<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT FOR
THE
TRANSACTIONS PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER:
0-10238
U.S. ENERGY SYSTEMS, INC.
DELAWARE 52-1216347
(STATE OR JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
515 N. FLAGLER DRIVE
SUITE 702
WEST PALM BEACH, FL 33401
(Address of Principal Executive Offices)
(561) 820-9779
(Issuer's Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after distribution of
securities under a plan confirmed by a court.
Yes [X] No [ ]
State the number of shares outstanding of each of issuer's classes of
common equity, as of October 31, 1998:
Title of Class Number of Shares
-------------- ----------------
Common 5,160,605
Transitional Small Business Disclosure Format (check One):
Yes [ ] No [X]
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<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
U.S. ENERGY SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
October 31, 1998 January 31, 1998
(Unaudited)
---------------- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash .................................................................... $ 1,088,000 $ 319,000
Accounts receivable (less allowance for doubtful accounts $11,000) ...... 693,000 757,000
Notes receivable - current portion ...................................... 127,000 105,000
Other current assets .................................................... 222,000 276,000
------------ ------------
Total current assets ................................................ 2,130,000 1,457,000
Property, plant and equipment, net ........................................... 5,866,000 5,780,000
Notes receivable, less current portion ....................................... 1,877,000 1,799,000
Investments in joint ventures:
Lehi Independent Power Associates, L.C .............................. 956,000 984,000
Plymouth Cogeneration Limited Partnership ........................... 525,000 549,000
Goodwill, net ................................................................ 1,974,000 2,053,000
Other assets ................................................................. 882,000 407,000
------------ ------------
Total ............................................................... $ 14,210,000 $ 13,029,000
============ ============
LIABILITIES
Current liabilities:
Current portion of long-term debt ....................................... $ 97,000 $ 85,000
Notes payable - bank .................................................... 231,000 200,000
Accounts payable ........................................................ 382,000 460,000
Accrued expenses ........................................................ 390,000 470,000
Royalties payable ....................................................... 54,000 428,000
------------ ------------
Total current liabilities ........................................... 1,154,000 1,643,000
Long-term debt, less current portion ......................................... 383,000 397,000
Convertible subordinated secured debentures (including due to related
parties of $80,000) ..................................................... 875,000 875,000
Advances from joint ventures ................................................. 41,000 41,000
------------ ------------
Total liabilities ................................................... 2,453,000 2,956,000
------------ ------------
Minority interests ........................................................... 504,000 504,000
------------ ------------
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, authorized 10,000,000 shares; issued and
outstanding, 250,000 .................................................... 3,000 --
Common stock, $.01 par value, authorized 50,000,000 shares; issued and
outstanding, 5,160,605 .................................................. 51,000 51,000
Additional paid-in capital ................................................... 17,641,000 15,454,000
Accumulated deficit .......................................................... (6,442,000) (5,936,000)
------------ ------------
Total stockholders' equity .......................................... 11,253,000 9,569,000
------------ ------------
Total ............................................................... $ 14,210,000 $ 13,029,000
============ ============
</TABLE>
See notes to financial statements
A-2
<PAGE> 3
U.S ENERGY SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months Ended Nine months Ended
October 31, October 31,
----------------------------- -----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues .................................................... $ 1,117,000 $ 795,000 $ 3,020,000 $ 1,537,000
=========== =========== =========== ===========
Cost and expenses:
Operating expenses (Note A) ............................ 595,000 344,000 1,672,000 683,000
Administrative expenses ................................ 481,000 434,000 1,484,000 1,119,000
Litigation costs ....................................... -- 105,000 47,000 252,000
Depreciation and amortization .......................... 89,000 70,000 264,000 144,000
Loss from joint ventures ............................... 18,000 34,000 57,000 94,000
----------- ----------- ----------- -----------
1,183,000 987,000 3,524,000 2,292,000
----------- ----------- ----------- -----------
(Loss) before interest income (expense) ..................... (66,000) (192,000) (504,000) (755,000)
Interest income ............................................. 78,000 29,000 226,000 118,000
Interest expense ............................................ (29,000) (35,000) (105,000) (93,000)
----------- ----------- ----------- -----------
Net (loss) before extraordinary item ........................ (17,000) (198,000) (383,000) (730,000)
Extraordinary gain from restructuring of liabilities ........ -- -- -- 36,000
----------- ----------- ----------- -----------
Net (loss) .................................................. (17,000) (198,000) (383,000) (694,000)
Dividends on preferred stock ................................ (51,000) -- (123,000) --
