VISUAL EDGE SYSTEMS INC, SB-2, 1997-04-07

VISUAL EDGE SYSTEMS INC
SB-2, 1997-04-07
MEMBERSHIP SPORTS & RECREATION CLUBS

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<PAGE> 1

As filed with the Securities and Exchange Commission on April 7, 1997
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

VISUAL EDGE SYSTEMS INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7999 13-377-8895
(State or other jurisdiction (Principal Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

2424 NORTH FEDERAL HIGHWAY, SUITE 100
BOCA RATON, FLORIDA 33431
(561) 750-7559
(Address and telephone number of registrant's principal executive offices)

EARL T. TAKEFMAN
CHIEF EXECUTIVE OFFICER
VISUAL EDGE SYSTEMS INC.
2424 NORTH FEDERAL HIGHWAY, SUITE 100
BOCA RATON, FLORIDA 33431
(561) 750-7559

COPIES TO:
DAVID W. POLLAK, ESQ.
MORGAN, LEWIS & BOCKIUS LLP
101 PARK AVENUE
NEW YORK, NEW YORK 10178
TEL: (212) 309-6000
FAX: (212) 309-6273

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [x]

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> 2

CALCULATION OF REGISTRATION FEE

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<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED SECURITY(1) PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01
per share . . . . . . . . . . 125,000 $11.125 $1,390,625 $421.40
- ----------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01
per share(2) . . . . . . . . 100,000 $11.125 $1,112,500 $337.12
- ----------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01
per share(3) . . . . . . . . 260,000 (4) (4) (4)
- ----------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01
per share(5) . . . . . . . . . 1,495,000 (6) (6) (6)
- ----------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01
per share(7) . . . . . . . . . 220,000 (8) (8) (8)
- ----------------------------------------------------------------------------------------------------------------------
Total Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $758.52
======================================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the filing fee.

(2) Issuable upon the exercise of warrants held by the Selling Stockholders.

(3) Issuable upon the exercise of 130,000 warrants, each to purchase one share
of Common Stock, and 130,000 warrants, each to purchase one warrant to
purchase one share of Common Stock, held by Whale Securities Co., L.P.

(4) These securities were registered under a previous Registration Statement
(No. 333-5193) filed by the Company. Pursuant to Rule 429, the Company is
carrying forward from such Registration Statement the 260,000 shares
registered hereby, as well as the filing fee of $605.16 previously paid
with respect to such securities.

(5) Issuable upon exercise of the 1,495,000 Redeemable Warrants sold to the
public in the Company's initial public offering on July 24, 1996.

(6) These securities were registered under a previous Registration Statement
(No. 333-5193) filed by the Company. Pursuant to Rule 429, the Company is
carrying forward from such Registration Statement the 1,495,000 shares of
Common Stock registered hereby, as well as the filing fee of $2,577.58
previously paid with respect to such securities.

(7) Represents shares beneficially owned and to be sold by certain selling
stockholders, and registered for offer on a delayed basis pursuant to Rule
415.

(8) These securities were registered under a previous Registration Statement
(No. 333-5193) filed by the Company. Pursuant to Rule 429, the Company is
carrying forward from such Registration Statement the 220,000 shares
registered hereby, as well as the filing fee of $379.31 previously paid
with respect to such securities.

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<PAGE> 3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED APRIL __, 1997

SHARES OF COMMON STOCK

VISUAL EDGE SYSTEMS INC.

This Prospectus relates to the offer and sale of up to an aggregate of
2,200,000 shares (the "Shares") of Common Stock of Visual Edge Systems Inc.
(the "Company"), which Shares consist of the following: (i) 200,000 shares of
Common Stock to be offered and sold by certain investors who received such
shares in a bridge financing consummated by the Company in March 1997, (ii)
25,000 shares to be offered and sold by a former officer of the Company, (iii)
220,000 shares of Common Stock to be offered and sold by certain investors who
invested in the Company prior to the Company's initial public offering (the
"IPO"), (iv) 260,000 shares of Common Stock underlying an aggregate of 260,000
warrants held by Whale Securities Co., L.P. ("Whale"), the underwriter in the
Company's IPO, and (v) 1,495,000 shares of Common Stock underlying the
Company's Redeemable Warrants, which were sold in the IPO. See "Selling
Stockholders and Plan of Distribution" and "Description of Securities." The
Company will receive up to $128,000 of the net proceeds from the sale of the
Shares offered hereby by the former officer of the Company. See "Management -
Severance Arrangement."

The Common Stock of the Company is traded on the Nasdaq SmallCap
Market ("Nasdaq") under the symbol "EDGE." On March 27, 1997, the last
reported sale price of the Common Stock as quoted on Nasdaq was $11.125 per
share.

THE SHARES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND SHOULD NOT BE PURCHASED BY INVESTORS WHO CANNOT AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" BEGINNING ON PAGE 6.

The Shares may be sold from time to time in brokerage transactions at
or near prevailing market prices through Whale or others, or in privately
negotiated transactions for the account of Whale or each of the Selling
Stockholders. The Company has agreed to bear all expenses (other than
discounts, selling commissions and stock transfer taxes relating to the Shares)
in connection with the registration and sale of the Shares being registered
hereby. See "Selling Stockholders and Plan of Distribution."

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.

No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus and, if given or made, such information and representations
must not be relied upon as having been authorized by the Company, Whale or the
Selling Stockholders. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company since the date hereof or
that the information contained herein is correct as of any time subsequent to
its date. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the Common Stock to
which it relates. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy such securities in any circumstances in which
such offer or solicitation is unlawful.

THE DATE OF THIS PROSPECTUS IS APRIL __, 1997.

<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the
more detailed information and financial statements, including the notes
thereto, appearing elsewhere in this Prospectus. Prospective investors are
urged to read this Prospectus in its entirety.

THE COMPANY

Visual Edge Systems Inc. (the "Company") was organized to develop and
market personalized videotape golf lessons featuring One-on-One instruction by
leading professional golfer Greg Norman and is in the early stages of being an
operational company. To date, the Company has focused its efforts on
developing and marketing computer software which digitally combines actual
video footage of a golfer's swing with a synchronized "split-screen" comparison
to Greg Norman's golf swing to produce a 45-minute One-on-One videotape golf
lesson. The Company's One-on-One video golf lesson analyzes a golfer's swing
by comparing it to Greg Norman's swing at several different club positions from
two camera angles using Greg Norman's pre-recorded instructional commentary and
analysis and computer graphics to highlight important golf fundamentals
intended to improve a golfer's performance.

Pursuant to a license agreement by and among the Company, Greg Norman
and Great White Shark Enterprises, Inc. (the "Greg Norman License"), Greg
Norman agreed to grant to the Company a worldwide license to use his name,
likeness and endorsement in connection with the production and promotion of the
Company's products. The agreement provides that the continued use of the
license by the Company is conditioned upon guaranteed payments aggregating
$3,300,000 during the three-year period commencing July 1, 1996 to be applied
against a royalty equal to 8% of the Company's net revenues from product sales.
The Company's business and prospects are dependent upon the Company's continued
association with Greg Norman.

In 1995, the Company developed the software necessary to operate a
video editing and videotape production process and an initial version of a
right-handed, full swing videotape golf lesson. Since then, the Company has
developed six full swing personalized One-on-One golf lessons with Greg Norman
for both right- and left-handed golfers. The Company's personalized products
include a lesson stressing basic golf fundamentals for either males or females,
a lesson geared towards senior golfers, an advanced lesson for lower-handicap
players and a "follow-up" lesson which measures a golfer's improvement from
prior lessons. The Company also plans to develop additional videotape golf
lessons, such as short game, sand play and putting lessons.

A Company employee operates videotaping equipment at the first tee,
driving range or other suitable location to videotape a golfer's swing which is
edited inside a One-on-One van to create a personalized videotape golf lesson
in approximately 16 minutes.

The Company's primary marketing strategy is to sell One-on-One
videotapes on a prearranged basis to various organizers of amateur corporate,
charity and member golf tournaments (who typically offer gifts to tournament
participants), golf professionals at private and daily fee golf courses and
driving ranges and indoor event planners who organize trade shows, conventions,
sales meetings, retail store openings and promotions and automobile dealer
showroom promotions. To implement its marketing and business strategy, the
Company has already developed seven mobile One-on-One vans equipped with video
and personal computer equipment to market, promote and produce the Company's
products, and the Company has ordered an additional eight such mobile units
which it expects to have operational by May 31, 1997. The Company will
position such vans in selected geographic areas that will service golf courses
and driving ranges throughout the United States, and has initially placed its
first seven vans in Florida (3), Georgia, Texas, Arizona and Southern
California.

Golf has become an increasingly popular form of sport and
entertainment in recent years. According to the National Golf Foundation,
consumer spending on golf-related activities, including green fees, golf
equipment and related merchandise, has increased from approximately $12.7
billion in 1989 to approximately $15.1 billion in 1994. The number of golfers
and golf courses and driving ranges has also increased and golf industry
participants have sought to

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increase public awareness and provide greater access to golfers of all ages and
income levels. It is estimated that golfers spend approximately $440 million
annually on golf lessons. The Company believes that the capabilities of its
software, including its ability to produce instructional commentary by Greg
Norman and synchronized, "split-screen" comparisons with Greg Norman's swing,
coupled with the consumer recognition and appeal of Greg Norman, differentiate
the Company's products from competing products and position the Company to
capitalize on the growing popularity of golf.

Since its inception, the Company has engaged in limited operations and
has generated minimal operating revenues. The Company incurred substantial
up-front expenses in connection with product development and commercialization
(including the payment of license fees and the lease of One-on-One vans and
video and computer equipment), resulting in significant operating losses which
are likely to continue for the foreseeable future. There can be no assurance
that the Company will be able to successfully implement its business plan. See
"Risk Factors."

The Company was incorporated under the laws of the State of Delaware
in July 1994 under the name Golf Vision, Inc. The Company changed its name to
Visual Edge Systems Inc. in March 1995. The Company's executive offices are
located at 2424 North Federal Highway, Suite 100, Boca Raton, Florida 33431,
and its telephone number is (561) 750-7559.

RECENT BRIDGE FINANCING

In March 1997, the Company consummated a bridge financing (the "Bridge
Financing") pursuant to which it issued to 13 investors, including Status-One
Investments Inc., a company controlled by Earl T. Takefman, the Chief Executive
Officer of the Company, an aggregate of (i) 100,000 shares of Common Stock and
(ii) 100,000 warrants to purchase 100,000 shares of Common Stock at a price of
$10.00 per share, subject to adjustment in certain circumstances. As
consideration for such securities, the investors in the Bridge Financing
pledged an aggregate of $3,500,000 in cash and other marketable securities as
cash collateral (the "Cash Collateral") to Republic Bank of New York (Canada)
Ltd. ("Republic"), which in turn issued a stand-by letter of credit (the
"Letter of Credit") to the Company in an amount up to $3,500,000, which expires
on December 31, 1997. The Company has used the Letter of Credit to secure a
$3,500,000 line of credit (the "Line of Credit") from Barnett Bank. In the
event that the Company draws upon the Line of Credit and is subsequently unable
to repay amounts owed to Barnett Bank under the Line of Credit prior to
December 31, 1997, Barnett Bank will present the Letter of Credit to Republic,
who will pay Barnett Bank amounts owed to it using the Cash Collateral. In
such instance, the investors in the Bridge Financing will be issued additional
shares of Common Stock by the Company according to a pre-determined formula.
See "Plan of Operation."

3
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THE OFFERING

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<S> <C>
Securities offered hereby(1) . . . . 2,200,000 shares of Common Stock.

Common Stock to be outstanding
after the offering(2) . . . . . . 4,840,000 shares

Use of Proceeds . . . . . . . . . . . The Company will receive up to $128,000 from the sale of the
Common Stock offered hereby. See "Use of Proceeds."

Risk Factors . . . . . . . . . . . . The securities offered hereby are speculative and involve a
high degree of risk and should not be purchased by investors
who cannot afford the loss of their entire investment. See
"Risk Factors."

Nasdaq Symbols . . . . . . . . . . . Common Stock -- EDGE
Redeemable Warrants -- EDGEW
- -------------------
</TABLE>

(1) Includes (i) 200,000 shares of Common Stock to be offered and sold by
certain investors in a bridge financing consummated by the Company in March
1997; (ii) 25,000 shares to be offered and sold by a former officer of the
Company; (iii) an aggregate of 1,495,000 shares of Common Stock reserved
for issuance upon the exercise of the Company's Redeemable Warrants (the
"Redeemable Warrants"), which were sold by the Company on July 24, 1996 in
the Company's initial public offering ("IPO"); (iv) an aggregate of 260,000
shares of Common Stock reserved for issuance upon the exercise of an
aggregate of 260,000 warrants held by Whale (the "Whale Warrants"); and
(v) an aggregate of 220,000 shares of Common Stock owned by certain pre-IPO
investors in the Company. See "Selling Stockholders and Plan of
Distribution" and "Description of Securities."

(2) Does not include (i) an aggregate of 1,495,000 shares of Common Stock
reserved for issuance upon the exercise of the Redeemable Warrants; (ii) an
aggregate of 260,000 shares of Common Stock reserved for issuance upon the
exercise of the Whale Warrants; (iii) 965,871 shares of Common Stock which
may be issued upon the exercise of outstanding options under the Company's
Amended and Restated 1996 Stock Option Plan (the "Plan"), including up to
500,000 shares of Common Stock issuable upon the exercise of options granted
to Earl T. Takefman and Alan L. Lubell, Chief Executive Officer and Chairman
of the Board of the Company, respectively; or (iv) 234,129 shares of Common
Stock reserved for issuance upon the exercise of options available for
future grant under the Plan. See "Management -- Employment and Consulting
Agreements," "-- Stock Option Plan," "Certain Transactions" and "Description
of Securities."

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SUMMARY FINANCIAL DATA

The summary financial information set forth below is derived from and
should be read in conjunction with the financial statements, including the
notes thereto, appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS DATA:
Year Ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ 132,267
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,397,690) (464,963)
Net loss per share . . . . . . . . . . . . . . . . . . . . . . . (.63) (.14)
Weighted average number of shares outstanding . . . . . . . . . . 3,801,250 3,220,000

BALANCE SHEET DATA:
December 31,
1996 1995
------------- ---------------
Working capital (deficit) . . . . . . . . . . . . . . . . . . . . $ 1,400,158 $ (682,422)
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . 4,784,170 633,477
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 1,119,514 682,980
Deficit accumulated during the development stage . . . . . . . . (2,862,653) (464,963)
Stockholders' equity (deficit) . . . . . . . . . . . . . . . . . 3,664,656 (49,503)
</TABLE>

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RISK FACTORS

Prospective investors should carefully consider the following risk
factors, in addition to the other information contained in this Prospectus, in
evaluating an investment in the shares of Common Stock offered hereby. This
Prospectus contains certain statements of a forward-looking nature relating to
future events or the future financial performance of the Company. Prospective
investors are cautioned that such statements are only predictions and that
actual events or results may differ materially. In evaluating such statements,
prospective investors should specifically consider the various factors
identified herein, including the matters set forth below, which could cause
actual results to differ materially from those indicated by such
forward-looking statements.

No Significant Operating Revenues. To date, the Company has generated
minimal operating revenues, and may not generate any meaningful revenues until
after the Company operates several One-on-One vans. There can be no assurance
that the Company will ever generate meaningful revenues. See "Financial
Statements."

Significant and Continuing Losses; Going Concern. For the period from
July 15, 1994 (inception) to December 31, 1996, the Company incurred a
cumulative net loss of $2,862,653. Since December 31, 1996, the Company has
continued to incur significant losses and anticipates that it will incur
continuing losses until, at the earliest, the Company generates sufficient
revenues to offset the substantial up-front capital expenditures and operating
costs (including significantly increased salaries of executives officers)
associated with enhancing and commercializing its products. The Company
incurred a non-recurring charge of $600,000 relating to the transfer of Common
Stock to Greg Norman prior to the consummation of the Company's initial public
offering (the "IPO"). In addition, the Company incurred costs of $1,615,000
relating to the IPO which was a reduction to its equity. The Company's
independent auditors have included an explanatory paragraph in their report on
the Company's financial statements stating that the Company's recurring losses
through 1996 and contractual commitments under a licensing agreement raise
substantial doubt about its ability to continue as a going concern unless the
Company receives additional equity or other financing. There can be no
assurance that the Company will ever achieve profitable operations. See
"Financial Statements."

Uncertainty of Proposed Plan of Operation. The Company's plan of
operation and prospects will be largely dependent upon the Company's ability to
successfully hire and retain skilled technical, marketing and other personnel,
establish and maintain satisfactory relationships with those who arrange golf
events, successfully develop, equip and operate One-on-One vans on a timely and
cost effective basis and achieve significant market acceptance for its
products. The Company has limited experience in developing and commercializing
new products based on innovative technology and there is limited information
available concerning the performance of the Company's video editing and
production process or market acceptance of the Company's products. There can be
no assurance that the Company will be able to successfully implement its
business plan or that unanticipated expenses, problems or technical
difficulties will not occur which would result in material delays in its
implementation. See "Plan of Operation."

Need for Additional Financing. The continued implementation of the
Company's business plan or the development of additional products will require
capital resources greater than the proceeds of the IPO and the Bridge Financing
or other funds currently available to the Company. There can be no assurance
that any additional financing, particularly the significant amounts of
financing that would be required if the Company is unable to secure
satisfactory equipment leasing or financing arrangements, will be available to
the Company on commercially reasonable terms, or at all.

Dependence on Greg Norman License. Pursuant to the Greg Norman
License, Greg Norman agreed to grant to the Company a worldwide license to use
his name, likeness and endorsement in connection with the production and
promotion of the Company's products. The license agreement provides that the
continued use of the license by the Company is conditioned upon guaranteed
payments aggregating $3,300,000 during the three-year period commencing July 1,
1996 to be applied against a royalty equal to 8% of the Company's net revenues
from product

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sales. The Company is required to make payments aggregating $600,000,
$1,000,000 and $1,700,000, respectively, during each of the years commencing
July 1, 1996, 1997 and 1998, whether or not the Company derives any revenues
from product sales. Failure to make any required payment under the Greg Norman
License would result in termination of the license agreement, which would have
a material adverse effect on the Company. Greg Norman's death, disability or
retirement from tournament play or any significant decline in the level of his
tournament play would, under certain circumstances, have a material adverse
effect on the Company. In addition, the commission by Greg Norman of any
serious crime or any act which adversely affects his reputation could also have
an adverse affect on the Company. The Company has obtained "key-man" insurance
on the life of Greg Norman in the amount of $10,000,000. See "Business --
Relationship with Greg Norman."

Uncertainty of Market Acceptance and Commercialization Strategy. The
Company's One-on-One personalized videotape golf lesson is a new business
concept and, accordingly, demand and market acceptance for the Company's
products is subject to a high level of uncertainty. Achieving market acceptance
for the Company's products will require significant efforts and expenditures by
the Company to create awareness and demand by golf professionals at golf
courses and driving ranges and consumers. The Company's prospects will be
significantly affected by its ability to successfully build an effective sales
organization and develop a significant number of One-on-One vans. The Company
has only recently commenced marketing activities and has limited marketing and
technical experience and limited financial, personnel and other resources to
independently undertake extensive marketing activities. The Company's strategy
and preliminary and future marketing plans may be subject to change as a result
of a number of factors, including progress or delays in the Company's marketing
efforts, changes in market conditions (including the emergence of potentially
significant related market segments), the nature of possible license and
distribution arrangements which may become available to it in the future and
competitive factors. To the extent that the Company enters into third-party
marketing and distribution arrangements in the future, it will be dependent on
the marketing efforts of such third parties and in certain instances on the
popularity and sales of their products. Additionally, to the extent that the
Company seeks to market its products in foreign markets, the Company may be
subject to various risks associated with foreign trade, including customs
duties, quotas and other trade restrictions, shipping delays, currency
fluctuations and international political and economic developments. There can
be no assurance that the Company's strategy will result in successful product
commercialization or that the Company's efforts will result in initial or
continued market acceptance for the Company's products. See "Business --
Marketing and Distribution."

Competition. The Company faces intense competition for a finite
amount of consumer discretionary spending from numerous other businesses in the
golf industry and related market segments. The Company competes with numerous
other products and services which provide golf instruction, including
instructional golf videotapes, golf software used to analyze golf swings and
golf courses, schools and professionals who offer video golf lessons, certain
of which may be less expensive or provide other advantages to consumers.
Various instructional golf videotapes currently being marketed by leading golf
professionals and instructors such as Jack Nicklaus, Tom Kite, Nick Faldo,
David Leadbetter, Jim McLean and Greg Norman have achieved significant
national, regional and local consumer recognition. These products are marketed
by companies with substantially greater financial, marketing, distribution,
personnel and other resources than the Company, permitting such companies to
implement extensive advertising and promotional campaigns, both generally and
in response to efforts by additional competitors to enter into new markets. In
addition, certain companies offer both hardware and software to golf
professionals for use in connection with golf lessons. Moreover, the
instructional golf video segment of the industry has no substantial barriers to
entry and, consequently, the Company expects that other companies which have
developed software technologies may seek to enter into the Company's target
markets and compete directly against the Company. There can be no assurance
that other companies are not developing or will not seek to develop similar
products.

The Greg Norman License prohibits Greg Norman from granting similar
rights to any person with respect to any concept which is the same as or
confusingly similar to the Company's concept or proposed products. For
purposes of the Greg Norman License, however, the self-instructional golf video
product known as Better Golf featuring Greg Norman or any other form of golf
instructional video or multi-media presentation for teaching golf techniques is
not deemed the same as or confusingly similar to the Company's products. There
can be no assurance that the Company will be able to compete successfully. See
"Business -- Competition."

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<PAGE> 10

Potential Product Obsolescence. The markets for the Company's products
may be characterized by rapidly changing technology which could result in
product obsolescence or short product life cycles. Accordingly, the ability of
the Company to compete may be dependent upon the Company's ability to complete
development and commercialization of the Company's products in a timely manner
and to continually enhance and improve its software. There can be no assurance
that competitors will not develop technologies or products that render the
Company's products obsolete or less marketable. See "Business -- Product
Development."

Dependence on Limited Product Line. The Company is entirely dependent
on the commencement of sales of a limited product line to generate revenues and
on the commercial success of its products. There can be no assurance that the
Company's products will prove to be commercially viable. Failure to achieve
commercial viability would have a material adverse effect on the Company. See
"Business."

Industry Factors. Sales of the Company's instructional golf videotapes
are dependent on discretionary spending by consumers, which may be adversely
affected by unfavorable general economic conditions, as well as a decline in
the popularity of golf. Any decrease in the level of consumer spending on golf
instruction could adversely affect the Company's business and prospects. The
Company's future operating results will depend on numerous factors beyond its
control, including the popularity, price and timing of other instructional golf
videos and related products being introduced and distributed, national,
regional and local economic conditions (particularly recessionary conditions
adversely affecting consumer spending), changes in consumer demographics, the
availability and relative popularity of other forms of sports and
entertainment, and public tastes and preferences, which may change rapidly and
cannot be predicted. The Company's ability to plan for product development and
promotional activities may be affected by the Company's ability to anticipate
and respond to relatively rapid changes in consumer tastes and preferences. To
the extent that the Company targets consumers with limited disposable income,
the Company may find it more difficult to price its products at levels which
result in profitable operations. In addition, seasonal weather conditions
limiting the playing seasons in certain geographic areas may result in
fluctuations in the Company's future operating results. See "Business."

Uncertainty of Patent Protection. The Company has filed a patent
application with the United States patent and Trademark Office covering certain
aspects of its digital video editing and videotape production process. There
can be no assurance, however, as to the breadth or degree of protection which
patents may afford the Company, that any patent applications will result in
issued patents or that patents will not be circumvented or invalidated. Rapid
technological developments in the computer software industry result in
extensive patent filings and a rapid rate of issuance of new patents. Although
the Company believes that its products do not and will not infringe patents or
violate proprietary rights of others, the Company has not conducted any
investigation to determine whether its products infringe patents or violate
proprietary rights of others, and it is possible that infringement of existing
or future patents or proprietary rights of others have occurred or may occur.
In the event the Company's products infringe patents or proprietary rights of
others, the Company may be required to modify the design of its products or
obtain a license. There can be no assurance that the Company will be able to
do so in a timely manner, upon acceptable terms and conditions or at all. The
failure to do any of the foregoing 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 action and the Company could, under certain circumstances, become
liable for damages, which also could have a material adverse effect on the
Company. See "Business -- Patents, Trademarks and Proprietary Information."

Proprietary Information. The Company relies on proprietary processes
and employs various methods to protect the concepts, ideas and documentation of
its products. However, such methods may not afford complete protection and
there can be no assurance that others will not independently develop such
processes or obtain access to the Company's proprietary processes, ideas and
documentation. Furthermore, although the Company has entered into
confidentiality agreements with certain of its employees, there can be no
assurance that such arrangements will adequately protect the Company. See
"Business -- Patents, Trademarks and Proprietary Information."

8
<PAGE> 11

Dependence on Third-Party Production Companies and Equipment
Manufacturers. The Company relies on third-party manufacturers for all of its
supply of video and computer equipment and vans used in its operations. The
Company has not entered into agreements with any equipment manufacturer and
intends to purchase or lease equipment components pursuant to purchase orders
placed from time to time in the ordinary course of business. Failure or delay
by any manufacturer in supplying components to the Company on favorable terms
could result in interruptions in its operations and adversely affect the
Company's ability to implement its business plan. See "Business."

Dependence on Key Personnel; Need for Qualified Personnel. The success
of the Company will be dependent on the personal efforts of Earl T. Takefman,
its Chief Executive Officer, and other key personnel. The loss of the services
of Mr. Takefman could have a material adverse effect on the Company's proposed
business and prospects. The Company has entered into employment agreements with
Mr. Takefman and other key personnel and has obtained "key-man" insurance on
the life of Mr. Takefman in the amount of $5,000,000. The success of the
Company is also dependent upon its ability to hire and retain additional
qualified marketing, technical, financial and other personnel. Competition for
qualified personnel is intense and there can be no assurance that the Company
will be able to hire or retain additional qualified personnel. Any inability
to attract and retain qualified personnel would have a material adverse effect
on the Company. See "Management."

Control by Management. Earl T. Takefman, the Company's Chief
Executive Officer, and Alan L. Lubell, Chairman of the Board of Directors of
the Company, currently beneficially own, in the aggregate, approximately 46.9%
of the outstanding shares of Common Stock (assuming no exercise of any of the
Company's outstanding warrants or unexercised options). Accordingly, such
persons, acting together, are effectively in a position to control the Company,
elect all of the Company's directors, cause an increase in the authorized
capital or the dissolution, merger or sale of the assets of the Company, and
generally to direct the affairs of the Company. See "Management" and
"Principal Stockholders."

Outstanding Options. There are currently outstanding options to
purchase an aggregate of 965,871 shares of Common Stock at exercise prices
ranging from $5.00 to $10.75 per share, of which options to purchase up to an
aggregate of 500,000 shares (the "Executive Options") were granted to Messrs.
Takefman and Lubell upon consummation of the IPO. The Executive Options vest
five years from the date of grant, subject to acceleration if the trading price
of the Common Stock reaches certain thresholds and have an exercise price of
$5.00. Specifically, the vesting of 300,000 of the Executive Options would
accelerate to the date that the market price of the Common Stock equaled or
exceeded $10.00 per share for at least five consecutive trading days on or
prior to January 24, 1998, if the price reaches such threshold. This threshold
was achieved on February 7, 1997, and, accordingly, 300,000 of the Executive
Options became exercisable as of such date. The vesting of the remaining
200,000 of the Executive Options will accelerate to the date the market price
of the Common Stock equals or exceeds $15.00 per share for five consecutive
trading days on or prior to January 24, 1999, if the price reaches such
threshold. Exercise of any of the foregoing options will have a dilutive
effect on the Company's stockholders. Furthermore, the terms upon which the
Company may be able to obtain additional equity financing may be adversely
affected, since the holders of the options can be expected to exercise them, if
at all, at a time when the Company would, in all likelihood, be able to obtain
any needed capital on terms more favorable to the Company than those provided
in the options. See "Management -- Stock Option Plan."

No Dividends. To date, the Company has not paid any cash dividends on
its Common Stock and does not expect to declare or pay dividends on the Common
Stock in the foreseeable future. In addition, the payment of cash dividends
may be limited or prohibited by the terms of future loan agreements or the
future issuance of Preferred Stock. See "Dividend Policy."

Authorization and Discretionary Issuance of Preferred Stock. The
Company's Certificate of Incorporation authorizes the Company's Board of
Directors to issue up to 5,000,000 shares of preferred stock, from time to
time, in one or more series. The Board of Directors will be authorized,
without further approval of the stockholders, to fix the dividend rights and
terms, conversion rights, voting rights, redemption rights and terms,
liquidation preferences, and

9
<PAGE> 12

any other rights, preferences, privileges and restrictions applicable to each
new series of preferred stock. The issuance of such stock could adversely
affect the voting power of the holders of Common Stock and, under certain
circumstances, make it more difficult for a third party to gain control of the
Company, discourage bids for the Common Stock at a premium, or otherwise
adversely affect the market price of the Common Stock. See "Description of
Securities -- Preferred Stock."

Volatility of Market Price of Common Stock and Warrants. Since the
IPO, the market prices of the Company's publicly traded securities have been
highly volatile as has been the case with the securities of other emerging
companies. Factors such as the Company's operating results and announcements
by the Company or its competitors may have a significant impact on the market
price of the Company's securities. In addition, in recent years, the stock
market has experienced a high level of price and volume volatility and market
prices for the stock of many companies have experienced wide price fluctuations
which have not necessarily been related to the operating performance of such
companies.

Potential Influence on the Market of Whale Securities Co., L.P. Whale
Securities Co., L.P. ("Whale"), the underwriter in the Company's IPO, makes a
market in the Common Stock and publicly traded warrants (the "Warrants") and
may otherwise effect transactions in the Common Stock and the Warrants. Such
activities may exert a dominating influence on the market and such activity may
be discontinued at any time. The prices and liquidity of the Company's
securities may be significantly affected to the extent, if any, that Whale
participates in such market.

Shares Eligible for Future Sale. Including 225,000 of the shares of
Common Stock offered hereby, the Company has 4,840,000 shares of Common Stock
outstanding (assuming no exercise of any of the Company's outstanding warrants),
of which 1,840,000 shares, consisting of 1,615,000 shares registered in
connection with the IPO (220,000 of which shares remain subject to certain
contractual restrictions described below) and the 225,000 shares offered hereby
by certain of the Selling Stockholders and Mr. Ami Trauber, a former officer of
the Company, will be freely tradeable without restriction or further
registration under the Securities Act. All of the remaining 3,000,000 shares of
Common Stock outstanding are "restricted securities", as that term is defined in
Rule 144 promulgated under the Securities Act, and in the future may be sold
only pursuant to an effective registration statement under the Securities Act,
in compliance with the exemption provisions of Rule 144 or pursuant to another
exemption under the Securities Act. Of the 3,000,000 restricted shares, an
aggregate of 2,520,406 shares will be eligible for sale, without registration,
under Rule 144 (subject to certain volume limitations prescribed by such rule
and to the contractual restrictions described below), commencing March 1997.
All of the Company's officers and directors as well as the investors in a
pre-IPO bridge financing who hold an aggregate of 220,000 shares have agreed not
to sell or dispose of any of their securities of the Company for a period of
twelve months ending on July 24, 1997 without Whale's prior written consent,
provided that such restrictions shall terminate if the closing bid quotation of
the Common Stock as reported by Nasdaq is at least $10.00 per share for 20
consecutive trading days commencing on or after April 24, 1997. No prediction
can be made as to the effect, if any, that sales of such securities or the
availability of such securities for sale will have on the market prices
prevailing from time to time. However, even the possibility that a substantial
number of the Company's securities may be sold in the public market may
adversely affect prevailing market prices for the Common Stock and Warrants and
could impair the Company's ability to raise capital through the sale of its
equity securities. See "Description of Securities," "Shares Eligible for
Future Sale" and "Selling Stockholders and Plan of Distribution."

Limitations of Liability of Directors and Officers. The Company's
Certificate of Incorporation includes provisions to limit, to the full extent
permitted by Delaware law, the personal liability of directors of the Company
for monetary damages arising from a breach of their fiduciary duties as
directors. The Certificate of Incorporation also includes provisions to the
effect that (subject to certain exceptions) the Company shall, to the maximum
extent permitted from time to time under the law of the State of Delaware,
indemnify, and upon request shall advance expenses to, any director or officer
to the extent permitted under such law as it may from time to time be in
effect. In addition, the Company's By-Laws require the Company to indemnify,
to the full extent permitted by law, any director, officer, employee or agent
of the Company for acts which such person reasonably believes are not in
violation of the Company's corporate purposes as set forth in the Certificate
of Incorporation. As a result of such provisions in the Certificate of

10
<PAGE> 13

Incorporation and the By-Laws of the Company, stockholders may be unable to
recover damages against the directors and officers of the Company for actions
taken by them which constitute negligence, gross negligence or a violation of
their fiduciary duties, which may reduce the likelihood of stockholders
instituting derivative litigation against directors and officers and may
discourage or deter stockholders from suing directors, officers, employees and
agents of the Company for breaches of their duty of care, even though such an
action, if successful, might otherwise benefit the Company and its
stockholders. See "Management -- Limitations of Liability and
Indemnification."

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<PAGE> 14

PRICE RANGE OF COMMON STOCK AND WARRANTS

The Company's Common Stock and Warrants are traded on the Nasdaq
SmallCap Market under the symbols "EDGE" and "EDGEW," respectively. The Company
completed its initial public offering in July 1996 at an offering price of
$5.00 per share for its Common Stock and $.10 per Warrant. The following tables
set forth, for the Company's fiscal periods indicated, the range of high and
low last reported sale prices for the Common Stock and the Warrants.

<TABLE>
<CAPTION>
COMMON STOCK: HIGH LOW
------------- ---- ---
<S> <C> <C>
FISCAL YEAR 1996
Third Quarter (from July 24, 1996) $ 8.00 $ 4.375
Fourth Quarter 7.625 5.625
FISCAL YEAR 1997
First Quarter (through March 27, 1997) 12.25 5.75

WARRANTS: HIGH LOW
--------- ---- ---

FISCAL YEAR 1996
Third Quarter (from July 24, 1996) $ 4.125 $ 1.00
Fourth Quarter 3.156 1.875
FISCAL YEAR 1997
First Quarter (through March 27, 1997) 7.25 1.875
</TABLE>

HOLDERS

On March 27, 1997, the last reported sale price of the Common Stock on
the Nasdaq SmallCap Market was $11.125 per share and the last reported sale
price of the Warrants on the Nasdaq SmallCap Market was $6.125 per Warrant. At
February 25, 1997, there were 83 holders of record of the Company's Common
Stock and 2 holders of record of the Company's Warrants, although the Company
believes that there are approximately 425 beneficial holders of the Common
Stock.

