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As filed with the Securities and Exchange Commission on March 2, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 (I.R.S. Employer
incorporation or 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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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED SECURITY(1) PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share.... 3,390,000 $0.90625 $3,072,187.50 $854.07
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</TABLE>
(1) Estimated solely for the purpose of determining the registration fee,
based upon the average of the bid and asked prices of the Registrant's
Common Stock as quoted on the Nasdaq SmallCap Market on March 1, 1999,
pursuant to Rule 457(c).
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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 certain of our stockholders, as well as to shares
of common stock offered and sold by certain of our stockholders pursuant to the
Prospectus dated August 18, 1997, as supplemented, the Prospectus dated November
21, 1997, as supplemented, and the Prospectus dated April 15, 1998, as
supplemented. We will not receive any of the proceeds from the sale of the
shares offered hereby.
Our common stock is traded on the Nasdaq SmallCap Market under the
symbol "EDGE." On March 1, 1999, the last reported sale price of such common
stock as quoted on the Nasdaq SmallCap Market was $0.90625 per share.
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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 4.
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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 March 2, 1999.
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TABLE OF CONTENTS
PAGE
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Available Information.......................................................3
Incorporation of Certain Information by Reference...........................3
Risk Factors ...............................................................4
The Company.................................................................7
Business Overview...........................................................7
Use of Proceeds............................................................12
Selling Stockholders ......................................................12
Plan of Distribution.......................................................14
Legal Matters..............................................................15
Experts....................................................................15
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AVAILABLE INFORMATION
Visual Edge Systems Inc. (the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files periodic reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information concerning
the Company 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 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 the Company, that file
electronically with the Commission. The address of such site is
HTTP://WWW.SEC.GOV.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
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 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 the exhibits thereto 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 the
Company, are hereby incorporated by reference into this Prospectus:
1. The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997;
2. The Company's Quarterly Reports on Form 10-QSB for the fiscal
quarters ended March 31, 1998, June 30, 1998 and September 30,
1998;
3. The Company's Current Report on Form 8-K dated January 8, 1999;
and
4. The description of the common stock set forth in the Company's
Registration Statement filed pursuant to Section 12 of the
Exchange Act on Form 8-A on July 11, 1996, and any amendment or
report filed for the purpose of updating any such description.
All reports and other documents subsequently filed by the Company after the
date of this Prospectus pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act and prior to the termination of this
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offering shall be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date of filing such documents or reports.
Any statement contained in a document incorporated or deemed to be
incorporated into this Prospectus by reference shall be deemed to be modified or
superseded for the purpose of this Prospectus to the extent that a statement
contained in this Prospectus, or in any other subsequently filed document which
also is or is deemed to be incorporated into this Prospectus by reference,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES CERTAIN DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN EXHIBITS TO
SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED HEREIN BY
REFERENCE) ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST DIRECTED TO
VISUAL EDGE SYSTEMS INC., 2424 NORTH FEDERAL HIGHWAY, SUITE 100, BOCA RATON,
FLORIDA 33431, ATTENTION: EARL TAKEFMAN (561) 750-7559.
RISK FACTORS
Readers of this Registration Statement should carefully consider the
following risk factors, in addition to the other information contained herein.
This Registration Statement contains certain statements of a forward-looking
nature relating to future events or the future financial performance of the
Company within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and
which are intended to be covered by the safe harbors created thereby. Readers
are cautioned that such statements are only predictions and that actual events
or results may differ materially. In evaluating such statements, readers 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.
SIGNIFICANT AND CONTINUING LOSSES. For the period from July 15, 1994 (inception)
to September 30, 1998, we incurred a cumulative net loss of $17,955,377. We
believe that we will incur continuing losses until, at the earliest, we generate
sufficient revenues to offset the substantial up-front capital expenditures and
operating costs associated with commercializing our products.
UNCERTAINTY OF PROPOSED PLAN OF OPERATION. Our plan of operation and prospects
largely depend upon our ability to:
o achieve significant market acceptance for our products;
o establish and maintain satisfactory relationships with those who
arrange golf events;
o successfully hire and retain skilled technical, marketing and
other personnel; and
o successfully develop, equip and operate ONE-ON-ONE vans on a
timely and cost effective basis.
