-----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, CvlQB3Jr4uuJ9wwX3KqcJkQ7Ul7b3bwk73cNgfYXTsGI7WSIfetYGpDnbTCTMc9s ZmF8D78INImoIddhF8+92A== 0000950144-96-007887.txt : 19961209 0000950144-96-007887.hdr.sgml : 19961209 ACCESSION NUMBER: 0000950144-96-007887 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VISUAL EDGE SYSTEMS INC CENTRAL INDEX KEY: 0001015172 STANDARD INDUSTRIAL CLASSIFICATION: 7997 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-20995 FILM NUMBER: 96659386 BUSINESS ADDRESS: STREET 1: 7 W 51ST ST CITY: NEW YORK STATE: NY ZIP: 10019 MAIL ADDRESS: STREET 1: 7 WEST 51ST STREET STREET 2: 7 WEST 51ST STREET CITY: NEW YORK STATE: NY ZIP: 10019 10QSB 1 VISUAL EDGE SYSTEMS FORM 10-QSB 09/30/96 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 UNITED STATES FORM 10-QSB [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 0-11770 For the transition period from _________________ to ______________________ VISUAL EDGE SYSTEMS INC. (Exact name of registrant as specified in its charter) DELAWARE 13-3778895 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 2424 NORTH FEDERAL HIGHWAY, SUITE 100, BOCA RATON, FLORIDA 33431 (Address of principal executive offices) (561) 750-7559 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. At September 30, 1996, there were 4,615,000 shares of common stock at a $.01 par value per share. -- 1 -- 2 VISUAL EDGE SYSTEMS INC. TABLE OF CONTENTS PART I FINANCIAL INFORMATION ITEM 1. Financial Statements: Condensed Balance Sheets 3 December 31, 1995 and September 30, 1996 Condensed Statements of Operations 4 Three and Nine Months Ended September 30, 1996 and 1995 and period from inception to September 30, 1996 Condensed Statements of Cash Flows 5 Nine Months Ended September 30, 1996 and 1995 and period from inception to September 30, 1996 Notes to Consolidated Condensed Financial Statements 6 & 7 ITEM 2. Management's Discussion and Analysis of Results of 8 Operations and Financial Condition Signature 9 PART II OTHER INFORMATION 10
-- 2 -- 3 VISUAL EDGE SYSTEMS, INC. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS
September 30, 1996 December 31, (unaudited) 1995 ------------- ------------ ASSETS CURRENT ASSETS: Cash & Cash Equivalents $3,601,252 $ 558 Other Current Assets 26,100 -- ---------- -------- Total Current Assets 3,627,352 558 ---------- -------- Fixed assets, net 608,472 606,434 Product development costs 527,594 Deferred organization costs, net 100,484 26,485 Advance royalties 300,000 -- Other assets 28,338 -- ---------- -------- TOTAL ASSETS $5,192,240 $633,477 ========== ======== LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts Payable & Accrued Expenses $ 411,868 $282,980 ---------- -------- TOTAL CURRENT LIABILITIES $ 411,868 $282,980 ---------- -------- Note Payable to Bank -- 400,000 ---------- -------- Total Liabilities 411,868 682,980 ---------- -------- STOCKHOLDERS' EQUITY: Preferred Stock (see prospectus) -- -- Common Stock, $.01 par value, 20,000,000 shares Authorized, 4,615,000 shares issued and outstanding 46,150 30,000 Additional paid-in capital 6,478,941 385,460 Deficit accumulated during the development stage (1,744,719) (464,963) ---------- -------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 4,780,372 (49,503) ---------- -------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) $5,192,240 $633,477 ========== ========
- 3 - 4 VISUAL EDGE SYSTEMS, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS (UNAUDITED)
Nine Months Ended Three Months Ended Period from Inception September 30, September 30, July 15, 1994 to -------------------------- -------------------------- September 30 1996 1995 1996 1995 1996 ----------- --------- ----------- --------- ----------- REVENUE Product Sales $ - $ - $ - $ - $ 7,267 License Fees - - - - 125,000 ----------- --------- ----------- --------- ----------- Total Revenue - - - - 132,267 ----------- --------- ----------- --------- ----------- COST OF SALES - - - - 44,167 ----------- --------- ----------- --------- ----------- SELLING AND ADMINISTRATIVE EXPENSES: Licensing Fee 600,000 - 600,000 - 600,000 Other Selling & Administrative Expense 654,483 289,917 500,113 280,705 1,201,706 ----------- --------- ----------- --------- ----------- TOTAL SELLING AND ADMINISTRATIVE 1,254,483 289,917 1,100,113 280,705 1,801,706 ----------- --------- ----------- --------- ----------- OPERATING LOSS (1,254,483) (289,917) (1,100,113) (280,705) (1,713,606) Interest Income / (Expense) (25,274) - 5,472 - (30,392) ----------- --------- ----------- --------- ----------- NET LOSS BEFORE INCOME TAXES (1,279,757) (289,917) (1,094,641) (280,705) (1,743,998) Provision for Income Taxes - (721) - - (721) ----------- --------- ----------- --------- ----------- NET LOSS $(1,279,757) $(290,638) $(1,094,641) $(280,705) $(1,744,719) =========== ========= =========== ========= =========== LOSS PER SHARE $ ( 0.28) $ ( 0.10) $ ( 0.24) $ ( 0.09) $ ( 0.38) =========== ========= =========== ========= =========== WEIGHTED AVERAGE SHARES OUTSTANDING 4,615,000 3,000,000 4,615,000 3,000,000 4,615,000 =========== ========= =========== ========= ===========
