As filed with the Securities and Exchange Commission April 8,2004
File No. ___________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BUYERS UNITED, INC.
(Exact name of registrant as specified in its charter)
Delaware 7389 87-0528557
(State or Other (Primary Standard (IRS Employer
Jurisdiction of Industrial Identification No.)
Incorporation or Classification Code
Organization) Number)
14870 Pony Express Road, Bluffdale, Utah 84065
(801) 320-3300
(Address and telephone number of registrant's principal offices)
Paul Jarman
14870 Pony Express Road, Bluffdale, Utah 84065
(801) 320-3300
(Name, address and telephone number of agent for service)
Copies to:
Mark E. Lehman, Esq.
Cohne, Rappaport & Segal, P.C.
525 East 100 South, 5th Floor, Salt Lake City, UT 84102
(801) 532-2666
(801) 355-1813 fax
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [X].
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the box: [ ]
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, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------
Title of Each Class Amount to be Proposed Proposed Maximum Amount of
Of Securities to be Registered Offering Aggregate Registration
Registered Price Offering Price Fee
Per Share
--------------------------------------------------------------------------------
Common Stock 5,340,546 $2.90 $15,487,583.40 $1,962.28
$0.0001 par value (1) shares
--------------------------------------------------------------------------------
Common Stock 164,125 $2.90 $475,962.50 $60.30
$0.0001 par value (2) shares
--------------------------------------------------------------------------------
Total $15,963,545.90 $2,022.58
--------------------------------------------------------------------------------
________________________
(1) The offering price and gross offering proceeds are estimated solely for the
purpose of calculating the registration fee in accordance with paragraph
(c) of Rule 457 under the Securities Act of 1933.
(2) These shares are registered on behalf of a selling security holder who
holds an outstanding warrant to purchase common stock at an exercise price
of $2.76 per share, which is lower than $2.90 (the average high bid and low
asked prices on April 6, 2004). The amount registered also includes such
additional shares as may be issued as a result of the anti-dilution
provisions of the warrant in accordance with Rule 416 under the Securities
Act of 1933. The offering price and gross offering proceeds are estimated
solely for the purpose of calculating the registration fee in accordance
with paragraphs (c) and (g)(3) of Rule 457 under the Securities Act of
1933.
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.
ii
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Subject to completion: April 8, 2004
Prospectus
BUYERS UNITED, INC.
COMMON STOCK
This prospectus covers 5,504,671 shares of the common stock of Buyers
United, Inc., that may be sold from time to time by the persons listed under the
caption "Selling Security Holders," beginning on page 10. The 5,504,671 shares
consist of 4,532,000 shares issued in a private placement that closed in March
2004, 808,546 shares issued as dividends and on conversion in March 2004 of
previously outstanding preferred stock, and 164,125 shares issuable on exercise
of a warrant at an exercise price of $2.76 per share.
Buyers United will receive the proceeds from exercise of the warrant, but
will not receive any proceeds or benefit from the resale of the shares by the
selling security holders.
Quotations for our common stock are reported on the OTC Bulletin Board
under the symbol "BYRS." On April 7, 2004, the closing bid price for our common
stock was $2.86 per share.
A copy of our annual report on Form 10-KSB for the year ended December 31,
2003 accompanies this prospectus. The mailing address and telephone number of
our executive office are:
Buyers United, Inc.
14870 Pony Express Road, Bluffdale, Utah 84065
Telephone (801) 320-3300
See "Risk Factors" beginning on page 5 for information you should consider
before you purchase shares.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _______________, 2004.
You should rely only on the information contained in this document,
incorporated by reference herein, or to which we refer you. We have not
authorized anyone to provide you with information that is different. This
document may be used only where it is legal to sell these securities. The
information in this document is accurate only as of the date of this document,
regardless of the time of the delivery of this prospectus or of any sale of our
common stock.
TABLE OF CONTENTS
Page
Forward-Looking Statements 2
Summary 3
Risk Factors 5
Information About Buyers United 9
Incorporation By Reference 9
Selling Security Holders 10
Plan of Distribution 12
Description of Capital Stock 13
Indemnification 17
Legal Matters 17
Experts 17
FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus, or incorporated by reference
into this prospectus, contains forward-looking statements that involve
substantial risks and uncertainties. Any statement in this prospectus that is
not a statement of an historical fact constitutes a "forward-looking statement."
Further, when we use the words "may," "expect," "anticipate," "plan," "believe,"
"seek," "estimate," "internal," and similar words, we intend to identify
statements and expressions that may be forward-looking statements. We believe it
is important to communicate certain of our expectations to our investors.
Forward-looking statements are not guarantees of future performance. They
involve risks, uncertainties and assumptions that could cause our future results
to differ materially from those expressed in any forward-looking statements.
Many factors are beyond our ability to control or predict. You are accordingly
cautioned not to place undue reliance on such forward-looking statements. We
have no obligation or intent to update publicly any forward-looking statements
whether in response to new information, future events or otherwise.
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SUMMARY
Our company
Buyers United, Inc. is a telecommunications company that offers a wide
range of long distance, toll free, data transmission, and related communication
service options at competitive prices, and provides to its customers a standard
of service it believes is comparable to other industry participants. The
telecommunications services we offer include the following:
o Switched long distance services to business and residential customers
o Dedicated access long distance service
o Toll-free 800/888/877/866 services
o Dedicated data transmission
o Private line data services
o Calling card services
o Conference calling
o Automatic call distribution
o Interactive voice response
o Outbound dialing and voice message broadcasting
o Fax to email
o Voice mail
o Real time account management
These services can be offered individually, or in a suite of services
tailored to a customer's needs. During 2003 we acquired and integrated into our
operations a voice over Internet protocol network (VoIP Network) that enables us
to offer a number of services in the form of software solutions that are
delivered through our VoIP Network.
