<PAGE> 1
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _____
Commission file number 1-10927
VSI ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Delaware 84-1104448
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5801 Goshen Springs Road
Norcross, Georgia 30071
(Address of principal executive offices) (Zip Code)
(770) 242-7566
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
-------- --------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class of Securities November 13, 1996
-------------------
Common Stock, $.00025 Par Value 38,840,552
<PAGE> 2
VSI ENTERPRISES, INC. AND SUBSIDIARIES
Index
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
--------
<S> <C> <C>
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets
September 30, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . . . 3
Consolidated Condensed Statements of Operations
Three Months and Nine Months Ended September 30, 1996 and 1995 . . . . . . . 4
Consolidated Condensed Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . 5
Notes to Consolidated Condensed Financial Statements . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations:
Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Liquidity and Sources of Capital . . . . . . . . . . . . . . . . . . . . . . 10
PART II. OTHER INFORMATION
Item 2: Changes in Securities 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . 12
</TABLE>
2
<PAGE> 3
CONSOLIDATED CONDENSED BALANCE SHEETS
VSI Enterprises, Inc. and Subsidiaries
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,480,943 $ 4,202,613
Accounts receivable, net 3,696,514 6,809,037
Cost and estimated earnings in excess of bilings on
uncompleted contracts - 206,361
Inventories, net 3,595,562 3,854,370
Rental and demonstration inventory, net 1,099,809 290,555
Prepaid expenses 392,451 672,375
------------- --------------
Total current assets 15,265,279 16,035,311
------------- --------------
Property and equipment, net 1,520,666 1,497,559
Software Development Costs 976,485 1,243,510
Costs in excess of assets acquired, net 701,979 735,578
Other assets 278,658 154,136
------------- --------------
$ 18,743,067 $ 19,666,094
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 509,162 $ 3,339,420
Bank credit facilities 113,607 155,676
Accounts payable 2,702,966 3,299,294
Accrued expenses 977,937 1,879,456
Billings in excess of costs and estimated
earnings on uncompleted contracts - 174,578
Deferred revenue 583,577 261,601
------------- --------------
Total current liabilities 4,887,249 9,110,025
5% Convertible debentures 5,000,000 -
Stockholders' equity:
Common stock, authorized 46,000,000 shares of
$.00025 par value; issued and outstanding
36,819,629 and 34,525,506 shares, respectively 9,205 8,756
Additional paid-in-capital 31,555,586 28,112,597
Accumulated deficit (22,589,503) (17,417,615)
Cumulative translation adjustment (119,471) (147,669)
------------- --------------
Total stockholders' equity 8,855,817 10,556,069
------------- --------------
$ 18,743,067 $ 19,666,094
============= ==============
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE> 4
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
VSI Enterprises, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
1996 1995 1996 1995
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net product sales $ 11,251,228 $ 15,367,922 $ 4,255,967 $ 5,535,868
Costs and expenses
Cost of product sales 8,356,521 10,900,125 3,262,032 4,169,947
Selling, general and administrative 6,829,374 6,012,938 2,405,757 1,900,712
Research & development 938,969 367,299 272,768 239,043
-------------- -------------- ------------- --------------
Total costs and expenses 16,124,864 17,280,362 5,940,557 6,309,702
-------------- -------------- ------------- --------------
Loss from Operations (4,873,636) (1,912,440) (1,684,590) (773,834)
Other expenses, primarily financing charges (352,023) (347,170) (85,417) (74,839)
-------------- -------------- ------------- --------------
Loss from continuing operations
before income taxes (5,225,660) (2,259,610) (1,770,006) (848,673)
Income tax (provision) benefit 53,772 (91,684) 0 (39,018)
-------------- -------------- ------------- --------------
Loss from continuing operations (5,171,888) (2,351,294) (1,770,006) (887,691)
-------------- -------------- ------------- --------------
Loss from discontinued operations 0 (365,722) 0 (340,102)
-------------- -------------- ------------- --------------
Net loss $ (5,171,888) $ (2,717,016) $ (1,770,006) $ (1,227,793)
============== ============== ============= ==============
Earnings Per Common Share:
Loss per common share
for continuing operations: $ (0.15) $ (0.08) $ (0.05) $ (0.03)
============== ============== ============= ==============
Loss per common share
for discountined operations: $ 0.00 $ (0.01) $ 0.00 $ (0.01)
============== ============== ============= ==============
Loss per common share: $ (0.15) $ (0.09) $ (0.05) $ (0.04)
============== ============== ============= ==============
Weighted average shares outstanding 35,666,183 29,992,527 36,451,585 32,143,696
============== ============== ============= ==============
</TABLE>
See notes to consolidated condensed financial statements.
