As filed with the Securities and Exchange Commission on August 26, 1997
Registration No. 333-__________
- - --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
U-SHIP, INC.
(Exact Name of Registrant as Specified in Its Charter)
UTAH 39-1713181
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
5583 WEST 78TH STREET
EDINA, MINNESOTA 55439
(612) 941-4080
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
--------------------------
BRUCE H. SENSKE, PRESIDENT AND CHIEF EXECUTIVE OFFICER
U-SHIP, INC.
5583 WEST 78TH STREET
EDINA, MINNESOTA 55439
(612) 941-4080
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
COPIES TO:
AVRON L. GORDON, ESQ.
BRIGGS AND MORGAN, PROFESSIONAL ASSOCIATION
2400 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
(612) 334-8400
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED
SALE TO THE PUBLIC: AS SOON AS PRACTICABLE AFTER
THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
---------------
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE AGGREGATE PRICE PER AGGREGATE OFFERING AMOUNT OF
TITLE OF SHARES TO BE REGISTERED REGISTERED SHARE(1) PRICE(1) REGISTRATION FEE
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($.004 par value)............. 958,858 $1.375 $1,318,430 $400
===================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and based upon the last reported sale price for
the Common Stock on August 25, 1997, as reported by the Nasdaq SmallCap
Market.
------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a)
OF THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a)
MAY DETERMINE.
- - --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY THESE SECURITIES BE ACCEPTED PRIOR TO THE TIME SUCH REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BY ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
PROSPECTUS SUBJECT TO COMPLETION, DATED AUGUST 26, 1997
- - --------------------------------------------------------------------------------
958,858 SHARES
U-SHIP, INC.
COMMON STOCK
- - --------------------------------------------------------------------------------
This Prospectus relates to 958,858 shares (the "Shares") of common
stock, par value $.004 per share (the "Common Stock") of U-Ship, Inc. (the
"Company") that may be offered for sale for the account of certain shareholders
(the "Selling Shareholders") of the Company as stated herein under the heading
"Selling Shareholders." No period of time has been fixed within which the Shares
may be offered or sold. The Common Stock is traded on the Nasdaq SmallCap Market
under the symbol "USHP." On August 22, 1997, the average of the high and low
prices of the Common Stock on the Nasdaq SmallCap Market was $1.4375 per share.
There can be no assurance, however, of the continued listing on the Nasdaq
SmallCap Market of the shares of Common Stock. See "Risk Factors - Limitations
on Broker-Dealer Sales of Company Common Stock; Applicability of "Penny Stock"
Rules; No Assurance of Continued Quotation on The Nasdaq Stock Market."
The Selling Shareholders have advised the Company that sales of the
Shares by them, or by their pledgees, donees, transferees or other successors in
interest, may be made from time to time in the over-the-counter market, through
negotiated transactions or otherwise at market prices prevailing at the time of
sale or at negotiated prices. The Shares may be sold by one or more of the
following methods: (a) a block trade in which a broker or dealer so engaged will
attempt to sell the Shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account pursuant
to this Prospectus; and (c) ordinary brokerage transactions and transactions in
which a broker solicits purchasers. Sales of the Shares may be made pursuant to
this Prospectus to or through broker-dealers who may receive compensation in the
form of discounts, concessions or commissions from the Selling Shareholders or
the purchasers of shares of Common Stock for whom such broker-dealer may act as
agent or to whom it may sell as principal, or both (which compensation as to a
particular broker-dealer may be in excess of customary commissions). One or more
supplemental Prospectuses may be filed pursuant to Rule 424 promulgated by the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), to describe any material
arrangements for the sales of the Shares if and when such arrangements are
entered into by any of the Selling Shareholders and any other broker-dealer that
participates in a sale of the Shares.
The Selling Shareholders and any broker-dealers or other persons acting
on their behalf in connection with the sale of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commissions
received by them and any profit realized by such person on the resale of the
Shares as principals may be deemed to be underwriting commissions under the
Securities Act. As of the date hereof, there are no special selling arrangements
between any broker-dealer or other person and any Selling Shareholder.
The Company will receive no proceeds upon the sale of the Shares. See
"Plan of Distribution." Pursuant to the terms of registration rights granted to
the Selling Shareholders, the Company will pay all the expenses of registering
the Shares, except for selling expenses incurred by the Selling Shareholders in
connection with this offering, including any fees and commissions payable to
broker-dealers or other persons, which will be borne by the Selling
Shareholders. In addition, such registration rights provide for certain other
usual and customary terms, including indemnification by the Company of the
Selling Shareholders against certain liabilities arising under the Securities
Act.
THE SHARES INVOLVE CERTAIN RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE
6 OF THIS PROSPECTUS.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
THE DATE OF THIS PROSPECTUS IS ___________, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information filed by
the Company pursuant to the Exchange Act may be inspected and copied at the
public reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, Northwest, Washington, D.C. 20549 and at the regional offices of
the Commission located at Seven World Trade Center, Suite 1300, New York, New
York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can also be obtained from the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street,
Northwest, Washington, D.C. 20549, at prescribed rates. The Commission maintains
a World Wide Web site that contains reports, proxy statements and other
information regarding registrants that file electronically with the Commission
at http://www.sec.gov. In addition, the Common Stock is quoted on the Nasdaq
SmallCap Market. Reports, proxy statements and other information concerning the
Company can be inspected and copied at the Public Reference Room of the National
Association of Securities Dealers, Inc., 1735 K Street, Northwest, Washington,
D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act. This Prospectus does not contain all of the
information, exhibits and undertakings set forth in the Registration Statement,
certain parts of which are omitted as permitted by the rules and regulations of
the Commission. For further information, reference is hereby made to the
Registration Statement which may be inspected and copied in the manner and at
the sources described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission pursuant to the Exchange Act are incorporated into this Prospectus by
reference:
(a) The Company's Annual Report on Form 10-KSB for the year ended
June 30, 1996 (File No. 000-28432) filed with the Commission
on September 26, 1996.
