SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only ( as permi
tted by Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] definitive Additional Materials
[ ] Soliciting Material Pursuant to &240.14a-11(c) or &240.14a-
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U.S. TECHNOLOGIES INC.
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
Item 22(a)(2) if Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
______________________________________________
2) Aggregate number of securities to which transaction
applies:
______________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
______________________________________________
4) Proposed maximum aggregate value of transaction:
______________________________________________
5) Total fee paid:
______________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
4) Date Filed:
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U. S. Technologies, Inc.
1402 Industrial Boulevard
P.O. Box 697
Lockhart, TX 78644 - USA
Facsimile No.: (512) 375-2045
Notice of Annual Meeting of Stockholders
to be held in Austin on July 25, 1996
The Board of Directors of U.S. Technologies Inc., a Delaware
Corporation (the "Company"), hereby gives notice that the 1996
Annual Meeting of Stockholders of the Company will be held on
Thursday, July 25, 1996, at 10:30 a.m. Central Standard Time, in
the Company's Conference room at 1402 Industrial Boulevard,
Lockhart, Texas, for the following purposes:
1. To elect three persons to serve on the Company's Board of
Directors.
2. To consider and vote upon a proposal to approve the
Company's 1996 Option Plan.
3. To consider and vote upon a proposal to undertake a reverse
split of the Company's Authorized and Outstanding shares on
the basis of one (1) "new" share for ever five (5) "old "
shares.
4. To consider and vote upon a proposal to effectively increase
the number of authorized and unissued shares.
5 To ratify selection by the Board of Directors of Brown,
Graham & Company, as the Company's independent certified
public accountants for fiscal year ending December 31, 1996.
6 To transact any other business as may properly come before
the meeting or any adjournment(s) thereof.
Stockholders of record at the close of business on May 28,
1996, are entitled to notice of and to vote at the meeting. If
you attend the meeting you may vote in person if you wish, even
though you may have returned your proxy. A copy of the Company's
Proxy Statement and its' Annual Report for the year ended
December 31, 1995 are enclosed herewith.
By Order of the Board of
Directors
William Meehan, Secretary
June 24, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN THE
ENCLOSED PROXY, WHICH IS SOLICITED BY THE COMPANY'S BOARD OF
DIRECTORS, AND RETURN IT IN THE PRE-ADDRESSED ENVELOPE PROVIDED.
ANY STOCKHOLDER MAY REVOKE HIS PROXY AT ANY TIME BEFORE THE
MEETING BY WRITTEN NOTICE TO SUCH EFFECT, BY SUBMITTING A
SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE MEETING AND VOTING
IN PERSON.
U. S. Technologies, Inc.
1402 Industrial Boulevard
P.O. Box 697
Lockhart, TX 78644 - USA
Facsimile No.: (512) 375-2045
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
on July 25, 1996
This Proxy Statement and the accompanying Notice of Annual
Meeting of Stockholders and Annual Report for the Year Ended
December 31, 1995 are being furnished in connection with the
solicitation by the Board of Directors of U.S. Technologies Inc.,
a Delaware corporation (the "Company"), of proxies for use at the
1996 Annual Meeting of Stockholders (the "Annual Meeting") of the
Company to be held on Thursday, July 25, 1996, at 10:30 a.m.,
Central Standard Time, in the Company's Conference room at 1402
Industrial Boulevard, Lockhart, Texas, and at any adjournments
thereof. This Proxy Statement and the enclosed proxy are first
being sent to stockholders on or about July 5, 1996.
The close of business on May 28, 1996, has been selected
as the record date (the "Record Date") for determining the
holders of outstanding shares of the Company's common stock, par
value $.02 per share (the "Common Stock"), entitled to receive
notice of and vote at the Annual Meeting. On the Record Date,
there were 17,097,263 shares of Common Stock outstanding and
approximately 870 holders of record. Holders of Common Stock are
entitled to one vote per share.
VOTING OF PROXIES
The presence in person or by properly executed proxy of
the record holders of a majority of the outstanding shares of
Common Stock will constitute a quorum at the Annual Meeting.
Elections of directors will be determined by a plurality vote of
all shares present in person or by properly executed proxy and
voting at the Annual Meeting. The affirmative vote of the record
holders of a majority of the Common Stock present in person or by
proxy at the Annual Meeting and entitled to vote is required to
approve the 1996 Option Plan (the "Option Plan") described
herein, to approve the 5 for 1 reverse split of the Company's
Common stock and to ratify the selection of the independent
public accountants. Abstentions will have the same effect as a
withheld vote with respect to the election of directors and a
vote against the approval of the Option Plan and will have no
effect on the ratification of the selection of the independent
public accountants. Broker non-votes will have no effect on the
votes with respect to the election of directors, the approval of
the Option Plan or the ratification of the selection of the
independent certified public accountants.
