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As filed with the Securities and Exchange Commission on September 22, 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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VSI ENTERPRISES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 84-1104448
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5801 GOSHEN SPRINGS ROAD
NORCROSS, GEORGIA 30071
(770) 242-7566
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
RICHARD E. HARRISON, CHIEF EXECUTIVE OFFICER
5801 GOSHEN SPRINGS ROAD
NORCROSS, GEORGIA 30071
(770) 242-7566
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
ROBERT T. MOLINET, ESQ.
SMITH, GAMBRELL & RUSSELL, LLP
1230 PEACHTREE STREET, N.E., SUITE 3100
ATLANTA, GEORGIA 30309
(404) 815-3643
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement.
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, 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. [ ]
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE (1) (2) PRICE (1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, par value
$.001 per share............ 4,121,355 $0.594 $2,448,085 $681
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</TABLE>
(1) The shares of common stock are being registered hereby for the account
of certain shareholders of VSI Enterprises, Inc. No other shares of
common stock are being registered pursuant to this offering. Pursuant
to Rule 416, this registration statement also covers such
indeterminate number of additional shares of common stock as may be
issued because of future stock dividends, stock distributions, stock
splits, or similar capital readjustments.
(2) Estimated solely for the purpose of calculating the filing fee
pursuant to Rule 457(c) under the Securities Act of 1933.
-------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED SEPTEMBER 22, 1999
PROSPECTUS
4,121,355 SHARES
VSI ENTERPRISES, INC.
COMMON STOCK
This is a resale of VSI Enterprises, Inc. common stock by our
shareholders.
The common stock is traded on the Nasdaq SmallCap Market under the
symbol "VSIN." On September 21, 1999, the last reported sale price for the
common stock, as reported on the Nasdaq SmallCap Market, was $0.875 per share.
INVESTING IN COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 7.
PRICE TO THE PUBLIC: The selling shareholders may sell the common stock
in one or more transactions through brokers in the over-the-counter market, in
private transactions, or otherwise, at current market prices. Accordingly,
sales prices will depend upon price fluctuations and the manner of sale.
PROCEEDS TO SHAREHOLDERS: Proceeds to the selling shareholders will
depend upon price fluctuations and the manner of sale.
UNDERWRITING DISCOUNT: The selling shareholders may effect such
transactions by selling to or through one or more broker-dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
brokerage commissions or similar fees in amounts which may vary from
transaction to transaction. Such brokerage commissions and charges and the
legal fees, if any, will be paid by the selling shareholders. VSI Enterprises
will bear all other expenses in connection with registering the shares being
offered, which expenses are estimated to total approximately $30,000.
PROCEEDS TO VSI ENTERPRISES: VSI Enterprises will not receive any of
the cash proceeds from the sale of shares of common stock.
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.
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The date of this Prospectus is _________, 1999
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AVAILABLE INFORMATION
VSI Enterprises is subject to informational requirements of the
Securities Exchange Act of 1934. In accordance with the 1934 Act, VSI
Enterprises files reports and other information with the Securities and
Exchange Commission. Such reports and other information can be inspected and
copied at the Public Reference Room maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the Securities and Exchange
Commission at (800) SEC-0330 for further information on the Public Reference
Room. VSI Enterprises' Securities and Exchange Commission filings are also
available to the public at the Securities and Exchange Commission's Internet
site at http://www.sec.gov.
VSI Enterprises has filed a registration statement on Form S-3 under
the Securities Act of 1933, as amended, with respect to the common stock being
offered. This prospectus does not contain all 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 contained in this
prospectus concerning the provisions of documents are necessarily summaries of
such documents, and each statement is qualified in its entirety by reference to
the copy of the applicable document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission pursuant
to the 1934 Act are hereby incorporated in this prospectus by reference:
1. VSI Enterprises' Annual Report on Form 10-K for the year
ended December 31, 1998;
2. VSI Enterprises' Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999;
3. VSI Enterprises' Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999;
4. VSI Enterprises' Current Report on Form 8-K dated January 5,
1999;
5. VSI Enterprises' Current Report on Form 8-K dated August 31,
1999; and
6. The description of VSI Enterprises' common stock contained in
VSI Enterprises' registration statement on Form 8-A as filed
with the Commission on November 12, 1991.
All documents filed by VSI Enterprises pursuant to Section 13(a),
13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this prospectus
and prior to the termination of this offering shall be deemed to be
incorporated by reference into this prospectus. Any information incorporated by
reference shall be modified or superseded by any information contained in this
prospectus or in any other document filed later with the Commission which
modifies or supersedes such information. Any information that is modified or
superseded shall become a part of this prospectus as the information has been
so modified or superseded.
We will provide without charge to each person to whom a prospectus is
delivered, upon written or oral request of such person, a copy of any and all
of the information that has been incorporated by reference in this prospectus
(excluding exhibits unless such exhibits are specifically incorporated by
reference into such documents). Please direct such requests to Investor
Relations Department, VSI Enterprises, Inc., 5801 Goshen Springs Road,
Norcross, Georgia 30071, telephone number (770) 242-7566.
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THE COMPANY
GENERAL
VSI Enterprises, Inc. is an Atlanta-based telecommunications holding
company. Our core business is the development, production, sale and service of
software based audio/visual command and control systems and videoconferencing
products which operate on PC platforms, through our wholly-owned subsidiary,
Videoconferencing Systems, Inc. Additionally, we resell voice and data services
and equipment on behalf of large telecommunications companies, through our
majority-owned subsidiary, VSI Network Services, Inc. d/b/a Eastern Telecom,
Inc. ("ETI"). Our common stock is publicly traded on the Nasdaq SmallCap
Market, under the symbol "VSIN."
In 1998, Videoconferencing Systems generated revenue of $13.6 million
or approximately 70% of our total revenues. Customers include corporations,
educational institutions, state and federal governments and health care
providers, primarily in the United States and Europe.
