<PAGE> 1
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
--------------
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 Incorporation) (I. R. S. Employer
Identification No.)
3901 Roswell Road, Suite 300
Marietta, Georgia 30062
(Address of principal executive offices.)
Registrant's telephone number,
including area code: (770) 565-4311
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [ ] No [X]
The number of shares outstanding of the Registrant's common stock, par value
$0.02, at April 30, 1999, was 28,795,278 shares.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
U.S. TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 38,048 $ 110,140
Trade accounts receivable, net of reserves of $140,000
at March 31, 1999 and December 31, 1998 684,321 572,975
Inventories 647,726 585,855
Prepaid expenses 107,515 29,831
------------ ------------
Total current assets 1,477,610 1,298,801
------------ ------------
Property and equipment, net of accumulated depreciation of
$1,235,733 and $1,208,991 at March 31, 1999 and
December 31, 1998, respectively 479,781 499,749
------------ ------------
Other assets:
Net investment in and advances to subsidiary to be sold -- 524,558
Note receivable - sale of subsidiary 1,387,870 --
Other assets 9,835 44,425
------------ ------------
Total other assets 1,397,705 568,983
------------ ------------
Total assets $ 3,355,096 $ 2,367,533
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 1,052,493 $ 844,173
Accrued expenses 543,270 626,937
Accrued severance expenses 284,833 124,469
Current portion of long-term debt and capital leases 15,793 16,050
------------ ------------
Total current liabilities 1,896,389 1,611,629
------------ ------------
Long-term debt and capital leases, less current portion 29,023 31,862
------------ ------------
Stockholders' equity:
Series A convertible preferred stock (net):
$0.02 par value; 10,000,000 shares authorized;
5,000,000 subscribed, none issued or outstanding 4,292,011 3,648,682
Common stock; $.02 par value; 40,000,000 shares
authorized; 29,195,278 shares issued and 28,795,278
shares outstanding at March 31, 1999 and
December 31, 1998 583,906 583,906
Additional paid-in capital 12,605,029 12,605,029
Accumulated deficit (15,673,373) (15,735,686)
Stock receivable (150,205) (150,205)
Treasury stock (227,684) (227,684)
------------ ------------
Total stockholders' equity 1,429,684 724,042
------------ ------------
Total liabilities and stockholders' equity $ 3,355,096 $ 2,367,533
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
2
<PAGE> 3
U.S. Technologies Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
1999 1998
------------ ------------
<S> <C> <C>
Net Sales $ 1,870,284 $ 1,510,563
------------ ------------
Operating costs and expenses:
Cost of sales 2,036,641 997,589
Selling expense 18,389 37,131
General and administrative expense 596,691 381,426
Severance expenses 228,275 --
------------ ------------
Total operating costs and expenses 2,879,996 1,416,146
------------ ------------
Income (loss) from operations (1,009,712) 94,417
Other income (expense)
Gain on sale of subsidiary 1,168,994 --
Other (61,713) 19,753
Interest (35,256) (2,295)
------------ ------------
Total other income 1,072,025 17,458
------------ ------------
Net earnings $ 62,313 $ 111,875
============ ============
Net earnings per common share:
Basic $ 0.00 $ 0.00
============ ============
Diluted $ 0.00 $ 0.00
============ ============
Shares used in per share calculation:
Basic 28,795,278 28,826,286
============ ============
Diluted 29,062,678 29,093,686
============ ============
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
3
<PAGE> 4
U.S. Technologies Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
1999 1998
----------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 62,313 $ 111,875
Adjustments to reconcile net earnings
to net cash used in operating
activities:
Depreciation and amortization 26,742 14,114
Gain on sale of subsidiary (1,168,994)
Changes in current assets and liabilities:
Accounts receivable (111,346) (145,069)
Inventories (61,871) (88,897)
Prepaid expense (77,684) (45,081)
Accounts payable 208,320 36,115
Accrued expenses 76,697 50,681
----------- ---------
Net cash used in operating activities (1,045,823) (66,262)
----------- ---------
Investing activities:
Equipment purchases (6,774) (10,983)
Advances, net of deficit in operating results, (570,318) --
to subsidiary prior to sale
Proceeds from sale of subsidiary 876,000 --
Change in other assets 34,590 (162)
----------- ---------
Net cash provided by (used in) investing activities 333,498 (11,145)
----------- ---------
Financing activities:
Proceeds from issuance of common stock -- 224,277
Proceeds from convertible preferred stock issuable 643,329 --
Payments of notes payable (3,096) (2,638)
----------- ---------
Net cash provided by financing activities 640,233 221,639
----------- ---------
Increase (decrease) in cash (72,092) 144,232
Cash, beginning of period 110,140 489
----------- ---------
Cash, end of period $ 38,048 $ 144,721
=========== =========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
4
<PAGE> 5
U.S. Technologies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to form 10-Q and do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. These statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's 1998 Form 10-K as filed with the Securities and
Exchange Commission.
