<PAGE>

================================================================================

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON DC 20549

                                 ____________

                                  FORM 10-QSB
                                 ____________

                                   (Mark One)

            X     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
           ---
                        SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended March 31, 2001
                                 ____________

           ___    TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
              For the transition period from _______ to _______ .

                          Commission File No. 0-28452


                       UNITED SHIPPING & TECHNOLOGY, INC.
             (Exact name of registrant as specified in its charter)


                   Utah                               87-0355929
     (State or Other Jurisdiction of       (IRS Employer Identification No.)
     Incorporation or Organization)


           9850 51st Avenue North, Suite 110, Minneapolis, MN  55442
              (Address of Principal Executive Offices) (Zip Code)


       Registrant's Telephone Number, Including Area Code: (952) 941-4080

                                ______________

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

                   YES (X)   NO (___)

As of May 14, 2001, there were 16,646,399 shares of common stock of the
registrant issued and outstanding.

Transitional Small Business Disclosure Format

                   YES (___) NO (X)


================================================================================
<PAGE>

                       UNITED SHIPPING & TECHNOLOGY, INC.
                              INDEX TO FORM 10-QSB
                                 MARCH 31, 2001


<TABLE>
<CAPTION>
                                                                                                 Page
                                                                                                 ----
PART I.        FINANCIAL INFORMATION
<S>            <C>                                                                           <C>
   ITEM 1.     Consolidated Financial Statements (Unaudited)

               Balance Sheets as of March 31, 2001 and July 1, 2000...............................   3
               Statements of Operations for the Three and Nine Months Ended
                      March 31, 2001 and April 1, 2000............................................   4
               Statement of Shareholders' Deficit.................................................   5
               Statements of Cash Flows for the Nine Months Ended
                      March 31, 2001 and April 1, 2000............................................   6
               Notes to Consolidated Financial Statements for the Three and Nine
                      Months Ended March 31, 2001 and April 1, 2000...............................   7

   ITEM 2.     Management's Discussion and Analysis of
               Financial Condition and Results of Operations......................................  12

PART II.       OTHER INFORMATION
   ITEM 1.     Legal Proceedings..................................................................  15
   ITEM 2.     Changes in Securities and Use of Proceeds..........................................  16
   ITEM 3.     Defaults upon Senior Securities....................................................  19
   ITEM 4.     Submission of Matters to a Vote of Securities Holders..............................  19
   ITEM 5.     Other Information..................................................................  20
   ITEM 6.     Exhibits...........................................................................  20
SIGNATURES .......................................................................................  21
EXHIBIT INDEX ....................................................................................  22
</TABLE>

                                       2
<PAGE>

PART I.

              UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES
                          Consolidated Balance Sheets
                            (Amounts in thousands)


                                                           March 31,    July 1,
                                                              2001        2000
                                                          -----------   -------
                                                          (unaudited)


                                    ASSETS

Current assets:
   Cash                                                      $    905  $  3,993
   Accounts receivable, net                                    51,037    57,698
   Accounts receivable - other                                  2,673     3,960
   Prepaid expense                                              9,132     9,213
   Other current assets                                           372     1,272
                                                             --------  --------

     Total current assets                                      64,119    76,136

Property and equipment, net                                    10,963    12,796

Goodwill                                                       82,584    89,220
Notes receivable from related party                             1,074     1,354
Other assets, net                                               1,914     2,217
                                                             --------  --------
Total assets                                                 $160,654  $181,723
                                                             ========= ========

                     LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
   Trade accounts payable                                    $ 30,897  $ 30,792
   Accrued insurance and claims                                12,194    18,903
   Accrued wages and benefits                                   3,799     9,020
   Accrued legal and claims                                     3,898    16,192
   Other accrued liabilities                                   17,417    12,669
   Current portion of long-term debt and capital leases        45,224     2,763
                                                             --------  --------
     Total current liabilities                                113,429    90,339

Long-term debt and capital leases                              16,317    43,899
Accrued insurance and claims                                   18,189    23,347

Series B redeemable preferred stock                            21,366    25,261
Series C redeemable preferred stock                            12,000         -
Preferred stock Series C warrants                               2,800         -
Series D redeemable preferred stock                             1,867         -

Shareholders' deficit:

   Common stock, $0.004 par value, 75,000 shares authorized,
     16,646 and 16,400 shares issued and outstanding at
     March 31, 2001 and July 1, 2000, respectively.                66        65
   Common stock warrant                                           857         -
   Additional paid-in-capital                                  46,957    43,240
   Accumulated deficit                                        (73,096)  (44,387)
   Foreign currency translation                                   (98)      (41)
                                                             --------  --------

     Total shareholders' deficit                              (25,314)   (1,123)
                                                             --------  --------
     Total liabilities and shareholders' deficit             $160,654  $181,723
                                                             ========  ========

  The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       3
<PAGE>

              UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                 (Amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                           Three Months Ended                      Nine Months Ended
                                                    ----------------------------------     ----------------------------------
                                                       March 31,         April 1,             March 31,         April 1,
                                                         2001              2000                 2001              2000
                                                    ----------------  ----------------     ----------------  ----------------
<S>                                                 <C>               <C>                  <C>               <C>
Revenue                                                   $ 112,214         $ 138,900            $ 365,024         $ 331,532

Cost of services                                             90,473           107,171              291,443           256,504
                                                    ----------------  ----------------     ----------------  ----------------

        Gross profit                                         21,741            31,729               73,581            75,028

Operating expenses:
        General and administrative                           25,114            35,045               83,180            82,190
        Sales and marketing                                   2,375             3,107                7,741            10,832
        Restructuring charge                                  4,425                 -                4,425                 -
                                                    ----------------  ----------------     ----------------  ----------------

Loss from operations                                        (10,173)           (6,423)             (21,765)          (17,994)

Other income (expense):
        Net interest expense                                 (1,428)           (1,487)              (4,767)           (3,217)
        Other                                                    59                63                 (147)              517
                                                    ----------------  ----------------     ----------------  ----------------

Net loss                                                  $ (11,542)        $  (7,847)           $ (26,679)        $ (20,694)
                                                    ================  ================     ================  ================

Net loss applicable to common shareholders                $ (11,672)        $  (7,847)           $ (28,709)        $ (20,694)
                                                    ================  ================     ================  ================

Basic and diluted net loss per share                      $   (0.70)        $   (0.50)           $   (1.73)        $   (1.57)
                                                    ================  ================     ================  ================

Basic and diluted weighted average number
        of common shares outstanding                         16,646            15,656               16,604            13,166
                                                    ================  ================     ================  ================
</TABLE>

  The accompanying notes are an integral part of the consolidated financial
                                  statements