Unless proxies have been previously revoked, all shares
represented by properly executed proxies will be voted at the
Annual Meeting in accordance with the directions given on such
proxies. Any person giving a proxy has the power to revoke it,
in writing delivered to the Secretary of the Company at the
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address given above, at any time prior to its exercise. If no
direction is given, a properly executed proxy will be voted FOR
the election of the three persons named under "Election of
Directors," FOR the 1 for 5 reverse split of the Company's common
shares, FOR the effective increase in the Company's number of
authorized and unissued common shares, FOR the approval of the
Option Plan and FOR the ratification of the selection of Brown,
Graham & Company, as the Company's independent certified public
accountants. The Board of Directors does not anticipate that any
other matters will be brought before the Annual Meeting. If,
however, other matters are properly presented, the persons named
in the proxy will have discretion, to the extent allowed by
Delaware law, to vote in accordance with their own judgment on
such matters.
_____________________
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ELECTIONS OF DIRECTORS
ITEM 1 - ELECTION OF DIRECTORS
Pursuant to the Company's Bylaws, the Company's Board of
Directors consists of five members, each to hold office until the
next annual meeting or until his respective successor is elected
and qualified. If any nominee listed below should become
unavailable for any reason, the proxy will be voted for any
substitute nominee or nominees who may be selected by management
prior to or at the Annual Meeting, or, if no substitute is
selected prior to or at the Annual Meeting, for a motion to
reduce the membership of the Board to the number of nominees
available.
Nominees for Director
John V. Allen Currently a Director of the Company
William Meehan Currently a Director of the Company
Dr. James Chen Currently a Director of the Company
Certain information regarding these nominees is set forth
below in the section entitled "Management of the Company -
Directors and Executive Officers."
Vote Required
The affirmative vote of the record holders of a plurality
of the Common Stock present in person or by proxy at the Annual
Meeting and voting is required to elect Directors. The enclosed
proxy provides a means for stockholders to vote for the election
of all of the nominees, to withhold authority to vote for one or
more such nominees, or to withhold authority to vote for all of
such nominees. Abstentions with respect to the election of a
nominee for Director will have the same effect as a withheld vote
and broker non-votes will have no effect on the election of
Directors.
It is the intention of the persons in the enclosed proxy
to vote FOR the election of the above-named nominees to serve as
Directors of the Company. The nominees, each of whom currently
serves as a Director, or who have been nominated to coincide with
the Annual Meeting, have consented to be named in this Proxy
Statement and to serve if elected. Management does not
contemplate or foresee that any of the nominees will be unable or
unwilling to serve or be otherwise unavailable for election.
Board Recommendation
The Board of Directors recommends that stockholders vote
FOR the election of the nominees for Director set forth above.
APPROVAL OF THE COMPANY'S 1996 STOCK OPTION PLAN
ITEM 2 - PROPOSAL TO APPROVE THE ADOPTION OF THE COMPANY'S 1996
STOCK OPTION PLAN
General
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On May 1, 1996, the Company's Board of Directors adopted
the Company's 1996 Stock Option Plan (the "Option Plan"). The
following summary of the provisions of the Option Plan is
qualified in its entirety by express reference to the text of the
Option Plan attached as Exhibit I hereto. Terms not otherwise
defined in this summary shall have the meaning given to them in
the text of the Option Plan.
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Shares Granted and Reserved
Under the Option Plan, a total of 600,000 shares of Common
Stock are reserved to be issued upon exercise of options granted
under the plan, subject to adjustment in the event of, among
other things, an increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, stock
divided, combination or reclassification of the Common Stock of
the Company or the payment of a stock dividend with respect to
the Common Stock. As of May 28, 1996, no options had been
granted or were outstanding for the purchase of shares under the
Option Plan. The stock option prices will be set at an exercise
price equal to the fair market value of the Common Stock on the
date of grant. A total of 600,000 shares are available for
issuance under the Option Plan.
Plan Description
Purpose. The Purpose of the Option Plan is to strengthen
the Company by providing an incentive to its employees, officers
and directors and encouraging them to devote their abilities to
the success of the Company. It is intended that this purpose be
achieved by extending to employees, officers and directors of the
Company or any subsidiary an added long-term incentive for high
levels of performance and exceptional efforts through the grant
of options to purchase shares of the Common Stock of the Company.
Administration. The Option Plan provides that it shall be
administered by a committee consisting of at least two members of
the Board of Directors (the person as defined in Rule 16b-3 under
the Securities Exchange Act of 1934 (the "Exchange Act").
Subject to the terms of the Option Plan, the Committee has full
power to select, from among the employees and directors eligible
for option grants, the individual to whom options will be
granted, and to determine the specific terms and conditions of
each option grant in a manner consistent with the Option Plan; to
waive compliance by participants with terms and conditions of
option grants; to modify or amend option grants in a manner
consistent with the Option Plan; to interpret the Option Plan and
decide any questions and settle all controversies and disputes
that may arise in connection therewith; and to adopt, amend, and
rescind rules and regulations for the administration of the
Option Plan. Determinations of the Committee on all matters
relating to the Option Plan are conclusive.
