As filed with the Securities and Exchange Commission on February 1, 1999
Registration No.
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SKYMALL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Nevada 5961 86-0651100
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
1520 East Pima Street
Phoenix, Arizona 85034
(602) 254-9777
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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ROBERT M. WORSLEY
President
SkyMall, Inc.
1520 East Pima Street
Phoenix, Arizona 85034
(602) 254-9777
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
Copies to:
Christopher D. Johnson, Esq. Christine A. Aguilera, Esq.
Squire, Sanders & Dempsey L.L.P. Vice President of Business Development
40 North Central Avenue General Counsel and Secretary
Phoenix, Arizona 85004 SkyMall, Inc.
(602) 528-4000 1520 East Pima Street
Phoenix, Arizona 85034
602-254-9777
<PAGE>
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM
SECURITIES AMOUNT OFFERING AGGREGATE AMOUNT OF
TO BE TO BE PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER SHARE* PRICE* FEE
---------- ---------- ---------- --------- ------------
Common Stock 158,824 $18.28125 $2,903,501 $807
$.001 par value
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* Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to Rules 457(c) and 457(h) of the Securities Act
of 1933, on the basis of the average of the high and low prices for shares
of Common Stock on January 29, 1999.
Approximate date of proposed sale to public: As soon as practicable after
the effective date of this Registration Statement.
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, 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, 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 the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
================================================================================
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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
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SUBJECT TO COMPLETION, DATED FEBRUARY 1, 1999
PROSPECTUS
158,824 SHARES
SKYMALL, INC.
COMMON STOCK
We have issued warrants (the "Warrants") to purchase 158,824 shares of our
common stock (the "Common Stock"). 58,824 of the Warrants were issued to WWF
Paper Corporation ("WWF"), and 100,000 of the Warrants were issued to GiftOne,
Inc. in two separate private placement transactions. GiftOne, Inc.'s Warrants
were subsequently distributed to Greg Gretsch and Paul Bauersfeld in connection
with its dissolution. WWF, Mr. Gretsch and Mr. Bauersfeld are individually
referred to in this document as a "Selling Shareholder" and collectively, as the
"Selling Shareholders". The Selling Shareholders can use this Prospectus to sell
to other purchasers some or all of the shares of Common Stock they receive by
exercising the Warrants. Each Selling Shareholder may sell the Common Stock in
ordinary broker's transactions, directly to market makers in our Common Stock,
private transactions or any of the other methods of distribution that are
described in this Prospectus under the section titled "Plan of Distribution".
WWF will receive all, and Messrs. Gretsch and Bauersfeld will receive
two-thirds, of the amount received upon any sale by them of the Common Stock
offered hereby, minus any brokerage commissions or other expenses incurred by
them in connection with any sale. We will receive one-third of the net amount
Messrs. Gretsch and Bauersfeld receive upon any sale of the Common Stock to be
issued to them upon exercise of their Warrants. We will also receive up to
$1,270,592 as the purchase price for the Common Stock if the Selling
Shareholders exercise all of the Warrants. Under certain circumstances, Messrs.
Gretsch and Bauersfeld may be required to reimburse us for our costs and
expenses associated with the registration of the shares of Common Stock that
will be issued to them upon exercise of their Warrants, in an amount not to
exceed $15,000. WWF has agreed to reimburse us for our costs and expenses
associated with the registration of the Common Stock that will be issued to WWF
upon exercise of their Warrants, in an amount not to exceed $25,000.
The Selling Shareholders and the brokers or other third parties through
whom the Selling Shareholders sell the Common Stock may be deemed "underwriters"
as that term is defined in the Securities Act of 1933, as amended, for purposes
of the resale of the shares of Common Stock offered in this Prospectus.
Our Common Stock is traded on the Nasdaq National Market ("Nasdaq") under
the symbol "SKYM". According to Nasdaq, on January 29, 1999, the last reported
sale price for our Common Stock was $17.75.
<PAGE>
BEFORE PURCHASING ANY OF THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS,
WE URGE YOU TO READ AND CAREFULLY CONSIDER THE RISK FACTORS DISCUSSED IN THIS
PROSPECTUS, BEGINNING ON PAGE 7. YOU SHOULD BE PREPARED TO ACCEPT ALL OF THOSE
RISKS, INCLUDING THE RISK THAT YOU COULD LOSE YOUR ENTIRE INVESTMENT IN THE
COMMON STOCK, AS WELL AS ANY OTHER RISKS THAT MAY BE DISCUSSED IN THIS
PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE SALE OF THE COMMON STOCK OR DETERMINED THAT THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE OR COMPLETE. IT IS ILLEGAL FOR ANY
PERSON TO TELL YOU OTHERWISE.
The date of this Prospectus is ____________, 1999
<PAGE>
YOU SHOULD ONLY RELY UPON THE INFORMATION INCLUDED IN OR INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS OR IN ANY PROSPECTUS SUPPLEMENT THAT IS DELIVERED
TO YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH ADDITIONAL OR
DIFFERENT INFORMATION.
