<PAGE>

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

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   ----------

                                  FORM 10-KSB/A

                                   ----------

                                   (Mark One)

                 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                     For the fiscal year ended July 1, 2000

                                   ----------

                           Commission File No. 0-28452

                       UNITED SHIPPING & TECHNOLOGY, INC.
                 (Name of small business issuer 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)

                    Issuer's telephone number: (952) 941-4080

                                   ----------

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Stock, par
value $.004 per share.

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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation SB contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year. $471,200,000.

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the common equity was sold, or the
average bid and asked prices of such common equity, as of a specified date
within the past 60 days: $60,053,064 as of September 15, 2000.

As of September 15, 2000, there were 16,622,029 shares of Common Stock of the
registrant issued and outstanding.

                    DOCUMENTS INCORPORATED BY REFERENCE None


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

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

      This Management's Discussion and Analysis of Financial Condition and
Results of Operations and other parts of this Annual Report on Form 10-KSB
contain forward-looking statements that involve risks and uncertainties. The
Company's actual results may differ significantly from the results discussed in
the forward-looking statements and such differences may be material.


General

      From 1996 until the beginning of 1999, the primary business of the Company
was the development, manufacture and marketing of self-service, automated
shipping systems for use by consumers and small businesses who ship packages and
priority letters through major carriers in the air express and package delivery
market. Historically, the Company placed these kiosks in service in multiple
locations of major retailers.

      In 1998 and 1999, the Company substantially revised its historical
business of providing automated self-service shipping kiosks by focusing on the
estimated $15 billion same-day delivery industry. Based on its market research,
the Company found that this industry was highly fragmented, dominated by an
estimated 6,000 small companies, with no dominant national brands and relatively
low technological sophistication. The Company also felt that the same-day
delivery industry could benefit from a variety of emerging economic and
technological trends, such as the movement toward outsourcing of corporate
services, the explosive growth of e-commerce, the increasing use of the Internet
and the availability of sophisticated communications technologies. The Company
concluded that these circumstances presented it with an opportunity for growth.
As a result, the Company adopted a new strategy of growth through acquisitions
in the same-day delivery industry. The Company's goal was to develop a national
network of delivery services and to combine it with sophisticated communications
technology and a national brand identity.

      The Company began to acquire small local courier companies in 1998. In
December of that year, the Company acquired the assets of JEL Trucking, Inc., a
Minneapolis-based trucking company engaged in dock truck and courier shipments.
In January 1999 the Company acquired Twin City Transportation, Inc., a
Minneapolis and St. Paul based courier with revenues of approximately $1.8
million. These initial acquisitions allowed the Company to refine and focus its
consolidation strategy.

      With the acquisition of Velocity Express, the Company has achieved its
goal of developing a national network of same-day delivery capabilities. As the
largest same-day delivery company in the United States, the Company believes
that it is the only service provider in the industry with the kind of national
presence and variety of service offerings needed to support the growing demands
of corporate customers and e-commerce for reliability, speed and outsourcing
capabilities. The Company intends to continue its strategy of growth through
acquisition and also plans to utilize sophisticated technology to provide
greater value to its current and potential customers. The Company's goal is to
become the premier corporate same-day transportation corporate outsourcing and
e-commerce delivery and support company in the United States.


Results of Operations

      Revenue for the fiscal year ended July 1, 2000, increased $469,669,000 or
31,670% to $471,152,000 from $1,483,000 for the fiscal year ended June 30, 1999.
This increase in revenues is principally a result of the Velocity Express
acquisition.

      Cost of services increased by $378,110,000 or 50,685% to $378,856,000 from
$746,000 in fiscal year 1999. The increase is primarily due to the Velocity
Express acquisition.

      General and administrative expenses for the fiscal year ended July 1,
2000, increased $96,529,000 or 3,275% to $99,476,000 from $2,947,000 in fiscal
year 1999. The increase is principally due to the Velocity Express acquisition.

      Marketing and sales expenses increased $15,748,000 or 4,090% to
$16,133,000 from $385,000 in fiscal year 1999. The increase is principally due
to the Velocity Express acquisition.


                                       2
<PAGE>

      Research and Development expenses for the fiscal year ended July 1, 2000,
decreased $296,000 or 100% to $0 from $296,000 in fiscal year 1999. Research and
Development activities were temporarily suspended as a result of a redirected
focus on turnaround planning and integration of the Velocity Express
acquisition. Research and Development activities are expected to resume in
fiscal year 2001.

      Interest income for the fiscal year ended July 1, 2000 increased $5,000 or
9.62% to $57,000 from $52,000 in fiscal year 1999. Interest expense increased to
$5,329,000 for the fiscal year ended July 1, 2000, compared to $56,000 for the
fiscal year ended June 30, 1999. The increase in interest income is the result
of the debt taken on to complete the Velocity Express acquisition.

      Net loss for the fiscal year ended July 1, 2000 increased by $25,317,000
to $28,212,000 from $2,895,000 for the comparable period in the prior year. The
Company expects to incur additional losses as it continues to implement its
business strategy to offset its operating expenses. Net loss applicable to
common shareholders for the fiscal year ended July 1, 2000 included a single
charge for the beneficial conversion feature of the Series B Convertible
Preferred Stock of $3,508,000.


Liquidity and Capital Resources

      In order to finance its revised business strategy, the Company raised over
$46,360,000 through the sale of its Common Stock, Series B Convertible Preferred
Stock and warrants in private placements and the exercise of stock options
during the fiscal year ended July 1, 2000. In addition, the Company converted
into Common Stock, at a price of $4.50 per share, its short and medium-term
promissory notes in the aggregate original principal amount of $617,000 during
the fiscal year ended July 1, 2000.

      The Company incurred an operating loss of approximately $23 million for
the year ended July 1, 2000 and has a negative working capital of approximately
$42 million at July 1, 2000 which the Company is addressing as it continues to
integrate and improve the operating results of the Velocity Express acquisition.
Although the operating loss for fiscal 2000 was not unexpected, the Company's
ability to continue to fund these operating losses and its ability to grow the
business depends on its ability to obtain additional sources of funds for
working capital for fiscal 2001.

      As of July 1, 2000, the Company had purchase commitments for capital
improvements totaling approximately $950,000. These commitments and the timing
of the payments of these commitments occurred over the first six months of
fiscal 2001, and as such, were funded out of working capital.

      The Company's financial condition during the past year was impacted
substantially by the acquisition of Velocity Express in August 1999. Cash flow
used in operations was $18,893,000, driven principally by a net loss before
depreciation, amortization and other non-cash items of $18,432,000.
Approximately 70 percent of this loss was attributed to the operations of
Velocity Express. Other working capital changes resulted in an additional use of
cash of $461,000 and were again the direct result of the acquisition of Velocity
Express. Accounts payable generated a positive increase in working capital of
$13,184,000, while accounts receivable, other assets and miscellaneous accruals
generated negative cash flow of $13,645,000.

      Cash flow used as a result of investing activities was also the direct
result of the Velocity Express acquisition. Cash required for the acquisition of
Velocity Express amounted to $58,513,000. This cash was obtained through the
issuance of a new revolving credit facility, seller notes and the raising of
additional capital by the Company through the sale of Common Stock, Preferred
Stock, and warrants. Capital expenditures were $4,223,000 in fiscal 2000,
compared to $557,000 in fiscal 1999. Investment in Velocity Express accounted
for 98 percent of 2000 capital expenditures and was primarily for computer
hardware and software expenditures.

      Cash flow generated through financing activities amounted to $86,388,000
during fiscal 2000. Net proceeds from the issuance of debt instruments and
proceeds from the private placement of Common Stock and Preferred Stock were the
primary sources of cash during fiscal 2000. Long-term debt and notes payable
generated $40,028,000 during fiscal 2000, with approximately 90 percent of those
proceeds coming from the Company's revolving credit facility. The Company also
sold 2,901,000 shares of Common Stock and 4,806,797 shares of Preferred Stock in
fiscal 2000. Proceeds from these private placements amounted to $15,776,000 and
$37,300,000, respectively.


                                       3
<PAGE>

      The principal financing agreements consist of a revolving note, senior
subordinated note, long-term subordinated note, short-term subordinated note and
convertible subordinated note. The Company's subsidiary is the borrower on the
notes with the Company, and its other subsidiaries, acting as guarantors. The
long-term subordinated note, short-term subordinated note and convertible
subordinated note are referred to as the "seller notes."

      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 an institutional
financier. Interest is payable monthly at a rate of Prime plus 0.6% (9.6% at
July 1, 2000). 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. The lender has established
various reserves under the facility.

      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 $1.4 million at July
31, 2000. The discount is amortized over the life of the note. The warrant has
an exercise price of $3.1041 per share and entitles the holder to acquire, in
whole or in part, 1,457,959 shares of the Company's common stock, subject to
adjustment for certain anti-dilution rights as defined in the warrant purchase
agreement.

      Both the long-term subordinated note and the convertible subordinated
notes are due on September 24, 2004. Interest payments are due quarterly at the
rate of 12% on the long-term note and 6% on the Convertible note.

      Substantially all of the assets and operations of Velocity Express have
been pledged to secure borrowings under the revolving note, the senior
subordinated note and the seller notes. The Company is subject to certain
restrictive covenants under each of the notes and the amendments thereto. These
covenants include limitations on dividends, loans and investments, capital
expenditures, new indebtedness, changes in capital structure and limitations on
the sale of assets. 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, mergers or changes in the Company's business objectives.

      In conjunction with institutional debt financing for the Velocity Express
acquisition, the Company is subject to certain financial covenants for which it
was not in compliance at various times in fiscal 2000. The Company was
successful in obtaining waivers for the violations, however, there is no
assurance that such waivers, if needed, will be available from the Company's
lenders in the future.

      Based on its financial forecasts, the Company believes that it has
sufficient resources given its operating profit levels and revenue expectations
to fund the future year's cash requirements.

      The Company's operating plans include the continued implementation of
integration and consolidation activities it had initiated in fiscal 2000 to
further improve the operating performance of the Velocity Express acquisition as
well as specific initiatives to reduce specific cash expenditures related to
general and administrative expenses.

      The Company is dependent upon achieving certain revenue and expense
targets in its financial plan for fiscal 2001. The Company expects to meet its
financial projections for the next fiscal year and to continue to secure
additional financing from its lenders or through the issuance of additional
Company equity securities, however, there can be no assurance that such funding
can be obtained.

      Subsequent to year-end, the Company has negotiated more favorable debt
covenants with its primary lenders to facilitate access to financing. In
addition, the Company has raised an additional $12 million in connection with
the issuance to the TH Li Funds of its Series C Preferred (see Recent Sales of
Unregistered Securities). The Company believes that the additional borrowing
capacity it should have available as a result of working with its lenders in
establishing revised debt covenants, the additional proceeds it received from
the sale of its Series C Preferred to the TH Li Funds, as well as the continued
implementation of the efforts it has initiated and expects to continue to reduce
cash expenditures, will allow it meet its fiscal 2001 financial plan. The
Company further believes that the reduction in costs will not have a material
adverse impact on its revenue growth.


                                       4
<PAGE>

ITEM 7.   FINANCIAL STATEMENTS

               United Shipping & Technology, Inc. and Subsidiaries

                        Consolidated Financial Statements

                         July 1, 2000 and June 30, 1999



                                  CONTENTS                                PAGE
                                  --------                                ----

Report of Independent Auditors                                             6
Independent Auditor's Report                                               7
Consolidated Financial Statements
     Consolidated Balance Sheets                                           8
     Consolidated Statements of Operations                                 9
     Consolidated Statements of Shareholders' (Deficit) Equity             10
     Consolidated Statements of Cash Flow                                  11
Notes to Consolidated Financial Statements                                 12


                                       5
<PAGE>

                         Report of Independent Auditors



The Board of Directors and Shareholders
United Shipping & Technology, Inc.