Eligibility. Options may be granted to any employee,
officer or director of the Company, provided that incentive stock
options (as defined below) may only be granted to employees and
to officers who are also employees. Under Exchange Act Rule 16b-
3, a member of the Committee may not participate in the Option
Plan.
Options: Grants and Exercise. The Option Plan permits the
granting of non-transferable stock options that qualify as
incentive stock options ("ISOs") under Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), and non-
transferable stock options that do not so qualify ("non-statutory
options"). The option exercise price of each option is to be
determined by the Committee, but it may not be less than 100% of
the fair market value of the shares on the date of grant (110% in
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the case of a person who owns stock possessing more than 10% of
the voting power of the Company (a "10% stockholder")). For
purposes of the Option Plan, "fair market value" on any given
date means the average of the high and low sales price at which
Common Stock is traded on such date as reflected on the NASDAQ
Market.
The term of each option shall be determined by the
Committee; provided, however, in the case of an ISO, the term may
not exceed ten years from the date of grant (five years, in the
case of a 10% stockholder); non-statutory options have a term
limited to ten years (five years, in the case of a 10%
stockholder) from the date of grant.
The Committee determines at what time or times and under
what conditions (including performance criteria) each option may
be exercised. Options may be made executable in installments,
and the exerciseability of options may be accelerated by the
Committee. The Committee also determines, at the time of grant
of each option, the terms and conditions under which the options
granted to a participant may be exercised in the event of such
participant's termination of service as an employee or director
as a result of death, disability or termination of employment.
To the extent not otherwise provided by the Committee,
options granted to employees become executable in three
installments, each equal to one-third of the entire option
granted and executable on the first, second and third
anniversaries of the grant date, respectively. In the event of
termination of a participant's service to the Company, vested
options may be exercised within twelve months following the date
of death or following a determination of disability and within
three months following termination for any other reason; except
that, if such termination is for cause, the options will not be
executable following such termination. In no event may an option
be exercised later than the date of expiration of the term of the
option as set forth in the agreement evidencing such option.
In order to exercise an option, the participant must
provide written notice and full payment to the Secretary of the
Company. The option exercise price of options granted under the
Option Plan must be paid for in cash or other shares of Common
Stock upon such terms and conditions as determined by the
Committee. The Committee may require that upon exercise of an
option, certificates representing shares thereby acquired bear an
appropriate restrictive legend if the sale of the shares has not
been registered under the Securities Act of 1933, as amended.
No option may be transferred other than by will or by the
laws of descent and distribution, and during a participant's
lifetime an option may only be exercised by him or her.
Mergers and Consolidations. In the event of a dissolution
or liquidation or merger or consolidation of the Company, the
options shall continue in effect in accordance with their
respective terms, and each participant shall be entitled to
receive the same number and kind of stock, securities, cash,
property or other consideration that each holder of Common Stock
was entitled to receive in the transaction in respect of the
Common Stock.
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Amendment. The Board may amend the Option Plan or any
outstanding option for any purpose which may at the time be
permitted by law, except that no amendment or termination of the
Option Plan may adversely affect the rights of any participant
(without his or her consent) under an option previously granted.
Term of Plan. Unless sooner terminated by the Board, the
Option Plan will terminate at the tenth anniversary of the date
of adoption by the Board.
Certain Federal Income Tax Consequences
The following summary generally describes the principal
federal (and not state and local) income tax consequences of
options granted under the Option Plan. It is general in nature
and is not intended to cover all tax consequences that may apply
to an Option Plan participant or to the Company. The provisions
of the Code and the regulations thereunder relating to these
matters ("Treasury Regulations") are complex, and their impact in
any case may depend upon the particular circumstances. Each
holder of an option under the Option Plan should consult the
holder's own accountant, legal counsel or other financial advisor
regarding the tax consequences of participation in the Option
Plan. This discussion is based on the Code as currently in
effect.
If an option (whether an ISO or non-statutory) is granted
to a participant in accordance with the terms of the Option Plan,
no income will be recognized by such participant at the time the
option is granted.
Generally, on exercise of a non-statutory option, the
amount by which the fair market value of the shares of the Common
Stock on the date of exercise exceeds the purchase price of such
shares will be taxable to the participant as ordinary income,
and, in the case of any employee, the Company will be required to
withhold tax on the amount of income recognized by the employee
upon exercise of a non-statutory option. Such amount will be
deductible for tax purposes by the Company in the year in which
the participant recognizes the ordinary income. The disposition
of shares acquired upon exercise of a non-statutory option will
result in capital gain or loss (long-term or short-term depending
on the applicable holding period) in an amount equal to the
difference between the amount realized on such disposition and
the sum of the purchase price and the amount or ordinary income
recognized in connection with the exercise of the non-statutory
option.
Generally, on exercise of an ISO, an employee will not
recognize any income and the Company will not be entitled to a
deduction for tax purposes. However, the difference between the
purchase price and the fair market value of the shares of Common
Stock received ("ISO shares") on the date of exercise will be
treated as a positive adjustment in determining alternative
minimum taxable income, which may subject the employee to the
alternative minimum tax ("AMT"). Upon the disposition of the ISO
shares, the employee will recognize long-term or short-term
capital gain or loss (depending on the applicable holding period)
in an amount equal to the difference between the amount realized
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on such disposition and the purchase price of such shares.
