UNITED SYSTEMS TECHNOLOGY INC
DEF 14A, 1998-04-28
PREPACKAGED SOFTWARE
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                                  UNITED STATES
                         SECURITIES EXCHANGE COMMISSION
                             Washington, D.C. 20549


                            SCHEDULE 14A INFORMATION

           Proxy Statement Pursuant to Section 14(a) of the Securities
                              Exchange Act of 1934

Filed by the Registrant [ X ] Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[  ]  Preliminary Proxy Statement
[X]  Definitive Proxy Statement
[  ]  Definitive Additional Materials
[  ]  Soliciting  Material  Pursuant  to  Rule  14a-11(c)  or  Rule.14a-12  [  ]
Confidential, for use pf Commission only (as permitted by Rule 14a-6 (e) (2)

                         UNITED SYSTEMS TECHNOLOGY, INC.
                (Name of Registrant as Specified in Its Charter)

                                Randall L. McGee
                   (Name of Person(s) filing Proxy Statement)

Payment of filing fee (Check the appropriate box):

[X]  No fee required

[   ] Fee  computed  in table below per  Exchange  Act Rules 14a-6 (i) (4) and
      0-11  Title of each  class of  securities  to which  transaction  applies.
      Aggregate number of securities to which transaction applies.
      Per unit price or other underlying value of transaction  computed pursuant
      to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
      calculated and state how it was determined).  Proposed  maximum  aggregate
      value of transaction.
      Total fee paid.

[   ] Fee paid previously with preliminary materials.

[   ] Check box if any part of the fee is offset as provided by Exchange  Act
      Rule 0-11 (a) (2) and identify the filing for which the  offsetting fee
      was paid previously.  Identify the previous filing by registration
      statement  number, or the Form or Schedule and the date of its filing.



<PAGE>





                         UNITED SYSTEMS TECHNOLOGY, INC.
    ------------------------------------------------------------------------

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                                  JUNE 24, 1998
    ------------------------------------------------------------------------


     The Annual Meeting of Shareholders of United Systems  Technology,  Inc., an
Iowa corporation,  will be held at 9:00 a.m.,  Central Time,  Wednesday June 24,
1998 at the Company's executive offices,  1850 Crown Road, Suite #1109,  Dallas,
Texas, 75234, for the following purposes:


     To elect four members of the Board of Directors of the Company;

     To ratify or reject the selection of Grant Thornton LLP as the  independent
     accountants for the Company;

     To consider and act upon such other  business as may  properly  come before
     the meeting or any adjournment thereof.


     All shareholders are cordially invited to attend the meeting, although only
shareholders of record at the close of business on May 15, 1998 will be entitled
to vote.

     A Proxy  Statement  explaining  the matters to be acted upon at the meeting
follows.  Please read it  carefully.  Also  enclosed is a copy of the  Company's
Annual Report for the fiscal year ended December 31, 1997.


                                             Randall L. McGee, Secretary


May 22, 1998
1850 Crown Road, #1109
Dallas, Texas              75234


                             YOUR VOTE IS IMPORTANT

     Shareholders  are urged to designate  their choices as to the matters to be
acted  upon,  and to date,  sign,  and  return  the  enclosed  proxy card in the
envelope  provided,  which  requires no postage if mailed in the United  States.
Your prompt  return of the Proxy will help to assure a quorum at the meeting and
to avoid additional Company expense for further solicitation.

<PAGE>




                         UNITED SYSTEMS TECHNOLOGY, INC.
                 ANNUAL MEETING OF SHAREHOLDERS - JUNE 24, 1998
    ------------------------------------------------------------------------

                                 PROXY STATEMENT
    ------------------------------------------------------------------------

                               GENERAL INFORMATION

     This Proxy  Statement is furnished in connection  with the  solicitation of
Proxies on behalf of the Board of Directors of United Systems Technology,  Inc.,
an Iowa corporation, for use at the Company's Annual Meeting of Shareholders, to
be held on Wednesday,  June 24, 1998,  and at any and all  adjournments  of such
meeting.  This Proxy  Statement  and Proxy are being  mailed on or about May 22,
1998 to shareholders of record of the Company on May 15, 1998.

