As filed with the Securities and Exchange Commission on July 14, 2000
Registration No. 333-____________
================================================================================
Securities and Exchange Commission
Washington, DC. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
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 Number)
</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)
---------------------
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:
Gregory R. Hall, Esq. Christine A. Aguilera, Esq.
Squire, Sanders & Dempsey L.L.P. Executive Vice President,
Two Renaissance Square General Manager, General
40 North Central Avenue, Suite 2700 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
================================================================================
PROPOSED
PROPOSED PROPOSED MAXIMUM
TITLE OF MAXIMUM MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
---------------- ------------- -------------- --------- ------------
Common Stock 2,665,792 $2.1875 $5,831,420 $1,540
$.001 par value
================================================================================
--------------
(1) Includes (i) up to 182,792 shares of common stock to be issued upon
exercise of warrants and (ii) an indeterminate number of additional shares
of common stock as may from time to time become issuable upon exercise of
the warrants by reason of stock splits, stock dividends and similar
transactions, which shares are registered hereunder pursuant to Rule 416
under the Securities Act of 1933, as amended.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to Rule 457 of the Securities Act of 1933, as
amended, based on the average of the high and low prices for shares of
common stock of SkyMall, Inc. as reported by the Nasdaq National Market on
July 10, 2000.
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 SEC, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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-ii-
<PAGE>
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THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THE SELLING SHAREHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS DECLARED
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.
--------------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED JULY 14, 2000
PROSPECTUS
2,665,792 SHARES
SKYMALL, INC.COMMON STOCK
We have issued 2,483,000 shares of our common stock and 166,313 warrants to
purchase 166,313 shares of our common stock in a private placement completed on
June 30, 2000. The private placement was completed pursuant to the terms of a
Stock Purchase Agreement. Of such shares of common stock and warrants, 2,483,000
shares of common stock were issued to the investors in the private placement and
166,313 warrants were issued to the placement agents that assisted the Company
in completing the private placement. Pursuant to the anti-dilution provisions of
warrants previously issued by the Company to Shoreline Pacific, who acted as a
placement agent in connection with a private placement conducted by the Company
in 1999, as a result of the June 30, 2000 private placement, an additional
16,479 warrants to purchase 16,479 shares of common stock of the Company were
issued to Shoreline. The investors and the placement agents (which we
collectively refer to in this prospectus as the "selling shareholders") can use
this prospectus to sell to other purchasers some or all of the shares of common
stock received in the private placement and upon exercise of the warrants. Each
selling shareholder may sell the common stock in ordinary broker's transactions,
directly to market makers in our common stock, in private transactions or any of
the other methods of distribution that are described in this prospectus under
the section titled "Plan of Distribution."
The selling shareholders will receive all of the amounts received upon any
sale by them of the common stock, less any brokerage commissions or other
expenses incurred by them. We will not receive any proceeds from the sale of the
common stock by the selling shareholders. However, we will receive up to
$456,218.50 as payment of the warrant exercise price for the common stock
underlying the warrants if all of the warrants are exercised. We are paying for
the costs of registering the shares covered by this prospectus.
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 under the symbol
"SKYM." According to Nasdaq, on July 10, 2000, the last reported sale price for
our common stock was $2.1875.
BEFORE PURCHASING ANY OF THE SHARES OF COMMON STOCK COVERED BY THIS PROSPECTUS,
WE URGE YOU TO READ AND CAREFULLY CONSIDER THE RISK FACTORS DISCUSSED IN THIS
PROSPECTUS, BEGINNING ON PAGE 10. 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 SEC 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 _____________, 2000
<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 OF SUCH DOCUMENT.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information with
the U.S. Securities and Exchange Commission. 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 website 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 with the SEC that covers
the resale of the common stock offered under this prospectus. This prospectus is
part of the registration statement; however, the prospectus does not include all
of the information included in the registration statement and its exhibits. As a
result, you should refer to the registration statement for additional
information about us and the common stock offered under 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
2
<PAGE>
common stock. In addition to previously filed documents that are incorporated by
reference, documents that we file with the SEC after the date of this prospectus
will automatically update the registration statement. The documents that we have
previously filed and that are incorporated by reference include the following:
o Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999;
o Our Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2000;
o Our Current Report on Form 8-K filed January 3, 2000;
o Our Current Report on Form 8-K filed January 4, 2000;
o Our Current Report on Form 8-K filed March 2, 2000;
o Our Current Report on Form 8-K filed May 8, 2000;
o Our Current Report on Form 8-K filed June 30, 2000;
o Our Current Report on Form 8-K filed July 13, 2000;
o Our Definitive Proxy Statement for our Special Meeting of Shareholders
held on March 10, 2000;
o Our Definitive Proxy Statement for our 2000 Annual Meeting of
Shareholders dated June 9, 2000; and
o 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 Securities Exchange Act of 1934, as amended, 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 IN OTHER SECTIONS OF THIS PROSPECTUS. IN ADDITION, YOU
SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER "RISK FACTORS" AT PAGE 10
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, Inc., a Nevada corporation, is an integrated
specialty retailer that markets high-quality products and services through a
number of unique channels and partnerships. The Company offers its products and
services via various media, including the SkyMall in-flight print catalogs,
workplace catalogs, multi-media CD-ROM and on the Internet at WWW.SKYMALL.COM,
WWW.SKYMALLTRAVEL.COM, WWW.DURHAM.SKYMALL.COM and WWW.SKYDISC.COM SkyMall is
best known for its in-flight catalog, which is available on more than 70% of all
domestic airlines, reaching approximately 500 million domestic airline
passengers annually. Through its skymall.com, inc. subsidiary, which operates
the SKYMALL.COM(R) and SKYMALLTRAVEL.Com(R) Web sites, SkyMall offers an
expanded selection of products and services to online shoppers and enables other
companies to conduct electronic commerce using skymall.com's merchant solution.
Through another subsidiary, Durham & Company, SkyMall offers high-quality logo
merchandise via its catalogs, workplace initiatives and the DURHAM.SKYMALL.COM
Web site. SkyMall's subsidiary, SkyMall Ventures, Inc., is responsible for the
Company's broadband, new media and business-to-business custom loyalty
initiatives. Through its subsidiary, SkyMall Media Ventures, Inc., the Company
intends to develop interactive media content in cooperation with participants
from numerous industries, including retail, entertainment and services, and
intends to distribute optical media, including CDs, at no cost to the consumer,
across SkyMall's distribution channels.
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.
OUR OPERATIONS
SkyMall operates two distinct segments, which include its
business-to-consumer and business-to-business initiatives. The
business-to-consumer segment provides retail merchandise service through the
Company's in-flight catalogs placed in domestic and international airlines and
through the Company's Web site. The business-to-business segment provides retail
merchandise services, employee logo and corporate recognition merchandise and
advertising media to other businesses through loyalty programs and catalogs,
workplace catalogs, CD-ROM and the Company's Web site.
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BUSINESS-TO-CONSUMER SEGMENT
OVERVIEW
SkyMall is a "one-stop" shopping source for customers who may purchase a
variety of merchandise from many different well-known merchants in a single
transaction. Although most of the merchandise offered by SkyMall, both in its
print catalogs and on its SKYMALL.COM Web site, is available from other catalog
and retail companies, each of these companies typically has its own policies for
shipping and handling charges, merchandise returns, sales taxes and price
guarantees, as well as its own Web site. In addition, each company typically has
different customer service hours and credit and payment policies.
By aggregating the merchandise of our various participating merchants into
a single location in our print catalog and on our Web site, we offer our
customers a diverse variety of products from numerous retailers and product
categories, including clothing, fashion accessories, health and beauty aids,
children's toys, executive gifts, educational products, gourmet cooking aids,
exercise equipment, jewelry, luggage, travel aids, and home accessories. Some of
the retailers who offer their products and/or services through our print
catalogs or on our Web site are: American Historic Society, Balducci's, Canadian
Geographic, Frontgate(R), FTD.com, garden.com(TM), Hammacher Schlemmer(R),
Improvements(R), Lillian Vernon(R), L.L. Bean(R), Magellan's(R), Orvis(R), Plow
& Hearth(R), Reliable Home Office, Seiko Instruments, Successories(R), The
Sharper Image(R), T. Shipley(R), and The Wine Enthusiast(TM).
