SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           --------------------------

                                   FORM 10-QSB

                   Quarterly Report under Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934

                           --------------------------

For the Quarter Ended:                         Commission File Number
   March 31, 2002                                    0 - 9574

                           --------------------------


                         UNITED SYSTEMS TECHNOLOGY, INC.

        Iowa                                            42-1102759
(State of Incorporation)                             (I.R.S. Employer
                                                   Identification Number)

                           1850 Crown Road, Suite 1109
                               Dallas, Texas 75234
                                 (972) 402-8600

          (Address of principal executive offices and telephone number)

                           --------------------------

     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 __X__        No ______


     As of March 31,  2002  there  were  56,178,663  shares of the  registrant's
Common Stock, par value $0.10 per share, outstanding.


<PAGE>
                UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARIES

                              INDEX TO FORM 10-QSB



PART I - FINANCIAL INFORMATION (UNAUDITED)                       PAGE
------------------------------------------

Item 1.  Consolidated Financial Statements

           Balance Sheets                                          3

           Statements of Income                                    4

           Statements of Cash Flows                                5

           Notes to Consolidated Financial Statements              6


Item 2.  Management's Discussion and Analysis or
         Plan of Operation                                         9


PART II - OTHER INFORMATION                                       11
---------------------------


            ---------------------------------------------------------



     The consolidated financial information reflects all adjustments, which are,
in the opinion of  management,  necessary  to a fair  presentation  of financial
position  and of the  statements  of  operations  and cash flows for the periods
presented.

     These consolidated  financial statements should be read in conjunction with
the notes to the  consolidated  financial  statements  which are included in the
annual report on Form 10-KSB for the fiscal year ended December 31, 2001.


<PAGE>


                 United Systems Technology, Inc. and Subsidiary
                           Consolidated Balance Sheets


                                                March 31,
                                                  2002         December 31,
                                               (Unaudited)        2001
                                               ===========     ===========
Current Assets
 Cash and cash equivalents                     $ 1,749,759     $ 1,383,173
 Trade accounts receivable, less allowance
  for doubtful accounts of $34,500 at
  March 31, 2001 and $32,000 at
  December 31, 2000                                247,730         850,189
                                                 ---------       ---------
   Total current assets                          1,997,489       2,233,362
                                                 ---------       ---------

Property and equipment, net                        109,513         115,989
Goodwill, net                                      417,531         417,893
Purchased software, net                            633,563         669,428
Deposits and other                                  27,359          31,411
                                                 ---------       ---------
                                                 1,187,966       1,234,721
                                                 ---------       ---------
   Total assets                                $ 3,185,455     $ 3,468,083
                                                 =========       =========

Liabilities and Stockholders' Equity
Current Liabilities
 Notes payable - related party                 $    10,416     $    10,416
 Trade accounts payable                             36,579          40,567
 Accrued payroll                                    91,153         191,230
 Accrued interest - related party                   19,571          19,359
 Other accrued expenses                             78,437         147,250
 Deferred revenue                                1,168,066       1,445,720
                                                 ---------       ---------
   Total current liabilities                     1,404,222       1,854,542

   Total liabilities                             1,404,222       1,854,542
                                                 ---------       ---------

Commitments and contingencies                         -               -

Stockholders' Equity
 Preferred stock, convertible, voting,
  cumulative, par value $.10 per share;
  authorized 5,000,000 shares; issued and
  outstanding, 500,000 shares of Series B
  and 300,000 shares of Series E, aggregate
  liquidating preference of $800,000
  ($1.00 per share)                                 80,000          80,000
 Common stock, par value $.10 per share;
  authorized 100,000,000 shares; issued
  and outstanding 56,178,663 at March 31,
  2001 and December 31, 2000                     5,617,866       5,617,866
 Additional paid-in capital                      2,825,554       2,825,554
 Accumulated deficit                            (6,624,189)     (6,799,071)
 Currency translation adjustments                  (77,998)        (70,808)
                                                 ---------       ---------
                                                 1,821,233       1,653,541
Less stock purchase note receivable                 40,000          40,000
                                                 ---------       ---------
   Total stockholders' equity                    1,781,233       1,613,541
                                                 ---------       ---------

   Total liabilities and stockholders' equity  $ 3,185,455     $ 3,468,083
                                                 =========       =========



    The accompanying notes are an integral part of the financial statements.

