-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SoREcll/pERjiEXk3Csp/XSpi3s4pHmE4pX2yk36GliQ4EHShTPxv5PKKLzymYrj yIuH1Ox6oylJH8/lBni3Qw== /in/edgar/work/0000891554-00-001766/0000891554-00-001766.txt : 20000718 0000891554-00-001766.hdr.sgml : 20000718 ACCESSION NUMBER: 0000891554-00-001766 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000705 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000717 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VISUAL EDGE SYSTEMS INC CENTRAL INDEX KEY: 0001015172 STANDARD INDUSTRIAL CLASSIFICATION: [7997 ] IRS NUMBER: 133778895 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-20995 FILM NUMBER: 674257 BUSINESS ADDRESS: STREET 1: 901 YAMATO ROAD SUITE 175 CITY: BOCA RATON STATE: FL ZIP: 33431 BUSINESS PHONE: 5617507559 MAIL ADDRESS: STREET 1: 901 YAMATO ROAD SUITE 175 STREET 2: SUITE 175 CITY: BOCA RATON STATE: FL ZIP: 33431 8-K 1 0001.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) July 13, 2000 VISUAL EDGE SYSTEMS INC. (Exact name of registrant as specified in its charter) Delaware 0-20995 13-3778895 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 901 Yamato Road, Suite 175, Boca Raton, Florida 33431 (Address of principal executive offices) (561) 750-7559 (Registrant's telephone number, including area code) Item 1. Change in Control of Registrant. In June 1997 Visual Edge Systems, Inc., or Edge, arranged a three-year $7.5 million debt and convertible equity facility, which is referred to as the Infinity Financing, with a group of investment funds, including Infinity Investors Limited. Under the Bridge Securities Purchase Agreement relating to the Infinity Financing, including the amendments that have since been made to such agreement, Edge issued to the investment funds shares of common stock, shares of Series A-2 Convertible Preferred Stock and convertible notes. In August 1999, Infinity converted 1,627 shares of the Series A-2 Convertible Preferred Stock into 9,594,857 shares of Edge's common stock, which Edge recognized in June 2000 effective as of August 13, 1999 after the dismissal of litigation relating to the conversion. The principal amounts due under the convertible notes matured in June 2000, and those amounts, as well as unpaid interest on the convertible notes and dividends on the Series A-2 Convertible Preferred Stock, remain unpaid. As a result of Edge's failure, among other matters, to pay amounts of principal, interest and dividend payments owed to the holders of the convertible securities, consisting of the convertible notes and Series A-2 Convertible Preferred Stock, Events of Default exist under the Infinity Financing. Because of the existence of Events of Default, the holders of the convertible securities may take any and all remedies available to them under the Securities Purchase Agreement and related documents, including without limitation the Security Agreement among Edge and the holders of the convertible securities, which grants to the holders a security interest in substantially all of Edge's assets. The holders of the convertible securities have entered into an Agreement and Fourth Amendment of Bridge Securities Purchase Agreement with Edge providing that, subject to the conditions contained in the agreement, the holders will not convert their convertible securities or take any other action as a remedy under the Bridge Securities Purchase Agreement until August 9, 2000. Furthermore, if the conditions are satisfied, the holders of the convertible securities will convert all the convertible securities based on a formula of four (4) shares of common stock for each $1.00 of principle and interest outstanding under the convertible notes and for each $1.00 of liquidation amount of the Series A-2 Preferred Stock and of unpaid dividends. The number of shares of common stock issuable upon a conversion using this formula is approximately 26,756,660 before taking into account the reverse stock split discussed below. The conditions Edge must fulfill by August 9, 2000 include: o Edge must have effected a reverse stock split of which converts at least four (4) shares of Edge's common stock into one (1) share of Edge's common stock. o Edge must have effected the sale and issuance of its securities to investors providing net proceeds of at least $4.0 million to Edge. o Edge must have secured the services of Pierre Koshakji and Johann Schotte as officers of Edge. Messrs. Koshakji and Schotte have consented to serving in these positions, subject to Edge fulfilling certain conditions. o Edge must have paid Infinity approximately $39,000, an amount which has been advanced by Infinity to Edge for working capital purposes. o Edge must have paid Infinity approximately $180,000, an amount which has been advanced by Infinity to Edge for working capital purposes, or must have restructured the terms of this advanced amount on terms acceptable to Infinity. o Edge must have consummated its investment in Hencie.com, Inc., which is further discussed in Item 5 of this Report on Form 8-K. In connection with each of these actions, Infinity intends to transfer shares of Edge common stock to Entertainment Education Enterprises Corporation (or its designee), which is referred to in this Report as E3. The number of shares that Infinity will sell to E3 is approximately 27,479,413 before taking into account the reverse stock split discussed above. As a result of this transfer of securities, E3 will hold approximately 59% of Edge's outstanding common stock. If this transfer takes place, E3 will control Edge. We cannot assure our investors that the anticipated transactions will close, that such transactions will prove successful or that unforeseen developments will not occur, any of which could have a material adverse effect on our business, financial condition and results of operations. Biographical information regarding Messrs. Schotte and Koshakji Johan Schotte is the founder and Chairman of Media Trust, S.A., a private Luxembourg-based multinational investment and management company. Mr. Schotte is currently Chairman and Chief Executive Officer of Odyssey Pictures Corporation (OTCBB: OPIX), one of Media Trust's portfolio companies. Pierre Koshakji is co-founder and President of E3, an international investment group with interests in entertainment and technology holdings. Mr. Koshakji is a founding Director of PurchasePooling.com, an Internet-based demand aggregator for the government sector. From February 1998 to December 1999, Mr. Koshakji served as President of Odyssey Pictures Corporation (OTCBB: OPIX) in a successful turnaround effort to reorganize Odyssey as a media company. Mr. Koshakji began his career as an Electrical Engineer in 1984 at Chrysler Technologies Airborne Systems specializing in communication systems and project management. He pursued international management consulting with KPMG Management Consulting in 1991 in the country of Kuwait as a Manager and was hired by the 1994 World Cup Organizing Committee in 1992 to serve as Deputy Executive Director of the 1994 World Cup, Dallas Venue, including having the responsibility of liaison with the European Broadcast Union and International Broadcast as well as overseeing the technology group. Mr. Koshakji held various positions in the sports industry from 1994 through 1997. He played a development role in establishing Major League Soccer (MLS), served as Senior Vice President of Marketing on the Las Vegas Domed Stadium project and served as Marketing Consultant to the San Francisco Giants new Ball Park at China Basin. Mr. Koshakji graduated from Vanderbilt University with a BSEE in 1984 and received his Masters of Business Administration at Southern Methodist University in 1990. Edge expects to raise