We have audited the accompanying consolidated balance sheet of United Shipping &
Technology, Inc. and Subsidiaries (the "Company") as of July 1, 2000, and the
related consolidated statements of operations, cash flows and shareholders'
deficit for the year ended July 1, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

Since the date of completion of our audit of the accompanying financial
statements and initial issuance of our report thereon dated September 25, 2000,
the Company, as discussed in Note 12, has experienced continued operating losses
and negative cash flows from operations that affect the Company's current
liquidity. Note 12 describes management's plans to address these issues.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company at July 1, 2000, and the consolidated results of its operations and its
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States.

                                                     /s/ Ernst & Young LLP
                                                     Ernst & Young LLP

Minneapolis, Minnesota
September 25, 2000, except for Note 12,
as to which the date is July 26, 2001.


                                       6
<PAGE>

                          Independent Auditor's Report



Board of Directors
United Shipping and Technology, Inc.
Plymouth, Minnesota

We have audited the accompanying consolidated balance sheet of United Shipping
and Technology, Inc. & Subsidiaries (formerly U-Ship, Inc.) as of June 30, 1999,
and the related consolidated statements of operations, shareholders' (deficit)
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of United Shipping and Technology,
Inc. & Subsidiaries as of June 30, 1999, and the results of their operations and
their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States.

                                         /s/ LURIE, BESIKOF, LAPIDUS & CO., LLP
                                         LURIE, BESIKOF, LAPIDUS & CO., LLP

Minneapolis, Minnesota
August 13, 1999


                                       7
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries

                           Consolidated Balance Sheets
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                               July 1,     June 30,
                                                                2000         1999
                                                              ---------    ---------
<S>                                                           <C>          <C>
Assets
Current assets:                                               $   3,993    $     252
     Cash and cash equivalents
     Accounts receivable, net of allowance for doubtful
        accounts of $2,575 and $23 in 2000 and 1999,
        respectively                                             57,698          275
Accounts receivable - other                                       3,960           --
Stock subscription receivable                                        --          250
Prepaid expenses                                                  9,213          194
Inventories                                                       1,109          883
Other current assets                                                163          122
                                                              ---------    ---------
Total current assets                                             76,136        1,976
Property and equipment:
     Land                                                           488           --
     Buildings and leasehold improvements                         1,863           --
     Furniture, equipment and vehicles                           15,340        1,811
                                                              ---------    ---------
                                                                 17,691        1,811
     Less accumulated depreciation                               (4,895)        (953)
                                                              ---------    ---------
                                                                 12,796          858
Goodwill, net of accumulated amortization of $3, 312
     and $46 in 2000 and 1999, respectively                      89,220        1,426
Notes receivable from related party                               1,354           --
Other assets                                                      2,217          128
                                                              ---------    ---------
Total assets                                                  $ 181,723    $   4,388
                                                              =========    =========

                                                               July 1,     June 30,
                                                                2000         1999
                                                              ---------    ---------
Liabilities and shareholders' (deficit) equity
Current liabilities:
     Trade accounts payable                                   $  30,792    $     557
     Accrued insurance and claims                                42,238           --
     Accrued wages and benefits                                   9,020           --
     Accrued legal and claims                                    16,192           --
     Other accrued liabilities                                   12,669          228
     Current maturities of long-term debt and
        capital lease obligations                                 7,167           40
                                                              ---------    ---------

Total current liabilities                                       118,078          825
Long-term debt, including capital lease obligations
     (net of current maturities)                                 39,495          617
Other long-term accrued liabilities                                  12           --
Series B redeemable preferred stock                              25,261           --

Shareholders' (deficit) equity:
     Common stock, $0.0004 par value:
       Authorized shares - 75,000
       Issued and outstanding shares - 16,400 and 10,611
         In 2000, and 1999, respectively                             65           42
     Additional paid-in capital                                  43,240       15,571
     Accumulated deficit                                        (44,387)     (12,667)
     Accumulated other comprehensive loss                           (41)          --
                                                              ---------    ---------
Total shareholders' (deficit) equity                             (1,123)       2,946
                                                              ---------    ---------
Total liabilities and shareholders' (deficit) equity          $ 181,723    $   4,388
                                                              =========    =========
</TABLE>

                             SEE ACCOMPANYING NOTES.


                                       8
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries

                      Consolidated Statement of Operations
                  (Amounts in thousands, except per share data)

                                                       July 1,      June 30,
                                                        2000         1999
                                                      ---------    ---------
Revenue                                               $ 471,152    $   1,483
Cost of service                                         378,856          746
                                                      ---------    ---------
Gross profit                                             92,296          737
Operating expenses:
     General and administrative                          99,476        2,947
     Marketing and sales                                 16,133          385
     Research and development                                --          296
                                                      ---------    ---------
Total operating expenses                                115,609        3,628
                                                      ---------    ---------
Loss from operations                                    (23,313)      (2,891)
Other income (expense)
     Interest expense                                    (5,329)         (56)
     Other income                                           373           --
     Interest income                                         57           52
                                                      ---------    ---------
Net loss                                              $ (28,212)   $  (2,895)
                                                      =========    =========
Net loss applicable to common shareholders            $ (31,720)   $  (2,895)
                                                      =========    =========
Basic and diluted net loss per share                  $   (2.27)   $   (0.42)
                                                      =========    =========

Basic and diluted weighted average number of common
   shares outstanding                                    13,954        6,882
                                                      =========    =========



SEE ACCOMPANYING NOTES.


                                       9
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries

            Consolidated Statements of Shareholders' (Deficit) Equity
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                               Series A
                                              Cumulative
                                              Convertible                                                   Accumulated
                                            Preferred Stock        Common Stock    Additional                 Other
                                            -------------------------------------    Paid-in   Accumulated Comprehensive
                                             Shares     Amount    Shares   Amount    Capital     Deficit       Loss       Total
                                            -------------------------------------------------------------------------------------
<S>                                         <C>         <C>       <C>       <C>     <C>         <C>         <C>           <C>
Balance at June 30, 1998                      4,455       $ 18    4,980     $ 20    $ 12,935    $ (9,772)         $ -     $ 3,201
    Acquisition of JEL Trucking, Inc.             -          -      100        -          60           -            -          60
    Acquisition of Twin City Transportation,
       Inc.                                       -          -      423        2         908           -            -         910
    Conversion of preferred stock            (4,455)       (18)   4,456       18           -           -            -           -
    Warrants issued to purchase common stock      -          -        -        -         135           -            -         135
    Stock options exercised                       -          -      121        -         166           -            -         166
    Warrants exercised                            -          -       20        -          58           -            -          58
    Conversion of notes payable and accrued
       interest                                   -          -      275        1         762           -            -         763
    Private placement of common stock             -          -      236        1         547           -            -         548
    Net loss and comprehensive loss               -          -        -        -           -      (2,895)           -      (2,895)
                                             ------------------------------------------------------------------------------------
Balance at June 30, 1999                          -          -   10,611       42      15,571     (12,667)           -       2,946
    Private placement of common stock             -          -    2,901       12      15,764           -            -      15,776
    Warrants related to senior subordinated
       note                                       -          -        -        -       1,708           -            -       1,708
    Value of preferred stock conversion
       feature                                    -          -        -        -       3,508      (3,508)           -           -
    Stock options exercised                       -          -      366        1       1,633           -            -       1,634
    Warrants exercised                            -          -    2,351        9       4,344           -            -       4,353
    Conversion of notes payable and accrued
       interest                                   -          -      135        1         616           -            -         617
    Other                                         -          -       36        -          96           -            -          96
    Net loss                                      -          -        -        -           -     (28,212)           -     (28,212)
    Foreign currency translation                  -          -        -        -           -           -          (41)        (41)
                                                                                                                      -----------
    Comprehensive loss                            -          -        -        -           -           -            -     (28,253)
                                             ------------------------------------------------------------------------------------
Balance at July 1, 2000                           -        $ -   16,400     $ 65    $ 43,240   $ (44,387)       $ (41)   $ (1,123)
                                             ====================================================================================
</TABLE>

SEE ACCOMPANYING NOTES.


                                      10
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows
                             (Amounts in thousands)


<TABLE>
<CAPTION>
                                                                   Year ended
                                                               July 1,    June 30,
                                                                2000        1999
                                                              --------    --------
<S>                                                           <C>         <C>
Operating activities
Net Loss                                                      $(28,212)   $ (2,895)
Adjustments to reconcile net loss to net cash used in
  operating activities:
     Depreciation and amortization                               4,696         348
    Amortization                                                 3,742          80
    Other                                                        1,219        --
    Loss on retirement of equipment                                 52        --
    Non-cash portion of merger and restructuring charge             71        --
    Changes in operating assets and liabilities:
      Accounts receivable                                       (4,365)         74
      Other current assets                                      (5,850)       (168)
      Other assets                                               1,794          55
      Accounts payable                                          13,184         392
      Accrued liabilities and deferred revenue                  (5,224)         77
                                                              --------    --------
Cash used in operating activities                              (18,893)     (2,037)
Investing activities
Proceeds from sale of equipment                                    498        --
Purchases of property and equipment                             (4,223)       (557)
Acquisition of business, net of cash acquired                  (58,513)       (810)
Notes receivable                                                (1,354)       (122)
Redemption of short-term investments                              --         1,700
Other, net                                                        (111)        (42)
                                                              --------    --------
Cash (used in) provided by investing activities                (63,703)        169
Financing activities
Payments on notes payable and long-term debt                    (4,388)        (58)
Proceeds from notes payable and long-term debt                  44,416       1,350
Proceeds from stock subscription                                   250          18
Proceeds from sale  of common stock                             15,776         480
Proceeds from sale of redeemable preferred stock                25,261        --
Proceeds from sale of warrants                                    --           135
Proceeds from exercise of options and warrants                   5,987         224
Expenditures related to sales of preferred and common stock       (914)       (183)
                                                              --------    --------
Cash provided by financing activities                           86,388       1,966
Effect of currency exchange rate changes on cash                   (51)       --
                                                              --------    --------
Net increase in cash and cash equivalents                        3,741          98
Cash and cash equivalents, beginning of year                       252         154
                                                              --------    --------
Cash and cash equivalents, end of year                        $  3,993    $    252
                                                              ========    ========
Supplemental disclosures of cash flow information
Cash paid for interest                                        $  5,023    $     24
                                                              ========    ========
Supplemental disclosures of noncash investing and financing
   activities
Issuance of common stock through the conversion of debt       $    617    $    763
                                                              ========    ========
Value of warrants issued in lieu of services performed        $  1,219    $   --
                                                              ========    ========
Property and equipment returned to inventory                  $   --      $    406
                                                              ========    ========
</TABLE>

                             SEE ACCOMPANYING NOTES.


                                      11
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                                  July 1, 2000

1.    Description of Business

      United Shipping & Technology, Inc. and its subsidiaries, (collectively,
the "Company") are engaged in the business of providing same-day delivery and
distribution/logistics services to individual consumers and businesses, as well
as developing, manufacturing and operating equipment used as automated
self-service intelligent shipping kiosks. The Company operates primarily in the
United States with limited operations in Canada. The Company currently operates
in a single-business segment and thus additional disclosures under Statement of
Financial Accounting Standards ("SFAS") No. 131, Disclosures About Segments of
an Enterprise and Related Information, are not required.


2.    Significant Accounting Policies

Basis of Presentation

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

      Effective fiscal year 2000, the Company adopted a change in its fiscal
year from a June 30th year end to a 52-53 week fiscal year ending on the
Saturday closest to June 30th, whereby each quarter consists of a 13-week period
ending on a Saturday. In fiscal years consisting of 53 weeks, the final quarter
will consist of 14 weeks. For fiscal year 2000, the quarter end dates were
October 2, 1999, January 1, 2000, April 1, 2000 and July 1, 2000.

Revenue Recognition

      Revenue from the same-day delivery services is recognized when services
are rendered to customers. Revenue arising from the automated self-service
intelligent shipping kiosks is recognized upon delivery and installation of the
kiosks.