For the past eight years Buyers United has been engaged in the business of
reselling telecommunication services provided by others to Buyers United at
wholesale rates. Domestic long distance services make up a major portion of our
sales with the other services listed above making smaller contributions to our
sales mix.
Buyers United now services approximately 150,000 business and residential
consumers across America. We have refined our business model over the past
several years to address specific niche opportunities in the vast communications
industry. Our brand, United Carrier Networks (UCN), was adopted in the last
quarter of 2001 for providing our services to business customers. We previously
used the brand name BuyersOnline to service residential customers.
Buyers United is now marketing its services primarily through independent
agents to business customers. Our UCN web site supports the marketing effort of
our agents by providing a resource for exploring and selecting the specialized
services and options we offer business customers. During the past year we
acquired both business and residential customers by purchase from other
providers and may consider opportunities for additional purchases in the future,
although at the present time we are not considering any purchase opportunities.
Buyers United was originally formed as a Utah corporation in 1994. In March
1999, Buyers United changed its corporate domicile from Utah to Delaware through
a merger with a Delaware corporation formed for that purpose. When we changed
the corporate domicile our name became BUI, Inc., and we effected a 1-for-4
reverse split in the issued and outstanding common stock. On April 20, 2000, we
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changed our name to BuyersOnline.com, Inc., and on November 20, 2001, our name
was changed again to Buyers United, Inc.
Recent developments
In March 2004 Buyers United sold 3,782,000 shares of common stock at $2.30
per share, or a total of approximately $8.7 million, in a private placement to
institutional and accredited investors. Net proceeds of the offering after
placement fees and expenses were approximately $8.1 million. The net proceeds of
the private placement are intended to be used for various corporate purposes,
including sales and marketing related programs, funding further development of
our VoIP Network, reducing debt, and for working capital and other general
corporate purposes. Buyers United agreed to file the registration statement of
which this prospectus is a part under the Securities Act of 1933 to permit
resale of the shares sold in the offering. In the private placement Roth Capital
Partners, LLC, acted as our placement agent. As partial compensation for its
services, we issued to Roth Capital Partners a warrant to purchase up to 164,125
shares of our common stock at an exercise price of $2.76 per share, representing
120 percent of the purchase price paid by investors in the private placement,
which is exercisable during the period beginning September 15, 2004 and ending
March 15, 2007.
In December 2002, Buyers United entered into an agreement to purchase
assets of Acceris Communications Inc. (formerly I-Link, Inc.) and its
subsidiary, I-Link Communications, Inc., and license in perpetuity software
developed by Acceris, all of which comprise the VoIP Network we now own and
operate. The transaction was closed in May 2003, with several outstanding
accounts to reconcile. The assets acquired include dedicated equipment required
for operating the VoIP Network, customers of I-Link Communications serviced
through the network, carrier identification codes, and certain trademarks. In
consideration for the assets and software license, Buyers United issued to
Acceris 300,000 shares of Series B Convertible Preferred Stock. This preferred
stock was converted to 1,500,000 common shares in March 2004 pursuant to an
agreement with Acceris that resolved the open account issues, allowed Acceris to
sell 750,000 of the converted common shares to the same investors that purchased
Buyers United common stock in March 2004, and granted to Acceris the right to
include its common stock in the registration statement of which this prospectus
is a part.
Buyers United entered into an agreement to purchase 37 dedicated long
distance customers from Source Communications, LLC for $750,000 in February
2004. Closing of the acquisition was subject to complying with applicable
federal and state regulation pertaining to transfer of the customers. All of the
regulatory requirements were satisfied and the acquisition of the customers is
completed.
The offering
Maximum shares that may be offered by selling security holders 5,504,671
Proceeds to Buyers United assuming the warrant covering shares $452,985
that may be offered by a selling security holder is exercised
Use of proceeds from exercise of warrant Proceeds will be used
for working capital
Buyers United may issue up to 7,461,083 additional common shares on
exercise or conversion of outstanding warrants, options, and convertible notes
that are registered for sale under a registration statement filed with the
Securities and Exchange Commission for persons other than the selling security
holders listed in the prospectus, up to 2,053,344 shares underlying other
warrants and options, up to 150,000 shares reserved for issuance on conversion
4
of other outstanding notes, and up to 3,929,000 shares issuable on conversion of
outstanding preferred stock.
RISK FACTORS
An investment in Buyers United involves a high degree of risk and common
stock should not be purchased by anyone who cannot afford the loss of his or her
entire investment. You should carefully consider all of the following risk
factors discussed below as well as other information in the prospectus before
purchasing the common stock. The risks described below are not all of the risks
facing us. Additional risks, including those that are currently not known to us
or that we currently deem immaterial, may also impair our business operations.
Our revenues and operating results may be negatively impacted by the pricing
decisions of our competitors and our providers.
Our revenues from period to period depend on the pricing for long distance
service we can obtain from the wholesale providers of these services. We also
must price our services at levels that are competitive in the marketplace. This
industry has a history of downward pressure on long distance service rates as a
result of competition among providers. To acquire and retain customers we offer
these services at prices that are perceived as competitive in conjunction with
the other benefits we provide. Consequently, falling prices will likely result
in lowering our rates to customers, which will reduce revenues. On the other
hand, higher prices charged by our providers will cut into gross profit margins
unless we raise prices to our customers, which may be difficult for us to do if
our competitors are not subject to the same upward pricing pressures or chose
not to increase prices notwithstanding such pressure. To make up for potential
reductions in either revenues or profits, it would be necessary for us to
continue to make significant increases in our customer base from period to
period, and there is no assurance that that we will be successful in doing so.
Our substantial debt adversely affects our operations and financial condition.
