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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 30, 1998
REGISTRATION NO. 333-33437
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------------------
INTRANET SOLUTIONS, INC.
(Exact name of registrant as specified in charter)
<TABLE>
<CAPTION>
MINNESOTA 7373 41-1652566
<S> <C> <C>
(State or other jurisdiction (Primary Standard Industrial (I.R.S. employer
of incorporation or organization) Classification Code Number) identification number)
8091 WALLACE ROAD
EDEN PRAIRIE, MINNESOTA 55344
(612) 903-2000
(Address, including zip code, and telephone number, including area code, of registrants' principal executive offices)
</TABLE>
COPY TO:
MR. ROBERT F. OLSON WILLIAM M. MOWER, ESQ.
INTRANET SOLUTIONS, INC. MASLON EDELMAN BORMAN & BRAND, LLP
8091 WALLACE ROAD 3300 NORWEST CENTER
EDEN PRAIRIE, MINNESOTA 55344 MINNEAPOLIS, MINNESOTA 55402-4140
(612) 903-2000 (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. [ ]
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PROSPECTUS
INTRANET SOLUTIONS, INC.
1,126,592 SHARES OF COMMON STOCK
-----------------------------------------
The 1,126,592 shares of Common Stock of IntraNet Solutions, Inc. (the
"Company") offered hereby on a resale basis by the Selling Shareholders include
(i) 800,000 shares issuable upon exercise (at a price of $5.18 per share) of
certain warrants issued to purchasers of the Company's Series A Convertible
Preferred Stock (the "Preferred Stock"), (ii) 170,000 shares issuable upon
exercise (at a price of $4.00 per share) of warrants received by investors in
the Company's December 1996 bridge loan financing, (iii) 5,129 shares issuable
upon exercise (at a price of $4.00 per share) of certain other outstanding
warrants and (iv) 151,463 shares of Common Stock acquired by certain of the
Selling Shareholders in private placement offerings. The Company will not
receive any of the proceeds from the sale of shares by the Selling Shareholders.
Prior to its amendment by this Post-Effective Amendment No. 1, this
Registration Statement related to the shares of Common Stock referenced in the
preceding paragraph and also to 1,077,441 shares issuable upon conversion of
800,000 shares of Preferred Stock, assuming conversion at the maximum conversion
price of $3.7125 per share. The Company registered such shares in order to
comply with obligations contained in Registration Rights Agreements between the
Company and the holders of the Preferred Stock. However, pursuant to the terms
of such Registration Rights Agreements, the Company's obligation to keep such
shares registered has lapsed, and accordingly the Company is amending this
Registration Statement hereby to reduce the total number of shares of Common
Stock registered by such 1,077,441 shares.
The Common Stock is listed on the Nasdaq SmallCap Market under the
symbol "INRS." On October 26, 1998, the last sale price for the Common Stock as
reported on the Nasdaq National Market was $3.375.
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 , 1998.
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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 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. In
addition, the Commission maintains a Web site than contains reports, proxy and
information regarding registrants, such as the Company, that file electronically
with the Commission. The address of this Web site is: http://www.sec.gov.
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.
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, 1998.
(ii) the Company's Quarterly Report on Form 10-QSB for the three
months ended June 30, 1998.
(iii) the Company's definitive proxy statement dated August 12, 1998.
(iv) 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
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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., 8091 Wallace Road, Eden Prairie, 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 loss attributable to
common shareholders of $5.3 million for the year ended March 31, 1998 and a net
loss of $3.7 million for the year ended March 31, 1997. The Company had an
accumulated deficit of $9.1 million at March 31, 1998 and $10.7 million at June
30, 1998. The Company intends to continue to make expenditures related to new
product introductions, marketing, research and development, and administrative
infrastructure over the near term. 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 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
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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
Company's Common Stock 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 and value added resellers. 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. 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. As a result of the Company's recent sale of its hardware
businesses, the Company's future success will depend on its ability to increase
revenues from existing proprietary software products and related consulting
services, support and training 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.