- 4 - 5 VISUAL EDGE SYSTEMS, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOW
Nine Months Ended Period from Inception September 30 July 15, 1994 to -------------------------- September 30 1996 1995 1996 ----------- ---------- ------------ OPERATING ACTIVITIES: Net Loss $(1,279,757) $(290,638) $(1,744,719) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation and Amortization 156,287 218,671 Deferred Organization Costs (73,999) (23,534) (100,484) Increase in Accounts Payable & Accrued Expenses 128,888 411,868 Increased in Advanced Royalties (300,000) (300,000) Increase in Current Assets (26,100) (26,100) Increase in Other Assets (28,338) (28,338) ----------- --------- ----------- NET CASH USED IN OPERATING ACTIVITIES (1,423,019) (314,172) (1,569,102) ----------- --------- ----------- INVESTING ACTIVITIES: Capital Expenditures (158,668) (226,600) (829,844) Development Costs (527,594) (527,594) ----------- --------- ----------- Net Cash Used in Investing Activities (686,262) (226,600) (1,357,438) ----------- --------- ----------- FINANCING ACTIVITIES: Proceeds from Issuance of common stock & 6,109,974 1,000 6,525,092 warrants, net of offering cost. 402,700 402,700 Loans from Shareholders (400,000) (400,000) Payment of Bank Loan 515,000 150,000 515,000 Proceeds of Bank Loan 1,100,000 1,100,000 Proceeds of Bridge Loan (515,000) (515,000) Payment of Bank Loan (1,100,000) (1,100,000) Payment of Bridge Loan ----------- --------- ----------- 5,709,974 553,700 6,527,792 NET CASH PROVIDED BY FINANCING ACTIVITIES ----------- --------- ----------- 3,600,694 12,928 3,601,251 NET INCREASE IN CASH 558 CASH AT BEGINNING OF PERIOD ----------- --------- ----------- $ 3,601,252 $ 12,928 $ 3,601,251 CASH AT END OF PERIOD =========== ========= ===========
-- 5 -- 6 VISUAL EDGE SYSTEMS INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATMENTS (UNAUDITED) (1) DESCRIPTION OF BUSINESS Visual Edge Systems Inc. (the "Company") was organized to develop and market personalized videotape golf lessons featuring One-on-One instruction by leading professional golfer Greg Norman. To date, the Company has focused its efforts on developing computer software and hardware which digitally combines actual video footage of a golfer's swing with a synchronized "split-screen" comparison to Greg Norman's golf swing to produce a One-on-One videotape golf lesson. The Company's One-on-One personalized videotape golf lesson analyzes a golfer's swing by comparing it to Greg Norman's swing at several different club positions from two camera angles using Greg Norman's pre-recorded individualized instructional commentary and analysis and computer graphics to highlight important golf fundamentals intended to improve a golfer's performance. The Company was incorporated in July 1994 and commenced operations in January 1995. The Company is a development stage company which has not commenced generating revenue from its planned primary business activities. Since the Company's inception, it has been primarily engaged in product development, market testing its products, recruitment of key personnel, raising capital and preparing the software and videotaped coaching instructions used in the production of its products. As a consequence, the Company has not generated any revenue of substance from operations to date. (2) UNAUDITED INTERIM FINANCIAL STATEMENTS The accompanying unaudited, condensed interim financial statements have been prepared in accordance with the instructions for Form 10-QSB and reflect all adjustments (consisting of normal recurring adjustments by the Company) which are, in the opinion of management, necessary for a fair presentation of the financial position of the Company and the results of its operations as of and for the nine months ended September 30, 1996 and 1995. Results for the nine months ended September 30, 1996 are not necessarily indicative of results which could be expected for the entire year. While the Company believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these consolidated condensed financial statements be read in conjunction with the financial statements and the notes included in the Company's July 24, 1996 initial public offering prospectus and Amendment No. 2 to the Company's Registration Statement, Form SB-2. (3) LOSS PER SHARE For the periods prior to the initial public offering completed on July 24, 1996 per share information was computed pursuant to the rules of the Securities and Exchange Commission (SEC), which requires that common stock issued by the Company during the 12 months immediately preceding the Company's initial public offering, plus the number of common shares issuable pursuant to the grant of stock options during the same period, be included in the shares outstanding using the treasury stock method. For the periods subsequent to the consummation of the initial public offering, per share information is computed using the weighted average number of common shares and common share equivalents outstanding when applying the treasury stock method. Common share equivalents result