SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
--------------------
For the Fiscal Year Ended:
December 31, 1999
Commission File Number
0-9574
--------------------
UNITED SYSTEMS TECHNOLOGY, INC.
Iowa 42-1102759
(State of Incorporation) (I.R.S. Employer Identification Number)
1850 Crown Road - Suite 1109
Dallas, Texas 75234
(972) 402-8600
(Address of principal executive offices and telephone number)
---------------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X No _____.
AS OF MARCH 20, 2000 THE AGGREGATE MARKET VALUE OF VOTING STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT WAS $13,409,947.
As of March 20, 2000, there were 52,569,078 shares of the Registrant's
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant's
definitive proxy statement relating to its 1999 annual meeting of shareholders
is incorporated by reference into Part III of this Form 10-KSB.
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF THE REGISTRANT'S KNOWLEDGE, IN THE PROXY STATEMENT INCORPORATED BY
REFERENCE INTO PART III OF THE FORM 10-KSB OR ANY AMENDMENT HERETO. X
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PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
United Systems Technology, Inc. ("USTI"), was incorporated under the laws
of the State of Iowa on June 5, 1978, and its wholly-owned subsidiary, United
Systems Technology East, Inc. ("USTEI"), was incorporated under the laws of the
State of Delaware on June 10, 1991 (USTI and USTEI, collectively, are referred
to herein as the "Company"). The Company is engaged in the business of
developing, supporting and marketing computer software products to county and
local governments. The software applications of the Company operate on IBM
mid-range computers, and on various network computer systems both in DOS and
Windows environments. The products are offered to customers in five product
application groups. These product application groups, consisting of over 30
separate software titles, are Financial, Public Works, General Administration
and Public Safety.
NARRATIVE DESCRIPTION OF BUSINESS
PRODUCTS
The software applications offered by the Company consist of a comprehensive
line fo management infromation systems, which were developed to specifically
meet the unique requirements of local governmental entities. The software
applications of the Company are offered through its LegacyTM, QuestTM and
asystTM product lines. The Legacy TM product line operates on the IBM AS/400
mid-range computer system. The quest TM product line operates in a single user
or small network PC dos enviorment.The asystTM product line operates in a single
user or network Windows environment. An initial software sale typically averages
between $1,500 and $40,000. The cost of the related hardware varies depending on
the type of machine purchased as well as the amount of memory capacity,
peripheral equipment and optional features obtained on the machine.
The Company markets its software packages in the following four product
application groups.
FINANCIAL SYSTEMS
This group includes software modules in the areas of general ledger and
budgetary accounting, budget preparation, accounts payable, payroll, accounts
receivable, centralized cash receipts, purchase orders and comprehensive
financial report writer.
PUBLIC WORKS
This group includes software modules in the areas of utility billing and
collections, hand held meter reading and bank drafting.
GENERAL ADMINISTRATION
This group includes software modules in the areas of building permits,
animal licenses, business licenses and code enforcement.
PUBLIC SAFETY
This group includes software modules in the areas of computer aided
dispatch, law enforcement records management, jail management and court
administration.
<PAGE>
The Company has completed the development of several new software products,
which significantly enhance the competiveness of its comprehensive software
offering. These products are marketed under the asystTM brand name, were
developed as Windows applications to "look and work like Microsoft Office", and
include a Fund Accounting product line, a Utility Billing product line, a
General Government product line and a Public Safety product line. The Fund
Accounting product line includes General Ledger, Budget XLence, Report XLence,
Accounts Payable, Accounts Receivable, Purchase Orders, Cash Receipts and
Payroll modules. The Utility Billing product line includes Utility Billing,
Meter Reader Interface, Bank Drafts and Budget Billing modules. The General
Government product line includes Master and Land Directories, Business and
Animal Licenses and Building Permits modules. The Public Safety product line
includes Mater Name Index, Calls for Service, Offense Reports, Citations, State
Interface, computer aided dispatch and UCR reports modules. The Company is
currently developing additional modules for its asystTM product lines, including
Code enforcement, service orders, alarm billing and Jail management modules, to
add to its existing asystTM offerings and anticipates that these packages will
be released in the 1st quarter of 2000. The Company derives its revenue
principally from (i) licensing of its software packages, (ii) installation,
training and customer support, (iii) maintenance agreements, and (iv) equipment
and supplies sales.
SOFTWARE PACKAGES
The Company licenses its software packages under a perpetual nonexclusive
and nontransferable license agreement.
INSTALLATION, TRAINING AND CUSTOMER SUPPORT
The Company provides services related to the training and implementation of
the software packages to its customers. These services are delivered at the
customer site, conducted in a classroom setting at the company's headquarters or
as "remote" training through interactive computer-to-computer hookup. In the
event that the customer requests additional functions from the product, which
are not standard in the software packages, the Company provides custom
programming services for these modifications.
MAINTENANCE AGREEMENTS
The Company offers maintenance agreements in conjunction with the licensing
of its software packages. These agreements provide telephone support, software
product enhancements, error corrections, upgrades and remote diagnostics
support.
EQUIPMENT AND SUPPLIES SALES
The Company sells PC's and hand-held computers as well as certain computer
forms that are used in conjunction with the Company's products.
For the year ended December 31, 1999, the Company generated approximately
29% of its revenue from the sale of software, 14% from installation, training
and customer support, 41% from software maintenance, and 16% from equipment and
supplies sales.
MARKETING
The Company markets its products on a nationwide basis. Marketing is
conducted through its full-time sales staff in Dallas, Texas as well as through
the Company's full-time sales representative located in Minneapolis, Minnesota.
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The Company's customers are primarily municipal governments with
populations between 1,000 AND 100,000, county governments, police departments,
emergency medical services providers and municipal court systems. The Company
currently has over 1,600 customer installations nationwide. The Company proposes
to sell computer equipment when selling its software, but the customer may
obtain their computer equipment from a hardware manufacturer or dealer and then
purchase one or more software modules from the Company.