THE COMMON STOCK IS NOT BEING OFFERED IN ANY STATE WHERE SUCH AN OFFER IS
NOT PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION INCLUDED IN OR INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS OR IN ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF
ANY DATE LATER THAN THE DATE ON THE FRONT OF THE PROSPECTUS OR PROSPECTUS
SUPPLEMENT.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information with
the U.S. Securities and Exchange Commission (the "SEC"). You may read and copy
any document that we have filed at the SEC's Public Reference Room located at
450 Fifth Street N.W., Room 1024, Washington, D.C. 20549 and at the SEC's
regional offices located at World Trade Center, 13th Floor, New York, New York,
10048 and at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Please call the SEC at 1-800-732-0330 for more
information about the Public Reference Room facilities. Our SEC filings are also
available to you free of charge at the SEC's web sit at HTTP://WWW.SEC.GOV.
Copies of publicly available documents that we have filed with the SEC can
also be inspected and copied at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
We have filed a Registration Statement on Form S-3 (the "Registration
Statement") with the SEC that covers the resale of the Common Stock offered by
this Prospectus. This Prospectus forms a part of the Registration Statement;
however, the Prospectus does not include all of the information included in the
Registration Statement. As a result, you should refer to the Registration
Statement for additional information about us and the Common Stock being offered
in this Prospectus. Statements that we make in this Prospectus relating to any
documents filed as an exhibit to the Registration Statement or any document
incorporated by reference into the Registration Statement are not necessarily
complete and you should review the referenced document itself for a complete
understanding of its terms.
INCORPORATION OF CERTAIN DOCUMENTS BY REFRENCE
Some of the information that we are required to include in the Registration
Statement has been "incorporated by reference." This means that we have
disclosed information to you simply by referring you to documents other than the
Registration Statement. The documents that have been incorporated by reference
are an important part of the Prospectus, and you should be sure to review that
information in order to understand the nature of any investment by you in the
Common Stock. In addition to previously filed documents that are incorporated by
reference, documents that we file with the Securities and Exchange Commission
after the date of this Prospectus will automatically update the Registration
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Statement. The documents that we have previously filed and that are incorporated
by reference include the following:
* Our Annual Report on Form 10-K for the fiscal year ended December 31,
1997;
* Our Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 1998, June 30, 1998 and September 30, 1998;
* Our Current Report on Form 8-K dated December 7, 1998;
* Our Definitive Proxy Statement for our 1998 Annual Meeting of
Shareholders dated April 21, 1998; and
* The description of our Common Stock included in our Registration
Statement on Form 8-A, filed October 31, 1996, including all
amendments or reports filed for the purpose of updating the
description.
All documents and reports filed by us pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
date that this offering of our Common Stock is terminated, will automatically be
incorporated by reference into this Prospectus. We will provide you with copies
of any of the documents incorporated by reference, at no charge to you; however,
we will not deliver copies of any exhibits to such documents unless the exhibit
itself is specifically incorporated by reference. If you would like a copy of
any document, please write or call us at:
SkyMall, Inc.
1520 East Pima Street
Phoenix, Arizona 85034
Attn: General Counsel
Telephone: (602) 254-9777
3
<PAGE>
PROSPECTUS SUMMARY
The following summary should by read by you together with the more detailed
information included at other sections of this Prospectus. In addition, you
should carefully consider the factors described under "Risk Factors" at Page 7
of this Prospectus.
Throughout this Prospectus, we refer to SkyMall, Inc. and its subsidiaries
as "us", "we", "our", "SkyMall" or the "Company".
THE COMPANY
Founded in 1989, SkyMall provides products and services to a wide variety
of consumers, merchants and host partners. Our primary distribution channel is
our in-flight catalog, which is placed in airline seat pockets and available to
approximately 70% of all domestic airline passengers. Through our skymall.com
subsidiary, we also offer products and services to online shoppers at our
website, and enable other companies to conduct electronic commerce using
skymall.com's merchant solution. In addition, through another one of our
subsidiaries, Durham & Co., we offer high quality logo merchandise to domestic
corporations and other organizations. We are attempting to broaden our
distribution channels and our customer base through international expansion of
our in-flight catalog program and electronic commerce initiatives.
SkyMall and skymalll.com aggregate and offer high-quality products and
services to more than 400 million airline passengers each year, as well as to
online shoppers. We market and sell premium merchandise from participating
merchants, including major catalog companies and specialty retailers. Some of
our participating merchants include Brookstone(R), Frontgate (R), Hammacher
Schlemmer, Norm Thompson (R), Solutions (R), The Wine Enthusiast (TM) and The
Sharper Image (R). The merchandise of each participating merchant is presented
in a separate section of the SkyMall catalog and website to allow browsing from
"store to store," providing the convenience and variety of an upscale shopping
mall environment. Substantially all of the merchandise sold by us is shipped
directly to customers by participating merchants. We believe this delivery
method enables us to avoid significant inventory risk. We have exclusive
agreements to place our catalogs in aircraft seat pockets on 16 airlines. These
16 airlines carried approximately 70 percent of all domestic passengers in 1997.
They include America West, Continental, Delta, Southwest, TWA, United and US
Airways.
Our Internet hosts typically feature the same products and services offered
through our paper catalogs as a part of their own websites. However, because the
Internet does not pose the same size and weight constraints as our paper
catalogs, we plan to offer a greater number and variety of our merchant
partners' products and services through the Internet. In addition to working
with third party Internet hosts, we also feature our products and services at
our own website, WWW.SKYMALL.COM.
