<PAGE> 1
As filed with the Securities and Exchange Commission on April 25, 2000
REGISTRATION NO. 333-____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------------------
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:
CARL L. SOLLEE, ESQ.
SMITH, GAMBRELL & RUSSELL, LLP
1230 PEACHTREE STREET, N.E., SUITE 3100
ATLANTA, GEORGIA 30309
(404) 815-3785
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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TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
REGISTERED REGISTERED SHARE (1)(2) PRICE (1) FEE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, par value 1,875,751 $4.00 $7,503,004 $1,981
$.001 per share............
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</TABLE>
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(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 in
connection with 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
under Rule 457(c) of 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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<PAGE> 3
SUBJECT TO COMPLETION, DATED MAY ____, 2000
PROSPECTUS
1,875,751 SHARES
VSI ENTERPRISES, INC.
COMMON STOCK
This is a resale of VSI Enterprises, Inc. common stock by our
shareholders. VSI Enterprises will not receive any of the cash proceeds from the
sale of our shares of common stock.
The common stock is traded on the OTC Bulletin Board under the symbol
"VSIN." On April 24, 2000, the last reported sale price for the common stock, as
reported on the OTC Bulletin Board, was $3.625 per share.
INVESTING IN COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 3.
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.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is May ___, 2000
<PAGE> 4
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 and at the Northeast Regional Office located at
Seven World Trade Center, Suite 1300, New York, New York 10048 and the Midwest
Regional Office located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. 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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission are hereby
incorporated in this prospectus by reference:
1. VSI Enterprises' Annual Report on Form 10-K for the year ended
December 31, 1999; and
2. 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 under 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 that 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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<PAGE> 5
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. The following
summarizes the risks inherent in our business.
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL CAPITAL TO FINANCE OUR OPERATIONS WHEN
NEEDED.
We will require additional capital or other funding 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. We may not be able
to obtain such financing when needed, or if obtained, it may not be sufficient
or on terms and conditions acceptable to us.
WE MAY NOT BE ABLE TO ACHIEVE OR SUSTAIN PROFITABILITY IN THE FUTURE.
After 14 years of operations, we have not reported any profits for a
full year of operations, and as of December 31, 1999, we had an accumulated
deficit of $49.7 million. We may not be able to achieve or sustain profitability
in the future. We anticipate an increase in expenses as a result of research and
development and marketing for our new products. As a result, we may incur
additional losses and negative cash flow from operations for the foreseeable
future.
IF WE FAIL TO SECURE SUFFICIENT CAPITAL OR FAIL TO CREATE A STRONG MARKETING
SUPPORT TEAM, OUR EFFORTS TO PENETRATE NEW MARKETS COULD FAIL, RESULTING IN
DECREASED CASH FLOW.
Expanding our presence in the audio/visual command and control market
will require 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 could adversely affect operating results and cash flow.
IF WE FAIL TO DEVELOP COMPETITIVE PRODUCTS IN RESPONSE TO TECHNOLOGICAL CHANGES,
OUR BUSINESS WILL NOT GROW OR REMAIN COMPETITIVE.
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
quality at reduced prices. 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 would be significantly harmed. For
example, the successful launch in the last quarter of 2000 of Voyager, our
second-generation PC-based device controller, depends on our ability to complete
the design and development of complex audio/visual control software built on a
new software kernel co-developed with ACIS, Inc.
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. For instance, the
ability to transact business via the Internet is becoming increasingly
important. Accordingly, in order to remain competitive,
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<PAGE> 6
we are currently developing a system that will allow us to deliver products and
services to our customers via the Internet. We may not be able to timely or
effectively implement this strategy.
OPERATING RESULTS COULD BE ADVERSELY AFFECTED BY A DISRUPTION IN SUPPLY OR A
SIGNIFICANT PRICE INCREASE OF VIDEOCONFERENCING COMPONENTS OR FAILURE OF A THIRD
PARTY SUPPLIER TO REMAIN COMPETITIVE IN PRICE.
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 result in lost
sales. We could 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.
WE DEPEND ON PURCHASES FROM A FEW SIGNIFICANT CUSTOMERS, AND ANY LOSS
CANCELLATION, OR REDUCTION OF PURCHASES BY THESE CUSTOMERS COULD HARM OUR
BUSINESS.
We currently sell control and videoconferencing systems to a small
number of major customers. During the year ended December 31, 1999,
approximately fifty percent (50%) of our revenues were from three large
customers. Further, we do not have long term contracts with any of our other
customers, so our customers could stop purchasing our products at any time. The
loss of Bell Atlantic as a customer of Videoconferencing Systems, any
termination or material modification of Eastern Telecom's agency agreement with
Bell Atlantic or the loss other major customers, or any reduction in purchases
by these customers, could significantly harm our business.