The typical purchaser's representative is a City Manager, Administrative
Manager, Controller or Director of Finance. Customer leads are established from
customer referrals, direct mail campaigns and attendance at national and
regional trade shows. In addition, the names and addresses of target city
governments are readily available from directory sources. The Company also holds
an annual users' meeting in Dallas, Texas. The two-day meeting is typically
attended by approximately 100 current and prospective users. In the past, new
business has been generated from current customers who have upgraded systems by
purchasing new modules.
Approximately 30% of the Company's customers are located in Texas and
Minnesota, and the remaining customers are located in various states nationwide.
COMPETITION
The Company is aware of sizable, nationally prominent competitors, which
market products that are similar to those of the Company. Numeraous other
competitors are small, local vendors who often do not market standard
application packages. Management believes that the comprehensive nature of its
product offering, including the uniqueness of the new asystTM product line, has
a positive impact on its competitive status.
EMPLOYEES
The Company presently has 16 full-time employees, including its executive
officers. In addition, from time to time, the Company engages the services of
consultants and part-time employees.
RESEARCH AND DEVELOPMENT
During 1999, the Company incurred approximately $100,000 in research and
developemnt costs related to the development of its asystTM product line.
PATENTS, COPYRIGHTS, TRADEMARKS AND ROYALTIES
The Company does not believe that its products are patentable, and, to
date, has not registered any copyright with respect to its products. The Company
believes that all of its products are of a proprietary nature and the Company's
licensing arrangements prohibit disclosure of the program by the customer.
However, there can be no assurance that the Company's software is incapable of
being duplicated or that the Company will be successful in discovering or
preventing any such duplication.
The Company entered into royalty agreements as part of the sale of assets
to NCS on February 21, 1997. In addition, the Company is a party to certain
royalty agreements, which, individually, and in the aggregate, have not required
the payment of material amounts. Under these agreements, the Company is the
licensee of certain software systems, which it markets as part of its product
line.
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ITEM 2. PROPERTIES
The Company leases its 5,033 sqaure foot facility at 1850 Crown Road, Suite
1109, Dalls, Texas, 75234. The lease for this facility was entered into on
September 30, 1997 for a sixty-two month lease term commencing on November 1,
1997 and expiring on December 31, 2002.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in the following legal proceedings:
On December 10, 1993, Plaintiff County of Essex filed suit against USTI,
USTEI, New Jersey Municipal Data Management ("MDM") and MDM's surety in Superior
Court of New Jersey. The Company filed third party complaints against counsel
representing the parties to the transaction for negligence in their
representation on this matter. On April 26, 1999, a settlement was reached in
this matter, with all parties, whereby this case was dismissed with prejudice
without material adverse effect to the Company.
Occasionally the Company is also a defendant in other legal actions, which
arise out of the normal course of its business. In the opinion of management,
none of these actions are expected to have a material effect on the consolidated
results of operations or financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the fourth quarter of 1999.
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<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The Company's common stock is traded over-the-counter on the National
Association of Securities Dealers, Inc. Over-The-Counter Bulletin Board System.
The quotations shown below represent prices among the dealers and do not include
retail mark-ups, mark-downs, or commissions, and do not necessarily represent
actual transactions.
HIGH LOW
QUARTER ENDED BID PRICE BID PRICE
March 31, 1998 $0.01 $0.01
June 30, 1998 $0.11 $0.01
September 30, 1998 $0.06 $0.02
December 31, 1998 $0.03 $0.02
March 31, 1999 $0.11 $0.02
June 30, 1999 $0.09 $0.04
September 30, 1999 $0.15 $0.05
December 31, 1999 $0.29 $0.10
As of March 20, 2000, the Company had 474 shareholders of record and its
common stock had a closing bid price of $0.30 per share and a closing asked
price of 0.31 per share
Holders of the Company's common stock are entitled to receive such
dividends as may be declared by the Company's Board of Directors. However, no
dividends on common stock have ever been paid by the Company, nor does the
Company anticipate that dividends will be paid in the foreseeable future. In
addition, payment of dividends to holders of the Company's common stock are
restricted pursuant to the terms of outstanding shares of preferred stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company derives its revenue from the licensing of its software
packages, installation, training and customer modifications, maintenance
agreements and sale of equipment and supplies. Results of operations for 1999
include revenues of $2,113,197 resulting in net income of $422,253 as compared
to revenues of $1,856,973 and net income of $309,288 in 1998.
The Company is continuing the development of additional modules for its
asystTM products, a windows product line that operates in a single user or
network enviorment and is seamlessly integrated with the Micrsoft Office
products. The asystTM product line currently includes a Fund Accounting product
line, a Utility Billing product line, a General Government product line and a
Public Safety product line. The Fund Accounting product line includes General
Ledger, Budget XLence, Report XLence, Accounts Payable, Accounts Receivable,
Purchase Orders, Cash Receipts and Payroll modules. The Utility Billing product
line includes Utility Billing, Meter Reader Interface, Bank Drafts and Budget
Billing modules. The General Government product line includes Master and Land
Directories, Business and Animal Licenses and Building Permits modules. The
Public Safety product line includes Mater Name Index, Calls for Service, Offense
Reports, Citations, State Interface, Computer Aided Dispatch and UCR Reports
modules. the Company is currently developing additional modules for its asystTM
product lines, uncluding Code Enforcement, Service Orders, Alarm Billing and
Jail Management modules, to add to its existing asystTM offerings and
anticipates that these packages will be released in the 1st quarter of 2000.
6
<PAGE>
The Company believes that its asystTM product line will continue to offer
its current and prospective custoemrs an attractive software solution, both from
a financial and functionality standpoint and follows the trend of clients moving
to a Windows based PC networks. This trend resulted in an increase in the volume
of licensing activity to new customers or the Company's asystTM products during
1999. The Company offered a Year 2000 compliant upgraded version of certain
modules of the LegacyTM products which it shipped to those customers in 1999.