     If the enclosed Proxy Card is properly  executed and returned in time to be
voted at the meeting,  the shares  represented  will be voted in accordance with
the   instructions   contained   therein.   Executed  Proxies  that  contain  no
instructions  will be voted (1) for the nominees for director  indicated  herein
and (2) in favor of  ratification  of the  selection  of Grant  Thornton  LLP as
independent  accountants for the Company.  In their discretion,  the proxies are
also authorized to vote upon such other business as may properly come before the
meeting or any and all adjournments thereof.

     A shareholder who executes a Proxy for the Annual Meeting may revoke it any
time before it is voted. A Proxy may be revoked by delivering  written notice of
revocation to the Company,  by delivering a duly executed  Proxy bearing a later
date, or by attending the meeting and voting in person.

         The Company's  executive  offices are located at 1850 Crown Road, Suite
1109, Dallas, Texas 75234.

                         VOTING RIGHTS AND VOTE REQUIRED

     Only  shareholders  of record at the close of business on May 15, 1998 will
be entitled to vote at the Annual Meeting. As of May 15, 1998, 43,178,043 shares
of Common Stock, par value $.10 per share;  500,000 shares of Series B Preferred
Stock, par value $.10 per share; 500,000 shares of Series D Preferred Stock, par
value $.10 per share;  and 300,000 shares of Series E Preferred Stock, par value
$.10 per share were issued and outstanding.  Each Common Shareholder is entitled
to one vote per share on each matter to be voted upon at the  meeting.  Series B
Preferred Shareholders are entitled to a total of 4,183,730 votes on each matter
to be voted upon at the meeting. Series D Preferred Shareholders are entitled to
a total of  2,253,235  votes on each  matter  to be voted  upon at the  meeting.
Series E Preferred  Shareholders  are entitled to a total of 2,227,525  votes on
each matter to be voted upon at the meeting.

<PAGE>

     A quorum for the  Annual  Meeting  will  exist if a majority  of the shares
entitled  to vote are  present  in person or by Proxy.  If a quorum is  present,
election of directors for the ensuing year and the  ratification of Management's
selection  of  independent  accountants  will require an  affirmative  vote by a
majority of the votes to which  shareholders  voting at the meeting are entitled
to vote with respect to each such matter.

     Meeting  costs,  including  the costs of  preparing  and  mailing the Proxy
Statement and Proxy, will be borne by the Company. The Company may, in addition,
use the services of its  directors,  officers and employees to solicit  Proxies,
personally or by telephone,  but at no additional  salary or  compensation.  The
Company  will also  request  banks,  brokers,  and others who hold shares of the
Company in nominee  names to  distribute  annual  reports  and Proxy  soliciting
materials to beneficial  owners,  and will  reimburse such banks and brokers for
reasonable out-of-pocket expenses which they may incur in so doing.

                              Election of Directors

     The Company's  Board of Directors  has  nominated  the four persons  listed
below for election as directors for the ensuing year. Directors will hold office
until  the  Annual  Meeting  of  Shareholders  held in  1999,  and  until  their
successors are duly elected and qualified, or until their death,  resignation or
removal.  The nominees are presently directors of the Company and have served in
that capacity since originally  elected.  A shareholder using the enclosed Proxy
Card can vote for all or any of the  nominees or such  shareholder  may withhold
his  vote  from  all or any of such  nominees.  If the  Proxy  Card is  properly
executed but  unmarked,  it will be voted for all of the  nominees.  Each of the
nominees  has  agreed to serve as a director  if  elected;  however,  should any
nominee become unable or unwilling to accept nomination or election, the persons
named in the Proxy  will  exercise  their  voting  power in favor of such  other
person or persons as the Board of Directors of the Company may recommend.  There
are no family relationships among these nominees.
<TABLE>