DIVIDEND POLICY

The Company does not anticipate paying any cash dividends on its
Common Stock in the foreseeable future and intends to retain its earnings, if
any, to finance the expansion of its business and for general corporate
purposes. Any payment of future dividends will be at the discretion of the
Board of Directors and will depend upon, among other things, the Company's
earnings, financial condition, capital requirements, level of indebtedness,
contractual restrictions and other factors that the Company's Board of
Directors deems relevant.

USE OF PROCEEDS

The sale of the 225,000 shares of Common Stock offered hereby by the
Selling Stockholders and Mr. Trauber will not result in any proceeds to the
Company, except that the Company will receive up to $128,000 of the net
proceeds from the sale of Common Stock offered hereby by Mr. Trauber. See
"Management - Severance Arrangement." The Company will use such proceeds for
general corporate purposes, including the purchase and deployment of additional
mobile units. See "Business--Marketing and Distribution."

The sale of the 220,000 shares of Common Stock offered hereby by
certain investors in a bridge financing consummated by the Company prior to the
consummation of the IPO will not result in any proceeds to the Company.

The sale of the 1,495,000 shares underlying the Company's Redeemable
Warrants upon the exercise of such warrants, if any, will not result in any
proceeds to the Company. However, in connection with the actual exercise, if

12
<PAGE> 15

any, of such warrants, the Company will receive $5.00 in cash per Redeemable
Warrant. See "Description of Securities-- Redeemable Warrants."

The sale of the 260,000 shares underlying the Whale Warrants upon the
exercise of such warrants, if any, will not result in any proceeds to the
Company. However, in connection with the actual exercise, if any, of such
warrants, the Company will receive (i) $6.90 in cash per warrant for 130,000 of
such outstanding warrants and (ii) $7.038 in cash per warrant in connection
with the exercise of 130,000 of such outstanding warrants. See "Description of
Securities--Whale Warrants."

13
<PAGE> 16

CAPITALIZATION

The following table sets forth, as of December 31, 1996, the
capitalization of the Company.

<TABLE>
<CAPTION>
December 31,
1996
<S> <C>
Short term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 500,000
==========
Stockholders' equity (deficit):
Common Stock, $0.01 par value:
20,000,000 shares authorized; 4,615,000 shares issued and outstanding(1) . . . . . $ 46,150
Preferred Stock, 5,000,000 shares authorized; none issued . . . . . . . . . . . . . . . -
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,481,159
Deficit accumulated during the development stage . . . . . . . . . . . . . . . . . . . (2,862,653)
----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,664,656
----------
Total capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,164,656
==========
</TABLE>

__________________
(1) Does not include (i) 100,000 shares of Common Stock reserved for issuance
upon the exercise of warrants held by the Selling Stockholders; (ii) an
aggregate of 1,495,000 shares of Common Stock reserved for issuance upon
the exercise of the Redeemable Warrants; (iii) an aggregate of 260,000
shares of Common Stock reserved for issuance upon the exercise of the Whale
Warrants; (iv) 965,871 shares of Common Stock (of which 787,871 were
outstanding as of December 31, 1996) which may be issued upon the exercise
of outstanding options under the Company's Amended and Restated 1996 Stock
Option Plan, including up to 500,000 shares of Common Stock issuable upon
the exercise of options granted to Earl T. Takefman and Alan L. Lubell,
Chief Executive Officer and Chairman of the Board of the Company,
respectively; and (v) 234,129 shares of Common Stock reserved for issuance
upon the exercise of options available for future grant under the Plan
(which Plan was amended as of January 1, 1997 to increase the number of
shares reserved for issuance under the Plan from 900,000 to 1,200,000). See
"Management -- Employment and Consulting Agreements," "-- Stock Option
Plan," "Certain Transactions" and "Description of Securities."

14
<PAGE> 17

PLAN OF OPERATION

Due to the successful completion of the Bridge Financing in March 1997
(as described below), management believes it will be able to launch 15 to 25
"One-on-One with Greg Norman" vans by the end of the year which will operate in
California, Arizona, Texas, Nevada, Florida, Georgia, Illinois, Michigan and
the northeastern United States. Management also intends to build the
infrastructure required to support these vans from an operations and sales
perspective. Management also intends on negotiating international distribution
rights with third parties during the year.

RESULTS OF OPERATIONS

Year Ended December 31, 1996 ("Fiscal 1996") compared to Year Ended December
31, 1995 ("Fiscal 1995")

The Company is a development stage company and generated no revenues
during Fiscal 1996. The Company's revenues of $132,267 in Fiscal 1995 were
primarily attributable to the licensing of its technology and product to an
Australian company. In Fiscal 1996, the Company commenced its introduction and
marketing of computerized videotape golf lessons featuring One-on-One
instruction by leading professional golfer Greg Norman. In 1997, the Company
intends to introduce its product to the golf tournament market throughout the
United States.

In Fiscal 1996, the Company continued to focus its efforts on
upgrading its proprietary hardware and software technology, video products and
mobile video capturing and processing production units. In Fiscal 1996, the
Company completed its first five mobile production units as well as the
Company's training facility.

Costs during Fiscal 1996 consisted primarily of start-up product
development, payroll, marketing and other administrative expenses. A
significant portion of the Company's disbursements during Fiscal 1996
represents the Company's investment in mobile production units, training
facilities, product development equipment and other fixed assets aggregating
$1,365,365 compared with similar expenditures which aggregated $395,369 in
Fiscal 1995. Investment in video and marketing production costs during fiscal
1996 totaled $398,558 compared with $275,808 in Fiscal 1995.

In addition, the Company incurred a one-time non-cash stock
compensation expense totaling $600,000 in conjunction with the transfer of
300,000 shares of Common Stock from the founding shareholders to Greg Norman.
See "Financial Statements."

LIQUIDITY AND CAPITAL RESOURCES

In July 1996, the Company consummated an initial public offering (the
"IPO") of its Common Stock and Warrants. Net proceeds from the IPO (including
in-house placement related expenses) aggregated $5,511,849. Of the proceeds
from the IPO, $515,000 was utilized to repay bank debt and $1,100,000 was used
to repay bridge loans provided to the Company prior to the IPO. In addition, a
portion of the proceeds of the IPO was used to develop and deploy seven mobile
operating units, to purchase other operating assets and to establish the
Company's marketing, operating and administrative infrastructure.

In November 1996, the Company entered into a $4,000,000 revolving line
of credit arrangement with a financial institution. At December 31, 1996 the
outstanding balance under this line was $500,000.

On December 31, 1996, the Company executed an agreement with a
financial institution to finance the first seven mobile production units
whereby the Company can borrow up to $840,000 during 1997. No amounts were
drawn against this lease at December 31, 1996.

16
<PAGE> 18

The Company is required to make payments to Greg Norman under a
license agreement aggregating $600,000, $1,000,000 and $1,700,000,
respectively, during each of the years commencing July 1, 1996, 1997 and 1998,
whether or not the Company derives any revenues from product sales.

RECENT BRIDGE FINANCING

In March 1997, the Company consummated the Bridge Financing pursuant
to which it issued to 13 investors, including Status-One Investments Inc., a
company controlled by Earl T. Takefman, the Chief Executive Officer of the
Company, an aggregate of (i) 100,000 shares of Common Stock and (ii) 100,000
warrants to purchase 100,000 shares of Common Stock at a price of $10.00 per
share, subject to adjustment in certain circumstances. As consideration for
such securities, the investors in the Bridge Financing (the "Bridge Investors")
pledged an aggregate of $3,500,000 in cash and other marketable securities as
cash collateral (the "Cash Collateral") to Republic Bank of New York (Canada)
Ltd. ("Republic"), which in turn issued a stand-by letter of credit (the
"Letter of Credit") to the Company in an amount up to $3,500,000, which expires
on December 31, 1997. The Company has used the Letter of Credit to secure a
$3,500,000 line of credit (the "Line of Credit") from Barnett Bank. In the
event that the Company draws upon the Line of Credit and is subsequently unable
to repay amounts owed to Barnett Bank under the Line of Credit prior to
December 31, 1997, Barnett Bank will present the Letter of Credit to Republic,
who will pay Barnett Bank amounts owed to it using the Cash Collateral.

In the event that some or all of the Cash Collateral is utilized and
is thus not returned to the Bridge Investors on December 31, 1997, the
expiration date of the Letter of Credit, the Company is obligated to promptly
issue to each Bridge Investor a number of shares of Common Stock equal to (x)
the amount of such Bridge Investor's unreturned Cash Collateral divided by (y)
$7.50, provided that the average of the closing bid prices of the Common Stock
on the Nasdaq SmallCap Market on each of the twenty consecutive trading days
immediately prior to December 31, 1997 is greater than $11.00. Alternatively,
if the average of the closing bid prices of the Common Stock on the Nasdaq
SmallCap Market on each of the twenty consecutive days immediately prior to
December 31, 1997 is less than $11.00, the price by which a Bridge Investor's
unreturned Cash Collateral is to be divided shall be one-half of the average of
the closing bid prices of the Common Stock on the Nasdaq SmallCap Market on
each of the twenty consecutive trading days prior to December 31, 1997. In the
event that the Company issues shares of Common Stock in accordance with the
foregoing, the Company is contractually obligated to promptly use its best
efforts to effect the registration of such shares of Common Stock under the
Securities Act.

The Company believes that the completion of the Bridge Financing will
enable the Company to deploy additional mobile production units in several
markets throughout the United States and Canada and provide working capital
during the product launch period.

The Company believes that its current cash position combined with its
available credit lines, as well as other pending financing agreements which the
Company hopes to consummate in 1997, will be adequate to satisfy its capital
and operating cash requirements in 1997.

17
<PAGE> 19

BUSINESS

The Company was incorporated in July 1994 and commenced operations in
January 1995. Since the Company's inception, it has been primarily engaged in
the development and marketing of videotape golf lessons featuring personalized
One-on-One instruction by leading professional golfer Greg Norman. The Company
sells its products under the name One-on-One with Greg Norman.(TM)

INDUSTRY OVERVIEW

Golf has become an increasingly popular form of sport in recent years.
According to the National Golf Foundation, consumer spending on golf-related
activities, including green fees, golf equipment and related merchandise,
increased from approximately $12.7 billion in 1989 to approximately $15.1
billion in 1994. The Company believes that this trend is due largely to the
aging of the general population as well as baby boomers, whose income and
leisure time spent on recreational activities have been increasing. According
to the National Golf Foundation, golfers are generally well-educated, high
income, young to middle-aged adult males, a target market with attractive
demographics and significant spending power. Also, it is estimated that there
are more female golfers enjoying the sport than ever before.

The number of golfers, golf courses and driving ranges has also
increased and golf industry participants have sought to increase public
awareness and provide greater access to golfers of all ages and income levels.
According to the National Golf Foundation, there are approximately 15,000
public and private courses and, according to the Golf Range and Recreational
Association, 1,900 to 2,300 stand-alone driving ranges in the United States
today. In addition, the National Golf Foundation has estimated that there are
currently 1,850 golf courses under construction in the United States. It is
also estimated that golfers spend approximately $440 million annually on golf
lessons. The Company believes that golfers are motivated to continually improve
their play and that video is an effective method of delivering instruction. The
Company believes that the capabilities of its software, including its ability
to produce instructional commentary by Greg Norman and synchronized,
"split-screen" comparisons with Greg Norman's swing, coupled with consumer
recognition and appeal of Greg Norman, differentiate the Company's products
from competing products and position the Company to capitalize on the growing
popularity of golf.

PRODUCTS

The Company's One-on-One personalized videotape golf lesson analyzes a
golfer's swing by comparing it to Greg Norman's swing at several different club
positions from two camera angles using Greg Norman's pre-recorded instructional
commentary and analysis and computer graphics to highlight important golf
fundamentals intended to improve a golfer's performance. The Company's
products, through the use of synchronized "split-screen" comparisons to Greg
Norman's swing, are designed to enable golfers to make meaningful
self-observations to improve their play. In each of the Company's video golf
lessons, Greg Norman emphasizes the importance of the relevant golf
fundamental, comments on the golfer's execution of the fundamental and
summarizes the key fundamentals to remember. The Company's products include the
following right and left-handed, full swing personalized One-on-One golf
lessons with Greg Norman:

- The Basic Fundamentals: The Company's basic fundamental golf
lesson is designed for golfers of all skill levels and is
approximately 45 minutes. The Company has developed three
versions of this lesson, each focusing on a different body and
swing type.

- The Basic Fundamentals for Senior Golfers: The Company's
senior lesson is intended for male and female senior golfers
who typically have more limited range of motion. It is
approximately 45 minutes.

18
<PAGE> 20

- The Basic Fundamentals for Female Golfers: The Company's
female lesson is designed for a female golfer and includes a
professional female golfer to provide additional comparisons.
It is approximately 45 minutes.

- The Swing Plane: The Company's advanced golf lesson is
designed primarily for golfers who have taken the Basic
Fundamentals lesson and for lower handicap golfers. It is
approximately 30 minutes.

- The Follow-Up: This self-comparison video lesson is designed
to permit golfers to compare two swings taken at different
times to Greg Norman's swing to measure improvement or
deterioration through the use of triple "split-screen" video.
Golfers are able to store several swings on a computer
diskette which may be incorporated into a self-comparison
One-on-One video at any time.

The Company's products sell for $19.95 to $49.95 and are available on
VHS videotape format. The Company also expects to make personalized video golf
lessons available on CD-ROM in the future. In addition, the Company plans to
develop additional One-on-One video golf lessons, including short game lessons
designed to focus on short iron play, chipping and pitching, sand play lessons
and putting lessons. In the event the Company is able to meet its business
objective, the Company believes that potential opportunities exist for the
application of its One-on-One concept to the sports of bowling, tennis and
baseball. There can be no assurance that the Company will be able to
successfully develop any of these proposed additional sports.

RELATIONSHIP WITH GREG NORMAN

Greg Norman, currently the number one player in the world according to
the SONY golfer ranking system, is a two-time British Open winner, was awarded
the Varden Trophy for the lowest average score on the PGA Tour in 1989, 1990 and
1994 and was named the 1995 PGA Player of the Year. The Company's business and
prospects are dependent upon the Company's continued association with Greg
Norman.

Pursuant to a license agreement dated March 1, 1995, by and among the
Company, Greg Norman and Great White Shark Enterprises, Inc. (the "Greg Norman
License"), Greg Norman agreed to grant to the Company a worldwide license to
use his name, likeness and endorsement in connection with the production and
promotion of the Company's products. Greg Norman also agreed to grant to the
Company the right to use any trademarks owned by him (except for the "Shark"
logo). The agreement provides that the continued use of the license by the
Company is conditioned upon guaranteed payments aggregating $3.3 million during
the three-year period commencing July 1, 1996 (the "Initial Term") to be
applied against a royalty equal to 8% of the Company's net revenues from
product sales. "Net revenues" is defined as revenues less costs associated with
discounts, allowances, payments to golf clubs, driving ranges or golf
professionals, sales tax and returns, not to exceed 20% of product sales.

Under the agreement, the Company is required to make payments
aggregating $600,000, $1,000,000 and $1,700,000, respectively, during each of
the years commencing July 1, 1996, 1997 and 1998, whether or not the Company
derives any revenues from product sales. Such annual payments are payable on a
quarterly basis. The Company has the option to renew the agreement for two
additional five-year periods. In the event of renewal, the Company is obligated
to make guaranteed payments of $1,300,000 during the first year of any renewal
term, increasing by $100,000 for each successive year. In connection with the
agreement, in April 1996, certain principal stockholders of the Company
transferred an aggregate of 300,000 shares of Common Stock owned by them to Mr.
Norman pursuant to an option held by Mr. Norman.

The Company has the right to require Greg Norman to be available,
subject to his commitments to the PGA Tour and other golf tours and contractual
commitments, to produce the Company's products and make promotional appearances
to market such products and to play with individuals who achieve a hole-in-one
in a tournament who have purchased the Company's Ultimate Hole-in-One prize.
Greg Norman is required to be available to the Company on three days, one day
and two days during the first, second and third year, respectively, of the
Initial Term, and two days during

19
<PAGE> 21

each year of any renewal term. In order to assist the Company in developing its
products and if a tournament participant achieves a hole-in-one, Greg Norman
has agreed to make himself available, at a cost of $50,000 per day or $50,000
per hole-in-one and subject to his schedule and convenience, for additional
days in 1997 for the purpose of filming personalized One-on-One golf video
lessons. Greg Norman has the right to approve prototypes and finished products
and related advertising and promotional materials and may withhold his consent
under certain circumstances. The agreement also requires Greg Norman to make
himself available for medical exams for the purpose of assisting the Company in
obtaining up to $10 million in "key-man" insurance on his life, which policy is
now in effect. The Company has agreed to indemnify Greg Norman against any
liability arising out of the Greg Norman License.

The Greg Norman License prohibits Greg Norman from granting similar
rights to any person with respect to any concept which is the same as or
confusingly similar to the Company's concept or products. "Products" means a
videotape or CD-ROM or printed versions or other similar medium that is given
or sold to a consumer upon use of the concept in which Greg Norman's golf swing
or any other golf professional's golf swing is compared to the user's golf
swing using audio and video analysis of both swings. For purposes of the
agreement, however, the self-instructional golf video product Better Golf
featuring Greg Norman or any other form of golf instructional video or
multi-media presentation for teaching golf techniques are not deemed to be the
same as or confusingly similar to the Company's concept or products.

Greg Norman may terminate the agreement in the event the Company fails
to make any payment, breaches the agreement, is declared bankrupt or becomes
insolvent, assigns its assets for the benefit of creditors, consents to the
appointment of a receiver or trustee or winds up or ceases to carry on its
business. The Company may terminate the agreement in the event Greg Norman
dies, voluntarily enters a substance abuse program, commits an act that results
in a criminal conviction damaging to his reputation or good will or breaches
any material term of the agreement.

The Company may assign the agreement to an affiliated entity and enter
into distribution agreements with third parties with respect to product sales.
The Company has no right to sublicense its rights under the agreement to a
third party without the prior consent of Greg Norman.

MARKETING AND DISTRIBUTION

Marketing Strategy

Target Markets

The Company believes that its primary target markets include:

Amateur Golf Tournaments. The Company believes that private and public
golf courses present a significant opportunity to sell personalized One-on-One
videotape golf lessons. The Company has targeted private and public golf
courses which host corporate, charity and member tournaments and whose sponsors
typically offer gifts such as golf umbrellas, golf bag towels, golf balls or
golf shirts to tournament participants. The Company believes there is a
significant opportunity for product and promotional "tie-ins" with these
potential corporate and charity sponsors.

Golf Courses and Golf Professionals. The Company has focused its
marketing efforts on golf professionals at private and public golf courses. The
Company believes that golf professionals will be willing to use the Company's

20
<PAGE> 22

products as instructional tools to enhance the marketing and quality of golf
lessons given to their students and as a participant gift in member-guest
tournaments.

Driving Ranges. The Company has identified driving ranges as a
potentially significant market for the Company's One-on-One videotapes. Driving
ranges generally conduct a substantial portion of their business during the
evenings and on weekends. The Company intends to market its products at driving
ranges during evening hours to complement its marketing efforts to private and
public golf courses during the daytime.

Other Potential Markets. The Company also believes that travel agents
who plan golf trips, golf specialty shops and sporting goods retailers and
professional golf tournaments are also potential markets for the Company's
products, as well as event planners who arrange indoor and outdoor events such
as conventions and trade shows, new store openings, sales meetings and seminars
and in-store retail promotions.

Distribution Strategy

The Company's has developed mobile One-on-One vans equipped with video
and personal computer equipment to market, promote and produce the Company's
products. The Company has positioned and will position such vans in selected
geographic areas that will serve golf courses and driving ranges throughout the
United States. The Company has placed its first seven vans in Florida (3),
Georgia, Texas, Arizona and Southern California. The Company plans to place
its next eight vans (which have been ordered) in California (2), Illinois,
Michigan, New York, Massachusetts, Washington, D.C. and New Jersey.

Strategic Relationships

The Company may also seek to enter into strategic relationships with
third parties relating to product marketing and distribution. Potential
marketing partners may include golf industry participants, such as organizers
of golf tournaments and companies that offer hole-in-one insurance.

In November 1995, the Company entered into a distribution agreement
with Visual Edge Systems Australia Pty. Ltd. ("Vesa"), an unaffiliated third
party, pursuant to which the Company granted to Vesa the exclusive right to
distribute One-on-One products in Australia, New Zealand and Indonesia. In
connection with the agreement and upon delivery of the Company's initial
version of its product, the Company received a non-refundable payment of
$125,000 to be applied against future royalties, and is entitled to receive a
royalty of $5.00 for each videotape sold. During the second and third years of
the agreement, the Company is entitled to receive aggregate guaranteed
royalties of $700,000. In addition, the agreement provides for certain profit
sharing arrangements.

The Company has recently commenced its marketing activities and has
limited marketing and technical experience and limited financial, personnel and
other resources to independently undertake extensive marketing activities. The
Company's strategy and preliminary and future marketing plans may be subject to
change as a result of a number of factors, including progress or delays in the
Company's marketing efforts, changes in market conditions (including the
emergence of potentially significant related market segments), the nature of
possible license and distribution arrangements which may become available to it
in the future and competitive factors. There can be no assurance that the
Company's strategy will result in successful product commercialization or that
the Company's efforts will result in initial or continued market acceptance for
the Company's products.

PRODUCTION

The Company's One-on-One products are made possible by relatively
recent advancements in the capabilities of affordable desktop personal
computers to process, manipulate and edit digital video information. Creation
of a One-on-One videotape involves videotaping a golfers' swing, editing and
production of a videotape. Videotaping involves the operation of video
equipment, including three digital cameras, a small television monitor, two
computers and power

21
<PAGE> 23

supply. Editing involves the use of several computers, a television, a scan
converter and several video cassette recorders and consists of editing the
video footage of a golfer, synchronizing and sizing the golfer's swing to Greg
Norman's swing and identifying key clubhead and body positions. In the final
videotape production stage, the Company's software scans the videotape to
locate the first blank segment where it records a "split-screen" image of Greg
Norman and the golfer at similar club positions. Using pre-recorded film and
audio footage stored in the computer's memory, the software creates computer
graphics designed to illustrate comparisons to Greg Norman's swing and chooses
appropriate verbal instructions and analytical comments from Greg Norman. A
Company employee operates videotaping equipment at the first tee, driving range
or other suitable location to videotape a golfer's swing which is edited inside
the One-on-One van to create a personalized video golf lesson in approximately
16 minutes.

COMPETITION

The Company faces intense competition for a finite amount of consumer
discretionary spending from numerous other businesses in the golf industry and
related market segments. The Company competes with numerous other products and
services which provide golf instruction, including instructional golf
videotapes, golf software used to analyze golf swings and golf courses, golf
schools and professionals who offer video golf lessons, which may be less
expensive or provide other advantages to consumers.

Various instructional golf videotapes currently being marketed by
leading golf professionals and instructors such as Jack Nicklaus, Tom Kite,
Nick Faldo, David Leadbetter, Jim McLean and Greg Norman, including Better Golf
and Shark Attack, among others, featuring Greg Norman, have achieved
significant national, regional and local consumer recognition. These products
are marketed by companies with substantially greater financial, marketing,
distribution, personnel and other resources than the Company, permitting such
companies to implement extensive advertising and promotional campaigns, both
generally and in response to efforts by additional competitors to enter into
new markets.

In addition, certain companies offer both hardware and software to
golf professionals for use in connection with golf lessons. Such companies
include Astar, Inc., Vivid Visions, Inc. and Golf Training Systems, Inc. The
Company believes that such companies offer hardware and software at prices
ranging from $4,500 to $20,000. Certain companies also offer computer software
to permit a golfer to analyze a golf swing, such as David Leadbetter's Computer
Coach, which sells at a price of $59.95.

The instructional golf video segment of the industry has no
substantial barriers to entry and, consequently, the Company expects that other
companies which have developed software technologies may seek to enter into the
Company's target markets and compete directly against the Company. There can be
no assurance that other companies are not developing or will not seek to
develop similar products.

The Greg Norman License prohibits Greg Norman from granting similar
rights to any person with respect to any concept which is the same as or
confusingly similar to the Company's concept or proposed products.
Notwithstanding this prohibition, the self-instructional golf video product
known as Better Golf featuring Greg Norman or any other form of golf
instructional video or multi-media presentation for teaching golf techniques
are not deemed the same as or confusingly similar to the Company's concept or
products. There can be no assurance that the Company will be able to compete
successfully.

PATENTS, TRADEMARKS AND PROPRIETARY INFORMATION

The Company has filed a patent application with the United States
Patent and Trademark Office covering certain aspects of its digital video
editing and production process. There can be no assurance, however, as to the
breadth or degree of protection which patents may afford the Company, that any
patent applications will result in issued patents or that patents will not be
circumvented or invalidated. Rapid technological developments in the computer
software industry results in extensive patent filings and a rapid rate of
issuance of new patents. Although the Company believes

22
<PAGE> 24

that its products do not and will not infringe patents or violate proprietary
rights of others, the Company has not conducted any investigation to determine
whether its products infringe patents or violate proprietary rights of others,
and it is possible that infringement of existing or future patents or
proprietary rights of others have occurred or may occur. In the event the
Company's products infringe patents or proprietary rights of others, the
Company may be required to modify the design of its products or obtain a
license. There can be no assurance that the Company will be able to do so in a
timely manner, upon acceptable terms and conditions or at all. The failure to
do any of the foregoing 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 action
and the Company could, under certain circumstances, become liable for damages,
which also could have a material adverse effect on the Company.

The Company relies on proprietary processes and to employ various
methods to protect the concepts, ideas and documentation of its products.
However, such methods may not afford complete protection and there can be no
assurance that others will not independently develop such processes or obtain
access to the Company's proprietary processes, ideas and documentation.
Furthermore, although the Company intends to enter into confidentiality
agreements with its employees, there can be no assurance that such arrangements
will adequately protect the Company.

The Company has filed a trademark application with the United States
Patent and Trademark Office, on behalf of Greg Norman, for the mark One-on-One
with Greg Norman(TM) and may use this mark, as well as all other trademarks
owned by Greg Norman (except the "Shark" logo) in connection with the marketing
of its products. The Company's rights in these marks may be a significant part
of the Company's proposed business. The Company is not aware of any claims or
infringement or other challenges to the Company's rights to use these marks.

EMPLOYEES

As of March 31, 1997, the Company employed (directly or indirectly)
seven executive employees and 33 employees involved in the operation of its
office and vans.

PROPERTIES

The Company's executive offices are located in approximately 4400
square feet of office space in Boca Raton, Florida. This office space is leased
and is principally used for operations and general administrative functions.
The Company believes that its property is generally well maintained, in good
condition and adequate for its present needs. Furthermore, the Company
believes that suitable additional or replacement space will be available when
required.

The Company also intends to lease two additional facilities in
southern California and in the Northeast, each of which is anticipated to be
approximately 1,000 square feet.

In order to secure its obligations under its financing arrangement
with Barnett Bank, the Company granted to Barnett Bank a lien on substantially
all of the Company's liquid assets.

LEGAL PROCEEDINGS

The Company is not presently a party to any material litigation.

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<PAGE> 25

MANAGEMENT

The following table sets forth certain information concerning the
directors, executive officers and key employees of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Earl T. Takefman . . . . . . . . . . . . . . . . . . . 47 Chief Executive Officer and Director

Alan L. Lubell . . . . . . . . . . . . . . . . . . . . 58 Chairman of the Board and Vice
President

Richard Parker . . . . . . . . . . . . . . . . . . . . 35 President and Chief Operating Officer

Edward Smith . . . . . . . . . . . . . . . . . . . . . 45 Chief Financial Officer

Thomas Peters(1) . . . . . . . . . . . . . . . . . . . 51 Director of Software Development

Peter Gorski(1) . . . . . . . . . . . . . . . . . . . . 41 Vice President of Operations

Eddie Einhorn(2) . . . . . . . . . . . . . . . . . . . 60 Director

Mark Hershhorn(2)(3) . . . . . . . . . . . . . . . . . 48 Director

Beryl Artz (3) . . . . . . . . . . . . . . . . . . . . 44 Director

Frank Williams . . . . . . . . . . . . . . . . . . . . 57 Advisor to the Board of Directors
- ---------------
</TABLE>
(1) Executive employee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.

Earl T. Takefman, a co-founder of the Company, has been Chief
Executive Officer of the Company since March 1995. Prior to founding the
Company, Mr. Takefman was Co-Chief Executive Officer of SLM International, Inc.
("SLM"), a publicly traded toy and sporting goods company, from December 1989
to August 1994. SLM filed for protection under Chapter 11 of the U.S.
Bankruptcy Code in October 1995. From 1980 to 1989, prior to joining SLM, Mr.
Takefman was Chief Operating Officer of Charan Industries ("Charan"), a
publicly traded Canadian toy and sporting goods company. Mr. Takefman received
a Bachelor of Architecture degree in 1971 and a Masters of Business
Administration degree from McGill University in Montreal, Canada in 1973.

Alan L. Lubell, a co-founder of the Company, has been Chairman of the
Board of the Company since July 1994 and Vice President since May 1996. Prior
to founding the Company, Mr. Lubell had been an entrepreneur in the area of
sports television. From 1977 to July 1994, Mr. Lubell served as President of
Marathon Entertainment, a sports television company which he founded that
created many events and programs that were sold to television stations and
networks and national advertisers. Among the events developed, packaged and
produced by Marathon Entertainment was the New York City Marathon. Mr. Lubell
received a Bachelor of Science degree in marketing from New York University in
1960.

Richard Parker has been the Company's President and Chief Operating
Officer since July 1996. From February 1990 until his appointment as Chief
Operating Officer of the Company, Mr. Parker was the founder, owner and
president of Diomo Marketing Inc. and Devrew Merchandising Inc., companies
engaged in marketing and selling

24
<PAGE> 26

consumer products in Canada. From August 1984 to February 1990, Mr. Parker held
various positions, including Vice President, at Charan. Mr. Parker graduated
from Vanier College in Montreal in 1980.

Edward Smith became the Company's Chief Financial Officer in March
1997. From January 1996 until February 1997, Mr. Smith was the Vice President
of Finance for Enterprise Development Corporation, a Florida corporation that
provides consulting services to developing and early stage companies. From
January 1995 until January 1996, Mr. Smith was the Chief Financial Officer for
Kirker Enterprises, Inc., a Delaware corporation specializing in the
manufacturing of bulk cosmetics. From September 1985 until January 1995, Mr.
Smith was the Chief Financial Officer of the Calabrian Corporation, a Delaware
corporation which manufactures specialized chemicals. From February 1981 to
September 1985, Mr. Smith was a Manager at KPMG Peat Marwick LLP in the
consulting area. Mr. Smith received a B.B.A. in accounting from Pace
University in 1975 and an M.B.A. from Pace University in 1978.

Thomas Peters has been Director of Software Development of the Company
since May 1996. Since July 1992, Mr. Peters has been the owner of Smart View
("Smart View"), a company he founded to design and develop computer golf
software to be used by golf professionals when giving video golf lessons. Since
March 1995, Smart View has been engaged as an independent consultant to the
Company and is principally responsible for the development of the software used
in the Company's products. Smart View also has developed operating systems used
by the Golf Academy at PGA National and at the Doral Golf Learning Center, each
in Florida. Prior to founding Smart View, Mr. Peters, for 26 years, held
various positions at International Business Machines Corporation, including
Manager of Application Development from July 1989 to July 1992 and Personal
Computer Product Planning Manager from 1984 to 1989. Mr. Peters graduated from
Harper College at University of New York in 1967, with a B.A. in mathematics.

Peter Gorski has been the Company's Vice President of Operations since
August 1996. From March 1996 until his appointment as Vice President of
Operations, Mr. Gorski was founder and owner and President of GHD Systems,
Inc., a company providing courier services in five states. From February 1979
to March 1996, Mr. Gorski held various positions with the Federal Express
Corporation, including Managing Director of District Operations, South Florida
District. Mr. Gorski graduated from University of Wisconsin - Whitewater in
1976.

Eddie Einhorn became a director of the Company on July 24, 1996 upon
completion of the Company's IPO. Mr. Einhorn currently serves, and has served
for the past five years, as Vice-Chairman of the Chicago White Sox baseball
team franchise. Prior to being appointed Vice-Chairman, he served the
franchise as its President and Chief Operating Officer from 1981 to 1991. Mr.
Einhorn is a member of the Major League Baseball Schedule Format Committee, the
Professional Baseball Association Committee, and was a member of the Television
Committee from 1992 to 1995. In 1989, Mr. Einhorn was appointed television
consultant to the United States Olympic Committee. He is currently a
television consultant for the United States Figure Skating Association and the
International Skating Union, the Governing bodies for figure skating throughout
the world. Mr. Einhorn also serves on the Board of Directors of the Chicago
Bulls basketball team of the National Basketball Association. Prior to 1981,
Mr. Einhorn was executive producer of CBS Sports Spectacular, where he was
awarded an Emmy Award in 1980. Mr. Einhorn holds a Bachelor's degree from the
University of Pennsylvania and is a graduate of Northwestern University School
of Law.

Mark Hershhorn became a director of the Company on July 24, 1996 upon
completion of the Company's IPO. Mr. Hershhorn currently serves and has
served since November 1994 as President and Chief Executive Officer and as a
director of National Media Corporation of Philadelphia, a publicly-traded
worldwide infomercial company, and as Chairman of the Board of its
international subsidiary, Quantum International, Inc. From August 1994 to
November 1994, Mr. Hershhorn acted as President and Chief Operating Officer of
National Media. Mr. Hershhorn was President and Chief Operating Officer of
Buckeye Communications, a publicly traded corporation, from June 1993 to August
1994 and of National Media from December 1991 to April 1993. From 1990 to
December 1991, Mr. Hershhorn was a Senior Vice President of Food Marketing for
Nutri-Systems Inc., a diet food company. Prior to joining Nutri-Systems, he
held various positions at the Franklin Mint, including Chief Financial
Officers, Treasurer, Vice President and director, from 1985 to 1990. Mr.
Hershhorn received a Bachelor of Arts degree in economics Rutgers University
and a Masters of Business Administration degree from the Wharton School of
Business at the University of Pennsylvania. He

25
<PAGE> 27

currently serves as a member of the Wharton School Graduate Executive Board and
as a member of the Executive Committee of the National Infomercial Marketing
Associations.

Beryl Artz became a director of the Company on March 19, 1997. Since
March 1995, Mr. Artz has served as an Executive Vice President and director for
Club Corporation of America, a corporation that owns and manages golf courses,
in which position he has responsibility for private clubs, public golf and
semi-private club operations within Texas and the Southeast United States.
From January 1988 until January 1995, Mr. Artz was the Executive Vice President
of GolfCorp, a corporation that owns and manages golf courses, where he had
responsibility for the public golf course and semi-private club operations.
Mr. Artz also currently serves as an advisor to the Board of Directors of Club
Corporation International, a privately held corporation that owns and manages
golf courses and that has annual gross revenues of over $700 million and over
228,000 memberships nationwide.

