Form 10-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_______________________
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15960
U.S. TECHNOLOGIES INC.
(Exact name of Registrant as specified in its charter.)
State of Delaware 73-1284747
(State of other jurisdiction of (I.R.S. Employer
Identification No.)
incorporation or organization)
1402 Industrial Blvd
Lockhart, Texas
78644
(Address of principal executive offices.)
(Zip Code)
Registrant's telephone number, including area code: (512)
376-1049
_______________________
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 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 [ ]
The aggregate market value of voting stock held by non-affiliates
of the Registrant at April 12, 1996 was approximately $5,397,827.
The number of shares outstanding of the Registrant's Common
Stock, par value $0.02 per share, at March 31, 1995 was
15,875,963 shares.
TABLE OF CONTENTS
PART I
Item 1. Business 3
Item 2. Properties 9
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security
Holders 11
PART II
Item 5. Market for Registrant's Common Equity and related
Stockholders matters 11
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 8. Financial Statements and Supplementary Data 19
Item 9. Changes in and Disagreements on Accounting and
Financial Disclosure 34
PART III.
Item 10. Directors and Executive Officers of the
Registrant 34
Item 11. Executive Compensation 37
Item 12. Security Ownership of Certain Beneficial Owners
and Management 39
Item 13. Certain Relationships and Related Transactions
41
PART IV.
Item 14. Exhibits, Financial Statement Schedules and
reports on Form 8-K 41
Schedules and Reports on Form 10-K:
Schedule II Valuation and Qualifying Accounts
43
2
PART I
ITEM 1. BUSINESS.
General Development of Business
U. S. Technologies Inc. (the "Company") was
incorporated on September 9, 1986, in the State of Delaware
as CareAmerica Inc. From time to time the term "Company" as
used herein refers to U.S. Technologies Inc. by itself or to
collectively refer to U. S. Technologies Inc. and some or
all of its subsidiaries, past and present. The Company was
formed to furnish in-home medical care services. On April
14, 1987, the Company completed a public offering of 660,000
units, each unit consisting of one share of Common Stock and
one Redeemable Warrant, each separately transferable
immediately upon issuance. The foregoing reflects a 1 for 5
reverse split of the Registrant's Common Stock, Warrants and
Options which took place on February 8, 1993, and assumes no
additional shares issued in respect of any fractional shares
which may have resulted from the reverse split.
In 1987 the Company changed business direction from the
medical industry to electronics. On September 1, 1988, the
Company moved its corporate headquarters from Kansas City,
Missouri, to Austin, Texas. The Company's decision to move
its headquarters to Austin, Texas, was made in order to more
effectively monitor the day-to-day activities of its
Subsidiaries. The management of the Company felt that
maintaining offices in Kansas City, Missouri, when its
operating Subsidiaries were in Austin, Texas, was an
unnecessary expense for the Company.
On July 14, 1989, the shareholders of the Company
approved a proposal to change the name of the Corporation
from CareAmerica Inc. to U.S. Technologies Inc. On July 14,
1989, the Company filed a Certificate of Amendment of
Certificate of Incorporation with the Secretary of State of
Delaware causing the name of the corporation to be changed
to U.S. Technologies Inc. Effective with the start of
business July 17, 1989, the Company's Common Stock traded on
the over-the-counter market and listed on the National
Association of Securities Dealers Automated Quotations
(NASDAQ) System. The trading symbol was changed to USXX.
Prior to June, 1994, the Company owned three (3)
additional subsidiaries which had been in operation for
several years: American Microelectronics Inc. ("AMI"),
Republic Technology Corporation ("Republic"), and U.S.
MicroLabs Inc. ("MicroLabs"). AMI was in the electronics
contract manufacturing business. Republic was in the
business of designing and marketing personal computers.
MicroLabs had been inactive for several years, but had at
3
one time been in the business of developing and marketing
software. AMI was the largest secured creditor of Republic.
The Company was the largest secured creditor of AMI. In
June, 1994, AMI foreclosed on its security interest in
Republic and accepted an assignment of all of Republic's
assets (all of which were covered by AMI's security
agreement) in satisfaction of Republic's debts to AMI.
Subsequent thereto the Company foreclosed on its security
interest in AMI and accepted an assignment of AMI's assets
(that were covered by the Company's security agreement) in
satisfaction of AMI's debts to the company. The Company
made a capital contribution of the foreclosed assets to the
newly formed company, Lockhart Technologies, Inc., "LTI" in
exchange for all of the capital stock of that company.
After the foreclosures, the Company sold all of its interest
in AMI, Republic, and MicroLabs for a total consideration of
$1,758.
The Company presently has two wholly owned
subsidiaries: Lockhart Technologies, Inc., a Texas
corporation ("LTI") and Newdat, Inc., an Arizona corporation
("Newdat"). Newdat owns an eighty percent (80%) interest in
SensonCorp Limited, an Arizona corporation ("Senson"). The
Company acquired Newdat on January 23, 1995, in exchange for
7,053,728 shares of the Company's common stock.
4
LTI was incorporated on June 29, 1994. LTI was
capitalized by the Company by the contribution of certain
assets, tangible and intangible, which the Company received
through its foreclosure of AMI. The assets were valued at
$1,764,580. LTI operates an electronics contract
manufacturing facility located inside a minimum security
prison facility located in Lockhart, Texas. LTI has an
Industry Work Program Agreement (the "IWPA"), which includes
a lease agreement, with Wackenhut Corrections Corporation,
The Texas Department of Criminal Justice, Division of
Pardons, and Paroles and the City of Lockhart, Texas. The
IWPA and Lease were assigned to LTI by American
Microelectronics Inc., a corporation formerly owned by the
Company. Wackenhut Corrections Corporation has not yet
formally ratified the assignment of the IWPA from American
Microelectronics Inc. to LTI, but has continued full
cooperation with LTI over the past 22 months. The Industry
Work Program Agreement provides and encourages LTI to
recruit and hire qualified employees from the 500 male
residents presently in this facility. Prospective resident
employees are provided vocational and educational training
by Wackenhut and the Texas Department of Criminal Justice,
Division of Pardons and Paroles tailored to the Company's
specifications. The Company is required to pay resident
employees at a rate prevailing in the area for similar work,
but at no time less the Federal Minimum Wage rate. The
lease agreement provides for approximately 27,800 square
feet of manufacturing and office space through January 31,
1997 and provides for automatic three year extensions unless
notification is given by either party at least six months
prior to the expiration of each term. The lease provides
for annual rental rates of $1 per year for the primary term
and the first automatic three year extension.
Principal Products, Services and Revenue Sources
The Company furnishes direction, administrative and
consulting services to its Subsidiaries, and raises funds as
appropriate for their operation and expansion.
LTI offers contract manufacturing services for
electronic circuit boards. LTI does not manufacture the
actual circuit boards; LTI purchases them from board
manufacturers. Electrical components placed on the boards
are furnished by LTI's customers in kit form or purchased
directly from electrical supply houses or parts
manufacturers. LTI places the components on the board,
solders the connections and, if requested, tests the
assembled board. LTI also performs electro-mechanical
assembly.
The electronic circuit board is the basic element for
manufacturing electronic circuitry today. Individual
electrical components such as resistors, capacitors and
5
solid state devices are mounted on the circuit board. Such
electrical components are "packaged" as "through-hole" or
"surface mount" devices. Through-hole components have wire
leads which are placed through holes on the board. The wire
leads are soldered to the board on the reverse side.
Surface mount components are smaller and have much shorter
leads or metallic ends which are soldered directly to small
metal pads on top of the board.
LTI's services may be used by any business that uses
electronic circuit boards. LTI presently assembles products
utilized in computers, computer peripherals, security and
communications systems, medical equipment and electronic
testing devices. LTI markets its services through two (2)
in-house salespeople and five manufacturing representative
sales people. It has increased the sales force by 350% over
the past six months and is attempting to expand its contract
manufacturing business by including larger runs and turnkey
operations.
Newdat, Inc. is an Arizona corporation which has
developed to market ready status a device for measuring (in
real time during production) the thickness of coatings on
wire, e.g., measuring the thickness of the zinc coating on
galvanized wire. This device has wide ranging alternative
applications. For example it can also be used to detect
flaws in wire and cable during production or while in use,
e.g., elevator or ski lift cables. Newdat is also
developing a high speed tape backup unit for computers,
utilizing a helical scan technology. Newdat also owns an
eighty percent (80%) interest in SensonCorp Limited "Senson"
which is presently marketing a line of environmentally
friendly chemical coatings developed by a major Australian
chemical company. Senson has exclusive rights to
manufacture and market these products in North America. The
coatings have a variety of applications, all with non toxic
anti-corrosion capability using vapor phase corrosion
inhibitors. Over the past half year, the Company's
management has consolidated much of Newdat's engineering
business in Lockhart as a control measure and cost saving
exercise. This has been a highly successful move which has
expanded the engineering capability of LTI, allowing it to
work on a wider range of business. LTI is also preparing to
manufacture its own proprietary products.
LTI successfully concluded an agreement in the third quarter
of 1995 to manufacture a unique earthquake early warning
device which has been designed and priced for the consumer
market in North America, Japan, and many other earthquake
prone regions of the world. Under the present arrangement,
LTI is guaranteed $10 net profit for every unit manufactured
to an agreed cost, and management is presently in discussion
with the owner of the technology for the purpose of
acquiring a controlling interest in the technology as well
6
as world manufacturing and marketing rights. Both
manufacture-only and technology ownership options offer the
Company good prospects for resolving its liquidity problems
and returning a very satisfactory profit.
Another potential business opportunity for LTI is a product
which it has developed on behalf of a customer. The product
is an energy saving device which has been developed for a
local company and is presently in field testing. The
product offers LTI the opportunity to undertake long
production run work which will enable combining the building
of circuit boards and coils with electro-mechanical
assembly.
7
Raw Materials
Some of the components and raw materials used by LTI
and Newdat are available from a limited number of suppliers
and/or are susceptible to non availability due to periodic
shortages. While component purchasing lead times are
improving due to greater competition. In some instances
there may be lead times of several months or longer to
obtain and sustain an adequate supply of components. While
parts are generally available, delays in obtaining some
parts could jeopardize orders and increase the cost of
operations for LTI and Newdat. LTI and Newdat have
experienced prolonged or significant shortages in the past.
However, from time to time parts shortages may be expected
to cause temporary delays in production of some products.
To mitigate potential supply problems, LTI has recruited a
materials specialist who has already in his brief time with
the Company considerably reduced any risk of production
delays while also reducing component cost through judicious
ordering procedures. Senson's raw materials include
chemical stocks which are generally available and management
does not presently anticipate any restrictions or delays in
production due to shortages in raw materials.
Patents, Trademarks, Licenses, Franchises and Concessions
The Company and LTI do not have any patents,
trademarks, licenses, franchises or concessions; however,
they may apply for some in the future. Because of the rapid
pace of technological change, the Company believes that
copyright, trademark and other legal protections are less
significant in its industry than such factors as innovative
skills, technological expertise and marketing abilities.
Newdat, Inc. holds U.S. and Canadian patents relating
to its wire measurement technology. These patents; covering
the same technology, reveal a new technology for measuring
the thickness of zinc and similar coatings on wire as well
as nondestructive electromagnetic testing of other
properties of wire. It is difficult to ascertain the value
of these patents. The novel parts of the device are its
ability to sense changes in external and internal
structures, including the on-line measurement of metallic
coating being applied to wire. The Company believes that
the rapid pace of change in high technology fields today
makes the ability to continuously innovate and develop new
technologies as important in some instances as the patents
themselves.
Senson's conformal coatings are widely protected by
patents, in particularly the "phased" emission of VPCI's
from the coatings.
Working Capital Practices
8
The Company's subsidiaries are discouraged from
carrying excess quantities of raw materials or purchased
parts because most of their products are produced to demand;
therefore, components and parts can usually be ordered as
needed. LTI has an agreement which allows one of its
suppliers to purchase materials from LTI's inventory when
they have needs for certain items. This procedure is to be
extended to other customers and known users of certain of
LTI's inventory, and should result in an increase turn in
inventory and in an overall reduction of the raw material
inventory during 1996. In a determined effort to limit
inventory holdings, LTI has introduced a heavy hand in its
writeoff program and has made a allowance for a $295,000
complemented with a determination to find buyers for slow
moving items. LTI offers selected customers a 2% discount
if bills are paid within ten days. Normal terms are net 30.