The following table sets forth, for the period indicated, the relative
percentage which certain items in the Consolidated Statements of Operations of
the Company bear as a percent of total revenues and the percentage change in
those items from period to period.
Percentage of Revenues
Yeear Ended December 31,
1999 1998
---- ----
Revenue
Software packages 29% 26%
Installation, training and
customer support 14% 6%
Maintenance 41% 53%
Equipment and other 16% 15%
--- ---
100% 100%
Costs and expenses
Salaries 44% 46%
Other general administrative
and selling expense 21% 22%
Depreciation and amortization 6% 7%
Commissions 3% 3%
Cost of equipment sold 8% 8%
--- ---
Total costs and expenses 82% 86%
Operating income 18% 14%
Non-operating income 2% -
Income before extraordinay item 20% 14%
Extraordinay item - 3%
Net income 20% 17%
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<PAGE>
1999 VS 1998
- ------------
The Comany's total revenue increased 14% for the year ended December 31,
1999 from $1,856,973 in 1998 to $2,113,197 in 1999. Software license fees
increased 27% in 1999 due, in part, to a 44% increase in the licensing of the
Company's asystTM products and the license fees related to the Year 2000
compliant version of its LegacyTM products. The Company continues to market its
products toward prspective customers, which it believes are best suited for its
products. Installation, training and customer support revenue increased 171% in
1999 due, in part to, an increased demand for custom programming related to the
implemantation of the Year 2000 version of the Company's LegacyTM products.
Maintenance revenue decreased 12% in 1999, due, in part, to a decrease in the
number of the Company's QuestTM and LegacyTM customers that elected to select
maintenance coverage. This decrease was partially offsett by an increase in
maintenance from new asystTM customers. Equipment sales and supplies increased
21% as a result of an increase in the volume of computer equipment and forms
sold in conjunction with its software products.
Total cost and expenses increased 7% for the year ended December 31, 1999
from $1,608,003 in 1998 to $1,727,176 in 1999. Salary expense increased 8% in
1999 due to an increase in incentives resulting from the improved results of
operations. Depreciation and amortization expense decreased 10% in 1999 from
1998 as a result of many previously purchased assets becoming fully depreciated
in 1999. Commission expenses increased 24% in 1999 as a result of the increased
licensing of the Company's software procusts in 1999. Cost of equipment sold
increased 27% in 1999 as a result of increased sales of computer equipment and
supplies in 1999.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company had net cash provided by operating activities of $ 470,274
during 1999 as compared to $294,909 provided in 1998. This increase in cash
provided was primarilly the result of the improvement in the results of
operations in 1999 as compared to 1998. Net cash of$56,996 was utilized in 1999
for the purchase of equipment necessary for the sales, development and support
of its products.
Management believes that its ability to generate positive cash flows from
operations, in addition to its existing cash balances will be adequate to meet
its working capital requirements in the near future. However, if the Company is
not able to continue to generate positive cash flows in the future by achieving
a level of sales adequate to support the Company's cost structure, additional
financing may be required, of which there can be no assurance.
The Company is currently in arrears in the payment of dividends to holders
of its preferred stock. As of December 31, 1999, dividends were in arrears on
the Series B preferred stock in the amount of $393,800 and on Series E preferred
stock in the amount of $179,735.
On October 5, 1999, the preferred stock holder elected its option to
convert its 500,000 shares of the Company's Series D preferred stock into shares
of the Company's common stock. There were dividends in arrears on the Series D
preferred stock in the amount of $336,860, which were also converted into common
stock. A total of 2,391,035 shares of the Company's common stock were issued as
a result of this conversion.
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<PAGE>
YEAR 2000
- ---------
Until just a few years ago, most computer programs were written to define
an applicable year byusing two digits for the year instead of four. The effect
on a computer program that was written in such a way is to define a year that is
entered with the two digits "00" as 1900 rather than 2000. When the Year 2000
arrived, any computer programs that were written in the manner EITHER have to be
modified to accept a date in the 21st century or the programs had to be
replaced. This issue not only effected the Company's internal automated
information systems but also effected the software products the Comapny develps,
support and markets to its customers. The Company evaluated the computer
programs it utilizes internally for its information systems and determined that
all os its systems were Year 2000 compliant. The Company's asystTM product line
is Year 2000 compliant. The Company's customers that are utilizing the LegacyTM
and QuestTM product lines are being offered a Year 2000 compliant version of
certain packages within these product lines or are being encouraged to migrate
to the Company's products that are Year 2000 compliant. Based on currently
available information, the Company does not anticipate that the costs to address
the issues related to the Year 2000 will have a material adverse impact on the
Company's financial condition, results of operations or liquidity.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements, other than historical
facts, which reflect the view of Company's management with respect to future
events. Such forward-looking statements are based on assumptions made by and
information currently available to the Company's management. Although management
believes that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Important factors that could cause actual results to differ
materially from such expectations include, without limitation, the ability of
the Company i) to generate levels of revenue and adequate cash flows from its
operations to support and maintain its current cost structure and ii) to develop
and deliver products that are competitive, accepted by its markets and are not
rendered obsolete by changing technology. The forward-looking statements
contained herein reflect the current views of the Company's management with
respect to future events and are subject to these factors and other risks,
uncertainties and assumptions relating to the operations, results of operations
and financial position of the Company. The Company assumes no obligation to
update the forward-looking statements or to update the reasons actual results
could differ from those contemplated by such forward-looking statements.