Frank Williams served as a director of the Company from July 24, 1996,
the date of completion of the Company's IPO, until March 1997, and currently
serves as an advisor to the Board of Directors. Mr. Williams has been the
Managing Director of Great White Shark Enterprises, Inc. since January 1993.
From 1988 to January 1993, Mr. Williams served as a General Manager of the
Australian division of International Management Group, a company engaged in
representing athletes and producing sports programming. From 1978 to 1988, Mr.
Williams was Managing Director and a co-founder of the Australian Masters Gold
Tournament.

BOARD OF DIRECTORS

All directors currently hold office until the next annual meeting of
stockholders and until their successors are duly elected and qualified. The
Company reimburses directors for reasonable travel expenses incurred in
connection with their activities on behalf of the Company but does not
currently pay its directors any fees for attending Board meetings. The Company
has granted to each of its non-employee directors options to purchase 5,000
shares of Common Stock and each of such directors will receive annual option
grants to purchase 2,500 shares of Common Stock. See "Stock Option Plan."

Audit Committee. The Company has established an Audit Committee of
the Board of Directors comprised of Messrs. Einhorn and Hershhorn. Audit
Committee members meet regularly with the Company's financial management and
independent auditors to review the results of their examination, the scope of
audits and their opinions on the adequacy of internal controls and quality of
financial reporting.

Compensation Committee. The Company has established a Compensation
Committee of the Board of Directors comprised of Messrs. Hershhorn and Artz.
The Committee makes recommendations to the Board of Directors concerning the
salaries of all elected officers. In addition, the Compensation Committee
administers the Company's 1996 Stock Option Plan and determines the amounts of,
and the individuals to whom, awards shall be made thereunder. See "Stock
Option Plan."

The Company has agreed, for a three-year period ending on July 24,
1999, if so requested by Whale, to nominate and use its best efforts to elect a
designee of Whale as a director of the Company, or at Whale's option, as a non-
voting advisor to the Company's Board of Directors. Whale has not yet
exercised its right to designate such a person.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth certain information regarding the
compensation earned by or awarded to the Chief Executive Officer and each of
the other executive officers (the "Named Executive Officers") of the Company
for the fiscal year ended December 31, 1996. Prior to the consummation of the
Company's initial public offering on July 24, 1996, none of the Named Executive
Officers received compensation or benefits from the Company.

26
<PAGE> 28

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
--------------------------------------- ---------------------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OTHER($) AWARD(S)(#) OPTIONS(1) COMPENSATION($)
------- --------- --------- -------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earl T. Takefman, Chief Executive Officer . . . . 1996 150,000 0 0 0 337,478 0

Alan L. Lubell, Chairman of the Board and Vice
President . . . . . . . . . . . . . . . . . . 1996 75,000 0 0 0 250,000 0

Richard Parker, Predident and Chief Operating
Officer . . . . . . . . . . . . . . . . . . . 1996 62,500 0 0 0 50,000 0

Ami Trauber, Chief Financial Officer(2) . . . . . 1996(2) 62,500 0 0 0 25,000 0
</TABLE>

(1) Reflects options to acquire shares of the Company that were granted
in 1996. The Company has not granted stock appreciation rights.

(2) Mr. Trauber was terminated on February 28, 1997, and was replaced
as Chief Financial Officer by Edward Smith. Mr. Smith receives an
annual salary of $100,000 in connection with his employment.

SEVERANCE ARRANGEMENT

Effective February 28, 1997, the employment of Ami Trauber, the
Company's former Chief Financial Officer, was terminated. Pursuant to an
agreement in principle (the "Release"), between the Company and Mr. Trauber, the
vesting of options to purchase 25,000 shares of Common Stock, at an exercise
price of $5.00 per share, granted to Mr. Trauber would be accelerated so that
all of such options vested immediately. The shares of Common Stock underlying
such options (the "Option Shares") are being registered hereby. Mr. Trauber has
authorized Whale or another broker of the Company's choosing to sell the Option
Shares at prevailing market prices such that the Company will receive up to
$128,000 from such exercise, with Mr. Trauber retaining the remaining proceeds.

EMPLOYMENT AGREEMENTS

Effective January 1, 1996, the Company entered into a three-year
employment agreement with Earl T. Takefman, the Chief Executive Officer of the
Company. Pursuant to the agreement, Mr. Takefman is entitled to receive a base
salary of $150,000 per annum, subject to increase to $200,000 in July 1997 and
$250,000 in July 1998 if the Company achieves pre-tax earnings of $2 million
and $4 million in the prior 12-month periods, respectively. The agreement also
provides for additional compensation in the amount of 5% of pre-tax earnings of
the Company in each year if the Company achieves pre-tax earnings of a least $3
million and $5 million in fiscal 1997 and 1998, respectively. In addition,
pursuant to the agreement, Mr. Takefman received the Executive Options upon the
consummation of the Company's IPO, which options vest five years from the date
of grant, subject to acceleration if the trading price of the Common Stock
reaches certain thresholds, and which have an exercise price of $5.00.
Specifically, the vesting of 150,000 of the Executive Options would accelerate
to the date that the market price of the Common Stock equaled or exceed $10.00
per share for at least five consecutive trading days on or prior to January 24,
1998, if the price reaches such threshold. This threshold was achieved on
February 7, 1997, and, accordingly, 150,000 of the Executive Options became
exercisable as of such date. The vesting of the remaining 100,000 of the
Executive Options will accelerate to the date that the trading price of the
Common Stock equals or exceed $15.00 per share for at least five consecutive
trading days on or prior to January 24, 1999, if the price reaches such
threshold. The agreement is automatically renewed for additional one-year
periods unless Mr. Takefman or the Company provides notice to the other of its
termination. In the event that Mr. Takefman is terminated without cause, he
will be entitled to receive as severance the amount of his base salary for the
lesser of one year or the remaining term of the agreement.

27
<PAGE> 29

Effective January 1, 1996, the Company entered into a three-year
employment agreement with Alan L. Lubell, the Chairman of the Board and Vice
President of the Company. Pursuant to the agreement, Mr. Lubell is entitled to
receive a base salary of $75,000 per annum, subject to increase to $100,000 in
July 1997 and $125,000 in July 1998 if the Company achieves pre-tax earnings,
of $2 million and $4 million in the prior 12-month periods, respectively. In
addition, Mr. Lubell shall have the right to receive a bonus based on the
Company's performance, as determined by the board of Directors, and the
Executive Options on the same terms and subject to the same conditions as Mr.
Takefman. The agreement is automatically renewed for additional one-year
periods unless Mr. Lubell or the Company provides notice to the other of its
termination. In the event Mr. Lubell is terminated without cause, he will be
entitled to receive as severance the amount of his base salary for six months.

Effective June 1, 1996, the Company entered into an employment
agreement with Richard Parker, pursuant to which Mr. Parker serves as the
President and Chief Operating Officer of the Company. Mr. Parker is entitled
to receive a base salary of $150,000 per annum, subject to increase to $175,000
in 1998 if the Company achieves certain pre-tax earnings during 1997. Pursuant
to his employment agreement, Mr. Parker is also eligible to receive a cash
bonus and additional options under a formula based upon (i) the Company's stock
price at the end of its fiscal year, or (ii) whether the Company achieves
certain pre-determined target earnings per share thresholds. The agreement
expires on December 31, 1998 but will automatically be renewed annually unless
terminated by one or both of the parties. If Mr. Parker is terminated without
cause, he will be entitled to received as severance the amount of his base
salary for the lesser of six months or the remaining term of the agreement.

Since March 1995, Thomas Peters and Smart View have been engaged to
act as independent consultants to the Company in the area of software
development, and are principally responsible for the development of the
software used in the Company's proposed products. Mr. Peters was paid an
aggregate of $91,525 in connection with services rendered for the period from
March 1995 through April 30, 1996 and also received 9,155 shares of Common
Stock and options to purchase 20,411 shares of Common Stock. As of May 1,
1996, the Company entered into a two-year employment agreement with Thomas
Peters, pursuant to which Mr. Peters serves the Company, as a Director --
Software Development. Mr. Peters is entitled to receive a base salary of
$100,000 in the first year of the agreement and $100,000 in the second year.
Pursuant to the agreement, Mr. Peters is eligible to receive a bonus based on
the Company's performance, as determined by the Board of Directors. The
agreement is automatically renewed for additional one-year periods unless Mr.
Peters or the Company provides notice to the other of its termination. In the
event that Mr. Peters is terminated without cause, he will be entitled to
receive as severance the amount of his base salary for three months. Mr.
Peters has entered into a confidentiality agreement with the Company, has
agreed, pursuant to his employment agreement, to devote all of his business
time to the Company's affairs and has assigned to the Company all of his
rights, title and interest in and to any invention relating to or used in
connection with the Company's One-on-One products which he developed while
engaged by the Company.

STOCK OPTION PLAN

In April 1996, the Board of Directors and the Company's stockholders
approved the Company's 1996 Stock Option Plan (the "Plan"). The purpose of the
Plan is to provide directors, officers and key employees of, and consultants to
the Company with additional incentives by increasing their ownership interests
in the Company. Directors, officers and other key employees of the Company are
eligible to participate in the Plan. Awards may also be granted to consultants
providing valuable services to the Company. In addition, individuals who have
agreed to become a key employee of or a consultant to the Company are eligible
for option grants, conditional in each case on actual employment or consultant
status. Awards of options to purchase Common Stock may include incentive stock
options ("ISOs") and/or non-qualified stock options ("NQSOs").

The Plan was amended by the Board of Directors on January 1, 1997 to
increase the maximum number of shares of Common Stock that may be subject to
outstanding options, determined immediately after the grant of any option. The
Plan currently provides that such maximum number of shares of Common Stock is
equal to the greater of

28
<PAGE> 30

1,200,000 shares or 12% of the aggregate number of shares of the Company's
Common Stock outstanding, provided, however, that options to purchase no more
than 300,000 shares of Common Stock may be granted as ISOs.

The Board of Directors has established a Compensation Committee,
consisting of Messrs. Hershhorn and Artz, each of whom qualifies as a
disinterested person within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to administer the Plan.
The Compensation Committee generally has discretion to determine the terms of
any option grant, including the number of option shares, option price, term,
vesting schedule, the post-termination exercise period, and whether the grant
will be an ISO or NQSO. Notwithstanding this discretion: (i) the number of
shares subject to options granted to any individual in any calendar year may
not exceed 250,000; (ii) with respect to ISO's the option price per share of
Common Stock may not be less than 100% of the market value of such share at the
time of grant (or 110% if the ISO is granted to a 10% or more stockholder);
(iii) the term of any option may not exceed 10 years (unless granted as an ISO
to a 10% or more stockholder, which term may not exceed five years); and (iv)
an option may terminate upon a grantee's termination of employment for cause.
In addition, unless otherwise specified by the Compensation Committee, all
outstanding options vest upon a "change in control" of the Company (as defined
in the Plan), and all options will terminate three months following any
termination of employment.

The Plan also provides for automatic option grants to directors who
are not otherwise employed by the Company. Upon commencement of service (or
upon agreeing to serve in the case of the initial non-employee directors),
non-employee directors receive a nonqualified option to purchase 5,000 shares
of Common Stock, and continuing non-employee directors receive annual options
to purchase 2,500 shares of Common Stock. Options granted to non-employee
directors become exercisable one-third on the date of grant and one-third on
each of the next two anniversaries of the date of grant. Non-employee
directors' options have a term of five years from the date of grant. Messrs.
Einhorn and Hershhorn each received options to purchase 5,000 shares of Common
Stock upon the consummation of the IPO, and, upon his appointment to the Board
of Directors on March 19, 1997, Mr. Artz received options to purchase 5,000
shares of Common Stock. In addition, Mr. Frank Williams, a former director of
the Company, currently acts as an advisor to the Company's Board of Directors
and will continue to receive annual options to purchase 2,500 shares of Common
Stock as long as he continues in such advisory capacity.

The Plan will remain in effect until terminated by the Board of
Directors. The Plan may be amended by the Board of Directors without the
consent of the stockholders of the Company, except that any amendment, although
effective when made, will be subject to stockholder approval if required by any
Federal or state law or regulation or by the rules of any stock exchange or
automated quotation system on which the Common Stock may then be listed or
quoted. On January 1, 1997, the Board of Directors amended the Plan to provide
for an increase in the maximum number of shares of Common Stock that may be
subject to outstanding options, subject to the terms described above. At the
Company's 1997 annual meeting, the Company intends to have the stockholders of
the Company ratify such amendment to the Plan.

The Company currently has outstanding nonqualified options to purchase
an aggregate of 965,871 shares of Common Stock. Of such options, options to
purchase 337,478, 250,000, 100,000, 40,411, 25,000, 15,832 and 5,832 shares
have been granted to Earl Takefman, Alan Lubell, Richard Parker, Thomas Peters,
Edward Smith, Mark Lubell and Mona-Lee Takefman, respectively. All of such
options are exercisable at a price per share ranging from $5.00 to $10.00 and
vest in equal installments over a three- or five-year period, except for the
Executive Options granted to each of Mr. Takefman and Mr. Lubell. Such
Executive Options vest on a date five years from the date of the consummation
of the IPO, subject to acceleration if the trading price of the Common Stock
reaches certain thresholds and have an exercise price of $5.00. On February 7,
1997, the vesting of 300,000 of such Executive Options was accelerated, as the
market price of the Common Stock equaled or exceeded $10.00 per share for five
consecutive trading days. The vesting period of the remaining 200,000
Executive Options has not been accelerated. See "Management -- Employment
Agreements."

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<PAGE> 31

STOCK OPTION GRANT TABLE

The following table shows, with respect to the Named Executive
Officers, information concerning the grant of stock options pursuant to the
Plan during the fiscal year ended December 31, 1996.

OPTIONS GRANTED IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------
NUMBER OF PERCENTAGE OF TOTAL
SECURITIES OPTIONS GRANTED TO EXERCISE OR BASE
UNDERLYING EMPLOYEES IN FISCAL PRICE PER SHARE
NAME OPTIONS GRANTED 1996 ($/SHARE)(1) EXPIRATION DATE
--------------------- --------------- ------------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Earl T. Takefman . . 337,478(2) 43.9% $5.00 July 24, 2006

Alan L. Lubell . . . 250,000(3) 32.6 $5.00 July 24, 2006

Richard Parker . . . 50,000 6.5 $5.00 July 24, 2006

Ami Trauber(4) . . . 25,000 3.3 $5.00 July 24, 2006
</TABLE>

(1) The exercise price per share for all options granted is equal to the market
price of the underlying Common Stock as of the date of grant.

(2) Excludes (i) 10,000 Bridge Warrants received by Mr. Takefman in the Bridge
Financing, which were purchased on the same terms as the purchase of Bridge
Warrants by the other investors in the Bridge Financing, and (ii) 5,832
shares underlying options owned by Mr. Takefman's spouse, as to which
shares Mr. Takefman disclaims beneficial ownership. See "Certain
Transactions -- Bridge Financing" and "Description of Securities."

(3) Excludes 15,832 shares underlying options owned by Mr. Lubell's son, Mark
Lubell, as to which shares Mr. Alan Lubell disclaims beneficial ownership.

(4) Mr. Trauber's employment as the Company's Chief Financial Officer was
terminated on February 28, 1997.

STOCK OPTION EXERCISES AND YEAR END VALUES TABLE

The following table shows, with respect to the Named Executive
Officers, information with respect to the unexercised options to purchase
shares of Common Stock granted under the Plan and held as of December 31, 1996.
None of the Named Executive Officers exercised options during the year ended
December 31, 1996.

30
<PAGE> 32

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES

NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS HELD AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1996 AT DECEMBER 31, 1996 (1)
------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Earl T. Takefman . . . 0 337,478(2) 0 $253,108.50
Alan L. Lubell . . . . 0 250,000(3) 0 187,500.00
Richard Parker . . . . 0 50,000 0 37,500.00
Ami Trauber(4) . . . . 0 25,000 0 18,750.00
</TABLE>

(1) Options are "in-the-money" if the closing market price of the Company's
Common Stock exceeds the exercise price of the options. The value of the
unexercised options represents the difference between the exercise price
of such options and the closing market price of the Company's Common Stock
on December 31, 1996.

(2) Excludes (i) 10,000 Bridge Warrants received by Mr. Takefman in the Bridge
Financing, which were purchased on the same terms as the purchase of
Bridge Warrants by the other investors in the Bridge Financing, and (ii)
5,832 shares underlying options owned by Mr. Takefman's spouse, as to
which shares Mr. Takefman disclaims beneficial ownership. See "Certain
Transactions -- Bridge Financing" and "Description of Securities."

(3) Excludes 15,832 shares underlying options owned by Mr. Lubell's son, Mark
Lubell, as to which shares Mr. Alan Lubell disclaims beneficial ownership.

(4) Mr. Trauber's employment as the Company's Chief Financial Officer was
terminated on February 28, 1997. In connection with such termination, Mr.
Trauber and the Company reached an agreement in principle pursuant to which
the vesting of Mr. Trauber's 25,000 options would be accelerated such that
all of such options would be presently exercisable. See "Management -
Severance Arrangement."

LIMITATIONS OF LIABILITY AND INDEMNIFICATION

Section 145 of the Delaware General Corporation Law ("DGCL") contains
provisions entitling the Company's directors and officers to indemnification
from judgment, fines, amounts paid in settlement, and reasonable expenses
(including attorney's fee) as the result of an action or proceeding in which
they may be involved by reason of having been director or officer of the
Company. In its Certificate of Incorporation, the Company has included a
provision that limits, to the fullest extent now or hereafter permitted by the
DGCL, the personal liability of its directors to the Company or its
stockholders for monetary damages arising from a breach of their fiduciary
duties as directors. Under the DGCL as currently in effect, this provision
limits a director's liability except where such director (i) breaches his duty
of loyalty to the Company or its stockholders, (ii) fails to act in good faith
or engages in intentional misconduct or a knowing violation of law, (iii)
authorizes payment of an unlawful dividend or stock purchase or redemption as
provided in Section 174 of the DGCL, or (iv) obtains an improper personal
benefit. This provision does not prevent the Company or its stockholders from
seeking equitable remedies, such as injunctive relief or rescission. If
equitable remedies are found not to be available to stockholders in any
particular case, stockholders may not have any effective remedy against actions
taken by directors that constitute negligence or gross negligence.

The Certificate of Incorporation also includes provisions to the
effect that (subject to certain exceptions) the Company shall, to the maximum
extent permitted from time to time under the law of the State of Delaware,
indemnify, and upon request shall advance expenses to, any director or officer
to the extent that such indemnification and advancement of expenses is
permitted under such law, as it may from time to time be in effect. In
addition, the

31
<PAGE> 33

Company's By-Laws require the Company to indemnify, to the full extent
permitted by law, any director, officer, employee or agent of the Company for
acts which such person reasonably believes are not in violation of the
Company's corporate purposes as set forth in the Certificate of Incorporation.
At present, the DGCL provides that, in order to be entitled to indemnification,
an individual must have acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the Company's best interests.

32
<PAGE> 34

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information, as of the date of
this Prospectus, relating to the beneficial ownership of shares of Common Stock
by: (i) each person or entity who is known by the Company to own beneficially
five percent or more of the outstanding Common Stock; (ii) each of the
Company's executive officers and directors; and (iii) all directors and
executive officers of the Company as a group.

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
BENEFICIALLY OWNED(2)
NUMBER OF ----------------------------
SHARES
NAME AND ADDRESS OF BENEFICIALLY BEFORE AFTER
BENEFICIAL OWNERS(1) OWNED(2) OFFERING OFFERING
-------------------- ----------- -------- --------
<S> <C> <C> <C>
Earl T. Takefman(3) . . . . . . . . . . . . . . . 1,314,118 26.2% 25.3%
Alan L. Lubell(4) . . . . . . . . . . . . . . . . 1,255,958 25.0 24.4
Greg Norman . . . . . . . . . . . . . . . . . . . 300,000 6.0 5.9
Barry Minsky(5) . . . . . . . . . . . . . . . . . 248,503 5.0 4.9
Richard Parker . . . . . . . . . . . . . . . . . 0 -- --
Edward Smith(6) . . . . . . . . . . . . . . . . . 0 -- --
Eddie Einhorn(7) . . . . . . . . . . . . . . . . 1,666 * *
Mark Hershhorn(7) . . . . . . . . . . . . . . . . 1,666 * *
Beryl Artz(7) . . . . . . . . . . . . . . . . . . 1,666 * *
All directors and executive officers as a group
(seven persons) . . . . . . . . . . . . . . . . . 3,123,577 62.2 60.7
- --------------------
*Less than 1%
</TABLE>

(1) Unless otherwise indicated, the address for each named individual,
corporation or group is in care of Visual Edge Systems Inc., 2424 North
Federal Highway, Suite 100, Boca Raton, Florida 33431.

(2) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them. A person is deemed to be the
beneficial owner of securities which may be acquired by such person within
60 days from the date of this Prospectus upon the exercise of options,
warrants or convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that options that are held by such
person (but not those held by any other person) and which are exercisable
within 60 days of the date of this Prospectus, have been exercised.

(3) Includes (i) 1,164,118 shares owned by Status-One Investments Inc., a
Delaware corporation owned by Earl T. Takefman and certain family members
and controlled by Earl T. Takefman (which includes 10,000 shares of Common
Stock acquired in the Bridge Financing and 10,000 shares of Common Stock
underlying the Bridge Warrants) and (ii) presently exercisable options to
acquire 150,000 shares of Common Stock, but does not include (x) shares of
Common Stock underlying options held by Mr. Takefman and his spouse (as to
which Mr. Takefman disclaims beneficial ownership) to acquire an aggregate
of 193,310 shares of Common Stock, none of which are exercisable within 60
days, or (y) 2,136 shares of Common Stock owned by Mr. Takefman's spouse, as
to which shares Mr. Takefman disclaims beneficial ownership. See "Certain
Transactions -- Bridge Financing" and "Management -- Employment Agreements."

(4) Includes (i) presently exercisable options to acquire 150,000 shares of
Common Stock and (ii) shares underlying an aggregate of 134,236 options to
acquire shares owned by Mr. Lubell, which options Mr. Lubell granted to
certain persons and which are not exercisable within 60 days, but does not
include (x) 21,827 shares of Common Stock that Mr. Lubell has agreed to
give to certain persons on July 24, 1997 upon the expiration of the
transfer restrictions

33
<PAGE> 35

on such shares and (y) 100,000 shares of Common Stock underlying the
Executive Options, which are not exercisable within 60 days. See
"Management -- Employment Agreements."

(5) The shares are owned by Greenwich Properties Inc., a company controlled by
Barry Minsky. Mr. Minsky's address is c/o Greenwich Properties Inc., 545
Madison Avenue, New York, New York 10022.

(6) Excludes shares underlying options to acquire 25,000 shares of Common
Stock, none of which are exercisable within 60 days.

(7) Excludes shares underlying options to acquire 3,334 shares of Common
Stock, none of which are exercisable within 60 days.

34
<PAGE> 36

CERTAIN TRANSACTIONS

STOCK ISSUANCES AND LOANS

In March 1995, the Company issued (i) 1,708,938 shares of Common Stock
to Alan L. Lubell, its Chairman of the Board and Vice President, (ii) 732,402
shares of Common Stock to Status-One Investments Inc. ("Status-One"), a company
controlled by Earl Takefman, its Chief Executive Officer, and (iii) 488,268
shares of Common Stock to Greenwich Properties Inc. ("Greenwich"), a company
controlled by Barry Minsky, for nominal consideration.

In March 1995, Mr. Lubell transferred 427,235 shares of Common Stock
to Status-One in accordance with the terms of a shareholders agreement, dated
March 1, 1995, by and between Status-One and Mr. Lubell (the "Shareholders
Agreement"). The Shareholders Agreement has since been terminated. Between
June 1995 and March 1996, Mr. Lubell sold an additional 102,536 shares of
Common Stock to various investors for $630,000 in the aggregate, and Greenwich
sold 9,765 shares in consideration of $60,000 in the aggregate.

Since its inception, the Company borrowed $191,750, $162,500 and
$48,450, respectively, from Mr. Lubell, Status-One and Greenwich. In December
1995, these loans were contributed to the capital of the Company for no
consideration.

In March 1995, the Company issued an additional 24,413 shares of
Common Stock to Status-One and granted options to purchase 87,478 shares of
Common Stock to Earl Takefman in exchange for financing considerations arranged
by Status-One. In addition, in March 1995 the Company issued an additional
24,413 shares of Common Stock to Status-One in consideration of services
rendered to the Company by Earl Takefman, 9,155 shares to Thomas Peters in
consideration of software development services rendered to the Company, 2,136
shares to Mona-Lee Takefman, the spouse of Earl Takefman, the Company's Chief
Executive Officer, in consideration of clerical and secretarial services
rendered to the Company and 2,136 shares to Mark Lubell, the son of Alan
Lubell, the Company's Chairman of the Board of Directors and Vice President, in
consideration of managerial services rendered to the Company during its market
testing activities. The value of the foregoing services were, in each case,
determined by the Board of Directors of the Company based upon a per share
valuation of $.17.

In April 1996, Greenwich, Status-One and Mr. Lubell transferred
180,000, 56,250 and 63,750 shares of Common Stock, respectively, to Greg
Norman, upon his exercise of an option granted to him pursuant to the terms of
the Shareholders Agreement and the Greg Norman License. Pursuant to the Greg
Norman License, the Company is required to make guaranteed payments aggregating
$3,300,000 during the three-year period commencing July 1, 1996.

RECAPITALIZATION

In March 1996, the Company effected a recapitalization of its capital
stock. Each outstanding share of Class A Common Stock was converted into the
right to receive .488268 shares of Common Stock, and each outstanding share of
Class B Common Stock was converted into the right to receive 4,882.68 shares of
Common Stock. In addition, options to purchase 505,000 shares of Class A
Common Stock were converted, on the same terms and conditions, into the right
to purchase 294,508 shares of Common Stock.

LOAN GUARANTEES

As of May 31, 1996, the Company borrowed an aggregate of $507,000 from
Republic National Bank of New York, which was repaid from the proceeds of the
IPO. Prior to such repayment, all of the Company's assets were pledged as
collateral to secure such indebtedness and Earl T. Takefman, Alan Lubell and
Barry Minsky, principal stockholders of the Company, had guaranteed and pledged
personal assets in the form of letters of credit and certificates of deposit
and in the amounts of $354,400, $106,325 and $39,275, respectively, to secure
the loan. Such personal guarantees and pledges of collateral were released
upon the Company's repayment of the indebtedness.

35
<PAGE> 37

BRIDGE FINANCING

In connection with the Company's Bridge Financing, Status-One
contributed $350,000 in cash of the aggregate $3,500,000 cash collateral
delivered to Republic to secure a letter of credit in an amount up to
$3,500,000. As consideration for the use of such collateral, the Company issued
to Status-One 10,000 shares of Common Stock and 10,000 warrants, each to
purchase one share of Common Stock at a price of $10.00 per share, subject to
adjustment in certain circumstances. In the event that some or all of the cash
collateral delivered by Status-One is not returned to it, Status-One will
receive additional shares of Common Stock from the Company. Status-One's
investment in the Bridge Financing was made on the same terms as the other
investors in the Bridge Financing who are not affiliated with the Company. See
"Plan of Operation -- Recent Bridge Financing."

OTHER

Prior to the IPO, the Company utilized office space in New York, New
York provided to it at no charge by Alan L. Lubell, its Chairman of the Board
and Vice President. The Company does not owe any rental charges to Mr. Lubell
as a result of the use of such space.

The Company believes that each of the foregoing transactions were on
terms no less favorable than those which could have been obtained from
unaffiliated third parties. All future transactions between the Company and
its affiliates will be on terms no less favorable than would be obtained from
unaffiliated third parties.

36
<PAGE> 38

DESCRIPTION OF SECURITIES

GENERAL

The Company is authorized to issue 20,000,000 shares of Common Stock,
par value $.01 per share, and 5,000,000 shares of Preferred Stock, par value
$.01 per share. As of the date of this Prospectus, including 225,000 of the
shares being registered and offered hereby, there are 4,840,000 shares of
Common Stock outstanding and no shares of Preferred Stock outstanding.

COMMON STOCK

The holders of the Common Stock are entitled to one vote for each
share held of record in the election of directors of the Company and in all
other matters to be voted on by the stockholders. There is no cumulative
voting with respect to the election of directors, with the result that the
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors. Holders of Common Stock are entitled (i) to
receive such dividends as may be declared from time to time by the Board out of
funds legally available therefor and (ii) in the event of liquidation,
dissolution or winding up of the Company, to share ratably in all assets
remaining after payment of liabilities and after provision has been made for
each class of stock, if any, having preference over the Common Stock. The
rights of the holders of the Common Stock are subject to any rights that may be
fixed for holders of Preferred Stock, when and if any Preferred Stock is
issued. All of the outstanding shares of Common Stock are fully paid and
non-assessable. The holders of Common Stock have no preemptive rights.

PREFERRED STOCK

The Company is authorized to issue 5,000,000 shares of Preferred Stock
from time to time in one or more series, in all cases ranking senior to the
Common Stock with respect to payment of dividends and in the event of the
liquidation, dissolution or winding-up of the Company. There are no shares of
Preferred Stock currently outstanding. Pursuant to the Company's Certificate
of Incorporation, the Board of Directors, without further stockholder approval,
is authorized to issue shares of one or more series of Preferred Stock, at any
time, for such consideration and with such relative rights, privileges,
preferences and other terms as the Board may determine (including, but not
limited to, terms relating to dividend rates, redemption rates, liquidation
preferences and voting, sinking fund and conversion or other rights). The
rights and terms relating to any new series of Preferred Stock could adversely
affect the voting power or other rights of the holders of the Common Stock or
could be utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of the Company.

REDEEMABLE WARRANTS

In connection with the IPO an aggregate of 1,495,000 of the Company's
redeemable warrants (the "Redeemable Warrants") were sold to the public. Each
Redeemable Warrant entitles the registered holder thereof to purchase one share
of Common Stock, at a price of $5.00, subject to adjustment in certain
circumstances, at any time after July 24, 1997 until July 24, 2000.

The Redeemable Warrants are redeemable by the Company, upon the consent
of Whale, at any time after July 24, 1997, upon notice of not less than 30 days,
at a price of $.10 per Redeemable Warrant, provided that the closing bid price
of the Common Stock on all 30 of the trading days ending on the third day prior
to the day on which the Company gives notice has been at least 150% (currently
$7.50, subject to adjustment) of the then effective exercise price of the
Redeemable Warrants. All warrantholders have exercise rights until the close of
business on the date fixed for redemption.

The Redeemable Warrants have been issued in registered form under a
Warrant Agreement between the Company and American Stock Transfer & Trust
Company as Warrant Agent. Reference is made to said Warrant Agreement for a
complete description of the terms and conditions therein (the description herein
contained being qualified in its entirety by reference thereto).

The exercise price and number of shares of Common Stock or other
securities issuable on exercise of the Redeemable Warrants are subject to
adjustment in certain circumstances, including in the event of a stock dividend,
recapitalization,

37
<PAGE> 39

reorganization, merger or consolidation of the Company. However, such
Redeemable Warrants are not subject to adjustment for issuances of Common Stock
at a price below the exercise price of the Redeemable Warrants, including the
issuance of shares of Common Stock pursuant to the Plan.

The Redeemable Warrants may be exercised upon surrender of the
Redeemable Warrant certificate on or prior to the expiration date at the offices
of the Warrant Agent, with the exercise form on the reverse side of the
certificate completed and executed as indicated, accompanied by full payment
of the exercise price (by certified check payable to the Company) to the Warrant
Agent for the number of Redeemable Warrants being exercised. The warrantholders
do not have the rights or privileges of holders of Common Stock.

No Redeemable Warrant will be exercisable unless at the time of
exercise the Company has filed a current registration statement with the
Commission covering the shares of Common Stock issuable upon exercise of such
Redeemable Warrant and such shares have been registered or qualified or deemed
to be exempt under the securities laws of the state of residence of the holder
of such Redeemable Warrant. The Company will use its best efforts to have all
such shares so registered or qualified on or before the exercise date and to
maintain a current prospectus relating thereto until the expiration of the
Redeemable Warrants, subject to the terms of the Warrant Agreement. While it is
the Company's intention to do so, there is no assurance that it will be able to
do so.

No fractional shares will be issued upon exercise of the Redeemable
Warrants. However, if a warrantholder exercises all Redeemable Warrants then
owned of record by him, the Company will pay to such warrantholder, in lieu of
the issuance of any fractional share which is otherwise issuable, an amount in
cash based on the market value of the Common Stock on the last trading day prior
to the exercise date.

The 1,495,000 shares of Common Stock underlying the Redeemable
Warrants are being registered hereby, though none of such shares will be
eligible for offer or sale until July 24, 1997, the date the Redeemable
Warrants may first be exercised or redeemed.

WHALE WARRANTS

In connection with the IPO, the Company has granted to Whale and/or
its designees warrants (the "Whale Warrants") to purchase up to 130,000 shares
of Common Stock at an exercise price of $6.90 per share and/or up to 130,000
warrants (each to purchase one share of Common Stock at $6.90 per share) at an
exercise price of $.138 per warrant. The Whale Warrants may not be sold,
transferred, assigned or hypothecated for a one-year period ending on July 24,
1997, except to officers and partners of Whale and members of the selling group
in the IPO, and are exercisable at any time and from time to time, in whole or
in part, during the five-year period ending on July 24, 2001 (the "Warrant
Exercise Term").

Subject to certain limitations and exclusions, the Company has agreed,
at the request of the holders of a majority of the Whale Warrants, at the
Company's expense, to register the Whale Warrants, the shares and warrants
underlying the Whale Warrants, and the shares issuable upon exercise of the
underlying warrants under the Securities Act on one occasion during the Warrant
Exercise Term and to include the Whale Warrants and all such underlying
securities in any appropriate registration statement which is filed by the
Company during the seven year period ending on July 24, 2003.

The 260,000 shares of Common Stock underlying the Whale Warrants are
being registered hereby, though none of such shares will be eligible for offer
or sale until July 24, 1997.

BRIDGE FINANCING WARRANTS

In connection with the Bridge Financing, the Company issued an
aggregate of 100,000 warrants (the "Bridge Warrants") to the investors in the
Bridge Financing. Each Bridge Warrant entitles the registered holder thereof to
purchase one share of Common Stock, at a price of $10.00, subject to adjustment
in certain circumstances, at any time from March 26, 1997 until March 26, 2002.

38
<PAGE> 40

The Bridge Warrants have been issued pursuant to Share and Warrant
Purchase Agreements entered into between the Company and each of the investors
in the Bridge Financing. Reference is made to said Share and Warrant Purchase
Agreement for a complete description of the terms and conditions therein (the
description herein contained being qualified in its entirety by reference
thereto).

The exercise price and number of shares of Common Stock or other
securities issuable on exercise of the Bridge Warrants are subject to
adjustment in certain circumstances, including in the event of a stock
dividend, subdivision or combination of the Company's Common Stock.

The Bridge Warrants may be exercised upon surrender of the Bridge
Warrant on or prior to the expiration date at the offices of the Company, with
a completed form of subscription executed as indicated, accompanied by full
payment of the exercise price (by certified check payable to the Company) for
the number of Bridge Warrants being exercised. The warrantholders do not have
the rights or privileges of holders of Common Stock.