Among Videoconferencing Systems' largest customers are Bell Atlantic,
Bank of America, Boeing, General DataComm, Hoffmann-LaRoche and
Lockheed-Martin. On average, 75% of Videoconferencing Systems' revenues each
year come from existing customers. The balance of our 1998 revenues of $5.9
million was generated primarily through Eastern Telecom's voice and data
services and equipment reselling business. Eastern Telecom is one of Bell
Atlantic's largest agents and serves business accounts with less than $250,000
in annual billings.
A typical Videoconferencing Systems customer is a large, multi-site
organization that utilizes sophisticated audio, video and communications
network technologies that require complex command and control solutions and
superior after-the-sale service. Historically, Videoconferencing Systems has
utilized a direct sales model. However, in order to grow sales and to reach and
maintain profitability, management believes that Videoconferencing Systems can
better leverage its technological and service competencies by marketing and
selling its products through third party resellers and system integrators, and
by entering new markets for its patented Omega technology.
This strategic shift resulted from a thorough review and analysis of
VSI Enterprises conducted by former President & CEO Judi North, who began the
project soon after joining VSI Enterprises in October 1997, and by Chairman
Larry Carr. We have closed operations that were unprofitable or inconsistent
with its core strategy, reduced administrative overhead and negotiated the
restructuring of our short- and long-term debt. Videoconferencing Systems has
implemented a new pricing strategy thereby improving gross margins, instituted
more focused marketing and sales support campaigns and has realigned its
videoconferencing product families. Once fully implemented, Videoconferencing
Systems' shift to channel resellers should expand sales, lower the cost of
sales and shorten the sales cycle for its products and services. Eastern
Telecom has broadened its product offerings to include Lucent Technologies
phone hardware, thus further diversifying its revenue stream.
These strategic actions have enabled Videoconferencing Systems to
reposition its product line in order to expand its presence in the $120 million
audio/visual command and control systems market. This market, which to some
degree overlaps the high-end videoconferencing market already served by
Videoconferencing Systems, is almost exclusively maintained by thousands of
resellers and system integrators. Videoconferencing Systems' products are being
re-engineered such that they may also be sold
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through these third party channels. We believe that, once product development
has been completed, Videoconferencing Systems will offer a functionally
superior and lower cost, fully integrated solution providing command and
control and remote diagnostics for audio, visual and room environment devices
and for network connectivity. Videoconferencing Systems has already experienced
success in this market, having recently completed approximately $1.7 million of
custom command and control projects for two long-time customers.
Once established in the AV command and control market, we envision
developing additional applications for other command and control system markets
(including process control applications in manufacturing environments and the
burgeoning home entertainment market) that may involve licensing aspects of the
patented Omega technology to manufacturers, in addition to third-party reseller
channels.
We incorporated under the laws of Delaware on September 19, 1988 as
Fi-Tek III, Inc. to raise capital and to seek out business opportunities in
which to acquire an interest. On August 21, 1990, we acquired 89.01% of the
total common stock and common stock equivalents then issued and outstanding of
Videoconferencing Systems, Inc., a Delaware corporation. Videoconferencing
Systems was founded in 1985 through the acquisition of a portion of the assets
of a Sprint Corporation videoconferencing subsidiary. In December 1990, we
changed our name from Fi-Tek III, Inc. to VSI Enterprises, Inc. During the
first half of 1991, we acquired the remaining additional outstanding shares of
common stock of Videoconferencing Systems.
In addition to our Videoconferencing Systems and Eastern Telecom
subsidiaries, we conducted our operations in 1998 through the following three
subsidiaries:
- - Videoconferencing Systems, n.v., otherwise known as VSI Europe, is a
distributor of our videoconference systems in Europe and has installed
videoconference room systems in Europe.
VSI Europe has offices located in London and Antwerp.
- - VSI Solutions, Inc. is a software company whose products include a
reservation system for the management of videoconferencing systems. We
closed VSI Solutions on June 30, 1999, upon the completion of a
contract with a customer and the sale of our reservation system source
code.
- - VSI Network Services, Inc., d/b/a Integrated Network Services, Inc.
was engaged in the design, installation and support of local and wide
area networks. Integrated Network Services was 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.
Integrated Network Services discontinued operations in December 1998
and has filed for protection under Chapter 7 of the U.S. Bankruptcy
Code.
We operate through two primary reportable segments: (1)
videoconferencing and control systems and (2) through our Eastern Telecom
subsidiary, telephone network reselling.
On January 15, 1999, we implemented a 1-for-4 reverse split of the
shares of our common stock. All share and per share amounts included in this
report reflect the effects of the reverse split.
Our principal executive offices and manufacturing facilities are
located at 5801 Goshen Springs Road, Norcross, Georgia 30071, and our telephone
number is (770) 242-7566.
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RECENT DEVELOPMENTS
Debt Restructuring. On August 31, 1999, we restructured our debt with
Thomson Kernaghan & Co., Ltd., which totaled $1,089,750 at August 31, 1999. We
made a cash payment of $150,000 at closing, and the remaining balance was
exchanged for a 7% Secured Convertible Debenture, with a one year term. The
Debenture is secured by a lien on our ownership interest in ETI, which is
junior to our converting term note holders and new investors, as discussed
below. ETI is a marketer and reseller of telecommunications services and
products. Additionally, under the terms of the agreement, Thomson Kernaghan
released its existing security interest in our patents. Thomson Kernaghan has
the option to commence converting the Debenture into shares of our common stock
at the initial rate of 7.5% per month beginning January 1, 2000. This rate will
increase to 15% per month commencing April 1, 2000. The conversion price is the
lesser of $1.00 per share or the five-day average closing bid price of the our
common stock prior to the date of any such conversion, with a floor of $0.50
per share. Furthermore, Thomson Kernaghan has the option of converting the
Debenture into shares of ETI common stock at any time and at the rate of one
share of ETI common stock for each $6.50 of principal so converted. Any
remaining balance of the Debenture will be payable on the maturity date.