Generally, however, if the employee disposes the ISO shares
within two years after the date of option grant or within one
year after the date of option exercise (a "disqualifying
disposition"), the employee will recognize ordinary income, and
the Company will be entitled to a deduction for tax purposes for
the taxable year in which the disqualifying disposition occurs,
in the amount of the excess of the fair market value of the
shares on the date of exercise over the purchase price (or, if
less, the amount of the gain on sale). Any excess of the amount
realized by the holder on the disqualifying disposition over the
fair market value of the shares on the date of exercise of the
ISO will ordinarily constitute capital gain.
If an option is exercised through the use of Common Stock
previously owned by the employee, such exercise generally will
not be considered a taxable disposition of the previously owned
shares and, thus, no gain or loss will be recognized with respect
to such shares upon such exercise. However, proposed Treasury
Regulations would provide that, if the previously owned shares
are ISO shares and the holding period requirement for those
shares was not satisfied at the time they were used to exercise
an option, such use would constitute a disqualifying disposition
of such previously owned ISO shares, resulting in the recognition
of ordinary income (but not any additional capital gain) in the
amount described above. If an otherwise qualifying ISO first
becomes executable in any one year for shares having a fair
market value, determined as of the date of the grant, in excess
of $100,000, the portion of the option in respect of such excess
shares will be treated as a non-statutory option.
Section 16(b) of the Exchange Act generally requires
officers, directors and 10% stockholders of the Company to
disgorge profits realized by buying and selling the Company's
Common Stock within a six month period. Consequently, by
application of Code Section 83 to these participants who are
subject to Section 16, generally the relevant date for
recognizing and measuring the amount of ordinary income in
connection with an exercise of a non-statutory option (or AMT in
the case of an ISO), as well as the relevant date for recognizing
and measuring the amount of an employee's ordinary income and the
Company's tax deduction in connection with a disqualifying
disposition of ISO shares as discussed above, will be the later
of: (i) six months following the date of grant, and (ii) the date
of exercise of the option unless such participants elect
otherwise under Code Section 83(b).
Vote Required
The affirmative vote of the record holders of the majority
of the Common Stock present in person or by proxy at the Annual
Meeting and entitled to vote is required to approve the Option
Plan. Approval of the Option Plan by stockholders is required
for ISO options granted under the Option Plan to meet the
requirements of Code Section 422 and for options granted under
the Option Plan to persons potentially liable under Section 16 of
the Exchange Act to be exempt from liability to the extent
provided under Exchange Act Rule 16b-3. Abstentions will have
the same effect as a vote against the approval of the Option Plan
and broker non-votes will have no effect on such vote.
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Board Recommendation
The Board of Directors recommends that stockholders vote
FOR the approval of the Option Plan.
APPROVAL OF 1 FOR 5 REVERSE SPLIT OF THE COMPANY'S COMMON SHARES
ITEM 3 - PROPOSAL TO APPROVE A 1 FOR 5 REVERSE SPLIT OF THE
COMPANY'S COMMON SHARES
On May 28, 1996, the Board of Directors of the Company
adopted a resolution declaring it advisable that the common stock
of the Company be reverse split on an 1 for 5 basis.
This proposal would effect a 1 for 5 reverse split of the
Company's issued and outstanding Common Shares ( the "Stock
Split"). The Stock Split would result in one post-split Common
Share being issued in exchange for each 5 Common Shares which are
presently issued and outstanding. The Company would not issue
fractional shares pursuant to the Stock Split, but instead would
issue one whole Common Share to those shareholders who would
otherwise be entitled to receive fractional shares. The
principal effect of the Stock Split would be to decrease the
number of issued and outstanding Common Shares as of May 28,
1996, from 17,097,263 to approximately 3,419,453, depending on
the number of whole Common Shares issued in elimination of
fractional Common Shares. The Stock Split would not have an
immediate effect on any shareholder's proportionate interest in
the Company, including the proportionate interest of management,
except for (i) the de minimis effect on those shareholders who
receive one whole share in lieu of fractional shares, and (ii)
the increase in future possible dilution, as described below.
The following table illustrates the principal effects of the
proposed stock split based on the Company's capitalization as of
December 31, 1995:
Common Shares Prior to Split After Split
Authorized 40,000,000 40,000,000
Outstanding 17,097,263 3,419,453*
Available for future issuance22,902,737 36,580,547*
* Assumes that no post-split Common Shares are issued in lieu
of fractional Common Shares
Reasons for the Reverse Stock Split
The Company's Common Stock is listed on the National
Association of Securities Dealers Automated Quotation System
("NASDAQ"). As of May 28, 1996, the Company's Common Stock is
trading at $0.34 bid and $.041 ask per share, respectively. For
continued inclusion in the NASDAQ system, a minimum bid price per
share shall be $1.00, provided, however that the Company shall
not be required to maintain the $1.00 per share minimum bid price
if it maintains the market value of public float of $1,000,000 or
$2,000,000 in capital and surplus. Currently, the Company
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maintains a public float market value of approximately
$5,813,000, however, the Company does not maintain $2,000,000 in
capital and surplus. Accordingly, in order to maintain its
listing on the NASDAQ system the Company must increase the price
per share from $0.34 bid to a price in excess of $1.00 per share.