Net Loss 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.

                                                       Year ended
                                                July 1,           June 30,
                                                  2000              1999
                                               ---------------------------
                                                 (Amounts in thousands,
                                                 except per share data)
Numerator:
   Net loss                                    $ (28,212)        $ (2,895)
    Beneficial conversion feature                 (3,508)               -
                                               ---------------------------
    Adjusted net loss applicable to common
       shareholders                            $ (31,720)        $ (2,895)
                                               ===========================
Denominator for basic and diluted loss
   per share - weighted average shares            13,954            6,882
                                               ===========================
Basic and diluted loss per share               $   (2.27)        $  (0.42)
                                               ===========================


                                      12
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


Use of Estimates

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Cash Equivalents

      All highly liquid investments with a maturity of three months or less at
the date of purchase are considered to be cash equivalents, consisting primarily
of money market accounts, and are carried at cost which approximates market.

Inventories

      Inventories are stated at the lower of cost, using the first-in, first-out
method ("FIFO"), or market.

Property and Equipment

      Property and equipment are recorded at cost and are depreciated over their
estimated useful lives using the straight-line method. The estimated useful
lives of buildings and leasehold improvements are 40 years or the life of the
lease and are three to seven years for furniture, equipment and vehicles.

Income Taxes

      The Company accounts for income taxes following the provisions of SFAS No.
109, Accounting for Income Taxes. SFAS No. 109 requires that deferred income
taxes be recognized for the tax consequences in future years of differences
between the tax bases of assets and liabilities and their financial reporting
amounts at each year end, based on enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to affect
taxable earnings. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount more likely than not to be realized. The
effect of changes in tax rates is recognized in the period in which the rate
change occurs.

Research and Development

      Research and development costs are charged to expense as incurred.

Stock Plans and Awards

      The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees ("APB 25"), in accounting for its
employee stock options. Under APB 25, since the exercise price of employee and
director stock options equals the market price of the underlying common stock on
the date of grant, no compensation expense is recognized.

Comprehensive Income

      The Company follows the provisions of SFAS No. 130, Reporting
Comprehensive Income, which established standards for reporting and display of
comprehensive income and its components. Comprehensive income reflects the
change in equity of a business enterprise during a period from transactions and
other events and circumstances from non-owner sources. For the Company,
comprehensive income represents net income adjusted for foreign currency
translation adjustments. In accordance with SFAS No. 130, the Company has chosen
to disclose comprehensive income in the consolidated statement of shareholders'
(deficit) equity.


                                      13
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


Foreign Currency Translation and Transactions

      Foreign assets and liabilities are translated using the year-end exchange
rate. Results of operations are translated using the average exchange rates
throughout the year. Translation gains or losses, net of applicable deferred
taxes, are accumulated as a separate component of stockholders' equity.

Goodwill

      Goodwill represents the excess of the purchase price over the estimated
fair value of the net tangible assets acquired in business combinations and is
amortized on a straight-line basis over 15 years.

Long-Lived Assets

      The Company follows SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of. SFAS No. 121
requires that long-lived assets, including goodwill, be reviewed for impairment
whenever events or circumstances indicate the carrying amount of an asset may
not be recoverable. The Company evaluates potential impairment by comparing the
carrying amount of the assets with the estimated undiscounted cash flows
associated with them. If an impairment exists, the Company measures the
impairment utilizing discounted cash flows.

Concentrations of Credit Risk

      The Company places its cash with federally insured financial institutions.
At times, such cash balances may be in excess of the federally insured limit.
Concentrations of credit risk with respect to accounts receivable is limited due
to the wide variety of customers to which the Company's services are sold and
the dispersion of those services across many industries and geographic areas. An
allowance for doubtful accounts is reviewed periodically based on management's
evaluation of collectibility, historical experiences, and other economic
factors.

New Accounting Pronouncements

      Effective July 2, 2000, the Company adopted SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, which requires the Company to
recognize all derivatives on the balance sheet at fair value. The adoption of
this new accounting pronouncement is not expected to have a material impact on
the Company's results of operations or financial position.

      In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, Accounting for Certain Transactions Involving Stock
Compensation, and Interpretation of APB Opinion No.25. The Interpretation, which
is effective prospectively as of July 1, 2000, requires that stock options that
have been modified in such a way to trigger a new measurement date be accounted
for as variable. The Company has not modified its stock plan or its options
outstanding, therefore, the Company will continue to account for its stock
options as fixed.

Reclassifications

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


                                      14
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


3.    Acquisitions

      Effective August 28, 1999, the Company acquired from CEX Holdings, Inc.
("CEX") all of the outstanding shares of common stock of Corporate Express
Delivery Systems, Inc. ("CEDS"), 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, $19.5
million in a combination of short- and long-term notes issued to CEX, and the
assumption of $28.7 million of net liabilities. The Company recognized
approximately $91.2 million in goodwill. The results of CEDS' operations have
been included in the Company's consolidated financial statements since August
28, 1999.

      The final purchase price adjustments have not been finalized with CEX. The
Company expects to complete adjustments to the allocation of the purchase price
by the second quarter of fiscal year 2001.

      In connection with the August 28, 1999 acquisition of CEDS, management
implemented a plan to involuntarily terminate approximately 100 employees and to
consolidate certain facilities. Approximately $3.9 million in anticipated costs
relating to such items was included in the acquisition cost allocation. During
the fourth quarter of fiscal 2000, the plan was finalized and final adjustments
of approximately $1.5 million were made to the acquisition cost allocation. As
of July 1, 2000, approximately $1.5 million in costs (primarily related to
severance payments and lease terminations) has been charged against the reserve
and no amounts related to such plan have been included in the determination of
net loss for the year.

      The following represents the activity within these accruals (in
thousands):

      Balance at June 30,  1999            $     -
         Additions                           3,929
         Payments                           (1,451)
                                           -------
      Balance at July 1, 2000              $ 2,478
                                           =======

      In connection with the acquisition of CEDS, 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 to former employees. The
contingent payments are due in annual increments of $.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.

      On January 13, 1999, the Company acquired Twin City Transportation, Inc.
("TCT"). TCT was an established courier service operating in the Minneapolis-St.
Paul metropolitan area. Under the terms of the merger agreement, the common
stock of TCT was exchanged for 423,300 shares of the Company's common stock
valued at $.9 million, a warrant for the purchase of 1,000 shares of common
stock exercisable at $1.063 per share, cash of $.4 million, payment by the
Company of $.3 million for TCT liabilities, and acquisition expenses.


                                      15
<PAGE>

      The following unaudited pro forma financial information gives effect to
the CEDS and TCT acquisitions as if they had occurred at the beginning of fiscal
years 2000 and 1999. The pro forma results were prepared for comparative
purposes only and do not purport to be indicative of the results of operations
which actually would result had the acquisitions occurred on the dates
indicated, or which may result in the future.

                                                     2000          1999
                                                  -------------------------
                                                   (Amounts in thousands,
                                                   except per share data)

      Revenue                                     $ 558,428      $ 607,612
      Loss from operations                          (28,344)       (36,337)
      Net loss applicable to common shareholders    (37,553)       (42,357)
      Basic and diluted net loss per share        $   (2.69)     $   (6.15)

      On December 11, 1998, the Company acquired substantially all the assets
and assumed certain liabilities of JEL Trucking, Inc., a Minneapolis based
trucking company engaged in dock truck and courier shipments. The purchase price
included 100,000 shares of the Company's common stock valued at approximately
$60,000 and cash of approximately $.1 million.

      All acquisitions were accounted for using the purchase method of
accounting. Accordingly, the purchase prices were allocated to the net assets
acquired based upon their estimated fair values.

4.    Long-Term Debt and Capital Leases

      Long-term debt and capital leases consisted of the following (in
thousands):

                                               July 1,      June 30,
                                                2000          1999
                                              ----------------------
      Revolving note                          $ 21,903          $ -
      Senior subordinated note                   3,577            -
      Long-term subordinated note to CEX         6,519            -
      Short-term subordinated note to CEX        4,404            -
      Convertible subordinated note to CEX       3,600            -
      9% convertible subordinated note             951            -
      Equipment financing debt                   5,471            -
      Various other notes and leases               237          657
                                              ----------------------
                                                46,662          657
      Less current maturities                   (7,167)         (40)
                                              ----------------------
                                              $ 39,495        $ 617
                                              ======================


                                      16
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


      The future maturities on long-term debt consist of the following (in
thousands):

      Fiscal year:
      2001                        $  7,167
      2002                           1,641
      2003                           1,641
      2004                             547
      2005                          35,666
                                  --------
                                  $ 46,662
                                  ========

      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 million swing line note issued to the institutional debt
financier ($29.4 million at July 1, 2000). Interest is payable monthly at a rate
of prime plus 0.6% (9.6% at July 1, 2000). The Company may elect the rate of
LIBOR plus 3% at its discretion from time to time. 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.

      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 $1.4 million at July 1,
2000. The discount is amortized over the five-year life of the note. The warrant
has an exercise price of $3.1041 per share and entitles the holder to acquire,
in whole or in part, 1,457,959 shares of the Company's common stock, as adjusted
to reflect certain anti-dilution rights as defined in the warrant purchase
agreement.

      The long-term subordinated note issued to CEX has interest payable
quarterly at 12% and is due September 24, 2004. The note is subordinate to the
revolving note and the senior subordinated note.

      The short-term subordinated note issued to CEX has interest payable
quarterly at 9% and is due September 24, 2000. The note was reduced by the
mandatory prepayment from the exercise of the Company's warrants issued in
connection with the purchase of its Series A Preferred Stock in April and June
of 1998. The note is subordinate to the revolving note and the senior
subordinated note. Subsequent to July 1, 2000, as a result of the note's
subordination to the revolving note, the Company was notified by the revolving
note holder that it would not consent to the payment of the note to CEX at the
September 24, 2000 due date. The Company continues to include the note in the
accompanying balance sheet in current liabilities.

      The convertible subordinated note issued to CEX has interest payable
quarterly at 6% and is due September 24, 2004. The note is subordinate to the
revolving note and the senior subordinated note. The note is convertible in
whole or in part into shares of the Company's common stock at an exchange rate
of $4.59 per share to a maximum of 784,314 shares, subject to certain
anti-dilution rights under an exchange agreement entered into in connection with
the convertible subordinated note.

      As a result of the acquisition of CEDS, the Company was also liable on a
6% convertible subordinated note which was due January 31, 2000. In March 2000,
the Company made a principal payment in the amount of $.5 million plus accrued
interest and in April 2000 restructured the terms of the original agreement into
a 9% convertible subordinated note in the amount of approximately $1.7 million.
Under the new agreement, the Company is required to pay principal and interest
in an amount equal to $.2 million (or such lesser amount if less than $.2
million of unpaid principal and accrued interest is outstanding) commencing May
1, 2000 and continuing until all principal and interest is paid or otherwise
provided for. In connection with the new agreement, the Company also issued
warrant to purchase 15,000 shares of common stock at an exercise price of
$12.925 per share. The Company recorded the fair value associated with this
warrant as a discount against the carrying value of the note.


                                      17
<PAGE>

      Equipment financing debt is payable in 48 monthly payments of $186,000 at
an interest rate of 12%.

      Substantially all of the assets and operations of the CEDS 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
restricted 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 and minimum fixed charge coverage
ratio. The agreements with the lenders also require the Company to obtain the
consent of the lenders for additional acquisitions.