from outstanding options and warrants to purchase Common Stock. Common share equivalents have not been included in computed net loss per share since the effect would have been antidilutive. (4) NEW ACCOUNTING PRONOUNCEMENTS In October 1995, the Financial Accounting Standards Board (FASB) issued Statement No. 123, "Accounting for Stock-Based Compensation," which must be adopted by the Company in 1996. The Company has elected not to implement the fair value based accounting method for employee stock options, but has elected to disclose the pro-forma net income and loss per share as if such method had been used to account for stock-based compensation as described in the Statement. -- 6 -- 7 VISUAL EDGE SYSTEMS INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATMENTS (UNAUDITED) (5) COMMON STOCK In July 1996, the Company sold 1,300,000 shares of common stock and redeemable warrants to purchase 1,300,000 shares of common stock to the public at $5.00 per share and $.10 per warrant resulting in net proceeds to the Company, after offering costs, of approximately $5,765,065. In August, 1996, the Underwriters exercised their over allotment which resulted in additional new proceeds to the Company of $475,000. In April 1996, three shareholders transferred 300,000 shares of Common Stock to Greg Norman, upon his exercise of an option granted to him pursuant to the terms of the Shareholders Agreement and Greg Norman License. -- 7 -- 8 VISUAL EDGE SYSTEMS INC. (A DEVELOPMENT STAGE COMPANY) MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS The Company is a development stage company and has generated no revenue during the three month and nine month periods ended September 30, 1996. The Company commenced introduction and marketing computerized videotape golf lessons, featuring One-on-One instruction by leading professional golfer Greg Norman, during October 1996. Initially, the product is being primarily introduced to the golf tournament market in Florida. Through September 30, 1996, the Company focused its efforts on developing and upgrading its proprietary hardware, software, video products, and mobile video capturing and processing production units. The first mobile and training units were completed during September 1996. Selling and administrative expenses increased considerably in both the three and nine month periods September 30, 1996 by approximately $219,000 or 78% and $365,000 or 126%, respectively, as compared to the same periods in the prior year. The expenses consisted primarily of start-up, payroll, marketing, and other administrative expenses. A significant portion of the Company's disbursements during the third quarter represent investment in product development ($527,594) and fixed assets ($158,668). At September 30, 1996, the Company's cumulative investment in product development and fixed assets aggregated ($527,594) and ($829,844), respectively. LIQUIDITY AND CAPITAL RESOURCES During July 1996, the Company sold 1,395,000 shares of Common Stock and 1,395,000 Redeemable Warrants to the public. Net proceeds of such sales totaled $5,509,183. Subsequently, the Company repaid its bank loan ($515,000) to a bank and a "Bridge Loan" ($1,100,000) arranged by Whale Securities Co., LP. At September 30, 1996, the Company's cash and marketable securities balance was $3,627,352 and the Company was debt free. Other than planned purchases of operating equipment, no significant expenditures are anticipated for the remainder of 1996. Management of the Company believes that existing working capital and Projected funds to be generated from operations will be sufficient to cover the Company's anticipated capital needs in connection with its present plans for roll-out mobile production units in the initial test and introductory markets. THIRD PARTY REPORTS The Company does not make financial forecasts or projections nor endorse the financial forecasts or projections of third parties nor does it comment on the accuracy of third party reports. The company does not participate in the preparation of the reports or the estimates given by the analysts. Analysts who issue financial reports are not privy to non-public financial information. Any purchase of the Company's securities based on financial estimates provided by analysts or third parties is done entirely at the risk of the purchaser. -- 8 -- 9 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Visual Edge Systems, Inc. November 12, 1996 By: /s/ Ami Trauber ----------------------------- Ami Trauber Chief Financial Officer (Principal Financial Officer) -- 9 -- 10 VISUAL EDGE SYSTEMS INC. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is not presently subject to any material litigation. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (27) Financial Data Schedule (b) Reports on Form 8-K None
-- 10 -- EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 3,601,252 0 0 0 0 3,627,352 829,844 221,372 5,192,240 411,868 0 0 0 46,150 4,734,222 5,192,240 0 0 0 1,254,483 0 0 28,274 (1,279,787) 0 (1,279,787) 0 0 0 (1,279,787) (0.28) 0
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