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

                                   FORM 10-KSB

                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                              --------------------

For the Fiscal Year Ended:                              Commission File Number
   December 31, 1996                                           0-9574
           
                              --------------------


                         UNITED SYSTEMS TECHNOLOGY, INC.

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


                          3021 Gateway Drive, Suite 240
                               Irving, Texas 75603
                                 (214) 518-0728

          (Address of principal executive offices and telephone number)
                              ---------------------

        Securities registered pursuant to Section 12(b) of the Act: None

               Securities registered pursuant to Section 12(g) of
                                    the Act:

                     Common Stock, par value $.10 per share

         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 7, 1997, the aggregate market value of voting stock held by
non-affiliates of the Registrant was $603,235.

         As of March 26, 1997, there were 37,969,765  shares of the Registrant's
Common Stock outstanding.

         DOCUMENTS INCORPORATED BY REFERENCE:  Portions of the Registrant's
definitive  proxy statement  relating to its 1996 annual meeting of shareholders
is incorporated by reference into Part III of this Form 10-KSB.

         Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, and will not be contained, 
to the best of the Registrant's knowledge, in the proxy statement incorporated 
by reference into Part III of the Form 10-KSB or any amendment hereto.  X




<PAGE>





                                     PART I

ITEM 1.  BUSINESS

General Development of Business

         United Systems  Technology,  Inc. ("USTI"),  was incorporated under the
laws of the  State of Iowa on June 5,  1978,  and its  wholly-owned  subsidiary,
United Systems Technology East, Inc. ("USTEI"),  was incorporated under the laws
of the State of  Delaware on June 10,  1991 (USTI and USTEI,  collectively,  are
referred to herein as the "Company").  The Company is engaged in the business of
developing,  supporting and marketing  computer  software products to county and
local  governments.  The  software  applications  of the Company  operate on IBM
mid-range  computers,  and on various network  computer  systems both in DOS and
Windows  environments.  The  products  are offered to  customers in five product
application  groups.  These product  application  groups,  consisting of over 30
separate software titles, are Financial,  General Administration,  Public Works,
Civil Processing and Public Safety.

         On  November  15,  1995,  United  Systems  Technology,   Inc.  ("USTI")
purchased substantially all of the assets and assumed certain liabilities of QDS
Acquisitions,  Inc. (QDS") from Dralvar Capital Corp. ("Dralvar").  These assets
were previously acquired by certain Dralvar  shareholders through foreclosure on
their  security  interests in such assets  granted by QDS.  The  purchase  price
consisted of the issuance of 4,326,600 shares of USTI Common Stock. In addition,
USTI  assumed  certain  obligations  of Dralvar.  The assets  purchased  by USTI
consisted  of (a) all  operating  assets of QDS  including  its Utility  Billing
System  ("UBS")  and  its  Law  Enforcement   Automated  Data  Retrieval  System
("LEADRS")  software,(b)  the  non-exclusive  right to sell and provide software
maintenance and services for the Quest Fund Accounting  ("QFA") software product
line from the closing date through  February 28,  1997,  (c)  substantially  all
hardware, equipment,  supplies,  furniture,  furnishings and other fixed assets,
(d) all software used for product development, (e) trade secrets and proprietary
information  including the name QuestTM and any other  trademarks,  (f) business
records of Dralvar,  including customer lists and related contracts and contract
rights and (g) certain  accounts  receivable of Dralvar  totaling  approximately
$61,131.  USTI  assumed  certain  obligations  of  Dralvar  which  consisted  of
obligations  to customers in the amount of $187,645 and accrued  expenses in the
amount of $36,774.

         On February 21, 1997 Noll Computer Systems ("NCS") exercised its option
to reacquire  certain assets,  including the  InterFundTM  products and customer
relationships  existing in 1994.  In addition,  NCS  purchased  the  InterFundTM
products developed at USTI and customer  relationships added since October 1994,
including,  but not limited to, the following contractual  obligations:  License
Agreements,  Customer Support Agreements,  and certain  contractual  obligations
related  to ongoing  Service  Requests.  In  October  17,  1994,  USTI  acquired
substantially all of the assets of Noll Computer Systems,  Inc. ("NCS"), a Texas
Corporation.  USTI's  initial  decision  to  infuse  the  company  with  the new
technology, specifically the Progress and UNIX based InterFundTM product family,
was based on the belief that USTI needed a new  technology  direction to provide
an  alternative  to the AS/400 based Legacy  product  family that had come under
increasing  competition  from more "Open" systems.  Sales of this product family
did not reach the required  levels in the 1994  agreement  with NCS. The Company
made the  decision  not to prepay  the  stipulated  minimum  royalty  amounts as
provided for in the agreement to retain the InterFundTM product line.  According
to the 1994  agreement,  in the event that royalty  payments,  based on sales or
prepayment, did not equal certain stipulated minimum annual amounts, NCS had the
right to reacquire  the  InterFundTM  product  line.  On February 21, 1997,  NCS
exercised its right to reacquire  certain assets and elected to purchase  others
that had been developed by USTI.


                                        2



<PAGE>


Narrative Description of Business

Products

         The  software   applications  offered  by  the  Company  consist  of  a
comprehensive  line of management  information  systems which were  developed to
specifically meet the unique  requirements of local governmental  entities.  The
software  applications of the Company are offered through its LegacyTM,  QuestTM
and  asystTM  product  lines.  The  LegacyTM  product  line  operates on the IBM
mid-range  computer  systems,  including  the  AS/400 and the  Advanced/36.  The
QuestTM  product line operates in a single user or small network PC environment.
The  asystTM  product  line  operates  in  a  single  user  or  network  Windows
environment.  An initial  software sale  typically  averages  between $1,500 and
$40,000.  The  cost of the  related  hardware  varies  depending  on the type of
machine purchased as well as the amount of memory capacity, peripheral equipment
and optional features obtained on the machine.

         The Company markets its software packages in the following five product
application groups.

    Financial Systems

    This group  includes  software  modules  in the areas of general  ledger and
    budgetary  accounting,   budget  preparation,   accounts  payable,  payroll,
    accounts receivable,  centralized cash receipts, tax billing and collection,
    and comprehensive financial report writer.

    Public Works

    This group includes  software  modules in the areas of building  permits and
    inspections,  utility  billing  and  collections,  hand held meter  reading,
    assessment billing and project accounting.


    General Administration

    This group includes  software modules in the areas of information  indexing,
    perpetual inventory, vehicle and equipment maintenance, fixed asset records,
    and business licenses.


    Public Safety

    This  group  includes  software  modules  in the  areas  of  computer  aided
    dispatch,  law enforcement  records management,  jail management,  emergency
    medical services billing, court administration and alarm billing.

    Civil Processing

    This group includes software modules in the areas of summonses and complaint
    docketing,  process  server  activity,  writ and  foreclosure  docketing and
    garnishments  and is  designed  exclusively  for the  County  Sheriff  Civil
    Process function..

         The Company has substantially  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,  are  developed  as  Windows  applications  to "look  and work like
Microsoft  Office",  and include a new Fund Accounting  system including General
Ledger,  Budget Preparation,  Fixed Assets,  Accounts Payable,  Purchase Orders,
Cash  Receipts,  Payroll,  Utility  Billing  and  the  BOSS  for  Windows  civil
processing  system.  The  Company  derives  its  revenue  principally  from  (i)
licensing of its software  packages,  (ii)  installation,  training and customer
support, (iii) maintenance agreements, and (iv) equipment and supplies sales.

                                        3

<PAGE>

    Software Packages

    The Company  licenses its software  packages under a perpetual  nonexclusive
    and nontransferable license agreement.


    Installation, Training and Customer Support

    The Company provides services related to the training and  implementation of
    the software  packages to its customers.  These services  typically occur at
    the customer  site,  but are also  conducted  in a classroom  setting at the
    company's   headquarters  or  as  "remote"   training  through   interactive
    computer-to-computer  hookup.  In  the  event  that  the  customer  requests
    additional functions from the product which are not standard in the software
    packages,  the  Company  provides  custom  programming  services  for  these
    modifications.


    Maintenance Agreements

    The Company offers maintenance  agreements in conjunction with the licensing
    of its  software  packages.  These  agreements  provide  telephone  support,
    software  product  enhancements,  error  corrections,  upgrades  and  remote
    diagnostics support.


    Equipment and Supplies Sales

    The Company sells PC's and hand-held  computers as well as certain  computer
    forms that are used in conjunction with the Company's products.

         For  the  year  ended   December  31,  1996,   the  Company   generated
approximately  11%  of  its  revenue  from  the  sale  of  software,   25%  from
installation,  training and customer support, 59% from software maintenance, and
5% from equipment and supplies sales.

Marketing

         The Company  markets its products on a nationwide  basis.  Marketing is
conducted  through its  full-time  sales  staff in Dallas,  Texas as well as the
Company's  full-time sales  representatives  located in Minneapolis,  Minnesota;
Ringwood, New Jersey; and Lexington, Kentucky.

         The  Company's  customers  are  primarily  municipal  governments  with
populations between 1,000 and 100,000,  county governments,  police departments,
emergency  medical services  providers and municipal court systems.  The Company
currently  has  approximately  1,500  customer  installations  nationwide.  USTI
proposes  computer  equipment  when selling its  software,  but the customer may
obtain their computer equipment from a hardware  manufacturer or dealer and then
purchases one or more software modules from the Company.

         The   typical   purchaser's   representative   is   a   City   Manager,
Administrative  Manager,  Controller or Director of Finance.  Customer leads are
established  from customer  referrals,  direct mail  campaigns and attendance at
national and  regional  trade shows.  In  addition,  the names and  addresses of
target city  governments  are readily  available  from  directory  sources.  The
Company  also  holds an annual  users'  meeting in Dallas,  Texas.  The  two-day
meeting is  typically  attended by  approximately  100  current and  prospective
users.  In the past, new business has been generated from current  customers who
have upgraded  systems by purchasing new modules.  In addition,  the Company has
gained new accounts from persons attending this meeting.


                                        4

<PAGE>

         Approximately  32% of the Company's  customers are located in Texas and
Minnesota, and the remaining customers are located in various states nationwide.

Competition

         The Company is aware of sizable, nationally prominent competitors which
market  products  that  are  similar  to those of the  Company.  Numerous  other
competitors  are  small,   local  vendors  who  often  do  not  market  standard
application  packages.  Management believes that the comprehensive nature of its
product offering,  including the uniqueness of the new asystTM product line, has
a positive impact on its competitive status.

Employees

         The  Company  presently  has  23  full-time  employees,  including  its
executive  officers.  In addition,  from time to time,  the Company  engages the
services of various consultants and part-time employees.

Research and Development

         During 1996, the Company incurred approximately $75,000 in research and
development costs related to the development of its asystTM product line.

Patents, Copyrights, Trademarks and Royalties

         The Company does not believe that its products are patentable,  and, to
date, has not registered any copyright with respect to its products. The Company
believes that all of its products are of a proprietary  nature and the Company's
licensing  arrangements  prohibit  disclosure  of the  program by the  customer.
However,  there can be no assurance that the Company's  software is incapable of
being  duplicated  or that the Company  will be  successful  in  discovering  or
preventing any such duplication.

         The Company  entered  into  royalty  agreements  as part of the sale of
assets to NCS on  February  21,  1997.  In  addition,  the Company is a party to
certain royalty agreements which,  individually,  and in the aggregate, have not
required the payment of material amounts. Under these agreements, the Company is
the licensee of certain software systems which it markets as part of its product
line.




                                        5

<PAGE>

ITEM 2.  PROPERTIES

         The Company  maintains  its offices at 3021 Gateway  Drive,  Suite 240,
Irving, Texas, 75063. The lease for this facility was entered into on August 27,
1994 to include  approximately  6,160 square feet and had an expiration  date of
August 31,  1995.  On July 31,  1995,  the lease was renewed  for an  additional
five-year term  commencing on September 1, 1995 and expiring on August 31, 2000.
The Company leases this space from a nonaffiliate for a monthly rental of $4,310
for the first twelve  months of the lease,  $4,525 for the next twelve months of
the lease,  $4,750 for the next twelve months of the lease,  $4,990 for the next
twelve  months of the lease and $5,240 for the final twelve months of the lease.
In  addition,  the lease  allows the Company and the lessor a right to terminate
the lease at the end of the third year of the lease by providing written notice.

ITEM 3.  LEGAL PROCEEDINGS


The Company is involved in the following legal proceedings:

         On December  10,  1993,  Plaintiff  County of Essex filed suit  against
USTI,  USTEI, New Jersey  Municipal Data Management  ("MDM") and MDM's surety in
Superior Court of New Jersey.  The suit is based on allegations  that MDM failed
to perform its obligations  related to software and related services sold by MDM
to the County of Essex and that USTI and USTEI  succeeded to the  obligations of
MDM by the  acquisition  of MDM.  USTI  and  USTEI  have  answered  each of such
lawsuits,  denying all material  allegations  therein,  and intend to vigorously
defend such allegations.

         On August 11, 1993,  Plaintiff City of Sinton, Texas filed suit against
USTI  alleging  defects in software and services  sold to the city in 1990.  The
suit failed to specify a measure of damages  which the City of Sinton  seeks and
USTI has answered the lawsuit by denying all material  allegations  therein, and
intends to vigorously defend such allegations.

         On August 12, 1996,  Plaintiff City of Siloam  Springs,  Arkansas filed
suit against USTI alleging  defects in software and services sold to the city in
1994.  The suit alleges  three  different  theories of  recovery,  as to each of
which,  plaintiff claims damages in excess of $10,000.  USTI has been granted an
extension  of time to file an answer in the  matter  and  intends  to answer the
lawsuit by denying all material  allegations  therein, and intends to vigorously
defend such allegations.

         Management of the Company is of the opinion that these lawsuits will
not have a material effect on the consolidated results of operations or 
financial position of the Company.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of the Company's  security  holders
during the fourth quarter of 1996.



                                        6

<PAGE>

                                     PART II

ITEM 5.           MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
            SHAREHOLDER MATTERS

         The Company's common stock is traded  over-the-counter  on the National
Association of Securities Dealers, Inc.  Over-The-Counter Bulletin Board System.
The quotations shown below represent prices among the dealers and do not include
retail mark-ups,  mark-downs,  or commissions,  and do not necessarily represent
actual transactions.
<TABLE>

                                                 High      Low
Quarter Ended Bid Price Bid Price

<S>   <C> <C>                                    <C>       <C>  
March 31, 1995                                   $0.04     $0.03
June 30, 1995                                    $0.03     $0.02
September 30, 1995                               $0.03     $0.01
December 31, 1995                                $0.02     $0.01
March 31, 1996                                   $0.03     $0.01
June 30, 1996                                    $0.01     $0.01
September 30, 1996                               $0.05     $0.04
December 31, 1996                                $0.03     $0.03

</TABLE>

         As of March 7, 1997, the Company had 481 shareholders of record and its
common  stock  had a closing  bid  price of $.025 per share and a closing  asked
price of $.032 per share

         Holders of the  Company's  common  stock are  entitled to receive  such
dividends as may be declared by the Company's  Board of Directors.  However,  no
dividends  on common  stock  have ever  been paid by the  Company,  nor does the
Company  anticipate  that dividends will be paid in the foreseeable  future.  In
addition,  payment of  dividends  to holders of the  Company's  common stock are
restricted pursuant to the terms of outstanding shares of preferred stock.


ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS

Results of Operations

         The Company  derives its revenue  from the  licensing  of its  software
packages,  installation,   training  and  customer  modifications,   maintenance
agreements  and sale of equipment and supplies.  Results of operations  for 1996
include  revenues of $2,004,746  resulting in a net loss of $299,000 as compared
to revenues of $1,771,332 and a net loss of $867,005 in 1995.

         During 1996,  the Company  continued  to adjust its  expenses  based on
anticipated  levels of revenue  resulting  in  decreased  expenses  and improved
results of operations.  The Company continued to diversify its product offerings
in 1996 by introducing  its asystTM  product line in the second quarter of 1996.
With this added diversity,  as well as the QuestTM product line and the Boss for
Windows  application,  the Company believes it presents to prospective clients a
broader choice of hardware platforms on which to operate the Company's software.
Recently, the response to the Company's direct marketing efforts for the asystTM
product line have been  encouraging to the Company.  Like BOSS for Windows,  the
asystTM  product line operates in a single user or network  Windows  environment
and is seamlessly  interfaced with other Microsoft Office products.  The Company
believes  that its asystTM  product  line  offers its  current  and  prospective
customers  an  attractive  option,  both  from  a  financial  and  functionality
standpoint.



                                        7

<PAGE>
         On February 21, 1997 Noll Computer Systems ("NCS") exercised its option
to reacquire  certain assets,  including the  InterFundTM  products and customer
relationships  existing in 1994.  In addition,  NCS  purchased  the  InterFundTM
products developed at USTI and customer  relationships added since October 1994,
including,  but not limited to, the following contractual  obligations:  License
Agreements,  Customer Support Agreements,  and certain  contractual  obligations
related  to ongoing  Service  Requests.  In  October  17,  1994,  USTI  acquired
substantially all of the assets of Noll Computer Systems,  Inc. ("NCS"), a Texas
Corporation.  USTI's  initial  decision  to  infuse  the  company  with  the new
technology, specifically the Progress and UNIX based InterFundTM product family,
was based on the belief that USTI needed a new  technology  direction to provide
an  alternative  to the AS/400 based Legacy  product  family that had come under
increasing  competition  from more "Open" systems.  Sales of this product family
did not reach the required  levels in the 1994  agreement  with NCS. The Company
made the  decision  not to prepay  the  stipulated  minimum  royalty  amounts as
provided for in the agreement to retain the InterFundTM product line.  According
to the 1994  agreement,  in the event that royalty  payments,  based on sales or
prepayment, did not equal certain stipulated minimum annual amounts, NCS had the
right to reacquire  the  InterFundTM  product  line.  On February 21, 1997,  NCS
exercised its right to reacquire  certain assets and elected to purchase  others
that had been developed by USTI.

         The following table sets forth, for the period indicated,  the relative
percentage which certain items in the  Consolidated  Statements of Operations of
the Company  bear as a percent of total  revenues and the  percentage  change in
those items from period to period.
<TABLE>


                                        Percentage of Revenues
                                       Year Ended December 31,    % Change
                                                1996      1995   1996 vs 1995
Revenue
<S>                                              <C>       <C>       <C>
  Software Packages                              15%       11%       59%
  Installation, training and
  customer support                               12%       25%      (45%)
  Maintenance                                    60%       59%       16%
  Equipment and other                            13%        5%      167%
                                                ----      ----      
                                                100%      100%       13%

Costs and expenses
  Salaries                                       58%       68%       (4%)
  Other general administrative
  and selling expense                            28%       33%       (1%)
  Depreciation and amortization                  37%       44%       (3%)
  Commissions                                     2%        1%       37%
  Cost of equipment sold                          6%        3%      107%

Total costs and expenses                        131%      149%       -

Operating loss                                  (31%)     (49%)     (28%)

Non-operating (expense) income                   (1%)       --       78%

Loss before income taxes and
  extraordinary items                           (32%)     (49%)     (27%)


</TABLE>


                                        8





<PAGE>

1996 vs 1995

         The Company's  total revenue  increased 13% for the year ended December
31, 1996 from  $1,771,332 in 1995 to $2,004,747 in 1996.  Software  license fees
increased 59% in 1996 due, in part, to the Company's increased marketing efforts
for its Quest and asyst  product  lines.  Installation,  training  and  customer
support  revenue  decreased  45%  in  1996  due  to the  decrease  in  licensing
minicomputer products in previous periods.  Maintenance revenue increased 16% in
1996, which is attributable to the addition of the Quest Data clients. Equipment
sales and supplies increased  significantly over 1995 due, in part, to the sales
of computer  equipment and the addition of compatible  preprinted  forms for its
products.

         Total costs and expenses remained constant for the year ended December
31, 1996 decrasing from $2,630,623 in 1995 to $2,630,623 in 1996.  Salaries,
other  general, administrative and selling expense costs decreased only 
marginally by 4% in 1996 as a result of continued efforts to control or reduce
expenses. Depreciation and amortization expense decreased 3% in 1996 from 1995 
due in part to the complete depreciation of the leasehold improvements for the
corporate office move in 1993. Commission expenses increased 37% in 1996 
resulting  from the increased  licensing of the Company's  software products by 
Company sales  representatives over the same period in 1995. Cost of equipment 
sold increased  significantly over 1995 due, in part, to the increased sales of
computer equipment and the addition of compatible  preprinted forms for its 
products.


Liquidity and Capital Resources

         The Company had net cash  provided by  operating  activities  of $4,088
during 1996 as compared to $136,882 used in 1995. This decrease in cash used was
primarily the result of the  improvement  in the results of  operations  and the
improved collection efforts in 1996 as compared to 1995. Net cash of $33,321 was
utilized  in  1996  for the  purchase  of  equipment  necessary  for the  sales,
development and support of the new asystTM product line. Net cash of $42,749 was
utilized during 1996 for the reduction of capital lease obligations.

         Management believes that the effect of its continued focus on adjusting
the Company's  expenses to the level of revenue,  which  management  anticipates
achieving,  and the Company's  current cash balance will be adequate to meet its
working capital requirements in the near future.  However, if the Company is not
able to continue to generate  positive  cash flows in the future by  achieving a
level of sales  adequate to support the  Company's  cost  structure,  additional
financing may be required, of which there can be no assurance.

         The  Company  has a $50,000  note  payable to Ventana  Growth  Fund,  a
related  party.  The maturity date of the note was extended  from  September 30,
1996 to September 30, 1998. The original  maturity date of this note was October
17, 1987. As of December 31, 1996, there was $72,020 of interest  outstanding on
the note.

         The  Company is  currently  in arrears in the payment of  dividends  to
holders of its  preferred  stock.  As of December  31, 1996,  dividends  were in
arrears on the Series B preferred stock in the amount of $288,800, on the Series
C preferred stock in the amount of $115,415,  on the Series D preferred stock in
the  amount  of  $240,685  and on  Series E  preferred  stock in the  amount  of
$116,735.


                                        9

<PAGE>

           ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY
                                      DATA



                 United Systems Technology, Inc. and Subsidiary
                   Index to Consolidated Financial Statements
                           And Supplementary Schedules

                                                                 Pages

Reports of Independent Accountants                                F-1

Consolidated Financial Statements

    Balance sheets as of December 31, 1996 and 1995               F-2
    Statements of operations for the years
    ended December 31, 1996 and 1995                              F-3
    Statements of stockholders' equity for the years
    ended December 31, 1996 and 1995                              F-4
    Statements of cash flows for the years
    ended December 31, 1996 and 1995                              F-5 to F-6
    Notes to Consolidated Financial Statements                    F-7 to F-19





                                       10


<PAGE>

               Report of Independent Certified Public Accountants





Board of  Directors and Shareholders
United Systems Technology, Inc.


We have audited the accompanying  consolidated  balance sheets of United Systems
Technology,  Inc.  and  subsidiary  as of December  31,  1996 and 1995,  and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows  for  the  years  then  ended.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.


We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.


In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial  position of United Systems
Technology,  Inc.  and  subsidiary  as of December  31,  1996 and 1995,  and the
consolidated  results of their operations and their  consolidated cash flows for
the  years  then  ended,  in  conformity  with  generally  accepted   accounting
principles.



/s/ GRANT THORNTON LLP

Dallas, Texas
March 21, 1997

                                       F-1

<PAGE>

<TABLE>

                 United Systems Technology, Inc. and Subsidiary
                           Consolidated Balance Sheets
                           December 31, 1996 and 1995

                Assets                              1996                 1995
                                                 ==========         ============
Current Assets
<S>                                         <C>                 <C>            
  Cash and cash equivalents                 $        67,252     $       139,234
  Trade accounts receivable, less allowance 
  for doubtful accounts of
  $40,000 in 1996 and $75,000 in 1995               253,692             368,803
  Prepaid expenses and other                            279               8,314
                                                  ----------         -----------
  Total current assets                              321,223             516,351
                                                  ----------         -----------

  Property and equipment at cost, net               115,738             164,962
  Goodwill, net                                     741,744           1,168,515
  Software development costs, net                      --               136,713
  Purchased software, net                            71,833             195,720
  Deposits and other                                 27,942              28,541
                                                  ----------         -----------
                                                    957,257           1,694,451
                                                 ----------         -----------

  Total Assets                                    1,278,480           2,210,802
                                                 ==========         ============
                Liabilities and Stockholders' Equity
Current Liabilities
  Notes payable - related party                        --                50,000
  Current portion of capital lease obligations        8,271              51,283
  Trade accounts payable                            230,039             301,645
  Accrued payroll                                    20,432              22,248
  Accrued interest - related party                   72,020              67,873
  Other accrued expenses                            115,368             115,970
  Deferred revenue                                  664,797             839,767
                                                  ----------         ----------
  Total current liabilities                       1,110,927           1,448,786

  Notes payable - related party                        --                50,000
  Capital lease obligations, 
  net of current portion                              6,730               6,467
                                                
                                                 ----------         -----------
  Total liabilities                               1,167,657           1,455,253
                                                 ----------         -----------

  Commitments and contingencies                        --                  --

                               Stockholders' Equity
Preferred stock, voting, convertible, 
cumulative, par value $.10 per share; 
authorized 5,000,000 shares; issued 
and outstanding, 500,000 shares of 
Series B, 750,000 shares of Series C,
500,000 shares of Series D and 300,000 
shares of Series E (liquidating preference 
of $1.00, $.20, $1.00 and $1.00 per
share, respectively,) aggregating 
$1,450,000                                          205,000             205,000
Common stock, par value $.10 per share; 
authorized 100,000,000 shares; 
issued and outstanding 37,969,765 and
38,643,165 shares in 1996 and 1995 respectively   3,796,975           3,864,315
Additional paid-in capital                        4,214,390           4,157,151
Accumulated deficit                              (8,105,542)         (7,470,917)
                                                 ----------         -----------
  Total stockholders' equity                        110,823             755,549
                                                 ----------         -----------
Total liabilities and stockholders's equity       1,278,480           2,210,802
                                                 ==========         ===========

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


                                       F-2
</TABLE>

<PAGE>
<TABLE>

                 United Systems Technology, Inc. and Subsidiary
                      Consolidated Statements of Operations
                        For The Years Ended December 31,

                                                    1996                 1995
                                                 ==========         ============
Revenue
<S>                                                 <C>                 <C>    
  Software packages                                 302,305             189,756
  Installation, training and customer support       246,014             446,671                                         
  Maintenance                                     1,203,724           1,040,246      
  Equipment sales and supplies                      241,871              88,461
  Other                                              10,833               6,198
                                                 ----------         -----------
                                                  2,004,747           1,771,332
                                                 ----------         -----------                            
                                                               
Costs and expenses
  Salaries                                        1,156,355           1,204,488
  Other general, administrative 
   and selling expense                              488,819             494,184
  Depreciation and amortization                     336,621             501,151
  Rent                                               74,466              72,913
  Commissions                                        34,271              24,982
  Cost of equipment and supplies sold               124,574              60,117
  Impairment of software development costs           74,915             272,788 
  Impairment of goodwill                            335,625                -   
                                                 ----------         -----------           
                                                  2,625,646           2,630,623
                                                 ----------         -----------                        
Operating loss                                     (620,899)           (859,291)
                                                 ----------         -----------

Nonoperating (expense)income                               
  Interest expense                                   (8,608)            (18,349)
  Loss on sale of assets                             (8,205)               -
  Interest income                                     3,087              10,635
                                                 ----------         -----------                            
                                                    (13,726)             (7,714)
                                                 ----------         -----------

Net loss                                           (634,625)           (867,005)
                                                 ----------         -----------                           
        
Preferred stock dividend requirement               (104,500)           (104,500)
                                                 ----------         -----------

Loss allocable to common shareholders              (739,125)           (971,505)
                                                 ==========         ============                        
                                               
Net loss per common share                             (0.02)              (0.03)
                                                 ==========         ============                            
                                                  
Weighted average number of common
 shares outstanding                             33,955,837           34,273,165
                                                ==========         ============               





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

                                       F-3
</TABLE>


<PAGE>
<TABLE>

                 United Systems Technology, Inc. and Subsidiary
                 Consolidated Statements of Stockholders' Equity
                        For the Years Ended December 31,

                            Capital Stock     Additional
                               Issued           Paid-In   Accumulated
                          Preferred   Common    Capital     Deficit      Total
<S>                      <C>       <C>        <C>        <C>         <C>       
Balance January 1, 1995  $205,000  $3,364,315 $4,589,651 ($6,603,912)$1,555,054
                                                                                                         

Issuance of 5,000,000 
 shares of common
 stock for a business
 acquisition                          500,000   (432,500)                67,500
Net loss                                                     (867,005) (867,005)
                         --------  ----------  ---------  -----------  ---------             
Balance,December 31,1995  205,000   3,864,315  4,157,151   (7,470,917)  755,549
                                                                                                        
Acquisition and 
 retirement of 673,400
 shares of common stock               (67,340)    57,239                (10,101)
Net loss                                                     (634,625) (634,625)
                         --------  ----------  ---------  -----------  ---------
Balance,December 31,1996 $205,000  $3,796,975 $4,214,390  ($8,105,542)  $110,823
                         ========  ==========  =========  ===========  =========



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

                                       F-4

</TABLE>


<PAGE>
<TABLE>
                 United Systems Technology, Inc. and Subsidiary
                      Consolidated Statements of Cash Flows
                        For the Years Ended December 31,

                                                    1996                 1995
                                                 ==========         ============
Cash flows from operating activities:

<S>                                              <C>                <C>         
  Net loss                                       $(634,625)         $  (867,005)
                                                                                       

  Adjustments to reconcile net loss
   to net cash provided by (used in) 
   operating  activities:
                                                 
  Depreciation and amortization                    336,621              501,151
  Impairment of software development costs          74,915              272,788
  Impairment of goodwill                           335,625                 -
  Loss on sale of assets                             8,205                 -
                                                                                           
Change in operating assets and liabilities:
  Trade accounts receivable                         99,700              483,353
  Prepaid Expenses                                   8,035               (4,644)
  Deposits and other                                   599                 (208)
  Accounts payable                                 (67,459)             (56,611)
  Accrued expenses                                  (2,418)            (248,377)
  Deferred revenue                                (155,110)            (217,329)
                                                 ----------         -----------
                                                 $ 638,713           $  730,123
                                                 ----------         -----------                                        
                                                                            
Net cash provided by (used) in
 operating activities                                4,088             (136,882)
                                                 ----------         -----------  
                                                                           
Cash flows from investing activities:
  Property and equipment additions               $ (33,321)          $  (33,968)
                                                 ----------         -----------

Cash flows from financing activities:
Payments on capital lease obligations            $ (42,749)          $ (109,621)
                                                  ----------         -----------

Decrease in cash and cash equivalents            $ (71,982)          $ (280,471)
Cash and cash equivalents, beginning of year       139,234              419,705
                                                  ----------         -----------

Cash and cash equivalents, end of year           $  67,252           $  139,234
                                                 ==========         ============


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


                                       F-5
</TABLE>
<PAGE>
<TABLE>

                 United Systems Technology, Inc. and Subsidiary
                  Consolidated Statements of Cash Flows, Cont.
                        For the Years Ended December 31,

                                                    1996                 1995
                                                 ==========         ============

Supplemental disclosures of cash flow information:

Cash paid during the period for:
<S>                                              <C>                 <C>       
  Interest                                       $   6,356           $   12,767
                                                 ==========         ============                                      
Supplemental disclosures of noncash
  investing and financing activities:

The Company entered into capital lease 
obligations for new equipment                    $  12,332           $     -
                                                 ==========         ============                                  

Common stock received in payment
of receivable                                    $  10,101           $     -
                                                 ==========         ============                                   



On November 15, 1995 the Company purchased
 substantially all the assets and assumed 
 certain liabilities of QDS Acquisitions, Inc.
 ("QDS") from Dralvar Capital Corp. for
 4,326,600 shares of the Company's common
 stock.  In conjunction with the acquisition,
 liabilities were assumed as follows:

    Fair value of assets acquired                                    $  291,919
    Fair value of stock issued                                          (67,500)
                                                                     -----------                                  
    Liabilities assumed                                              $  224,419
                                                                     ==========                                     

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

                                       F-6


</TABLE>
<PAGE>
                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1996 and 1995


1.       Summary of Significant Accounting Policies:

         Nature of Operations

         The Company is engaged in the business of  developing,  supporting  and
         marketing  computer  software  products to county and local governments
         located throughout the United States.