                                       4
<PAGE>

              UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT
                                  (Unaudited)
                            (Amounts in thousands)

<TABLE>
<CAPTION>
                                                              Common Stock
                                                           ------------------    Additional                  Foreign
                                                                                   Paid-in   Accumulated    Currency
                                                           Shares      Amount      Capital     Deficit     Translation    Total
                                                           -------     ------    ---------   -----------   -----------  ---------
<S>                                                        <C>         <C>       <C>         <C>           <C>          <C>
Balance at July 1, 2000                                     16,400     $   65    $  43,240   $   (44,387)  $       (41) $  (1,123)

   Value of preferred stock conversion feature                   -          -        2,670             -             -      2,670
   Adjustments to Series B redeemable preferred
        stock and Series B and C warrants                        -          -            -        (2,030)            -     (2,030)
   Stock options exercised                                      36          -          161             -             -        161
   Common Stock warrant                                          -          -          455             -             -        455
   Common Stock warrants issued
        for services rendered                                    -          -          402             -             -        402
   Warrants exercised                                          110          1          336             -             -        337
   Issuance of common stock as
        litigation settlement                                  100          -          550             -             -        550

   Net loss                                                      -          -            -       (26,679)            -    (26,679)
   Foreign currency translation                                  -          -            -             -           (57)       (57)
                                                                                                                        ---------
   Comprehensive loss                                                                                                     (26,736)
                                                           -------     ------    ---------   -----------   -----------  ---------
Balance at March 31, 2001                                   16,646     $   66    $  47,814   $   (73,096)  $       (98) $ (25,314)
                                                           =======     ======    =========   ===========   ===========  =========
</TABLE>


   The accompanying notes are an integral part of the consolidated financial
                                  statements

                                       5

<PAGE>

              UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                            (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                                  Nine Months Ended
                                                                         ------------------------------------
                                                                             March 31,            April 1,
                                                                               2001                 2000
                                                                         ---------------    -----------------
<S>                                                                      <C>                <C>
OPERATING ACTIVITIES
        Net loss                                                            $   (26,679)       $    (20,694)
        Adjustments to reconcile net loss to net
           cash flows used in operating activities:
            Depreciation and amortization                                         9,154               5,745
            Equity instruments issued in lieu of
                payment for services received                                       402                 199
            Other                                                                 2,108                   -
            Loss (gain) on retirement of equipment                                  128                 (42)
        Change in operating assets and liabilities:
            Accounts receivable                                                   6,661              (6,338)
            Other current assets                                                  1,818               2,776
            Other assets                                                             20              (1,834)
            Accounts payable                                                        105              14,760
            Accrued liabilities and deferred revenue                            (22,708)            (10,097)
                                                                         ---------------    ---------------

               Cash used in operating activities                                (28,991)            (15,525)

INVESTING ACTIVITIES
        Proceeds from sale of equipment                                             154                 280
        Purchases of property and equipment                                      (2,962)             (2,463)
        Acquisition of business, net of cash received                                 -             (55,570)
        Other, net                                                                    -                 (39)
                                                                         ---------------    ---------------
               Cash used in investing activities                                 (2,808)            (57,792)

FINANCING ACTIVITIES
        Borrowings under revolving credit agreement, net                          7,184              35,741
        Payments on notes payable and long-term debt                             (2,561)               (275)
        Proceeds from notes payable and long-term debt                            9,500              19,029
        Proceeds from note and stock subscription receivable                        280                 250
        Proceeds from sale of common stock                                          498              21,444
        Proceeds from sale of preferred stock                                    13,867                   -
                                                                         ---------------    ---------------
               Cash provided by financing activities                             28,768              76,189
                                                                         ---------------    ---------------
Effect of currency exchange rate on cash                                            (57)                (39)
                                                                         ---------------    ---------------
Net (decrease) increase in cash and cash equivalents                             (3,088)              2,833
Cash and cash equivalents, beginning of period                                    3,993                 252
                                                                         ---------------    ---------------
Cash and cash equivalents, end of period                                    $       905        $      3,085
                                                                         ===============    ===============
</TABLE>

  The accompanying notes are an intergral part of the consolidated financial
                                  statements.

                                       6
<PAGE>

              UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2001 AND APRIL 1, 2000

                                  (Unaudited)
--------------------------------------------------------------------------------


1.    SIGNIFICANT ACCOUNTING POLICIES

      Basis of Presentation - The consolidated financial statements included
herein have been prepared by United Shipping & Technology, Inc. which, together
with its wholly-owned subsidiaries, shall be referred to herein as the
"Company," without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of the Company, all
adjustments consisting only of normal recurring adjustments, necessary to
present fairly the financial position of the Company as of March 31, 2001, and
the results of its operations for the three and nine months ended March 31,
2001, and its cash flows for the nine months ended March 31, 2001 have been
included. Certain information in footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles has been condensed or omitted pursuant to such rules and regulations,
although the Company believes that the disclosures are adequate to make the
information presented not misleading. These consolidated financial statements
should be read in conjunction with the financial statements for the year ended
July 1, 2000, and the footnotes thereto, included in the Company's Report on
Form 10-KSB, filed with the Securities and Exchange Commission.

      Principles of Consolidation - The consolidated financial statements
include the accounts of United Shipping & Technology, Inc. and its wholly owned
subsidiaries. All inter-company balances and transactions have been eliminated
in the consolidation.

      Reclassifications - Certain reclassifications have been made to prior
years' consolidated financial statements to conform to the current year
presentation.

      Earnings per Share - Basic net loss per share excludes dilution and is
computed by dividing net loss by the weighted average number of common shares
outstanding for the period. Diluted net loss per share reflects the potential
dilution that could occur if securities or other obligations to issue common
stock were exercised or converted into common stock or resulted in the issuance
of common stock that then shared in the earnings of the Company. For all periods
presented, diluted net loss per share is equal to basic net loss per share
because the effect of including such securities or obligations would have been
antidilutive. Total options and warrants outstanding as of March 31, 2001 and
April 1, 2000 were 10,233,658 and 5,095,835, respectively.