<PAGE>

                 United Systems Technology, Inc. and Subsidiary
                      Consolidated Statements of Operations
                                   (Unaudited)
                                                     Three Months Ended
                                                          March 31,
                                                  2002            2001
                                               ===========     ===========
Revenue
 Software packages                             $   152,849     $    39,054
 Installation, training and customer support       143,115         101,540
 Maintenance                                       492,698         440,126
 Equipment and supplies sales                       87,544          45,158
 Other                                                  25           4,875
                                                 ---------       ---------
                                                   876,231         630,753
                                                 ---------       ---------
Costs and expenses
 Salaries                                          400,873         327,744
 Other general, administrative and
  selling expense                                  190,345         148,546
 Depreciation and amortization                      46,756          57,730
 Commissions                                        16,674           1,364
 Cost of equipment and supplies sold                51,946          21,404
                                                 ---------       ---------
                                                   706,594         556,788
                                                 ---------       ---------
Income from operations                             169,637          73,965
                                                 ---------       ---------

Nonoperating income (expense)
 Interest expense                                     (212)           (257)
 Interest income                                     6,456           9,994
                                                 ---------       ---------
                                                     6,244           9,737
                                                 ---------       ---------
Net income                                         175,881          83,702
                                                 ---------       ---------

Preferred stock dividend requirements              (13,810)        (13,771)
                                                 ---------       ---------

Income available for common stockholders       $   162,071     $    69,931
                                                 =========       =========

Net income per common share - basic
 and diluted                                   $       NIL     $       NIL
                                                 =========       =========

Weighted average number of common
 shares outstanding
      Basic                                     56,178,633      56,178,633
                                                ==========      ==========
      Diluted                                   60,880,607      59,917,100
                                                ==========      ==========


    The accompanying notes are an integral part of the financial statements.


<PAGE>

                 United Systems Technology, Inc. and Subsidiary
                      Consolidated Statements of Cash Flows
            For the Three Month Period Ended March 31, 2002 and 2001
                                   (Unaudited)

                                                  2002            2001
                                               ===========     ===========
Cash flows in operating activities:
 Net income                                    $   175,881     $    83,702

 Adjustments to reconcile net income to
  net cash provided by operating activities:
   Depreciation and amortization                    46,756          57,730
   Recognition of deferred compensation costs
    on employee stock purchase                        -              4,500
 Change in operating assets and liabilities,
 net of effect of acquisitions:
   Accounts receivable                             602,459         226,160
   Deposits and other                               10,052         (41,991)
   Accounts payable                                 (3,988)         31,079
   Accrued expenses                               (168,678)        (75,627)
   Deferred revenue                               (277,654)       (195,231)
                                                 ---------       ---------

Net cash provided by operating activities      $   384,828     $    90,322
                                                 ---------       ---------

Cash flows from investing activities:
 Property and equipment additions                   (4,053)        (16,195)
 Acquisition of businesses                          (6,000)       (132,065)
                                                 ---------       ---------
Net cash used in investing activities              (10,053)       (148,260)
                                                 ---------       ---------

Effect of exchange rate changes on cash             (8,189)         13,124
                                                 ---------       ---------

Increase (decrease) in cash and cash
 equivalents                                       366,586         (44,814)
Cash and cash equivalents, beginning of year     1,383,173         814,240
                                                 ---------       ---------

Cash and cash equivalents, end of period       $ 1,749,759     $   769,426
                                                 =========       =========


    The accompanying notes are an integral part of the financial statements.


<PAGE>
                UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                                   (Unaudited)

Note 1.  Basis of Presentation:

     In the  opinion of  management,  the  accompanying  unaudited  consolidated
statements  contain  all  adjustments   (consisting  of  only  normal  recurring
accruals)  necessary to present fairly the  consolidated  financial  position of
United  Systems  Technology,  Inc.  (the  "Company")  as of March  31,  2002 and
December 31, 2001 and the results of  operations  and cash flows of USTI for the
three  months  ended  March  31,  2002 and 2001.  The  consolidated  results  of
operations  for the  three  months  ended  March  31,  2002 are not  necessarily
indicative of the results to be expected for the full year.


