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As filed with the Securities and Exchange Commission on May 13, 1999
Registration No. 333-73215
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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VISUAL EDGE SYSTEMS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3778895
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification Number)
2424 NORTH FEDERAL HIGHWAY, SUITE 100
BOCA RATON, FLORIDA 33431
(561) 750-7559
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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EARL T. TAKEFMAN
CHIEF EXECUTIVE OFFICER
VISUAL EDGE SYSTEMS INC.
2424 NORTH FEDERAL HIGHWAY, SUITE 100
BOCA RATON, FLORIDA 33431
(561) 750-7559
(Name, address, including zip code, and telephone
number, including area code, of agent for service of process)
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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
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act"), other than securities
offered only in connection with dividend or interest reinvestment plans, check
the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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3,390,000 Shares
VISUAL EDGE SYSTEMS INC.
Common Stock
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This prospectus relates to the offer and sale of shares of common stock
of Visual Edge Systems Inc. by some of our stockholders. We will not receive any
of the proceeds from the sale of the shares offered under this prospectus.
Our common stock is traded on the Nasdaq SmallCap Market under the
symbol "EDGE." On May 12, 1999, the last reported sale price of our common stock
as quoted on the Nasdaq SmallCap Market was $.4688 per share.
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THE SHARES OFFERED UNDER THIS PROSPECTUS 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 2.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
The date of this prospectus is May 13, 1999.
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TABLE OF CONTENTS
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Available Information.............................................................................................1
Incorporation of Certain Information by Reference.................................................................1
The Company.......................................................................................................2
Recent Developments...............................................................................................2
Risk Factors......................................................................................................2
Business Overview.................................................................................................6
Use of Proceeds...................................................................................................9
Selling Stockholders..............................................................................................9
Plan of Distribution.............................................................................................11
Legal Matters....................................................................................................12
Experts..........................................................................................................13
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AVAILABLE INFORMATION
Visual Edge Systems Inc. is subject to the informational requirements of
the Securities Exchange Act of 1934 and files periodic reports, proxy statements
and other information with the Securities and Exchange Commission. These
reports, proxy statements and other information concerning Visual Edge 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 this material may be obtained by mail from the Public
Reference Section 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, including Visual Edge, that file electronically with the
Commission. The address of this web site is http://www.sec.gov.
Visual Edge has filed with the Commission a registration statement on Form
S-3 under the Securities Act of 1933 with respect to the shares of common stock
offered under this prospectus. This prospectus does not contain all of the
information set forth in the registration statement, some parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements made in this prospectus about the contents of contracts, agreements
or other documents are not necessarily complete. These statements are qualified
in their entirety by reference to each contract, agreement or other document
filed as an exhibit to the registration statement or as previously filed with
the Commission and incorporated therein by reference. Copies of the registration
statement and its exhibits are on file at the offices of the Commission and may
be inspected and copied in the manner and at the locations described above.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, previously filed with the Commission by Visual
Edge, are incorporated by reference into this prospectus:
1. Visual Edge's Annual Report on Form 10-KSB/A for the fiscal
year ended December 31, 1998;
2. Visual Edge's Current Report on Form 8-K dated January 8,
1999; and
3. The description of the common stock set forth in Visual Edge's
Registration Statement filed under Section 12 of the
Securities Exchange Act of 1934 on Form 8-A on July 11, 1996,
and any amendment or report filed for the purpose of updating
the description.
All reports and other documents subsequently filed by Visual Edge after the
date of this prospectus under Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act and prior to the termination of this offering shall be incorporated by
reference into this prospectus and be a part of this prospectus from the date of
filing the documents or reports.
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Any information incorporated into this prospectus by reference shall be
modified or superseded for the purpose of this prospectus to the extent that a
statement contained in this prospectus, or in any other document that later is
filed with the Commission and also is incorporated into this prospectus by
reference, modifies or supersedes that information. Any information that is so
modified or superseded shall not be a part of this prospectus, except as so
modified or superseded.
THIS PROSPECTUS INCORPORATES SOME DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED IN THIS PROSPECTUS OR DELIVERED WITH THIS PROSPECTUS. THESE DOCUMENTS
ARE AVAILABLE WITHOUT CHARGE BUT VISUAL EDGE WILL NOT SEND THE EXHIBITS TO THESE
DOCUMENTS, UNLESS THEY ARE SPECIFICALLY INCORPORATED INTO THIS PROSPECTUS BY
REFERENCE. TO RECEIVE THESE DOCUMENTS, YOU SHOULD DIRECT YOUR REQUEST TO VISUAL
EDGE SYSTEMS INC., 2424 NORTH FEDERAL HIGHWAY, SUITE 100, BOCA RATON, FLORIDA
33431, ATTENTION: EARL TAKEFMAN (561) 750-7559.
