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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION SEPTEMBER 17, 1997
REGISTRATION NO. 333-14175
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________
POST EFFECTIVE AMENDMENT NO. 2
ON FORM S-3
TO FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________________________
INTRANET SOLUTIONS, INC.
(Exact name of registrant as specified in charter)
7373
(Primary Standard
MINNESOTA Industrial 41-1652566
(State or other jurisdiction Classification Code (I.R.S. employer
of incorporation or organization) Number) identification number)
9625 WEST 76TH STREET, SUITE 150
MINNEAPOLIS, MINNESOTA 55344
(612) 903-2000
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
________________________________
MR. ROBERT F. OLSON
INTRANET SOLUTIONS, INC.
9625 WEST 76TH STREET, SUITE 150
MINNEAPOLIS, MINNESOTA 55344
(612) 903-2000
COPIES TO:
WILLIAM M. MOWER, ESQ.
PHILIP J. TILTON, ESQ.
MASLON EDELMAN BORMAN & BRAND, LLP
3300 NORWEST CENTER
MINNEAPOLIS, MINNESOTA 55402-4140
(612) 672-8200
APPROXIMATE DATE OF THE COMMENCEMENT OF PROPOSED DISTRIBUTION: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION, DATED SEPTEMBER 17, 1997
PROSPECTUS
INTRANET SOLUTIONS, INC.
563,435 SHARES OF COMMON STOCK
_________________________________________
Of the 563,425 shares of Common Stock offered hereby, 415,218 are being
sold by IntraNet Solutions, Inc. (the "Company") and 148,217 are being sold by
the Selling Shareholders. The 415,218 shares offered by the Company are
issuable upon the exercise of (i) 183,500 outstanding, publicly traded,
redeemable warrants (the "Redeemable Warrants") and (ii) an aggregate of
231,718 non-publicly Traded, non-redeemable warrants (the "Non-Redeemable
Warrants," together with the Redeemable Warrants, the "Warrants"). The Company
will not receive any proceeds from the sale of the shares offered by the
Selling Shareholders. See "Selling Shareholders."
The Company's Common Stock and Redeemable Warrants (each enabling the
holder to acquire one share of Common Stock at an exercise price of $4.00 per
share) are traded in the over the counter market through the National
Association of Securities Dealers Automated Quotation System Small-Cap Market
("Nasdaq") under the symbols INRS and INRSW, respectively. On September 16,
1997, the closing bid prices of the Common Stock and the Redeemable Warrants
were $5.00 and $1.0625, respectively.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DESCRIPTION OF CERTAIN
FACTORS WHICH SHOULD BE CONSIDERED BY INVESTORS BEFORE PURCHASING THE
SECURITIES OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is September 17, 1997.
ADDITIONAL INFORMATION
This Prospectus is part of a Registration Statement on Form S-3 (together
with all amendments and exhibits thereto, the "Registration Statement") which
the Company has filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the securities offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to herein are not necessarily
complete. With respect to each such contract, agreement or other document filed
as an exhibit to the Registration Statement, reference is made to the exhibit
for a more complete
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description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Commission. Such reports, proxy and information statements
and other information as well as the Registration Statement and Exhibits of
which this Prospectus is a part filed by the Company may be inspected and
copied at the public reference facilities of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, as well as at
the following Regional Offices: 7 World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street--Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the Commission by mail at
prescribed rates. Requests should be directed to the Commission's Public
Reference Section, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, DC 20549. Material filed by the Company can also be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street N.W., Washington, D.C. 20006. The Company is an electronic filer with
the Commission pursuant to, and within the meaning of, Rules 101 and 901 of
Regulation S-T. The Commission maintains a site on the World Wide Web that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the Commission's site is: http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference and made a part hereof:
(i) the Company's Annual Report on Form 10-KSB for the fiscal year ended
March 31, 1997.
(ii) the Company's Quarterly Report on Form 10-QSB for the three months
ended June 30, 1997.
(iii) the description of the Company's Common Stock included in its
Registration Statement on Form SB-2 (Registration No. 333-14175) under the
caption "Description of Securities."
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, subsequent to the date of this
Prospectus and prior to the termination of the offering described herein, shall
be deemed to be incorporated by reference in this Prospectus from the
respective dates those documents are filed. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, on the written or oral request of such
person, a copy of any or all of the documents referred to above which have
been, or may be, incorporated in this Prospectus by reference, other than
exhibits to such documents. Request for such copies should be directed to Mr.
Jeffrey Sjobeck, IntraNet Solutions, Inc., 9625 West 76th Street, Suite 150,
Minneapolis, Minnesota 55344.
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RISK FACTORS
Each prospective investor should carefully consider the following factors,
among others, prior to purchasing any of the securities offered hereby.