At December 31, 2003 borrowings and long term debt included $3.5 million of
notes payable to certain of our directors that pay interest at 12 percent per
annum, $4.2 million of obligations related to the purchase or acquisition of
customer accounts, and $4.1 million of borrowings under our line of credit. A
substantial amount of our cash flow from operations is used to service our debt
rather than to promote and expand our business, which adversely affects results
of operations. In March 2004, we completed a $8.7 million private equity
investment in Buyers United and will use approximately $3 million for reduction
of debt. Nevertheless, we expect that servicing the remaining debt through the
end of 2004 will continue to be a use of free cash flow that could be used to
develop our business.
Disruptions in the operation of our technology could adversely affect our
operations.
We are dependent on our computer databases, billing and account computer
programs, Internet protocol network, and computer hardware that houses these
systems to effectively operate our business and market our services. Our
customers and providers may become dissatisfied by any system failures that
interrupt our ability to provide our service to them. Substantial or repeated
system failures would significantly reduce the attractiveness of our services.
Significant disruption in the operation of these systems would adversely affect
our business and results of operations.
5
Our enhanced services are dependent on leased telecommunications lines, and a
significant disruption or change in these services could adversely affect our
business.
The enhanced services we offer, such as automatic call distribution, fax to
email, real time account management, and the inNetwork(TM) family of products,
are provided to customers through a dedicated network of equipment we own
connected through leased telecommunications lines with capacity dedicated to us
that is based on Internet protocol, which means the communication initiated by
the customer is converted to data packs that are transmitted through the
dedicated network and managed by our software that resides on our equipment
attached to the network. We also move a portion of our voice long distance
service over this dedicated network, because it lowers our cost of providing the
service from the cost of using traditional transmission methods.
We lease telecommunication lines and space at co-location facilities for
our equipment, which represents the backbone of our dedicated network, from
third party suppliers. If any of these suppliers is unable or unwilling to
provide or expand their current levels of service to us that enable us to serve
our customers, the services we offer would be adversely affected. Although we
believe leased telecommunications lines and co-location facilities are available
from alternative suppliers, we might not be able to obtain substitute services
from other providers at reasonable or comparable prices or in a timely fashion.
Any resulting disruptions in the services we offer that are provided over our
dedicated network would likely result in customer dissatisfaction and adversely
affect our operations. Furthermore, pricing increases by any of the suppliers we
rely on for the dedicated network could adversely affect our results of
operations if we are unable to pass pricing increases through to our customers.
Our business could be materially harmed if our computer systems were damaged.
Substantially all of our dedicated network systems are located at four
locations in Los Angeles, Salt Lake City, Dallas, and New York. Our customer
service, billing, and service management systems are located at out offices in
Bluffdale and Draper, Utah. Fires, floods, earthquakes, power losses,
telecommunications failures, break-ins and similar events could damage these
systems. Computer viruses, electronic break-ins, human error, or other similar
disruptive problems could also adversely affect our systems. We do not carry
business interruption insurance. Accordingly, any significant systems disruption
could have a material adverse effect on our business, financial condition, and
results of operations.
We use the Internet in various aspects of our business. The viability of the
Internet as an information medium and commercial marketplace will depend in
large part upon the stability and maintenance of the infrastructure for
providing Internet access and carrying Internet traffic.
Historically we have relied on the Internet for customer service and
billing. Failure to develop a reliable network system or timely development and
acceptance of complementary products, such as high-speed access systems, could
materially harm our business. In addition, the Internet could lose its viability
due to delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity or due to increased
government regulation. If the Internet does not remain a viable conduit for data
and transactional traffic or the manner in which it now operates changes
significantly, then our business and results of operations could be adversely
affected.
6
A fundamental requirement for online communications is the secure transmission
of confidential information over public networks. Our failure to protect this
confidential information could result in liability.
If third parties succeed in penetrating our network security or otherwise
misappropriate our customer information, we could be subject to liability. Our
liability could include claims for unauthorized purchases with credit card or
banking information, impersonation or other similar fraud claims, as well as for
other misuses of personal information, including for unauthorized marketing
purposes. These claims could result in litigation and adverse publicity, which
could have a material adverse effect on our reputation, business, and results of
operations.
Our growth and results of operations are not predictable, which means an
investment in us has greater risk.
Buyers United experienced significant growth in 2003, primarily through
internal growth and the purchase of customer accounts. Recent acquisitions of
assets and customers have substantially increased our operations. We have no
other customer base acquisitions under consideration and cannot predict if or
when another such acquisition opportunity may present itself. Consequently, it
is not possible to predict with any certainty the growth of our business over
the next year, whether internally or through acquisitions. Our ability to
continue our growth and profitability will depend on a number of factors,
including our ability to maintain and expand our independent agent network, the
availability of capital to fund purchases of customers or acquisitions, existing
and emerging competition, and our ability to maintain sufficient profit margins
despite pricing pressures. Furthermore, the growth and development of our
business may be harmed if we are unable to adapt and expand our systems,
procedures, and controls to support and manage our growth. All of these factors
indicate there could be fluctuations in our results of operations and volatility
in our stock price that could expose an investor to greater risk.
Our inability to promote our name and service could adversely affect the
development of our business.
Building recognition of our brand name, "UCN", is beneficial to attracting
additional customers, obtaining favorable reseller agreements with providers of
long distance, and establishing strategic relationships with independent agents
and businesses that can facilitate or enhance our service offerings and
marketing efforts. In January 2004 we filed an application with the U.S. Patent
and Trademark Office to register the mark, but have yet to receive any response
on the application. If we fail to obtain registration of UCN, we may consider
adopting new marks for promotion, so we would gain little from promoting UCN.
Even if we are successful in registering the mark, our failure to promote and
maintain our brand name successfully may result in slowed growth, loss of
customers, loss of market share, and loss of strategic relationships. We cannot
assure you that we will be able to promote our brand names as fully as we would
like, or that promoting our brand name will enable us to be competitive or
improve our results of operations.
Our development of enhanced services could subject us to claims of patent
infringement that would adversely affect our results of operations.