There can be no assurance that we will be able to continue to implement our
business plan or that unanticipated expenses, problems or technical difficulties
will not occur which would result in material delays in its implementation.
Failure to implement our business plan or material delays in its implementation
would have a material adverse effect on us.
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POTENTIAL INFLUENCE ON MARKET OF SALE OF CERTAIN SHARES. As part of certain
financing transactions, we issued to certain stockholders, through December 31,
1998, an aggregate of 1,039,388 shares of our common stock. In addition, we will
be obligated to issue to such stockholders additional shares of common stock if
they decide to convert their convertible notes or shares of convertible
preferred stock into common stock. Conversion of some or all of such notes or
preferred stock would have a dilutive effect on our stockholders. 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.
DEPENDENCE ON GREG NORMAN LICENSE. Pursuant to a license agreement with Greg
Norman (including several recent amendments), we have a worldwide license to use
Mr. Norman's name, likeness, endorsement and certain trademarks in connection
with the production and promotion of our products. The license agreement
originally required us to make guaranteed minimum royalty payments to Mr.
Norman; however, as a result of a recent amendment there are no longer any
guaranteed payments required, other than a royalty of all of our sales of our
product. As at December 31, 1998, we have paid Mr. Norman $1,300,000 in cash and
have issued to him 602,000 shares of our common stock, as well as 125,000
options to purchase shares of our common stock at $1.00 per share. The original
term of the license agreement expires on December 31, 2001. There may be a
material adverse effect to us if Mr. 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. We
have obtained "keyman" life insurance on the life of Mr. Norman in the amount of
$10,000,000.
MINIMUM BID PRICE. If the bid price of shares listed on Nasdaq is below $1.00
per share for thirty consecutive business days, Nasdaq will notify the issuer of
such failure to comply with Nasdaq's continued inclusion requirements. Through
March 1, 1999, the bid price of our shares has been less than $1.00 per share
for thirty-one consecutive business days. If we receive notice from Nasdaq
regarding the bid price of our shares, we then will have ninety calendar days to
achieve compliance with Nasdaq rules. According to Nasdaq's rules, we can
achieve compliance if the bid price of our shares is above $1.00 per share for
at least ten consecutive business days during the ninety-day compliance period.
While we anticipate that we will meet Nasdaq's compliance tests, exclusion of
our shares from Nasdaq would adversely affect the liquidity of our equity
securities.
UNCERTAINTY OF MARKET ACCEPTANCE AND BUSINESS STRATEGY. Our ONE-ON-ONE
personalized videotape golf lesson is a new business concept and, accordingly,
demand and market acceptance for our products are subject to a high level of
uncertainty. Achieving market acceptance for our products will require
significant efforts and expenditures by us to create awareness and demand. Our
prospects will be significantly affected by our ability to successfully build an
effective sales organization and develop a significant number of ONE-ON-ONE
vans. We only commenced marketing activities in 1997 and we have limited
marketing and technical experience and limited financial, personnel and other
resources to independently undertake extensive marketing activities. Our
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 our marketing
efforts and changes in market conditions. To the extent that we enter into
third-party marketing and distribution arrangements in the future, we will be
dependent on the marketing efforts of such third parties and in certain
instances on the popularity and sales of their products. There can be no
assurance that our strategy will result in successful product commercialization
or that our efforts will result in initial or continued market acceptance for
our products.
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POTENTIAL FOR PRODUCTS TO 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. Accordingly, our ability to compete
may be dependent upon our ability to continually enhance and improve our
software. There can be no assurance that competitors will not develop
technologies or products that render our products obsolete or less marketable.
DEPENDENCE ON KEY PERSONNEL; NEED FOR QUALIFIED PERSONNEL. Our prospects are
dependent on the personal efforts of Earl T. Takefman, our Chief Executive
Officer, and other key personnel. The loss of the services of Mr. Takefman could
have a material adverse effect on our proposed business and prospects. 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. Our success is also dependent upon our 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 we 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 us.
DEPENDENCE ON LIMITED PRODUCT LINE. We are entirely dependent on the sales of a
limited product line to generate revenues and on the commercial success of our
products. There can be no assurance that our products will prove to be
commercially viable. Failure to achieve commercial viability would have a
material adverse effect on us.