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<PAGE>
ITEM 7. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
United Systems Technology, Inc. and Subsidiary
Index to Consolidated Financial Statements
And Supplementary Schedules
PAGES
-----
Report of Independent Certified Public Accountants F-1
Consolidated Financial Statements
Balance sheets as of December 31, 1999 and 1998 F-2
Statements of income for the years
ended December 31, 1999 and 1998 F-3
Statements of stockholders' equity for the years
ended December 31, 1999 and 1998 F-4
Statements of cash flows for the years
ended December 31, 1999 and 1998 F-5
Notes to Consolidated Financial Statements F-6 to F-13
10
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
United Systems Technology, Inc.
We have audited the accompanying consolidated balance sheets of United
Systems Technology, Inc. and subsidiary as of December 31, 1999 and 1998, and
the related consolidated statements of income, stockholders' equity and cash
flows for the years 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 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 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 consolidated financial position of United Systems
Technology, Inc. and subsidiary as of December 31, 1999 and 1998, and the
consolidated results of their operations and their consolidated cash flows for
the years then ended, in conformity with accounting principles generally
accepted in the United States.
/s/ GRANT THORNTON LLP
Dallas, Texas
February 18, 2000
F-1
<PAGE>
United Systems Technology, Inc. and Subsidiary
Consolidated Balance Sheets
December 31, 1999 and 1998
1999 1998
==== ====
Assets
Current Assets
Cash and cash equivalents $ 922,838 $ 478,008
Trade accounts receivable, less allowance for
doubtful accounts of $25,000 in 1999 and 1998 216,577 329,708
--------- ---------
Total current assets 1,139,415 807,716
--------- ---------
Property and equipment at cost, net 86,572 65,329
Goodwill, net 345,715 413,653
Purchased software, net 19,878 33,301
Deposits and other 18,824 5,139
--------- ---------
470,989 517,422
--------- ---------
Total Assets $1,610,404 $1,325,138
--------- ---------
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable - related party $ 22,915 $ -
Current portion of capital lease obligations 2,448
Trade accounts payable, including $113,200
payable to a related party in 1999 and 1998 171,208 182,366
Accrued payroll 157,611 110,806
Accrued interest - related party 38,673 43,457
Other accrued expenses 58,078 83,241
Deferred revenue 512,109 701,180
--------- ---------
Total current liabilities 960,594 1,123,498
Notes payable - related party - 27,083
--------- ---------
Total Liabilities $ 960,594 $1,150,581
--------- ---------
Commitments and contingencies - -
Stockholders' Equity
Preferred stock, convertible, voting, cumulative,
par value $.10 per share; authorized 5,000,000
shares; issued and outstanding, 500,000 shares
of Series B, 300,000 shares of Series E,
aggregate liqudating preference of $800,000 in
1999 and $1,300,000 in 1998 80,000 130,000
Common stock, par value $.10 per share; authorized
100,000,000 shares; issued and outstanding
51,569,078 and 48,178,043 shares in 1999 and
1998, respectively 5,156,908 4,817,804
Additional paid-in capital 3,097,457 3,333,561
Accumulated deficit (7,644,555) (8,066,808)
--------- ---------
689,810 214,557
Less stock purchase notes receivable 40,000 40,000
--------- ---------
Total Shareholders' Equity 649,810 174,557
--------- ---------
Total Liabilities and Shareholders' Equity $1,610,404 $1,325,138
--------- ---------
The accompanying notes are an integral part of the financial statements.
F-2
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United Systems Technology, Inc. and Subsidiary
Consolidated Statements of Income
For The Years Ended December 31,
1999 1998
==== ====
Revenue
Software packages $ 612,679 $ 482,922
Installation, training and customer support 296,647 109,527
Maintenance 872,920 992,005
Equipment sales and supplies 313,554 260,139
Other 17,397 12,380
--------- ---------
2,113,197 1,856,973
--------- ---------
Costs and Expenses
Salaries 936,833 870,539
Other general, administrative and
selling expense 380,782 363,777
Depreciation and amortization 117,116 130,243
Rent 54,928 54,878
Commissions 60,578 48,971
Cost of equipment sold 176,939 139,595
--------- ---------
1,727,176 1,608,003
--------- ---------
Operating Income 386,021 248,970
--------- ---------
Nonoperating (expense) income
Interest expense (2,044) (4,057)
Interest income 28,406 10,662
--------- ---------
26,362 6,605
--------- ---------
Net income before extraordinary income 412,383 255,575
Extraordinary gain on settlement of debt 9,870 53,713
--------- ---------
Net income 422,253 309,288
Preferred stock dividend requirement (82,177) (91,000)
--------- ---------
Income allocable to common shareholders $ 340,076 $ 218,288
--------- ---------
Net income per common share before
extraordinary item - basic and diluted $ 0.01 $ NIL
Extraordinay gain on settlemetn of debt NIL NIL
--------- ---------
Net income per common share after
extraordinary item - basic and diluted $ 0.01 $ NIL
--------- ---------
Weighted average number of common shares
outstanding - basic 48,930,152 44,630,098
---------- ----------
diluted 61,729,244 44,630,098
--------- ----------
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
United Systems Technology, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
For the Years Ended December 31,
Stock
Additional Purchase
Capital Stock Issued Paid-In Accumulated Note
Preferred Common Capital Deficit Receivable Total
========= ====== ======= ======= ========== =====
Balance Jan 1,
1998 $ 130,000 $4,317,804 $3,768,561 $(8,376,096) $ - $(159,731)
Sale of
5,000,000
shares of
common stock 500,000 (450,000) (40,000) 10,000
Recognition of
deferred
compensation on
sale of stock 15,000 15,000
Net income 309,288 309,288
--------- ---------- ---------- ------------ --------- ---------
Balance December
31, 1998 $ 130,000 $4,817,804 $3,333,561 $(8,066,808) $(40,000) $ 174,557
Conversion of
Series D
preferred
stock to
common stock (50,000) 239,104 (189,104) -
Exercise stock
options 100,000 (65,000) 35,000
Recognition of
deferred
compensation
on sale of
stock 18,000 18,000
Net income 422,253 422,253
--------- ---------- ---------- ------------ --------- ---------
Balance December
31, 1999 $ 80,000 $5,156,908 $3,097,457 $(7,644,555) $(40,000) $ 649,810
========= ========== ========== ============ ========= =========
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
United Systems Technology, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the Years Ended December 31,
1999 1998
==== ====
Cash flows in operating activities:
Net Income $ 422,253 $ 309,288
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 117,116 130,243
Recognition of deferred compensation costs
on employee stock purchase 18,000 15,000
Extraordinary gain on settlement of debt (9,870) (53,713)
Change in operating assets and liabilities:
Trade accounts receivable 113,131 (113,015)
Prepaid expenses - 6,165
Deposits and other (13,685) (140)
Trade accounts payable (11,158) 5,050
Accrued expenses 23,558 74,336
Deferred revenue (189,071) (78,305)
--------- ---------
Net cash provided by operating activities $ 470,274 $ 294,909
--------- ---------
Cash Flows from investing activities:
Property and equipment additions (56,996) (21,925)
--------- ---------
Cash flows from financing activities:
Exercise of common stock options 35,000 -
Sale of common stock - 10,000
Payment of notes payable (1,000) (5,500)
Payments on capital lease obligations (2,448) (4,283)
--------- ---------
Net cash provided from financing activities 31,552 217
Increase in cash and cash equivalents 444,830 273,201
Cash and cash equivalents, beginning of year 478,008 204,807
--------- ---------
Cash and cash equivalents, end of year $ 922,838 $ 478,008
========= =========
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
1. Summary fo Significant Accounting Policies:
Nature of Operations
The Company is engaged in the business of developing, supporting and
marketing computer software products to county and local governments located
throughout the United States.