the funds for this transaction through the sale of its securities. We cannot assure our investors that the anticipated transaction with Hencie will close, that such an investment will prove successful or that unforeseen developments will not occur, any of which could have a material adverse effect on our business, financial condition and results of operations. Item 5. Other Events. Subject to the satisfaction of the matters described in Items 1 and 5 of this Report on Form 8-K, as well as other matters, Edge intends to expand its operations to include the operation, financing and development of technology-oriented companies internationally through subsidiaries and affiliated companies. Edge plans to make acquisitions and take strategic positions in other technology-related companies that provide services and/or products that complement its strategy and subsidiaries. Edge intends to be structured to emphasize and promote opportunities for cross business relationships among its network of companies, and to develop strategic partnerships with established global technology companies, scientific organizations and investment and consulting partners. Edge intends to: o finance, operate, and develop businesses that may be acquired or developed internally. o take minority strategic positions in companies that complement Edge's majority owned businesses. These businesses may include start-up investments, acquisitions and new markets. o Promote and actively facilitate cross business relationships among all Edge's subsidiaries through processes of integration. As further described below under the heading "Risk Factors," we cannot assure our investors that we will be able to expand our operations as described in a successful manner or that unforeseen developments will not occur, either of which could have a material adverse effect on our business, financial condition and results of operations. 3 Corporate changes Edge intends, subject to stockholder approval, to change its name from Visual Edge Systems Inc. to Edge Technology Group, Inc. to better describe the expanded scope of its operations. Additionally, subject to stockholder approval, Edge intends to transfer its video golf lesson operations into a wholly owned subsidiary corporation. Resignation of Officer and Director Ronald F. Seale has resigned as Edge's Chairman of the Board, Chief Executive Officer and President effective as of July 12, 2000. Mr. Seale has agreed to serve in a consulting capacity to Edge. Edge's Board of Directors has elected Thomas Peters as the Chief Executive Officer and President of Edge ffective as of July 12, 2000. Investment in Hencie.com, Inc. As an investment contemplated in connection with Edge's expanded operations described in Item 5 of this Report, Edge has executed a term sheet to invest approximately $2.8 million in Hencie.com, Inc. ("Hencie") for shares of Series C Redeemable Convertible Preferred Stock representing ownership of approximately 10% of the issued and outstanding capital stock of Hencie on a fully diluted basis. Hencie is a Texas-based corporation that provides IT, systems integration, and consulting services for e-commerce software implementation. The term sheet contemplates the grant of an option to Edge to purchase additional shares in an amount equal to 10% of the outstanding common stock of Hencie for approximately $3.8 million. The term sheet also contemplates that Edge will have the right to elect one member to the Board of Directors of Hencie and that the President and Chief Executive Officer of Hencie will be elected to the Board of Advisors of Edge. Edge anticipates that the closing of Edge's investment in Hencie will occur simultaneously with the closing of the transactions contemplated in Item 1 of this Report on Form 8-K. Risk Factors Investors considering acquiring shares of our common stock should consider carefully the risks associated with our forward-looking statements, as well as the following risk factors. Any of the following risks, as well as other risks and uncertainties that are not yet identified or that we currently believe are immaterial, could harm our business, financial condition and operating results, and could cause the trading price of our common stock to decline as well as result in the complete loss of any investment. Cautionary statement concerning forward-looking statements. We have made forward-looking statements in this Report that are subject to risks and uncertainties. These statements generally include the words "believe," "expect," "anticipate," "intend," "estimate" or similar expressions. These statements reflect our current views with respect to future events that are subject to certain risks, uncertainties and assumptions, including without limitation any statements regarding the following: market opportunities, strategies, competition, expected activities, additional financing, strategic alliances and projected expenditures. If one or more of these risks or uncertainties materialize, or should our assumptions prove incorrect, actual results may vary materially from those described in this Report. We cannot assure our investors that the anticipated results will occur, that these judgments or assumptions will prove correct or that unforeseen developments will not occur. Our investments may have incurred historical losses and may not have any future profits. Hencie.com may continue to incur operating losses while it expands and builds its customer base. Other companies into which Edge makes investments may have operating losses. As start-up companies, these businesses may continue to incur significant increases in expenses. These increases may adversely impact our business and their financial condition. Our market is rapidly evolving. The market for Internet-based and other technology products and services is rapidly evolving and is speculative in nature. The demand and market acceptance for our products and services and the products and services of companies into which we may invest are subject to a high level of uncertainty and risk. Our business prospects, and the prospects of companies into which we invest, must be considered in light of the risks, expenses and difficulties frequently encountered by companies in the new and rapidly evolving market for Internet-based and other technology products and services. Some of the risks include the ability to design, build, operate and expand technology; create awareness of brand, products and services; obtain strategic relationships and alliances; effectively compete with existing and unforeseen competitors; and develop products and services to meet the evolving needs of customers. 