(b) The Company's Quarterly Reports on Form 10-QSB for the fiscal
quarters ended September 30, 1996, December 31, 1996 and March
31, 1997 (File No. 000-28432) filed with the Commission on
November 12, 1996, February 14, 1997 and May 14, 1997,
respectively.
(c) The description of Common Stock contained in the Company's
Registration Statement on Form SB-2 (No. 333-01652C) as filed
with the Commission on February 26, 1996 and as amended by
Amendment Nos. 1, 2, 3, 4, 5 and 6 filed with the Commission
on April 26, April 29, April 30, May 9, May 21, and May 29,
1996, respectively.
(d) The Company's Definitive Schedule 14A (Proxy Statement) filed
with the Commission on November 18, 1996 (File No. 000-28452),
relating to the Company's Annual Meeting of Shareholders held
on December 12, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by reference
in this Prospectus and to be a part hereof from the date of filing of such
documents.
Any statement contained herein or in a document all or any portion of
which is incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
<PAGE>
The Company will provide, without charge, to each person to whom this
Prospectus is delivered, upon written or oral request of any such person, a copy
of any or all of the foregoing documents (other than exhibits to such documents
which are not specifically incorporated by reference in such documents). Written
requests for such copies should be directed to the Company at 5583 West 78th
Street, Edina, Minnesota 55439, Attention: Chief Financial Officer. Telephone
requests may be directed to the office of the Chief Financial Officer of the
Company at (612) 941-4080.
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED BY THE MORE DETAILED INFORMATION AND
CONSOLIDATED FINANCIAL STATEMENTS APPEARING ELSEWHERE OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, INFORMATION IN THIS
PROSPECTUS GIVES EFFECT TO A ONE-FOR-FOUR REVERSE STOCK SPLIT WITH RESPECT TO
THE COMMON STOCK EFFECTED ON FEBRUARY 29, 1996.
THIS PROSPECTUS CONTAINS "FORWARD-LOOKING STATEMENTS," AS DEFINED IN
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 (THE "LITIGATION REFORM
ACT") THAT INVOLVE RISKS AND UNCERTAINTIES. PURCHASERS OF THE COMMON STOCK ARE
CAUTIONED THAT THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE
RESULTS DISCUSSED IN SUCH FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE
OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE FACTORS DISCUSSED HEREIN UNDER
"RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.
THE COMPANY
U-Ship, Inc. (the "Company" or "U-Ship") manufactures, markets and
operates self-service, automated shipping systems for use by consumers and small
business shippers who ship packages and priority letters through major carriers
in the air express and package delivery market. In November 1994, the Company
began deployment of its network of electronic, customer-operated, self-service
shipping centers. The Company's Automated Shipping Center ("ASC"), which is
being placed in retail locations in the United States and Canada, provides a
feeder system to United Parcel Service of America, Inc. ("UPS") and can provide
similar services to other carriers in the multi-billion dollar air express and
package shipping market. As of June 30, 1997, the Company had placed in service
approximately 300 ASCs in 40 states. The Company derives revenue primarily from
package shipping transactions and, to a lesser extent, from the sale of ASCs.
The Company holds eight patents related to hardware and software utilized in its
ASCs and is not aware of other comparable self-service, automated shipping
systems currently marketed or available to consumers and small business package
shippers. The Company believes that its ASC technology is among the most
advanced self-service, automated, air express and package shipping system
available for consumers and small businesses.
The Company's strategy is to make shipping services available to
consumers through the installation of its ASC systems in major office supply and
instant printing outlets, business centers and office parks. Historically, the
majority of ASCs placed in service by the Company have been leased by retailers
from third party leasing companies. The Company placed in service approximately
one-third of its ASCs through such arrangements. During 1996 and 1997, however,
the Company's deployment strategy has been to emphasize the placement of
Company-owned and operated ASCs in retail locations. The Company is, however,
currently reevaluating these deployment methods in light of lower than
anticipated package shipping volumes and lack of anticipated revenue per site.
Subject to this reevaluation, the Company contemplates the placement of
additional ASC systems in order to capture increased package shipping volume. In
addition to retail placements, the Company has been seeking to market its ASC
technology to private carriers. The Company believes that air express and
package shipping carriers may, in the future, utilize some form of self-service
technology to increase accessibility to their services in the market, although
there can be no assurance that carriers will decide to use the Company's
technology.
The Company is also exploring various consumer incentives, (e.g.,
coupons) in an attempt to increase usage of ASCs currently in place. Finally,
the Company is attempting to add additional package pickup times and is
considering decreases in its price structure so as to become more competitive in
the air express and packaging market. There can be no assurance, however, that
these or other efforts currently being considered by the Company will serve to
increase market acceptance of the Company's ASCs. See "Risk Factors - Market
Acceptance of Products."
<PAGE>
The Company served customers in approximately 55,000 transactions
during the year ended June 30, 1997 through its various retail locations which
include OfficeMax stores and Kinko's Copy Centers. The Company enters into
agreements with retailers to provide service and maintenance support related to
the operation of the ASC at retail locations. The services provided by the
Company under these agreements include data processing of credit card
transactions, reconciliation and payment of weekly UPS bills for service
contracted by the Company, customer service support related to package tracking
and damage and loss claims for consumers who have used the system. These
agreements also provide for maintenance of the hardware and licensing of the
software related to the operation of the ASC. The Company generates revenue from
package shipping transactions and compensates retailers based upon the number
and types of shipping transactions processed. Each location in the Company's
network of ASCs is centrally controlled and serviced through an electronic
connection to the Company's computer network system located at its headquarters.
The Company accepts cash and major credit cards for payment of package shipping
charges. The Company also issues U-Ship private labeled "Preferred Business
Shipper" credit cards to small businesses for which it bills and collects
monthly. The Company also derives revenue, to a lesser extent, from the sale of
shipping supplies such as boxes, packing material and tape to retailers for
consumer sales.
In September 1996, the Company entered into an Installation and
Marketing Agreement (the "Kinko's Agreement") with Kinko's, Inc. ("Kinko's").