4
<PAGE> 5
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
VSI Enterprises, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Nine months ended September 30,
1996 1995
(Unaudited) (Unaudited)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (5,171,888) $ (2,691,117)
Adjustments to reconcile net loss to net
cash provided (used) in operating activities:
Depreciation and amortization 1,013,525 541,445
Allowance to reduce inventory to lower
of cost or market 112,525 60,025
Provision for doubtful accounts, net (54,458) 1,262
Changes in operating assets and liabilities:
Accounts receivable 3,373,342 (176,203)
Inventories 146,283 (831,432)
Rental and demonstration inventory (890,499) 0
Prepaid expenses and other assets 279,924 51,616
Accounts payable (596,328) (690,142)
Accrued expenses (1,076,097) (27,827)
Deferred revenue 321,976 (29,865)
------------- -------------
Net cash (used) by operating activities (2,541,694) (3,792,238)
------------- -------------
Cash flows from investing activities:
Purchases of property and equipment (624,100) (754,276)
Change in other assets (124,522) (60,325)
Capitalized software development costs (30,663) (647,592)
------------- -------------
Net cash used by investing activities (779,285) (1,462,192)
------------- -------------
Cash flows from financing activities:
Payments on notes payable (2,830,259) (1,122,989)
Net borrowings (payments) on short term credit facilities (42,069) (208,121)
Proceeds from exercise of stock options
and warrants 166,781 4,634,628
Proceeds from issuance of common stock in connection
with debt agreements 591,424 1,358,601
Proceeds from issuance of common stock in connection
with employee services and employee stock purchase plan 228,538 433,258
Proceeds from issuance of common stock in connection
with acquisition of cR Solutions - 300,800
Proceeds from issuance of common stock in connection
with acquisition of ETI 4,966,920 -
Proceeds from stock issuance -
Proceeds from private placement 2,489,776 535,800
------------- -------------
Net cash provided (used)by financing activities 5,571,111 5,931,977
------------- -------------
Effect of exchange rate changes on cash 28,198 (105,411)
Increase (decrease) in cash and cash equivalents 2,278,330 572,136
Cash and cash equivalents at beginning of the period 4,202,613 1,302,947
------------- -------------
Cash and cash equivalents at end of the period $ 6,480,943 $ 1,875,083
============= =============
Cash paid during the nine month period:
Interest $ 261,370 $ 82,864
============= =============
</TABLE>
See notes to consolidated condensed financial statements.
5
<PAGE> 6
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
VSI ENTERPRISES, INC. AND SUBSIDIARIES
NOTE A - BASIS OF PRESENTATION.
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation have been made and are
of a normal recurring nature. Operating results for the nine month period
ended September 30, 1996 are not necessarily indicative of the results that may
be expected for the year ending December 31, 1996. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Company's Form 10-K for the year ended December 31, 1995.
NOTE B - PRINCIPLES OF CONSOLIDATION.
The consolidated financial statements include the accounts of VSI Enterprises,
Inc. and its subsidiaries, Videoconferencing Systems, Inc., VSI Network
Services Inc. (d.b.a. Integrated Network Services, Inc.), Videoconferencing
Systems, n.v., and VSI Solutions, Inc. All significant intercompany
transactions and balances have been eliminated.
NOTE C - NET INCOME (LOSS) PER SHARE OF COMMON STOCK.
Net income (loss) per share of Common Stock for the three month and nine month
periods ended September 30, 1996 and 1995 have been computed based on the
weighted average number of shares and common equivalent shares outstanding
during each period. Fully diluted information is not presented as fully diluted
earnings per share is not significantly different from the primary earnings per
share presented.
NOTE D - ACQUISITION
On June 28, 1996, the Company acquired all outstanding shares of Integrated
Network Services, Inc. (INS), in exchange for 500,000 shares of the Company's
common stock. The transaction was accounted for as a pooling of interest.
Accordingly, all previously reported financial information has been restated to
reflect the acquisition.
INS designs, installs and supports intelligent computer networks. It is an
integration firm specializing in the connectivity of multi-protocol
environments, ranging from small local area networks to large, enterprise wide
networks employing WAN technologies to connect multiple sites.