         <S>                          <C>              <C>
           
             Name                     Age                 Position

         Thomas E. Gibbs               49              Chairman of the Board,
                                                       Chief Executive Officer,
                                                       President and Director

         Jordan Issackedes             66              Director

         Scott A. Burri                35              Director

         Earl H. Cohen                 50              Director

</TABLE>

<PAGE>

     Thomas E. Gibbs, Chairman of the Board, Chief Executive Officer,  President
and Director.  Mr. Gibbs founded  Mentor  Systems,  Inc. in 1981,  served as its
President  until  1987  when  the  company  was  sold to  Philadelphia  Suburban
Corporation, and continued as President until 1988. From 1988 to 1989, Mr. Gibbs
served as Chairman of PSC Information Services, Inc., the information technology
subsidiary  of  Philadelphia  Suburban  Corporation  and  President  of  Digital
Systems,  Inc., a PSC Information  Services  subsidiary.  From 1989 to 1990, Mr.
Gibbs was Senior Vice  President  for  Information  Technology  at  Philadelphia
Suburban  Corporation.  In 1990, Mr. Gibbs became  President of PSC  Information
Services,  Inc. and served in that capacity  until 1991 when two of the five PSC
Information  Services companies were acquired by Systems and Computer Technology
Corp.  ("SCT").  After the  acquisition,  Mr. Gibbs  became  President of Mentor
Information Systems, Inc., one of the two companies acquired by SCT, until 1993.
In addition,  from 1992 until 1993 he served as President of Moore  Governmental
Systems,  Inc.,  another SCT  subsidiary.  Mr.  Gibbs was elected to his current
position of Chairman of the Board,  Chief Executive Officer and President of the
Company  effective  January 1, 1994.  Mr.  Gibbs  received a Bachelor of Science
degree,  Masters  of  Business  Administration  and  a  Ph.D.  degree  from  the
University of Cincinnati.

     Jordan Issackedes,  Director.  Mr. Issackedes began his career in 1953 with
the accounting firm of Coopers & Lybrand.  From 1960 to 1969, Mr. Issackedes was
employed by the Okinite Company in various management capacities, culminating in
his serving as Vice  President of Finance and a member of the Board of Directors
from 1966 to 1969.  From  1969 to 1982,  Mr.  Issackedes  was  President,  Chief
Operating  Officer  and a member  of the  Board of  Directors  of  General  Felt
Industries,  Inc.  From 1983 trough  1985,  Mr.  Issackedes  was  President  and
principal owner of C&J Zimmerman,  a flooring manufacturer and contractor.  From
1984 to 1988,  Mr.  Issackedes  was  affiliated  with  Software  Plus,  Inc.,  a
privately-held  corporation  which  develops  and markets  specialized  computer
software  systems,  initially as a member of its Board of  Directors  and of the
executive  committee of the Board,  and from 1985 to 1988 as its Chairman of the
Board and Chief  Executive  Officer.  Currently  Mr.  Issackedes is President of
Jordan  Issackedes  Associates,  Inc., a  management  services  firm,  which Mr.
Issackedes  founded in 1983. Mr. Issackedes was a consultant to the Company from
July 1988 until  October 1989 when he was elected to the position of Chairman of
the Board,  Chief Executive Officer and President,  which he held until December
31, 1993. He has served as a director of the Company since December 1988.

     Scott A Burri,  Director.  Mr.  Burri has been  employed by Ventana  Growth
Funds, a California-based  asset management firm, since 1992, and is responsible
for the management,  analysis and oversight of a number of portfolio  companies.
Prior to 1992,  Mr. Burri was employed as an  investment  banker at First Boston
Corporation in New York, New York and Credit Suisse in Zurich, Switzerland.  Mr.
Burri has previously served on the Boards of public and private  companies.  Mr.
Burri  received a Bachelor of Science  degree from Oregon State  University  and
Master of Business degree from the University of Southern California.