As part of closing the Thomson Kernaghan transaction, $1,213,000 of
our 18-month term notes due March 31,2000 were converted into 195,099 shares of
ETI common stock which were owned by us, representing a 19.5% minority interest
in ETI. In addition, $1,040,000 of new capital was raised by selling a 16.0%
minority interest in ETI. The consideration received for the sale of shares of
common stock of ETI was based on an internal valuation of ETI. We still hold
the remaining 64.5% majority ownership interest in ETI.
Participants in the term note conversion and new equity participants
also received 1,098,492 and 396,497 warrants to acquire shares of our common
stock at an exercise price of $0.50 and $1.00 per share, respectively. Under
the terms of the Thomson Kernaghan agreement, we have undertaken to sell our
remaining interest in ETI at not less than fair market value, provided the
terms of any such transaction are otherwise acceptable to us. Additionally,
ETI's minority shareholders have a put option, which gives them the right to
put their ETI shares back to us after one year, and we have a call option to
reacquire shares of ETI at any time, both at a price of $6.50 per share of ETI
common stock.
Management Changes. On May 1, 1999, we entered into consulting
agreements with Dallas, Texas based venture capital, merchant banking and
consulting firm, Taconic Partners, L.L.C., and with Karen Franklin to assist
with our ongoing and anticipated operational and financial restructuring. On
June 7, 1999, Ms. Franklin replaced interim Chief Financial Officer, Sam
Horgan. On June 8, 1999, we announced that President and Chief Executive
Officer Judi North would be resigning her position, effective June 11, 1999,
for personal reasons. Mrs. North was replaced, on an interim basis, by Richard
E. Harrison, President of Taconic Partners. Concurrent with the announcement of
Ms. North's resignation, we promoted Rick Egan to President of our
Videoconferencing Systems subsidiary. Ms. North remains on our board of
directors.
Richard E. Harrison, age 41, is the President and a Manager of Taconic
Partners, L.L.C., a Dallas, Texas based venture capital, merchant banking and
consulting firm. Since October 1996, Mr. Harrison has served as Chairman,
President and CEO of OHA Financial, Inc., an affiliated investment of Taconic
engaged in the specialty finance industry. Before founding Taconic Partners,
Inc. in 1990
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(predecessor to Taconic Partners, L.L.C.), Mr. Harrison was a senior consultant
with Towers Perrin, where he specialized in post-merger integration of
operations and organizations for larger international companies. Prior to
joining Towers Perrin, Mr. Harrison worked for Thomson McKinnon in corporate
finance. Before that, Mr. Harrison was on the marketing staff of Reliance
Electric Company. Mr. Harrison holds a B.B.A. degree in Finance from Baylor
University and an M.B.A. degree from the University of Texas at Austin where he
graduated with honors.
Karen T. Franklin, age 42, served as Controller of OHA Financial, Inc.
from September 1997 through May 1999. Previously, she had served as Director of
Financial Accounting for Jayhawk Acceptance Corporation, a publicly held
specialty finance company, and in managerial positions with
PricewaterhouseCoopers, Nations Credit Corporation and US Trails, Inc. She
holds a master of science degree in accounting from the University of North
Texas. She is a Certified Public Accountant.
Nasdaq Listing. On April 19, 1999, we were informed by the Nasdaq
Stock Market Inc. that we no longer meet the requirements for continued listing
on the Nasdaq SmallCap Market, due to deficiencies in the net tangible assets
requirement and the minimum bid price requirement. Nasdaq initiated a review of
our eligibility for continued listing, and requested that we submit by May 3 a
detailed proposal for achieving compliance as well as a discussion of our plans
to address specific concerns highlighted by our independent auditor in our 1998
Form 10-K. We submitted a detailed proposal and discussion of all relevant
issues by the May 3 deadline.
On June 25, 1999, Nasdaq notified us that our common stock would be
delisted from the Nasdaq SmallCap Market on July 6 unless we filed an appeal
and request for a hearing with the Nasdaq Listing Qualifications Panel. We
filed the appeal and request for hearing on July 1, thereby staying the
delisting order. The hearing was held on August 19, 1999. Our common stock will
continue to be listed on the Nasdaq SmallCap Market without restriction until
the Nasdaq Listing Qualifications Panel renders a decision.
Following the panel's decision, we will either be granted more time to
regain compliance or the shares will be delisted to the OTC Bulletin Board.
Delisting to the OTC Bulletin Board may adversely affect the trading market for
the common stock, as price quotations for the common stock may not be as
readily obtainable.
Proposed Sale of VSI Europe. Currently, we are negotiating an
agreement to sell 76% of the capital stock of our European subsidiary, VSI
Europe, n.v., to certain members of VSI Europe's executive management team. As
a condition of such sale, we must be released from all liabilities including
certain guarantees under VSI Europe's bank credit agreements. Concurrent with
the sale, VSI Enterprises and VSI Europe have agreed to enter into a
non-exclusive reseller agreement wherein VSI Europe will retain the right to
market our videoconferencing product line in Europe.
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RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the risks below and other information in this
prospectus before deciding to invest in our common stock. We are subject to the
risks associated with being wholly dependent upon the performance of our
subsidiaries. The following summarizes the risks inherent in our business.
VSI ENTERPRISES WILL REQUIRE ADDITIONAL CAPITAL TO FINANCE OUR OPERATIONS
We will require additional capital or other financing to finance our
operations, new market development and continued growth. We may seek additional
equity financing through the sale of securities on a public or a private
placement basis on such terms as are reasonably attainable. There can be no
assurance that we will be able to obtain such financing when needed, or that if
obtained, it will be sufficient or on terms and conditions acceptable to us.
Sales and potential sales of substantial amounts of our common stock included
in the registration in the public market could adversely affect the prevailing
market prices for the common stock and impair our ability to raise additional
capital through the sale of equity securities.