<TABLE>
<CAPTION>
                                                                          Three Months Ended                  Nine Months Ended
                                                                     -----------------------------    ------------------------------
                                                                       March 31,        April 1,           March 31,        April 1,
                                                                         2001             2000               2001             2000
                                                                     --------------  -------------    ----------------  ------------
                                                                              (Amounts in thousands, except per share data)
<S>                                                                  <C>             <C>              <C>               <C>
Numerator
        Net loss                                                        $ (11,542)     $ (7,847)         $ (26,679)     $ (20,694)
        Accretion of Series B Redeemable Preferred Stock
              to its redemption value                                        (190)            -               (475)             -
        Adjustment of Preferred Series B Warrants to market value               -             -             (2,295)             -
        Adjustment of Preferred Series C Warrants to market value              60             -                740              -
                                                                        ---------      --------          ---------      ---------
        Net loss applicable to common shareholders                      $ (11,672)     $ (7,847)         $ (28,709)     $ (20,694)
                                                                        =========      ========          =========      =========

Denominator for basic and diluted loss per share
        Weighted average shares                                            16,646        15,656             16,604         13,166
                                                                        =========      ========          =========      =========

BASIC AND DILUTED LOSS PER SHARE                                        $   (0.70)     $  (0.50)         $   (1.73)     $   (1.57)
                                                                        =========      ========          =========      =========
</TABLE>

                                       7
<PAGE>

              UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2001 AND APRIL 1, 2000

                                  (continued)

                                  (Unaudited)
--------------------------------------------------------------------------------


2.   ACQUISITIONS

     Effective August 28, 1999, the Company acquired from CEX Holdings, Inc.
("CEX") all of the outstanding shares of common stock of Velocity Express, Inc.
("Velocity"), formerly known as Corporate Express Delivery Systems, Inc., a
provider of same day delivery solutions. The purchase price was approximately
$91.2 million, subject to adjustment as defined in the merger agreement. The
purchase price consisted of $43 million in cash provided by an institutional
debt financier and an investment firm, and $19.5 million in a combination of
short and long-term notes issued to CEX. The Company, as a result of the
acquisition, received approximately $86.6 million of Velocity's assets and
assumed approximately $115.3 million of Velocity's liabilities, which resulted
in the Company recognizing approximately $91.2 million in goodwill. The results
of Velocity's operations have been included in the Company's consolidated
financial statements since August 28, 1999.

     In connection with the acquisition of Velocity, the Company incurred or may
incur fees for merger and acquisition related services totaling up to $5.0
million. These fees consist of $3.8 million upon the closing of the transaction
and possible contingent payments of up to $1.2 million. The contingent payments
are due in annual increments of $0.6 million in fiscal years 2001 and 2002, upon
the Company achieving various revenue targets. The Company has paid the $3.8
million of fees that were due upon the closing. Given the nature of the
contingent portion of the agreement, the Company will recognize the expense
associated with the contingent payments if and at the time the revenue targets
are achieved. If the revenue targets are not achieved, the Company is not liable
for the contingent portion of the agreement.

     The following unaudited pro forma financial information gives effect to the
Velocity acquisition as if it had occurred at the beginning of fiscal year 2000.
The pro forma results were prepared for comparative purposes only and are not
indicative of the results of operations which actually would result had the
acquisition occurred on the date indicated, or which may result in the future.

<TABLE>
<CAPTION>
                                                  Three Months Ended          Nine Months Ended
                                                        April 1,                  April 1,
                                                         2000                      2000
                                                 -------------------         -------------------
                                                  (Amounts in thousands, except per share data)
     <S>                                         <C>                       <C>

     Revenue                                        $   138,900                  $   418,127
     Loss from operations                                (6,423)                     (21,486)
     Net loss                                            (7,847)                     (25,195)
     Basic and diluted loss per share               $     (0.50)                 $     (1.91)
</TABLE>

                                       8
<PAGE>

               UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2001 AND APRIL 1, 2000
                                  (continued)

                                  (Unaudited)
--------------------------------------------------------------------------------

3.   RESTRUCTURING

     During March 2001, the Company began implementing a multi-faceted
restructuring program. This program is being implemented over the next four
months to achieve a cost structure that will allow the Company to better
position itself to achieve profitability in the ever-changing logistics and
transportation marketplace. The Company is streamlining and downsizing its
operations by reducing its workforce and consolidating various locations. As a
result of this program beginning in March 2001 the Company has reduced its
workforce by 62 full-time employees. The Company has taken a charge to date in
the amount of $4.4 million. This $4.4 million charge was comprised of a $1.0
million charge for the write-down of inventory, a $2.0 million charge for rental
costs associated with the termination of building leases and location
rationalization costs, and severance costs in the amount of $1.4 million related
to the workforce reduction.


4.   LONG-TERM DEBT AND CAPITAL LEASES

     Long-term debt and capital leases consisted of the following:


                                                  March 31,      July 1,
                                                    2001          2000
                                                 ---------      ---------
                                                  (Amounts in thousands)

     Revolving note                               $ 29,087       $ 21,903
     Senior subordinated note                        3,833          3,577
     Long-term subordinated noted to CEX             6,519          6,519
     Short-term subordinated note to CEX             4,404          4,404
     Convertible subordinated note to CEX            3,600          3,600
     9% Convertible subordinated note                    -            951
     Convertible note                               10,000              -
     Equipment financing debt                        4,026          5,471
     Various other notes and leases                     72            237
                                                 ---------      ---------

                                                    61,541         46,662
     Less current maturities                       (45,224)        (2,763)
                                                 ---------      ---------
     Total                                        $ 16,317       $ 43,899
                                                 =========      =========

     Borrowings under the revolving note are limited to the lesser of $55
million or an amount based on a defined portion of receivables less the amount
outstanding on the $5.0 million Swing Line Note issued to the institutional
financier. Interest is payable monthly at a rate of Prime plus 1.35% (9.35% at
March 31, 2001). All amounts advanced are due September 23, 2004. In addition,
the Company is required to pay a commitment fee of 0.375% on unused amounts of
the total commitment, as defined in the agreement.

     As of March 31, 2001, the Company was not in compliance with a covenant in
its revolving note and senior subordinated note facilities to provide $1.5
million of additional equity by April 6, 2001. The Company is currently in
discussions with its revolving note and senior subordinated note lenders to
resolve this default. Because of the Company's inability to cure these defaults
as of March 31, 2001, the balance of the revolving note and the senior
subordinated note have been classified as current liabilities.

                                       9
<PAGE>

              UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2001 AND APRIL 1, 2000 (continued)

                                  (Unaudited)
--------------------------------------------------------------------------------

     The senior subordinated note has interest payable quarterly at 12% and is
due September 30, 2004. The note is subordinate to the revolving note. The
initial carrying value of the senior subordinated note was reduced by $1.7
million for the fair value of the common stock warrant issued to the senior
subordinated lender. The unamortized discount aggregated $1.17 million at March
31, 2001. The discount is amortized over the life of the note. The warrant has
an exercise price of $2.787 per share and entitles the holder to acquire, in
whole or in part, 1,623,869 shares of the Company's common stock, subject to
adjustment for certain anti-dilution rights as defined in the warrant purchase
agreement.