PRINT MEDIA
GENERAL. We market our merchandise through a number of print media,
including our in-flight catalogs. The merchandise of each participating merchant
in our catalogs is presented in a separate section of each catalog to allow
browsing from "store-to-store," providing the convenience and variety of an
upscale shopping mall environment.
Our print media provides consumers with a selection of only the
best-selling products from our most well-known merchant partners. This ensures
that consumers quickly see the most popular items, without having to review
hundreds of items that may be of little interest. Through our SKYMALL.COM Web
site, we offer online consumers a larger product selection.
SKYMALL DOMESTIC IN-FLIGHT CATALOGS. Our in-flight catalogs, which are
placed in airline seat pockets, are our largest distribution channel. Over the
past ten years, we have experienced substantial growth in our domestic in-flight
catalog business. We have exclusive agreements to place our catalogs on 18
airlines, making our catalog available to approximately 500 million airline
passengers annually. These 18 airlines, which carried approximately 70% of all
domestic passengers in 1999, include America West Airlines, Continental
Airlines, Delta Air Lines, Northwest Airlines, Southwest Airlines, United
Airlines and US Airways. The Company's catalogs carry the SkyMall name on all
participating airlines, except US Airways, which offers the SkyMall catalog
under the name "Selections." In order to enhance the appeal of our product
offerings, we produce four new domestic in-flight catalogs per year. To gain
efficiency in production and printing, the catalog content is substantially the
same for all of our airline partners.
5
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The SkyMall program offers airlines a low-risk means of incrementally
increasing their earnings. In exchange for placement of our catalogs in
seat-back pockets, we pay each airline partner a monthly commission based on net
merchandise revenues generated by the Company from sales to that airline's
passengers. Some agreements also require payment of a minimum monthly commission
or a boarding cost that reimburses the airline for the increased fuel costs
attributable to the weight of the catalogs. We believe our relations with each
of our airline partners are good.
SKYMALL INTERNATIONAL IN-FLIGHT CATALOGS. We believe that the demographic
and technological trends that are driving the domestic consumer to shift from
traditional retail shopping are also present in many international markets,
which we believe are substantially under-served. In early 1998, we launched an
international initiative under which we began making specialized catalogs
available to passengers on certain international flights traveling to Japan and
serving the Pacific Rim featuring merchandise tailored to this audience.
Although international sales have been immaterial to our total net
merchandise sales, we plan to continue exploring opportunities in these markets.
SkyMall continues to gain experience in international markets, including the
areas of merchandising, customer service and fulfillment. The Company believes
that its experience in the domestic in-flight business, as well as its Web-based
infrastructure, will enable it to maintain its presence in international
markets, particularly those with a strong interest in U.S. products or where
remote shopping already has some level of acceptance by consumers.
OTHER PRINT MEDIA PROGRAMS. We provide unique, upscale catalogs to the
membership-oriented airport lounges of one of our major airline partners. The
SkyMall catalogs are also available on certain Northeastern routes of Amtrak.
ELECTRONIC MEDIA
GENERAL. We launched our first Internet Web site in January of 1996 and
since then have continued to refine and develop our e-commerce strategies. In
1999, we devoted substantial financial, marketing, technical and personnel
resources to further develop our electronic commerce initiatives. Our strategies
in this area included, among other things, (i) significantly improving the look
and feel, as well as the speed, performance and search functionality of our Web
sites, (ii) further development of our technology and other business
infrastructures used to convey orders and provide order status information to
our customers, (iii) conducting marketing and other promotional campaigns
through both online and off-line media designed to enhance brand awareness of
the SkyMall name and drive traffic to our Web site, (iv) significantly
increasing the selection and variety of products for our programs, and (v)
developing non-product travel-related content for our Web site that encourages
consumers to visit our site for information as well as shopping.
In February 2000, we re-launched our Web site, SKYMALL.COM, in the
culmination of our year-long technology development efforts. The new site
includes both improvements to the consumer shopping experience as well as
significant advances in the overall performance, speed and stability of the
site. Our new Web site is more consumer-friendly due to improved navigation
capabilities, new features and an enhanced search engine, which enables
6
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customers to search and define their shopping needs. The most noticeable change
for consumers is the redesign of our home page, which is visually more appealing
with key consumer features prominently displayed. In addition, based on formal
user testing surveys, the flow of the user checkout process has been vastly
simplified.
Using data modeling, skymall.com created its newest feature, the Gift Shop,
with a search feature that enables the user to shop according to occasion, price
categories and gender. Data modeling also has been used more extensively on the
Web site to sort by category and sub-category, which enables customers to search
and define their shopping needs faster and easier. In addition, we have added
e-reminders, e-cards and wishlist functionality, together with a "specials"
area, which features new promotions on a regular basis to encourage consumers to
return to the site to take advantage of special offers. The "specials" area also
provides easy access to skymall.com's travel site, SKYMALLTRAVEL.COM, as well as
other rewards partners. For further discussion, see "BUSINESS-TO-BUSINESS
SEGMENT."
CONSUMER INCENTIVE AND LOYALTY PROGRAMS. The loyalty and award point
industry is anticipated to become a strong market for the Company, both for
print catalogs and CD-ROM. We are in the process of defining programs and
services that will be offered to customers of other companies' loyalty programs.
BUSINESS-TO-BUSINESS SEGMENT
OVERVIEW
SkyMall's business-to-business segment provides unique solutions for
corporate clients. In particular, this segment offers retail merchandise
services through loyalty programs, workplace catalogs, CD-ROM and the Company's
Web site. Through these initiatives, SkyMall offers custom solutions to loyalty
programs for redemption of program points for SkyMall merchandise. The workplace
catalog presents high-quality, customized logo merchandise. The CD-ROM program
provides customers with an opportunity to experience a broadband experience from
the comfort of their home or on the road through a laptop. This channel provides
businesses with a new advertising medium combined with SkyMall's favorable
demographics. Additionally, the SKYMALL.COM Web site provides our affiliate
partners a mechanism to offer products to their customer bases.
PRINT MEDIA
WORKPLACE MERCHANDISE CATALOGS. Through our subsidiary, Durham & Company, a
Utah corporation, acquired in October 1998, we offer logo merchandise and
recognition products to employees of a number of blue-chip organizations,
primarily through print catalogs and since September 1999, on the
durham.skymall.com Web site. Competing in the highly fragmented incentive
industry, Durham distinguishes itself by providing high-quality products and
excellent customer service and focuses its marketing efforts on large
organizations.
INCENTIVE AND LOYALTY PROGRAMS. The loyalty and award point industry is
anticipated to become a strong market segment for the Company, both for print
catalogs and CD-ROM. We are in the process of defining programs and services
that will be offered in the future to loyalty programs. In March 2000, SkyMall
entered into an agreement with The GM Card(R), a division of General Motors
Corporation(R), to provide a unique selection of merchandise to customers who
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acquire The New GM CardSM allowing its card members to redeem Earnings for
non-vehicle offers including unique merchandise from skymall.com. In April 2000,
SkyMall entered into an agreement with employee savings.com to join its network
of premium product and service providers offering exclusive savings to more than
1.4 million FORTUNE 1000 employees and their families, and an agreement with ISP
Channel, SoftNet Systems, Inc.'s wholly-owned broadband Internet
access-over-cable service provider, to provide e-commerce opportunities for its
customers by establishing a co-branded closed e-commerce link from ISP Channel
Neighborhood Web sites to SkyMall's skymall.com Web site.
ELECTRONIC MEDIA
AFFILIATE PROGRAM. In addition to developing our own Web sites, we have an
affiliate program through which we provide a turn-key merchant solution to
businesses that are interested in providing SkyMall's merchandise to visitors to
their own Web sites. Our unique proprietary technology and other systems allow
us to quickly and cost-effectively implement affiliate site programs. Visitors
to SkyMall's affiliate sites go directly to a SkyMall site, which is typically
co-branded with the affiliate partner, for shopping services. After shopping,
the customers are directed back exclusively to the site from which they began so
that the affiliate partner does not lose the benefit of the traffic to its site.