The results of operations for the periods presented are not necessarily
indicative of the operating results for the full year.
2. Earnings per Share
The Company has adopted the provisions of Statements of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per Share", which is effective for fiscal
years ending after December 15, 1997. Basic earnings per common share is based
on the weighted average number of common shares outstanding during the period.
Diluted earnings per share includes the dilutive effect of common stock
equivalents. For the three months ended March 31, 1999 and 1998 diluted earnings
per share are presented in the following table.
<TABLE>
<CAPTION>
Per
Earnings Shares share
(Numerator) (Denominator) amount
----------- ------------- ------
<S> <C> <C> <C>
Three months ended March 31, 1999:
Net earnings $62,313 28,795,278 $0.00
Effect of dilutive potential common shares:
Stock options -- 267,400
Warrants -- --
------- ----------
Diluted earnings per share:
Net earnings available to common shareholders
plus assumed conversions $62,313 29,062,678 $0.00
======= ========== =====
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
Per
Earnings Shares share
(Numerator) (Denominator) amount
----------- ------------- ------
<S> <C> <C> <C>
Three months ended March 31, 1998:
Net earnings $111,875 28,826,286 $0.00
Effect of dilutive potential common shares:
Stock options -- 267,400
Warrants -- --
-------- -----------
Diluted earnings per share:
Net earnings available to common shareholders
plus assumed conversions $111,875 29,093,686 $0.00
======== =========== =====
</TABLE>
3. INVENTORIES
At March 31, 1999, and December 31, 1998, inventories consisted of the
following:
<TABLE>
<CAPTION>
1999 1998
---- ------
<S> <C> <C>
Raw materials, net of reserves $335,287 $ 285,766
Work in progress 239,506 239,243
Finished goods 72,933 60,846
-------- -----------
$647,726 $ 585,855
======== ===========
</TABLE>
4. NOTE RECEIVABLE - SALE OF SUBSIDIARY
The note receivable - sale of subsidiary at March 31, 1999, in the amount of
$1,387,870 represents an obligation of the former President and CEO of the
Company, Mr. Kenneth H. Smith. This obligation resulted from the purchase by Mr.
Smith, in February 1999, of the Company's wholly-owned subsidiary, GWP, Inc.
("GWP"), and GWP's 51% interest in Technology Manufacturing & Design, Inc.
("TMD"). The total purchase price for GWP of approximately $2.64 million was
paid with cash of approximately $876,000 and a promissory note from Mr. Smith in
the amount of approximately $1.76 million.
5. CONVERTIBLE PREFERRED STOCK
In July 1998, the Company entered into an investment agreement with USV
Partners, LLC, ("USV Partners") pursuant to which the Company is to issue
500,000 shares of Series A Convertible Preferred Stock ("Preferred Stock") and a
warrant to purchase 500,000 shares of the Company's common stock. The aggregate
purchase price of the Preferred Stock and warrants is $5 million. USV Partners
invested $4.3 million through March 31, 1999. On May 10, 1999, the Company
received the final payment from USV Partners in connection with the sale of the
Preferred Stock. With the $5 million having now been invested, the Company will
issue the Preferred Stock and warrants, before June 30, 1999. The aggregate net
proceeds, of approximately $4.9 million (after payment of associated legal and
professional fees), have been and will continue to be used primarily for
corporate purposes and working capital. Gregory Earls the President and Chief
Executive Officer of the Company, is the sole member of USV Management, LLC, the
manager of USV Partners.