INDUSTRY FACTORS. Our future operating results will depend on numerous factors
beyond our control, including:
o the popularity, price and timing of competitors' products being
introduced and distributed;
o national, regional and local economic conditions (particularly
recessionary conditions adversely affecting consumer spending);
o changes in consumer demographics;
o the availability and relative popularity of other forms of sports
and entertainment; and
o 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. In addition, seasonal weather
conditions limiting the playing seasons in certain geographic areas may result
in fluctuations in our future operating results.
OUTSTANDING OPTIONS AND WARRANTS. There are currently outstanding options to
purchase an aggregate of 1,884,587 shares of our common stock at exercise prices
ranging from $1.00 to $7.50 per share, and outstanding warrants to purchase an
aggregate of 1,930,000 shares of our common stock at exercise prices ranging
from $3.25 to $10.00. Exercise of any of such options or warrants will have a
dilutive effect on our stockholders. Furthermore, holders of such options or
warrants are more likely to exercise them at times when we could obtain
additional equity capital on terms that are more favorable to us than those
provided in the options or warrants. As a result, exercise of the options or
warrants may adversely affect the terms of such financing.
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VOLATILITY OF MARKET PRICE OF COMMON STOCK AND WARRANTS. Since our initial
public offering, the market prices of our publicly traded securities have 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 such companies.
THE COMPANY
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. The
Company 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. 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."
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 in 1994. 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
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.
RELATIONSHIP WITH GREG NORMAN
Pursuant to a license agreement, as amended, 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 and certain trademarks owned by him in connection with
the production and promotion of the Company's products. Pursuant to the Greg
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Norman License, the Company is required to make royalty payments to Mr. Norman
on its net sales of the ONE-ON-ONE WITH GREG NORMAN product. As of December 31,
1998, the Company has paid Mr. Norman $1,300,000 in cash, issued 602,000 shares
of its common stock, $.01 par value per share (the "Common Stock"), and issued
options to purchase 125,000 shares of Common Stock at $1.00 per share. After the
initial term, which ends on December 31, 2001, the Company has the option to
renew the Greg Norman License for two additional five-year periods. The
Company's business and prospects are dependent upon the Company's continued
association with Greg Norman.
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 and does not prohibit
the Company from entering into similar endorsement agreements with other
athletes or instructors. Additionally, the Company is the beneficiary of a
$10,000,000 life insurance policy on Mr. Norman.
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 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. In addition, there can be no assurance that the
Company will have financial or other resources necessary to enforce its own
patent 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 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.
FINANCING TRANSACTIONS
JUNE FINANCING AND SUBSEQUENT AMENDMENTS
On June 13, 1997, the Company arranged a three-year $7.5 million debt
and convertible equity facility (the "June Financing") with a group of
investment funds (the "Funds"). The Company issued and sold to the Funds the
following securities pursuant to the Securities Purchase Agreement, dated as of
June 13, 1997 (the "Agreement"), among the Company and the Funds: (i) 8.25%
unsecured convertible notes (the "Notes") in the aggregate principal amount of
$7,500,000 with a maturity date of three years from the date of issuance,
subject to the mandatory automatic exchange of $5 million of the Notes for
Preferred Stock, par value $.01 per share, which Notes are convertible into
shares of Common Stock (the "Note Conversion Shares") at any time and from time
to time commencing January 1, 1998 at the option of the holder thereof subject
to certain limitations on conversion set forth in the Agreement; (ii) 93,677
shares of Common Stock subject to adjustment (the "Grant Shares"); and (iii)
five-year warrants (the "June Warrants") to purchase 100,000 shares of Common
Stock (the "Warrant Shares") at an exercise price equal to $10.675. The June
Warrants are redeemable commencing October 1, 1998 at a redemption price
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equal to $.10 per share, subject to adjustment based on a 20-day minimum closing
bid price of the Common Stock. The net proceeds to the Company from the sale of
the Notes, Grant Shares and June Warrants was $7,236,938. In addition, the
Company issued 14,052 shares (the "IPO Underwriters Shares") of Common Stock to
the underwriter in the Company's initial public offering as a fee for services
rendered in connection with the transactions contemplated by the Agreement.
Pursuant to the Agreement, the Company was required to issue additional
Grant Shares (the "Additional Grant Shares") to the Funds in the event that the
closing bid price of Common Stock for each trading day during any consecutive 10
trading days from June 13, 1997 through December 31, 1997 did not equal at least
$10.00 per share. The Company issued 180,296 Additional Grant Shares during the
fourth quarter of 1997.
