As filed with the Securities and Exchange Commission on March 1, 2000
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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UNITED SHIPPING & TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in Its Charter)
UTAH 87-0355929
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9850 51ST AVENUE NORTH, SUITE 110
MINNEAPOLIS, MINNESOTA 55442
(612) 941-4080
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
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PETER C. LYTLE, CHIEF EXECUTIVE OFFICER
UNITED SHIPPING & TECHNOLOGY, INC.
9850 51ST AVENUE NORTH, SUITE 110
MINNEAPOLIS, MINNESOTA 55442
(612) 941-4080
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
COPIES TO:
AVRON L. GORDON, ESQ. KENNETH D. ZIGRINO, ESQ.
THOMAS F. STEICHEN, ESQ. VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
BRIGGS AND MORGAN, P.A. UNITED SHIPPING & TECHNOLOGY, INC.
2400 IDS CENTER 9850 51ST AVENUE NORTH, SUITE 110
MINNEAPOLIS, MINNESOTA 55402 MINNEAPOLIS, MINNESOTA 55442
(612) 334-8400 (612) 941-4080
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AS DETERMINED BY
MARKET CONDITIONS.
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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>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE AGGREGATE PRICE PER AGGREGATE OFFERING AMOUNT OF
TITLE OF SHARES TO BE REGISTERED REGISTERED SHARE(1)(2) PRICE(1)(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock ($.004 par value)....... 6,575,712 $12.46875 $81,990,909 $21,646
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(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
such stock on February 23, 2000 as reported by the Nasdaq SmallCap
Market.
(2) In accordance with Rule 416 under the Securities Act of 1933, common
stock offered hereby shall also be deemed to cover an indeterminate
number of securities to be offered or issued to prevent dilution
resulting from stock splits, stock dividends or similar transactions.
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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.
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PROSPECTUS SUBJECT TO COMPLETION, DATED MARCH 1, 2000
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6,575,712 SHARES
UNITED SHIPPING & TECHNOLOGY, INC.
COMMON STOCK
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The shareholders listed on page 24 below are offering and may sell up to
6,575,712 shares of our common stock under this prospectus. We will not receive
any part of the proceeds from this offering.
Our common stock is quoted on the Nasdaq SmallCap Market and trades
under the ticker symbol "USHP." On February 29, 2000, the closing price of one
share of our stock on the Nasdaq SmallCap Market was $17.6875.
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Purchase of our common stock involves a high degree of risk. You should
purchase shares only if you can afford a loss on your investment. SEE "RISK
FACTORS" BEGINNING ON PAGE 16 TO READ ABOUT CERTAIN FACTORS YOU SHOULD CONSIDER
BEFORE BUYING SHARES OF OUR COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
THE DATE OF THIS PROSPECTUS IS ___________________, 2000.
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PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SOME IMPORTANT INFORMATION FROM THIS PROSPECTUS,
BUT DOES NOT CONTAIN ALL IMPORTANT INFORMATION ABOUT US OR THE OFFERING. YOU
SHOULD READ THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS AND NOTES
APPEARING IN, OR INCORPORATED BY REFERENCE IN, THIS PROSPECTUS. YOU SHOULD
CAREFULLY CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET FORTH UNDER "RISK
FACTORS" BEFORE YOU DECIDE TO PURCHASE OUR STOCK.
OUR BUSINESS
With the acquisition of Corporate Express Delivery Systems, Inc. (CEDS)
in September 1999, we have become the largest same-day delivery company in the
nation. We operate from 240 locations throughout the world, including 80 of the
100 largest markets in the United States. We provide the following services:
* on-demand delivery;
* scheduled routing and delivery;
* medical delivery;
* worldwide air courier;
* fleet replacement;
* facilities management;
* distribution delivery--which includes supply chain management,
integrated supply, third-party logistics and critical parts
banking; and
* secure transfer of information over the Internet.
OUR BUSINESS STRATEGIES
In 1998 and 1999, we substantially revised our historical business of
providing automated self-service shipping kiosks by focusing on the estimated
$15 billion same-day delivery industry. Based on our market research, we found
that this industry was highly fragmented, dominated by an estimated 6,000 small
companies, with no dominant national brands and relatively low technological
sophistication. We also felt that the same-day delivery industry could benefit
from a variety of emerging economic and technological trends, such as the
movement toward outsourcing of corporate services, the explosive growth of
e-commerce, the increasing use of the Internet and the availability of
sophisticated communications technologies. We concluded that these circumstances
presented us with an opportunity for growth. As a result, we adopted a new
strategy of growth through acquisitions in the same-day delivery industry. Our
goal was to develop a national network of delivery services and to combine it
with sophisticated communications technology and a nationally-recognized brand
identity.
We began to acquire small local courier companies in 1998. In December
of that year, we acquired the assets of JEL Trucking, Inc., a Minneapolis-based
trucking company engaged in dock truck and courier shipments. In January 1999 we
acquired Twin City Transportation, Inc., a Minneapolis and St. Paul based
courier with revenue of approximately $1.8 million and which employed 50
independent drivers. These initial acquisitions allowed us to refine and focus
our consolidation strategy.
With the acquisition of CEDS, we have achieved our goal of developing a
national network of same-day delivery capabilities. We are the largest same-day
delivery company in the United States. We also believe that we are the only
service provider in the industry with the kind of national presence and variety
of service offerings needed to support the growing demands of corporate
customers and e-commerce for reliability, speed and outsourcing capabilities. We
intend to continue our strategy of growth through acquisition. We also plan to
continue our efforts to utilize sophisticated technology and develop a national
brand identity to provide greater value to our current and potential customers.
Our goal is to become the premier corporate outsourcing and e-commerce delivery
and support company in the United States.
THIS OFFERING
We issued or will issue the securities covered by this prospectus to the
selling shareholders primarily in private placement transactions between the
selling shareholders and us. The selling shareholders may offer their shares
through public or private transactions, on or off the Nasdaq SmallCap Market, at
prevailing market
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prices or privately negotiated prices. No period of time has been fixed within
which the shares may be offered or sold.
GENERAL
In 1979, we incorporated in Utah under the name Basin Energy
Corporation. We have amended our name several times since then. In 1992 we
changed our name to U-Ship, Inc., and in May 1999 we changed our name to United
Shipping & Technology, Inc. From 1979 until 1991, we engaged in business
activities that are unrelated to our current business. Our principal executive
offices are located at 9850 51st Avenue North, Suite 110, Minneapolis, Minnesota
55442 and our telephone number is (612) 941-4080. Our website is www.u-s-t.com.
This document and the documents incorporated herein by reference contain
various forward-looking statements, which provide other than historical
information, within the meaning of Section 21E of the Exchange Act. Although we
believe that, in making any such statements, our expectations are based on
reasonable assumptions, any such statement may be influenced by factors that
could cause actual outcomes and results to be materially different from those
projected. When used in this document and the documents incorporated herein by
reference, the words "anticipates," "believes," "expects," "intends," "plans,"
"estimates" and similar expressions, as they relate to us or our management, are
intended to identify such forward-looking statements. These forward-looking
statements are subject to numerous risks and uncertainties that could cause
actual results to differ materially from those anticipated. Factors that could
cause actual results to differ materially from those anticipated, certain of
which are beyond our control, are set forth herein under the caption "Risk
Factors."
Our actual results, performance or achievements could differ materially
from those expressed in, or implied by, forward-looking statements. Accordingly,
we cannot be certain that any of the events anticipated by forward-looking
statements will occur or, if any of them do occur, what impact they will have on
us. We caution you to keep in mind the cautions and risks described herein and
to refrain from placing undue reliance on any forward-looking statements, which
speak only as of the date of the document in which they appear.
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THE COMPANY
OVERVIEW-RECENT SIGNIFICANT ACQUISITION
On September 24, 1999, we acquired the same-day delivery operations of
Corporate Express Delivery Systems, Inc. (CEDS) from CEX Holdings, Inc. by a
merger of CEDS with our wholly-owned subsidiary, United Shipping & Technology
Acquisition Corp. The purchase price was approximately $62.5 million, consisting
of $43.0 million in cash provided by institutional debt financing, and the
remainder in a combination of short and long-term notes issued to CEX. CEDS was
the surviving corporation in the merger. CEDS changed its name to UST Delivery
Systems, Inc. (Delivery Systems), but still conducts its business under the name
Corporate Express Delivery Systems. Delivery Systems is incorporated in
Delaware.
With the acquisition of CEDS, we have become the leader in nationwide
customized delivery solutions for same-day, time-critical shipping and
distribution. We provide an array of same-day ground and air delivery services,
including scheduled delivery, on-demand delivery, distribution services and air
courier services. Our network consists of approximately 240 locations in 80 of
the top 100 metropolitan areas in the United States. Our operations are
supported by a fleet of approximately 9,800 vehicles, including 4,700
company-leased and owned vehicles and 5,100 vehicles utilized by independent
contractors. We currently have approximately 10,000 employees. Our Delivery
Systems subsidiary has offices in Australia, Canada, France, Hong Kong and the
United Kingdom to facilitate our same-day international air delivery business.
The purchase of CEDS was the final step in meeting our goal of becoming
the premier same-day express delivery and e-commerce fulfillment service in the
United States. With the acquisition of CEDS, we now provide the following
products and services to individual consumers and businesses:
* same-day ground and air transportation services throughout the
United States and internationally;
* distribution, logistics and supply chain management services;
* the ability to fulfill any type of customer need in transferring
virtually any type of product or goods in many different forms
and time scenarios; and
* secure transfer of information over the Internet.
We now derive our revenues primarily from our same-day ground and air
delivery operations. Our revenues for the fiscal year ended June 30, 1999 (prior
to our acquisition of CEDS) were approximately $1.5 million. For the fiscal year
ended January 30, 1999, CEDS' revenue from operations was approximately $648.3
million. CEDS' results of operations have been included in our financial
statements since the September 24, 1999 acquisition of CEDS.
We have currently organized our operations in a number of subsidiaries.
We conduct the CEDS same-day delivery business through Delivery Systems and
continue to operate a portion of our Minneapolis same-day delivery and package
delivery services. We also develop software and kiosk technology through our
Intelligent Kiosk subsidiary.
HISTORICAL BUSINESS AND EVOLUTION OF OUR BUSINESS STRATEGY
In 1991, we began the development and marketing of self-service
automated shipping systems designed to be installed at the shipping hubs of
major package carriers such as United Parcel Service, Inc. Our kiosks had a
limited test experience with United Parcel Service, but to date no significant
sales of hub-automation kiosks have been made to United Parcel Service or any
other carrier. Later, we began to manufacture and operate self-service
intelligent shipping kiosks (ISKs) in retail locations such as Kinko's Copy
Centers and CopyMax stores.
In late 1997, as a result of lower than anticipated revenues from the
ISKs placed in retail locations, we began an extensive evaluation of our
strategies and results from our placement sites. Ultimately, in 1998, we
concluded that our historical ISK placement strategy was not profitable. In the
course of reviewing alternative
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directions for our business, we determined that the same-day delivery business
presented an opportunity for us to employ our advanced technology in a large but
fragmented market and obtain an independent revenue stream in a growing
industry. We also felt that the same-day delivery industry could benefit from a
variety of emerging economic and technological trends, such as the movement
toward outsourcing of corporate services, the explosive growth of e-commerce,
the increasing use of the Internet and the availability of sophisticated
communications technology. Based on this determination, we adopted a revised
business strategy with the goal of becoming the national leader in same-day
delivery and related services through a series of acquisitions of same-day
delivery businesses. Our goal was to develop a national network of delivery
services and to combine it with sophisticated communications technology and a
nationally-recognized brand identity. We felt that this combination would allow
customers to participate in Internet-based business, or e-commerce, and would
allow us to offer an array of integrated distribution and logistics services to
corporate clients and companies engaged in e-commerce.