6
<PAGE> 7
The Preferred Stock has a dividend rate of nine percent, payable annually on
April 1, beginning retroactively in 1999. The dividend, at the discretion of the
Board of Directors of the Company, may be paid in cash or Preferred Stock having
an aggregate stated value equal to the amount of the dividend or common stock
having a fair value, as defined, equal to the rate of the dividend. The dividend
rate will increase to 11% upon certain "triggering events", as defined, which
are generally events of default. The determination of any accretive dividend to
be recorded resulting from an issuance of the Preferred Stock at a discount will
be made on the date the Preferred Stock is issued.
Shares of the Preferred Stock are convertible into shares of common stock from
issuance through January 12, 2004. The preferred shares can be converted into
that number of common stock shares determined by dividing the stated value of
$10.00 per share plus accrued and unpaid dividends, by a conversion price of
$.41 and multiplying the Conversion Factor, as defined. The Conversion Factor,
initially 1.00, is adjusted from time to time so as not to dilute the number of
shares of common stock that would be received upon conversion of the Preferred
Stock. The Company is required to reserve 12.2 million shares of common stock
for conversion of the Preferred Stock. The Company, at its option, may redeem
the Preferred Stock in the event that the daily average closing price of the
common stock is $2.50 or greater for 20 consecutive trading days. The redemption
price is equal to the stated value of $10.00 per share plus accumulated and
unpaid dividends.
As long as at least 45% of the Preferred stock that was issued remains
unconverted, the holders of the Preferred Stock have the right to elect at least
one member and up to one-third of the members of the board of directors. The
holders of Preferred Stock are also entitled to vote together as a single class
with the holders of common stock on certain corporate matters submitted to a
vote of stockholders. The holders of Preferred stock have one vote for each
share of common stock that could then be acquired on conversion of the Preferred
Stock.
Upon any dissolution, liquidation or winding-up of the Company, before any
payments are made to any holders of common stock or any other class or series of
the Company's capital stock then outstanding, the holders of the Preferred Stock
are entitled to receive an amount equal to the stated value of $10.00 per share
of Preferred Stock plus accrued and unpaid dividends. There is no sinking fund
in respect to the Preferred Stock.
6. SEGMENT INFORMATION
During 1998, the Company adopted SFAS 131, Disclosures about Segments of an
Enterprise and Related Information. SFAS 131 establishes standards for the way
that public business enterprises report information about operating segments in
their financial statements. The standard defines operating segments as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision makers in
deciding how to allocate resources and in assessing the performance. The
Company's chief operating decision makers aggregate operating segments based on
the location of the segment and whether it is prison-based or free-world. Based
on the quantitative thresholds specified in SFAS 131, the Company has
determined that it has four reportable segments. The four reportable segments
are USXX (Marietta, Georgia), LTI (Lockhart, Texas), TMD (Georgetown, Texas)
and STI (Draper, Utah). USXX is the corporate office, LTI is a prison-based
manufacturer of computer circuit boards, TMD is a freeworld manufacturer of
computer circuit boards and STI is a prison-based inbound/outbound call center.
Other segments include manufacturing of modular office furniture components and
cut-and-sew operations. Segment amounts disclosed are prior to any elimination
entries made in the consolidation.
