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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-35578
SUBJECT TO COMPLETION, DATED MAY 19, 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 May 18, 2000, the last reported sale price for the common stock, as
reported on the OTC Bulletin Board, was $2 7/8 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 19, 2000
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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 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;
2. VSI Enterprises Definitive Proxy Statement filed April 21,
2000; and
3. 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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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.
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, 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.
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.
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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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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. Our appeal of Nasdaq's decision to delist our shares
was rejected. 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.
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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. On May 18, 2000, we closed the sale of our majority-owned
subsidiary, VSI Network Solutions, Inc., doing business as Eastern Telecom, to
PentaStar Communications, Inc., a Denver, Colorado based communications
services agent. Our 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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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 208,500 1.34% 200,000 8,500 *
Andover Group, Inc. 121,900 * 20,000 101,900 *
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) 5,000 * 3,625 1,375 *
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 7.49%
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 230,499 1.55% 32,558 197,941 1.33%
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 14,492 * 6,992 7,500 *
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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(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
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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.
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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:
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- - 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> 14
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 19, 2000
5801 GOSHEN SPRINGS ROAD
NORCROSS, GEORGIA 30071
(770) 242-7566