We began our same-day delivery consolidation strategy in late 1998,
through the acquisition of JEL Trucking, Inc., which enabled us to offer
same-day delivery and package delivery services in the Minneapolis/St. Paul
metropolitan area. In January 1999, we also acquired Twin City Transportation,
Inc., which expanded our same-day delivery service in the Minneapolis/St. Paul
metropolitan area. On September 24, 1999, we acquired Corporate Express Delivery
Systems, with fiscal year 1998 revenues in excess of $600 million. We continue
to explore the acquisition of additional same-day delivery companies to increase
market penetration and provide a national platform for e-commerce fulfillment
and logistics services. As of the date of this prospectus, we had no agreements
pending to acquire any additional companies.
In order to increase the strength of our market leadership in the
same-day delivery business and obtain the maximum economies of scale from our
consolidation efforts, we have made a determination that we must continue to
invest in upgrading and developing computer and communications technology. We
currently employ in most of our fleet sophisticated communications and dispatch
systems. In addition, we have begun the testing in our larger on-demand delivery
operations of a satellite-driven, computerized, on-demand routing system that
utilizes Global Positioning System (GPS) technology and mobile data terminals to
continuously track the location of every vehicle and package in real time. Our
ultimate goal is to expand the capabilities of our communications systems to
further improve our same-day delivery, supply-chain management and logistics
services, and to provide an Internet-based platform for customized e-commerce
delivery solutions. We also continue to explore the opportunity of utilizing our
kiosk technology to provide more robust and comprehensive capabilities that can
be ultimately integrated with our same-day delivery operations.
In March 1999 we introduced an Internet-based shipping service called
i-courier(TM). This service offers secure, trackable electronic document
transfer and storage for small or large files. We intend to expand this service
to include links to our dispatch system and our recently-introduced on-line
ordering and package tracking system. We also intend to expand the capabilities
of i-courier(TM) and to pursue other e-commerce opportunities.
OUR SAME-DAY DELIVERY OPERATIONS
MARKET OPPORTUNITY
The same-day delivery market provides scheduled and non-scheduled,
same-day delivery of documents and packages in local and inter-city markets.
Some same-day delivery companies offer specialized services beyond small package
delivery, such as legal filing, process serving and dock-truck services for
large items. A few same-day delivery companies, such as us, offer warehousing
and facilities management, and logistics solutions, as well as supply chain
management and cross-dock and package aggregation services.
Industry sources, which we believe to be reliable, estimate that the
same-day delivery services industry is a $15 billion market in the United
States, with a growth rate of more than 5% per year. Although the market is
large, it is highly fragmented. There are relatively low entry barriers in this
market because the capital requirements to start a local courier business are
relatively small and the industry is not subject to
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extensive regulation. We believe that there are currently as many as 6,000
same-day delivery companies in the United States. Most participants are
privately held and operate only on the local level. The focus is generally on
operations, with little attention given to marketing and sales. Accordingly, we
believe that there is little perceived service differentiation between
competitors, and that customer loyalty is generally short-term. There are no
dominant brands in the industry, and the industry has a relatively low level of
technology usage. By contrast, the next-day package delivery industry is highly
consolidated and dominated by large, well-recognized companies such as United
Parcel Service and Federal Express, both of which use technology extensively.
Same-day delivery customers increasingly seek greater reliability,
convenience and speed, as well as additional services, from a package delivery
provider which they trust. We expect that further growth in the same-day
shipping market will be fueled by corporate America's trend toward outsourcing,
as well as the rapid growth of e-commerce and the heightened demand for
immediate response and comprehensive distribution management solutions. We
believe that customers will be attracted to companies with the ability to offer
greater efficiency through the use of technology, such as our sophisticated
dispatch and communications software, our Internet document transfer
capabilities, and our newly-introduced online ordering and tracking system. We
plan to use technology and the Internet to manage and coordinate dispatching,
delivery, tracking, warehousing and logistics and other "back room" functions to
help us and our customers operate more efficiently and, we believe, more
cost-effectively. Our customers will also benefit from our national market
presence because it offers them the ability to purchase an array of services
from one vendor operating in multiple markets. We are also in the process of
determining how the increasing demand for such time-dependent same-day delivery
services may provide opportunities to utilize our ISK as an electronic drop box
for same-day delivery services. We believe the integration of high-tech
communications software with the currently low-tech same-day delivery business
can also provide a market differentiation between our services from those of our
competitors.
SAME-DAY DELIVERY CONSOLIDATION STRATEGY
In late 1998, to meet potential customers' increased expectations and
needs, we adopted a same-day delivery services consolidation strategy with four
major objectives:
* to develop a national market presence to serve large corporate
customers and e-commerce;
* to use our present and developing technology to reduce costs and
to provide better service;
* to develop a national brand to differentiate our service and
foster customer loyalty; and
* to realize economies of scale.
We initially entered the same-day delivery business in the Minneapolis/St. Paul
metropolitan area by acquiring courier and package delivery companies beginning
in late 1998. With the purchase of CEDS on September 24, 1999, we became the
national leader in same-day delivery services. As we grow, we expect to be able
to achieve substantial cost savings by consolidating and standardizing dispatch,
billing, tracking and other administrative functions. We also plan to further
increase our market penetration through acquisition and internal growth.
We intend to develop, license or acquire a national brand for our
same-day delivery services. We are actively seeking a well-recognized
synergistic brand that will represent reliability, superior customer service and
speed. We believe that a uniform presentation of our same-day delivery and
related services across multiple markets will provide a significant competitive
advantage, by fostering customer and employee loyalty and familiarity, and will
help to integrate our acquired companies.
We also intend to use technology to provide better and new services to
customers. To meet our customers' needs for reliability, speed and efficiency,
we currently employ in most of our fleet, sophisticated communications and
dispatch systems. For example, we have begun the testing in our larger on-demand
delivery operations of a satellite-driven, computerized, routing system. This
product utilizes GPS technology and mobile data terminals to continuously track
every vehicle and package in real time. The system helps to
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optimize delivery routes, which we anticipate will result in significantly lower
mileage, fleet and administrative costs through enhanced driver productivity and
improved route density. In addition, we believe that our existing and proposed
systems will provide additional benefits to the customer, including enhancing
the accuracy of package delivery estimates, up-to-the minute status updates on
all jobs, and electronic proof-of-delivery documentation. We intend to expand
the capabilities of our communications systems to further integrate and improve
the efficiency of our same-day delivery, supply chain management and logistics
services. Our ultimate goal is to provide an Internet-based platform for
corporate outsourcing and e-commerce delivery solutions. We believe that
utilizing such technologies will result in a paradigm shift in the same-day
delivery business.
Our i-courier(TM) Internet initiative supports our consolidation
strategy by providing secure, trackable electronic document transfer services.
We have recently introduced a new service into selected markets which gives our
customers the capability of ordering delivery services online and tracking
packages over the Internet. We also intend to further expand our offerings of
logistics services to companies engaged in e-commerce such as those companies
needing "just in time" inventory and spare parts warehousing and delivery
services.
SAME-DAY DELIVERY OPERATIONS
With the acquisition of CEDS, we are the nation's largest provider of
customized same-day, time-critical shipping, distribution and logistics
solutions. No public or private competitor currently duplicates our national
presence or our full complement of service offerings. We believe that these
capabilities give us a significant competitive advantage in meeting the demands
of sophisticated, national customers who depend on same-day delivery services in
the execution of their businesses. With fiscal 1999 revenues of over $600
million, we are approximately twice the size of our largest competitor. Our
current network is comprised of approximately 240 locations, which serves 80 of
the top 100 metropolitan markets in the United States and numerous secondary
markets.
Our Delivery Systems subsidiary now has approximately 12,000 employees
throughout the United States. In addition, we have offices in Australia, Canada,
France, Hong Kong and the United Kingdom, primarily in conjunction with our
same-day air delivery business. The same-day ground delivery service employs
approximately 9,800 vehicles, 4,700 of which are owned or leased by us and 5,100
of which are utilized by independent contractors. Of our approximately 13,300
drivers, 8,200 are employees and 5,100 are independent contractors.
Currently, our same-day delivery operations are divided into two primary
areas: ground services and air services. Each segment provides various service
offerings and supports a diversified customer base. Following is a brief
description of the various services that we currently offer.
GROUND SERVICES
We are the largest same-day ground delivery service provider in North
America. Our ground operations provide delivery services from approximately 190
locations in the United States and operate in 80 of the 100 top metropolitan
areas, as well as numerous secondary markets. We group our ground business into
three main business units and we derive approximately 85 percent of our total
ground revenues from same-day delivery services.
We generally enter into customer contracts for scheduled and routed
delivery, distribution and supply chain management services that are terminable
by customers upon notice. These contracts are short-term, usually ranging from
30 to 60 days. Typically, we do not enter into contracts with our customers for
on-demand delivery services. Prices for our services are currently determined at
the local level based on the distance and time sensitivity of a particular
delivery, the size, weight and quantity of the delivery, and the specific type
of goods being moved. Currently, billing information is generated and processed
locally through
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our computer systems. We are in the process of having a single billing location
for all of our business, which will be made possible through the expansion of
our Internet capabilities and such technology as bar coding.
SCHEDULED DELIVERY. Same-day scheduled delivery services are provided
for time sensitive deliveries that are recurring in nature. Pickup and delivery
routes are pre-defined based on the needs of the customer. A dispatcher
coordinates and assigns scheduled pickups and deliveries to the drivers and
manages the delivery flow. In many cases, certain drivers will handle a
designated group of scheduled routes on a recurring basis.
The largest customer base for this type of service consists of financial
institutions who need a wide variety of services including the pickup and
delivery of non-negotiable instruments, primarily canceled checks and ATM
receipts, the delivery of office supplies, and the transfer of inner-office mail
and correspondence. Typical service involves the pickup of non-negotiable
instruments or other correspondence from various bank branches in a designated
geographic area at a pre-scheduled time for delivery to a central processing
center. The expeditious and reliable transportation of the instruments from the
branches to a processing center is vital in order to obtain the rapid transfer
of funds from individual accounts to the institution. Consequently, financial
institutions consider scheduled delivery to be a critical part of their
outsourcing service needs. We believe that we maintain a dominant position in
scheduled delivery services for financial institutions, with a greater than 35%
market share. Other users of scheduled delivery services include film
processors, pharmaceutical companies and companies with critical parts
replenishment needs. We provide scheduled delivery services in 79 of the top 100
metropolitan markets and in many secondary markets.
ON-DEMAND DELIVERY. We provide local and inter-city same-day on-demand
delivery services, whereby our messengers or drivers respond to a customer's
request for immediate pickup and delivery. We typically offer one hour, two to
four hour, and over four hours delivery services depending on the customer's
time requirements. Most deliveries occur within a metropolitan area or radius of
40 miles. On-demand delivery services are typically available 24 hours a day,
seven days a week.
Most of our on-demand operations centers are staffed by dispatchers, as
well as customer service representatives and operations personnel. Incoming
calls are received by trained customer service representatives who provide the
customer with a job specific price quote and transmit the order to the
appropriate dispatched location. A dispatcher coordinates shipments for delivery
within a specific time frame. Shipments are routed according to the type and
weight of the shipment, the geographic distance between the origin and
destination, and the time allotted for the delivery. After proper routing for
the package is determined, coordination and deployment of delivery personnel is
accomplished either through mobile data terminals linked to our dispatch
computer system, through pagers or by radio. In addition to our fleet-wide
communications and dispatch systems, we also use, in a number of our facilities,
an advanced, satellite-driven on-demand management system which links
dispatchers and drivers through a personal two-way mobile data terminal. The
system continuously tracks every vehicle and every job in real-time and provides
electronic proof of delivery as evidence of delivery for chain of custody
issues. This system will streamline our routing and dispatch systems and add
customer value. Typical users of on-demand services include every type of
customer ranging from organ transportation for hospitals to delivery of legal
documents for law offices. We provide on-demand delivery services in 75 of the
top 100 metropolitan areas.