Newdat and Senson currently offer 14 day terms.
9
Dependence on Customers
LTI has broadened its customer base during 1995 and is
less dependent on key customers than during the last two
years. However, it is now seeking longer production runs
than in the recent past and if it is successful, dependence
on one or more customers is inevitable. The loss of any one
of such customers would have a material adverse effect on
LTI and the Company. Management believes that this
situation will abate as LTI's customer base expands. Newdat
and Senson do not appear to have dependence upon any
particular customer at this stage of their development.
Backlog
At December 31, 1995, LTI's backlog (which represents
that portion of outstanding contracts not yet included in
revenue) was approximately $235,000. It is anticipated that
100% of the backlog will be delivered before June 30, 1996.
At December 31, 1995, Newdat had no backlog as the wire
measurement devices have not passed through their Beta site
testing phases, and are therefore not offered for sale.
At December 31, 1995, Senson's backlog was
approximately $2,750, and this should not be a problem
generally as the Company manufactures in large batches and
holds adequate stocks. The backlog will be delivered before
March 31, 1996.
Because LTI and Newdat receive price commitments from
their vendors, their costs normally do not increase relative
to backlog orders. Engineering changes in products by any
of LTI's customers or other events beyond the control of LTI
could result in the cancellation or suspension of some of
LTI's present backlog.
Competitive Conditions
LTI, Newdat and Senson are in competition with a large
number of firms. Most of their competitors are
substantially larger and have greater financial resources.
LTI's business is capital intensive, i.e., a significant
investment in equipment is necessary. The greater financial
resources of many of LTI's competitors gives those
competitors an advantage over LTI. Newdat and Senson have
products which face competition from other products. The
Company believes the products of Newdat and Senson have
features and qualities which give them a competitive
advantage. However, the existing control of the market
place by their competitors and the financial resources which
such competition can apply to their competitive marketing
efforts are significant negative factors against the ability
of Newdat and Senson to successfully complete in their
10
markets. Positive factors pertaining to LTI's competitive
position are the experience of LTI's new management team and
what LTI believes is its ability to address the growing need
for mixed technology circuit boards, i.e., circuit boards
containing both through-hole and surface mount components.
LTI has automated equipment for the assembly of circuit
boards using surface mount and through-hole components.
However, LTI's surface mount equipment is limited in
capacity. If LTI is able to sustain and increase its volume
of business, further investments in capital equipment will
be required. The Company will require additional debt
and/or lease financing to acquire additional equipment and
expanded receivables financing to fund any growth in sales.
Terms of possible lease agreements and/or the cost of
borrowed funds may be prohibitive in relationship to the
returns the Company would be able to initially be able
obtain through the use of such borrowed funds or leased
equipment for its operations.
Research and Development Activities
Newdat acquired products of which one had already been
developed. Newdat is limiting further research and
development to support the latest possible entry of its
proprietary products into market, and then the support and
enhancement of those products in the field.
Number of Persons Employed
As of December 31, 1995, the Company had two salaried
employees. Several employees of LTI devoted a significant
portion of their time to the affairs of the Company.
As of December 31, 1995, LTI had approximately 47
regular employees. LTI employees include residents from the
minimum security prison facility where the Company is
located.
As of December 31, 1995, Newdat had one regular
employees.
As of December 31, 1995, Senson had 4 regular
employees.
None of the Company's employees are represented by a
union. The Company believes that its relationship with its
employees is good.
Regulation
The Company is subject to Food and Drug Administration
("FDA") regulations relating to medically related devices
which its subsidiary, LTI manufactures. These regulations
are generally applicable to companies producing medical
11
electronics. The products that are subject to FDA
regulation are not a significant portion of LTI's business.
All of the Company's subsidiaries are subject to OSHA.
12
ITEM 2. PROPERTIES.
Leases and Facilities
LTI's operations are located in a minimum security
prison facility under a lease agreement with Wackenhut
Corrections Corporation, The Texas Department of Criminal
Justice, Division of Pardons and Paroles and the City of
Lockhart, Texas, to lease approximately 27,800 square feet
of manufacturing and office space under an operating lease
through January 31, 1997 and provides for automatic three
year extensions unless notification is given by either party
at least six months prior to the expiration of each term.
The lease was originally in the name of AMI. AMI has
assigned all of its right title and interest in the lease to
LTI, although the assignment has not been formally ratified.
The lease provides for annual rental rates of $1 per year
for the primary term and the first automatic three year
extension. Rental expense at other locations for the years
ended December 31, 1995, 1994 and 1993, was $33,144, $7,290,
and $132,000, respectively. The rent expense for 1993 was
rent expense incurred by AMI, a former subsidiary, at
another location. Wackenhut Corrections Corporation is not
an affiliated party.
Senson has a lease agreement with Laura Investments
Ltd. ("Laura") whereby Laura provides approximately 3,700
and 2,100 square feet of office space in Chandler, Arizona
and Vancouver, British Columbia for a total monthly lease
payment of $1,940 and $2,300 respectively. The lease is for
the period beginning July 1, 1994 and terminating July 1,
1997. Under an Administrative Services Agreement between
Senson and Laura, Senson pays Laura $4,500 per month for
administrative and miscellaneous services. The agreement
terminates by its terms on July 1, 1997, but Senson may
terminate it earlier upon 90 days notice. John Allen,
Chairman of the Board of the Company, is a director of
Laura. Newdat is presently utilizing space provided it by
Senson.
13
ITEM 3. LEGAL PROCEEDINGS.
On March 22, 1995, the Company was served with a
citation in TTI Testron, Inc. vs. American Microelectronics,
Inc. and Lockhart Technologies, Inc., County Court at Law
No. 1, Travis County, Texas, Cause No. 221,094. The
petition alleges that Lockhart Technologies, Inc. received
the assets of American Microelectronics Inc. without
consideration. The action seeks damages of $11,527. The
Company believes the claim is without merit.
On January 24, 1995, an action styled SensonCorp
Systems, Inc., SensonCorp Pacific, SensonCorp Southeast,
SensonCorp West, Creative Media Resources vs. SensonCorp
Limited, William Meehan, Dugal Allen, John Allen, DOES 1
through 50, in the United States District Court Northern
District of California, Cause No. C-95-00282. The action
seeks equitable relief and damages for breach of contract,
breach of implied warranty of good faith and fair dealing,
common law fraud, negligent misrepresentation, unfair
competition, interference with contract, accounting,
receiver/attachment, and theft of trade secrets. The causes
of action are related to a marketing agreement between
Senson and the plaintiffs. Defendant John Allen is the
Chairman of the Board of the Company. Dugal Allen is John
Allen's son and was Vice President of operations for Senson
at the time. Mr. Meehan is President of U.S. Technologies
Inc., and was a founding member of SensonCorp Limited. The
suit does not specify the dollar amount of damages sought.
The plaintiff's were denied most of the equitable relief
they sought, but obtained a temporary injunction requiring
Senson to continue selling them certain products on Senson's
usual and customary terms. This ceased when Senson
subsequently cancelled the agreement on "Without Cause"
grounds in May 1995. The Company formally sought to
participate in arbitration during April 1996 and is awaiting
a date for the arbitration to be heard. The Company
strongly believes that the plaintiffs claims are without
merit and that SensonCorp, Limited. and the other defendants
will prevail.
On July 16, 1995, the Company was served with a
citation in Elpac Electronics vs. U.S. Technologies Inc., in
the 53rd District Court of Travis County, Texas. The
petition alleges that the Company is liable for certain
debts of a former subsidiary, American Microelectronics,
Inc. ("AMI") on the basis of fraudulent transfer of assets
from AMI to the Company. The petition seeks $101,461 in
damages plus $35,000 in attorney's fees, interest and costs.
The Company believes the complaint is without merit.
On July 16, 1995, the Company was served with a
citation in Evins Personnel Consultants vs. U.S.
Technologies Inc., County Court at Law No. 1 of Travis
14
County, Texas. The petition alleges that the Company is
liable for certain debts of a former subsidiary, American
Microelectronics, Inc. ("AMI") on the theory that the
Company was doing business as AMI. The petition seeks
$40,818 in damages plus $13,500 in attorney's fees, interest
and costs. The Company believes that the complaint is
without merit.
On July 16, 1995, the Company was served with a
citation in Texas Industrial Svcs. vs. U.S. Technologies
Inc., in County Court at Law No. 2 Travis County, Texas.
The petition alleges that the Company is liable for certain
debts of a former subsidiary, American Microelectronics,
Inc. ("AMI") on the theory the Company is doing business as
AMI. The petition seeks $24,482 in damages plus $8,000 in
attorney's fees, interest and costs. The Company believes
that the complaint is without merit.
There were several lawsuits outstanding against AMI and
Republic at the time they were sold. AMI and Republic are
separate corporations, incorporated under the laws of the
State of Texas. Therefore, the Company believes it has no
liability arising out of or in connection with any lawsuits
against AMI or Republic.
15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
No matters were submitted to the stockholders for their
consideration during the fourth quarter of 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's Common Stock is traded in the over-the-
counter market and listed on the National Association of
Securities Dealers Automated Quotations ("NASDAQ") System
under the "USXX" symbol. The following table sets forth the
high and low bid prices of the Common Stock in the over-the-
counter market for the years ended December 31, 1995, 1994,
1993, 1992, and 1991. Prices are as quoted on the NASDAQ
System. Quotations reflect interdealer prices without
retail mark-up, mark-down or commissions and may not
necessarily represent actual transactions.
Bid
High Low
1995
4th Quarter $.5937 $.3437
3rd Quarter $.7187 $.5000
2nd Quarter $.7187 $.2812
1st Quarter $.7812 $.3750
1994
4th Quarter $.7812 $.2500
3rd Quarter $.8125 $.2500
2nd Quarter $1.1875 $.5625
1st Quarter $1.7500 $.8750
1993
4th Quarter $2.3125 $0.9375
3rd Quarter $2.3750 $1.3125
2nd Quarter $2.5625 $1.5000
1st Quarter $3.0000 $1.3750
1992
4th Quarter $1.8750 $1.2500
3rd Quarter $4.0625 $1.2500
2nd Quarter $9.3750 $3.1250
1st Quarter $9.6875 $5.0000
1991
4th Quarter $6.5625 $5.0000
3rd Quarter $6.5625 $3.7500
2nd Quarter $6.2500 $4.3750
1st Quarter $5.9375 $2.3440
On April 123, 1995, the closing bid price of the Common
Stock, as quoted on the NASDAQ system, was $0.34.
16
As of March 31, 1996, there were 398 holders of record
of the Company's Common Stock. This number is exclusive of
beneficial owners whose securities are held in street name.
17
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data set forth below for the years
ended December 31, 1995, 1994, 1993, 1992 and 1991 is
derived from the Company's audited financial statements.
This information should be read in conjunction with the
financial statements for 1995, 1994 and 1993 and notes
thereto included elsewhere herein and "Management's
Discussion and Analysis of Financial Condition and Results
of Operations" included in Item 7 which are incorporated
herein by reference.
Years Ended December 31,
1995 1994 1993 1992 1991
Operations statement
data:
Net sales $1,951,487$1,668,865$6,655,573
$8,888,016$8,368,471
Loss from operations $(1,861,474)$(2,230,710)
$(2,448,096)$(356,835)$(49,841)
Net income (loss) $(1,861,088)$(847,016)$(2,352,572)
$(463,423)$(168,689)
Per Share Data:
Loss per share $(0.12) $(0.16) $(0.62) $(0.16)
$(0.06)
Weighted-average
common shares outstanding 14,997,5325,302,1473,794,631
2,830,972 2,707,144
Cash dividends per common share -0- -0- -0-
- -0- -0-
Balance sheet data:
Total assets $3,326,537$2,120,340$2,685,325
$2,915,400$3,160,281
long-term debt
(including capital
lease obligations) $840,435 $-0-$19,166 $19,166$110,062
12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis should be read in
conjunction with the Financial Statements and notes thereto
appearing elsewhere in this Form 10-K.