THE COMPANY
Visual Edge was organized to develop and market personalized videotape
golf lessons featuring One-on-One instruction by leading professional golfer
Greg Norman. Visual Edge has developed 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. Visual Edge'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. Visual Edge sells its products under the name "One-on-One with Greg
Norman."
RECENT DEVELOPMENTS
On April 30, 1999, Visual Edge announced results for the quarter ended
March 31, 1999. Sales for the first quarter of 1999 increased by 37% to $320,397
from $234,006 in the first quarter of 1998. Gross loss for the first quarter of
1999 was reduced by 13% to a gross loss of $158,979 from a gross loss of
$182,569 for the comparable period in 1998. Operating expenses for the first
quarter in 1999 decreased 27% from the first quarter in 1998, to $791,926 from
$1,090,622. Our operating loss for the quarter decreased by 25% to $950,905 from
$1,273,191 a year earlier. Net loss decreased 22% from $1,315,208 in the first
quarter of 1998 to $1,020,335 in the first quarter of 1999. Loss per share in
the quarter decreased from $0.29 to $0.10, a decrease of 66%.
RISK FACTORS
Readers of this registration statement should carefully consider the
following risk factors, in addition to the other information contained in this
registration statement. This registration statement contains statements of a
forward-looking nature relating to future events or the future financial
performance of Visual Edge within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and which are
intended to be covered by the safe harbors created by those sections. Readers
are cautioned that forward-looking statements are only predictions and that
actual events or results may differ greatly. In evaluating these statements,
readers should specifically consider the various factors identified in this
registration statement, including the
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matters set forth below, which could cause actual results to differ materially
from those indicated by forward-looking statements.
WE HAVE INCURRED SIGNIFICANT LOSSES, WHICH COULD LIMIT OUR ABILITY TO
RAISE NEW FUNDS AND STAY IN BUSINESS.
For the period from July 15, 1994 (inception) to December 31, 1998, we
incurred an accumulated deficit of $20,302,283. We incurred a net loss of
$4,846,792 for the year ended December 31, 1998. We believe that we will
continue to incur losses until, at the earliest, we generate sufficient revenues
to offset the costs associated with producing, selling and delivering our
products. These losses could limit our ability to grow and to raise new funds to
allow us to remain in business.
WE MAY HAVE DIFFICULTY RAISING CAPITAL IN THE FUTURE, WHICH WOULD HARM
OUR ABILITY TO CONTINUE IN BUSINESS.
As a result of our continuing losses and the low market price of our
common stock, we believe that it will be very difficult, if not impossible, for
us to raise additional capital in the future. As of April 28, 1999, we had a
total of cash and cash equivalents and certificates of deposit of approximately
$1,222,425. Thus, if we are unable to become profitable in the near future, or
raise new funds, we will exhaust our cash resources and be unable to continue in
business.
YOUR OWNERSHIP INTEREST IN VISUAL EDGE MAY BE SUBSTANTIALLY DILUTED
WHICH MAY DEPRESS OUR STOCK PRICE.
If you purchase shares of common stock being sold under this
registration statement, your ownership interest in Visual Edge may subsequently
be diluted substantially. Some of our stockholders hold notes or shares of our
preferred stock, which are convertible into shares of common stock. If this
conversion occurs, there would be a dilutive effect on our stockholders because
the number of outstanding shares of common stock would increase drastically. In
addition, our officers, directors and employees hold options to purchase an
aggregate of 1,569,889 shares of common stock. While no prediction can be made
as to the effect that the sale of any of these shares will have on market prices
of our common stock, the possibility that a substantial number of shares of
common stock may be sold in the public market may adversely affect prevailing
market prices and could impair our ability to further raise capital through the
sale of our equity securities.
In addition, our stockholders' ownership may be diluted as a result of
our acquisition strategy. While we hope to limit the amount of stockholder
dilution created through potential acquisitions to 25%, the actual dilution
amount could be greater.
OUR BUSINESS SUCCESS DEPENDS ON GREG NORMAN'S CONTINUED STATUS AS A
WORLD-CLASS ATHLETE.
Our business may be adversely affected if Greg Norman dies, becomes
disabled, retires, experiences a significant decline in the level of his
tournament play, commits a serious crime or performs any act which adversely
affects his reputation. In connection with the production and promotion of our
products, we use, under a worldwide license, Mr. Norman's name, likeness,
endorsement and certain trademarks. Our license expires on December 31, 2001,
but is subject to renewal at our option for two additional five-year periods,
with a fee of $500,000 per renewal term. We have obtained "keyman" life
insurance on the life of Mr. Norman in the amount of $10,000,000.
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OUR SHARES MAY BE EXCLUDED FROM NASDAQ, WHICH WOULD HARM THE LIQUIDITY
OF OUR STOCK.