         Basis of Presentation

         The financial statements for the years ended December 31, 1996 and 1995
         are consolidated and include the accounts of United Systems Technology,
         Inc.   ("USTI")  and  its  wholly-owned   subsidiary,   United  Systems
         Technology East, Inc. ("USTEI"). All material intercompany transactions
         and balances have been eliminated.

         Cash Equivalents

         The Company considers short-term  investments purchased with an initial
         maturity of three months or less to be cash equivalents.

         Property and Equipment

         Property and equipment are recorded at cost.  Depreciation  of property
         and  equipment  is  computed  using the  straight-line  method over the
         estimated useful lives of such property and equipment, which range from
         three to five  years.  Gains and losses on the  disposal of such assets
         are recognized as incurred.

         Software Development Costs

         The Company has  implemented and accounted for certain costs related to
         the  development of its computer  software  products in accordance with
         Statement of Financial  Accounting  Standards No. 86,  "Accounting  for
         Costs of Computer  Software to be Sold,  Leased or Otherwise  Marketed"
         ("SFAS  86").  Under  SFAS 86,  all costs  incurred  to  establish  the
         technological feasibility of a computer software product are charged to
         operations as incurred. After technological feasibility is established,
         costs of producing the computer  software product are capitalized until
         the  product  is  available  for  general  release  to  customers.  The
         capitalized cost of internally developed software is amortized over its
         estimated useful life,  generally five years,  using the  straight-line
         method or the ratio of  current  revenues  to current  and  anticipated
         revenues   from  such   software,   whichever   provides   the  greater
         amortization.  Amortization and impairment of developed  software costs
         was $136,713  and  $527,869  for the years ended  December 31, 1996 and
         1995, respectively.

         Stock Options
     
         Statement of Fiancial Accounting Standards No. 123 is effective for
         1996 and establishes fiancial accounting and reporting standards,
         based on fair value, for stock-based compensation plans.  However, the
         statement permits, as an alternative, the use of existing accounting
         rules based on intrinsic value for such plans.  The Company has 
         elected to continue use of the intrinsic value method and will provide
         pro forma disclosures prescribed by the statement.



                                       F-7

<PAGE>

                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1996 and 1995

1.       Summary of Significant Accounting Policies (Cont'd.):

         Other Assets

         Goodwill  represents the excess of the total  acquisition cost over the
         fair  value  of  the  net  assets   acquired  of   Municipal   Software
         Consultants,  Inc. ("MSC"), acquired in 1986, New Jersey Municipal Data
         Management,  Inc. ("MDM") acquired in 1991, and QDS Acquisitions,  Inc.
         ("QDS")  acquired in 1995. The goodwill  resulting from the MSC and MDM
         acquisitions is and is being amortized using the  straight-line  method
         over 20 years from date of acquisition. The goodwill resulting from the
         QDS acquisition is being amortized using the straight-line  method over
         10 years from date of acquisition.  Purchased software represent assets
         acquired in the MDM and QDS acquisitions, and are being amortized using
         the straight-line method over a five-year period.

         Revenue Recognition

         The Company  recognizes  revenue from the initial  license for computer
         software  product  sales upon delivery of a software  package.  Revenue
         from  installation,  training and customer support is recognized in the
         period in which the services are  provided.  Revenue from  contracts to
         maintain its computer  software products is recognized over the term of
         the contracts.

         Impairment of Long-Lived Assets

         The Company  reviews  its  long-lived  assets and certain  identifiable
         intangibles  for  impairment  when  events or changes in  circumstances
         indicate that the carrying amount of the assets may not be recoverable.
         In  reviewing  recoverability,  the Ocmpany  estimates  the future cash
         flows expected to result from using the assets and eventually disposing
         of them. If the sum of the expected future cash flows  (undiscouted and
         without interest charges) is less than the carrying amout of the asset,
         an impairment loss is recognized based on the assets fair value.

         Earnings (Loss) Per Common Share

         Earnings  (loss) per common  share is  computed  based on the  weighted
         average number of common and common equivalent shares  outstanding.  In
         1996 and 1995,  the  convertible  preferred  stock,  stock  options and
         warrants were excluded from the computation as they were anti-dilutive.

         Financial Instruments

         The fair value of the Company's  financial  instruments,  consisting of
         cash and cash equivalents and debt, approximate their carrying values.

         Use of Estimates

         In preparing financial statements in conformity with generally accepted
         accounting  principles,  management  is required to make  estimates and
         assumptions  that affect the reported amounts of assets and liabilities
         and the disclosure of contingent  asset and  liabilities at the date of
         the financial statements and revenues and expenses during the reporting
         period. Actual results could differ from those estimates

                                       F-8

<PAGE>
<TABLE>
                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1996 and 1995


2.       Property and Equipment:

         Property and  equipment at December 31, 1996 and 1995  consisted of the
following:

                                                       1996           1995
                                                       ----           ----

<S>                                               <C>            <C>       
  Leasehold improvements                          $   58,702     $   58,702
  Furniture and fixtures                              38,330         37,518
  Equipment                                          869,292        847,956
                                                     -------        -------
                                                     966,324        944,176
  Less accumulated depreciation
   and amortization                                 (850,586)      (779,214)
                                                    ---------      ---------
                                                    $115,738       $164,962
                                                     =======        =======

</TABLE>
<TABLE>
3.       Other Assets:

         Other assets at December 31, 1996 and 1995 consisted of the following:


                                             Accumulated
                                Cost         Amortization           Net
                                ----         ------------           ---
 1996

<S>                          <C>              <C>               <C>      
  Goodwill                   $ 1,692,128      $ (950,384)       $ 741,744
  Software development costs   2,337,299      (2,337,299)               0
  Purchased software             590,654        (518,821)          71,833

1995

  Goodwill                    $1,692,128      $ (523,613)     $ 1,168,515
  Software development costs   2,337,299      (2,200,586)         136,713
  Purchased software             620,853        (425,133)         195,720
</TABLE>


4.       Capital Lease Obligations:

         The Company  leases  certain  assets under capital  leases.  The leases
         include  interest at rates  ranging  from 10.75% to 11.9% and expire at
         various  dates  through  1999.  The  leases are  collateralized  by the
         related  asset and most of the leases  include  options to purchase the
         equipment  at the end of the  lease  term.  During  1991,  the  Company
         entered into a $200,000  capital  lease with Ventana  Leasing,  Inc., a
         related  party.  The balance of this lease obligation was $39,840 at 
         December  31, 1995.


                                       F-9
<PAGE>

                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1996 and 1995


<TABLE>
4.       Capital Lease Obligations (Cont'd.):

         Included  in property  and  equipment  as of December  31, 1996 are the
         following assets held under capital leases:

<S>                                                         <C>     
           Office furniture and equipment                   $443,683
           Accumulated amortization                         (405,752)
                                                             -------
           Assets under capital lease, net                  $ 37,931
                                                             =======


</TABLE>
<TABLE>
         Future  minimum lease  payments under capital leases as of December 31,
         1996 are as follows:

<S>        <C>                                              <C>    
           1997                                             $ 9,558
           1998                                               4,914
           1999                                               2,376
                                                            -------
         Total minimum lease payments                        16,848
                                                           
         Less amount representing interest                   (1,847)
                                                            -------
         Present value of capital lease obligations          15,001

         Less current portion                                (8,271)
                                                            -------
                                                           $  6,730
                                                            =======

</TABLE>

         Amortization  expense associated with these assets amounted to $40,058,
         and  $47,615  for  the  years  ended   December  31,  1996,  and  1995,
         respectively.

5.       Notes Payable:

         The  Company  had a note  payable  to a related  party in the amount of
         $50,000 at December 31, 1996 and 1995. This note payable,  which is not
         collateralized,  bears interest at prime plus 2.5%,  through  September
         30, 1995 and at prime after  September  30, 1995,  and is due September
         30, 1998. The prime rate of interest was 8.25% at December 31, 1996 and
         8.75% in 1995.  There was  approximately  $72,020 and  $67,873  accrued
         interest  outstanding  on this  note at  December  31,  1996 and  1995,
         respectively.  Interest  expense incurred was $4,147 and $4,427 for the
         years ended December 31, 1996 and 1995, respectively.



                                      F-10

<PAGE>

                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1996 and 1995


6.       Capital Stock:

         Preferred Stock

         The Company's amended articles of incorporation  authorize the issuance
         of  5,000,000  shares of  preferred  stock with a par value of $.10 per
         share.  The  preferred  stock may be issued in series from time to time
         with such designation, rights, preferences and limitations as the Board
         of Directors may determine by resolution.  The Company has  established
         four series of preferred stock: Series B, Series C, Series D and Series
         E.


         In June 1988,  the Company  established  and issued  500,000  shares of
         Series B preferred  stock.  The terms of the Series B  preferred  stock
         provide for, among other things: (i) a cumulative  dividend of $.07 per
         share per annum, payable quarterly,  which accrues day to day and which
         must be paid  prior to the  payment  of a  dividend  to  holders of the
         Company's  common  stock;  (ii) a  liquidation  preference of $1.00 per
         share plus accrued but unpaid  dividends paid prior to any distribution
         to holders  of common  stock and Series C  preferred  stock;  (iii) the
         right to convert  each share plus  accrued  but unpaid  dividends  into
         common stock; (iv) the right to vote on all matters submitted to a vote
         of  stockholders  of the Company;  and (v)  redemption at the Company's
         option at a  redemption  price of $1.00 per share plus all  accrued and
         unpaid  dividends.  As of December  31,  1996 the  500,000  outstanding
         shares of Series B preferred  stock were entitled to be converted  into
         3,943,995  shares of common stock and were entitled to 3,943,995  votes
         on all matters  submitted to a vote of stockholders of the Company.  At
         December 31, 1996 cumulative  dividends of approximately  $288,800 were
         in arrears.

         In June 1988,  the Company  established  and issued  750,000  shares of
         Series C preferred  stock.  The terms of the Series C  preferred  stock
         provide for,  among other things:  (i) a cumulative  dividend of $0.018
         per share per annum  which  accrues  from day to day and which  must be
         paid prior to the  payment of a  dividend  to holders of the  Company's
         common stock;  (ii) a dividend  equal to that paid any other holders of
         common  stock;  (iii) a  liquidation  preference of $.20 per share plus
         accrued but unpaid  dividends paid prior to any distribution to holders
         of common stock;  (iv) the right to convert each share plus accrued but
         unpaid  dividends  into  common  stock;  (v) the  right  to vote on all
         matters  submitted to a vote of stockholders  of the Company;  and (vi)
         the right to approve any issuance of Series A preferred  stock prior to
         its issuance.  As of December 31, 1996, the 750,000  outstanding shares
         of  Series  C  preferred  stock  were  entitled  to be  converted  into
         1,327,070  shares of common stock and were entitled to 1,327,070  votes
         on all matters  submitted to a vote of stockholders of the Company.  At
         December 31, 1996 cumulative  dividends of approximately  $115,415 were
         in arrears.


                                      F-11

<PAGE>

                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1996 and 1995


Capital Stock (Cont'd.):

         In February 1990, the Company  established and issued 500,000 shares of
         Series D preferred  stock.  The terms of the Series D  preferred  stock
         provide for, among other things: (i) a cumulative  dividend of $.07 per
         share per annum, payable quarterly,  which accrues day to day and which
         must be paid  prior to the  payment  of a  dividend  to  holders of the
         Company's  common  stock;  (ii) a  liquidation  preference of $1.00 per
         share plus accrued but unpaid  dividends paid prior to any distribution
         to holders  of common  stock and Series C  preferred  stock;  (iii) the
         right to convert  each share plus  accrued  but unpaid  dividends  into
         common stock; (iv) the right to vote on all matters submitted to a vote
         of  stockholders  of the Company;  and (v)  redemption at the Company's
         option at a  redemption  price of $1.00 per share plus all  accrued and
         unpaid  dividends.  As of December  31,  1996 the  500,000  outstanding
         shares of Series D preferred  stock were entitled to be converted  into
         2,116,243  shares of common stock and were entitled to 2,116,243  votes
         on all matters  submitted to a vote of stockholders of the Company.  At
         December 31, 1996 cumulative  dividends of approximately  $240,685 were
         in arrears.

         In June 1991,  the Company  established  and issued  300,000  shares of
         Series E preferred  stock.  The terms of the Series E  preferred  stock
         provide for, among other things: (i) a cumulative  dividend of $.07 per
         share per annum, payable quarterly,  which accrues day to day and which
         must be paid  prior to the  payment of the  dividend  to holders of the
         Company's  common  stock;  (ii) a  liquidation  preference of $1.00 per
         share plus accrued but unpaid  dividends paid prior to any distribution
         to holders  of common  stock and Series C  preferred  stock;  (iii) the
         right to convert  each share plus  accrued  but unpaid  dividends  into
         common stock; (iv) the right to vote on all matters submitted to a vote
         of  stockholders  of the Company;  and (v)  redemption at the Company's
         option at a  redemption  price of $1.00 per share plus all  accrued and
         unpaid  dividends.  As of December  31,  1996 the  300,000  outstanding
         shares of Series E preferred  stock were entitled to be converted  into
         2,083,685  shares of common stock and were entitled to 2,083,685  votes
         on all matters  submitted to a vote of stockholders of the Company.  At
         December 31, 1996, cumulative dividends of approximately  $116,735 were
         in arrears.