The Company believes that by reverse splitting the outstanding
shares of Common Stock on a basis of 1 for 5, it will increase
the price per share in excess of $1.00. In the event that the
shares are reverse split on a 1 for 5 basis , there is no
assurance that the price per share will exceed $1.00, or in the
event the bid price does exceed $1.00 per share that it will
remain at or above $1.00, and accordingly, it is possible that
the Company's shares of Common Stock could be delisted from the
NASDAQ system even though the reverse split is approved by the
shareholders and effectuated. In the event the Company's shares
of Common Stock are delisted from the NASDAQ system, their
marketability because of the reluctance of many leading brokerage
firms to recommend low priced securities to their clients, may be
adversely affected. Further, a number of brokerage firms
policies tend to discourage individual brokers within those firms
from dealing in low priced securities. The Board of Directors is
hopeful that by decreasing the number of Common Shares
outstanding as a consequence of the reverse split, and the
resulting increase in price level will generate broader interest
in the Company's Common shares and promote continued liquidity
for the Company's shareholders.
Future Dilution; Anti-Takeover Effects
There may be certain disadvantages suffered by shareholders
of the Company as a result of approval of the Amendment. These
include a significant increase in possible dilution to present
shareholders' percentage ownership of the Common Shares. As
described above, assuming issuance of all authorized Common
Shares, present shareholders, in the aggregate, would own
approximately 42.7% of the then-outstanding Common Shares under
the Company's present capital structure, but only 8.6% of the
outstanding Common Shares under the Capital structure assuming
adoption of the amendment.
The proportionate increase in the number of Common Shares
available for future issuance may also have certain anti-takeover
effects, For example, the availability of a large number of
Common Shares for future issuance might allow the Company's Board
of Directors to dilute the percentage share ownership of persons
who might attempt to obtain control over the Company. Approval
of the Amendment therefore might allow the Board of Directors to
frustrate a takeover attempt which might be favorable to
shareholders as a group, and may have the effect of limiting
shareholder participation in these types of transactions.
While the Amendment may have certain anti-takeover effects,
management of the Company is not aware of any attempts by third
persons to accumulate a large number of Common Shares.
Accordingly, the Amendment has not been recommended by the Board
of Directors in response to any existing attempts by third
parties at obtaining control of the Company.
No Plans or Agreements to issue Any Additional Common Shares
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The Company has no plans or agreements to issue any
additional Common Shares at this time.
Exchange of Certificates and Liquidation of Fractional Shares
American Securities Transfer, Inc. has been appointed to
serve as the exchange agent (the "Exchange Agent") to act for
shareholders in effecting the exchange of their certificates.
As soon as practicable after the Effective Date,
shareholders will be notified and requested to surrender their
certificates representing Common Shares to the Exchange Agent in
exchange for certificates representing post-split Common Shares.
Commencing on the Effective Date, each certificate representing
pre-split Common Shares will be deemed for all purposes to
evidence ownership of post-split Common Shares.
Certificates representing fractional Common Shares will not
be issued in connection with the Stock Split. Assuming approval
of the Stock Split by shareholders, shareholders who would
otherwise receive fractional shares will be entitled to receive
one whole Common Share in lieu of any fractional share.
Vote Required
The affirmative vote of a majority of the outstanding Common
Shares is required to adopt the Amendment. The Company's
officers and directors are expected to vote for the adoption of
the Amendment.
Federal Income Tax Consequences
The federal income tax consequences of the proposed Stock
Split are set forth below. The following information is based
upon existing tax laws, which are subject to change by
legislation, administrative action and judicial decision.
Shareholders are therefore advised to consult with their own tax
advisor for more detailed information relating to their
individual tax circumstances.
1. The post-split Common Shares in the hands of a
shareholder will have an aggregate basis for computing gain or
loss equal to the aggregate basis of the pre-split Common Shares
held by the shareholder immediately prior to the Stock Split.
Registration
The Board of Directors believes the changes to be effected
by the reverse split will not cause the Company to terminate
registration of the Common Shares under the Securities Exchange
Act of 1934 or to cease filing reports under that Act with the
Securities and Exchange Commission. The Company does not have
any present plans to take any action which would further reduce
the number of shares
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE 1 FOR 5
REVERSE STOCK SPLIT.
APPROVAL OF EFFECTIVE INCREASE IN AUTHORIZED AND UNISSUED SHARES
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ITEM 4 - PROPOSAL TO APPROVE THE EFFECTIVE INCREASE IN THE NUMBER
OF AUTHORIZED AND UNISSUED SHARES.