     On March 1, 2001, the Company entered into an agreement with CEX that
accomplished the following: (1) waiver of all current defaults relating to
obligations existing under the Merger Agreement, the Short-Term Subordinated
Note, the Long-Term Subordinated Note, and the Convertible Subordinated Note;
(2) extension of the maturity date of the Short-Term Subordinated Note to July
2, 2002; (3) deferment of quarterly interest payments under all the above notes
due on March 31, 2001 until June 30, 2001; and (4) deferment of payment on past
due interest on the above notes until the notes are restructured into a debt
instrument at the time of the restructuring of the Company's revolving debt.

     Substantially all of the assets and operations of Velocity have been
pledged to secure borrowings under the revolving note, the senior subordinated
note and the CEX subordinated notes. The Company is subject to certain
restrictive covenants, the more significant of which include limitations on
dividends, loans and investments, capital expenditures, new indebtedness and
changes in capital structure. The Company is also required to maintain certain
financial covenants related to minimum EBITDA. The agreements with the lenders
also require the Company to obtain the consent of the lenders for additional
acquisitions.

5.   EQUITY

     In May 2000, the Company entered into an agreement to sell 2,806,797 shares
of the Company's Series B Convertible Preferred Stock (the "Series B Preferred")
at a price of $9.00 per share for a total of approximately $25.3 million. The
Series B Preferred requires the Company to redeem each outstanding share at
$9.00 per share, subject to adjustment, on May 31, 2006. The fair value of the
warrants issued with the Series B Preferred was allocated from the carrying
amount of the Series B Preferred to the respective warrants at the August 14,
2000 measurement date. The shares of the Series B Preferred are convertible into
shares of the Company's common stock at a rate of 1:1 subject to adjustment to
prevent dilution. An adjustment of $2.3 million was recorded in the first
quarter to mark the Series B Preferred stock warrants to market. The Series B
Preferred will be accreted up to its redemption amount of $25.3 million.
Accretion for the nine and three months ended March 31, 2001 was $475,000 and
$190,000, respectively.

     In September 2000, the Company issued 2,000,000 shares of its Series C
Convertible Preferred Stock (the "Series C Preferred") at $6.00 per share for
total proceeds of approximately $12 million. The Series C Preferred is
convertible at any time at a price of $6.00, subject to adjustment in order to
prevent dilution. The Series C Preferred requires the Company to redeem each
outstanding share at $6.00 per share, subject to adjustment, on August 31, 2006.
In connection with the issuance of the Series C Preferred the Company issued
warrants to purchase 825,484 shares of Series C Preferred at an exercise price
of $.01 per share (the "Series C Warrants"). The fair value of the Series C
Warrants was determined to be approximately $3.5 million and was allocated from
the amount of the Series C Preferred Stock. Adjustment of the Series C warrants
to their market value for the nine and three months ended March 31, 2001 was
$0.7 million and $0.06 million, respectively.

                                       10
<PAGE>

              UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2001 AND APRIL 1, 2000 (continued)

                                  (Unaudited)
--------------------------------------------------------------------------------

     Beginning in January 2001, the Company entered into several financing
arrangements to meet its working capital requirements. The Company entered into
a bridge loan agreement dated January 4, 2001, and a supplemental bridge loan
agreement dated January 31, 2001 (collectively, the "Bridge Loan Agreement"),
pursuant to which the Company received $3.5 million on January 4, 2001, and an
additional $1.5 million on January 31, 2001. This indebtedness is represented by
promissory notes bearing interest at a rate of 18% per annum (the "Bridge
Notes"), which are convertible at the option of the lender into shares of the
Company's Series D Preferred at an exercise price of $6.00 per share of Series D
Preferred upon shareholder approval of the conversion. Each share of Series D
Preferred is convertible into ten shares of the Company's common stock. The
Series D shares have a mandatory redemption feature that requires the Company to
redeem each outstanding share on the redemption date, March 1, 2007, at a price
equal to the liquidation value per such share. In connection with the Bridge
Loan Agreement, the Company issued warrants to purchase an aggregate 216,533
shares of Series D Preferred at a purchase price of $0.01 per share (the "Bridge
Warrants").

   The Company also entered into securities purchase agreements in connection
with the sale of Series D Preferred and entered into note purchase agreements in
connection with the issuance of promissory notes convertible into shares of
Series D Preferred (the "Subscription Notes").  On March 1, 2001, the Company
sold 250,000 shares of Series D Preferred to an investor for $2.0 million for a
purchase price of $8.00 per share and during March and April, sold Subscription
Notes for an aggregate $5.0 million.  Each Subscription Note is convertible into
shares of Series D Preferred at an effective purchase price of $8.00 per share
of Series D Preferred.

   On March 3, 2001, the Company's board of directors approved the issuance of a
warrant to purchase up to 500,000 shares of the Company's common stock at $0.01
per share to a related party as compensation for services provided in connection
with raising equity in fiscal 2001.  The warrant has not been issued as of the
date of this filing.



                                       11
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

              UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES
                 (Amounts in thousands, except per share data)

     In accordance with the "Safe Harbor" Provisions of the Private Securities
Litigation Reform Act of 1995, the Company notes that certain statements in this
Form 10-QSB and elsewhere which are forward-looking and which provide other than
historical information, involve risks and uncertainties that may impact the
Company's results of operations.  These forward-looking statements include,
among others, statements concerning the Company's general business strategies,
financing decisions, and expectations for funding capital expenditures and
operations in the future.  When used herein, the words "believe," "plan,"
"continue," "hope," "estimate," "project," "intend," "expect," and similar
expressions are intended to identify such forward-looking statements.  Although
the Company believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, no statements contained in this
Form 10-QSB should be relied upon as predictions of future events.  Such
statements are necessarily dependent on assumptions, data or methods that may be
incorrect or imprecise and may be incapable of being realized.  The risks and
uncertainties inherent in these forward-looking statements could cause results
to differ materially from those expressed in or implied by these statements.

     Readers are cautioned not to place undue reliance on the forward-looking
statements contained herein, which speak only as of the date hereof.  The
information contained in this Form 10-QSB is believed by the Company to be
accurate as of the date hereof.  Changes may occur after that date, and the
Company will not update that information except as required by law in the normal
course of its public disclosure practices.

OVERVIEW - RECENT SIGNIFICANT ACQUISITION

     With the acquisition of Velocity, the Company has become a leader in
nationwide customized delivery solutions for same-day, time-critical shipping
and distribution.  The Company provides an array of same-day ground and air
delivery services, including scheduled delivery, on-demand delivery,
distribution services and air courier services.  The Company's network consists
of approximately 210 locations in 86 of the top metropolitan areas in the United
States.  A fleet of approximately 7,500 vehicles, including 2,800 Company-leased
and owned vehicles, and approximately 4,700 vehicles utilized by independent
contractors, supports the Company's operations.  The Company currently has
approximately 5,000 employees.