IF WE CANNOT ATTRACT, RETAIN, TRAIN OR MANAGE OUR KEY MANAGEMENT OR TECHNICAL
PERSONNEL EFFECTIVELY, OUR ABILITY TO DEVELOP AND SELL NEW PRODUCTS COULD BE
HINDERED, RESULTING IN A REDUCTION IN SALES.
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. Since we do not have long-term employment agreements with
our key management personnel or technical employees, we could lose one or more
of our key management or technical personnel that could significantly harm our
business. Our future success is also dependent upon our ability to effectively
attract, retain, train, motivate and manage our employees, and failure to do so
could hinder the development and marketing of our new products which could
result in a reduction in sales, and our customers could shift their purchases to
our competitors.
WE MAY NOT BE ABLE TO MAINTAIN OR IMPROVE OUR COMPETITIVE POSITION BECAUSE THERE
ARE COMPETITORS WHO MAY ENTER THE MARKET WITH FAR GREATER TECHNICAL AND
FINANCIAL RESOURCES THAN WE HAVE.
Competition in the command and control and video communications markets
is intense. We expect other competitors, some with significantly greater
technical and financial resources, may enter these markets. If we cannot
continue to offer new command and control and videoconferencing products with
improved performance and reduced cost, our competitive position will erode.
Moreover, competitive price reductions may adversely affect our results of
operations. In the command and control market, our primary competitors are
Panja, Inc. and Crestron Electronics, Inc. In the videoconferencing market, our
primary competitors are PictureTel Corporation, VTEL Corporation and Polycom
Inc.
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<PAGE> 7
FLUCTUATIONS IN OUR QUARTERLY PERFORMANCE COULD ADVERSELY AFFECT OUR TOTAL
REVENUES AND NET INCOME LEVELS.
Our revenues have historically occurred 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;
- - 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 MAY NOT BE ABLE TO REGAIN OUR NASDAQ LISTING.
Effective as of the close of business on September 22, 1999, our common
stock was delisted from the Nasdaq SmallCap Market and began trading on the OTC
Bulletin Board. The delisting occurred as a result of the minimum bid price on
our common stock being less than $1.00 per share and our net tangible assets
being under $2.0 million. We are appealing Nasdaq's decision to delist our
shares and have been advised by Nasdaq that its review council will likely issue
its decision in April 2000. If our appeal is unsuccessful, our common stock will
continue to trade on the OTC Bulletin Board until such time as we qualify for
inclusion on the Nasdaq Stock Market. Because the requirements for a new listing
on the Nasdaq Stock Market are substantially more onerous than the requirements
for continued listing, we may not be in a position in the future to reapply for
listing on Nasdaq. Because the OTC Bulletin Board is generally a less efficient
market than the Nasdaq Stock Market, the liquidity and volatility of our shares
could be adversely impacted. Furthermore, institutional investors are less
likely to be interested in stocks trading on the OTC Bulletin Board.
RESALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE.
We currently have an effective registration statement covering the
resale of 4,258,865 shares of our common stock by certain shareholders,
although, as a result of the repayment of convertible debentures held by Thomson
Kernaghan, only 2,561,935 may be sold under such registration statement.
The 1,875,751 total shares we are registering for sale under this Prospectus
are comprised of 1,351,625 shares of common stock sold in the March 10, 2000
private placement and 524,126 shares of common stock that were issued in
exchange for Eastern Telecom shares held by its minority shareholders.
The sale of these shares into the market may adversely affect the market
price of our common stock.
5
<PAGE> 8
BUSINESS SUMMARY
GENERAL
FORWARD-LOOKING STATEMENTS
Certain statements contained in this filing are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, such as statements relating to financial results and plans for future
business development activities, and are thus prospective. All statements other
than statements of historical fact we make in this report are forward-looking.
Such forward-looking statements are subject to risks, uncertainties and other
factors, which could cause actual results to differ materially from future
results expressed or implied by such forward-looking statements. Potential risks
and uncertainties include, but are not limited to, economic conditions,
competition and other uncertainties set out above under "Risk Factors" and as
detailed from time to time in our Securities and Exchange Commission filings.