----------- ----------- ----------- -----------
Net (loss) applicable to common stock ....................... $ (68,000) $ (198,000) $ (506,000) $ (694,000)
=========== =========== =========== ===========
Net (loss) per common share, basic and diluted .............. $ (0.01) $ (0.04) $ (0.10) $ (0.15)
=========== =========== =========== ===========
Weighted average shares outstanding, basic
and diluted ............................................ 5,160,605 4,885,628 5,160,605 4,520,022
=========== =========== =========== ===========
Note A: Certain depreciation expenses are
included in operating expenses: $ 41,000 $ -- $ 107,000 $ --
</TABLE>
See notes to financial statements
A-3
<PAGE> 4
U.S. ENERGY SYSTEMS AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL
Nine Months Ended October 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------------------- --------------------------
Number Number
of Shares Amount of Shares Amount
--------- ----------- --------- -----------
<S> <S> <C> <C> <C>
Balance, January 31, 1998 -- -- 5,160,609 $ 51,000
Net proceeds from sale of
preferred stock 250,000 $ 3,000
Cash paid for fractional shares (4)
Net (Loss) for the nine months
ended October 31, 1998
------- ----------- --------- -----------
Balance, October 31, 1998 250,000 $ 3,000 5,160,605 $ 51,000
======= =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
Additional
Paid-in Accumulated
Capital Deficit Total
----------- ----------- -----------
<S> <C> <C> <C>
Balance, January 31, 1998 $15,454,000 $(5,936,000) $ 9,569,000
Net proceeds from sale of
preferred stock 2,187,000 2,190,000
Cash paid for fractional shares
Net (Loss) for the nine months
ended October 31, 1998 (506,000) (506,000)
----------- ----------- -----------
Balance, October 31, 1998 $17,641,000 $(6,442,000) $11,253,000
=========== =========== ===========
</TABLE>
See notes to financial statements.
A-4
<PAGE> 5
U.S. ENERGY SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended October 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................................................ $ (383,000) $ (694,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization ................................................ 371,000 144,000
Equity in loss of joint ventures ............................................. 52,000 111,000
Gain from restructuring of liabilities ....................................... -- (36,000)
Changes in:
Accounts receivable ....................................................... 64,000 (49,000)
Other current assets ...................................................... 54,000 67,000
Other assets .............................................................. (475,000) (58,000)
Accounts payable and accrued expenses ..................................... (158,000) (235,000)
Royalties payable ......................................................... (374,000) 19,000
Accrued interest on pre-reorganization taxes payable ...................... -- (67,000)
----------- -----------
Net cash used in operating activities ........................................ (849,000) (798,000)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business ......................................................... (27,000) (362,000)
Notes Receivable ................................................................ (10,000) 8,000
Loans to Reno Energy, LLC ....................................................... (164,000) (1,408,000)
Repayments of loan by Reno Energy, LLC .......................................... 74,000 68,000
Acquisition of equipment and leasehold improvements ............................. (351,000) (245,000)
----------- -----------
Net cash used in investing activities ........................................ (478,000) (1,939,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of preferred stock ........................................... 2,190,000 --
Payment of dividends on preferred stock ......................................... (123,000) --
Proceeds from notes payable ..................................................... 31,000 87,000
Payment of convertible subordinated secured debentures .......................... -- (150,000)
Payment of pre-organization taxes payable ....................................... -- (311,000)
Payment of long-term debt ....................................................... (2,000) (140,000)
Minority equity investment in subsidiary ........................................ -- 120,000
Advances from joint ventures .................................................... -- 10,000
----------- -----------
Net cash provided by (used in) financing activities .......................... 2,096,000 (384,000)
----------- -----------
NET INCREASE (DECREASE) IN CASH ..................................................... 769,000 (3,121,000)
Cash - beginning of period .......................................................... 319,000 4,125,000
----------- -----------
CASH - END OF PERIOD ................................................................ $ 1,088,000 $ 1,004,000
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest .......................................................... $ 95,000 $ 111,000
Supplemental schedule of non cash financing activities
Common stock issued for acquisition of subsidiary ............................... None $ 2,394,000
</TABLE>
See notes to financial statements
A-5
<PAGE> 6
U.S. ENERGY SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED OCTOBER 31, 1998 AND 1997
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with instructions to Form 10-QSB and, accordingly,
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal accruals) considered
necessary for a fair presentation have been included. The results for the three
and six month periods are not necessarily indicative of results for the full
year.
For further information see Management's Discussion and Analysis of
Financial Condition and Operating Results, and refer to the financial statements
and footnotes included in the Company's Annual Report on Form 10-KSB/A for its
fiscal year ended January 31, 1998.