Interest payments on the Notes are, at the option of the Company,
payable in cash or in shares of Common Stock. During 1997 the Company issued an
aggregate of 65,671 shares (the "Interest Shares") for payment of interest due.
During 1998 the Company issued an aggregate of 80,989 Interest Shares for
payment of interest due.
On February 6, 1998, the Company entered into the First Amendment to
the Securities Purchase Agreement and Related Documents, dated as of December
31, 1997 (the "First Amendment"), among the Company and the Funds. Pursuant to
the First Amendment, the Funds converted $6 million aggregate principal amount
of the Notes into the Company's Series A Convertible Preferred Stock (the
"Preferred Stock"). In addition, the "Maximum Conversion Price" (as defined in
the First Amendment) at which shares of Preferred Stock are convertible into
Common Stock (the "Stock Conversion Shares") is $6.00, subject to adjustment in
certain circumstances.
Dividends on the Preferred Stock and the Series A-2 Preferred Stock (as
hereafter defined) are, at the option of the Company, payable in cash or in
shares of Common Stock. During 1998 the Company issued an aggregate of 302,755
shares (the "Dividend Shares") for payment of dividends.
The remaining $1.5 million of outstanding Notes held by the Funds have
become secured debt pursuant to a Security Agreement, dated as of February 6,
1998 (the "Security Agreement"), between the Company and H.W. Partners, L.P., as
agent for and representative of the Funds. With respect to such $1.5 million in
outstanding Notes, the Funds have been granted a security interest in the
collateral described in the Security Agreement, which includes all of the
Company's unrestricted cash deposit accounts, accounts receivable, inventory and
equipment and fixtures excluding the vans.
On March 16, 1998, the Company sold an additional 1,550 shares of
Preferred Stock to the Funds in exchange for marketable securities with an
aggregate value of $1,550,000. In connection therewith, the Funds as the holders
of the majority of the outstanding Preferred Stock obtained the right to appoint
one director to the Company's Board of Directors, though they had not named such
director as of December 31, 1998. On April 20, 1998, the Company redeemed such
1,550 shares of Preferred Stock in exchange for marketable securities with an
aggregate value of $1,550,000.
As a condition to the consummation of the Marion Equity Financing (as
defined in and described in "Marion Equity Financing"), the Company 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
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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 all of the
Preferred Stock and the Notes owned by 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 (as
hereafter defined) 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. Furthermore, because the Company did not redeem all of
the Preferred Stock and Notes owned by the Funds before June 30, 1998, the Funds
received 200,000 additional shares of Common Stock.
On December 29, 1998, the Company entered into the Third Amendment to
Bridge Securities and Purchase Agreement and Related Documents (the "Third
Amendment"), among the Company and the Funds (or, if applicable, their
respective transferees) (the "New Funds"). Pursuant to the Third Amendment, the
Company agreed to retire all of the issued and outstanding shares of the
Preferred Stock and, in exchange therefor, issue to the New Funds a new class of
Series A-2 Convertible Preferred Stock (the "Series A-2 Preferred Stock"). The
Series A-2 Preferred Stock is senior to the Common Stock with respect to
dividends, liquidation and dissolution. Prior to January 1, 2000, no dividends
shall accrue or be payable on the Series A-2 Preferred Stock. Beginning on
January 1, 2000, each share of Series A-2 Preferred Stock shall entitle the
holder to an annual dividend of 8.25%, payable on a quarterly basis, which
dividend shall increase to 18% in certain situations as specified in the
Certificate of Designation with respect to the Series A-2 Preferred Stock.
The Third Amendment also revised the conversion price at which the
Notes may be convertible into Common Stock and at which the Series A-2 Preferred
Stock may be convertible into Common Stock (the "Series A-2 Conversion Shares").