History of Operating Losses and Accumulated Deficit; Anticipated Future
Losses; Limited Operating History. The Company incurred a net loss of
$3,748,464 for the year ended March 31, 1997 and a net loss of $852,326 for the
quarter ended June 30, 1997. The Company had an accumulated deficit of
$4,597,159 at June 30, 1997, and the report issued by the Company's independent
accountants on the Company's financial statements as of and for the year ended
March 31, 1997 contains an explanatory paragraph relating to the Company's
ability to continue as a going concern. The Company intends to continue to
make expenditures related to new product introductions, marketing, research and
development, regional expansion of its electronic document
warehouse/distribution business and administrative infrastructure over the near
term. As a result, the Company expects to incur net operating losses through
at least the second fiscal quarter of 1998.
The likelihood of the Company's success must be considered in light of the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with the establishment of any business. There is no
assurance that the Company can operate profitably or that it will successfully
implement its expansion plans. Additionally, the Company has only a limited
operating history upon which to base an evaluation of its current principal
business and prospects. Operating results for future periods are subject to
numerous uncertainties, and there can be no assurance that the Company will
achieve or sustain profitability on an annual or quarterly basis. The
Company's prospects must be considered in light of the risks encountered by
businesses in the early stage of development, particularly businesses in new
and rapidly evolving markets. Future operating results will depend upon many
factors, including the demand for the Company's products, the level of product
and price competition, the ability of the Company to develop and market new
products and product enhancements, the growth of activity on the Internet, the
World Wide Web and private intranet networks, the success of the Company in
attracting and retaining motivated and qualified personnel, the ability of the
Company to control its costs and general economic conditions. There can be no
assurance that the Company will be successful in addressing such risks.
Significant Capital Requirements; Need for Additional Financing. The
Company's capital requirements in connection with its development and marketing
activities have been and will continue to be significant. The Company has been
dependent upon the proceeds from sales of its securities, as well as various
private loans, to fund its development and marketing activities. There can be
no assurance that such additional funding will be available on terms attractive
to the Company, or at all. Any additional equity financings may be dilutive to
shareholders, and additional debt financing, if available, may involve
restrictive covenants. Collaborative arrangements may require the Company to
relinquish rights to certain of its technologies, products or marketing
territories. In the event that the proceeds of the offering and cash flow
prove to be insufficient to fund operations (due to a change in the Company's
plans or a change or inaccuracy in its assumptions or as a result of
unanticipated expenses, technical difficulties, problems or otherwise), the
Company would be required to seek additional financing sooner than currently
anticipated. The Company has no current arrangement with respect to, or
sources of, additional financing. The inability to obtain additional financing
when needed, would have a material adverse effect on the Company.
Uncertainty of Future Operating Results; Fluctuations in Future Operating
Results. Prior growth rates in the Company's revenue and operating results are
not necessarily indicative of future growth, if any, or of future operating
results. The Company's future operating results may vary substantially from
quarter to quarter and will depend on many factors, including the level of
sales of its proprietary software products and continued expansion of the
market for corporate intranets. At its
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current stage of operations, the Company's quarterly revenues and results of
operations may be materially affected by the timing of the development,
introduction and market acceptance of the Company's and its competitors'
products. Product development and marketing costs are often incurred in
periods before any revenues are recognized from the sales of products.
Operating expenses are higher during periods in which such product development
costs are incurred and marketing efforts are commenced. In addition, the
timing of the Company's receipt of significant contracts could add to quarter
to quarter variation in operating results. Due to these and other factors,
including the general economy, stock market conditions and announcements by the
Company or its competitors, the market price of the securities offered hereby
may be highly volatile.
Intense Competition. The markets for business application software and
computer software generally are intensely competitive. The Company faces
competition from a variety of software vendors, most of whom have substantially
greater financial, technical and marketing resources than the Company, and many
of the Company's competitors currently marketing products in the document
management market are more established than the Company and have the benefits
of pre-existing relationships with potential customers and greater name
recognition than the Company. The Company also faces indirect competition from
other systems integrators, value added resellers and traditional commercial
printers. The Company's competitors could introduce products with more features
and lower prices than the Company's products, or which render the Company's
products obsolete. These companies could also bundle existing or new products
with other more established products in order to compete with the Company.
Although the Company believes its product features and pricing enable it to
compete effectively with respect to such factors, there can be no assurance
that the Company will have the financial resources, technical expertise or
marketing, distribution or support capabilities to compete successfully in the
future.
Emerging Markets; Dependence Upon Continued Market Expansion. The
continued expansion of the Company's business is generally dependent on the
continued expansion of the markets for which its products were developed, and
specifically dependent upon the continued growth of activity on the Internet,
the Web and private intranet networks. The intranet market is a relatively new
market and is intensely competitive, highly fragmented and subject to change.