We offer enhanced services through our dedicated network, such as fax to
email. This, and other enhanced services, has been the subject of claims by
certain patent holders that providing the enhanced services violates existing
patent rights covering the manner and method by which the services are
performed. We have not received any notice or claim from any party that any
service we offer violates any such rights. Should we receive such a notice, we
expect that the patent holder would seek a licensing arrangement in which we
would be required to pay a license fee to continue to offer the service, and may
7
seek license payment for past sales of the service using the alleged patented
technology. Payment of any such license fees would have an adverse impact on the
net revenue generated from sales of the enhanced services.
Regulation of IP telephony services is unclear, so the imposition of significant
regulation in the future could adversely affect our operations.
We deliver our enhanced services and move other long distance service
through our VoIP Network. At both the Federal and state level, proceedings and
investigations are pending with respect to whether IP-enabled voice
communications are telecommunications services subject to Federal and state
regulation. A determination that such services are subject to regulation would
likely increase the cost of services we provide, which would adversely affect
our results of operations. Even if a determination is made that our IP delivered
services are not subject to current regulation, there is no assurance that
Federal or state governments will not impose regulation on IP-enabled
communications in the future that would add substantially to our costs of doing
business.
Future sales or the potential for sale of a substantial number of shares of our
common stock could cause the trading price of our common stock to decline and
could impair our ability to raise capital through subsequent equity offerings.
As of April 7, 2004, we have 13,154,579 shares of common stock outstanding,
of which 4,608,739 shares are freely tradable, 3,205,294 shares may be sold
subject to the volume, timing, and other conditions of Rule 144 adopted under
the Securities Act of 1933, 808,546 shares may be sold subject to the volume,
timing, and other conditions of Rule 144 beginning May 1, 2004 and the remaining
4,532,000 shares may be sold subject to the volume, timing, and other conditions
of Rule 144 beginning March 15, 2005. We agreed with the holders of 5,340,546
restricted shares to file a registration statement with the Securities and
Exchange Commission in April 2004 for the purpose of registering resale of their
shares.
In addition, we have outstanding warrants, options and convertible notes to
acquire 7,461,083 additional shares that are registered for sale by the holders
in the public market under a registration statement filed with the Securities
and Exchange Commission in September 2003, which has been temporarily suspended
until we file an amendment updating the registration statement with our
financial statements for 2003 and other information. Assuming all these warrants
and options are exercised, there would be 20,615,662 shares of common stock
issued and outstanding. We have also reserved for future issuance 6,296,469
additional shares of common stock as follows:
o 3,929,000 shares issuable on conversion of outstanding preferred stock;
o Up to 2,006,351 shares underlying other warrants and options that were
granted and remained outstanding as of the date of this filing;
o Up to 211,118 shares reserved for issuance under our stock plans; and
o Up to 150,000 shares reserved for issuance on conversion of outstanding
notes.
Of the 3,929,000 shares of common stock issuable on conversion of
outstanding preferred stock, 3,374,000 may be sold without limitation under Rule
144(k).
Sales of a substantial number of shares of our common stock in the public
markets, or the perception that these sales may occur, could cause the market
price of our stock to decline, which could adversely affect an investment in our
stock and could materially impair our ability to raise capital through the sale
of additional equity securities. The holders of these outstanding warrants,
options, and convertible securities have the opportunity to profit from a rise
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in the value or market price of our common stock and to exercise purchase or
conversion rights when we could obtain equity capital on more favorable terms
than those contained in these securities.
INFORMATION ABOUT BUYERS UNITED
We currently file periodic reports pursuant to the Securities Exchange Act
of 1934. All of our reports, such as annual and quarterly reports, and other
information, such as proxy statements, are filed electronically with the
Securities and Exchange Commission (SEC). Copies of the reports, proxy
statements, and other information may be read and copied at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can
request copies of such documents by writing to the SEC and paying a fee for the
copying cost. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a web
site at (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC.
This prospectus is part of a Registration Statement on Form S-2 that we
filed with the SEC. Certain information in the Registration Statement has been
omitted from this prospectus in accordance with the rules and regulations of the
SEC. We have also filed exhibits and schedules with the Registration Statement
that are excluded from this prospectus. For further information you may:
o Read a copy of the Registration Statement, including the exhibits and
schedules, without charge at the SEC's Public Reference Room; or
o Obtain a copy from the SEC upon payment of the fees prescribed by the SEC
Our corporate website is http://www.buyersonline.com. We make available on
this website, free of charge, access to our Annual Report on Form 10-KSB,
Quarterly Reports on Form 10-QSB, Current Reports on Form 8-K, Proxy Statement
on Schedule 14A and amendments to those materials filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as
reasonably practicable after we electronically submit such material to the SEC.
INCORPORATION BY REFERENCE
The Securities and Exchange Commission allows us to incorporate by
reference certain of our publicly filed documents into this prospectus, which
means that information included in those documents is considered part of this
prospectus. We incorporate by reference into this prospectus our annual report
on Form 10-KSB for the fiscal year ended December 31, 2003 filed with the
Securities and Exchange Commission on March 30, 2004, a copy of which is being
provided to you with this prospectus, and current report on Form 8-K filed with
the Securities and Exchange Commission on March 17, 2004.
Upon a written or oral request, we will provide to you free of charge a
copy of any or all of such documents incorporated by reference, other than
exhibits to such documents unless the exhibits are specifically incorporated by
reference in those documents. You should direct any requests for documents to:
Kimm Partridge, Secretary
Buyers United, Inc.
14870 Pony Express Road
Bluffdale, Utah 84065
Telephone (801) 320-3300
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SELLING SECURITY HOLDERS
The following table sets forth as of April 7, 2004 the name of each of the
selling security holders, the number of shares of common stock that each selling
security holder owns, the number of shares of common stock owned by each selling
security holder that may be offered for sale from time to time by this
prospectus, and the percent of our outstanding common stock each selling
security holder will continue hold assuming the sale of all the common stock
offered.