Note 2.  Property and Equipment:

     Property and equipment at March 31, 2002 and December 31, 2001 consisted of
the following:

                                                   March 31,     December 31,
                                                     2002            2001
                                                     ----            ----

Leasehold improvements                         $    74,935     $    74,995
Furniture and fixtures                              60,254          59,257
Equipment                                        1,059,677       1,056,581
                                                 ---------       ---------
                                                 1,194,866       1,190,793
Less Accumulated depreciation
  and amortization                              (1,085,353)     (1,074,804)
                                                 ---------       ---------
                                               $   109,513     $   115,989
                                                 ---------       ---------

Note 3.  Other Assets:

     Other  assets at March 31,  2002 and  December  31, 2001  consisted  of the
following:

                                               Accumulated
March 31, 2002                  Cost          Amortization         Net
--------------                  ----          ------------         ---

Goodwill                      $ 1,935,548     $(1,518,017)    $   417,531
Purchased Software              1,433,481        (799,918)        633,563

December 31, 2001
-----------------
Goodwill                      $ 1,936,027     $(1,518,134)    $   417,893
Purchased Software              1,433,565        (764,137)        669,428


<PAGE>

                UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                                   (Unaudited)

Note 4.  Preferred Stock:

     The  Company is in arrears in the  payment of  dividends  to holders of its
Series B and E Preferred Stock. Holders of Series B Preferred Stock are entitled
to annual  dividends of $.07 per share,  payable  quarterly and, as of March 31,
2002, are entitled to the payment of approximately $472,430 in dividends,  which
are  currently in arrears.  Holders of Series E Preferred  Stock are entitled to
annual dividends of $.07 per share, payable quarterly and, as of March 31, 2002,
are entitled to the payment of  approximately  $226,915 in dividends,  which are
currently in arrears.


Note 5.  Comprehensive Income (Loss):

         Comprehensive income (loss) is as follows:

                                                March 31,         March 31,
                                                  2002              2001
                                                  ----              ----

         Net income                           $  175,881        $  83,702
         Currency translation adjustments         (8,189)         (24,068)
                                                 -------          -------

         Comprehensive income                 $  167,692        $  59,634
                                                 -------          -------


Note 6.  New Accounting Pronouncements:

     Effective  January 1, 2002,  the Company  adopted  Statement  of  Financial
Accounting  Standards  (SFAS) No. 141,  Business  Combinations and SFAS No. 142,
Goodwill and Intangible Assets,  and SFAS No. 144,  Accounting for Impairment or
Disposal of Long-Lived Assets.

SFAS No. 141 and SFAS 142

     Major  provisions  of these  statements  and their  effective  dates are as
follows:

     o intangible  assets  acquired in a business  combination  must be recorded
       separately  from goodwill if they arise from  contractual  or other legal
       rights and are  separable  from  the  acquired  entity  and can be  sold,
       transferred,licensed,  rented  or  exchanged,  either  individually  or
       as part of a related contract, asset or liability;

     o effective  January  2,  2002,  all  previously   recorded  goodwill  and
       intangible   assets  with  indefinite   lives  will  no  longer  be
       subject  to amortization;

<PAGE>
                UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                                   (Unaudited)

     o  effective  January  2,  2002,  all  previously   recorded  goodwill  and
        intangible  assets with indefinite lives will be tested for impairment
        annually or whenever there is an impairment indicator; and

     o  all acquired goodwill must be assigned to reporting units for purposes
        of impairment testing and segment reporting

     The Company amortized goodwill related and intangible assets acquired prior
to July 1, 2001 until December 31, 2001.  Beginning  January 1, 2002,  quarterly
and annual  goodwill  amortization  is no longer  recognized.  The Company  will
complete a  traditional  fair value  based  impairment  test of  goodwill  as of
January 1, 2002 by June 30, 2002.  Impairment losses, if any, resulting from the
transitional  testing wil be  recognized  as a cumulative  effect of a change in
accounting principal.

Intangible assets consist of the following:

                                March 31, 2002            December 31, 2001
                           -----------------------    ------------------------
                            Gross                      Gross
                           Carrying    Accumulated    Carrying     Accumulated
                             Value    Amortization     Value      Amortization

Amortized intangible assets

   Purchased Software      $1,433,481    (799,918)    $1,433,565    (764,137)
                            ---------     -------      ---------     -------

Intangible assets not
  subject to amortization

   Goodwill                $1,936,027  (1,517,017)    $1,936,027  (1,518,134)
                            ----------  ---------      ---------   ---------


     Amortization  expense  related to  intangible  assets  totaled  $35,780 and
$44,770  during the three  months ended March 31, 2002 and 2001.  The  aggregate
estimated  amortization  expense for intangible assets remaining as of March 31,
2002 ia as follows:


         Remainder of 2002    $   98,400
         2003                    147,500
         2004                    147,000
         2005                    138,000
         2006                     74,800
         2007                     27,800
                                --------
         Total                $  633,500
                                --------



<PAGE>

                UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARIES


Item 2.   Management's Discussion and Analysis of Financial Condition
          or Plan of Operation

Results of Operations
---------------------
     The  Company  derives  its  revenue  from  the  licensing  of its  software
packages,   installation,   training  and  custom   modifications,   maintenance
agreements and equipment  sales and  commissions.  Results of operations for the
period  ended March 31,  2002  include  revenues  of $876,231  and net income of
$175,881 as  compared to revenues of $630,753  and net income of $83,702 for the
same period in 2001.