Basis of Presentation
The financial include the accounts of United Systems Technology, Inc.
("USTI") and its wholly-owned subsidiary, United Systems Technology East, Inc.
("USTEI"). All intercompany transactions and balances have been eliminated.
Cash Equivalents
The Company considers short-term investments purchased with an initial
maturity of three months or less to be cash equivalents.
Property and Equipment
Property and equipment are recorded at cost. Depreciation of property and
equipment is computed using the straight-line method over the estimated useful
lives of such property and equipment, which range from three to five years.
Gains and losses on the disposal of such assets are recognized as incurred.
Other Assets
Goodwill represnets the excess of the total acquisition cost over the fair
value of the net assets acquired of Municipal Software Consultants, Inc.
("MSC"), acquired in 1986 and QDS Acuisitions, Inc.("QDS") acquired in 1995. The
gooswill resulting from the MCS acquisition is being amortized using the
straight-line method over 20 years from date of acquisition. The goodwill
resulting from the QDS acquisition is being amortized using the straight-line
method over 10 years from date of acquisition. Purchased software represent
assets acquired in the MDM and QDS acquisitions, and are being amortized using
the straight-line method over a five-year period.
Revenue Recognition
The Company recognizes revenue from the initial license for computer
software product sales upon delivery of a software package. Revenue from
installation, training and customer support is recognized in the period in which
the services are provided. Revenue from contracts to maintain its computer
software products is recognized over the term of the contracts.
F-6
<PAGE>
UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
1. Summary fo Significant Accounting Policies (CONT'D.):
Impairment of long-lived assets
The Company reviews its long-lived assets and certain identifiable
intangibles for impairment when events or changes in circumstances indicate that
the carrying amount of the assets may not be recoverable. In reviewing
recoverability, the Company estimates the future cash flows expected to result
from using the assets and eventually disposing of them. If the sum of the
expected future cash flows (undiscounted and without interest charges) is less
than the carrying amount of the asset, an impairment loss is recognized.
Earning per Common Share
The Company computes basic earnings per common share based on the
weighted-average number of common shares outstanding. Diluted earnings per share
are computed based on the weighted-average number of common shares outstanding
plus the number of additional common shares that would have been outstanding if
dilutive potential common shares had been issued
Financial Instruments
The fair value of the Company's financial instruments, consisting of cash
and cash equivalents and debt, approximate their carrying values.
Stock-Based Compensation
Statement of Financial Accounting Standards No. 123 "Accounting for
Stock-Based Compensation" (SFAS 123) encourages, but does not require, companies
to record costs for stock-based employee compensation plans at fair value. The
Company has chosen to account for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board Opinions No. 25
"Accounting for Stock Issued to Employees" and related interpretations, and to
provide the pro forma disclosures as if the requirements of SFAS 123 had been
adopted.
Use of Estimates
In preparing financial statements in conformity with accounting principles
generally accepted in the United States, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent asset and liabilities at the date
of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.
F-7
<PAGE>
UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
2. Property and Equipment:
1999 1998
---- ----
Leasehold improvements $ 66,416 $ 64,772
Furniture and fixtures 40,655 40,655
Equipment 974,789 923,841
--------- ---------
1,081,860 1,029,268
Less accumulated depreciation
and amortization (995,288) (963,939)
--------- ---------
$ 86,572 $ 65,329
========= =========
3. Other Assets:
Accumulated
Cost Amortization Net
---- ------------ ---
1999
----
Goodwill $ 1,692,128 $(1,346,413) $ 345,715
Purchased Software 597,104 (577,226) 19,878
1998
----
Goodwill $ 1,692,128 $(1,278,475) $ 413,653
Purchased software 592,700 (559,399) 33,301
4. Capital Stock:
Common Stock
In September 1998, the Company sold 5,000,000 shares of common stock to
four members of management at a price of $.01 per share. The fair market value
of the common stock on the date of the transaction was $.022 per share.
Preferred Stock
The Company's articles of incorporation authorize the issuance of 5,000,000
shares of preferred stock with a par value of $.10 per share. The preferred
stock may be issued in series from time to time with such designation, rights,
preferences and limitations as the Board of Directors may determine by
resolution.