4 We have an unproven business model. Our ability to generate revenues depends upon whether we can generate revenues from our operations and invest in or establish strategic relationships with operating companies to provide us with an adequate revenue stream. If we cannot achieve or sustain an adequate revenue stream or if our products and services, or the products and services of companies in which we invest, do not achieve or sustain broad market acceptance, our business, operating results and financial condition will be materially adversely affected. Our ability to generate future revenues depends on a number of factors, many of which are beyond our control, including among other things, the risk factors described in this Report. Therefore, we are unable to forecast our revenues with any degree of accuracy. We may have future capital needs and may not be able to obtain suitable financing. Due to our limited operating history and the nature of the Internet and other technology-related industries, our future capital needs are difficult to predict. We may require additional capital to fund any of the following: o advertising, maintenance and expansion o sales, marketing, research and development o unanticipated opportunities o operating losses from changing business conditions o operating losses from unanticipated competitive pressures o new venture capital investments o strategic alliances We cannot assure our investors that adequate levels of additional financing will be available at all or on acceptable terms. Any additional financing could result in significant dilution to our existing stockholders. If we are unable to raise additional capital, our growth and development could be impeded. If we do not have sufficient capital, we may not be able to take advantage of growth opportunities, respond to competitive pressures or pursue our business plan. Our failure to have sufficient capital could have a material adverse effect on our business, operating results and financial condition. As a result of our continuing losses, the low market price of our common stock and the delisting of our common stock from the Nasdaq SmallCap Market, it may be very difficult for Edge to raise additional capital in the future. As of December 31, 1999, Edge had a total of cash and cash equivalents of approximately $19,274. Our subsidiaries are not, and in the future may not be, wholly owned. Upon closing of our proposed investment, we expect to hold approximately 10% of the outstanding capital stock of Hencie on a fully diluted basis. We may not be able to direct its management and policies, or those of other companies into which we invest in the future. Although we expect under the provisions of the executed term sheet to have representation on the board of Hencie.com, no assurance can be given that our representatives will be able to influence its future direction in a manner which results in increased value to us through our minority ownership interest. If we fail to manage our growth and integrate our acquired businesses, our business will be adversely affected. If the reorganization disclosed in this Report results in significant growth of our operations, we will be required to implement and improve our operating and financial systems and controls, and to expand, train and manage our employee base to manage this growth. We will be dependent upon our management to assume and perform the management functions formerly performed by management of each of the parties to the reorganization. To the extent that our management is unable to assume or perform these combined duties, our business, results of operations and financial condition could be adversely affected. There can be no assurance that the management, 5 systems and controls currently in place or any steps taken to improve such management, systems and controls will be adequate in the future. In addition, the integration of the acquired entities and their operations will require our management to make and implement a number of strategic operational decisions. The timing and manner of the implementation of these decisions will materially impact our business operations. We must recruit and retain key management and technical personnel to be competitive. Our success depends to a significant extent on the continued contributions, experience and knowledge of our senior management team and key technical and marketing personnel. Our success also depends upon our ability to identify, attract, hire, train, retain and motivate highly skilled technical, managerial, sales and marketing personnel. No assurance can be given that we will be able to successfully attract, assimilate or retain a sufficient number of qualified personnel. The failure to do so could have a material adverse effect on our business. We operate in an industry with evolving technology trends and industry standards. Our success, in part, depends upon our ability, as well as the ability of companies into which we invest, to develop and provide new products and services that meet customers' changing requirements. The Internet and technology-related industries have been characterized by significant technological changes, frequent new system and product enhancements, evolving industry standards and changes in customer needs that have had and will continue to have a significant impact on the industries and their participants. New technologies and standards could render existing systems obsolete and ultimately result in lost revenues. Our future success, as well as the success of companies into which we invest, will depend, in part, on the ability to effectively use leading technologies, continue to develop technological expertise, enhance currently planned products and services, develop and implement new products and services that meet changing customer needs, anticipate changes and influence and respond to emerging industry standards and other technological changes on a timely and cost effective basis. No assurance can be made that we, or the companies into which we invest, will keep pace with ever changing technological trends and evolving industry standards. Infinity and its affiliates exercise, and in the future E3 may exercise, control over Edge and may have conflicts of interest. Infinity and its affiliates own a sufficient amount of our common stock to exercise significant control over our business, policies and affairs and, in general, determine the outcome of any corporate transaction or other matters submitted to the stockholders for approval, all in a manner that could conflict with the interests of other stockholders. Upon the transfer of shares of common stock from Infinity to E3, as discussed above, E3 may exercise significant control over our business, policies and affairs and, in general, determine the outcome of any corporate transaction or other matters submitted to the stockholders for approval, all in a manner that could conflict with the interests of other stockholders We may become subject to increased governmental oversight. There can be no assurance that Internet and technology-related products and services which are sold by us or the companies into which we invest will not be actively regulated. Increased regulation of the Internet and technology-related products and services may slow our growth, particularly if other countries also impose similar regulations. Any regulation may negatively impact our cost of doing business and may materially adversely affect our business, financial condition, operating results and future prospects. Increased regulation in one or more countries could materially adversely affect our business, financial condition, operating results and prospects. We do not plan to pay dividends on our capital stock. We do not expect to pay dividends on our common stock in the foreseeable future. We anticipate that we will retain any earnings used in the development of new products or services, investments or the expansion of business operations. There can be no assurance that we will ever recognize a gain from our business operations or pay a dividend on our capital stock. 