                                      F-12

<PAGE>
                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1996 and 1995


7.       Commitments and Contingencies:

         Operating Leases

         The Company leases certain office facilities under noncancelable lease
         agreements  which expire at various dates through  August 31, 2000. The
         future  minimum lease  payments under these leases are $55,201 in 1997,
         $57,960 in 1998,  $60,858 in 1999 and $41,903 in 2000. Rent expense was
         $74,466 and $72,913 in 1996 and 1995, respectively.

         Legal Proceedings

         The Company is involved in the following legal proceedings:

         On December 10, 1993,  County of Essex filed suit against USTI,  USTEI,
         New  Jersey  Municipal  Data  Management  ("MDM")  and MDM's  surety in
         Superior Court of New Jersey. The suit is based on allegations that MDM
         failed to perform  its  obligations  related to  software  and  related
         services  sold by MDM to the  County  of Essex  and that USTI and USTEI
         succeeded to the obligations of MDM by the acquisition of MDM. USTI and
         USTEI  have  answered  each  of such  lawsuits,  denying  all  material
         allegations therein, and intend to vigorously defend such allegations.

         On August 11,  1993,  City of Sinton,  Texas  filed suit  against  USTI
         alleging defects in software and services sold to the city in 1990. The
         suit  failed to specify a measure  of damages  which the City of Sinton
         seeks  and USTI has  answered  the  lawsuit  by  denying  all  material
         allegations therein, and intends to vigorously defend such allegations.

         On August 12, 1996, City of Siloam Springs, Arkansas filed suit against
         USTI  alleging  defects in software  and  services  sold to the city in
         1994. The suit alleges three different theories of recovery, as to each
         of which,  plaintiff claims damages in excess of $10,000. USTI has been
         granted  an  extension  of time to file an  answer  in the  matter  and
         intends to answer  the  lawsuit by  denying  all  material  allegations
         therein, and intends to vigorously defend such allegations.

    Management of the Company is of the opinion that these lawsuits will not
have a material effect on the consolidated results of operations or financial
position of the Company.


                                      F-13

<PAGE>

                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1996 and 1995


8.       Common Stock Options and Warrants:

         Stock Options

         In September  1986,  the Board of Directors  approved the adoption of a
         stock  option  plan  (the  "Plan"),  whereby  12,000,000  shares of the
         Company's  common  stock are  reserved  for  options  to be  granted to
         employees  and  directors at the  discretion of the Board of Directors.
         The  exercise  price  shall be at a minimum of 100% of the fair  market
         value of the stock at the time the option is granted.  Unless otherwise
         specified,  the options expire ten years from the date of grant and may
         not be exercised during the initial one-year period from date of grant.
         All outstanding otions expire five years from the date of grant.

         Compensation  costs for stock options  granted to employees is measured
         as the excess,  if any,  of the quoted  market  price of the  Company's
         stock at the date of grant  over the  amount  an  employee  must pay to
         acquire the stock. If the Company recognized compensation expense based
         upon the fair value at the grant date for options granted during 1996
         and 1995 under the Plan,  the Company's  1996 and 1995 net loss and net
         loss per common  share  would have increased to the pro forma amounts
         indicated as follows:

<TABLE>
                                                         1996            1995
                                                         ----            ----

          Net loss allocable to common shareholders
<S>                                                  <C>           <C>         
            As reported                              $ (739,125)   $  (971,505)
            Pro forma                                $ (813,306)   $(1,011,901)

          Net loss per common share
            As reported                                 $ (0.02)       $ (0.03)
            Pro forma                                   $ (0.02)       $ (0.03)

</TABLE>
         The fair  value of these  options  was  estimated  at the date of grant
         using  the  Black-Scholes  option  pricing  model  with  the  following
         weighted-average  assumptions,  expected volatility of 560% in 1996 and
         253% in 1995;  risk free  interest  rates of 7.05% in 1996 and 6.50% in
         1995; no dividend yield; and expected lives of 5 years.

         The pro forma amounts  presented are not  representative of the amounts
         that will be  disclosed  in the  future  because  they do not take into
         effect pro forma expenses related to grants before 1995.

                                      F-14
<PAGE>
                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1996 and 1995

8.       Common Stock Options and Warrants (Cont'd.):

         Additional  information with respect to options outstanding at December
         31, 1996,  and the changes for each of the two years in the period then
         ended was as follows:

<TABLE>
                                                              1996
                                                  --------------------------    
                                                                 Weighted
                                                                  Average
                                                                 Exercise
                                                     Shares        Price
                                                     ------      --------
<S>                                                <C>             <C> 
         Outstanding at beginning of year          4,810,000       $.04
         Granted                                   1,077,500        .06
         Forfieted                                   (65,000)       .04
                                                  -----------       ---

         Oustanding at end of year                 5,822,500       $.04
                                                  ===========       ===
         Options exercisable at December 31, 1996  2,952,500       $.04
                                                  ===========       ===

         Weigted average fair value per share
          of options granted during 1996                           $.06
                                                                    ---

                                                            1995
                                                  --------------------------     
                                                                 Weighted
                                                                  Average
                                                                 Exercise
                                                     Shares        Price
                                                     ------      --------
         Outstanding at beginning of year          1,600,000       $.09
         Granted                                   4,730,000        .04
         Forfieted                                (1,520,000)       .08
                                                  -----------       ---

         Oustanding at end of year                 4,810,000       $.04
                                                  ===========       ===

         Options exercisable at December 31, 1995     75,000       $.25
                                                  ===========       ===

</TABLE>

         Information  about stcok  options  outstanding  at December 31, 1996 is
         summarized as follows:

<TABLE>
                                               Options Outstanding
                                   --------------------------------------------
                                               Weighted Average
                                     Number       Remaining     Weighted Average
         Range of Exercise Prices  Outstanding Contractual Life  Exercise Price
         ------------------------  ----------- ----------------  --------------
<S>             <C>     <C>         <C>           <C>                <C> 
                $.01 to $.05        4,660,000     3.6 years          $.04
                $.06 to $.10        1,062,500     4.6 years          $.06
                $.11 to $.25          100,000      .3 years          $.25
                                   ----------

                                    5,822,500
                                   ==========

</TABLE>
                                      F-15

<PAGE>
                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1996 and 1995

8.       Common Stock Options and Warrants (Cont'd.):

<TABLE>
                                               Options Exercisable
                                      --------------------------------------
                                         Number              Weighted Average
         Range of Exercise Prices     Exercisable             Exercise Price
         ------------------------     -----------             --------------
<S>             <C>     <C>            <C>                           <C> 
                $.01 to $.05           2,852,500                     $.04
                $.06 to $.10                -                          -
                $.11 to $.25             100,000                     $.25
                                      ----------
                                       2,952,500
                                      ==========  
</TABLE>
         Stock Purchase Warrants

         In connection  with the sale of preferred stock discussed in Note 6 and
         the loan from a  partnership  discussed  in Note 5, the Company  issued
         stock  purchase  warrants  which  entitle the  partnership  to purchase
         750,000  shares of the  Company's  common  stock at a price of $.20 per
         share.  These stock purchase  warrants expired on September 30, 1994. A
         new warrant was issued in  connection  with the  extension  of the loan
         from the  partnership.  The new warrant  entitles  the  partnership  to
         purchase  750,000  shares of the  Company's  common stock at a price of
         $.05 per share and  expires  on  November  22,  1997.  The terms of the
         warrants provide that the holder has certain  registration  rights,  at
         the  Company's  expense,  regarding  public  resale of the common stock
         underlying  the  warrants.  As of  December  31,  1996,  none of  these
         warrants have been exercised.


         As of December 31, 1996 additional  common stock purchase  warrants had
         been issued  primarily to officers,  directors and employees  including
         warrants to purchase  1,000,000  shares at $.035 per share issued in
         1995 to a director  of the  Company  for the  issuance  of a letter 
         of credit to collateralize  debt of the Company.  As of December  31,
         1996,  none of these warrants have been exercised and are all fully
         vested:

<TABLE>

                                              Vesting As Of the Year Ending 1996
                 Expiration        Exercise
                    Date            Price                 Total
                 ----------        --------       -----------------------
<S>                  <C>            <C>                  <C>    
                 Mar 1, 1997        $.250                500,000
                 Mar 31,1997        $.280                200,000
                 Oct 29,1997        $.190                100,000
                 Feb 16,1999        $.080              1,000,000
                 Aug 9, 1999        $.050              1,000,000
                 Aug 9, 2000        $.035              1,000,000
                                                       ---------
                                                       3,950,000
                                                       =========  


</TABLE>


                                      F-16


<PAGE>
                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1996 and 1995


9.       Income Taxes:

         At December 31, 1996, the Company has net operating loss carry-forwards
         of approximately  $4,142,000.  These  carry-forwards  expire during the
         period 1997 through 2011.  Additionally,  the Company has approximately
         $71,000 in unused  general  business tax credits  available to directly
         offset  future  income tax  liabilities  and  $624,000 in capital  loss
         carry-forwards available to directly offset future capital gains.

         For the years ended December 31, 1996 and 1995 the  difference  between
         the  effective  federal  income tax rate and the amounts  determined by
         applying  the  statutory  federal  income  tax  rate to  income  before
         provision for federal income tax was as follows:


<TABLE>
                                                           1996          1995
                                                          Amount        Amount

<S>                                                     <C>         <C>         
         Federal income tax benefit at statutory rate   $ (215,772) $  (294,780)
         Amortization of goodwill                          145,102       27,280
         Expiration of net operating loss carryforward     186,164         - 
         Other                                               7,406       54,500
         Change in valuation allowance                    (122,900)     213,000
                                                          ---------   ---------
                                                        $     0     $      0
                                                          =========   =========

</TABLE>

         Because of losses from  operations for the past two years,  the Company
         has recorded a valuation allowance equal to the net deferred tax asset.

         The components of the deferred tax accounts as of December 31, 1996 and
         1995 are approximately as follows:
<TABLE>

                                                        1996          1995
                                                        ----          ----
          Deferred tax assets:
<S>                                                  <C>           <C>       
            Net operating losses carried forward     $1,408,400    $1,538,800
            Capital losses carried forward              212,300       212,300
            Deferred revenue                            226,000       285,500
            Accounts payable and accrued expenses       148,800       166,900
            General business tax credits                 71,000        71,000
                                                      ---------     ---------
                  Total deferred tax asset           $2,066,500    $2,274,500
                                                      ---------     ---------


                                      F-17

<PAGE>
                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1996 and 1995


9.       Income Taxes (Cont'd.):

          Deferred tax liabilities:
            Accounts receivable                          86,300       122,500
            Capitalized software                           -           46,500
            Purchased software, property
             and equipment                               59,500        61,900
                                                      ---------     ---------                                    
                  Total deferred tax asset              145,800       230,900
                                                      ---------     ---------

          Net deferred tax asset before
           valuation allowance                        1,920,700     2,043,600

          Less valuation allowance                    1,920,700     2,043,600
                                                      ---------     ---------

          Net deferred tax asset                     $    -        $    -
                                                      ---------     ---------
</TABLE>


10.      Acquisition of Business:

         On November 15, 1995, the Company  purchased  substantially  all of the
         assets  and  assumed  certain  liabilities  of QDS  Acquisitions,  Inc.
         ("QDS")  from  Dralvar  Capital  Corp.  ("Dralvar").  These assets were
         previously acquired by certain Dralvar shareholders through foreclosure
         on their security interests in such assets granted by QDS. The purchase
         price  consisted of the issuance of 4,326,600  shares of the  Company's
         common  stock.  The  assets  purchased  by  USTI  consisted  of (a) all
         operating  assets of QDS including its Utility  Billing  System ("UBS")
         and its Law  Enforcement  Automated  Data Retrieval  System  ("LEADRS")
         software,(b)  the  non-exclusive  right  to sell and  provide  software
         maintenance and services for the Quest Fund Accounting ("QFA") software
         product  line from the closing date  through  February  28,  1997,  (c)
         substantially all hardware, equipment, supplies, furniture, furnishings
         and other fixed assets, (d) all software used for product  development,
         (e)  trade  secrets  and  proprietary  information  including  the name
         QuestTM  and any other  trademarks,  (f)  business  records of Dralvar,
         including  customer lists and related contracts and contract rights and
         (g)  certain  accounts  receivable  of Dralvar  totaling  approximately
         $61,131,.  USTI assumed certain  obligations of Dralvar which consisted
         of  obligations  to  customers  in the amount of  $187,645  and accrued
         expenses in the amount of $36,774.

         The following  summarizes the unaudited  consolidated pro forma results
         of operations of the Company as though the  acquisition had occurred as
         of the beginning of the year ended December 31, 1995 (in thousands):

<TABLE>
                                                     Pro Forma
<S>                                                   <C>   
                  Revenue                             $2,366
                  Net loss                            (1,033)
                  Net loss per share                   (0.03)

</TABLE>


                                      F-18

<PAGE>
                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1996 and 1995

11.      Sale of Assets

         On February 21, 1997 Noll Computer Systems ("NCS") exercised its option
         to reacquire  certain assets,  including the  InterFundTM  products and
         customer relationships existing in
         1994.  In addition, NCS purchased the InterFundTM products developed at
         USTI and customer relationships added since October 1994, including,
         but not limited to, the following contractual obligations: License 
         Agreements, Customer Support Agreements, and certain contractual
         obligations related to ongoing Service Requests. In October 17, 1994,
         USTI acquired substantially all of the assets of Noll Computer Systems,
         Inc. ("NCS"),  a Texas  Corporation.  USTI's initial decision to infuse
         the company  with the new  technology,  specifically the Progress and 
         UNIX based  InterFundTM  product family,  was based on the belief that
         USTI needed a new  technology  direction  to provide an alternative
         to the AS/400  based Legacy  product  family that had come under 
         increasing  competition  from more "Open" systems.  Sales of this 
         product  family  did not  reach  the  anticipated  levels  in the  1994
         agreement  with NCS.  The Company  made the  decision not to prepay the
         stipulated  minimum royalty amounts as provided for in the agreement to
         retain the InterFundTM  product line.  According to the 1994 agreement,
         in the event that royalty payments,  based on sales or prepayment,  did
         not equal certain stipulated minimum annual amounts,  NCS had the right
         to reacquire the  InterFundTM  product line. The February 21, 1997
         transaction did not have a material effect on the Company.

12.      Employee Benefit Plans:

         Effective January 16, 1992, the Company established the USTI Employee's
         401(k) Profit  Sharing Plan and Trust (the "Plan"),  which is a defined
         contribution plan that covers  substantially all full-time employees of
         the  Company  eligible  to  participate.  The  Plan is  subject  to the
         provisions of the Employee  Retirement  Income Security Act of 1974, as
         amended  ("ERISA") and Section 401(k) of the Internal Revenue Code. The
         Company made  contributions  for the benefit of the participants in the
         Plan in the amount of $2,623 and  $1,425 for the years  ended  December
         31, 1996 and 1995, respectively.

13.      Fourth Quarter Adjustments:

         During the  fourth  quarter's  of 1996 and 1995,  the  Company  charged
         operations for adjustments to software  development costs of
         approximately $74,915 and $273,000 in 1996 and 1995, respectively.

         During the fourth quarter of 1996, the Company  charged  operations
         for an impairment to goodwill of approximately $335,625.


                                      F-19

<PAGE>

ITEM  8.          CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                           ACCOUNTING AND FINANCIAL DISCLOSURE

         The Company has had no disagreements  with its Independent  Accountants
on accounting and financial disclosure matters.