The Kinko's Agreement provides that Kinko's will use its best efforts to provide
the Company the opportunity to install up to 250 ASCs in Kinko's Copy Centers by
December 1997. Under the terms of the Kinko's Agreement, each ASC shall remain
in service for 36 months following the date of its installation, subject to
certain contingencies. Also, the Kinko's Agreement provides that the Company
will retain ownership of the ASCs installed at Kinko's sites, and package
shipping revenue generated at each site will be shared between the Company and
Kinko's. As of June 30, 1997, the Company had installed 78 ASCs in Kinko's Copy
Center locations. The Company is currently conducting discussions with Kinko's
concerning the placement of additional ASCs in Kinko's locations under existing
contracts and methods of promoting the increased usage of ASCs in Kinko's and
OfficeMax stores. In October 1996, the Company entered into a 36 month
Installation and Marketing Agreement (the "OfficeMax" Agreement") with
OfficeMax, Inc. ("OfficeMax"). The terms of the OfficeMax Agreement, as amended,
require the Company to install 140 ASCs into various CopyMax locations by the
end of December 1997. Under the terms of the OfficeMax Agreement, each ASC shall
remain in service for 36 months following the date of its installation. As of
June 30, 1997, the Company had installed 87 ASCs in various CopyMax stores.
The Company was incorporated in Utah under the name Basin Energy
Corporation on September 10, 1979. In January 1980, the Company completed a
public offering of 750,000 shares of Common Stock and thereafter engaged in
various activities unrelated to its present business. In February 1990, the
Company changed its name to EuroDynamics Corporation, and in May 1992, the
Company entered into an exchange agreement with U-Ship International, Ltd., a
Wisconsin corporation ("USI"), which provided for the acquisition of USI by the
Company, which then amended its name to U-Ship, Inc. All references to the
Company herein shall include U-Ship International, Ltd., the Company's operating
subsidiary, and U-Ship America, Inc. Substantially all of the Company's current
management and Board of Directors joined the Company subsequent to January 1993.
The Company's principal executive offices are located at 5583 West 78th
Street, Edina, Minnesota 55439 and its telephone number is (612) 941-4080.
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVES A
HIGH DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS, IN ADDITION TO THE OTHER INFORMATION SET FORTH IN THIS
PROSPECTUS, IN CONNECTION WITH AN INVESTMENT IN THE SHARES OF COMMON STOCK
OFFERED HEREBY.
WHEN USED BELOW AND ELSEWHERE IN THIS PROSPECTUS, INCLUDING DOCUMENTS
INCORPORATED HEREIN BY REFERENCE, THE WORDS "BELIEVES," "ANTICIPATES," "INTENDS"
AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY "FORWARD-LOOKING STATEMENTS,"
AS DEFINED IN THE LITIGATION REFORM ACT. SUCH STATEMENTS ARE SUBJECT TO CERTAIN
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE PROJECTED. POTENTIAL PURCHASERS OF SHARES OF COMMON STOCK ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS, WHICH
SPEAK ONLY AS OF THE DATE HEREOF.
LIMITED OPERATING HISTORY; LOSSES FROM OPERATIONS; GOING CONCERN
UNCERTAINTY. The Company entered its current business in 1992 and has a limited
operating history. The Company's proposed operations are subject to all the
risks inherent in the establishment of a new business. The Company has never
generated net income, continues to sustain substantial operating losses and
expects to continue to operate at a loss for the foreseeable future. For the
nine months ended March 31, 1997, the Company incurred a net loss of $1,698,109.
As of March 31, 1997, the Company had an accumulated deficit of $7,041,369 and
had a working capital deficit of $735,432. The Company anticipates that its
losses for year ended June 30, 1997 will exceed $2.0 million. The Company will
continue to incur these losses until there is a wide placement of ASCs which
generate sufficient revenues to offset operating costs. The report of the
Company's independent public accountants concerning the Company's financial
statements as of June 30, 1995 and 1996 contains an explanatory paragraph
relating to the Company's ability to continue as a going concern. Based on
year-to-date results, the Company anticipates that the report of its independent
public accountants for the year ended June 30, 1997 will contain a similar
explanatory paragraph. There can be no assurance that the Company will achieve
profitable operations. The Company expects that it will require additional debt
or equity financing during the next six to eight months to continue its
business. The Company is currently unaware of any such sources of additional
financing. A failure on the part of the Company to raise such financing would
result in the reduction or cessation of the Company's business.
MARKET ACCEPTANCE OF PRODUCTS. A prerequisite to the Company's success
will be the development of demand for self-service, automated shipping services
and wide placement of ASCs at retail and other business locations. This is an
undeveloped market and there can be no assurance that such demand or market
acceptance will develop. To date, the Company has had limited success in
creating a demand for automated shipping services. The number of shipping
transactions which currently utilize the Company's ASCs are lower than expected.
Additionally, the Company has encountered significant difficulty in keeping its
ASCs operational. The Company has also received complaints regarding the fact
that the Company's ASCs are cumbersome to use and difficult to understand. While
the Company is undertaking efforts to address these problems and to create a
demand for the Company's ASCs, the marketing and other costs of doing so may be
beyond the Company's funding capabilities. A failure on the part of the Company
to address these and other issues and to create a market demand for its products
could result in the reduction or cessation of the Company's business.
The Company operates in 40 states from Alaska to New York. The
commercial (non-U.S. Postal Service) package shipping market is dominated by a
relatively small number of carriers, and carriers affiliated with direct air
carriers, including UPS, Fed. Ex., Inc. ("Federal Express"), Roadway Package
System, Inc. ("RPS"), DHL Worldwide Services ("DHL") and Airborne Express
("Airborne"). These established carriers, together with the U.S. Postal Service,
process the vast majority of consumer and small business package shipping
transactions. There can be no assurance that any of such dominant commercial
package shippers or the public will adopt a self-service shipping center concept
or that they will select the Company's ASCs in preference to the shipping
services offered by its competitors or potential competitors. The failure to
achieve market acceptance would have a material adverse effect on the Company's
business. In addition, there can
<PAGE>
be no assurance that the Company will have the resources or the capacity to meet
the demand, if any, for its product.