During the years ended March 31, 1996, 1997 and 1998, the Company incurred
approximately $500,000, $1.1 million and $1.2 million, of research and
development costs, respectively. The Company devotes significant resources to
research and development; 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
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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 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. Intra.doc!(R) and INTRANET SOLUTIONS(R) are registered
trademarks of the Company. 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.
Dependence Upon Key Vendor Relationships. The Company is materially
dependent on Adobe Systems, Inc. and Verity, Inc. for the supply of key
components sold as part of its software products. Any disruption in the
relationship between the Company and either of those companies would have an
immediate and material adverse impact on the Company. Although the Company
believes that secondary sources are currently available for similar software
products, there can be no assurance that suitable alternative vendor
relationships could be established in a timely manner, if at all.
Dependence on Key Personnel; Need for Additional Employees. The Company
is currently greatly dependent on the personal knowledge and experience of
Messrs. Robert Olson and Jeffrey 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%
of the outstanding shares of its
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common stock from a former shareholder and director for an aggregate redemption
price of $200,000. TPSI paid $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 42% of the Company's outstanding
Common Stock, without giving effect to the exercisability of the Warrants. As
such, Mr. Olson is able to exercise control over the business policies and
affairs of the Company. The directors, executive officers and principal
shareholders of the Company, and certain of their affiliates, beneficially own
approximately 46% of the Company's outstanding Common Stock. 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 dividend 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. See
"Principal Shareholders."
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 implemented increases in
the quantitative standards for maintenance of listings on the Nasdaq SmallCap
Market. The new standards for continued listing on the Nasdaq SmallCap Market
include maintenance of any of (i) $2,000,000 of net tangible assets, (ii)
$35,000,000 of market capitalization or (iii) $500,000 of net income for two of
the last three years. In the event that the Common Stock is delisted from the
Nasdaq SmallCap Market, 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
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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 Common Stock and the ability
of purchasers in this offering to sell their shares of Common Stock in the
secondary market.
Year 2000 Compliance. The Company is aware of the issues associated
with the programming code in existing computer systems as the year 2000
approaches. The "Year 2000" problem is pervasive and complex, as many computer
systems will be affected in some way by the rollover of the two-digit year
value to 00. Systems that do not properly recognize such information could
generate erroneous data or cause a system to fail. The "Year 2000" issue
creates risk for the Company from unforeseen problems in its own computer
systems and from third parties with whom the Company deals. Failures of the
Company's and/or third parties' computer systems could have a material impact
on the Company's ability to conduct its business. With respect to its internal
systems, the Company has studied its computer hardware and software to
determine its exposure from the Year 2000 date change. The Company expects to
substantially complete these efforts at the end of 1998, with extensive testing
to continue through 1999. Although the Company does not believe that it will
incur material costs or experience material disruptions in its business
associated with preparing its internal systems for the year 2000, there can be
no assurances that the Company will not experience serious unanticipated
negative consequences and/or material costs caused by undetected errors or
defects in the technology used in its internal systems, which are composed of
third party software, third party hardware that contains embedded software and
the Company's own software products.
Demand and Incidental Registration Rights. Certain shareholders and
warrant holders of the Company, including Robert 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 4.3
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.
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.
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.
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 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.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common
Stock by the Selling Shareholders.