     Earl H Cohen,  Director.  Mr.  Cohen is an attorney and has served as Chief
Executive Officer of the law firm of Mansfield & Tanick,  P.A. since 1992. Prior
to joining the law firm of Mansfield & Tanick in 1990, Mr. Cohen was an attorney
in private  practice from 1976 through 1990.  From 1973 through 1976,  Mr. Cohen
served as Trust  Officer of Norwest Bank  Minneapolis.  Mr.  Cohen  received his
Bachelor of Science  degree in Business from the University of Minnesota in 1970
and his law degree from the  University  of  Minnesota  in 1973.  Mr.  Cohen has
previously served on the boards of private companies.

<PAGE>

     The  Board  of  Directors  has  established  a  Compensation/Stock   Option
Committee and an Audit Committee.  The Board of Directors originally established
the  Compensation/Stock  Option  Committee in January,  1987 to  administer  the
Company's  Stock  Option  Plan.  In June 1988 the duties of the  Committee  were
expanded to include the review of management  compensation.  The Committee  held
one meeting  during the year ended  December 31, 1997 and was comprised of David
Sengpiel,  Scott Burri and Earl Cohen.  The Board of Directors  established  the
Audit Committee in June 1988 to monitor  preparation of the Company's  financial
statements.  The Committee  held no meetings  during the year ended December 31,
1997 and was comprised of David Sengpiel, Jordan Issackedes and Scott Burri. The
Company  has  no  other   committees  of  the  Board  of  Directors.   Committee
appointments  for the  upcoming  year will be made at the annual  meeting of the
Board of Directors.

     The Board of Directors held three  meetings  during the year ended December
31, 1997. All Directors attended 75% or more of all meetings of the Board and of
the committees on which they served.

                               Executive Officers

     The Executive  officers of the Company are appointed  annually by the Board
of Directors and serve an indefinite term. All executive officers of the Company
are employed on a full-time  basis.  No family  relationship  exists between any
executive officer of the Company.
<TABLE>
 
             <S>                  <C>               <C>
             Name                 Age               Position

         Thomas E. Gibbs           49               Chairman of the Board,
                                                    Chief Executive Officer,
                                                    President and Director

         Randall L. McGee          41               Secretary, Treasurer and
                                                    Vice-President - Finance

</TABLE>

     Thomas E. Gibbs, Chairman of the Board, Chief Executive Officer,  President
and   Director.    See   Resume   on   Page   3   of   this   Proxy   Statement.

     Randall L. McGee,  Secretary/Treasurer  and Vice  President - Finance.  Mr.
McGee was  appointed  Secretary,  Treasurer  and  Controller  of the  company in
October 1988. Mr. McGee is a certified public accountant and, from 1982 until he
joined the Company,  served as Controller  of National FSi,  Inc., a provider of
computer software and ancillary services for the management of pension and other
employee  benefit  plans.  Mr.  McGee  received  a  Bachelor  of Arts  Degree in
Accounting from the University of Northern Iowa in 1979.

<PAGE>

                          SECURITY OWNERSHIP OF CERTAIN
                        BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth the ownership of each person who is known to
the Company to be the beneficial  owner of more than 5% of the Company's  Common
Stock as of May 15, 1998.
<TABLE>
       <S>                         <C>                           <C>

       Name and Address            Amount and Nature             Percent
      of Beneficial Owner        of Beneficial Ownership         of Class
      -------------------        -----------------------         --------

       John Pappajohn                  8,078,255  (1)             17.9%
       666 Walnut Street
       Des Moines, IA   50309

       D&D Holdings, Inc.              8,664,490  (2)             16.7%
       1915 Grand Avenue
       Des Moines, IA   50309

       Edgewater Private               6,166,666                  14.3%
        Equity Fund L.P.
       666 Grand Avenue, Suite 200
       Des Moines, IA   50309

       Thomas E. Gibbs                 4,060,000  (3)              8.8%
       4701 American Blvd., #2319
       Euless, TX   76040

       Jordan Issackedes               2,653,300  (4)              6.0%
       73 Merritt Drive
       Oradell, NJ   07649