Series B Preferred Stock provide for, among other things:(i) a cumulative
dividend of $.07 per share per annum, payable quarterly, which must be paid
prior to the payment of a dividend to holders of the Company's common stock;
(ii) a liquidation preference of $1.00 per share plus accrued but unpaid
dividends paid prior to any distribution to holders of common stock and Series C
preferred stock; (iii) the right to convert each share plus accrued but unpaid
dividends into common stock; (iv) the right to vote on all matters submitted to
a vote of stockholders of the Company; and (v) redemption at the Company's
option at a redemption price of $1.00 per share plus all accrued and unpaid
dividends. As of December 31, 1999 the 500,000 oustanding shares of Series B
preferred stock were entiltled to be converted into 4,468,995 shares of common
stock and were entitled to 4,468,995 votes on all matters submitted to a vote of
stockholders of the Company. at December 31, 1999 cumulative dividends of
approximately $393,800 were in arrears.
F-8
<PAGE>
UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
4. Capital Stock:(CONT'D.):
Series E Preferred Stock provide for, among other things:(i) a cumulative
dividend of $.07 per share per annum, payable quarterly, which must be paid
prior to the payment of a dividend to holders of the Company's common stock;
(ii) a liquidation preference of $1.00 per share plus accrued but unpaid
dividends paid prior to any distribution to holders of common stock and Series C
preferred stock; (iii) the right to convert each share plus accrued but unpaid
dividends into common stock; (iv) the right to vote on all matters submitted to
a vote of stockholders of the Company; and (v) redemption at the Company's
option at a redemption price of $1.00 per share plus all accrued and unpaid
dividends. As of December 31, 1999 the 300,000 outstanding shares of Series E
preferred stock were entiltled to be converted into 2,398,685 shares of common
stock and were entitled to 2,398,685 votes on all matters submitted to a vote of
stockholders of the Company. At December 31, 1999, cumulative dividends of
approximately $179,735 were in arrears.
5. Commitments and Contingencies:
Operating Leases
The Company leases certain office facilities under a non-cancelable lease
agreement which expires December 31, 2002. The future minimum annual lease
payments under this lease are $49,070 from 1999 through 2002. Rent expense was
$54,930 and $54,878 in 1999 and 1998, respectively.
6. Common Stock Options and Warrants:
Stock Options
In September 1986, the Board of Directors approved the adoption of a stock
option plan (the "Plan"), whereby 12,000,000 shares of the Company's common
stock are reserved for options to be granted to employees and directors at the
discretion of the Board of Directors. The exercise price shall be at a minimum
of 100% of the fair market value of the stock at the time the option is granted.
Unless otherwise specified, the Plan allows for the options to expire ten years
from the date of grant and may not be exercised during the initial one-year
period from date of grant.
Compensation costs for stock options granted to employees is measured as
the excess, if any, of the quoted market price of the Company's stock at the
date of grant over the amount an employee must pay to acquire the stock. If the
Company recognized compensation expense based upon the fair value at the grant
date for options under the Plan, the Company's 1999 and 1998 net income and net
income per common share would have increased to the pro forma amounts indicated
as follows:
1999 1998
---- ----
Net income allocable to common shareholders
As reported $ 340,076 $ 218,288
Pro forma $ 185,364 $ 159,476
Net income per common share
As reported $ 0.01 $ NIL
Pro forma $ NIL $ NIL
F-9
<PAGE>
UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
6. Common Stock Options and Warrants:(CONT'D.):
The fair value of these options was estimated at the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions, expected volatility of 415%; risk free interest rate of 6.32%; no
dividend yield; and expected lives of 4 years in 1999 and five years in 1998.
The pro forma amounts presented are not representative of the amounts that
will be disclosed in the future because they do not take into effect pro forma
expenses related to grants before 1996.
Additional information with respect to options outstanding at December 31,
1999, and the changes for each of the two years in the period then ended was as
follows:
1999
------------------------
Weighted
Average
Exercise
Shares Price
------ -----
Outstanding at beginning of year 7,852,500 $.04
Granted 3,950,500 .05
Exercised (1,000,000) .04
Foreited (215,000) .05
---------- ---
Outstanding at end of year 10,587,500 $.04
---------- ---
Options exercisable at December 31, 1999 5,587,500 $.04
---------- ---
Weighted average fair value per share of
options granted during 1999 $.05
---
1998
------------------------
Weighted
Average
Exercise
Shares Price
------ -----
Outstanding at beginning of year 7,890,000 $.04
Granted - -
Foreited (37,500) .05
--------- ---
Outstanding at end of year 7,852,500 $.04
--------- ---
Options exercisable at December 31, 1998 5,330,625 $.04
--------- ---
F-10
<PAGE>
UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
6. Common Stock Options and Warrants:(CONT'D.):
Information about stock options outstanding at December 31, 1999 is
summarized as follows:
Options Outstanding
--------------------------------------------------
Weighted Average
Number Remaining Weighted Average
Range of Exercise Prices Outstanding Contractual Life Exercise Price
- ------------------------ ----------- ---------------- ----------------
$.01 to $.05 8,337,500 2.4 years $.04
$.06 TO $.10 2,250,000 1.5 years $.06
----------
10,587,500
----------
Options Exercisable
--------------------------------
Number Weighted Average
Range of Exercise Prices Exercisable Exercise Price
- ------------------------ ----------- ----------------
$.01 to $.05 4,712,500 $.03
$.06 TO $.10 875,000 $.06
---------
5,587,500
---------
Stock Purchase Warrants
As of December 31, 1999 common stock purchase warrants had been issued
primarily to officers, directors adn employees including warrants to purchase
1,000,000 shares at $.035 per share issued to a Director of the Company for the
issuance of a letter of credit to collateralize debt of the Company. As of
December 31, 1999, these warrants are fully vested: No warrants were issued in
1999 or 1998.