Although an online store can be privately labeled for our affiliate partners,
most of our affiliate sites are co-branded to increase SkyMall's brand awareness
as well as generate affinity for our online partners. Participants in our
affiliate program include some of our airline partners and related entities,
such as Delta Air Lines, Delta Crown Room, Continental Airlines, Northwest
Airlines, America West Airlines and US Airways. Other participants include Visa
USA, Visa International, First USA, the largest Visa card issuer and a banking
leader in electronic commerce. The Company continues to evaluate the success of
its individual affiliates and, in some cases, has terminated relationships while
it continues to pursue new affiliations.
OTHER ELECTRONIC MEDIA.
SKYMALLTRAVEL.COM. In July 1999, SkyMall launched its SKYMALLTRAVEL.COM Web
site targeted to frequent travelers, which provides one-stop access for all
their travel needs. SKYMALLTRAVEL.COM organizes many of the best travel
resources in one place, including linked directories for airlines, hotels,
rental car and online booking services, as well as content and tools that assist
business travelers before, during and after their trips.
SKYMALL VENTURES, INC. AND SKYMALL MEDIA VENTURES, INC. Our subsidiary,
SkyMall Ventures, Inc., is responsible for the Company's broadband, new media
and business-to-business custom loyalty initiatives. Through our subsidiary,
SkyMall Media Ventures, Inc., we intend to develop interactive media content in
cooperation with participants from numerous industries, including retail,
entertainment and services, and intend to distribute optical media, including
CD-ROMs, at no cost to the consumer, across SkyMall's distribution channels.
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THE OFFERING
Securities offered by the selling
shareholders............................. 2,665,792 shares of common stock
Common stock outstanding as of
July 12, 2000............................ 15,817,420 shares(1)
Use of Proceeds.......................... We will not receive any proceeds from
the sale of the common stock by the
selling shareholders. However, we
will receive up to $456,218.50 as the
purchase price for the shares of
common stock underlying the warrants
if all of the warrants are exercised.
See "Use of Proceeds."
Risk Factors............................. The shares of common stock offered
under this prospectus involve a high
degree of risk. See "Risk Factors."
Nasdaq National Market Symbol............ SKYM
----------------
(1) Does not include (i) 947,852 shares of common stock issuable upon the
exercise of outstanding stock options issued pursuant to the Company's
stock option plans, (ii) an additional 793,781 shares of common stock
reserved for issuance pursuant to future awards granted under such stock
option plans, (iii) 50,000 shares of common stock issuable upon the
exercise of warrants issued in an acquisition, which are exercisable at
$8.00 per share, (iv) 25,000 shares of common stock issuable upon the
exercise of warrants issued to Ryan, Beck & Co., Inc. in connection with
Ryan, Beck's services to the Company related to the Company's financing
efforts, which are exercisable at $9.31 per share, (v) 571,444 shares of
common stock issuable upon the exercise of warrants issued to investors in
the Company's November 1999 private placement, which are exercisable at
$8.00 per share, (vi) 129,136 shares of common stock issuable upon the
exercise of warrants issued to placement agents in connection with the
Company's November 1999 private placement, which are exercisable at prices
ranging from $8.00 to $9.12 per share, (vii) 14,420 shares of common stock
issuable upon the exercise of warrants issued upon conversion of an
outstanding note, which are exercisable at $8.00 per share, (viii) 50,000
shares of common stock issuable upon the exercise of warrants issued to
Genesis Select Corporation in connection with its services as an investor
relations consultant to the Company, exercisable at prices ranging from
$8.19 to $14.40 per share; (ix) 313,003 shares of common stock issuable
upon the exercise of warrants issued to investors in the Company's December
20, 1999 private placement, which are exercisable at $8.00 per share, (x)
200,742 shares of common stock issuable upon the exercise of warrants
issued to placement agents in connection with the Company's December 20,
1999 private placement, which are exercisable at prices ranging from $7.00
to $9.12 per share, (xii) 571,429 shares of common stock issuable upon the
exercise of warrants issued to investors in the Company's December 30, 1999
private placement, which are exercisable at $8.00 per share, (xii) 250,000
warrants issued to a financial advisor in payment of an advisory fee in
connection with the transactions contemplated pursuant to the December 30,
1999 private placement which are exercisable at $8.00 per share, (xiii)
34,286 shares of common stock issuable upon the exercise of warrants issued
to placement agents in connection with the Company's December 30, 1999
private placement, which are exercisable at $7.00 per share, and (xiv)
182,792 shares of common stock issuable upon the exercise of the warrants
which are a part of the shares of common stock that are being offered
pursuant to this prospectus.
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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 REPORTED LOSSES IN FISCAL 1999 AND MAY NOT BE PROFITABLE IN THE FUTURE.
While we have been profitable in the past, and are planning to be profitable by
the fourth quarter of 2000, we incurred a net loss of $24,140,000 for the fiscal
year ended December 31, 1999, and a net loss of $7,458,000 for the fiscal
quarter ended March 31, 2000. We expect to experience fluctuations in our future
operating results due to a variety of factors, many of which are outside the
Company's control, including the following:
o the demand for our products and services,
o the level of competition in the merchants we serve,
o our success in maintaining and expanding our distribution channels,
o our success in attracting and retaining motivated and qualified
personnel,
o our ability to expand into existing and new domestic, as well as
international markets,
o our development and marketing of new products and services,
o our ability to control costs, and
o general economic conditions.
Our operating results will be materially and adversely affected if we do
not successfully address these and other risks.
WE MAY NOT BE ABLE TO RAISE SUFFICIENT CAPITAL. Our existing line of credit
and cash resources may not be sufficient to permit the Company to fully
implement its business plan. In order to fully implement our business plan, we
may need to raise additional capital from third parties or otherwise secure
additional financing for the Company. There can be no assurance that the Company
will be able to successfully raise additional capital or secure other financing,
or that such funding will be available on terms that are favorable to the
Company. To the extent we are unable to raise sufficient additional capital or
secure other financing, this could have a material adverse effect on the
Company.
OUR BUSINESS MAY NOT GROW IN THE FUTURE. Since our inception, we have
rapidly expanded our operations, growing from total revenues of $200,000 in 1990
to total revenues of $78.9 million in 1999. Our continued future growth will
depend to a significant degree on our ability to increase revenues from our
existing businesses, maintain existing channel partner relationships and develop
new channel partner relationships, expand our product and content offering to
consumers, while maintaining adequate gross margins, and implement other
programs that increase the circulation of the SkyMall print catalogs and
generate traffic for our e-commerce programs. 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:
10
<PAGE>
o our ability to select products that appeal to our customer base and
effectively market them to our target audience,
o sustained or increased levels of airline travel, particularly in
domestic airline markets,
o increasing adoption by consumers of the Internet for shopping,
o the continued perception by participating merchants that we offer an
effective marketing channel for their products and services, and
o our ability to attract, train and retain qualified employees and
management.
There can be no assurance that we will be able to successfully implement
our growth strategy.
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. There is no assurance that consumers
will continue to make purchases over the Internet 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.
If use of online services does not continue to grow as expected, or if the
technological infrastructure for the Internet is unable to effectively support
its growing use, our growth strategy, business and financial condition may be
materially adversely affected.
WE MAY BE UNABLE TO MANAGE THE POTENTIAL GROWTH OF OUR BUSINESS. Our
potential growth may place significant demands upon our personnel, management
and financial resources. There is no assurance that our current personnel,
systems, procedures and controls will be adequate to support our future
operations, that we will be able to 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 could be adversely affected.
OUR PLANS FOR INTERNATIONAL OPERATIONS POSE ADDITIONAL RISKS. We have
limited experience in selling our products and services internationally.
International operations place additional burdens upon our management, personnel
and financial resources and may cause the Company to incur losses. We also face
different and additional competition in these international markets. In
addition, international operations have certain unique risks, such as regulatory
requirements, legal uncertainty 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 operate or expand our business internationally, we also are
subject to risks associated with international monetary exchange fluctuations.
Any one of these risks could affect our international operations, as well as
have a material adverse impact upon our overall business operations, growth and
financial condition.
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.