The Company incurred significant losses and in each of
the three years ended December 31, 1995, 1994 and 1993 and
had working capital deficiencies in the year ended December
31, 1993. As a result, the Company continues to experience
liquidity problems and the Company's auditors, Brown, Graham
& Company P.C. have rendered a "going concern" opinion in
their reports. Additionally, the Company failed to meet the
NASDAQ requirement of minimum total capital and surplus of
$1,000,000 at December 31, 1993. This requirement was
subsequently met. Under NASDAQ's rules, the Company must
maintain a minimum bid price of $1.00 per share unless the
market value of the public float in the Company's capital
and surplus are at least $2,000,000 and $1,000,000,
respectively. On February 8, 1993, at a special
shareholders meeting, a one for five reverse spilt was
approved which raised the bid price above the minimum $1.00
per share requirement, thereby enabling the Company's stock
to continue being traded on NASDAQ.
The Company has been working to address its current
financial difficulties. (See "Liquidity and Capital
Resources" and Note 13 to the Notes to Financial Statements
which are incorporated herein by reference). The Company
believes there is a reasonable expectation that cash
generated from future operations (which the Company
recognizes are not assured), discontinuance of unprofitable
operations , the sale of additional common stock through a
private placement of $1,000,000, which was commenced on
April 4, 1996 and of which $100,000 has been placed as of
the date of this report, and the conversion by certain
creditors of debt obligation to equity may enable the
Company to alleviate its liquidity and capital deficit
problems. During January and March 1994, 223,000 shares of
non qualified stock options and 75,000 shares of qualified
stock options were exercised and 100,000 shares of the
Company's Rule 144 stock was sold which netted the Company
$322,000. On April 12, 1996, the closing bid price of the
Company's common stock was $.34. As of December 31, 1995,
the Company had once again fallen below the minimum capital
requirement of $2,000,000 (the capital requirement for
stocks with a bid price below $1.00 for continued listing on
the NASDAQ market system). The Company has talked to the
holders of the long-term notes and plans to convert some if
not all of the outstanding long-term debt to equity. If the
Company fails to meet the minimum bid requirements within a
reasonable period, the Company will be delisted from the
NASDAQ system thereby resulting in the owners of the
13
Company's Common Stock and warrants being unable to sell
their securities in the open market. Even if the Company
establishes that it presently meets such capital
requirements ($1,000,000 of capital, $2,000,000 market value
of public float, and a minimum $2.00 per share price; or
$2,000,000 in capital), there is no assurance the Company
will be able to continue to do so in the future; if the
Company fails to meet such capital requirements it could be
delisted from the NASDAQ system with the consequences to
stockholders outlined above.
The Company's continued existence is dependent upon its
ability to resolve its liquidity problems. While there is
no assurance that such problems can be resolved, the Company
is confident that it will achieve its goals through the
plans and actions outlined above and subsequently detailed.
See "Business - General Development of Business,"
"Principal Shareholders," "Certain Transactions" and
"Description of Capital Stock."
Additionally, the Company's independent accountants
advised the Company of material weakness in the internal
control structure which effected interim financial
reporting. The Company took some corrective action during
1993 by establishing an audit committee of four senior
executives and officers of the Company and its subsidiaries.
This audit committee is to meet monthly to review all
financial aspects of the Company's operations. In addition,
the audit committee will systematically review the Company's
internal controls and make such changes as may be
appropriate. Some actions have already been taken to insure
compliance with existing controls and procedures. In
addition, the Company will, at the end of each fiscal
quarter, consistently perform control procedures, including
reconciliation of subledgers to general ledger account
balances, review allowance accounts for adequacy of
reserves, analyze account balances and net realizable values
where appropriate, perform analytical procedures and other
control procedures as deemed necessary to provide an
adequate internal control structure. A major change in
management personnel during the summer of 1995 resulted in
new attention being paid to monthly reviews of profit and
loss statements and other financial indications of the
Company's status. The effects of regular utilization of
these judgmental management tools are still the main focus
realizing the need for additional accounting personnel, and
stronger monthly manufacturing figures. In 1994, the
Company implemented a policy requiring a physical inventory
to be taken at the end of each fiscal quarter in addition to
the physical inventory taken at year end. This has resulted
in a satisifactory control system being evidenced.
Liquidity and Capital Resources
14
At December 31, 1995, the Company has a positive
working capital balance of $574,146 compared to $779,566 at
December 31, 1994. This decrease in working capital was due
primarily to the a significant inventory writedown and an
increase in accrue payables and expenses.
As of December 31, 1995, the Company had a cash balance
of $25,860 compared to a cash balance of $2.579 and $40,911
at December 31, 1994 and 1993, respectively. The cash
balance at December 31, 1995 was the result of the company
trying to better manage its cash. The decrease or low
balance of cash at December 31, 1994 is due primarily to the
low volume of sales in November and December 1994. The
positive cash balance at December 31, 1993 was principally
the result of stock sales which were offset by significant
operating losses and the Company better managing its cash.
Accounts payable increased approximately 100% to
$254,658 at December 31, 1995, primarily due to the lack of
available funds to timely pay creditors and a decrease in
production in the last quarter. Accounts payable decreased
from $1,299,417 at December 31, 1993 primarily due to the
sale of AMI and Republic which had outstanding accounts
payable of approximately $1,500,000 at June 30, 1994, the
date on which these entities were sold. Payables increased
approximately 51% to $1,299,417 at December 31, 1993, from
$858,617 at December 31, 1992 primarily due to the lack of
available funds to timely pay creditors and the decrease in
production levels during 1993.
Inventories decreased by approximately 12% to $919,970
at December 31, 1995 from $1,042,306 at December 31, 1994.
Inventories at December 31, 1993 were $1,470,424. The
inventory consists principally of electrical components and
raw materials utilized in the layout, design and assembly
process of electronic circuit boards. The Company will be
liquidating excess inventory during 1996. During 1995, an
allowance of $262,000 was charged to income for obsolescence
and reduction in net realizable value. The Company does not
presently anticipate significant writedowns for obsolescence
or reductions in net realizable value of product inventory
during 1996. The Company has an agreement with one of its
suppliers that it will let the supplier purchase components
from its existing inventory for its customers. This should
reduce inventory values and give the Company additional
lines of credit for other components which it may need to
meet customer production requirements.
On June 29, 1994, AMI foreclosed on Republic under a
secured note and security agreement. Under the terms of the
security agreement and the provision of the Texas Uniform
Commercial Code, AMI accepted an assignment from Republic of
all of the property described in the security agreement
15
(being all of the tangible and intangible assets) in
satisfaction of Republic's secured debt to AMI.
Subsequently, on or about June 29, 1994, U.S. Technologies
Inc., foreclosed on AMI under a series of notes and security
agreements representing $1,871,069 in original principal.
Under the terms of the security agreements and the
provisions of the Texas Uniform Commercial Code, U.S.
Technologies Inc., accepted an assignment from AMI of all of
the property described in the security agreement (being
substantially all of AMI's tangible and intangible assets)
in satisfaction of AMI's secured debts to U. S. Technologies
Inc.
The Company sold its interest in Republic, AMI and Microlabs
on June 30, 1994 for $1,758 which resulted in a gain on the
sale of these entities of $1,376,959 (see note 16). On July
1, 1994, U.S. Technologies Inc. contributed the assets
obtained from AMI for all of the stock in a new corporation,
LTI.
The Company has entered into an agreement with one of
its suppliers to let them purchase components from LTI's
inventory when they have needs for certain items which
should result in an overall reduction of the raw material
inventory during 1996. The risk of obsolescence is inherent
due to the nature of the Company's business where designs
and components can become obsolete due to the rapid rate of
change in the electronics industry. The Company will
attempt to minimize this risk by planning its production and
inventory acquisition practices so as to minimize its
possible exposure. However, the rate of change is so rapid
that it is not possible to anticipate every possible risk.
Therefore, the risk of writedowns for future obsolescence
will be a continuing risk faced by the Company and will be
evaluated by management on an on going basis.
The Company is dependent on seven customers for a major
portion of its sales. The sales of services to IBM
represented approximately 11%, and 24% for the years ended
December 31, 1994, and 1993, respectively. Trimble
Navigation represented approximately 27%, and 12% of sales
during the years ended December 31, 1994, and 1993,
respectively, Dell Computer Corporation represented
approximately 9%, 20% and 35% of the Company's sales for the
years ended December 31, 1995, 1994 and 1993; Texas
Instruments accounted for approximately 15% and 14% of total
sales during the years ended December 31, 1995 and 1994,
respectively. Sales to Crystal Semiconductor accounted for
13% of sales during the year ended December 31, 1995.
Micronics Computer and Intel Corporation each accounted for
9% of total sales during the year ended December 31, 1995.
The Company is attempting to developed a broader
customer base to so that the Company will not rely on any
16
one customer for more that 10% of its business in the
future.
The Competitiveness of LTI's quotes enable through
improved controls and efficiencies should enable LTI to
increase its contract manufacturing business to $300,000 per
month, to broaden its scope of job bidding, and to achieve a
healthy blend of contract manufacturing work with it's own
proprietary product.
The business of LTI is capital intensive, as was the
former business of AMI, i.e., significant investment in
equipment has been necessary. The Company acquired
approximately, $10,000, $17,000, and $197,000 of new and
used equipment during 1995, 1994 and 1993, respectively.
During the year ended December 31, 1993, the Company
exercised all of the lease purchase options in the amount of
$78,695 on the capital leases which matured during 1993.
Additionally, the Company purchased software license rights
in the amount of $5,250 during 1992. The Company had funded
the capital expenditures of AMI through a mixture of
internal and external sources such as bank borrowings and
lease agreements.
AMI entered into an operating lease agreement with
Wackenhut Corrections Corporation, The Texas Department of
Criminal Justice, Division of Pardons and Paroles and the
City of Lockhart, Texas, to lease approximately 27,800
square feet of manufacturing and office space commencing
December 29, 1993 through January 31, 1997 and provides for
automatic three year extensions unless notification is given
by either party at least six months prior to the expiration
of each term. The lease provides for annual rental rates of
$1 per year for the primary term and the first automatic
three year extension. AMI made an assignment of this lease
to LTI on October 7, 1994. AMI assigned all of its right
title and interest in the lease to LTI, but the assignment
of the Lease has not yet been accepted.
Republic was incorporated in November, 1988, and
introduced the Remote Processing Module systems (RPM) to the
microcomputer networking market in 1990. The RPM is a
diskless local area network workstation. No expenditures
were made during 1994 for research and development expenses
while approximately $76,000 and $128,000 were incurred for
the years ended December 31, 1993 and 1992, which
contributed to Republic operating losses of approximately
$212,000 and $938,000, respectively. Republic was sold on
June 30, 1994 and predominately all of the finished goods
inventory has subsequently been sold by LTI. The Company
does not intend to incur any more research and development
expense for this line of products or manufacture any more of
these systems.
17
During April 1993, the Company entered into an
uncollateralized note payable agreement with Mr. Leonard
Hilt, a former officer and director of the Company and now
President of LTI, totaling $44,000. The loan was payable on
demand with an annual interest rate of 8%. On June 18, 1993,
Mr. Hilt exercised incentive stock options to purchase
22,000 shares of the Company's Common Stock in payment of
this note.
During 1994 and 1993, 1,770,000 and 491,000 shares of
the Company's Rule 144 stock was sold for total
consideration of $412,500 and $214,860, respectively. The
excess of market price for the shares sold exceeded the
purchase price by $348,750 and $190,421 which has been
treated as compensation. The shares are "restricted
securities" as that term is defined in Rule 144 of the
Securities Act of 1933, as amended, and may only be resold
in compliance with said Rule 144. For a discussion of the
sale of these shares of Common Stock, see Note 12 to the
Notes to the Financial Statements which is incorporated
herein by reference. Additionally, 1,122,600, and 701,000
shares of the Company's qualified and non qualified stock
options were exercised which netted the Company $415,287 and
$808,531, for 1994 and 1993, respectively.