6 The shares eligible for future sale may decrease the price of our common stock. If our stockholders sell substantial amounts of their common stock in the public market, including shares issued upon the exercise of outstanding options, then the market price of our common stock could fall. Restrictions under the securities laws may limit the number of shares of common stock available for sale in the public market. Our right to issue preferred stock and anti-takeover provisions under Delaware law could make a third party acquisition of us difficult Our certificate of incorporation provides that our board of directors may issue preferred stock without stockholder approval. The issuance of preferred stock could make it more difficult for a third party to acquire us without the approval of its board. Additionally, Delaware corporate law imposes certain restrictions on corporate control transactions that could make it more difficult for a third party to acquire us without the approval of our board. Our common stock has a limited trading history and an illiquid market. There has only been a limited public market for our common stock. We cannot predict the extent to which an active trading market will develop or how liquid that market might become. The price of our common stock issued in the reorganization may not be indicative of prices that will prevail in the trading market. We have experienced significant and continuing losses. As of December 31, 1999, Edge had an accumulated deficit of $24,173,544. We incurred a net loss of $3,237,570 for 1999. We believe that Edge will continue to incur losses until Edge generates sufficient revenues to offset the operating costs associated with commercializing its products. These losses could limit our ability to grow and to raise new funds and could ultimately jeopardize our ability to remain in business. The value of Edge's securities could decrease upon the issuance of additional securities by Edge. There are a substantial number of outstanding options and warrants to purchase shares of our common stock. The exercise of any of these options or warrants will have a dilutive effect on our stockholders. Furthermore, holders of such options or warrants are more likely to exercise them at times when Edge could obtain additional equity capital on terms that are more favorable to us than those provided in the options or warrants. As a result, exercise of the options or warrants may adversely affect the terms of such financing. The sale of a substantial number of our common stock may adversely affect the prevailing price of such common stock in the public market and may impair our ability to raise capital through the sale of its equity securities. Our common stock has been delisted from the Nasdaq Smallcap Market and is subject to additional significant risks. Because we were unable to meet Nasdaq's listing requirements, Edge was delisted from the Nasdaq SmallCap Market as of June 1, 1999. The delisting of our common stock means that, among other things, fewer investors have access to trade our common stock which will limit our ability to raise capital through the sale of its securities. In addition, our common stock is subject to penny stock regulations, which could cause fewer brokers and market makers to execute trades in our common stock. This is likely to hamper our common stock trading with sufficient volume to provide liquidity and could cause our stock price to further decrease. The penny stock regulations require that broker-dealers who recommend penny stocks to persons other than institutional accredited investors must make a special suitability determination for the purchaser, receive the purchaser's written agreement to the transaction prior to the sale and provide the purchaser with risk disclosure documents which identify risks associated with investing in penny stocks. Furthermore, the broker-dealer must obtain a signed and dated acknowledgement from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before effecting a transaction in penny stock. These requirements have historically resulted in reducing the level of trading activity in securities that become subject to the penny stock rules. Holders of our common stock may find it more difficult to sell their shares of common stock, which is expected to have an adverse effect of the market price of the common stock. 7 We are at risk of securities class action litigation due to our stock price volatility. In the past, securities class action litigation has often been brought against a company following periods of volatility in the market price of its securities. We may be the target of similar litigation. Securities litigation may result in substantial costs and divert management's attention and resources, which may seriously harm our business, prospects, financial condition and results of operations. 8 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits 10.1 Agreement and Fourth Amendment to Bridge Securities Purchase Agreement and Related Documents among Visual Edge and certain of its stockholders 99.1 Press Release date July 13, 2000 99.2 Press Release dated July 17, 2000 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of l934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. VISUAL EDGE SYSTEMS INC. (Registrant) /s/ Thomas Peters ------------------------------------------- Thomas Peters Chief Executive Officer and President Date: July 17, 2000 9 EX-10.1 2 0002.txt AGREEMENT AND FOURTH AMENDMENT Exhibit 10.1 -- Agreement and Fourth Amendment to Bridge Securities Purchase Agreement among Visual Edge and certain of its stockholders AGREEMENT AND FOURTH AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT AND RELATED DOCUMENTS THIS AGREEMENT AND FOURTH AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT AND RELATED DOCUMENTS (the "Fourth Amendment") dated as of July 13, 2000 among VISUAL EDGE SYSTEMS, INC., a Delaware corporation (the "Company"), INFINITY INVESTORS LIMITED ("Infinity"), SUMMIT CAPITAL LIMITED ("Summit") and GLACIER CAPITAL LIMITED ("Glacier") (Infinity, Summit and Glacier being collectively referred to as the "Purchasers"). R E C I T A L S: A. The Company and the Purchasers (directly or through entities which previously assigned their interests therein to Purchasers) have entered into that certain Bridge Securities Purchase Agreement dated as of June 13, 1997 (the "Initial Purchase Agreement"), as amended by that certain First Amendment to Bridge Securities Purchase Agreement and Related Documents (the "First Amendment") dated as of December 31, 1997, as further amended by that certain Agreement and Second Amendment to Bridge Securities Purchase Agreement and Related Documents (the "Second Amendment") dated as of March 27, 1998, and as further amended by that certain Third Amendment to Securities Purchase Agreement and Related Documents (the "Third Amendment") dated as of December 29, 1998 (collectively, the Initial Purchase Agreement, as amended by the First Amendment, the Second Amendment and the Third Amendment, being referred to herein as the "Purchase Agreement"). B. The Convertible Notes (as defined below) matured on June 13, 2000 and are due and payable in full by the Company to the Purchasers. C. The Purchasers have loaned to the Company an aggregate of $180,000 since January 1, 2000, which loans are now due and payable in full (collectively, the "$180,000 Loan"). D. The Company is in need of additional capital and is seeking to consummate a financing transaction through a sale of the Company's securities in an amount which will provide at least $4 million of net proceeds to the Company (a "Financing Transaction"). The Company has determined that consummation of any such Financing Transaction on terms favorable to the Company and its stockholders will require the Purchasers to convert their Convertible Instruments (as defined below) into shares of common stock of the Company (the "Common Stock") contemporaneous with or immediately preceding consummation thereof. In addition, the Company has requested that the Purchasers provide certain bridge financing while the Company continues its efforts to consummate such Financing Transaction. Further, in order to provide certainty as to the Company's capital structure while the Company attempts to consummate a Financing Transaction, the Company desires to amend the Conversion Price (as defined below) of the Convertible Instruments to provide