SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
JUNE 12, 1998
Date of report (Date of earliest event reported)
U-SHIP, INC.
(Exact Name of Registrant as Specified in Charter)
UTAH 000-28452 39-1713181
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification Number)
5583 WEST 78TH STREET
EDINA, MINNESOTA 55439
(Address of Principal Executive Offices, including Zip Code)
(612) 941-4080
(Registrant's Telephone Number, including Area Code)
<PAGE>
ITEM 5 OTHER EVENTS
Pursuant to a letter from Nasdaq to the Company dated May 29, 1998,
in which Nasdaq approved the Company's compliance with certain requirements for
continued listing of the Company's common stock on the Nasdaq SmallCap Market,
the Company is submitting the following information to verify that the net
tangible assets of the Company were at least $3.7 million on a pro forma
unaudited basis as of April 30, 1998.
By separate closings on June 2, 1998, and June 8, 1998, the Company
completed a private placement in which it sold to accredited investors 2,883,824
shares of its $0.004 par value Series A Cumulative Convertible Preferred Stock
(the "Preferred Shares"), together with Warrants ("the Warrant") to purchase
1,441,912 shares of Common Stock. The Preferred Shares and Warrants were sold in
units ("Units"), each consisting of two (2) Preferred Shares and one (1) Warrant
to purchase one share of Common Stock at a price of $1.75 per share. Each of the
Preferred Shares is convertible into the Company's $0.004 par value common stock
(the "Common Stock") and is entitled to a 5% cumulative annual dividend. Subject
to their registration under, or exemption from, applicable federal and state
securities laws, the Warrants may be exercised to purchase Common Stock any time
before May 1, 2001. The Units were offered by R.J. Steichen & Co. (the "Agent"),
a non-exclusive agent of the Company on a "best efforts, all or none" basis, at
a purchase price of $1.20 per Unit. The total consideration received by the
Company for the sale of these Units was $1,504,607, net of interest ($7080) and
the Agent's commissions and nonaccountable expenses.
On May 4, 1998, the Company sold to various individual accredited
investors (collectively, the "Additional Investors") in a private placement
transaction 785,837 Units at a price of $1.20 per Unit, for a total
consideration received by the Company of $943,003. These Units were sold by the
Company without the services of the Agent. The terms and conditions of these
Units were identical to those sold to investors by the Agent in the
above-referenced offering.
The total net consideration from the sale of the Units in the two
offerings described above was $2,447,610. The amount of the Company's net
tangible assets as of April 30, 1998 was $1,298,869. Accordingly, on an
unaudited pro forma basis, taking into account the net proceeds from the
above-described private placements, the Company's net tangible assets as of
April 30, 1998 was $3,753,560.
The following is the Company's pro forma balance sheet dated as of
April 30, 1998. Reference is also made to the press release dated June 3, 1998
and issued to the public by the Registrant on June 4, 1998, and attached hereto
as an exhibit.
U-SHIP, INC. AND SUBSIDIARIES
Consolidated Pro-Forma Balance Sheets
(Giving effect only to net proceeds of Private Placement)
<TABLE>
<CAPTION>
April 30, Private Placement Pro Forma
1998 Sale of April 30,
(ESTIMATED) Units 1998
------------------------------------------------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 15,286 $ 2,454,690 $ 2,469,976
Short-term investments -- --
Accounts receivable 68,615 68,615
Prepaid expenses 8,533 8,533
Inventories 620,216 620,216
------------------------------------------------
712,650 2,454,690 3,167,340
------------------------------------------------
PROPERTY AND EQUIPMENT:
Shipping centers 1,517,529 1,517,529
Furniture, fixtures and equipment 514,486 514,486
Less-Accumulated depreciation (889,132) (889,132)
------------------------------------------------
<PAGE>
1,142,883 -- 1,142,883
------------------------------------------------
Other assets, net 179,595 179,595
------------------------------------------------
$ 2,035,128 $ 2,454,690 $ 4,489,818
================================================
CURRENT LIABILITIES:
Current maturities of long-term debt and notes payable $ 59,958 59,958
Deferred Revenue 27,431 27,431
Accounts payable 295,360 295,360
Accrued liabilities 266,935 266,935
------------------------------------------------
649,684 -- 649,684
------------------------------------------------
Long-term debt, net of current maturities 86,575 86,575
------------------------------------------------
SHAREHOLDERS' EQUITY:
Preferred stock, $.004 par value; 25,000,000 shares authorized;
0 issued and outstanding as of 4/30/98, 4,455,498 issued and
outstanding as of close of private placement -- 17,822 17,822
Common stock, $.004 par value; 75,000,000 shares authorized; --
4,979,717 and 4,967,669 issued and outstanding 19,919 19,919
Additional paid-in capital 10,494,837 2,429,789 12,924,626
Warrants 19,500 19,500
Accumulated deficit (9,235,387) 7,079 (9,228,308)
------------------------------------------------
1,298,869 2,454,690 3,753,559
------------------------------------------------
$ 2,035,128 $ 2,454,690 $ 4,489,818
================================================
</TABLE>
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
99 - Press Release dated June 3, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized on June 12, 1998.