As such, the Company's success will continue to be dependent upon a
continuation of the trend toward network-based computing environments and the
continued willingness of large businesses to reengineer the processes they
employ to create, store, manage and distribute data. In addition, the
Company's future success is dependent upon the continued expansion of the
on-demand printing market. Any factors which have an adverse impact on the
continued expansion of these markets generally could have a material adverse
impact on the Company.
Management of Rapid Growth. The Company has experienced rapid growth in
revenues, personnel, research and development activities and the general
expansion of its business. In addition, the Company's markets have evolved and
continue to evolve at a rapid pace. The Company believes that continued growth
in the number and breadth of its product lines and services and in its
personnel will be required to maintain its competitive position. The
Company's growth, coupled with the rapid evolution of its markets, has placed
and will continue to place significant strains on its administrative operations
and financial resources and will increase the demands placed on its internal
systems, procedures and controls. The Company's ability to support, manage and
control its continued growth is also dependent upon, among other things, its
ability to train, supervise and manage increased personnel. There can be no
assurance that the Company's personnel, procedures, staff, internal controls or
systems will be adequate to support such growth or that management will be able
to achieve the rapid, effective execution of the product and business
initiatives necessary to successfully penetrate the markets for the Company's
products and services. If the Company is unable to manage future growth
effectively, the Company's business, operating results and financial condition
will be materially adversely affected.
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Dependence on Narrow Product Line; Technology Risks; Risk of Market
Acceptance. To date, the Company has marketed a limited line of its
proprietary software products. The Company's future success will depend, to a
large extent, on its ability to increase sales from existing products and
derive sales from new products. There can be no assurance that the Company
will be able to further penetrate the market with its existing products or
introduce and gain acceptance of its new products. The market for Internet
software products is highly competitive and characterized by rapid innovation
and technological change. The Company's products were specifically designed to
meet the needs of the document management market, but other companies have also
introduced or announced the development of products designed to address the
same markets as the Company's products. In addition, technological advances
that would make the Company's products less attractive to current and potential
customers could adversely impact the business of the Company. The Company's
plans with respect to the development of new products are subject to the risks
inherent in the development and marketing of complex software products,
including the risks that the release of the product may be delayed, errors may
be found in the product after its release despite extensive testing, and
discovered errors may not be corrected in a timely manner. Further, the
commercial success of the Company's products will depend on the willingness of
potential customers to perform and accept the use of the Company's products to
create, manage and distribute unstructured business-critical data.
Dependence on Development of New Products. The Company's future success
is dependent upon its continued introduction of new software products and its
ability to develop enhancements and upgrades to its existing product line. The
Company devotes significant resources to research and development and believes
it will have sufficient resources to support its research and development
efforts; however, the development of new, technologically advanced products is
a complex and uncertain process requiring high levels of innovation, as well as
the accurate anticipation of technological and market trends. Delays in the
introduction or shipment of new or enhanced products, the inability of such
products to gain market acceptance or problems associated with new or enhanced
products could adversely affect the Company's operating results. The market
for the Company's products is characterized by rapidly changing technology,
frequent new product introductions and product enhancement and evolving
industry standards. The introduction or enhancement of products embodying new
technology or the emergence of new industry standards could render the
Company's current products, or any other products the Company may develop in
the future, obsolete and unmarketable. The Company's ability to anticipate
changes in technology, products and industry standards and to successfully
develop and introduce new and enhanced products on a timely basis will be a
significant factor in the Company's ability to grow and remain competitive.
There can be no assurance that the Company will be successful in introducing
new products to respond to emerging industry trends, and there can be no
assurance that the level of research and development expenses necessary for the
Company to remain competitive will be as currently anticipated or that the
Company's revenues will be sufficient to cover its research and development
costs.
Dependence Upon Proprietary Technology; Risk of Infringement. The
Company's success is heavily dependent upon proprietary technology. The Company
has no patents or pending patent applications. In the absence of significant
patent or copyright protection, the Company may be vulnerable to competitors
who attempt to develop functionally equivalent products. Although the Company
believes that it has all rights necessary to market its products without
infringing upon any patents, copyrights or trademarks held by others, there can
be no assurance that conflicting patent, copyright or trademark rights do not
exist. There can be no assurance that third parties will not claim
infringement by the Company with respect to its current or future products.
The Company expects that software product developers will increasingly be
subject to infringement claims as the number of products and competitors in the
Company's industry segment grows and the functionality of products in different
industry segments overlaps. Any such claims, with or without merit, could be
time-consuming, result in costly litigation, cause product shipment delays or
require the Company to enter into royalty or licensing agreements. Such
royalty or licensing agreements, if required, may not be available on terms
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acceptable to the Company or at all, which would have a material adverse effect
upon the Company's business, operating results and financial condition. The
Company relies upon trade secret protection, confidentiality procedures and
contractual provisions to protect its proprietary information. There can be no
assurance that others will not independently develop substantially equivalent
proprietary information and techniques or otherwise gain access to the
Company's trade secrets or disclose such technology, or that the Company can
meaningfully protect its trade secrets. The Company has applied for trademark
registration for the following marks: Intra.doc!(TM) , INTRANET SOLUTIONS,
DOCUMENT REFINERY, WEB REFINERY, and WEB VAULT. There can be no assurance that
any trademarks which have been applied for but are not yet issued will be
issued. In the absence of trademark protection, the Company may be unable to
take advantage of the brand name recognition it is attempting to build.