9
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SELLING SHAREHOLDERS
The following table sets forth the number of shares of the Common Stock
owned by each Selling Shareholder as of September 30, 1997 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 Beneficially Owned Shares Beneficially Owned
Prior to the Offering After the Offering
------------------------- Shares to be ------------------------
Number Percentage Sold in the Number Percentage
Name Of Shares Of Class (1) Offering Of Shares Of Class (1)
- ---- --------- ------------ ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
ProFutures Special Equities Fund, L.P........ 150,000 1.5 150,000 0 *
Professional Edge L.P........................ 150,000 1.7 150,000 0 *
Perkins Opportunity Fund..................... 160,000 1.9 70,000 90,000 1.0
Wayne W. Mills............................... 308,750 3.6 78,750 230,000 2.7
Willow Creek Capital Partners, L.P........... 107,000 1.2 50,000 57,000 *
Larry Arnold................................. 20,000 * 20,000 0 *
Wessels, Arnold & Henderson Employee
Savings Plan FBO Larry Arnold............. 10,000 * 10,000 0 *
Alan Geiwitz................................. 20,000 * 20,000 0 *
Troy Jones, Jr............................... 5,000 * 5,000 0 *
Michael T. Mulligan.......................... 10,000 * 10,000 0 *
Pyramid Partners, L.P........................ 50,000 * 50,000 0 *
Industricorp & Co. FBO 1561000091............ 40,000 * 40,000 0 *
Joan E. and James G. Peters, Trustees
U/A dtd 7-25-96 FBO Joan E. Peters........ 5,000 * 5,000 0 *
Daniel S. and Patrice M. Perkins............. 10,000 * 10,000 0 *
Daniel S. Perkins, Trustee U/A
dtd 5-12-88 FBO Patrice M. Perkins........ 5,000 * 5,000 0 *
Patrice M. Perkins, Trustee U/A
dtd 5-12-88 FBO Daniel S. Perkins......... 5,000 * 5,000 0 *
Piper Jaffray as Custodian FBO
David H. Potter IRA....................... 5,000 * 5,000 0 *
Wyncrest Capital Inc......................... 288,571 3.4 65,000 223,571 2.6
Steven J. Harmon............................. 30,000 * 20,000 10,000 *
Craig C. Avery............................... 20,000 * 20,000 0 *
GA Partnership............................... 10,000 * 10,000 0 *
James G. Sippl............................... 75,000 * 5,000 70,000 *
John Kubinski................................ 51,017 * 51,017 0 *
John Coleman................................. 79,568 * 21,593 57,975 *
Dale Ragan................................... 54,397 * 21,593 32,804 *
John F. Stapleton............................ 20,949 * 10,796 10,153 *
William McGee................................ 41,898 * 21,593 20,305 *
Richard Lockwood............................. 111,875 1.3 26,250 85,625 1.0
Circle F Ventures LLC........................ 160,000 1.9 160,000 0 *
Hayden R. and LaDonna M. Fleming
Revocable Trust........................... 10,000 * 10,000 0 *
--------- --------- -------
2,014,025 1,126,592 887,433
========= ========= =======
</TABLE>
- ------------------
(1) As of September 30, 1997.
* Less than one percent.
10
<PAGE> 12
PLAN OF DISTRIBUTION
An aggregate of 800,000 shares of Preferred Stock were originally
issued to and purchased by certain of the Selling Shareholders at a price of
$5.00 per share in connection with a private placement made by the Company.
Warrants to purchase up to 800,000 shares of Common Stock at an exercise price
of $5.18 per share were issued to purchasers of the Preferred Stock. All of the
warrants, other than the warrants issued to purchasers of the Preferred Stock,
are exercisable at a price of $4.00 per share.
This Registration Statement is being filed by, and at the expense of,
the Company pursuant to various registration obligations undertaken by the
Company in connection with the sale of securities to the Selling Shareholders.
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 on the over-the-counter market, or in negotiated
transactions, or otherwise, at prices and at terms then obtainable.
Brokers-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 thereby 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. at
March 31, 1998 and for the year then ended, incorporated by reference in this
Prospectus and elsewhere in the Registration Statement have been audited by
Grant Thornton LLP, independent auditors, and at March 31, 1997 and for the year
then ended, by Ernst & Young LLP, independent auditors, and at March 31, 1996,
and for the year then ended by Lund Koehler Cox & Arkema, PLLP, independent
auditors, as set forth in their respective reports thereon (the Ernst & Young
LLP report contains an explanatory paragraph describing conditions that raise
substantial doubt about the Company's ability to continue as a going concern as
of March 31, 1997) incorporated herein by reference, and are included in
reliance upon such reports given upon the authority of such firms as experts in
accounting and auditing.