</TABLE>

- ------------------------------------------------------------------------

     (1) Includes:  (i) 2,900,000 shares of Common Stock issuable on exercise of
warrants  held by Mr.  Pappajohn;  (ii) 202,500  shares of Common Stock owned by
Mary Pappajohn,  the wife of Mr.  Pappajohn;  and (iii) 400,000 shares of Common
Stock owned by Evia Associates,  a partnership owned by John and Mary Pappajohn.
Mr. Pappajohn disclaims beneficial ownership of the shares of Common Stock owned
by his wife and  200,000  shares of the  shares of  Common  Stock  owned by Evia
Associates.

     (2) D&D Holding,  Inc. ("D&D") is deemed to be the beneficial owner of such
shares  because it is the holder of 500,000  shares of Series B Preferred  Stock
which,  as of May 15,  1998 were  convertible  into  4,183,730  shares of Common
Stock; the holder of 500,000 shares of Series D Preferred Stock which, as of May
15, 1998, were  convertible into 2,253,235 shares of Common Stock and the holder
of 300,000 shares of Series E Preferred  Stock which,  as of May 15, 1998,  were
convertible  into 2,227,525  shares of Common Stock. D&D is the beneficial owner
of 100% if the  Company's  Preferred  Stock by  virtue of its  ownership  of the
500,000 shares of Series B Preferred Stock, 500,000 shares of Series D Preferred
Stock and 300,000  shares of Series E  Preferred  Stock.  The 500,000  shares of
Series B Preferred Stock are entitled to a total of 4,183,730  votes, the Series
D Preferred  Stock are  entitled to  2,253,235  votes and the Series E Preferred
Stock are  entitled  to a total of  2,227,525  votes at the  Annual  Meeting  of
Shareholders which is the subject of the Proxy Statement.

<PAGE>


     (3)  Includes  3,000,000  shares of Common  Stock  issuable  on exercise of
options held by Mr.  Gibbs.  Under the terms of these  options,  750,000  shares
became  exercisable on February 17, 1995,  750,000 shares became  exercisable on
February 17, 1996,  375,000 shares become  exercisable on July 11, 1996, 375,000
shares become  exercisable on July 11, 1997,  375,000 become exercisable on July
11, 1998 and 375,000 shares become exercisable on July 11, 1999.

     (4) Includes (i) 500,000  shares of Common Stock issuable on exercise of an
option held by Mr. Issackesdes and (ii) 250,000 shares of Common Stock which Mr.
Issackedes has the right to purchase from the Company at any time. The option is
exercisable on July 11, 1996.


     ______________________________________________________________________


     The  following  table sets forth the  ownership of each of the directors of
the Company,  and the directors and officers as a group, of the Company's Common
Stock as of May 10, 1996.
<TABLE>
        <S>                         <C>                           <C>

        Name and Address            Amount and Nature             Percent
      of Beneficial Owner        of Beneficial Ownership         of Class
      -------------------        -----------------------         --------
        Thomas E. Gibbs                4,060,000  (1)              8.8 %

        Jordan Issackedes              2,653,300  (2)              6.0 %

        Randall L. McGee               1,500,000  (3)              3.4 %

        Earl H. Cohen                    689,256  (4)              1.6 %

        Scott A. Burri                   280,000                    *


        All Officers and Directors
        as a group (6 persons)         9,182,556                  18.9 %

</TABLE>

          *  Percent of class less than 1 %

     ______________________________________________________________________



     (1)  Includes  3,000,000  shares of Common  Stock  issuable  on exercise of
options held by Mr.  Gibbs.  Under the terms of these  options,  750,000  shares
became  exercisable on February 17, 1995,  750,000 shares became  exercisable on
February 17, 1996,  375,000 shares become  exercisable on July 11, 1996, 375,000
shares become  exercisable on July 11, 1997,  375,000 become exercisable on July
11, 1998 and 375,000 shares become exercisable on July 11, 1999.