Expiration Exercise
Date Price Shares
------------ ----------- ------
Aug 9, 2000 $.035 1,000,000
Sep 30, 2000 $.050 514,585
---------
1,514,585
---------
7. Income Taxes:
At December 31, 1999, the Company has net operating loss carry-forwards of
approximately $2,489,000. These carry-forwards expire from 2000 through 2011.
Additionally, the Company has approximately $71,000 in unused general business
tax credits available to directly offset future income tax liabilities and
$624,000 in capital loss carry-forwards available to offset future capital
gains.
F-11
<PAGE>
UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
7. Income Taxes:(CONT'D.):
For the years ended December 31, 1999 and 1998 the difference between the
effective federal income tax rate and the amounts determined by applying the
statutory federal income tax rate to income before provision for federal income
tax was as follows:
1999 1998
Amount Amount
------ ------
Federal income tax at statutory rate $ 143,570 $ 105,160
Amortization of goodwill 23,100 23,100
Other (7,270) 6,440
Change in valuation allowance (159,400) (134,700)
--------- ---------
$ - $ -
========= =========
Because of losses from operations in recent years, the Company has recorded
a valuation allowance equal to the net deferred tax asset.
The components of the deferred tax accounts as of December 31, 1999 and
1998 are as follows:
1999 1998
------ ------
Deferred tax assets:
Net operating losses carried forward $ 846,400 $ 992,600
Capital losses carried forward 212,300 212,300
Deferred revenue 174,100 238,400
Accounts payable and accrued expenses 132,100 117,500
General business tax credits 71,000 71,000
---------- ----------
Total deferred tax asset $1,435,900 $1,631,800
---------- ----------
Deferred tax liabilities:
Accounts receivable 88,500 126,000
Purchased software,property and equipment 27,900 26,900
---------- ----------
Total deferred tax liability 116,400 152,900
---------- ----------
Net deferred tax asset before valuation
allowance 1,319,500 1,478,900
Less valuation allowance 1,319,500 1,478,900
--------- ---------
Net deferred tax asset $ - $ -
========= =========
F-12
<PAGE>
UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
9. Employee Benefit Plans:
Effective January 16, 1992, the Company established the USTI Employee's
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) of the Internal Revenue Code. The Company made contributions for
the benefit of the participants in the plan in the amount of $5,305 and $4,095
for the years ended December 31, 1999 and 1998, respectively.
F-13
<PAGE>
ITEM 8. Changes In and Disagreements With Accountants On Accounting
and Financial Disclosure
The Company has had no disagreements with its Independent Accountants on
accounting and financial disclosure matters.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is set forth in the Company's
definitive proxy statement relating to the Company's 2000 Annual Meeting of
Shareholders under the captions "Election of Directors" and "Executive
Officers." Such information is incorporated herein by reference therefrom.
ITEM 10. EXECUTIVE COMPENSATION
The information required by this item is set forth in the Company's
definitive proxy statement relating to the Company's 2000 Annual Meeting of
Shareholders under the caption "Management Compensation." Such information is
incorporated herein by reference therefrom.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is set forth in the Company's
definitive proxy statement relating to the Company's 2000 Annual Meeting of
Shareholders under the caption "Security Ownership of Certain Beneficial Owners
and Management." Such information is incorporated herein by reference therefrom.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is set forth in the Company's
definitive proxy statement relating to the Company's 2000 Annual Meeting of
Shareholders under the caption "Certain Relationships and Related Transactions."
Such information is incorporated herein by reference therefrom.
11
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Report:
1. CONSOLIDATED FINANCIAL STATEMENTS
See "Index to Consolidated Financial Statements and Supplementary
Schedules" under Item 8 of this Report.
2. CONSOLIDATED FINANCIAL STATEMENTS SCHEDULES
See "Index to Consolidated Financial Statements and Supplementary
Schedules" under Item 8 of this Report. All other schedules have been omitted,
as the required information is inapplicable or the information is presented in
the financial statements or the notes thereto.
3. EXHIBITS
The following documents are filed as exhibits herewith, unless otherwise
specified, and are incorporated herein by this reference:
Exhibit
Number
- -------
3.1 Amended and Restated Articles of Incorporation of the Company as filed on
November 21, 1986 with the Secretary of State of the State of Iowa.
(Incorporated by reference, Registration Statement on Form S-1, File No.
33-9574, Exhibit 3.11)
3.2 Articles of Merger of Municipal Software Consultants, Inc. into United
Systems Technology, Inc., as filed on December 31, 1986 with the
Secretaries of State of the States of Iowa and Texas. (Incorporated by
reference, Annual Report on Form 10-K for the fiscal year ended December
31, 1986, Exhibit 3.2)
3.3 Statement Establishing and Designating Series B Preferred Stock of the
Company, as filed on June 13, 1988 with the Secretary of State of the
State of Iowa. (Incorporated by reference, Quarterly Report on Form 10-Q
for the quarter ended June 30, 1988, Exhibit 4.1)
3.4 Statement Establishing and Designating Series C Preferred Stock of the
Company, as filed on June 13, 1988 with the Secretary of State of the
State of Iowa. (Incorporated by reference, Quarterly Report on Form 10-Q
for the quarter ended June 30, 1988, Exhibit 4.2)
12
<PAGE>
Exhibit
Number
- -------
3.5 Articles of Amendment to the Articles of Incorporation of the Company, as
filed on July 15, 1988 with the Secretary of State of the State of Iowa.