DEPENDENCE UPON CARRIERS. The Company is substantially dependent upon
UPS to pick up and transport packages processed via the Company's ASCs. Any
interruption in, or increase in price of, such service, or the failure of the
Company to continue to maintain arrangements with UPS or to develop
relationships with other package carriers, would cause an interruption of
service to the Company's customers and would have a material adverse effect upon
its business. The Company has no control over the nature, cost or availability
of services provided by any carrier, including UPS, and has no long term
contracts with such carriers.
On August 4, 1997, the Teamsters Union went on strike against UPS. As a
result, a significant number of UPS' 185,000 employees, who are also Teamster
Union members, joined the strike. In addition, most of the 2,000 pilots
belonging to the Independent Pilots Association honored the strike, further
hampering UPS' shipping capabilities. This strike halted the shipment of the
vast majority of packages intended to be shipped via UPS, including those
intended to be so shipped and which utilized the Company's ASCs. While UPS and
the Teamsters reached an agreement which ended the strike on August 18, 1997,
there can be no assurance of the effect that the inability to use the Company's
ASCs during the strike will have on customer acceptance or continued use of such
machines.
For each ASC location, the Company enters into a Commercial Counter
Agreement with UPS which provides the basic terms of service, advertising
restrictions and certain related matters. The Company has also entered into an
Automated Shipping System Letter Agreement with UPS regarding the Company's
arrangements for use of UPS's Parcel Register, Computer Manifest and other
systems for identifying and recording packages turned over to UPS for delivery.
This agreement is generally terminable at will, although the Company has enjoyed
a shipper-carrier relationship with UPS since 1992. Further, UPS is a regulated
carrier which, under applicable laws and regulations, is obligated, upon
reasonable request, to provide safe and adequate service, equipment and
facilities for the surface transportation of property in interstate commerce.
This duty to furnish continuous and adequate service obligates UPS to furnish
ground transportation services without discrimination at its established rates
and to the limit of its capacity. However, UPS is not regulated with respect to
shipments tendered which involve prior or subsequent movement by air.
SUBSTANTIAL INVESTMENT IN EQUIPMENT. As a part of its business
strategy, the Company seeks to place ASCs in locations that it believes have the
potential to generate high package volume and with businesses that it believes
have multiple strategic locations, such as business centers and other service
provider chains. Although the Company has previously been able to sell ASCs with
financing from third party lessors, no assurance can be given that such
financing will be available in the future. Also, the Company's strategy has
recently changed so as to emphasize placement of ASCs in retail locations at its
expense. In such locations, the Company relies solely upon package shipping
revenue to recover its investment in the ASCs. Although the Company believes
that such strategy will lead to the generation of increased package shipping
volume and that such strategic placements of ASCs is more cost-effective than
individually-negotiated leases for ASCs to be placed in service, there can be no
assurance that such strategy will be successful or that the Company will be able
to recover its investment in ASCs through profit margins on higher volumes of
package shipments.
RELIANCE UPON THIRD PARTIES FOR FINANCING. Historically, the Company
has relied extensively upon third parties to provide lease financing for ASCs
sold or leased to retailers. While the Company's focus has shifted away from the
placement of ASCs in reliance on such financing, there can be no assurance that
such financing will be available to the Company on terms acceptable or favorable
to it. In the event the Company should be unable to maintain relationships with
third parties to provide lease financing for ASCs, its business could be
adversely affected.
TEST MARKETING PROGRAM. In an effort to increase the number of ASC
installations to produce increased package shipping revenue, the Company
introduced a new marketing program in 1995 which offered a limited retailer
return option. This program allowed the Company or the retailer to terminate the
agreement between the retailer and the Company if certain criteria related to
package volume, retailer advertising and promotion and consumer acceptance were
not met within the first 12 months of the ASC's operation. Sales under this
<PAGE>
program were deferred and recognized as revenue as return rights lapse. As of
March 31, 1997, the Company had deferred recognition of $59,724 of revenue
related to these ASCs. Since June 30, 1995, return privileges have been
exercised with respect to 27 ASCs, which represents 37% of the total ASCs sold
with the return option. The return privileges were exercised primarily as a
result of lower than expected package volume. The Company is also responsible
for ongoing maintenance of the ASCs. As of March 31, 1997, the Company had
deferred a total of $52,857 for such maintenance obligations. The Company
recognizes deferred maintenance revenue over the term of the maintenance
agreement, generally five years. To the extent return options are exercised, the
Company will generally return the ASC to its inventory, reimburse all or a
portion of sales proceeds and attempt to remarket the same. To the extent the
ASC cannot be resold, the Company does not realize any ongoing package shipping
revenue. The Company no longer sells machines with these return rights. However,
such rights present a contingent, ongoing liability to the Company.
ABILITY TO FORM STRATEGIC RELATIONSHIPS. The Company's strategy
includes the formation of strategic relationships with major carriers and
retailers. To date, the Company has had limited success in creating such
relationships. The Company believes that relationships with carriers and other
strategic partners will enable it to deploy its proprietary technology in the
market by leveraging a partner's established service and distribution channels.
The Company has entered into relationships with Kinko's and OfficeMax pursuant
to which the Company has installed a limited number of ASCs in Kinko's Copy
Centers and CopyMax stores. These agreements have, however, not generated
expected levels of package shipping transactions and the Company has curtailed
installation of ASCs under the terms of both agreements. The Company requires
substantial additional financing in order to continue its business. The Company
believes that, at least in part, such financing can be obtained from the
partners with whom it is able to create significant strategic relationships. The
Company has not been successful in creating relationships with potential
partners other than Kinko's and OfficeMax. To the extent that the Company is not
able to enter into additional strategic relationships with carriers or other
business partners, it may be required to reduce or cease its business
operations.
DEPENDENCE ON PROPRIETARY RIGHTS. The Company's success depends, in
part, upon its ability to protect its proprietary technology, for which it
relies on a combination of patent, copyright, trademark and trade secret laws.