     The purchase of Velocity was a key step in the Company meeting its goal of
becoming the premier same-day express delivery and e-commerce fulfillment
service in the United States.  With the acquisition of Velocity, the Company now
provides the following products and services to individual consumers and
businesses:

          *    same-day ground and air transportation services throughout the
               United States; and

          *    distribution, logistics and supply chain management services.

     The Company was incorporated in Utah in 1979 under the name Basin Energy
Corporation. The Company has amended its name several times since then.  In 1992
the Company changed its name to U-Ship, Inc., and in May 1999 to United Shipping
& Technology, Inc.  From 1979 until 1991, the Company was engaged in business
activities that were unrelated to its current business.  The Company's principal
executive offices are located at 9850 51st Avenue North, Suite 110, Minneapolis,
Minnesota 55442 and its telephone number is (952) 941-4080.  The Company's
website is www.velocityexp.com.

                                       12
<PAGE>

RESULTS OF OPERATIONS:

Comparison of Quarters Ended March 31, 2001 and April 1, 2000
-------------------------------------------------------------

     Revenue for the quarter ended March 31, 2001 decreased $26.7 million, or
19.2%, to $112.2 million from $138.9 million for the quarter ended April 1,
2000.  The decrease in revenue for the quarter ended March 31, 2001 is primarily
the result of the following:  (1) the loss of revenues from operations sold
during the year of approximately $18.4 million over the same quarter last year,
(2) approximately $6.5 million of revenue lost due to the loss of approximately
five business days due to inclement weather, and (3) approximately $1.8 million
related to there being one less day in the quarter ended March 31, 2001 compared
to the same quarter last year.

     Cost of services decreased $16.7 million, or 15.6%, to $90.5 million from
$107.2 million for the quarter ended April 1, 2000; however, as a percentage of
revenue, cost of services increased from 77.2% to 80.6%.  The increase in cost
of services as a percentage of revenue resulted from increased insurance costs
over the same period from a year ago and increased labor and vehicle costs in
markets that were affected by inclement weather.  The overall dollar decrease in
cost of services for the quarter resulted from reduced costs due to the sale of
various operations offset by increased costs for insurance, labor and vehicles
over the same period a year ago.

     General and administrative expenses were $25.1 million or 22.4% of revenue
for the three months ended March 31, 2001 as compared with $35.0 million or
25.2% for the three months ended April 1, 2000, a decrease of $9.9 million or
28.3%.  The decrease in general and administrative costs is a result of the sale
of various operations of $4.7 million, and the continued efforts by the Company
to integrate the administrative functions of the Company of approximately $5.0
million.

     Sales and marketing expenses were $2.4 million or 2.1% of revenue for the
three months ended March 31, 2001 as compared with $3.1 million or 2.2% for the
three months ended April 1, 2000, a decrease of $0.7 million or 23.6%.  The
initiative leading to the restructuring of the sales force of the Company into
the national sales and logistics services group was instrumental in allowing the
Company to achieve this decrease.

     Net interest expense decreased $0.06 million for the three months ended
March 31, 2001 as compared with the same period last year. The decrease in
interest expense is principally attributable to lower interest rates under the
Company's revolving note.

Comparison of Nine Months Ended March 31, 2001 and April 1, 2000
----------------------------------------------------------------

     Revenue for the nine months ended March 31, 2001 increased $33.5 million or
10.1%, to $365.0 million from $331.5 million for the nine months ended April 1,
2000.  The revenue trend for the nine months ended March 31, 2001 is the result
of the following:  (1) increased revenue of $86.6 million associated with nine
months of Velocity results in fiscal 2001 compared with seven months in fiscal
2000; (2) decreased revenue associated with operations that have been sold of
$38.8 million; (3) decreased revenue associated with business lost due to
inclement weather of approximately $6.5 million; and (4) decreased revenue
associated with ongoing operations of $7.8 million.

     Cost of services for the nine months ended March 31, 2001 increased $34.9
million, or 13.6%, to $291.4 million from $256.5 million for the nine months
ended April 1, 2000, and as a percentage of revenue, increased from 77.4% to
79.8%.  The increase in cost of services resulted from (1) increased costs of
$70.2 million associated with nine months of Velocity results in fiscal 2001
compared with seven months in fiscal 2000; (2) decreased costs associated with
operations that have been sold of $29.5 million and (3) decreased costs
associated with ongoing operations of $5.8 million.

                                       13
<PAGE>

     General and administrative expenses were $83.2 million or 22.8% of revenue
for the nine months ended March 31, 2001 as compared with $82.2 million or 24.8%
for the nine months ended April 1, 2000, a decrease of $1.0 million or 1.2%.
The decrease in general and administrative costs resulted from (1) increased
costs of $34.2 million associated with nine months of Velocity results in fiscal
2001 compared with seven months in fiscal 2000; (2) decreased costs associated
with operations that have been sold of $21.5 million and (3) decreased costs
associated with ongoing operations of $13.7 million.

     Sales and marketing expenses were $7.7 million or 2.1% of revenue for the
nine months ended March 31, 2001 as compared with $10.8 million or 3.3% for the
nine months ended April 1, 2000, a decrease of $3.1 million or 28.5%.  The
initiative leading to the restructuring of the sales force of the Company into
the national sales and logistics services group and decreased branding costs in
fiscal 2001 compared to fiscal 2000 resulted in the decrease.

     Net interest expense for the nine months ended March 31, 2001 increased
$1.6 million to $4.8 million from $3.2 million for the nine months ended April
1, 2000. The increase is primarily due to nine months of activity under the
revolving note in fiscal 2001 compared to seven months of activity in fiscal
2000.

LIQUIDITY AND CAPITAL RESOURCES:

     Historically, the Company has operated at a loss and has funded its
operations from the proceeds of a credit facility with a commercial lender as
well as public and private equity offerings. Throughout fiscal 2000 and the
first three quarters of fiscal 2001, the Company has financed the implementation
of its revised business strategy through a credit facility with a commercial
lender, various private placements of equity and debt, including sales of common
stock and preferred stock, the issuance of warrants, and various bridge loan
agreements.