From time to time during 1995, 1994, and 1993, the
Company has been delinquent or in default under all of its
loan and lease agreements with the exception of those loans
to the Company from its officers, directors and
shareholders. The Company's various lenders and leasing
companies have worked with the Company and provided it the
opportunity to bring the loans and lease obligations back
into performance. The leases matured in 1993 and AMI
exercised it's purchase option of the underlying equipment
for total cash outlay of $78,695. The Company did not enter
into any modification agreements as a result of any of the
past delinquencies or defaults with the exception of an
informal agreement with the FDIC with respect to those
certain loans having a principal balance of approximately
$158,681 at December 31, 1993 and June 30, 1994. These
loans were assigned to the FDIC following the closing of
Bank of the Hills. Following the assignment of the loans to
the FDIC the Company suspended payments thereon. In July,
1992, the Company entered into a verbal agreement to pay the
back interest that had accumulated on the notes in two
installments and to resume payments on the original terms.
Past due interest on these loans was paid to the FDIC in
September 1992. The Company also made principal payments of
approximately $19,000 during 1993 before payments were
discontinued due to lack of available funds. . (See Notes 6
and 8 to the Notes to Financial Statements which is
incorporated herein by reference.) On August 2, 1993 and
September 2, 1993, the FDIC Notified AMI that it considered
$43,251 and $115,430, respectively, of the loan in default
18
and demanded payment in full. These loans remained unpaid
as of June 30, 1994, the date on which AMI, Republic and
Microlabs were sold.
A future source of additional working capital may be
the 660,000 outstanding Redeemable Warrants issued in
connection with the Company's initial public offering and
60,000 redeemable warrants issued on April 14, 1987, The
Warrants are executable at $10.00 per Warrant and could
generate, after offering expenses, approximately $6,393,000.
The warrants were to expire April 14, 1992, however, the
Board of Directors of the Company have extended the
expiration date several times to July 31, 1996. Management
will be evaluating alternative sources of capital as there
is no assurance the Common Stock trading in the public
market will ever trade at the required closing bid price for
the specified amount of time to enable the exercise of the
Redeemable Warrants. It appears unlikely that the warrants
will be exercised unless the Company should reduce the
exercise price of the warrants, an action which may not be
practical.
During 1993 and for the first six months of 1994, one
of the Company's former subsidiaries had an factoring
arrangement which provided for the sale of eligible accounts
receivables with and without recourse to the factoring
company which advanced funds equal to 80% of such eligible
receivables. Additionally, the factoring company charged a
factoring fee of 3% of the face amount of all invoices
purchased and an interest rate for funds advanced at an
annualized rate of 3.5% above the prime rate of American
Federal Bank of Dallas. Under the terms of the agreement,
the factoring company retained a continuing security
interest in the factored accounts receivables and inventory.
The interest and factoring fees discussed above of
$44,167, and $154,834 were incurred during the two years
ended December 31, 1994, and 1993, respectively, and are
included in the Consolidated Statements of Operations in
general and administrative expense. The estimated allowance
for doubtful accounts pursuant to the recourse provision was
reported as a provision for uncollectible accounts
receivable in the Consolidated Statement of Operations.
Total funding received during the years ended December 31,
1994, and 1993 from the sale of receivables was $837,923,
and $4,517,891, respectively.
On July 16, 1993, Republic entered into a OEM Agreement
with Datapoint Corporation. Under the OEM agreement
Republic was to manufacture and deliver 386 and 486 versions
of its RPM computers to Datapoint for resale under the
Datapoint label. Due to production delays during 1993 in
Hong Kong and subsequent AMI production problems, only a
small number of units were delivered to Datapoint during
19
1993 and 1994. During the first three months of 1994
Republic tried to have AMI manufacture these units for
Datapoint, but experienced manufacturing problems and
component purchasing problems due to long lead times and the
lack of credit lines with suppliers. LTI has elected not to
continue on with this contract due to the lack of sufficient
credit lines and personnel to source the various components.
Additionally Datapoint's requirements were not as great as
initially projected.
On July, 23 1993, the Company purchased a National
Cycle League (NCL) Team Membership which included a $5,000
membership fee to NCL Properties for the total purchase
price of $265,000, represented by a cash payment of $14,250
and 118,000 shares of its Restricted Rule 144 Common Stock.
The team membership gives the Company the option of
establishing a team in either Germany or Spain if the NCL
doesn't sell a team membership in either country. If a team
membership is sold by the NCL in either of these countries,
the Company will have the right to establish a team in the
other country. During the year ended December 31, 1994,
there have been sales of teams which help establish market
value greater than the carrying value of the investment by
the Company. Also, the league owners association has
established a minimum offering price for any new teams in
excess of the carrying value of this investment. This
franchise is transferable to a new prospective owner should
the Company desire to dispose of the investment. The
disposal of this investment would be a source of future cash
funds. Until the franchise is activated, there presently
are no cash requirements to maintain the franchise.
On May 31, 1994, The Company exchanged 300,000 shares
of its common stock with Paris Fashion Ltd. for gem stones
with a purported value of approximately $300,000. During
the year ended December 31, 1994 the Company obtained an
appraisal of the stones which determined the value to be
approximately $143,000. The Company contacted Paris Fashion
Ltd. and demanded that the difference in appraised value be
corrected. During the year ended December 31, 1995, Paris
Fashions, Ltd provided the Company with additional gem
stones with a purported value of $170,000. The gem stones
have been appraised during 1996 at a value of $270,000. The
Company has provided for a valuation reserve and a charge
against operations in the amount of $30,000 and $160,000 for
the years ended December 31, 1995 and 1994, respectively.
The Company's Board of Directors guaranteed severance
pay to four individuals, including themselves, in the event
of any merger or acquisition by the Company. In such event
the company guaranteed severance pay of four months each to
the then Chairman Ryan Corley and the then Director Jack
Bryant; and two months each for Leonard Hilt and Neil
Ginther, if their employment with the Company or any
20
subsidiary was terminated voluntarily or involuntarily for
any reason (with or without cause) within six months
following the closing of any acquisition or merger. The
same conditions applied if any of the parties resigned
before the designated date. Mr. Ginther resigned from the
Company during February 1995 and Mr. Corley and Mr. Bryant
resigned from the Company during July 1995. Mr. Ginther has
stated that he did not wish to claim the severance, while
Messers Corley and Bryant have requested payment. The
present Board of Directors question the legality of this
form of compensation and is obtaining a legal ruling. The
severance pay of $46,000 has not been recorded in the
accompanying financial statements due to the uncertainty.
The Company and certain of its Subsidiaries are parties
to several legal proceedings that management considers to
have occurred during the normal course of business or as a
direct result of its inability to repay vendors on a timely
basis. See legal proceedings herein incorporated by
reference.
Results of Operations
During the Year ended December 31, 1995 the Company had
a net loss of $(1,951,487) or $(0.12) per weighted-average
share, on consolidated net sales of $1,951,487 as compared
to a net loss of $(847,046) or, $(0.16) per weighted-average
share, on consolidated net sales of $1,668,865 in 1994. In
1993, the Company had a net loss of $(2,352,572) or $(0.62)
per weighted-average share, on consolidated net sales of
$6,655,573. The increase in sales for 1995 is mainly due to
sales of the company's new products obtained through the
purchase of Newdat. The decrease in sales during 1994 was
due primarily to the loss of a number of customer orders
after AMI moved into the prison facility. Many of these
orders were lost due to poor quality of work being produced
by the residents. After the quality was brought under
control the Company was in such poor financial position that
it was having severe difficulties in meeting its payroll
obligations and vendor commitments. The Company was on a
COD basis for virtually all purchases and did not reduce its
existing staffing levels quickly enough the help curtail the
problem.
The Company incurred a negative gross profit of
approximately $364,000 and $206,000 for the years ended
December 31, 1994 and 1993, respectively. Gross profit for
the year ended December 31, 1995 was $270,000 or 13.8%
Management anticipates gross margins to improve due to the
continued decreased labor cost, the decrease in employee
benefits required for the resident employees and reduced
facilities cost in the future.
21
Selling expenses represented approximately 11.6% of
sales in 1995 compared to 9.7% of sales in 1994 compared to
6.2% in 1993. The increase of selling expense in 1994
compared to 1993 is due primarily to a decrease in sales
volumes and sales personnel having fixed minimum
compensation. The decrease in sales expense during 1993 was
due primarily to the loss of one sales person and their
related sales expense.
Administrative expenses were approximately $1,777,934
or 91.0% of sales during 1995 compared to 89.8% and 26.2% in
1994 and 1993, respectively. The increase in administrative
expense for 1994 and 1993 was almost exclusively to the
charge to administrative expense in the amount of $869,000
and $689,000, respectively for the difference in the
exercise price for non-qualified stock options compared to
the market price on the date of the grant. Continued
attempts are being made to control both selling and
administrative costs.
No expenditures were made during 1994 for research and
development while approximately $82,750 and $76,000, was
spent during the two years ended December 31, 1995 and 1993,
respectively. The Company does anticipate incurring
expenditures for research and development during 1996 in
completing the high speed tape back up system being
developed by Newdat.
While LTI anticipates continuing increases in demand
for its services, the capability to meet these demands are
limited by equipment, personnel and working capital.
Management does not anticipate a lower level of sales for
LTI than that realized during 1995.
The Company adopted the Statement of Position number 94-6
"Disclosure of Certain Significant Risks and
Uncertainities." during the year ended December 31, 1995,
which requires disclosure of risks and uncertainities that
could significantly affect the amounts reported in the
financial statements or the near-term functioning of the
Company and communicate to financial statements users the
inherent limitations in financial statements.
22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
U.S. Technologies Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets
of U.S. Technologies Inc. and Subsidiaries as of December
31, 1995 and 1994, and the related consolidated statements
of operations, changes in stockholders' equity and cash
flows for the years ended December 31, 1995, 1994 and 1993.
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 generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management as well as evaluating the overall financial
statement presentation. We believe that our 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 U.S. Technologies Inc. and
Subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for the
years ended December 31, 1995, 1994 and 1993 in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern.
As discussed in Note 1 to the financial statements, the
Company suffered significant losses from operations during
each of the three years ended December 31, 1995, 1994 and
1993 and had working capital deficiencies at December 31,
1993 that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard
to these matters are also described in Note 1. The
financial statements do not include any adjustments that
might result from this uncertainty.
BROWN, GRAHAM AND COMPANY P.C.
19
Georgetown, Texas
April 14, 1996
20
U.S. Technologies Inc.