The Company is registering hereby 100,000 shares of Common Stock which
are the shares of Common Stock underlying the 100,000 Bridge Warrants.

No fractional shares will be issued upon exercise of the Bridge
Warrants. However, if a warrantholder exercises all Bridge Warrants then owned
of record by him, the Company will pay to such warrantholder, in lieu of the
issuance of any fractional share which is otherwise issuable, an amount in cash
based on the market value of the Common Stock on the last trading day prior to
the exercise date.

REGISTRATION RIGHTS

In connection with the Bridge Financing, the Company is obligated to
issue additional shares of Common Stock to certain investors if the Line of
Credit is drawn upon and such indebtedness is repaid from the Letter of Credit,
resulting in the forfeiture of some or all of the Cash Collateral pledged by
the investors in the Bridge Financing. In the event the Company issues
additional shares of Common Stock to such investors, the Company is obligated
to promptly register such additional shares.

In connection with the IPO, the Company granted to Whale certain demand
and piggyback registration rights in connection with the 260,000 shares of
Common Stock issuable upon exercise of the 260,000 Whale Warrants. In
connection with such rights, the Company has included 260,000 shares of Common
Stock in the Registration Statement of which this Prospectus forms a part.

STATUTORY PROVISIONS AFFECTING STOCKHOLDERS

Following the consummation of this offering, the Company will be
subject to the State of Delaware's "business combination" statute, Section 203
of the Delaware General Corporation Law. In general, such statute prohibits a
publicly held Delaware corporation from engaging in various "business
combination" transactions with any "interested stockholder" for a period of
three years after the date of the transaction in which the person became an
"interested stockholder," unless (i) the transaction in which the interested
stockholder obtained such status or the business combination is approved by the
Board of Directors prior to the date the interested stockholder obtained such
status; (ii) upon consummation of the transaction which resulted in the
stockholder becoming an "interested stockholder," the "interested stockholder"
owned at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced, excluding for purposes of determining the
number of shares outstanding those shares owned by (a) persons who are
directors and also officers and (b) employee stock plans in which employee
participants do not have the right to determine confidentially whether shares
held subject to the plan will be tendered in a tender or exchange offer; or
(iii) on or subsequent to such date the "business combination" is approved by
the Board of Directors and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least 66 2/3% of the outstanding
voting stock which is not owned by the "interested stockholder." A "business
combination" includes mergers, asset sales and other transactions resulting in
financial benefit to a stockholder. An "interested stockholder" is a person
who, together with affiliates and associates, owns (or within three years, did
own) 15% or more of a corporation's voting stock. The statute

39
<PAGE> 41

could prohibit or delay mergers or other takeover or change in control attempts
with respect to the Company and, accordingly, may discourage attempts to
acquire the Company.

DIVIDEND POLICY

Holders of Common Stock are entitled to receive such dividends as may
be declared and paid from time to time by the Board of Directors out of funds
legally available therefor. The Company intends to retain any earnings for the
operation and expansion of its business and does not anticipate paying cash
dividends in the foreseeable future. Any future determination as to the
payment of cash dividends will depend upon future earnings, results of
operations, capital requirements, the Company's financial condition and such
other factors as the Board of Directors may consider.

TRANSFER AGENT AND REGISTRAR

The transfer and registrar for the Common Stock and the warrant agent
for the Redeemable Warrants is American Stock Transfer and Trust Company, New
York, New York.

REPORTS TO STOCKHOLDERS

The Company has registered its Common Stock and Redeemable Warrants
under the provisions of Section 12(g) of the Exchange Act. Such registration
requires the Company to comply with periodic reporting, proxy solicitation and
certain other requirements of the Exchange Act.

SHARES ELIGIBLE FOR FUTURE SALE

As of the date of this Prospectus, including 225,000 of the shares
being registered and offered hereby by certain of the Selling Stockholders and
Mr. Trauber, the Company has 4,840,000 shares of Common Stock outstanding
(assuming no exercise of any of the Company's outstanding warrants), of which
1,840,000 shares consisting of the 1,395,000 shares of Common Stock sold by the
Company in the IPO, the 220,000 shares owned by the investors in the pre-IPO
bridge financing (which are being registered hereby but remain subject to
certain contractual restrictions described below) and the 225,000 shares
offered by certain of the Selling Stockholders and Mr. Trauber will be freely
tradeable without restriction or further registration under the Securities Act.
All of the remaining 3,000,000 shares outstanding are "restricted securities,"
as that term is defined in Rule 144 promulgated under the Securities Act, and
in the future may only be sold pursuant to a registration statement under the
Securities Act, in compliance with the exemption provisions of Rule 144 or
pursuant to another exemption under the Securities Act. Of the 3,000,000
restricted shares, an aggregate of 2,520,406 shares will be eligible for sale,
without registration, under Rule 144 (subject to certain volume limitations
prescribed by such rule and to the contractual restrictions described below),
commencing March 1997.

In general, under Rule 144 as currently in effect, if two years have
elapsed since the later of the date of the acquisition of restricted shares of
Common Stock from either the Company or any affiliate of the Company, the
acquiror or subsequent holder thereof may sell, within any three-month period
commencing 90 days after the date of this Prospectus, a number of shares that
does not exceed the greater of 1% of the then outstanding shares of Common
Stock or the average weekly trading volume of the Common Stock on the Nasdaq
SmallCap Market during the four calendar weeks preceding the date on which
notice of the proposed sale is sent to the Commission. Sales under Rule 144
are also subject to certain manner of sale provisions, notice requirements and
the availability of current public information about the Company. If three
years have elapsed since the later of the date of the acquisition of restricted
shares of Common Stock from the Company or any affiliate of the Company, a
person who is not deemed to have been an affiliate of the Company at any time
for 90 days preceding a sale would be entitled to sell such shares under Rule
144 without regard to the volume limitations, manner of sale provisions or
notice requirements. Through an amendment to Rule 144, the Commission has
reduced the two-year and three-year holding periods described above to one year
and two years, respectively. Such amendment will become effective on April 29,
1997.

40
<PAGE> 42

The Company's officers and directors as well as the investors in a
pre-IPO bridge financing who hold an aggregate of 220,000 shares have agreed
not to sell or dispose of any of their securities of the Company for a period
of twelve months from the date of the IPO without Whale's prior written
consent, provided that such restrictions shall terminate if the closing bid
quotation of the Common Stock as reported by Nasdaq is at least $10.00 per
share for 20 consecutive trading days commencing on or after April 24, 1997.

The possibility that a substantial amount of Common Stock may be sold
in the public market 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.

41
<PAGE> 43

SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION

An aggregate of up to 2,200,000 shares of Common Stock may be offered
and sold pursuant to this Prospectus consisting of the following: (i) 200,000
shares by the Bridge Investors, including 100,000 shares underlying the Bridge
Warrants, (ii) 25,000 shares by Ami Trauber, the former Chief Financial Officer
of the Company, (iii) 260,000 shares by Whale, which shares underly the Whale
Warrants, (iv) 1,495,000 shares underlying the Redeemable Warrants, which
shares may be offered and sold by holders of the Redeemable Warrants upon
exercise or conversion thereof, and (v) 220,000 by certain investors who
invested in the Company prior to the IPO. The Company has agreed to register
the public offering of all of such shares under the Securities Act and to pay
all expenses in connection therewith, and such shares have been included in the
Registration Statement of which this Prospectus forms a part. Except for
Status-One Investments Inc., a company controlled by Earl T. Takefman, the
Chief Executive Officer of the Company, Ami Trauber, the Company's former Chief
Financial Officer, Frank Williams, a former director of the Company who
currently serves in an advisory capacity to the Company's Board of Directors,
and Whale, the Company's underwriter in the IPO, none of the Selling
Stockholders has ever held any position or office with the Company or has had
any other material relationship with the Company. The Company will receive up
to $128,000 of the proceeds from the sale of the shares of Common Stock by Mr.
Trauber. See "Management - Severance Arrangement." All of the Selling
Stockholders have an address in care of the Company at 2424 North Federal
Highway, Suite 100, Boca Raton, Florida 33431, except for Whale, whose address
is 650 Fifth Avenue, New York, New York 10019, and Mr. Trauber, whose address
is 3598 Yacht Club Drive, Apt. 1903, Aventura, Florida 33180. The following
tables set forth certain information with respect to the Selling Stockholders:
<TABLE>
<CAPTION>
PERCENTAGE
BENEFICIAL BENEFICIAL BENEFICIAL
OWNERSHIP OF AMOUNT OF OWNERSHIP OF OWNERSHIP OF
COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK
SELLING STOCKHOLDERS PRIOR TO SALE OFFERED AFTER OFFERING AFTER OFFERING
-------------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Status-One Investments Inc. (1) 1,314,118 20,000(2) 1,294,118 25.7%

Abbott Finance Inc. 28,572 28,572(2) - -

Neil Freder 41,919 14,286(2) 27,633 *

Leonard Mendell 62,282 19,282(3) 48,000 1.0

Avrum Schwam Holdings Inc. 31,431 8,572(2) 22,859 *

Carajen International Inc. 42,896 8,572(2) 34,324 *

Venture Management 28,572 28,572(2) - -
Consultants LLC

Sandy Lang 14,286 14,286(2) - -

Frank Leo 14,286 14,286(2) - -

Martin Miller 22,286 14,286(2) 8,000 *

Frank Williams 13,853 5,714(2) 8,139 *

Dan Elituv 14,286 14,286(2) - -

Sol Zuckerman 19,286 14,286(2) 5,000 *

Ami Trauber (4) 25,000 25,000 - -
</TABLE>

42
<PAGE> 44

<TABLE>
<CAPTION>
Percentage
Beneficial Beneficial Beneficial
Ownership of Amount of Ownership of Ownership of
Common Stock Common Stock Common Stock Common Stock
Selling Stockholders Prior to Sale Offered After Offering(1) After Offering(1)
-------------------- ------------- ------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Whale Securities Co., L.P. 260,000(5) 260,000 - -

Dr. Lawrence Howard 20,000 20,000 - -

Dr. Steven Landman 5,000 5,000 - -

John R. Tompson and 5,000 5,000 - -
Constance A. Tompson,
Joint Tenants with Right
of Survivorship

Allan R. Lyons 5,000 5,000 - -

Jonathan Robinson 5,000 5,000 - -

Michael Weissman 5,000 5,000 - -

Isaac Kier 10,000 10,000 - -

Craig Effron 5,000 5,000 - -

Mark Dickstein 5,000 5,000 - -

Robert Laikin 20,000 20,000 - -

Lisa Grossman 10,000 10,000 - -

Gary Newman 5,000 5,000 - -

Albert Nocciolino 5,000 5,000 - -

FGR Akel 5,000 5,000 - -

Scott C. Gottlieb 5,000 5,000 - -

Alfonso and Federico de 10,000 10,000 - -
Riveroll, Joint Tenants
with Right of Survivorship

Roderick D. MacAlpine 5,000 5,000 - -

Leonard A. Albanese 5,000 5,000 - -

Lester Lieberman 5,000 5,000 - -

Albert Greenspoon 5,000 5,000 - -

B&B Trading Corp. 5,000 5,000 - -
Retirement Plan

Garland T. Duke, Jr. 5,000 5,000 - -

Charles J. Reilly and 5,000 5,000 - -
Kathleen M. Reilly
</TABLE>

43
<PAGE> 45

<TABLE>
<CAPTION>
PERCENTAGE
BENEFICIAL BENEFICIAL BENEFICIAL
OWNERSHIP OF AMOUNT OF OWNERSHIP OF OWNERSHIP OF
COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK
SELLING STOCKHOLDERS PRIOR TO SALE OFFERED AFTER OFFERING(1) AFTER OFFERING(1)
-------------------- ------------- ------------ ----------------- -----------------
<S> <C> <C> <C> <C>
James H. Cooper 5,000 5,000 - -

Wendy and Robert Ull, 5,000 5,000 - -
Joint Tenants with Right
of Survivorship

Michael Freidman 10,000 10,000 - -

Edward S. Rosenthal 10,000 10,000 - -

Nicholas Kahla 5,000 5,000 - -

Elliott Broidy 20,000 20,000 - -
</TABLE>

* Less than 1%

(1) Status-One Investments Inc. is a Delaware corporation owned by Earl T.
Takefman, the Company's Chief Executive Officer, and certain of his family
members and controlled by Mr. Takefman.

(2) One-half of such shares of Common Stock are shares received in the Bridge
Financing, and the other one-half of such shares are the shares of Common
Stock underlying the Bridge Warrants received in the Bridge Financing.
See "Plan of Operations - Recent Bridge Financing."

(3) Includes 7,141 shares of Common Stock received in the Bridge Financing and
7,141 shares of Common Stock underlying the Bridge Warrants received in the
Bridge Financing.

(4) In connection with his termination as the Company's Chief Financial
Officer, the vesting of all of Mr. Trauber's options was accelerated such
that all 25,000 of his options are presently exercisable. The shares of
Common Stock underlying such options are being registered hereby. See
"Management - Severance Arrangement."

(5) Shares of Common Stock underlying the Whale Warrants. See "Description of
Securities - Whale Warrants."

The shares may be offered and sold from time to time as market
conditions permit in the over-the-counter market, or otherwise, at prices and
terms then prevailing or at prices related to the then-current market price, or
in negotiated transactions. The shares may be sold by one or more of the
following methods, without limitation: (a) a block trade in which a broker or
dealer so engaged will attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction; (b)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its account pursuant to this Prospectus; (c) ordinary brokerage transactions
and transactions in which the broker solicits purchases; and (d) face-to-face
transactions between sellers and purchasers without a broker/dealer. In
effecting sales, brokers or dealers engaged by the Selling Stockholders or Whale
may arrange for other brokers or dealers to participate. Such brokers or
dealers may receive commissions or discounts from Selling Stockholders or Whale
in amounts to be negotiated. Such broker and dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act, in connection with such sales.

44
<PAGE> 46

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Morgan, Lewis & Bockius LLP, New York, New York.

EXPERTS

The financial statements of Visual Edge Systems Inc. (a development
stage company) as of December 31, 1996 and 1995 and for the years then ended
and for the period from inception (July 15, 1994) to December 31, 1996 have
been included herein and in the Registration Statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing. The report of KPMG Peat Marwick LLP contains an
explanatory paragraph that states that the Company is in its development stage
and its recurring losses through 1996 and contractual commitments under a
licence agreement raise substantial doubt about the entity's ability to
continue as a going concern unless additional financing or equity is obtained.
The financial statements do not include any adjustments that might result from
the outcome of that uncertainty.

AVAILABLE INFORMATION

The Company has filed with the Commission a registration statement on
Form SB-2 under the Securities Act (together with all amendments and exhibits
thereto, the "Registration Statement") with respect to the shares of Common
Stock offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Statements made in
this Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete and are qualified in their entirety by
reference to each such contract, agreement or other document which is filed as
an exhibit to the Registration Statement. The Registration Statement, including
the exhibits and schedules thereto, may be inspected without charge at the
principal office of the Commission 450 Fifth Street, N.W., Washington, D.C.
20549, or at the Regional Offices of the Commission: Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60601, and 7 World Trade
Center, 13th Floor, New York, New York 10007. Copies of such material may be
obtained by mail from the Public Reference Branch of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains an Internet web site that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the Commission. The address of that site is http://www.sec.gov.

45
<PAGE> 47

VISUAL EDGE SYSTEMS INC.
(A DEVELOPMENT STAGE COMPANY)

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITORS' REPORT F-2

FINANCIAL STATEMENTS:

Balance Sheets as of December 31, 1996 and 1995 F-3

Statements of Operations for the years ended December 31,
1996 and 1995 and from the period of inception (July 15,
1994) to December 31, 1996 F-4

Statements of Stockholders' Equity (Deficit) from the period
of inception (July 15, 1994) to December 31, 1994 and for
the years ended December 31, 1995 and 1996 F-5

Statements of Cash Flows for the years ended December 31,
1996 and 1995 and from the period of inception (July 15,
1994) to December 31, 1996 F-6

Notes to Financial Statements F-7 - F-15
</TABLE>

F-1
<PAGE> 48

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Visual Edge Systems Inc.:

We have audited the accompanying balance sheets of Visual Edge Systems Inc. (a
development stage company) as of December 31, 1996 and 1995 and the related
statements of operations, stockholders' equity (deficit) and cash flows for the
years then ended and for the period from inception (July 15, 1994) to December
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Visual Edge Systems Inc. as of
December 31, 1996 and 1995 and the results of its operations and its cash flows
for the years then ended and for the period from inception (July 15, 1994) to
December 31, 1996 in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1(a) to the
financial statements, the Company is in its development stage and its recurring
losses through 1996 and contractual commitments under a license agreement raise
substantial doubt about its ability to continue as a going concern unless
additional financing or equity is obtained. Management's plans in regard to
these matters are also described in Note 1(a). The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

/s/ KPMG Peat Marwick LLP

Fort Lauderdale, Florida
January 24, 1997 except as to
note 9(b), which is as of
April 3, 1997

F-2
<PAGE> 49

VISUAL EDGE SYSTEMS INC.
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
ASSETS 1996 1995
------ ----------- ---------
<S> <C> <C>
Current assets:
Cash $ 233,117 $ 558
Short-term investments 1,869,052 --
Advance royalties (note 9a) 300,000 --
Other current assets 117,503 --
----------- ---------
Total current assets 2,519,672 558
Fixed assets, net (note 2) 1,624,826 330,626
Intangible assets, net (note 3) 616,470 302,293
Other assets 23,202 --
----------- ---------
Total assets $ 4,784,170 $ 633,477
=========== =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
- ----------------------------------------------

Current Liabilities:
Bank borrowings (note 6) $ 500,000 $ 400,000
Accounts payable 333,114 269,262
Accrued expenses 284,900 13,718
Other current liabilities 1,500 --
----------- ---------
Total current liabilities 1,119,514 682,980
----------- ---------
Commitments and contingencies (notes 1(a), 8 and 9)
Stockholders' equity (deficit) (Notes 5, 8 and 9):
Preferred Stock, 5,000,000 shares authorized, none
issued -- --
Common stock, $.01 par value, 20,000,000 shares
authorized, 4,615,000 shares issued and outstanding at
December 31, 1996 and 3,000,000 shares issued and
outstanding at December 31, 1995 46,150 30,000
Additional paid-in capital 6,481,159 385,460
Deficit accumulated during the development stage (2,862,653) (464,963)
----------- ---------
Total stockholders' equity (deficit) 3,664,656 (49,503)
----------- ---------
Total liabilities and stockholders'
equity (deficit) $ 4,784,170 $ 633,477
=========== =========
</TABLE>

See accompanying notes to financial statements.

F-3
<PAGE> 50

VISUAL EDGE SYSTEMS INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Period from
inception
(July 15,
For the years ended 1994) to
December 31, December 31,
1996 1995 1996
------------ ----------- ------------
<S> <C> <C> <C>
Product sales $ -- $ 7,267 $ 7,267
License fees -- 125,000 125,000
------------ ----------- ------------
-- 132,267 132,267
------------ ----------- ------------
Cost of sales -- 44,167 44,167
General and administrative expenses 1,552,062 520,224 2,072,286
Selling and marketing 264,772 15,240 280,012
One-time stock compensation expense
(note 9(a)) 600,000 11,760 611,760
------------ ----------- ------------
2,416,834 591,391 3,008,225
------------ ----------- ------------
Operating loss (2,416,834) (459,124) (2,875,958)
Other:
Interest expense (50,854) (5,118) (55,972)
Interest income 69,998 -- 69,998
------------ ----------- ------------
Total other 19,144 (5,118) 14,026
------------ ----------- ------------
Loss before income taxes (2,397,690) (464,242) (2,861,932)
Provision for income taxes (note 7) -- (721) (721)
------------ ----------- ------------
Net loss $ (2,397,690) $ (464,963) $ (2,862,653)
============ =========== ============
Net loss per share $ (.63) $ (.14) $ (.82)
------------ ----------- ------------
Weighted average common shares
outstanding (note 1e) 3,801,250 3,220,000 3,510,625
============ =========== ============
</TABLE>

See accompanying notes to financial statements.

F-4
<PAGE> 51

VISUAL EDGE SYSTEMS INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

PERIOD FROM INCEPTION (JULY 15, 1994) TO
DECEMBER 31, 1994 AND FOR THE YEARS ENDED
DECEMBER 31, 1995 AND 1996

DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
------------ PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
--------- ------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance at inception (July 15,
1994) to December 31, 1994 -- $ -- $ -- $ -- $ --
Issuance of common stock 2,929,608 29,296 374,404 -- 403,700
Common stock issued for services 70,392 704 11,056 -- 11,760
Net loss -- -- -- (464,963) (464,963)
--------- ------- ---------- ------------ -----------
Balance at December 31, 1995 3,000,000 30,000 385,460 (464,963) (49,503)
Issuance of common stock 1,615,000 16,150 5,495,699 -- 5,511,849
Common stock issued by shareholders
for services -- -- 600,000 -- 600,000
Net loss -- -- -- (2,397,690) (2,397,690)
--------- ------- ---------- ------------ -----------
Balance at December 31, 1996 4,615,000 $46,150 $6,481,159 $ (2,862,653) $ 3,664,656
========= ======= ========== ============ ===========
</TABLE>

See accompanying notes to financial statements.

F-5
<PAGE> 52

VISUAL EDGE SYSTEMS INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
For the period
from inception
For the years ended (July 15, 1994)
December 31, to December 31,
1996 1995 1996
------------ ---------- ------------
<S> <C> <C> <C>
Operating activities:
Net loss $ (2,397,690) $ (464,963) $ (2,862,653)
Adjustments to reconcile net loss to
net cash used in operating activities:
One-time stock compensation expense 600,000 11,760 611,760
Depreciation and amortization 155,546 67,686 223,232
Changes in assets and liabilities:
Increase in other current assets (117,503) -- (117,503)
Increase in advanced royalties (300,000) -- (300,000)
Increase in other assets (23,202) -- (23,202)
Increase in accounts payable 63,852 269,262 333,114
Increase in accrued expenses 271,182 13,718 284,900
Increase in other current liabilities 1,500 -- 1,500
------------ ---------- ------------
Net cash used in operating activities (1,746,315) (102,537) (1,848,852)
------------ ---------- ------------
Investing activities:
Purchases of short-term investments (3,508,015) -- (3,508,015)
Proceeds from the sale of short-term
investments 1,638,963 -- 1,638,963
Deferred organization costs -- (29,428) (29,428)
Increase in intangible assets (398,558) (275,808) (674,366)
Capital expenditures (1,365,365) (395,369) (1,760,734)
------------ ---------- ------------
Net cash used in investing activities (3,632,975) (700,605) (4,333,580)
------------ ---------- ------------
Financing activities:
Proceeds from borrowings 1,715,000 400,000 2,115,000
Repayment of borrowings (1,615,000) -- (1,615,000)
Proceeds from issuance of common stock 5,511,849 403,700 5,915,549
------------ ---------- ------------
Net cash provided by financing
activities 5,611,849 803,700 6,415,549
------------ ---------- ------------
Net increase in cash 232,559 558 233,117
Cash at beginning of period 558 -- --
------------ ---------- ------------
Cash at end of period $ 233,117 $ 558 $ 233,117
============ ========== ============
Supplemental information:
Cash paid for interest $ 50,854 $ 5,118 $ 55,972
============ ========== ============
Cash paid for income taxes $ -- $ 721 $ 721
============ ========== ============
</TABLE>

See accompanying notes to financial statements.

F-6
<PAGE> 53

VISUAL EDGE SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of Business and Basis of Presentation

Visual Edge Systems Inc. (the "Company") was organized to
develop and market personalized videotape golf lessons
featuring One-on-One instruction by leading professional
golfer Greg Norman. To date, the Company has focused its
efforts on developing video production technology which
digitally combines actual video footage of a golfer's swing
with a synchronized "split-screen" comparison to Greg Norman's
golf swing to produce a 45-minute One-on-One videotape golf
lesson. The Company's One-on-One personalized videotape golf
lesson analyzes a golfer's swing by comparing it to Greg
Norman's swing at several different club positions from two
camera angles using Greg Norman's pre-recorded instructional
commentary and analysis and computer graphics to highlight
important golf fundamentals intended to improve a golfer's
performance. The Company sells its products under the name
"One-on-One with Greg Norman."

The Company was incorporated in July 1994 and commenced
operations in January 1995. Since the Company's inception, it
has been primarily engaged in product development, market
development, testing technology, recruitment of key personnel,
raising capital and preparing the software, hardware and
videotape coaching instructions used in the production of its
products. As a consequence, the Company has not generated any
significant revenue and operated as a development stage
company through December 31, 1996. Subsequent to year-end, the
Company commenced generating revenue from its primary business
activities.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As
a development stage company, the Company has not generated any
significant revenues. Its recurring losses through 1996, and
contractual commitments under a license agreement raise
substantial doubt about the Company's ability to continue as a
going concern unless additional financing or equity is
obtained. The financial statements do not include any
adjustments that might arise from the outcome of this
uncertainty.

In March 1997, the Company obtained some additional financing
(see Note 10). Currently, the Company is in negotiation with
several parties to obtain additional financing. There is no
assurance the Company will be able to successfully obtain
financing.

(b) Revenue Recognition

Revenue from product sales is recognized as videotape products
are delivered to the customer and in accordance with
individual contracted terms. Royalties and license fees are
recorded as revenue when earned.

Fixed assets are stated at cost. Depreciation is calculated on
the straight-line method over the estimated useful lives of
the assets (4 years).

F-7
<PAGE> 54

Intangible assets consist principally of video production
costs. The costs of video production are amortized over the
estimated useful lives of the respective assets (4 years).

The Company adopted the provisions of SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," on January 1, 1996. This
Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to
be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceed
fair value.

(d) Income Taxes

Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for
future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes
the enactment date.

(e) Loss Per Share

The Company has presented loss per share information giving
effect to the recapitalization discussed in note 5. Pursuant
to the Securities and Exchange Commission Staff Accounting
Bulletin Topic 4:D, stock issued and stock options granted
during the 12-month period preceding the date of the Company's
July 1996 initial public offering (the IPO) have been included
in the calculation of weighted average common shares
outstanding for the period prior to the IPO, even when the
impact of such incremental shares is antidilutive. The
computation of weighted average common shares and equivalents
outstanding for the year ended December 31, 1995 and December
31, 1996 follows:

<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Weighted average common shares outstanding,
exclusive of issuances within twelve months
prior to the IPO 3,000,000 3,000,000
Shares issued within 12 months prior to the IPO
assumed to be outstanding for the entire
period 220,000 220,000
Weighted average common shares outstanding, for
shares issued after IPO 581,250 --
--------- ---------
Weighted average common shares outstanding at
end of year 3,801,250 3,220,000
========= =========
</TABLE>

(f) Fair Value of Financial Instruments

Statement of Financial Accounting Standards No. 107,
"Disclosures About Fair Value of Financial Instruments,"
requires disclosure of the fair value of certain financial
instruments. Cash, short term investments, advance royalties
and other current assets as well as accounts payable, accrued
expenses and other current liabilities as reflected in the
financial statements approximate fair value because of the
short-term maturity of these instruments. The carrying value
of the note payable to bank at

F-8
<PAGE> 55

December 31, 1995 and the borrowings against the line of
credit at December 31, 1996 approximated fair value as the
variable rates offered are comparable to rates currently
available to the Company.

(g) Stock Option Plan

As permitted by Statement No. 123, "Accounting for Stock Based
Compensation," the Company accounts for its stock option plan
in accordance with the provisions of Accounting Principles
Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. As such, compensation
expense would generally be recorded only if the current market
price of the underlying stock exceeded the exercise price on
the date of grant. Consistent with Statement No. 123, the
Company discloses pro forma net loss and pro forma net loss
per share for employee stock option grants made in 1995 and
future years as if the fair-value-based method described in
Statement No. 123 had been applied.

(h) Short-Term Investments

Short-term investments consist of discount notes and Treasury
bills and are available for sale. The difference between the
carrying value and fair value is immaterial at December 31,
1996.

(i) Use of Estimates

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

(j) Reclassification

Certain accounts in the 1995 financial statements were
reclassified in order to conform to the 1996 financial
statement presentation.

(2) FIXED ASSETS

Fixed assets consist of the following at December 31, 1996 and 1995:

<TABLE>
<CAPTION>
1996 1995
---------- --------
<S> <C> <C>
Mobile video production units $ 951,653 $ --
Product development equipment 407,184 220,915
Training and processing equipment 112,302 --
Office furniture and equipment 144,808 31,930
Show and exhibit displays 144,787 142,524
---------- --------
1,760,734 395,369
Less accumulated depreciation (135,908) (64,743)
---------- --------
$1,624,826 $330,626
========== ========
</TABLE>

F-9
<PAGE> 56

(3) INTANGIBLE ASSETS

Intangible assets consist of the following at December 31, 1996 and
1995:

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Video and marketing production costs $674,366 $275,808
Deferred organization costs 29,428 29,428
-------- --------
703,794 305,236
Less: accumulated amortization (87,324) (2,943)
-------- --------
$616,470 $302,293
======== ========
</TABLE>

(4) LEASES

The Company has a noncancelable lease for office space that expires in
1999. Rental payments include minimum rentals plus building expenses.
Rental expense for this lease during 1996 was $16,984. Through October
1996, the Company utilized minimal office space provided by an officer
of the Company.

Future minimum lease payments under this lease as of December 31, 1996
are:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
<S> <C>
1997 $ 102,452
1998 105,751
1999 90,512
---------
$ 298,715
=========
</TABLE>

The Company entered into a capitalized master lease agreement with a
financial institution which permits the Company to finance its mobile
video productions units of up to $840,000 through May 2000 at an
interest rate of approximately 10%. At December 31, 1996, no amounts
were drawn against this master capital lease. In January 1997, the
Company financed one mobile video production unit for $130,284 under
this lease. Future payments under this capital lease for each of the
following three years is $49,210. Also, the Company anticipates
financing six additional mobile video production units in 1997 for
approximately the same amount.

(5) COMMON STOCK

During 1995, the Company's founding shareholders made capital
contributions or loaned funds to the Company which were subsequently
contributed to the Company as capital, totaling $403,700, in exchange
for 5,000,000 Class A non-voting shares and 100 Class B voting shares.

In March 1995, the Company issued 144,167 shares of Class A non-voting
shares to employees and consultants for services. The estimated market
value of such shares of $11,760 was recorded as compensation expense.

On March 11, 1996, the Company's Board of Directors eliminated the
Class A and B designation of its common stock and declared a
recapitalization effective May 2, 1996, whereby .488268 of a share and
4882.68 shares of common stock with a par value of $.01 per share was
issued for each Class A and Class B share, respectively, of common
stock outstanding on that date. In addition, options to purchase Class
A common stock were converted into the right to purchase .5831847
shares of common stock. All share and per share information related to
shares issued prior to the recapitalization have been restated to
reflect the recapitalization.

F-10
<PAGE> 57

In April 1996, three shareholders transferred 300,000 shares of Common
Stock to Greg Norman, upon his exercise of an option granted to him
pursuant to the terms of the Shareholders Agreement and Greg Norman
License (see note 9(a)).

To generate funds to continue the development of the Company's
products and commence its planned primary business activities, the
Company on May 31, 1996, raised $965,000 net of expenses, from sale of
22 units in a private placement for $50,000 per unit, each unit
consisting of an 8% unsecured promissory note in the principal amount
of $50,000 and 10,000 shares of the Company's common stock. The
promissory notes ($1,100,000) were repaid upon consummation of the
initial public offering (IPO) on July 24, 1996.

In the July 1996 IPO, including the over-allotment option granted to
the underwriters in connection therewith, the Company sold 1,395,000
shares of Common Stock and 1,495,000 Redeemable Warrants to the public.
Each Redeemable Warrant gives the registered holder thereof, during the
period from July 24, 1997 until July 24, 2000, the right to purchase
one share of Common Stock at an exercise price of $5.00. The
Redeemable Warrants are redeemable by the Company, upon the consent of
Whale Securities Co., L.P. (Whale) at any time after July 24, 1997,
upon notice of not less than 30 days, at a price of $.10 per Redeemable
Warrant, provided that the closing bid price of the Common Stock is at
least $7.50 per share for thirty trading days ending on the third day
prior to the date on which the Company gives notice of the redemption
of the Redeemable Warrants, subject to adjustment in certain
circumstances. Net proceeds from the IPO were $5,511,849. At December
31, 1996, 1,495,000 shares of common stock are reserved for issuance
upon exercise of the Redeemable Warrants and an additional 260,000
shares of Common Stock are reserved for issuance upon exercise of an
aggregate of 260,000 warrants held by Whale, which warrants were
received in connection with Whale's role as underwriter in the IPO.

(6) BANK BORROWINGS

In October 1995, the Company borrowed $400,000 from a bank which was
due on demand. This note bore interest at the bank's reference rate
(8.25% at December 31, 1995). The note was secured by all of the
Company's assets and certain personal assets of certain of the
Company's shareholders and was personally guaranteed by such
shareholders. In January and April 1996, the Company borrowed an
additional $115,000 and the total outstanding balance of $515,000 was
converted to a promissory note. This note was paid off in July 1996
using the proceeds obtained from the IPO.

In November 1996, the Company entered into a revolving line of credit
arrangement with a financial institution for $4,000,000. Through
December 20, 1996, the line of credit bore an interest rate of 6.625%.
Subsequent to December 20, 1996, the interest rate is 1.25% plus LIBOR
(5.50% at December 31, 1996). All investments held with the financial
institution are pledged as collateral for the line of credit. At
December 31, 1996, the outstanding balance under this line was
$500,000.

F-11
<PAGE> 58

(7) INCOME TAXES

Income tax expense in 1995 represented current state and local taxes.

Net operating losses which are not currently usable are the principal
difference between the expected amounts of tax benefits computed by
applying the statutory federal income tax rate to the Company's loss
before income taxes for the years ended December 31, 1996 and 1995.

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1996 and 1995 are presented below:

<TABLE>
<CAPTION>
1996 1995
------------ ---------
<S> <C> <C>
Deferred tax assets:
Deferred start-up costs $ 75,550 $ 97,500
Net operating loss carryforward 1,095,160 54,300
Accrued expenses 22,212 --
Amortization 5,439 --
Fixed asset depreciation -- 6,000
------------ ---------
Total gross deferred tax assets 1,198,361 157,800
Less valuation allowance (1,075,644) (157,800)
------------ ---------
Net deferred tax assets 122,717 --
------------ ---------
Deferred tax liabilities:
Fixed asset depreciation (9,827) --
Advanced royalties (112,890) --
------------ ---------
Total gross deferred tax liabilities (122,717) --
------------ ---------
Net deferred tax asset $ -- $ --
============ =========
</TABLE>

As of December 31, 1996, the Company has a tax net operating loss
carryforward of approximately $1,160,000 expiring in 2010. The Company
has provided a valuation allowance of $1,075,644 and $157,800 at
December 31, 1996 and 1995 against its net deferred tax assets since
it is more likely than not that the Company will not realize such
assets given the Company's development stage and the losses incurred
since inception. The change in valuation allowance in 1996 was
$917,844.