On March 1, 1999, the minimum bid price of our shares had been less
than $1.00 per share for thirty consecutive business days and, in accordance
with Nasdaq's listing requirements, we received notice from Nasdaq regarding the
minimum bid price of our shares. If the bid price of our shares is not above
$1.00 per share for at least ten consecutive business days before June 1, 1999,
our shares could be excluded from Nasdaq for failure to comply with Nasdaq's
minimum bid price requirement. Although we may attempt to meet Nasdaq's
compliance tests by effecting a reverse stock split, this is unlikely. Exclusion
of our shares from Nasdaq would adversely affect the liquidity of our equity
securities.
IF OUR COMMON STOCK IS DELISTED FROM THE NASDAQ SMALLCAP MARKET, IT MAY
BECOME SUBJECT TO PENNY STOCK REGULATIONS.
In the event our common stock is delisted from the Nasdaq SmallCap
Market, it may subsequently become subject to the rules and regulations
governing penny stocks. In general, penny stocks are equity securities:
o of companies that have net tangible assets of less than $2 million,
if continuously operating for less than three years, or $5 million,
if continuously operating for more than three years; and
o that have a market price of less than $5.00, excluding securities
that are quoted on Nasdaq or are registered on a national securities
exchange meeting certain guidelines.
As at December 31, 1998, we had been continuously operating for more
than three years and had net tangible assets of $3,382,103. In addition, as
indicated in the immediately preceding risk factor, the market price of our
common stock has been less than $5.00.
Under the penny stock rules, broker-dealers who recommend those
securities to persons other than institutional accredited investors must make a
special suitability determination for the purchaser, receive the purchaser's
written agreement to the transaction prior to the sale and provide the purchaser
with risk disclosure documents which identify risks associated with investing in
penny stocks and which describe the market for the penny stock and the
purchaser's legal remedies. Further, the broker-dealer must obtain a signed and
dated acknowledgment from the purchaser demonstrating that the purchaser has
actually received the required risk disclosure document before effecting a
transaction in a penny stock. These requirements may have the effect of reducing
the level of trading activity in securities which become subject to the penny
stock rules. If our common stock becomes subject to the penny stock rules,
purchasers of the shares offered under this prospectus may find it more
difficult to sell these securities, which could have an adverse affect on their
market price.
OUR PRODUCT LINE IS NEW AND IT MAY BE DIFFICULT TO PREDICT ITS SUCCESS
IN THE MARKET.
Our One-on-One personalized videotape golf lesson is a new business
concept and, accordingly, demand and market acceptance for our products is
uncertain. Although we commenced marketing activities in 1997, we have not been
able to develop a sales force necessary to raise widespread awareness of the
product and acquire a customer base sufficient to offset our expenses. Our
business prospects will depend significantly on our ability to successfully
build an effective sales organization. To the extent that we enter into
third-party marketing and distribution arrangements in the future, we will
depend on the marketing efforts of those third parties, which will reduce our
operating and gross profit margins. We cannot assure you that our business
strategy will result in successful product commercialization or that our efforts
will result in broad-based market acceptance of our products. We may need to
change our marketing plans based on the progress of our marketing efforts and
changes in market conditions. We cannot assure that we will be able to continue
to implement our business plan.
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OUR PRODUCTS MAY QUICKLY BECOME OBSOLETE.
The markets for our products may be characterized by rapidly changing
technology which could result in product obsolescence or short product life
cycles. Our competitors could develop technologies or products that render our
products obsolete or less marketable. Accordingly, our ability to compete may
depend on our ability to continually enhance and improve our products.
THE LOSS OF KEY PERSONNEL COULD HARM US.
We depend on the personal efforts of Earl Takefman, Richard Parker,
Thomas Peters and other key personnel to implement our operating and growth
strategies. The loss of the services of these individuals could adversely affect
our business and prospects because they have unique knowledge and experience in
the industry. We have entered into employment agreements with Mr. Takefman and
other key personnel and have obtained "keyman" insurance on the life of Mr.
Takefman in the amount of $5,000,000, which will not be renewed when it expires
in July 1999.
WE HAVE A LIMITED PRODUCT LINE, WHICH COULD CAUSE US NOT TO REALIZE OUR
SALES GOALS.
We are entirely dependent on the sales of a limited product line to
generate revenues and on the commercial success of our products. We cannot
assure you that our products will prove to be commercially viable. Failure to
achieve commercial viability on a timely basis would cause us to close our
business.
THE COMPETITION WE FACE FROM OTHER COMPANIES IN THE SPORTS AND
ENTERTAINMENT INDUSTRIES MAY ADVERSELY AFFECT OUR OPERATING RESULTS.
Our future operating results will depend on numerous factors beyond our
control, including:
- the popularity, price and timing of competitors' 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.
