-----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, CP8isXB2DQnO/cTNZ0k0BAD3+JnSQxW3MTkP9ILh2/vJc/Fdnoyhvl27/ZuhrbaE NGDsJv8ltwj94JY2cO53hA== 0001047469-98-014272.txt : 19980410 0001047469-98-014272.hdr.sgml : 19980410 ACCESSION NUMBER: 0001047469-98-014272 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980327 ITEM INFORMATION: FILED AS OF DATE: 19980409 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VISUAL EDGE SYSTEMS INC CENTRAL INDEX KEY: 0001015172 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEMBERSHIP SPORTS & RECREATION CLUBS [7997] IRS NUMBER: 133778895 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-20995 FILM NUMBER: 98590175 BUSINESS ADDRESS: STREET 1: 2424 NORTH FEDERAL HIGHWAY STREET 2: SUITE 100 CITY: BOCA RATON STATE: FL ZIP: 33431 BUSINESS PHONE: 5617507559 MAIL ADDRESS: STREET 1: 2424 NORTH FEDERAL HIGHWAY STREET 2: SUITE 100 CITY: BOCA RATON STATE: FL ZIP: 33431 8-K/A 1 FORM 8-K/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________ FORM 8-K/A CURRENT REPORT Pursuant to Section l3 or l5(d) of the Securities Exchange Act of l934 Date of Report (Date of earliest event reported) MARCH 27, 1998 -------------- VISUAL EDGE SYSTEMS INC. --------------------------- (Exact name of registrant as specified in its charter) DELAWARE 0-20995 13-3778895 - -------------------------------------------------------------------------- (State or other juris- (Commission (I.R.S. Employer diction of incorporation) File Number) Identification No.) 2424 NORTH FEDERAL HIGHWAY, SUITE 100, BOCA RATON, FL 33431 - -------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (561) 750-7559 -------------- (Registrant's telephone number, including area code) Item 5. OTHER EVENTS On March 27, 1998, the Company entered into a Purchase Agreement (the "Marion Agreement") with Marion Interglobal, Ltd., an investment group ("Marion"). The Marion Agreement calls for the Company to receive up to $11,000,000 from Marion in exchange for shares of the Company's common stock, par value $.01 per share (the "Common Stock"), as explained herein. Pursuant to the Marion Agreement, the purchase of Common Stock is to occur in three tranches as follows: (i) on March 27, 1998 the Company sold to Marion 1,200,000 shares of Common Stock for an aggregate consideration of $3,000,000; $1,500,000 of the $3,000,000 has been funded, with the remaining $1,500,000 to be funded on the business day after the Company's shelf registration statement with respect to the shares sold to Marion has been declared effective by the Securities and Exchange Commission ("SEC"); (ii) sixty days following the registration of all the underlying shares of Common Stock under the Marion Agreement, the Company will sell to Marion 800,000 shares of Common Stock for an aggregate consideration of $2,000,000; and (iii) on or prior to September 30, 1998 the Company shall sell a number of shares of Common Stock (to be determined by when the closing occurs, which would range from 2,666,667 shares to 3,200,000 shares) for an aggregate consideration of $6,000,000 (these three tranches are collectively referred to as the "Marion Financing"). The third tranche is contingent on the Company meeting or exceeding certain financial targets provided by Marion. The Company has agreed to use the $6,000,000 in proceeds from the third tranche to redeem the Company's outstanding Convertible Notes (the "Notes") and Series A Preferred Stock ("Preferred Stock") issued in the financing consummated by the Company in June 1997. The issuance and sale of 1,400,000 shares of Common Stock in the first tranche and all of the shares to be issued in the second tranche to Marion, is subject to approval by the Company's stockholders. The Company will pay transaction fees to Marion upon completion of each tranche as follows: (i) 1,200,000 shares of Common Stock for the first $3,000,000 tranche; (ii) 800,000 shares of Common Stock for the second $2,000,000 tranche; and (iii) no additional fee for the completion of the third tranche. Further, upon the consummation of the second tranche of the Marion Agreement, Mr. Alan Lubell, Chairman of the Board of the Company, has agreed to transfer to Marion 250,000 shares of Common Stock, which shares are required to be registered under the Securities Act of 1933, as amended. In addition, if the third tranche of the aforementioned financing is completed, then until March 30, 2001, the Company is required to obtain the prior written consent of Marion before the consummation of any additional financing transaction except for any credit facilities or lines of credit with lenders or equipment financing arrangements. Further, the Company may not redeem the warrants issued in its initial public offering without the prior written consent of Marion. As a condition to the consummation of this equity financing, the Company renegotiated the terms of its outstanding Notes and Preferred Stock with certain investment funds (the "Funds") who hold all of the outstanding Notes and Preferred Stock. Specifically, the Company -2- entered into the Agreement and Second Amendment to Bridge Securities Purchase Agreement and Related Documents (the "Second Amendment"), among the Company and the Funds. Pursuant to the Second Amendment, the Funds agreed that they would not convert, prior to December 31, 1998, any shares of Preferred Stock or any principal amount of the Notes into shares of Common Stock, unless a "Material Transaction" (defined as a change of control of the Company, a transfer of all or substantially all of the Company's assets or a merger of the Company into another entity) has occurred. Further, the Funds agreed that they would not, prior to March 31, 1999, publicly sell any shares of Common Stock owned or acquired by the Funds, unless a Material Transaction has occurred; the Funds are permitted, after June 30, 1998 and subject to the Company's right of first refusal, to privately sell any shares of Common Stock that they own or acquire, provided the purchaser agrees