(8) STOCK OPTION PLAN

In April 1996, the Company adopted the 1996 Stock Option Plan (the
"Plan"), which provided for the granting to directors, officers, key
employees and consultants of the greater of 900,000 shares of common
stock or 12% of the aggregate number of the Company's common stock
outstanding, whichever is greater. Grants of options may be incentive
stock options (to a maximum of 300,000) or non-qualified stock options
and will be at such exercise prices, in such amounts, and upon such
terms and conditions, as determined by the Compensation Committee of
the Board of Directors. However, with respect to incentive stock
options, the option exercise price may not be less than 100% of the
market value at the time of grant (110% if the incentive stock option
is granted to a 10% or more stockholder) and the term of any option
may not exceed ten years (unless granted as an incentive stock option
to a 10% or more stockholder, which term may not exceed five years.)
The Company has not granted any incentive stock options. On January
1, 1997, the Plan was amended by the Board of Directors to increase
the maximum number of shares of Common Stock that may be subject to
outstanding options, determined immediately after the grant of any
option. The Plan currently provides that such maximum number of
shares of Common Stock is equal to the greater of 1,200,000 shares or
12% of the aggregate number of shares of the Company's Common Stock
outstanding, provided, however, that options to purchase no more than
300,000 shares of Common Stock may be granted as ISOs.

F-12
<PAGE> 59

The plan also provides for the automatic grant of 5,000 non-qualified
stock options upon commencement of service of a non-employee director
and 2,500 options per year per director thereafter. The exercise price
of the option may not be less than 100% of the market value at the
time of grant. Such options vest one-third on the date of grant and
one third on the first two anniversary dates and have a term of five
years.

At the time of the IPO (July 1996), 787,871 nonqualified options were
granted to purchase common stock at an exercise price equal to the IPO
price of the common stock ($5.00).

In March 1995, the Company granted 177,871 nonqualified options to
purchase common stock at an exercise price equal to the IPO price of
the common stock ($5.00). Such options have been canceled.

The Company applies APB Opinion No. 25 in accounting for its Plan,
and, accordingly, no compensation cost has been recognized for its
stock options in the financial statements. Had the Company determined
compensation cost based on fair value at the grant date for its stock
options under Statement No. 123, the Company's net loss and net loss
per share for the year ended December 31, 1996 would have increased to
$3,579,469 and $.94, respectively, and, for the year ended December
31, 1995, the Company's net loss and net loss per share would have
increased to $719,904 and $.23, respectively.

In calculating the Company's net loss had the compensation cost been
determined under Statement No. 123, it was assumed that Earl Takefman's
options would vest in the year granted, others would vest over a four
year period, 5% of the options would be forfeited, no dividends,
volatility percent of 10% and an interest rate of 6.3%.

Stock option activity during the periods is indicated as follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER EXERCISE
OF SHARES PRICE
--------- ------
<S> <C> <C>
Balance at January 1, 1995
Granted 177,871 $ 5.00
Exercised -- --
Forfeited -- --
Expired -- --
-------- ------
Balance at December 31, 1995 177,871 $ 5.00
Granted 787,871 $ 5.00
Exercised -- --
Forfeited -- --
Canceled (177,871) $ 5.00
-------- ------
Balance at December 31, 1996 787,871 $ 5.00
======== ======
</TABLE>

At December 31, 1996, 4,998 options are exercisable. In addition, on February
7, 1997, an additional 300,000 options became exercisable. See Note 9(b).

At December 31, 1996, the exercise price and weighted-average remaining
contractual life of outstanding options was $5.00 and 10 years, respectively.

(9) COMMITMENTS AND CONTINGENCIES

(A) LICENSE AGREEMENT

F-13
<PAGE> 60
Effective March 1, 1995 the Company entered into a license
agreement with Greg Norman (Norman), a professional golfer,
and his corporation, Great White Shark Enterprises, Inc.
(Great White Shark), pursuant to which the Company was granted
a worldwide license to use his name, likeness and endorsement
in connection with the production and promotion of the
Company's products. Norman will receive royalties of 8% of all
net revenues, as defined, derived from the sale of One-on-One
videotapes. The Company extended the agreement in 1996 and
used a portion of the proceeds from its private placement to
pay the initial $150,000 required to extend the agreement. The
extension of the agreement, which is for three additional
years, requires the Company to pay certain guaranteed fees,
amounting to $3,300,000, to be paid in quarterly installments
to Great White Shark and total $600,000 (including the
$150,000 payment referred to above) in the year ending June
30, 1997, $1 million in the year ending June 1998 and $1.7
million in the year ending June 30, 1999. Such guaranteed
payments will be credited against future 8% royalties due on
the Company's net revenues from the sale of the One-on-One
video. Through December 31, 1996, the Company made payments to
Norman amounting to $300,000. These payments are presented as
advance royalties on the balance sheet at December 31, 1996.
As the Company generates revenue, the advance royalties will
be recorded as expense.

The Company has the right to renew the license agreement for
two additional periods of five years each. In the event of
renewal, the Company is obligated to make guaranteed payments
of $1,300,000 during the first year of the renewal term,
increasing by $100,000 per year thereafter.

Also in March 1995, the Company's three founding shareholders
entered into an Agreement which gave Norman an option to
receive 10% of the outstanding shares of the Company from
them. The option was conditioned upon the Company delivering a
notice to Norman that was intended to extend the License
Agreement for three years. In April 1996, Norman exercised the
option and those shareholders transferred 300,000 shares of
their common stock to Norman. The market value of such shares
was $600,000. In accordance with Accounting Principles Board
Opinion ("APB") No. 25, the non-cash transaction was recorded
as a charge to the statement of operation and an increase in
additional paid-in capital, in April 1996, with no net impact
on the Company's equity.

(B) EMPLOYMENT AGREEMENTS

The Company entered into employment agreements with seven
executive employees expiring through December 1998 which
provide for aggregate minimum annual compensation of
approximately $763,000 in 1997 and $888,000 in 1998. The
agreements are automatically renewed for additional one-year
periods unless the Company or the employees provide timely
notice of termination. Two of the employment agreements
provide for an increase in compensation commencing in July
1997, if the Company achieves prescribed pre-tax earnings
thresholds. The agreements also provide for bonuses and
severance payments ranging from three to twelve months. In
addition, two of the employment agreements provide for options
for each employee to purchase an aggregate of up to 250,000
shares of common stock, at an exercise price per share equal
to the IPO price of $5 per share, which was the per share
price at the date of grant (see note 8). Such options had a
vesting term of five years, subject to acceleration if the
trading price of the Common Stock reached certain thresholds.
Specifically, the vesting of 300,000 of such options would
accelerate to the date that the market price of the Common
Stock equaled or exceeded $10.00 per share for at least five
consecutive trading days prior to January 24, 1998, if such
threshold is reached. This threshold was achieved on February
7, 1997, at which time such 300,000 options became
exercisable. The vesting of the remaining 200,000 options
will be accelerated to the date that the trading price of the
Common Stock equals or exceeds $15.00 per share for at least
five consecutive trading days on or before January 24, 1999 if
such threshold is reached. This threshold has not yet been
reached. The original optional agreement contained an error
in that it did not include a provision for the options to vest
in five years. Such error was corrected by revisions to the
option agreements dated April 3, 1997.

(10) SUBSEQUENT EVENT (unaudited)

F-14

<PAGE> 61
$3,500,000, which expires on December 31, 1997. The Company has used
the Letter of Credit to secure a $3,500,000 line of credit (the "Line
of Credit") from Barnett Bank. In the event that the Company draws
upon the Line of Credit and is subsequently unable to repay amounts
owed to Barnett Bank under the Line of Credit prior to December 31,
1997, Barnett Bank will present the Letter of Credit to Republic, who
will pay Barnett Bank amounts owed to it using the Cash Collateral. In
such instance, the investors in the Bridge Financing will be issued
additional shares of Common Stock by the Company according to a
predetermined formula to a maximum of 467,000 shares provided that the
average of the closing bid prices of the Common Stock on the Nasdaq
SmallCap Market on each of the twenty consecutive trading days
immediately prior to December 31, 1997 is greater than $11.00.
Alternatively, if the average of the closing bid prices of the Common
Stock on the Nasdaq SmallCap Market on each of the twenty consecutive
days immediately prior to December 31, 1997 is less than $11.00, the
Company is obligated to issue to each investor in the Bridge Financing
a number of shares of Common Stock equal to (x) the amount of such
investor's unreturned Cash Collateral divided by (y) one-half of the
average of the closing bid prices of the Common Stock on the Nasdaq
SmallCap Market on each of the twenty consecutive trading days prior to
December 31, 1997.

F-15
<PAGE> 62

<TABLE>
<S> <C>
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL
HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS COMMON STOCK
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, WHALE SECURITIES
CO., L.P. OR THE SELLING STOCKHOLDERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR
A SOLICITATION OF AN OFFER TO BUY, ANY SECURITY BY VISUAL EDGE
ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER SYSTEMS INC.
OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, IMPLY THAT THE
INFORMATION IN THIS PROSPECTUS IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.

----------
TABLE OF CONTENTS
PROSPECTUS
PAGE
---- ----------

Prospectus Summary . . . . . . . . . . . . . 2
Risk Factors . . . . . . . . . . . . . . . . 6
Price Range of Common Stock and Warrants . . 12
Dividend Policy . . . . . . . . . . . . . . . 12
Use of Proceeds . . . . . . . . . . . . . . . 12
Capitalization . . . . . . . . . . . . . . . 14
Plan of Operation . . . . . . . . . . . . . . 15
Business . . . . . . . . . . . . . . . . . . 17 April __, 1997
Management . . . . . . . . . . . . . . . . . 23
Principal Stockholders . . . . . . . . . . . 32
Certain Transactions . . . . . . . . . . . . 34
Description of Securities . . . . . . . . . . 36
Shares Eligible For Future Sale . . . . . . . 39
Selling Stockholders and Plan of Distribution 41
Legal Matters . . . . . . . . . . . . . . . . 44
Experts . . . . . . . . . . . . . . . . . . . 44
Available Information . . . . . . . . . . . . 44
Index to Financial Statements . . . . . . . . F-1

_____________________________
</TABLE>

<PAGE> 63

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Generally, Section 145 of the General Corporation Law of the State of
Delaware (the "GCL") permits a corporation to indemnify certain persons made a
party or threatened to be made a party to an action by reason of the fact that
such person is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or enterprise. In the case of an
action by or in the right of the corporation, no indemnification may be made in
respect of any matter as to which such person was adjudged liable for
negligence or misconduct in the performance of such person's duty to the
corporation unless the Delaware Court of Chancery or the court in which such
action was brought determines that despite the adjudication of liability such
person is fairly and reasonably entitled to indemnity for proper expenses. To
the extent such person has been successful in the defense of any matter, such
person shall be indemnified against expenses actually and reasonably incurred
by him.

The Company has adopted provisions in its By-Laws which provide for
indemnification of its officers and directors to the full extent permitted
under Delaware law.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the expenses that will be incurred by
the Registrant in connection with the offering described in this Registration
Statement. All of such amounts (except the SEC Registration Fee and the Nasdaq
SmallCap Market listing fee) are estimated.

<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 758.52
Nasdaq SmallCap Market listing fee . . . . . . . . . . . . . . . . . . . . 2,000.00
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . 10,000.00
Accounting fees and expenses . . . . . . . . . . . . . . . . . . . . . . . 5,000.00
Printing and engraving expenses . . . . . . . . . . . . . . . . . . . . . 5,000.00
State securities qualification fees and expenses . . . . . . . . . . . . . 2,000.00
Transfer agent fees and expenses . . . . . . . . . . . . . . . . . . . . . 2,000.00
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,241.48
----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $29,000.00
</TABLE>

None of the foregoing expenses will be borne by the Selling
Stockholders.

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

The table below sets forth the sales of unregistered securities made
by the Company since the date of its organization on July 15, 1994. All of
such sales were private placements made in reliance upon the exemption provided
by Section 4(2) of the Securities Act of 1933, as amended, and no underwriters
were involved in such placements. In each instance in which the Company
received services as consideration for the issuance and sale of Common Stock,
the value of the services so rendered was determined by the Board of Directors
of the Company based upon a per share valuation of $.17.

II-1
<PAGE> 64

<TABLE>
<CAPTION>
Title and
Amount of
Purchaser Security Date of Sale Consideration
--------- -------- ------------ -------------
<S> <C> <C> <C>
Alan L. Lubell . . . . . . . . . . . 1,708,938
Common Stock March 1995 $192,350

Status-One Investments Inc. . . . . . 732,402
Common Stock March 1995 162,750

Greenwich Properties Inc. . . . . . . 488,268
Common Stock March 1995 48,600

Greg Norman . . . . . . . . . . . . . 300,000 License and Services under
Common Stock June 1996 License Agreement

Status-One Investments Inc. . . . . . 24,413
Common Stock March 1995 Executive Services

Frank Williams . . . . . . . . . . . 8,139
Common Stock March 1995 Consulting Services

Thomas Peters . . . . . . . . . . . . 9,155
Common Stock March 1995 Software Development Services

Mona-Lee Takefman . . . . . . . . . . 2,136 Secretarial and Clerical
Common Stock March 1995 Services

Mark Lubell . . . . . . . . . . . . . 2,136
Common Stock March 1995 Management Services

Dr. Lawrence Howard . . . . . . . . . 20,000
Common Stock
$100,000
Note May 1996 $100,000

Dr. Leonard Mandell . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000

Dr. Steven Landman . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000

John R. Tompson and 5,000
Constance A. Tompson, Common Stock
Joint Tenants with Right of $25,000
Survivorship . . . . . . . . Note May 1996 25,000

Allan R. Lyons . . . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000
</TABLE>

II-2
<PAGE> 65

<TABLE>
<CAPTION>
Title and
Amount of
Purchaser Security Date of Sale Consideration
--------- -------- ------------ -------------
<S> <C> <C> <C>
Jonathan Robinson . . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 $25,000

Michael Weissman . . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000

Isaac Kier . . . . . . . . . . . . . 10,000
Common Stock
$50,000
Note May 1996 50,000

Craig Effron . . . . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000

Mark Dickstein . . . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000

Robert Laikin . . . . . . . . . . . . 20,000
Common Stock
$100,000
Note May 1996 100,000

Lisa Grossman . . . . . . . . . . . . 10,000
Common Stock
$50,000
Note May 1996 50,000

Gary Newman . . . . . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000

Albert Nocciolino . . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000

FGR Akel . . . . . . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000
</TABLE>

II-3
<PAGE> 66

<TABLE>
<CAPTION>
Title and
Amount of
Purchaser Security Date of Sale Consideration
--------- -------- ------------ -------------
<S> <C> <C> <C>
Scott Gottlieb . . . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 $25,000

Alfonso and Federico de Riveroll, 10,000
Joint Tenants with Right of Common Stock
Survivorship . . . . . . . . $50,000
Note May 1996 50,000

Roderick D. MacAlpine . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000

Leonard A. Albanese . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000

Lester Lieberman . . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000

Albert Greenspoon . . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000

B&B Trading Corp. 5,000
Retirement Plan . . . . . . . Common Stock
$25,000
Note May 1996 25,000

Garland T. Duke, Jr. . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000

Charles J. Reilly and 5,000
Kathleen M. Reilly . . . . . Common Stock
$25,000
Note May 1996 25,000

James H. Cooper . . . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000
</TABLE>

II-4
<PAGE> 67

<TABLE>
<CAPTION>
Title and
Amount of
Purchaser Security Date of Sale Consideration
--------- -------- ------------ -------------
<S> <C> <C> <C>
Wendy and Robert Ull, 5,000
Joint Tenants with Right of Common Stock
Survivorship . . . . . . . . $25,000
Note May 1996 $25,000

Michael Friedman . . . . . . . . . . 10,000
Common Stock
$50,000
Note May 1996 50,000

Edward S. Rosenthal . . . . . . . . . 10,000
Common Stock
$50,000
Note May 1996 50,000

Nicholas Kahla . . . . . . . . . . . 5,000
Common Stock
$25,000
Note May 1996 25,000

Elliott Broidy . . . . . . . . . . . 20,000
Common Stock
$100,000
Note May 1996 100,000

Status-One Investments Inc. . . . . . 10,000
Common Stock
10,000 Bridge
Warrants March 1997 350,000

Abbott Finance Inc. . . . . . . . . . 14,286
Common Stock
14,286 Bridge
Warrants March 1997 500,000

Neil Freder . . . . . . . . . . . . . 7,143
Common Stock
7,143
Bridge Warrants March 1997 250,000

Leonard Mendell . . . . . . . . . . . 7,141
Common Stock
7,141
Bridge Warrants March 1997 250,000

Avrum Schwam Holdings Inc. . . . . . 4,286
Common Stock
4,286
Bridge Warrants March 1997 150,000
</TABLE>

II-5
<PAGE> 68

<TABLE>
<CAPTION>
Title and
Amount of
Purchaser Security Date of Sale Consideration
--------- -------- ------------ -------------
<S> <C> <C> <C>
Carajen International Inc. . . . . . 4,286
Common Stock
4,286
Bridge Warrants March 1997 $150,000

Venture Management Consultants Inc. 14,286
Common Stock
14,286
Bridge Warrants March 1997 500,000

Sandy Lang . . . . . . . . . . . . . 7,143
Common Stock
7,143
Bridge Warrants March 1997 250,000

Frank Leo . . . . . . . . . . . . . . 7,143
Common Stock
7,143
Bridge Warrants March 1997 250,000

Martin Miller . . . . . . . . . . . . 7,143
Common Stock
7,143
Bridge Warrants March 1997 250,000

Frank Williams . . . . . . . . . . . 2,857
Common Stock
2,857
Bridge Warrants March 1997 100,000

Dan Elituv . . . . . . . . . . . . . 7,143
Common Stock
7,143
Bridge Warrants March 1997 250,000

Sol Zuckerman . . . . . . . . . . . . 7,143
Common Stock
7,143
Bridge Warrants March 1997 250,000
</TABLE>

II-6
<PAGE> 69

ITEM 27. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.

(a) Exhibits

The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
3.1 Certificate of Incorporation of the Company, as amended (Incorporated by reference to Exhibit 3.1 to
Amendment No. 2 to the Registrant's Registration Statement on Form SB-2 (Registration No. 333-5193)
effective July 24, 1996)

3.2 Amended and Restated By-Laws of the Company (Incorporated by reference to Exhibit 3.2 to Amendment No.
1 to the Registrant's Registration Statement on Form SB-2 (Registration No. 333-5193) effective July
24, 1996)

4.1 Form of Specimen Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to Amendment No. 1
to the Registrant's Registration Statement on Form SB-2 (Registration No. 333-5193) effective July 24,
1996)

4.2 Form of Specimen Redeemable Warrant Certificate (Incorporated by reference to Exhibit 4.2 to Amendment
No. 1 to the Registrant's Registration Statement on Form SB-2 (Registration No. 333-5193) effective
July 24, 1996)

4.3 Form of Warrant Agreement between the Company and Whale Securities Co., L.P. (Incorporated by reference
to Exhibit 4.3 to the Registrant's Registration Statement on Form SB-2 (Registration No. 333-5193)
effective July 24, 1996)

4.4 Form of Warrant among American Stock Transfer & Trust Company, the Company and Whale Securities Co.,
L.P. (Incorporated by reference to Exhibit 4.4 to the Registrant's Registration Statement on Form SB-2
(Registration No. 333-5193) effective July 24, 1996)

4.5 Form of Warrant Certificate issued to investors in the Bridge Financing

5 Opinion of Morgan, Lewis & Bockius LLP

10.1 License Agreement, dated March 1, 1995, between Great White Shark Enterprises, Inc. and the Company, as
supplemented (Incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement on
Form SB-2 (Registration No. 333-5193) effective July 24, 1996)

10.2 Promissory Note, dated April 15, 1996, payable to the Republic National Bank of New York (Incorporated
by reference to Exhibit 10.2 to the Registrant's Registration Statement on Form SB-2 (Registration No.
333-5193) effective July 24, 1996)

10.3 Employment Agreement, dated as of January 1, 1996, between Earl Takefman and the Company (Incorporated
by reference to Exhibit 10.3 to the Registrant's Registration Statement on Form SB-2 (Registration No.
333-5193) effective July 24, 1996)

10.4 Employment Agreement, dated as of January 1, 1996, between Alan Lubell and the Company (Incorporated by
reference to Exhibit 10.4 to the Registrant's Registration Statement on Form SB-2 (Registration No.
333-5193) effective July 24, 1996)
</TABLE>

II-7
<PAGE> 70

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>

10.5 Employment Agreement, dated as of May 1, 1996, between Thomas S. Peters and the Company (Incorporated
by reference to Exhibit 10.5 to the Registrant's Registration Statement on Form SB-2 (Registration No.
333-5193) effective July 24, 1996)

10.6 License Agreement, dated as of November 1, 1996, between the Company and Visual Edge Systems
(Australia) Pty. Ltd. (Incorporated by reference to Exhibit 10.6 to the Registrant's Registration
Statement on Form SB-2 (Registration No. 333-5193) effective July 24, 1996)

10.7 Form of Consulting Agreement between the Company and Whale Securities Co., L.P. (Incorporated by
reference to Exhibit 10.7 to the Registrant's Registration Statement on Form SB-2 (Registration No.
333-5193) effective July 24, 1996)

10.8 Amended and Restated 1996 Stock Option Plan

10.9 Employment Agreement, dated as of June 1, 1996, between the Company and Richard Parker (Incorporated by
reference to Exhibit 10.9 to Amendment No. 1 to the Registrant's Registration Statement on Form SB-2
(Registration No. 333-5193) effective July 24, 1996)

10.10 Assignment, dated April 19, 1996 from Thomas S. Peters to the Company (Incorporated by reference to
Exhibit 10.11 to the Registrant's Registration Statement on Form SB-2 (Registration No. 333-5193)
effective July 24, 1996)

10.11 Share and Warrant Purchase Agreement, dated as of February 27, 1997, between the Company and Status-One
Investments Inc.

10.12 Form of Share and Warrant Purchase Agreement, dated as of February 27, 1997, between the Company and
each unaffiliated investor in the Bridge Financing

11 Computation of Per Share Loss

23 Consent of KPMG Peat Marwick LLP

24 Power of Attorney (included with the signature page hereof)
</TABLE>

(b) Financial Statement Schedules:

None.

II-8
<PAGE> 71

ITEM 28. UNDERTAKINGS.

(1) The undersigned Registrant hereby undertakes that it will:

(a) File, during any period in which offers or sales are
being made, a post-effective amendment to this
Registration Statement to:

(i) include any prospectus required by Section
10(a)(3) of the Act;

(ii) reflect in the prospectus any facts or events
which, individually or together, represent a
fundamental change in the information in the
Registration Statement; and

(iii) include any additional or changed material
information on the plan of distribution.

(b) For determining any liability under the Act, each
post-effective amendment shall be deemed to be a new
Registration Statement of the securities offered, and
the offering of securities at that time shall be
deemed to be the initial bona fide offering thereof.

(c) Remove from registration by mens of a post-effective
amendment any of the securities being registered
which remain unsold at the termination of this
offering.

(2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Company pursuant to the
foregoing provisions, or otherwise, the company has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in such act and is, therefore, unenforceable. In
the event that a claim for indemnification against such
liabilities (other than the payment by the company of expenses
incurred or paid by a director or officer or controlling
person of the Company 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 Company 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 of
whether such indemnification by it is against public policy as
expressed in such act and will be governed by the final
adjudication of such issue.

(3) The Company hereby undertakes:

(a) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from
the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and
contained in a form of Prospectus filed by the
Company 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.

(b) For the purpose of determining any liability under
the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to
the securities offered therein, and the offering of
such securities at that time shall be deemed to be
the initial bona fide offering thereof.

II-9
<PAGE> 72

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to meet all of the
requirements for filing on Form SB-2 and authorized this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of Boca Raton, State of Florida, on April 3, 1997.

VISUAL EDGE SYSTEMS INC.

By: /s/ Earl T. Takefman
--------------------------------
Earl T. Takefman
Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Earl T. Takefman and Alan L. Lubell,
and each of them such person's true and lawful attorneys-in-fact and agents,
with full power of substitution and revocation, for such person and in such
person's name, place and stead, in any and all capacities to sign any and all
amendments (including additional amendments to this Registration Statement) and
to file the same with all exhibits thereto, and the 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 such person might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
- --------- ------------------------ ----

<S> <C> <C>
/s/ Earl Takefman Director, Chief Executive Officer April 3, 1997
- ----------------------------- (Principal Executive Officer)
Earl Takefman

/s/ Edward Smith Chief Financial Officer April 3, 1997
- ----------------------------- (Principal Financial Officer
Edward Smith and Principal Accounting Officer)

/s/ Alan Lubell Chairman of the Board April 3, 1997
- -----------------------------
Alan Lubell

Director April _, 1997
- -----------------------------
Eddie Einhorn

/s/ Mark Hershhorn Director April 3, 1997
- -----------------------------
Mark Hershhorn

Director April _, 1997
- -----------------------------
Beryl Artz
</TABLE>
<PAGE> 73

EXHIBIT INDEX

4.5 Form of Warrant Certificate issued to investors in the Bridge Financing

5 Opinion of Morgan, Lewis & Bockius LLP

</TABLE>
<PAGE> 74

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.5 Employment Agreement, dated as of May 1, 1996, between Thomas S. Peters and the Company (Incorporated
by reference to Exhibit 10.5 to the Registrant's Registration Statement on Form SB-2 (Registration No.
333-5193) effective July 24, 1996)

10.8 Amended and Restated 1996 Stock Option Plan

10.11 Share and Warrant Purchase Agreement, dated as of February 27, 1997, between the Company and Status-One
Investments, Inc.

10.12 Form of Share and Warrant Purchase Agreement, dated as of February 27, 1997, between the Company and
each unaffiliated investor in the Bridge Financing

11 Computation of Per Share Loss

23 Consent of KPMG Peat Marwick LLP

24 Power of Attorney (included with the signature page hereof)
</TABLE>

(b) Financial Statement Schedules:

None.

<PAGE> 1

Exhibit A

WARRANT CERTIFICATE

NEITHER THE WARRANT REPRESENTED BY THIS CERTIFICATE NOR THE COMMON STOCK
ISSUABLE UPON THE EXERCISE HEREOF HAS BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND NEITHER MAY BE
SOLD OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER SUCH ACT AND ANY
APPLICABLE STATE SECURITIES LAW UNLESS AN EXEMPTION FROM REGISTRATION IS THEN
AVAILABLE.

WARRANT TO PURCHASE COMMON STOCK

VISUAL EDGE SYSTEMS INC.
Date: February __, 1997

This is to certify that, FOR VALUE RECEIVED, the registered
holder hereof, ____________________ (the "Holder" or the "Holders"), is
entitled to purchase, subject to the provisions of this Warrant Certificate,
from VISUAL EDGE SYSTEMS INC., a Delaware corporation (the "Company"), up to
_______ shares (as such number may be adjusted in accordance with Section 5
hereof) of the Company's Common Stock, par value $.01 per share (such class of
stock, together with any capital stock of the Company into which such class of
stock shall be converted, being referred to herein as "Stock"), at $10.00 per
share (as such number may be adjusted in accordance with Section 5 hereof) (the
"Exercise Price"). The number of shares of Stock to be received upon the
exercise of this Warrant and the Exercise Price shall be adjusted from time to
time as hereinafter set forth. The shares of Stock or other securities or
property deliverable upon such exercise, as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares."

This Warrant Certificate is one of the Warrant Certificates
(the "Warrants", which term includes all Warrants
<PAGE> 2

issued in substitution therefor) originally issued in connection with the issue
and sale by the Company of_________ shares of its Common Stock. The Warrants
and the Common Stock have been issued pursuant to the Share and Warrant
Purchase Agreements, dated as of February 27, 1997 (the "Purchase Agreements"),
between the Company and the investors named therein (the "Purchasers"). The
Warrants originally so issued evidence rights to purchase an aggregate of
________ Warrant Shares at the Exercise Price. The Purchase Agreement under
which this Warrant was originally issued is herein referred to as the "Purchase
Agreement." This Warrant is subject to the provisions, and is entitled to the
benefits, of the Purchase Agreement.

Section 1. Exercise of Warrant.

1.1. Manner of Exercise. (a) This Warrant may be
exercised by the Holder, in whole or in part, at any time or from time to time
through and including the fifth (5th) anniversary of the date hereof (the
"Expiration Date") during normal business hours on any Business Day (as defined
in the Purchase Agreement) by surrender of this Warrant, together with the form
of subscription duly executed by such Holder in substantially the form attached
as Annex A hereto, to the Company at its office designated pursuant to Section
16 of the Purchase Agreement.

(b) Payment of the Exercise Price for the Warrant Shares
shall be made by certified or bank check or wire transfer payable to the order
of the Company, in any case, in an amount equal to (A) the number of Warrant
Shares specified in such form of subscription, multiplied by (B) the then
current Exercise Price. The Holder shall thereupon be entitled to receive the
number of Warrant Shares specified in such form of subscription (plus cash in
lieu of any fractional share as provided in Section 1.3 hereof).

1.2. Effective Date. Each exercise of this Warrant
pursuant to Section 1.1 hereof shall be deemed to have been effected
immediately prior to the close of business on the Business Day on which this
Warrant is surrendered to the Company as provided in Section 1.1 hereof (except
that if such exercise is in connection with an underwritten public offering of
Warrant Shares subject to this Warrant, then such exercise shall be

2
<PAGE> 3

deemed to have been effected upon such surrender of this Warrant). On each
such day that an exercise of this Warrant is deemed effected, the person or
persons in whose name or names any certificate or certificates for Warrant
Shares are issuable upon such exercise (as provided in Section 1.3 hereof)
shall be deemed to have become the Holder or Holders of record thereof.

1.3. Warrant Share Certificates, Cash for Fractional
Warrant Shares and Reissuance of Warrants. As promptly as practicable after
the exercise of this Warrant, in whole or in part, and in any event within five
(5) Business Days thereafter (unless such exercise shall be in connection with
a public offering of Warrant Shares subject to this Warrant, in which event
concurrently with such exercise), the Company at its expense (including the
payment by it of any applicable issue, stamp or other taxes) will cause to be
issued in the name of and delivered to the Holder:

(a) a certificate or certificates for the number of
Warrant Shares to which the Holder shall be entitled upon such
exercise plus, in lieu of any fractional share to which the Holder
would otherwise be entitled, cash in an amount equal to the same
fraction of the Market Price (as defined in Section 5.1 hereof) per
Warrant Share on the effective date of such exercise; and

(b) in case such exercise is in part only, a new Warrant
or Warrants, substantially identical hereto, representing the rights
formerly represented by this Warrant which have not expired or been
exercised.

1.4. Acknowledgment of Obligation. The Company will, at
the time of or at any time after each exercise of this Warrant, upon the
request of the Holder hereof or of any Warrant Shares issued upon such
exercise, acknowledge in writing its continuing obligation to afford to such
Holder all rights to which such Holder shall continue to be entitled under this
Warrant Certificate and the Purchase Agreement; provided, that if any such
Holder shall fail to make any such request, the failure shall not affect the
continuing obligation of the Company to afford such rights to such Holder.

3
<PAGE> 4

1.5. Conditional Exercise. Notwithstanding any other
provision hereof, if any exercise of any portion of this Warrant is to be made
in connection with a public offering of Warrant Shares or any transaction
described in Section 5.8 hereof, the exercise of any portion of this Warrant
may, at the election of the Holder, be conditioned upon the consummation of the
public offering or such transaction, in which case such exercise shall not be
deemed to be effective until the consummation of such public offering or
transaction.

Section 2. Reservation of Shares.

The Company shall at all times after the date hereof and until
the Expiration Date reserve for issuance and delivery upon exercise of this
Warrant the number of Warrant Shares as shall be required for issuance and
delivery upon exercise in full of this Warrant.

Section 3. Transfer, Exchange, Assignment or Loss of Warrant.

3.1. Transfer. This Warrant may be assigned in whole or in
part or transferred in whole or in part; subject, however, to compliance with
the provisions of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Act").

3.2. Procedure for Assignment or Transfer. Any assignment or
transfer hereunder shall be made by surrender of this Warrant to the Company at
its office designated pursuant to Section 15 of the Purchase Agreement,
together with the form of assignment duly executed by the Holder in
substantially the form attached as Annex B hereto and funds sufficient to pay
any required transfer tax. In such event the Company shall, without charge,
execute and deliver a new Warrant or Warrants substantially identical hereto in
the name of the assignee or assignees named in such instrument of assignment
and designate the assignee or assignees as the registered holder or holders on
the Company's records and this Warrant shall promptly be canceled. This
Warrant may be divided or combined with other Warrants which carry the same
rights upon presentation thereof at the principal office of the Company
together with a written

4
<PAGE> 5

notice signed by the holder thereof, specifying the names and denominations in
which new Warrants are to be issued.

3.3. Loss, Theft, Destruction or Mutilation. Upon receipt by
the Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification to the Company or (in the case of
mutilation) presentation of this Warrant for surrender and cancellation, the
Company will execute and deliver a new Warrant identical hereto and any such
lost, stolen, destroyed or mutilated Warrant shall thereupon become void.

Section 4. Warrant Certificate Holder Not Deemed a
Stockholder.

Except as otherwise provided herein, the Holders shall not,
solely because of holding this Warrant, be entitled to vote, receive dividends
or be deemed the holder of Stock or any other securities of the Company which
may at any time be issuable on the exercise of the Warrant for any purpose
whatsoever, nor shall anything contained herein be construed to confer upon the
Holders, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matters submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger, conveyance or otherwise), or to receive notice of
meetings or other actions affecting stockholders, or to receive dividend or
subscription rights, or otherwise, until this Warrant shall have been exercised
in accordance with the provisions hereof.

Section 5. Anti-Dilution.

The number of Warrant Shares for which this Warrant is
exercisable and/or the Exercise Price at which such Warrant Shares may be
purchased upon exercise of this Warrant shall be subject to adjustment from
time to time as set forth in this Section 5. The Company shall give the
Holders notice of any event described below which requires an adjustment
pursuant to this Section 5 at the time of such event.

5
<PAGE> 6

5.1. Special Definitions. For purposes of this Section 5
the following terms shall have the following meanings:

"Additional Shares of Stock" shall mean all shares of Stock
issued by the Company after the date hereof, other than (i) the Stock to be
issued upon exercise of the Warrants, (ii) redeemable warrants to purchase
1,300,000 shares of Common Stock issued pursuant to the Warrant Agreement,
dated as of July 24, 1996, among the Company, Whale Securities Co., L.P.
("Whale") and American Stock Transfer & Trust Company, (iii) the Stock to be
issued upon exercise of the warrants for shares of Stock issued to Whale, (iv)
shares of Stock to be issued pursuant to the Company's 1996 Stock Option Plan
and (vi) 130,000 shares of Stock to be issued to certain executives upon the
exercise of outstanding stock options held by such persons.

"Convertible Securities" shall mean evidences of indebtedness,
shares of preferred stock or other securities which are convertible into or
exchangeable, with or without payment of additional consideration in cash or
property, for Additional Shares of Stock, either immediately or upon the
occurrence of a specified date or a specified event.