DISTRIBUTION SERVICES. We also provide same-day distribution services
for time-sensitive local and regional deliveries that require intermediate
handling or sorting prior to being delivered to multiple locations. Typically,
we receive bulk shipments at our warehouse from customers' suppliers or
wholesalers. These shipments are then subdivided into smaller shipments and
sorted for delivery to specific locations. For example, we may receive a bulk
shipment of retail inventory for a pharmaceutical wholesaler, which we sort and
divide into smaller shipments, and deliver to the customer's stores or end user
destinations. Same-day distribution services are provided on both a local and
multi-city basis. Our on-demand delivery resources are available to supplement
the customer's drivers as needed. Customers utilizing distribution services
typically include air freight companies, pharmaceutical wholesalers, retailers,
manufacturers or other companies which must distribute merchandise every day
from a single point of origin to many locations within a clearly defined
geographic region. We provide distribution services in 70 of the top 100
metropolitan areas.
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SUPPLY CHAIN MANAGEMENT. We offer supply chain management services
whereby we assume inventory replenishment responsibilities of repair, production
and supply items for customers. Our integrated supply services include
monitoring the customer's inventories based on predetermined inventory levels
and reordering needed supplies through the customer's purchasing agents.
Inventory shipments are sent to our site adjacent to the customer's facility,
from which we sort and then distribute items to their appropriate destination.
We also offer "critical parts banking" for a customer's parts and supplies and
offer related "just-in-time" transportation of those items to support service or
production activities. Parts are stored at our facilities located in a
metropolitan area. A customer's service technician lacking a needed repair part,
for instance, can order the part which is quickly delivered to the service site,
adding the kind of value which we believe allows purchase decisions to be based
more on capability than price. Though accounting for less than 2% of our current
total revenues, we view these services as a growth opportunity, and we intend to
expand our "just-in-time" warehousing and delivery and logistics business both
through internal growth and acquisitions. Companies utilizing integrated supply
services include petrochemical companies, which use the services to centralize
non-critical inventory management at their large chemical plants.
OTHER SERVICES. The remainder of our services include inter-company
delivery, fleet replacement and facilities management, logistics, warehouse and
storage services, and a limited amount of long-haul services.
Several industry sectors have a need for national or regional same-day
delivery services. Typical industries that we serve include:
FINANCIAL INSTITUTIONS. Financial institutions, primarily commercial
banks, utilize our scheduled delivery services to deliver non negotiable
instruments, such as canceled checks and ATM receipts, supplies and inter-office
correspondence. Typical service involves the pickup of non negotiable
instruments from various bank branches in a designated geographic area at a
pre-scheduled time for delivery to a central processing center. The expeditious
and reliable transportation of the instruments from the branches to the center
is vital. Consequently, financial institutions consider scheduled delivery to be
a crucial part of their outsourced service needs. We estimate that we have a
greater than 35% market share in the financial institutions same-day delivery
industry.
HEALTH CARE. Health care customers consist primarily of:
* pharmaceutical wholesalers;
* medical supply wholesalers;
* hospitals;
* medical labs;
* blood banks; and
* home healthcare providers.
Pharmaceutical wholesalers utilize our distribution delivery services to
transport bulk shipments from centralized locations to various retail sites. We
typically receive bulk shipments from a pharmaceutical or medical supply
wholesaler, sort and divide the shipment into smaller bundles, and then deliver
the shipment to destination outlets, including retail drug stores and hospitals.
Hospitals primary utilize our on-demand services for the transportation of such
things as samples or equipment among different areas within the hospitals or
between different hospitals or labs. Local, regional and national medical
laboratories use our services to transport samples among laboratories by either
on-demand or scheduled ground or air transportation delivery. Home healthcare
providers use our services to provide patients with such things as medications
and the delivery of medical equipment.
RETAIL. Retail customers, typically large national companies, primarily
use our supply chain management service. For example, we service our largest
retail customer by providing a national network of scheduled and routed vehicles
to deliver primarily three separate product lines: technical parts, gas repair
shop parts and retail products. Included in these product lines are items such
as refrigerators, condensers, weed
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whackers and other retail products. Typically, we receive a bulk shipment and
then break it down into multiple shipments. We then deliver the items to retail
locations or pre-specified drop sites to be picked up by the customer.
PETROCHEMICAL. Petrochemical customers use our integrated supply
services to centralize non-critical inventory management at their large chemical
plants. Typically, we monitor a petrochemical customer's inventory based on
predetermined inventory levels and reorder of needed supplies through the
customer's purchasing agent. Inventory shipments are sent to one of our sites
adjacent to the customer's facility, from which we sort and then distribute
items to their appropriate destinations. Petrochemical customers prefer to use a
national provider such as us in order to reduce the number of different vendors
with whom they conduct business.
TECHNOLOGY. Technology customers primarily use our on-demand services.
The prototype service we aim to provide technology customers is a critical parts
management system utilizing the Internet. For example, we service our largest
technology customer by partnering with third party logistics supplier to provide
critical parts banking. This provider, one of the largest third party logistics
providers in North America, provides a national network whereby they centrally
manage 100 regional stocking locations of 500 to 4,500 square feet, utilizing an
Internet-based warehouse management system. Typically, our customers place
orders over the telephone, which are then entered into our suppliers' database.
The database determines if the part is available and, if available, the
applicable regional stocking location. The part is then pulled from the regional
stocking location while a driver is dispatched. The driver delivers the part to
its destination, sometimes in less than one hour, and places the damaged part in
a return package to be delivered to the repair center.
AIR SERVICES
Our Air Group provides primarily same-day scheduled and on-demand
delivery services demanding inter-city delivery. The Air Group operates under
three brand names: Tricor, Air Courier Dispatch, and Midnite Express. Our Air
Group provides delivery services from approximately 40 locations supported by
its own ground fleet of approximately 228 vehicles. We do not own any aircraft.
Instead, we purchase our air transportation from preferred vendors. The Air
Group has negotiated contracts with most major airlines on favorable terms that
enable us to charge competitive rates for services. In order to utilize fleet
assets efficiently, certain Air Group locations perform scheduled ground and
on-demand delivery services.
SCHEDULED AIR DELIVERY SERVICES. Same-day scheduled delivery services
are provided for time-sensitive deliveries that are recurring in nature. Pickup
and delivery routes are pre-defined based on the needs of the customer. The
largest customer base for this type of service consists of financial
institutions for delivery of non negotiable instruments, primarily canceled
checks.
A typical shipment of bank documents is picked up from the sending
bank's processing center by an Air Group driver. The driver follows a
predetermined pickup schedule. Shipments are pre-sorted by city by bank
personnel and then transported to Air Group facilities generally located in
close proximity to the local airport.
At our Air Group's facilities, packages are consolidated by destination,
placed in large shipping bags and then transferred to the airport for shipment.
At the airport, the bags are verified against an internal manifest to ensure
that all of the packages are accounted for and sent to the proper destination.
Upon arrival at the destination city, the shipment is off-loaded for the final
time and delivered by an Air Group driver to the receiving bank or Federal
Reserve Branch.
NEXT AVAILABLE FLIGHT AIR SERVICE. The Air Group provides local same-day
on-demand delivery services, whereby messengers or drivers respond to a
customer's request for immediate pick up and delivery. The Air Group's on-demand
service begins with a customer placing an order to a customer service
representative who provides the customer with the job specific price quote, and
coordinates the pickup schedule, flight arrangements and delivery times. Similar
to its scheduled services, the Air Group purchases
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its air transportation from certain major airlines and air charter operators.
Pickup of the package is handled by an Air Group carrier or agent, dependent
upon whether the Air Group maintains ground operations at a particular pickup
location. Upon receipt by the driver, the driver notifies the dispatcher that
the package has been picked up and is en route to the airport. At the airport
the package is placed on the plane and sent to a specific destination. Upon
arrival an Air Group carrier or agent secures the package and notifies the Air
Group of its receipt. The package is then transported from the airport to its
final destination where the customer signs the bill and finishes the chain of
custody. Typical customers of the Air Group's on-demand services include
entertainment firms, for the shipping of production materials, including film
footage and music, investment banks, advertising agencies, hospitals for
shipping human organs and manufacturing firms to ship replacement parts for
idled equipment.
AIR GROUP CUSTOMER BASE. As of February 1, 2000, the Air group had a
diversified customer base of over 3,800 active customers across the United
States. Our target customers are businesses that distribute time-sensitive,
non-flexible items to multiple locations and financial institutions, primarily
commercial banks, transferring non-negotiable items to processing centers.
OUR KIOSK OPERATIONS
In 1991, we started developing automated shipping systems, designed for
installment at the shipping hubs of major package carriers such as United Parcel
Service. From 1991 to 1998, our primary business was the manufacture, marketing
and operation of self-service, automated shipping systems for use by consumers
and small businesses who ship packages and priority letters through major
carriers in the air express and package delivery market. Our shipping kiosks
automate many of the functions involved in shipping packages and priority
letters, such as weighing, determining the charge, accepting payment and
printing a shipping label. We believe that our Kiosk technology is among the
most advanced self-service automated air express and package shipping systems
available for consumers and small businesses. Based upon our becoming the
national leader in same-day delivery solutions, our shipping kiosks are being
further developed and analyzed to determine how we can use the kiosk technology
to offer increased convenience to customers of same-day delivery service. We
believe that our kiosk technology and know-how will provide a unique and
valuable opportunity and we may also seek to license the technology to third
parties or enter into other arrangements with third parties to utilize and/or
further develop this technology.
INDUSTRY BACKGROUND
We believe that the market for same-day delivery services is large and
growing. Based on industry studies which we believe to be reliable, the same-day
delivery services market in the United States is estimated to generate revenues
of approximately $15 billion per year, with an annual industry growth rate in
excess of 5%. Although the market is large, it is highly fragmented. There are
relatively low barriers to entry in this market because the capital requirements
to start a local same-day delivery business are relatively small and the
industry is not subject to extensive regulation. There are as many as 6,000
same-day delivery companies in the United States. Most participants are
privately held and operate only on the local level. The focus of same-day
delivery businesses is generally on operations, with little attention given to
marketing and sales. Accordingly, we believe that there is little perceived
service differentiation between competitors and that customer loyalty is
generally short-term. There are no dominant brands in the industry, and the
industry has a relatively low level of technology usage.
We believe that customers are seeking to streamline their processes,
improve their customer-vendor relationships and increase their productivity.
This principal, along with several other trends are benefiting the same-day
delivery market. First, the trend toward outsourcing of non-core functions has
resulted in numerous companies turning to third party providers for a range of
services including same-day delivery and the management of in-house logistics.
Many businesses that outsource their distribution and logistics requirements
prefer to purchase such services from one source capable of servicing multiple
cities, which not only decreases their number of vendors, but also maximizes
efficiency, improves customer service and
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simplifies billing. We believe that we are the only national same-day delivery
service with the geographic reach to meet these evolving needs.
Trends also show that customers are increasingly seeking greater
reliability and convenience from their package delivery service provider, along
with security, operating efficiency and speed. Customers are seeking to reduce
their cycle times and implement "supply chain management" and "just-in-time"
inventory management practices designed to reduce inventory carrying costs,
together with attendant logistics and customized warehousing services. The
growth of these practices has increased the demand for more reliable delivery
services. Technological developments such as e-mail and facsimile transmission
have increased the pace of business and other transactions, thereby increasing
demand for the same-day delivery of a wide array of items, beyond voluminous
documents, to include such products as critical manufacturing parts to medical
devices. Consequently, there has been increased demand for same-day
transportation of items that are not suitable for fax or electronic
transmission, but for which there is an immediate need.
Industry participants have recently taken demand practices beyond basic
point-to-point delivery into more advanced applications. For instance, some
same-day delivery companies, which includes us, provide "critical parts banking"
for a customer's parts and supplies, and offer related just-in-time
transportation of those items to support service or production activities. Parts
are stored at our facilities located primarily in a metropolitan area. A
customer's service technician can order a required repair part, which is
promptly delivered to the service site within a pre-determined time period,
generally under one hour. When such applications are provided, the customer
receives exceptional value, and their purchase decisions are based on capability
more than price.
The nature of the growing e-commerce segment places additional demands
for reliability, communication and speed, including the capability to handle
consumer returns of goods and interface electronically with the e-commerce web
sites. We believe that customers will increasingly rely on more advanced
technology, such as our new computerized customer ordering, tracking, and
management systems, as well as professionalism and appropriate ancillary
services such as logistics, warehousing, and product returns. To serve these
current and emerging customers needs, same-day delivery service companies must
realize economies of scale and provide greater service options, such as our
current and planned critical parts banking, logistics and warehousing services.