     The Company has completed the development of several new software products,
which significantly  enhance the  competitiveness of its comprehensive  software
offering.  These  products  are  marketed  under the asystTM  brand  name,  were
developed as Windows  applications to "look and work like Microsoft Office", and
include a Fund  Accounting  product  line,  a Utility  Billing  product  line, a
General  Government  product line and a Public  Safety  product  line.  The Fund
Accounting product line includes General Ledger,  Budget XLence,  Report XLence,
Accounts Payable, Accounts Receivable,  Purchase Orders, Cash Receipts,  Payroll
and Fixed Assets  modules.  The Utility  Billing  product line includes  Utility
Billing, Service Orders, Meter Reader Interface,  Bank Drafts and Budget Billing
modules.   The  General   Government  product  line  includes  Master  and  Land
Directories,  Business and Animal Licenses,  Code Enforcement,  Building Permits
and Property Tax modules.  The Public Safety  product line includes  Master Name
Index, Calls for Service, Offense Reports, Citations, State Interface,  Computer
Aided Dispatch,  Jail  Management,  Alarm Billing and UCR Reports  modules.  The
Company is currently developing additional modules for its asystTM product line.

Three Month Period Ended March 31, 2002 and 2001
------------------------------------------------
     The Company's  total revenue  increased 39% from $630,753  during the first
quarter in 2001 to $876,231 in 2002.  Software  license fees increased 291% from
$39,054 in 2001 to $152,849 in 2002. This increase resulted from the increase in
the licensing of the Company's asystTM products and sales of additional  modules
to its MASTM customers during 2002. Installation and training increased 41% from
$101,540 in 2001 to  $143,115  in 2002 due, in part,  to an increase in services
provided to its Canadian  customers.  Maintenance  revenue  increased 12% during
2002, due primarily to an increase in revenue from the MASTM customers  acquired
by the Company in 2001.  Equipment and supplies sales  increased from $45,158 in
2001 to $87,544  in 2002 as a result of an  increase  in the volume of  computer
equipment and supplies sold in conjunction with its software products.

<PAGE>

     Total costs and expenses increased 27% from $556,788 in 2001 to $706,594 in
2002.  Salary  expense  increased 22% from $327,744 in 2001 to $400,873 in 2002,
due in part, from the addition of employees related to previous acquisitions and
increased  incentives  resulting  from  improved  results of  operations.  Other
general,  administrative  and selling expenses increased 28% in 2002 as compared
to 2001 as a result of increased costs related to acquisitions. Depreciation and
amortization  expense  decreased 19% from the addition of assets  related to the
CPS,  Auto Admin and MAS  acquisitions.  Cost of  equipment  and  supplies  sold
decreased in 2002 as a result of decreased sales of computer equipment.

Liquidity and Capital Resources
-------------------------------

     The Company had net cash  provided  from  operating  activities of $384,828
during the three months ended March 31, 2002,  as compared to net cash  provided
by  operations  of $90,322  for the same period in 2001.  This  increase in cash
provided in 2002 was primarily the result of the  improvement  in the results of
operations  in the first  quarter of 2002 and an increase in the  collection  of
outstanding  accounts  receivable.  Net cash of $10,053 was utilized in 2002 for
capital acquisitions.

     Management  believes that its ability to generate  positive cash flows from
operations,  in addition to its existing cash balances, will be adequate to meet
its working capital requirements in the near future.

     The Company is  currently in arrears in the payment of dividends to holders
of its preferred  stock. As of March 31, 2002,  dividends were in arrears on the
Series B  preferred  stock in the amount of  $472,430  and on Series E preferred
stock in the amount of $226,915.