Further, even if all trademarks applied for are issued, there can be no
assurance that such trademarks will prove valuable to the Company.
Dependence Upon Key Vendor Relationships. The Company is materially
dependent on Sun Microsystems, Inc. and Interleaf, Inc. for the supply of the
hardware and non-proprietary software products sold as part of its systems. Any
disruption in the relationship between the Company and either of Sun
Microsystems, Inc. or Interleaf, Inc. would have an immediate and material
adverse impact on the Company. Although the Company believes that secondary
sources are currently available for similar hardware products, there can be no
assurance that suitable alternative vendor relationships could be established
in a timely manner, if at all. The Company purchased approximately 54%, 68% and
67% of its total product resale requirements from Sun Microsystems, Inc. in
each of the fiscal years ended 1995, 1996 and 1997, respectively.
Dependence on Key Personnel; Need for Additional Employees. The Company
is currently greatly dependent on the personal knowledge and experience of
Messrs. Olson, Sippl and Sjobeck. The Company believes that its senior
management team has knowledge which, due to the Company's relatively small
size, is personal to such individuals and has not been institutionalized. As
such, the loss of any of these key personnel could be detrimental to the
Company. There can be no assurance that the loss of the services of Mr. Olson
or any of its executive officers or other key employees would not have a
material adverse effect on the Company. To avoid the negative impact which the
loss of a senior manager could have on the Company, as well as to achieve its
business plan, the Company must hire additional employees at various
operational levels. The future development and success of the Company will
depend in part upon its ability to attract and retain additional personnel with
the highly specialized expertise necessary to provide, engineer, design and
support the integration of such products and services. There can be no
assurance that the Company will be able to attract or retain such personnel or
that the hiring and retention of such personnel will result in the
institutionalization of vital information.
Product Defects and Product Liability. The Company's software products
are complex and sophisticated and could from time to time contain design
defects or software errors that could be difficult to detect and correct.
Errors, bugs or viruses may result in the loss of or the delay in market
acceptance or the loss of customer data. The Company's license agreements with
its customers typically contain provisions designed to limit the Company's
exposure to potential product liability claims; however, it is possible that
the limitation of liability provisions contained in the Company's license
agreements may not be effective under the laws of certain jurisdictions.
Although the Company has not experienced any material adverse effect resulting
from any software defects or errors, there can be no assurance that despite
testing by the Company and its customers, errors will not be found in new
products which could result in a delay or an inability to achieve market
acceptance and thus could have a material adverse impact upon the Company's
business, operating results or financial condition.
Former Shareholder Lien. On July 31, 1995, Technical Publishing
Solutions, Inc., a predecessor in interest to the Company ("TPSI") redeemed 50
percent of the outstanding shares of its common stock from a former shareholder
and director for an aggregate redemption price of $200,000. TPSI paid
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$150,000 of the purchase price in cash and delivered a the balance of the
redemption price in the form of a promissory note with a face amount of
$50,000. The note requires annual principal payments of approximately $10,000
and matures in August 2000. TPSI and the former shareholder also entered into
consulting and non-competition agreements pursuant to which the Company is
obligated to make payments of $10,000 per month through August 2000. To secure
the purchase price of the redeemed shares and TPSI's monetary obligations under
the aforementioned agreements, TPSI granted the former shareholder a security
interest in the redeemed shares. As a result of the 1996 merger of TPSI with
and into the Company, the Company succeeded to the obligations of TPSI under
these agreements. In the event the Company fails to satisfy its monetary
obligations under these agreements, the former shareholder may be able to
assert a claim of ownership interest in the Company. If the former shareholder
is successful in this regard, the value of the shares of Common Stock may be
reduced substantially.
Control by Founder. Mr. Robert F. Olson, the Company's President and
Chief Executive Officer, holds approximately 52 percent of the Company's
outstanding Common Stock and will hold approximately 50 percent of the
Company's Common Stock upon the exercise of the Warrants. As such, Mr. Olson
is able to exercise control over the business policies and affairs of the
Company. Additionally, directors, executive officers and principal shareholders
of the Company, and certain of their affiliates, will beneficially own
approximately 60 percent of the Company's outstanding Common Stock upon the
exercise of the Warrants. Accordingly, these persons, individually and as a
group, effectively control the Company and can direct its affairs and business,
including all determinations with respect to the acquisition or disposition of
assets by the Company, future issuances of Common Stock or other securities by
the Company, and any dividends payable on the Common Stock. Such concentration
of ownership may also have the effect of delaying, deferring or preventing a
change in control of the Company.