     (2) Includes (i) 500,000  shares of Common Stock issuable on exercise of an
option held by Mr. Issackesdes and (ii) 250,000 shares of Common Stock which Mr.
Issackedes has the right to purchase from the Company at any time.

     (3)  Includes  1,500,000  shares of Common  Stock  issuable  in exercise of
options held by Mr. McGee. Under the terms of the options, 125,000 shares become
exercisable on July 11, 1996, 62,500 shares become exercisable on June 26, 1997,
125,000  shares  become  exercisable  on July 11, 1997,  250,000  shares  become
exercisable  on June 26, 1998,  125,000  shares become  exercisable  on July 11,
1998,  250,000 shares become exercisable on June 26, 1999, 125,000 shares become
exercisable on July 11, 1999, 250,000 shares become exercisable on June 26, 2000
and 187,500 shares become exercisable on June 26, 2001.

<PAGE>

     (4)  Includes  250,000  shares of Common  Stock  issuable on exercise of an
option held by Mr. Cohen, which becomes exercisable on June 26, 1997.

                             Management Compensation

Executive Compensation

     The  following  table  sets forth the  compensation  paid or accrued by the
Company for service  rendered during the last fiscal year to the Company's Chief
Executive  Officer  and  each of the most  highly  compensated  officers  of the
Company whose compensation exceeds $ 100,000.


 Summary Compensation Table
<TABLE>
 <S>                     <C>    <C>          <C>     <C>           <C>


 Name and                Annual Compensation         Long Term     All Other
 Principal Position        Year     Salary   Bonus  Compensation  Compensation
 ------------------        ----     ------   -----  ------------  ------------
 Thomas E. Gibbs           1997    $150,000   -0-       -0-            -0-
 Chairman of the Board
 Chief Executive Officer
 and President

</TABLE>

     None of the Company's officers currently have written employment agreements
with the company.


Stock Option and Warrant Grants in Last Fiscal Year

     In June,  1997,  the  Company  granted an option to Mr.  McGee to  purchase
750,000 shares of its Common Stock at a price of $.03 per share.

<PAGE>

Aggregate Stock Option and Warrant Exercises in the
Last Fiscal Year and Fiscal Year-End Option and Warrant Values
- --------------------------------------------------------------

     The following  table sets forth  information  regarding  year-end  value of
options and warrants held by the Company's Chief Executive  Officer for the year
ending December 31, 1997. No options or warrants were exercised by the Company's
Chief Executive Officer during the year.

<TABLE>
<S>    <C>        <C>        <C>         <C>           <C>         <C>
                                                                                        Value of
                                     Number of              Unexercised
                                    Unexercised             In-The-Money
       Shares      Value         Options/Warrants         Options/Warrants  (1)
      Acquired    Realized      -----At Year End-----    -----At Year End-----
Name On Exercise At Exercise Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------

Thomas E.
 Gibbs      -0-      -0-      2,250,000    2,250,000       -0-         -0-

</TABLE>


                 (1) 1997 closing bid price was $.01.

Compensation Pursuant to Plans

     The  Company  adopted a Stock  Option Plan on May 25,  1982.  This plan was
terminated in September,  1986. All options granted under this plan have expired
or been extinguished.  The Board of Directors of the Company adopted a new Stock
Option Plan on  September,  27, 1986 (the "Plan").  The Company  currently has a
total of  12,000,000  shares of Common Stock for issuance  pursuant to the Plan.
The Plan was approved by the  stockholders  of the Company on June 3, 1987.  The
Plan is designed as an incentive for directors and employees and is administered
by the  Compensation/Stock  Option  Committee of the Board of  Directors,  which
selects optionees and determines the number of shares of Common Stock subject to
each  option and whether  such option is an  incentive  or  non-statutory  stock
option. The Plan provides that no option may be granted at a price less than the
fair market  value of the Common  Stock on the date of grant.  Unless  otherwise
specified,  the  options  expire ten years from the date of grant and may not be
exercised  in whole or in part  during the entire  one-year  period from date of
grant.  Thereafter,  options may be exercised in whole or in part,  depending on
the terms of the  particular  option.  There  are  currently  5,672,500  options
outstanding under the Plan