NOTE 2 - NET (LOSS) PER SHARE
Net (Loss) per share has been computed on the basis of the weighted average
number of shares outstanding during the period. Common stock equivalents have
not been included in the computation since their inclusion would be
anti-dilutive.
NOTE 3 - ADDITIONAL CAPITAL
At the Annual Meeting of the Company on August 26, 1998, a Proposal was
approved to issue an option to purchase up to 888,888 shares of the Company's
Series A Convertible Preferred Stock in a private placement. If fully exercised,
this would provide an investment of $8,000,000 in the Company. The terms and
conditions of the additional option are the same as those in the original
private placement of 250,000 shares of the Series A Convertible Preferred Stock
which was issued on March 23, 1998. The new option was granted to the same
optionee.
NOTE 4 - CONTINGENCIES
On March 27, 1997, the Company filed for a declaratory judgement against
Enviro Partners, LP ("Enviro") and other partners of the Enviro Limited
Partnership. On March 28, 1997, Enviro counterclaimed seeking $6,000,000 of
damages. Management believes the counterclaim has no merit and intends to
contest vigorously. However, the outcome is presently indeterminable. Full
details can be found in the Company's Form 10-KSB/A for January 31, 1998.
A-6
<PAGE> 7
Item 2 - Management's Discussion and Analysis or Plan of Operation.
U.S. ENERGY SYSTEMS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine Months Ended October 31, 1998 Compared to
Nine Months Ended October 31, 1997
RESULTS OF OPERATIONS
Revenues for the nine months ended October 31, 1998 ("First Nine Months
1998") totaled $3,020,000 as against $1,520,000 in the nine months ended October
31, 1997 ("First Nine Months 1997"). This consisted of $1,311,000 from the
operations of Steamboat Envirosystems, LLC ("Steamboat") compared to $1,163,000
in the same period of the previous year, and $1,709,000 from the operations of
American Enviro-Services, Inc. and Commonwealth Petroleum Recycling, Inc.
("together AES") which were acquired on August 18, 1997 and January 5, 1998
respectively. Revenues of AES for the period from August 18, 1997 to October 31,
1997 had totaled $357,000.
Operating expenses are those costs directly related to the production of
revenues, and totaled $1,672,000 in First Nine Months 1998, compared to $683,000
in First Nine Months 1997, when AES was included only for the period August 18,
1997 to October 31, 1997. Steamboat incurred operating expenses amounting to
$482,000 in First Nine Months 1998, compared to $504,000 in First Nine Months
1997. AES operating expenses in the 1998 period amounted to $1,190,000,
including operations depreciation charges of $107,000. For the shorter period of
1997 AES operating expenses totaled $179,000.
Administrative expenses in First Nine Months 1998 increased to $1,484,000
from $1,119,000 in the same period a year earlier, primarily due to the
inclusion of AES for the full nine month period in 1998. Administrative expenses
were 49% of revenues in the 1998 period, compared to 73% in the same period of
1997.
Material elements in administrative expenses for First Nine Months 1998
compared to First Nine Months 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
AES, as explained above $ 311,000 $ 62,000
Exclusive of AES:
Salaries and consulting fees 380,000 390,000
Steamboat royalties 184,000 164,000
Legal and professional fees 157,000 131,000
Insurance 94,000 104,000
Corporate expenses 166,000 82,000
Other 192,000 186,000
---------- ----------
Total $1,484,000 $1,119,000
========== ==========
</TABLE>
Corporate expenses increased primarily due to regulatory and state fees
associated with the increase in numbers of shares authorized, and increased
costs of shareholder relations.
Litigation costs decreased to $47,000 in First Nine Months 1998 from
$252,000 in the same period a year earlier due to the settlement of certain
actions in the earlier year, and the fact that the one remaining action is
awaiting court decision on the Company's application for summary judgment.
A-7
<PAGE> 8
Depreciation and amortization charges increased to $264,000 in First Nine
Months 1998, compared to $144,000 in the earlier year when AES was included only
for the period from August 18, 1997 to October 31, 1997.
Loss from Joint Ventures is broken down as follows:
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Lehi Independent Power Associates, LC $33,000 $48,000
Plymouth Cogeneration Limited Partnership 24,000 46,000
------- -------
Loss from Joint Ventures $57,000 $94,000
======= =======
</TABLE>
The Company's net (loss) for First Nine Months 1998 was $383,000 as
compared to a net (loss) of $694,000 for the same period a year earlier. In
addition, dividends paid on preferred stock for the period through October 31,
1998 totaled $123,000. There were no such dividends in the prior year since the
Preferred Stock was not issued until March 1998.