Economies of scale will enable the low-cost application of technology, a more
dense or concentrated network of drivers and related operations, and more
intensive marketing to assist in customer acquisition and to reinforce customer
retention.
To meet our customers' needs for reliability, efficiency and speed, we
use a sophisticated fleet-wide communications and dispatch system. We have also
been testing, in our larger on-demand delivery operations, a satellite-driven,
computerized, routing system. This product utilizes GPS technology and mobile
data terminals to continuously track every vehicle and package in real time. The
system increases pick-up choices and route optimization, resulting in
significantly lower mileage, fleet and administrative expenses through improved
driver productivity and route density. In addition, we believe that our existing
and planned communications systems will provide additional benefits to the
customer, including enhancing the accuracy of package delivery estimates,
up-to-the minute status updates on all jobs, and electronic proof of delivery.
Additionally, we plan to use our kiosk technology to augment the same-day
delivery operations through the use of the kiosks as electronic document and
package drop boxes, which can be tied into our electronic network through the
application of the communications technologies we currently use, and
additionally those of which we will seek to develop or acquire. We believe that
utilizing such technologies in the scheduled delivery business would result in a
paradigm shift in the same-day delivery business. Such route optimization
software will allow us to use our on-demand and scheduled resources
interchangeably, allowing more efficient utilization of our fleet and personnel.
We anticipate that increased pressure will be placed on delivery
performance, full service, delivery and the security of a delivery. As a result,
customers will most likely rely on fewer and better providers of package
movement and services. No national brand exists within the same-day delivery
industry, and development will instill greater confidence in our current and
prospective customers by building a perception
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of a higher level of professionalism, superior service performance and a broader
scope of service capabilities, such as brand initiative, may expand the industry
and provide us with a strategic competitive advantage. Through the achievement
of market penetration and economies of scale in the building of a strong brand,
we believe that we will be uniquely suited for both customer growth and customer
retention. We also believe that this strategy will increase the industry
barriers to entry.
REGULATION AND SAFETY
Our operations are subject to various state and local regulations and,
in many instances, require permits and licenses from various state authorities.
In connection with the operation of certain motor vehicles and the handling of
hazardous materials, we are subject to regulation by the United States
Department of Transportation and the corresponding agencies in the states in
which such same-day delivery operations occur. Our relationship with our
employees is subject to regulations that relate to occupational safety, hours of
work, workers' compensation and other matters. To the extent that we hold
licenses to operate two-way radios to communicate with couriers, we are
regulated by the Federal Communications Commission.
SALES AND MARKETING
We have recently initiated a comprehensive marketing program that
emphasizes our competitive position as the leading national provider of same-day
delivery services. We have also realigned our business development team,
restructured our field sales organization and hired 65 new sales professionals
to help us implement our new marketing program.
Sales efforts are conducted at both the local and national levels
through our extensive network of local sales representatives and our business
development group. We employ over 150 sales representatives who make regular
calls on existing and potential customers to identify each customer's delivery
and logistics needs. Sales efforts are coordinated with customer service
representatives who regularly communicate with customers to monitor the quality
of services and to quickly respond to customer concerns.
Our business development department develops and executes marketing
strategies and programs which are supported by corporate communications and
research services. The business development department also provides ongoing
communication of corporate activities and programs to employees, the press and
the general public.
RESEARCH AND DEVELOPMENT
Our ongoing research and development team is focused on increasing the
sophistication, use and deployment of both our present and potential
communications and computer systems. To meet our customers' needs for
reliability, speed and efficiency, we employ a computerized communications and
dispatch tracking system. In addition, we are currently testing, in our larger
on-demand delivery operations. a satellite-driven, computerized routing system.
This product utilizes GPS technology and mobile data terminals to continuously
track every vehicle and package in real time. Our i-courier(TM) Internet
initiative supports our consolidation strategy by providing secure, trackable
electronic document transfer services. We have recently introduced a new service
into selected markets which gives our customers the capability of ordering
delivery services online and tracking their packages over the Internet. If the
initial rollout proves successful, we plan to implement this system in all of
our markets nationwide. We plan to expand the capabilities of our present and
planned communications systems to further integrate our same-day delivery,
supply-chain management and logistics services, and to provide an Internet-based
platform for customized e-commerce delivery solutions.
MANUFACTURING
We believe that we maintain good relationships with all of our suppliers
and have no long-term manufacturing commitments with any such component
manufacturer or supplier. We do not believe that we
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are materially dependent on any of our suppliers or contract manufacturers
because alternative sources for product components and manufacturing services
are readily available.
COMPETITION
In the same-day delivery business, we compete with established local
couriers and messenger services. Competition in this market is intense. In the
Minneapolis/ St. Paul metropolitan area, for example, there are over 30 courier
services with which we compete, but none of the services has more than 10% of
the market.
Nationally, we compete with other large companies. There are several
companies that have same-day delivery operations in multiple markets.
Dynamex/Roadrunner is believed to have over 30 branches, most of which are in
Canada. Pony Express is believed to be doing business in 36 states, primarily in
the Northeast, Southeast and Midwest United States. DMS has adopted a
consolidation strategy and has acquired several courier operations in various
major markets in the United States. These and other companies which may compete
with us have substantial resources and experience in the same-day delivery
business. We believe that our national presence and wide array of service
offerings, our use of sophisticated communications and other technology, and our
branding strategy will differentiate our services and allow us to compete
successfully in any market in which we currently operate or may enter, but there
can be no assurances that other, larger competitors will not enter the market or
develop as a result of the trend toward consolidation in the same-day delivery
market, thereby eroding our competitive position.
We also compete with a number of national and international carriers who
provide document and package shipment solutions to individuals and business
customers. This market, which is dominated by major carriers, such as United
Parcel Service, Federal Express, Airborne, DHL and the United States Postal
Service, are also extremely competitive. These companies engage primarily in the
next-day and second-day ground and air delivery businesses and operate by
imposing strict drop-off deadlines, rigid package dimensions and weight
limitations on customers. By comparison, we operate in the same-day delivery
business, and handle deliveries as diverse as human organs to truckloads of
steel pipe on a same-day basis, either scheduled or on-demand. Accordingly, we
do not believe that we are in direct competition with these major carriers in
same-day delivery services, although there can be no assurances that such
organizations will not determine to enter into direct competition with us. Such
organizations may have more experience, as well as human and financial resources
than we have. For example, United Parcel Service, the world's largest package
distribution company, had revenues of over $22 billion on a volume of over three
billion packages and documents in 1997. In addition, many competitors, including
Federal Express, United Parcel Service, and the United States Postal Service are
larger, possess far greater resources, have more established methods of
operation and have developed loyalty among vendors who provide them with new
technology and automation. We may be at a disadvantage in competing with these
larger and more established companies in trying to establish ourselves as a
leader in the same-day express delivery business.
PATENTS AND INTELLECTUAL PROPERTY
We currently own nine United States patents and one Canadian patent that
together cover technology and methodology which is currently employed in our
kiosk products. We have also filed for patent protection in several foreign
countries, including Japan and the European Patent Community. However, there can
be no assurance that our patents will afford our technology and methodology
significant protection, and we may be vulnerable to competitors, many of whom
are larger and have greater financial and technological resources then we have
and who may attempt to copy or design around our products.
There can be no assurance that any patents now issued or that may be
issued in the future to us will afford us protection against competitors with
similar technology. In addition, no assurance can be given that our patents will
not be infringed, designed-around by others or invalidated. Some foreign
countries provide significantly less patent protection than the United States.
There also can be no assurance that any of our technology will not infringe
patents or proprietary rights of others. Furthermore, there can be no assurance
that challenges will not be instituted against the validity or enforceability of
any patent that we own or, if instituted,
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that such challenges will not be successful. The cost of litigation to uphold
the validity and prevent infringement of a patent can be substantial as can be
the costs of defending against such claims.
We also own other proprietary technology and intellectual property,
including trade dress, trade secrets and software that we intend to protect
vigorously with applicable state and federal intellectual property laws.
Although limited protection for software under the patent laws of the United
States is currently available, there can be no assurance that software will
continue to be the subject of such protection in the United States. Also,
foreign countries offer varying levels of patent protection for software when
compared with the United States.
TRADEMARKS
We currently have applications for United States trademark registrations
for trademarks and service marks, including but not limited to United Shipping &
Technology and a related design, and i-courier(TM). There can be no assurance
that any of these registrations will be granted. These applications for
registration are for the following goods and services, among others: automated
shipping machine for packages and overnight letters which computes charges and
prints labels, receipts and other similar documents, the provision of delivery
services, and the secure transmission of documents over the Internet. We also
own United States trademark registrations for the trademark U-Ship and for
U-Ship and a related design/logo.
There can be no assurance that any of our trademarks or service marks,
if registered, will afford protection against competitors with similar marks
that may have a prior use date. In addition, no assurance can be given that our
trademarks will not be infringed upon by others. There also can be no assurance
that our trademarks will not infringe upon trademarks or proprietary rights of
others. Furthermore, there can be no assurance that challenges will not be
instituted against the validity or enforceability of any trademark claimed by us
and, if instituted, that such challenges will not be successful. The cost of
litigation to uphold the validity and prevent infringement of a trademark can be
substantial, as can be the costs of defending against such claims.
EMPLOYEES
As of December 31, 1999, we had approximately 12,000 employees in our
Delivery Systems subsidiary. As of February 1, 2000, we employed seven employees
on a full-time basis and none on a part-time basis, outside of our same-day
delivery operations. We believe that our relations with our employees are good.
Additionally, we use the services of over 5,100 independent contractor drivers
in our same-day delivery operations.
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RISK FACTORS
BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE OF THE
FOLLOWING RISKS. YOU SHOULD CONSIDER CAREFULLY THESE RISK FACTORS, AND THE OTHER
INFORMATION INCLUDED IN THIS PROSPECTUS, BEFORE YOU DECIDE TO PURCHASE SHARES OF
OUR COMMON STOCK.
WHEN USED IN THIS PROSPECTUS, THE WORDS "BELIEVES," "ANTICIPATES,"
"INTENDS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY "FORWARD-LOOKING
STATEMENTS," AS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
THESE STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE WE PROJECT. YOU ARE CAUTIONED NOT
TO PLACE UNDUE RELIANCE ON OUR FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS
OF THE DATE OF THIS PROSPECTUS.
WE HAVE SUSTAINED LOSSES IN THE PAST AND WE EXPECT TO SUSTAIN LOSSES IN
THE FUTURE. Our net loss for the fiscal year ended June 30, 1999 was $2,894,479.
For the six months ended January 1, 2000, our net loss, which includes the
operations of CEDS was $12,847,000. We expect operating losses to continue as we
pursue our growth strategy. The reports of our independent public accountants
concerning our financial statements for the last three fiscal years contained
explanatory paragraphs relating to our ability to continue as a going concern.
We cannot assure you that we will achieve profitable operations. We face the
risks, expenses and uncertainties frequently encountered by emerging companies
that operate in new and evolving markets. Successfully achieving our growth plan
depends upon, among other things, our ability to:
* successfully finance and complete additional acquisitions;
* effectively integrate acquisitions made and planned;
* develop or license a nationally-known brand for products and
services;
* deliver products and services which are equal or superior to
those of our competitors; and
* develop or buy technology.
We may not be successful in implementing our growth plans.
WE WILL NEED ADDITIONAL CAPITAL TO FINANCE OUR GROWTH AND CAPITAL NEEDS.
We may be unable to obtain the cash required to offset the substantial operating
losses we expect to incur for the foreseeable future. We believe we will
continue to use substantial sums of cash in our operations for an indefinite
period of time. To date, we have primarily relied upon equity investments to
fund our operations and growth. We need to spend cash or obtain financing to:
* provide working capital to fund our growth, operating losses and
expenses;
* complete acquisitions of complimentary businesses or assets;
* complete the development of new hardware and software; and
* respond to unanticipated developments or competitive pressures.