11
<PAGE>
American Airlines and TWA currently offer merchandise catalogs to their
customers through a competitor. 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
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 Web sites or those
of other third parties. The success of online marketing cannot be currently
determined, and further penetration in this market will require substantial
additional financial resources, acquisition of technology, investments in
marketing and contractual relationships with third parties. Results will also be
affected by existing competition, which the Company anticipates will intensify,
and by additional entrants to the market who may already have the necessary
technology and expertise, many of whom may have substantially greater resources
than the Company.
DEPENDENCE ON CHANNEL RELATIONSHIPS. Our business depends significantly on
our relationships with the airlines, affiliate Web sites, hotels and other
channel partners. Some of our agreements with our channel partners are
short-term allowing the partner to terminate the relationship on 60-to-180 days'
advance notice. There is no assurance that our channel partners will continue
their relationships with us, and the loss of one or more of our significant
channel partners could have a material adverse effect on our business,
prospects, financial condition and results of operations.
WE MAY BE UNABLE TO MAINTAIN HISTORICAL MARGIN LEVELS. We may be unable to
increase or maintain our gross margins at historical levels, particularly for
our electronic commerce initiatives. As competition in online shopping
intensifies, our merchant participants may be unable or unwilling to participate
in our programs when more favorable economic arrangements may be available from
other third parties. Although many of our merchants have participated with us
for several years, most of our relationships are short-term and may be
re-negotiated by the merchant every 90 days. To the extent our gross margins
decline from historical levels, our business, financial condition and results of
operations may be adversely affected.
WE FACE CREDIT RISKS. Some participating merchants agree to pay a placement
fee to us for including their merchandise in our programs. 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 we purchase from program participants. 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
business, financial condition and results of operations.
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 and airline fuel markets 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 could have a material adverse effect on our business, financial
condition and results of operations.
12
<PAGE>
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 business, financial
condition and results of operations.
WE FACE RISKS ASSOCIATED WITH ONLINE SECURITY BREACHES OR FAILURES. In
order to successfully make sales over the Internet, it is necessary that we can
ensure the secure transmission of confidential customer 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, may mean
that fewer consumers are likely to make purchases 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 MAY NOT BE ABLE TO ADAPT TO RAPIDLY CHANGING TECHNOLOGIES OR WE MAY
INCUR SIGNIFICANT COSTS IN DOING SO. The Internet is characterized by rapidly
changing technologies, evolving industry standards, frequent new product and
service introductions, and changing customer demands. As a result of the rapidly
changing nature of the Internet business, we may be subject to risks, now and in
the future, of which we are not currently aware. To be successful, we must adapt
to our rapidly evolving market by continually enhancing our products and
services and introducing new products and services to address our customers'
changing and increasingly sophisticated requirements. We may use new
technologies ineffectively or we may fail to adapt our e-commerce
transaction-processing systems and infrastructure to meet customer requirements,
competitive pressures, or emerging industry standards. We could incur
substantial costs if we need to modify our services or infrastructure. Our
business could be materially and adversely affected if we incur significant
costs to adapt, or cannot adapt, to these changes.
BECAUSE WE DEPEND ON COMPUTER SYSTEMS, A SYSTEMS FAILURE WOULD CAUSE A
SIGNIFICANT DISRUPTION TO OUR BUSINESS. Our business, financial condition and
results of operations could be materially and adversely affected by any event
that interrupts or delays our operations. Our business depends on the efficient
and uninterrupted operation of our servers and communications hardware systems
and infrastructure. Any sustained or repeated systems interruptions that cause
our Web sites to become unavailable for use would result in our inability to
service our customers. While we have taken precautions against systems failure,
interruptions could result from our failure to maintain our computer systems and
equipment in effective working order, as well as natural disasters, power loss,
telecommunications failure, and similar events. We currently maintain our
computer systems at offices located in Arizona, Utah and New York.
In addition, our users depend on telecommunications providers, Internet
service providers, and network administration for access to our products and
13
<PAGE>
services. Our systems and equipment could experience outages, delays, and other
difficulties as a result of system failures unrelated to our systems.
OUR EQUIPMENT MAY BE UNABLE TO SUPPORT INCREASED VOLUME. Growth in the
number of users accessing our Web site may strain or exceed the capacity of our
computer and networking systems or the systems of our third party service
providers, which could result in impaired performance or systems failure. If
this occurs, customer service and satisfaction may suffer, which could lead to
dissatisfied users, reduced traffic, and an adverse impact on our business. Our
current systems may be inadequate to accommodate rapid traffic growth on our
servers.
WE MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATION. Due to the
increasing popularity and use of the Internet, governmental or other regulatory
bodies in the United States and abroad may adopt additional laws and regulations
with respect to the Internet that cover issues such as content, privacy,
pricing, encryption standards, consumer protection, cross-border commerce,
electronic commerce, taxation, copyright infringement, and other intellectual
property issues. Moreover, the applicability to the Internet of existing laws
governing issues such as property ownership, content, taxation, defamation, and
personal privacy is uncertain. Any new legislation or regulation or governmental
enforcement of existing regulations may limit the growth of the Internet,
increase our cost of doing business or increase our legal exposure. We currently
are not subject to direct regulation by any governmental agency other than laws
and regulations generally applicable to businesses and specifically, mail order
businesses. We cannot predict the impact, if any, that any future regulatory
changes or development may have on our business, financial condition, and
results of operations. Changes in the regulatory environment relating to the
Internet could have a material adverse effect on our business, financial
condition, and results of operations.
SECURITY PROTECTION FOR OUR NETWORK MAY BE INSUFFICIENT. We believe that
concern regarding the security of confidential information, such as credit card
numbers, prevents many people from engaging in online commercial transactions.
We face potential security breaches from within our organization and from the
public at large. If we do not maintain sufficient security, we may be subject to
additional legal exposure. We have taken measures to protect the integrity of
our infrastructure and the privacy of confidential information contained within
our infrastructure. Nonetheless, our infrastructure is potentially vulnerable to
physical or electronic break-ins, viruses or similar problems. If a person
circumvents our security measures, he or she could jeopardize the security of
confidential information stored on our systems, misappropriate proprietary
information or cause interruptions in our operations. Although we intend to
continue to implement security measures, such measures have been circumvented in
the past and we cannot provide assurance that measures we implemented will not
be circumvented in the future. Although we do have "firewalls" protecting our
systems from outside circumvention, such "firewalls" do not completely protect
our systems from our own employees, should one or more of them become inclined
to inflict damage upon our systems. We may be required to make significant
additional investments and efforts to protect against or remedy security
breaches. Security breaches that result in access to confidential information
could damage our reputation and expose us to a risk of loss or liability.
Alleviating problems caused by computer viruses or other inappropriate uses or
security breaches may require interruptions, delays, or cessation in service to
our customers. In addition, since we expect that our users will increasingly use
14
<PAGE>
the Internet for commercial transactions in the future, any malfunction or
security breach could cause these transactions to be delayed, not completed at
all, or completed with compromised security.
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 1999, approximately 42% 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 catalogs and our electronic
commerce sites feature products and services from numerous 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 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, 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 AND WAND PARTNERS INC. CAN CONTROL MANY IMPORTANT COMPANY
DECISIONS. As of July 12, 2000, Mr. Worsley and his wife (the "Worsleys")
beneficially owned 4,830,280 shares, or approximately 30.5% of our outstanding
common stock, and Wand Partners Inc. beneficially owned 2,114,286 shares, or
approximately 13.4% of our outstanding common stock. In addition, David J.
Callard, the President of Wand Partners Inc., is a member of the Board of
Directors of the Company. As a result, the Worsleys and Wand Partners 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 and Wand Partners may also discourage or
prevent any proposed takeover of the Company pursuant to a tender offer.
THE PRICE OF OUR COMMON STOCK IS EXTREMELY 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:
o new merchant agreements
o the acquisition or loss of one or more airline, electronic commerce or
other channel partners
o fluctuations in our operating results
o analyst reports, media stories, Internet chat room discussions, news
broadcasts and interviews
o market conditions for retailers and electronic commerce companies in
general
15
<PAGE>
o changes in airline fuel, paper or our other significant expenses
o changes in the purchase price for products acquired from 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. Accordingly, the price of our
common stock may be impacted by these or other trends.
OUR OUTSTANDING SHARES MAY BE DILUTED. The market price of our common stock
may decrease as more shares of common stock become available for trading.