OVERVIEW
VSI Enterprises, Inc. is an Atlanta-based holding company. Our core
business is the design, manufacture, marketing and servicing of software based
command and control systems, including videoconferencing control systems, which
operate on PC platforms, through our wholly owned subsidiary, Videoconferencing
Systems, Inc. In addition, we resell voice and data services and equipment on
behalf of large telecommunications companies through our majority-owned
subsidiary, VSI Network Solutions, Inc., doing business as Eastern Telecom. We
have entered into a definitive agreement to sell Eastern Telecom to PentaStar
Communications, Inc., a Denver, Colorado based communications services agent.
The definitive agreement is subject to, among other things, approval by the
stockholders of VSI Enterprises at the Annual Meeting to be held on May 18,
2000. The consolidated statements of operations have been adjusted to reflect
the discontinuance of Eastern Telecom's operations.
Our command and control solutions allow end users to operate, as a
single system, a broad range of electronic equipment such as projectors, VCRs,
computers, sound systems, lighting and temperature controls and other
audio/video devices in a variety of settings. Our videoconferencing products are
designed to allow multiple participants at geographically dispersed sites to see
and hear each other on live television and share graphical and pictorial
information using standard commercially available telecommunications
transmission facilities. We integrate standard video, audio and transmission
components with our own proprietary video, audio and computer control components
and patented software under the trade name Omega. A typical customer is a large,
multi-site organization that utilizes sophisticated audio, video and
communications network technologies that require complex command and control
solutions. These solutions can be used in a variety of settings, including
corporate meetings and conferences, distance learning and judicial arraignment
systems. These customers also require superior after-the-sale service.
Historically, we have 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, who specialize in the sale, installation, support and
service of audio/visual equipment, and by entering new markets for its control
system technology.
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<PAGE> 9
During 1999 and continuing into 2000, we undertook a restructuring of
our business operations and balance sheet that are intended to achieve
profitable operations and provide positive operating cash flows. As part of this
restructuring, we raised additional equity capital and paid off our debt
holders. This restructuring included raising additional equity capital through
the private sale of common stock and exchanging our common stock for shares of
Eastern Telecom held by its minority interest holders, restructuring and then
subsequently retiring our debt, selling non-strategic assets and aggressively
managing accounts receivable and inventory.
These restructuring initiatives have enabled Videoconferencing Systems
to reposition its product line and to expand its presence in the audio/visual
command and control systems market. This market, which to some degree overlaps
the high-end videoconferencing market historically 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 through these third party channels. We believe that,
once product development has been completed, Videoconferencing Systems will
offer a functionally superior, lower cost, fully integrated solution that
provides 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 completed approximately $1.7
million of custom command and control projects for two long-time customers in
1999.
Once established in the audio/visual 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 our
control software to existing OEM vendors, in addition to third-party reseller
channels.
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.
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of April 19, 2000 by the
shareholders who are offering securities in connection with this prospectus.
Beneficial ownership includes shares for which an individual 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. Of the 1,875,751 total shares we are
registering for sale under this Prospectus, 1,351,625 consist of shares of
common stock sold in the March 10, 2000 private placement and 524,126 consist of
shares of common stock that were issued in exchange for Eastern Telecom shares
held by its minority shareholders.
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<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 OWNED OF CLASS
- ---------------------------------- ------------ -------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Andover Real Estate Services, Inc. 20,290 * 9,787 10,503 *
Allen B. Mann 200,000 1.34% 200,000 0 0
Andover Group, Inc. 20,000 * 20,000 0 0