Our working capital has been at a level to enable us to sustain our
current business and implement our consolidation strategy. If we exhaust our
current sources of capital and we cannot obtain additional capital, we will be
required to take various steps in order to continue our operations. Such steps
may include an immediate reduction of operating costs and other expenditures,
including reductions of personnel and suspension of acquisitions involving the
expenditure of cash. If those measures prove insufficient, we may need to
implement other cost reductions. Any of such actions could adversely effect our
ability to grow, increase sales and implement our growth plans. We cannot assure
you, however, that we would be able to reduce our costs to a level which would
be sufficient to achieve profitable operations or generate adequate cash flow.
Ultimately, if we could not obtain additional capital and our cost measures were
not sufficient to allow us to achieve profitable operations and adequate cash
flow, we could be forced to terminate our operations or seek protection from our
creditors.
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WE HAVE SUBSTANTIAL INDEBTEDNESS. As of September 24, 1999, in
connection with our acquisition of CEDS, we entered into a long-term
subordinated promissory note for $6,519,000, a short-term subordinated
promissory note for $7,700,000, which we have paid down to $4,404,000 as of
January 1, 2000, and a convertible subordinated promissory note in the amount of
$3,600,000, each with CEX Holdings, Inc. As of September 24, 1999 we also
entered into a credit agreement with General Electric Capital Corporation
whereby we issued to GE a revolving note in the amount of $55,000,000, of which
$41,029,000 was outstanding as of January 1, 2000. We also issued a note and
warrant purchase agreement with Bayview Capital Partners LP whereby we issued to
Bayview a $5,000,000 senior subordinated note, of which $3,292,000 was
outstanding as of January 1, 2000. Subject to the restrictions in the notes, we
and our subsidiaries may incur additional indebtedness from time to time to
finance capital expenditures and acquisitions and for other general corporate
purposes.
The degree to which we are leveraged could have important consequences
to the holders of our stock, including: (i) we may be more vulnerable to
economic downturns and other adverse developments and more limited in our
ability to withstand competitive pressures than our competitors that are not as
leveraged; (ii) the possible limitation in the future on our ability to obtain
additional financing for working capital, acquisitions, capital expenditures,
debt service requirements or other purposes; (iii) a substantial portion of our
cash flow from operations will be dedicated to the payment of the principal of
and interest on our indebtedness, thereby reducing funds available for
operations and capital indebtedness, (iv) certain of our borrowings under the
notes will be at variable rates of interest which could cause us to be
vulnerable to increases in interest rates; and (v) our leveraged status may
affect our ability to make acquisitions in the future.
Our ability to make scheduled payments of the principal of, or interest
on, or to refinance, our indebtedness, will depend on our future operating
performance and cash flow, which are subject to prevailing economic conditions,
prevailing interest rate levels, and financial, competitive, business and other
factors, many of which are beyond our control. However, based upon our current
and anticipated level of operations, we believe that our cash flow from
operations will be adequate to meet our anticipated cash requirements for
working capital, capital expenditures, interest payments and scheduled principal
payments. There can be no assurance, however, that our business will continue to
generate cash flow at or above current levels. If we are unable to generate
sufficient cash flow from operations in the future to service our indebtedness,
we may be required to refinance all or a portion of our indebtedness, to obtain
additional financing or to dispose of material assets or operations.
WE ARE SUBJECT TO RESTRICTIVE DEBT COVENANTS AND HAVE NOT COMPLIED WITH
CERTAIN DEBT COVENANTS AS OF DECEMBER 31, 1999. The notes and agreements with
our creditors contain a number of significant covenants that, among other
things, restrict our ability to dispose of our assets, incur additional
indebtedness or amend certain debt instruments, pay dividends, create liens on
assets, enter into sale and leaseback transactions, make investments, loans or
advances, make acquisitions, engage in mergers or consolidations, change our
business, or engage in certain transactions with affiliates and otherwise
restrict certain corporate activities. As of December 31, 1999, we were unable
to comply with covenants relating to our credit agreement with General Electric.
We did not implement a new computer system and eliminate a practice of accruing
revenues for outside contractors. We were unable to achieve our target for
earnings before interest, taxes, depreciation and amortization. Our failure to
meet these covenants results in an event of default under our credit agreement.
General Electric has waived the noncompliance with these covenants as of the end
of our quarter ended January 1, 2000, but has not agreed to waive these or other
defaults in the future. We might not comply with these or other covenants in the
current or a future fiscal quarter, and have no assurance that any lender will
agree to waive noncompliance. We intend to amend the terms of our credit
agreement with General Electric, but no assurance can be given that we will be
able to negotiate satisfactory terms.
Our ability to comply with such agreements may be affected by events
beyond our control, including prevailing economic, financial and industry
conditions. The breach of any such covenants or restrictions could result in a
default under the notes, which would permit the senior lenders, or the holders
of the notes, or both, as the case may be, to declare all amounts borrowed
thereunder to be due and payable, together with accrued and unpaid interest. If
we are unable to repay our indebtedness, such lenders could proceed against the
collateral securing such indebtedness.
THE RAPID TECHNOLOGICAL CHANGES IN INTERNET AND E-COMMERCE WILL REQUIRE
SUBSTANTIAL EXPENDITURES BY US. The Internet market in which we compete is
characterized by rapidly changing technology, evolving industry standards,
frequent new service and product announcements, introductions and enhancements,
compromises in security and changing customer demands. These market
characteristics are exacerbated by the emerging nature of the Internet and the
apparent need of companies from a multitude of industries to offer
Internet-based products, services and technologies. Accordingly, our future
success will
17
<PAGE>
depend on our ability to adapt to rapidly changing technologies, to adapt our
services to evolving industry standards and to continually improve the
performance, features and reliability of our technology and services in response
to competitive service and product offerings and evolving demands of the
marketplace. In addition, the widespread adoption of new Internet, networking or
telecommunications technologies or other technological changes will require
substantial expenditures by us, which could have a material adverse effect on
our business, results of operations and financial condition.
We are in the process of expanding our operations and services by
developing and promoting new and complementary technologies, services or
products, and expanding the current breadth and depth of our services and
products. There can be no assurance that we will be able to expand our
operations in a cost-effective or timely manner or that any such efforts will
maintain or increase our current overall market acceptance. Furthermore, any new
products or services that we launch that are not favorably received by our
customers or consumers could damage our reputation. Expansion of our operations
in this manner will also require significant additional expenses and
development, operations and other resources. The lack of market acceptance of
such products or services or our inability to generate satisfactory revenues
from such expanded services to offset their cost could have a material adverse
effect on our business, results of operations and financial condition.
WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO EFFECTIVELY INTEGRATE AND
MANAGE ACQUIRED BUSINESSES. Our failure to successfully integrate acquisitions
would negatively affect our business and the execution of our business strategy.
We have acquired three businesses in the transportation and same-day delivery
industries and intend to acquire additional businesses. One of our acquisitions,
CEDS, is a very large company with operations throughout the country and world.
Integrating acquired businesses, especially CEDS, will involve unforeseen
difficulties and may require significant financial and other resources,
including management time. Our success will depend, in part, on the extent to
which we are able to integrate acquired businesses in terms of centralizing
record keeping, operating communications, administrative functions, such as
billing, collections and financial controls, and eliminating duplication of
other functions of acquired businesses with a view to maintaining a cohesive,
efficient enterprise. We could encounter delays, complications and unanticipated
expenses in implementing, integrating and operating such systems, any of which
could have a material adverse effect on our business, financial condition and
results of operations. In addition, we may not be able to successfully manage or
achieve anticipated cost savings from the combination of the companies we
acquire. If we are unable to successfully integrate acquisitions, we can expect
that this will have a material adverse effect on our business, financial
condition and results of operations. Further, our failure to integrate
operations could adversely effect our ability to attract additional acquisition
candidates.
WE FACE A NUMBER OF RISKS IN CONNECTION WITH OUR ACQUISITION STRATEGY.
We cannot assure you that we will successfully consummate any additional
acquisitions. One of our primary growth strategies is to increase revenues,
expand our markets served and achieve profitability through the acquisition of
additional same-day delivery and related businesses. Several large, national
publicly traded companies have implemented similar consolidation strategies
through the acquisition of independent courier companies. These companies may
have greater resources and more experience in acquiring, integrating and
managing acquisitions in the same-day delivery industry. We cannot assure you
that we have the ability to effectively compete for acquisition candidates on
terms we deem acceptable, or that we will be able to successfully integrate
acquired businesses without substantial costs, delays or other operational or
financial problems. We cannot assure you that companies acquired in the future
will remain or become profitable and be beneficial to the successful
implementation of our growth strategy, or that acquisitions will produce returns
that justify the investments to acquire them, or that we will be successful in
achieving meaningful economies of scale as a result of such acquisitions. In
addition, acquisitions involve a number of special risks including:
* possible adverse effect upon our operating results if
integration is not properly achieved;
* diversion of our management's attention;
* dependence upon the retention, hiring and training of key
personnel;
* unanticipated legal problems or liabilities;
18
<PAGE>
* the ability to engage sufficient numbers of independent
contractor drivers and to maintain their independent contractor
status for legal purposes; and
* maintaining customer satisfaction.
To the extent we are unable to acquire additional same-day delivery or
transportation firms and successfully integrate them, our ability to expand our
operations and increase our revenues and earnings to desired goals would be
significantly reduced.
WE FACE SIGNIFICANT RISKS OF TAX AUTHORITIES CLASSIFYING INDEPENDENT
CONTRACTORS AS EMPLOYEES. The IRS may view our independent contractors as
employees, thereby increasing our labor costs. A significant number of our
delivery and pickup drivers are and will be independent contractors (meaning
that they are not our employees). From time to time, federal and state taxing
authorities have sought to assert that drivers in the same-day delivery and
transportation industries are employees, rather than independent contractors. We
do not pay or withhold federal or state employment taxes with respect to
independent contractors. Although we believe that the independent contractors
which we utilize are not our employees under existing interpretations of federal
and state laws, we cannot guarantee you that federal and state authorities will
not challenge our position or that other laws or regulations, including tax laws
and laws relating to employment and worker compensation, will not change. If the
IRS should successfully assert that our independent contractors are in fact our
employees, we would be required to pay withholding taxes and extend additional
employee benefits to such persons. In addition, we could become responsible for
certain past and future employment taxes and, if we are required to pay
withholding taxes with respect to amounts previously paid to such persons, we
could be required to pay penalties or be subject to other liabilities as a
result of incorrectly classifying such employees. If our drivers are deemed to
be employees rather than independent contractors, we could be required to
increase their compensation since they may no longer be receiving
commission-based compensation. Any of the foregoing possibilities could increase
our operating costs and have a material adverse effect on our business,
financial condition and results of operations.
WE COULD BE SUBJECT TO CLAIMS FOR PERSONAL INJURY, DEATH AND PROPERTY
DAMAGE OR NON-DELIVERY OR DELAYED DELIVERY OF PACKAGES. We could be exposed to
claims for personal injury, death and property damage as a result of accidents
involving our employees and independent contractors. We could also be subject to
claims resulting from non-delivery or delayed delivery of packages, many of
which could be significant because of unique or time sensitive nature
deliveries. If we have problems with our Internet site, we could be exposed to
claims caused by the non-delivery or misdelivery of packages or documents and
claims due to the mishandling of confidential information. We intend to carry
liability insurance and require that our independent contractors maintain the
minimum amount of liability insurance required by state law. We also intend to
limit by contract our liability with respect to our package delivery operations.
We cannot assure you that any claims made against us will not exceed the amount
of insurance coverage, or that we will be able to contractually limit our
liability for package deliveries. Successful claims could have an adverse effect
upon our business, financial condition and results of our operations.
WE FACE MANY RISKS UNIQUE TO THE PACKAGE SHIPPING AND SAME-DAY DELIVERY
INDUSTRIES. Numerous events and factors that affect the delivery services
industry could also affect our business, revenues and earnings, including:
* weather conditions;
* economic factors affecting customers, fuel prices and shortages
of, or disputes with, labor;
* downturns in the level of general economic activity or
employment in the United States, which could affect the demand
for package and priority document delivery; and
* the development and increased usage of communication media which
serve as alternatives to point-to-point delivery services,
including facsimile machines and e-mail.