     Effective  January 16, 1992, the Company  established  the USTI  Employees'
401(K)  Profit  Sharing  Plan  and  Trust  (the  "Plan"),  which  is  a  defined
contribution  plan that covers  substantially  all  full-time  employees  of the
Company  eligible to  participate.  The Plan is subject to the provisions of the
Employee  Retirement  Income  Security Act of 1974,  as amended  ("ERISA"),  and
Section  401(K) if the  Internal  Revenue  Code.  The  Company may elect to make
contributions  for  the  benefit  of the  participants  in the  Plan,  based  on
semi-annual   resolutions   of  the  Board  of   Directors.   The  Company  made
contributions for the benefit of the participants in the Plan in the amount of $
3,665 for the year ended December 31,1997.

     The Company offers a medical insurance plan for all full-time  employees of
the Company. The Company has no pension, profit sharing or insurance program for
the benefit of its directors, officers or employees.

<PAGE>


Director Compensation

     No officer or director of the Company  receives any cash  compensation  for
services as a director.  Non-management  directors receive  reasonable  expenses
incurred for attendance at meetings of the Board of Directors.

                            CERTAIN RELATIONSHIPS AND
                              RELATED TRANSACTIONS

Share Issuances

     In February  1994,  the Company  sold  3,333,3334  shares of the  Company's
Common Stock at a price of $.06 per share, for a total of $200,000. This private
placement  sale of stock was made to Mr. John  Pappajohn and  Edgewater  Private
Equity  Fund L.P. In October  1994,  the Company  sold  7,600,000  shares of the
Company's Common Stock at a price of $.05 per share. This private placement sale
included the sale of stock to Mr. John Pappajohn,  Edgewater Private Equity Fund
L.P.  and  Mr.  Jordan  Issackedes.  The  Company  extended  certain  incidental
registration  rights  to the  shareholders  in  connection  with  these  private
placements.

     In  February  1994,  the Company  granted  Mr. John  Pappajohn a warrant to
purchase  1,000,000 shares of the Company's Common Stock at an exercise price of
$.08 per share,  in August  1994  granted  Mr.  Pappajohn  a warrant to purchase
900,000  shares of the Company's  Common Stock at an exercise  price of $.05 per
share and in July 1995  granted Mr.  Pappajohn  a warrant to purchase  1,000,000
shares of the  Company's  Common Stock at an exercise  price of $.035 per share.
These warrants were issued in  consideration  for the letter of credit issued by
Mr. Pappajohn to collateralize a line of credit of the Company.

     In February  1994,  pursuant to the terms of his employment by the Company,
the  Company  granted Mr.  Thomas E. Gibbs (1) an option to  purchase  1,500,000
shares of the Company's Common Stock at an exercise price of $.08 per share, and
(2) 1,000,000  shares of Common Stock.  In July,  1995,  the Company  granted an
option to Mr. Gibbs to purchase  1,500,000 shares of its Common Stock at a price
of $.035 per share and the Company  canceled  the option  issued to Mr. Gibbs in
February 1994 to purchase 1,500,000 shares of its Common Stock and, in addition,
issued a new  option to Mr.  Gibbs to  purchase  1,500,000  shares of its Common
Stock at a price of $.035 per share.

     In August 1994,  the Company  issued  1,750,640  shares of its Common Stock
when it converted a $50,000  note  payable to Ventana  Growth Fund and a $35,000
note payable to Mr. John  Pappajohn.  This debt was  converted at a rate of $.05
per share.