WE HAVE NO HISTORY OF PROFITABILITY
After 13 years of operations, we have not reported any profits for a
full year of operations. There can be no certainty regarding our ability to
achieve or sustain profitability in the future. Whether or not we are able to
operate profitably, we will require additional capital to finance our
operations.
OUR ANTICIPATED GROWTH DEPENDS ON THE DEVELOPMENT OF PRODUCTS AND SERVICES FOR
THE COMMAND AND CONTROL MARKETS
Our core technology, developed for videoconferencing applications, can
also be used as the foundation for products and services in other markets,
particularly for command and control applications for general business and
industrial users. Entering that market successfully will require sufficient
capital for further software product development, and the creation of sales
channels and a marketing support team. The inability to secure sufficient
capital or the failure to create a strong sales channel/marketing support
organization could result in a failed effort to penetrate these new markets,
and adversely affect operating results and cash flow.
OUR SUCCESS DEPENDS UPON FINANCING AND INTEGRATING ACQUISITIONS WITH OUR
EXISTING OPERATIONS
An important element of our growth strategy is to expand when
appropriate through acquisitions. Our future success is dependent upon our
ability to finance and effectively integrate acquired businesses with our
operations. There can be no assurance that future acquisitions will be
successfully integrated or that any such acquisition will otherwise be
successful. In addition, our financial performance is now and will continue to
be subject to various risks associated with the acquisition of businesses,
including the financial effects associated with the integration of such
businesses. There can be no assurance that our acquisition strategy will be
successful.
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IF WE FAIL TO DEVELOP COMPETITIVE PRODUCTS IN RESPONSE TO TECHNOLOGICAL
CHANGES, OUR BUSINESS COULD BE NEGATIVELY AFFECTED
The market for our products is characterized by rapidly changing
technology, evolving industry standards and frequent product introductions.
Product introductions are generally characterized by increased functionality
and better picture quality at reduced prices. The introduction of products
embodying new technology may render existing products obsolete and
unmarketable. Our ability to successfully develop and introduce on a timely
basis new and enhanced products that embody new technology, and achieve levels
of functionality and prices that are acceptable to the market will be a
significant factor in our ability to grow and to remain competitive. If we are
unable, for technological or other reasons, to develop competitive products in
a timely manner in response to changes in the industry, our business and
operating results will be materially and adversely affected.
WE WILL BE VERY DEPENDENT ON THIRD PARTIES
Substantially all of our videoconferencing components, subsystems and
assemblies are made by outside vendors. Disruption in supply, a significant
increase in price of one or more of these components or failure of a
third-party supplier to remain competitive in functionality or price could have
a material adverse effect on our business and operating results. There can be
no assurance that we will not experience such problems in the future.
Similarly, excessive rework costs associated with defective components or
process errors associated with our anticipated new product line of
videoconferencing systems could adversely affect our business and operating
results.
OUR FINANCIAL CONDITION MAY BE ADVERSELY AFFECTED BY A NUMBER OF RISKS INHERENT
IN INTERNATIONAL SALES AND OPERATIONS WHICH ARE BEYOND OUR CONTROL
During the year ended December 31, 1998, revenues from international
sales represented approximately 27% of our net product sales, as compared to
14% of net product sales during the year ended December 31, 1997. Our
profitability and financial condition therefore will be impacted by the success
of these foreign operations. International sales and operations are subject to
inherent risks beyond our control, including:
- - difficulties and delays in obtaining pricing approvals and
reimbursement,
- - unexpected changes in regulatory requirements,
- - tariffs and other barriers,
- - political instability,
- - difficulties in staffing and managing foreign operations,
- - longer payment cycles; and
- - greater difficulty in accounts receivable collection and adverse tax
consequences.
Currency translation gains and losses on the conversion to United
States dollars from international operations could contribute to fluctuations
in our results of operations. If for any reason exchange or price controls or
other restrictions on the conversion or repatriation of foreign currencies were
imposed, our operating results could be adversely affected. There can be no
assurance that these factors will not have an adverse impact on our future
international sales and operations and, consequently, on our operating results.
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OUR OPERATIONS COULD BE ADVERSELY AFFECTED BY THE LOSS OF A MAJOR CUSTOMER
We sell videoconferencing systems and related control services and
network services to a number of major customers. During the year ended December
31, 1998, approximately 37% of our revenues were from Bell Atlantic. There can
be no assurance that the loss of this or other customers will not have an
adverse effect on our operations.
OUR SUCCESS LARGELY DEPENDS UPON THE SKILL AND EXPERIENCE OF OUR MANAGEMENT AND
TECHNICAL EMPLOYEES
Our development, management of our growth and other activities depend
on the efforts of key management and technical employees. Competition for such
persons is intense. We use incentives, including competitive compensation and
stock option plans, to attract and retain well-qualified employees. There can
be no assurance, however, that we will continue to attract and retain personnel
with the requisite capabilities and experience. The loss of one or more of our
key management or technical personnel also could adversely affect our
operations. We do not have long-term employment agreements with our key
management personnel or technical employees. Our future success is also
dependent upon our ability to effectively attract, retain, train, motivate and
manage our employees. Failure to do so could have a material adverse effect on
our business and operating results.
WE EXPECT COMPETITORS MAY ENTER THE MARKET WHICH HAVE FAR GREATER TECHNICAL AND
FINANCIAL RESOURCES THAN WE HAVE
Competition in the video communications and command and control
markets is intense. In the videoconferencing market, our primary competitors
are PictureTel Corporation, VTEL Corporation and Polycom Inc. In the command
and control market, our primary competitors are Panja, Inc. and Crestron
Electronics, Inc. We expect other competitors, some with significantly greater
technical and financial resources, may enter these markets. If we cannot
continue to offer new videoconferencing and command and control products with
improved performance and reduced cost, our competitive position will erode.
Moreover, competitive price reductions may adversely affect our results of
operations.