Certain events over which you have no control result in the issuance of
additional shares of our common stock, which would dilute your ownership
percentage in SkyMall. We may issue additional shares of common stock or
preferred stock:
o to raise additional capital or finance acquisitions; or
o upon the exercise or conversion of outstanding options and warrants
As of July 12, 2000, there were outstanding warrants and options to acquire
up to 3,340,104 shares of common stock at exercise prices ranging from $2.00 to
$24.50 per share, including the 182,792 warrants issued to placement agents in
connection with the June 30, 2000 private placement which are a part of the
shares of common stock that are being offered pursuant to this prospectus. If
exercised, these securities will dilute the percentage ownership of holders of
outstanding common stock of the Company. These securities, unlike the common
stock, provide for anti-dilution protection upon the occurrence of stock splits,
redemptions, mergers, reclassifications, reorganizations and other similar
corporate transactions, and, in some cases, major corporate announcements. If
one or more of these events occurs, the number of shares of common stock that
may be acquired upon conversion or exercise would increase.
RISK THAT FORWARD-LOOKING STATEMENTS MAY NOT COME TRUE. This prospectus and
the documents incorporated herein by reference, contain forward-looking
statements that involve risks and uncertainties. We use words such as "believe,"
"expect," "anticipate," "plan" or similar words to identify 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 our current expectations and are subject to a number of risks and
uncertainties, many of which are beyond our control. You should not place undue
reliance on these forward-looking statements, which apply only as of the date of
such documents. Our actual results could differ materially from those
anticipated in these forward-looking statements for many reasons, including the
risks faced by us described above and elsewhere in this prospectus.
FORWARD-LOOKING STATEMENTS
Certain statements made herein, in future filings by the Company with the
SEC and in the Company's written and oral statements made by or with the
approval of an authorized executive officer, constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, and the Company intends that
such forward-looking statements be subject to the safe harbors created thereby.
16
<PAGE>
These statements discuss, among other items, the Company's growth strategy and
anticipated trends in our business. Words and phrases such as "should be," "will
be," "believes," "expects," "anticipates," "plans," "intends," "may" and similar
expressions identify 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 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. Examples of uncertainties which could cause
such differences include, but are not limited to, the Company's dependence on
its relationships with its airline, merchant, and other partners, the ability of
the Company to attract and retain key personnel, especially highly skilled
technology personnel, the ability of the Company to secure additional capital to
finance its business strategy, fluctuations in paper prices and airline fuel
costs, customer credit risks, competition from other catalog companies,
retailers and e-commerce companies, and the Company's reliance on technology and
information and telecommunications systems, all of which are discussed more
fully above and in the Company's other filings with the Securities and Exchange
Commission. The Company undertakes no obligation to publicly update or revise
any forward-looking statements whether as a result of new information, future
events, or otherwise.
SELLING SHAREHOLDERS
The shares being offered by the selling shareholders were issued in the
June 30, 2000 private placement pursuant to a Stock Purchase Agreement, or will
be issued upon exercise of warrants. We are registering the shares in order to
permit the selling shareholders to offer these shares for resale from time to
time.
The following table provides certain information with respect to the common
stock beneficially owned by each selling shareholder as of July 12, 2000. None
of the selling shareholders has a material relationship with us except as noted
in the following table. 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.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior Number of Owned After
to the Offering Shares the Offering
------------------------- Offered ------------------------
---------
Name Number Percent(1) Number Percent(2)
---- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Benjamin and Christine Aguilera 86,650(3) * 7,500 79,150(3) *
c/o SkyMall, Inc.
1520 E. Pima Street
Phoenix, Arizona 85034
American High Growth Equities 196,429(4) 1.2% 75,000 121,429(4) *
Retirement Trust
Trump Tower - 24th Floor
725 5th Avenue
New York, New York 10022
Lyle R. Knight and Toril Knight 181,086(5) 1.2% 25,000 156,086(5) 1.0%
c/o First Interstate Banc System
401 N. 31st Street
Billings, Montana 59116-0918
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior Number of Owned After
to the Offering Shares the Offering
------------------------- Offered ------------------------
---------
Name Number Percent(1) Number Percent(2)
---- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Laborers' District Council and 150,000 1.0% 150,000 0 0%
Contractors of Ohio
State Street Bank & Trust Company
55 Water Street
Plaza Level - 3rd Floor
New York, New York 10004
New York State Nurses Association 225,000 1.4% 225,000 0 0%
Pension Plan
The Northern Trust Company
40 Broad Street, 8th Floor
New York, New York 10004
Ohio Carpenters' Pension Plan 200,000 1.3% 200,000 0 0%
State Street Bank & Trust Company
55 Water Street
Plaza Level - 3rd Floor
New York, New York 10004
Oregon Investment Council 425,000 2.7% 425,000 0 0%
State Street Bank & Trust Company
55 Water Street
Plaza Level - 3rd Floor
New York, New York 10004
Randy Petersen 58,894(6) * 1,250 57,644(6) *
Frequent Flyer Service
4715-C Town Center Drive
Colorado Springs, Colorado 80916
RS Diversified Growth Fund (7) 240,000 1.5% 160,000 80,000 *
388 Market Street, Second Floor
San Francisco, California 94111
SCAP-5 LLC (8) 200,000 1.3% 200,000 0 0%
One Joy Street
Boston, Massachusetts 02108
Sherleigh Associates, Inc. Profit 75,000 * 75,000 0 0%
Sharing Plan
920 Fifth Avenue, #3B
New York, New York 10021
Special Situations Cayman 151,265(10) 1.0% 50,000 101,265(10) *
Fund L.P. (9)
153 E. 53rd Street
New York, New York 10022-1200
Special Situations Fund III L.P.(9) 440,879(11) 2.8% 150,000 290,879(11) 1.8%
153 E. 53rd Street
New York, New York 10022-1200
Special Situations Private Equity 427,186(12) 2.7% 150,000 277,186(12) 1.7%
Fund L.P. (9)
153 E. 53rd Street
New York, New York 10022-1200
The Paisley Fund (7) 225,000 1.4% 150,000 75,000 *
388 Market Street, Second Floor
San Francisco, California 94111
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior Number of Owned After
to the Offering Shares the Offering
------------------------- Offered ------------------------
---------
Name Number Percent(1) Number Percent(2)
---- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
The Paisley Pacific Fund (7) 550,000 3.5% 250,000 300,000 1.9%
388 Market Street, Second Floor
San Francisco, California 94111
Wand Affiliates Fund L.P.(13) 101,976(14) * 8,205 93,771(14) *
630 Fifth Avenue, Suite 2435
New York, New York 10111
Wand Equity Portfolio II L.P.(13) 1,762,310(15) 11.1% 141,795 1,620,515(15) 10.1%
630 Fifth Avenue, Suite 2435
New York, New York 10111
Robert M. Worsley and Christi M. 4,830,280(16) 30.5% 31,750 4,798,530(16) 30.0%
Worsley as Trustees of The Robert
Merrill Worsley and Christi Marie
Worsley Family Revocable Trust
dated July 28, 1998
c/o SkyMall, Inc.
1520 E. Pima Street
Phoenix, Arizona 85034
Budd Zuckerman 309,226(17) 2.0% 157,500 151,726(17) 1.0%
6587 Lake View Drive
Boulder, Colorado 80303
Schneider Securities 24,783(18) * 16,313 8,470(18) *
1625 17th Street, Suite 311
Denver, Colorado 80202
Shoreline Pacific Equity Ltd. (19) 35,902(20) * 6,395 29,507(20) *
c/o Shoreline Pacific Institutional
Finance
3 Harbor Drive, Suite 211
Sausalito, California 94965
Harlan P. Kleiman (19) 46,262(21) * 8,239 38,023(21) *
c/o Shoreline Pacific Institutional
Finance
3 Harbor Drive, Suite 211
Sausalito, California 94965
Greg Tansey (19) 6,143(22) * 1,094 5,049(22) *
c/o Shoreline Pacific Institutional
Finance
3 Harbor Drive, Suite 211
Sausalito, California 94965
Jim Healy (19) 2,369(23) * 422 1,947(23) *
c/o Shoreline Pacific Institutional
Finance
3 Harbor Drive, Suite 211
Sausalito, California 94965
Vida Harband (19) 1,407(24) * 251 1,156(25) *
c/o Shoreline Pacific Institutional
Finance
3 Harbor Drive, Suite 211
Sausalito, California 94965
Beth Collins (19) 221(25) * 39 182(25) *
c/o Shoreline Pacific Institutional
Finance
3 Harbor Drive, Suite 211
Sausalito, California 94965
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior Number of Owned After
to the Offering Shares the Offering
------------------------- Offered ------------------------
---------
Name Number Percent(1) Number Percent(2)
---- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Maria Jorajuria (19) 221(26) * 39 182(26) *
c/o Shoreline Pacific Institutional
Finance
3 Harbor Drive, Suite 211
Sausalito, California 94965
</TABLE>
_______________
* Less than 1%.