U-SHIP, INC.
By: /s/ Peter C. Lytle
---------------------------
Peter C. Lytle
President
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
99 Press Release dated June 3, 1998
EXHIBIT 99
FOR IMMEDIATE RELEASE
Media Contacts:
- ---------------
Peter Lytle, CEO
U-Ship, Inc. Joan Knight, Knight Public Relations
612-941-4080, ext. 113 612-593-1508
or 612-473-3831 Fax: 612-593-5197
FOR IMMEDIATE RELEASE:
U-SHIP ADDS EQUITY AND ANNOUNCES NEW CEO AND STRATEGIC REPOSITIONING
MINNEAPOLIS, MN, June 10, 1998 -- U-Ship, Inc. (USHP) raised additional equity
and has named a new Chairman and CEO as well as a number of key management
positions to launch a repositioning strategy. U-Ship is the leading developer,
manufacturer and operator of consumer-operated automated shipping centers, with
the only automated, self-service packaging and shipping service currently
available.
The $2.6M in new equity was raised through private placements. A portion of the
financing was raised by R. J. Steichen & Company, an investment-banking firm
based in Minneapolis, Minnesota.
Peter Lytle, principal and founder of Business Development Group (BDG), a
national consulting and management firm with headquarters in Minneapolis, has
been elected Chairman and Chief Executive Officer. BDG has provided advisory
services to U-Ship since March of 1998. Tim Becker of the BDG and former CFO of
Primo Piatto, Inc. is now Chief Financial Officer. Marshall Masko joins the
company as Vice Chairman and as a marketing consultant. Masko was most recently
Vice President, Marketing for NordicTrack, where he helped grow sales from $90
million to $525 million in a four-year period. Kenneth Zigrino is now Vice
President, Administration, General Counsel and Secretary. Bruce Senske, the
company's CEO from January of 1993 through May of 1998 will remain as a director
and Vice President of Automated Shipping Technology.
According to Lytle, the new equity will launch Phase Two of U-Ship's
development. "Phase One pioneered the technology, but in this fast-paced
industry, you have to move forward quickly in order to stay dominant. We need to
implement these unique systems and technologies, form strategic partnerships and
as we move ahead, secure a return on our shareholders' investment."
The Phase Two program includes the following strategies:
* Build strategic partnerships with major carriers (UPS, FedEx, and DHL) to
offer significant savings in labor costs by adding U-Ship technology to
their current delivery systems.
* Rapid introduction of the next generation technology (self-contained,
non-attended postal units) to expand consumer access to priority package
and letter shipping around the clock, with the soon-to-be-tested hourly
pickup and delivery 24 hours a day.
* Relocate and consolidate automated shipping units (assisted service and
self-service units) to focus on metro areas, allowing for economies of
scale in advertising and promotion. The Minneapolis and St. Paul market is
currently targeted for up to 200 units within the next twelve months.
<PAGE>
* Explore franchising or limited partnership strategies to expand the
company's products, services and geographic locations.
* Move on synergistic acquisitions to expand the revenue base and service
levels. (Examples: courier services, internet document transfer services,
etc.)