a fixed Conversion Price rather than the current Conversion Price of 77.5% of the average market price over a trading range of the Company's Common Stock, such amendment to be effective upon the satisfaction of each of the Conditions Precedent (as defined below) specified herein. E. Consistent with the foregoing Recitals, the Company has requested that the Purchasers (i) loan to the Company an additional $39,000, which loan shall be due and payable in full on or before July 31, 2000 (the "$39,000 Loan"), (ii) extend the maturity date of the Convertible Notes and the $180,000 Loan and forbear from exercising certain of their rights under the Purchase Agreement, (iii) agree to commit to convert, effective upon the satisfaction of each of the Conditions Precedent specified herein, the Convertible Instruments, together with all accrued interest and dividends thereon, into shares of Common Stock of the Company at the amended Conversion Price specified herein, (iv) agree to a moratorium on the conversion of the Convertible Instruments on the terms specified herein and (v) agree to a moratorium on the exercise of their demand registration rights, and to waive compliance by the Company with certain provisions, under the Registration Rights Agreement dated June 13, 1997. F. The Purchasers are willing to agree with the Company's requests on the terms specified herein. NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I Definitions Section 1.1 Definitions. Capitalized terms used in this Fourth Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Purchase Agreement. In addition: (a) "Conversion Price" shall mean the price at which the Convertible Instruments shall be converted into Common Stock. (b) "Convertible Instruments" shall mean collectively the Convertible Notes and the Preferred Stock, as such terms are defined in the Purchase Agreement. ARTICLE II Agreements of the Parties Section 2.1 Conversion Price. The Company and the Purchasers hereby agree that the Conversion Price shall, upon satisfaction of the Conditions Precedent set forth in Article 3 hereof, be amended to be twenty five cents ($.25) per share of Common Stock, such that each dollar value of the Convertible Instruments (which, for purposes of the Preferred Stock, shall be calculated as the 2 Liquidation Preference thereof multiplied by the number of shares of Preferred Stock converted) shall be convertible into four (4) shares of Common Stock. Until the Conditions Precedent set forth in Article 3 have been satisfied, the Conversion Price shall remain unaltered as set forth in the Purchase Agreement. Section 2.2 Adjustment for Reverse Stock Split. The Conversion Price shall be adjusted upon the occurrence of the Reverse Stock Split (as defined below). By way of illustration, if the Reverse Stock Split is 1 for 6, the Conversion Price shall be adjusted from twenty five cents ($.25) per share to one dollar and fifty cents ($1.50) per share of Common Stock. Section 2.3 Extension of Maturity Dates. The Company and the Purchasers hereby agree that the maturity date of the Convertible Notes shall be extended until July 31, 2000, and the maturity date of the $180,000 Loan shall be extended until the earlier to occur of the Closing Date (as defined below) or July 31, 2000. Section 2.4 $39,000 Loan. Infinity hereby agrees to make the $39,000 Loan to the Company, and the Company hereby agrees to execute and deliver to Infinity the Promissory Note in the form attached hereto as Exhibit A evidencing the $39,000 Loan. The Company acknowledges and agrees that the $180,000 Loan and the $39,000 Loan are each secured by all of the collateral and security interests granted to the Purchasers by the Company and its subsidiaries applicable to the Convertible Notes as contemplated by the Purchase Agreement. Section 2.5 Conversion of Convertible Instruments. The Purchasers hereby covenant and agree that upon satisfaction of each Condition Precedent or the waiver thereof by the Purchasers, each Purchaser shall convert all of its respective Convertible Instruments (including all accrued and unpaid interest and dividends payable thereon) into Common Stock (the "Conversion Shares") at the Conversion Price of twenty five cents ($.25) per share (before giving effect to the Reverse Stock Split). The total number of Conversion Shares to be issued to the Purchasers, assuming the Closing Date is July 31, 2000, would be as follows:
============================================ ================ ============== ============= Infinity Catalyst Glacier -------------------------------------------- ---------------- -------------- ------------- Liquidation Preference of Preferred Stock (4,373 shares in the aggregate remaining outstanding) $2,773,000 800,000 800,000 -------------------------------------------- ---------------- -------------- ------------- Principal of Convertible Notes $1,100,000 200,000 200,000 -------------------------------------------- ---------------- -------------- ------------- Accrued Interest (calculated through July 31, 2000) $ 261,800 47,600 47,600 -------------------------------------------- ---------------- -------------- ------------- Accrued Dividends (calculated through July 31, 2000) $ 291,165 84,000 84,000 -------------------------------------------- ---------------- -------------- ------------- Total Conversion Amount $4,425,965 1,131,600 1,131,600 -------------------------------------------- ---------------- -------------- ------------- Total Conversion Shares Issued (before giving effect to the Reverse Stock Split) 17,703,860 4,526,400 4,526,400 ============================================ ================ ============== =============
Section 2.6 Moratorium on Conversion and Foreclosure. The Purchasers hereby covenant and agree to refrain from converting their respective Convertible Instruments into shares of Common Stock or exercising any other remedies as a lender and secured party available to them under the Purchase Agreement, the Security Agreement or any other Financing Document until the earlier to occur of (i) August 9, 2000 or (ii) satisfaction of each Condition Precedent set forth in Article 3 (a "Moratorium"); provided however, that should a Sale Event occur after the date hereof 3 and prior to the earlier to occur of these events, then the Moratorium shall not apply and the Purchasers shall, at their sole option, be authorized to convert their respective Convertible Instruments into shares of Common Stock in connection with the consummation of the Sale Event. ARTICLE III Conditions Precedent The amendment to the Conversion Price as set forth in Section 2.1 of this Fourth Amendment, and the agreement of the Purchasers to convert their Convertible Instruments into shares of Common Stock at such amended Conversion Price as set forth in Section 2.5 of this Fourth Amendment are each subject to the conditions precedent (the date of satisfaction of such events being referred to as the "Closing Date") (the "Conditions Precedent") that on or before the Closing Date the Purchasers shall have received all of the following in form and substance acceptable to it and its counsel (each or any of which Conditions Precedent may be waived by the Purchasers in their sole and absolute discretion): (a) Evidence of the consummation by the Company of a reverse stock split (the "Reverse Stock Split") of at least one for four, on terms acceptable to the Company and each of the Purchasers, in their sole and absolute discretion; (b) Evidence of the filing of an amendment to the Company's charter (following stockholder approval, if required) to reflect (i) the Reverse Stock Split, (ii) the amendment of the Conversion Price contemplated herein, and (iii) any other items required to effect