Effects of Delisting from Nasdaq SmallCap Market; Lack of Liquidity of Low
Priced Stocks. If the Company fails to maintain the qualification for its
Common Stock to trade on the Nasdaq SmallCap Market, its securities
could be subject to delisting. The Nasdaq Stock Market recently announced
increases in the quantitative standards for maintenance of listings on The
Nasdaq SmallCap Market. The revised standards for continued listing, which
will be applied beginning in February, 1998, include maintenance of any of (x)
$2,000,000 of net tangible assets, (y) $35,000,000 of market capitalization or
(z) $500,000 of net income for two of the last three years and the elimination
of the requirements to maintain minimum total assets and a minimum capital and
surplus. In the event the Company is unable to satisfy the continued listing
requirements, trading, if any, in the Common Stock would thereafter be
conducted in the over-the-counter markets in the so-called "pink sheets" or the
National Association of Securities Dealer's "Electronic Bulletin Board."
Consequently, the liquidity of the Company's Common Stock would likely be
impaired, not only in the number of shares which could be bought and sold, but
also through delays in the timing of the transactions, reduction in security
analysts' and the news media's coverage if any, of the Company and lower prices
for the Company's securities than might otherwise prevail.
In addition, if the Company's securities were to become delisted from
trading on The Nasdaq SmallCap Market and the trading price of such securities
were to fall below $5.00 per share, trading in such securities would also be
subject to the requirements of certain rules promulgated under the Exchange
Act, which require additional disclosure by broker-dealers in connection with
any trades involving a stock defined as a penny stock (generally, any
non-Nasdaq equity security that has a market price of less than $5.00 per
share, subject to certain exceptions). Such rules require the delivery, prior
to any penny stock transaction, of a disclosure schedule explaining the penny
stock market and the risks associated therewith, and impose various sales
practice requirements on broker-dealers who sell penny stock to persons other
than established customers and accredited investors (generally institutions).
For these types of transactions, the broker-dealer must make a special
suitability determination for the purchase and have received the purchaser's
written consent to the transaction prior to the sale. The additional burdens
imposed upon broker-dealers by such requirements may discourage broker-dealers
from effecting transactions in the Common Stock which could severely limit the
market liquidity of such
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Common Stock and the ability of purchasers in this offering to sell their
shares of Common Stock in the secondary market.
Demand and Incidental Registration Rights. Certain shareholders and
warrant holders of the Company, including Robert F. Olson, have the right,
subject to certain conditions, to participate in future registrations of the
Company's equity securities or to demand that the Company register up to
approximately 4.9 million shares of Common Stock owned by them as of the date
of this Prospectus. Pursuant to these registration rights, if the Company
proposes to register any of its Common Stock, other than in certain specified
instances, either on its own behalf or for the account of others, such holders
are entitled to notice of such proposed registration and must be given the
opportunity to participate therein. These demand and incidental registration
rights are subject to certain terms and limitations. All such holders have
waived their registration rights with respect to this offering.
Absence of Dividends. The Company has never paid cash dividends on its
Common Stock and does not anticipate paying cash dividends in the foreseeable
future. Moreover, the Company is prohibited from paying any cash dividends
under the terms of its existing credit agreement.
Shares Eligible for Future Sale. Assuming the exercise of all the
Warrants, approximately 8,044,000 shares of Common Stock will be outstanding.
Of the shares outstanding after this offering, approximately 3.8 million shares
of Common Stock will be freely tradable by persons who are not affiliates of
the Company and 4.2 million shares will be eligible for public sale under Rule
144, subject in certain cases to volume and manner of sale limitations. The
Company may issue up to an additional 692,993 shares of Common Stock under its
employee stock option plan. The Company may issue additional options, warrants,
or equity securities in the future. The sale, or availability for sale, of
substantial amounts of Common Stock in the public market subsequent to this
offering, or the perception that such sales could occur, could adversely affect
the prevailing market price of the Common Stock and could impair the Company's
ability to raise additional capital through the sale of its equity securities.
Volatility of Stock Price. The market prices of the Company's securities
have experienced and may continue to experience substantial volatility. The
securities markets have from time to time experienced significant price and
volume fluctuations that may be unrelated to the operating performance of
particular companies. The market prices of the common stock of many publicly
traded technology companies have in the past been, and in the future are
expected to be, especially volatile. Announcements of technological
innovations or new products by the Company or its competitors, developments or
disputes concerning patents or proprietary rights, and economic and other
external factors, as well as period-to-period fluctuations in the Company's
financial results, may have a significant impact on the market price of the
Common Stock.