Our ability to plan for product development and promotional activities may be
affected by our ability to anticipate and respond to relatively rapid changes in
consumer tastes and preferences. To the extent that we target consumers with
limited disposable income, we may find it more difficult to price our products
at levels which result in profitable operations.
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WE MAY BE UNABLE TO IDENTIFY SUITABLE ACQUISITION TARGETS, WHICH COULD
LEAVE US TOTALLY DEPENDENT ON OUR EXISTING PRODUCT LINE.
We have recently adopted an acquisition strategy to expand our product
offering, focusing on technology companies including, in particular, companies
engaged in the business of "distance education" or instruction via the Internet.
To be suitable for acquisition by us, these companies must be small enough to be
affordable yet profitable. These candidates may be few in number and may attract
offers from companies with greater financial resources than Visual Edge. We
cannot assure you that we will be able to locate suitable acquisition targets or
that we will be able to complete any acquisitions.
WE MAY HAVE DIFFICULTY FINANCING OUR FUTURE ACQUISITIONS, WHICH COULD
RESULT IN OUR INABILITY TO COMPLETE ANY ACQUISITIONS.
Our current financial condition will not allow us to finance an
acquisition independently. If we locate an acquisition opportunity, we will have
to depend on the profitability of the company to be acquired and the efforts of
some of our major stockholders to attract and obtain financing. We cannot assure
you that we will be able to obtain financing on acceptable terms or at all. If
we cannot obtain financing, we will not be able to complete any acquisitions.
THE MARKET PRICE OF OUR COMMON STOCK MAY BE HIGHLY VOLATILE.
Since our initial public offering, the market price of our publicly
traded securities has been highly volatile, as has been the case with the
securities of other emerging companies. Our operating results and announcements
by us or our competitors may have a significant impact on the market price of
our 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 those companies.
BUSINESS OVERVIEW
INDUSTRY OVERVIEW
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, increased from approximately $12.7 billion in 1989 to approximately
$15.1 billion and $16.3 billion in 1994 and 1998, respectively. The number of
golfers and 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.
PRODUCTS
Visual Edge has developed six full swing personalized One-on-One golf
lessons with Greg Norman for both right- and left-handed golfers. Visual Edge'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
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improvement from prior lessons. Visual Edge also plans to develop additional
videotape golf lessons, such as short game, sand play and putting lessons.
RELATIONSHIP WITH GREG NORMAN
Under an exclusive license agreement by and among Visual Edge, Greg
Norman and Great White Shark Enterprises, Inc., Greg Norman agreed to grant to
Visual Edge an exclusive worldwide license to use his name, likeness and
endorsement and certain trademarks owned by him in connection with the
production and promotion of Visual Edge's products. Under this license
agreement, we are required to make royalty payments to Mr. Norman on net sales
of the One-on-One with Greg Norman product. As of December 31, 1998, we have
paid Mr. Norman an aggregate of $1,300,000 in cash, issued him 602,000 shares of
common stock and issued him options to purchase 125,000 shares of common stock
at $1.00 per share. After the initial term of the license agreement expires on
December 31, 2001, we have the option to renew the agreement for two additional
five-year periods. If we exercise this option, we will be required to pay Mr.
Norman $500,000 per renewal term. Our present business and future prospects
depend on our continued association with Greg Norman. Additionally, Visual Edge
is the beneficiary of a $10,000,000 life insurance policy with Mr. Norman.
ACQUISITION STRATEGY
Visual Edge has introduced a new acquisition strategy to attempt to
enhance stockholder value and improve its stock price. The strategy is aimed at
identifying profitable companies wishing to merge with a public company. Visual
Edge intends to focus on companies in the technology field, with a particular
emphasis on those in the "distance education" marketplace.
Visual Edge currently has no corporate funds or existing credit lines
that would be available to fund acquisitions. Rather, Visual Edge believes that
it may be able to obtain debt financing based on the profitability of the
companies to be acquired and the efforts of its major stockholders. We cannot
assure you, however, that we will be able to obtain the financing necessary to
complete any acquisitions.
Visual Edge does not anticipate that any potential acquisition would
cause a change in control and anticipates that stockholder dilution as a result
of the implementation of this strategy, if successful, will be less than 25%.
PATENTS, TRADEMARKS AND PROPRIETARY INFORMATION
Visual Edge has filed a patent application with the United States
Patent and Trademark Office covering some aspects of its digital video editing
and videotape production process. We cannot assure you, however, as to the
breadth or degree of protection which patents may afford Visual Edge, 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. In addition, we cannot assure you that Visual Edge will
have financial or other resources necessary to enforce its own patent or defend
a patent infringement action. Visual Edge relies on proprietary processes and
employs various methods to protect the concepts, ideas and documentation of its
products. However, these methods may not afford complete protection and we
cannot assure you that others will not independently develop or obtain access to
our proprietary processes, ideas and documentation. Furthermore, although Visual
Edge has entered into confidentiality
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agreements with some of its employees, we cannot assure you that those
arrangements will adequately protect us.