the transactions contemplated to occur on the Closing Date. (c) Evidence of the clarification of the terms of the Convertible Instruments if necessary and consistent with the terms of the Third Amendment, to provide that the Purchasers may convert accrued and unpaid interest and dividends thereon into shares of Common Stock at the Conversion Price; (d) Evidence of the consummation of a Financing Transaction on terms satisfactory to the Company and each of the Purchasers, in their sole and absolute discretion; (e) Consummation of the sale by Infinity of its Conversion Shares (and all other shares of Common Stock owned by Infinity) to Entertainment Education Enterprises Corporation (or its designee) on terms acceptable to each of Infinity and Entertainment Education Enterprises Corporation, in their sole and absolute discretion; (f) Evidence of the engagement by the Company of Pierre Koshakji and Johann Schotte as officers of the Company on terms acceptable to each of the Purchasers, the Company and Messrs. Koshakji and Schotte; (g) Payment in full of the $39,000 Loan by the Company; (h) Either payment in full of the $180,000 Loan by the Company or the restructuring of the terms of the $180,000 Loan on terms acceptable to the Company and the Purchasers, in their sole and absolute discretion; 4 (i) Evidence of the consummation of an investment by the Company in Hencie.com, Inc. in exchange for an equity interest therein on terms acceptable to the Purchasers and the Company, in their sole and absolute discretion; and (j) Payment to the Purchasers by the Company of the fees and expenses of its counsel pursuant to Section 5.9 hereof. ARTICLE IV Ratification; Representations and Warranties; Acknowledgments Section 4.1 Ratification. The terms and provisions of the Financing Documents, as modified by this Fourth Amendment, are ratified and confirmed and shall continue in full force and effect. The Company acknowledges and agrees that each of the Financing Documents, as amended hereby, is and shall remain in full force and effect and is and shall continue to be the legal, valid and binding obligation of the Company, enforceable against it in accordance with their respective terms. The Company further acknowledges and agrees that the Promissory Notes evidencing the $180,000 Loan and the $39,000 Loan are each Financing Documents, as contemplated by the Purchase Agreement. Section 4.2 Representations and Warranties. The Company hereby represents and warrants to the Purchasers that: (a) the execution, delivery and performance of this Fourth Amendment and all other transactions and documents contemplated hereby have been authorized by all requisite corporate action on the part of the Company; (b) this Fourth Amendment constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to or limited by liquidation, bankruptcy, conservatorship, insolvency, reorganization, rearrangement, moratorium or other similar law relating to or affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (c) there is no provision of law, in the charter or bylaws of the Company, and no provision of any existing mortgage, contract, lease, indenture or agreement binding on the Company, which would be contravened by the making or delivery of this Fourth Agreement, or by the performance or observance of any of the terms hereof; and (d) the execution, delivery and performance of this Fourth Agreement and the transactions contemplated hereby do not require any approval or consent of, or filing or registration with, any governmental or other agency or authority, of stockholders, or of any other party, or, if such approval or consent is required, the same has been obtained. Section 4.3 Representations and Warranties of Purchasers. Each of the Purchasers hereby represents and warrants to the Company that: (a) the execution, delivery and performance of this Fourth Amendment and all other transactions and documents contemplated hereby have been authorized by all requisite action on the part of such Purchaser, (b) this Fourth Amendment constitutes a legal, valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, subject to or limited by liquidation, bankruptcy, conservatorship, insolvency, reorganization, rearrangement, moratorium or other similar law relating to or affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (c) there is no Purchaser, and no provision of any existing mortgage, contract, lease, indenture or agreement 5 binding on such Purchaser, which would be contravened by the making or delivery of this Fourth Amendment, or by the performance or observance of any of the terms hereof; and (d) the execution, delivery and performance of this Fourth Amendment and the transactions contemplated hereby do not require any approval or consent of, or filing or registration with, any governmental or other agency or authority, of stockholders, or of any other party, or, if such approval or consent is required, the same has been obtained. Section 4.4 Acknowledgments by the Company. The Company hereby acknowledges that (a) Arter & Hadden LLP has acted as counsel solely for the Purchasers in connection with the negotiation and preparation of this Fourth Amendment and that the Company has been represented by its independent counsel with respect to such matters and (b) John Wagner and Keith Benedict, directors of the Company, have, in such capacity, abstained from any involvement in the discussions, deliberations and voting in any way relating to the approval by the Company of this Fourth Amendment. Section 4.5 Registration Rights. The Registrable Securities defined in the Registration Rights Agreement dated June 13, 1997 shall be amended promptly after the conversion contemplated by Section 2.5 to include all shares of Common Stock now owned by the Purchasers and their assignees and all shares issuable upon conversion of the Convertible Instruments. In addition, the Purchasers hereby agree to forebear from exercising any demand registration rights under the Registration Rights Agreement until December 31, 2000 and hereby waive compliance by the Company of its obligations under Section 2.3 of such Registration Rights Agreement until December 31, 2000. ARTICLE V Miscellaneous Section 5.1 Survival of Representations, Warranties and Covenants. All representations, warranties and covenants made in this Fourth Amendment or any other document furnished in connection with this Fourth Amendment shall survive the execution and delivery of this Fourth Amendment, and no investigation by the Purchasers or any closing shall affect the representations, warranties and covenants or the right of the Purchasers to rely upon them. Section 5.2 References to Financing Documents. The Financing Documents and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Financing Documents, as amended hereby, are hereby amended so that any reference therein to the Financing Documents shall mean a reference to the Financing Documents as amended hereby. Section 5.3 Further Assurances. The Company and each Purchaser hereby agree that at any time and from time to time, upon the written request of the other party, it will execute and deliver such further documents and do such further acts and things as the other party may reasonably request in order to fully effect the purposes of this Fourth Amendment. Section 5.4 Severability. Any provision of this Fourth Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Fourth Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. 