                                    PART III


ITEM 9.           DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The  information  required  by this item is set forth in the  Company's
definitive  proxy  statement  relating to the Company's  1997 Annual  Meeting of
Shareholders   under  the  captions   "Election  of  Directors"  and  "Executive
Officers." Such information is incorporated herein by reference therefrom.


ITEM 10.          EXECUTIVE COMPENSATION

         The  information  required  by this item is set forth in the  Company's
definitive  proxy  statement  relating to the Company's  1997 Annual  Meeting of
Shareholders under the caption  "Management  Compensation."  Such information is
incorporated herein by reference therefrom.


ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT

         The  information  required  by this item is set forth in the  Company's
definitive  proxy  statement  relating to the Company's  1997 Annual  Meeting of
Shareholders under the caption "Security  Ownership of Certain Beneficial Owners
and Management." Such information is incorporated herein by reference therefrom.


ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  information  required  by this item is set forth in the  Company's
definitive  proxy  statement  relating to the Company's  1997 Annual  Meeting of
Shareholders under the caption "Certain Relationships and Related Transactions."
Such information is incorporated herein by reference therefrom.


                                       11

<PAGE>

                                     PART IV


ITEM 13.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
                  FORM 8-K

(a)      Documents filed as part of this Report:

         1.       Consolidated Financial Statements

                           See "Index to Consolidated  Financial  Statements and
                  Supplementary Schedules" under Item 8 of this Report.

         2.       Consolidated Financial Statements Schedules

                           See "Index to Consolidated  Financial  Statements and
                  Supplementary  Schedules"  under  Item 8 of this  Report.  All
                  other schedules have been omitted, as the required information
                  is  inapplicable  or  the  information  is  presented  in  the
                  financial statements or the notes thereto.

         3.       Exhibits

The following documents are filed as exhibits herewith, unless otherwise 
specified, and are incorporated herein by this reference:



Exhibit
Number

3.1 Amended and Restated Articles of Incorporation of the Company as filed on
November 21, 1986 with the Secretary of State of the State of Iowa.
(Incorporated by reference, Registration Statement on Form S-1, File No. 33-
9574, Exhibit 3.11)

3.2 Articles of Merger of Municipal Software Consultants, Inc. into United
Systems Technology, Inc., as filed on December 31, 1986 with the Secretaries
of State of the States of Iowa and Texas. (Incorporated by reference, Annual
Report on Form 10-K for the fiscal year ended December 31, 1986, Exhibit 3.2)

3.3 Statement Establishing and Designating Series B Preferred Stock of the 
Company, as filed on June 13, 1988 with the Secretary of State of the State
of Iowa.  (Incorporated by reference, Quarterly Report on Form 10-Q for the 
quarter ended June 30, 1988, Exhibit 4.1)

3.4 Statement Establishing and Designating Series C Preferred Stock of the
Company, as filed on June 13, 1988 with the Secretary of State of the State of
Iowa.  (Incorporated by reference, Quarterly Report on Form 10-Q for the quarter
ended June 30, 1988, Exhibit 4.2)


                                       12
<PAGE>

Exhibit
Number



3.5 Articles of Amendment to the Articles of Incorporation of
the Company, as filed on July 15, 1988 with the Secretary of
State of the State of Iowa. (Incorporated by reference,
Quarterly Report on Form 10-Q for the quarter ended June 30,
1988, Exhibit 3.1)

3.6 By-Laws of the Company, as amended and currently in effect. (Incorporated by
reference, Registration Statement on Form S-1, File No. 33-9574, Exhibit 3.6)

3.7 Articles of Amendment to the Articles of Incorporation
designating the Series D Preferred Stock of the Company, as
filed on February 23, 1990 with the Iowa Secretary of State.
(Incorporated by reference, Form 8-K Current Report dated
February 15, 1990, Exhibit 3.1)

3.8 Statement establishing and designating Series E Preferred
Stock of the Company, as filed on June 26, 1991, with the
Secretary of the State of Iowa. (Incorporated by referenced,
Annual Report on Form 10-K for the year ended December 31,
1991, Exhibit 3.8)

10.1 1986 Stock Option Plan. (Incorporated by reference, Registration Statement
on Form S-1, File No. 33-9574, Exhibit 10.9)

10.2 Agreement Regarding Preferred Stock Purchase, Warrant Purchase and Loan,
dated October 16, 1986, by and between the Company and Ventana Growth Fund.
(Incorporated by reference, Registration Statement on Form S-1, File No. 33-
9574, Exhibit 10.10)

10.3 Preferred Stock Purchase Agreement, dated October 28, 1986, by and between
the Company and Ventana Growth Fund. (Incorporated by reference, Registration
Statement on Form S-1, File No. 33-9574, Exhibit 10.17)

10.4 Promissory Note, dated October 16, 1986, in the amount of $150,000.00, from
the Company to Ventana Growth Fund. (Incorporated by reference, Registration
Statement on Form S-1, File No. 33-9574, Exhibit 10.19)

10.5 Stock Purchase Agreement, dated June 8, 1988, by and between the Company
and Farm Bureau Mutual Insurance Company. (Incorporated by reference, Quarterly
Report on Form 10-Q for the quarter ended June 30, 1988, Exhibit 19.1)

10.6 Preferred Stock Exchange Agreement, dated June 8, 1988, by and between the
Company and Ventana Growth Fund. (Incorporated by reference, Quarterly
Report on Form 10-Q for the quarter ended June 30, 1988, Exhibit 19.2)

10.7 Purchase Agreement, dated February 15, 1990, by and
between the Company and International Technology Group, Inc.
(Incorporated by reference, Form 8-K Current Report dated
February 15, 1990, Exhibit 10.1)


                                       13

                                 
<PAGE>

Exhibit
Number



10.8 Assignment and Assumption Agreement, dated February 15, 1990, by and
between the Company and International Technology Group, Inc. assigning all
relevant rights and interest in a maintenance agreement with Grumman Systems
Support Corp. to the Company. (Incorporated by reference, Form 8-K Current 
Report dated February 15, 1990, Exhibit 10.2)

10.9 Assignment and Assumption Agreement, dated February 15, 1990, by and 
between the Company and International Technology Group, Inc. assigning all 
rights and interest in a Technology Transfer Agreement with AM Computer
Corporation and Microvote Partners, Ltd. to the Company. (Incorporated by
reference, Form 8-K Current Report dated February 15, 1990, Exhibit 10.3)

10.10 Assignment and Assumption Agreement, dated February 15, 1990, by and
between the Company and International Technology Group, Inc. assigning all
rights and interest in trademark INTEGRITY to the Company. (Incorporated by 
reference, Form 8-K Current Report dated February 15, 1990, Exhibit 10.4)

10.11 Stock Purchase Agreement, dated February 14, 1990, by and between Farm
Bureau Mutual Insurance Company and the Company. (Incorporated by
reference, Form 8-K Current Report dated February 15, 1990, Exhibit 10.5)

10.12 Asset Purchase Agreement, dated June 10, 1991, by and between the Company
and New Jersey Municipal Data Management, Inc. (Incorporated by reference
Form 8-K Current Report, dated June 10, 1991)

10.13 Asset Purchase Agreement, dated December 22, 1994, by
and between the Company and Sequoia Pacific Systems, a
division of Smurfit Packaging Corporation. (Incorporated by
reference Form 8-K Current Report, dated December 22, 1994,
Exhibit 10.1)

10.14 Assignment and Assumption Agreement, dated December 22,
1994, by and between the Company and Sequoia Pacific Systems,
a division of Smurfit Packaging Corporation. (Incorporated by
reference Form 8-K Current Report, dated December 22, 1994,
Exhibit 10.2)

10.15 Asset Purchase Agreement, dated October 17, 1994, by and
between the Company and Noll Computer Systems, Inc.("NCS").
(Incorporated by reference, Annual Report on Form 10-KSB for
the year ended December 31, 1994, Exhibit 10.15)

10.16 Asset Purchase Agreement, dated November 15, 1995, by and between the
Company, Dralvar Capital Corp. ("Dralvar") and Ken Neff. (Incorporated by
reference, Form 8-K Current Report, dated November 15, 1995, Exhibit 10.1)

10.17 Asset purchase Agreement dated February 21, 1997, by and between the 
Company and Noll Computer Services, Inc. ("NCS").


                                       14

                                                
<PAGE>

Exhibit
Number




     (b)          Reports on Form 8-K

                  No reports  on Form 8-K were  filed  during the year for which
                  this report is filed.


     (c)          Exhibits

                  The response to this portion of Item 14 is submitted as a
                  separate section of this report.

     (d)          Financial Statement Schedules
         
                  The response to this portion of Item 14 is submitted as a 
                  separate section of this
                  report.

                                       15

                                                  
<PAGE>
                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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: March 29, 1997                          By:  /s/  Thomas E. Gibbs
                                                   -------------------------  
                                                   Thomas E. Gibbs,
                                                   Chief Executive Officer and
                                                   Chairman of the Board

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.


Date:  March 29, 1997                         By: /s/  Thomas E. Gibbs
                                                  --------------------------
                                                  Thomas E. Gibbs,
                                                  Chief Executive Officer and
                                                  Chairman of the Board
                                                 (Principal Executive Officer)
 
Date: March 29, 1997                          By: /s/  Randall L. McGee
                                                  --------------------------
                                                  Randall L. McGee,
                                                  Secretary and Treasurer
                                                 (Principal Financial &
                                                  Accounting Officer)


Date:  March 29, 1997                         By: /s/  David Sengpiel
                                                  --------------------------
                                                  David Sengpiel, Director


Date:  March 29, 1997                         By: /s/  Scott Burri
                                                  --------------------------
                                                  Scott Burri, Director


Date:  March 29, 1997                         By: /s/  Jordan Issackedes
                                                  --------------------------
                                                  Jordan Issackedes, Director


Date:  March 29, 1997                         By: /s/  Earl Cohen
                                                  --------------------------
                                                  Earl Cohen, Director



                                       16


                                                  
<PAGE>

                         United Systems Technology, Inc.
                                   Form 10-KSB
                                  Exhibit 10.17









                            ASSET PURCHASE AGREEMENT


                                 By and Between

                         United Systems Technology, Inc.

                                       And

                           Noll Computer Systems, Inc.











                                Febraury 21, 1997

                                                     

<PAGE>

                                TABLE OF CONTENTS




1.       SALE AND PURCHASE OF ASSETS                                3
         1.1      Description of Assets                             3
         1.2      Assets Excluded                                   4
         1.3      Liabilities                                       4

2.       PURCHASE PRICE                                             4
         2.1      Amount and Payment                                4


3.       RECLAIMED ASSETS                                           5
         3.1      Description of Reclaimed Assets                   5
         3.2      Customer Relationships                            6

4.       CLOSING                                                    6
         4.1      Deliveries by Company                             6
         4.2      Deliveries by Purchaser                           6
         4.3      Possession                                        7
         4.4      Taxes and Fees                                    7

5.       REPRESENTATIONS AND WARRANTIES OF COMPANY                  7
         5.1      Organization, Good Standing, Power, etc.          7
         5.2      Authorizations and Enforceability                 7
         5.3      Effect of Agreement, etc                          7
         5.4      Restrictions; Burdensome Agreements               8
         5.6      Hardware, Equipment and Condition                 8
         5.7      Customers                                         8
         5.8      Brokers                                           8

6.       REPRESENTATIONS AND WARRANTIES OF PURCHASER                8
         6.1      Organization, Good Standing, Power, etc           8
         6.2      Authorization of Agreement and Enforceability     8
         6.3      Effect of Agreement. Consents. etc                8
         6.4      No Finder                                         9

7.       CONDITIONS TO COMPANY'S OBLIGATIONS                        9
         7.1      Accuracy of Representations and Warranties        9
         7.2      Performance of Covenant                           9


                                        1

<PAGE>

8.       CONDITIONS TO PURCHASER'S OBLIGATIONS                      9
         8.1      Accuracy of Representations and Warranties        9
         8.2      Performance of Covenants                          9

9.       TERMINATION                                               10

10.      INDEMNIFICATION                                           10

11.      GENERAL
         11.1     Expenses, etc                                    10
         11.2     Survival of Representations and Warranties       10
         11.3     Waivers                                          11
         11.4     Announcements                                    11
         11.5     Binding Effect; Benefits                         11
         11.6     Notices                                          11
         11.7     Further Assurances                               12
         11.8     Entire Agreement; Amendment                      12
         11.9     Headings                                         12
         11.10    Severability                                     12
         11.11    Counterparts                                     12
         11.12    Gender; Singular and Plural                      12
         11.13    Third Parties                                    13
         11.14    Governing Law; Performance                       13
         11.15    Attorneys' Fees                                  13
         11.16    Time of Essence                                  13

         Exhibit 1.1(a)             InterFund TM Software Packages and Customers
                                     Being Purchased
         Exhibit 1.1(b)             Hardware, Equipment and other Fixed Assets
         Exhibit 1.1(c)             Contracts and Agreements Being Purchased
         Exhibit 1.2(a)             Assets Excluded
         Exhibit 1.3(a)             Contract Obligations
         Exhibit 1.3(b)             City of Hurst Purchase Agreement
         Exhibit 2.1(a)             Capital Projects License Royalty Agreement
         Exhibit 2.1(b)             Business Tax License Royalty Agreement
         Exhibit 2.1(c)             Maintenance Royalty Agreement
         Exhibit 3.1(a)             Reclaimed InterFund Customers
         Exhibit 4.1(a)             Bill of Sale


                                        2

<PAGE>
    

ASSET PURCHASE AGREEMENT


PARTIES
The parties to this  Agreement  are UNITED  SYSTEMS  TECHNOLOGY,  INC.,  an Iowa
corporation,   the   company   which   is   selling   certain   of  its   assets
("Company"),.NOLL COMPUTER SYSTEMS, INC., a Texas corporation,  the purchaser of
such assets of the Company ("Purchaser"). The parties hereby agree as follows:



RECITALS
     A.  Company and Purchaser  entered into an Asset Purchase  Agreement in
         October 1994 which has a provision for the Purchaser to reclaim
         certain assets transferred in the October 1994 Agreement; and

     B.  Company owns  certain  assets that were not subject to be reclaimed by
         the Purchaser as part of the October 1994 Agreement; and

     C.  Company is willing to sell and Purchaser is willing to purchase certain
         assets that were not subject to be reclaimed  by the  Purchaser as part
         of the October 1994  Agreement  upon the terms and conditions set forth
         herein:


AGREEMENT
1.       SALE AND PURCHASE OF ASSETS. On the terms and subject to the conditions
         of this  Agreement,  Company will sell,  assign and convey to Purchaser
         and Purchaser will purchase from Company,  all of the right,  title and
         interest in and to the  "Assets," as defined  below,  free and clear of
         all  liens,  claims and  encumbrances,  except  for the  assumption  by
         Purchaser  of the  "Liabilities"  as  defined  below,  or as  otherwise
         provided herein.