(1) Percentages are based upon 15,817,420 shares of the Company's common stock
outstanding as of July 12, 2000.
(2) Percentages are based upon 16,000,212 shares of the Company's common stock
being outstanding, assuming the exercise of all of the warrants issued to
placement agents in connection with the private placement and the sale of
the underlying common stock by the selling shareholders.
(3) Ms. Aguilera is Executive Vice President, Acting General Manager, Acting
Chief Financial Officer, General Counsel and Secretary of the Company.
Includes 75,000 shares of common stock issuable to Ms. Aguilera upon
exercise of options to purchase shares of common stock granted pursuant to
the Company's 1994 Stock Option Plan
(4) Includes (i) 71,429 shares of common stock issuable to American High Growth
Equities Retirement Trust upon exercise of warrants issued in the Company's
November 1999 private placement and (ii) 50,000 shares of common stock
issuable upon exercise of the warrants issued in the Company's December 20,
1999 private placement.
(5) Mr. Knight serves as a director of the Company. Includes (i) 7,286 shares
of common stock issuable upon exercise of warrants issued to Mr. and Mrs.
Knight in the Company's December 20, 1999 private placement, (ii) 81,086
shares of common stock held in IRA accounts for the benefit of Mr. Knight,
(iii) 7,143 shares of common stock issuable upon exercise of warrants held
in an IRA account for the benefit of Mr. Knight, issued in the December 20,
1999 private placement, and (iii) 46,000 shares of common stock issuable to
Mr. Knight upon exercise of options to purchase shares of common stock
granted pursuant to the Company's Non-Employee Director Stock Option Plan.
(6) Mr. Petersen serves as a director of the Company. Includes (i) 1,786 shares
of common stock issuable upon exercise of warrants issued to Mr. Petersen
in the December 20, 1999 private placement, and (ii) 46,000 shares of
common stock issuable to Mr. Petersen upon exercise of options to purchase
shares of common stock granted pursuant to the Company's Non-Employee
Director Stock Option Plan.
(7) RS Growth Group LLC is the General Partner of RS Diversified Growth Fund,
The Paisley Fund and The Paisley Pacific Fund. In addition, RS Growth Group
LLC is the General Partner of RS Emerging Growth Pacific Partners, RS
Emerging Growth Partners LP, RS Premium Partners LP, who also hold shares
of common stock of the Company. As a group, these shareholders beneficially
own a total of 1,657,857 shares of Common Stock of the Company, or 10.5% as
of July 12, 2000.
(8) Thomas J. Litle, a director of the Company, holds a 37.5% membership
interest in SCAP-5, LLC.
(9) MGP Advisers Limited Partnership (MGP), a Delaware limited partnership, is
the general partner of the Special Situations Fund III, L.P., a Delaware
limited partnership. AWM Investment Company, Inc. (AWM), a Delaware
corporation, is the general partner of MGP and the general partner of and
investment adviser to the Special Situations Cayman Fund, L.P. MG Advisers
L.L.C. (MG), a New York limited liability company, is the general partner
of the Special Situations Private Equity Fund, L.P., a Delaware limited
partnership. Austin W. Marxe and David M. Greenhouse are the principal
owners of MG, MGP and AWM and are principally responsible for the
selection, acquisition and disposition of the portfolios securities by the
investment advisers on behalf of their funds. As a group, these
shareholders beneficially own a total of 1,019,330 shares of Common Stock
of the Company, or 6.4% as of July 12, 2000.
(10) Includes (i) 32,150 shares of common stock issuable to Special Situations
Cayman Fund L.P. upon exercise of warrants issued in the Company's November
1999 private placement and (ii) 16,072 shares of common stock issuable upon
exercise of warrants issued to Special Situations Cayman Fund L.P. in the
Company's December 1999 private placement.
(11) Includes (i) 96,450 shares of common stock issuable to Special Situations
Fund III L.P. upon exercise of certain warrants issued in the Company's
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November 1999 private placement and (ii) 47,143 shares of common stock
issuable upon exercise of warrants issued to Special Situations Fund III
L.P. in the Company's December 20, 1999 private placement.
(12) Includes (i) 85,700 shares of common stock issuable to Special Situations
Private Equity Fund L.P. upon exercise of warrants issued in the Company's
November 1999 private placement and (ii) 43,929 shares of common stock
issuable upon exercise of warrants issued to Special Situations Private
Equity Fund L.P. in the Company's December 20, 1999 private placement.
(13) These selling shareholders are co-managed under a management agreement with
Wand Partners Inc. In addition, Wand Partners Inc. may be deemed to be the
beneficial holder of the shares held by Wand Equity Portfolio II L.P. and
Wand Affiliates Fund L.P. Wand Partners Inc. acts as an investment advisor
to the Company and David J. Callard, President of Wand Partners Inc., is a
director of the Company. As a group, including 250,000 shares of common
stock issuable upon exercise of warrants held by Wand Partners Inc., these
shareholders beneficially own a total of 2,216,262 shares of common stock
of the Company, or 14% as of July 12, 2000.
(14) Includes 31,257 shares of common stock issuable upon exercise of warrants
issued to Wand Affiliates Fund L.P. as an investor in the Company's
December 30, 1999 private placement.
(15) Includes 540,172 shares of common stock issuable upon exercise of warrants
issued to Wand Equity Portfolio II L.P. as an investor in the Company's
December 30, 1999 private placement. (16) Mr. Worsley is Chairman of the
Board, President and Chief Executive Officer of the Company. Includes (i)
1,692,658 shares of common stock held by The Robert Merrill Worsley and
Christi Marie Worsley Family Revocable Trust dated July 28, 1998 of which
Mr. and Mrs. Worsley are the Trustees (the "Worsley Trust"), (ii) 71,429
shares of Common Stock issuable upon exercise of warrants issued to the
Worsley Trust in the Company's November 1999 private placement, (iii)
3,065,201 shares of common stock held jointly by Mr. and Mrs. Worsley, 496
shares of common stock held by Mr. Worsley individually and (iv) 496 shares
of common stock held by Mrs. Worsley individually.
(17) Mr. Zuckerman is President of Genesis Select Corporation, an investor
relations consultant to the Company. In addition to being an investor in
the June 30, 2000 private placement, as an associate of Schneider
Securities, which acted as a placement agent in such private placement, Mr.
Zuckerman received warrants to purchase shares of common stock. The number
of shares beneficially owned by Mr. Zuckerman includes (i) 150,000 shares
of common stock issuable upon exercise of warrants granted to him in
connection with Schneider Securities' services as a placement agent in the
June 30, 2000 private placement, (ii) 76,226 shares of common stock
issuable upon exercise of warrants granted to him in connection with
Schneider Securities' services as a placement agent in the December 20,
1999 private placement, (iii) 7,500 shares of common stock issuable upon
exercise of warrants issued to him as an investor in the December 20, 1999
private placement, and (iv) 50,000 shares of common stock issuable upon
exercise of the warrants granted to Genesis Select Corporation for investor
relations services.
(18) Schneider Securities acted as a placement agent in connection with the
private placement. The number of shares beneficially owned by Schneider
Securities includes (i) 16,313 shares of common stock issuable upon
exercise of warrants to purchase common stock granted to Schneider
Securities as a placement agent in connection with the June 30, 2000
private placement, and (ii) 8,470 shares of common stock issuable upon
exercise of warrants to purchase common stock granted to Schneider
Securities as a placement agent in connection with the Company's December
20, 1999 private placement.