5.2. Stock Dividends, Subdivisions and Combinations. If
at any time the Company shall:

(i) take a record of the holders of its Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Stock,

(ii) subdivide its outstanding shares of Stock into a
larger number of shares of Stock, or

(iii) combine its outstanding shares of Stock into a
smaller number of shares of Stock,

then (I) the Warrant Shares for which this Warrant is exercisable immediately
after the occurrence of any such event shall be adjusted to equal the number of
shares of Stock which a record holder of the same number of shares of Stock for
which this Warrant is exercisable immediately prior to the occurrence of such
event would own or be entitled to receive after the

6
<PAGE> 7

happening of such event, and (II) the Exercise Price shall be adjusted to equal
(x) the Exercise Price multiplied by the Warrant Shares for which this Warrant
is exercisable immediately prior to the adjustment divided by (y) the Warrant
Shares for which this Warrant is exercisable immediately after such adjustment.

5.3. Certain other Distributions. If at any time the
Company shall take a record of the holders of its Stock for the purpose of
entitling them to receive any dividend or other distribution of:

(i) cash,

(ii) any evidences of its indebtedness, any shares of its
Stock or any other securities or property of any nature whatsoever
(other than cash or Additional Shares of Stock), or

(iii) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any share of its Stock or
any other securities or property of any nature whatsoever (other than
cash or Additional Shares of Stock),

then, (I) the Warrant Shares for which this Warrant is exercisable shall be
adjusted to equal the product of the Warrant Shares for which this Warrant is
exercisable immediately prior to such adjustment by a fraction (x) the
numerator of which shall be the Exercise Price at the date of taking such
record and (y) the denominator of which shall be such Exercise Price per share
of Stock minus the amount allocable to one share of Stock of any such cash so
distributable and of the fair value (as determined in good faith by the Board
of Directors of the Company) of any and all such evidences of indebtedness,
shares of stock, other securities or property or warrants or other subscription
or purchase rights so distributable, and (II) the Exercise Price shall be
adjusted to equal (x) the Exercise Price multiplied by the Warrant Shares for
which this Warrant is exercisable immediately prior to the adjustment divided
by (y) the Warrant Shares for which this Warrant is exercisable immediately
after such adjustment. A reclassification of the Stock (other than a change in
par value, or from par value to no par value or from no par value to par value)
into shares of Stock and shares of any

7
<PAGE> 8

other class of stock shall be deemed a distribution by the Company to the
Holders of its Stock of such shares of such other class of stock within the
meaning of this Section 5.3 and, if the outstanding shares of the Stock shall
be changed into a larger or smaller number of shares of the Stock as part of
such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of the Stock within
the meaning of Section 5.2.

5.4. Issuance of Additional Shares of Stock. If at any
time the Company shall (except as hereinafter provided) issue or sell any
Additional Shares of Stock in exchange for consideration in an amount per
Additional Share of Stock less than the Exercise Price in effect immediately
prior to such issuance or sale of Additional Shares of Stock, then the Exercise
Price as to the Warrant Shares for which this Warrant is exercisable
immediately prior to such adjustment shall be adjusted to equal the price
determined by multiplying the Exercise Price by a fraction, of which

(x) the numerator shall be (1) the number of shares
of Stock outstanding immediately prior to such issuance or
sale of Additional Shares of Stock plus (2) the number of
shares of Stock which the aggregate amount of consideration,
if any, received by the Company for the total number of such
Additional Shares of Stock so issued or sold would purchase at
the Exercise Price in effect immediately prior to such
issuance or sale of Additional Shares of Stock, and

(y) the denominator shall be the number of shares of
Stock outstanding immediately after such issuance or sale of
Additional Shares of Stock.

The provisions of this Section 5.4 shall not apply to any issuance of
Additional Shares of Common Stock for which an adjustment is provided under
Section 5.2 or 5.3.

5.5. Issuance of Warrants or Other Rights. If at any time
the Company shall take a record of the holders of its Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue

8
<PAGE> 9

or sell, any warrants or other rights to subscribe for or purchase any
Additional Shares of Stock or any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
consideration received for such warrants or other rights or such Convertible
Securities shall be less than the Exercise Price in effect immediately prior to
the time of such issue or sale, then the Exercise Price shall be adjusted as
provided in Section 5.4. No further adjustments of the Exercise Price shall be
made upon the actual issue of such Stock or of such Convertible Securities upon
exercise of such warrants or other rights or upon the actual issue of such
Stock upon such conversion or exchange of such Convertible Securities.

5.6. Issuance of Convertible Securities. If at any time
the Company shall take a record of the holders of its Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any Convertible Securities, whether or not the
rights to convert thereunder are immediately exercisable, and the consideration
received for such stock shall be less than the Exercise Price in effect
immediately prior to the time of such issue or sale, then the Exercise Price
shall be adjusted as provided in Section 5.4. No adjustment of the Exercise
Price shall be made under this Section 5.6 upon the issuance of any Convertible
Securities which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights therefor, if any such adjustment shall
previously have been made upon the issuance of such warrants or other rights
pursuant to Section 5.5. No further adjustments of the Exercise Price shall be
made upon the actual issue of such Stock upon conversion of such Convertible
Securities and, if any issue or sale of such Convertible Securities is made
upon exercise of any warrant or other right to subscribe for or to purchase any
such Convertible Securities for which adjustments of the Exercise Price have
been or are to be made pursuant to other provisions of this Section 5, no
further adjustments of the Exercise Price shall be made by reason of such issue
or sale.

5.7. Other Provisions Applicable to Adjustments under this
Section. The following provisions shall be applicable to the making of
adjustments of the Warrant Shares for which this

9
<PAGE> 10

Warrant is exercisable and the Exercise Price at which such Warrant Shares may
be purchased upon exercise of this Warrant provided for in this Section 5:

(a) Computation of Consideration. To the extent that any
Additional Shares of Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase any Additional
Shares of Stock or any Convertible Securities shall be issued for cash
consideration, the consideration received by the Company therefor
shall be the amount of the cash received by the Company therefor, or,
if such Additional Shares of Stock or Convertible Securities are
offered by the Company for subscription, the subscription price, or,
if such Additional Shares of Stock or Convertible Securities are sold
to underwriters or dealers for public offering without a subscription
offering, the public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends
and any compensation, discounts or expenses paid or incurred by the
Company for and in the underwriting of, or otherwise in connection
with, the issuance thereof). To the extent that such issuance shall
be for a consideration other than cash, then except as herein
otherwise expressly provided, the amount of such consideration shall
be deemed to be the fair value of such consideration at the time of
such issuance as determined in good faith by the Board of Directors of
the Company. In case any Additional Shares of Stock or any
Convertible Securities or any warrants or other rights to subscribe
for or purchase such Additional Shares of Stock or Convertible
Securities shall be issued in connection with any merger in which the
Company issues any securities, the amount of consideration therefor
shall be deemed to be the fair value, as determined in good faith by
the Board of Directors of the Company, of such portion of the assets
and business of the nonsurviving corporation as such Board in good
faith shall determine to be attributable to such Additional Shares of
Stock, Convertible Securities, warrants or other rights, as the case
may be. The consideration for any Additional Shares of Stock issuable
pursuant to any warrants or other rights to subscribe for or purchase
the same shall be the consideration received by the Company for
issuing such warrants or other rights plus the additional
consideration payable to the Company upon

10
<PAGE> 11

exercise of such warrants or other rights. The consideration for any
Additional Shares of Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by the
Company for issuing warrants or other rights to subscribe for or
purchase such Convertible Securities, plus the consideration paid or
payable to the Company in respect of the subscription for or purchase
of such Convertible Securities, plus the additional consideration, if
any, payable to the Company upon the exercise of the right of
conversion or exchange in such Convertible Securities. In case of the
issuance at any time of any Additional Shares of Stock or Convertible
Securities in payment or satisfaction of any dividends upon any class
of stock other than Stock, the Company shall be deemed to have
received for such Additional Shares of Stock or Convertible Securities
a consideration equal to the amount of such dividend so paid or
satisfied.

(b) When Adjustments to Be Made. The adjustments
required by this Section 5 shall be made whenever and as often as any
event requiring an adjustment shall occur, except that any adjustment
of the Warrant Shares for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Stock, as provided for in
Section 5.2) up to, but not beyond the date of exercise if such
adjustment either by itself or with other adjustments not previously
made adds or subtracts less than 1% of the shares of the Stock for
which this Warrant is exercisable immediately prior to the making of
such adjustment. Any adjustment representing a change of less than
such minimum amount (except as aforesaid) which is postponed shall be
carried forward and made as soon as such adjustment, together with
other adjustments required by this Section 5 and not previously made,
would result in a minimum adjustment or on the date of exercise. For
the purpose of any adjustment, any event shall be deemed to have
occurred at the close of business on the date of its occurrence.

(c) Fractional Interests. In computing adjustments under
this Section 5, fractional interests in the Stock shall be taken into
account to the nearest 1/10th of a share.

11
<PAGE> 12

(d) When Adjustment Not Required. If the Company shall
take a record of the holders of the Stock for the purpose of entitling
them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the taking of
such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.

(e) Challenge to Good Faith Determination. Whenever the
Board of Directors of the Company shall be required to make a
determination in good faith of the fair value of any item under this
Section 5, such determination may be challenged in good faith by a
Holder and any dispute shall be resolved by an investment banking firm
of recognized national standing selected by the Company and acceptable
to such Holder. The fees of such investment banker shall be borne by
the Holder if the Company's calculation is determined to be correct
and otherwise by the Company.

5.8. Reorganization, Reclassification, Merger or
Consolidation. If the Company shall at any time reorganize or reclassify the
outstanding shares of Stock (other than a change in par value, or from no par
value to par value, or from par value to no par value, or as a result of a
subdivision or combination) or consolidate with or merge into another
corporation (where the Company is not the continuing corporation after such
merger or consolidation), the Holders shall thereafter be entitled to receive
upon exercise of this Warrant in whole or in part, the same kind and number of
shares of stock and other securities, cash or other property (and upon the same
terms and with the same rights) as would have been distributed to the Holder
upon such reorganization, reclassification, consolidation or merger had the
Holder exercised this Warrant immediately prior to such reorganization,
reclassification, consolidation or merger (subject to subsequent adjustments
under Section 5 hereof). The Holders shall pay upon such exercise the Exercise
Price that otherwise would have been payable pursuant to the terms of this
Warrant. If any such reorganization, reclassification, consolidation or merger
results in a cash distribution in excess

12
<PAGE> 13

of the Exercise Price provided by this Warrant, a Holder may, at the Holder's
option, exercise this Warrant without making payment of the Exercise Price, and
in such case the Company shall, upon distribution to the Holder, consider the
Exercise Price to have been paid in full, and in making settlement to the
Holder, shall deduct an amount equal to the Exercise Price from the amount
payable to the Holder. Notwithstanding anything herein to the contrary, the
Company will not effect any such reorganization, reclassification, merger or
consolidation unless prior to the consummation thereof, the corporation who may
be required to deliver any stock, securities or other assets upon the exercise
of this Warrant shall agree by an instrument in writing to deliver such stock,
cash, securities or other assets to the Holder. A sale, transfer or lease of
all or substantially all of the assets of the Company to another person shall
be deemed a reorganization, reclassification, consolidation or merger for the
foregoing purposes.

5.9. Chief Financial Officer's Opinion. Upon each adjustment
of the Exercise Price and upon each change in the Warrant Shares issuable upon
the exercise of this Warrant, and in the event of any change in the rights of a
Holder by reason of other events herein set forth, then and in each such case,
the Company will promptly obtain an opinion of the chief financial officer of
the Company, stating the adjusted Exercise Price and the new Warrant Shares so
issuable, or specifying the other shares of the Stock, securities or assets and
the amount thereof receivable as a result of such change in rights, and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. The Company will promptly mail a copy of such
opinion to the Holders. If a Holder disagrees with such calculation, the
Company agrees to obtain within thirty (30) business days an opinion of a firm
of independent certified public accountants selected by the Company's Board of
Directors and acceptable to such Holder to review such calculation and the
opinion of such firm of independent certified public accountants shall be final
and binding on the parties and shall be conclusive evidence of the correctness
of the computation with respect to any such adjustment of the Exercise Price
and any such change in the number of Warrant Shares so issuable. The fees of
such accountants shall be borne by the Holder if the Company's

13
<PAGE> 14

calculation is determined by such accountants to be correct and otherwise by
the Company.

5.10. Company to Prevent Dilution. In case at any time or
from time to time conditions arise by reason of action taken by the Company,
which in the good faith opinion of its Board of Directors or a majority of the
Holders are not adequately covered by the provisions of this Section 5, and
which might materially and adversely affect the exercise rights of the Holders,
the Board of Directors of the Company shall appoint such firm of independent
certified public accountants acceptable to a majority of the Holders, which
shall give their opinion upon the adjustment, if any, on a basis consistent
with the standards established in the other provisions of this Section 5,
necessary with respect to the Exercise Price, so as to preserve, without
dilution (other than as specifically contemplated by this Warrant), the
exercise rights of the Holders. Upon receipt of such opinion, the Board of
Directors of the Company shall forthwith make the adjustments described
therein.

Section 6. Character of Shares of Stock.

All shares of the Stock issuable upon the exercise of this
Warrant shall, when issued to a Holder, be duly authorized, validly issued,
fully paid and nonassessable, free and clear of any lien or encumbrance and
without any preemptive rights.

Section 7. Notice to Holder.

So long as this Warrant shall be outstanding, (i) if the
Company shall pay any dividend or make any distribution upon the Stock
otherwise than in cash, (ii) if the Company shall offer to the holders of
Stock, for subscription or purchase by them, any shares of any class of stock
of the Company or any other rights or (iii) if there shall be any capital
reorganization of the Company, reclassification of the capital stock of the
Company, consolidation or merger of the Company with or into another
corporation, sale, lease or transfer of all or substantially all of the
property and assets of the Company, voluntary or involuntary dissolution,
liquidation or winding up of the Company, then in any such event, the Company
shall cause to be mailed by certified mail to each Holder, at least 30 days
prior to the relevant date of the event described above, a notice

14
<PAGE> 15

containing a brief description of the proposed action and stating the date or
expected date on which a record is to be taken for the purpose of such
dividend, distribution or rights, or the date or expected date such
reclassification, reorganization, consolidation, merger, conveyance, lease or
transfer, dissolution, liquidation or winding up shall take place or be voted
upon by holders of the Stock of record, and the date or expected date as of
which the holders of Stock of record shall be entitled to exchange their shares
of Stock for securities or other property deliverable upon any such event.

Section 8. Disposition of Warrant Shares.

The stock certificates of the Company that will evidence the
Warrant Shares or any other security issued or issuable upon exercise of this
Warrant will be imprinted with a conspicuous legend in substantially the
following form:

The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or any
applicable state securities laws and may not be sold, pledged,
hypothecated, donated or otherwise transferred (whether or not for
consideration) unless registered under the Act and any applicable
state securities laws or in a transaction exempt from such
registrations.

Except as provided in the Purchase Agreements, the Company has not agreed to
register any of the Warrant Shares for distribution in accordance with the
provisions of the Act or any applicable state securities laws, and the Company
has not agreed to comply with any exemption from registration under the Act or
any applicable state securities laws for the resale of the Warrant Shares.
Hence, it is the understanding of the Holder that by virtue of the provisions
of certain rules respecting "restricted securities" promulgated by the
Securities and Exchange Commission, the Warrant Shares may be required to be
held indefinitely, unless and until registered under the Act and any applicable
state securities laws unless an exemption from such registration is available,
in which case the Holders may still be limited as to the number of Warrant
Shares that may be sold.

15
<PAGE> 16

Section 9. Governing Law.

This Warrant shall be construed in accordance with the laws of
the State of New York applicable to contracts executed and to be performed
wholly within such state without regard to any conflicts of laws principles.

Section 10. Notice.

Any notice, demand, document or other communication given or
delivered hereunder shall be in writing, and may be (i) personally delivered,
(ii) given or made by United States registered or certified mail, return
receipt requested, postage prepaid, or (iii) given or made by overnight
courier, delivery charges prepaid, addressed as follows:

If to the Company: Visual Edge Systems Inc.
2424 North Federal Highway
Suite 100
Boca Raton, Florida 33431
Attention: Chief Executive Officer

With a Copy to: Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: David W. Pollak, Esq.

If to Holder:

The Company and the Holder shall each have the right to designate a different
address for itself by notice similarly given. All such notices, demands,
documents or other communication will be deemed to be delivered (i) upon
receipt, if personally delivered, (ii) on the third full Business Day following
the day of mailing, if sent by United States registered or certified mail and
(iii) on the Business Day following the date it was sent, if sent by overnight
courier.

16
<PAGE> 17

Section 11. Remedies.

The Company stipulates that the remedies at law of the Holder
in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise, in
addition to any other remedies which may be available at law or in equity.

Section 12. Successors and Assigns.

This Warrant and the rights evidenced hereby shall inure to
the benefit of and be binding upon the successors of the Company and the
successors and assigns of the Holders hereof. The provisions of this Warrant
are intended to be for the benefit of all Holders from time to time of this
Warrant and shall be enforceable by any such Holder.

Section 13. Amendment.

This Warrant Certificate may be modified or amended and any
provision hereof may be waived by a writing executed by the Company and holders
of Warrants representing a majority of the Warrant Shares obtainable upon
exercise of the Warrants.

Section 14. Headings.

Section headings in this Warrant are for reference only and
shall not affect the meaning or construction of any of the provisions hereof.

17
<PAGE> 18

IN WITNESS WHEREOF, the Company has executed this Warrant as
of the date first written above.

VISUAL EDGE SYSTEMS INC.

By:
------------------------------
Name: Earl Takefman
Title: Chief Executive Officer

18
<PAGE> 19

ANNEX A

FORM OF SUBSCRIPTION

(To be executed only upon exercise of the Warrant
in whole or in part)

To VISUAL EDGE SYSTEMS INC.

The undersigned registered holder of the accompanying Warrant
hereby irrevocably exercises such Warrant or portion thereof for, and purchases
thereunder, _______(1) Warrant Shares (as defined in such Warrant) and herewith
makes payment therefor of $_______. The undersigned requests that the
certificates for such Warrant Shares be issued in the name of, and delivered
to, ____________________________, whose address is ___________________________
______________________________________.

Dated:

------------------------------------
(Name must conform to name of holder
as specified on the face of the
Warrant)

------------------------------------
(Street Address)

------------------------------------
(City) (State) (Zip Code)

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

(1) Insert the number of Warrant Shares as to which this Warrant is being
exercised. In the case of a partial exercise, a new Warrant or Warrants
will be issued and delivered, representing the unexercised portion of this
Warrant, to the holder surrendering the same.
<PAGE> 20

ANNEX B

FORM OF ASSIGNMENT

(To be signed only on transfer of Warrant)

For value received, the undersigned hereby sells, assigns and
transfers unto ____________________________ [Name] of _____________ [Address]
the right represented by the within Warrant to purchase ________ shares of
Common Stock of VISUAL EDGE SYSTEMS INC. to which the within Warrant relates,
and appoints ____________________ Attorney to transfer such right on the books
of VISUAL EDGE SYSTEMS INC., with full power of substitution in the premises.

Dated:
--------------

------------------------------------
(Name must conform to name of holder
as specified on the face of the
Warrant)

------------------------------------
(Street Address)

------------------------------------
(City) (State) (Zip Code)

Signed in the presence of:

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

<PAGE> 1
EXHIBIT 5

April 3, 1997

Visual Edge Systems Inc.
2424 North Federal Highway, Suite 100
Boca Raton, FL 33431

Re: Issuance of Shares Pursuant to
Registration Statement on Form SB-2

Ladies and Gentlemen:

We have acted as counsel to Visual Edge Systems Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), of a Registration Statement on Form SB-2 (the
"Registration Statement") relating to the sale of an aggregate of 2,200,000
shares of the Company's Common Stock, par value $.01 per share (the "Common
Stock"), as follows: (i) 100,000 shares of Common Stock to be sold by certain
investors (the "Bridge Investors") who received such shares in a bridge
financing consummated by the Company in March 1997; (ii) 25,000 shares of
Common Stock to be sold by a former officer of the Company; (iii) 220,000
shares of Common Stock to be offered and sold by certain investors who invested
in the Company prior to the Company's initial public offering (the "IPO"); (iv)
100,000 shares of Common Stock underlying certain warrants owned by the Bridge
Investors; (v) 260,000 shares of Common Stock underlying certain warrants owned
by Whale Securities Co., L.P., the underwriter in the IPO; and (v) 1,495,000
shares of Common Stock underlying the Company's redeemable warrants which were
sold in the IPO. The shares of Common Stock referred to above in clauses (i),
(ii) and (iii) are collectively referred to herein as the "Shares," and the
shares of Common Stock referred to above in clauses (iv), (v) and (vi) are
collectively referred to herein as the "Warrant Shares."

In so acting, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of the Certificate of Incorporation
of the Company, as amended, the By-Laws of the Company, as amended, and such
other documents, records, certificates and other instruments as in our judgment
are necessary or appropriate for purposes of this opinion.
<PAGE> 2

Based on the foregoing, we are of the opinion that:

1. The Shares have been duly authorized and validly
issued by the Company and are fully paid and
non-assessable.

2. The Warrant Shares have been duly authorized by the
Company and, when issued and paid for as described in
the Registration Statement, such shares of Common
Stock will be duly and validly issued and fully paid
and non-assessable.

We render this opinion as members of the Bar of the State of New York
and express no opinion as to any law other than the General Corporation Law of
the State of Delaware.

We consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement. In giving this consent, we do not
admit that we are acting within the category of persons whose consent is
required under Section 7 of the Act.

Very truly yours,

/s/ Morgan, Lewis & Bockius LLP

<PAGE> 1
EXHIBIT 10.8

VISUAL EDGE SYSTEMS INC.
AMENDED AND RESTATED 1996 STOCK OPTION PLAN

Section 1. Purpose

The Plan (i) authorizes the Committee to provide to Employees and
Consultants of the Corporation and its Subsidiaries, who are in a position to
contribute materially to the long-term success of the Corporation, with options
to acquire Stock of the Corporation, and (ii) provides for the automatic grant
of options to Non-Employee Directors of the Corporation in accordance with the
terms specified herein. The Corporation believes that this incentive program
will cause those persons to increase their interest in the Corporation's
welfare, and aid in attracting and retaining Employees, Consultants and
Directors of outstanding ability.

Section 2. Definitions

Unless the context clearly indicates otherwise, the following terms,
when used in this Plan, shall have the meanings set forth in this Section:

(a) "Board" shall mean the Board of Directors of the Corporation.

(b) A "Change in Control" shall be deemed to have occurred if:

(i) any person (as defined in Sections 3(a)(9) and 13(d)(3)
of the Exchange Act), other than the Corporation or an employee
benefit plan of the Corporation, acquires directly or indirectly the
Beneficial Ownership (within the meaning of Rule 13d-3 promulgated
pursuant to the Exchange Act) of any voting security of the
Corporation and immediately after such acquisition such Person is,
directly or indirectly, the Beneficial Owner of voting securities
representing 30% or more of the total voting power of all of the
then-outstanding voting securities of the Corporation;

(ii) the individuals (A) who, as of the closing date of the
Initial Public Offering, constitute the Board (the "Original
Directors") or (B) who thereafter are elected to the Board and whose
election, or nomination for election, to the Board was approved by a
vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are elected to the
Board and whose election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the Original
Directors and Additional Original Directors then still in office (such
directors also becoming "Additional Original Directors" immediately
following their election)

<PAGE> 2

(such individuals being the "Continuing Directors"), cease for any
reason to constitute a majority of the members of the Board;

(iii) the stockholders of the Corporation shall approve a
merger, consolidation, recapitalization, or reorganization of the
Corporation, a reverse stock split of outstanding voting securities,
or consummation of any such transaction if stockholder approval is not
sought or obtained, other than any such transaction which would result
in at least 75% of the total voting power represented by the voting
securities of the surviving entity outstanding immediately after such
transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of the Corporation immediately prior to
the transaction, with the voting power of each such continuing holder
relative to other such continuing holders not substantially altered in
the transaction; or

(iv) the stockholders of the Corporation shall approve a plan
of complete liquidation of the Corporation or an agreement for the
sale or disposition by the Corporation of all or a substantial portion
of the Corporation's assets (i.e., 50% or more of the total assets of
the Corporation).

(d) "Committee" shall mean the Board, or any Committee of two or more
Directors that may be designated by the Board to administer the Plan.

(e) "Consultant" shall mean (i) any person who is engaged to perform
services for the Corporation or its Subsidiaries, other than as an Employee or
Director, or (ii) any person who has agreed to become a consultant within the
meaning of clause (i).

(f) "Control Person" shall mean any person who, as of the date of
grant of an Option, owns (within the meaning of Section 422(b)(6) of the Code)
stock possessing more than ten percent (10%) of the total combined voting power
or value of all classes of stock of the Corporation or of any parent or
Subsidiary.

(g) "Corporation" shall mean Visual Edge Systems Inc., a Delaware
corporation.

(h) "Director" shall mean any member of the Board.

(i) "Employee" shall mean (i) any full-time employee of the
Corporation or its Subsidiaries (including Directors who are otherwise employed
on a full-time basis by the Corporation or its Subsidiaries), or (ii) any
person who has agreed to become an employee within the meaning of clause (i).

<PAGE> 3

(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
it may be amended from time to time.

(k) "Fair Market Value" of the Stock on a given date shall be based
upon: (i) if the Stock is listed on a national securities exchange or quoted in
an interdealer quotation system, the last sales price or, if unavailable, the
average of the closing bid and asked prices per share of the Stock on such date
(or, if there was no trading or quotation in the Stock on such date, on the
next preceding date on which there was trading or quotation) as provided by one
of such organizations; or (ii) if the Stock is not listed on a national
securities exchange or quoted in an interdealer quotation system, as determined
by the Board in good faith in its sole discretion; provided, however, that the
"fair market value" of Stock on the date on which shares of Stock are first
issued and sold pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission shall be the Initial Public
Offering price of the shares so issued and sold, as set forth in the first
final prospectus used in such offering.

(l) "Grantee" shall mean a person granted an Option under the Plan.

(m) "Initial Public Offering" shall mean an initial public offering of
shares of Stock in a firm commitment underwriting registered with the
Securities and Exchange Commission in compliance with the provisions of the
1933 Act.

(n) "ISO" shall mean an Option granted pursuant to the Plan to
purchase shares of the Stock and intended to qualify as an incentive stock
option under Section 422 of the Code, as now or hereafter constituted.

(o) "1933 Act" shall mean the Securities Act of 1933, as amended.

(p) "Non-Employee Director" shall mean a Director of the Corporation
who is not an Employee, nor has been an Employee at any time during the prior
one year period.

(q) "NQSO" shall mean an Option granted pursuant to the Plan to
purchase shares of the Stock that is not an ISO.

(r) "Options" shall refer collectively to NQSOs and ISOs issued under
and subject to the Plan.

(s) "Parent" shall mean any parent corporation as defined in Section
424 of the Code.

(t) "Plan" shall mean this Amended and Restated 1996 Stock Option Plan
as set forth herein and as amended from time to time.

<PAGE> 4

(u) "Stock" shall mean shares of the Common Stock of the Corporation,
par value $0.01 per share.

(v) "Stock Option Agreement" shall mean a written agreement between
the Corporation and the Grantee, or a certificate accepted by the Grantee,
evidencing the grant of an Option hereunder and containing such terms and
conditions, not inconsistent with the Plan, as the Committee shall approve.

(w) "Subsidiary" shall mean (i) any corporation with respect to which
the Corporation owns, directly or indirectly, 50% or more of the total combined
voting power of all classes of stock of such corporation, or (ii) any entity
which the Committee reasonably expects to become a subsidiary within the
meaning of clause (i).

Section 3. Shares of Stock Subject to the Plan

The total amount of Stock that may be subject to outstanding Options,
determined immediately after the grant of any Option, shall not exceed the
greater of 1,200,000 shares, or 12% percent of the total number of shares of
Stock outstanding. Notwithstanding the foregoing, the number of shares that may
be delivered upon exercise of ISOs shall not exceed 300,000, provided, however,
that shares subject to ISOs shall not be deemed delivered if such Options are
forfeited, expire or otherwise terminate without delivery of shares to the
Grantee. Any shares of Stock delivered pursuant to an Option may consist, in
whole or in part, of authorized and unissued shares or treasury shares.

Section 4. Administration of the Plan

The Plan shall be administered by the Committee. Subject to the
express provisions of the Plan, the Committee shall have the authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, to determine the terms and provisions of Stock Option
Agreements thereunder and to make all other determinations necessary or
advisable for the administration of the Plan. Any controversy or claim arising
out of or related to this Plan or the Options granted thereunder shall be
determined unilaterally by, and at the sole discretion of, the Committee. Any
action of the Committee with respect to the Plan shall be final, conclusive,
and binding on all persons, including the Corporation, subsidiaries of the
Corporation, Grantees, any person claiming any rights under the Plan from or
through any Grantee, and stockholders. The express grant of any specific power
to the Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. To the extent
necessary to comply with Rule 16b-3 under the Exchange Act, determinations
concerning Options granted to any person who is subject to Section 16(b) of the
Exchange Act shall be made by the Committee, all of whose members shall be
"disinterested persons" within the meaning of Rule 16b-3 under the Exchange
Act. The Committee may delegate to officers or managers of the Corporation or
any Subsidiary the authority, subject to such terms as the Committee shall
determine, to perform administrative

<PAGE> 5

functions and, with respect to persons not subject to Section 16 of the
Exchange Act, to perform such other functions as the Committee may determine,
to the extent permitted under Rule 16b-3, if applicable, and other applicable
law.

Section 5. Types of Options

Options granted under the Plan may be of two types: ISOs or NQSOs. The
Committee shall have the authority and discretion to grant to an eligible
Employee either ISOs, NQSOs or both, but shall clearly designate the nature of
each Option at the time of grant in the Stock Option Agreement. Grantees who
are not Employees (determined with reference to Section 2(i)(i) only) of the
Corporation or a Subsidiary (determined with reference to Section 2(w)(i) only)
on the date an Option is granted shall only receive NQSOs.

Section 6. Grant of Options to Employees and Consultants

(a) Employees and Consultants of the Corporation and its Subsidiaries
shall be eligible to receive Options under the Plan.

(b) The exercise price per share of Stock subject to an Option granted
to an Employee or Consultant shall be determined by the Committee and specified
in the Stock Option Agreement, provided, however, that the exercise price of
each share subject to an ISO shall be not less than 100%, or, in the case of an
ISO granted to a Control Person, 110%, of the Fair Market Value of a share of
the Stock on the date such Option is granted.

(c) The term of each Option granted to an Employee or Consultant shall
be determined by the Committee and specified in a Stock Option Agreement,
provided that no Option shall be exercisable more than ten years from the date
such Option is granted, and provided further that no ISO granted to a Control
Person shall be exercisable more than five years from the date of Option grant.

(d) The Committee shall determine and designate from time to time
Employees or Consultants who are to be granted Options, and shall specify in
the Stock Option Agreement the nature of each Option granted and the number of
shares of Stock subject to each such Option, provided, however, that in any
calendar year, no Employee or Consultant may be granted an Option to purchase
more than 250,000 shares of Stock (determined without regard to when such
Option is exercisable), subject to adjustment pursuant to Section 10.

(e) Notwithstanding any other provisions hereof, the aggregate Fair
Market Value (determined at the time the ISO is granted) of the Stock with
respect to which ISOs are exercisable for the first time by any Employee during
any calendar year under all plans of the Corporation and any Parent or
Subsidiary corporation shall not exceed $100,000. To the

<PAGE> 6

extent the limitation set forth in the preceding sentence is exceeded, the
Options with respect to such excess shall be treated as NQSOs.

(f) The Committee shall determine whether any Option granted to an
Employee or Consultant shall become exercisable in one or more installments and
specify the installment dates in the Stock Option Agreement. The Committee may
also specify in the Stock Option Agreement such other provisions, not
inconsistent with the terms of this Plan, as it may deem desirable, including
such provisions as it may deem necessary to qualify any ISO under the
provisions of Section 422 of the Code. Unless otherwise determined by the
Committee and specified in the Stock Option Agreement, all Options shall
immediately become exercisable upon a Change in Control.

(g) The Committee may, at any time, grant new or additional options to
any eligible Employee or Consultant who has previously received Options under
this Plan, or options under other plans, whether such prior Options or other
options are still outstanding, have been exercised previously in whole or in
part, or have been cancelled. The exercise price of such new or additional
Options may be established by the Committee, subject to Section 6(b) hereof,
without regard to such previously granted Options or other options.

Section 7. Grants of Options to Non-Employee Directors

(a) Non-Employee Directors of the Corporation who serve on the
Committee shall be eligible to receive Options under the Plan only pursuant to
the provisions of this Section 7. Each individual who agrees to become a
Non-Employee Director prior to the consummation of the Corporation's Initial
Public Offering shall receive, without the exercise of the discretion of any
person, an NQSO under the Plan relating to the purchase of 5,000 shares of
Stock at an exercise price per share equal to the Initial Public Offering price
per share. Such option grant shall be conditional upon, and for all purposes
hereunder, deemed granted upon, the Initial Public Offering. Each individual
who becomes a Non-Employee Director thereafter shall, on the date such
individual becomes a Non-Employee Director, receive, without the exercise of
the discretion of any person, an NQSO under the Plan relating to the purchase
of 5,000 shares of Stock. In addition, on the day of the annual meeting of
stockholders next following the date of an Initial Public Offering, and the day
of each subsequent annual meeting, each individual who is a continuing
Non-Employee Director on any such date (other than a Non-Employee Director who
was granted an Option pursuant to the preceding sentence within 30 days of the
date of any such annual meeting) shall receive, without the exercise of the
discretion of any person, an NQSO under the Plan relating to the purchase of
2,500 shares of Stock. In the event that there are not sufficient shares
available under this Plan to allow for the grant to each Non-Employee Director
of an NQSO for the number of shares provided herein, each Non-Employee Director
shall receive an NQSO for his pro rata share of the total number of shares of
Stock available under the Plan.

<PAGE> 7

(b) The exercise price of each share of Stock subject to an Option
granted to a Non-Employee Director shall equal the Fair Market Value of a share
of Stock on the date such Option is granted. Payment of the exercise price for
the shares being purchased shall be made in cash.

(c) Each Option granted to a Non-Employee Director shall become
exercisable in three equal annual installments on the date of grant and on each
of the first two anniversaries of the date of grant, and shall have a term of
five years from the date of grant. Notwithstanding the exercise period of any
Option granted to a Non-Employee Director, all such Options shall immediately
become exercisable upon a Change in Control.

Section 8. Exercise of Options

(a) A Grantee shall exercise an Option by delivery of written notice
to the Corporation setting forth the number of shares with respect to which the
Option is to be exercised, together with cash, certified check, bank draft,
wire transfer, or postal or express money order payable to the order of the
Corporation for an amount equal to the Option price of such shares and any
income tax required to be withheld. The Committee may, in its sole discretion,
permit a Grantee to pay all or a portion of the exercise price by delivery of
Stock or other property (including notes or other contractual obligations of
Grantees to make payment on a deferred basis, such as through "cashless
exercise" arrangements, to the extent permitted by applicable law), and the
methods by which Stock will be delivered or deemed to be delivered to Grantees.