         1.1      Description of Assets.  The "Assets" are specifically 
                  described below, consisting at Closing of:

              (a) Certain  operating  assets  of the  Company  as  follows:  the
                  InterFund  TM software  packages  developed by the Company and
                  the  customer   relationships   and  related   contracts   and
                  agreements  with  respect to  InterFund  customers  which were
                  added by the Company  since October  1994.  Such  InterFund TM
                  software packages are more  specifically  described in Exhibit
                  1.1(a)  and  customers   described  in  Exhibit  1.1(c),  both
                  attached hereto;

              (b) Certain hardware, equipment and other fixed assets (the "fixed
                  assets") as described in Exhibit 1.1(b) hereto;

              (c) The name "InterFund TM", and all trademark and service mark 
                  rights with respect thereto;

                                        3

<PAGE>


              (d) Certain  contract rights and agreements in connection with
                  the InterFund  product line for customers added by the Company
                  since  October  1994 as listed on Exhibits  1.1(c)  subject to
                  certain royalty payments described herein, and

              (e) The  Company's  customer  relationship  and  related  contract
                  rights in  connection  with the Company's  Purchase  Agreement
                  with the City of Hurst  entered  into in July 1996 (the "Hurst
                  Agreement")  subject  to  certain  payments  to be made to the
                  Company.  The Hurst  Agreement  and the payment  terms are set
                  forth on Exhibit 1.3(b).

         1.2      Assets Excluded.  Except as provided elsewhere herein, 
                    the Assets exclude:

              (a) All accounts  receivable  related to the  InterFund  customers
                  billed  to the  InterFund  customers  prior to  Closing  date,
                  specifically listed on Exhibit 1.2(a) attached hereto.

         1.3      Liabilities. Except as expressly provided in this Section 1.3,
                  Purchaser   assumes  no  debts,   tax   liabilities  or  other
                  liabilities  or  obligations  (contractual  or  otherwise)  of
                  Company or any other debts, liabilities or obligations related
                  to the conduct of Company's  business.  Purchaser  will assume
                  the following  liabilities (the "Liabilities") of Company, and
                  no others:

              (a) Obligations under those certain contracts, license and 
                  maintenance agreements for the customers listed in Exhibit 
                  1.3(a). and

              (b) Obligations related to a Purchase Agreement Between the City
                  of Hurst and USTI, Inc. dated July 1996 subject to certain 
                  payments to be made to the Company as described in Exhibit
                  1.3(b) attached hereto.

2.       PURCHASE PRICE.

         2.1      Amount and Payment.  The purchase price ("Purchase Price") 
                  for the Assets shall be:

              (a) Company's right to receive certain royalty payments equal to
                  twenty-five percent (25%) of license fee revenues on sales by
                  Purchaser of InterFund TM software packages listed on Exhibit
                  1.1(a) until Company has received a total cumulative royalty
                  of Fourteen Thousand Dollars ($14,000) for the InterFund TM
                  Capital Projects package and a total cumulative royalty of 
                  Four Thousand Dollars ($4,000) for the InterFund TM Business
                  Tax package, all as described in those certain License Royalty
                  Agreements attached as Exhibit 2.1(a) and Exhibit 2.1(b)
                  hereto, respectively  ("Capital Projects License Royalty
                  Agreement and Business Tax License Royalty Agreement"); and

              (b) Company's right to receive  certain royalty  payments equal to
                  fifteen  percent  (15%)  of the  annual  maintenance  contract
                  revenues of the  InterFund  product line for  customers  added
                  since October 1994 as listed on Exhibits 1.1(c),  for the next
                  three (3)  annual  renewal  dates,  all as  described  in that
                  certain  Maintenance  Contract Royalty  Agreement  attached as
                  Exhibit 2.1(c) hereto ("Maintenance Contract
                  Royalty Agreement");.

            As set forth in the Capital Projects License Royalty Agreement, 
          Purchaser will provide to Company a monthly report of the license
          fee revenues and royalties owing thereunder.  In


                                        4
<PAGE>

         the  event  that  Company  receives  maximum  cumulative  royalties  of
         Fourteen  Thousand Dollars  ($14,000),  Purchaser shall have no further
         obligation to make royalty payments to Company.

            As  set  forth  in  the  Business  Tax  License  Royalty  Agreement,
         Purchaser  will provide to Company a monthly  report of the license fee
         revenues  and  royalties  owing  thereunder.  In the event that Company
         receives  maximum   cumulative   royalties  of  Four  Thousand  Dollars
         ($4,000),  Purchaser  shall have no further  obligation to make royalty
         payments to Company.

            As  set  forth  in  the  Maintenance   Contract  Royalty  Agreement,
         Purchaser  will  provide  to  Company  a monthly  report of the  annual
         maintenance contract revenues for accounts listed on Exhibit 1.1(c) and
         royalties  owing  thereunder.   In  the  event  that  Company  receives
         royalties at the next three annual  renewals for each of the  contracts
         listed in Exhibit 1.1(c),  Purchaser shall have no further  obligations
         to make payment of additional royalties to the Company.

3.       RECLAIMED ASSETS.  The October,  1994 Asset Purchase  Agreement between
         the  Company  and  Purchaser  gave the  Purchaser  the right to reclaim
         certain  assets  thereby  transferred  to the  Company in the event the
         Company  failed to pay the Purchaser  certain  minimum  royalties.  The
         Company has failed to pay those royalties.  Pursuant to this Agreement,
         the Purchaser  hereby reclaims and the Company hereby  transfers to the
         Purchaser the following assets (the "Reclaimed Assets"):

         3.1      The following InterFund software packages or product lines:
                     General Ledger
                     Accounts Payable
                     Payroll
                     Utility Billing
                     Municipal Court
                     Accounts Receivable
                     Property Tax Billing and Collection
                     Fixed Assets
                     Work Order Management
                     Inventory Control
                     Purchase Order Management

         3.2      The  Company's  customer  relationships  and related  contract
                  rights in  connection  with the preceding  InterFund  software
                  packages or product Lines for customers of Purchaser that were
                  transferred  to the  Company in  October,  1994,  as listed in
                  Exhibit 3.1(a).

4.       CLOSING.  The  closing of the  transactions  contemplated  by Section 1
         hereof  (the  "Closing")  shall  take  place at the  offices  of Untied
         Systems Technology,  Inc. 3021 Gateway Drive, Suite 240, Irving, Texas,
         75063 at 2:00 p.m.,  local time, on February 21, 1997, or at such other
         date,  time and place as Purchaser and Company shall  mutually agree in
         writing (the "Closing Date").

            Conveyance,  transfer,  assignment  and  delivery  of the  Assets to
         Purchaser  shall  be  by  bills  of  sale,  certificates  of  transfer,
         endorsements,   assignments  and  other  instruments  of  transfer  and
         conveyance in such form as Purchaser may reasonably request. Assumption
         of the  Liabilities by Purchaser  shall be by execution and delivery of
         this Agreement and certain contracts and other instruments in such form
         as Company may reasonably  request.  At Closing,  Company and Purchaser
         shall  respectively   execute  and  deliver  the  following  additional
         instruments and documents:

         4.1      Deliveries by Company:

                                        5

<PAGE>

              (a) A bill of  sale in form  attached  hereto  as  Exhibit  4.1(a)
                  covering all of the Assets and Reclaimed Assets being acquired
                  hereunder;

              (b) The License Royalty Agreement and Maintenance Contract Royalty
                  Agreement duly executed by Company;

              (c) Such  other  documents  and  instruments  as  counsel  for the
                  Company and Purchaser may reasonably  require to effectuate or
                  evidence the transfer of the Assets.

         4.2      Deliveries by Purchaser:

              (a)     The Capital Projects License Royalty Agreement, Business 
                      Tax License Royalty Agreement and Maintenance Contract 
                      Royalty Agreement duly executed by Purchaser;

              (b)     Such  other  documents  and  instruments  as  counsel  for
                      Company  may  reasonably  require,  from time to time,  to
                      effectuate  or  evidence  the  transactions   contemplated
                      hereby.

         4.3      Possession. Purchaser shall take possession of the Assets 
                  and Reclaimed Assets as of Closing.

         4.4      Taxes and Fees.

              (a)    Any transfer,  sales or use tax, or transfer,  filing or 
                     recording  fees, payable upon or with respect to the sale
                     of the Assets shall be paid when due by Purchaser.

              (b)    All personal property taxes attributable to any of the 
                     Assets shall be apportioned and pro rated as of Closing.

5.       REPRESENTATIONS AND WARRANTIES OF COMPANY.  The "Disclosure
         Schedules"  described  herein shall mean all of the disclosures made in
         writing by Company to  Purchaser,  whether in the form of  Exhibits  to
         this Agreement,  summarized schedules, or copies or originals of actual
         documents  delivered or made  available  to  Purchaser  for its review.
         Company and Purchaser shall agree in writing at Closing on the specific
         content of the final  Disclosure  Schedules.  Subject to the Disclosure
         Schedules, Company represents and warrants to Purchaser as follows:


         5.1      Organization, Good Standing, Power, etc.  Company (a) is a
                  corporation duly organized, validly existing and in good 
                  standing under the laws of the State of Iowa; (b) is
                  authorized or licensed to do business as a foreign corporation
                  and is in good standing in the jurisdictions listed in the 
                  Disclosure Schedules; (c) is not required to be authorized or
                  licensed to do business as a foreign corporation in any other
                  jurisdiction (within or without the United States) by reason
                  of the nature of the business conducted by it or the
                  properties owned or leased or operated by it; and (d) has the
                  requisite power and authority to own, lease and operate its
                  properties and to carry on its business as currently 
                  conducted.

         5.2      Authorizations and Enforceability.  Company has all requisite
                  power and authority to execute, deliver and perform this
                  Agreement and to consummate the transactions contemplated 
                  hereby. This Agreement has been duly and validly

                                        6

<PAGE>

                  authorized,  executed and delivered by Company and constitutes
                  the valid and binding obligation of Company, fully enforceable
                  in accordance with its terms.

         5.3      Effect of Agreement.  Consents.  No consent, authorization or
                  approval or exemption by, or filing with, any governmental or
                  public body or authority is required in connection with the
                  execution, delivery and performance by Company of this
                  Agreement or the taking of any action hereby contemplated. 
                  The Assets and the Reclaimed Assets are not subject to any
                  lien, security interest, charge or encumbrance other than
                  those specifically set forth in this Agreement and exhibits
                  hereto.  The execution, delivery and performance of this 
                  Agreement by the Company and the consummation of the 
                  transactions contemplated hereby will not, with or without the
                  giving of notice or the lapse of time, or both, result in the
                  breach of or conflict with any term, covenant or provision of
                  any contract to which the Company is a party.

         5.4      Restrictions; Burdensome Agreements.  Company is not a party 
                  to any contract, commitment or agreement, and none of Company
                  or its properties or the Assets are subject to or bound or 
                  affected by any charter, bylaw or other corporate restriction,
                  or any order, judgment, decree, law, statute, ordinance, rule,
                  regulation or other restriction of any kind or character, 
                  which would prevent Company from entering into this Agreement
                  or from consummating the transactions contemplated hereby.

         5.5      Hardware, Equipment and Condition. Exhibit 1.1(b) sets forth a
                  correct and complete list of all of the hardware and equipment
                  being sold hereunder ("fixed assets"). The fixed assets are in
                  good  condition and repair  (ordinary  wear and tear excepted)
                  and suitable for the uses for which intended.

         5.6      Customers. Exhibit 1.2(a) sets forth the following information
                  with respect to Company's InterFund customers:  A list of each
                  of  Company's  InterFund  customers  including  a list  of the
                  software  packages licensed to each customer and the status of
                  license and/or maintenance agreements with each customer.

         5.7      Brokers.  To the Company's  knowledge,  no firm,  corporation,
                  agency  or other  person  has any right to a  consultant's  or
                  finder's  fee or any type of brokerage  commission  payable in
                  relation   to  or  in   connection   with   the   transactions
                  contemplated  by this  Agreement by reason of any action taken
                  or agreement entered into by Company.

6.       REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
         and warrants to Company as follows:

         6.1      Organization,  Good  Standing,  Power,  etc.  Purchaser  is  a
                  corporation  duly  organized,  validly  existing  and in  good
                  standing  under the laws of the State of Texas.  Purchaser has
                  all  requisite  corporate  power  and  authority  to  execute,
                  deliver  and  perform  this   Agreement  and   consummate  the
                  transactions contemplated herein.

                                        7
<PAGE>
         6.2      Authorizations  and  Enforceability.  Purchaser  has  all
                  requisite power and authority to execute,  deliver and perform
                  this Agreement and to consummate the transactions contemplated
                  hereby.  This Agreement has been duly and validly  authorized,
                  executed and delivered by Purchaser and  constitutes the valid
                  and binding  obligation of  Purchaser,  fully  enforceable  in
                  accordance with its terms.

         6.3      Effect of Agreement. Consents.  No consent, authorization or
                  approval or exemption by, or filing with, any governmental or
                  public body or authority is required in connection with the
                  execution, delivery and performance by Purchaser of this
                  Agreement or the taking of any action hereby contemplated. 
                  The execution, delivery and performance of this Agreement by
                  the Purchaser and the consummation of the transactions 
                  contemplated hereby will not, with or without the giving of
                  notice or the lapse of time, or both, result in the breach of
                  or conflict with any term, covenant or provision of any 
                  contract to which the Purchaser is a party.

         6.4      No  Finder.  To  Purchaser's  knowledge,  there  is  no  firm,
                  corporation,  agency or other  person  that is  entitled  to a
                  consultant's   or  finder's  fee  or  any  type  of  brokerage
                  commission   in  relation  to  or  in   connection   with  the
                  transactions contemplated by this Agreement as a result of any
                  agreement with Purchaser.


7.        CONDITIONS TO COMPANY'S OBLIGATIONS.  The obligations of Company
          hereunder are subject to the fulfillment, at or prior to the Closing,
          of each of the following conditions, any or all of which may be waived
          in writing by Company, in its sole discretion:

         7.1      Accuracy  of  Representations  and  Warranties.  Each  of  the
                  representations  and warranties of Purchaser contained in this
                  Agreement shall be true on and as of the Closing Date with the
                  same force and effect as though  made on and as of the Closing
                  Date, except as affected by transactions contemplated hereby.

         7.2      Performance of Covenants.  Purchaser  shall have performed and
                  complied with all covenants,  obligations and agreements to be
                  performed or complied with by it on or before the Closing Date
                  pursuant to this Agreement.


8.       CONDITIONS TO PURCHASER'S OBLIGATIONS.  The obligations of Purchaser
         hereunder are subject to the  fulfillment,  at or prior to the Closing,
         of each of the following conditions,  any or all of which may be waived
         in writing by Purchaser, in its sole discretion:

         8.1      Accuracy  of  Representations  and  Warranties.  Each  of  the
                  representations  and  warranties of Company  contained in this
                  Agreement shall be true on and as of the Closing Date with the
                  same force and effect as though  made on and as of the Closing
                  Date, except as affected by transactions contemplated hereby.

         8.2      Performance  of Covenants.  Company  shall have  performed and
                  complied with all covenants,  obligations and agreements to be
                  performed or complied with by it on or before the Closing Date
                  pursuant to this Agreement.

                                        8

<PAGE>
9.       TERMINATION This Agreement may be terminated prior to the Closing Date:

         9.1      By Company or  Purchaser if the Closing has not taken place on
                  or before February 21, 1997,  unless extended by Purchaser and
                  Company in accordance with Section 3 hereto; provided, however
                  that  such  termination  shall  not  relieve  any  party  from
                  liability if such party,  as of the  termination  date,  is in
                  breach of any of the provisions of this Agreement.

         9.2      By Purchaser, if on the Closing Date any of the conditions set
                  forth in  Section  7 have not been  satisfied,  or  waived  by
                  Purchaser.