Bruce Senske says, "U-Ship is ready to move ahead in expanding its technology of
automated shipping center units and to add additional services, based on the
data collected from the 321 units currently in test in 40 states and in Canada."
GROWTH THROUGH ACQUISITIONS AND JOINT VENTURES
"We view U-Ship as a provider of technology and services to the package and
shipping industry, and plan to expand through key acquisitions or joint
ventures," said Tim Becker, the company's CFO. "We have formed an acquisition
team and have begun a screening process for candidates with complementary
technologies and services. We're now in discussion with several of these."
TARGETING A GROWTH MARKET WITH EXPANDED PRODUCT LINE AND MARKETING ALLIANCES
Marshall Masko cites marketing strategies to capitalize on a growing $8 billion
market for shipping priority small packages and letters not addressed by the
"managed" shipping industry, including the explosive growth of residence-based
businesses.
"We believe we are in an excellent position to build partnerships and expand our
product lines," he said. "Beyond supporting the big three carriers, we also hope
to gain U. S. Post Office approval to utilize electronic stamps, because we see
tremendous potential in the full postal self-shipping business," he said. "We
also plan to increase the number of units placed and build alliances with
existing shipping locations and suppliers. These partnerships should bring
U-Ship into currently non-automated sites and help those firms reduce labor
cost. Becoming a 24-hour rapid pick up and delivery system is a key focus of
ours."
SUPPORTING NEW GROWTH STRATEGIES WITH HUMAN RESOURCES
To support its growth strategies, U-Ship is in a job search for a vice president
of marketing, a director of franchising/LLC programs and support staff in
information systems, customer service and finance. Additional board members have
also been named. They are Jim Bartholomew, CPA, a financial and strategic
workout consultant, Marlin Rudebusch, Business Unit Director for Renal Systems
Division of Minntech Corporation and Susan Clemens, Vice President, Human
Resources and Administration, Primo Piatto, Inc. In February 1998, the board
accepted the resignation of B. Richard Vogen as Chairman and a director and of
Donald Kotula as a director. Bruce Senske and Gary Ramsden are continuing to
serve as directors.
Lytle noted that Manchester Financial Group was important in helping the company
realign expenses and focus on a growth strategy. Manchester served as an advisor
to the company in this transaction and its engagement is now complete. The
company has been released from all obligations to Manchester under the terms of
its retainer agreement.
PIONEERING TECHNOLOGIES MAKE SHIPPING EASIER AND MORE CONVENIENT
U-Ship was founded in 1991 by Gary Ramsden to develop an alternative system to
inconvenient shipping systems of the past. Today consumers can utilize the
automated shipping center units much like an ATM machine. The user-friendly,
self-service units are voice prompted, credit-card activated and they weigh
packages electronically. Data bases can even be built for repeat shippers.
U-Ship also offers its own credit card, and is less costly than services offered
by mail/ship stores.
The automated shipping center units save time and money for carriers.
Electronically entered and collected information tells carriers whether
immediate pick up is necessary, and keyboard entries eliminate costly errors of
illegible writing. By minimizing labor and operational costs, U-Ship offers
retail operators a profitable traffic builder.
<PAGE>
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The foregoing press release, to the extent referring to non-historical facts,
contains various forward-looking statements as defined in the Private Securities
Litigation Reform Act of 1995, which may be identified by the use of
forward-looking statements such as the company's proposed strategies to build
its business and the use of such terminology as its "plans", "hope" or other
comparable terminology. Such statements are subject to certain risks and
uncertainties relating to the company's future performance. Actual results or
events may materially differ from those indicated in such forward-looking
statements. In evaluating such statements, shareholders and prospective
investors are cautioned not to place undue reliance on such forward-looking
statements and are specifically directed to review the various factors
identified under the caption "cautionary factors" which could cause actual
results to differ materially from those indicated in such forward-looking
statements. It is suggested that this discussion be read in conjunction with the
company's report on Form 10-KSB, filed with the Securities and Exchange
Commission on September 26, 1997. Reference is also made to the company's report
on Form 10-QSB filed February 17, 1998 and May 15, 1998 (SEC file 0-28452).
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