Convertible Preferred Stock. During July 1997, the Company issued and
sold, for gross proceeds of $4,000,000, an aggregate of 800,000 units (the
"Units"), each Unit consisting of one share of 5 percent convertible preferred
stock with a liquidation preference of $5.00 per share (the "Preferred Stock")
and a warrant to purchase one share of the Company's Common Stock at an exercise
price of $5.18 per share (the "Warrants"). The Preferred Stock is convertible
into shares of Common Stock at the rate of 75 percent of the average closing
bid price thereof for the five-day trading period immediately preceding the
date of conversion, subject to maximum and minimum conversion rates of $3.7125
and $1.00 per share, respectively. In the event that the average closing bid
price of the Company's Common Stock falls to or below $1.33 per share for a
five-day trading period, holders of the Preferred Stock could cause the
Company to issue up to 4,000,000 shares of its Common Stock upon the conversion
of same, all of which, together with shares of Common Stock issuable upon
exercise of the Warrants, are subject to demand and incidental registration
rights granted to purchasers of the Units.
Possible Issuances of Preferred Stock; Anti-Takeover Effect of Minnesota
Law. Pursuant to the Company's Articles of Incorporation, the Company's
shareholders do not have the right to cumulative voting in the election of
directors. In addition, the Board of Directors has authority to fix the
rights, preferences, privileges and restrictions, including voting rights, of
unissued shares of the Company's
8
<PAGE> 10
capital stock and to issue such stock without any further vote or action by the
shareholders. The rights of the holders of Common Stock will be subject to,
and may be adversely affected by, the rights of the holders of any preferred
stock that may be created and issued in the future. The issuance of preferred
stock could have the effect of delaying, deferring or preventing a change in
control of the Company. In addition, certain provisions of Minnesota law
applicable to the Company could have the effect of discouraging certain
attempts to acquire the Company, which could deprive the Company's shareholders
of opportunities to sell their shares of Common Stock at prices higher than
prevailing market prices and may also have a depressive effect on the market
price of the Company's Common Stock.
Note Receivable in Default. The Company has a note receivable arising
from the sale of the MacGregor trademark with an outstanding balance of $570,000
due from Hutch USA, Inc. (Hutch). The entire amount of this note is due and
in arrears. The Company commenced an action against Hutch on July 26, 1997 and
received a judgment against Hutch on August 22, 1997. On August 29, 1997, the
parent company of Hutch, RDM Sports Group, Inc., filed a voluntary petition
for Chapter 11 bankruptcy in the United States Bankruptcy Court, Northern
District of Georgia.
The Company is currently exploring its options with respect to the
satisfaction of the note. These options include, but are not limited to, 1)
petitioning the bankruptcy court to obtain the MacGregor trademark back from
Hutch and sell it to a third party in satisfaction of the judgment, 2)
obtaining reimbursement from the indemnification escrow provided by the terms
of the merger agreement, and 3) pursuing collection through the bankruptcy
court.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common
Stock by the Selling Shareholders.
9
<PAGE> 11
SELLING SHAREHOLDERS
The following table sets forth the number of shares of the Common Stock
owned by each Selling Shareholder as of the date hereof and after giving effect
to this offering. All Selling Shareholders are accredited investors as that
term is defined in Regulation D promulgated under the Securities Act of 1933.
The Company will not receive any proceeds from the sale of the Common Stock by
the Selling Shareholders.
<TABLE>
<CAPTION>
Shares Shares
Beneficially Owned Shares to Beneficially Owned
Prior to the Offering be Sold After the Offering
--------------------- in the ------------------
Name of Beneficial Owner Number Percentage Offering Number Percentage
- ------------------------ ------ ---------- -------- ------ ----------
<S> <C> <C> <C> <C> <C>
John Coleman(1) 79,568 1.0% 20,305 59,263 *
Dale Ragan(2) 54,397 * 20,305 34,092 *
John Stapleton(3) 20,949 * 10,153 10,796 *
William McGee(4) 41,898 * 20,305 21,593 *
Laurentian American Equity Fund(5) 36,599 * 36,599 0 *
Laurentian Special Equity Fund(6) 1,775 * 1,775 0 *
Boston Financial Partners(7) 26,379 * 26,379 0 *
Security Pacific Business Credit Inc.(8) 59,394 * 59,394 0 *
MCPED(9) 44,384 * 44,384 0 *
D. Bradly Olah(10) 3,836 * 3,836 0 *
Kim Hensley(11) 6,250 * 6,250 0 *
J.T. Emerson(12) 8,750 * 8,750 0 *
C. Frederick LeBaron, Jr.(13) 96,099 1.3% 12,500 83,599 1.0%
T.B. Olson(14) 2,500 * 2,500 0 *
Timothy Duuos(15) 6,250 * 6,250 0 *
Mark Cates(16) 1,000 * 1,000 0 *
Raymond Rossini(17) 13,125 * 2,000 11,125 *
Floyd Adelman(18) 6,350 * 3,000 3,350 *
F. Stephen Gill(19) 1,500 * 1,500 0 *
Keith J. Nelson(20) 500 * 500 0 *
Raymond Dykema(21) 26,250 * 26,250 0 *
Aaron Grunfeld(22) 19,200 * 19,200 0 *
Joel Ronning(23) 5,000 * 5,000 0 *
Joseph Buska(24) 500 * 500 0 *
Bruce Reichert(25) 28,000 * 3,000 25,000 *
Craig Avery (26) 21,593 * 800 20,793 *
Okabena Partnership K 37,500 * 37,500 0 *
------- ------- -------
649,546 379,935 269,611
======= ======= =======
</TABLE>
- -------------------------------
* Less than one percent.