The quarter ended October 31, 1998 provided, for the first time, positive
earnings before interest, taxes, depreciation and amortization (EBITDA) of
$67,000. The nine month EBITDA is a negative ($120,000). EBITDA for the same
periods in 1997 were a negative ($122,000) for the three months and ($611,000)
for the nine months.
<TABLE>
<CAPTION>
Three Months Ended October 31, Nine Months Ended October 31,
------------------------------ ------------------------------
1998 1997 1998 1997
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Revenues $ 1,117,000 $ 795,000 $ 3,020,000 $ 1,537,000
Operating expenses (553,000) (344,000) (1,565,000) (683,000)
Administrative expenses,
inclusive of litigation
costs but exclusive of
state income taxes (479,000) (539,000) (1,518,000) (1,371,000)
Loss from joint ventures (18,000) (34,000) (57,000) (94,000)
----------- ----------- ----------- -----------
Earnings, positive or (negative)
before interest, taxes,
depreciation and
amortization $ 67,000 $ (122,000) $ (120,000) $ (611,000)
=========== =========== =========== ===========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
During First Nine Months 1998, cash used in operations totaled $849,000, as
compared to $798,000 in the same period a year earlier. The increase in cash
flow provided by depreciation and amortization of $371,000 in the 1998 period,
compared to $144,000 in the same period in the prior year was due to the fact
that AES is now included for the full term, whereas in the 1997 period it was
included only from August 18, 1997 to October 31, 1997. Cash was used as a
result of other assets increasing by $475,000 in the 1998 period, compared to
$58,000 in the 1997 period, due mainly to increases in deferred acquisition
costs. Cash was also used to reduce royalties payable when a payment of $385,000
in deferred royalties and interest was paid to Sierra Pacific Power Company in
June, 1998.
A-8
<PAGE> 9
Cash used in investing activities amounted to $478,000 in First Nine Months
1998 as compared to $1,939,000 in First Nine Months 1997. The 1997 figure
included $1,408,000 in new loans to Reno Energy, LLC, whereas only $164,000 in
new loans were made to Reno in the 1998 period.
Cash totaling $2,096,000 was provided from financing activities during
First Nine Months 1998, primarily representing the proceeds of the sale of
Series A Convertible Preferred Stock to Energy Systems Investors, LLC, in a
private placement. The Company, therefore, had working capital of $976,000 at
October 31, and believes that it has sufficient liquidity to enable it to meet
the working capital requirements of its existing operations.
At the Annual Meeting on August 26, 1998 the stockholders approved the
issuance to Energy Systems Investors, LLC, of an option to purchase up to
888,888 shares of the Company's Series A Convertible Preferred Stock at an
aggregate purchase price of approximately $8.0 million, on the same terms and
conditions as the original 250,000 shares of the Series A Convertible Preferred
Stock already held by Energy Systems Investors, LLC. If exercised, management
expects that this option will provide the Company with funds for possible future
acquisitions and internal expansion as well as for general working capital.
Sierra Pacific Power Company agreed to a stipulation effective July 20,
1998, which raises the rates paid under the power purchase agreement for power
produced by the Steamboat 1 plant. These rates will also be applied to power
production of Steamboat plant 1-A when its present rate structure ends in
December 1998.
YEAR 2000 COMPLIANCE
The Company has assessed the issues associated with the programming code in
existing computer systems with respect to a two digit year value as the Year
2000 approaches and believes that its internal systems are in full compliance.
In addition, the Company has communicated with suppliers and customers with
whom it does significant business to determine their Year 2000 Compliance
readiness and the extent to which the Company is vulnerable to any third party
Year 2000 issues. The Company believes that only Sierra Pacific Power Company
("Sierra"), to which the Company sells power from its Steamboat facilities, may
be affected by the programming code problem to an extent which could have a
material adverse effect on the Company. Sierra has assured the Company, however,
that the interface with the Steamboat facilities is in compliance with Year 2000
requirements. However, there can be no guarantee that the systems of other
companies on which the Company's systems rely will be timely converted, or that
a failure to convert by another company, or a conversion that is incompatible
with the Company's systems, would not have a material adverse effect on the
Company.
The total cost to the Company of these Year 2000 Compliance activities has
not been and is not anticipated to be material to its financial position or
results of operations in any given year. This is based on the Company
management's best estimates, which were derived utilizing numerous assumptions
of future events including the continued availability of certain resources,
third party modification plans and other factors. However, there can be no
guarantee that these estimates will be achieved and actual results could differ
from those plans.