Although the Company has received patents for its ASC, there can be no assurance
that current intellectual property laws will afford the Company significant
protection against competitors or that other technology will not be developed to
functionally compete with the Company's product. The Company believes that one
or more major carriers, all of which have greater financial, technical and
marketing resources than the Company, have attempted to develop or purchase
products or technologies competitive with the Company's ASCs. The Company is
aware that Federal Express and UPS test marketed PC-based automated self-service
shipping terminals between 1992 and 1994, but believes that substantially all of
these systems have been removed from the test market. The Company also is aware
of the fact that the U.S. Postal Service is in the process of developing a
self-service, automated Postal Transaction Machine ("PTM"), which, the Company
believes, will enable consumers to ship letters and packages via the United
States mail. The Company is unaware of whether the PTM, or parts thereof,
infringe upon any of the Company's proprietary technology. The Company is not
currently aware of any self-service, automated shipping products in use which
would infringe upon the Company's patents. Should the Company determine that its
patents are being infringed, it could incur substantial legal costs in any
action to enforce its patents or other intellectual property rights, and there
can be no assurance that it would be successful in any such action.
FRANCHISE REGULATION. The Federal Trade Commission regulates the offer
and sale of franchises under its "Franchise Rule," a regulation which sets forth
standards mandating disclosure of information before the sale of a franchise or
business opportunity. Additionally, several states, including Minnesota, have
laws and rules which regulate various aspects of franchising and the sale of
business opportunities. The Company believes that its programs for the sale,
lease or placement of ASCs do not constitute franchises or business
opportunities within the meaning of the Franchise Rule or such state laws. If
the Company should be required to comply with such laws or rules it would incur
substantial costs, delays and other burdens associated with various franchise
registration and disclosure compliance obligations. In addition, there can be no
assurance that other governmental regulations will not hinder the Company's
plans. A finding that the Company has violated state franchise laws or
regulations or the Franchise Rule could result in administrative, civil or
<PAGE>
criminal actions against the Company and would materially and adversely affect
its business. In addition, if the Company is found to have violated franchise
laws, certain persons entitled to the benefit of such laws may have the right to
rescind their purchases or leases of the Company's ASCs, in addition to
recovering damages, interest and attorneys' fees. The Company does not believe,
however, that it has operated in violation of any franchise laws.
COMPETITION. The commercial (non-U.S. Postal Service) package shipping
market is dominated by a relatively small number of companies which have more
experience in the industry and have greater financial and technical resources
than the Company. Both Federal Express and UPS have test marketed automated
self-service shipping terminals, but have, to the best of the Company's
knowledge, discontinued such tests, and neither of them currently operates
competing machines in the market that are comparable to the form and function of
the Company's ASC. The Company is aware, however, that the U.S. Postal Service
is in the process of developing the PTM. Because the Company's ASC does not
currently permit consumers to ship packages through the United States Mail, to
the extent that the PTM will, it may discourage people from using the Company's
ASCs. The Company also competes with major air express carriers, such as UPS,
Federal Express, Airborne, DHL and the U.S. Postal Service, all of which deploy
large numbers of "drop boxes" which compete with the Company's ASCs. According
to industry sources, these carriers are deploying additional drop boxes on an
ongoing basis. Many of such boxes have or will be installed in business centers,
office parks and shopping malls, which could be potential sites for the
Company's ASCs. There can be no assurance that such dominant commercial package
shippers or the public will adopt a self-service shipping center concept or that
they will select the Company's products and services in preference to their
current methods of package collection, or to those of the Company's competitors
or potential competitors. The Company also faces intense competition from the
related service industry providing package collection services, such as mail and
packaging stores. In addition, the Company's competitors and the dominant
package shippers, all which have greater resources than the Company, could
develop products competitive with the Company's ASCs.
TECHNOLOGICAL RISKS. The Company anticipates that any market which
develops for automated shipping services will be characterized by rapidly
changing technology and user preferences. Such market will likely be heavily
influenced by the preferences and acceptance of such technology by major package
and parcel carriers. There can be no assurance that future products or
technology developed by others will not render obsolete the Company's
technology. Failure on the part of the Company to develop new technology to meet
competitive challenges may adversely affect the Company's prospects.
UNINSURED OBLIGATIONS TO SHIPPING CUSTOMERS. The Company or a retailer
with whom a package is deposited may have exposure to a customer to the maximum
extent of the declared value of the package in the event of its damage or
destruction while in the possession of the Company or a retailer. The Company
limits its liability to the customer to the amount of the declared value
pursuant to the shipping transaction documentation. The Company, however, has no
insurance which would protect it against such losses.
DEPENDENCE ON KEY PERSONNEL. The Company's future success will depend
in large part upon the continued service of its key technical, marketing and
management personnel, as well as on its ability to continue to attract
independent contractors. The Company is also dependent on its ability to
identify, hire, train and motivate qualified personnel necessary to enable it to
continue ongoing product development and to market its products and services.
The Company does not have key person life insurance policies on any of its
employees. Substantially all of the Company's employees are subject to
confidentiality agreements. The departure of key employees could have a material
adverse effect on the Company's business. No assurance can be given that the
Company's current employees will continue to work for the Company or that the
Company will be able to obtain the services of additional personnel necessary
for the Company's growth.
QUARTERLY REVENUE FLUCTUATION; SEASONALITY. The Company expects to
experience continued and substantial fluctuations in revenue due to seasonal
changes which affect the volume of package shipping transactions. Generally, the
Company experiences its highest volume of package shipping between the
back-to-school and Christmas seasons. Such fluctuations create significant
imbalances in the Company's cash flow. Potential investors should not,
therefore, rely on individual quarterly results as being indicative of the
Company's overall performance.
<PAGE>
CONTROL BY MANAGEMENT. The current officers and directors of the
Company beneficially own approximately 12.5% of the outstanding shares of Common
Stock. Accordingly, because the Company does not have cumulative voting, such
persons, if voting in concert, may be able to elect the entire board of
directors, and generally direct the affairs of the Company. Further, this
concentration of ownership could have the effect of delaying, deferring or
preventing a change in control of the Company.