Summary information by segment for the three months ended March 31, 1999 and
1998 follow (in thousands):
<TABLE>
<CAPTION>
1999 USXX LTI TMD(1) STI Other Total
- -------------------- ---------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ -- $ 749 $ 948 $ -- $ 173 $ 1,870
Operating profit
(loss) (539) (240) (66) (29) (136) (1,010)
======= ====== ======= ====== ====== =======
<CAPTION>
1998 USXX LTI TMD STI Other Total
- -------------------- ---------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ -- $1,511 $ -- $ -- $ -- $ 1,511
Operating profit
(loss) (249) 347 -- (9) -- 89
======= ====== ======= ====== ====== =======
</TABLE>
- ---------------------
(1) TMD was sold by the Company on February 12, 1999. The operating results
include activity through that date.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the consolidated
financial statements of the Company (including the notes thereto) included in
the Company's form 10-K for the year ended December 31, 1998.
General
The Company is an "outsourcing company" soliciting manufacturing, assembly,
repair, kitting and customer call center services from Fortune 1000 and other
select businesses. The Company performs its services utilizing prison labor
under the Prison Industry Enhancement Program ("PIE"). Congress created the PIE
program in 1979 to encourage states and local units of government to establish
employment opportunities for prisoners that approximate private sector work
opportunities. The program is designed to place inmates in a realistic working
environment, pay them the local prevailing wage for similar work, and enable
them to acquire marketable skills to increase their potential for successful
rehabilitation and meaningful employment upon release. The PIE Program has two
primary objectives:
To generate products and services that enable prisoners to make a
contribution to society, help offset the cost of their incarceration,
compensate crime victims, and provide inmate family support.
To provide a means of reducing prison idleness, increasing inmate job
skills, and improving the prospects for successful inmate transition to
the community upon release.
To serve its clients the Company has established U.S. Technologies Inc. as the
parent organization to provide management and financial resources to its wholly
owned operating subsidiaries. The operating subsidiaries are Labor-to-Industry
Inc. ("LTI"), which operates the Company's manufacturing outsourcing operations,
and Service-to-Industry Inc. ("STI"), formed in March 1998, which will operate
the Company's service outsourcing operations. Each subsidiary negotiates an
agreement with a prison under which facilities and participants are available to
the Company.
In January 1997, the Company was acquired by a group of individuals led by the
Company's former Chairman and CEO, Mr. Kenneth H. Smith. As a part of the
acquisition the preceding management and Board of Directors resigned. During
1997 a new management team was assembled, the Company's mission statement was
revised, and the Company's operations were restructured.
On February 12, 1999, concurrent with his purchase of GWP and GWP's 51% interest
in TMD, Mr. Smith resigned his position as an officer and director of the
Company. On and since that date Mr. Smith has tendered or forfeited all of his
approximately 6.3 million shares of the Company's common stock in partial
payment for his purchase of GWP. Mr. Smith was replaced as the Company's
President and Chief Executive Officer by Gregory Earls, the President of USV
Partners that has entered into an agreement with the Company to purchase $5
million of the Company's preferred stock. Mr. Earls is working with the
Company's remaining management personnel to reorganize the Company.
Results of Operations
The following analysis compares the results of operations for the three months
ended March 31, 1999 to the three months ended March 31, 1998.
During the three months ended March 31, 1999, the company reported net income
of $62,313 or $0.00 per weighted-average share, including a gain on the sale
of GWP and GWP's 51% interest in TMD, of approximately $1.2 million. During
the three months ended March 31, 1998 the Company had net income of $111,875
or $0.00 per weighted-average share. Net sales during the three months ended
March 31, 1999 were $1,870,284, compared to $1,510,563 during the three
months
8
<PAGE> 9
ended March 31, 1998. The increase in net sales in the amount of $359,721, or
24%, was attributable to sales of TMD, up to the date of its sale on February
12, 1999. Sales from the Company's continuing operations decreased by
$588,455 or 39%, as a result management changes in the Company's LTI facility
in Lockhart, Texas ("Lockhart").
In the three months ended March 31, 1999, cost of goods sold was $2,036,641,
which represented 109% of net sales. During the three months ended March 31,
1998, cost of goods sold was $997,589, which represented 66% of net sales.