11
<PAGE> 13
<TABLE>
<S> <C>
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 INTRANET SOLUTIONS, INC.
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 1,126,592 SHARES
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER OF
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE COMMON STOCK
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
ADDITIONAL INFORMATION........................................2 _____________________
INCORPORATION OF CERTAIN PROSPECTUS
DOCUMENTS BY REFERENCE.....................................2 _____________________
RISK FACTORS..................................................4
USE OF PROCEEDS...............................................9
SELLING SHAREHOLDERS.........................................10
PLAN OF DISTRIBUTION.........................................11
LEGAL MATTERS................................................11
EXPERTS......................................................11 OCTOBER ___, 1998
</TABLE>
12
<PAGE> 14
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>
SEC registration fee............................................ $ 4,261
Accounting fees................................................. 5,000
Nasdaq additional listing fee................................... 7,500
Legal fees and expenses......................................... 15,000
Miscellaneous................................................... 1,500
--------
Total........................................................ $33,261
=======
</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.
ITEM 16. EXHIBITS.
NUMBER DESCRIPTION
- ------ -----------
5 Opinion of Maslon Edelman Borman & Brand, LLP
23 (1) Consent of Grant Thornton LLP
23 (2) Consent of Ernst & Young LLP
23 (3) Consent of Lund Koehler Cox & Arkema, LLP
23 (4) Consent of Maslon Edelman Borman & Brand, LLP (included
in Exhibit 5)
24 Power of Attorney (included on Page II-3)
II-1
<PAGE> 15
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> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Minneapolis, State of
Minnesota, on October 30, 1998.
INTRANET SOLUTIONS, INC.
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 30th day of October, 1998 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 Officer
Jeffrey J. Sjobeck and Accounting Officer) and Director
/s/ Paul R. Anderson
- -------------------------------- Director
Paul R. Anderson
/s/ Ronald E. Eibensteiner
- -------------------------------- Director
Ronald E. Eibensteiner
/s/ Kenneth H. Holec
- -------------------------------- Director
Kenneth H. Holec
/s/ Steven C. Waldron
- -------------------------------- Director
Steven C. Waldron
</TABLE>
II-3
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
EXHIBIT DESCRIPTION OF DOCUMENT PAGE NO.
5 Opinion of Maslon Edelman Borman & Brand, LLP*
23 (1) Consent of Grant Thornton LLP
23 (2) Consent of Ernst & Young LLP
23 (3) Consent of Lund Koehler Cox & Arkema, LLP
23 (4) Consent of Maslon Edelman Borman & Brand, LLP (included in Exhibit 5)
24 Power of Attorney (included on Page II-3).
</TABLE>
* Previously filed.
II-4
<PAGE> 1
EXHIBIT 23(1)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated June 1, 1998 accompanying the
consolidated financial statements of IntraNet Solutions, Inc. and subsidiaries
included in the Annual Report on Form 10-KSB for the year ended March 31, 1998
which is incorporated by reference in this Registration Statement. We consent to
the incorporation by reference in the Registration Statement (Post-Effective
Amendment No. 1 to Form S-3) of the aforementioned report and to the use of our
name as it appears under the caption "Experts."
/s/ Grant Thornton LLP
Minneapolis, Minnesota
October 30, 1998
<PAGE> 1
EXHIBIT 23(2)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Post-Effective Amendment No. 1 to the Registration Statement (Form S-3 No.
333-33437) and related Prospectus of IntraNet Solutions, Inc. for the
registration of shares of its common stock and to the incorporation by reference
therein of our report dated June 30, 1997, with respect to the consolidated
financial statements of IntraNet Solutions, Inc. included in its Annual Report
(Form 10-KSB) for the year ended March 31, 1998, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
October 30, 1998
<PAGE> 1
EXHIBIT 23(3)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report dated May 14, 1996 included in the
Company's Annual Report on Form 10-KSB for the year ended March 31, 1998 into
this Registration Statement on (No. 333-33437).
/s/ Lund Koehler Cox & Arkema, LLP
Minneapolis, Minnesota
October 29, 1998