5.    Preferred and Common Stock

                                                Authorized        Par
                                                  Shares         Value
                                               -------------------------
      Series A Cumulative Convertible
           Preferred Stock                        4,500,000     $ 0.004
      Series B Convertible and Redeemable
           Preferred Stock                       10,000,000       0.004
      Series C Convertible Preferred Stock        5,000,000       0.004
      Preferred stock - undesignated              5,500,000       0.004
      Common stock                               75,000,000       0.004

Series A Cumulative Convertible Preferred Stock

      In April 1998, the Company designated 4,500,000 shares of authorized but
unissued preferred stock as Series A Cumulative Convertible Preferred Stock. The
Series A preferred shares were convertible into common stock and were entitled
to a cumulative annual dividend of $0.03 per share. The stock was convertible
beginning November 1, 1998, at an initial conversion rate of one share of common
stock for each preferred share, to be adjusted if additional common stock was
issued for less than $0.60 per share. This preferred stock contained
restrictions on the issuance of additional stock with priority, or parity with
the stock, mergers, consolidations, or disposals of all or substantially all
assets of the Company. This preferred stock also contained certain liquidation
preferences.

      The Company sold 4,455,498 shares of its Series A Cumulative Convertible
Preferred Stock in private placements in May and June 1998, raising
approximately $2,421,000, net of expenses of approximately $252,000. The shares
were sold in units at a purchase price of $1.20 per unit, each unit consisting
of two preferred shares and one warrant to purchase one share of common stock at
a price of $1.75 per share. The warrants were exercisable any time before May 1,
2001. The shares were sold to various investors, certain directors, and officers
of the Company. In connection with the private placement in June 1998, the
placement agent received warrants to purchase up to 288,381 shares of common
stock at $0.60 per share. These warrants were exercisable for three years
beginning one year from date of issuance.

      In February 1999, the Company converted all Series A Cumulative
Convertible Preferred Stock to an equal number of shares of common stock.

Series B Convertible and Redeemable Preferred Stock

      In May 2000, the Company entered into an agreement to sell 2,806,797
shares of the Company's Series B Convertible and Redeemable Preferred Stock
("Series B Preferred") at a price of $9.00 per share for a total of
approximately $25.3 million. The preferred shares require the Company to redeem
each outstanding share at $9.00 per share, subject to adjustment, on May 31,
2006. The Company agreed to issue with the preferred shares three warrants
pending the approval of the Company's shareholders. On August 14, 2000 at a
special meeting of shareholders the warrant issuance and exercise was approved.
The terms of the three warrants are as follows:

      o     A warrant to purchase the number of shares of Series B Preferred
            equal to an aggregate of $30 million divided by the 45 day average
            closing sales price of the Company's common stock immediately prior
            to the date of exercise. The fair value of this preferred warrant
            was determined to be approximately $4.4 million at the date of
            shareholder approval. The warrant expires on November 30, 2001.


                                      18
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


      o     A warrant to purchase up to an aggregate of 452,901 shares of Series
            B Preferred at an exercise price of $9.00 per share, subject to
            adjustment in order to prevent dilution. The fair value of this
            preferred warrant was determined to be approximately $.6 million at
            the date of shareholder approval. The warrant expires on November
            30, 2001.

      o     A warrant to purchase an aggregate of 425,000 shares of the
            Company's common stock. The warrant becomes exercisable on a pro
            rata basis in the event and to the extent that any of the 3,000,000
            options granted under the Company's 2000 Stock Options Plan are
            exercised. The exercise price is equal to the lowest exercise price
            of the initially approved 2000 Plan options, subject to adjustment
            to prevent dilution. The fair value of this warrant was determined
            to be approximately $.4 million at the date of shareholder approval.
            The warrant expires on May 31, 2004.

      The fair value of the warrants issued with the Series B Preferred will be
allocated from the carrying amount of the Series B Preferred to the respective
warrants at the August 14, 2000 measurement date. Subsequent to that date, the
Series B Preferred will be accreted up to its redemption amount. 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.

      The Company's Series B Preferred was deemed to have contained beneficial
conversion features that were recognized as a deemed dividend to preferred
shareholders. The value of the proceeds allocated to the beneficial conversion
feature was $3.5 million and was recognized as a return to the preferred
shareholders at the date of issuance since the Series B Preferred is immediately
convertible.

Series C Convertible Preferred Stock

      Subsequent to the Company's fiscal year end, in September 2000, the
Company issued 2,000,000 shares of its Series C Convertible Preferred Stock at
$6.00 per share for total proceeds of approximately $12 million. The Series C
Convertible Preferred Stock is convertible at any time at a price of $6.00,
subject to adjustment in order to prevent dilution. The preferred shares require
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
Convertible Preferred Stock, the Company issued warrants to purchase 825,484
shares of the Company's Series C Convertible Preferred Stock at an exercise
price of $.01 per share.

      In exchange for the Series C Warrants, the Company canceled two warrants
to purchase Series B Preferred issued in May 2000 and approved on August 14,
2000.

Common stock

      In January 2000, an accredited investor purchased 666,667 shares of the
Company's common stock at $7.50 per share for a total purchase price of
$5,000,000.

      In December 1999, the Company issued to a director 22,083 shares of common
stock in payment for consulting fees performed on behalf of the Company. Also in
January 2000, the Company sold to five accredited investors an aggregate of
25,000 shares of common stock at a purchase price of $5.025 per share, together
with warrants to purchase an aggregate of 2,500 shares of common stock at an
exercise price of $12.50 per share for a period of five years.

      In December 1999, the Company sold to an accredited investor 50,000 shares
of common stock at a purchase price of $6.375 per share, together with a warrant
to purchase 5,000 shares of common stock at an exercise price of $6.375 per
share for a period of five years. In December 1999, the Company also sold to
seven institutional investors an aggregate of 1,791,044 shares of common stock
at a purchase price of $5.025 per share, together with warrants to purchase an
aggregate of 179,104 shares of common stock at an exercise price of $12.50 per
share for a period of five years.

      In September 1999, the Company sold to five accredited investors 124,000
shares of common stock at a purchase price of $4.50 per share, together with
warrants to purchase an aggregate of 41,333 shares of common stock at an
exercise price of $4.50 per share for a period of one year.


                                      19
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


      Between July 26, 1999 and August 12, 1999 the Company sold to four
accredited investors an aggregate of 237,000 shares of common stock at prices
ranging from $2.87 to $3.50 per share, for an aggregate of $750,000. In
connection with the sales, the Company issued to two of the purchasers one-year
warrants to purchase an aggregate of 16,668 shares of common stock at an
exercise price of $2.25 per share.

      In July 1999, the Company sold to certain of its employees an aggregate of
7,612 shares of its common stock at a purchase price of $3.00 per share.

      In August 2000, pursuant to a settlement agreement dated June 20, 2000,
between the Company and a former employee, the Company issued 100,000 shares of
the Company's common stock in connection with the settlement of certain
litigation. These shares were placed in escrow pending the registration of the
shares or the earlier termination of the Agreement.

Stock Options and Warrants

      The Company currently sponsors the 1995 Stock Option Plan and the 2000
Stock Option Plan and the 1996 Director Stock Option Plan. These plans provide
for the issuance of up to 5,160,000 shares. Options may be granted to employees,
directors and consultants at option prices not less than the fair market value
of the Company's common stock on the date of grant. The majority of the options
vest annually in equal amounts over a four-year period. The 2000 Stock Option
Plan also allows for the issuance of performance shares or restricted stock. No
performance shares or restricted stock are outstanding at July 1, 2000.

      The Company has 259,245 shares reserved for grants under the option plans
at July 1, 2000.

      A summary of the status of the Company's stock option plans as of July 1,
2000 and activity during the three fiscal years then ended is presented below:


                                   Options Outstanding        Weighted
                                       Under the Plan          Average
                                 -------------------------  Exercise Price
                                      ISO        Non-ISO      Per Share
                                 -------------------------   -----------
      Balance at June 30, 1998       130,250      637,500        1.10
          Options granted            450,500            -        1.91
          Options exercised          (11,000)    (110,000)       1.38
          Options forfeited          (90,500)           -        3.77
                                 -------------------------
      Balance at June 30, 1999       479,250      527,500        1.11
          Options granted          2,962,105      810,900        9.37
          Options exercised          (16,000)    (350,000)       4.47
                                 -------------------------
      Balance at July 1, 2000      3,425,355      988,400       $7.96
                                 =========================


                                      20
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


<TABLE>
<CAPTION>
                     Options Outstanding                                  Options Exercisable
-------------------------------------------------------------------   --------------------------
                                            Weighted
                             Shares          Average       Weighted       Shares       Weighted
                           Outstanding      Remaining      Average     Exercisable     Average
  Range of                 at July 1,      Contractual     Exercise     at July 1,     Exercise
  Exercise Prices             2000            Life          Price          2000         Price
-------------------------------------------------------------------   ----------------------------
<S>                       <C>              <C>                <C>           <C>           <C>
       $ 0.19  -  $ 0.40      560,000       7.3 years       $ 0.40        560,000       $ 0.40
         1.13  -    1.50      310,000       6.6 years         1.25        270,000         1.26
         2.94  -    3.50      120,750       7.1 years         3.22        104,950         3.21
         4.50  -    5.00      585,690       9.3 years         4.63        569,190         4.63
        10.75  -   14.86    2,837,315       4.9 years        10.94        955,000        10.88
                           ----------                                  ----------
                            4,413,755       6.0 years       $ 7.96      2,459,140       $ 5.66
                           ==========                                  ==========
</TABLE>

<TABLE>
<CAPTION>
                                                   2000                               1999
                                       -----------------------------      ---------------------------
                                                        Weighted                            Weighted
                                                         Average                             Average
                                                        Exercised                           Exercised
                                          Warrants        Price              Warrants         Price
                                       -----------------------------      ---------------------------
<S>                                    <C>              <C>                 <C>             <C>
Balance at beginning of year                3,965,999     $ 2.47             3,700,826        $ 2.05
   Granted                                  2,334,597       6.39               396,333          2.34
   Exercised                               (2,350,612)      2.09               (20,000)         2.92
   Forfeited                                 (175,998)      3.90              (111,160)         3.48
                                           ----------                       ----------
Balance at end of year                      3,773,986     $ 5.59             3,965,999        $ 2.47
                                           ==========                       ==========
</TABLE>

<TABLE>
<CAPTION>
                                                              Weighted Average
                                                  ----------------------------------------
                                                       Remaining             Exercise
     Range of Exercise Prices    Warrants           Contractual Life          Price
---------------------------------------------     ----------------------------------------
<S>                              <C>                 <C>                    <C>
       $ 0.600  -  $ 1.063         383,660             3.00 years             $ 0.67
         1.750  -    2.265         557,068             3.40 years               1.85
         2.800  -    3.250       1,769,309             9.10 years               3.06
         3.500  -    4.500         364,423             2.30 years               4.07
         5.025  -    7.500         502,923             4.00 years               6.75
        10.150  -   12.925         196,603             4.30 years              12.53
                                ----------
                                 3,773,986             7.44 years             $ 5.59
                                ==========
</TABLE>

      In November 1999, the Company issued a non-qualified option outside of the
Company's 1995 Stock Option Plan to an employee for the purchase of 75,000
shares of common stock at a purchase price of $4.95 per share.

      In June 2000 the Company issued a non-qualified stock option outside of
the Company's 2000 Stock Option Plan to an employee for the purchase of 250,000
shares of common stock at a purchase price of $10.875 per share.


                                      21
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


      In accordance with SFAS No. 123, Accounting for Stock-Based Compensation,
the Company continues to elect to utilize APB Opinion No. 25 and related
interpretations in accounting for its stock option plans. If the Company had
elected to recognize compensation cost based on the fair value of the options
granted and shares sold pursuant to the purchase plan as prescribed by SFAS No.
123, net income and earnings per share would have been reduced to the pro forma
amounts indicated in the table below for fiscal years 2000 and 1999:

<TABLE>
<CAPTION>
                                                                    2000        1999
                                                                  --------    -------
<S>                                                               <C>         <C>
      Net loss applicable to common shareholders - as reported    $(31,720)   $(2,895)
      Net loss applicable to common shareholders - pro forma       (36,799)    (3,063)
      Net loss per share - basic and diluted as reported            $(2.27)    $(0.42)
      Net loss per share - basic and diluted pro forma               (2.64)     (0.45)
</TABLE>

      The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option-pricing model with the following assumptions for
the fiscal years shown:

<TABLE>
<CAPTION>
                                                                    2000       1999
                                                                  --------    -------
<S>                                                               <C>         <C>
Expected dividend yield                                                --          --
Expected stock volatility                                             134%       167%
Risk-free interest rate                                              6.17%      5.10%
Expected life of options                                                5          5
</TABLE>

      The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options, which have no vesting restrictions and are
fully transferable. In addition, option-pricing models require the input of
highly subjective assumptions. Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models may not
necessarily provide a reliable single measure of the fair value of its employee
stock options. Under the forgoing assumptions, the weighted-average fair value
of each option granted during fiscal year 2000 and 1999 was $8.27 and $1.81,
respectively.