Forward-Looking Statements
--------------------------

     This report  contains  forward-looking  statements,  other than  historical
facts,  which  reflect the view of Company's  management  with respect to future
events.  Such  forward-looking  statements are based on assumptions  made by and
information currently available to the Company's management. Although management
believes that the expectations reflected in such forward-looking  statements are
reasonable,  it can give no assurance that such  expectations will prove to have
been  correct.  Important  factors  that could  cause  actual  results to differ
materially from such expectations  include,  without limitation,  the ability of
the Company i) to generate  levels of revenue and  adequate  cash flows from its
operations to support and maintain its current cost structure and ii) to develop
and deliver products that are  competitive,  accepted by its markets and are not
rendered  obsolete  by  changing  technology.   The  forward-looking  statements
contained  herein  reflect the current  views of the Company's  management  with
respect to future  events  and are  subject to these  factors  and other  risks,
uncertainties and assumptions relating to the operations,  results of operations
and  financial  position of the Company.  The Company  assumes no  obligation to
update the  forward-looking  statements or to update the reasons  actual results
could differ from those contemplated by such forward-looking statements.

<PAGE>

Part II - Other Information

Item 1.  Legal Proceedings

     The Company is a defendant in various legal actions, which arose out of the
normal course of business.  In the opinion of management,  none of these actions
are expected to have a material effect on the consolidated results of operations
or financial position of the Company.

Item 2.  Change In Securities

         Not Applicable


Item 3.  Defaults Upon Senior Securities

     The  company is in arrears in the  payment of  dividends  to holders of its
Series B and E Preferred Stock. Holders of Series B Preferred Stock are entitled
to annual  dividends of $.07 per share,  payable  quarterly and, as of March 31,
2002, are entitled to the payment of approximately $472,430 in dividends,  which
are  currently in arrears.  Holders of Series E Preferred  Stock are entitled to
annual dividends of $.07 per share, payable quarterly and, as of March 31, 2002,
are entitled to the payment of  approximately  $226,915 in dividends,  which are
currently in arrears.

Item 4.  Submission of Matters to a Vote of Security Holders

         Not Applicable

Item 5.  Other Information

         Not Applicable


Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits - 10.1  Form of Grant of Nonstatutory Stock Option.

         (b)  No reports on Form 8-K were filed  during the  quarter  for which
              this report is filed.

<PAGE>
                                   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.


                                         United Systems Technology, Inc.

Date:  May 14, 2002                      By: /s/  Thomas E. Gibbs
                                             --------------------
                                             Thomas E. Gibbs, President
                                              and Chairman of the Board
                                             (Principal Executive Officer)



Date:  May 14, 2002                      By: /s/  Randall L. McGee
                                             ---------------------
                                             Randall L. McGee, Secretary
                                              and Treasurer
                                             (Principal Financial and
                                               Accounting Officer)

<PAGE>
                                  Exhibit 10.1

                       GRANT OF NONSTATUTORY STOCK OPTION
                                       OF
                         UNITED SYSTEMS TECHNOLOGY, INC.


Date of Grant:  _______________

     THIS GRANT,  dated as of the date of grant first stated above (the "Date of
Grant"),  is delivered by UNITED SYSTEMS  TECHNOLOGY,  INC., an Iowa corporation
(the "Company"), to __________________________ (the "Grantee") who is a director
or employee of the Company.

     WHEREAS,  the Board has determined  that it is in the best interests of the
Company to provide an incentive to certain key  employees  and  directors of the
Company who are providing substantial services to the Company; and

     WHEREAS, the Board has approved the grant of a Nonstatutory Stock Option to
the Grantee as documented herein.

     NOW, THEREFORE,  the parties hereto,  intending to be legally bound hereby,
agree as follows:

1.   Grant of Option

     Subject to the terms and conditions  hereinafter set forth,  Company,  with
the approval and at the direction of Board,  hereby grants to Grantee, as of the
Date of Grant,  an option to purchase up to ___________  shares of the Company's
common stock,  par value $.10 per share (the "Stock") at a price of ________ per
share,  which the Board has  determined is not less than 100% of the fair market
value per share of the Stock on the Date of Grant.  Such  option is  hereinafter
referred to as the "Option," and the shares of stock  purchasable  upon exercise
of the Option are hereinafter  sometimes referred to as the "Option Shares." The
Option is  intended  by the  parties  hereto to be, and shall be  treated  as, a
Nonstatutory  Stock Option (as that term is defined  under the Internal  Revenue
Code of 1986, as amended).

2.   Exercise of Option

         This Option will be exercisable as follows:

     a. Exercise of Option.  Exercise of this Option will not be effective until
Company has received  written  notice of exercise.  Such notice must specify the
number of whole shares to be purchased and be  accompanied by payment in full of
the aggregate  exercise price of the number of shares being  purchased.  Company
will not in any case be required to sell,  issue, or deliver a fractional  share
with respect to this Option.  The exercise price of stock covered by this Option
shall be payable  upon the  exercise of this  Option in cash,  by  certified  or
cashier's check.