         9.3      By Company, if on the Closing Date any of the conditions set
                  forth in Section 6 have not been satisfied, or waived by the
                  Company.

10.      INDEMNIFICATION.

         10.1     Company, jointly and severally, will defend, indemnify and 
                  hold harmless Purchaser and any person claiming by or through
                  it or its successors and assigns from, against and in respect
                  of any and all losses, claims, and liabilities incurred by or
                  asserted against Purchaser or its successors or assigns in 
                  connection with (i) any breach of any of the representations 
                  and warranties of Company in this Agreement,(ii) any breach of
                  any covenant or agreement made by Company in this Agreement,
                  or (iii) any liability, debt or obligation of Company or lien
                  or encumbrance on the Assets not specifically assumed by 
                  Purchaser in this Agreement.

         10.2     Purchaser will defend, indemnify and hold harmless Company and
                  any person claiming by or through it or its successors and 
                  assigns from, against and in respect of any and all loses, 
                  claims, and liabilities incurred by or asserted against
                  Company or its successors or assigns in connection with (i)
                  any breach of any of the representations and warranties of
                  Purchaser in this Agreement, (ii) any breach of any covenant
                  or agreement made by Purchaser in this Agreement, or (iii) any
                  claim, liability, debt or obligation of Company with respect 
                  to the Liabilities assumed by Purchaser in this Agreement.

11.      GENERAL

         11.1     Expenses, etc. Except as otherwise provided herein, whether or
                  not  the  transactions  contemplated  by  this  Agreement  are
                  consummated,  each party hereto shall pay its own expenses and
                  the fees and expenses of its counsel and accountants and other
                  experts.

         11.2     Survival    of    Representations    and    Warranties.    The
                  representations,  warranties,  covenants  and  agreements  set
                  forth in this Agreement,  the Disclosure Schedules,  any other
                  written  representation  and in any ancillary  document  shall
                  survive the Closing.

         11.3     Waivers.  The waiver by any party hereto of a breach of any
                  provision of this Agreement shall not operate or be construed
                  as a waiver of any subsequent breach.

                                        9

<PAGE>
         11.4     Announcements.  Each party  hereto  agrees that it shall
                  not,  except  as  otherwise  required  by  applicable  law  or
                  regulations,  make or release any statement,  announcement  or
                  publicity with respect to this  Agreement or the  transactions
                  contemplated   hereby,   including   written   statements   to
                  employees,  customers,  and  suppliers,  or permit  any of its
                  officers,  directors or employees to do so unless the form and
                  content of any such  statement,  announcement or publicity and
                  the time of  release  thereof  shall  have been  approved,  in
                  writing, by Purchaser and Company.

         11.5     Binding Effect; Benefits.  This Agreement shall be binding 
                  upon and inure to the benefit of the parties hereto and their
                  respective heirs, personal representatives, successors and 
                  assigns.

         11.6     Notices.   All   notices,    requests,   demands   and   other
                  communications  which are required to be or may be given under
                  this Agreement shall be in writing and shall be deemed to have
                  been duly given when delivered in person or transmitted by fax
                  or five (5) days after deposit in the U.S.  mails by certified
                  or  registered  first  class  mail,  postage  prepaid,  return
                  receipt requested,  addressed to the party to whom the same is
                  so given or made.

              11.6.1                if to Purchaser, to:

                  Noll Computer Systems, Inc.
                  2401 Gravel Street
                  Fort Worth, TX                     76118
                  Attn:      David Noll, President
                  Fax Number:               (817) 284-2459

     with a copy to:
                  McClean & Sanders
                  100 Main Street
                  Fort Worth, TX                     76102
                  Attn:      James Whitton
                  Fax Number:               (817) 870-2265

              11.6.2                if to Company to:

                  United Systems Technology, Inc.
                  3021 Gateway Drive - Suite 240
                  Irving, Texas                                        75063
                  Attn:      Thomas E, Gibbs, President
                  Fax Number:               (972) 580-8280

     with a copy to:
                Law, Snakard & Gambill
                3200 Bank One Tower
                500 Throckmorton Street
             Fort Worth, TX                          76102
                 Attn:     Vernon Rew
                 Fax Number:         (817) 332-7473

                                       10

<PAGE>

         or to such other  address or Fax Number as any party may  designate  by
         giving notice to the other parties hereto.

         11.7     Further Assurances. The Company shall, from time to time at or
                  after the Closing,  at the request of  Purchaser,  and without
                  further   consideration,   execute  and  deliver   such  other
                  instruments  and take such other actions as may be required to
                  confer  to   Purchaser   and  its   assignees   the   benefits
                  contemplated by this Agreement.

         11.8     Entire  Agreement;  Amendment.  This Agreement  (including the
                  Exhibits and  Disclosure  Schedules  hereto)  constitutes  the
                  entire  agreement  and  supersedes  all prior  agreements  and
                  understandings,  oral and written,  between the parties hereto
                  with  respect  to the  subject  matter  hereof  and may not be
                  amended, modified or terminated unless in a written instrument
                  executed by the party or parties sought to be bound.

         11.9     Headings.  The section and other  headings  contained  in this
                  Agreement  are for  reference  purposes  only and shall not be
                  deemed to be a part of this Agreement or to affect the meaning
                  or interpretation of this Agreement.

         11.10    Severability. The invalidity of all or any part of any section
                  of this  Agreement  shall not render  invalid the remainder of
                  this  Agreement  or the  remainder  of  such  section.  If any
                  provision   of  this   Agreement   is  so   broad   as  to  be
                  unenforceable,  such provision shall be interpreted to be only
                  so broad as is enforceable.

         11.11    Counterparts.  This Agreement may be executed in any number of
                  counterparts, each of which, when executed, shall be deemed to
                  be an original and all of which together shall be deemed to be
                  one and the  same  instrument.  A  faxed  copy of an  executed
                  counterpart shall evidence execution.

         11.12    Gender;  Singular and Plural.  Any reference in this Agreement
                  in the masculine  gender shall include the feminine and neuter
                  genders, and vice versa, as appropriate. Any reference in this
                  Agreement  in the  singular  shall mean the  plural,  and vice
                  versa, as appropriate.

         11.13    Third Parties. Nothing in this Agreement, whether expressed or
                  implied,  is  intended to confer any rights or remedies on any
                  person other than  Purchaser  and Company,  nor is anything in
                  this Agreement intended to relieve or discharge the obligation
                  or liability of any third party,  nor shall any provision give
                  any third party any right of subrogation or action against any
                  party to this Agreement.

         11.14    Governing Law; Performance.  This Agreement shall be construed
                  as to both validity and performance and enforced in accordance
                  with and governed by the internal laws of the State of Texas.
                  This Agreement shall be performable in Tarrant County, Texas

         11.15    Attorneys'  Fees.  In the event of any  action  or  proceeding
                  arising  out of or in  connection  with  this  Agreement,  the
                  prevailing  party will be entitled to all costs,  expenses and
                  reasonable  attorneys'  fees incurred with or without suit and
                  on appeal.

                                       11

<PAGE>

         11.16    Time of Essence.  Time is of the essence of this Agreement.

                                       12
<PAGE>
 

     DATED this 21st day of February 1997.


COMPANY:                          UNITED SYSTEMS TECHNOLOGY, INC.
                                  By /s/ Thomas E. Gibbs
                                     ---------------------------
                                     Thomas E. Gibbs, President


                             AND

                                  By /s/ Randall L.McGee
                                     --------------------------
                                     Randall L. McGee, Secretary and Treasurer



PURCHASER:                        NOLL COMPUTER SYSTEMS, INC.
                                  By /s/ J. David Noll
                                     --------------------------
                                     J. David Noll, President

                                       13


<PAGE>

                        Capital Projects License Royalty
                                    Agreement


         This License Royalty Agreement (this  "Agreement") is entered into this
21st day of February 1997, by and between UNITED  SYSTEMS  TECHNOLOGY,  INC., an
Iowa  corporation   ("Company")  and  NOLL  COMPUTER  SYSTEMS,   INC.,  a  Texas
corporation ("Purchaser").


RECITALS

     A.  Company  and  Purchaser  are  parties to that  certain  Asset  Purchase
         Agreement  dated  February  21, 1997 (the "Asset  Purchase  Agreement")
         pursuant  to which the  Company  is  selling  certain  of its assets to
         Purchaser for the  consideration  set forth therein.  Capitalized terms
         used but not  otherwise  defined  herein shall have the meanings  given
         then in the Asset Purchase Agreement; and

     B.  As a portion of such  consideration,  Purchaser  is  agreeing to pay to
         Company a certain  royalty  with  respect to sales by the  Purchaser of
         InterFundTM Capital Projects package as set forth herein.

     Now, therefore, in  consideration  of  the  premises  and  of  the  mutual
         agreements and covenants set forth herein,  the parties do hereby agree
         as follows:


AGREEMENT

1.   Royalty.  Purchaser  hereby  agrees  to  pay  to  Company  a  royalty  (the
     "Royalty")  equal to twenty-five  percent (25%) of the Purchaser's  license
     fee revenues on sales by the Purchaser of the InterFundTM  Capital Projects
     package software until the Company has received a total cumulative  Royalty
     of Fourteen Thousand Dollars ($14,000).  The Purchaser's initial $24,000 of
     license fee revenues on sales by the Purchaser of the  InterFundTM  Capital
     Projects package software will be excluded from Royalty payments.

2.   Accounts  and  Payment.  Purchaser  shall keep an  accurate  account of all
     license fees actually received on sales of the InterFundTM Capital Projects
     package as provided  herein and shall render a statement (the  "Statement")
     in writing to the Company  within (30) days after the end of each  calendar
     month during the term of this Agreement  setting forth the amounts actually
     received  on  the  sales  of  the  InterFundTM  Capital  Projects  package.
     Concurrently  with the rendering of such Statement,  Purchaser shall pay to
     the  Company  the  Royalties   based  on  the  cash  receipts   during  the
     corresponding  calendar  month.  The Statement  shall include the amount of
     license fee revenues on the InterFundTM  Capital  Projects package received
     during the corresponding  calendar month and the computation of the Royalty
     resulting from such receipts.


3.   Grant of  Security  Interest.  Purchaser  hereby  grants  to the  Company a
     security  interest in the following  described  property  hereafter  called
     "collateral":  The InterFundTM Capital Projects package and the extensions,
     improvements,  refinements and changes thereto and such records, documents,
     writings,   computer  records,  disks,  tapes  and  other  means  that  are
     reproducible  that are associated  with the  InterFundTM  Capital  Projects
     package.  This  grant is made for the  purpose of  securing  payment of the
     obligations  set forth herein and any and all extensions and renewals of or
     substitutes for any part thereof.  Purchaser  agrees to punctually pay such
     obligations  when due.
                                       14
<PAGE>

     Purchaser agrees that for the term of this  Royalty  Agreement it will not,
     without the prior  written  consent of the Company,  1) sell,  assign,
     transfer,  exchange or otherwise  dispose of the  InterFundTM  Capital
     Projects package,  2) grant a lien or security interest in or execute,
     file or record any financing  statement or other  security  instrument
     with respect to the InterFundTM  Capital Projects package to any third
     party  other than the  Company,  or 3) convey  actual or  constructive
     possession of the InterFundTM  Capital  Projects  package to any party
     other than the  Company,  except  granting  licenses  in the  ordinary
     course  of  business.  Purchaser  hereby  agrees  to sign  one or more
     financing  statements and any required  amendments  thereto,  to fully
     reflect  Company's  security  interest  in  the  InterFundTM   Capital
     Projects  package.

4.   Representations,  Warranties  and Agreements of Purchaser. Purchaser
     represents, warrants and agrees as follows:

     Purchaser's  principal  place of business will be 2401 Gravel Street,  Fort
     Worth,  Texas, 76118 effective as of the signing of this agreement and
     Purchaser  shall  promptly give Company  written  notice of any change
     thereto.  All  tangible  collateral  and all of  Purchaser's  business
     records,  including those pertaining to the collateral,  shall be kept
     at the above  address.  In the event  that the  Purchaser's  principal
     place of business  changes,  the Purchaser shall notify the Company in
     writing within 30 days of such change of address.

5.   Term. The term of this Agreement shall be for the period ending on the date
     that the Royalty  amount of Fourteen  Thousand  Dollars  ($14,000)  is paid
     hereunder.

6.   Notices. All notices and other communications hereunder shall be in writing
     and shall be deemed to have been given when  delivered in  accordance  with
     Section 10.6 of the Asset Purchase Agreement.

7.   Binding Effects; Benefits.  This Agreement shall be binding upon and inure
     to the benefit of the parties hereto and their respective heirs, personal
     representatives, successors and assigns.

                                       15

<PAGE>

8.   Entire Agreement: Amendment.  This Agreement constitutes the entire 
     Agreement between the parties hereto with respect to the subject matter 
     hereof and supersedes all prior agreements and understandings, oral and 
     written, between the parties hereto and may not be amended, modified or
     terminated unless in a written instrument executed by the party of
     parties sought to be bound.

10.  Headings.  This section and other headings  contained in this Agreement are
     for  reference  purposes  only and shall not be deemed to be a part of this
     Agreement or to affect the meaning or interpretation of this Agreement.

11.  Severability.  The  invalidity  of all or any part of any  section  of this
     Agreement  shall not render  invalid the remainder of this Agreement or the
     remainder of such section.  If any provision of this  Agreement is so broad
     as to be  unenforceable,  such provision shall be interpreted to be only so
     broad as is enforceable.

12.  Counterparts. This Agreement may be executed in any number of counterparts,
     each of which, when executed,  shall be deemed to be an original and all of
     which together shall be deemed to be one and the same  instrument.  A faxed
     copy of an executed counterpart shall evidence execution.

13.  Gender;  Singular  and  Plural.  Any  reference  in this  Agreement  in the
     masculine  gender shall include the feminine and neuter  genders,  and vice
     versa, as appropriate. Any reference in the Agreement in the singular shall
     mean plural, and vice versa, as appropriate.

14.  Third Parties.  Nothing in the Agreement,  whether expressed or implied, is
     intended  to confer any  rights or  remedies  on any person  other than the
     Purchaser and the Company,  nor is anything in this  Agreement  intended to
     relieve or discharge the  obligation  or liability of any third party,  nor
     shall any provision give any third party any right of subrogation or action
     against any party to this Agreement.

15.  Governing Law; Performance.  This Agreement shall be construed as to both
     validity and performance and enforced in accordance with and governed by
     the internal laws of the State of Texas.  This Agreement shall be
     performable in Tarrant County, Texas.

16.  Attorneys' Fees. In the event of any action or proceeding arising out of or
     in connection with this Agreement, the prevailing party will be entitled to
     all costs, expenses and reasonable attorneys' fees incurred with or without
     suit on appeal.

                                       16

<PAGE>


     DATED this 21st day of February 1997.


COMPANY:                          UNITED SYSTEMS TECHNOLOGY, INC.
                                  By /s/ Thomas E. Gibbs
                                     ---------------------------
                                     Thomas E. Gibbs, President


                             AND

                                  By /s/ Randall L.McGee
                                     --------------------------
                                     Randall L. McGee, Secretary and Treasurer



PURCHASER:                        NOLL COMPUTER SYSTEMS, INC.
                                  By /s/ J. David Noll
                                     --------------------------
                                     J. David Noll, President

                                       17



<PAGE>

                          Business Tax License Royalty
                                    Agreement


         This License Royalty Agreement (this  "Agreement") is entered into this
21st day of February 1997, by and between UNITED  SYSTEMS  TECHNOLOGY,  INC., an
Iowa  corporation   ("Company")  and  NOLL  COMPUTER  SYSTEMS,   INC.,  a  Texas
corporation ("Purchaser").