In addition, our package and priority document delivery business faces
increased competition from major companies such as United Parcel Service,
Federal Express, DHL and other large, established carriers which dominate the
overnight courier industry and which could enter the same-day delivery industry
in direct competition with us.
19
<PAGE>
OUR BUSINESS DEPENDS UPON A NUMBER OF DIFFERENT INFORMATION AND
TELECOMMUNICATION TECHNOLOGIES INCLUDING THE INTERNET. We require these
technologies to maintain a high volume of inbound and outbound calls and process
transactions accurately and on a timely basis. These technologies serve as an
essential component in our plans to integrate our kiosks with a consolidation of
the same-day delivery business. Because we believe that our technology
distinguishes us from our competitors, any interruption of our ability to
receive and send calls or to process transactions on an accurate and timely
basis could result in the loss of customers and diminish our reputation.
WE DEPEND UPON OUR ABILITY TO ENGAGE AND RETAIN, AS EMPLOYEES OR THROUGH
INDEPENDENT CONTRACTOR OR OTHER ARRANGEMENTS, QUALIFIED DRIVER AND DELIVERY
PERSONNEL WHO POSSESS THE SKILLS AND EXPERIENCE NECESSARY TO MEET THE NEEDS OF
OUR OPERATIONS. We compete in markets in which unemployment is relatively low
and competition for couriers and other employees is intense. We must continually
evaluate, train and upgrade our pool of available drivers to keep pace with the
increasing demands for delivery services. We cannot assure you that qualified
driver employees or contractors will continue to be available in sufficient
numbers and on terms acceptable to us. Our inability to attract and retain
qualified driver personnel would have a material adverse impact on our business,
financial condition and results of operations.
WE MUST COMPLY WITH VARIOUS GOVERNMENTAL REGULATIONS. Various local,
state and federal regulations require us to obtain and maintain permits and
licenses in connection with our operations. Additionally, some of our operations
may involve the delivery of items subject to more stringent regulation,
including hazardous materials, which would require us to obtain additional
permits. Our failure to maintain required permits and licenses, or to comply
with applicable regulations, could result in substantial fines or revocation of
permits and licenses we may have to do business, any of which could have a
material adverse effect on our business, financial condition and results of
operations. Further, delays in obtaining permits or licenses, or the failure to
obtain them, could delay or impede possible acquisitions.
WE MAY BE UNABLE TO DEVELOP NEW SERVICES AND PRODUCTS. We believe our
long-term success depends in part on our ability to enhance our existing
services and products, particularly those related to our same-day delivery
business, develop new services and address the increasingly sophisticated needs
of our customers. If we fail to develop and introduce enhancement to our
services and products on a timely and cost-effective basis in response to
customer needs and changing technologies, our business, financial condition and
results of operations could be materially and adversely affected.
WE FACE INTENSE COMPETITION IN THE MARKET FOR SAME-DAY DELIVERY AND
OTHER DELIVERY SERVICES. No substantial barriers to entry exist in these markets
and we expect that competition will continue to intensify. Competitive pressures
could cause material adverse effects on our business and the trading price of
our stock. Companies which have more experience in the industry and greater
financial and technical resources than we do dominate the commercial (non-United
States Postal Service) package shipping market.
The market for point-to-point delivery services is highly competitive,
with a number of companies having multi-state and multi-city operations and more
experience in the industry than we do. A number of these competitors have more
experience and name recognition than we do. In addition, several large,
national, publicly traded companies have begun to consolidate the courier
industry through the acquisition of independent point-to-point courier
companies. We compete with these competitors not only in providing services, but
also for acquisition candidates. Most of these other firms have longer operating
histories and greater financial resources than we do. Any of the foregoing risks
may have a material adverse effect on our business, financial condition and
results of operations.
WE ARE A PARTY TO A SIGNIFICANT CLASS ACTION LAWSUIT. On May 19, 1998,
William F. Addvnesky and other similarly situated individuals filed a complaint
in the Superior Court of the State of California for the County of San Diego
against CEDS and one of its subsidiaries. This involves a suit brought on behalf
of drivers (plaintiffs) who provided services with their own vehicles and who
were paid on a commission basis.
20
<PAGE>
The plaintiffs allege that they were paid for their services half in the form of
wages and half in the form of expense reimbursement. Based on the amounts that
the plaintiffs claim were paid as wages, the plaintiffs seek damages for alleged
underpayment based on California law governing minimum wages and overtime pay.
The plaintiffs also allege that the amounts paid in reimbursement were
insufficient to cover their expenses. Plaintiffs seek back pay and reimbursement
for any underpayment of wages that may have been paid at a rate less than the
minimum wage for all hours worked and overtime wages for any overtime hours
worked from May 19, 1995 through trial. Plaintiffs also request that the Court
order the disgorgement of any profits that were realized from any alleged
unlawful conduct. Plaintiffs further seek punitive damages, waiting time
penalties, interest, costs and attorneys' fees. The case has been certified as a
class. Plaintiffs have indicated they may seek damages in excess of $20 million.
We have denied the plaintiffs' allegations and we are vigorously defending this
lawsuit. We have filed a declaratory judgment case against our insurance carrier
who has denied coverage.
During February 2000, the parties met to continue a mediation and
reached a tentative agreement to settle all claims. An unfavorable outcome of
this case could have a material adverse effect on our business and financial
condition and results of operations.
WE DEPEND ON OUR KEY PERSONNEL. We depend upon the continued services of
our senior management for our success. The loss of a member of our senior
management could have a negative impact on our business, financial condition and
results of operations. We cannot assure you that we will be able to retain our
senior management or our other key personnel.
WE MAY NOT BE SUCCESSFUL IN PROTECTING OUR PROPRIETARY RIGHTS OR
AVOIDING CLAIMS THAT WE INFRINGED THE PROPRIETARY RIGHTS OF OTHERS. We rely upon
our patents relating to the hardware and software in connection with our
automated shipping system. We cannot be certain that we have taken adequate
steps to prevent misappropriation of our technology or that our competitors will
not independently develop technologies substantially equivalent or superior to
our technologies. Although we do not believe that our technology infringes the
proprietary rights of any third parties, third parties could assert claims
against us in the future and such claims may be successful. We could incur
substantial costs and diversion of management resources in the defense of any
claims relating to proprietary rights, which could materially hinder our ability
to integrate our kiosk technology into our same-day delivery operations or
license such technology to third parties.
MANAGEMENT AND CERTAIN SHAREHOLDERS CAN EXERCISE SIGNIFICANT INFLUENCE
OVER US. As of June 30, 1999, our executive officers, directors and holders of
five percent or more of our common stock and their affiliates owned an aggregate
of 13.2% of our outstanding shares. As a result, such persons acting together
have the ability to control and influence the outcome of any vote upon matters
submitted to shareholders for approval, including the election and removal of
directors and any merger, consolidation, or sale of substantially all of our
assets, and to control our management and affairs.
WE HAVE A SUBSTANTIAL INVESTMENT IN EQUIPMENT AND TECHNOLOGY. As a part
of our revised business strategy, we have invested in equipment and technology,
and we will continue to make substantial investments in equipment and
technology, in order to successfully implement our same-day delivery
consolidation strategy and to successfully maintain our presence in the same-day
delivery industry. We believe that this investment will give us an advantage
over our competitors. We continue to make investments in our shipping and
interactive kiosk technology to be used in other markets, such as the automation
of shipping hubs of major carriers. We cannot assure you that this strategy will
be successful or that we will be able to recover our investment in such
equipment and technology.
WE COULD STILL FACE PROBLEMS RELATED TO THE YEAR 2000 ISSUE. To date,
our customers have not reported any problems with our software products as a
result of the commencement of the year 2000 and we have not experienced any
impairment in our internal operations with the year 2000 issue. Nonetheless,
computer experts have warned that there may still be residual consequences
stemming from the change in
21
<PAGE>
centuries and, if these consequences become widespread, they could result in
claims against us, a decrease in sales of our products and services, increased
operating expenses and other business interruptions.
WE HAVE RECENTLY EXPANDED INTO INTERNATIONAL OPERATIONS. Through our
acquisition of CEDS, we are now doing business in such countries as Canada,
Australia, the United Kingdom, Germany, France, New Zealand, Italy, Ireland and
Switzerland. We anticipate that such international expansion will continue in
the future. Over time, we plan to implement appropriate aspects of our business
model in our international operations. Expansion into international markets may
involve additional risks relating to implementing key aspects of our business
model, as well as risks relating to fluctuations in currency exchange rates, new
and different legal, tax, accounting and regulatory requirements, difficulties
in staffing and managing foreign, operations, operating difficulties and other
factors. In addition, our results may be negatively affected by competitive or
operating difficulties arising out of the evolving integration of Europe into a
single economic unit.
WE CONTINUE TO DEVELOP OUR COMPUTER SOFTWARE AND HAVE IMPLEMENTED
VARIOUS NEW SYSTEMS. We will integrate the computer systems which CEDS currently
uses into our systems. CEDS' software and systems are different and more
extensive than our current software and systems. We believe that we will be
successful in this integration, but such integration may cause system failures
or errors, business interruptions and the inability to engage in normal business
practices for an unknown length of time. The failure or delay in this
integration could have a material adverse effect on our business, financial
condition and results of operations.
WE FACE VARIOUS RISKS ASSOCIATED WITH DEVELOPING OUR INTERNET
TECHNOLOGIES. We are currently in various stages of developing proprietary
technologies to be utilized by customers in Internet-related activities and
e-commerce business. Developing and rolling out these technologies will take
time and require capital for research and development, testing, marketing and
operations to launch. There can be no assurances that our Internet technology
will be established successfully, generate revenues and/or be profitable.
OUR E-COMMERCE BUSINESS IS EMERGING AND DEPENDENT UPON CONSUMER TRENDS.
We intend to derive a portion of our revenues from relationships with customers
engaged in Internet activities and e-commerce and fees from strategic alliances.
As a result, this source of revenue will depend to a large extent upon continued
demand for the types of goods and services that our customers and partners offer
via the Internet. A decline in the popularity of, or demand for, certain
products or other services sold through the customer's Internet site could
reduce the overall volume of transactions, resulting in reduced revenues to us.
In addition, certain consumer "fads" may temporarily inflate the volume of
certain types of products and services offered through the Internet sites of our
customer base, placing a significant strain upon the capacity of our
technologies or the customers' Internet sites. Any decline in the demand for the
goods and services offered through the Internet sites of our customers as a
result of changes in consumer trends could have a material adverse effect on our
business, results of operations and financial condition.
WE WILL BE DEPENDENT ON THE INTERNET INFRASTRUCTURE FOR E-COMMERCE. The
future success of our business will depend upon the development and maintenance
of the Internet infrastructure, as a reliable network backbone with the
necessary speed, data capacity and security, or timely development of
complementary products such as high speed modems, for providing reliable
Internet access and services. Because global commerce and the online exchange of
information is new and evolving, it is difficult to predict with any assurance
whether the Internet will prove to be a viable commercial marketplace in the
long term. The Internet has experienced, and is expected to continue to
experience, significant growth in the number of users and amount of traffic. To
the extent that the Internet continues to experience increased numbers of users,
frequency of use or increased bandwidth requirements of users, there can be no
assurance that the Internet infrastructure will continue to be able to support
the demands placed on it by this continued growth or that the performance or
reliability of the Internet will not be adversely affected. Furthermore,
Internet service providers have experienced a variety of outages and other
delays as a result of damage to portions of its infrastructure, and could face
such outages and delays in the future. These outages and delays could adversely
affect the level of Internet usage and also the level of traffic and the
processing of orders. In addition, the
22
<PAGE>
Internet could lose its viability due to delays in the development or adoption
of new standards and protocols to handle increased levels of activity. In
addition, companies that control access to transactions through network access
or Internet browsers could promote our competitors or charge us substantial fees
for inclusion. Any and all of these events could have a material adverse effect
on our business, results of operations and financial condition.