The primary causes of the increase in cost of goods sold were errors in
estimating material and labor costs in Lockhart, the inability to reduce
costs in Lockhart as rapidly as sales decreased and TMD's inefficient
purchasing of raw materials .
Selling expenses during the three months ended March 31, 1999 were $18,389,
representing 1% of net sales. During the three months ended March 31, 1998,
selling expenses in the amount of $37,131 represented 2% of net sales. These
expenses decreased primarily due to the increase in sales revenue combined
with an increase in the proportion of house account sales, as opposed to
sales made through commissioned sales personnel.
General and administrative expenses during the three months ended March 31,
1999 were $824,966, which represented 44% of net sales. During the three
months ended March 31, 1998, general and administrative expenses were
$381,426, which represented 25% of net sales. The increase in general and
administrative expenses is the result of significantly reduced sales in the
Company's continuing operations plus the accrual of approximately $228,000 in
severance costs related to the Company's reorganization during the quarter
ended March 31, 1999. These severance costs relate to Mr. Kenneth H. Smith
and Mr, James C. Melton, former senior officers of the Company and will be
paid out by the end of 1999.
Liquidity and Capital Resources
During the three months ended March 31, 1999 and 1998, the Company experienced
negative operating cash flows of $1,045,823 and $66,262 respectively. Negative
operating cash flows in the three months ended March 31, 1999 resulted
principally from significant operating losses. Negative operating cash flows in
the three months ended March 31, 1998 resulted principally from increases in
accounts receivable of $145,069, and inventory of $88,897, attributable to
increased sales volume.
Net cash provided by investing activities of $333,498 during the three months
ended March 31, 1999, was primarily the result of cash advances to TMD offset by
cash proceeds from the sale of TMD. Net cash used of $11,145 during the three
months ended March 31, 1998 was to make equipment purchases.
Net cash provided by financing activities of $643,329 during the three months
ended March 31, 1999 was primarily due to the receipt of net proceeds from the
subscription of preferred stock. Net cash provided by financing activities of
$221,639, during the quarter ended March 31, 1998 was primarily due to the
issuance of common stock. On January 12, 1998, the Company issued 4% convertible
subordinated debentures and 275,000 common stock purchase warrants exercisable
at $1.00 per share, through a private placement to certain foreign investors
pursuant to a claim of exemption under Regulation "S" promulgated by the
Securities and Exchange Commission under the Securities Act of 1933. The net
proceeds to the Company, after legal and other costs, was $224,277, which was
used to liquidate certain 1996 liabilities at a substantial discount and provide
working capital to support the Company's operations. On February 25, 1998 and
March 5, 1998, the holders of the debentures converted the amounts outstanding
into 563,215 shares of the Company's common stock. All of the warrants remain
outstanding.
As a result of the operating losses described above, partially offset by
proceeds from preferred stock subscriptions and the sale of GWP, net working
capital declined by $105,951 from a negative $312,828 as of December 31, 1998,
to a negative $418,779 as of March 31, 1999. Cash flows used for investing
activities of $542,502 is primarily the result of the sale of GWP and related
note receivable from the Company's former CEO, Kenneth Smith. This note
receivable was reduced by $1,050,000 in
9
<PAGE> 10
April 1999 as a result of Mr. Smith forfeiting the remaining 3,000,000 shares
of his common stock due to a default under a promissory note and stock pledge
agreement. These shares were sold under a subscription agreement for $1,050,000
to USV Partners. Gregory Earls the President and Chief Executive Officer of the
Company, is the sole member of USV Management, LLC, the manager of USV Partners.
The Company's growth plans include increasing sales in its electronics facility
and restructuring operations in its customer call center. The Company is in the
process of reorganizing its Lockhart electronics facility, which has resulted in
significant sales increases. The Company's customer call center located in a
women's correctional facility in Draper, Utah, which was temporarily closed in
December 1998, has reopened as the result of agreements reached with new
customers. The Company is also evaluating another prison facility in Utah as a
possible call center location.