Results of operations previously reported by the separate companies and the
combined amounts are presented below:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
VSI $ 2,814,211 $ 3,209,735 $ 7,693,141 $ 9,314,467
INS 1,441,756 2,326,133 3,558,087 6,053,455
--------- --------- ----------- -----------
Combined $ 4,255,967 $ 5,535,868 $11,251,228 $15,367,922
Net earnings (loss):
VSI $(1,745,590) $(1,104,624) $(4,991,907) $(2,691,117)
INS (24,416) (123,169) (179,981) (25,899)
------------ ------------ ------------ ------------
Combined $(1,770,006) $(1,227,793) $(5,171,888) $(2,717,016)
</TABLE>
6
<PAGE> 7
On October 2, 1996, the Company acquired Eastern Telecom, Inc. (ETI), a company
engaged in the business of marketing and sales of telecommunications services
and products. This business will be operated as a wholly-owned subsidiary of
the Company. The Company acquired ETI in exchange for 2,135,093 shares of
common stock of the Company and $3.5 million cash. However, ETI's financial
results will not be included until the fourth quarter of 1996, and are not
reflected in this third quarter 10-Q report.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
VSI ENTERPRISES, INC. AND SUBSIDIARIES
FINANCIAL CONDITION
All previously reported financial information has been restated to reflect the
June 28, 1996 acquisition of Integrated Network Services, Inc. (INS), which was
accounted for as a pooling of interest. VSI's 1995 financial results have also
been restated to account for operations of INS that have since been
discontinued.
Since December 31, 1995, the Company's total assets decreased 5% to
$18,743,067, primarily due to a 46% decrease in accounts receivable. The
decrease in accounts receivable was due to improvements in collection efforts
and a decrease in revenues. Much of that accounts receivable decrease was
offset by a 54% increase in cash, to $6,480,943. The cash position increased
due to the issuance of $5,000,000 in 5% convertible debentures due September
1999, the proceeds of which were used to fund the cash portion of the October
2, 1996 acquisition of ETI and for working capital purposes.
Current liabilities as of September 30, 1996 decreased $4,222,776, or 46%, from
December 31, 1995, primarily as a result of an 85% decrease in notes payable, a
48% decrease in accrued expenses and an 18% decrease in accounts payable.
During the nine-month period ending September 30, 1996, the Company increased
deferred revenue by 123%, from $261,601 to $583,577, primarily due to an
increase in service billings that have been invoiced but are not yet
recognizable as revenue.
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 1995
Revenues for the three months ended September 30, 1996 decreased 23% from the
revenues of $5,535,868 recorded for the three months ended September 30, 1995.
The decrease was due primarily to lower than usual revenues for Integrated
Network Services, Inc., a wholly-owned subsidiary of VSI which was acquired
June 28, 1996, in a pooling of interest transaction. The sudden and unexpected
death in early 1996 of INS' then-chairman and CEO, Bill Rogers, adversely
affected subsequent sales efforts prior to and shortly after VSI's acquisition
of INS. Also contributing to the decrease was a longer than expected sales
cycle in closing key accounts of the Company's videoconferencing subsidiaries
(Videoconferencing Systems, Inc. and Videoconferencing Systems, n.v.).
The Company's backlog of purchase orders at September 30, 1996 was $3,721,760.
Gross margin as a percentage of revenues for the three months ended September
30, 1996 was 23%, down from 25% for the three months ended September 30, 1995,
due to a moderate increase in the sale of lower margin items in the product
mix.
Selling, general and administrative expenses for the three months ended
September 30, 1996, increased 27% over the three months ended September 30,
1995 to $2,405,757, due to an increase in the Company's sales and marketing
expenses to support strategic partner BellSouth's rollout of its
videoconferencing sales and services programs. VSI is the primary system
integrator for BellSouth's multipoint videoconferencing service, and is a part
of BellSouth's Network Complementary Applications Program, through which VSI's
videoconferencing systems are offered to BellSouth customers.
The Company charges research and development costs to expense as incurred until
technological feasibility of a software product has been established. Software
development costs incurred after technological feasibility has been established
are capitalized and amortized over the useful life of the product. For the
three month period ended September 30, 1996, the Company's research and
development expenses were $272,768, a 14% increase over the three month period
ended September 30, 1995. The increase in expense was a result of expanding the
research and development work force to accommodate efforts related to
forthcoming generations of the Omega group and desktop
8
<PAGE> 9
systems product lines and other software products, along with amortization of
costs previously capitalized. At September 30, 1996, the balance in software
development costs was $976,485, a 21% decrease as compared to the $1,243,510
capitalized as of December 31, 1995.