FINANCING TRANSACTIONS
For the past several years, we have sought financing through private
sources. In general, we have raised capital through a combination of debt and
equity issuances to private investor groups.
INFINITY FINANCING
On June 13, 1997, we entered into a financing arrangement with a group
of investment funds, which resulted in net proceeds to Visual Edge of
approximately $7.2 million. Under a securities purchase agreement and several
amendments thereto, we have issued to these investors 1,039,388 shares of common
stock, 6,000 shares of Series A-2 Convertible Preferred Stock with a liquidation
preference of $1,000 per share and 8.25% convertible notes in the current
principal amount of $1.5 million. As of the date of this prospectus, the
investment funds hold 700,638 shares of our common stock. However, the
investment funds also may convert their Series A-2 preferred stock and notes
into additional shares of our common stock, although Visual Edge has the right
at any time to prepay or redeem any of these convertible instruments and, as a
result, suffer no dilutive effects. If Visual Edge does not make such
prepayment or redemption, then the investment funds will receive upon conversion
the number of shares set forth below, based upon the timing of the exercise of
their conversion right:
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If the investment funds convert Series A-2 preferred stock: then they will receive a maximum of:
at any time through June 30, 1999 3,300,000 shares of common stock
between July 1, 1999 and January 1, 2000 3,827,273 shares of common stock
on or after January 2, 2000 4,800,000 shares of common stock
If the investment funds convert notes: then they will receive a maximum of:
at any time through January 1, 2000 600,000 shares of common stock
on or after January 2, 2000 1,200,000 shares of common stock
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The investment funds have agreed not to convert any shares of Series
A-2 preferred stock or notes which would result in them owning an aggregate of
9.99% or more of our outstanding common stock following the conversion.
Dividends on the Series A-2 preferred stock will begin accruing on
January 1, 2000 at the rate of 8.25% annually, payable quarterly in cash or in
shares of common stock. The Series A-2 preferred stock is convertible into
shares of our common stock at conversion prices ranging between $1.25 and
$2.50, and has rights that are senior to those of the common stock with respect
to dividends, liquidation and dissolution. The investment funds are entitled to
receive 495,000 shares of our common stock in each of 2000 and 2001 as payment
of dividends on the Series A-2 preferred stock.
The notes mature in June 2000 and interest on the notes shall be paid
in cash. The notes are secured by all of our significant assets and are
convertible into shares of common stock at a price of $2.50 per share, although
that price will become $1.25 per share after January 1, 2000.
MARION EQUITY FINANCING
In March 1998, we entered into an equity financing arrangement with
Marion Interglobal, Ltd., an investment group owned by Ron Seale, Visual Edge's
Chairman of the Board, and its nominees. Under this agreement, Marion was to
invest up to $11 million in exchange for up to 5,200,000 shares of
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common stock in three separate phases. In connection with the first two phases,
in March and June 1998, respectively, we issued to Marion an aggregate of
2,000,000 shares of our common stock in exchange for $5 million. Marion opted
not to proceed with the third phase. We paid "transaction fees" to Marion
totaling 2,000,000 additional shares of common stock upon completion of the
first two phases of Marion's investment. Marion presently holds 976,000 shares
of common stock for its own account, with the remaining shares having been given
to Marion's nominees.
Marion's investment in Visual Edge was on terms as favorable to Visual
Edge as those available in an arm's length transaction in the marketplace.
USE OF PROCEEDS
The shares of common stock being offered under this prospectus are for
the account of some stockholders of Visual Edge. Accordingly, Visual Edge will
not receive any of the proceeds from the sale of these shares by the selling
stockholders. See "Selling Stockholders."