6 Section 5.5 Applicable Law. This Fourth Amendment and all other documents executed pursuant hereto shall be governed by and construed in accordance with the laws of the State of New York. Section 5.6 Successors and Assigns. This Fourth Amendment is binding upon and shall inure to the benefit of the Purchasers and the Company, and their respective successors and assigns, except the Company may not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Purchasers. Section 5.7 Effect of Waiver. No consent or waiver, express or implied, by the Purchasers to or for any breach of or deviation from any covenant, condition or duty by the Company shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty. Section 5.8 ENTIRE AGREEMENT. THE PURCHASE AGREEMENT AS AMENDED HEREBY, THE OTHER FINANCING DOCUMENTS AND ALL AGREEMENTS EXECUTED IN CONNECTION WITH THIS FOURTH AMENDMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. Section 5.9 Fees and Expenses. The Company agrees to pay: (a) all of its own fees and expenses incurred in connection with this Fourth Amendment; and (b) all fees and expenses of counsel incurred by Purchasers in connection with the negotiation and preparation of this Fourth Amendment and each other agreement and document contemplated by this Fourth Amendment (including, without limitation, the agreements and documents required to satisfy each Condition Precedent). Section 5.10 Headings. The headings, captions, and arrangements used in this Fourth Amendment are for convenience only and shall not affect the interpretation of this Fourth Amendment. [Signature page follows] 7 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Fourth Amendment as of the date first written above. VISUAL EDGE SYSTEMS, INC. By: /s/ Thomas Peters ---------------------------------- Name: Thomas Peters ---------------------------------- Title: President ---------------------------------- INFINITY INVESTORS LIMITED By: /s/ James E. Martin ---------------------------------- Name: James E. Martin ---------------------------------- Title: Director ---------------------------------- SUMMIT CAPITAL LIMITED By: /s/ J.A. Loughran ---------------------------------- Name: J.A. Loughran ---------------------------------- Title: Director ---------------------------------- GLACIER CAPITAL LIMITED By: /s/ J.A. Loughran ---------------------------------- Name: J.A. Loughran ---------------------------------- Title: Director ---------------------------------- 8 EX-99.1 3 0003.txt PRESS RELEASE 99.1 Press Release Expansion of Operations and Corporate Reorganization announced by Visual Edge Systems, Inc. Boca Raton, Florida. July 13, 2000 -- Visual Edge Systems Inc. (OTC BB: EDGE), producers of the Greg Norman One-on-One interactive golf lessons, announced today the proposed expansion of its operations and reorganization and restructuring of the company. Expansion of Operations Edge intends to expand significantly its operations to include: o Operating, financing and developing technology-oriented companies internationally through subsidiaries and affiliated companies; o Building minority strategic positions in companies that provide services and/or products that complement Edge's strategy and majority owned businesses; and o Promoting and integrating cross business relationships among Edge's network of companies while developing strategic partnerships with successful global technology companies, scientific organizations and investment and consulting partners. Edge intends to focus on industries where technology can increase profitability and create new business opportunities. Edge has identified specific opportunities in industries including biotechnology, communications and information technology. Corporate Changes Edge intends, subject to stockholder approval, to change its name from Visual Edge Systems, Inc. to Edge Technology Group, Inc. to better describe the expanded scope of its operations. Additionally, subject to stockholder approval, Edge intends to transfer its current lines of CD-ROM products with Internet delivery into a wholly-owned subsidiary corporation which will retain the name Visual Edge Systems, Inc. Corporate Reorganization In connection with the expansion of Edge's operations, the holders of Edge's convertible notes and Series A-2 Convertible Preferred Stock have entered into an Agreement and Fourth Amendment of Bridge Securities Purchase Agreement with Edge. Under the Fourth Amendment, the holders of the convertible securities have agreed that, subject to the satisfaction of certain conditions, they will convert all their convertible securities based on a formula of four shares of common stock for each $1.00 in value of principle and interest outstanding under the convertible notes and for each $1.00 in value of liquidation amount of the Series A-2 Preferred Stock and of unpaid dividends. The number of shares of common stock issuable upon a conversion using this formula is approximately 26,800,000 before taking into account the reverse stock split discussed below. This conversion will eliminate a substantial portion of Edge's debt and enhance future opportunities to raise new capital. As part of the reorganization, Edge intends to raise new capital and believes the conversion will assist it in these efforts. Edge must complete its contemplated capital raise of at least $3.0 million in net proceeds as a condition to the conversion. As a further condition to the reorganization occurring, Edge must cause a reverse stock split which converts four shares of Edge's common stock into one share of Edge's common stock. The reorganization is expected to close in early August 2000. At the closing of the reorganization, Mr. Pierre Koshakji is expected to become president and chief executive officer of Edge and Mr. Johan Schotte is expected to become chairman of the board, Messrs. Koshakji and Schotte have consented to serving in these positions, subject to Edge fulfilling certain conditions. Mr. Koshakji is president of Entertainment Education Enterprises Corporation, a Dallas-based investment and management company, and is an electrical engineer and management executive by training and experience. Mr. Schotte is founder and chairman of Media Trust S.A., a private Luxembourg-based multinational investment and management company and is currently serving as chief executive officer and chairman of Odyssey Pictures Corporation, a portfolio company of Media Trust S.A. Having stabilized Edge's business, Mr. Ronald Seale, the chairman of the board, president and chief executive officer of Edge, is stepping down from his positions as part of the reorganization, Mr. Seale will continue to act as a consultant to the company with primary responsibility for business development for Edge's current sports technology operations. We cannot assure our investors that the transactions discussed in this press release will close, that such transactions will prove successful or that unforeseen developments will not occur, any of which could have a material adverse effect on our business, financial condition and results of operations. This statement contains references to future events and results, including anticipated transactions involving Visual Edge Systems Inc. These statements are forward-looking statements regarding future events and the future financial performance of Visual Edge and no assurances can be made regarding their eventual occurrence. Actual occurrences and results may differ substantially and materially from those projected as a result of risks and uncertainties detailed in Visual Edge's periodic reports and registration statements filed with the Securities and Exchange Commission (viewable at www.sec.gov), including its Form 10-K for the year ended December 31, 1999, and Form 8-K filed in connection with the transactions contemplated in this statement. Corporate changes Edge intends, subject to stockholder approval, to change its name from Visual Edge Systems, Inc. to Edge Technology Group, Inc. to