in writing to be bound by the same resale restrictions. The Funds have granted to the Company an option to redeem the Preferred Stock and the Notes owned by the Funds as follows: (i) up to $2,500,000 may be redeemed on or before April 30, 1998; (ii) an additional $2,500,000 may be redeemed on or before May 31, 1998; and (iii) an additional $2,500,000 may be redeemed from and after June 1, 1998. If the date that the Company redeems such Preferred Stock and Notes is on or before June 30, 1998, the redemption price will be 80% of the principal amount outstanding of the Notes being redeemed or 80% of the liquidation preference of the Preferred Stock being redeemed, plus accrued interest and dividends in the event that all of the Preferred Stock and Notes owned by the Funds are not redeemed by June 30, 1998. If the redemption of the Notes and Preferred Stock is after June 30, 1998 but on or before December 31, 1998, the 80% referred to in the preceding sentence shall increase by 2% per month, up to 90% in December 1998. If the redemption of the Notes and Preferred Stock occurs after December 31, 1998, the redemption price shall be as provided in the original agreement between the Company and the Funds. The Company is required to redeem all of the Preferred Stock outstanding prior to redemption of any of the Notes. In addition, the Funds have granted to the Company and to Marion an option to acquire, on or before March 31, 1999, all of the shares of Common Stock owned by the Funds. In connection with the Second Amendment, the Funds received 100,000 shares of Common Stock, as well as the right to receive 200,000 additional shares of Common Stock in the event that all of the Preferred Stock and Notes owned by the Funds have not been redeemed by the Company by June 30, 1998. Further, the exercise price of 100,000 warrants (each to purchase one share of the Company's Common Stock) owned by the Funds has been reduced from $10.675 per share to $3.25 per share and the exercise price of 200,000 additional warrants (each to purchase one share of the Company's Common Stock) owned by the Funds has been reduced from $4.00 per share to $3.25 per share. The Company has agreed to register all of such shares of Common Stock (including the shares underlying warrants) under the Securities Act of 1933, as amended. -3- On a pro forma basis, assuming the Marion Financing had been completed on February 28, 1998, the Company's balance sheet, on an unaudited basis, would have been as follows:
VISUAL EDGE SYSTEMS INC. BALANCE SHEET PRO FORMA AS OF FEBRUARY 28, 1998 - UNAUDITED Assets Current Assets: Cash and Cash Equivalents $ 5,035,543 Short-Term Investments 380,000 Accounts Receivable 23,585 Inventory 76,958 Prepaid Expenses - Advance Royalties 536,667 Other Current Assets 170,584 ------------ Total Current Assets 6,223,337 Fixed Assets, net 2,539,641 Intangible Assets, net 265,891 Other Assets 308 Investments-Restricted 817,517 ------------ Total Assets $ 9,846,694 ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities: Accounts Payable $ 333,207 Accrued Expenses 206,117 Other Current Liabilities 227,297 Current Maturities of Equipment Loans 540,264 ------------ Total Current Liabilities 1,306,885 Equipment Loans 611,751 ------------ Total Liabilities 1,918,636 ------------ ------------ STOCKHOLDERS' EQUITY (DEFICIT): Preferred Stock, $.01 par value, 5,000,000 shares authorized, none issued Common Stock, $.01 par value, 20,000,000 shares authorized, 12,616,700 shares issued and outstanding at February 28, 1998 126,167 Additional Paid in Capital 22,365,979 Accumulated Deficit (14,564,088) ------------ Total Stockholders' Equity (Deficit) 7,928,058 ------------ Total Liabilities & Stockholders' Equity (Deficit) $ 9,846,694 ------------ ------------
-4- The foregoing pro forma balance sheet has not been audited or reviewed by the Company's accountants and is subject to revision and/or change. Further, this pro forma unaudited balance sheet is as of a date (I.E. February 28, 1998) on which the Company does not customarily prepare a balance sheet. The Company's unaudited balance sheet for the fiscal quarter ended March 31, 1998 will be included in the Company's Form 10-QSB to be filed with the SEC on or about May 15,1998. This pro forma unaudited balance sheet is provided for informational purposes only in order to illustrate the effect of the Marion Financing and should not be relied upon by any stockholder or investor in making an investment decision in the Company. -5- (c) Exhibits 99.1 Purchase Agreement, dated as of March 27, 1998, among the Company and Marion Interglobal, Ltd.* 99.2 Registration Rights Agreement, dated as of March 27, 1998, among the Company and Marion Interglobal, Ltd.* 99.3 Second Amendment to Bridge Securities Purchase Agreement and Related Documents, dated as of March 27, 1998, among the Company, Infinity Investors Limited, Infinity Emerging Opportunities Limited, Summit Capital Limited (as the transferee of Sandera Partners, L.P.) and Glacier Capital Limited (as the transferee of Lion Capital Partners, L.P.) _______________ *Previously filed -6- SIGNATURES 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 thereunto duly authorized. VISUAL EDGE SYSTEMS INC. (Registrant) By: /s/ Earl Takefman ------------------------------ Earl Takefman Chief Executive Officer Date: April 8, 1998 -7- EXHIBIT INDEX NO. 99.1 Purchase Agreement, dated as of March 27, 1998, among the Company and Marion Interglobal, Ltd.* 99.2 Registration Rights Agreement, dated as of March 27, 1998, among the Company and Marion Interglobal, Ltd.* 99.3 Second Amendment to Bridge Securities Purchase Agreement and Related Documents, dated as of March 27, 1998, among the Company, Infinity Investors Limited, Infinity Emerging Opportunities Limited, Summit Capital Limited (as the transferee of Sandera Partners, L.P.) and Glacier Capital Limited (as the transferee of Lion Capital Partners, L.P.)* _________ *Previously filed -8- -----END PRIVACY-ENHANCED MESSAGE-----