Some of the selling security holders may distribute their shares, from time
to time, to their limited and/or general partners and members, who may sell
shares pursuant to this prospectus. Each selling security holder may also
transfer shares owned by him by gift, and upon any such transfer the donee would
have the same right of sale as the selling security holder. Except as described
in the notes to the table, none of the selling security holders has had a
material relationship with us within the past three years other than as a result
of the ownership of our common stock. We may amend or supplement this prospectus
from time to time to update the disclosure set forth herein.
We are registering 5,504,671 shares of common stock, par value of $0.001
per share, on behalf of the selling security holders. Of these shares, 4,532,000
shares were acquired in a private placement in March 2004, 808,546 shares
represent common stock issued as dividends and on conversion of Series B
Preferred Stock, and 164,125 shares are issuable on exercise of a warrant. All
of the foregoing securities were issued pursuant to exemptions from the
registration requirements of the Securities Act of 1933 provided by Section 4(2)
thereof.
The registration agreement we made with the purchase agreement used in
connection with the private placement provides that no later than 30 days
following the closing we will file a registration statement on Form S-2 to
enable the resale of the shares purchased by the selling security holders in the
private placement, and that we will use all commercially reasonable efforts to
cause the registration statement to be declared effective as promptly as
possible after filing. In the event the registration statement is not declared
effective within 90 days following the closing, then we may be required to pay a
fee to the selling security holders equal to one percent of the total purchase
price of the shares purchased in the private placement on the expiration of the
90-day period plus two percent of that amount per month for each subsequent 30
day period that the registration statement has not been declared effective up to
a maximum aggregate amount of 15 percent of the total purchase price of the
shares purchased. Buyers United will receive no proceeds from this offering,
other than through the possible exercise of the warrant held by Roth Capital
Partners for 164,125 shares at $2.76 per share, or a total of $452,985.
Number Of Number Of Percentage
Shares Shares Owned
Selling Security Holder Owned (1) Offered After
033 Growth Partners I, L.P. (2) 585,231 585,231 -0-
033 Growth Partners II, LP (2) 183,123 183,123 -0-
Oyster Pond Partners, LP (2) 134,953 134,953 -0-
033 Growth International Fund Ltd. (2) 291,693 291,693 -0-
Lagunitas Partners LP 521,740 521,740 -0-
Gruber & McBaine International 130,870 130,870 -0-
J Patterson McBaine 76,086 76,086 -0-
Jon D. Gruber & Linda W. Gruber 76,086 76,086 -0-
Firefly Partners LP 65,218 65,218 -0-
Shannon River Partners, LP (3) 241,129 241,129 -0-
Shannon River Partners II, LP (3) 333,871 333,871 -0-
10
Wynnefield Partners Small Cap Value,
LP I (3) 77,000 77,000 -0-
Wynnefield Partners Small Cap Value, LP (3) 71,000 71,000 -0-
Wynnefield Small Cap Value Offshore Fund,
Ltd. (3) 52,000 52,000 -0-
MicroCapital Fund LP 280,000 280,000 -0-
MicroCapital Fund Ltd. 150,000 150,000 -0-
The Pinnacle Fund, L.P. 422,000 422,000 -0-
Westpark Capital, L.P. 350,000 350,000 -0-
Proximity Partners L.P. 150,000 150,000 -0-
Proximity Fund L.P. 125,000 125,000 -0-
Topaz Partners 100,000 100,000 -0-
Graham Partners, L.P. 80,000 80,000 -0-
Incline Capital, L.P. 35,000 35,000 -0-
Acceris Communications Inc. (4) 808,546 808,546 -0-
Roth Capital Partners, LLC (5) 164,125 164,125 -0-
__________________________
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rule, beneficial ownership includes any shares as
to which the individual has sole or shared voting power or investment power
and also any shares that the individual has the right to acquire within 60
days of the date of this prospectus through the exercise of any stock
option or other right. Unless otherwise indicated in the footnotes, each
person has sole voting and investment power (or shares such powers with his
or her spouse) with respect to the shares shown as beneficially owned.
Percentage of beneficial ownership is based on 13,154,579 shares of common
stock outstanding as of April 7, 2004.
(2) As reported in a Schedule 13G filed with the Securities and Exchange
Commission, 033 Asset Management, LLC, may be deemed to hold an indirect
beneficial interest in the shares held by these funds because of its status
as investment manager for the funds, but 033 Asset Management, LLC, also
reported that it disclaims and economic interest or beneficial ownership of
the shares.
(3) As reported in a Schedule 13G filed with the Securities and Exchange
Commission, Shannon River Capital Management, LLC may be deemed to hold an
indirect beneficial interest in the shares held by Shannon River Partners,
L.P. and Shannon River Partners II, L.P. Furthermore, Shannon River
Partners, L.P. and Shannon River Partners II, L.P. may be deemed to hold an
indirect beneficial interest in the shares held by Wynnefield Partners
Small Cap Value, LP I, Wynnefield Partners Small Cap Value, LP, and
Wynnefield Small Cap Value Offshore Fund, Ltd. because of their status as
portfolio managers for the funds, which means Shannon River Capital
Management, LLC may also be deemed to hold an indirect beneficial interest
in those shares.
(4) In December 2002, Buyers United entered into an agreement to purchase
assets of Acceris Communications Inc. (formerly I-Link, Inc.) and its
subsidiary, I-Link Communications, Inc., and license in perpetuity software
developed by Acceris, all of which comprise the VoIP Network we now own and
operate. As a result of the transaction, Acceris Communications acquired
300,000 shares of Series B Convertible Preferred Stock and became a
principal stockholder of Buyers United. This preferred stock was converted
to 1,500,000 common shares in March 2004 pursuant to an agreement with
Acceris that resolved the open account issues, allowed Acceris to sell
750,000 of the converted common shares to the same investors that purchased
Buyers United common stock in March 2004, and granted to Acceris the right
to include its common stock in the registration statement of which this
prospectus is a part.