We have experienced substantial growth since 1994. Total revenues have
increased from approximately $30.3 million in 1994 to approximately $60.8
million in 1997, for a compound annual growth rate of 26 percent. Our revenue
per passenger enplanement on flights carrying the SkyMall catalog increased from
approximately $0.06 in 1994 to approximately $0.11 in 1997, for a compound
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annual growth rate of 22 percent. Although our revenues from electronic commerce
sales increased significantly from 1997 to 1998, these revenues represented
approximately five percent of our total revenues in 1998.
SkyMall's foundation is built on its relationships with its customers,
merchants and host partners. Our customers enjoy the convenience of being able
to shop for a wide variety of innovative products while traveling or online. We
offer a no mark-up, fair price guarantee under which we will refund the price
difference if the customer finds the same item advertised elsewhere at a lower
price. In order to enhance the ongoing appeal of our product offerings, we
produce four new catalogs per year. We maintain a toll free 24-hour telephone
ordering service (from air and ground phones), and an in-house staff of customer
service representatives who are trained to provide exemplary service in order to
build strong customer loyalty and increase revenue from repeat and referral
business.
In exchange for offering our products and services, we pay each host a
monthly commission based on net merchandise revenues generated by our sales to
that host's customers. Some of our agreements also require payment of minimum
monthly fees. Our hosts benefit from additional revenue and from being able to
enhance the experiences of their customers by providing our products and
services as an additional amenity.
Participating merchants obtain exposure for their products and services to
a demographically diverse group of potential customers with strong economic
profiles, generate additional revenues and acquire new customers to add to their
own proprietary mailing lists. Under contracts with participating merchants, we
earn a percentage of the revenues generated by our sales, placement fees for
inclusion of the merchants' products in the SkyMall catalog, or a combination
thereof.
Our principal executive offices are located at and our mailing address is
1520 East Pima Street, Phoenix, Arizona 85034. Our telephone number is (602)
254-9777.
5
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THE OFFERING
Securities Offered Hereby............. 158,824 shares of Common Stock.
Common Stock Outstanding as of
January 27, 1999.................... 8,995,298 shares.(1)
Use of Proceeds....................... We will receive one-third of the net
amounts received by Mr. Gretsch or Mr.
Bauersfeld from the sale of any Common
Stock issued to them upon exercise of the
Warrants. We will also receive proceeds
from the exercise of the Warrants, which
would be $1,270,592 if the Selling
Shareholders exercise all of the
Warrants. We will use all of these
proceeds for working capital for our
operations. See "Use of Proceeds."
Risk Factors.......................... The shares of Common Stock offered hereby
involve a high degree of risk. See "Risk
Factors."
Nasdaq National Market Symbol......... "SKYM"
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(1) Does not include (i) 830,052 shares of Common Stock issuable upon exercise
of outstanding stock options issued pursuant to the Company's stock option
plans, (ii) an additional 264,412 shares of Common Stock reserved for
issuance pursuant to future awards granted under such stock option plans,
(iii) 56,400 shares of Common Stock issuable by the Company upon the
exercise of warrants issued to preferred shareholders in connection with
the Company's 1996 Private Placement, which are exercisable at $8.00 per
share, and (iv) 158,824 shares of Common Stock issuable to the Selling
Shareholders upon exercise of the Warrants which are the shares of Common
Stock that are being offered hereby.
6
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RISK FACTORS
BEFORE YOU BUY ANY OF THE SHARES OF COMMON STOCK BEING OFFERED BY THIS
PROSPECTUS, YOU SHOULD CAREFULLY READ AND CONSIDER EACH OF THE RISK FACTORS WE
HAVE DESCRIBED IN THIS SECTION. YOU SHOULD BE PREPARED TO ACCEPT ALL OF THESE
RISKS, INCLUDING THE RISK THAT YOU MAY LOSE YOUR ENTIRE INVESTMENT, BEFORE YOU
MAKE A DECISION TO BUY ANY OF THE SHARES OF COMMON STOCK.
WE HAVE A LIMITED HISTORY OF PROFITABLE OPERATIONS AND WE MAY NOT BE PROFITABLE
IN THE FUTURE
We commenced operations in late 1990, however, prior to fiscal 1995, we
incurred substantial financial losses. There is no assurance that our operations
will remain profitable.
OUR BUSINESS MAY NOT GROW IN THE FUTURE
Since our inception, we have rapidly expanded our operations, growing from
total revenues of $0.02 million in 1990 to total revenues of $60.8 million in
1997. Our continued future growth will depend to a significant degree on our
ability to increase revenue per host partner, broaden our customer base by
entering into relationships with new domestic and foreign hosts, and implement
other programs that increase the circulation of the SkyMall catalogs, products
and services. Our ability to implement our growth strategy will also depend on a
number of other factors, many of which are or may be beyond our control,
including (i) our ability to select products that appeal to our customer base,
(ii) sustained or increased levels of airline travel, particularly in domestic
airline markets, (iii) the growth of electronic commerce sales, (iv) the
continued perception by participating merchants that we offer an effective
marketing channel for their products and services, (v) our ability to attract,
train and retain qualified employees and management, and (vi) the continued
profitability of existing operations. There can be no assurance that we will be
able to successfully implement our growth strategy or that our planned expansion
will be profitable.