(Incorporated by reference, Quarterly Report on Form 10-Q for the quarter
ended June 30, 1988, Exhibit 3.1)
3.6 By-Laws of the Company, as amended and currently in effect. (Incorporated
by reference, Registration Statement on Form S-1, File No. 33-9574,
Exhibit 3.6)
3.7 Articles of Amendment to the Articles of Incorporation designating the
Series D Preferred Stock of the Company, as filed on February 23, 1990
with the Iowa Secretary of State. (Incorporated by reference, Form 8-K
Current Report dated February 15, 1990, Exhibit 3.1)
3.8 Statement establishing and designating Series E Preferred Stock of the
Company, as filed on June 26, 1991, with the Secretary of the State of
Iowa. (Incorporated by referenced, Annual Report on Form 10-K for the year
ended December 31, 1991, Exhibit 3.8)
10.1 1986 Stock Option Plan. (Incorporated by reference, Registration Statement
on Form S-1, File No. 33-9574, Exhibit 10.9)
10.2 Agreement Regarding Preferred Stock Purchase, Warrant Purchase and Loan,
dated October 16, 1986, by and between the Company and Ventana Growth
Fund.(Incorporated by reference, Registration Statement on Form S-1, File
No.33-9574, Exhibit 10.10)
10.3 Preferred Stock Purchase Agreement, dated October 28, 1986, by and
between the Company and Ventana Growth Fund. (Incorporated by reference,
Registration Statement on Form S-1, File No. 33-9574, Exhibit 10.17)
10.4 Promissory Note, dated October 16, 1986, in the amount of $150,000.00,
from the Company to Ventana Growth Fund. (Incorporated by reference,
Registration Statement on Form S-1, File No. 33-9574, Exhibit 10.19)
10.5 Stock Purchase Agreement, dated June 8, 1988, by and between the Company
and Farm Bureau Mutual Insurance Company. (Incorporated by reference,
Quarterly Report on Form 10-Q for the quarter ended June 30, 1988,
Exhibit 19.1)
10.6 Preferred Stock Exchange Agreement, dated June 8, 1988, by and between
the Company and Ventana Growth Fund. (Incorporated by reference,
Quarterly Report on Form 10-Q for the quarter ended June 30, 1988,
Exhibit 19.2)
10.7 Purchase Agreement, dated February 15, 1990, by and between the Company
and International Technology Group, Inc. (Incorporated by reference,
Form 8-K Current Report dated February 15, 1990, Exhibit 10.1)
13
<PAGE>
Exhibit
Number
- -------
10.8 Assignment and Assumption Agreement, dated February 15, 1990, by and
between the Company and International Technology Group, Inc. assigning
all relevant rights and interest in a maintenance agreement with Grumman
Systems Support Corp. to the Company. (Incorporated by reference,
Form 8-K Current Report dated February 15, 1990, Exhibit 10.2)
10.9 Assignment and Assumption Agreement, dated February 15, 1990, by and
between the Company and International Technology Group, Inc. assigning
all rights and interest in a Technology Transfer Agreement with AM
Computer Corporation and Microvote Partners, Ltd. to the Company.
(Incorporated by reference, Form 8-K Current Report dated February 15,
1990, Exhibit 10.3)
10.10 Assignment and Assumption Agreement, dated February 15, 1990, by and
between the Company and International Technology Group, Inc. assigning
all rights and interest in trademark INTEGRITY to the Company.
(Incorporated by reference, Form 8-K Current Report dated February 15,
1990, Exhibit 10.4)
10.11 Stock Purchase Agreement, dated February 14, 1990, by and between Farm
Bureau Mutual Insurance Company and the Company. (Incorporated by
reference, Form 8-K Current Report dated February 15, 1990, Exhibit 10.5)
10.12 Asset Purchase Agreement, dated June 10, 1991, by and between the Company
and New Jersey Municipal Data Management, Inc. (Incorporated by reference
Form 8-K Current Report, dated June 10, 1991)
10.13 Asset Purchase Agreement, dated December 22, 1994, by and between the
Company and Sequoia Pacific Systems, a division of Smurfit Packaging
Corporation. (Incorporated by reference Form 8-K Current Report, dated
December 22, 1994, Exhibit 10.1)
10.14 Assignment and Assumption Agreement, dated December 22, 1994, by and
between the Company and Sequoia Pacific Systems, a division of Smurfit
Packaging Corporation. (Incorporated by reference Form 8-K Current
Report, dated December 22, 1994, Exhibit 10.2)
10.15 Asset Purchase Agreement, dated October 17, 1994, by and between the
Company and Noll Computer Systems, Inc.("NCS"). (Incorporated by
reference, Annual Report on Form 10-KSB for the year ended December 31,
1994, Exhibit 10.15)
10.16 Asset Purchase Agreement, dated November 15, 1995, by and between the
Company, Dralvar Capital Corp. ("Dralvar") and Ken Neff. (Incorporated
by reference, Form 8-K Current Report, dated November 15, 1995, Exhibit
10.1)
10.17 Asset purchase Agreement dated February 21, 1997, by and between the
Company and Noll Computer Services, Inc. ("NCS"). (Incorporated by
reference, Annual Report on Form 10-KSB for the year ended December 31,
1996, Exhibit 10.17)
14
<PAGE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the year for which
this report is filed.
(c) Exhibits
The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a
separate section of this report.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of 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.
UNITED SYSTEMS TECHNOLOGY, INC.
DATE: MARCH 29, 2000 BY: /S/ THOMAS E. GIBBS
--------------------
Thomas E. Gibbs,
Chief Executive Officer and
Chairman of the Board
Pursuant to the requirements of 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.
DATE: MARCH 29, 2000 BY: /S/ THOMAS E. GIBBS
--------------------
Thomas E. Gibbs,
Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
DATE: MARCH 29, 2000 BY: /S/ RANDALL L. MCGEE
---------------------
Randall L. McGee,
Secretary and Treasurer
(Principal Financial &
Accounting Officer)
DATE: MARCH 29, 2000 BY: /S/ SCOTT BURRI
----------------
Scott Burri, Director
DATE: MARCH 29, 2000 BY: /S/ JORDAN ISSACKEDES
----------------------
Jordan Issackedes, Director
DATE: MARCH 29, 2000 BY: /S/ EARL COHEN
---------------
Earl Cohen, Director
16
<PAGE>
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