<PAGE>

     b. Restrictions on Amount Exercisable. Grantee may not exercise this Option
during the first twelve (12) month period following ______________ (the "Date of
Grant").  Grantee may exercise up to (but not more than) one-fourth (1/4) of the
total shares of Stock  subject to this Option at any time after the first twelve
(12) month period  following the Date of Grant.  Grantee may exercise up to (but
not more  than)  one-half  (1/2) of the total  shares of Stock  subject  to this
Option at any time after the first  twenty-four  (24) month period following the
Date of Grant.  Grantee  may  exercise  up to (but not more than)  three-fourths
(3/4) of the total shares of Stock  subject to this Option at any time after the
first  thirty-six  (36) month period  following  the Date of Grant.  Grantee may
exercise all of the shares of Stock subject to this Option at any time after the
first forty-eight (48) month period following the Date of Grant. Notwithstanding
what is just stated,  if Grantee is sixty-five (65) years of age or older at the
time the Option is granted,  such Grantee may exercise up to (but not more than)
one-half  (1/2) of the total shares of Stock subject to such Option.  Subject to
the  limitations  just  stated,  each Option may be  exercised at one time or on
several successive  occasions;  however,  each Option may not be exercised in an
amount less than one hundred (100) shares at any one time.

     c. Withholding. If Grantee's exercise of the Option is a taxable event, the
Board may, in its  discretion,  require Grantee to pay to Company at the time of
exercise of this Option (or a portion  thereof)  the amount that  Company  deems
necessary to satisfy its obligation to withhold federal,  state, or local income
or other taxes  incurred  by reason of the  exercise.  Upon the  exercise of any
Option  requiring tax  withholding,  Grantee may make a written  request to have
shares of Stock  withheld by Company  from the shares  otherwise to be received.
The number of shares so withheld  shall have an  aggregate  fair market value on
the date of exercise sufficient to satisfy the applicable withholding taxes. The
acceptance  of any such request by Grantee  shall be at the sole  discretion  of
Board,  including,  if deemed necessary by the Board, approval by the Securities
and Exchange  Commission and the  satisfaction  of any  additional  requirements
necessary to obtain such approval.  If the Grantee is subject to liability under
Section  16b of the  Act,  the  additional  requirements  must be  met:  (1) any
previously owned shares of Stock used to satisfy the withholding obligation must
have  been held by the  taxpayer  for at least six (6)  months,  and any  Option
shares otherwise  issuable  hereunder to be withheld to satisfy such obligations
may be so withheld  only if both the  exercise of the Option and the election to
have shares  withheld  are made at least six (6) months after the date of grant;
(2) the Option holder's  election must be made: (a) at least six (6) months less
one day prior to the date on which the option exercise becomes  taxable,  or (b)
within a 10-day  "window  period"  beginning on the third business day following
the release of Company's annual or quarterly financial reports and ending on the
twelfth day thereafter  (but in no event later than the date the option exercise
becomes  taxable);   (3)  Company  has  been  subject  to  the  Act's  reporting
requirements  for more  than a year and has  filed all  reports  and  statements
required to be filed  pursuant to Section 13 of the Act;  (4) Company  regularly
issues  quarterly or annual  summary  statements of sales and earnings;  (5) all
members of the Board  administering  the  Option  with  respect  to the  Grantee
subject  to  liability  under  Section  16b of the  Act are  "disinterested"  in
accordance  with Rule  16b-3  promulgated  under the Act;  (6) the Board will be
empowered to consent to or disapprove the Grantee's  withholding  election;  and
(7) any withholding election will be required to be irrevocable.

<PAGE>

     d. Term of Option.  This Option may not be  exercised  after  ____________,
such date is not greater than ten (10) years from the Date of Grant hereof,  and
may be  exercised  during  such term only in  accordance  with the terms of this
Agreement.


     e.       Terms, Time of Exercise, and Transferability of Options.

     1. Decrease in Term of Option.  This Option shall be exercisable during the
Grantee's  lifetime  only  by him or her  or by  his or her  guardian  or  legal
representative (or assignee after a permitted assignment). This Option shall not
be  transferrable  other than by will or the laws of descent and distribution or
to a qualified charity or a member of the Grantee's family.  For this purpose, a
"qualified  charity" shall mean an  organization  described in Section 170(c) of
the Internal Revenue Code of 1986, as amended. Each Option shall also be subject
to the following terms and conditions:


         (A)  Termination of Employment or Directorship.