WE DEPEND UPON OUR HOST RELATIONSHIPS
Our business depends significantly on our relationships with the airlines,
websites, hotels and other hosts. Our agreements with hosts typically have
one-year terms, but generally permit the host to terminate the relationship on
60 to 180 days' advance notice. There is no assurance that our hosts will
continue their relationships with us and the loss of one or more of our
significant hosts could have a material adverse affect on our financial
condition and results of operations.
WE FACE INTENSE COMPETITION
The distribution channels for our products are highly competitive. From
time to time in our airline catalog business, competitors, typically other
catalog retailers, have attempted to secure contracts with various airlines to
offer merchandise to their customers. Northwest Airlines and American Airlines
currently offer merchandise catalogs to their customers through a competitor of
ours. Various international airlines also offer merchandise catalogs to their
passengers through our competitors. We also face competition for customers from
airport-based retailers, duty-free retailers, specialty stores, department
stores and specialty and general merchandise catalogs, many of which have
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greater financial and marketing resources than we have. In addition, we compete
for customers with other in-flight marketing media, such as airline-sponsored
in-flight magazines and airline video programming. In our electronic commerce
sales, we face intense competition from other content providers and retailers
who seek to offer their products and/or services at their own websites or those
of other third parties. We believe that the principal competitive factors are
brand recognition, price, quality, customer service and convenience. All of the
products and services offered by us can also be found in other retail stores and
catalogs.
WE MAY BE UNABLE TO MANAGE THE POTENTIAL GROWTH OF OUR BUSINESS
We are currently experiencing a period of significant growth in our
business and we anticipate that further expansion will be required to address
potential growth in our customer base and market opportunities. This growth will
place significant demands upon our personnel, management and financial
resources. In order to manage this growth, we may have to hire additional
personnel and develop additional management infrastructure. There is no
assurance that people with the necessary skills and experience will be available
as needed or on terms favorable to us. In addition, we may be required to enter
into relationships with various strategic partners, online service provides,
airlines and other third parties. There is no assurance that our current and
planned personnel, systems, procedures and controls will be adequate to support
our future operations, that we will be able to attract. hire, train, retain,
motivate and manage necessary personnel or that our management will be able to
identify, manage and exploit existing and potential strategic relationships and
market opportunities. If we are unable to effectively manage any potential
growth, our business and financial condition, as well as the trading price of
our Common Stock could be adversely affected.
OUR PLANS FOR INTERNATIONAL EXPANSION POSE ADDITIONAL RISKS
A significant aspect of our growth strategy is to expand our business
internationally, through our in-flight catalog program as well as the Internet.
We have limited experience in selling our products and services internationally.
Such expansion will place additional burdens upon our management, personnel and
financial resources. We will also face different and additional competition in
these international markets. In addition, international expansion has certain
unique risks, such as regulatory requirements, legal uncertainly regarding
liability, tariffs and other trade barriers, difficulties in staffing and
managing foreign operations, longer payment cycles, political instability and
potentially adverse tax implications. To the extent we expand our business
internationally, we will also become subject to risks associated with
international monetary exchange fluctuations. Any one of these risks could
impair our ability to expand internationally as well as have a material adverse
impact upon our overall business operations, growth and financial condition.
WE ARE VULNERABLE TO INCREASES IN PAPER COSTS AND AIRLINE FUEL PRICES
The cost of paper used to print our catalogs and the fees paid to airlines
to reimburse them for the increased fuel costs associated with carrying our
catalogs are significant expenses of our operations. Historically, paper and
airline fuel prices have fluctuated significantly from time to time. Prices in
the paper market can and often do change dramatically over a short period of
time. Any significant increases in paper or airline fuel costs that we must pay
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could have a material adverse effect on our financial condition and results of
operations.
SOME OF OUR MERCHANTS MAY BE UNABLE OR UNWILLING TO PAY OUR FEES
Some participating merchants agree to pay a placement fee to us for
including their merchandise in the SkyMall catalog. For each month of the
catalog issue we record an account receivable from the merchant for the
placement fee. In some cases, we collect the placement fee either from the
merchant or by withholding it from amounts due to the merchant for merchandise
sold. To the extent that the placement fee receivable exceeds the sales of the
merchant's products and the merchant is unable or unwilling to pay the
difference to us, we may experience credit losses which could have a material
adverse effect on our financial condition and results of operations.
OUR INFORMATION AND TELECOMMUNICATIONS SYSTEMS MAY FAIL OR BE INADEQUATE
We process a large volume of relatively small orders. Consequently, our
success depends to a significant degree on the effective operation of our
information and telecommunications systems. These systems could fail for
unanticipated reasons or they may be inadequate to process any increase in our
sales volume that may occur. Any extended failure of our information and
telecommunications systems could have a material adverse effect on our financial
condition and results of operations.
OUR FUTURE GROWTH IS IN PART DEPENDENT UPON THE CONTINUED GROWTH OF THE
ELECTRONIC COMMERCE MARKET
The market for the sale of products and services over the Internet is a new
and rapidly evolving market. Our future growth strategy is partially dependent
upon the widespread acceptance and use of online services as an avenue for
retail purchases. Consumers have only recently begun to make purchases over the
Internet and there is no assurance that they will continue to do so in the
future. In order for us to grow our online customer base, we will need to
attract purchasers who have historically relied upon traditional venues for
making their retail purchases.