(5) This figure represents the shares of common stock issuable upon exercise of
a warrant issued to Roth Capital Partners, LLC as partial compensation for
its services as placement agent in connection with the private placement we
closed in March 2004. Roth Capital Partners is a registered broker-dealer.
11
PLAN OF DISTRIBUTION
The selling security holders and any of their pledgees, donees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The selling security holders may use any one or more
of the following methods when selling shares:
o Ordinary brokerage transactions and transactions in which the broker-dealer
solicits investors;
o Block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
o Purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o An exchange distribution in accordance with the rules of the applicable
exchange;
o Privately negotiated transactions;
o To cover short sales made after the date that the registration statement of
which this prospectus is a part is declared effective by the Securities and
Exchange Commission;
o Broker-dealers may agree with the selling security holders to sell a
specified number of such shares at a stipulated price per share;
o A combination of any such methods of sale; and
o Any other method permitted pursuant to applicable law.
The selling security holders may also sell shares under Rule 144 under the
Securities Act of 1933, if available, rather than under this prospectus.
Broker-dealers engaged by the selling security holders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling security holders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. The selling security holders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved.
The selling security holders may from time to time pledge or grant a
security interest in some or all of the shares owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell shares of common stock from time to time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list of
selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus.
Upon Buyers United being notified in writing by a selling security holder
that any material arrangement has been entered into with a broker-dealer for the
sale of common stock through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a
supplement to this prospectus will be filed, if required, pursuant to Rule
12
424(b) under the Securities Act of 1933, disclosing (i) the name of each such
selling security holder and of the participating broker-dealer(s), (ii) the
number of shares involved, (iii) the price at which such the shares of common
stock were sold, (iv) the commissions paid or discounts or concessions allowed
to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did
not conduct any investigation to verify the information set out or incorporated
by reference in this prospectus, and (vi) other facts material to the
transaction. In addition, upon Buyers United being notified in writing by a
selling security holder that a donee or pledge intends to sell more than 500
shares of common stock, a supplement to this prospectus will be filed if then
required in accordance with applicable securities law.
The selling security holders also may transfer the shares of common stock
in other circumstances, in which case the transferees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
The selling security holders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933 in connection with such sales. In such
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act of 1933. Discounts,
concessions, commissions and similar selling expenses, if any, that can be
attributed to the sale of securities will be paid by the selling security holder
and/or the purchasers. Each selling security holder has represented and
warranted to Buyers United that it does not have any agreement or understanding,
directly or indirectly, with any person to distribute the common stock.
Buyers United has advised each selling security holder that it may not use
shares registered on the registration statement of which this prospectus forms a
part to cover short sales of common stock made prior to the date on which the
registration statement is declared effective by the Securities and Exchange
Commission. If a selling security holder uses this prospectus for any sale of
the common stock, it will be subject to the prospectus delivery requirements of
the Securities Act of 1933. The selling security holders will be responsible to
comply with the applicable provisions of the Securities Act of 1933 and the
Securities Exchange Act of 1934, and the rules and regulations there under
promulgated, including, without limitation, Regulation M, as applicable to such
selling security holders in connection with resales of their respective shares
under the registration statement of which this prospectus is a part.
Buyers United is required to pay all fees and expenses incident to the
registration of the shares, but it will not receive any proceeds from the resale
of the common stock. Buyers United has agreed to indemnify the selling security
holders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act of 1933. If the selling security holders
use this prospectus for any sale of the common stock, they will be subject to
the prospectus delivery requirements of the Securities Act of 1933.
DESCRIPTION OF CAPITAL STOCK
Buyers United's charter authorizes it to issue up to: (i) 100,000,000
shares of common stock, $0.0001 par value per share; and (ii) 15,000,000 shares
of preferred stock, $0.0001 par value per share. As of the date of this
Prospectus, there are 13,154,579 shares of common stock outstanding, and
1,827,500 shares of Series A Convertible Preferred Stock and 420,300 shares of
Series B Convertible Preferred Stock outstanding. In addition, there are
outstanding options, warrants and convertible notes to acquire up to an
additional 9,617,434 shares of common stock.
13
Common stock
Holders of the common stock are entitled to one vote per share on all
matters submitted to the stockholders for a vote. There are no cumulative voting
rights in the election of directors. The shares of common stock are entitled to
receive such dividends as may be declared and paid by the board of directors out
of funds legally available there for and to share, ratably, in the net assets,
if any, of Buyers United upon liquidation. The stockholders have no preemptive
rights to purchase any shares of our capital stock.
Preferred stock
General. The board of directors, without further action by the holders of
the common stock, is authorized to classify any shares of our authorized but
unissued preferred stock as preferred stock in one or more series. With respect
to each series, the board of directors may determine:
o The number of shares which shall constitute such series;
o The rate of dividend, if any, payable on shares of such series;
o Whether the shares of such series shall be cumulative, non-cumulative or
partially cumulative as to dividends, and the dates from which any
cumulative dividends are to accumulate;
o Whether the shares of such series may be redeemed, and, if so, the price or
prices at which and the terms and conditions on which shares of such series
may be redeemed;
o The amount payable upon shares of such series in the event of the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of
Buyers United;
o The sinking fund provisions, if any, for the redemption of shares of such
series;
o The voting rights, if any, of the shares of such series;
o The terms and conditions, if any, on which shares of such series may be
converted into shares of capital stock of Buyers United of any other class
or series;
o Whether the shares of such series are to be preferred over shares of
capital stock of Buyers United of any other class or series as to
dividends, or upon the voluntary or involuntary dissolution, liquidation,
or winding up of the affairs of Buyers United, or otherwise; and
o Any other characteristics, preferences, limitations, rights, privileges,
immunities or terms not inconsistent with the provisions of the Charter.