FLUCTUATIONS IN OUR QUARTERLY PERFORMANCE COULD ADVERSELY AFFECT OUR TOTAL
REVENUES AND NET INCOME LEVELS
Our product sales have historically been derived primarily from the
sale of videoconferencing systems and related equipment, the market for which
is still developing. In addition, our revenues occur predominantly in the third
month of each fiscal quarter. Accordingly, our quarterly results of operations
are difficult to predict, and delays in the closing of sales near the end of
the quarter could cause quarterly revenues and, to a greater degree, operating
and net income to fall substantially short of anticipated levels. Our total
revenues and net income levels could also be adversely affected by:
- - cancellations or delays of orders,
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- - interruptions or delays in the supply of key components,
- - changes in customer base or product mix,
- - seasonal patterns of capital spending by customers,
- - delays in purchase decisions due to new product announcements by us or
our competitors; and
- - increased competition and reductions in average selling prices.
WE HAVE NO ASSURANCE OF A CONTINUED TRADING MARKET IN OUR COMMON STOCK
Our common stock is traded on the Nasdaq SmallCap Market. While we
believe there are several securities broker/dealers making a market in our
common stock, there is no assurance that a public market for our common stock
will continue to be made or that persons purchasing our securities will be able
to avail themselves of a public trading market for the common shares in the
future.
For our common stock to be eligible for continued listing on the
Nasdaq SmallCap Market, the common stock must, among other things, have a
minimum bid price per share of $1.00 and net tangible assets of not less than
$2.0 million. Our common stock currently is trading at a price below $1.00 per
share and, as a result of the 1998 net loss, net tangible assets are less than
$2.0 million, putting VSI Enterprises in jeopardy of falling out of compliance
with Nasdaq's continued listing requirements. There can be no assurance that we
will remain in compliance with Nasdaq's continued listing requirements.
On June 25, 1999, Nasdaq notified VSI Enterprises that our common
stock would be delisted from the Nasdaq SmallCap Market on July 6 unless we
filed an appeal and request for a hearing with the Nasdaq Listing
Qualifications Panel. We filed the appeal and request for hearing on July 1,
thereby staying the delisting order. The hearing was held on August 19, 1999.
Our common stock will continue to be listed on the Nasdaq SmallCap Market
without restriction until the Nasdaq Listing Qualifications Panel renders a
decision.
Following the panel's decision, we will either be granted more time to
regain compliance or the shares will be delisted to the OTC Bulletin Board.
Delisting to the OTC Bulletin Board may adversely affect the trading market for
the common stock, as price quotations for the common stock will not be as
readily obtainable.
WE DO NOT EXPECT TO PAY DIVIDENDS ON COMMON STOCK FOR THE FORESEEABLE FUTURE
We have never paid cash dividends on our common stock and have no
plans to pay cash dividends in the foreseeable future. The policy of our board
of directors is to retain all available earnings for use in the operation and
expansion of our business.
IF WE ISSUE PREFERRED STOCK, THE VALUE OF OUR COMMON STOCK MAY DECREASE
We are authorized to issue up to 800,000 shares of preferred stock,
$.00025 par value. Preferred stock may be issued in one or more series, the
terms of which may be determined at the time of issuance by the board of
directors, without further action by stockholders, and may include voting
rights (including the right to vote as a series on particular matters),
preferences as to dividends and liquidation, conversion
-10-
<PAGE> 12
and redemption rights and sinking fund provisions. No preferred stock is
currently outstanding, and we have no present plans to issue any preferred
stock. The issuance of any preferred stock could affect the rights of the
holders of common stock, and therefore, reduce the value of the common stock
and make it less likely that holders of common stock would receive a premium
for the sale of their shares of common stock. In particular, specific rights
granted to future holders of preferred stock could be issued to restrict our
ability to merge with or sell our assets to a third party.
USE OF PROCEEDS
We will not receive any of the cash proceeds from the sale of shares
of the common stock by the selling shareholders. We will receive proceeds from
the exercise of stock purchase warrants. Such proceeds will be used for general
corporate purposes, including working capital.
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of September 1, 1999 by the
shareholders who are offering securities pursuant to this prospectus.
Beneficial ownership includes shares for which an individual, directly or
indirectly, has or shares, voting or investment power or both. All of the
listed persons have sole voting and investment power over the shares listed
opposite their names unless otherwise indicated in the notes below.
<TABLE>
<CAPTION>
BEFORE THE OFFERING AFTER THE OFFERING
----------------------- ---------------------
NUMBER SECURITIES TO NUMBER
NAME OF BENEFICIAL BENEFICIALLY PERCENT BE SOLD BENEFICIALLY PERCENT
OWNER OWNED OF CLASS IN OFFERING (1) OWNED OF CLASS
- ------------------------ ------------ -------- --------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Acis, Inc. 500,000 3.9 500,000 0 0
Andover Real Estate Services, Inc. 10,503 * 10,503 0 0
Sharon Carr and Larry Carr TIC (2) 700,906 (3) 5.6 150,037 550,869 (3) 4.4
Chester C. Cavoli 9,377 * 9,377 0 0
Rodney J. Conard 3,751 * 3,751 0 0
Namasshaya Doddi 7,502 * 7,502 0 0
Rick Egan (4) 10,325 (5) * 3,751 6,574 (5) *
Bruce M. Fogel 3,751 * 3,751 0 0
Ambrose W. Givens, Sr. 37,510 * 37,510 0 0
Karen T. Franklin (6) 50,000 * 50,000 0 0
Richard E. Harrison (7) 800,000 (8) 6.1 800,000 (8) 0 0
A. John Knapp, Jr. 73,008 (9) * 73,008 (9) 0 0
Maurice and Mary-Ann LaFlemme, JT 3,751 * 3,751 0 0
Francis W. Marceau and Linda Dupont, JT 3,751 * 3,751 0 0
Julia B. North (10) 82,501(11) * 3,751 78,750(11) *
OHA Financial, Inc. 500,000 3.9 500,000 0 0
Harlan Platt (12) 32,988(13) * 3,751 29,237(13) *
Edward S. Redstone (14) 1,488,629(15) 11.5 575,019 913,610(15) 7.4
Richard Allen Schubert 22,505(16) * 22,505(16) 0 0
Walter W. Sessions 9,377 * 9,377 0 0
Richard K. Snelling 37,510 * 37,510 0 0
</TABLE>
-11-
<PAGE> 13
<TABLE>
<CAPTION>
BEFORE THE OFFERING AFTER THE OFFERING
----------------------- -----------------------
NUMBER SECURITIES TO NUMBER
NAME OF BENEFICIAL BENEFICIALLY PERCENT BE SOLD BENEFICIALLY PERCENT
OWNER OWNED OF CLASS IN OFFERING (1) OWNED OF CLASS
- ------------------------ ------------ -------- --------------- ------------ --------
<S> <C> <C> <C> <C> <C>
James H. Stewart 1,876 * 1,876 0 0
Thomson Kernaghan & Co., Ltd. 1,913,875(17) 13.5 1,913,875(17) 0 0
Thomas E. Van Lente 3,751 * 3,751 0 0
Vital Resources profit Sharing Trust, 3,751 * 3,751 0 0
FBO Francis J. Knott
A. Max Walker 37,510 3,751 0 0
Walter J. Wisialko 3,751 * 3,751 0 0
---------
Total 4,121,355
=========
</TABLE>
- ------------------
* Less than 1% of outstanding shares.