(19) Shoreline Pacific Institutional Finance ("Shoreline") acted as a placement
agent in connection with the Company's November 1999private placement. Such
warrants contain anti-dilution provisions which required the issuance of
additional warrants in connection with the December 20, 1999 and December
30, 1999 private placements, and, as a result of the June 30, 2000 private
placement, required the issuance of an additional 16,479 warrants to
purchase 16,479 shares of common stock of the Company. Pursuant to the
terms of the agreement between the Company and Shoreline, such warrants
have been issued to Shoreline Pacific Equity Ltd. and certain employees of
Shoreline Pacific Institutional Finance.
(20) The number of shares beneficially owned by Shoreline Pacific Equity Ltd.
includes (i) 23,280 shares of common stock issuable upon exercise of
warrants granted in connection with Company's November 1999 private
placement, (ii) 6,227 shares of common stock issuable upon exercise of
warrants granted in connection with the December 20, 1999 and December 30,
1999 private placements, and (iii) 6,395 shares of common stock issuable
upon exercise of warrants granted in connection with the June 30, 2000
private placement. (See Footnote 19, above.)
(21) Mr. Kleiman, as an associate of Shoreline, received warrants to purchase
shares of common stock in connection with the November 1999, December 20,
1999, December 30, 1999 and June 30, 2000 private placements of the
Company. The number of shares beneficially owned by Mr. Kleiman includes
(i) 30,000 shares of common stock issuable upon exercise of warrants
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granted to him in connection with the November 1999 private placement, (ii)
8,023 shares of common stock issuable upon exercise of warrants granted to
him in connection with the December 20, 1999 and December 30, 1999 private
placements, and (iii) 8,239 shares of common stock issuable upon exercise
of warrants granted to him in connection with the June 30, 2000 private
placement. (See Footnote 19, above.)
(22) Mr. Tansey, as an associate of Shoreline, received warrants to purchase
shares of common stock in connection with the November 1999, December 20,
1999, December 30, 1999 and June 30, 2000 private placements of the
Company. The number of shares beneficially owned by Mr. Tansey includes (i)
3,984 shares of common stock issuable upon exercise of warrants granted to
him in connection with the November 1999 private placement, (ii) 1,065
shares of common stock issuable upon exercise of warrants granted to him in
connection with the December 20, 1999 and December 30, 1999 private
placements, and (iii) 1,094 shares of common stock issuable upon exercise
of warrants granted to him in connection with the June 30, 2000 private
placement. (See Footnote 19, above.)
(23) Mr. Healy, as an associate of Shoreline, received warrants to purchase
shares of common stock in connection with the November 1999, December 20,
1999, December 30, 1999 and June 30, 2000 private placements of the
Company. The number of shares beneficially owned by Mr. Healy includes (i)
1,536 shares of common stock issuable upon exercise of warrants granted to
him in connection with the November 1999 private placement, (ii) 411 shares
of common stock issuable upon exercise of warrants granted to him in
connection with the December 20, 1999 and December 30, 1999 private
placements, and (iii) 422 shares of common stock issuable upon exercise of
warrants granted to him in connection with the June 30, 2000 private
placement. (See Footnote 19, above.)
(24) Mr. Harband, as an associate of Shoreline, received warrants to purchase
shares of common stock in connection with the November 1999, December 20,
1999, December 30, 1999 and June 30, 2000 private placements of the
Company. The number of shares beneficially owned by Mr. Harband includes
(i) 912 shares of common stock issuable upon exercise of warrants granted
to him in connection with the November 1999 private placement, (ii) 244
shares of common stock issuable upon exercise of warrants granted to him in
connection with the December 20, 1999 and December 30, 1999 private
placements, and (iii) 251 shares of common stock issuable upon exercise of
warrants granted to him in connection with the June 30, 2000 private
placement. (See Footnote 19, above.)
(25) Ms. Collins, as an associate of Shoreline, received warrants to purchase
shares of common stock in connection with the November 1999, December 20,
1999, December 30, 1999 and June 30, 2000 private placements of the
Company. The number of shares beneficially owned by Ms. Collins includes
(i) 144 shares of common stock issuable upon exercise of warrants granted
to her in connection with the November 1999 private placement, (ii) 38
shares of common stock issuable upon exercise of warrants granted to her in
connection with the December 20, 1999 and December 30, 1999 private
placements, and (iii) 39 shares of common stock issuable upon exercise of
warrants granted to her in connection with the June 30, 2000 private
placement. (See Footnote 19, above.)
(26) Ms. Jorajuria, as an associate of Shoreline, received warrants to purchase
shares of common stock in connection with the November 1999, December 20,
1999, December 30, 1999 and June 30, 2000 private placements of the
Company. The number of shares beneficially owned by Ms. Jorajuria includes
(i) 144 shares of common stock issuable upon exercise of warrants granted
to her in connection with the November 1999 private placement, (ii) 38
shares of common stock issuable upon exercise of warrants granted to her in
connection with the December 20, 1999 and December 30, 1999 private
placements, and (iii) 39 shares of common stock issuable upon exercise of
warrants granted to her in connection with the June 30, 2000 private
placement. (See Footnote 19, above.)
22
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock by the
selling shareholders. However, we will receive up to $456,218.50 upon payment of
the exercise price for the common stock underlying the warrants if all of the
warrants are exercised. We will use all of these proceeds for working capital
for our operations.
DETERMINATION OF OFFERING PRICE
Since this prospectus relates only to the resale of previously issued
shares of common stock, we did not determine an offering price. The selling
shareholders will individually determine the offering price of the common stock.
The selling shareholders may use this prospectus from time to time to sell their
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.
PLAN OF DISTRIBUTION
In connection with our issuance to the selling shareholders of our common
stock and warrants, we provided to them certain registration rights and have
subsequently filed a registration statement on Form S-3 with the SEC. That
registration statement covers the resale of the common stock from time to time
on the Nasdaq National Market or other national security exchange or automated
quotation system upon which our common stock is then traded or in privately
negotiated transactions. This prospectus forms a part of that registration
statement. We have also agreed to prepare and file any amendments and
supplements to the registration statement as may be necessary to keep it
effective until this prospectus is no longer required for the selling
shareholders to sell their shares of common stock and to indemnify and hold the
selling shareholders harmless against certain liabilities under the Securities
Act that could arise in connection with the selling shareholders' sale of their
shares. We have agreed to pay all reasonable fees and expenses incident to the
filing of the registration statement.
The selling shareholder may sell the shares of common stock described in
this prospectus directly or through underwriters, broker-dealers or agents. The
selling shareholders may also transfer, devise or gift their shares by other
means not described in this prospectus. As a result, pledgees, donees,
transferees or other successors in interest that receive such shares as a gift,
partnership distribution or other non-sale related transfer may offer shares of
common stock. In addition, if any shares covered by this prospectus qualify for
sale pursuant to Rule 144 under the Securities Act, the selling shareholders may
sell such shares under Rule 144 rather than pursuant to this prospectus.
The selling shareholders may sell shares of common stock from time to time
in one or more transactions:
o at fixed prices that may be changed,
o at market prices prevailing at the time of sale, or
o at prices related to such prevailing market prices or at negotiated
prices.
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The selling shareholders may offer their shares of common stock in one or
more of the following transactions:
o on any national securities exchange or quotation service on which the
common stock may be listed or quoted at the time of sale, including
the Nasdaq National Market,
o in the over-the-counter market,
o in privately negotiated transactions,
o through options,
o by pledge to secure debts and other obligations,
o by a combination of the above methods of sale, or
o to cover short sales made pursuant to this prospectus.
In effecting sales, brokers or dealers engaged by the selling shareholders
may arrange for other brokers or dealers to participate in the resales. The
selling shareholders may enter into hedging transactions with broker-dealers,
and in connection with those transactions, broker-dealers may engage in short
sales of the shares. The selling shareholders also may sell shares short and
deliver the shares to close out such short positions. The selling shareholders
also may enter into option or other transactions with broker-dealers that
require the delivery to the broker-dealer of the shares, which the broker-dealer
may resell pursuant to this prospectus. The selling shareholders also may pledge
the shares to a broker or dealer, and upon a default, the broker or dealer may
effect sales of the pledged shares pursuant to this prospectus.