Austin Stephens(1) 18,533 * 1,000 17,533 *
Barbara B. Harrison Living Trust 6,000 * 6,000 0 0
Catherine C. Reed 12,000 * 12,000 0 0
Juliet Louise Shane 6,000 * 6,000 0 0
Bruce M. Fogel 9,246 * 5,495 3,751 *
Bruce Pecaro 40,000 * 40,000 0 0
Christina Sanders 10,000 * 10,000 0 0
Craig S. Collins 20,000 * 20,000 0 0
Richard Mays(2) 512,019 3.43% 1,000 511,019 3.43%
Eric J. Sundsvold 15,000 * 15,000 0 0
Excalibur Limited Partnership 333,333 2.24% 333,333 0 0
Frank R. and Colleen T. Trabold 40,000 * 40,000 0 0
Frederick M. Phillips 2,000 * 2,000 0 0
Jack M. and Zoe A. Ciarletta 20,000 * 20,000 0 0
Jeffery M. Travis (IRA/SEP) 3,625 * 3,625 0 0
James L. and Deborah Y. Lollar 10,000 * 10,000 0 0
John Daly 9,000 * 9,000 0 0
John G. Schulz 5,000 * 5,000 0 0
John W. Tonti 100,000 * 100,000 0 0
Karen T. Franklin(3) 77,000 * 2,000 75,000 *
Ken Burke 15,000 * 15,000 0 0
Ken Oberkofler(4) 15,266 * 3,500 11,766 *
Larry and Sharon Carr(5) 1,573,639 10.03% 459,815 1,413,824 *
Michael and Barbara S. Tonti 60,000 * 60,000 0 0
Peter M. Gerard 12,500 * 12,500 0 0
Randall Taylor 10,000 * 10,000 0 0
Richard E. Harrison(6) 986,667 6.28% 20,000 966,667 6.49%
Robert W. Schneier 3,000 * 3,000 0 0
Sheila and Robert Brian 10,667 * 10,667 0 0
Steve Burke 5,000 * 5,000 0 0
Steven R. and Juliet L. Shane 100,000 * 100,000 0 0
William E. and Charlotte Harrison 4,000 * 4,000 0 0
Richard A. Schubert 122,828 * 19,223 103,605 *
A. John Knapp, Jr 105,566 * 32,558 73,008 *
Michael Segal 3,549 * 3,549 0 0
</TABLE>
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<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 OWNED OF CLASS
- ----------------------------------------- ------------ -------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Ezekiel(1) 200,000 1.34% 200,000 0 0
Timothy M. Bates 10,000 * 10,000 0 0
Thomas E. Van Lente 234,246 1.57% 20,495 213,751 1.43%
Wallace G. Franklin 3,000 * 3,000 0 0
Ambrose W. Givens, Sr 72,465 * 34,955 37,510 *
Albert J. Wisialko 7,248 * 3,497 3,751 *
Chester C. Cavoli 18,115 * 8,738 9,377 *
Richard K. Snelling 382,729 2.57% 34,955 347,744 2.33%
Francis W. Marceau and Linda Dupont 7,246 * 3,495 3,751 *
James H. Stewart 3,625 * 1,749 1,876 *
Julia B. North(7) 115,996 * 3,495 112,501 *
Maurice and Mary Ann La Flamme 7,246 * 3,495 3,751 *
A. Max Walker 116,306 * 33,796 82,510 *
Namassivaya Doddi 14,494 * 6,992 7,502 *
OHA Financial 666,667 4.47% 166,667 500,000 3.36%
Richard W. Egan(8) 33,080 * 3,495 29,585 *
Rodney J. Conard 3,495 * 3,495 0 0
Vital Resources Profit Sharing Trust FBO 7,131 * 3,380 3,751 *
Total 1,875,751
---------
</TABLE>
- -----------
* Less than 1% of outstanding shares.
(1) Includes 16,246 shares of common stock subject to presently
exercisable stock options.
(2) Includes 11,019 shares of common stock subject to stock
options that are exercisable within the next sixty days and
500,000 shares held by ACIS, Inc. of which Mr. Mays is the
controlling stockholder.
(3) Includes 50,000 shares of common stock issuable upon the
exercise of warrants that are exercisable within the next
sixty days and 25,000 shares of common stock issuable upon the
exercise of options.
(4) Includes 3,894 shares of common stock issuable upon the
exercise of warrants and options that are exercisable within
sixty days.
(5) Includes 20,000 shares of common stock subject to stock
options that are exercisable within the next sixty days and
262,537 shares of common stock subject to presently
exercisable common stock Purchase Warrants. Also includes
166,667 shares and 500,000 shares subject to warrants held in
the name of OHA Financial, the board of which Mr. Carr serves
as a director; Mr. Carr disclaims beneficial ownership of
these shares. Mr. Carr's mailing address is 5801 Goshen
Springs Road, Norcross, Georgia 30071.
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<PAGE> 12
(6) Includes 300,000 shares of common stock subject to stock
warrants that are exercisable within the next sixty days. Also
includes 166,667 shares and 500,000 shares subject to warrants
held in the name of OHA Financial, for which Mr. Harrison
serves as a director; Mr. Harrison disclaims beneficial
ownership of these shares. Mr. Harrison's mailing address is
5801 Goshen Springs Road, Norcross, Georgia 30071.
(7) Includes 103,750 shares of common stock subject to stock
options that are exercisable within the next sixty days and
5,001 shares of common stock issuable upon the exercise of
warrants.
(8) Includes 18,334 shares of common stock issuable upon the
exercise of options that are exercisable within the next sixty
days and 3,751 shares subject to warrants.
10
<PAGE> 13
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.
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 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.
11
<PAGE> 14
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 broker-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.