     (1)  Voluntary  Termination.  If the  Grantee  ceases to be employed by the
Company  because the Grantee  voluntarily  terminates his or her employment with
the Company and the Grantee  does not remain or  thereupon  become a director of
Company,  or if the  Grantee  ceases to be a  director  of the  Company  and the
Grantee does not remain or thereupon become an employee of Company,  the portion
(if any) of an Option that remains unexercised,  including that portion (if any)
that  pursuant to the  Agreement is not yet  exercisable,  as of the date of the
Grantee's  termination  of  employment  or ceasing to be a  director,  whichever
occurs later, shall terminate and cease to be exercisable as of such date.

     (2)  Termination  for Cause.  If the  Grantee  ceases to be employed by the
Company because the Company  terminates the Grantee's  employment for cause, the
portion (if any) of an Option that remains  unexercised,  including that portion
(if any) that is not yet exercisable,  at the time of the Grantee's  termination
of employment, shall terminate and cease to be exercisable immediately upon such
termination.  The Grantee's employment shall be deemed terminated "for cause" if
terminated  by the  Board of  Directors  of  Company  because  of  incompetence,
insubordination,  dishonesty, other acts detrimental to the interest of Company,
or  any  material  breach  by the  Grantee  of  any  employment,  nondisclosure,
noncompetition, or other contract with the Company. Whether "cause" exists shall
be  determined  by such Board of  Directors in its sole  discretion  and in good
faith.  The exercise of an option in  anticipation  of a  termination  for cause
shall be null and void.

     (3) Termination  Without Cause. If the Grantee ceases to be employed by the
Company  because  the  Company  terminates  the  employment  of the  Grantee for
otherwise than for "cause," and the Grantee does not remain or thereupon  become
a director  of Company,  the  Grantee  shall have the right for thirty (30) days
following  such  termination to exercise the Option with respect to that portion
thereof  that has become  exercisable  pursuant to this Option as of the date of
such  termination,  and  thereafter  the Option shall  terminate and cease to be
exercisable.

<PAGE>

     (B)  Disability.  If the  Grantee  ceases to be  employed by the Company by
reason of  disability  (as  defined in Sec.  22(e)(3)  of the Code) and does not
remain or thereupon  become a director of Company,  or if the Grantee  ceases by
reason of such  disability  to be a director of the Company,  the Grantee  shall
have the right for ninety (90) days after the date of  termination of employment
with,  or cessation  of  directorship  of, the Company by reason of  disability,
whichever  occurs  later,  to  exercise  the  Option to the extent the Option is
exercisable on the date of his or her termination of employment,  and thereafter
the Option shall terminate and cease to be exercisable.

     (C) Death.  If the  Grantee  dies while in the employ of  Company,  or dies
while a director of the Company,  his or her Option shall be  exercisable by his
or her legal  representatives,  legatees,  or  distributees  for six (6)  months
following  the  date  of the  Grantee's  death  to the  extent  such  Option  is
exercisable  on the Grantee's  date of death,  and  thereafter  the Option shall
terminate and cease to be exercisable.

     2. Issuance of Stock  Certificates.  Within a reasonable time, or such time
as may be permitted  by law,  after  Company  receives  written  notice that the
Grantee has elected to exercise all or a portion of this Option,  such notice to
be accompanied by payment in full of the aggregate  exercise price of the number
of shares purchased,  Company shall issue and deliver a certificate representing
the shares acquired as a result of the exercise and any other amounts payable in
consequence of such exercise.

     3. Issuance in Compliance  With Securities  Laws.  Nothing herein or in any
Option granted hereunder shall require Company to issue any shares upon exercise
of any Option if such  issuance  would,  in the opinion of counsel for  Company,
constitute a violation of the Securities Act of 1933, as amended, or any similar
or  superseding  statute  or  statutes,  or  any  other  applicable  statute  or
regulation, as then in effect.