(1) Except for shares of common stock to be sold by Acis, Inc. and Thomson
Kernaghan & Co., Ltd., the shares of common stock to be sold in this
offering represent shares issuable by VSI Enterprises upon the
exercise of presently exercisable stock purchase warrants.
(2) Mr. Carr serves as Chairman of the Board of VSI Enterprises. Mr.
Carr's business address is 1301 South Bowen Road, Suite 335,
Arlington, Texas 76013.
(3) Includes 86,250 shares subject to presently exercisable stock options
and stock purchase warrants.
(4) Mr. Egan serves as President of Videoconferencing Systems, Inc., a
subsidiary of VSI Enterprises.
(5) Includes 4,074 shares of common stock subject to presently exercisable
stock options.
(6) Ms. Franklin serves as Chief Financial Officer of VSI Enterprises.
(7) Mr. Harrison serves as Chief Executive Officer of VSI Enterprises. Mr.
Harrison's business address is 5801 Goshen Springs road, Norcross,
Georgia 30071.
(8) Includes warrants to purchase 500,000 shares of common stock held by
OHA Financial, Inc., of which Mr. Harrison serves as President and a
director.
(9) Includes warrants to purchase 3,751 shares of common stock held
jointly with Richard Allen Schubert and warrants to purchase 10,503
shares of common stock held by Andover Real Estate Services, Inc., an
entity controlled by Mr. Knapp.
(10) Ms. North serves as a director of VSI Enterprises.
(11) Includes 75,000 shares of common stock subject to presently
exercisable stock options.
(12) Mr. Platt serves as a director of VSI Enterprises.
(13) Includes 25,000 shares of common stock subject to presently
exercisable stock options.
(14) Mr. Redstone serves as a director of VSI Enterprises. Mr. Redstone's
business address is 222 Merrimack Street, Suite 210, Lowell,
Massachusetts 01852.
-12-
<PAGE> 14
(15) Includes 16,250 shares of common stock subject to presently
exercisable stock options.
(16) Includes warrants to purchase 3,751 shares of common stock owned
jointly with A. John Knapp.
(17) Represents shares of common stock issuable by VSI Enterprises upon
conversion of 7% convertible debentures due August 2000. The
convertible debentures are convertible into shares of common stock on
the basis of a floating conversion ratio depending, in part, on the
market price of the Company's stock at the time of conversion and,
therefore, cannot be determined at this time. The number of shares of
Company Common Stock listed as beneficially owned by the selling
shareholder assumes that all of the convertible debentures
beneficially owned by such shareholder were converted on September 1,
1999, which represents the maximum number of shares into which the
debenture can be converted. Also includes 34,375 shares of Common Stock
issuable upon the exercise of immediately exercisable stock purchase
warrants.
DESCRIPTION OF SECURITIES
The authorized capital stock of VSI Enterprises consists of 40,000,000
shares of common stock of $.001 par value and 800,000 shares of preferred stock
of $.00025 par value, issuable in series, the relative rights and preferences
of which may be designated by the board of directors.
COMMON STOCK
Each record holder of common stock is entitled to one vote for each
share held on all matters properly submitted to the stockholders for their
vote. Cumulative voting for the election of directors is not permitted by the
certificate of incorporation. Holders of outstanding common shares are entitled
to those dividends declared by the board of directors out of legally available
funds; and, in the event of liquidation, dissolution, or winding up of the
affairs of VSI Enterprises, holders are entitled to receive, ratably, the net
assets of VSI Enterprises available to holders of common shares after
distribution is made to the preferred stockholders. Holders of outstanding
common shares have no preemptive, conversion, or redemptive rights. All of the
issued and outstanding common shares are, and all unissued shares when issued
pursuant to the exercise of warrants will be, duly authorized, validly issued,
fully paid, and nonassessable.
PREFERRED STOCK
VSI Enterprises is authorized to issue up to 800,000 shares of $.00025
par value preferred stock, none of which is outstanding. The board of directors
has the power, without further action by the stockholders, to divide any and
all shares of preferred stock into a series. The board also has the power to
fix and determine the relative rights and preferences of the preferred stock,
such as the designation of series and the number of shares constituting such
series, dividend rights, redemption and sinking fund provisions, liquidating
and dissolution preferences, conversion or exchange rights and voting rights,
if any.