6.    Income Taxes

      The significant components of deferred income tax assets and liabilities,
primarily long-term, were as follows (in thousands):

                                                    July 1,   June 30,
                                                     2000       1999
                                                   --------   --------
      Deferred tax assets:
         Net operating loss carry forwards         $ 17,331   $ 4,500
         Reserves, allowances and accruals            1,180       114
                                                   --------   -------
                                                     18,511     4,614
      Deferred tax liabilities                       (1,690)     (143)
                                                   --------   -------
                                                     16,821     4,471
      Valuation allowance                           (16,821)   (4,471)
                                                   --------   -------
                                                   $     --   $    --
                                                   ========   =======

      At July 1, 2000, the Company had net operating loss carry forwards for
income tax purposes of approximately $45.6 million, which expire 2005 through
2020. A portion of the losses may be limited pursuant to Internal Revenue Code
Section 382.

      The change in the valuation allowance was an increase of $12.4 million and
$.9 million in fiscal years 2000 and 1999, respectively, and resulted
principally from net operating loss carry forwards.


                                      22
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


7.    Commitments and Contingencies

Lease Commitments

      The Company leases equipment, vehicles, and buildings under non-cancelable
leases. Future minimum lease commitments under non-cancelable leases as of July
1, 2000 were as follows (in thousands):

                                                     Operating
                                                      Leases
                                                     ---------
                 Fiscal year:
                 2001                                 $24,267
                 2002                                   6,384
                 2003                                   4,750
                 2004                                   3,390
                 2005                                   2,586
                 Thereafter                               876
                                                      -------
                                                      $42,253
                                                      =======

      Rent expense was $29.4 million and $.1 million during the years ended July
1, 2000 and June 30, 1999, respectively.

Automobile and Workers' Compensation Liabilities

      The Company is partially self-insured for automobile, workers'
compensation and cargo claims. The Company has elected to retain a portion of
expected losses through the use of deductibles. Provisions for losses expected
under these programs are recorded based upon the Company's estimates of the
aggregate liability for claims incurred. These estimates include the Company's
actual experience based on information received from the Company's insurance
carriers and historical assumptions of development of unpaid liabilities over
time.

Litigation

      The Company is subject to legal proceedings and claims that arise in the
ordinary course of their business. The Company determined the size of its legal
reserve with respect to these matters in accordance with generally accepted
accounting principles based on management's estimate of the most likely
liability. In the opinion of management, none of these legal proceedings or
claims is expected to have a material effect upon the Company's financial
position or results of operations. However, the impact on cash flows might be
material in the periods such claims are settled and paid.

8.    Employee Benefit Plans

      The Company has defined contribution retirement plans (the "Plans") in
accordance with Section 401(k) of the Internal Revenue Code. Under the Plans,
the Company matches a portion of each eligible employee's salary. All full-time
employees of the Company and its subsidiaries are eligible to participate in the
Plans. The Company's matching contribution expense was $.9 million for the
fiscal year ended July 1, 2000. The Company made no matching contributions for
the fiscal year ended July 1, 1999.


                                      23
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

9.    Related Party Transactions

      At July 1, 2000, the Company had in its accounts payable and accrued
liabilities balances amounts owed to Corporate Express, Inc. ("CEI"), a
subsidiary of CEX, of approximately $2.1 million for products and services
purchased by the Company during fiscal 2000, payments made to vendors on the
CEDS' behalf subsequent to the acquisition and settlement of CEDS' cash balances
for the effective date of the acquisition. Additionally, as of July 1, 2000, the
Company had in its accounts receivable balance a receivable from CEI of
approximately $.6 million related to delivery services provided to CEI.

      One of the Company's board members is a partner in the senior subordinated
note lender. In addition to the lender providing debt financing of $5 million
for the CEDS acquisition, the board member and other partners in the senior
subordinated note lender collectively purchased 23,648 shares of the Company's
common stock and received 2,365 warrants at an exercise price of $12.50 per
share. Proceeds from the sale of common stock were approximately $.1 million.
These transactions were valued at the fair value of the Company's warrants and
stock at the time of the transactions.

      During fiscal 2000, the Company sold its Midnite Express operations to an
employee of the Company. The employee resigned from the Company at the time of
the sale. The Company received proceeds from the sale of approximately $1.6
million, which consisted of approximately $1.4 million in notes receivable and
$.2 million in cash, the fair value allocated as a result of purchase accounting
for the CEDS acquisition.

10.   Cash Requirements

      The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. The Company incurred an operating loss of approximately $23 million
for the year ended July 1, 2000 and has a negative working capital of
approximately $42 million at July 1, 2000 which the Company is addressing as it
continues to integrate and improve the operating results of the CEDS
acquisition. Although the operating loss for fiscal 2000 was not unexpected, the
Company's ability to continue to fund these operating losses and its ability to
grow the business depends on its ability to obtain additional sources of funds
for working capital for fiscal 2001.

      In conjunction with institutional debt financing for the CEDS acquisition,
the Company is subject to certain financial covenants for which it was not in
compliance at various times in fiscal 2000. The Company was successful in
obtaining waivers for the violations, however, there is no assurance that such
waivers, if needed, will be available from the Company's lenders in the future.

      The Company's operating plans include the continued implementation of
integration and consolidation activities it had initiated in fiscal 2000 to
further improve the operating performance of the CEDS acquisition as well as
specific initiatives to reduce specific cash expenditures related to general and
administrative expenses.

      The Company is dependent upon achieving certain revenue and expense
targets in their financial plan for fiscal 2001. The Company expects to meet its
financial projections for the next fiscal year and to continue to secure
additional financing from its lenders or through the issuance of additional
Company equity securities, however, there can be no assurance that such funding
can be obtained.


                                      24
<PAGE>

               United Shipping & Technology, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


11.   Quarterly Financial Information (unaudited)

      Unaudited summarized financial data by quarter for fiscal years 2000 and
1999 is as follows (in thousands, except per share data):


<TABLE>
<CAPTION>
                                                                    Three Months ended
                                                  October 2,      January 1,       April 1,        July 1,
                                                    1999            2000            2000            2000
                                                 ----------------------------------------------------------
<S>                                               <C>            <C>
      Fiscal year 2000:
         Revenue                                  $ 53,724        $138,908        $138,900       $139,620
         Loss from operations                       (1,479)        (10,092)         (6,423)        (5,319)
         Net loss applicable to
           common shareholders                      (1,617)        (11,230)         (7,847)       (11,026)(1)
         Basic and diluted net loss
           per share                              $  (0.15)       $  (0.86)       $  (0.50)      $  (0.76)

         (1)      The net loss applicable to common shareholders in the fourth
                  quarter includes $3,508 for the impact of the beneficial
                  conversion feature of the Company's Series B Preferred issued
                  in May 2000.
</TABLE>

<TABLE>
<CAPTION>
                                                                             Three Months ended
                                                      September 30,      January 2,      March 31,      June 30,
                                                           1998            1999           1999           1999
                                                    ------------------------------------------------------------
<S>                                                       <C>              <C>             <C>             <C>
       Fiscal year 1999:
          Revenue                                         $  124          $  148         $  483          $  728
          Loss from operations                              (626)           (670)          (771)           (824)
          Net loss                                          (605)           (656)          (797)           (837)
          Basic and diluted net loss
            per share                                     $(0.12)         $(0.13)        $(0.11)         $(0.06)
</TABLE>

12.   Subsequent Events

      As discussed in Note 10, the Company's operating plans include continued
efforts toward the integration and consolidation of activities to further impact
the operating performance of the Velocity Express acquisition as well as
specific initiatives to reduce cash expenditures related to general and
administrative expenses. While those activities continue, the Company's
operating results were impacted by the severe winter weather that impacted
revenues and related cash collections. For the nine months ended March 31, 2001,
the Company had net losses of approximately $26.7 million and negative cash
flows from operating activities of approximately $29.0 million. As a result, the
Company's current liquidity into fiscal 2002 may be affected. Additionally, the
Company had a technical default on its revolving credit agreement and was
successful in obtaining a waiver.

      The Company's operating plan includes further cost reduction efforts,
continued consolidation of operating activities as well as securing additional
financing from lenders or through the issuance of additional Company equity
securities. There can be no assurance, however, that these efforts will be
successful.


                                      25
<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

      On November 10, 1999, the Company engaged Ernst & Young LLP ("Ernst &
Young") as its principal independent accountant to audit its financial
statements. On the same date, the Company informed Lurie, Besikof, Lapidus &
Co., LLP ("Lurie") that Lurie would no longer serve as the Company's independent
accountant. The replacement of Lurie by Ernst & Young was approved by the
Company's Board of Directors on November 10, 1999.

      Except for an explanatory paragraph with respect to substantial doubt
about the Company's ability to continue as a going concern to the Company's
consolidated financial statements of and for the years ended June 30, 1999 and
1998, Lurie's reports on the Company's financial statements for the past two
fiscal years have not contained an adverse opinion or a disclaimer of opinion
principles. In conjunction with the Company's filing its form 10-KSB for the
year ended July 1, 2000, the explanatory paragraph expressing substantial doubt
about the Company's ability to continue as a going concern was removed from the
opinion of Lurie, Besikof, Lapidus & Co,, LLP. There have been no disagreements,
during or subsequent to the Company's past two fiscal years, between the Company
and Lurie on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which, if not resolved to
Lurie's satisfaction, would have caused Lurie to make reference to the subject
matter of such disagreements in connection with its report.


                                      26
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      As of September 22, 2000, the Company had issued and outstanding
16,622,029 shares of Common Stock, 2,806,797 shares of Series B Preferred and
833,333 shares of Series C Preferred. Each share of Series B Preferred and
Series C Preferred may be converted into one share of Common Stock (in both
cases, subject to adjustment to prevent dilution) at any time upon the request
of the holder thereof.