WE MAY BE SUBJECT TO GOVERNMENT REGULATION OF INTERNET ACTIVITIES IN THE
FUTURE. We are not currently subject to direct local, state or federal
regulation, or laws or regulations applicable to access to or commerce on the
Internet, other than regulations applicable to businesses generally. However,
due to the increasing popularity and use of the Internet and other online
services, it is possible that a number of laws and regulations may be adopted
with respect to the Internet or other online services covering issues such as
user privacy, freedom of expression, pricing, content and quality of products
and services, taxation, advertising, intellectual property rights and
information security. In addition, applicability to the Internet of existing
laws governing issues such as property ownership, copyrights and other
intellectual property issues, taxation, libel, obscenity and personal privacy is
uncertain. The vast majority of such laws were adopted prior to the advent of
the Internet and related technologies and, as a result, do not contemplate or
address the unique issues of the Internet and related technologies.
Several states have also proposed legislation that would limit the uses
of personal user information gathered online or require online services to
establish privacy policies. The Federal Trade Commission has also initiated
action against at least one online service regarding the manner in which
personal information is collected from users and provided to third parties.
Changes to existing laws or the passage of new laws intended to address these
issues, including some recently proposed changes, could create uncertainty in
the marketplace that could reduce demand for our products and services or
increase the cost of doing business. Any such new legislation or regulation, or
the application of laws or regulations from jurisdictions whose laws do not
currently apply to our business, could have a material adverse effect on our
business, results of operations and financial condition.
23
<PAGE>
SELLING SHAREHOLDERS
The following table presents information regarding the selling
shareholders. The shares listed below represent the shares that each selling
shareholder owned on February 1, 2000, and the shares which each selling
shareholder may own upon the exercise of options or warrants.
The securities "beneficially owned" by a person are determined in
accordance with the SEC's definition of "beneficial ownership" and, accordingly,
may include securities owned by or for, among others, the spouse, children or
other relatives of such person, as well as other securities over which the
person has or shares voting or investment power or securities which the person
has the right to acquire within 60 days of February 1, 2000.
In the following table, percentage of beneficial ownership is based on
15,768,069 outstanding shares of common stock. Shares issuable pursuant to the
exercise of warrants are deemed outstanding for computing the percentage of the
person holding such securities but are not deemed outstanding for computing the
percentage of any other person. Our registration of the shares does not
necessarily mean that the selling shareholders will sell all or any of the
shares covered by this prospectus.
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING
SHARES SHARES SHARES
BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED(1) SHARES OWNED(1) UPON OWNED UPON
PRIOR TO OFFERED COMPLETION OF COMPLETION OF
SELLING SHAREHOLDER OFFERING HEREBY THE OFFERING THE OFFERING
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bayview Capital Partners LP 1,366,220(2) 1,366,220 -- --
The Raptor Global Portfolio Ltd. 981,134(3) 981,134 -- --
BY Partners, L.P. 557,260(4) 557,260 -- --
Shawn Weinand 507,250(5) 120,000 387,250 1.7
J. Iver & Company 353,000(6) 353,000 -- --
Bruce H. Senske 278,612(7) 15,000 263,612 1.2
Robert F. and Barbara C. 275,000 125,000 150,000 *
McCullough Trustees for
McCullough Living Trust
Dated 11/30/92
Brahman Institutional Partners, 262,240(8) 262,240 -- --
L.P.
John E. Feltl 222,152(9) 222,152 -- --
B. Bros. Investment Company 194,000(10) 83,000 111,000 *
Richard H. Hochman 188,000 60,000 128,000 *
Pyramid Partners, L.P. 185,000(11) 185,000 -- --
Isaac Eugene Phelps 175,000 50,000 125,000 *
Humberto Martinez-Suarez 168,998(12) 41,666 127,332 *
Schottenfeld Associates, L.P. 166,666 166,666 -- --
Raymond Freeman 156,433(13) 156,433 -- --
C.S.L. Associates, L.P. 125,000 125,000 -- --
Robert F. McCullough, Jr. 124,998 41,666 83,332 *
Mark W. Sheffert 100,000(14) 100,000 -- --
David R. Chamberlin, TTEE 93,998 41,666 32,332 *
David R. Chamberlin Revocable
Trust
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING
SHARES SHARES SHARES
BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED(1) SHARES OWNED(1) UPON OWNED UPON
PRIOR TO OFFERED COMPLETION OF COMPLETION OF
SELLING SHAREHOLDER OFFERING HEREBY THE OFFERING THE OFFERING
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Levon Perkins and Darlene L. 87,500 87,500 -- --
Bass-Perkins, JTWROS
Brahman Partners II, L.P. 87,340(15) 87,340 -- --
Eldon F. Buschbom 83,334 83,334 -- --
Michael James Cunningham 77,000 62,500 14,500 *
James D. Cochran 75,001 75,001 -- --
Brewster Diversified Services, Inc. 70,000(16) 70,000 -- --
Brahman C.P.F. Partners, L.P. 67,980(17) 67,980 -- --
Oscar Investment Fund, LP 64,966(18) 64,966 -- --
Ronald Lee Randall 62,500(19) 62,500 -- --
Donald L. Johnson 57,125(20) 57,125 -- --
Howard L. Hatfield, Jr. 55,000(21) 55,000 -- --
Andrew K. Boszhardt, Jr. 53,334(22) 53,334 -- --
A. Alexander Arnold, III, Trustee 50,348 50,348 -- --
FBO David Berol Trust
A. Alexander Arnold III, Trustee 50,348 50,348 -- --
FBO John A. Berol Trust
John C. Lawrie 50,000 50,000 -- --
and Karen T. Lawrie JTWROS
Leon W. Orr 45,250 3,250 42,000 *
Jeanne E. Schnack and 41,667 41,667 -- --
Thomas W. Schnack
Radwan Ibrahim 41,667 41,667 -- --
Richard Feldman 41,666 41,666 -- --
Hair Biz, Inc. 37,500 37,500 -- --
Coach LLC 30,000 10,000 20,000 *
A. Alexander Arnold, III 25,174 25,174 -- --
A. Alexander Arnold, III, Trustee, 25,174 25,174 -- --
Berol Family Trust FBO Margaret
Beattie
Michael E. Mahoney and Dana S. 25,000 25,000 -- --
Mahoney JTWROS
Wade W. Wilson 23,515(23) 16,015 7,500 *
Jennifer R. Skinner 23,515(23) 16,015 7,500 *
JoAnn J. Pihl 16,667(24) 16,667 -- --
David Arthur Lantz 15,100(25) 8,800 6,300 *
Ben Reuben and Sophie Reuben 15,000(26) 15,000 -- *
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING
SHARES SHARES SHARES
BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED(1) SHARES OWNED(1) UPON OWNED UPON
PRIOR TO OFFERED COMPLETION OF COMPLETION OF
SELLING SHAREHOLDER OFFERING HEREBY THE OFFERING THE OFFERING
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Anthony Scaramucci 13,334(27) 13,334 -- --
Cline Wood Agency, Inc. 13,200(28) 13,200 -- --
D. Michael Wood 13,200(28) 13,200 -- --
Richard W. Perkins 12,000(29) 12,000 -- --
Patrick M. Sidders 11,208(30) 9,625 1,583 *
Brahman Partners II Offshore, Ltd. 10,254(31) 10,254 -- --
Thomas M. Grossman 10,000 10,000 -- --
Aleem Siddiqui 9,464(32) 5,000 4,464 *
Dale Stoltenow 9,000(33) 750 8,250 *
William A. Goldberg 7,500(34) 7,500 -- --
Revocable Trust
Myra Halpern 7,000(35) 2,000 5,000 *
Strickland Family Ltd. Partnership 7,000(36) 7,000 -- --
Thomas W. Abbas and Rebecca A. 5,203(37) 5,203 -- --
Abbas, JTWROS
David Aronsohn 5,000(32) 5,000 -- --
Joel David Chesin 5,000(32) 5,000 -- --
Paul Marshall Dean 5,000(32) 5,000 -- --
Dennis Doyle 5,000(32) 5,000 -- --
Joseph Farmer and Carol Farmer, 5,000(32) 5,000 -- --
Trustees for Joseph and Carol
Farmer Trust
Stuart and Carol Holmer 5,000 5,000 -- --
Robert D. and Karen L. Johnson 5,000 5,000 -- --
Mark Kaiser 5,000(32) 5,000 -- --
Lawrence and Mary Mans 5,000(32) 5,000 -- --
Robert W. Mehlhouse 5,000(32) 5,000 -- --
Phil C. Murray 5,000(32) 5,000 -- --
Realty Center, Inc. p/s/t FBO: 5,000(32) 5,000 -- --
Thomas A. Ries, Thomas A. Ries
and James A. Lamson, Trustees
Jeffrey A. Robinson 5,000(32) 5,000 -- --
Ron Shimek 5,000(32) 5,000 -- --
Dan and Catherine Thums 5,000(32) 5,000 -- --
Marion A. Trybula 5,000(32) 5,000 -- --
John A. Tschida 5,000(32) 5,000 -- --
Peggy Cooper Trust 4,732 2,500 2,232 *
Michael Noe 4,136(38) 136 4,000 *
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING
SHARES SHARES SHARES
BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED(1) SHARES OWNED(1) UPON OWNED UPON
PRIOR TO OFFERED COMPLETION OF COMPLETION OF
SELLING SHAREHOLDER OFFERING HEREBY THE OFFERING THE OFFERING
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Altar Rock Fund L.P. 3,940(39) 3,940 -- --
Cary Musech 3,715(40) 3,715 -- --
Kristine R. Anders 3,008(41) 1,008 2,000 *
First Trust National Association 2,500(42) 2,500 -- *
FBO Kurt J. King
First Trust National Association 2,500 2,500 -- --
FBO Philip McLaughlin IRA
Theresa Weler Johnson 2,400(43) 400 2,000 *
Bonnie J. Doepel 2,384(44) 384 2,000 *
Peter Slocum 2,230(45) 2,230 -- --
Robert E. and Katherine A. 1,487(46) 1,487 -- --
Tunheim, JTWRS
Matthew S. Carpenter 1,444 1,444 -- --
Scott M. Carpenter 1,444 1,444 -- --
Ann C. Kay 1,444 1,444 -- --
Judd Y. Carpenter 1,443 1,443 -- --
Allen J. Zenk 590 590 -- --
Vicki Lynn Anderson 438(47) 438 -- --
Kenneth W. Richards 69 69 -- --
</TABLE>
- -----------------------
* INDICATES AN AMOUNT LESS THAN 1%.
(1) The securities "beneficially owned" by a person are determined in
accordance with the definition of "beneficial ownership" set forth in
the regulations of the Commission and accordingly, may include the
securities owned by or for, among others, the spouse, children or
certain other relatives of such person, as well as other securities over
which the person has or shares voting or investment power or securities
which the person has the right to acquire within 60 days.
(2) Includes 1,366,220 shares of common stock purchasable pursuant to the
exercise of warrants.
(3) Includes 89,194 shares of common stock purchasable pursuant to the
exercise of warrants.
(4) Includes 50,660 shares of common stock purchasable pursuant to the
exercise of warrants.
(5) Includes 20,000 shares of common stock purchasable pursuant to the
exercise of warrants.
(6) Indicates the estimated maximum number of shares of common stock
reserved for issuance upon the exercise of a convertible promissory note
we assumed in connection with our acquisition of CEDS. Includes 15,000
shares of common stock purchasable pursuant to the exercise of warrants.
(7) Includes 151,406 shares of common stock owned by Mr. Senske, 91,750
shares of common stock purchasable pursuant to the exercise of warrants
and 35,456 shares of common stock owned by Mr. Senske's wife.
(8) Includes 23,840 shares of common stock purchasable pursuant to the
exercise of warrants.
(9) Includes 222,152 shares of common stock purchasable pursuant to the
exercise of warrants.
(10) Includes 10,500 shares of common stock purchasable pursuant to the
exercise of warrants.
(11) Includes 35,000 shares of common stock purchasable pursuant to the
exercise of warrants.