Issuances of preferred stock by the board of directors may result in
such shares having senior dividend and/or liquidation preferences to the
holders of shares of common stock and may dilute the voting rights of such
holders. Issuances of preferred stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could,
among other things, adversely affect the voting rights of holders of the common
stock. In addition, the issuance of preferred stock could make it more
difficult for a third party to acquire a majority of the outstanding voting
stock. Accordingly, the issuance of preferred stock may be used as an
anti-takeover device without further action on the part of the
-13-
<PAGE> 15
stockholders of VSI Enterprises. VSI Enterprises has no present plans to issue
any shares of preferred stock.
TRANSFER AGENT
SunTrust Bank, Atlanta, acts as the Transfer Agent for the common
shares of VSI Enterprises.
PLAN OF DISTRIBUTION
VSI Enterprises is registering the shares on behalf of the selling
shareholders. Selling shareholders include donees and pledgees selling shares
received from a named selling shareholder after the date of this prospectus.
All costs, expenses and fees in connection with the registration of the shares
offered by this prospectus will be borne by VSI Enterprises. Brokerage
commissions and similar selling expenses, if any, attributable to the sale of
shares will be borne by the selling shareholders.
Sales of shares may be effected by selling shareholders from time to
time in one or more types of transactions (which may include block
transactions) on Nasdaq, in the over-the-counter market, in negotiated
transactions, through put or call options transactions relating to the shares,
through short sales of shares, or a combination of such methods of sale, at
market prices prevailing at the time of sale, or at negotiated prices. Such
transactions may or may not involve brokers or dealers.
The selling shareholders have advised VSI Enterprises that they have
not entered into any agreements, understandings or arrangements with any
underwriters or brokers-dealers regarding the sale of their securities. In
addition, there is not an underwriter or coordinating broker acting in
connection with the proposed sale of shares by the selling shareholders.
The selling shareholders may effect such transactions by selling
shares directly to purchasers or to or through broker-dealers, which may act as
agents or principals. Such broker-dealers may receive compensation in the form
of discounts, concessions, or commissions from the selling shareholders and/or
the purchasers of shares for whom such broker-dealers may act as agents or to
whom they sell as principal, or both. The compensation paid as to a particular
broker-dealer might be in excess of customary commissions.
The selling shareholders and any broker-dealers that act in connection
with the sale of shares might be deemed to be underwriters within the meaning
of Section 2(11) of the Securities Act. And, any commissions received by such
broker-dealers and any profit on the resale of the shares sold by them while
acting as principals might be deemed to be underwriting discounts or
commissions under the Securities Act.
Because selling shareholders may be deemed to be underwriters within
the meaning of Section 2(11) of the Securities Act, the selling shareholders
will be subject to the prospectus delivery requirements of the Securities Act,
which may include delivery through the facilities of The Nasdaq Stock Market
pursuant to Rule 153 under the Securities Act. VSI Enterprises has informed the
selling shareholders that the anti-manipulative provisions of Regulation M
promulgated under the Exchange Act may apply to their sales in the market.
Selling shareholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of such rule.
-14-
<PAGE> 16
One of the selling shareholders, Thomson Kernaghan, has the option to
commence converting the Debenture into shares of common stock at the initial
rate of 7.5% per month beginning January 1, 2000. This rate will increase to
15% per month commencing April 1, 2000. See "The Company -- Recent Developments
- -- Debt Restructuring."
Upon VSI Enterprises being notified by a selling shareholder that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to
this prospectus will be filed, if required, pursuant to Rule 424(b) under the
Act. The supplement shall disclose (1) the name of each such selling
shareholder and of the participating broker-dealer(s), (2) the number of shares
involved, (3) the price at which such shares were sold, (4) the commissions
paid or discounts or concessions allowed to such broker-dealer(s), where
applicable, (5) that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this prospectus
and (6) other facts material to the transaction. In addition, upon VSI
Enterprises being notified by a selling shareholder that a donee or pledgee
intends to sell more than 500 shares, a supplement to this prospectus will be
filed.
LEGAL MATTERS
Certain legal matters in connection with the offering are being passed
upon for VSI Enterprises by Smith, Gambrell & Russell, LLP, Suite 3100, 1230
Peachtree Street N.E., Atlanta, Georgia 30309. As of September 1, 1999, Smith,
Gambrell & Russell, LLP owned an aggregate of 25,000 shares of common stock.
EXPERTS
The consolidated financial statements as of December 31, 1998 and for
the years ended December 31, 1998 and 1996, incorporated by reference in this
registration statement and prospectus, to the extent and for the periods
indicated in their reports, have been audited by Grant Thornton LLP,
independent public accountants, and are incorporated by reference in reliance
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements and schedules of VSI
Enterprises, Inc. and subsidiaries as of and for the year ended December 31,
1997, incorporated by reference in this prospectus and elsewhere in the
registration statement, have been audited by Arthur Andersen LLP, independent
public accountants, and are incorporated by reference herein in reliance upon
the authority of said firm as experts in giving said reports.
-15-
<PAGE> 17
================================================================================
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION AND REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY VSI ENTERPRISES. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED BY THIS PROSPECTUS IN ANY JURISDICTION OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN
THIS PROSPECTUS OR IN THE AFFAIRS OF VSI ENTERPRISES SINCE THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information........................................................ 2
Incorporation of Certain
Documents by Reference..................................................... 2
The Company.................................................................. 3
Risk Factors................................................................. 7
Use of Proceeds.............................................................. 11
Selling Shareholders......................................................... 11
Description of Securities.................................................... 13
Plan of Distribution......................................................... 14
Legal Matters................................................................ 15
Experts...................................................................... 15
</TABLE>
================================================================================
================================================================================
VSI ENTERPRISES, INC.