The availability of preferred stock, while providing desirable flexibility
in connection with possible acquisitions and other corporate purposes, could
have the effect of discouraging takeover proposals, and the issuance of
preferred stock could have the effect of delaying or preventing a change in
control of Buyers United not approved by the board of directors.
14
Series A Convertible Preferred Stock. Buyers United has outstanding
1,827,500 shares of Series A Convertible Preferred Stock. The Series A Stock is
senior to the common stock with respect to payment of dividends and
distributions in liquidation. Holders of the Series A Stock are entitled to
receive dividends payable semi-annually equal to 8 percent of the liquidation
preference value of the Series A Stock, which is $2.00 per share or a total of
$3,655,000. No dividends or distributions may be made with respect to the common
stock unless all dividend payments on the Series A Stock are current. Each share
of Series A Stock is convertible at the election of the holder to one share of
common stock, subject to adjustment in certain circumstances to prevent dilution
of the equity interest of the holders of the Series A Stock. Buyers United may
convert the Series A Stock to common stock when the market price of our common
stock is $4.00 or more during 30 consecutive trading days. We may redeem the
Series A Stock at the liquidation preference value after January 1, 2005. The
Series A Stock does not have voting rights.
Series B Convertible Preferred Stock. Buyers United has outstanding 420,300
shares of Series B Convertible Preferred Stock. The Series B Stock is senior to
the common stock with respect to payment of dividends and distributions in
liquidation. Holders of the Series B Stock are entitled to receive dividends
payable semi-annually equal to 8 percent of the liquidation preference value of
the Series B Stock, which is $10.00 per share or a total of $4,203,000. No
dividends or distributions may be made with respect to the common stock unless
all dividend payments on the Series B Stock are current. Each share of Series B
Stock is convertible at the election of the holder to five shares of common
stock, subject to adjustment in certain circumstances to prevent dilution of the
equity interest of the holders of the Series B Stock. Buyers United may convert
the Series B Stock to common stock when the market price of our common stock is
$4.00 or more during 30 consecutive trading days. We may redeem the Series B
Stock at the liquidation preference value after January 1, 2005. The Series B
Stock does not have voting rights.
Statutory business combinations provision
Buyers United is subject to the provisions of Section 203 of the Delaware
General Corporation Law. Section 203 provides, with certain exceptions, that a
Delaware corporation may not engage in any of a broad range of business
combinations with a person or an affiliate, or associate of such person, who is
an "interested stockholder" for a period of three years from the date that such
person becomes an interested stockholder unless: (i) the transaction resulting
in a person becoming an interested stockholder, or the business combination, is
approved by the board of directors of the corporation before the person becomes
an interested stockholder; (ii) the interested stockholder acquired 85 percent
or more of the outstanding voting stock of the corporation in the same
transaction that makes such person an interested stockholder (excluding shares
owned by persons who are both officers and directors of the corporation, and
shares held by certain employee stock ownership plans); or (iii) on or after the
date the person becomes an interested stockholder, the business combination is
approved at an annual or special meeting by the corporation's board of directors
and by the holders of at least 66 2/3 percent of the corporation's outstanding
voting stock, excluding shares owned by the interested stockholder. Under
Section 203, an "interested stockholder" is defined as any person who is: (i)
the owner of 15 percent or more of the outstanding voting stock of the
corporation; or (ii) an affiliate or associate of the corporation and who was
the owner of 15 percent or more of the outstanding voting stock of the
corporation at any time within the three-year period immediately prior to the
date on which it is sought to be determined whether such person is an interested
stockholder.
A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws, through
action of its stockholders, to exempt itself from coverage, provided that such
bylaw or certificate of incorporation amendment shall not become effective until
12 months after the date it is adopted. Buyers United has not adopted such an
amendment to its certificate of incorporation or bylaws.
15
Limitation on directors' liabilities
Pursuant to the certificate of incorporation and under Delaware law,
directors and executive officers are not liable to Buyers United or its
stockholders for monetary damages for breach of fiduciary duty, except liability
in connection with a breach of duty of loyalty, acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
dividend payments or stock repurchases illegal under Delaware law, or any
transaction in which a director has derived an improper personal benefit.
Our certificate of incorporation and bylaws provide that we will indemnify
our directors and officers to the fullest extent permitted by law against
liabilities and expenses incurred in connection with litigation in which these
persons may be involved because of their offices with us if they acted in good
faith or in a manner reasonably believed to be in or not opposed to our best
interests. However, nothing in the certificate of incorporation and bylaws
protects or indemnifies a director, officer, employee, or agent against any
liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. To the extent that a director or officer
has been successful in defense of any proceeding, our bylaws provides that he
shall be indemnified against reasonable expenses incurred in connection
therewith.
Penny stock rules
It is likely public transactions in our stock will be covered by the Penny
Stock rules, which impose significant restrictions on broker-dealers and may
affect the resale of our stock. A penny stock is generally a stock that
o Is not listed on a national securities exchange or Nasdaq,
o Is listed in "pink sheets" or on the NASD OTC Bulletin Board,
o Has a price per share of less than $5.00 and
o Is issued by a company with net tangible assets less than $5 million.
The penny stock trading rules impose additional duties and responsibilities
upon broker-dealers and salespersons effecting purchase and sale transactions in
common stock and other equity securities, including
o Determination of the purchaser's investment suitability,
o Delivery of certain information and disclosures to the purchaser, and
o Receipt of a specific purchase agreement from the purchaser prior to
effecting the purchase transaction.
Many broker-dealers will not effect transactions in penny stocks, except on
an unsolicited basis, in order to avoid compliance with the penny stock trading
rules. It is likely our common stock will be covered by the penny stock trading
rules. Therefore, such rules may materially limit or restrict a holder's ability
to resell our common stock, and the liquidity typically associated with other
publicly traded equity securities may not exist.