      The following table contains certain information known to the Company
regarding beneficial ownership of its Common Stock as of September 22, 2000, by
(i) each person who is known to the Company to own beneficially more than five
percent of the Company's Common Stock, (ii) each of the Company's directors,
(iii) each of the Company's officers, and (iv) all current executive officers
and directors as a group. Unless otherwise noted, each person identified below
has sole voting and investment power with respect to such shares

<TABLE>
<CAPTION>
                                                                     Beneficially   Beneficially
             Name and Address of Beneficial Owner                      Owned (1)      Owned (2)
      ------------------------------------------------------------   ------------   -------------
<S>                                                                  <C>            <C>
      TH Lee.Putnam Internet Partners, L.P. (3)
      200 Madison Avenue, Suite 2225, New York NY  10016..........     5,150,751       23.7%

      Richard and Mabeth Neslund (4)
      15210 Wayzata Boulevard, Wayzata, MN  55391.................     1,948,900       11.7%

      Bayview Capital Partners LP (5)
      641 East Lake Street, Suite 230, Wayzata, MN  55391.........     1,507,529        8.3%

      RS Investment Management Co. LLC
      338 Market Street, Suite 200, San Francisco, CA  94111......     1,058,243        6.4%

      Peter C. Lytle (6)..........................................     1,056,600        6.1%

      Entities Affiliated with Brahman Management Corp. (7)
      277 Park Avenue, 26th Floor, New York, NY  10172............       985,074        5.9%

      Peter A. Hochfelder (7)
      277 Park Avenue, 26th Floor, New York, NY  10172............       985,074        5.9%

      Robert J. Sobel (7)
      277 Park Avenue, 26th Floor, New York, NY  10172............       985,074        5.9%

      Mitchell A. Kuflick (7)
      277 Park Avenue, 26th Floor, New York, NY  10172............       985,074        5.9%

      Entities Affiliated with Tudor Investment Corporation (8)
      600 Steamboat Road Greenwich, CT  06830.....................       985,074        5.9%

      Timothy G. Becker (9).......................................       742,502        4.3%

      Kenneth D. Zigrino (10).....................................       412,500        2.4%

      Marshall T. Masko (11)......................................       376,584        2.2%

      Susan Clemens (12)..........................................       145,001          *

      Ronald G. Olson (13)........................................        28,000          *

      James A. Bartholomew (14)...................................        20,000          *

      Marlin Rudebusch (15).......................................        20,000          *

      Peter W. Kooman (16)........................................        14,865          *

      Mark E. Ties................................................           669          *

      James G. Brown..............................................             -          -

      All directors and officers as a group (10 persons) (17).....     2,816,727       15.0%
      ----------------------------
      * Represents less than 1%.
</TABLE>


                                      27
<PAGE>

      (1)   Beneficial ownership is determined in accordance with the rules of
            the SEC and includes Common Stock or securities convertible into or
            exercisable for Common Stock owned by or for, among others, the
            spouse, children or certain other relatives of such person as well
            as other securities as to which the person has or shares voting or
            investment power or has the right to acquire within 60 days of
            September 15, 2000. The same shares may be beneficially owned by
            more than one person. Unless otherwise indicated, the address for
            each listed shareholder is c/o United Shipping & Technology, Inc.,
            9850 51st Avenue North, Suite 110, Minneapolis, Minnesota 55442. To
            the Company's knowledge, except as indicated in the footnotes to
            this table, the persons named in this table have sole voting and
            investment power with respect to all Common Stock shares.

      (2)   Percentage of beneficial ownership is based on 16,622,029 shares of
            Common Stock outstanding as of September 11, 2000. Shares issuable
            pursuant to warrants, stock options, the Series B Preferred and the
            Series C Preferred are deemed outstanding for computing the
            percentage of the holders thereof, but not for computing the
            percentage of any other person. Assumes no issuance of 8,806,394
            shares of Common Stock issuable upon exercise of outstanding
            employee stock options, director stock options or warrants,
            including warrants issued in conjunction with bridge financing
            completed by the Company in December 1995 or private placements.
            Also assumes no issuance of Common Stock upon conversion of Series B
            Preferred or the Series C Preferred, upon exercise of the Common
            Warrants or the Series C Warrants issued to any of the TH Li Funds
            or upon exercise of warrants granted to broker-dealers in connection
            with private placements and a public offering of the Company's
            securities.

      (3)   Includes (i) 1,508,861 shares of Common Stock issuable upon
            conversion of Series B Preferred owned by TH Lee.Putnam Internet
            Partners, L.P. and 1,297,936 shares of Common Stock issuable upon
            conversion of Series B Preferred owned by TH Lee.Putnam Internet
            Parallel Partners, L.P.; (ii) 1,089,043 shares of Common Stock
            issuable upon conversion of Series C Preferred owned by TH
            Lee.Putnam Internet Partners, L.P., 825,932 shares of Common Stock
            issuable upon conversion of Series C Preferred owned by TH
            Lee.Putnam Internet Parallel Partners, L.P., 61,400 shares of Common
            Stock issuable upon conversion of Series C Preferred owned by TH Li
            Coinvestment Partners LLC, and 23,625 shares of Common Stock
            issuable upon conversion of Series C Preferred owned by Blue Star I,
            LLC; and (iii) 449,494 shares of Common Stock issuable upon the
            exercise of warrants to purchase Series C Preferred owned by TH
            Lee.Putnam Internet Partners, L.P., 340,897 shares of Common Stock
            issuable upon the exercise of warrants to purchase Series C
            Preferred owned by TH Lee.Putnam Internet Parallel Partners, L.P.,
            25,435 shares of Common Stock issuable upon the exercise of warrants
            to purchase Series C Preferred owned by TH Li Coinvestment Partners
            LLC, and 9,658 shares of Common Stock issuable upon the exercise of
            warrants to purchase Series C Preferred owned by Blue Star I, LLC
            (collectively, the "Series C Warrants"). Does not include 228,469
            shares of Common Stock purchasable pursuant to warrants to purchase
            Common Stock owned by TH Lee.Putnam Internet Partners, L.P. and
            196,531 shares of Common Stock purchasable pursuant to warrants to
            purchase Common Stock owned by TH Lee.Putnam Internet Parallel
            Partners, L.P. (collectively, the "Common Warrants"). The Common
            Warrants become exercisable only in the event and to the extent that
            3,000,000 options granted under the Company's 2000 Stock Option Plan
            are exercised, on a pro rata basis. TH Lee.Putnam Internet Parallel
            Partners, L.P., TH Li Coinvestment Partners LLC, and Blue Star I,
            LLC are affiliates of TH Lee Putnam Internet Partners, L.P. Exercise
            of the Common Warrants was conditioned upon satisfaction of the
            applicable waiting period under the Hart-Scott-Rodino Improvements
            Act of 1976, as amended, which waiting period has expired.

      (4)   Includes 1,885,567 shares owned directly and 63,333 shares
            purchasable pursuant to warrants.

      (5)   Includes 1,507,529 shares purchasable pursuant to warrants, 27,312
            shares of which become exercisable only in the event and to the
            extent that 3,000,000 options granted under the Company's 2000 Stock
            Option Plan are exercised, on a pro rata basis.

      (6)   Includes 251,600 shares owned directly, 125,000 shares purchasable
            pursuant to warrants and 680,000 shares purchasable pursuant to
            stock options.


                                      28
<PAGE>

      (7)   Includes 506,000 shares owned directly and 50,660 shares purchasable
            pursuant to warrants held by BY Partners, L.P., 238,400 shares owned
            directly and 23,840 shares purchasable pursuant to warrants held by
            Brahman Institutional Partners, L.P., 79,400 shares owned directly
            and 7,940 shares purchasable pursuant to warrants held by Brahman
            Partners II, L.P., 61,800 shares owned directly and 6,180 shares
            purchasable pursuant to warrants held by Brahman C.P.F. Partners,
            L.P., and 9,322 shares owned directly and 932 shares purchasable
            pursuant to warrants held by Brahman Partners II offshore, Ltd.
            Peter A. Hochfelder, Robert J. Sobel and Mitchell A Kuflick,
            together the executive officers and directors of Brahman Capital
            Corp. and the sole managers of Brahman Management, L.LC., each are
            deemed to have beneficial ownership of the above reference shares.

      (8)   Includes 891,940 shares owned directly and 89,194 shares purchasable
            pursuant to warrants held by the Raptor Global Portfolio Ltd., 3,582
            shares owned directly and 358 purchasable pursuant to warrants held
            by Altar Rock Fund L.P. Tudor Investment Corporation expressly
            disclaims beneficial ownership of such shares. Mr. Paul Tudor Jones
            II, the controlling shareholder of Tudor Investment Corporation,
            also disclaims beneficial ownership in such shares.

      (9)   Includes 41,688 shares owned directly, 20,834 shares purchasable
            pursuant to warrants and 680,000 shares purchasable pursuant to
            stock options.

      (10)  Includes 125,000 shares owned directly, 62,500 shares purchasable
            pursuant to warrants and 225,000 shares purchasable pursuant to
            stock options.

      (11)  Includes 181,584 shares owned directly and 190,000 shares
            purchasable pursuant to stock options.

      (12)  Includes 83,334 shares owned directly and 41,667 shares purchasable
            pursuant to warrants and 20,000 shares purchasable pursuant to stock
            options.

      (13)  Includes 5,000 shares purchasable pursuant to options and 23,000
            shares purchasable pursuant to a warrant.

      (14)  Includes 20,000 shares purchasable pursuant to options.

      (15)  Includes 20,000 shares purchasable pursuant to options.

      (16)  Includes 13,514 shares owned directly and 1,351 shares purchasable
            pursuant to warrants.

      (17)  Includes an aggregate of 2,119,352 shares purchasable pursuant to
            currently exercisable stock options and warrants.


                                      29
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      In April 1998, various individual accredited investors, including
executive officers and directors of the Company, purchased 785,837 Units, each
Unit consisting of two shares of its $0.004 par value per share Series A
Cumulative Convertible Preferred Stock and one warrant to purchase one share of
Common Stock at a price of $1.75 per share, at a price of $1.20 per Unit, for a
total consideration received by the Company of $943,003. Each Preferred Share
could be voted on an as-if converted basis and was convertible into the
Company's $0.004 par value Common Stock, commencing November 1, 1998, subject to
anti-dilution adjustments. Each share of Preferred Stock was entitled to 5%
cumulative annual dividend. The Warrants could be exercised to purchase Common
Stock at any time before May 1, 2001. These Units were sold by the Company
without the services of an Agent. The closing of these transactions was
completed on May 4, 1998. The following executive officers and directors
purchased Preferred Stock and Warrants in the amounts set forth respectively:

<TABLE>
<CAPTION>
                                                                 Number of
                                                                 Series A
                                                                 Preferred      Number of
           Name                       Position                    Shares         Warrants
      ------------------   ----------------------------------    ---------      ---------
      <S>                  <C>                                   <C>            <C>
      Peter C. Lytle       President, Chief Executive Officer
                           and Director                           250,000        125,000
      Susan M. Clemens     Director                                83,334         41,667
      Kenneth D. Zigrino   Vice President and Secretary           125,000         62,500
      Marshall T. Masko    Director                                83,334         41,667
      Timothy G. Becker    Chief Financial Officer                 41,668         20,884
</TABLE>

      The above persons purchased Units for the same consideration as was paid
by nonaffiliated purchasers. In separate closings on June 2, 1998, and June 8,
1998, the Company also completed a private placement in which it sold to
non-affiliated accredited investors, some of whom are officers and directors of
the Company, 1,441,912 Units. The Units were offered by R.J. Steichen & Co., a
non-exclusive agent of the Company on a "best-efforts, all or none" basis, at a
purchase price of $1.20 per Unit. The total consideration received by the
Company for the sale of these Units was $1,477,856, net of interest ($7,080) and
the Agent's commissions and nonaccountable expenses and other expenses of the
private placement.

      On February 25, 1999, the Company elected to cause the mandatory
conversion of each of the outstanding Series A Preferred Shares into one share
of Common Stock, for a total of 4,455,498 shares of Common Stock. On September
10, 1999, the Company exercised its option to redeem the unexercised Warrants
(other than the agent's warrant) purchased by investors in the above-described
Unit offering. Such redemption was at a price of $0.01 for each share of Common
Stock issuable upon exercise of said unexercised Warrants, subject to the rights
of the warrant holders to exercise the Warrants during the 30 day period
beginning on the date of the Company's notice of redemption. Prior to such
redemption, the Warrants of Peter C. Lytle, Timothy G. Becker, Susan M. Clemens
and Kenneth D. Zigrino were amended to remove the Company's redemption option.

      In 1999, Marshall Masko rendered consulting services to the Company in
connection with the development and implementation of portions of its revised
business strategy. For his services, the Company paid him the aggregate sum of
$10,500 and approximately $90,000 in Common Stock. Between November 1, 1999 and
July 1, 2000, Kenneth D. Zigrino rendered consulting services to the Company in
connection with his duties as General Counsel. For his services, the Company
paid Mr. Zigrino an aggregate of $214,287.50.

      One of the Company's board members is a partner in the senior subordinated
note lender providing debt financing of $5.0 million for the CEDS acquisition.
On January 18, 2000, the board member and other partners in the senior
subordinated note lender collectively purchased 23,648 shares of the Company's
Common Stock and received 2,365 warrants at an exercise price of $12.50 per
share. Proceeds from the sale of Common Stock were approximately $0.1 million.