         4. Investment Legend. At the time of exercise of an Option, Company
may, as a condition precedent to the exercise of such Option, require from the
Grantee of the Option (or in the event of his or her death, his or her legal
representatives, legatees, or distributees) such written representations, if
any, concerning his or her intentions with regard to the retention or
disposition of the shares being acquired by exercise of such Option and such
written covenants and agreements, if any, as to the manner of disposal of such
shares as, in the opinion of counsel to Company, may be necessary to ensure that
any disposition by such Grantee (or in the event of his or her death, his or her
legal representatives, legatees, or distributees), will not involve a violation
of the Securities Act of 1933, as amended, or any similar or superseding statute
or statutes, or any other applicable state or federal statute or regulation, as
then in effect. Certificates for shares of Stock, when issued, may have the
following legend, or statements of other applicable restrictions, endorsed
thereon, and may not be immediately transferable:

            The shares of Stock evidenced by this certificate have been issued
            to the registered owner in reliance upon written representations
            that these shares have been purchased for investment. These shares
            may not be sold, transferred, or assigned unless, in the opinion of
            Company and its legal counsel, such sale, transfer, or assignment
            will not be in violation of the Securities Act of 1933, as amended,
            applicable rules and regulations of the Securities and Exchange
            Commission, and any applicable state securities laws.
<PAGE>


     3.Adjustments Upon Changes in Capitalization, Merger, etc.

     The number and class of shares subject to each outstanding  Option, and the
exercise price of each outstanding  Option,  shall be automatically  adjusted to
accurately  and  equitably   reflect  the  effect  thereon  of  a  stock  split,
combination, exchange of shares or other recapitalization, merger, or otherwise,
in which  Company  is the  surviving  corporation.  In the  event  of a  dispute
concerning such adjustment, the decision of the Board shall be conclusive.

         4.Fair Market Value

     The "fair  market  value" of a share of Stock  shall be the  average of the
high and low sale  prices  per share of Stock on the Stock  Exchange,  composite
tape or other  recognized  market  source  where the stock is being  traded,  as
determined by the Board,  on the applicable date of reference  hereunder,  or if
there is no sale on such  date,  then the  average  of such  high and low  sales
prices on the last previous day on which a sale is reported.

         5. No Rights of Shareholders

     Neither Grantee nor any personal representative shall be, or shall have any
of the rights and  privileges  of, a shareholder  of Company with respect to any
shares of Stock  purchasable  or issuable  upon the  exercise of the Option,  in
whole or in part, prior to the date of exercise of the Option.

         6. Non-Transferability

     This Option is exercisable  during Grantee's lifetime only by him or by his
guardian or legal  representative.  This Option shall not be transferable  other
than by will or the laws of descent and distribution.

         7.Employment Not Affected

     Neither the  granting of the Option nor its  exercise is to be construed as
granting to Grantee  any right with  respect to  continuance  of  employment  of
Company.  Except as may  otherwise  be  limited by a written  agreement  between
Company  and  Grantee,  the right of  Company  to  terminate  at will  Grantee's
employment with it at any time (whether by dismissal,  discharge,  retirement or
otherwise) is specifically reserved by Company and acknowledged by Grantee.

         8.Amendment of Option

     The  Option  may be  amended  by the  Board at any  time:  (i) if the Board
determines, in its sole discretion,  that amendment is necessary or advisable in
the light of any addition to or change in the  Internal  Revenue Code of 1986 or
in the regulations issued thereunder,  or any federal or state securities law or
other law or regulation,  which change occurs after the Date of Grant and by its
terms applies to the Option; or (ii) other than in the  circumstances  described
in clause (i) above, with the consent of Grantee.

<PAGE>

         9.Notice

     Any notice to Company provided for in this instrument shall be addressed to
it in care of its Secretary at its executive  offices at 1850 Crown Road,  Suite
1109,  Dallas,  Texas  75234,  and any notice to Grantee  shall be  addressed to
Grantee at the current  address shown on the corporate  records of Company.  Any
notice  shall be  deemed to be duly  given if and when  properly  addressed  and
posted by registered or certified mail, postage prepaid.

         10. Governing Law

     The validity, construction,  interpretation,  and effect of this instrument
shall  exclusively be governed by and determined in accordance  with the laws of
the State of Iowa, except to the extent preempted by federal law, which shall to
that extent govern.

     IN WITNESS  WHEREOF,  Company  has caused its duly  authorized  officers to
execute and attest this Grant of  Nonstatutory  Stock  Option,  and to apply the
corporate seal hereto, and Grantee has placed his signature hereon, effective as
of the Date of Grant.

                                    COMPANY:

                                    UNITED SYSTEMS TECHNOLOGY, INC.


                                    By:      ______________________________
                                               Thomas E. Gibbs,
                                               Chairman of the Board


                                    GRANTEE:


                                    By:     ______________________________

                                    Printed Name:   ______________________
ATTEST:

-------------------------------
Randall L. McGee, Secretary

<PAGE>