(12) Includes 124,998 shares of common stock owned by Mr. Martinez and 44,000
shares of common stock owned by Mr. Martinez's wife.
(13) Includes 131,433 shares of common stock purchasable pursuant to the
exercise of warrants.
27
<PAGE>
(14) Includes 100,000 shares of common stock purchasable pursuant to the
exercise of warrants.
(15) Includes 7,940 shares of common stock purchasable pursuant to the
exercise of warrants.
(16) Includes 70,000 shares of common stock purchasable pursuant to the
exercise of warrants.
(17) Includes 6,180 shares of common stock purchasable pursuant to the
exercise of warrants.
(18) Includes 30,000 shares of common stock purchasable pursuant to the
exercise of warrants.
(19) Includes 62,500 shares of common stock purchasable pursuant to the
exercise of warrants.
(20) Includes 57,125 shares of common stock purchasable pursuant to the
exercise of warrants.
(21) Includes 5,000 shares of common stock purchasable pursuant to the
exercise of warrants.
(22) Includes 13,334 shares of common stock purchasable pursuant to the
exercise of warrants.
(23) Includes 7,143 shares of common stock purchasable pursuant to the
exercise of warrants.
(24) Includes 16,667 shares of common stock purchasable pursuant to the
exercise of warrants.
(25) Includes 6,300 shares of common stock purchasable pursuant to the
exercise of warrants.
(26) Includes 15,000 shares of common stock purchasable pursuant to the
exercise of warrants.
(27) Includes 3,334 shares of common stock purchasable pursuant to the
exercise of warrants.
(28) Includes 1,200 shares of common stock purchasable pursuant to the
exercise of warrants.
(29) Includes 12,000 shares of common stock purchasable pursuant to the
exercise of warrants.
(30) Includes 9,625 shares of common stock purchasable pursuant to the
exercise of warrants.
(31) Includes 932 shares of common stock purchasable pursuant to the exercise
of warrants.
(32) Includes 5,000 shares of common stock purchasable pursuant to the
exercise of warrants.
(33) Includes 7,250 shares of common stock purchasable pursuant to the
exercise of options.
(34) Includes 7,500 shares of common stock purchasable pursuant to the
exercise of warrants.
(35) Includes 2,000 shares of common stock purchasable pursuant to the
exercise of warrants.
(36) Includes 7,000 shares of common stock purchasable pursuant to the
exercise of warrants.
(37) Includes 473 shares of common stock purchasable pursuant to the exercise
of warrants.
(38) Includes 4,000 shares of common stock purchasable pursuant to the
exercise of options.
(39) Includes 358 shares of common stock purchasable pursuant to the exercise
of warrants.
(40) Includes 338 shares of common stock purchasable pursuant to the exercise
of warrants.
(41) Includes 2,000 shares of common stock purchasable pursuant to the
exercise of options.
(42) Includes 2,500 shares of common stock purchasable pursuant to the
exercise of warrants.
(43) Includes 2,000 shares of common stock purchasable pursuant to the
exercise of warrants.
(44) Includes 384 shares of common stock purchasable pursuant to the exercise
of options.
(45) Includes 202 shares of common stock purchasable pursuant to the exercise
of warrants.
(46) Includes 135 shares of common stock purchasable pursuant to the exercise
of warrants.
(47) Includes 438 shares of common stock purchasable pursuant to the exercise
of warrants.
We have 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." This prospectus forms a
part of the registration statement.
USE OF PROCEEDS
The shares offered by this prospectus will be sold by the selling
shareholders. We will not receive any of the proceeds from the sale of the
shares by the selling shareholders.
28
<PAGE>
PLAN OF DISTRIBUTION
The selling shareholders may offer their shares at various times in one
or more of the following transactions:
* on the Nasdaq SmallCap Market;
* in transactions other than on such market;
* through the writing of options on Shares or short sales;
* in privately negotiated transactions; or
* in a combination of any of the above transactions.
The selling shareholders may sell their shares at market prices
prevailing at the time of sale, at prices related to such prices, or at
negotiated prices. We are indemnifying the selling shareholders against
liabilities under the Securities Act.
The selling shareholders may use broker-dealers to sell their shares. If
this happens, broker-dealers will either receive discounts, commissions or
concessions from the selling shareholders, or they will receive commissions from
purchasers of shares for whom they acted as brokers or agents.
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(a)(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.
If necessary, to comply with applicable state securities laws, the
shares will be sold only through registered or licensed brokers or dealers in
such jurisdictions. In addition, the shares will not be sold until they have
been registered or qualified for sale in the applicable state or an exemption
from the registration or qualification requirement is available.
LEGAL MATTERS
For the purposes of this offering, Kenneth D. Zigrino, our Vice
President, General Counsel and Secretary is giving his opinion on the validity
of the shares and certain legal matters. Mr. Zigrino has options to purchase
shares of our common stock.
EXPERTS
The financial statements incorporated in this prospectus by reference
from our Annual Report on Form 10-KSB for the year ended June 30, 1999 have been
audited by Lurie, Besikof, Lapidus & Co., LLP, independent auditors, as stated
in their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You can inspect and copy the Registration
Statement as well as reports, proxy statements and other information we have
filed with the SEC at the public reference room maintained by the SEC in
Washington, D.C., New York, New York and Chicago, Illinois. You can call the SEC
at 1-800-732-0330 for further information about the public reference rooms. We
are also required to file electronic versions of these documents with the SEC,
which may be accessed through the SEC's Web Site at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to the documents we file with the SEC. The information
incorporated by reference is considered to be part of this prospectus.
Information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14
or 15(d) of
29
<PAGE>
the Securities Exchange Act of 1934 until the selling shareholders sell all the
shares covered by this prospectus.
* Annual Report on Form 10-KSB for the year ended June 30, 1999;
* Quarterly Reports on Form 10-QSB for the quarters ended October
2, 1999, and January 1, 2000;
* Description of our common stock contained in our Registration
Statement on Form SB-2 (No. 333-01652C) filed on May 29, 1996
(as amended); and
* Current Reports on Form 8-K filed on October 8, 1999 (as amended
on December 8, 1999), November 12, 1999 and November 12, 1999.
This prospectus is part of a registration statement we filed with the
SEC. You may request a copy of the registration statement or any of the above
filings, at no cost, by writing or telephoning our Chief Financial Officer at
the following address:
United Shipping & Technology, Inc.
9850 51st Avenue North, Suite 110
Minneapolis, Minnesota 55442
(612) 941-4080
We have not authorized any dealer, salesperson or other person to give
any information or represent anything not contained in this prospectus. You
should not rely on any unauthorized information. This prospectus does not offer
to sell or buy any shares in any jurisdiction in which it is unlawful. The
information in this prospectus is current as of the date on the cover.
30
<PAGE>
YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT TO WHICH
WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN
THIS DOCUMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF
THIS DOCUMENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN
OFFER TO BUY ANY SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
-------------------
TABLE OF CONTENTS
-------------------
Page
----
Prospectus Summary......................................................... 2
The Company................................................................ 4
Risk Factors............................................................... 16
Selling Shareholders....................................................... 24
Use of Proceeds............................................................ 28
Plan of Distribution....................................................... 29
Legal Matters.............................................................. 29
Experts.................................................................... 29
Where You Can Find More Information........................................ 29
6,575,712 SHARES
UNITED SHIPPING & TECHNOLOGY, INC.
COMMON STOCK
-------------------
PROSPECTUS
-------------------
______________, 2000
<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 United
Shipping & Technology in connection with the sale and distribution of the shares
being registered. All amounts shown are estimates, except the registration fee.
SEC registration fee..................................... $ 21,646
-----------
Legal fees and expenses.................................. $ 28,000
-----------
Accounting fees and expenses............................. $ 10,000
-----------
Blue sky and related fees and expenses................... $ 2,000
-----------
Miscellaneous (including listing fees, if applicable).... $ 1,000
-----------
Total.................................................. $ 62,646
===========
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. Article IV of our Amended and Restated
Articles of Incorporation provide that we 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 us 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. Our Bylaws also
provide for certain indemnification of directors, officers, employees and
agents, past or present, of us, and persons serving as such of another
corporation or entity at the request of us.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
5.1 Opinion of Kenneth D. Zigrino, Esq.
23.1 Consent of Kenneth D. Zigrino, Esq. (included in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Lurie, Besikof, Lapidus & Co., 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;
II-1
<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 SEC 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.
II-2
<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 Minneapolis and State of Minnesota, on March 1, 2000.
UNITED SHIPPING & TECHNOLOGY, INC.
By /s/ Peter C. Lytle
-----------------------------------------
Peter C. Lytle, Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Peter C. Lytle and Timothy G.
Becker, jointly and severally, his or her true and lawful attorneys-in-fact,
each with full power of substitution, for him or her in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact or any
of them, or his or their substitute or substitutes, may lawfully do or cause to
be done or 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/ Peter C. Lytle President and Chief Executive March 1, 2000
- -------------------------- Officer and Director (Principal
Peter C. Lytle Executive Officer)
/s/ Timothy G. Becker Chief Financial Officer and March 1, 2000
- -------------------------- Principal Accounting and
Timothy G. Becker Financial Officer
/s/ Marlin Rudebusch Director March 1, 2000
- --------------------------
Marlin Rudebusch
/s/ Susan M. Clemens Director March 1, 2000
- --------------------------
Susan M. Clemens
/s/ Ronald G. Olson Director March 1, 2000
- --------------------------
Ronald G. Olson
/s/ James A. Bartholomew Director March 1, 2000
- --------------------------
James A. Bartholomew
/s/ Marshall T. Masko Director March 1, 2000
- --------------------------
Marshall T. Masko
/s/ Peter Kooman Director March 1, 2000
- --------------------------
Peter Kooman
II-3
<PAGE>
EXHIBIT INDEX
NUMBER DESCRIPTION
- ----------- ------------------------------------------------------------------
5.1 Opinion of Kenneth D. Zigrino, Esq.
23.1 Consent of Kenneth D. Zigrino, Esq. (included in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Lurie, Besikof, Lapidus & Co., LLP
24.1 Power of Attorney (included on signature page to Registration
Statement)
EXHIBIT 5.1
March 1, 2000
United Shipping & Technology, Inc.
9850 51st Avenue North, Suite 110
Minneapolis, Minnesota 55442
Gentlemen:
I am General Counsel of United Shipping & Technology, Inc. (the
"Company"), a Utah corporation, in connection with its filing of a registration
statement on Form S-3, under the Securities Act of 1933, as amended, relating to
the proposed sale by selling shareholders of 6,575,712 shares of the Company's
common stock.
I have examined the registration statement and those documents,
corporate records, and other instruments I deemed relevant as a basis for the
opinion herein expressed.
Based on the foregoing, it is my opinion that when the registration
statement shall have been declared effective by order of the Securities and
Exchange Commission, the shares sold by the selling shareholders as contemplated
by the registration statement will be legally and validly issued, fully-paid and
nonassessable.
I 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,
By: /s/ Kenneth D. Zigrino
-------------------------------------
Kenneth D. Zigrino
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated August 27, 1999 (except for Note 11,
for which the date is September 8, 1999) relating to the combined financial
statements of the Courier Operations of Corporate Express Delivery Systems, Inc.
as of January 30, 1999 and January 31, 1998 and for the year ended January 30,
1999, the eleven months ended January 31, 1998 and the year ended March 1, 1997,
which appears in the Amended Current Report on Form 8-K/A of United Shipping &
Technology, Inc. dated December 8, 1999 (No. 000-28452).
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Houston, Texas
March 1, 2000
EXHIBIT 23.3
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement of
United Shipping & Technology, Inc. on Form S-3 of our report dated August 13,
1999, except for Notes 2 and 15, as to which the date is September 9, 1999
appearing in the Annual Report on Form 10-KSB of United Shipping & Technology,
Inc. for the year ended June 30, 1999 and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
/s/ LURIE, BESIKOF, LAPIDUS & CO., LLP
- --------------------------------------
LURIE, BESIKOF, LAPIDUS & CO., LLP
Minneapolis, Minnesota,
February 29, 2000