(1) Includes 13,108 shares of common stock subject to currently
exercisable warrants and 37,670 shares of common stock subject to
currently exercisable stock options.
(2) Includes 13,108 shares of common stock subject to currently
exercisable warrants.
(3) Includes 6,554 shares of common stock subject to currently exercisable
warrants.
(4) Includes 13,108 shares of common stock subject to currently
exercisable warrants.
10
<PAGE> 12
(5) Includes 989 shares of common stock subject to currently exercisable
warrants.
(6) Includes 1,775 shares of common stock subject to currently exercisable
warrants.
(7) Includes 26,379 shares of common stock subject to currently
exercisable warrants.
(8) Includes 59,394 shares of common stock subject to currently
exercisable warrants.
(9) Includes 1,199 shares of common stock subject to currently exercisable
warrants.
(10) Includes 104 shares of common stock subject to currently exercisable
warrants.
(11) Includes 6,250 shares of common stock subject to currently exercisable
warrants.
(12) Includes 8,750 shares of common stock subject to currently exercisable
warrants.
(13) Includes 12,500 shares of common stock subject to currently
exercisable warrants and 82,141 shares of common stock that may be
deemed to be owned by Mr. LeBaron through his control of certain
entities, as to which he disclaims beneficial ownership.
(14) Includes 2,500 shares of common stock subject to currently exercisable
warrants.
(15) Includes 6,250 shares of common stock subject to currently exercisable
warrants.
(16) Includes 1,000 shares of common stock subject to currently exercisable
warrants.
(17) Includes 2,000 shares of common stock subject to currently exercisable
warrants.
(18) Includes 3,000 shares of common stock subject to currently exercisable
warrants.
(19) Includes 1,500 shares of common stock subject to currently exercisable
warrants.
(20) Includes 500 shares of common stock subject to currently exercisable
warrants.
(21) Includes 26,250 shares of common stock subject to currently
exercisable warrants.
(22) Includes 19,400 shares of common stock subject to currently
exercisable warrants.
(23) Includes 5,000 shares of common stock subject to currently exercisable
warrants.
(24) Includes 500 shares of common stock subject to currently exercisable
warrants.
(25) Includes 25,000 shares of common stock subject to currently
exercisable warrants.
(26) Includes 800 shares of common stock subject to currently exercisable
warrants.
11
<PAGE> 13
PLAN OF DISTRIBUTION
The Company hereby offers: (i) 183,500 shares of Common Stock that are
issuable upon the exercise of the Redeemable Warrants and (ii) 231,718 shares
of Common Stock that are issuable upon exercise of the Non-Redeemable Warrants.
The Selling Shareholders hereby offer 148,217 shares of Common Stock. No
underwriter is being used in connection with this offering.
The Selling Shareholders and/or their pledgees, donees, transferees or
other successors in interest will sell the securities of the Company covered by
this Prospectus to the public in the over-the-counter market or in negotiated
transactions, or otherwise, at prices and on terms then obtainable.
Broker-dealers either may act as agents for the Selling Shareholders and/or
their pledgees, donees, transferees or other successors in interest for such
commissions as may be agreed upon at the time, or may purchase any of the
securities covered hereby as principals and thereafter may sell such securities
from time to time in the over-the-counter market or in negotiated transactions,
or otherwise, at prices and on terms then obtainable.
LEGAL MATTERS
Certain legal matters in connection with the validity of the securities
offered hereby will be passed upon for the Company by Maslon Edelman Borman &
Brand, LLP, Minneapolis, Minnesota.
EXPERTS
The consolidated financial statements of IntraNet Solutions, Inc. as of
March 31, 1997 and for the year then ended incorporated by reference in this
Prospectus and elsewhere in the Registration Statement from IntraNet Solution,
Inc.'s Annual Report on Form 10-KSB for the year ended March 31, 1997 have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon (which contains an explanatory paragraph describing conditions
that raise substantial doubt about the Company's ability to continue as a going
concern) included therein and incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of IntraNet Solutions, Inc. as of
March 31, 1996 and for the two years then ended incorporated by reference in
this Prospectus and elsewhere in the Registration Statement have been audited
by Lund Koehler Cox & Company, PLLP, independent public accountants, as
indicated in their report with respect thereto incorporated herein by reference
in reliance upon the authority of said firm as experts in giving said report.