RECITALS

     A.  Company  and  Purchaser  are  parties to that  certain  Asset  Purchase
         Agreement  dated  February  21, 1997 (the "Asset  Purchase  Agreement")
         pursuant  to which the  Company  is  selling  certain  of its assets to
         Purchaser for the  consideration  set forth therein.  Capitalized terms
         used but not  otherwise  defined  herein shall have the meanings  given
         then in the Asset Purchase Agreement; and

     B.  As a portion of such  consideration,  Purchaser  is  agreeing to pay to
         Company a certain  royalty  with  respect to sales by the  Purchaser of
         InterFundTM Business Tax package as set forth herein.

     Now, therefore, in  consideration  of  the  premises  and  of  the  mutual
         agreements and covenants set forth herein,  the parties do hereby agree
         as follows:

AGREEMENT

1    Royalty.  Purchaser  hereby  agrees  to  pay  to  Company  a  royalty  (the
     "Royalty")  equal to twenty-five  percent (25%) of the Purchaser's  license
     fee  revenues on sales by the  Purchaser  of the  InterFundTM  Business Tax
     package software until the Company has received a total cumulative  Royalty
     of Four  Thousand  Dollars  ($4,000).  The  Purchaser's  initial  $4,000 of
     license fee revenues on sales by the Purchaser of the InterFundTM  Business
     Tax package software will be excluded from Royalty payments.

2.   Accounts and Payment.  Purchaser shall keep an accurate account of all 
     license fees actually received on sales of the InterFundTM Business Tax
     package as provided herein and shall render a statement (the "Statement")
     in writing to the Company within (30) days after the end of each calendar
     month during the term of this Agreement setting forth the amounts actually
     received on the sales of the InterFundTM Business Tax package.  
     Concurrently with the rendering of such Statement, Purchaser shall pay to 
     the Company the Royalties based on the cash receipts during the 
     corresponding calendar month.  The Statement shall include the amount of 
     license fee revenues on the InterFundTM Business Tax package received 
     during the corresponding calendar month and the computation of the Royalty
     resulting from such receipts.

3.   Grant of Security Interest.  Purchaser hereby grants to the Company a 
     security interest in the following described property hereafter called
     "collateral": The InterFundTM Business Tax package and the extensions, 
     improvements, refinements and changes thereto and such records, documents,
     writings, computer records, disks, tapes and other means that are
     reproducible that are associated with the InterFundTM Business Tax package.
     This grant is made for the purpose of securing payment of the obligations
     set forth herein and any and all extensions and renewals of or substitutes
     for any part thereof.  Purchaser agrees to punctually pay such obligations
     when due.
     
                                       18
<PAGE>

     Purchaser  agrees that for the term of this Royalty  Agreement it will not,
     without  the  prior  written  consent  of the  Company,  1)  sell,  assign,
     transfer, exchange or otherwise dispose of the InterFundTM  Business Tax
     package,  2) grant a lien or security interest in or  execute,  file or 
     record  any  financing  statement  or other  security instrument  with  
     respect to the  InterFundTM  Business  Tax package to any third party other
     than the  Company,  or 3) convey  actual or  constructive possession of the
     InterFundTM  Business Tax package to any party other than the Company, 
     except granting  licenses in the ordinary course of business. Purchaser 
     hereby agrees to sign one or more  financing  statements and any required
     amendments  thereto, to fully reflect Company's security interest in the
     InterFundTM Business Tax package.

4.   Representations, Warranties and Agreements of Purchaser.  Purchaser
     represents, warrants and agrees as follows:

     Purchaser's principal place of business will be 2401 Gravel Street, Fort
     Worth,  Texas,  76118  effective  as of the signing of this  agreement  and
     Purchaser shall promptly give Company written notice of any change thereto.
     All tangible collateral and all of Purchaser's business records,  including
     those pertaining to the collateral,  shall be kept at the above address. In
     the event that the  Purchaser's  principal place of business  changes,  the
     Purchaser shall notify the Company in writing within 30 days of such change
     of address.

5.   Term. The term of this Agreement shall be for the period ending on the date
     that  the  Royalty  amount  of  Four  Thousand  Dollars  ($4,000)  is  paid
     hereunder.

6.   Notices. All notices and other communications hereunder shall be in writing
     and shall be deemed to have been given when  delivered in  accordance  with
     Section 10.6 of the Asset Purchase Agreement.

7.   Binding Effects; Benefits.  This Agreement shall be binding upon and inure
     to the benefit of the parties hereto and their respective heirs, personal 
     representatives, successors and assigns.

                                       19

<PAGE>
                              




8.   Entire Agreement: Amendment.  This Agreement constitutes the entire 
     Agreement between the parties hereto with respect to the subject matter
     hereof and supersedes all prior agreements and understandings, oral and 
     written, between the parties hereto and may not be amended, modified or 
     terminated unless in a written instrument executed by the party of parties
     sought to be bound.

9.   Headings.  This section and other headings  contained in this Agreement are
     for  reference  purposes  only and shall not be deemed to be a part of this
     Agreement or to affect the meaning or interpretation of this Agreement.

10.  Severability.  The  invalidity  of all or any part of any  section  of this
     Agreement  shall not render  invalid the remainder of this Agreement or the
     remainder of such section.  If any provision of this  Agreement is so broad
     as to be  unenforceable,  such provision shall be interpreted to be only so
     broad as is enforceable.

11.  Counterparts. This Agreement may be executed in any number of counterparts,
     each of which, when executed,  shall be deemed to be an original and all of
     which together shall be deemed to be one and the same  instrument.  A faxed
     copy of an executed counterpart shall evidence execution.

12.  Gender;  Singular  and  Plural.  Any  reference  in this  Agreement  in the
     masculine  gender shall include the feminine and neuter  genders,  and vice
     versa, as appropriate. Any reference in the Agreement in the singular shall
     mean plural, and vice versa, as appropriate.

13.  Third Parties.  Nothing in the Agreement,  whether expressed or implied, is
     intended  to confer any  rights or  remedies  on any person  other than the
     Purchaser and the Company,  nor is anything in this  Agreement  intended to
     relieve or discharge the  obligation  or liability of any third party,  nor
     shall any provision give any third party any right of subrogation or action
     against any party to this Agreement.

14.  Governing Law; Performance.  This Agreement shall be construed as to both
     validity and performance and enforced in accordance with and governed by
     the internal laws of the State of Texas.  This Agreement shall be 
     performable in Tarrant County, Texas.

15.  Attorneys' Fees. In the event of any action or proceeding arising out of or
     in connection with this Agreement, the prevailing party will be entitled to
     all costs, expenses and reasonable attorneys' fees incurred with or without
     suit on appeal.
                                       20

<PAGE>


     DATED this 21st day of February 1997.


COMPANY:                          UNITED SYSTEMS TECHNOLOGY, INC.
                                  By /s/ Thomas E. Gibbs
                                     ---------------------------
                                     Thomas E. Gibbs, President


                             AND

                                  By /s/ Randall L.McGee
                                     --------------------------
                                     Randall L. McGee, Secretary and Treasurer



PURCHASER:                        NOLL COMPUTER SYSTEMS, INC.
                                  By /s/ J. David Noll
                                     --------------------------
                                     J. David Noll, President

                                       21

<PAGE>


                          Maintenance Royalty Agreement


         This Maintenance  Royalty Agreement (this  "Agreement") is entered into
this 21st day of February 1997, by and between UNITED SYSTEMS TECHNOLOGY,  INC.,
an Iowa  corporation  ("Company")  and  NOLL  COMPUTER  SYSTEMS,  INC.,  a Texas
corporation ("Purchaser").


RECITALS

     A.  Company  and  Purchaser  are  parties to that  certain  Asset  Purchase
         Agreement  dated  February  21, 1997 (the "Asset  Purchase  Agreement")
         pursuant  to which the  Company  is  selling  certain  of its assets to
         Purchaser for the  consideration  set forth therein.  Capitalized terms
         used but not  otherwise  defined  herein shall have the meanings  given
         then in the Asset Purchase Agreement; and

     B.  As a portion of such  consideration,  Purchaser  is  agreeing to pay to
         Company a certain  royalty with respect to the renewals of  maintenance
         contracts with certain  InterFundTM  customers added since October 1994
         as set forth herein and in Exhibit A attached here.

     Now, therefore, in  consideration  of  the  premises  and  of  the  mutual
         agreements and covenants set forth herein,  the parties do hereby agree
         as follows:


AGREEMENT

     1.   Royalty.  Purchaser  hereby  agrees to pay to  Company a royalty  (the
          "Royalty")   equal  to  fifteen   percent  (15%)  of  the  Purchaser's
          maintenance fee revenues on renewals of certain  customer  accounts as
          listed in Exhibit A hereto.  This  royalty will be paid to the Company
          by the  Purchaser  on the  three  annual  renewals  subsequent  to the
          signing  of this  Agreement,  it being  understood  that if after  the
          signing of this Agreement,  an InterFund  customer listed in Exhibit A
          does not renew its  maintenance  coverage and does not pay the related
          maintenance revenue to the Purchaser,  said Royalty will not be due to
          Company.

     2.   Accounts and Payment.  Purchaser shall keep an accurate account of all
          maintenance fees actually  received for the accounts listed on Exhibit
          A as provided herein and shall render a statement (the "Statement") in
          writing to the Company within (30) days after the end of each calendar
          month  during the term of this  Agreement  setting  forth the  amounts
          actually  received from the  customers  listed on Exhibit A for annual
          maintenance  fees for the  three  annual  renewals  subsequent  to the
          signing of this  Agreement.  Concurrently  with the  rendering of such
          Statement,  Purchaser  shall pay to the Company the Royalties based on
          the  cash  receipts  during  the  corresponding  calendar  month.  The
          Statement  shall include the amount of  maintenance  fee revenues from
          the customers  listed on Exhibit A received  during the  corresponding
          calendar month and the computation of the Royalty  resulting from such
          receipts.

     3.   Grant of Security  Interest.  Purchaser hereby grants to the Company a
          security interest in the following described property hereafter called
          "collateral":  The  InterFundTM  maintenance  contracts  with  certain
          InterFundTM  customers added since October 1994 a set forth in Exhibit
          A  attached  hereto.  This grant is made for the  purpose of  securing
          payment of the obligations set forth herein and any and all extensions
          and renewals of or substitutes for any part thereof.  Purchaser agrees
          to punctually pay such obligations when due.

                                       22

<PAGE>

          Purchaser agrees that for the term of this  Royalty  Agreement it will
          not, without the prior  written  consent of the Company,  1) sell,
          assign, transfer,  exchange or otherwise dispose of the InterFundTM
          customers listed  on  Exhibit  A, 2)  grant a lien or  security 
          interest  in of execute,file  or record  any  financing  statement
          or other security instrument with respect to the InterFundTM customers
          listed on Exhibit A to any third party other than the  Company, or 3)
          convey  actual or constructive possession of the InterFundTM customers
          listed on Exhibit A to any party other than the Company. Purchaser
          hereby agrees to sign one or more financing  statements and any
          required amendments thereto, to  fully  reflect  Company's  security
          interest  in the  InterFundTM customers listed on Exhibit A.

     4.   Representations, Warranties and Agreements of Purchaser.  Purchaser
          represents, warrants and agrees as follows:

          Purchaser's principal place of business will be 2401 Gravel Street, 
          Fort Worth,  Texas,  76118  effective  as of the signing of this
          agreement  and Purchaser shall promptly give Company written notice of
          any change thereto.  All Tangible collateral and all of Purchaser's
          business records,  including those pertaining to the collateral, shall
          be kept at the above address. In the event that the  Purchaser's 
          principal place of business  changes,  the Purchaser shall notify the
          Company in writing within 30 days of such change of address.

     5.   Term. The term of this Agreement shall be for the period ending on the
          date  that  all  Royalty  amounts  to be  paid to the  Company  by the
          Purchaser on the three annual  renewals  subsequent  to the singing of
          this  Agreement  for  the  customers  listed  on  Exhibit  A are  paid
          hereunder.

     6.   Notices.  All notices and other  communications  hereunder shall be in
          writing  and  shall be deemed to have been  given  when  delivered  in
          accordance with Section 10.6 of the Asset Purchase Agreement.

     7.   Binding  Effects;  Benefits.  This Agreement shall be binding upon and
          inure to the benefit of the parties hereto and their respective heirs,
          personal representatives, successors and assigns.

     8.   Entire  Agreement:  Amendment.  This Agreement  constitutes the entire
          Agreement  between  the  parties  hereto  with  respect to the subject
          matter hereof and supersedes all prior agreements and  understandings,
          oral and written,  between the parties  hereto and may not be amended,
          modified or terminated unless in a written instrument  executed by the
          party of parties sought to be bound.

     9.   Headings.  This section and other headings contained in this Agreement
          are for  reference  purposes only and shall not be deemed to be a part
          of this Agreement or to affect the meaning or  interpretation  of this
          Agreement.

     10.  Severability. The invalidity of all or any part of any section of this
          Agreement  shall not render invalid the remainder of this Agreement or
          the remainder of such section.  If any provision of this  Agreement is
          so broad as to be  unenforceable,  such provision shall be interpreted
          to be only so broad as is enforceable.

     11.  Counterparts.  This  Agreement  may  be  executed  in  any  number  of
          counterparts,  each of which, when executed,  shall be deemed to be an
          original and all of which  together  shall be deemed to be one and the
          same  instrument.  A  faxed  copy  of an  executed  counterpart  shall
          evidence execution.

     12.  Gender;  Singular and Plural.  Any reference in this  Agreement in the
          masculine  gender shall include the feminine and neuter  genders,  and
          vice versa,  as  appropriate.  Any  reference in the  Agreement in the
          singular shall mean plural, and vice versa, as appropriate.

                                       23
<PAGE>

     13.  Third Parties. Nothing in the Agreement, whether expressed or implied,
          is intended to confer any rights or remedies on any person  other than
          the  Purchaser  and the  Company,  nor is anything  in this  Agreement
          intended to relieve or discharge  the  obligation  or liability of any
          third party, nor shall any provision give any third party any right of
          subrogation or action against any party to this Agreement.

     14.  Governing Law;  Performance.  This Agreement  shall be construed as to
          both  validity and  performance  and enforced in  accordance  with and
          governed by the internal  laws of the State of Texas.  This  Agreement
          shall be performable in Tarrant County, Texas.

     15.  Attorneys' Fees. In the event of any action or proceeding  arising out
          of or in connection with this Agreement,  the prevailing party will be
          entitled  to  all  costs,  expenses  and  reasonable  attorneys'  fees
          incurred with or without suit on appeal.

                                       24


<PAGE>


     DATED this 21st day of February 1997.


COMPANY:                          UNITED SYSTEMS TECHNOLOGY, INC.
                                  By /s/ Thomas E. Gibbs
                                     ---------------------------
                                     Thomas E. Gibbs, President


                             AND

                                  By /s/ Randall L.McGee
                                     --------------------------
                                     Randall L. McGee, Secretary and Treasurer



PURCHASER:                        NOLL COMPUTER SYSTEMS, INC.
                                  By /s/ J. David Noll
                                     --------------------------
                                     J. David Noll, President

                                       25



<PAGE>