<PAGE>

                          RATIFICATION OF SELECTION OF
                         INDEPENDENT PUBLIC ACCOUNTANTS

     The  Board of  Directors  appointed  the  firm  Grant  Thornton  LLP as the
independent  public  accountants  of the  Company  for the fiscal  year 1996 and
recommends  to  the  shareholders  that  they  vote  for  ratification  of  this
appointment.  Grant  Thornton  LLP  was  engaged  as the  Company's  independent
accountants in December, 1993. Such firm audited the financial statements of the
Company  for the years ended  December  31,  1997,  1996,  1995,  1994 and 1993,
including the audited financial  statements dated December 31, 1997 filed by the
Company with the Securities and Exchange Commission in its Annual Report on Form
10-KSB.

     Representatives  of the firm  Grant  Thornton  LLP,  may be  present at the
Annual  Meeting  and, if present,  will be available to make a statement if they
desire to do so and to respond to appropriate shareholder' questions.

     In connection with its audits of the financial  statements of the Company's
1993,  1994,  1995,  1996 and 1997 fiscal  years,  there have been no reportable
disagreements with Grant Thornton LLP on any matter of accounting  principles or
practices, financial statement disclosures, or auditing scope or procedures.

                                 OTHER BUSINESS

     Management of the Company knows of no other business, which may come before
the meeting.  However,  if any additional  matters are properly presented at the
meeting,  it is intended that the persons named in the enclosed  Proxy, or their
substitutes,  will vote such Proxy in  accordance  with their  judgment  on such
matters.

                  SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING

     Shareholder  proposals  intended for  presentation  at the  Company's  next
Annual  Meeting  must be  received  by the  Company at its  principal  executive
offices in Dallas, Texas, no later than January 8, 1999.

                          ANNUAL REPORT TO SHAREHOLDERS

     The  Company's  Annual Report to  Shareholders,  which  includes  financial
statements, is enclosed with this Proxy Statement.

<PAGE>


                                  FRONT OF CARD
                                  -------------

PROXY                                                                    PROXY

                         UNITED SYSTEMS TECHNOLOGY, INC.
                 ANNUAL MEETING OF SHAREHOLDERS - June 24, 1998

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The  undersigned  hereby appoints Thomas E. Gibbs and Randall L. McGee severally
as proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and vote, as designated  below,  all of the votes to which the
undersigned shares of United Systems Technology, Inc. are entitled at the Annual
Meeting of Shareholders of the Company and at any and all adjournments  thereof,
with  respect to the  matters  set forth  below and  described  in the Notice of
Annual  Meeting and Proxy  Statement,  dated May 22,  1998,  receipt of which is
hereby acknowledged.





1. ELECTION OF DIRECTORS
     [  ]FOR ALL NOMINEES LISTED BELOW (except as marked to the contrary below)
     [  ]WITHHOLD AUTHORITY to vote for all nominees below

INSTRUCTIONS: TO withhold authority to vote for any nominee below, strike
 a line through the nominee's name:

     Thomas E. Gibbs, Jordan Issackedes, Scott A. Burri, Earl H. Cohen

2.  Ratification of Grant Thornton LLP as Independent Public Accountants for
     the Company:

            [  ]  FOR         [  ]  AGAINST          [  ]  ABSTAIN

In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting or any and all adjournments thereof.


                                  BACK OF CARD
                                  ------------

This Proxy, when properly executed,  will be voted in the manner directed herein
by the  undersigned  Shareholder.  If no indication is made,  this proxy will be
voted for all nominees for director and for Proposal 2.

                                            Please  sign  exactly  as your  name
                                            appears hereon.  When the shares are
                                            held by joint  tenants,  both should
                                            sign.  When  signing as an attorney,
                                            executor, administrator,  trustee or
                                            guardian,  please give full title as
                                            such. If a corporation,  please sign
                                            in full  corporate name by President
                                            or other  authorized  officer.  If a
                                            partnership,   please  sign  in  the
                                            partnership  name  by an  authorized
                                            person. 
                                            ___________________________________
                                            Signature
                                                    
                                            ___________________________________
                                            Signature, if held jointly
                                            
                                            Dated:______________________, 1998
                                                   

         PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
                USING THE ENCLOSED POSTAGE PRE-PAID ENVELOPE.



<PAGE>



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