                                      30
<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, in the city of Minneapolis, state of
Minnesota on July 30, 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 Accounting and Financial Officer)


                                POWER OF ATTORNEY

      KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Wesley C. Fredenburg and Mark E. Ties, or
either of them, his attorneys-in-fact, each with the power of substitution, for
him in any and all capacities, to sign any amendments to this Report on Form
10-KSB, and to file the same, with exhibits thereto and other documents in
connection therewith with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or substitute
or substitutes may do or cause to be done by virtue hereof.

      In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

         Signature                      Title                       Date
         ---------                      -----                       ----

   /s/ Peter C. Lytle          Chairman                         July 30, 2001
---------------------------
Peter C. Lytle

   /s/ Jeffry J. Parell        Chief Executive Officer and      July 30, 2001
---------------------------    Director
Jeffry J. Parell

   /s/ Marshall T. Masko       Vice Chairman and Director       July 30, 2001
---------------------------
Marshall T. Masko

   /s/ Timothy Becker          Director                         July 30, 2001
---------------------------
Timothy Becker

   /s/ James C. Brown          Director                         July 30, 2001
---------------------------
James C. Brown

   /s/ Marlin Rudebusch        Director                         July 30, 2001
---------------------------
Marlin Rudebusch

   /s/ Douglas Hsieh           Director                         July 30, 2001
---------------------------
Douglas Hsieh

   /s/ Peter W. Kooman         Director                         July 30, 2001
---------------------------
Peter W. Kooman


                                      31
<PAGE>

EXHIBIT INDEX

Exhibit
Number      Description
-------     -----------

1.1         Agency Agreement dated April 20, 1998 between the Company and R.J.
            Steichen & Co. (incorporated by reference to the Company's Annual
            Report on Form 10-KSB for the year ended June 30, 1998).

2.1         Merger Agreement by and among CEX Holdings, Inc., Corporate Express
            Delivery Systems, Inc., United Shipping & Technology, Inc. and
            United Shipping & Technology Acquisition Corp., dated as of
            September 8, 1999 (incorporated by reference to the Company's Form
            8-K, File Number 99725409, filed October 8, 1999).

2.2         Amendment No. 1 to Merger Agreement by and among CEX Holdings, Inc.,
            Corporate Express Delivery Systems, Inc., United Shipping &
            Technology, Inc. and United Shipping & Technology Acquisition Corp.,
            dated as of September 22, 1999 (incorporated by reference to the
            Company's 8-K, File Number 99725409, filed October 8, 1999).

2.3         Securities Purchase Agreement among United Shipping & Technology,
            Inc., TH Lee.Putnam Internet Partners, L.P. and TH Lee. Putnam
            Internet Parallel Partners, L.P., dated as of May 15, 2000
            (incorporated by reference to the Company's Form 8-K, File Number
            648608, filed June 2, 2000).

2.4         Securities Purchase Agreement among United Shipping & Technology,
            Inc., TH Lee.Putnam Internet Partners, L.P., TH Lee.Putnam Internet
            Parallel Partners, L.P., THLi Coinvestment Partners LLC and Blue
            Star I, LLC, dated as of September 1, 2000 (incorporated by
            reference to the Company's Form 8-K, File Number 719209, filed
            September 8, 2000).

3.1         Articles of Incorporation of United Shipping & Technology, Inc., as
            amended, together with Certificate of Designation for United
            Shipping & Technology, Inc. Series B Convertible Preferred Stock,
            dated as of May 31, 2000 (incorporated by reference to the Company's
            Form 8-K, File Number 648608, filed June 2, 2000).

3.2         Certificate of Designation of Preferences and Rights of Series C
            Convertible Preferred Stock and Articles of Amendment to the
            Restated Articles of Incorporation of United Shipping & Technology,
            Inc., dated as of August 30, 2000 (incorporated by reference to the
            Company's Form 8-K, File Number 719209, filed September 8, 2000).

3.3         The Company's Bylaws, as amended (incorporated by reference to the
            Company's Registration Statement on Form SB-2, File No. 333-01652C).

4.1         Specimen form of the Company's Common Stock certificate
            (incorporated by reference to the Company's Statement on Form SB-2,
            File No. 333-01652C).

4.2         The Company's Articles of Incorporation, as amended and restated
            (see Exhibit 3.1 and Exhibit 3.2).

4.3         The Company's Bylaws (see Exhibit 3.3).

10.1        Form of warrant issued pursuant to bridge loan financing completed
            by the Company in December 1995 (incorporated by reference to the
            Company's Statement on Form SB-2, File No. 333-01652C).

10.2        1996 Director Stock Option Plan, as amended (incorporated by
            reference to the Company's Form 10-QSB for the fiscal quarter ended
            January 1, 2000).

10.3        2000 Stock Option Plan (incorporated by reference to the Company's
            Definitive Schedule 14A filed on May 8, 2000).


                                      32
<PAGE>

Exhibit
Number      Description
-------     -----------

10.4        Warrant dated June 3, 1998 between Company and Manchester Financial
            Group, Inc. for the purchase of 100,000 shares of Common Stock
            (incorporated by reference to the Company's Statement on Form 10-KSB
            for the year ended June 30, 1998).

10.5        Form of Warrant between Company and investors in 1998 private
            placement (incorporated by reference to the Company's Statement on
            Form 10-KSB for the year ended June 30, 1998).

10.6        Form of Subscription Agreement and Letter of Investment Intent
            between Company and investors in private placement of May and June
            1998 (incorporated by reference to the Company's Statement on Form
            10-KSB for the year ended June 30, 1998).

10.7        Warrant dated June 8, 1998 between Company and R.J. Steichen & Co.
            for the purchase of 288,381 shares of Common Stock (incorporated by
            reference to the Company's Statement on Form 10-KSB for the year
            ended June 30, 1998).

10.8        Sublease Agreement dated March 15, 1999, between the Company and NM
            Holdings, Inc. for property located at 9850 51st Avenue North, Suite
            110, Plymouth, Minnesota 55442 (incorporated by reference to the
            Company's Statement on Form 10-KSB for the fiscal year ended June
            30, 1999).

10.9        Form of Promissory Note used in connection with the Company's sale
            of its Medium Term 12% Unsecured Notes in December of 1998
            (incorporated by reference to the Company's Statement on Form 10-QSB
            for the quarter ended December 31, 1998).

10.10       Form of Warrant used in connection with the Company's sale of its
            12% Medium Term Unsecured Notes in December of 1998 (incorporated by
            reference to the Company's Statement on Form 10-QSB for the quarter
            ended December 31, 1998).

10.11       Form of Promissory Note used in connection with the Company's sale
            of its Short Term 12% Unsecured Note in February of 1999
            (incorporated by reference to the Company's Statement on Form 10-QSB
            for the quarter ended March 31, 1999).

10.12       Form of Warrant used in connection with the Company's sale of its
            12% Short Term Unsecured Note in February of 1999 (incorporated by
            reference to the Company's Statement on Form 10-QSB for the quarter
            ended March 31, 1999).

10.13       Form of Note Conversion Agreement used in connection with the
            Company's conversion of its 12% Medium Term Unsecured Notes to
            Common Stock in March of 1999 (incorporated by reference to the
            Company's Statement on Form 10-KSB for the fiscal year ended June
            30, 1999).

10.14       Form of Warrant used in connection with the Company's conversion of
            its 12% Medium Term Unsecured Notes to Common Stock in March of 1999
            (incorporated by reference to the Company's Statement on Form 10-KSB
            for the fiscal year ended June 30, 1999).

10.15       Form of Note Conversion Agreement used in connection with the
            Company's conversion of its 12% Short Term Unsecured Note to Common
            Stock in May of 1999 (incorporated by reference to the Company's
            Statement on Form 10-KSB for the fiscal year ended June 30, 1999).

10.16       Form of Warrant between Company and investors in private placement
            of Common Stock on March 16, 1999 (incorporated by reference to the
            Company's Statement on Form 10-QSB for fiscal quarter ended March
            31, 1999).


                                      33
<PAGE>

Exhibit
Number      Description
-------     -----------

10.17       Form of Warrant between Company and investors in private placements
            of warrants on April 12, 1999 and April 14, 1999 (incorporated by
            reference to the Company's Statement on Form 10-QSB for fiscal
            quarter ended March 31, 1999).

10.18       Form of Warrant between Company and investor in private placement of
            warrants on June 7, 1999 (incorporated by reference to the Company's
            Statement on Form 10-KSB for the fiscal year ended June 30, 1999).

10.19       Form of Warrant between Company and investors in private placements
            of Common Stock on May 13, 1999 and May 18, 1999 (incorporated by
            reference to the Company's Statement on Form 10-KSB for the fiscal
            year ended June 30, 1999).

10.20       Form of Warrant between Company and investors in private placements
            of Common Stock on June 30, 1999 and July 26, 1999 (incorporated by
            reference to the Company's Statement on Form 10-KSB for the fiscal
            year ended June 30, 1999).

10.21       Form of Subscription Agreement and Letter of Investment Intent
            between Company and employee investors in private placement of
            Common Stock in July of 1999 (incorporated by reference to the
            Company's Statement on Form 10-KSB for the fiscal year ended June
            30, 1999).

10.22       Form of Subscription Agreement and Investment Letter between Company
            and investors in private placements of Common Stock and warrants in
            October 1999 (incorporated by reference to the Company's Form 10-QSB
            for the fiscal quarter ended October 2, 1999).

10.23       Form of Warrant issued to purchasers in October 1999 sales of Common
            Stock and Warrants (incorporated by reference to the Company's Form
            10-QSB for the fiscal quarter ended October 2, 1999).

10.24       Long-Term Subordinated Promissory Note by and among UST Delivery
            Systems, Inc. and CEX Holdings, Inc., dated September 24, 1999
            (incorporated by reference to the Company's Form 8-K, File Number
            99725409, filed October 8, 1999).

10.25       Short-Term Subordinated Promissory Note by and among UST Delivery
            Systems, Inc. and CEX Holdings, Inc., dated September 24, 1999
            (incorporated by reference to the Company's Form 8-K, File Number
            99725409, filed October 8, 1999).

10.26       Exchange Agreement by and among United Shipping & Technology, Inc.,
            UST Delivery Systems, Inc. and CEX Holdings, Inc., dated as of
            September 24, 1999 (incorporated by reference to the Company's Form
            8-K, File Number 99725409, filed October 8, 1999).

10.27       Credit Agreement by and among UST Delivery Systems, Inc. and General
            Electric Capital Corporation, dated as of September 24, 1999
            (incorporated by reference to the Company's Form 8-K, File Number
            99725409, filed October 8, 1999).

10.28       Revolving Note by and among UST Delivery Systems, Inc. and General
            Electric Capital Corporation, dated September 24, 1999 (incorporated
            by reference to the Company's Form 8-K, File Number 99725409, filed
            October 8, 1999).

10.29       Swing Line Note by and among UST Delivery Systems, Inc. and General
            Electric Capital Corporation, dated September 24, 1999 (incorporated
            by reference to the Company's Form 8-K, File Number 99725409, filed
            October 8, 1999).


                                      34
<PAGE>

Exhibit
Number      Description
-------     -----------

10.30       Note and Warrant Purchase Agreement by and among United Shipping &
            Technology, Inc., UST Delivery Systems, Inc. and Bayview Capital
            Partners LP, dated as of September 24, 1999 (incorporated by
            reference to the Company's Form 8-K, File Number 99725409, filed
            October 8, 1999).

10.31       Senior Subordinated Note by and among United Shipping & Technology,
            Inc., UST Delivery Systems, Inc. and Bayview Capital Partners LP,
            dated September 24, 1999 (incorporated by reference to the Company's
            Form 8-K, File Number 99725409, filed October 8, 1999).