As disclosed in item 3, the Board of Directors adopted a
resolution declaring it advisable that the common stock of the
Company be reverse split on a 1 for 5 basis.
The Board of Directors has recommended to keep the
authorized number of Common Shares at 40,000,000 after the split.
Normally the authorized number of shares would be reduced to
8,000,000 to reflect the 1 for 5 reverse split being proposed in
item 3 of this proxy statement. Electing to keep the authorized
number of shares at 40,000,000 could result in a significant
increase in possible dilution to present shareholders' percentage
of ownership of the Company's Common Shares. Assuming the
issuance of all authorized Common Shares, present shareholders,
in the aggregate, would own approximately 42.7% of the
outstanding shares under the Company's present capital structure
prior to the split, but only 8.6% of the outstanding Common
shares under the Capital structure assuming adoption of this
proposal.
The Board of Directors feels that retaining the existing
number of authorized Common shares may be more attractive for
future possible merger or acquisition candidates should the
opportunity become available and be in the Company's best
interest.
Should this proposal not be approved by the shareholders,
the Board of Directors will change the authorized number of
Common Shares to reflect the direct proportional reverse 1 for 5
split, which would result in the then authorized number of Common
Shares being 8,000,000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE EFFECTIVE
INCREASE IN THE AUTHORIZED AND UNISSUED NUMBER OF SHARES.
RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ITEM 5 - PROPOSAL TO APPROVE THE RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of Brown,
Graham & Company, as the Company's independent certified public
accountants for the fiscal year ending December 31, 1996.
Although the selection of auditors does not require ratification,
the Board has directed that the appointment of Brown, Graham &
Company be submitted to stockholders for ratification because
management believes this matter is of such significance as to
warrant stockholder participation. The Company expects a
representative of Brown, Graham & Company to be present at the
Annual Meeting in person or by telephone conference to respond to
appropriate stockholder questions, and they will be given the
opportunity to address the stockholders, if they so desire.
Vote Required
The affirmative vote of the record holders of a majority
of the Common Stock present in person or by proxy at the Annual
Meeting and voting is required to ratify the selection of the
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independent certified public accountants. Abstentions and broker
non-votes will have no effect on such vote.
Board Recommendation
The Board of Directors recommends that stockholders vote
FOR ratification of the selection of Brown, Graham & Company, as
the Company's independent certified public accountants for the
fiscal year ending December 31, 1996.
MANAGEMENT OF THE COMPANY
The directors and executive officers of the Company are as
follows:
Name Age Position
John V. Allen 57 Chairman of the Board
William Meehan 51 President and Director
James Chen 40 Director
Directors and Executive Officers
JOHN V. ALLEN. 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 it's 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, China and
the U.S. 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 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 Investment Ltd., a wholly owned
multi-national investment holding company with a diverse range of
high technology businesses.
WILLIAM MEEHAN. 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, China and the U.S. Mr.
Meehan was appointed as the Australian Consul General to Western
Canada, based in Vancouver, in December 1989 and served in that
14
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.
15
James Chen James Chen Phd. (Engineering) was appointed
to the Board of Directors of U.S. Technologies Inc., on May 28,
1996, to fill the vacant position created by the resignation of
Norman Frank on April 30, 1996. Dr. Chen has provided technical
assistance to the Company over the past year. Dr. Chen is Vice
President (International Engineering) for Laura Technologies
Ltd., a Vancouver based company. From October 1994 until
September 1995, Dr. Chen was Vice President, research, and a
member of the Board of Directors of Clarion Environmental Systems
Ltd. Prior to that he spent two and a half years as a post
doctoral fellow at the University of British Columbia,
specializing in air pollution technology and energy utilization.
Board of Directors and Committees
Pursuant to the Company's Bylaws, the Company's Board of
Directors consists of five members, each to hold office (subject
to the Company's By-Laws) until the next annual meeting or until
his respective successor is elected and qualified. In the case
of a vacancy, a director will be appointed by a majority of the
remaining directors then in office to serve the remainder of the
term left vacant. Directors do not receive any fees for
attending Board meetings. However, if two meetings are held in a
single month, then non-employee Directors receive a payment of
$100. Directors are entitled to receive reimbursement for
traveling costs and other out-of-pocket expenses incurred in
attending Board meetings. During the fiscal year ended December
31, 1995 ("fiscal 1995"), the Board of Directors held 8 meetings.
All incumbent directors attended at least 75 percent of those
meetings.
Based solely upon a review of the copies of the forms
furnished to the Company, or written representations from certain
reporting persons, the Company believes that during fiscal 1995,
all filing requirements applicable to its officers and directors
were complied with by such individuals.
Compensation of Executive Officers
The following table sets forth all compensation awarded
to, earned by or paid to each of the Company's executive officers
(the "Named Officers") for the Company's fiscal year as specified
below:
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Principal Other Annual
Position Year Salary Bonus Compe
nsation
William Meehan 1995 $90,000 $0 $0
President and 1994 30,000 0 0
Chief Executive
Officer (1)
Ryan Corley 1995 24,000 0 0
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President and 1994 67,500 0 0
Chief Executive 1993 60,000 0 0
Officer(2)
(1) Mr. Meehan served as president of SensonCorp, Inc., one of
Companies acquired in the Newdat, Inc., acquisition on January 21,
1995, and was appointed Company President and CEO on June 1, 1995.
