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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 16, 1997
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U.S. TRANSPORTATION SYSTEMS, INC.
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(Exact name of registrant as specified in charter)
Nevada 0-16140 34-1397328
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(State or other juris- (Commission File (IRS Employer Identi-
diction of incorporation Number) fication Number)
33 West Main Street, Elmsford, New York 10523
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(Address of principal executive office)
Registrant's telephone number, including area code: (914) 345-3339
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Item 5 Litigation Regarding Ownership of Gulf Northern Transport
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On January 30, 1997, U.S. Trucking, Inc. ("USTI"), a
subsidiary of U.S. Transportation Systems, Inc. (the "Company") which owns the
Company's two tractor-trailer operations, acquired 100% of the capital stock of
Gulf Northern Transport Inc. ("GNTI") and 100% of the capital stock of Mencor
Inc. ("Mencor"). GNTI and Mencor are affiliated corporations which are engaged
in full-load tractor-trailer operations throughout the Eastern United States
from a base in Charleston, SC. In 1996 GNTI and Mencor had combined revenues
totalling $13,756,481. In exchange for these corporations the Company gave 25%
of the capital stock of USTI, $300,000 cash, and an indemnity of GNTI secured
debt in the amount of $4,520,883. The Company also gave employment or
consulting agreements to the four principals of GNTI and Mencor, which will
require payment of $165,000 per annum, 37,500 shares of USTS Common Stock and
options for 125,000 shares at prices from $1.75 to $3.75.
USTI acquired GNTI from Logistics Management, L.L.C., a
Kentucky limited liability company ("Logistics"). Logistics represented to the
Company that it had acquired ownership of GNTI, free of liens or claims, from
Mid-America Transporters Group, Inc. ("MATG").
On April 16, 1997, United Acquisition II Corporation ("UACQ"),
which is the subject of a bankruptcy petition in the United States Bankruptcy
Court for the Southern District of New York (White Plains Division), commenced
an adversary proceeding in that Court against the Company, its Chairman and many
other
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corporate and individual defendants. UACQ alleges that it acquired ownership of
MATG through certain agreements prior to the transfer of GNTI to Logistics, and
that GNTI was acquired by Logistics from MATG without the consent of UACQ. UACQ
further alleges that the defendants conspired to deprive UACQ of its interest in
GNTI. The complaint seeks declaratory relief, the avoidance of the alleged
fraudulent transfer of GNTI, damages for fraud, and the imposition of a
constructive trust.
The defendants in this action allege that the agreements
pursuant to which UACQ claims ownership of MATG were rescinded and revoked
pursuant to the applicable laws. Motions to dismiss the complaint are presently
pending before the Bankruptcy Court.
The Company believes that USTI acquired full right and title
to GNTI through its January 30, 1997 agreement with Logistics, and it intends to
defend vigorously against the claims by UACQ. A result in this litigation
adverse to the Company, however, would materially interfere with the Company's
plans to expand its tractor-trailer operations.
EXHIBITS
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None
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SIGNATURES
Pursuant to the requirements 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.
July 1, 1997 U.S. TRANSPORTATION SYSTEMS, INC.
By: /s/ Michael Margolies
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Michael Margolies
Chief Executive Officer
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