MANAGEMENT OF GROWTH. The Company may experience periods of growth
which, if any, could place a significant strain on the Company's management,
operational, financial and other resources. Although there can be no assurance
as to the Company's future growth, the Company's ability to manage any growth
effectively will require it to continue to improve its operational, financial
and management information systems, and to attract, train and manage qualified
personnel. If the Company's management is unable to manage growth effectively,
the Company's operating results could be adversely affected.
PREFERRED SHARES. The authorized and unissued stock of the Company
includes 25,000,000 shares of preferred stock. The Company's Board of Directors,
without any action by the Company's shareholders, is authorized to issue the
preferred shares in such classes or series as it deems appropriate and to
establish the rights, preferences and privileges of such shares, including
dividend and liquidation preferences, and voting rights. No shares of preferred
stock or other senior equity securities have been issued by the Company, and
currently there is no plan to issue any such securities. However, the ability of
the Company's Board of Directors to issue such preferred shares could impede or
deter an unsolicited tender offer or takeover proposal regarding the Company,
and the issuance of additional shares having preferential rights could adversely
affect the voting power and other rights of holders of Common Stock.
NO DIVIDENDS. No dividends have been paid on shares of the Common
Stock. The Company does not intend to pay cash dividends on its Common Stock in
the foreseeable future, and anticipates that profits, if any, received from
operations will be devoted to the Company's future operations. Any decision to
pay dividends will depend upon the Company's profitability at the time, cash
available therefor, and other relevant factors.
IMPACT OF SALE OF SECURITIES; SECURITIES ELIGIBLE FOR FUTURE SALE;
POSSIBLE DILUTIVE EFFECT OF OUTSTANDING OPTIONS AND WARRANTS. There were
approximately 4,967,669 shares of Common Stock outstanding as of June 30, 1997.
In addition, there were warrants and options outstanding as of such date to
purchase approximately 1,447,446 additional shares of Common Stock which are
exercisable at prices ranging from $2.80 to $5.20 per share. The sale of such
securities, the Shares offered pursuant to this Prospectus, and the sale of
additional shares of Common Stock which may become eligible for sale in the
public market from time to time upon the exercise of warrants and options could
have the effect of depressing the market prices for the Common Stock.
LIMITATIONS ON BROKER-DEALER SALES OF COMPANY COMMON STOCK;
APPLICABILITY OF "PENNY STOCK" RULES; NO ASSURANCE OF CONTINUED QUOTATION ON THE
NASDAQ STOCK MARKET. Federal regulations promulgated under the Exchange Act
regulate the trading of so-called "penny stocks" (the "Penny Stock Rules"),
which are generally defined as any security not listed on a national securities
exchange or The Nasdaq Stock Market ("Nasdaq"), priced at less than $5.00 per
share and offered by an issuer with limited net tangible assets and revenues. In
addition, equity securities listed on Nasdaq which are priced at less than $5.00
per share are deemed penny stocks for the limited purpose of Section 15(b)(6) of
the Exchange Act. Therefore, if, during the time in which the Common Stock is
quoted on the Nasdaq SmallCap Market, the Common Stock is priced below $5.00 per
share, trading of the Common Stock will be subject to the provisions of Section
15(b)(6) of the Exchange Act, which make it unlawful for any broker-dealer to
participate in a distribution of any penny stock without the consent of the
Commission if, in the exercise of reasonable care, the broker-dealer is aware of
or should have been aware of the participation of a previously sanctioned
person. In such event, it may be more difficult for broker-dealers to sell the
Common Stock and purchasers of shares of Common Stock may experience difficulty
in selling such shares in the future in secondary trading markets.
The Common Stock is currently listed on the Nasdaq SmallCap Market. The
Nasdaq SmallCap Market requires that companies whose securities are listed
thereon maintain certain requirements, including total assets of at least $2
million, capital and surplus of at least $1 million, minimum bid price per share
of
<PAGE>
at least $1 and total market value of at least $1 million. As of March 31, 1997,
the Company's shareholders' equity was $1,858,225. On August 25, 1997, the
closing bid price per share of the Common Stock was $1.375. Failure on the part
of the Company to meet any of these listing requirements could result in the
suspension or termination of the Common Stock from continued listing on the
Nasdaq SmallCap Market. Should the Common Stock be suspended from trading
privileges on such market as a result of the Company's failure to comply with
any of the above, or other applicable requirements, the Company, prior to
re-inclusion, must comply with the respective requirements prior to continued
listing. However, should the Common Stock be terminated from trading privileges
on the Nasdaq SmallCap Market, the Company, prior to re-inclusion, must comply
with the applicable requirements for initial inclusion on the Nasdaq SmallCap
Market which, in some instances, are more stringent than the requirements for
continued listing. There can be no assurance, therefore, that the Common Stock
will continue to be listed on the Nasdaq SmallCap Market.
In the event that the Common Stock is delisted from the Nasdaq SmallCap
Market and the Company fails other relevant criteria, trading, if any, in shares
of Common Stock would be subject to the full range of the Penny Stock Rules.
Under these rules, broker-dealers must take certain steps prior to selling a
penny stock, which steps include: (i) obtaining financial and investment
information from the investor; (ii) obtaining a written suitability
questionnaire and purchase agreement signed by the investor; and (iii) providing
the investor a written identification of the shares being offered and in what
quantity. If the Penny Stock Rules are not followed by a broker-dealer, the
investor has no obligation to purchase the shares. Accordingly, delisting from
the Nasdaq SmallCap Market and the application of the comprehensive Penny Stock
Rules may make it more difficult for broker-dealers to sell the Common Stock,
purchasers of shares of Common Stock may have difficulty in selling such shares
in the future in secondary trading markets and the per share price of such stock
would likely be greatly reduced.