The "Conversion Price" (as defined in the Third Amendment) applicable to the
Notes is $2.50 until January 1, 2000, inclusive, and $1.25 thereafter. The
Conversion Price applicable to the Series A-2 Preferred Stock is (i) for the
first $2,000,000 of aggregate liquidation preference of the Series A-2 Preferred
Stock, $1.25, (ii) for the next $1,000,000 of aggregate liquidation preference
of the Series A-2 Preferred Stock, $2.00 until June 30, 1999, inclusive, $1.375
from July 1, 1999 until January 1, 2000, inclusive, and $1.25 thereafter, and
(iii) for any excess amounts of aggregate liquidation preference of the Series
A-2 Preferred Stock, $2.50 until June 30, 1999, inclusive, $2.00 from July 1,
1999 until January 1, 2000, inclusive, and $1.25 thereafter.
The New Funds agreed to a limitation on their conversion rights, such
that they may not convert any amount of convertible instruments or exercise any
portion of warrants that would result in the sum of (a) the number of shares of
Common Stock beneficially owned by the New Funds and their affiliates and (b)
the number of shares of Common Stock issuable upon conversion of convertible
instruments or exercise of warrants, exceeding 9.99% of the outstanding shares
of Common Stock after giving effect to
10
<PAGE> 13
such conversion. The Third Amendment also removed resale limitations on the New
Funds. Furthermore, for a period of one year or until his earlier termination of
employment with the Company, so long as the New Funds do not sell their shares
of Common Stock, Earl Takefman agreed not to sell any of his shares of Common
Stock. If he is terminated for cause (as defined in his employment contract), he
will not sell his shares of Common Stock for one year after such termination. If
he is terminated without cause (as defined in his employment contract) or if he
resigns, he will not sell his shares of Common Stock for thirty days after such
termination or resignation (or for such longer time as mandated by federal or
state securities laws).
In addition, pursuant to the Third Amendment, the parties agreed that
the following occurrences would constitute an Event of Default under the
Agreement, as amended: (a) any of Earl Takefman, Richard Parker or Thomas Peters
voluntarily resign from their respective positions with the Company, unless the
closing bid price of the Common Stock exceeds $2.00 for twenty out of the thirty
trading days preceding the effective date of such resignation; (b) the Greg
Norman License is materially impaired due to a material breach by the Company or
to an amendment that makes it economically impracticable for the Company to
carry out its obligations pursuant thereto; (c) the Commission does not declare
this registration statement effective by March 31, 1999; or (d) the Company
defaults or breaches any of its covenants, representations or agreements set
forth in the Third Amendment.
Furthermore, as a means of retaining the Company's management and as an
incentive for such management to pursue the Company's long-term goals, the Third
Amendment provided that all outstanding stock options granted to Earl Takefman,
Richard Parker and Thomas Peters shall be repriced to $1.00 per share and that
all such options shall be immediately vested. The Company also agreed to reprice
to $1.00 per share approximately 82,000 existing employee stock options, all
such options to be immediately vested. In addition, the New Funds agreed to
return to the Company warrants to purchase 284,000 shares previously granted to
them, provided that options to purchase 200,000 shares of Common Stock be
redistributed to Richard Parker and options to purchase 100,000 shares of Common
Stock be redistributed to Thomas Peters, all such options to be immediately
vested and to have an exercise price of $1.00 per share. Moreover, the Company
granted 200,000 new stock options to Richard Parker, all such options to be
immediately vested and to have an exercise price of $1.00 per share.
MARION EQUITY FINANCING
In March 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 Common Stock as explained
herein. Pursuant to the Marion Agreement, the purchase of Common Stock was 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; (ii) sixty days following the registration of all the underlying
shares of Common Stock under the Marion Agreement, the Company sold 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 was to 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. Marion opted not to proceed with the third tranche. The Company
paid transaction fees to Marion upon completion of the first two tranches as
follows: (i) 1,200,000 shares of Common Stock for the first $3,000,000 tranche;
and (ii) 800,000 shares of Common Stock for the second $2,000,000 tranche.
11
<PAGE> 14
Further, upon the consummation of the second tranche of the Marion
Agreement, Mr. Alan Lubell, then the Chairman of the Board of the Company,
transferred to Marion 250,000 shares of Common Stock.
In addition, the Company may not redeem the warrants issued in the
initial public offering without the prior written consent of Marion.
USE OF PROCEEDS
The shares of Common Stock being offered hereby are for the account of
certain stockholders of the Company (the "Selling Stockholders"). Accordingly,
the Company will not receive any of the proceeds from the sale of such 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 pursuant to 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
such Selling Stockholder and may depend upon a number of factors. The Company
will not receive any of the proceeds from the sale of the shares offered hereby.