There is not a significant capital investment required to reopen the call center
in Draper, Utah. There would be an investment of approximately $300,000 to open
a call center in the other Utah facility which is being evaluated. Management
believes that the future cash flow generated from operations is adequate to
enable the Company to expand sales in its Lockhart facility.
The Company's continued existence is dependent upon its ability to produce
operating profits which result in positive cash flow from operations. While
there is no assurance that such problems can be resolved, the Company believes
there is a reasonable expectation of achieving that goal through cash generated
from operations, the expansion of operations and the sale of additional stock
through private placements.
Inflation
Inflation has not had a material impact on the Company's operations.
New Accounting Pronouncements
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
SFAS No. 133 requires companies to recognize all derivative contracts as either
assets or liabilities in the balance sheet and to measure them at fair value. If
certain conditions are met, a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of gain or loss recognition
on the hedging derivative with the recognition of (i) the changes in the fair
value of the hedged asset or liability that are attributable to the hedged risk
or (ii) the earnings effect of the hedged forecasted transaction. For a
derivative not designed as a hedging instrument, the gain or loss is recognized
in income in the period of change.
Year 2000
In 1998, the Company assessed its computer systems and those of its subsidiaries
and determined that much of the software used for order entry, billing,
inventory management, job costing and other accounting functions would either
need to be upgraded or replaced in order to be year 2000 compliant. To date, the
Company has incurred expenses of approximately $2,000 in connection with
software upgrades. Although the Company is still in the process of determining
the most cost-effective means of upgrading or replacing its remaining non-year
2000 compliant software, it anticipates that these additional expenses will not
exceed $10,000. The Company estimates that all of its critical software will be
year 2000 compliant before the end of the third quarter of 1999. Should the
Company not be able to successfully convert its computer hardware and operating
systems to be year 2000 compliant, the Company would be able to operate manually
for some period of time without experiencing a significant negative impact on
its operations.
10
<PAGE> 11
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
Certain statements in this quarterly report on form 10-Q contain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, which statements can generally be identified by
use of forward-looking terminology, such as "may," "will," "expect," "estimate,"
"anticipate," "believe," "target," "plan," "project," or "continue" or the
negatives thereof or other variations thereon or similar terminology, and are
made on the basis of management's plans and current analyses of the Company, its
business and the industry as a whole. These forward-looking statements are
subject to risks and uncertainties, including, but not limited to, economic
conditions, competition, interest rate sensitivity and exposure to regulatory
and legislative changes. The above factors, in some cases, have affected, and in
the future could affect, the Company's financial performance and could cause
actual results for 1999 and beyond to differ materially from those expressed or
implied in such forward-looking statements, even if experience or future changes
make it clear that any projected results expressed or implied therein will not
be realized.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
The following exhibit is filed with this report:
Exhibit Description
No.
- ------- -----------
27.1 Financial Data Schedule (for SEC use only)
On February 26, 1999, the Company filed a report on Form 8-K describing the sale
of its 51% interest in TMD.
On April 29, 1999, the Company filed an amendment to the February 26, 1999,
report on Form 8-K revising the discussion of certain terms of the TMD sale and
describing certain related recent events.
12
<PAGE> 13
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
U.S. TECHNOLOGIES INC.
DATE: May 12, 1999 BY: /s/ C. Gregory Earls
-------------------------
C. Gregory Earls
President and CEO
13
<PAGE> 14
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
27.1 Financial Data Schedule (for SEC use only)
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1999, UNAUDITED FINANCIAL STATEMENTS OF US TECHNOLOGIES, INC., AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS IN FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-30-1999
<CASH> 38,048
<SECURITIES> 0
<RECEIVABLES> 824,321
<ALLOWANCES> 140,000
<INVENTORY> 647,726
<CURRENT-ASSETS> 1,477,610
<PP&E> 1,715,514
<DEPRECIATION> 1,235,733
<TOTAL-ASSETS> 3,355,096
<CURRENT-LIABILITIES> 1,896,389
<BONDS> 0
0
4,292,011
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</TABLE>