MANAGEMENT
The Directors and Executive Officer of the Company are:
NAME AGE POSITION(S)
- - --------- ------------ -------------------------------------
B. Richard Vogen 54 Chairman and Director
Bruce H. Senske 42 President, Chief Executive Officer
and Director
Donald L. Kotula 51 Director
Gary W. Ramsden 39 Director
B. RICHARD VOGEN. Mr. Vogen was appointed to the position of Chairman
of the Company in June 1997. Mr. Vogen has been a member of the Company's Board
since June 1993. Prior to joining the Company, Mr. Vogen founded Vocam Systems,
Inc. ("Vocam") in 1985, and served as its President and Chairman until its
acquisition by the Pitney Bowes Company in 1990. After its acquisition by Pitney
Bowes, Mr. Vogen continued to serve as President of the Vocam Systems division
until June 1994. Since that date, Mr. Vogen has served as an independent
management consultant.
BRUCE H. SENSKE. Mr. Senske has served as President and Chief Executive
Officer of the Company since January 1993. Mr. Senske has been a member of the
Company's Board since January 1993, and served as its Chief Financial Officer
and Treasurer between January 1993 and November 1996. From 1988 to 1992, Mr.
Senske was Vice President of Strategic Marketing and Product Planning at Vocam.
<PAGE>
DONALD L. KOTULA. Mr. Kotula has been a member of the Company's Board
since January 1995. Mr. Kotula is founder of Northern Hydraulics, a major
retailer of construction and light industrial equipment, tools and supplies. Mr.
Kotula has served as President and Chief Executive Officer of Northern
Hydraulics since 1981.
GARY W. RAMSDEN. Mr. Ramsden served as the President of U-Ship
International, Ltd., a subsidiary of the Company, from its inception in
September 1991 to January 1993, and has been a member of the Company's Board
since its merger with U-Ship International, Ltd. in June 1992. Mr. Ramsden is
currently a realtor with Burnett Realty in Eau Claire, Wisconsin. From October
1989 to March 1991, Mr. Ramsden was employed in sales and management capacities
for Crandell Moving and Storage, Incorporated in Altoona, Wisconsin. From July
1988 to September 1989, Mr. Ramsden was President of Five Star Moving Systems,
Incorporated in Shoreview, Minnesota.
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth, as of June 30, 1997, the name of each
Selling Shareholder, certain beneficial ownership information with respect to
the Selling Shareholders, and the number of Shares that may be sold from time to
time by each Selling Shareholder pursuant to this Prospectus. There can be no
assurance that the Shares offered hereby will be sold.
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING
SHARES SHARES SHARES
BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED SHARES OWNED UPON OWNED UPON
PRIOR TO OFFERED COMPLETION OF THE COMPLETION OF THE
SELLING SHAREHOLDER OFFERING HEREBY OFFERING OFFERING
- - ------------------------------------------ -------------- ------------- -------------------- ---------------------
<S> <C> <C> <C> <C>
Tablesalt & Co. 666,667 666,667 -- --
Donald L. Kotula 265,352(1) 8,696 256,656 5.1
Bruce H. Senske 239,630(2) 3,188 236,442 4.7
Northstar & Co. 86,957 86,957 -- --
Seawave & Co. 86,957 86,957 -- --
B. Richard Vogen 61,647(3) 8,696 52,951 1.1
Kenneth W. Liles 58,355(4) 2,522 55,833 1.1
Brookbreeze & Co. 28,986 28,986 -- --
Ellis Family Limited Partnership 23,928 15,000 8,928 *
Willis K. Drake 20,738(5) 8,696 12,042 *
Ronald D. Schmidt 20,696(6) 8,696 12,000 *
Harold Roitenberg, Trustee, F.B.O.
Harold Roitenberg Trust 18,928 10,000 8,928 *
Kenneth B. Heithoff 10,000 10,000 -- --
William R. Kennedy, Trustee, F.B.O.
Neurology Limited Employee Pension
Plan 10,000 10,000 -- --
Bryan M. Virgin 4,043 1,043 3,000 *
Anwar H. Bhimani 3,754 2,754 1,000 *
</TABLE>
- - ---------------------
* Indicates an amount less than 1%.
(1) Includes 40,466 shares of Common Stock owned by Mr. Kotula, 132,010
shares of Common Stock owned by Norquip Leasing, Inc. ("Norquip"), a
company owned by Mr. Kotula, 5,375 shares of Common Stock purchasable
pursuant to the exercise of options and warrants and 87,500 shares of
Common Stock purchasable pursuant to the exercise of warrants held by
Norquip.
(2) Includes 69,235 shares of Common Stock purchasable pursuant to the
exercise of warrants and 130,083 shares of Common Stock held in joint
tenancy with Mr. Senske's wife.
(3) Includes 18,250 shares of Common Stock purchasable pursuant to the
exercise of options and warrants.
<PAGE>
(4) Includes 12,500 shares of Common Stock purchasable pursuant to the
exercise of options and warrants.
(5) Includes 5,375 shares of Common Stock purchasable pursuant to the
exercise of options and warrants.
(6) Includes 5,000 shares of Common Stock purchasable pursuant to the
exercise of options.
The Company has agreed to bear all expenses (other than selling
commissions and fees) in connection with the registration and sale of the Shares
being offered by the Selling Shareholders in over-the-counter market
transactions or in negotiated transactions. See "Plan of Distribution." The
Company has filed with the Commission a Registration Statement on Form S-3 under
the Securities Act with respect to the resale of the Shares from time to time in
over-the-counter market transactions or in negotiated transactions. This
Prospectus forms a part of such Registration Statement.
USE OF PROCEEDS
The Shares offered hereby will be sold by the Selling Shareholders. The
Company will not receive any of the proceeds from the sale of the Shares by the
Selling Shareholders. See "Selling Shareholders."
PLAN OF DISTRIBUTION
The Shares offered hereby may be offered by the Selling Shareholders
from time to time. The Company will receive no proceeds from the sale of the
Shares. Sales may be effected by the Selling Shareholders in transactions on The
Nasdaq Stock Market, in negotiated transactions, or in a combination of such
methods of sale, at prices relating to prevailing market prices or at negotiated
prices. The Selling Shareholders may effect such transactions by selling the
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts or commissions from the Selling
Shareholders or the purchasers of the Shares for whom such broker-dealers may
act as agents or to whom they sell as principal, or both (which compensation as
to a particular broker-dealer may be in excess of customary commissions).