     Beginning in January 2001, the Company entered into several financing
arrangements to meet its working capital requirements.  The Company entered into
a bridge loan agreement dated January 4, 2001, and a supplemental bridge loan
agreement dated January 31, 2001 (collectively, the "Bridge Loan Agreement"),
pursuant to which the Company received $3.5 million on January 4, 2001, and an
additional $1.5 million on January 31, 2001.  This indebtedness is represented
by promissory notes bearing interest at a rate of 18% per annum (the "Bridge
Notes"), which are convertible at the option of the lender, into shares of the
Company's Series D Preferred at an exercise price of $6.00 per share of Series D
Preferred upon shareholder approval of the conversion.  Each share of Series D
Preferred is convertible into ten shares of the Company's common stock.  The
Series D shares have a mandatory redemption feature that requires the Company to
redeem each outstanding share on the redemption date, March 1, 2007, at a price
equal to the liquidation value per such share.  In connection with the Bridge
Loan Agreement, the Company issued warrants to purchase an aggregate 216,533
shares of Series D Preferred at a purchase price of $0.01 per share (the "Bridge
Warrants").

     As part of a $15.0 million private placement, and in addition to the Bridge
Loan Agreement, the Company also entered into securities purchase agreements in
connection with the sale of Series D Preferred and entered into note purchase
agreements in connection with the issuance of promissory notes convertible into
shares of Series D Preferred (the "Subscription Notes"). As of March 1, 2001,
the Company sold 250,000 shares of Series D Preferred to an investor for $2.0
million at a purchase price of $8.00 per share and sold Subscription Notes for
an aggregate of $5.0 million. Each Subscription Note is automatically
convertible into shares of Series D Preferred at an effective purchase price of
$8.00 per share of Series D Preferred upon shareholder approval. On March 13,
2001 the Company issued a press release stating, in part, that it had raised
$15.0 million of private placement financing of its Series D Convertible
Preferred stock. This announcement was based upon an aggregate equity investment
of $12.0 million and an additional $3.0 million anticipated from an investor,
which has not been received to date.

                                       14
<PAGE>

     On March 3, 2001, the Company's board of directors approved the issuance of
a warrant to purchase up to 500,000 shares of the Company's common stock at
$0.01 per share to an affiliate as compensation for services provided in
connection with raising equity in fiscal 2001. The warrant has not been issued
as of the date of this filing.

     To meet its working capital needs, the Company will continue to require
financing.  There can be no assurance that the Company will be able to obtain
the required financing, or if obtained, that the terms thereof would be
favorable to the Company.  If additional funding is not received, the Company
may be required to restructure operations, sell assets, or potentially curtail
operations.  If the Company is unable to obtain additional financing sufficient
to meet its needs it may not be able to continue its strategies or continue
operations.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

     As of March 31, 2001, and prior to its acquisition of Velocity in September
1999, the Company was not a party to any material legal proceedings.  Velocity
and certain related parties are parties to lawsuits arising out of the business
of Velocity.

     Velocity is a party to litigation and has claims asserted against it
incidental to its business.  Most of such claims are routine litigation that
involve workers compensation claims, claims arising out of vehicle accidents and
other claims arising out of the performance of same-day delivery services.
Velocity carries workers compensation insurance and auto liability coverage,
both subject to a deductible for the current policy year in the amount of
$250,000.  Velocity and its subsidiaries are also named as defendants in various
employment-related lawsuits arising in the ordinary course of the business.  The
Company vigorously defends against all of the foregoing claims.

     The Company does not believe that the pending lawsuits, if resolved or
settled unfavorably to the Company, would have a material adverse effect upon
the Company's financial position or results of operations. A monetary settlement
paid by the Company or an award against it in any of such actions could,
however, have a material adverse effect upon the Company's cash flow in a given
period in which a settlement or award occurs.

Cautionary Statements Regarding Pending Litigation and Claims

     The Company's statements above concerning pending litigation constitute
forward-looking statements. Investors should consider that there are many
important factors that could adversely affect the Company's assumptions and the
outcome of claims, and cause actual results to differ materially from those
projected in the forward-looking statements. These factors include:

     .    The Company has made estimates of its exposure in connection with the
          lawsuits and claims that have been made. As a result of litigation or
          settlement of cases, the actual amount of exposure in a given case
          could differ materially from that projected. In addition, in some
          instances, the Company's liability for claims may increase or decrease
          depending upon the ultimate development of those claims.

     .    In estimating the Company's exposure to claims, the Company is relying
          upon its assessment of insurance coverages and the availability of
          insurance. In some instances insurers could contest their obligation
          to indemnify the Company for certain claims, based upon insurance
          policy exclusions or limitations. In addition, from time to time, in
          connection with routine litigation incidental to the Company's
          business, plaintiffs may bring claims against the Company, which may
          include undetermined amounts of punitive damages. The Company is
          currently not aware of any such punitive damages claim or claims in
          the aggregate which would exceed 10% of its current assets. Such
          punitive damages are not normally covered by insurance.

                                       15
<PAGE>

     .    Although the Company has numerous claims, few, if any, are believed to
          have the potential to have a material adverse impact on the Company on
          a consolidated basis. An award against the Company or a subsidiary, or
          a settlement paid by it, in connection with currently pending claims
          could, however, have a material adverse effect upon the Company's cash
          flow in a given period in which an award or settlement occurs.
          Further, multiple awards against, or settlements by, the Company or
          its subsidiaries in a particular period could have a material adverse
          effect upon the Company's financial condition, cash flow and results
          of operations.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

Designation Of Series D Preferred Stock

     The Company's Amended and Restated Articles of Incorporation authorize the
Board of Directors to issue, without any action by the Company's shareholders,
up to 25,000,000 shares of preferred stock, in any classes or series the Board
of Directors determines, and to specify the rights, preferences and privileges
of such shares.  On February 1, 2001, the Board of Directors by unanimous
written consent authorized the creation and designation of 3,000,000 shares of
Series D Convertible Preferred, par value $0.004 per share.

     No share of Series D Preferred is entitled to preference over any other
share of Series D Preferred. Each share of Series D Preferred is entitled to one
vote per share of common stock into which the Series D Preferred is convertible.
As of the date hereof, each share of Series D Preferred was convertible into ten
shares of common stock. The Series D Preferred ranks senior to the Company's
common stock with respect to dividend rights and rights on liquidation,
dissolution and winding up. Upon any liquidation, dissolution or winding up of
the Company, each holder of Series D Preferred is entitled to receive an amount
in cash equal to $8.00 for each share of Series D Preferred, equal to $0.80 per
share of common stock into which the Series D Preferred would have been
convertible, plus any unpaid dividends thereon, for each share held by such
holder before any distribution or payment is made upon any common stock but
currently on an equal basis with any payment on Series B Preferred and Series C
Preferred. The Company intends to call a special meeting of its shareholders and
seek shareholder approval providing that if there occurs any liquidation,
dissolution or winding up of the Company, each holder of Series D Preferred
would be entitled to receive $8.00, equivalent to $0.80 per share of common
stock into which each share of Series D Preferred would have been convertible,
plus any unpaid dividends thereon, before any distribution or payment is made to
holders of the Company's Series B Preferred, Series C Preferred or common stock.