Except as indicated, 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 following table sets forth certain information as of March 1, 1999
with respect to the Selling Stockholders:
<TABLE>
<CAPTION>
SHARES OF SHARES OF
SHARES OF COMMON STOCK COMMON STOCK
NAME OF COMMON STOCK OFFERED IN THE OWNED AFTER THE
STOCKHOLDER (1) OWNED BEFORE OFFERING(2) OFFERING(3) OFFERING(4)
-------------- ------------------------ ---------------------- --------------------
NUMBER PERCENT(5) NUMBER PERCENT(5) NUMBER PERCENT(5)
------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Infinity 4,801,133(6) 27.57% 4,801,133 27.57% 0 0
Investors Limited
- ------------------------------------------------------------------------------------------------
IEO Holdings 1,066,919(6) 6.13% 1,066,919 6.13% 0 0
Limited
- ------------------------------------------------------------------------------------------------
Summit Capital 1,066,918(6) 6.13% 1,066,918 6.13% 0 0
Limited
- ------------------------------------------------------------------------------------------------
Glacier Capital 1,066,918(6) 6.13% 1,066,918 6.13% 0 0
Limited
- ------------------------------------------------------------------------------------------------
Greg Norman 727,000(7) 4.17% 727,000 4.17% 0 0
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) The address of each of Infinity Investors Limited ("Infinity"), IEO
Holdings Limited ("IEO"), Summit Capital Limited ("Summit") and Glacier
Capital Limited ("Glacier") is Hunkins Waterfont Plaza, P.O. Box 556 -
Main Street, Charles Town, Nevis, West Indies. The address of Greg
Norman ("Norman") is c/o Great White Shark Enterprises, Inc., 501 North
A1A, Jupiter, Florida 33477.
12
<PAGE> 15
(2) Unless otherwise indicated, to the knowledge of the Company, each
Selling Stockholder listed herein 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 and, as such, the number of shares of Common Stock
represented hereby does not reflect any shares of Common Stock
beneficially owned by any other Selling Stockholder.
(3) The number of shares of Common Stock offered by Infinity, IEO, Summit
and Glacier reflects the aggregate number of such shares owned by such
Selling Stockholders (including, without limitation, shares to be
issued as payment of dividends through 2001) pursuant to this
Prospectus, the Prospectus dated August 18, 1997, as supplemented, the
Prospectus dated November 21, 1997, as supplemented, and the Prospectus
dated April 15, 1998, as supplemented. The number of shares of Common
Stock offered by Norman reflects the aggregate number of shares owned
by Norman pursuant to this Prospectus and the Prospectus dated April
15, 1998, as supplemented.
(4) Assumes that all shares of Common Stock offered hereby are actually
sold.
(5) Percentage is based on 17,416,440 shares of Common Stock outstanding as
of March 1, 1999.
(6) The number of shares listed for Infinity, IEO, Summit and Glacier
includes 6,000,000 shares of Common Stock issuable upon conversion of
the Notes and the 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 such shares
issued upon conversion, Infinity owns 607,133 shares of Common Stock,
IEO owns 134,919 shares of Common Stock and Summit and Glacier each
owns 134,918 shares of Common Stock.
(7) The number of shares listed for 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 the Company or any of its predecessors or
affiliates.
The shares of Common Stock beneficially owned by IEO, Summit and
Glacier, 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."
Pursuant to the terms of a Registration Rights Agreement, dated as of
June 13, 1997, among the Company and the Funds, as amended, the Company 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 such Registration Statement, in
each case as contemplated by such Registration Rights Agreement, as amended. In
addition, the Company and the Funds have agreed to indemnify each other and
certain affiliated parties from and against any losses or claims arising out of,
13
<PAGE> 16
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.
Insofar as indemnification for liabilities arising under the Securities Act 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 the Securities 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, 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 the Securities Act and will be governed by the
final adjudication of such issue.