In addition to the risks described above, the Internet may prove not to be
commercially viable in the long term for a number of reasons, including
potential inadequacies in the development of network infrastructure, security
measures, performance or other reasons. As the Internet experiences growth in
the number of users, the frequency of use or bandwidth requirements, online
service providers may be unable to adequately address these demands. Changes in
or insufficient availability of telecommunications services needed to support
the Internet could result in slower online response times, making the Internet
less attractive to our customers. If use of online services does not continue to
grow as expected, if the technological infrastructure for the Internet is unable
to effectively support its growing use, or if the Internet does not ultimately
prove to be a viable commercial marketplace, our growth strategy may be
materially adversely affected.
WE FACE RISKS ASSOCIATED WITH ONLINE SECURITY BREACHES OR FAILURES
In order to successfully make sales over the Internet, it is necessary that
we be able to ensure the secure transmission of confidential customer
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information over public telecommunications networks. We employ certain
technology in order to protect such information, including customer credit card
information. However, there is no assurance that such information will not be
intercepted illegally. Advances in cryptography or other developments that could
compromise the security of confidential customer information could have a direct
negative impact upon our electronic commerce business. In addition, the
perception by consumers that making purchases over the Internet is not secure,
even if unfounded, will mean that fewer consumers are likely to make purchasers
through that medium. Finally, any breach in security, whether or not a result of
our acts or omissions, may cause us to be the subject of litigation, which could
be very time-consuming and expensive to defend.
WE FACE RISKS OF INCREASED GOVERNMENTAL REGULATION AND OTHER LEGAL UNCERTAINTIES
Our electronic commerce activities are not currently subject to significant
regulation, other than those applicable to businesses generally. However,
electronic commerce is a new market and it is likely that regulations and laws
may be enacted in the future which would apply to our electronic commerce
activities. Any such laws or regulations could result in additional costs
associated with such activities, reduce or inhibit the growth of Internet use,
thereby reducing the growth of our electronic commerce business, or have other
adverse effects. Additionally, certain states or international jurisdictions
could enact laws that would require us to register in such jurisdictions, pay
fees or otherwise increase our costs of doing business.
WE MAY BE SUBJECT TO ADDITIONAL STATE OR OTHER TAXES
We do not collect sales or other similar taxes in respect of goods sold by
us through the Internet. However, some states may seek to impose sales tax
collection obligations on out-of-state companies such as us and a number of
proposals have been introduced at various state and local levels that, if
adopted, could substantially impair the growth of our electronic commerce
business.
OUR BUSINESS IS SEASONAL
Our business is seasonal in nature, with the greatest volume of sales
typically occurring during the holiday selling season of the fourth calendar
quarter. During 1998, approximately 40 percent of our net merchandise sales were
generated in the fourth quarter. Any substantial decrease in sales for the
fourth quarter could have a material adverse effect on our results of
operations.
WE FACE A RISK OF PRODUCT LIABILITY CLAIMS
Our catalog and electronic commerce sites typically feature over 2,000
products and services from more than 100 participating merchants. Generally, our
agreements with these participating merchants require the merchants to indemnify
us and thereby be solely responsible for any losses arising from product
liability claims made by customers, including the costs of defending any such
claims, and to carry product liability insurance that names SkyMall as an
additional insured. In addition, we maintain product liability insurance in the
aggregate amount of $2.0 million and $1.0 million per occurrence. If ever a
merchant was unable or unwilling to indemnify us as required, and any such
losses exceeded our insurance coverage or were not covered by our insurer,
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our financial condition and results of operations could be materially adversely
affected.
WE RELY UPON OUR PRESIDENT AND OTHER KEY PERSONNEL
We depend on the continued services of Robert M. Worsley, our chairman,
president and chief executive officer, and on the services of certain other
executive officers. The loss of Mr. Worsley's services or of the services of
certain other executive officers could have a material adverse effect on our
business.
THE WORSLEYS CAN CONTROL MANY IMPORTANT COMPANY DECISIONS
As of January 27, 1999, Mr. Worsley and his wife (the "Worsleys")
beneficially own 4,577,416 shares, or approximately 51% of our outstanding
Common Stock. As a result, the Worsleys have the ability to significantly
influence the affairs of the Company and matters requiring a shareholder vote,
including the election of the Company's directors, the amendment of the
Company's charter documents, the merger or dissolution of the Company, and the
sale of all or substantially all of the Company's assets. The voting power of
the Worsleys may also discourage or prevent any proposed takeover of the Company
pursuant to a tender offer.
THE PRICE OF OUR COMMON STOCK IS VOLATILE
The market price of our Common Stock has been highly volatile. Occurrences
that could cause the trading price of our Common Stock to fluctuate dramatically
in the future include:
* new merchant agreements
* the acquisition or loss of one or more airline, electronic commerce or
other partners
* fluctuations in our operating results
* analyst reports, media stories, Internet chat room discussions, news
broadcasts, and interviews
* market conditions for retailers in general
* changes in our airline fuel, paper or other significant expenses
* decreases in the commissions we are able to negotiate with our
merchants
The stock market has from time to time experienced extreme price and volume
fluctuations that have particularly affected the market price for companies that
do some or all of their business on the Internet. Although Internet sales
represent only a small portion of our business, the price of our Common Stock
may nonetheless be impacted by these or other trends.