Transfer agent
The transfer agent for the common stock is Atlas Stock Transfer Company,
Salt Lake City, Utah.
16
INDEMNIFICATION
Under the certificate of incorporation and bylaws of Buyers United, the
board of directors has the authority to indemnify officers and directors to the
fullest extent permitted by Delaware law. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to our
directors, officers, and controlling persons, or to the extent any of the
selling security holders are entitled to indemnification under their agreements
with us, we have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable.
LEGAL MATTERS
Certain legal matters relating to the validity of the securities offered by
this prospectus will be passed upon for Buyers United by Cohne, Rappaport &
Segal, P.C., Salt Lake City, Utah.
EXPERTS
The financial statements incorporated in this registration statement by
reference from Buyers United, Inc.'s annual report on Form 10-KSB for the year
ended December 31, 2003 have been audited by Crowe Chizek and Company LLC,
independent auditors, as stated in their report, which is incorporated herein by
reference, and has been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
17
Prospective investors may rely only on the information contained in this
prospectus. Neither Buyers United nor any selling security holder has authorized
anyone to provide prospective investors with information different from that
contained in this prospectus. This prospectus is not an offer to sell nor is it
seeking an offer to buy the shares in any jurisdiction where the offer or sale
is not permitted. The information contained in this prospectus is correct only
as of the date of this prospectus, regardless of the time of the delivery of
this prospectus or any sale of the shares.
BUYERS UNITED, INC.
5,504,671 Shares
Common Stock
_______________
PROSPECTUS
_______________
__________________, 2004
18
IV
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with this
registration statement. We will pay all expenses of the offering. All of such
expenses are estimates, other than the filing fees payable to the Securities and
Exchange Commission.
Securities and Exchange Commission $ 2,023
Filing Fee
Printing Fees and Expenses 10,000
Legal Fees and Expenses 20,000
Accounting Fees and Expenses 10,000
Blue Sky Fees and Expenses 15,000
Miscellaneous 7,977
TOTAL $ 65,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Buyers United's Charter provides that, to the fullest extent that
limitations on the liability of directors and officers are permitted by the
Delaware General Corporation Law (the "DGCL"), no director or officer of Buyers
United shall have any liability to Buyers United or its stockholders for
monetary damages. The DGCL provides that a corporation's charter may include a
provision which restricts or limits the liability of its directors or officers
to the corporation or its stockholders for money damages except: (1) to the
extent that it is provided that the person actually received an improper benefit
or profit in money, property or services, for the amount of the benefit or
profit in money, property or services actually received, or (2) to the extent
that a judgment or other final adjudication adverse to the person is entered in
a proceeding based on a finding in the proceeding that the person's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. Buyers United's
Charter and Bylaws provide that Buyers United shall indemnify and advance
expenses to its currently acting and its former directors to the fullest extent
permitted by the DGCL and that Buyers United shall indemnify and advance
expenses to its officers to the same extent as its directors and to such further
extent as is consistent with law.
The Charter and Bylaws provide that Buyers United will indemnify its
directors and officers and may indemnify employees or agents of Buyers United to
the fullest extent permitted by law against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with Buyers United. However, nothing in the Charter or Bylaws of Buyers
United protects or indemnifies a director, officer, employee or agent against
any liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. To the extent that a director or officer
has been successful in defense of any proceeding, our Bylaws provide that he
shall be indemnified against reasonable expenses incurred in connection
therewith.
I
ITEM 16. EXHIBITS.
The following documents are included as exhibits to this registration
statement.
Exhibit
No. Title of Document
---- -----------------
5.1 Opinion on Legality (1)
10.1 Asset Purchase Agreement dated December 6, 2002, with I-Link
Communications, Inc. and I-Link Incorporated, without
exhibits (2)
10.2 Reconciliation Agreement dated March 9, 2004 with Acceris
Communications and I-Link Communications (3)
10.3 Form of Securities Purchase Agreement dated March 10, 2004 (3)
10.4 Form of Registration Rights Agreement dated March 10, 2004 (3)
10.5 Warrant issued to Roth Capital Partners, LLC
13.1 Annual Report on Form 10-KSB for the year ended December 31,
2003 (4)
23.1 Consent of Cohne, Rappaport & Segal, PC (1)
23.2 Consent of Crowe Chizek and Company LLC
24.1 Power of Attorney
_______________________________
(1) The consent of Cohne, Rappaport & Segal, P.C., is included in Exhibit 5.1.
(2) This document was filed as an exhibit to the annual report on Form 10-KSB
for 2002 filed by Buyers United with the Securities and Exchange Commission
on April 14, 2003, and is incorporated herein by this reference.
(3) These documents were filed as exhibits to the current report on Form 8-K
filed by Buyers United with the Securities and Exchange Commission on March
17, 2004, and are incorporated herein by this reference.
(4) This report was filed with the Securities and Exchange Commission on March
30, 2004, and is incorporated herein by this reference.
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 to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
II
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information set forth in
the Registration Statement, and notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of a prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) Include any additional or changed material information with
respect to the plan of distribution.
2. That for the purpose of determining any liability under the Securities
Act, each post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
B. Insofar as indemnification for liabilities under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in a successful defense of any action, suit or proceeding) is asserted by a
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issuer.
III
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in City of Bluffdale, State of Utah, on April 5, 2004.
BUYERS UNITED, INC.
By /s/ Theodore Stern, Chief Executive Officer
By /s/ David R. Grow, Chief Financial Officer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Theodore Stern, Director Date: April 5, 2004
/s/ Gary Smith, Director Date: April 5, 2004
/s/ Edward Dallin Bagley, Director Date: April 5, 2004
/s/ Steve Barnett, Director Date: April 5, 2004
/s/ Paul Jarman, Director Date: April 5, 2004
IV