12
<PAGE> 14
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OFFERED HEREBY TO ANY PERSON
IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
_______________________________
TABLE OF CONTENTS
Additional information 1
Incorporation of certain documents
by reference 2
Risk factors 3
Use of proceeds 9
Selling shareholders 10
Plan of distribution 12
Legal matters 12
Experts 12
INTRANET SOLUTIONS, INC.
563,435
SHARES
OF
COMMON STOCK
______________________
PROSPECTUS
______________________
SEPTEMBER 17, 1997
13
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and distribution of
the securities registered hereby, other than underwriting discounts and fees,
are set forth in the following table:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee $ 1,275
Accounting Fees 15,000
Legal Fees and Expenses 135,000
Printing Expenses 30,000
Miscellaneous 18,725
---------
Total $200,000
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is governed by Minnesota Statutes Chapter 302A. Minnesota
Statutes Section 302A.521 provides that a corporation shall indemnify any
person made or threatened to be made a party to any proceeding by reason of the
former or present official capacity of such person against judgments,
penalties, fines, including, without limitation, excise taxes assessed against
such person with respect to an employee benefit plan, settlements, and
reasonable expenses, including attorney's fees and disbursements, incurred by
such person in connection with the proceeding, if, with respect to the acts or
omissions of such person complained of in the proceeding, such person has not
been indemnified by another organization or employee benefit plan for the same
expenses with respect to the same acts or omissions; acted in good faith;
received no improper personal benefit and Section 302A.255, if applicable, has
been satisfied; in the case of a criminal proceeding, had no reasonable cause
to believe the conduct was unlawful; and in the case of acts or omissions by
persons in their official capacity for the corporation, reasonably believed
that the conduct was in the best interests of the corporation, or in the case
of acts or omissions by persons in their capacity for other organizations,
reasonably believed that the conduct was not opposed to the best interests of
the corporation. Subdivision 4 of Section 302A.521 of the Minnesota Statutes
provides that a company's articles of incorporation or bylaws may prohibit such
indemnification or place limits upon the same. The Company's articles and
bylaws do not include any such prohibition or limitation. As a result, the
Company is bound by the indemnification provisions set forth in Section
302A.521 of the Minnesota Statutes.
As permitted by Section 302A.251 of the Minnesota Statutes, the
Articles of Incorporation of the Company provide that a director shall have no
personal liability to the Company and its shareholders for breach of his
fiduciary duty as a director, to the fullest extent permitted by law.
II-1
<PAGE> 16
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
5 Opinion of Maslon Edelman Borman & Brand, LLP
23(1) Consent of Ernst & Young LLP
23(2) Consent of Lund Koehler Cox & Company, PLLP
23(3) Consent of Maslon Edelman Borman & Brand, LLP (included in Exhibit 5)
24 Power of Attorney (included on Page II-3)
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the Prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration Statement; and (iii) to
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
II-2
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Post-Effective Amendment No. 2 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of Minneapolis, State of Minnesota, on September 15, 1997.
INTRANET SOLUTIONS, INC.
Registrant
By: /s/ Robert F. Olson
----------------------
Name: Robert F. Olson
Title: President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert F. Olson and Jeffrey J. Sjobeck, each or
either of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
and to file the same with all exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite or necessary to be
done in and about the premises, as fully to all intents and purposes as he or
she might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his or her
substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the 15th day of September, 1997
by the following persons in the capacities indicated:
<TABLE>
<S> <C>
SIGNATURE TITLE
/s/ Robert F. Olson
- -------------------------------- President, Chief Executive Officer (Principal
Robert F. Olson Executive Officer) and Chairman of the Board
/s/ Jeffrey J. Sjobeck
- -------------------------------- Chief Financial Officer (Chief Financial
Jeffrey J. Sjobeck Officer and Accounting Officer) and Director
/s/ Ronald E. Eibensteiner
- --------------------------------
Ronald E. Eibensteiner Director
/s/ David Koentopf
- --------------------------------
David Koentopf Director
/s/ Henry Fong
- --------------------------------
Henry Fong Director
</TABLE>
II-3
<PAGE> 18
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF DOCUMENT PAGE NO.
5 Opinion of Maslon Edelman Borman & Brand, LLP.*
23(1) Consent of Ernst & Young LLP.*
23(2) Consent of Lund Koehler Cox & Company, PLLP*
23(3) Consent of Maslon Edelman Borman & Brand, LLP (included in
Exhibit 5).
24 Power of Attorney (included on Page II-3).
* Previously filed.