(b) Except as provided pursuant to Section 9(a), no Option granted to
an Employee or Consultant shall be exercised unless at the time of such
exercise the Grantee is then an Employee (determined with reference to Section
2(i)(i) only) or Consultant (determined with reference to Section 2(e)(i) only)
of the Corporation or a Subsidiary (determined with reference to Section
2(w)(i) only).

(c) Except as provided in Section 9(a), no Option granted to a
Non-Employee Director shall be exercised unless at the time of such exercise
the Grantee is then a Non-Employee Director.

Section 9. Exercise of Options upon Termination

(a) Unless otherwise determined by the Committee, upon termination of
a Grantee's employment with the Corporation and its Subsidiaries, such Grantee
may exercise any Options during the three month period following such
termination of employment, but only to the extent such Option was exercisable
immediately prior to such termination of employment. Notwithstanding the
foregoing, if the Committee determines that such termination is for cause, all
Options held by the Grantee shall immediately terminate. In addition, all
Options granted on the basis of clause (ii) of Section 2(e), (i) or (w) shall
immediately terminate if the

<PAGE> 8

Committee determines, in its sole discretion, that the Consultant, Employee or
Subsidiary, as the case may be, will not become a Consultant, Employee or
Subsidiary within the meaning of clause (i) of such Sections.

(b) Unless otherwise determined by the Committee and specified in the
Stock Option Agreement, in no event shall any Option be exercisable for more
than the maximum number of shares that the Grantee was entitled to purchase at
the date of termination of the relationship with the Corporation and its
Subsidiaries.

(c) The sale of any Subsidiary shall be treated as a termination of
employment with respect to any Grantee employed by such Subsidiary.

(d) Subject to the foregoing, in the event of death, Options may be
exercised by a Grantee's legal representative.

Section 10. Adjustment Upon Changes in Capitalization

In the event of any dividend or other distribution (whether in the
form of cash, Stock, or other property), recapitalization, forward or reverse
split, reorganization, merger, consoli dation, spin-off, combination,
repurchase, or share exchange, or other similar corporate transaction or event,
affects the Stock such that an adjustment is appropriate in order to prevent
dilution or enlargement of the rights of Grantees under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Stock deemed to be available thereafter
for grants of Options under Section 3, (ii) the number and kind of shares of
Stock that may be delivered or deliverable in respect of outstanding Options,
(iii) the number of shares with respect to which Options may be granted to a
given Grantee in the specified period as set forth in Section 6(d), and (iv)
the exercise price (or, if deemed appropriate, the Committee may make provision
for a cash payment with respect to any outstanding Option). In addition, the
Committee is authorized to make adjustments in the terms and conditions of, and
the criteria included in, Options (including, without limitation, cash payments
in exchange for an Option or substitution of Options using stock of a successor
or other entity) in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence) affecting the
Corporation or any Subsidiary or the financial statements of the Corporation or
any Subsidiary, or in response to changes in applicable laws, regulations, or
accounting principles.

Section 11. Restrictions on Issuing Shares

The Corporation shall not be obligated to deliver Stock upon the
exercise or settlement of any Option or take other actions under the Plan until
the Corporation shall have determined that applicable federal and state laws,
rules, and regulations have been complied with and such approvals of any
regulatory or governmental agency have been obtained and contractual
obligations to which the Option may be subject have been satisfied. The
Corporation, in its

<PAGE> 9

discretion, may postpone the issuance or delivery of Stock under any Option
until completion of such stock exchange listing or registration or
qualification of such Stock or other required action under any federal or state
law, rule, or regulation as the Corporation may consider appropriate, and may
require any Grantee to make such representations and furnish such information
as it may consider appropriate in connection with the issuance or delivery of
Stock under the Plan.

Section 12. Tax Withholding

The Corporation shall have the right to require that the Grantee make
such provision, or furnish the Corporation such authorization, necessary or
desirable so that the Corporation may satisfy its obligation, under applicable
laws, to withhold or otherwise pay for income or other taxes of the Grantee
attributable to the grant or exercise of Options granted under the Plan or the
sale of Stock issued with respect to Options. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Grantee's tax obligations.

Section 13. Transferability

No Option shall be subject to anticipation, sale, assignment, pledge,
encumbrance, charge or transfer except by will or the laws of descent and
distribution, and an Option shall be exercisable during the Grantee's lifetime
only by the Grantee, provided, however, that the Committee may permit a Grantee
to transfer an Option to a family member or a trust created for the benefit of
family members. In the case of such a transfer, the transferee's rights and
obligations with respect to the Option shall be determined by reference to the
Grantee and the Grantee's rights and obligations with respect to the Option had
no transfer been made. Notwithstanding such transfer, the Grantee shall remain
obligated pursuant to Section 11 if required by applicable law.

Section 14. General Provisions

(a) Each Option shall be evidenced by a Stock Option Agreement. The
terms and provisions of such Stock Option Agreements may vary among Grantees
and among different Options granted to the same Grantee.

(b) The grant of an Option in any year shall not give the Grantee any
right to similar grants in future years, any right to continue such Grantee's
employment relationship with the Corporation or its Subsidiaries, or, until
such Option is exercised and share certificates are issued, any rights as a
Stockholder of the Corporation. All Grantees shall remain subject to discharge
to the same extent as if the Plan were not in effect.

(c) No Grantee, and no beneficiary or other persons claiming under or
through the Grantee shall have any right, title or interest by reason of any
Option to any particular assets

<PAGE> 10

of the Corporation or its Subsidiaries, or any shares of Stock allocated or
reserved for the purposes of the Plan or subject to any Option except as set
forth herein. The Corporation shall not be required to establish any fund or
make any other segregation of assets to assure the payment of any Option.

(d) The issuance of shares of Stock to Grantees or to their legal
representatives shall be subject to any applicable taxes and other laws or
regulations of the United States or of any state having jurisdiction thereof.

Section 15. Amendment or Termination

The Board may, at any time, alter, amend, suspend, discontinue or
terminate this Plan; provided, however, that no such action shall adversely
affect the rights of Grantees to Options previously granted hereunder and,
provided further, however, that any shareholder approval necessary or desirable
in order to comply with Rule 16b-3 under the Exchange Act or with Section 422
of the Code (or other applicable law or regulation) shall be obtained in the
manner required therein. In addition, no plan provision, within the meaning of
Rule 16b-3(c)(2)(i)(D), shall be amended more than once every six months, other
than to comport with changes in the Code or rules thereunder. The Committee may
waive any conditions or rights under, or amend, alter, suspend, discontinue, or
terminate, any Option theretofore granted and any Stock Option Agreement
relating thereto; provided, however, that, without the consent of an affected
Grantee, no such action may materially impair the rights of such Grantee under
such Option.

Section 16. Effective Date of Plan

This Plan is effective upon its adoption by the Board and shall
continue in effect until terminated by the Board. No ISO may be granted more
than ten years after such date. The Plan has been amended and restated
effective as of January 1, 1997. No grant of options hereunder shall be
effective if made on or after the date of 1997 annual meeting of stockholders
of the Company, unless the Company's stockholders approve the Plan in
connection with the 1997 annual meeting.

<PAGE> 1
EXHIBIT 10.11

===============================================================================

SHARE AND WARRANT PURCHASE AGREEMENT

DATED AS OF

FEBRUARY 27, 1997

BETWEEN

VISUAL EDGE SYSTEMS INC.

AND

THE INVESTOR NAMED HEREIN

===============================================================================

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page

<S> <C> <C>
SECTION 1. SALE AND PURCHASE OF COMMON STOCK AND WARRANTS..................................................1

SECTION 2. THE CLOSING.....................................................................................2

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................3
3.1. Corporate Existence, Power and Authority........................................................3
3.2. Capital Stock...................................................................................4
3.3. No Defaults or Conflicts........................................................................4
3.4. Disclosure Materials; Other Information.........................................................5
3.5. Litigation......................................................................................5
3.6. Legal Compliance................................................................................5
3.7. Offering of Shares..............................................................................6
3.8. SEC Reports.....................................................................................6

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR..................................................6
4.1. Power and Authority.............................................................................6

SECTION 5. RESTRICTIONS ON TRANSFER........................................................................8

SECTION 6. COVENANTS OF THE COMPANY........................................................................8
6.1. Use of Proceeds.................................................................................8
6.2. Maintenance of Existence, Properties and Franchises; Compliance with Law;
Taxes; Insurance................................................................................8
6.3. No Dilution or Impairment; No Changes in Capital Stock..........................................9
6.4. Reservation of Shares..........................................................................10
6.5. Private Placement Status.......................................................................10
6.6. Application of Funds...........................................................................10
6.7. Registration of Shares and Warrants............................................................10

SECTION 7. CONDITIONS TO INVESTOR'S OBLIGATIONS...........................................................10
7.1. Accuracy of Representations and Warranties.....................................................11
7.2. Compliance with Agreements.....................................................................11
7.3. Officers' Certificates.........................................................................11
7.4. Proceedings....................................................................................11
7.5. No Material Adverse Change.....................................................................11
</TABLE>

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<PAGE> 3

<TABLE>
<S> <C>
SECTION 8. THE LETTER OF CREDIT ..........................................................................11
8.1. No Drawing on Letter of Credit.................................................................11
8.2. Drawing on Letter of Credit....................................................................12
8.3. Delivery of Shares.............................................................................12
8.4. Character of Shares............................................................................12
8.5. Termination....................................................................................12

SECTION 9. REGISTRATION RIGHTS............................................................................12
9.1. Initial Registration; Potential Registration After the Transaction Date........................12
9.2. Company's Fees and Expenses....................................................................12

SECTION 10 DEFINITIONS....................................................................................13

SECTION 11. BROKERS........................................................................................16

SECTION 12. EXPENSES.......................................................................................16

SECTION 13. AMENDMENTS AND WAIVERS.........................................................................16

SECTION 14. EXCHANGE OF SHARES; CANCELLATION OF
SURRENDERED SHARES; REPLACEMENT................................................................17

SECTION 15. NOTICES........................................................................................18

SECTION 16. MISCELLANEOUS..................................................................................18

EXHIBIT A Warrant Certificate

EXHIBIT B Legend
</TABLE>

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<PAGE> 4

SHARE AND WARRANT PURCHASE AGREEMENT

SHARE AND WARRANT PURCHASE AGREEMENT, dated as of February
27, 1997, between Visual Edge Systems Inc., a Delaware corporation (the
"Company"), and the Investor listed on the signature page of this Agreement
(the "Investor").

W I T N E S S E T H :

WHEREAS, the Company needs to obtain additional financing in
order to further its business plan;

WHEREAS, in order to obtain such a line of credit from a
financial institution (the "Line of Credit") or other additional financing, the
Company desires to obtain an irrevocable letter of credit up to an aggregate
amount of up to $3,500,000 expiring on December 31, 1997 (the "Letter of
Credit") from Republic National Bank of New York, or another financial
institution (the "Bank"), to serve as collateral for such additional financing;

WHEREAS, the Investor has indicated that it is willing to
provide the amount of cash, or cash equivalents acceptable to the Bank, set
forth on Schedule 1 hereto for use as collateral (the "Cash Collateral"), in
order to assist the Company in obtaining the Letter of Credit;

WHEREAS, the Company has agreed to issue to the Investor, and
the Investor has agreed to purchase from the Company, units, each consisting of
one share of Common Stock of the Company and one Warrant to purchase an equal
number of shares of Common Stock of the Company, all upon the terms and
provisions hereinafter set forth, in consideration for providing the Cash
Collateral;

NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

SECTION 1. SALE AND PURCHASE OF COMMON STOCK AND WARRANTS

(a) The Company agrees to sell to the Investor and, subject
to the terms and conditions hereof and in reliance upon the representations and
warranties of the Company contained herein or made pursuant hereto, the
Investor agrees to purchase from the Company on the Closing Date specified in
Section 2 hereof, the number of units, each consisting of one share of Common
Stock of the Company (the "Shares") and one Warrant to purchase an equal number

<PAGE> 5

of shares of Common Stock of the Company, set forth opposite the Investor's
name on Schedule 1 hereto. The Warrants to purchase shares of Common Stock of
the Company being acquired under this Agreement and by the other Investors
under the other Share and Warrant Purchase Agreements are collectively referred
to herein as the "Warrants", containing rights and privileges as more fully set
forth in the form of Warrant which shall be substantially in the form attached
hereto as Exhibit A (the "Warrant Certificate"). The units, each consisting of
one Share and one Warrant, being acquired under this Agreement and by the other
Investors under the other Share and Warrant Purchase Agreements are
collectively referred to herein as the "Units."

(b) The purchase price to be paid to the Company by the
Investor for the Units to be purchased by the Investor pursuant to this
Agreement shall be the use of the Cash Collateral set forth opposite the
Investor's name on Schedule 1 hereto for a period of time terminating on or
before (at the Company's option) December 31, 1997. The Cash Collateral shall
be delivered by the Investor to the Bank, such amount to be transferred to the
Bank in federal or other immediately available funds, immediately prior to the
Closing Date and shall be held by the Bank as collateral for the Letter of
Credit issued to the Company. No further payment shall be required from the
Investor for the Units.

(c) The Shares and the Warrants are being sold to the
purchasers listed on Schedule 1 hereto (the "Investors") pursuant to this
Agreement and other share and warrant purchase agreements (all such agreements
collectively, the "Share and Warrant Purchase Agreements"). The sale of Units
to each Investor under each Share and Warrant Purchase Agreement is to be a
separate sale, is not conditioned upon entering into any other Share and
Warrant Purchase Agreement, and no Investor shall have any liability under any
Share and Warrant Purchase Agreement other than the Share and Warrant Purchase
Agreement to which it is a party. The Company may consummate the transactions
completed under this Agreement without entering into any other Share and
Warrant Purchase Agreements.

(d) The Company will use the proceeds from the sale of the
Units, (i) to purchase vans, trailers and related computer and video equipment,
(ii) for advertising expenditures and (iii) to fund operating costs and for
general corporate purposes.

SECTION 2. CLOSING

(a) Subject to the terms and conditions hereof, the closing
of the purchase and sale of the Units to be purchased by the Investor (the
"Closing") will take place at the offices of Morgan, Lewis & Bockius LLP, 101
Park Avenue, New York, NY 10178, on Monday, March 3, 1997, or such other time
and date as shall be mutually agreed to by the Company and the Investor. Such
time and date are herein referred to as the "Closing Date." All documentation
and signature pages must be received by Morgan, Lewis & Bockius LLP no later
than February 28, 1997 by Federal Express or other courier. Upon the
fulfillment of the closing conditions,

-2-
<PAGE> 6

written instructions releasing such signature pages and instructing the Bank
will be exchanged by the parties on the Closing Date.

(b) Subject to the terms and conditions hereof, on the
Closing Date (i) the Company will deliver to the Investor (x) a certificate
registered in the Investor's name evidencing the number of Shares equal to the
number of Units set forth opposite the Investor's name on Schedule 1 and (y) a
Warrant Certificate registered in the Investor's name evidencing a number of
Warrants equal to the number of Units set forth opposite the Investor's name on
Schedule 1, and (ii) the Investor will deliver to the Bank instructions
confirming that the amount equal to the Cash Collateral previously deposited
with the Bank is to be used for security for bank financing as described herein
and that it has received consideration for the use of such funds in the form of
the Units to be purchased by it as set forth on Schedule 1.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Investor as
follows as of the date hereof and as of the Closing Date:

3.1. Corporate Existence, Power and Authority.

(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company is duly qualified, licensed and authorized to do business and is in
good standing in each jurisdiction in which it owns or leases any property or
in which the conduct of its business requires it to so qualify or be so
licensed, except for such jurisdictions where the failure to so qualify or be
so licensed would not have a material adverse effect on the Company's assets,
properties, liabilities, business, results of operations or condition.

(b) The Company has all requisite power, authority and legal
right to own or to hold under lease and to operate the properties it owns or
holds and to conduct its business as now being conducted.

(c) The Company has all requisite power, authority and legal
right to execute, deliver and consummate the transactions contemplated by and
perform its obligations under (i) the Share and Warrant Purchase Agreements,
including, without limitation, the issuance by the Company of the Shares, the
Warrants and the Conversion Shares as contemplated herein and in the Warrant
Certificates. The execution, delivery and performance of the Share and Warrant
Purchase Agreements by the Company (including, without limitation, the issuance
by the Company of the Shares, the Warrants and the Conversion Shares as
contemplated herein and in the Warrant Certificates) have been duly authorized
by all required corporate actions. The Company has duly executed and delivered
the Share and Warrant Purchase Agreements and the Warrant Certificates. The
Share and Warrant Purchase Agreements and the Warrant Certificates

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<PAGE> 7

constitute the legal, valid and binding obligations of the Company enforceable
in accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to the rights of
creditors generally.

3.2. Capital Stock.

(a) The authorized capital stock of the Company consists of
5,000,000 shares of Preferred Stock and 20,000,000 shares of Common Stock, $.01
par value per share. On the date hereof, there are outstanding no shares of
Preferred Stock and 4,615,000 shares of Common Stock. All of such outstanding
shares are duly authorized, validly issued and outstanding, fully paid and
non-assessable. The shares of the Company's Common Stock issuable upon the
exercise of the Warrants will, when issued in accordance with the terms of the
Warrants, be duly authorized, validly issued, fully paid and non-assessable.
None of the shares of the Company's capital stock outstanding at the Closing
(i) were subject to preemptive rights when issued or (ii) provide the holders
thereof with any preemptive rights with respect to any issuances of capital
stock.

(b) Except as referred to in Schedule 3.2(b), there are no
outstanding options, warrants, subscriptions, rights, convertible securities or
other agreements or plans under which the Company may become obligated to
issue, sell or transfer shares of its capital stock or other securities.

3.3. No Defaults or Conflicts.

(a) The Company is not in violation or default in any
material respect under any indenture, agreement or instrument to which it is a
party or by which it or its properties may be bound. The Company is not in
default under any material order, writ, injunction, judgment or decree of any
court or other governmental authority.

(b) The execution, delivery and performance by the Company of
the Share and Warrant Purchase Agreements, and any of the transactions
contemplated hereby (including, without limitation, the issuance of the Shares,
the Warrants and the Conversion Shares as contemplated herein and in the
Warrant Certificates) do not and will not (i) violate or conflict with, with or
without the giving of notice or the passage of time or both, any provision of
(A) the certificates of incorporation or by-laws of the Company or (B) any law,
rule, regulation or order of any federal, state, county, municipal or other
governmental authority, or any judgment, writ, injunction, decree, award or
other action of any court or governmental authority or arbitrator(s), or any
agreement, indenture or other instrument applicable to the Company or any of
its properties, (ii) result in the creation of any Lien upon any of the
Company's properties or assets or (iii) require the consent, waiver, approval,
order or authorization of, or declaration, registration, qualification or
filing with, any Person, other than Whale Securities, Co., L.L.P.
("Whale").

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<PAGE> 8

3.4. Disclosure Materials; Other Information.

(a) The Company has previously furnished to the Investor the
following material (the "Disclosure Material"): (i) audited consolidated
financial statements of the Company as of December 31, 1996, consisting of a
consolidated balance sheet as of December 31, 1996 and the related consolidated
statements of operations, changes in equity and cash flows for the year ended
December 31, 1996 and the related notes thereto, all of which statements have
been certified by KPMG Peat Marwick LLP, independent certified public
accountants, (ii) the Company's Prospectus dated July 24, 1996 and (iii) the
SEC Reports. The financial statements referred to or contained in the materials
referred to in the preceding clauses (i) and (ii) fairly present the financial
condition of the Company as of the respective dates thereof and the results of
the operations of the Company for such periods and have been prepared in
accordance with generally accepted accounting principles consistently applied,
except that any such unaudited statements may omit notes and may be subject to
year-end adjustment.

(b) Since December 31, 1996, (i) the business of the Company
has been conducted in the ordinary course and (ii) there has been no material
adverse change in the assets, properties, liabilities, business, results of
operations or condition of the Company. As of the date hereof, there are no
material liabilities of the Company which would be required to be provided for
in a balance sheet of the Company prepared in accordance with generally
accepted accounting principles consistently applied, other than liabilities
provided for in the financial statements referred to in Section 3.5(a).

(c) None of the Disclosure Material contained or contains a
false or misleading statement of a material fact or omits to state any material
fact necessary in order to make the statements made in such Disclosure
Material, in light of the circumstances under which they were made, not
misleading.

3.5. Litigation.

There is no action, suit, proceeding, investigation or claim
pending or, to the knowledge of the Company, threatened in law, equity or
otherwise before any court, administrative agency or arbitrator which (i)
questions the validity of the Share and Warrant Purchase Agreements, the
Warrant Certificates, the Units, the Shares, the Warrants or the Conversion
Shares or any action taken or to be taken pursuant hereto or thereto, (ii)
might adversely affect the right, title or interest of any Investor to the
Units, the Shares, the Warrants, or the Conversion Shares or (iii) might result
in a material adverse change in the assets, properties, liabilities, business,
affairs, results of operations or condition of the Company.

3.6. Legal Compliance.

(a) The Company has complied in all material respects with
all applicable laws, rules, regulations, orders, licenses, judgments, writs,
injunctions, decrees or demands.

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<PAGE> 9

(b) There are no adverse orders, judgments, writs,
injunctions, decrees or demands of any court or administrative body, domestic
or foreign, or of any other governmental agency or instrumentality, domestic or
foreign, outstanding against the Company.

3.7. Offering of Shares.

None of the Company, any agent or any other person acting on
its behalf, directly or indirectly, (i) offered any of the Units, the Shares,
the Warrants or any similar security of the Company (A) by any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) or (B) for sale to or solicited offers to buy any thereof
from, or otherwise approached or negotiated with respect thereto with, any
person other than the Investors and not more than 30 other persons, each of
which the Company reasonably believed was an "accredited investor" within the
meaning of Regulation D under the Securities Act, or (ii) has done or caused to
be done (or has omitted to do or to cause to be done) any act which act (or
which omission) would result in bringing the issuance or sale of the Units, the
Shares or the Warrants within the provisions of Section 5 of the Securities Act
or the filing, notification or reporting provisions of any state securities
laws.

3.8. SEC Reports.

The Company has filed all proxy statements, reports and other
documents required to be filed by it under the Exchange Act. The Company has
furnished the Investor with copies of (i) its Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1996 and (ii) its Quarterly Reports on Form
10-QSB for the fiscal quarter ended September 30, 1996 (collectively, the "SEC
Reports"). Each SEC Report complied in all material respects with the
requirements of its respective form and none of the SEC Reports, nor the
financial statements (and the notes thereto) included in the SEC Reports, as of
their respective dates, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

The Investor represents and warrants to the Company as
follows:

4.1. Power and Authority.

The Investor has all requisite power, authority and legal
right to execute, deliver and consummate the transactions contemplated by and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by the Investor have been duly authorized by all
required corporate and other actions. The Investor has duly executed and
delivered this Agreement and it constitutes the legal, valid and binding
obligation of the

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<PAGE> 10

Investor, enforceable against the Investor in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to the rights of creditors generally.

4.2. Investment Intent.

(i) The Investor has received and reviewed the SEC Reports
and except for the SEC Reports, the Investor has not been furnished with any
other materials or literature relating to the offer and sale of the Units, the
Shares, the Warrants or the Conversion Shares;

(ii) The Investor has had a reasonable opportunity to ask
questions of and receive answers from the Company concerning the Company and
the offering, and all such questions, if any, have been answered to the full
satisfaction of the Investor;

(iii) The Investor has such knowledge and expertise in
financial and business matters that the Investor is capable of evaluating the
merits and risks involved in an investment in the Units, the Shares, the
Warrants or the Conversion Shares;

(iv) The Confidential Purchaser Questionnaire to be delivered
by the Investor to the Company will be true, complete and correct in all
material respects; and the Investor understands that the Company has determined
that the exemption from the registration provisions of the Securities Act,
which is based upon non-public offerings, are applicable to the offer and sale
of the Units, the Shares, the Warrants or the Conversion Shares based, in part,
upon the representations, warranties and agreements made by the Investor herein
and in the Confidential Purchaser Questionnaire referred to above;

(v) No representations or warranties have been made to the
Investor by the Company or any agent, employee or affiliate of the Company and
in entering into this transaction the Investor is not relying upon any
information, other than that contained in the SEC Reports and the results of
independent investigation by the Investor;

(vi) The Investor understands that (A) the Units, the
Warrants, the Shares and the Conversion Shares have not been registered under
the Securities Act or the securities laws of any state, based upon an exemption
from such registration requirements for non-public offerings pursuant to
regulation D under the Securities Act; (B) the Units, the Warrants, the Shares
and the Conversion Shares are and will be "restricted securities", as said term
is defined in Rule 144 of the Rules and Regulations promulgated under the
Securities Act; and (C) the Units, Warrants, Shares and the Conversion Shares
may not be sold or otherwise transferred unless they have been first registered
under the Securities Act and all applicable state securities laws, or unless
exemptions from such registration provisions are available with respect to said
resale or transfer;

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<PAGE> 11

(vii) The Investor is acquiring the Units, the Shares, the
Warrants and the Conversion Shares solely for the account of the undersigned,
for investment purposes only, and not with a view towards the resale or
distribution thereof; and

(viii) The Investor is an "accredited investor," as such term
is defined in Regulation D of the Rules and Regulations promulgated under the
Securities Act.

SECTION 5. RESTRICTIONS ON TRANSFER

The Investor agrees that it will not sell or otherwise
dispose of any Units, Shares, Warrants or Conversion Shares unless such Units,
Shares, Warrants or Conversion Shares have been registered under the Securities
Act and, to the extent required, under any applicable state securities laws, or
pursuant to an applicable exemption from such registration requirements. The
Company may place a legend to that effect in the form of Exhibit B hereto on
all certificates evidencing Shares, Warrants or Conversion Shares, provided
that such legend will not be placed on any certificate which, when issued, are
no longer subject to the provisions of this Section 5 pursuant to the
provisions of the Securities Act.

SECTION 6. COVENANTS OF THE COMPANY

The Company covenants and agrees as follows:

6.1. Use of Proceeds.

The Company will use the proceeds realized from the sale of
the Units (i) to purchase vans, trailers and related computer and video
equipment, (ii) for advertising expenditures and (iii) to fund operating costs
and for general corporate purposes.

6.2. Maintenance of Existence, Properties and
Franchises; Compliance with Law; Taxes; Insurance.

The Company will:

(a) maintain its corporate existence, rights and other
franchises in full force and effect;

(b) maintain its tangible assets in good repair, working
order and condition (reasonable wear and tear excepted) to far as necessary or
advantageous to the proper carrying on of its business;

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<PAGE> 12

(c) comply with all applicable laws and with all applicable
orders, rules, rulings, certificates, licenses, regulations, demands,
judgments, writs, injunctions and decrees, provided, that such compliance shall
not be necessary so long as (i) the applicability or validity of any such law,
order, rule, ruling, certificate, license, regulation, demand, judgment, writ,
injunction or decree shall be contested in good faith by appropriate
proceedings and (ii) failure to comply will not have a material adverse effect
on the assets, properties, liabilities, business, results of operations or
condition of the Company;

(d) pay promptly when due all taxes, fees, assessments and
other government charges imposed upon its properties, assets or income and all
claims or indebtedness (including, without limitation, materialmen's, vendor's,
workmen's and like claims) which might become a lien upon such properties or
assets; provided, that payment of any such tax, fee, assessment, charge, claim
or indebtedness shall not be necessary so long as (i) the applicability or
validity thereof shall be contested in good faith by appropriate proceedings
and a reserve, if appropriate, shall have been established with respect thereto
and (ii) failure to make such payment will not have a material adverse effect
on the assets, properties, liabilities, business, results of operations or
condition of the Company; and

(e) keep adequately insured, by financially sound and
reputable insurers of nationally recognized stature, all its properties of a
character customarily insured by entities similarly situated, against loss or
damage of the kinds and in amounts customarily insured against by such entities
and with such deductibles or coinsurance as is customary.

6.3. No Dilution or Impairment; No Changes in Capital Stock.

The Company will not, by amendment of its certificate of
incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of the
Share and Warrant Purchase Agreements or the Warrant Certificates. Without
limiting the generality of the foregoing, the Company (a) will not permit the
par value or the determined or stated value of any shares of the Common Stock
receivable upon the exercise of the Warrants to exceed the amount payable
therefor upon such exercise, (b) will take all such action as may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and non-assessable shares of the Common Stock free from all taxes, Liens
and charges with respect to the issue thereof, upon the exercise of the
Warrants from time to time outstanding and (c) will not take any action which
results in any adjustment of the current exercise price under the Warrant
Certificates if the total number of shares of the Common Stock (or other
securities) issuable after the action upon the exercise of all of the then
outstanding Warrants would exceed the total number of shares of the Common
Stock (or other securities) then authorized by the Company's certificate of
incorporation and available for the purpose of issuance upon such exercise.

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<PAGE> 13

6.4. Reservation of Shares.

There have been reserved, and the Company shall at all times
keep reserved, free from preemptive rights, out of its authorized Common Stock
a number of shares of Common Stock sufficient to provide for the exercise of
the Warrants and pursuant to the terms of the Warrant Certificates.

6.5. Private Placement Status.

Neither the Company nor any agent or any other Person acting
on the Company's behalf will do or cause to be done (or will omit to do or to
cause to be done) any act which act (or which omission) would result in
bringing the issuance or sale of the Units, the Shares, the Warrants or the
Conversion Shares within the provisions of Section 5 of the Securities Act or
the filing, notification or reporting requirements of any state securities law.

6.6. Application of Funds.

As long as the Letter of Credit is outstanding, the Company
will (i) use all existing funds that it currently has, or that it receives from
its business operations, prior to borrowing funds under the Line of Credit, and
(ii) apply any funds that it receives (net of expenses) from any financing,
including, without limitation, any (A) future public or private sale of equity
or debt securities, other than a potential financing in an amount of
approximately $2,000,000 that the Company is currently working on, (B) future
redemption of outstanding warrants or (C) the sale and leaseback of its
software to Canadian limited partnerships (collectively referred to as a "New
Financing"), prior to borrowing funds on the Line of Credit or to repay
outstanding borrowings under the Line of Credit. In the event that the Company
completes a New Financing on or before December 31, 1997, and receives net
proceeds of $3,500,000 or more, then the Company shall use its best efforts to
cancel the Letter of Credit and have the Cash Collateral returned to the
Investor.

6.7. Registration of Shares and Warrants.

Promptly after the Closing, the Company will use its best
efforts to effect the registration of the shares of Common Stock and the
Conversion Shares under the Securities Act.

SECTION 7. CONDITIONS TO INVESTOR'S OBLIGATIONS

The Investor's obligation to purchase Units hereunder and to
provide the Cash Collateral to the Bank is subject to satisfaction of the
following conditions at the Closing (any of which may be waived by the
Investor):

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<PAGE> 14

7.1. Accuracy of Representations and Warranties.

The representations and warranties of the Company in the
Share and Warrant Purchase Agreements or in any certificate or document
delivered pursuant hereto or thereto shall be correct and complete in all
material respects on and as of the Closing Date with the same effect as though
made on and as of the Closing Date (after giving effect to the transactions
contemplated by this Agreement).

7.2. Compliance with Agreements.

The Company shall have performed and complied in all material
respects with all agreements, covenants and conditions contained in the Share
and Warrant Purchase Agreements and any other document contemplated hereby
which are required to be performed or complied with by the Company on or before
the Closing Date.

7.3. Officers' Certificates.

The Investor shall have received a certificate dated the
Closing Date and signed by the Chief Executive Officer and by the Secretary of
the Company, to the effect that the conditions in Sections 7.1, 7.2 and 7.5
have been satisfied.

7.4. Proceedings.

All corporate and other proceedings in connection with the
transactions contemplated by the Share and Warrant Purchase Agreements, and all
documents incident thereto, shall be in form and substance satisfactory to the
Investor and the Investor shall have received all such originals or certified
or other copies of such documents as the Investor may reasonably request.

7.5. No Material Adverse Change.

There shall have been no material adverse change in the
assets, properties, liabilities, business, results of operations or condition
of the Company since December 31, 1996.

SECTION 8. THE LETTER OF CREDIT

8.1. No Drawing on Letter of Credit. In the event that the
Letter of Credit is not drawn upon on or before December 31, 1997, then the
Bank shall return promptly the amount of Cash Collateral, and any interest
earned thereon, to the Investor. Upon receipt of such Cash Collateral, and
interest earned thereon by the Investor, this Agreement shall terminate and be
of no further force or effect.

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<PAGE> 15

8.2. Drawing on Letter of Credit. In the event that there are
one or more drawings on the Letter of Credit, in part or in whole, on or before
December 31, 1997 (the "Letter of Credit Drawing"), then on December 31, 1997
the Bank shall return promptly the remaining portion of the Cash Collateral to
the Investor (the portion drawn down or not returned being referred to as the
"Unreturned Cash Collateral").

8.3. Delivery of Shares. In the event of a Letter of Credit
Drawing, the Company shall, after December 31, 1997, promptly deliver to the
Investor a number of shares of Common Stock equal to (x) the Unreturned Cash
Collateral divided by (y) $7.50, provided that the average of the closing bid
prices of the Common Stock on the NASDAQ Small Cap Market on each of the twenty
(20) consecutive trading days immediately prior to December 31, 1997 is greater
than $11.00; or, if the average of the closing bid prices of the Common Stock
on the NASDAQ Small Cap Market on each of the twenty (20) consecutive trading
days immediately prior to December 31, 1997 is less than $11.00, clause (y) of
this Section 8.3 will be the average of the closing bid prices of the Common
Stock on the NASDAQ Small Cap Market on each of the twenty (20) consecutive
trading days immediately prior to December 31, 1997 divided by two.

8.4. Character of Shares. All shares of Common Stock issued
by the Company to the Investor pursuant to this Section 8 shall be duly
authorized, validly issued, fully paid and non-assessable.

8.5. Termination. Upon receipt by the Investor of the
remaining portion of the Cash Collateral and the delivery of shares of Common
Stock referred to in Section 8.3, this Agreement shall terminate and be of no
further force or effect, except that provisions of Sections 8 and 9 hereof
shall continue in full force and effect.

SECTION 9. REGISTRATION RIGHTS

9.1. Initial Registration; Potential Registration After the
Transaction Date. (a) Promptly after the date hereof, the Company will use its
best efforts to effect the registration of the shares of Common Stock and the
Conversion Shares under the Securities Act.

(b) Promptly after December 31, 1997, in the event that
additional shares of Common Stock are delivered to the Investor pursuant to
Section 8.3, the Company will use its best efforts to effect the registration
of the shares of Common Stock under the Securities Act.

9.2. Company's Fees and Expenses. All expenses incident to
the Company's performance of or compliance with Section 9 of this Agreement,
including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses, fees and expenses for listing or quoting the
Shares on each securities exchange or The NASDAQ Stock Market on which similar
securities

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<PAGE> 16

issued by the Company are then listed or quoted, and fees and disbursements of
counsel for the Company, any transfer agent and all independent certified
public accountants, underwriters (excluding discounts and selling commissions)
and other Persons retained by the Company in connection with any registration
(all such expenses being herein called "Registration Expenses"), will be paid
by the Company.