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/dealer, a supplement to this
prospectus will be filed, if required, under Rule 424(b) under the Act. The
supplement shall disclose:
12
<PAGE> 15
- - the name of each such selling shareholder and of the participating
broker-dealer(s),
- - the number of shares involved,
- - the price at which such shares were sold,
- - the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable,
- - that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus, and
- - 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.
EXPERTS
The consolidated financial statements as of December 31, 1999 and 1998
and for the years ended December 31, 1999 and 1998, 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.
13
<PAGE> 16
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
Risk Factors..................................................... 3
Business Summary................................................. 6
Use of Proceeds.................................................. 7
Selling Shareholders............................................. 7
Description of Securities........................................ 11
Plan of Distribution............................................. 12
Legal Matters.................................................... 13
Experts.......................................................... 13
</TABLE>
VSI ENTERPRISES, INC.
1,875,751 SHARES
COMMON STOCK
P R O S P E C T U S
May ___, 2000
5801 GOSHEN SPRINGS ROAD
NORCROSS, GEORGIA 30071
(770) 242-7566
<PAGE> 17
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 VSI
Enterprises in connection with the offer and sale of the common stock:
<TABLE>
<S> <C>
SEC registration fee.................................... $ 1,981
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.................................. 299
--------
Total....................................... $ 31,280
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
VSI Enterprises' Certificate of Incorporation provides that, in actions
other than in the right of VSI Enterprises, VSI Enterprises indemnifies
directors and officers of VSI Enterprises against costs, charges and expenses,
which include attorney's fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by them in connection with any action, suit or
proceeding if they acted in good faith and in a manner which they reasonably
believed to be in or not opposed to the best interest of VSI Enterprises.
With respect to actions by or in the right of VSI Enterprises, VSI
Enterprises indemnifies directors and officers of VSI Enterprises against costs,
charges and expenses, which include attorneys' fees, actually and reasonably
incurred by them in connection with the defense or settlement of any action or
suit if they acted in good faith and in a manner they reasonably believed to be
in or not opposed to the best interest of VSI Enterprises; 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 VSI Enterprises,
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 that the court
shall deem proper.
The indemnification provisions contained in VSI Enterprises'
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
</TABLE>
<PAGE> 18
<TABLE>
<S> <C>
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Smith, Gambrell & Russell (contained in
their opinion filed as Exhibit 5.1 hereto)
24.1 Powers of Attorney (contained on signature page to
this Registration Statement)
</TABLE>
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 that
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 under 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 under 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 according 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.
<PAGE> 19
SIGNATURES
In accordance with 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 amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Norcross, State of Georgia, on the
25th day of April, 2000.
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, Karen T. Franklin
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.
In accordance with the requirements of the Securities Act of 1933,
this registration statement amendment 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 April 25, 2000
- -------------------------------
Richard E. Harrison
/s/ Karen T. Franklin Chief Financial Officer April 25, 2000
- ------------------------------- (Principal Financial and
Karen T. Franklin Accounting Officer)
/s/ Larry M. Carr Director April 25, 2000
- -------------------------------
Larry M. Carr
/s/ Harlan D. Platt Director April 25, 2000
- -------------------------------
Harlan D. Platt
/s/ Julia B. North Director April 25, 2000
- -------------------------------
Julia B. North
</TABLE>
<PAGE> 20
<TABLE>
<S> <C> <C>
/s/ Edward S. Redstone Director April 25, 2000
- -------------------------------
Edward S. Redstone
</TABLE>
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
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
WILLIAM L. MEYER DIRECT FAX (404) 685-7044
DIRECT DIAL (404) 815-3744 E-MAIL: [email protected]
April 25, 2000
Board of Directors
VSI Enterprises, Inc.
5801 Goshen Springs Road
Norcross, Georgia 30071
RE: VSI Enterprises, Inc.
Registration Statement on Form S-3
1,875,751 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;
<PAGE> 2
(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, as amended, filed with
the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, relating to the sale of up
to 1,875,751 shares of Common Stock (the "Registration
Statement").
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 1,875,751 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/ William L. Meyer
William L. Meyer
CLS/peg
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated March 7, 2000 (except for Note M which date is
March 10, 2000), 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, 1999 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
April 19, 2000
<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
(except with respect to the effect of the pending sale of Eastern Telecom, Inc.
discussed in Note B, as to which the date is March 27, 2000) related to the
consolidated statements of operations, stockholders' equity, and cash flows for
the year ended December 31, 1997 of VSI Enterprises, Inc. and subsidiaries (the
"Company"), included in the Company's Form 10-K for the year ended December 31,
1999 and to all references to our Firm included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
Atlanta, Georgia
April 19, 2000
