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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
FORM 8-K/A
CURRENT REPORT
Pursuant to Section l3 or l5(d) of the
Securities Exchange Act of l934
Date of Report (Date of earliest event reported) MARCH 27, 1998
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VISUAL EDGE SYSTEMS INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-20995 13-3778895
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(State or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) Identification No.)
2424 NORTH FEDERAL HIGHWAY, SUITE 100, BOCA RATON, FL 33431
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(Address of principal executive offices) (Zip Code)
(561) 750-7559
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(Registrant's telephone number, including area code)
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Item 5. OTHER EVENTS
On March 27, 1998, the Company entered into a Purchase Agreement (the
"Marion Agreement") with Marion Interglobal, Ltd., an investment group
("Marion"). The Marion Agreement calls for the Company to receive up to
$11,000,000 from Marion in exchange for shares of the Company's common stock,
par value $.01 per share (the "Common Stock"), as explained herein. Pursuant to
the Marion Agreement, the purchase of Common Stock is to occur in three tranches
as follows: (i) on March 27, 1998 the Company sold to Marion 1,200,000 shares of
Common Stock for an aggregate consideration of $3,000,000; $1,500,000 of the
$3,000,000 has been funded, with the remaining $1,500,000 to be funded on the
business day after the Company's shelf registration statement with respect to
the shares sold to Marion has been declared effective by the Securities and
Exchange Commission ("SEC"); (ii) sixty days following the registration of all
the underlying shares of Common Stock under the Marion Agreement, the Company
will sell to Marion 800,000 shares of Common Stock for an aggregate
consideration of $2,000,000; and (iii) on or prior to September 30, 1998 the
Company shall sell a number of shares of Common Stock (to be determined by when
the closing occurs, which would range from 2,666,667 shares to 3,200,000 shares)
for an aggregate consideration of $6,000,000 (these three tranches are
collectively referred to as the "Marion Financing"). The third tranche is
contingent on the Company meeting or exceeding certain financial targets
provided by Marion. The Company has agreed to use the $6,000,000 in proceeds
from the third tranche to redeem the Company's outstanding Convertible Notes
(the "Notes") and Series A Preferred Stock ("Preferred Stock") issued in the
financing consummated by the Company in June 1997. The issuance and sale of
1,400,000 shares of Common Stock in the first tranche and all of the shares to
be issued in the second tranche to Marion, is subject to approval by the
Company's stockholders. The Company will pay transaction fees to Marion upon
completion of each tranche as follows: (i) 1,200,000 shares of Common Stock for
the first $3,000,000 tranche; (ii) 800,000 shares of Common Stock for the second
$2,000,000 tranche; and (iii) no additional fee for the completion of the third
tranche.
Further, upon the consummation of the second tranche of the Marion
Agreement, Mr. Alan Lubell, Chairman of the Board of the Company, has agreed to
transfer to Marion 250,000 shares of Common Stock, which shares are required to
be registered under the Securities Act of 1933, as amended.
In addition, if the third tranche of the aforementioned financing is
completed, then until March 30, 2001, the Company is required to obtain the
prior written consent of Marion before the consummation of any additional
financing transaction except for any credit facilities or lines of credit with
lenders or equipment financing arrangements. Further, the Company may not
redeem the warrants issued in its initial public offering without the prior
written consent of Marion.
As a condition to the consummation of this equity financing, the Company
renegotiated the terms of its outstanding Notes and Preferred Stock with certain
investment funds (the "Funds") who hold all of the outstanding Notes and
Preferred Stock. Specifically, the Company
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entered into the Agreement and Second Amendment to Bridge Securities Purchase
Agreement and Related Documents (the "Second Amendment"), among the Company and
the Funds. Pursuant to the Second Amendment, the Funds agreed that they would
not convert, prior to December 31, 1998, any shares of Preferred Stock or any
principal amount of the Notes into shares of Common Stock, unless a "Material
Transaction" (defined as a change of control of the Company, a transfer of all
or substantially all of the Company's assets or a merger of the Company into
another entity) has occurred. Further, the Funds agreed that they would not,
prior to March 31, 1999, publicly sell any shares of Common Stock owned or
acquired by the Funds, unless a Material Transaction has occurred; the Funds are
permitted, after June 30, 1998 and subject to the Company's right of first
refusal, to privately sell any shares of Common Stock that they own or acquire,
provided the purchaser agrees in writing to be bound by the same resale
restrictions.
The Funds have granted to the Company an option to redeem the Preferred
Stock and the Notes owned by the Funds as follows: (i) up to $2,500,000 may be
redeemed on or before April 30, 1998; (ii) an additional $2,500,000 may be
redeemed on or before May 31, 1998; and (iii) an additional $2,500,000 may be
redeemed from and after June 1, 1998. If the date that the Company redeems such
Preferred Stock and Notes is on or before June 30, 1998, the redemption price
will be 80% of the principal amount outstanding of the Notes being redeemed or
80% of the liquidation preference of the Preferred Stock being redeemed, plus
accrued interest and dividends in the event that all of the Preferred Stock and
Notes owned by the Funds are not redeemed by June 30, 1998. If the redemption
of the Notes and Preferred Stock is after June 30, 1998 but on or before
December 31, 1998, the 80% referred to in the preceding sentence shall increase
by 2% per month, up to 90% in December 1998. If the redemption of the Notes and
Preferred Stock occurs after December 31, 1998, the redemption price shall be as
provided in the original agreement between the Company and the Funds. The
Company is required to redeem all of the Preferred Stock outstanding prior to
redemption of any of the Notes. In addition, the Funds have granted to the
Company and to Marion an option to acquire, on or before March 31, 1999, all of
the shares of Common Stock owned by the Funds.