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
1995 1994
Current assets:
Cash in bank $ 25,860 $ 2,579
Accounts receivable:
Trade, net 168,717 117,900
Officers, directors and employees 79,894 72,927
Inventories, net 919,970 1,042,306
Prepaid expenses 6,022 31,112
Total current assets 1,200,463 1,266,824
Property and equipment - net 236,190 426,238
Other assets:
Investment - NCL 265,000 265,000
Investment - Gem stones 270,000 143,564
Investment - new technologies, net 1,351,272
Other assets 3,612 18,714
Total other assets 1,889,884 427,278
Total assets $3,326,537 $2,120,340
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 50,000
Accounts payable $ 254,658 129,048
Accrued expenses 371,659 308,210
Total current liabilities 626,317 487,258
Long term Liabilities:
Notes payable 840,435 ________
Commitments and contingencies: (Note 8)
Stockholders' equity:
Common stock - $.02 par value; 40,000,000 shares authorized;
15,875,963 and 6,969,635 shares issued and outstanding
at December 31, 1995 and 1994, respectively 317,520 139,393
Additional paid-in capital 9,887,485 7,977,821
Accumulated deficit (8,345,220) (6,484,132)
Total stockholders' equity 1,859,785 1,633,082
Total liabilities and stockholders' equity$3,326,537 $2,120,340
The accompanying notes are an integral part
of the consolidated financial statements
20
U.S. Technologies Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
1995 1994 1993
Net Sales $1,951,487$1,668,865$6,655,573
Operating costs and expenses:
Cost of sales 1,681,371 2,032,521 6,861,981
Research and development expense 82,750 76,419
Selling expense 227,034 161,752 416,479
General and administrative expense 1,777,934 1,499,036 1,742,160
Provision for doubtful receivables 43,872 206,266 6,630
_________ _________ _________
Total operating costs and expense3,812,961 3,899,575 9,103,669
_________ _________ _________
Loss from operations (1,861,474)(2,230,710)(2,448,096)
Other income (expense)
Interest income 1,610 1,655
Interest expense (113,997) (20,016) (62,093)
Gain on sale of subsidiaries 1,376,959
Other income 126,596 29,748 169,139
Other expense (13,823) (2,997) (13,177)
__________ _________ ________
Total other income (expense) 386 1,383,694 95,524
__________ _________ _________
Net Loss $(1,861,088)$(847,016)$(2,352,572)
Loss per common share $ ( .12)$ (0.16) $ (0.62)
Cash dividends per common share $ -0- $ -0- $ -0-
Weighted-average common shares outstanding 14,997,5325,302,1473,794,631
21
The accompanying notes are an integral part
of the consolidated financial statements
22
U.S. Technologies Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
$0.02 Par Value
Common StockAdditional
Number of Par Paid-InAccumulated
Shares ValueCapital Deficit Total
Balance, January 1, 19932,921,029$58,421$4,323,430$(3,284,544)1,097,307
Stock options exercised 340,000 6,800 709,231 716,031
Rule 144 stock issued 373,000 7,460 450,696 458,156
Stock exchanged for services325,0006,500 584,125 590,625
Stock issued - investment NCL118,0002,360248,390 250,750
Net loss _________ _________________ (2,352,572)(2,352,572)
Balance, December 31, 19934,077,029 81,541 6,315,872 (5,637,116) 760,297
Stock options exercised 171,606 3,432 125,718 129,150
Rule 144 stock issued 1,470,000 29,400 556,850 586,250
Stock exchanged for services951,00019,020685,381 704,401
Stock issued - gems 300,000 6,000 294,000 300,000
Net loss ________ ________________ (847,016) (847,016)
Balance, December 31, 19946,969,635139,3937,977,821(6,484,132)1,633,082
Stock exchanged for services372,0007,440 198,083 205,523
Stock issued for new product750,00015,000181,793 196,793
Stock options exercised 730,600 14,612 260,113 274,725
Stock issued for Newdat, Inc.
acquisition 7,053,728 141,0751,269,675 1,410,750
Net loss ________ ________________(1,861,088)(1,861,088)
Balance, December 31, 199515,875,963$317,520$9,887,485$(8,345,220)$1,859,785
The accompanying notes are an integral part
of the consolidated financial statements.
23
U.S. Technologies Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
1995 1994 1993
Cash flows from operating activities:
Net loss $(1,861,088)$(847,016)$(2,352,572)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 852,297 297,698 371,392
Allowance for writedown of gem stones(126,436)156,436
Excess of market over issue price
non qualified stock options and
Rule 144 stock 147,181 869,452 688,546
Gain on sale of subsidiaries (1,376,959)
Changes in current assets and liabilities:
Accounts receivable (28,470)(785,655) 169
Inventory 288,317 (80,341) 75,412
Notes receivable 48,805 378
Prepaid expense 25,090 (8,713) (50,242)
Accounts payable 91,890 858,745 440,800
Accrued expenses 63,441 406,753 241,582
________ ________ ________
Net cash used in operating activities(547,778)(460,795)(584,535)
________ ________ ________
Cash flows from investing activities:
Proceeds from sale of subsidiaries 1,758
Proceeds from release of
deposit on capital leases 46,184
Equipment purchases (3,294) (37,607) (197,989)
Decrease (increase) in other assets (1,482) 25 601
Investment in NCL ________________ (14,250)
Net cash used in investing activities (4,776) (35,824) (165,454)
Cash flows from financing activities:
Proceeds from issuance of common stock45,000458,287 1,076,266
Principal payments for obligation under capital leases
and notes payable (50,000) (120,214)
Increase in notes payable 580,835
Proceeds payments - overdrafts (165,152)
_______ _______ _______
Net cash provided by financing activities575,835 458,287 790,900
Increase (decrease) in cash 23,281 (38,332) 40,911
Cash, beginning of period 2,579 40,911 -0-
Cash, end of period $25,860 $ 2,579 $40,911
Supplemental disclosure of cash flow information:
Cash paid for interest during the years ended December 31,
1995, 1994 and 1993 was $12,411, $20,016 and $62,093
respectively.
Supplemental schedule of noncash investing and
The accompanying notes are an integral part
of the consolidated financial statements.
24
financing activities:
1995: Issued 750,000 shares of stock for new product
Issued 7,053,728 shares of stock for purchase of Newdat,
Inc.
1994: Issued 300,000 shares of stock for investment in gem
stones.
Sold three subsidiaries for $1,758 of cash. Purchaser
received $214,159 in current assets, $94,419
in fixed assets and the assumption of $1,589,360 in
current liabilities.
1993: Issued 118,000 shares of stock for investment in NCL
Capital lease obligations of $222,167 were relieved for
lease equipment returned to lessor.
Deposits on capital leases in the amount of $67,914 were
applied to capital lease obligations.
The accompanying notes are an integral part
of the consolidated financial statements.
25
U.S. Technologies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
U.S. Technologies Inc. furnishes administrative and management
services to its wholly owned subsidiaries, Lockhart
Technologies, Inc. ("LTI") and Newdat, Inc., and furnished the
same services to its formerly wholly owned subsidiaries American
Microelectronics Inc. "AMI", Republic Technology Corporation
"Republic", Microlabs, Inc. "Microlabs". LTI operations consist
of contract manufacturing, prototyping and repair of printed
circuit boards using surface mount, through-hole and mixed
technology. This technology accounted for approximately 99% of
the consolidated net sales. Newdat, Inc. and its 80% owned
subsidiary SensonCorp, Limited were acquired on January 23, 1995
(see note 18). U.S. Technologies Inc., together with its
subsidiaries, are hereinafter referred to collectively as "the
Company."
Principles of Consolidation
The consolidated balance sheet at December 31, 1995 includes
the accounts of U.S. Technologies Inc., and its wholly owned
subsidiaries Lockhart Technologies, Inc., Newdat, Inc. and its
80% owned subsidiary SensonCorp, Limited. The consolidated
balance sheet at December 31, 1994 includes U.S. Technologies
Inc. and Lockhart Technologies, Inc. The consolidated statements
of operations, changes in stockholders' equity and cash flows for
the year ended December 31. 1995, include the accounts of U.S.
Technologies Inc., Lockhart Technologies, Inc., Newdat, Inc., and
the operations of SensonCorp Limited. The consolidated
statements of operations, changes in stockholders' equity and
cash flows for the year ended December 31, 1994 includes the
accounts of U.S. Technologies Inc., Lockhart Technologies, Inc.
from its inception on June 29, 1994 and its formerly wholly owned
subsidiaries American Microelectronics Inc., Republic Technology
Corporation and U.S. Microlabs Inc., (see note 19). For the year
ended December 1993, consolidated statements of operations,
changes in stockholders' equity and cash flows include the
accounts of U.S. Technologies Inc., and its formerly wholly owned
subsidiaries American Microelectronics Inc., Republic Technology
Corporation and U.S. Microlabs Inc. Intercompany transactions and
balances have been eliminate in consolidation.
Presentation Basis
The Company's consolidated financial statements have been
presented on the basis that the Company is a going concern which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company
incurred significant losses during each of the three years in the
period ended December 31, 1995, and had working capital
deficiencies at December 31, 1993. Additionally, at various
times during 1995 and 1994, the Company was in default
(delinquent payments) on its debt obligations.
24
The Company's continued existence is dependent upon its
ability to resolve its liquidity problems. While there is no
assurance that such problems can be resolved, the Company
believes there is a reasonable expectation of achieving that goal
through the cash generated from future operations, the
introduction of new products into the market (see note 16) and
the sale of additional common stock through a private placement.
Inventories
Inventories are stated at the lower of cost or market
utilizing the average cost method for raw materials and work-in-
progress, and the first-in, first-out method for finished goods.
Property and Depreciation
Property and equipment are stated at cost less accumulated
depreciation. Expenditures for additions, renewals and
improvements of property and equipment are capitalized.
Expenditures for repairs, maintenance and gains or losses on
disposals are included in operations. Depreciation is computed
using the straight-line method over the following estimated
lives:
Estimated Lives
Equipment 5-7 years
Furniture and fixtures 7 years
Vehicles 3 years
Leasehold Improvementsterm of building lease
25
Licenses
The cost of obtaining the rights to copy certain proprietary
software for use in the Remote Processing Module ("RPM") are
being amortized over five years using the straight line method.
Earnings per Share
Net loss per common share is based on the weighted average
number of common shares and common share equivalents outstanding
in each period. The shares reserved for stock options and
warrants are anti-dilutive for the purpose of determining net
income or loss per share.
Product Warranties
Under the Company's product warranty program, the Company
has agreed to replace certain products during the one year
warranty program. Expected warranty costs, if any, are provided
for in the period in which products are sold. To date accrued
warranty costs are immaterial.
Revenue Recognition
Revenue is recognized from sales of products when the
product is shipped.
Recent Pronouncements
The Company adopted the Statement of Position number 94-6
"Disclosure of Certain Significant Risks and Uncertainties."
during the year ended December 31, 1995, which requires
disclosure of risks and uncertainties that could significantly
affect the amounts reported in the financial statements or the
near-term functioning of the Company and communicate to financial
statement users the inherent limitations in financial statements.
Risks and Uncertainties
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
2. ACCOUNTS RECEIVABLE - TRADE
During 1993 and for the first six months of 1994, one of the
Company's former subsidiaries had a factoring arrangement which
provided for the sale of eligible accounts receivables with and
without recourse to the factoring company which advanced funds
equal to 80% of such eligible receivables. Additionally, the
factoring company charged a factoring fee of 3% of the face
amount of all invoices purchased and an interest rate for funds
advanced at an annualized rate of 3.5% above the prime rate of
26
American Federal Bank of Dallas. Under the terms of the
agreement, the factoring company retained a continuing security
interest in the factored accounts receivables and inventory.
The interest and factoring fees discussed above of $44,167, and
$154,834 were incurred during the two years ended December 31,
1994, and 1993, respectively, and are included in the
Consolidated Statements of Operations in general and
administrative expense. The estimated allowance for doubtful
accounts pursuant to the recourse provision was reported as a
provision for uncollectible accounts receivable in the
Consolidated Statement of Operations. Total funding received
during the years ended December 31, 1994, and 1993 from the sale
of receivables was $837,923, and $4,517,891, respectively.
Accounts receivable - trade at December 31 is net of an
allowance for doubtful accounts as follows:
1995 $68,434
1994 49,830
3. INVENTORIES
At December 31, inventories consist of the following:
1995 1994
Raw Materials $1,186,863 $1,038,380
Work in progress 28,107 7,122
Finished goods ________ 29,804
1,214,970 1,075,306
Allowance for obsolescence 295,000 33,000
$919,970 $1,042,306
The Company provided an allowance for obsolete raw materials of
$262,000, $33,000 and $15,000, which was charged against cost of
sales, during the years ended December 31, 1995, 1994 and 1993,
respectively. Additionally the Company recorded, and charged to
cost of sales, a writedown to net realizable value its carrying
cost of finished goods inventory in the approximate amounts of
$46,000 and $26,000 during the years ended December 31, 1994, and
1993, respectively.
As a result of recent changes in the Company's market for certain
products, carrying amounts for those inventories have been
reduced by approximately $295,000 due to quantities in excess of
current requirements. Management believes that this reduces
inventory to its lower of cost or market, and no additional loss
will be incurred upon disposition of the excess quantities.
While it is at least reasonably possible that the estimate will
change materially in the near term, no estimate can be made of
the range of additional loss that is at least reasonably
possible.
4. PROPERTY AND EQUIPMENT
27
At December 31, property and equipment consists of:
1995 1994
Equipment $1,572,663 $1,566,634
Furniture and fixtures 165,362 179,721
Vehicles 12,873
Leasehold improvements 204,865 204,865
1,942,890 1,964,093
Less accumulated depreciation1,706,7001,537,855
$ 236,190 $ 426,238
Depreciation expense for the years ended December 31, 1995,
1994 and 1993 was $197,920, $287,782 and $346,594, respectively.