SECTION 10. DEFINITIONS

For purposes of this Agreement, the following definitions
shall apply:

"Agreement" means this Share and Warrant Purchase Agreement
(together with exhibits and schedules) as from time to time assigned,
supplemented or amended or as the terms hereof may be waived.

"Board" or "Board of Directors" means with respect to any
Person which is a corporation, a business trust or other entity, the
board of directors or other group, however, designated, which is
charged with legal responsibility for the management of such Person,
or any committee of such board of directors or group, however
designated, which is authorized to exercise the power of such board or
group in respect of the matter in question.

"Business Day" means any day other than a Saturday, Sunday or
a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.

"Closing" has the meaning set forth in Section 2(a) hereof.

"Closing Date" has the meaning set forth in Section 2(a)
hereof.

"Common Stock" means the Company's Common Stock, par value
$.01 per share, and any stock into which such Common Stock may
hereafter be changed or for which such Common Stock may be exchanged
after giving effect to the terms of such change or exchange (by way of
reorganization, recapitalization, merger, consolidation or otherwise).

"Company" means Visual Edge Systems Inc., a Delaware
corporation, its successors and assigns.

"Conversion Share" or "Conversion Shares" means the shares of
Common Stock obtained or obtainable upon exercise of Warrants and
shall also include any capital stock or other securities into which
Conversion Shares are changed and any capital stock or other
securities resulting from or comprising a

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<PAGE> 17

reclassification, combination or subdivision of, or a stock dividend
on, any Conversion Shares. In the event that any Conversion Shares are
sold either in a public offering pursuant to a registration statement
under the Securities Act or pursuant to a Rule 144 Transaction, then
the transferees of such Conversion Shares shall not be entitled to any
benefits under this Agreement with respect to such Conversion Shares
and such Conversion Shares shall no longer be considered to be
"Conversion Shares" for purposes of the definition of Majority
Shareholders or for purposes of any consent or waiver provision of
this Agreement.

"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules, regulations and interpretations thereunder.

"Investor" means the person who accepts and agrees to the
terms hereof as indicated by such person's signature (as "the
undersigned Investor") on the execution page of this Agreement,
together with its successors and assigns.

"Investors" has the meaning set forth in Section 1(c) hereof,
together with their respective successors and assigns.

"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security interest of any kind or nature
whatsoever (including, without limitation, any conditional sale or
other title retention agreement, any financing lease having
substantially the same effect as any of the foregoing, any assignment
or other conveyance of any right to receive income and any assignment
of receivables with recourse against the assignor), any filing of a
financing statement as debtor under the Uniform Commercial Code or any
similar statute and any agreement to give or make any of the
foregoing.

"Majority Shareholders" means the holder or holders, at the
time, of at least fifty-one percent (51%) of the shares represented by
(i) the shares issued under the Share and Warrant Purchase Agreements
and (ii) the Conversion Shares, including the Conversion Shares then
outstanding and the Conversion Shares then obtainable under
outstanding Warrants.

"Person" or "person" means an individual, corporation,
partnership, firm, association, joint venture, trust, unincorporated
organization, government, governmental body, agency, political
subdivision or other entity.

"Registrable Securities" means (i) any shares of Common Stock
issued or issuable upon exercise of the Warrants purchased by the
Investors pursuant to the Purchase Agreement, (ii) any securities
issued or issuable with respect to the

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<PAGE> 18

Common Stock referred to in clause (i) by way of stock dividend or
stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise. As to any particular Registrable Securities, such
securities will cease to be Registrable Securities when they have (x)
been effectively registered under the Securities Act and disposed of
in accordance with the registration statement covering them or (y)
been transferred pursuant to Rule 144 (or any similar rule then in
force) under the Securities Act.

"Rule 144" means (i) Rule 144 under the Securities Act as
such Rule is in effect from time to time and (ii) any successor rule,
regulation or law, as in effect from time to time.

"Rule 144 Transaction" means a transfer of Conversion Shares
(A) complying with Rule 144 as such Rule is in effect on the date of
such transfer (but not including a sale other than pursuant to
"brokers' transactions" as defined in clauses (1) and (2) of paragraph
(g) of such Rule as in effect on the date hereof) and (B) occurring
at a time when Conversion Shares are registered pursuant to Section
12 of the Exchange Act.

"SEC" means the Securities and Exchange Commission and any
other similar or successor agency of the federal government
administering the Securities Act or the Exchange Act.

"SEC Reports" has the meaning set forth in Section 3.9 hereof.

"Securities Act" means the Securities Act of 1933, as
amended, and the rules, regulations and interpretations thereunder.

"Share and Warrant Purchase Agreements" has the meaning set
forth in Section 1(c) hereof.

"Shares" has the meaning set forth in Section 1(a) hereof.

"Subsidiary", with respect to any Person, means any
corporation, association or other entity of which more than 50% of the
total voting power of shares of stock or other equity interests
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is, at the time as
of which any determination is being made, owned or controlled,
directly or indirectly, by such Person or one or more of its
Subsidiaries, or both. The term "Subsidiary" or "Subsidiaries" when
used herein without reference to any particular Person, means a
Subsidiary or Subsidiaries of the Company.

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<PAGE> 19

"Units" has the meaning set forth in Section 1(a) hereof.

"Warrant Certificate" has the meaning set forth in Section
1(a) hereof.

"Warrants" has the meaning set forth in Section 1(a) hereof.

SECTION 11. BROKERS

Except for certain fees payable to certain brokers or agents
(all of which fees will be paid by the Company), the Company, on the one hand,
and the Investor, on the other hand, each represents and warrants to the other
that there is no liability for any fees or expenses (or claims therefor) of any
investment banker, finder or broker in connection with any Share and Warrant
Purchase Agreements or any of the transactions contemplated hereby. The Company
will indemnify the Investor against all such fees or expenses payable to the
persons named in the preceding sentence and against any other such fees,
expenses or claims of any person, unless such person was engaged by the
Investor in connection with this Agreement or any of the transactions
contemplated hereby. The Investor will indemnify the Company against any such
fees, expenses or claims of any person engaged by the Investor in connection
with this Agreement or any of the transactions contemplated hereby.

SECTION 12. EXPENSES

(a) Whether or not the transactions herein contemplated are
consummated, the Company will pay (i) the costs, fees and expenses of the
Company and its counsel in connection with the Share and Warrant Purchase
Agreements, the Warrant Certificates and the issuance of the Units, the Shares,
the Warrants and the Conversion Shares, (ii) the fees and expenses of the
Investors in connection with the Share and Warrant Purchase Agreements, the
Warrant Certificates, or in connection with any other agreements between the
Investors and the Company, and (iii) the fees and expenses incurred in
connection with the obtaining of the Letter of Credit and the agreements
relating to the Cash Collateral.

(b) The obligations of the Company under this Section 12
shall survive the Closing hereunder and any termination of the Share and
Warrant Purchase Agreements.

SECTION 13. AMENDMENTS AND WAIVERS

(a) The terms and provisions of this Agreement may be
amended, waived, modified or terminated only with the written consent of the
Majority Shareholders; provided, however, that no such amendment, waiver,
modification or termination shall change the definition of Majority
Shareholders or this Section 13(a) without the written consent of the holders
of all the Shares, Warrants and Conversion Shares then outstanding.

-16-
<PAGE> 20

(b) The Company agrees that all holders of Shares, Warrants
and Conversion Shares shall be notified by the Company in advance of any
proposed amendment, waiver, modification or termination, but failure to give
such notice shall not in any way affect the validity of any such amendment,
waiver, modification or termination. In addition, promptly after obtaining the
written consent of the holders as herein provided, the Company shall transmit a
copy of any amendment, waiver, modification or termination which has been
adopted to all holders of Shares, Warrants and Conversions Shares then
outstanding, but failure to transmit copies shall not in any way affect the
validity of any such amendment, waiver, modification or termination.

SECTION 14. EXCHANGE OF SHARES; CANCELLATION OF SURRENDERED
SHARES; REPLACEMENT

(a) At any time at the request of any holder of Shares or
Warrants to the Company at its address provided under Section 15 hereof, the
Company at its expense (except for any transfer tax arising out of the
exchange) will issue and deliver to or upon the order of the holder in exchange
therefor a new certificate or certificates in such amount or amounts as such
holder may request in the aggregate representing the number of Shares or
Warrants represented by such surrendered certificates, and registered in the
name of such holder or as such holder may direct.

(b) Any Warrant Certificate which is converted into
Conversion Shares in whole or in part shall be canceled by the Company, and no
new Share certificates or Warrant Certificates shall be issued in lieu of any
Shares or Warrants which have been converted into Conversion Shares. The
Company shall issue a new certificate with respect to any Warrants which were
not exercised into Conversion Shares and were represented by a certificate
which was converted in part.

(c) Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction or mutilation of any Share certificate or Warrant
Certificate and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement reasonably satisfactory to the Company (if
requested by the Company and unsecured in the case of the Investor or an
institutional holder), or in the case of any such mutilation, upon surrender of
such Share certificate or Warrant Certificate (which surrendered Share
certificate or Warrant Certificate shall be canceled by the Company), the
Company will issue a new Share certificate or Warrant Certificate, of like
tenor in lieu of such lost, stolen, destroyed or mutilated Share certificate or
Warrant Certificate as if the lost, stolen, destroyed or mutilated Share
certificate or Warrant Certificate were then surrendered for exchange.

-17-
<PAGE> 21

SECTION 15. NOTICES

All notices, requests, demands, consents and other
communications hereunder shall be in writing and shall be delivered by hand or
shall be sent by telex or telecopy (confirmed by registered, certified or
overnight mail or courier, postage and delivery charges prepaid), (i) if
to the Company, to Visual Edge Systems Inc., 2424 North Federal Highway, Suite
100, Boca Raton, Florida 33431, Attention: Chief Executive Officer, with a copy
to Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178,
Attention: David W. Pollak, Esq., or (ii) if to the Purchaser, at the address
indicated on Schedule 1 hereto, or at such other address as a party may from
time to time designate as its address in writing to the other party to this
Agreement. Whenever any notice is required to be given hereunder, such notice
shall be deemed given and such requirement satisfied only when such notice is
delivered or, if sent by telex or telecopier, when received.

SECTION 16. MISCELLANEOUS

(a) The Share and Warrant Purchase Agreements and, upon the
closing hereunder, the Warrant Certificates together with any further
agreements entered into by the Investor and the Company at the closing
hereunder, contain the entire agreement between the Investor and the Company,
and supersede any prior oral or written agreements, commitments, terms or
understandings, regarding the subject matter hereof.

(b) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereby waive any provision of law which may
render any provision hereof prohibited or unenforceable in any respect.

(c) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
whether so expressed or not.

(d) The headings and captions in this Agreement are for
convenience of reference only and shall not define, limit or otherwise affect
any of the terms or provisions hereof.

(e) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York (other than any conflict of
laws rule which might result in the application of the laws of any other
jurisdiction).

-18-
<PAGE> 22

(f) This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument, and all signatures need not appear on any one counterpart.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.

VISUAL EDGE SYSTEMS INC.

By /s/ Earl T. Takefman
-------------------------------
Name: Earl T. Takefman
Title: Chief Executive Officer

Accepted and Agreed to as of the
date first above written by the
undersigned Investor:

Status-One Investments Inc.
- ------------------------------
by Earl T. Takefman

-19-

<PAGE> 23
Schedule 1
to the Share and
Warrant Purchase Agreement

Number
of
Name of Units
Investor -------- Shares Warrants Cash Collateral
-------- ------- ------ ---------------
<S> <C> <C> <C> <C>
Status-One Investments Inc. 10,000 10,000 10,000 $350,000
Abbott Finance Inc. 14,236 14,236 14,236 $500,000
Neil Freder 7,143 7,143 7,143 $250,000
Leonard Mendell 7,141 7,141 7,141 $250,000
Avrum Schwam Holdings Inc. 4,236 4,236 4,236 $150,000
Carajen International Inc. 4,236 4,236 4,236 $150,000
Venture Management Consultants 14,236 14,236 14,236 $500,000
LLC
Sandy Lang 7,143 7,143 7,143 $250,000
Frank Leo 7,143 7,143 7,143 $250,000
Martin Miller 7,143 7,143 7,143 $250,000
Frank Williams 2,857 2,857 2,857 $100,000
Dan Elituv 7,143 7,143 7,143 $250,000
Sol Zuckerman 7,143 7,143 7,143 $250,000
</TABLE>

Address:

-20-

<PAGE> 24

EXHIBIT B

SHARE LEGEND

The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"), or the securities laws of
certain states and are being offered and sold in reliance on exemptions from
the registration requirements of the Act and such laws. The securities may not
be transferred unless (i) registration under such Act or such applicable state
securities laws shall have become effective with regard thereto or (ii)
registration under such Act or such applicable state laws is not required in
connection with such proposed transfer.

THE TRANSFER OF THE STOCK REPRESENTED BY THIS INSTRUMENT IS SUBJECT TO THE
TRANSFER RESTRICTIONS, OBLIGATIONS AND CONDITIONS SPECIFIED IN THE SHARE AND
WARRANT PURCHASE AGREEMENT DATED AS OF FEBRUARY 27, 1997, AMONG VISUAL EDGE
SYSTEMS INC. AND THE HOLDERS OF THIS CERTIFICATE. A COPY OF SUCH AGREEMENT
WILL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
WITHOUT CHARGE.

<PAGE> 1
EXHIBIT 10.12

================================================================================

SHARE AND WARRANT PURCHASE AGREEMENT

dated as of

February 27, 1997

between

VISUAL EDGE SYSTEMS INC.

and

THE INVESTOR NAMED HEREIN

================================================================================

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. SALE AND PURCHASE OF COMMON STOCK AND WARRANTS .......................................................... 1

SECTION 2. THE CLOSING ............................................................................................. 2

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ........................................................... 3
3.1. Corporate Existence, Power and Authority. ............................................................... 3
3.2. Capital Stock ........................................................................................... 4
3.3. No Defaults or Conflicts ................................................................................ 4
3.4. Disclosure Materials; Other Information ................................................................. 5
3.5. Litigation. ............................................................................................. 5
3.6. Legal Compliance. ....................................................................................... 5
3.7. Offering of Shares. ..................................................................................... 6
3.8. SEC Reports. ............................................................................................ 6

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR .......................................................... 6
4.1. Power and Authority ..................................................................................... 6

SECTION 5. RESTRICTIONS ON TRANSFER ................................................................................ 8

SECTION 6. COVENANTS OF THE COMPANY ................................................................................ 8
6.1. Use of Proceeds. ........................................................................................ 8
6.2. Maintenance of Existence, Properties and Franchises; Compliance with Law; Taxes; Insurance .............. 8
6.3. No Dilution or Impairment; No Changes in Capital Stock .................................................. 9
6.4. Reservation of Shares. .................................................................................. 10
6.5. Private Placement Status. ............................................................................... 10
6.6. Application of Funds .................................................................................... 10
6.7. Registration of Shares and Warrants. .................................................................... 10

SECTION 7. CONDITIONS TO INVESTOR'S OBLIGATIONS .................................................................... 10
7.1. Accuracy of Representations and Warranties. ............................................................. 11
7.2. Compliance with Agreements. ............................................................................. 11
7.3. Officers' Certificates. ................................................................................. 11
7.4. Proceedings. ............................................................................................ 11
7.5. No Material Adverse Change. ............................................................................. 11
</TABLE>

-1-
<PAGE> 3

<TABLE>
<S> <C> <C>
SECTION 8. THE LETTER OF CREDIT ..................................................................................... 11
8.1. No Drawing on Letter of Credit ........................................................................... 11
8.2. Drawing on Letter of Credit .............................................................................. 12
8.3. Delivery of Shares ....................................................................................... 12
8.4. Character of Shares ...................................................................................... 12
8.5. Termination .............................................................................................. 12

SECTION 9. REGISTRATION RIGHTS ...................................................................................... 12
9.1. Initial Registration; Potential Registration After the Transaction Date .................................. 12
9.2. Company's Fees and Expenses .............................................................................. 12

SECTION 10 DEFINITIONS .............................................................................................. 13

SECTION 11. BROKERS .................................................................................................. 16

SECTION 12. EXPENSES ................................................................................................. 16

SECTION 13. AMENDMENTS AND WAIVERS ................................................................................... 16

SECTION 14. EXCHANGE OF SHARES; CANCELLATION OF SURRENDERED SHARES; REPLACEMENT ...................................... 17

SECTION 15. NOTICES .................................................................................................. 18

SECTION 16. MISCELLANEOUS ............................................................................................ 18

EXHIBIT A Warrant Certificate

EXHIBIT B Legend
</TABLE>

-2-
<PAGE> 4

SHARE AND WARRANT PURCHASE AGREEMENT

SHARE AND WARRANT PURCHASE AGREEMENT, dated as of February 27,
1997, between Visual Edge Systems Inc., a Delaware corporation (the "Company"),
and the Investor listed on the signature page of this Agreement (the
"Investor").

W I T N E S S E T H :

WHEREAS, the Company needs to obtain additional financing in
order to further its business plan;

SECTION 1. SALE AND PURCHASE OF COMMON STOCK AND WARRANTS

<PAGE> 5

SECTION 2. THE CLOSING

-2-
<PAGE> 6

written instructions releasing such signature pages and instructing the Bank
will be exchanged by the parties on the Closing Date.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Investor as follows
as of the date hereof and as of the Closing Date:

3.1. Corporate Existence, Power and Authority.

(b) The Company has all requisite power, authority and
legal right to own or to hold under lease and to operate the properties it owns
or holds and to conduct its business as now being conducted.

(c) The Company has all requisite power, authority and
legal right to execute, deliver and consummate the transactions contemplated by
and perform its obligations under (i) the Share and Warrant Purchase
Agreements, including, without limitation, the issuance by the Company of the
Shares, the Warrants and the Conversion Shares as contemplated herein and in
the Warrant Certificates. The execution, delivery and performance of the Share
and Warrant Purchase Agreements by the Company (including, without limitation,
the issuance by the Company of the Shares, the Warrants and the Conversion
Shares as contemplated herein and in the Warrant Certificates) have been duly
authorized by all required corporate actions. The Company has duly executed
and delivered the Share and Warrant Purchase Agreements and the Warrant
Certificates. The Share and Warrant Purchase Agreements and the Warrant
Certificates

-3-
<PAGE> 7

3.2. Capital Stock.

3.3. No Defaults or Conflicts.

(b) The execution, delivery and performance by the Company
of the Share and Warrant Purchase Agreements, and any of the transactions
contemplated hereby (including, without limitation, the issuance of the Shares,
the Warrants and the Conversion Shares as contemplated herein and in the
Warrant Certificates) do not and will not (i) violate or conflict with, with or
without the giving of notice or the passage of time or both, any provision of
(A) the certificates of incorporation or by-laws of the Company or (B) any law,
rule, regulation or order of any federal, state, county, municipal or other
governmental authority, or any judgment, writ, injunction, decree, award or
other action of any court or governmental authority or arbitrator(s), or any
agreement, indenture or other instrument applicable to the Company or any of
its properties, (ii) result in the creation of any Lien upon any of the
Company's properties or assets or (iii) require the consent, waiver, approval,
order or authorization of, or declaration, registration, qualification or
filing with, any Person, other than Whale Securities, Co., L.L.P. ("Whale").

-4-
<PAGE> 8

3.4. Disclosure Materials; Other Information.

(a) The Company has previously furnished to the Investor
the following material (the "Disclosure Material"): (i) audited consolidated
financial statements of the Company as of December 31, 1996, consisting of a
consolidated balance sheet as of December 31, 1996 and the related consolidated
statements of operations, changes in equity and cash flows for the year ended
December 31, 1996 and the related notes thereto, all of which statements have
been certified by KPMG Peat Marwick LLP, independent certified public
accountants, (ii) the Company's Prospectus dated July 24, 1996 and (iii) the
SEC Reports. The financial statements referred to or contained in the
materials referred to in the preceding clauses (i) and (ii) fairly present the
financial condition of the Company as of the respective dates thereof and the
results of the operations of the Company for such periods and have been
prepared in accordance with generally accepted accounting principles
consistently applied, except that any such unaudited statements may omit notes
and may be subject to year-end adjustment.

(b) Since December 31, 1996, (i) the business of the
Company has been conducted in the ordinary course and (ii) there has been no
material adverse change in the assets, properties, liabilities, business,
results of operations or condition of the Company. As of the date hereof,
there are no material liabilities of the Company which would be required to be
provided for in a balance sheet of the Company prepared in accordance with
generally accepted accounting principles consistently applied, other than
liabilities provided for in the financial statements referred to in Section
3.5(a).

3.5. Litigation.

3.6. Legal Compliance.

(a) The Company has complied in all material respects with
all applicable laws, rules, regulations, orders, licenses, judgments, writs,
injunctions, decrees or demands.

-5-
<PAGE> 9

3.7. Offering of Shares.

3.8. SEC Reports.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

The Investor represents and warrants to the Company as follows:

4.1. Power and Authority.

The Investor has all requisite power, authority and legal right
to execute, deliver and consummate the transactions contemplated by and perform
its obligations under this Agreement. The execution, delivery and performance
of this Agreement by the Investor have been duly authorized by all required
corporate and other actions. The Investor has duly executed and delivered this
Agreement and it constitutes the legal, valid and binding obligation of the

-6-
<PAGE> 10

4.2. Investment Intent.

(iv) The Confidential Purchaser Questionnaire to be
delivered by the Investor to the Company will be true, complete and correct in
all material respects; and the Investor understands that the Company has
determined that the exemption from the registration provisions of the
Securities Act, which is based upon non-public offerings, are applicable to the
offer and sale of the Units, the Shares, the Warrants or the Conversion Shares
based, in part, upon the representations, warranties and agreements made by the
Investor herein and in the Confidential Purchaser Questionnaire referred to
above;

(vi) The Investor understands that (A) the Units, the
Warrants, the Shares and the Conversion Shares have not been registered under
the Securities Act or the securities laws of any state, based upon an
exemption from such registration requirements for non-public offerings pursuant
to regulation D under the Securities Act; (B) the Units, the Warrants, the
Shares and the Conversion Shares are and will be "restricted securities", as
said term is defined in Rule 144 of the Rules and Regulations promulgated under
the Securities Act; and (C) the Units, Warrants, Shares and the Conversion
Shares may not be sold or otherwise transferred unless they have been first
registered under the Securities Act and all applicable state securities laws,
or unless exemptions from such registration provisions are available with
respect to said resale or transfer;

-7-
<PAGE> 11

(viii) The Investor is an "accredited investor," as such term
is defined in Regulation D of the Rules and Regulations promulgated under the
Securities Act.

SECTION 5. RESTRICTIONS ON TRANSFER

The Investor agrees that it will not sell or otherwise dispose
of any Units, Shares, Warrants or Conversion Shares unless such Units, Shares,
Warrants or Conversion Shares have been registered under the Securities Act
and, to the extent required, under any applicable state securities laws, or
pursuant to an applicable exemption from such registration requirements. The
Company may place a legend to that effect in the form of Exhibit B hereto on
all certificates evidencing Shares, Warrants or Conversion Shares, provided
that such legend will not be placed on any certificate which, when issued, are
no longer subject to the provisions of this Section 5 pursuant to the
provisions of the Securities Act.

SECTION 6. COVENANTS OF THE COMPANY

The Company covenants and agrees as follows:

6.1. Use of Proceeds.

The Company will use the proceeds realized from the sale of the
Units (i) to purchase vans, trailers and related computer and video equipment,
(ii) for advertising expenditures and (iii) to fund operating costs and for
general corporate purposes.

6.2. Maintenance of Existence, Properties and Franchises;
Compliance with Law; Taxes; Insurance.

The Company will:

(a) maintain its corporate existence, rights and other
franchises in full force and effect;

(b) maintain its tangible assets in good repair, working
order and condition (reasonable wear and tear excepted) to far as necessary or
advantageous to the proper carrying on of its business;

-8-
<PAGE> 12

6.3. No Dilution or Impairment; No Changes in Capital Stock.

-9-
<PAGE> 13

6.4. Reservation of Shares.

6.5. Private Placement Status.

Neither the Company nor any agent or any other Person acting on
the Company's behalf will do or cause to be done (or will omit to do or to
cause to be done) any act which act (or which omission) would result in
bringing the issuance or sale of the Units, the Shares, the Warrants or the
Conversion Shares within the provisions of Section 5 of the Securities Act or
the filing, notification or reporting requirements of any state securities law.

6.6. Application of Funds.

6.7. Registration of Shares and Warrants.

Promptly after the Closing, the Company will use its best
efforts to effect the registration of the shares of Common Stock and the
Conversion Shares under the Securities Act.

SECTION 7. CONDITIONS TO INVESTOR'S OBLIGATIONS

-10-
<PAGE> 14

7.1. Accuracy of Representations and Warranties.

The representations and warranties of the Company in the Share
and Warrant Purchase Agreements or in any certificate or document delivered
pursuant hereto or thereto shall be correct and complete in all material
respects on and as of the Closing Date with the same effect as though made on
and as of the Closing Date (after giving effect to the transactions
contemplated by this Agreement).

7.2. Compliance with Agreements.

7.3. Officers' Certificates.

7.4. Proceedings.

7.5. No Material Adverse Change.

There shall have been no material adverse change in the assets,
properties, liabilities, business, results of operations or condition of the
Company since December 31, 1996.

SECTION 8. THE LETTER OF CREDIT

-11-
<PAGE> 15

8.2. Drawing on Letter of Credit. In the event that there
are one or more drawings on the Letter of Credit, in part or in whole, on or
before December 31, 1997 (the "Letter of Credit Drawing"), then on December 31,
1997 the Bank shall return promptly the remaining portion of the Cash
Collateral to the Investor (the portion drawn down or not returned being
referred to as the "Unreturned Cash Collateral").

8.4. Character of Shares. All shares of Common Stock issued
by the Company to the Investor pursuant to this Section 8 shall be duly
authorized, validly issued, fully paid and non-assessable.

SECTION 9. REGISTRATION RIGHTS

9.1. Initial Registration; Potential Registration After the
Transaction Date. (a) Promptly after the date hereof, the Company will use
its best efforts to effect the registration of the shares of Common Stock and
the Conversion Shares under the Securities Act.

-12-
<PAGE> 16

issued by the Company are then listed or quoted, and fees and disbursements of
counsel for the Company, any transfer agent and all independent certified public
accountants, underwriters (excluding discounts and selling commissions) and
other Persons retained by the Company in connection with any registration (all
such expenses being herein called "Registration Expenses"), will be paid by the
Company.

SECTION 10. DEFINITIONS

For purposes of this Agreement, the following definitions shall
apply:

"Agreement" means this Share and Warrant Purchase Agreement
(together with exhibits and schedules) as from time to time assigned,
supplemented or amended or as the terms hereof may be waived.

"Board" or "Board of Directors" means with respect to any Person
which is a corporation, a business trust or other entity, the board of
directors or other group, however, designated, which is charged with
legal responsibility for the management of such Person, or any committee
of such board of directors or group, however designated, which is
authorized to exercise the power of such board or group in respect of
the matter in question.

"Business Day" means any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.

"Closing" has the meaning set forth in Section 2(a) hereof.

"Closing Date" has the meaning set forth in Section 2(a) hereof.

"Common Stock" means the Company's Common Stock, par value $.01
per share, and any stock into which such Common Stock may hereafter be
changed or for which such Common Stock may be exchanged after giving
effect to the terms of such change or exchange (by way of
reorganization, recapitalization, merger, consolidation or otherwise).

"Company" means Visual Edge Systems Inc., a Delaware
corporation, its successors and assigns.

"Conversion Share" or "Conversion Shares" means the shares of
Common Stock obtained or obtainable upon exercise of Warrants and shall
also include any capital stock or other securities into which Conversion
Shares are changed and any capital stock or other securities resulting
from or comprising

-13-
<PAGE> 17

a reclassification, combination or subdivision of, or a stock dividend
on, any Conversion Shares. In the event that any Conversion Shares are
sold either in a public offering pursuant to a registration statement
under the Securities Act or pursuant to a Rule 144 Transaction, then
the transferees of such Conversion Shares shall not be entitled to any
benefits under this Agreement with respect to such Conversion Shares and
such Conversion Shares shall no longer be considered to be "Conversion
Shares" for purposes of the definition of Majority Shareholders or for
purposes of any consent or waiver provision of this Agreement.

"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules, regulations and interpretations thereunder.

"Investor" means the person who accepts and agrees to the terms
hereof as indicated by such person's signature (as "the undersigned
Investor") on the execution page of this Agreement, together with its
successors and assigns.

"Investors" has the meaning set forth in Section 1(c) hereof,
together with their respective successors and assigns.

"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security interest of any kind or nature
whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the
same effect as any of the foregoing, any assignment or other conveyance
of any right to receive income and any assignment of receivables with
recourse against the assignor), any filing of a financing statement as
debtor under the Uniform Commercial Code or any similar statute and any
agreement to give or make any of the foregoing.

-14-
<PAGE> 18

Common Stock referred to in clause (i) by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise. As to any
particular Registrable Securities, such securities will cease to be
Registrable Securities when they have (x) been effectively registered
under the Securities Act and disposed of in accordance with the
registration statement covering them or (y) been transferred pursuant to
Rule 144 (or any similar rule then in force) under the Securities Act.

"Rule 144" means (i) Rule 144 under the Securities Act as such
Rule is in effect from time to time and (ii) any successor rule,
regulation or law, as in effect from time to time.

"Rule 144 Transaction" means a transfer of Conversion Shares (A)
complying with Rule 144 as such Rule is in effect on the date of such
transfer (but not including a sale other than pursuant to "brokers'
transactions" as defined in clauses (1) and (2) of paragraph (g) of such
Rule as in effect on the date hereof) and (B) occurring at a time when
Conversion Shares are registered pursuant to Section 12 of the Exchange
Act.

"SEC" means the Securities and Exchange Commission and any other
similar or successor agency of the federal government administering the
Securities Act or the Exchange Act.

"SEC Reports" has the meaning set forth in Section 3.9 hereof.

"Securities Act" means the Securities Act of 1933, as amended,
and the rules, regulations and interpretations thereunder.

"Share and Warrant Purchase Agreements" has the meaning set
forth in Section 1(c) hereof.

"Shares" has the meaning set forth in Section 1(a) hereof.

"Subsidiary", with respect to any Person, means any corporation,
association or other entity of which more than 50% of the total voting
power of shares of stock or other equity interests (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is, at the time as of which any
determination is being made, owned or controlled, directly or
indirectly, by such Person or one or more of its Subsidiaries, or both.
The term "Subsidiary" or "Subsidiaries" when used herein without
reference to any particular Person, means a Subsidiary or Subsidiaries
of the Company.

-15-
<PAGE> 19

"Units" has the meaning set forth in Section 1(a) hereof.

"Warrant Certificate" has the meaning set forth in Section 1(a)
hereof.

"Warrants" has the meaning set forth in Section 1(a) hereof.

SECTION 11. BROKERS

Except for certain fees payable to certain brokers or agents
(all of which fees will be paid by the Company), the Company, on the one hand,
and the Investor, on the other hand, each represents and warrants to the other
that there is no liability for any fees or expenses (or claims therefor) of any
investment banker, finder or broker in connection with any Share and Warrant
Purchase Agreements or any of the transactions contemplated hereby. The Company
will indemnify the Investor against all such fees or expenses payable to the
persons named in the preceding sentence and against any other such fees,
expenses or claims of any person, unless such person was engaged by the Investor
in connection with this Agreement or any of the transactions contemplated
hereby. The Investor will indemnify the Company against any such fees, expenses
or claims of any person engaged by the Investor in connection with this
Agreement or any of the transactions contemplated hereby.

SECTION 12. EXPENSES

(b) The obligations of the Company under this Section 12
shall survive the Closing hereunder and any termination of the Share and
Warrant Purchase Agreements.

SECTION 13. AMENDMENTS AND WAIVERS

-16-
<PAGE> 20

SECTION 14. EXCHANGE OF SHARES; CANCELLATION OF SURRENDERED SHARES;
REPLACEMENT

-17-
<PAGE> 21

SECTION 15. NOTICES

All notices, requests, demands, consents and other
communications hereunder shall be in writing and shall be delivered by hand or
shall be sent by telex or telecopy (confirmed by registered, certified or
overnight mail or courier, postage and delivery charges prepaid), (i) if to the
Company, to Visual Edge Systems Inc., 2424 North Federal Highway, Suite 100,
Boca Raton, Florida 33431, Attention: Chief Executive Officer, with a copy to
Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178,
Attention: David W. Pollak, Esq., or (ii) if to the Purchaser, at the address
indicated on Schedule 1 hereto, or at such other address as a party may from
time to time designate as its address in writing to the other party to this
Agreement. Whenever any notice is required to be given hereunder, such notice
shall be deemed given and such requirement satisfied only when such notice is
delivered or, if sent by telex or telecopier, when received.

SECTION 16. MISCELLANEOUS

(b) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law
which may render any provision hereof prohibited or unenforceable in any
respect.

(c) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
whether so expressed or not.

(d) The headings and captions in this Agreement are for
convenience of reference only and shall not define, limit or otherwise affect
any of the terms or provisions hereof.

-18-
<PAGE> 22

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.

VISUAL EDGE SYSTEMS INC.

By
------------------------------
Name:
Title:

Accepted and Agreed to as of the
date first above written by the
undersigned Investor:

- -------------------------------------
[NAME OF INVESTOR]

-19-
<PAGE> 23

Schedule 1
to the Share and
Warrant Purchase Agreement

Name of Number of
Investor Units Shares Warrants Cash Collateral
-------- --------- ------ -------- ---------------

Address:
- --------

-20-
<PAGE> 24

EXHIBIT B

SHARE LEGEND

<PAGE> 1
EXHIBIT 11

Visual Edge Systems Inc.
Computation of Per Share Loss

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
PRIMARY 1996 1995
------ ------
<S> <C> <C>
Weighted average common shares outstanding, exclusive 3,000,000 3,000,000
of issuances within twelve months prior to the IPO
Shares issued within 12 months prior to the IPO 220,000 220,000
assumed to be outstanding for the entire period
Weighted average common shares outstanding, for 581,250 --
shares issued after IPO ----------- ----------
Weighted average common shares outstanding at end of year 3,801,250 3,220,000
=========== ==========
Net loss $(2,397,690) $ (464,963)
=========== ==========
Net loss per share $ (.63) $ (.14)
=========== ==========
</TABLE>

<PAGE> 1
EXHIBIT 23

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
Visual Edge Systems Inc.

We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the Form SB-2 and in the prospectus.

Our report dated January 24, 1997 except as to note 9(b), which is as of April
3, 1997, contains an explanatory paragraph that states that the Company has
suffered recurring losses through 1996 and has contractual commitments under a
license agreement which raise substantial doubt about its ability to continue as
a going concern unless additional financing or equity is obtained. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

KPMG Peat Marwick LLP

Fort Lauderdale, Florida
April 3, 1997