In connection with the Second Amendment, the Funds received 100,000 shares
of Common Stock, as well as the right to receive 200,000 additional shares of
Common Stock in the event that all of the Preferred Stock and Notes owned by the
Funds have not been redeemed by the Company by June 30, 1998. Further, the
exercise price of 100,000 warrants (each to purchase one share of the Company's
Common Stock) owned by the Funds has been reduced from $10.675 per share to
$3.25 per share and the exercise price of 200,000 additional warrants (each to
purchase one share of the Company's Common Stock) owned by the Funds has been
reduced from $4.00 per share to $3.25 per share. The Company has agreed to
register all of such shares of Common Stock (including the shares underlying
warrants) under the Securities Act of 1933, as amended.
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On a pro forma basis, assuming the Marion Financing had been completed
on February 28, 1998, the Company's balance sheet, on an unaudited basis, would
have been as follows:
<TABLE>
<CAPTION>
VISUAL EDGE SYSTEMS INC.
BALANCE SHEET
PRO FORMA AS OF FEBRUARY 28, 1998 - UNAUDITED
Assets
<S> <C>
Current Assets:
Cash and Cash Equivalents $ 5,035,543
Short-Term Investments 380,000
Accounts Receivable 23,585
Inventory 76,958
Prepaid Expenses - Advance Royalties 536,667
Other Current Assets 170,584
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Total Current Assets 6,223,337
Fixed Assets, net 2,539,641
Intangible Assets, net 265,891
Other Assets 308
Investments-Restricted 817,517
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Total Assets $ 9,846,694
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts Payable $ 333,207
Accrued Expenses 206,117
Other Current Liabilities 227,297
Current Maturities of Equipment Loans 540,264
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Total Current Liabilities 1,306,885
Equipment Loans 611,751
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Total Liabilities 1,918,636
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STOCKHOLDERS' EQUITY (DEFICIT):
Preferred Stock, $.01 par value, 5,000,000 shares authorized, none
issued
Common Stock, $.01 par value, 20,000,000 shares authorized,
12,616,700 shares issued and outstanding at February 28, 1998 126,167
Additional Paid in Capital 22,365,979
Accumulated Deficit (14,564,088)
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Total Stockholders' Equity (Deficit) 7,928,058
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Total Liabilities & Stockholders' Equity (Deficit) $ 9,846,694
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The foregoing pro forma balance sheet has not been audited or reviewed
by the Company's accountants and is subject to revision and/or change. Further,
this pro forma unaudited balance sheet is as of a date (I.E. February 28, 1998)
on which the Company does not customarily prepare a balance sheet. The Company's
unaudited balance sheet for the fiscal quarter ended March 31, 1998 will be
included in the Company's Form 10-QSB to be filed with the SEC on or about May
15,1998. This pro forma unaudited balance sheet is provided for informational
purposes only in order to illustrate the effect of the Marion Financing and
should not be relied upon by any stockholder or investor in making an investment
decision in the Company.
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(c) Exhibits
99.1 Purchase Agreement, dated as of March 27, 1998, among the Company and
Marion Interglobal, Ltd.*
99.2 Registration Rights Agreement, dated as of March 27, 1998, among the
Company and Marion Interglobal, Ltd.*
99.3 Second Amendment to Bridge Securities Purchase Agreement and Related
Documents, dated as of March 27, 1998, among the Company, Infinity
Investors Limited, Infinity Emerging Opportunities Limited, Summit
Capital Limited (as the transferee of Sandera Partners, L.P.) and
Glacier Capital Limited (as the transferee of Lion Capital Partners,
L.P.)
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*Previously filed
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VISUAL EDGE SYSTEMS INC.
(Registrant)
By: /s/ Earl Takefman
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Earl Takefman
Chief Executive Officer
Date: April 8, 1998
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EXHIBIT INDEX
NO.
99.1 Purchase Agreement, dated as of March 27, 1998, among the Company and
Marion Interglobal, Ltd.*
99.2 Registration Rights Agreement, dated as of March 27, 1998, among the
Company and Marion Interglobal, Ltd.*
99.3 Second Amendment to Bridge Securities Purchase Agreement and Related
Documents, dated as of March 27, 1998, among the Company, Infinity
Investors Limited, Infinity Emerging Opportunities Limited, Summit
Capital Limited (as the transferee of Sandera Partners, L.P.) and
Glacier Capital Limited (as the transferee of Lion Capital Partners,
L.P.)*
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*Previously filed
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