(2) Mr. Corley resigned as Company President on June 1, 1995.
All other executive officers received less than $100,000 total annual
salary and bonus during the years being reported upon herein.
Employment Agreements
The Company is a party to an employment agreement with Mr.
William Meehan which expires on May 31, 1999. Pursuant to such
employment agreement, Mr. Meehan acts as President and Chief
Executive Officer of the Company, for which he currently receives
an annual salary of $120,000 and is prohibited from competing
with the Company for a period of one year following the term of
the agreement.
Stock Option Plans
1988 and 1990 Stock Option Plans
In March 1989 and June 1990, the shareholders approved the
1988 Stock Option Plan (the "1988 Plan") and (the "1990 Plan"),
respectively. The 1988 and 1990 Plans are designed to serve as
an incentive for retaining qualified and competent employees.
The Plans provide for the award of options to purchase up to
300,000 shares of Common Stock in each respective Plan, of which
137,580 were subject to outstanding options as of December 31,
1995. The Plans are administered by the Stock Option Committee
of the Board of Directors. The Stock Option Committee has,
subject to the provisions of each Plan, full authority to select
Company individuals eligible to participate in each respective
Plan, including officers and employees. The 1988 Plan provides
for the awarding of incentive stock options (as defined in
Section 422 of the Internal Revenue Code of 1986) and non-
incentive stock options. Options granted pursuant to the 1988
Plan will have such vesting schedules and expiration dates as the
Stock Option Committee shall establish in connection with each
Plan Participant, which terms shall be reflected in an option
agreement executed in connection with the granting of the option.
During the year ended December 31, 1995, 3,000 shares were
granted under the Plans.
On May 28, 1996, the Company's Board of Directors adopted
and approved the 1996 Stock Option Plan. The Option Plan is
designed to serve as an incentive for retaining qualified and
competent directors, officers and employees. See "Approval of
the Company's 1996 Option Plan."
Options Granted in Last Fiscal Year
There were no options granted to any of the named
executive officers during the year ended December 31, 1995.
Option Values
17
There were no unexercised options held by the named executive
officers as of December 31, 1995.
Board of Directors' Report on Executive Compensation
The Board of Directors has not established any
compensation committee. Therefore, the full Board reviews and
makes decisions regarding salaries, compensation and benefits of
executive officers and key employees of the Company.
Compensation of the Company's executive officers and key
employees has historically consisted of two components: base
salary and annual bonuses. Base compensation levels have been
developed in order to attract and retain executives and key
employees based on their level of responsibility within the
Company. Generally, the Company has positioned salaries at
median compensation levels for comparable positions and
responsibilities in the market. Individual salaries may be
higher or lower based on the qualifications and experience of the
individual as well as Company performance. Base salaries have
been subject to periodic review and adjustment and annual salary
adjustments have been made based on the factors described above.
Annual bonuses are under consideration and will closely link
executive pay with performance in areas key to the Company's
short term operating performances.
For fiscal 1995, the compensation package of the Company's
President, Mr. Meehan, was established pursuant to a written
employment agreement which expires on May 31, 1999. Mr. Meehan
currently receives an annual salary of $120,000. See "Management
of the Company - Employment Agreements."
The Board of Directors has instituted the 1996 Stock
Option Plan which is administered by the Stock Option Committee.
See "Management of the Company - Stock Option Plans." The
Company has adopted these stock option plans in order to create
incentives for retaining qualified and competent employees and
maximizing long-term stockholder values. For fiscal 1996, the
Board intends to examine and evaluate the performance of the
Company's officers and employees, through discussions with senior
management and otherwise, and make its decisions with respect to
base salary, annual bonuses and any other elements of
compensation in light of an overriding company philosophy linking
pay and performance.
Certain Relationships and Related Party 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.
Performance Graph
Set forth below is a graph comparing cumulative total
stockholder returns (assuming reinvestment of dividends) of the
Company, the Standard & Poor's High Tech composite and the
Standard & Poor's 500 index. The graph assumes $100 invested on
December 31, 1991 in the Company and in each of the indices. The
18
performance shown in the graph is not necessarily indicative of
future performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS
Performance Graph for
U.S. Technologies Inc.