4,121,355 SHARES
COMMON STOCK
P R O S P E C T U S
________________, 1999
5801 GOSHEN SPRINGS ROAD
NORCROSS, GEORGIA 30071
(770) 242-7566
================================================================================
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below are estimates of the fees and expenses payable by the
Company in connection with the offer and sale of the Common Stock:
<TABLE>
<S> <C>
SEC Registration Fee.......................................... $ 681
Blue Sky Qualification Fees and Expenses...................... 1,500
Legal Fees and Expenses....................................... 10,000
Accounting Fees and Expenses.................................. 15,000
Transfer Agent Fees........................................... 1,000
Printing, Materials, and Postage.............................. 1,500
Miscellaneous Expenses........................................ 319
-------
Total................................................. $30,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation provides that in actions
other than in the right of the Company, the Company indemnifies directors and
officers of the Company against costs, charges, expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with any action, suit or proceeding if he acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interest of the Company.
With respect to actions by or in the right of the Company, the Company
indemnifies directors and officers of the Company against costs, charges and
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of any action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interest of the Company; except that no indemnification shall be made
in respect to any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Company, unless and only to the extent that
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expense which the court shall deem proper.
The indemnification provisions contained in the Company's Certificate
of Incorporation are substantially coextensive with the provisions of Section
145 of the Delaware General Corporation Law, which sets forth the applicable
terms, conditions and limitations governing the indemnification of officers,
directors and other persons.
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<S> <C>
5.1 - Opinion of Smith, Gambrell & Russell, LLP
23.1 - Consent of Grant Thornton LLP
23.2 - Consent of Arthur Andersen LLP
23.3 - Consent of Smith, Gambrell & Russell (contained in their opinion filed as
Exhibit - 5.1 hereto)
</TABLE>
II-1
<PAGE> 19
24.1 - Powers of Attorney (contained on signature page to this
Registration Statement)
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referred to in Item 15
above, 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 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 Act and will be governed by the final adjudication of such
issue.
II-2
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 Norcross, State of Georgia, on the 21st day of
September, 1999.
VSI ENTERPRISES, INC.
By: /s/ Richard E. Harrison
-------------------------------------
Richard E. Harrison, Chief Executive
Officer (Principal Executive Officer)
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Richard E. Harrison and Larry M. Carr
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him, in his name, place and stead,
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
including a registration statement filed under Rule 462(b) of the Securities
Act of 1933, as amended, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
following capacities on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard E. Harrison Chief Executive Officer September 21, 1999
- --------------------------------------
Richard E. Harrison
/s/ Karen T. Franklin Chief Financial Officer September 21, 1999
- -------------------------------------- (Principal Financial and
Karen T. Franklin Accounting Officer)
/s/ Larry M. Carr Director September 21, 1999
- --------------------------------------
Larry M. Carr
/s/ Harlan D. Platt Director September 21, 1999
- --------------------------------------
Harlan D. Platt
/s/ Julia B. North Director September 21, 1999
- --------------------------------------
Julia B. North
/s/ Edward S. Redstone Director September 21, 1999
- --------------------------------------
Edward S. Redstone
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------ ----------------------
<S> <C>
5.1 Opinion of Smith, Gambrell & Russell, LLP
23.1 Consent of Grant Thornton LLP
23.2 Consent of Arthur Andersen LLP
</TABLE>
<PAGE> 1
EXHIBIT 5.1
SMITH, GAMBRELL & RUSSELL, LLP
ATTORNEYS AT LAW
SUITE 3100, PROMENADE II
1230 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309-3592
------
TELEPHONE
(404) 815-3500
FACSIMILE
(404) 815-3509
WEBSITE
WWW.SGRLAW.COM
ROBERT T. MOLINET Direct Fax (404) 685-6943
Direct Dial (404) 815-3643 E-Mail: [email protected]
September 22, 1999
Board of Directors
VSI Enterprises, Inc.
5801 Goshen Springs Road
Norcross, Georgia 30071
RE: VSI Enterprises, Inc.
Registration Statement on Form S-3
4,221,355 Shares of Common Stock
Gentlemen:
We have acted as counsel for VSI Enterprises, Inc. (the "Company") in
connection with the proposed public offering by certain of its shareholders of
shares of the Company's $.001 par value common stock (the "Common Stock")
covered by the above-described Registration Statement.
In connection therewith, we have examined the following:
(1) The Certificate of Incorporation of the Company, as amended,
certified by the Secretary of State of the State of Delaware;
(2) The Restated By-Laws of the Company, as amended, certified as
correct and complete by the Secretary of the Company;
(3) The minute book of the Company, certified as correct and
complete by the Secretary of the Company; and
(4) The Registration Statement on Form S-3 to be filed with the
Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended, relating to the sale of up to
4,221,355 shares of Common Stock (the "Registration
Statement").
<PAGE> 2
Based upon such examination and upon examination of such other
instruments and records as we have deemed necessary, we are of the opinion that
the 4,221,355 shares of Common Stock covered by said Registration Statement to
be sold by the selling shareholders referenced therein have been legally
authorized by the Company and, when sold in accordance with the terms described
in the Registration Statement, will be legally issued, fully paid and
nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus contained in said Registration Statement. In
giving this consent, we do not thereby admit that we come within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933, or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
SMITH, GAMBRELL & RUSSELL, LLP
/s/ Robert T. Molinet
------------------------------
Robert T. Molinet
RTM:cdg
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated March 5, 1999 accompanying the consolidated
financial statements of VSI Enterprises, Inc. and subsidiaries and the
accompanying schedule included in the Annual Report on Form 10-K for the year
ended December 31, 1998 which are incorporated by reference in this
Registration Statement. We consent to the incorporation by reference in the
Registration Statement of the aforementioned reports and to the use of our name
as it appears under the caption "Experts."
/s/ Grant Thornton LLP
Atlanta, Georgia
September 22, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated April 12, 1999
related to the consolidated balance sheet of VSI Enterprises, Inc.'s and
subsidiaries (the "Company") as of December 31, 1997 and the related statements
of operations, stockholders' equity and cash flows for the year then ended,
included in the Company's Form 10-K for the year ended December 31, 1998 and to
all references to our Firm included in or made a part of this registration
statement.
/s/ Arthur Andersen LLP
Atlanta, Georgia
September 22, 1999