All of the registration and filing fees, printing expenses, blue sky
fees (if any), fees and disbursements of counsel for the Company and certain
fees and disbursements of one counsel for the Selling Stockholders will be paid
by the Company; 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. Such sales may be made on Nasdaq,
in another over-the-counter market, on a national securities exchange (any of
which may involve crosses and block transactions), in privately negotiated
transactions or otherwise or in a combination of such transactions at prices and
at terms then prevailing or 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 pursuant to Section 4(1) of the Securities Act
or Rule 144 promulgated thereunder may be sold under such provisions rather than
pursuant to 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) 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; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this Prospectus;
(c) an exchange distribution in accordance with the rules of such exchange; (d)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (e) 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 such transactions, broker-dealers may engage in short sales of
the shares registered hereunder 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 such short positions. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of the shares
registered hereunder, which the broker-dealer may resell pursuant to this
Prospectus. The Selling Stockholders may also pledge the shares registered
hereunder to a broker or dealer and upon a default, the broker or dealer may
effect sales of the pledged shares pursuant to this Prospectus.
14
<PAGE> 17
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. Such 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 such sales and any such
commission, discount or concession 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, is 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 such 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 (the "Prospectus Supplement"). Any dealer or broker participating in
any distribution of the shares may be required to deliver a copy of this
Prospectus, including the Prospectus Supplement, if any, to any person who
purchases any of the shares from or through such dealer or broker.
The Company has advised the Selling Stockholders that during such time
as they may be engaged in a distribution of the shares included herein they are
required to comply with Regulation M promulgated under the Exchange Act. With
certain exceptions, Regulation M precludes any Selling Shareholder, any
affiliated purchasers and any broker-dealer or other person who participates in
such 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 hereunder, such sales, or the possibility
thereof, may have a depressive effect on the market price of the Company's
Common Stock.
LEGAL MATTERS
The validity of the shares 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. as of March 31,
1998, June 30, 1998 and September 30, 1998 have been incorporated by reference
herein in reliance upon the report of Arthur Andersen, LLP, independent
certified public accountants, included therein, and upon the authority of said
firm as experts in accounting and auditing. The financial statements of Visual
Edge Systems Inc. as of December 31, 1997 and for the year then ended have been
incorporated by reference herein from the Company's 1997 Annual Report on Form
10-KSB in reliance upon the report of Arthur Andersen, LLP, independent
certified public accountants, included therein, and upon the authority of said
firm as experts in accounting and auditing.
15
<PAGE> 18
===============================================================================
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 THE COMPANY 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 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
PAGE
------
Available Information...........................3
Incorporation of Certain Information by
Reference.....................................3
Risk Factors ...................................4
The Company.....................................7
Business Overview...............................7
Use of Proceeds................................12
Selling Stockholders ..........................12
Plan of Distribution...........................14
Legal Matters..................................15
Experts........................................15
VISUAL EDGE SYSTEMS INC.
3,390,000 SHARES OF
COMMON STOCK
------------
PROSPECTUS
------------
March 2, 1999
===============================================================================
<PAGE> 19
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 such amounts (except the SEC Registration Fee) are estimated.
SEC Registration Fee................................................. $ *
Legal fees and expenses.............................................. *
Accounting fees and expenses......................................... *
Printing and engraving expenses...................................... *
Miscellaneous........................................................ *
-------
Total........................................................ $
ITEM 15. 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.
Section 102(b)(7) of the GCL 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 such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the GCL or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision shall eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such 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 Company for monetary damages arising from a breach of their
fiduciary duties as directors.
- ----------------------------
* To be completed by amendment.
II-1
<PAGE> 20
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 pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-2
<PAGE> 21
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 March 2, 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 March 2, 1999
- ------------------------------------ (Principal Executive Officer)
Earl T. Takefman
/s/ Melissa Forzly Chief Financial Officer (Principal Financial March 2, 1999
- ------------------------------------ Officer and Principal Accounting Officer)
Melissa Forzly
Chairman of the Board March , 1999
- ------------------------------------
Ronald F. Seale
Director March , 1999
- ------------------------------------
Mark Hershhorn
/s/ Beryl Artz Director March 2, 1999
- ------------------------------------
Beryl Artz
/s/ Richard Parker Director March 2, 1999
- ------------------------------------
Richard Parker
</TABLE>
II-3
<PAGE> 22
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------
5 Opinion of Morgan, Lewis & Bockius LLP*
23.1 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5)*
23.3 Consent of Arthur Andersen LLP*
24 Power of Attorney (included with the signature page hereof)*
- -----------
* To be filed by amendment.