5. LICENSES
Prior to 1993, the Company entered into license agreements
totaling $160,250 with certain software vendors for the right to
reproduce and distribute 10,000 copies of certain BIOS and
operating system software used in its RPM units. The cost and
accumulated amortization are included in other assets.
Amortization is computed using the straight-line method over 5
years. Amortization expense for 1995, 1994 and 1993 totaled
$16,583, $9,917 and $24,798 respectively. Accumulated
amortization at December 31, 1995 and 1994 was $56,250, $39,667.
6. NOTES PAYABLE
Notes payable and long-term debt at December 31, 1995 and
1994, consist of the following:
1995 1994
10% unsecured note payable to
Carlton Technologies
Limited; due on December 15, 1997.$397,212
10% secured note payable to
Laura Technologies Limited;
due on December 15, 1997;
secured by the investment in
gemstones 210,774
10% unsecured note payable to
Tintagel Limited;
due on December 15, 1997.
232,449
Note payable to Coopers &
Lybrand. The loan is a demand
loan which requires monthly
principal payments in the
amount of $5,000 and bears an
interest rate at prime as
stated in the Wall Street
Journal and requires that the
interest be
28
paid monthly maturing June 21, 1994. _________50,000
Total Maturities $840,435 $50,000
7. INCOME TAXES
Deferred federal income tax at December 31, 1995 follows:
Deferred federal income tax asset $2,222,060
Valuation allowance (2,222,060)
Total deferred tax asset $ -
0-
The Company has available for federal income tax purposes
unused operating losses which may provide future tax benefits
which expire as follows:
Year of Expiration Net Operating Loss
2003 $1,383,000
2005 390,000
2006 165,000
2007 147,000
2008 2,291,000
2009 836,000
2010 1,323,470
$6,535,470
8. COMMITMENTS AND CONTINGENCIES
The Company relocated its operations to a minimum security
prison facility on December 29, 1993. AMI, a formerly wholly
owned subsidiary of the Company, had a lease agreement with
Wackenhut Corrections Corporation, The Texas Department of
Criminal Justice, Division of Pardons and Paroles, and the City
of Lockhart, Texas, to lease approximately 27,800 square feet of
manufacturing and office space under an operating lease through
January 31, 1997. The lease provides for automatic three year
extensions unless notification is given by either party at least
six months prior to the expiration of each term. This lease was
assigned by AMI to Lockhart Technologies, Inc. on October 7,
1994, although the assignment has not been formally ratified by
Wackenhut Corrections Corporation. The lease provides for annual
rental rates of $1 per year for the primary term and the first
automatic three year extension. The Company continues to lease
office space in Austin, Texas. Rental expense for the years ended
December 31, 1995, 1994 and 1993, was $33,144, $7,290 and
$132,000, respectively.
On March 22, 1995, the Company was served with a citation in
TTI Testron, Inc. vs. American Microelectronics, Inc. and
Lockhart Technologies, Inc., County Court at Law No. 1, Travis
County, Texas, Cause No. 221,094. The petition alleges that
Lockhart Technologies, Inc. received the assets of American
Microelectronics Inc. without consideration. The action seeks
29
damages of $11,527. The Company believes the claim is without
merit.
On January 24, 1995, an action styled SensonCorp Systems,
Inc., SensonCorp Pacific, SensonCorp Southeast, SensonCorp West,
Creative Media Resources vs. SensonCorp Limited, William Meehan,
Dugal Allen, John Allen, DOES 1 through 50, was filed in United
States District Court Northern District of California, Cause No.
C-95-00282. The action seeks equitable relief and damages for
breach of contract, breach of implied warranty of good faith and
fair dealing, common law fraud, negligent misrepresentation,
unfair competition, interference with contract, accounting,
receiver/attachment, and theft of trade secrets. The causes of
action are related to a marketing agreement between Senson and
the plaintiffs. Defendant John Allen is the Chairman of the
Board of the Company. Dugal Allen is John Allen's son and was
Vice President of operations for Senson at the time. Mr. Meehan
is President of U.S. Technologies Inc., and was a founding member
of SensonCorp Limited. The suit does not specify the dollar
amount of damages sought. The plaintiff's were denied most of
the equitable relief they sought, but obtained a temporary
injunction requiring Senson to continue selling them certain
products on Senson's usual and customary terms. This ceased when
Senson subsequently cancelled the agreement on "Without Cause"
grounds in May 1995. The Company formally sought to participate
in arbitration during April 1996 and is awaiting a date for the
arbitration to be heard. The Company strongly believes that the
plaintiffs claims are without merit and that SensonCorp, Limited.
and the other defendants will prevail.
On July 16, 1995, the Company was served with a citation in
Elpac Electronics vs. U.S. Technologies Inc., in the 53rd
District Court of Travis County, Texas. The petition alleges
that the Company is liable for certain debts of a former
subsidiary, American Microelectronics, Inc. ("AMI") on the basis
of fraudulent transfer of assets from AMI to the Company. The
petition seeks $101,461 in damages plus $35,000 in attorney's
fees, interest and costs. The Company believes the complaint is
without merit.
On July 16, 1995, the Company was served with a citation in
Evins Personnel Consultants vs. U.S. Technologies Inc., County
Court at Law No. 1 of Travis County, Texas. The petition alleges
that the Company is liable for certain debts of a former
subsidiary, American Microelectronics, Inc. ("AMI") on the theory
that the Company was doing business as AMI. The petition seeks
$40,818 in damages plus $13,500 in attorney's fees, interest and
costs. The Company believes that the complaint is without merit.
On July 16, 1995, the Company was served with a citation in
Texas Industrial Svcs. vs. U.S. Technologies Inc., in County
Court at Law No. 2 Travis County, Texas. The petition alleges
that the Company is liable for certain debts of a former
subsidiary, American Microelectronics, Inc. ("AMI") on the theory
the Company is doing business as AMI. The petition seeks $24,482
30
in damages plus $8,000 in attorney's fees, interest and costs.
The Company believes that the complaint is without merit.
There were several lawsuits outstanding against AMI and
Republic at the time they were sold. AMI and Republic are
separate corporations, incorporated under the laws of the State
of Texas. Therefore, the Company believes it has no liability
arising out of or in connection with any lawsuits against AMI or
Republic.
On July 14, 1989, the Company's Board of Directors adopted a
bonus plan that sets aside 1%, 2% and 3% of sales as long as the
Company has maintained pretax income of 10%, 15% and 20% of
sales, respectively. The performance standards will be based on
a three month period of time. Bonuses will be accrued quarterly
and determined as of the end of each calendar year. No employees
will have vested rights in the bonus plan. The Board of
Directors will act as a committee to determine who participates
and the actual amount, if any, of the individual bonuses. No
bonuses were declared during the three years ended December 31,
1995.
The Company's Board of Directors guaranteed severance pay to
four individuals, including themselves, in the event of any
merger or acquisition by the Company. In such event the company
guaranteed severance pay of four months each to the then Chairman
Ryan Corley and the then Director Jack Bryant; and two months
each for Leonard Hilt and Neil Ginther, if their employment with
the Company or any subsidiary was terminated voluntarily or
involuntarily for any reason (with or without cause) within six
months following the closing of any acquisition or merger. The
same conditions applied if any of the parties resigned before the
designated date. Mr. Ginther resigned from the Company during
February 1995 and Mr. Corley and Mr. Bryant resigned from the
Company during July 1995. Mr. Ginther has stated that he did not
wish to claim the severance, while Messers Corley and Bryant have
requested payment. The present Board of Directors question the
legality of this form of compensation and is obtaining a legal
ruling. The severance pay of $46,000 has not been recorded in
the accompanying financial statements due to the uncertainty.
9. ESCROW AGREEMENT
Dr. R. E. Woody, a shareholder; Mr. Ryan Corley, a
shareholder, a former Chairman of the Board of Directors,
President and Chief Executive Officer and Mr. Neil E. Ginther, a
shareholder of less than 5% of the outstanding shares of Common
Stock of the Company escrowed 693,360, 405,533 and 56,700 shares
of their stock, respectively, pursuant to an escrow agreement
required by the state of Texas which, among other things,
provided that if in the first twelve (12) months following the
effective date of the Registration Statement (April 14, 1987),
the closing bid price for the Company's Common Stock was not at
least $10.00 for a period of twenty (20) consecutive trading
days, an aggregate of 200,000 shares of Common Stock would be
31
released from the escrow and contributed back to the Company. On
April 14, 1988, pursuant to the escrow agreement, Mr. Ryan
Corley, Mr. Neil Ginther and Dr. R. E. Woody released an
aggregate of 200,000 shares of Common Stock from escrow and
contributed the shares back to the Company and such shares were
cancelled. Additionally, if in the second twelve (12) months
following such effective date, the closing bid price was not at
least $15.00 for a period of twenty (20) consecutive trading
days, an additional 200,000 shares of Common Stock in the
aggregate would be released from the escrow and delivered to the
Company. On April 14, 1989, pursuant to the escrow agreement,
Mr. Ryan Corley, Mr. Neil Ginther and Dr. R. E. Woody released an
aggregate of 200,000 shares of Common Stock from escrow and
contributed the shares back to the Company which cancelled them.
The escrow agreement provided for the release of the
remaining shares to each of the three shareholders yearly
commencing April 15, 1993 through April 15, 1998 at the rate of
20% of their respective shares remaining in escrow at April 15,
1993. The number of shares released from escrow on April 14,
1995, 1994 and 1993 to Dr. R.E. Woody, Ryan Corley and Neil E.
Ginther was 138,672, 81,106 and 11,340, respectively in each of
the three years.
All of the escrowed shares have been treated as issued and
outstanding shares in all references to the number of shares
outstanding and have been included in the weighted average number
of shares outstanding in all references to earnings per share
during the time periods in which they were outstanding.
10. CUSTOMERS
The Company is dependent on seven customers for a major
portion of its sales. The sales of services to IBM represented
approximately 11%, and 24% for the years ended December 31, 1994,
and 1993, respectively. Trimble Navigation represented
approximately 27%, and 12% of sales during the years ended
December 31, 1994, and 1993, respectively, Dell Computer
Corporation represented approximately 9%, 20% and 35% of the
Company's sales for the years ended December 31, 1995, 1994 and
1993; Texas Instruments accounted for approximately 15% and 14%
of total sales during the years ended December 31, 1995 and 1994,
respectively. Sales to Crystal Semiconductor accounted for 13%
of sales during the year ended December 31, 1995. Micronics
Computer and Intel Corporation each accounted for 9% of total
sales during the year ended December 31, 1995.
32
11. STOCK OPTION PLANS - QUALIFIED
The 1988 Employee Stock Option Plan (the "1988 Plan") was
approved at the Annual Meeting of Shareholders on March 16, 1989.
The 1988 Plan reserves 300,000 shares of the Company's Common
Stock to be granted to officers and employees at the discretion
of the Board of Directors.
The 1990 Employee Stock Option Plan (the "1990" Plan") was
approved at the Annual Meeting of Shareholders on June 8, 1990.
The 1990 Plan reserves 300,000 shares of the Company's Common
Stock to be granted to officers and employees at the discretion
of the Board of Directors.
Both plans provide that all options must be granted at not
less than the market price at the time of the grant. The term of
the options will be selected by the Board of Directors, but in no
event will such term exceed ten years from the date of the
granting of the option. All options are nontransferable, except
upon death, and, during the lifetime of the optionee, are
executable only by the optionee.