     To induce the investors to purchase the Series D Preferred, the existing
holders of Series B Preferred and Series C Preferred executed an Agreement,
Waiver and Estoppel dated March 6, 2001, and agreed to waive any right to
receive payments on an equal basis as the holders of the Series D Preferred in
the event of any liquidation, dissolution or winding up.  The Series B Preferred
and Series C Preferred certificates of designation must be amended to reflect
the changes in the rights of the Series B Preferred and Series C Preferred.

                                       16
<PAGE>

Issuance Of Series D Preferred and Securities Convertible Into Series D
Preferred

     In December 2000, the Company's revenue, the timing of billings to
customers and collections fell below amounts projected in its operating plan.
Lower receivables and collections, together with other operating conditions,
including projected negative cash flows in its second fiscal quarter, resulted
in a short-term working capital deficit. To meet its working capital
requirements, the Company entered into a bridge loan agreement dated January 4,
2001, and a supplemental bridge loan agreement dated January 31, 2001
(collectively, the "Bridge Loan Agreement"). Pursuant to the Bridge Loan
Agreement, the Company received $3.5 million on January 4, 2001, and an
additional $1.5 million on January 31, 2001. In connection with the Bridge Loan
Agreement, the Company issued Bridge Notes in the aggregate amount of $5.0
million, which are due and payable on July 4, 2001. The Bridge Notes are
subordinate to the Company's senior indebtedness. Each note bears interest on
the unpaid principal amount at an annual percentage rate of 18%. Interest on
each of the Bridge Notes is payable at maturity in immediately available funds
or, subject to ratification of the Company's shareholders and at the option of
the lender, in shares of Series D Preferred.

     Pursuant to the Bridge Loan Agreement, the Company issued the Bridge
Warrants to purchase an aggregate 216,533 shares of the Company's Series D
Preferred at a per share purchase price of $0.01. The Warrants were issued on
January 4, 2001, and expire on January 4, 2006.

     All or a portion of the principal and interest of the Bridge Notes may be
converted by the lender at any time into shares of Series D Preferred.  The
Bridge Notes provide that the number of shares of Series D Preferred issuable
upon conversion of the Bridge Notes shall equal the principal value of the
Bridge Notes and all accrued interest divided by the lesser of:  (a) the average
closing price of the Company's common stock as reported by Nasdaq for the five
days prior to the conversion, or (b) a price 25% lower than the price per share
at which the Company's Series D Preferred, or any voting stock of the Company
issued subsequent to issuance of the Bridge Notes, was last sold to one or more
third party investors.  Accordingly, pursuant to the purchase price of the
Series D Preferred established in the Series D Preferred Purchase Agreement, the
conversion price of the Bridge Notes was $0.60 per share as of the date hereof,
which would result in the issuance of 883,840 shares of Series D Preferred, or
8,838,400 shares of common stock upon conversion.  On January 4, 2001, the date
the Company entered into the Bridge Loan Agreement, the closing price per share
of the Company's common stock as listed on the Nasdaq SmallCap Market was $1.97.

     Under the terms of the Bridge Loan Agreement, at the next meeting of
shareholders of the Company other than the Annual Meeting of Shareholders held
on January 19, 2001, to be held following the issuance of the Bridge Notes, the
Company is obligated to (a) seek the ratification by its shareholders of the
conversion of the Bridge Notes, and (b) take all reasonable steps in its power
to ensure that the Board of Directors of the Company recommend to its
shareholders that such actions of the Company are ratified.

     Pursuant to the terms of a Securities Purchase Agreement dated March 1,
2001, between the Company and an investor (the "Series D Purchase Agreement"),
the Company issued 250,000 shares of Series D Preferred at a purchase price of
$8.00 per share, for an aggregate consideration of $2.0 million. The Series D
Preferred shares issued are currently convertible into 2,500,000 shares of the
Company's common stock, each share of Series D Preferred being presently
convertible into ten shares of the Company's common stock.

                                      17
<PAGE>

     Pursuant to Stock Purchase Agreements entered into during March and April
2001 (collectively, the "Series D Note Agreements"), the Company issued
Subscription Notes in the principal amount of $5.0 million to various investors.
On March 13, 2001 the Company issued a press release stating, in part, that it
had raised $15.0 million of private placement financing of its Series D
Convertible Preferred stock. This announcement was based upon an aggregate
equity investment of $12.0 million and an additional $3.0 million anticipated
from an investor, which has not been received to date. No interest accrues on
the unpaid principal balance outstanding of the Subscription Notes. In the event
that the Company's shareholders approve of the issuance of Series D Preferred
having voting power greater than 20% of the outstanding voting securities of the
Company, all of the principal balance of the Subscription Notes shall be
converted into a number of shares of the Company's Series D Preferred equal to
the quotient of the principal being converted divided by $8.00. Upon shareholder
approval, the principal amount of the Subscription Notes issued is convertible
into 562,406 shares of Series D Preferred, each share of Series D Preferred
being presently convertible into ten shares of the Company's common stock.

     If the lender converts the Bridge Notes, the lender, and the other
investors purchase all of the shares of the Series D Preferred as described
above and all holders convert Series D Preferred to common stock, the number of
shares of common stock issued upon such conversion would exceed 20% of the
outstanding voting securities of the Company.

     Under the terms of the Series D Purchase Agreements and the Series D Note
Agreements, the Company is obligated to seek shareholder approval of the
issuance of Series D Preferred to the extent that the number of shares of common
stock into which the Series D Preferred is convertible would exceed 20% of the
Company's outstanding voting securities.  The Company is also obligated to seek
shareholder approval of the issuance of Series D Preferred pursuant to the
Nasdaq Rules.  The Company intends to call a special meeting of its shareholders
and seek shareholder approval consistent with the Series D Purchase Agreements
and the Series D Note Agreements.

     The Company utilized the services an investment banking firm as placement
agent for the above-referenced securities transactions.  No means of general
solicitation was used in offering the securities. The securities in the
transaction were sold to a limited group of accredited investors in a private
placement transaction, exempt from registration under Rule 506 of Regulation D
under the Securities Act. All purchasers of the Company's securities were
sophisticated investors who qualified as accredited investors within the meaning
of Rule 501(a) of Regulation D under the Securities Act. Except where otherwise
indicated, the Company intends to use the net proceeds from the sale of these
securities to (1) strengthen its balance sheet by reducing accounts payable, (2)
strengthen its working capital position, (3) invest in technology, and (4)
purchase additional delivery equipment.