SELLING STOCKHOLDERS
An aggregate of 3,390,000 shares of common stock may be offered and
sold under this prospectus. The number of shares of common stock that may
actually be sold by each of the selling stockholders shall be determined by each
individual selling stockholder and may depend upon a number of factors. Visual
Edge will not receive any of the proceeds from the sale of the shares offered
under this prospectus. Except as indicated, none of the selling stockholders has
ever held any position or office with Visual Edge or has had any other material
relationship with Visual Edge. The following table sets forth certain
information as of May 7, 1999 with respect to the selling stockholders:
<TABLE>
<CAPTION>
NAME OF SHARES OF SHARES OF SHARES OF
STOCKHOLDER (1) COMMON STOCK COMMON STOCK COMMON STOCK
OWNED BEFORE OFFERING(2) OFFERED IN THE OFFERING OWNED AFTER THE
OFFERING(3)
- --------------------------------------------------------------------------------------------------------
NUMBER PERCENT(4) NUMBER PERCENT(4) NUMBER PERCENT(4)
------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Infinity 4,611,935(5) 31.60% 1,854,000 12.71% 2,757,935 18.90%
Investors
Limited
IEO Holdings 1,024,690(5) 9.04% 412,000 3.64% 612,690 5.41%
Limited
Summit Capital 1,027,006(5) 9.06% 412,000 3.64% 615,006 5.43%
Limited
Glacier Capital 1,027,007(5) 9.06% 412,000 3.64% 615,007 5.43%
Limited
Greg Norman 727,000(6) 6.91% 300,000 2.85% 427,000 4.06%
</TABLE>
(1) The address of each of Infinity Investors Limited, IEO Holdings
Limited, Summit Capital Limited and Glacier Capital Limited is Hunkins
Waterfont Plaza, P.O. Box 556 - Main Street,
9
<PAGE> 13
Charles Town, Nevis, West Indies. The address of Greg Norman is c/o
Great White Shark Enterprises, Inc., 501 North A1A, Jupiter, Florida
33477.
(2) Unless otherwise indicated, to the knowledge of Visual Edge, each
selling stockholder listed in this table has sole voting and sole
investment power with respect to all shares of common stock
beneficially owned. Each of the selling stockholders specifically
disclaims beneficial ownership of the shares of common stock held (or
acquirable upon exercise or conversion of any derivative securities
held) by the other selling stockholders. Therefore, the number of
shares of common stock represented for each selling stockholder does
not reflect any shares of common stock beneficially owned by any other
selling stockholder.
(3) Assumes that all shares of common stock offered under this prospectus
are actually sold.
(4) Percentage is based on 10,398,440 shares of common stock outstanding as
of May 7, 1999.
(5) The number of shares listed for Infinity Investors Limited, IEO
Holdings Limited, Summit Capital Limited and Glacier Capital Limited
includes 6,000,000 shares of common stock issuable upon conversion of
notes and Series A-2 preferred stock, based on a conversion price of
$1.25, and 990,000 shares of common stock issuable as payment of
dividends on the Series A-2 preferred stock. Other than the shares
issued upon conversion, Infinity Investors Limited owns 417,935 shares
of common stock, IEO Holdings Limited owns 92,690 shares of common
stock, Summit Capital Limited owns 95,007 shares of common stock and
Glacier Capital Limited owns 95,006 shares of common stock.
(6) The number of shares listed for Greg Norman includes 125,000 shares of
common stock issuable upon the exercise of immediately exercisable
options.
Except as set forth above or in the prospectus, none of the selling
stockholders has, nor within the past three years has had, any position, office
or other material relationship with Visual Edge or any of its predecessors or
affiliates.
The shares of common stock beneficially owned by IEO Holdings Limited,
Summit Capital Limited and Glacier Capital Limited, together with the underlying
registration rights, were acquired in private transactions from Infinity
Emerging Opportunities Limited, Sandera Partners L.P. and Lion Capital Partners,
L.P., respectively. Additional selling stockholders or other information
concerning the above listed selling stockholders may be set forth from time to
time in additional prospectus supplements.
The selling stockholders identified above may have sold, transferred or
otherwise disposed of all or a portion of their shares since the date on which
they provided the information regarding their common stock in transactions
exempt from the registration requirements of the Securities Act. Additional
information concerning the above listed selling stockholders may be set forth
from time to time in prospectus supplements to this prospectus. See "Plan of
Distribution."
Under a Registration Rights Agreement, dated as of June 13, 1997, among
Visual Edge and the Funds, Visual Edge has agreed to file the registration
statement to which this prospectus forms a part for the purpose of registering
the potential resale of the Funds' shares set forth above and to maintain the
effectiveness of the registration statement, in each case as contemplated by the
Registration Rights Agreement. In addition, Visual Edge and the Funds have
agreed to indemnify each other and some affiliated parties from and against any
losses or claims arising out of, among other things, (1) any alleged untrue
statement of a material fact or (2) any material omission contained or referred
to in the registration statement. To the extent that indemnification for
liabilities arising under the Securities Act
10
<PAGE> 14
may be permitted to directors, officers and controlling persons of Visual Edge
under the foregoing provisions, or otherwise, Visual Edge has been advised that
in the opinion of the Securities and Exchange Commission that indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against those
liabilities is asserted by the director, officer or controlling person in
connection with the securities being registered, Visual Edge 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 the
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of that issue. The preceding
sentence shall not apply to claims for indemnification relating to the payment
by Visual Edge of expenses incurred or paid by a director, officer or
controlling person of Visual Edge in the successful defense of any action, suit
or proceeding.