The following table contains information on stock options:
Average Option
Shares Price per Share
Granted:
1989 182,600 $2.00
1990 358,560 $2.50
1991 110,100 $5.10
1992 230,720 $4.41
1993 220,000 $1.64
1994 224,700 $0.60
1995 3,000 $0.63
Exercised:
1989 3,800 $1.90
1990 40 $2.20
1991 118,980 $3.20
1992 162,520 $3.28
1993 153,000 $1.99
1994 171,600 $0.75
1995 3,000 $0.63
Forfeited/cancelled:
1989 122,460 $4.20
1990 176,880 $3.60
1991 139,540 $3.10
1992 133,760 $4.97
1993 91,000 $3.16
1994 87,920 $3.03
1995 45,000 $6.68
Outstanding at year end:
1988 238,760 $4.95
1989 295,820 $3.30
1990 477,460 $2.90
1991 329,040 $3.60
1992 341,820 $3.79
33
1993 281,500 $2.86
1994 182,580 $3.41
1995 137,580 $2.34
Executable at year end:
1989 155,800 $4.85
1990 109,080 $3.60
1991 131,707 $3.10
1992 166,320 $3.84
1993 124,700 $1.98
1994 110,655 $3.80
1995 137,580 $2.34
Options for a total of 48,840 shares are available for
grant to officers and key employees under the 1988 and 1990
plans, under which grants may be made until August 2, 1998 and
October 6, 1999, respectively.
34
12. STOCK OPTION PLANS - NONQUALIFIED
On May 4, 1993, September 3, 1993 and April 15, 1994, the
Company adopted the 1993, 1993A and 1994 nonqualifying stock
option plans, respectively. The plans reserve 500,000, 800,000
and 800,000 shares of the Company's Common Stock to be granted to
non-employees, directors, and/or other persons associated with
the Company whose services have benefited the Company.
The following table contains information on the nonqualified
stock options:
Average Option
Shares Price per Share
Granted:
1993 1,025,000 $1.56
1994 710,000 $.20
1995 0 $.00
Exercised:
1993 512,000 $.98
1994 951,000 $.41
1995 272,000 $.05
Outstanding at year end:
1993 513,000 $2.13
1994 272,000 $.05
1995 0 $.00
Executable at year end:
1993 513,000 $2.13
1994 272,000 $.05
1995 0 $.00
Some of the options were granted at less than market value
at the date of the grant. The excess of the market value over
the option price in the amount of $147,181 and $188,694 has been
included in expense in the accompanying financial statements as
compensation for the years ended December 31, 1995 and 1994,
respectively.
There are 90,000 shares available to grant as of December
31, 1995 under these plans.
13. STOCKHOLDERS' EQUITY
At December 31, 1994, the Company has outstanding 660,000
warrants which entitle the holder to purchase one share of common
stock at $10 per warrant. The warrants expire on July 31, 1996.
During 1994, 1,770,000 shares of the Company's Rule 144
stock was sold for total consideration of $412,500. The excess
of market price for the shares sold exceeded the purchase price
35
by $348,750 has been treated as compensation and included in the
accompanying financial statements in administrative expenses.
The following table reconciles the number of common shares
shown as outstanding on the balance sheet with the weighted-
average number of common and common equivalent shares used in
computing earnings per share for the years ended December 31,
after giving effect to the one for five reverse stock split
effective February 9, 1993:
1994 1994 1993
Common shares outstanding at December 3115,875,9636,969,635
4,077,029
Effect of using weighted
average common
shares outstanding (878,431)(1,667,488)(289,398)
_________ _________ _________
Shares used in computing
earnings per share 14,997,532 5,302,147 3,794,631
On May 31, 1994, The Company exchanged 300,000 shares of its
common stock with Paris Fashion Ltd. for gem stones with a
purported value of approximately $300,000. During the year ended
December 31, 1994 the Company obtained an appraisal of the stones
which determined the value to be approximately $143,000. The
Company contacted Paris Fashion Ltd. and demanded that the
difference in appraised value be corrected. During the year ended
December 31, 1995, Paris Fashions, Ltd provided the Company with
additional gem stones with a purported value of $160,000. The
gem stones have been appraised during 1996 at a value of
$270,000. The Company has provided for a valuation reserve and a
charge against operations in the amount of $30,000 and $170,000
for the years ended December 31, 1995 and 1994, respectively.
On July, 23, 1993, The Company purchased a NCL International
LTD., formerly the National Cycle League (NCL), Team Membership
which included a $5,000 membership fee to NCL Properties for the
total purchase price of $265,000, represented by a cash payment
of $14,250 and 118,000 shares of its Restricted Rule 144 Common
Stock. The team membership gives the Company the option of
establishing a team in either Germany or Spain if the NCL doesn't
sell a team membership in either country within one year. The
Company has been given an extension to December 31, 1996 to
establish a team for the 1997 season and may also establish the
team in the U.S., Canada or Mexico.
During the year ended December 31, 1993, the Company issued
100,000 shares of its Rule 144 stock to Chandler, Church &
Company for an agreement for future promotional services.
Chandler, Church & Company advised the Company that it did not
consider that the stock was to have been issued by the Company
and advised the Company that they did not have a contract with
the Company. On December 21, 1993, The Company advised the stock
transfer agent to cancel the stock certificate and that if the
36
shares were presented for transfer that the purchaser thereof
could not be a bona fide purchaser. The Company has not included
the shares in the shares outstanding as of December 31, 1995,
1994 and 1993 or included them in the weighted average shares in
the per share computation.
14. SALE OF SUBSIDIARIES
Prior to June, 1994, the Company owned three (3) additional
subsidiaries which had been in operation for several years:
American Microelectronics Inc. ("AMI"), Republic Technology
Corporation ("Republic"), and U.S. MicroLabs Inc. ("MicroLabs").
AMI was in the electronics contract manufacturing business.
Republic was in the business of designing and marketing personal
computers. MicroLabs had been inactive for several years, but
had at one time been in the business of developing and marketing
software. AMI was the largest secured creditor of Republic. The
Company was the largest secured creditor of AMI. In June, 1994,
AMI foreclosed on its security interest in Republic and accepted
an assignment of all of Republic's assets (all of which were
covered by AMI's security agreement) in satisfaction of
Republic's debts to AMI. Subsequent thereto the Company
foreclosed on its security interest in AMI and accepted an
assignment of AMI's assets (that were covered by the Company's
security agreement) in satisfaction of AMI's debts to the
company. The Company made a capital contribution of the assets
thus obtained to the newly formed company, Lockhart Technologies,
Inc., in exchange for all of the capital stock of that company.
On June 30, 1994, all of the common stock of AMI, Republic
and Microlabs were sold to an unrelated party for cash totaling
$1,758. The transaction resulted in a gain of $1,376,959 which
has been included in operations in 1994.
Following is a summary of net assets and results of
operations for the three subsidiaries sold as of June 30, 1994,
and December 31, 1993, and for the six months ended June 30, 1994
and the year ended December 31, 1993.
1994 1993
Total Assets $ 214,159 $3,274,346
Total liabilities 1,589,360 4,663,284
Net assets (liabilities) $1,375,201 $(1,388,938)
Sales and other income $1,255,437 $6,926,368
Operating cost and other expense 1,783,733
8,432,324
Net income (loss) $(528,296)$(1,505,956)
37
15. FOURTH QUARTER ADJUSTMENTS
Significant adjustments increasing the fourth quarter loss
of 1995, 1994 and 1993 are as follows:
1995 1994 1993
Increase of allowance for doubtful accounts$55,268
$156,436
Unrecorded compensation on Rule 144 stock 20,142
$190,421
Physical inventory adjustments 57,183
Writedown of inventory for obsolete raw materials
60,703 33,000
Decrease in gain on sale of subsidiaries 224,000
Increase in goodwill in acquisition of Newdat, Inc.
500,000
Amortization of goodwill 100,000
Accrued expenses 84,519
Accrual of penalties and interest on
Travis County Tax Judgment_________26,712 18,180
Aggregate adjustment $800,490$460,290$265,784
16. ACQUISITION OF SUBSIDIARY
On January 23, 1995, the Company acquired all of the
outstanding capital stock of Newdat, Inc., in exchange for
7,053,728 shares of the Company's common stock. As a result of
the acquisition, the Company has available two new products which
will go into production during the second quarter and an 80%
interest in another company which is marketing a line of
environmentally friendly chemical coatings developed by a major
Australian chemical company.
The acquisition has been accounted for by the purchase
method of accounting, and accordingly, the purchase price has
been allocated to assets acquired and liabilities assumed based
on their fair market value at the date of acquisition. The
excess of purchase price over the fair values of net assets
acquired has been recorded as goodwill. The fair values of these
assets and liabilities are summarized as follows:
Cash $ 2,846
Accounts receivable 11,243
Inventory 165,981
Property and equipment 4,578
Purchased technologies 1,140,000
Goodwill 849,065
Accounts payable and accrued expenses(33,720)
Notes payable (729,243)
$1,410,750
Included in the purchased technologies is $300,000 of
technologies for a tape storage device that is still in the
development stage. That amount has been charged to expense in
1995. Goodwill and purchased technologies are being amortized
38
over 5 years on the straight line method. Amortization in the
amount of $337,793 has been charged to expense during the year
ended December 31, 1995.
Pro Forma Results of Operations, including the expense of
the tape storage device, had the acquisition been effective at
the beginning of 1994 are as follows:
Net sales $1,700,965
Net loss $(1,225,329)
Earnings per share $(.90)
Weighted average common shares outstanding 5,302,147
17. RELATED PARTIES
Mr. John Allen, Chairman of the Company is also Chairman of
the Board of Directors of Laura Technologies, Inc. with whom the
Company and or its subsidiaries have a loan in the amount of
$210,774 as of December 31, 1995,
39
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES.
During 1995, the Company had no disagreements with its
accountants on accounting and financial disclosures.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note 1 to the financial statements, the Company
suffered significant losses from operations during each of the
three years in the period ended December 31, 1995 and had working
capital deficiencies at December 31, 1993 that raise substantial
doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described
in Note 1. The financial statements do not include any
adjustments that might result from this uncertainty.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Name Age Position
John V. Allen 60 Chairman of the Board
Norman Frank 66 Director
William Meehan 50 Director, President and Chief
Executive Officer of the Company.
Peter Simmons 49 Vice President of Sales and
Marketing
Directors of the Company are elected at the annual meeting
of shareholders to serve for one year or until their successors
are elected and have qualified. Vacancies on the Board of
Directors of the Company and its Subsidiaries are filled by the
Board of Directors of the Company. Officers serve at the
discretion of the Board of Directors. There are no family
relationships between any of the directors or officers of the
Company.
John V. Allen - Chairman of the Board of Directors.
John Allen became a member and Chairman of the Board of
Directors on January 23, 1995, when U.S. Technologies Inc.
acquired Newdat, Inc. Mr. Allen has been Chairman of the Board
of Newdat, Inc. since its inception in 1994. Mr. Allen was a
founder and Chairman of the Board of Pan Pacific Gold Corporation
since July 1994, a Canadian resources company with activities in
British Columbia, Vietnam and China conducting mining operations
primarily for gold. Mr. Allen is the founder of and Chairman of
the Board of Laura Technologies Inc., an Arizona technology
corporation devoting its efforts to research and development of
40
principally electronic products. During the period of 1984
through 1989 Mr. Allen served as the founder and Chairman of
Superburn Systems Ltd., a Canadian public company involved in
environmental and waste management with offices in Canada, United
States, United Kingdom, Germany and other European countries.
Mr. Allen is a member of the Board of Directors of Laura
Investments Ltd., a wholly owned multinational investment holding
company with a diverse range of high technology businesses.
Norman W. Frank - Director
Norman W. Frank, was appointed to the Board of Directors on
October 30, 1995. From March 1994, Mr. Frank has operated his
own independent consulting firm specializing in environmental and
international business fields. For over 25 years Mr. Frank was
employed by United Technologies Elliott having served the Company
in several locations throughout his career. He set up several
domestic and foreign offices, and operations including joint
ventures and license agreements. He subsequently became Vice
President of International Operations. His responsibilities
included running the Company's international operations and
setting up new arrangements in other countries for the
manufacturing, sales and service of equipment for the oil, gas
and petrochemical industries. In 1976, while still employed with
Elliott, Mr. Frank was appointed to the Board of Directors of
Ebara Corporation, a large Japanese conglomerate. In 1981 he
joined Ebara full time and founded their first U.S. subsidiary
company, Ebara International Corp. He served as President of
this Company until 1986 when he became a consultant to Ebara for
their Environmental business, and later set up a new company for
them in the U. S. for these businesses. He served as President
of this company until February 1994. Mr. Frank has written many
papers on environmental situations, and serves as a consultant to
the International Atomic Energy Agency (IAEA) for radiation
processing. Mr. Frank attended Worcester Polytechnic Institute in
Worcester, Massachusetts and graduated with a degree in
Mechanical Engineering.