The Selling Shareholders and any persons who participate in the sale of
the Shares from time to time, may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act. Any commissions paid or
discounts or concessions allowed to any such persons and any profits received on
resale of the Shares, may be deemed to be underwriting compensation under the
Securities Act.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available.
The Company has agreed to indemnify the Selling Shareholders and their
control persons with respect to certain liabilities in connection with the sale
of the Shares pursuant to this Prospectus, including liabilities under the
Securities Act and the Exchange Act. In addition, certain Selling Shareholders
have agreed to indemnify the Company, its directors, officers, agents and
control persons against certain liabilities incurred as a result of information
provided by the Selling Shareholders for use in this Prospectus. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted pursuant to the foregoing provisions, the Company has been informed
that, in the opinion of the Commission, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
LEGAL MATTERS
The validity of the Shares offered hereby and certain legal matters
pertaining to the Company were passed upon on behalf of the Company by Briggs
and Morgan, Professional Association.
<PAGE>
EXPERTS
The consolidated financial statements for each of the two years ended,
June 30, 1995 and 1996, incorporated by reference in this Prospectus, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto (which contains an explanatory paragraph with
respect to substantial doubt about the Company's ability to continue as a going
concern) and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said report.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER DESCRIBED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDERS. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE UNDER THIS PROSPECTUS SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR SINCE THE DATE OF ANY DOCUMENTS
INCORPORATED HEREIN BY REFERENCE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES, OR AN OFFER OR SOLICITATION IN ANY STATE TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
---------------------
TABLE OF CONTENTS
---------------------
Page
Available Information................................. 2
Incorporation of Certain Documents
by Reference........................................ 2
Prospectus Summary.................................... 4
Risk Factors.......................................... 6
Management............................................11
Selling Shareholders..................................13
Use of Proceeds.......................................14
Plan of Distribution..................................14
Legal Matters.........................................14
Experts...............................................15
958,858 SHARES
U-SHIP, INC.
COMMON STOCK
--------------
PROSPECTUS
--------------
________, 1997
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses payable by the
Company in connection with the sale and distribution of the Shares being
registered. All amounts shown are estimates, except the registration fee.
SEC registration fee.........................................$ 400
Legal fees and expenses...................................... 3,000
Accounting fees and expenses................................. 5,000
Miscellaneous (including listing fees, if applicable)........ 1,600
--------
Total...................................................$ 10,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Unless prohibited in a corporation's articles, Utah Statutes Section
16-10a-903 requires indemnification of directors against reasonable expenses
(including attorneys' fees) incurred by such person in connection with the
successful defense of any proceeding to which he or she was a party because he
or she is or was a director of a Utah corporation. Further, Utah Statutes
Section 16-10a-907 requires indemnification for officers to the same extent as
directors, provides that a corporation may also indemnify employees and agents,
and provides that a corporation may indemnify all of such persons to a greater
extent than is statutorily required. The Company's Articles of Incorporation
provide that the Company shall indemnify officers and directors against any and
all expenses arising out of any suit or proceeding to which they are a party
because of their serving the Company as such, except in relation to matters as
to which any officer or director is adjudged liable for his or her own
negligence or misconduct in the performance of his or her duty. The Company's
Bylaws also provide for certain indemnification of directors, officers,
employees and agents, past or present, of the Company, and persons serving as
such of another corporation or entity at the request of the Company.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
5.1 Opinion of Briggs and Morgan, Professional Association
23.1 Consent of Briggs and Morgan, Professional Association (included in
Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
24.1 Power of Attorney (included on signature page to the Registration
Statement)
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
<PAGE>
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
provided, however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the provisions summarized in Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel, the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that (1) for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this Registration Statement
in reliance on Rule 430A and contained in the form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement as of the time it was
declared effective and (2) for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Edina and State of Minnesota, on August 26, 1997.
U-SHIP, INC.
By /s/ Bruce H. Senske
Bruce H. Senske, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Bruce H. Senske as his true and lawful
attorney-in-fact and agent, with full powers of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on the dates and
in the capacities indicated.
Signature Title Date
--------- ----- ----
/s/ Bruce H. Senske President, Chief Executive August 26, 1997
Bruce H. Senske Officer and Director (Principal
Executive, Accounting and
Financial Officer)
/s/ B. Richard Vogen Chairman and Director August 26, 1997
B. Richard Vogen
/s/ Donald L. Kotula Director August 26, 1997
Donald L. Kotula
/s/ Gary W. Ramsden Director August 26, 1997
Gary W. Ramsden
<PAGE>
EXHIBIT INDEX
NUMBER DESCRIPTION
- - --------- --------------------------------------------------------------------
5.1 Opinion of Briggs and Morgan, Professional Association
23.1 Consent of Briggs and Morgan, Professional Association (included
in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
24.1 Power of Attorney (included on signature page to Registration
Statement)
EXHIBIT 5.1
August 25, 1997
U-Ship, Inc.
5583 West 78th Street
Edina, Minnesota 55439
Gentlemen:
We are counsel to U-Ship, Inc., a Utah corporation (the "Company"), in
connection with its filing of a registration statement on Form S-3 (the
"Registration Statement"), under the Securities Act of 1933, as amended, in
connection with the proposed sale by Selling Shareholders of 958,858 shares of
common stock, $.004 par value, of the Company (the "Shares").
We have examined the Registration Statement and those documents,
corporate records, and other instruments we deemed relevant as a basis for the
opinion herein expressed.
Based on the foregoing, it is our opinion that when the Registration
Statement shall have been declared effective by order of the Securities and
Exchange Commission, and the Shares have been sold as contemplated by the
Registration Statement, the Shares will be legally and validly issued,
fully-paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus included in such Registration Statement.
Very truly yours,
BRIGGS AND MORGAN,
Professional Association
/s/ Avron L. Gordon
Avron L. Gordon
EXHIBIT 23.2
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our report
and to all references to our Firm included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Minneapolis, Minnesota,
August 22, 1997