10.32       Warrant to Purchase Common Stock of United Shipping & Technology,
            Inc. issued to Bayview Capital Partners LP, dated September 24, 1999
            (incorporated by reference to the Company's Form 8-K, File Number
            99725409, filed October 8, 1999).

10.33       Intercreditor and Subordination Agreement by and among Bayview
            Capital Partners LP, UST Delivery Systems, Inc., United Shipping &
            Technology, Inc. and General Electric Capital Corporation, dated as
            of September 24, 1999 (incorporated by reference to the Company's
            Form 8-K, File Number 99725409, filed October 8, 1999).

10.34       Guaranty by and between United Shipping & Technology, Inc. and
            General Electric Capital Corporation, dated as of September 24, 1999
            (incorporated by reference to the Company's Form 10-QSB for the
            fiscal quarter ended October 2, 1999).

10.35       Subscription Agreement and Letter of Investment Intent between the
            Company and an investor in private placement of Common Stock and
            warrants on December 17, 1999 (incorporated by reference to the
            Company's Form 10-QSB for the fiscal quarter ended January 1, 2000).

10.36       Warrant issued to an investor in connection with December 17, 1999
            private placement of Common Stock and warrants (incorporated by
            reference to the Company's Form 10-QSB for the fiscal quarter ended
            January 1, 2000).

10.37       Form of Subscription Agreement and Letter of Investment Intent
            between the Company and investors in private placement of Common
            Stock and warrants on December 31, 1999 (incorporated by reference
            to the Company's Form 10-QSB for the fiscal quarter ended January 1,
            2000).

10.38       Form of warrant issued to investors in connection with December 31,
            1999 private placement of Common Stock and warrants (incorporated by
            reference to the Company's Form 10-QSB for the fiscal quarter ended
            January 1, 2000).

10.39       Form of Subscription Agreement and Letter of Investment Intent
            between the Company and investors in private placement of Common
            Stock and warrants on January 18, 2000 (incorporated by reference to
            the Company's Form 10-QSB for the fiscal quarter ended January 1,
            2000).

10.40       Form of Subscription Agreement and Letter of Investment Intent
            between the Company and investors in a private placement of the
            Company's Common Stock in January 2000 (incorporated by reference to
            the Company's Form 10-QSB for the fiscal quarter ended April 1,
            2000).

10.41       Form of Option issued to employee on May 11, 2000 (incorporated by
            reference to the Company's Form 10-QSB for the fiscal quarter ended
            April 1, 2000).

10.42       Restructuring Agreement dated January 31, 2000 between the Company,
            UST Delivery Systems, Inc. and J. Iver & Company (incorporated by
            reference to the Company's Form 10-QSB for the fiscal quarter ended
            April 1, 2000).


                                      35
<PAGE>

Exhibit
Number      Description
-------     -----------

10.43       9% Convertible Subordinated Promissory Note in the original
            principal amount of $1,690,000 issued by the Company to J. Iver &
            Company dated April 25, 2000 (incorporated by reference to the
            Company's Form 10-QSB for the fiscal quarter ended April 1, 2000).

10.44       Warrant to purchase up to 15,000 shares of Common Stock at a price
            of $12.925 per share issued by the Company to J. Iver & Company
            dated April 25, 2000 (incorporated by reference to the Company's
            Form 10-QSB for the fiscal quarter ended April 1, 2000).

10.45       Stock Purchase Warrant to Acquire Series B Preferred Stock,
            Certificate No. W-1, issued May 31, 2000, granted by United Shipping
            & Technology, Inc. to TH Lee. Putnam Internet Partners, L.P. for up
            to a number of shares of Series B Preferred Stock equal to
            $16,127,220, divided by the exercise price (incorporated by
            reference to the Company's Form 8-K, File Number 648608, filed June
            2, 2000).

10.46       Stock Purchase Warrant to Acquire Series B Preferred Stock,
            Certificate No. W-2, issued May 31, 2000, granted by United Shipping
            & Technology, Inc. to TH Lee.Putnam Internet Parallel Partners, L.P.
            for up to a number of shares of Series B Preferred Stock equal to
            $13,872,780, divided by the exercise price (incorporated by
            reference to the Company's Form 8-K, File Number 648608, filed June
            2, 2000).

10.47       Stock Purchase Warrant to Acquire Common Stock, Certificate No. W-3,
            issued May 31, 2000, granted by United Shipping & Technology, Inc.
            to TH Lee.Putnam Internet Partners, L.P. for up to 228,469 shares of
            Common Stock (incorporated by reference to the Company's Form 8-K,
            File Number 648608, filed June 2, 2000).

10.48       Stock Purchase Warrant to Acquire Common Stock, Certificate No. W-4,
            issued May 31, 2000, granted by United Shipping & Technology, Inc.
            to TH Lee.Putnam Internet Parallel Partners, L.P. for up to 196,531
            shares of Common Stock (incorporated by reference to the Company's
            Form 8-K, File Number 648608, filed June 2, 2000).

10.49       Stock Purchase Warrant to Acquire Series B Preferred Stock,
            Certificate No. W-5, issued May 31, 2000, granted by United Shipping
            & Technology, Inc. to TH Lee.Putnam Internet Partners, L.P. for up
            to 243,468 shares of Series B Preferred Stock (incorporated by
            reference to the Company's Form 8-K, File Number 648608, filed June
            2, 2000).

10.50       Stock Purchase Warrant to Acquire Series B Preferred Stock,
            Certificate No. W-6, issued May 31, 2000, granted by United Shipping
            & Technology, Inc. to TH Lee Putnam Internet Parallel Partners, L.P.
            for up to 209,433 shares of Series B Preferred Stock (incorporated
            by reference to the Company's Form 8-K, File Number 648608, filed
            June 2, 2000).

10.51       Registration Rights Amendment, among United Shipping & Technology,
            Inc., TH Lee. Putnam Internet Partners, L.P. and TH Lee. Putnam
            Internet Parallel Partners, L.P., dated as of May 31, 2000
            (incorporated by reference to the Company's Form 8-K, File Number
            648608, filed June 2, 2000).

10.52       Stock Purchase Warrant to Acquire Series C Preferred Stock,
            Certificate No. W-7, issued September 1, 2000 by United Shipping &
            Technology, Inc. to TH Lee.Putnam Internet Partners, L.P. for
            187,290 shares of Series C Preferred Stock at a price per share
            equal to $0.01 (incorporated by reference to the Company's Form 8-K,
            File Number 719209, filed September 8, 2000).

10.53       Stock Purchase Warrant to Acquire Series C Preferred Stock,
            Certificate No. W-8, issued September 1, 2000 by United Shipping &
            Technology, Inc. to TH Lee.Putnam Internet Partners, L.P. for
            142,042 shares of Series C Preferred Stock at a price per share
            equal to $0.01 (incorporated by reference to the Company's Form 8-K,
            File Number 719209, filed September 8, 2000).


                                      36
<PAGE>

Exhibit
Number      Description
-------     -----------

10.54       Stock Purchase Warrant to Acquire Series C Preferred Stock,
            Certificate No. W-9, issued September 1, 2000 by United Shipping &
            Technology, Inc. to THLi Coinvestment Partners, LLC for 10,598
            shares of Series C Preferred Stock at a price per share equal to
            $0.01 (incorporated by reference to the Company's Form 8-K, File
            Number 719209, filed September 8, 2000).

10.55       Stock Purchase Warrant to Acquire Series C Preferred Stock,
            Certificate No. W-10, issued September 1, 2000 by United Shipping &
            Technology, Inc. to Blue Star I, LLC for 4,024 shares of Series C
            Preferred Stock at a price per share equal to $0.01 (incorporated by
            reference to the Company's Form 8-K, File Number 719209, filed
            September 8, 2000).

10.56       Stock Purchase Warrant to Acquire Series C Preferred Stock,
            Certificate No. W-11, to be issued at the time of the Second Closing
            by United Shipping & Technology, Inc. to TH Lee.Putnam Internet
            Partners, L.P. for 262,204 shares of Series C Preferred Stock at a
            price per share equal to $0.01 (incorporated by reference to the
            Company's Form 8-K, File Number 719209, filed September 8, 2000).

10.57       Stock Purchase Warrant to Acquire Series C Preferred Stock,
            Certificate No. W-12, to be issued at the time of the Second Closing
            by United Shipping & Technology, Inc. to TH Lee.Putnam Internet
            Parallel Partners, L.P. for 198,855 shares of Series C Preferred
            Stock at a price per share equal to $0.01 (incorporated by reference
            to the Company's Form 8-K, File Number 719209, filed September 8,
            2000).

10.58       Stock Purchase Warrant to Acquire Series C Preferred Stock,
            Certificate No. W-13, to be issued at the time of the Second Closing
            by United Shipping & Technology, Inc. to THLi Coinvestment Partners
            LLC for 14,837 shares of Series C Preferred Stock at a price per
            share equal to $0.01 (incorporated by reference to the Company's
            Form 8-K, File Number 719209, filed September 8, 2000).

10.59       Stock Purchase Warrant to Acquire Series C Preferred Stock,
            Certificate No. W-14, to be issued at the time of the Second Closing
            by United Shipping & Technology, Inc. to Blue Star I, LLC for 5,634
            shares of Series C Preferred Stock at a price per share equal to
            $0.01 (incorporated by reference to the Company's Form 8-K, File
            Number 719209, filed September 8, 2000).

10.60       Amended and Restated Registration Rights Agreement, among United
            Shipping & Technology, Inc., TH Lee.Putnam Internet Partners, L.P.,
            TH Lee.Putnam Internet Parallel Partners, L.P., THLi Coinvestment
            Partners LLC and Blue Star I, LLC, dated as of September 1, 2000
            (incorporated by reference to the Company's Form 8-K, File Number
            719209, filed September 8, 2000).

10.61       Form of Stock Restriction Agreement, entered into as of September 1,
            2000 between TH Lee.Putnam Internet Partners, L.P. and each of Peter
            Lytle, Tim Becker and Michael Harris (incorporated by reference to
            the Company's Form 8-K, File Number 719209, filed September 8,
            2000).

10.62       Mutual Release and Contract of Settlement, dated June 20, 2000,
            between Jack D. Ashabranner II, UST Delivery Systems, Inc. and
            United Shipping & Technology, Inc., as amended on July 31, 2000,
            whereby Mr. Ashabranner and his counsel, London & Schaeffer, L.L.P.
            were issued 100,000 shares of the Company's Common Stock in
            connection with the settlement of certain litigation against
            Velocity Express, Inc. (incorporated by reference to the Company's
            Form 10-KSB for the fiscal year ended July 1, 2001).

10.63       Form of Warrant issued to Bayview Capital Partners LP as of May 2000
            (incorporated by reference to the Company's Statement on Form 10-KSB
            for the fiscal year ended July 1, 2001).

10.64       Form of Warrant issued to Bayview Capital Partners LP as of July
            2000 (incorporated by reference to the Company's Statement on Form
            10-KSB for the fiscal year ended July 1, 2001).

10.65       Form of non-qualified stock option issued to employee as of June
            2000 (incorporated by reference to the Company's Statement on Form
            10-KSB for the fiscal year ended July 1, 2001).


                                      37
<PAGE>

Exhibit
Number      Description
-------     -----------

10.66       Employment Agreement between United Shipping & Technology, Inc. and
            Peter C. Lytle, Chairman of the Board of Directors and Chief
            Executive Officer, dated November 5, 1999.

10.67       Amendment to the Employment Agreement between United Shipping &
            Technology, Inc. and Peter C. Lytle.

10.68       Employment Agreement between United Shipping & Technology, Inc. and
            Timothy Becker, dated November 5, 1999.

10.69       Amendment to the Employment Agreement between United Shipping &
            Technology and Timothy Becker.

21          Subsidiaries.

23.1        Consent of Ernst & Young LLP.

23.2        Consent of Lurie, Besikof, Lapidus & Co., LLP.

27          Financial Data Schedule.

99.1        Cautionary Statements.


                                      38