A-9
<PAGE> 10
CAUTIONARY STATEMENT RELATING TO FORWARD LOOKING STATEMENTS
The foregoing Management's Discussion and Analysis may contain forward
looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which represent, or may be considered as representing, the Company's
expectations or beliefs concerning future events, including, but not limited to
statements regarding growth in sales of the Company's services and products,
profit margins and the sufficiency of the Company's cash flow for its future
liquidity and capital resource needs. These forward looking statements are
further qualified by important factors that could cause actual results to differ
materially from those in the forward looking statements. These factors include,
without limitation, the effect of competition, the Company's dependence on
certain consumers of the Company's electricity output, market acceptance of the
Company's services and the effects of governmental regulation. Results actually
achieved may differ materially from expected results included in these
statements as a result of these or other factors.
A-10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Reference is made to the Registrant's Annual Report on Form 10-KSB for the
year ended January 31, 1998 for a description of material legal proceedings.
There have been no material developments since the Registrant's last report with
respect to the previously disclosed legal proceeding.
ITEM 2 - CHANGES IN SECURITIES
On March 25, 1998 the Company issued 250,000 shares of its Series A
Convertible Preferred Stock in a private placement with Energy Systems
Investors, LLC, for $2,250,000. Each share of Preferred Stock is currently
convertible into four shares of common stock of the Company at a conversion
price of $2.25 per share, and carries a dividend of 9% per annum. The issuance
was made in reliance on an exemption from the registration requirements of the
Securities Act of 1933, as amended. Proceeds from the sale have been used for
general working capital purposes. At the Company's Annual Stockholders Meeting
on August 26, 1998, the stockholders approved granting to Energy Systems
Investors, LLC, an option to acquire up to 888,888 additional shares of the
Company's Series A Convertible Preferred Stock at an aggregate purchase price of
approximately $8.0 million on the same terms and conditions. The stockholders
also approved the increase in the number of authorized shares of the common
stock of the Company from 35,000,000 to 50,000,000 and to increase the number of
authorized shares of preferred stock of the Company from 5,000,000 to
10,000,000.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders of the Company on August 26, 1998,
Howard A. Nevins and Lawrence I. Schneider were elected as Class I directors, to
serve for three year terms. (5,422,089 votes were in favor, none opposed, and
63,896 votes were withheld.) Theodore Rosen, Richard H. Nelson, and Evan Evans
are the other directors whose terms of office continued after the meeting. The
stockholders also approved amending the Company's Certificate of Incorporation
to increase the number of authorized shares of the common stock of the Company,
par value $.01 per share, from 35,000,000 to 50,000,000 and to increase the
number of authorized shares of preferred stock of the Company, par value $.01
per share, from 5,000,000 to 10,000,000. (3,278,547 votes were cast in favor,
252,932 votes opposed, and 33,200 votes were withheld.) The stockholders also
approved the issuance to Energy Systems Investors, LLC, of an option to purchase
up to 888,888 shares of the Company's Series A Convertible Preferred Stock at an
aggregate purchase price of approximately $8.0 million, on the same terms and
conditions as the original 250,000 shares of the Series A Convertible Preferred
Stock already held by Energy Systems Investors, LLC. (2,084,882 votes were cast
in favor, 415,584 votes opposed, and 64,213 were withheld.)
ITEM 5 - OTHER INFORMATION
None
A-11
<PAGE> 12
ITEM 6 - EXHIBITS
(a) Exhibits
27 Financial Data Schedule.
(b) Reports on Form 8-K
None.
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned duly authorized.
Dated: December 5, 1998
U.S. Energy Systems, Inc.
By: /s/ Richard H. Nelson
-------------------------------------
Richard H. Nelson
President and Chief Executive Officer
By: /s/ Seymour J. Beder
-------------------------------------
Seymour J. Beder
Chief Financial and Accounting Officer
A-12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> OCT-31-1998
<CASH> 1,088,000
<SECURITIES> 0
<RECEIVABLES> 704,000
<ALLOWANCES> 11,000
<INVENTORY> 16,000
<CURRENT-ASSETS> 2,130,000
<PP&E> 6,366,000
<DEPRECIATION> 500,000
<TOTAL-ASSETS> 14,210,000
<CURRENT-LIABILITIES> 1,154,000
<BONDS> 1,258,000
0
3,000
<COMMON> 51,000
<OTHER-SE> 11,200,000
<TOTAL-LIABILITY-AND-EQUITY> 14,210,000
<SALES> 0
<TOTAL-REVENUES> 1,117,000
<CGS> 0
<TOTAL-COSTS> 595,000
<OTHER-EXPENSES> 588,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,000
<INCOME-PRETAX> (17,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (17,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,000)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