All of the registration and filing fees, printing expenses, blue sky
fees, if any, fees and disbursements of counsel for Visual Edge and fees and
disbursements of one counsel for the selling stockholders will be paid by Visual
Edge; provided, however, that any underwriting discounts or selling commissions
will be borne by the selling stockholders.
PLAN OF DISTRIBUTION
Sales of the shares may be made from time to time by the selling
stockholders, or, subject to applicable law, by pledgees, donees, distributees,
transferees or other successors in interest. These sales may be made on Nasdaq,
in another over-the-counter market, on a national securities exchange, in
privately negotiated transactions or otherwise, or in a combination of these
transactions at prices and at terms then prevailing, at prices related to the
then current market price or at privately negotiated prices. In addition, any
shares covered by this prospectus which qualify for sale under either Section
4(1) of the Securities Act or Rule 144 under the Securities Act may be sold
under those provisions rather than under this prospectus. Without limiting the
generality of the foregoing, the shares may be sold in one or more of the
following types of transactions:
- a block trade in which the broker-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;
- purchases by a broker or dealer as principal and resale by the
broker or dealer for its account under this prospectus;
- an exchange distribution in accordance with the rules of the
exchange;
- ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
- face-to-face transactions between sellers and purchasers
without a broker-dealer.
In effecting sales, brokers or dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate in the
resales.
In connection with distributions of the shares or otherwise, the
selling stockholders may enter into hedging transactions with broker-dealers. In
connection with these transactions, broker-dealers may engage in short sales of
the shares registered under this prospectus in the course of hedging the
positions they assume with selling stockholders. The selling stockholders may
also sell shares short and deliver the shares to close out the short positions.
The selling stockholders may also enter into option or other
11
<PAGE> 15
transactions with broker-dealers which require the delivery to the broker-dealer
of the shares registered under this prospectus, which the broker-dealer may
resell under this prospectus. The selling stockholders may also pledge the
shares registered under this prospectus to a broker or dealer and, upon a
default, the broker or dealer may effect sales of the pledged shares under this
prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders in amounts to be
negotiated in connection with the sale. The brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with these sales and these
commissions, discounts or concessions may be deemed to be underwriting discounts
or commissions under the Securities Act.
Information as to whether underwriters who may be selected by the
selling stockholders, or any other broker-dealer, are acting as principal or
agent for the selling stockholders, the compensation to be received by
underwriters who may be selected by the selling stockholders, or any
broker-dealer, acting as principal or agent for the selling stockholders and the
compensation to be received by other broker-dealers, in the event the
compensation of the other broker-dealers is in excess of usual and customary
commissions, will, to the extent required, be set forth in a supplement to this
prospectus. Any dealer or broker participating in any distribution of the shares
may be required to deliver a copy of this prospectus, including any prospectus
supplement, to any person who purchases any of the shares from or through the
dealer or broker.
Visual Edge has advised the selling stockholders that during the time
they may be engaged in a distribution of the shares included in this prospectus
they are required to comply with Regulation M under the Exchange Act. With some
exceptions, Regulation M prohibits any selling stockholder, any affiliated
purchasers and any broker-dealer or other person who participates in the
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase, any security which is the subject of the distribution
until the entire distribution is complete. Regulation M also prohibits any bids
or purchases made in order to stabilize the price of a security in connection
with the distribution of that security. All of the foregoing may affect the
marketability of the common stock.
It is anticipated that the selling stockholders will offer all of the
shares for sale. Further, because it is possible that a significant number of
shares could be sold at the same time under this prospectus, these sales, or the
possibility of these sales, may have a depressive effect on the market price of
Visual Edge's common stock.
LEGAL MATTERS
The validity of the shares offered in this prospectus will be passed
upon for Visual Edge by Morgan, Lewis & Bockius LLP, New York, New York.
12
<PAGE> 16
EXPERTS
The audited financial statements included in Visual Edge's Form
10-KSB/A for the year ended December 31, 1998, incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent certified public accountants, as indicated in
their report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
13
<PAGE> 17
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY VISUAL EDGE SYSTEMS INC. OR THE SELLING STOCKHOLDERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, ANY SECURITY BY ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER
OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE UNDER THIS PROSPECTUS 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
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Available Information.............................................................................................1
Incorporation of Certain Information by
Reference.......................................................................................................1
The Company.......................................................................................................2
Recent Developments...............................................................................................2
Risk Factors .....................................................................................................2
Business Overview.................................................................................................6
Use of Proceeds...................................................................................................9
Selling Stockholders .............................................................................................9
Plan of Distribution.............................................................................................11
Legal Matters....................................................................................................12
Experts..........................................................................................................13
</TABLE>
VISUAL EDGE SYSTEMS, INC.
3,390,000 SHARES OF
COMMON STOCK
- -------------------------------------------------------------------------------
PROSPECTUS
- -------------------------------------------------------------------------------
MAY 13, 1999
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. 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 these amounts (except the SEC Registration Fee) are estimated.