Non-operating expenses for the three month period ended September 30, 1996
increased 14% to $85,417 from the three month period ended September 30, 1995.
Net losses for the three month period ended September 30, 1996 were $1,770,006,
representing 42% of net product sales, as compared to $1,227,793, or 22% of net
product sales, for the three month period ended September 30, 1995. The
increase in losses was due to a 23% decrease in revenues, along with a 27%
increase in selling, general and administrative expenses.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE
MONTHS ENDED SEPTEMBER 30, 1995
Revenues for the nine months ended September 30, 1996 decreased 27% to
$11,251,228 from the revenues of $15,367,922 recorded for the nine months ended
September 30, 1995. The decrease was due primarily to lower than usual revenues
for Integrated Network Services, Inc., a wholly-owned subsidiary of VSI which
was acquired June 28, 1996, in a pooling of interest transaction. The sudden
and unexpected death in early 1996 of INS' then-chairman and CEO, Bill Rogers,
adversely affected subsequent sales efforts prior to and shortly after VSI's
acquisition of INS. Also contributing to the decrease was a longer than
expected sales cycle in closing key accounts of the Company's videoconferencing
subsidiaries (Videoconferencing Systems, Inc. and Videoconferencing Systems,
n.v.).
The Company's backlog of purchase orders at September 30, 1996 was $3,721,760.
Gross margin as a percentage of revenues for the nine months ended September
30, 1996 was 26%, down slightly from 29% for the nine months ended September
30, 1995, due to a moderate increase in the sale of lower margin items in the
product mix.
Selling, general and administrative expenses for the nine months ended
September 30, 1996 was $6,829,374, a 14% increase over the nine months ended
September 30, 1995, due to an increase in the Company's sales and marketing
expenses to support strategic partner BellSouth's rollout of its
videoconferencing sales and service programs. VSI is the primary system
integrator for BellSouth's multipoint videoconferencing service, and is a part
of BellSouth's Network Complementary Applications Program, through which VSI's
videoconferencing systems are offered to BellSouth customers.
The Company charges research and development costs to expense as incurred until
technological feasibility of a software product has been established. Software
development costs incurred after technological feasibility has been established
are capitalized and amortized over the useful life of the product. For the nine
month period ended September 30, 1996, the Company's research and development
expenses were $938,969, a 156% increase over the nine month period ended
September 30, 1995. The increase in expense was a result of expanding the
research and development work force to accommodate efforts related to
forthcoming generations of the Omega group and desktop systems product lines
and other software products, along with amortization of costs previously
capitalized. At September 30, 1996, the balance in software development costs
was $976,485, a 21% decrease as compared to the $1,243,510 capitalized as of
December 31, 1995.
Non-operating expenses for the nine month period ended September 30, 1996
decreased just 1% from the nine month period ended September 30, 1995.
Net losses for the nine month period ended September 30, 1996 were $5,171,888,
representing 46% of net product sales, as compared to $2,717,016, or 18% of net
product sales, for the nine month period ended September 30, 1995. The increase
in losses was due to a 27% decrease in revenues, along with a 14% increase in
selling, general and administrative expenses.
9
<PAGE> 10
LIQUIDITY AND SOURCES OF CAPITAL
As of September 30, 1996, the Company had cash and cash equivalents of
$6,480,943.
On September 30, 1996, the Company issued $5,000,000 of 5% Convertible
Debentures due September 1999 to three institutional investors, the proceeds of
which were utilized to fund the cash portion of the acquisition of ETI and for
working capital purposes. The debentures are convertible into shares of common
stock of the Company. Once a registration statement for the shares becomes
effective, the debenture holders may convert their interests into the Company's
common stock at the lesser of: (i) One hundred percent (100%) of the five-day
average closing bid price at the time of funding; or, (ii) Eighty percent (80%)
of the five-day average closing bid price at the time of conversion. Anytime
after September 30, 1997, provided that a 50% increase in the common stock from
the price of the common stock at funding has occurred, the Company has the
option to force conversion into stock at the lesser of: (i) One hundred percent
(100%) of the five-day average closing bid price at the time of funding; or,
(ii) Eighty percent (80%) of the five-day average closing bid price at the time
of conversion.