WE FACE RISKS ASSOCIATED WITH THE YEAR 2000
BACKGROUND. Many software programs use only two digits to identify the year
in the date field. If such programs are not corrected, data that includes a date
in the Year 2000 or later could cause many computer applications to fail,
lock-up or generate erroneous results. Further, certain computer programs may
not properly process the dates of September 9, 1999 or February 29, 2000. This
potential problem is generally referred to as the "Year 2000 Issue". We have
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initiated a program to evaluate and address our exposure to the Year 2000 Issue.
If not corrected, many computer applications could fail or create erroneous
results.
OUR STATE OF READINESS. We have initiated a program to identify our
exposure to the Year 2000 Issue and we have begun to implement measures to
mitigate any problems. We believe we have identified all significant internal
systems and applications that require attention of some form in order to address
our Year 2000 Issue risks.
The information or production systems which consist of order entry, order
conveyance and customer service are primarily based on the Microsoft suite of
products and the hardware is principally late model Compaq servers, both of
which are designed to meet Year 200 Issue functional requirements. We are in the
process of obtaining confirmation that these systems are not subject to the Year
2000 Issue.
We also have other non-production systems such as internal security
systems, telephone systems, and network computer equipment, which we are also
currently reviewing. In addition, we are also reviewing the capability of
critical systems of certain third parties such as our vendor partners, banks and
telephone service providers.
We plan on resolving any Year 2000 Issue problems by June 30, 1999.
COSTS. The financial and resource demands of our Year 2000 Issue project
are estimated to total less than $100,000. Much of this amount represents the
use of existing resources which will be refocused to survey third parties,
review internal and external systems environments, analyze potential impacts and
document our efforts.
RISKS. We have identified what we believe are our most significant worst
case Year 2000 Issue scenarios. These revolve around the ability of our vendors
to process orders and conduct business such as arranging deliveries to customers
and replenishing inventories. We do not currently have enough data to make an
accurate assessment of the potential impact of a material failure of our vendors
to be adequately prepared for the Year 2000 Issue.
CONTINGENCY PLANS. We have not yet developed formal contingency plans to
address the possibility that our critical systems, as well as those of our key
business partners on which we rely will experience significant interruption as a
result of the Year 2000 Issue. We will develop contingency plans by June 30,
1999, if such plans are deemed necessary after a more thorough evaluation of all
our mission critical systems.
FORWARD-LOOKING STATEMENTS IN THIS PROSPECTUS MAY PROVE TO BE INCORRECT
This Prospectus and the documents incorporated herein by reference, contain
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. These statements discuss, among other
items, the Company's growth strategy and anticipated trends in our business.
Whenever we use words like "believe", "expect", "anticipate", "plan" or other
similar words, you should understand that they are forward-looking statements.
Forward-looking statements are made based upon our belief as of the date that
such statements are made. These forward-looking statements are based largely on
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our current expectations and are subject to a number of risks and uncertainties,
many of which are beyond our control. Actual results could differ materially
from these forward-looking statements as a result of the factors described
herein, including, among others, regulatory or economic influences. In light of
these risks and uncertainties, there is no assurance that the forward-looking
information contained in this Prospectus will in fact occur or prove to be
accurate. We have no obligation to publicly update or revise any of the
forward-looking statements contained herein. Any written or oral statements made
in this Prospectus or after the date hereof by us, or someone acting on our
behalf, is qualified entirely by this paragraph.
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SELLING SHAREHOLDERS
The following table provides certain information with respect to the Common
Stock beneficially owned by each Selling Shareholder, all of which represent the
shares issuable upon exercise of the Warrants, as of January 27, 1999. None of
these Selling Shareholders has a material relationship with us. We believe that
the Selling Shareholders named in the following table have sole voting and
investment power with respect to the respective shares of Common Stock set forth
opposite their names. The shares of Common Stock offered by this Prospectus may
be offered from time to time by the Selling Shareholders named below or their
nominees.
Shares Beneficially Shares Beneficially
Owned Prior to the Number Owned After the
Offering of Shares Offering
------------------- Offered -------------------
---------
Name Number Percent Number Percent(1)
- ---- -------- ------- -------- ---------
Greg Gretsch............ 50,000 * 50,000 0 0%
Paul Bauersfeld......... 50,000 * 50,000 0 0%
WWF Paper Corporation... 58,824 * 58,824 0 0%
- ---------------
* Less than 1%.
(1) Percentages are based upon 8,995,298 shares of the Company's Common Stock
outstanding as of January 27, 1999.
USE OF PROCEEDS
We will receive one-third of the net amounts received by Mr. Gretsch or Mr.
Bauersfeld from the sale of any Common Stock issued to them upon exercise of the
Warrants. We will also receive proceeds from the exercise of the Warrants, which
would be $1,270,592 if the Selling Shareholders exercise all of the Warrants. We
will use all of these proceeds for working capital for our operations.
DETERMINATION OF OFFERING PRICE
All of the 158,824 shares of Common Stock offered hereby are issuable upon
the exercise of the Warrants. The terms of the Warrants provide that the per
share exercise price shall be $8.00 per share. The subsequent sale of the Common
Stock received upon the exercise of the Warrants will be determined by the
Selling Shareholder selling the Common Stock. The price at which the Common
Stock is sold may be based on market prices prevailing at the time of sale, at
prices relating to such prevailing market prices, or at negotiated prices.