William Meehan - President, Chief Executive Officer and member of
the Board of Directors.
William Meehan was appointed President and Chief Executive
Officer of the Company on June 1, 1995, and appointed to the
Board of Directors on October 30, 1995. Mr Meehan has served as
President, Chief Executive Officer and a member of the Board of
Directors of SensonCorp Limited from July 1994. Mr. Meehan
served from October 1992 as President and as a member of the
Board of Directors of Clarion Environmental Technologies Inc., a
Vancouver Stock Exchange public company, specializing in
environmental pollution eradication until his resignation in June
1994. Mr. Meehan has been President and a member of the Board
of Directors of Pan Pacific Gold Corporation, a Canadian public
Company trading on the Vancouver Stock exchange since August
1994. Pan Pacific conducts mining and extraction activities in
British Columbia, Vietnam and China. Mr. Meehan was appointed as
41
the Australian Counsul General to Western Canada, based in
Vancouver, in December 1989 and served in that position until
October 1992. Mr Meehan has a degree in civil engineering and
has written a fellowship in International Marketing. He has
worked extensively in Europe, the Middle East, Asia, Australia
and North America during his career.
Peter Simmons - Vice President of Sales and Marketing.
Peter Simmons was appointed as Vice President of Sales and
Marketing to the Company in June 1995. Mr. Simmons previously
served as Vice President of Sales and Marketing for the Hazardous
Gas Detector Division of Halitec Industries Corporation,
manufacturers of gas detectors for industrial, commercial and
residential use; while located in Surrey, British Columbia from
December 1993 through November 1994. Mr. Simmons served as
President of Campers Choice Superstore, a retail sales company
for RV's, camping and sporting goods, located in Delta, British
Columbia, from April 1992 thought December 1993. Previous to
that, Mr. Simmons served as Vice President of Sales and Marketing
for Nameco T.M.E. of Canada Ltd, manufacturers, importers and
distributors of RV, camping, marine, sporting goods, automotive
and hardware related products.
Significant Employees
The Company relies on the services of certain key employees.
Set forth below is certain information describing such persons.
Leonard Hilt - President of Lockhart Technologies, Inc.
Mr. Hilt is the founding officer of LTI the manufacturing
subsidiary of the Company. Mr Hilt has had a direct or indirect
association with the Company since 1987. Mr Hilt is a CPA and
graduated from Kansas State University with a degree in business
administration.
Walter Stierhoff - General Manager of Lockhart Technologies, Inc.
Mr. Stierhoff joined LTI in September 1995. Mr. Stierhoff
is a specialist in electronics and electro-mechanical production.
He has structured all key elements of the factory and recruit top
personnel as section heads in preparation for increased contract
manufacturing and for production of the Company's proprietary
products. Mr. Stierhoff a degree in electrical engineering for
Texas University.
42
Robert Walker - National Sales Manager for SensonCorp LTD.
Mr. Walker joined Senson during 1995. Mr. Walker controls 2
regional sales managers and with these managers is developing a
distribution net works for sales of product to industrial
distributors and end users. Mr. Walker is a graduate in science
from the University of Arizona.
43
ITEM 11. EXECUTIVE COMPENSATION.
The table below sets forth all cash and cash equivalent
remuneration paid by the Company and its subsidiaries during the
year ended December 31, 1995 to each of the Company's executive
officers and to a group consisting of all` executive officers of
the Company.
Name Capacities in which serves Cash
Compensation
John V. Allen Chairman of the Board
$0
William Meehan Director, President and
chief executive officer $95,0
00
Peter Simmons Vice President of Sales and Marketing
$31,343
Norman Frank Director $0
All Executive Officers
and Directors as a $126,343
Group (4 persons)
Compensation of Directors
Directors of the Company are reimbursed for travel expenses
incurred in serving on the Board of Directors. Directors who are
not executive officers of the Company receive $150 a month for
their services. An additional $50 per meeting is paid when the
Company holds more than two Board meetings during any calendar
month.
44
Stock Option Plans
The Company's Employee Incentive Stock Option Plan of 1988
and 1990 (the "Plans") were adopted by the Board of Directors and
approved by Shareholders on March 16, 1989 and June 8, 1990,
respectively. The purpose of the Plans is to attract and retain
qualified personnel. The Plans provide that the aggregate fair
market value of the shares of Common Stock for which any
participant may be granted incentive stock options in any
calendar year shall not exceed $100,000 plus any "unused limited
carryover" as determined under Section 422A(c) of the Internal
Revenue Code of 1954, as amended. No options may be granted
under the Plans after August 1, 1998 and October 5, 1999,
respectively.
The Plans are administered by the Board of Directors of the
Company who determine, subject to the provisions of the Plans, to
whom options are granted and the number of shares of the Common
Stock subject to option. The exercise price of such options
granted under the Plans must at least equal 100% of the fair
market value of the Common Stock on the date the option is
granted.
The Plans also provide that no option shall be executable
more than three months after termination of an optionee's
employment with the Company unless such termination of employment
occurs by reason of death or permanent and total disability. In
the event of the death or disability of a recipient of options
while an employee of the Company, the options which were
otherwise executable by the optionee or his legal representative
or beneficiary of his estate at any time prior to the expiration
of one year from the date of his death or disability. In no
event, however, shall an option be executable after 10 years from
the date it was granted.
As of December 31, 1995, no options have been issued to
Executive Officers, of the Company and executive officers of the
Company's subsidiaries pursuant to the 1988 and 1990 Plans,
respectively.
On May 4, 1993, September 3, 1993 the Company adopted the
1993, and 1993A nonqualifying stock option plans, respectively.
The plans reserved 500,000, and 800,000 shares of the Company's
Common Stock to be granted to non-employees, directors, and/or
other persons associated with the Company whose services have
benefited the Company.
On April 14, 1994, the Company adopted the 1994
Nonqualifying Stock Option Plan. The plans reserved 800,000
shares of the Company's Common Stock to be granted and issued to
its officers, directors, employees and or consultants whose
services have benefited the Company.
Bonus Plan
45
On July 14, 1989, the Company's Board of Directors adopted a
bonus plan that sets aside 1%, 2%, and 3% of sales as long as the
Company maintains a pre-tax income of 10%, 15%, and 20% of sales,
respectively. The performance standards will be based on
quarterly operating periods. Bonuses are accrued quarterly and
allocated as the end of each calendar year. No employees have
vested rights in the bonus plan. The Board of Directors of the
Company acts as a committee to determine who participates and the
actual amount of the individual bonuses. No bonuses were paid
during 1995, 1994, or 1993 under this plan.
46
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Mr. Ryan Corley, a shareholder, former Chairman of the Board
of Directors, former President and former Chief Executive
Officer; Dr. R. E. Woody, a shareholder and Mr. Neil E. Ginther,
a shareholder of less than 5% of the outstanding shares of Common
Stock of the Company escrowed 405,533, 693,360 and 56,700 shares
of their stock, respectively, pursuant to an escrow agreement
required by the State of Texas which, among other things,
provided that if in the first twelve months following the
effective date of the initial prospectus (April 14, 1987), the
closing bid price for the Company's Common Stock was not at least
$10.00 for a period of twenty consecutive trading days, an
aggregate of 200,000 shares of Common Stock would be released
from the escrow and contributed back to the Company. On April
14, 1988, pursuant to the escrow agreement, Mr. Corley, Dr. Woody
and Mr. Ginther released an aggregate of 200,000 shares of Common
Stock from escrow and contributed the shares back to the Company.
Furthermore, if in the second twelve months following such
effective date, such closing bid price was not at least $15.00
for a period of twenty consecutive trading days, an additional
200,000 shares of Common Stock in the aggregate would be so
released from the escrow and delivered to the Company. On April
14, 1989, pursuant to the escrow agreement, Mr. Corley, Dr. Woody
and Mr. Ginther released an aggregate of 200,000 shares of Common
Stock from escrow and contributed the shares back to the Company.
The foregoing reflects a 1 for 5 reverse split of the
Registrant's Common Stock, Warrants and Options which took place
on February 8, 1993, and assumes no additional shares issued in
respect of any fractional shares which may have resulted from the
reverse split.
47
The following table sets forth certain information regarding
ownership of Common Stock of the Company as of the date of this
Prospectus by each officer and director, all officers and
directors as a group and each beneficial owner of more than 5% of
the outstanding shares of Common Stock of the Company.
Number of Percentage
Name and Address Shares of Common Stock
of Beneficial
of Beneficial Owner Beneficially Owned [1]
Ownership
John V. Allen [1]
Suite 203
2750 Gulfshore Blvd.
North Naples, FL 33940
William Meehan [1]
7806 Newhall Lane
Austin, Texas 78746
Peter Simmons [1]
13117 20th Avenue
Surrey, British Columbia
Canada V4A 1Z1
Norman Frank [1] 10,000 .06%
717 Curtis Road
Greensburg, PA 15601
All Officers and Directors
as a Group (4 individuals) 10,000
.06%
Tintagel, Ltd. [2] 6,319,226 39.80
%
P.O. Box 156,
Hybiscus Square Pond Street
Grand Turk, Turks & Caicos Islands
British West Indies
Vancouver, B.C. Canada V6C2M7
[1] These individuals are officers and/or directors of the
Company.
[2] Beneficial owner of more than 5% of the outstanding shares
of the Company's Common Stock.
48
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Mr. John Allen, Chairman of the Company is also Chairman of
the Board of Directors of Laura Technologies, Inc. with whom the
Company and or its subsidiaries have a loan in the amount of
$210,774 as of December 31, 1995,
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS
ON FORM 8-K.
No reports on Form 8-K have been filed during the last
quarter for which this Form 10-K is filed.
49
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
U.S. Technologies Inc. and Subsidiaries
Our report on the consolidated financial statements of U.S.
Technologies Inc. and Subsidiaries is included on page __ of
this Form 10-K. In connection with our audit of such
financial statements, we have also audited the related
financial statement schedule listed in the index on page 2
of this Form 10-K.
In our opinion, the 1995 and 1994 financial statement
schedules referred to above, when considered in relation to
the basic financial statements taken as a whole, present
fairly, in all material respects, the information required
to be included therein.
BROWN, GRAHAM AND COMPANY
P.C.
Georgetown, Texas
April 14, 1995
42
U.S. Technologies Inc.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the years ended December 31, 1995, 1994 and 1993
Column A Column B Column C Column DColumn E
Additions
(1) (2)
Balance atCharged toCharged to Balance at
beginning cost and other end of
Classificationof periodexpensesaccounts Deductions period
1995:
Accounts receivable -
bad debt reserve$49,830$43,872 $25,268 $68,434
Inventory
Obsolescence$33,000262,000 $ - $295,000
1994:
Accounts receivable -
bad debt reserve$129,04449,830 $129,044 $49,830
Inventory
Obsolescence$170,363$33,000 $170,363 $33,000
1993:
Accounts receivable -
bad debt reserve$297,874 - $168,830 $129,044
Inventory
Obsolescence$148,193$22,170 $170,363
NOTE: These valuation and qualifying accounts were deducted
from the assets to which they apply.
43
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, U.S. Technologies Inc. has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 14th day of April, 1996.
U.S. TECHNOLOGIES INC.
BY:s/ John V. Allen
John V. Allen
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 date indicated:
Signature Title Date
s/Norman Frank Director April 14, 1996
Norman Frank
s/William Meehna PresidentApril 14,
1996
William Meehan Acting Controller
Acting Principal Accounting Officer
44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, U.S. Technologies Inc.
has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on the 14th day
of April, 1996.
U.S. TECHNOLOGIES INC.
BY:__________________________
John V. Allen
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 date indicated:
Signature Title Date
___________________ Director April
14, 1996
Norman Frank
___________________ President April
14, 1996
William Meehan Acting Controller
Acting Principal Accounting Officer
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