better describe the expanded scope of its operations. Additionally, subject to stockholder approval, Edge intends to transfer its side-by-side video comparison operations into a wholly-owned subsidiary corporation that will retain the name Visual Edge Systems, Inc. Corporate reorganization In connection with the expansion of Edge's operations, the holders of the Edge's convertible securities, consisting of Edge's convertible notes and Series A-2 Convertible Preferred Stock, have entered into an Agreement and Fourth Amendment of Bridge Securities Purchase Agreement with Edge. Under the Fourth Amendment, the holders of the convertible securities have agreed that, subject to the satisfaction of conditions, they will convert all their convertible securities based on a formula of four (4) shares of common stock for each $1.00 in value of principle and interest outstanding under the convertible notes and for each $1.00 in value of liquidation amount of the Series A-2 Preferred Stock and of unpaid dividends. The number of shares of common stock issuable upon a conversion using this formula is approximately [___] million before taking into account the reverse stock split discussed below. Furthermore, the holders of the convertible securities have agreed not convert their convertible securities or take any other action as a remedy under the Securities Purchase Agreement until August 9, 2000. The conditions Edge must fulfill by August 9, 2000 include: o Edge must have effected a reverse stock split which converts at least four (4) shares of Edge's common stock into one (1) share of Edge's common stock. o Edge must have effected the sale and issuance of its securities to investors providing net proceeds of at least $4.0 million to Edge. o Edge must have secured the services of Pierre Koshakji and Johann Schotte as officers of Edge. Messrs. Koshakji and Schotte have consented to serving in these positions, subject to Edge fulfilling certain conditions. [Consider adding biographies] o Edge must have paid Infinity approximately $39,000, an amount which has been advanced by Infinity to Edge for working capital purposes. o Edge must have restructured, on terms acceptable to Infinity, the terms of approximately $180,000 in notes due to Infinity. o Edge must have consummated its investment in Hencie.com, Inc. We cannot assure our investors that the transactions discussed in this press release will close, that such transactions will prove successful or that unforseen developments will not occur, any of which could have a material adverse effect on our business, financial condition and results of operations. This statement contains references to future events and results, including anticipated transactions involving Visual Edge Systems Inc. These statements are forward-looking statements regarding future events and the future financial performance of Visual Edge and no assurances can be made regarding their eventual occurrence. Actual occurrences and results may differ substantially and materially from those projected as a result of risks and uncertainties detailed in Visual Edge's periodic reports and registration statements filed with the Securities and Exchange Commission (viewable at www.sec.gov), including its Form 10-K for the year ended December 31, 1999, and Form 8-K filed in connection with the transactions contemplated in this statement. EX-99.2 4 0004.txt PRESS RELEASE Visual Edge Systems to Make Strategic Investment in Hencie Consulting Boca Raton, Florida. July 17, 2000 -- Visual Edge Systems, Inc. (OTC Bulletin Board: EDGE) announced today that it has reached terms for a strategic investment with the parent company of Hencie Consulting Services, Inc. ("Hencie"), a fast growing national e-business solutions provider and application services company. This announcement comes a few days after Edge announced its proposed reorganization and expansion of operations to include operating, financing and developing technology-oriented companies. As part of definitive agreements to be entered at closing, Edge will invest up to $6.6 million into Hencie and sign a strategic services agreement that will mutually serve Edge and Hencie's business models for growth. As part of the strategic relationship, Hencie will evaluate and provide key services and support to Edge companies. Hencie will also assist Edge to identify future investment opportunities and strategic partners through the many technology clients and technology partners Hencie serves. Edge will assist Hencie with the development and execution of its international expansion plans, promote Hencie's services, and assist in its corporate strategic planning and development. Pierre Koshakji, named to become President and CEO of Edge's proposed reorganized company, will serve on the Board of Hencie, and Adil Khan, President and CEO of Hencie will serve on Edge's Board of Advisors. Hencie is a Texas based corporation that provides unique, patented applied for, e-business solutions to Fortune 1000 and mid-market companies. Hencie offers end-to-end e-business solutions based on technologies from Oracle, i2 Technologies, Ariba, Allaire and other technology leaders. Along with Arthur Andersen and Grant Thornton, Hencie is one of three preferred solutions providers in the Southwest marketing region for Oracle. Hencie has grown from 20 employees in 1998 to over 100 employees currently and has been profitable over the past three years. Clients of Hencie include Raytheon Corporation, Kaiser Aluminum, Del Monte, Kerr- McGee Corporation and PGA of America. "As businesses increase their dependency on technology to gain competitive advantages," adds Mr. Khan, "Hencie will be able to accelerate its ability to deliver enterprise platform solutions through its strategic alliance with Edge." "We have been closely following Hencie's growth for over nine months and are very impressed with Hencie's profitability, top management and the quality of consultants it attracts" explains Pierre Koshakji. "We see the strategic relationship with Hencie as a powerful initial step to execute our new business model." Visual Edge Systems, Inc. based in Boca Raton produces and markets CD-ROM Internet instructional sports products including One-On-One with Greg Norman and is actively engaged in the research and development of new complimentary technologies. The company announced on July 13, 2000 a proposed plan to reorganize and expand operations to include operating, financing and developing technology-oriented companies. The Hencie investment is expected to close in early August 2000. The Company cannot assure investors that the transactions discussed in this press release will close, that such transactions will prove successful or that unforeseen developments will not occur, any of which could have a material adverse effect on the Company's business, financial condition and results of operations. This statement contains references to future events and results, including anticipated transactions involving Visual Edge Systems Inc. These statements are forward-looking statements regarding future events and the future financial performance of Visual Edge, and no assurances can be made regarding their eventual occurrence. Actual occurrences and results may differ substantially and materially from those projected as a result of risks and uncertainties detailed in Visual Edge's periodic reports and registration statements filed with the Securities and Exchange Commission (viewable at www.sec.govhttp://www.sec.gov), including its Form 10-K for the year ended December 31, 1999, and the Form 8-K filed in connection with the transactions contemplated in this statement. SOURCE: Visual Edge Systems Inc. -----END PRIVACY-ENHANCED MESSAGE-----