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<PAGE>
PLAN OF DISTRIBUTION
The Common Stock may be sold from time to time by the Selling Shareholders,
or by pledgees, donees, transferees or other successors in interest. Such sales
may be made on one or more exchanges or in the over-the-counter market or
otherwise, at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The Common Stock may
be sold in one or more of the following types of transactions: (a) a block trade
in which a Selling Shareholder will engage a broker-dealer who will then attempt
to sell the Common Stock, or position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker-dealer as
principal and resale by such broker-dealer for its account pursuant to this
Prospectus; (c) an exchange distribution in accordance with the rules of such
exchange; and (d) ordinary brokerage transactions and transactions in which the
broker solicits purchasers. In effecting sales, broker-dealers engaged by the
Selling Shareholders may arrange for other broker-dealers to participate in the
resales.
In connection with distributions of the Common Stock or otherwise, the
Selling Shareholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the Common Stock in the course of hedging the positions they assume with Selling
Shareholders. The Selling Shareholders may also sell Common Stock short and
redeliver the Common Stock to close out such short positions. The Selling
Shareholders may also enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of the Common
Stock, which the broker-dealer may resell or otherwise transfer pursuant to this
Prospectus. The Selling Shareholders may also loan or pledge Common Stock to a
broker-dealer and the broker-dealer may sell the Common Stock so loaned or, upon
a default, the broker-dealer may effect sales of the pledged Common Stock
pursuant to this Prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Shareholders in amounts
to be negotiated in connection with the sale. Such broker-dealers and any other
participating broker-dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting discounts or
commissions under the Securities Act. In addition, any securities covered by
this Prospectus which qualify for sale pursuant to Rule 144 may be sold under
Rule 144 rather than pursuant to this Prospectus.
Under certain circumstances, Messrs. Gretsch and Bauersfeld may be required
to reimburse us for our costs and expenses associated with the registration of
the shares of Common Stock that will be issued to them upon exercise of their
Warrants, in an amount not to exceed $15,000. WWF has agreed to reimburse us for
our costs and expenses associated with the registration of the Common Stock that
will be issued to WWF upon exercise of their Warrants, in an amount not to
exceed $25,000. Commissions and discounts, if any, attributable to the sales of
the Common Stock will be borne by the Selling Shareholders. The Selling
Shareholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the Common Stock against certain liabilities,
including liabilities arising under the Securities Act.
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In order to comply with the securities laws of certain states, if
applicable, sales of the Common Stock made in those states will only be through
registered or licensed brokers or dealers. In addition, in certain states the
securities may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with by us and the
Selling Shareholders.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Common Stock may not simultaneously engage in
market-making activities with respect to our Common Stock for a period of up to
five business days prior to the commencement of such distribution. In addition
to those restrictions, each Selling Shareholder will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including without limitation, Regulation M and Rule 10b-7, which provisions may
limit the timing of the purchases and sales of the Company's securities by the
Selling Shareholders.
DESCRIPTION OF SECURITIES
For a description of our Common Stock, see our Registration Statement on
Form 8-A filed with the Securities and Exchange Commission on October 31, 1996
and incorporated by reference into this Prospectus.
LEGAL MATTERS
Certain legal matters have been passed upon for the Company by Squire,
Sanders & Dempsey L.L.P., Phoenix, Arizona.
EXPERTS
The audited financial statements of the Company as of and for each of the
three years in the period ended December 31, 1997, incorporated by reference in
this Prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
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<TABLE>
<S> <C>
============================================= =============================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS
BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATION OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY
ANY OF THE SECURITIES OFFERED HEREBY BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH SKYMALL, INC.
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION HEREIN IS 158,824 SHARES
CORRECT AS OF ANY TIME SUBSEQUENT TO THE COMMON STOCK
DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
-----------------
TABLE OF CONTENTS
----------
Page PROSPECTUS
---- ----------
Where You Can Find More Information...... 2
Incorporation of Certain Documents
By Reference........................... 2
Prospectus Summary....................... 4
The Offering............................. 6
Risk Factors............................. 7
Selling Shareholders..................... 14
Use of Proceeds.......................... 14
Determination of Offering Price.......... 14
Plan of Distribution..................... 15
Description of Securities................ 16
Legal Matters............................ 16 __________, 1999
Experts.................................. 16
============================================= =============================================
</TABLE>
<PAGE>
PART II TO FORM S-3
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated costs and expenses of the
Company in connection with the offering other than commissions and discounts, if
any.
SEC Registration Fee................................................ $ 807
Legal Fees and Expenses............................................. 10,000
Accounting Fees and Expenses........................................ 3,000
Printing and Engraving Expenses..................................... 500
Blue Sky Fees and Expenses.......................................... 0
Miscellaneous....................................................... 2,500
---------
Total.......................................................... $ 16,807
=========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Articles 11 and 12 of the Company's Articles of Incorporation provide as
follows:
1. To the fullest extent permitted by the laws of the State of Nevada, as
the same exist or may hereinafter be amended, no director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for monetary damages for breach of fiduciary duty as a director or officer,
provided, however, that nothing contained herein shall eliminate or limit the
liability of a director or officer of the Corporation to the extent provided by
applicable laws (i) for acts or omissions which involve intentional misconduct,
fraud or knowing violation of law or (ii) for authorizing the payment of
dividends in violation of Nevada Revised Statutes Section 78.300. The limitation
of liability provided herein shall continue after a director or officer has
ceased to occupy such position as to acts or omissions occurring during such
director's or officer's term or terms of office. No repeal, amendment or
modification of this Article, whether direct or indirect, shall eliminate or
reduce its effect with respect to any act or omission of a director or officer
of the Corporation occurring prior to such repeal, amendment or modification.