TOTAL STOTAL SHAREHOLDER RETURNS
Dividends Reinvested
ANNUAL RETURN PERCENTAGE
Years Ending
Company/Index Dec 91 Dec 92 Dec 93 Dec 94 Dec 95
U. S. Technologies Inc. 113.22 -68.80 -23.91 -68.41
- -8.27
S & P High Tech Composite 14.08 4.13 23.01 16.55
44.04
S & P 500 Index 30.47 7.62 10.08 1.32 37.58
INDEXED RETURNS
Years Ending
Base
Period
Company/Index Dec 90 Dec 91 Dec 92 Dec 93 Dec 94 Dec 95
U. S. Technologies Inc. 100 213.22 66.52 50.62 15.99
14.67
S & P High Tech Composite100 114.08 118.79 146.13 170.31
245.32
S & P 500 Index 100 130.47 140.41 154.56 156.60 215.45
19
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
The following table set forth as of May 28, 1996, the
number and percentage of shares of Common Stock held by (i) each
of the executive officers and directors of the Company, (ii) all
persons who are known by the Company to be the beneficial owners
of, or who otherwise exercise voting or dispositive control over,
five percent or more of the Company's outstanding Common Stock
and (iii) all of the Company's present executive officers and
directors as a group:
Name and Address Common Stock Percentage of
of Beneficial Owner Owned (1) Outstanding
John V. Allen (1) 0 0.00
Suite 203
2750 Gulfshore Blvd.
North Naples, FL 33940
William Meehan (1) 0 0.00
7806 Newhall Lane
Austin, TX 78746
James Chen (1) 0 0.00
Suite 1110
900 West Hastings Street
Vancouver, British Columbia
Canada V6C 1E5
All Officers and Directors
as a Group (3 individuals) 0 0.00%
Tintagel, Ltd. (2) 6,319,226 39.80%
P.O. Box 156,
Hybiscus Square Pond Street
Grand Turk, Turks & Caicos Islands
British West Indies
(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.
20
OTHER MATTERS
The Board of Directors is not currently aware of any other
matters to be transacted at the Annual Meeting. However, if any
other matter should properly come before the Annual Meeting or
any adjournment thereof, the persons named in the accompanying
proxy intend to vote on such matters as they, in their
discretion, may determine, subject, in any event, to the
requirements of Delaware Law.
The Company will bear all costs of soliciting proxies in
the accompanying form. Solicitation will be made by mail, and
officers of the Company may also solicit proxies by telephone or
personal interview. In addition, the Company expects to request
persons who hold shares in their names and other to forward
copies of this proxy soliciting material to them and to request
authority to execute proxies in the accompanying form, and the
Company will reimburse such persons for their out-of-pocket and
reasonable clerical expenses in doing this.
FINANCIAL STATEMENTS
The Company's audited consolidated financial statements
for the fiscal year ended December 31, 1995 and certain other
related financial and business information of the Company are
obtained in the 1995 Annual Report to Stockholders mailed with
this Proxy Statement. Refer to Attachment 1.
STOCKHOLDERS' PROPOSALS
Any proposal which an eligible stockholder wishes to
include in the proxy statement for the 1997 Annual Meeting of
Stockholders must be received by the Company at its principal
executive offices at 1402 Industrial Boulevard, P.O. Box 697,
Lockhart, Texas 78644, not later than March 1, 1997.
By Order of the Board of
Directors
William Meehan, Secretary
Dated: June 27, 1996
21
U.S. TECHNOLOGIES INC. - STOCKHOLDERS ANNUAL MEETING - JULY 25,
1996
PROXY - This Proxy is solicited on behalf of the Board of
Directors
The undersigned hereby appoints the Chief Executive Officer of
U.S. Technologies Inc. (the "Company"), the attorney, agent and
proxy of the undersigned, with full power of substitution and
revocation, in the name, place and stead of the undersigned and
with all the powers the undersigned is entitled to vote at any
annual or special meeting of the shareholders of the Company
(including any adjournments thereof) on all matters on which such
shareholders are entitled to vote, (a) in favor of any nominees
for election to the Board of Directors of the Company (the
"Board") recommended by the Board, (b) otherwise, on each matter
to be voted on any such meeting of shareholders. In the same
proportion as the votes cast for, against and abstaining on such
matter by the other holders of stock of the Company present and
voting at such meeting.
______________________________
___
[Name]
Dated:____________________, 1996 [Settlement Date]
Agenda Item 1 Election of Directors
[ ] For all nominees listed below [ ] WITHHOLD
AUTHORITY
(except as marked to the contrary) to vote
for all nominees listed
(INSTRUCTION: To withhold authority for any individual nominee
strike a line through the nominees' name in the list below.)
John V. Allen, William Meehan, and James Chen
Agenda Item 2 [ ] [ ]
Proposal to Approve the Adoption of FOR
AGAINST
the Company's 1996 Stock Option Plan
Agenda Item 3 [ ] [ ]
Proposal to Approve the 5 for 1 Reverse split FOR
AGAINST
of the Company's Common shares.
Agenda Item 4 [ ] [ ]
Proposal to effectively increase the number of FOR
AGAINST
authorized and unissued shares.
22
Agenda Item 5 [ ] [ ]
Ratification of Appointment of FOR
AGAINST
Independent Certified Public Accountants
Please mark your choices above, date, sign and return this proxy
statement promptly using the enclosed envelope.
This proxy when executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made,
this proxy will be voted for Proposals 1, 2, 3, 4 and 5.
23