Approval of Warrants to Purchase Common Stock

     On March 3, 2001, the Company's board of directors approved the issuance of
a warrant to purchase up to 500,000 shares of the Company's common stock at
$0.01 per share to a related party as compensation for services provided in
connection with raising equity in fiscal 2001. The warrant has not been issued
as of the date of this filing.

                                       18
<PAGE>

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

     As of March 31, 2001, the Company was not in compliance with a covenant in
its revolving note and senior subordinated note facilities to provide $1.5
million of additional equity by April 6, 2001. The Company is currently in
discussions with its revolving note and senior subordinated note lenders to
resolve this default. Because of the Company's inability to cure these defaults
as of March 31, 2001, the balance of the revolving note and the senior
subordinated note have been classified as current liabilities.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.

   In January 2001, the Company submitted to its shareholders three matters, all
of which were approved at the annual meeting held on January 19, 2001. The
matters were to elect seven directors, to approve amendments to the 1996
Director Stock Option Plan, and to ratify the appointment of Ernst & Young LLP
as the Company's independent public accountants for the fiscal year ended June
30, 2001.

   At the annual meeting, the following directors received the following votes:


                                           Withhold
                                For        Authority
                                ---        ---------
Peter C. Lytle               12,934,162       75,368
Timothy G. Becker            12,915,026       94,504
Marshal T. Masko             12,898,773      110,757
Marlin Rudebusch             12,995,916       13,614
Timothy L. Traff             13,009,530            0
Ronald G. Olson              12,995,916       13,614
Peter W. Kooman              13,009,530            0

   The shareholders approved amendments to the Company's 1996 Director Stock
Option Plan, including an amendment to increase the number of shares for which
options may be granted under such plan from 210,000 to 600,000 shares, with
voting as follows: 12,465,117 for, 270,785 against, and 321,314 abstaining.

   The shareholders ratified the appointment of Ernst & Young LLP, independent
certified public accountants, as auditors of the Company for its fiscal year
ending June 30, 2001 with voting as follows: 13,006,889 for, 41,387 against, and
8,930 abstaining.

                                      19

<PAGE>

ITEM 5. OTHER INFORMATION.

     Not Applicable.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

     a.   Exhibits required by Item 601 of Regulation S-B:

          Reference is made to the Exhibit Index.

     b.   Reports on Form 8-K

          The Company filed four reports on Form 8-K during the fiscal quarter
          ended March 31, 2001, as follows:

               (1)    Current Report on Form 8-K filed on January 9, 2001,
                      relating to the announcement that the Company had
                      completed a private placement bridge financing with TH
                      Lee.Putnam Internet Partners, L.P., TH Lee.Putnam Internet
                      Parallel Partners, L.P., THLi Coinvestment Partners LLC,
                      and Blue Star I, LLC.

               (2)    Current Report on Form 8-K filed on January 29, 2001,
                      relating to the announcement that Jeffry Parell assumed
                      the office of Chief Executive Officer following the
                      resignation of such position by Peter Lytle, Chairman of
                      the Company's board of directors.

               (3)    Current Report on Form 8-K Filed on February 16, 2001,
                      relating to a proposed private placement of up to $15.0
                      million of the Company's equity securities for the purpose
                      of increasing its working capital.

               (4)    Current Report on Form 8-K filed on March 13, 2001,
                      relating to the announcement that the Company had
                      completed a private placement financing for $15.0 million
                      of its Series D Convertible Preferred Stock.

                                       20
<PAGE>

                                   SIGNATURES


     In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned; thereunto
duly authorized, in the City of Plymouth, State of Minnesota on May 21, 2001.


                       UNITED SHIPPING & TECHNOLOGY, INC.



                         By  /s/ Jeffry J. Parell
                             ---------------------------------------
                             Jeffry J. Parell
                             Chief Executive Officer


                         By  /s/ Mark E. Ties
                             ---------------------------------------
                             Mark E. Ties
                             Chief Financial Officer
                             (Principal Financial and Accounting Officer)

                                       21
<PAGE>

                               INDEX TO EXHIBITS

     Exhibit No.          Description
     -----------          -----------

          4.1             Certificate of Designation of Preferences and Rights
                          of Series D Preferred and Articles of Amendment to the
                          Company's Restated Articles of Incorporation
                          (incorporated by reference to the Company's Form 8-K,
                          filed May 21, 2001).

          4.2             Agreement, Waiver and Estoppel dated March 6, 2001,
                          between the holders of the Company's Series B
                          Preferred Stock, the holders of the Company's Series C
                          Preferred Stock and certain holders of Series D
                          Preferred (incorporated by reference to the Company's
                          Form 8-K, filed May 21, 2001).

         10.1             Securities Purchase Agreement Dated as of March 1,
                          2001 among the Company and RS Investment Management,
                          Inc. (incorporated by reference to the Company's
                          Form 8-K, filed May 21, 2001).

         10.2             Form of Stock Purchase Agreement to acquire
                          Subscription Notes presently convertible into an
                          aggregate 624,906 shares of Series D Preferred entered
                          into during March 2001 between the Company and TenX
                          Venture Partners, LLC, HomePoint Corporation,
                          Salah Al-Qahtani and AL-MAL Islamic Company
                          (incorporated by reference to the Company's Form 8-K,
                          filed May 21, 2001).

         10.3             Form of Subscription Notes presently convertible into
                          an aggregate 624,906 shares of Series D Preferred
                          issued to TenX Venture Partners, LLC, HomePoint
                          Corporation, Salah Al-Qahtani and AL-MAL Islamic
                          Company pursuant to Stock Purchase Agreements entered
                          into during March 2001 (incorporated by reference to
                          the Company's Form 8-K, filed May 21, 2001).

         10.4             Second Amended and Restated Registration Rights
                          Agreement dated as of March 1, 2001, among the
                          Company, TH Lee.Putnam Internet Partners, L.P., TH
                          Lee.Putnam Internet Parallel Partners, L.P., THLi
                          Coinvestment Partners LLC, Blue Star I, LLC, RS
                          Investment Management, Inc., TenX Venture Partners,
                          LLC, HomePoint Corporation, Salah Al-Qahtani and AL-
                          MAL Islamic Company (incorporated by reference to the
                          Company's Form 8-K, filed May 21, 2001).

         10.5             Form of warrant to purchase shares of Series D
                          Preferred issued to entities affiliated with TH
                          Lee.Putnam Internet Parallel Partners, L.P. on January
                          4, 2001 (incorporated by reference to the Company's
                          Form 8-K, filed May 21, 2001).

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