2. The Corporation shall indemnify, defend and hold harmless any person
who incurs expenses, claims, damages or liability by reason of the fact that he
or she is, or was, an officer, director, employee or agent of the Corporation,
to the fullest extent allowed pursuant to Nevada law.
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ITEM 16. EXHIBITS
Exhibit Page Number or
Number Description Method of Filing
- ------- ----------- ----------------
4 Form of Common Stock Certificate.................. *
5 Opinion re: legality of the securities
being registered................................ **
23.1 Consent of Independent Public Accountants......... **
23.2 Consent of Counsel................................ See Exhibit 5
24 Powers of Attorney................................ See Signature Page
- ---------------
* Previously filed as an Exhibit to the Company's Registration Statement on
Form S-1 (File No. 333-14539).
** Filed herewith.
ITEM 17. UNDERTAKINGS
1. The undersigned Registrant hereby undertakes to file, during any
period in which offers or sales are being made, a post-effective amendment to
this registration statement:
(a) To include any Prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) 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; provided, however, that paragraphs (a) and (b)
shall not apply if such information is contained in periodic reports filed
by the Registrant pursuant to Section 13 or Section 15(d) of the Securities
and Exchange Act that is incorporated by reference into this Registration
Statement.
(c) 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.
2. The undersigned Registrant hereby undertakes 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. The undersigned Registrant hereby undertakes 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.
II-2
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4. 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 into this
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.
5. The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the Prospectus, to deliver, or
cause to be delivered to each person to whom the Prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the Prospectus to provide such interim financial information.
6. 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 foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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<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 Phoenix, State of Arizona, on January 29, 1999.
SKYMALL, INC.
a Nevada Corporation
By: /s/ Robert M. Worsley
------------------------------------
Robert M. Worsley, President
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, constitute and
appoint ROBERT M. WORSLEY and ROBERT J. DIGAN, and each of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any and all pre- and post-effective amendments (including any
amendments pursuant to Rule 462(b) to this Form S-3 Registration Statement, and
to file the same with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting such
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully and to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that such
attorney-in-fact and agents, or each of them, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Robert M. Worsley Chairman of the Board, January 29, 1999
- -------------------------- President and Chief Executive
Robert M. Worsley Officer (Principal Executive
Officer)
/s/ Robert J. Digan Chief Financial Officer January 29, 1999
- -------------------------- (Principal Financial and
Robert J. Digan Accounting Officer)
/s/ Lyle R. Knight Director January 29, 1999
- --------------------------
Lyle R. Knight
/s/ Thomas J. Litle Director January 29, 1999
- --------------------------
Thomas J. Litle
/s/ Randy Petersen Director January 29, 1999
- --------------------------
Randy Petersen
S-1
EXHIBIT 5
SQUIRE, SANDERS & DEMPSEY
L.L.P.
Counsellors at Law
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
Telephone (602) 528-4000
Telecopier (602) 253-8129
January 29, 1999
VIA EDGAR
U.S. Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549
RE: SkyMall, Inc.
Ladies and Gentlemen:
This firm is counsel for SkyMall, Inc., a Nevada corporation (the
"Company"). As such, we are familiar with the Articles of Incorporation, as
amended, and Bylaws of the Company, as well as resolutions adopted by its Board
of Directors authorizing the issuance and sale of an aggregate of 158,824 shares
of the Company's $.001 par value Common Stock (collectively, the "Shares"),
issuable upon exercise of outstanding warrants (the "Warrants"), which are the
subject of a Registration Statement on Form S-3 (the "Registration Statement")
under the Securities Act of 1933, as amended. We have acted as counsel for the
Company with respect to certain matters in connection with the registration for
resale of the Shares and in preparation of the required filings with the
Securities and Exchange Commission. In addition, we have examined such documents
and undertaken such further inquiry as we consider necessary for rendering the
opinions hereinafter set forth below:
Based upon the foregoing, it is our opinion that the Shares, upon issuance
in accordance with the respective terms of the Warrants, will be validly issued,
fully paid and nonassessable.
We acknowledge that we are referred to under the heading "Legal Matters" in
the Prospectus , which is part of the Registration Statement, and we hereby
consent to the use of our name in such Registration Statement. We further
<PAGE>
U.S. Securities and Exchange Commission January 29, 1999
Page 2
consent to the filing of this opinion as Exhibit 5 to the Registration Statement
and with the state regulatory agencies in such states as may require such filing
in connection with the registration of the Shares for offer and Sale in such
states.
Respectfully Submitted,
SQUIRE, SANDERS & DEMPSEY L.L.P.
/s/ Squire, Sanders & Dempsey L.L.P.
EXHIBIT 23.1
[LETTERHEAD OF ARTHUR ANDERSEN LLP]
As independent public accountants, we hereby consent to the incorporation by
reference in the registration statement on Form S-3 of our report dated February
17, 1998 included in SkyMall, Inc.'s Form 10-K for the year ended December 31,
1997 and to all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
/s/ Arthur Andersen LLP
Phoenix, Arizona,
January 29, 1999.