<TABLE>
<S> <C>
SEC Registration Fee........................................................................ $ 854
Legal fees and expenses..................................................................... 35,000
Accounting fees and expenses................................................................ 5,000
Printing and engraving expenses............................................................. 15,000
Miscellaneous............................................................................... 5,000
----------
Total.................................................................................
$ 60,854
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Generally, Section 145 of the General Corporation Law of the State of
Delaware 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 the 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, that person shall be
indemnified against expenses actually and reasonably incurred by him.
Section 102(b)(7) of the General Corporation Law provides that a
corporation may eliminate or limit the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that the provision shall not eliminate or limit the
liability of a director:
- for any breach of the director's duty of loyalty to the
corporation or its stockholders,
- for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,
- under Section 174 of the General Corporation Law or
- for any transaction from which the director derived an
improper personal benefit.
II-1
<PAGE> 19
The provision shall not eliminate or limit the liability of a director
for any act or omission occurring prior to the date when the provision becomes
effective.
The Registrant has adopted provisions in its By-Laws which provide for
indemnification of its officers and directors to the full extent permitted under
Delaware law. The Registrant's Certificate of Incorporation includes provisions
to limit, to the full extent permitted by Delaware law, the personal liability
of directors of the Registrant for monetary damages arising from a breach of
their fiduciary duties as directors.
ITEM 16. EXHIBITS
See Exhibit Index.
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant hereby undertakes that it will:
(a) File, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement
to include any additional or changed material information on the plan
of distribution.
(b) For determining any liability under the Securities Act,
treat each post-effective amendment as 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) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(2) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant under the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
that indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against those liabilities is asserted by the director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
the indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of that issue. The
preceding sentence shall not apply to claims for indemnification relating to the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding.
II-2
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused 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 May 13, 1999.
Visual Edge Systems Inc.
By: /S/ Earl T. Takefman
-----------------------
Earl T. Takefman
Chief Executive Officer
Each person whose signature appears below hereby authorizes and
constitutes Earl T. Takefman and Richard Parker, and each of them singly, 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 (including his capacity as a director
and/or officer of Visual Edge Systems Inc.) to sign and file any and all
amendments (including post-effective amendments) to this Registration Statement,
and to sign any registration statement for the same offering covered by this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) promulgated under the Securities Act of 1933, as amended, and all
post-effective amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully as to all intents and purposes as
such person might or could do in person, and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 T. Takefman Director, Chief Executive Officer May 13, 1999
- ----------------------------------- (Principal Executive Officer)
Earl T. Takefman
* Chief Financial Officer (Principal Financial May 13, 1999
- ----------------------------------- Officer and Principal Accounting Officer)
Melissa Forzly
* Chairman of the Board May 13, 1999
- -----------------------------------
Ronald F. Seale
* Director May 13, 1999
- -----------------------------------
Mark Hershhorn
* Director May 13, 1999
- -----------------------------------
Beryl Artz
* Director May 13, 1999
- -----------------------------------
Richard Parker
</TABLE>
*By Earl T. Takefman under Power of Attorney
II-3
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER Description
------ -----------
<S> <C>
5 Opinion of Morgan, Lewis & Bockius LLP
23.1 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5)
23.2 Consent of Arthur Andersen LLP
24 Power of Attorney (included with the signature page hereof)
</TABLE>
<PAGE> 1
Exhibit 5
May 13, 1999
Visual Edge Systems Inc.
2424 North Federal Highway, Suite 100
Boca Raton, FL 33431
Re: Issuance of Shares Pursuant to
Registration Statement on Form S-3
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 S-3 (the "Registration
Statement") relating to the sale of an aggregate of 3,390,000 shares (the
"Shares") of the Company's Common Stock, par value $.01 per share (the "Common
Stock").
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. We have assumed that (i)
the Registration Statement, and any amendments thereto, will have become
effective, (ii) such Shares will have been duly authorized and reserved for
issuance and certificates evidencing the same will have been duly executed and
delivered against receipt of the consideration approved by the Board of
Directors of the Company, or a committee thereof, which will be no less than the
par value thereof, and (iii) the Shares will be issued in compliance with
applicable federal and state securities laws.
Based on the foregoing, we are of the opinion that the Shares, when
issued, will be duly authorized, validly issued, 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.
<PAGE> 2
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
-------------------------------
Morgan, Lewis & Bockius LLP
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
March 24, 1999 (except with respect to the matter discussed in Note 11, as to
which the date is May 12, 1999) included in Visual Edge Systems Inc.'s Form
10-KSB/A for the year ended December 31, 1998 and to all references to our Firm
included in this registration statement.
ARTHUR ANDERSEN LLP
Miami, Florida
May 13, 1999