In July, 1996, the Company completed a private placement of 1,122,361 shares of
common stock to 39 accredited investors, resulting in proceeds of approximately
$2.4 million. The proceeds of this offering were added to the working capital
of the Company and utilized for general corporate purposes.
Since June 1995, Videoconferencing Systems, Inc. (VSI), a subsidiary of VSI
Enterprises, Inc., has had a revolving credit and security agreement with
Fidelity Funding of California Inc. This credit facility provides the company
with up to $4.0 million at an interest rate of prime plus 2%. Funds available
under the credit facility are based on 80% of eligible VSI accounts receivable
invoices, with certain restrictions. The credit facility is secured by the
accounts receivable, inventory and fixed assets of VSI. At September 30, 1996,
approximately $867,214 was owed to Fidelity Funding under the credit facility.
Since April 1996, Integrated Network Services, Inc. (INS), a subsidiary of VSI
Enterprises Inc., has had a revolving credit and security agreement with
Princeton Capital Finance Company. This credit facility provides INS with up to
$1.2 million at an interest rate of prime plus 4%. Funds available under the
credit facility are based on 80% of eligible accounts receivable invoices, with
certain restrictions. The credit facility is secured by accounts receivable,
inventory and fixed assets of INS, as well as by personal guarantees of certain
INS officers. At September 30, 1996, approximately $183,560 was owed to
Princeton Capital Finance Company.
As of September 30, 1996, VSI Europe had a secured bank facility of $572,246,
of which $447,524 was outstanding at that time.
The Company's liquidity sources include existing cash and credit facilities.
10
<PAGE> 11
ITEM 2. CHANGES IN SECURITIES
On September 30, 1996, the Company issued $5,000,000 of 5% Convertible
Debentures due September 1999 to three institutional investors, the proceeds of
which were utilized to fund the cash portion of the acquisition of ETI and for
working capital purposes. The debentures are convertible into shares of common
stock of the Company. Once a registration statement for the shares becomes
effective, the debenture holders may convert their interests into the Company's
common stock at the lesser of: (i) One hundred percent (100%) of the five-day
average closing bid price at the time of funding; or, (ii) Eighty percent (80%)
of the five-day average closing bid price at the time of conversion. Anytime
after September 30, 1997, provided that a 50% increase in the common stock from
the price of the common stock at funding has occurred, the Company has the
option to force conversion into stock at the lesser of: (i) One hundred percent
(100%) of the five-day average closing bid price at the time of funding; or,
(ii) Eighty percent (80%) of the five-day average closing bid price at the time
of conversion.
In July, 1996, the Company completed a private placement of 1,122,361 shares of
common stock to 39 accredited investors, resulting in proceeds of approximately
$2.4 million. The proceeds of this offering were added to the working capital
of the Company and utilized for general corporate purposes.
All issuances of securities described above were made in reliance on the
exemption from registration provided by Section 4(2) and/or 3(b) of the
Securities Act of 1933 as transactions by an issuer not involving a public
offering. All of the securities were acquired by the recipients thereof for
investment and with no view toward the resale or distribution thereof. In each
instance, the offers and sales were made without any public solicitation and
the stock certificates bear restrictive legends. No underwriter was involved in
the transactions and no commissions were paid.
11
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
The following exhibit is filed with this report:
27.1 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K:
During the quarter ended September 30, 1996, the Company filed a current
report on Form 8-K dated June 28, 1996, and Amendment No. 1 on Form 8-K/A dated
September 10, 1996 to its current report on Form 8-K dated June 28, 1996.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VSI ENTERPRISES, INC.
Date: November 13, 1996 /s/ Richard K. Snelling
----------------------- ------------------------------------
Chairman & Chief Executive Officer
/s/ B.R. Brewer
------------------------------------
President & Chief Operating Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF VSI ENTERPRISES, INC. FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 6,481
<SECURITIES> 0
<RECEIVABLES> 3,697
<ALLOWANCES> 0
<INVENTORY> 3,596
<CURRENT-ASSETS> 15,265
<PP&E> 1,521
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,743
<CURRENT-LIABILITIES> 4,887
<BONDS> 0
0
0
<COMMON> 9
<OTHER-SE> 8,856
<TOTAL-LIABILITY-AND-EQUITY> 18,743
<SALES> 4,256
<TOTAL-REVENUES> 4,256
<CGS> 3,262
<TOTAL-COSTS> 5,941
<OTHER-EXPENSES> 85
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,770)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,770)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,770)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