In order to comply with the securities laws of certain states, the selling
shareholders must offer or sell the shares only through registered or licensed
brokers or dealers. In addition, in certain states, the selling shareholders can
not offer or sell the shares unless the shares 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.
The SEC may deem the selling shareholders and any underwriters,
broker-dealers or agents that participate in the distribution of the shares of
common stock to be "underwriters" within the meaning of the Securities Act. The
Commission may deem any profits on the resale of the shares of common stock and
any compensation received by any underwriter, broker-dealer or agent to be
underwriting discounts and commission under the Securities Act.
Under the Exchange Act, any person engaged in the distribution of the
shares of common stock may not simultaneously engage in market-making activities
with respect to the common stock for five business days prior to the start of
the distribution. In addition, each selling shareholder and any other person
participating in a distribution will be subject to the Exchange Act, which may
limit the timing of purchases and sales of common stock by the selling
shareholder or any such other person.
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DESCRIPTION OF SECURITIES
COMMON STOCK
For a description of our common stock, see our Registration Statement on
Form 8-A filed with the SEC on October 31, 1996 and incorporated by reference
into this prospectus.
RIGHTS
In September 1999, we adopted a Shareholder Rights Plan for the protection
of our shareholders. For a description of the Rights relating to our Shareholder
Rights Plan, see our Form 8-K filed with the SEC on September 23, 1999 and
incorporated by reference into this prospectus.
WARRANTS ISSUED TO THE PLACEMENT AGENTS IN CONNECTION WITH THE PRIVATE PLACEMENT
In connection with services performed as placement agents, we issued
warrants to the placement agents in connection with the private placement. The
warrants expire five years after issuance.
EXERCISE OF WARRANTS. The warrants may be exercised at any time after
issuance.
EXERCISE PRICE. The exercise prices of the warrants range from $2.00 to
$7.50 per share of common stock represented by the warrants. The exercise price
of the warrants is subject to customary anti-dilution adjustments upon such
events as the subdivision or combination of the common stock, the distribution
of our assets to holders of common stock, and other similar events.
CASHLESS EXERCISE OPTION. The placement agents are entitled to a "cashless
exercise" option. This option entitles the placement agents to elect to receive
fewer shares of common stock without paying the cash exercise price. The number
of shares to be issued would be determined by a formula based on the total
number of shares to which the warrant holder is entitled, the last reported sale
price of the common stock and the applicable exercise price of the warrants.
COVENANTS. We made certain customary covenants with respect to the
warrants, including, among others:
o the warrants, and any common stock to be issued upon exercise of the
warrants, are and will be duly authorized and validly issued;
o we will have 100% of the underlying shares of common stock authorized
and reserved for issuance during the term of the warrants;
o we must reserve at least 100% of the number of shares of common stock
issuable upon exercise of the warrants;
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o the common stock issuable upon exercise of the warrants shall be
listed on each national securities exchange or automated quotation
system upon which our common stock is then listed; and
o we will act in good faith in carrying out the provisions of the
warrants.
In addition, upon any conveyance or exchange of all or substantially all of
our assets to another corporation or entity, or a recapitalization,
reorganization, reclassification, consolidation, or merger in which the holders
of our common stock are entitled to receive stock, securities or assets with
respect to or in exchange for our common stock in which we are not the surviving
entity, we will obtain from the acquiring person or entity a written agreement
to deliver to each holder of the warrants, in exchange for the warrants, a
security from the acquiring entity evidenced by a written instrument
substantially similar in form and substance to the warrants.
AMENDMENT. We may not increase the exercise price of the warrants, decrease
the term of the warrants or decrease the amount of common stock issuable upon
exercise of any warrant or otherwise substantially alter the rights of the
holder without the written consent of the holder of such warrant.
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, 1999, 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 giving said reports.
26
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<TABLE>
<S> <C>
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No dealer, salesman or other person has
been authorized to give any information
or to make any representations other than
those contained or incorporated by
reference in this prospectus in connection
with the offering described herein, and,
if given or made, such information or
representation must not be relied upon as
having been authorized by the Company or
by any selling shareholder. This prospectus
does not constitute an offer to sell, or a
solicitation of an offer to buy, any
securities other than the registered
securities to which it relates, or an offer
to sell, or a solicitation of an offer to
buy, in any jurisdiction in which it is
unlawful to make such offer or solicitation. SKYMALL, INC.
Neither the delivery of this prospectus nor
any sale made hereunder shall, under any
circumstances, create an implication that
there has been no change in the affairs of
the Company since the date hereof or that 2,665,792 SHARES
the information contained herein is correct COMMON STOCK
as of any time subsequent to the date hereof.
---------------------
PROSPECTUS
TABLE OF CONTENTS
Page
----
Where You Can Find More Information...... 2
Incorporation of Certain Documents
By Reference............................ 2
Prospectus Summary....................... 4
The Company.............................. 4
Our Operations........................... 4 __________, 2000
The Offering............................. 9
Risk Factors............................. 10
Selling Shareholders..................... 17
Use of Proceeds.......................... 23
Determination of Offering Price.......... 23
Plan of Distribution..................... 23
Description of Securities................ 25
Legal Matters............................ 26
Experts.................................. 26
============================================ ============================================
</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...................................$ 1,540
Legal Fees and Expenses................................ 50,000
Accounting Fees and Expenses........................... 7,500
Printing and Engraving Expenses........................ 2,000
Blue Sky Fees and Expenses............................. 1,000
Miscellaneous.......................................... 7,960
--------
Total.................................................$ 70,000
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
NUMBER DESCRIPTION METHOD OF FILING
------ ----------- ----------------
4.1 Form of Warrant issued to Shoreline, et al. . . . . . (1)
4.2 Form of Warrant issued to Schneider Securities, Inc.
and Budd Zuckerman as placement agents in the private
placement . . . . . . . . . . . . . . . . . . . . . . (1)
5 Opinion re: legality of the securities being
registered. . . . . . . . . . . . . . . . . . . . . . (1)
10.1 Stock Purchase Agreement between the Company and
the investors in the private placement. . . . . . . . (1)
10.2 Registration Rights Agreement between the
Company and the investors in the private placement. . (1)
23.1 Consent of Independent Public Accountants . . . . . . (1)
23.2 Consent of Counsel. . . . . . . . . . . . . . . . . . See Exhibit 5
24 Powers of Attorney. . . . . . . . . . . . . . . . . . See Signature
Page
---------------
(1) 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
Exchange Act of 1934 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.
II-2
<PAGE>
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.
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 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-3
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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 July 14, 2000.
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 CHRISTINE A. AGUILERA, 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, July 14, 2000
------------------------ President and Chief Executive
Robert M. Worsley Officer (Principal Executive
Officer)
/s/ Lynne Berreman Corporate Controller July 14, 2000
------------------------ (Principal Financial Officer)
Lynne Berreman
S-1
<PAGE>
Signature Title Date
--------- ----- ----
/s/ David J. Callard Director July 14, 2000
------------------------
Randy Petersen
/s/ Lyle R. Knight Director July 14, 2000
------------------------
Lyle R. Knight
Director
------------------------
Thomas J. Litle
/s/ Randy Petersen Director July 14, 2000
------------------------
Randy Petersen
S-2
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
------ ----------- ----------------
4.1 Form of Warrant issued to Shoreline, et al. . . . . . (1)
4.2 Form of Warrant issued to Schneider Securities, Inc.
and Budd Zuckerman as placement agents in the private
placement . . . . . . . . . . . . . . . . . . . . . . (1)
5 Opinion re: legality of the securities being
registered. . . . . . . . . . . . . . . . . . . . . . (1)
10.1 Stock Purchase Agreement between the Company and
the investors in the private placement. . . . . . . . (1)
10.2 Registration Rights Agreement between the
Company and the investors in the private placement. . (1)
23.1 Consent of Independent Public Accountants . . . . . . (1)
23.2 Consent of Counsel. . . . . . . . . . . . . . . . . . See Exhibit 5
24 Powers of Attorney. . . . . . . . . . . . . . . . . . See Signature
---------------
(1) Filed herewith.
