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 and the power sports industry. The software applications of the Company are offered through its LegacyTM, QuestTM , asyst, CPSTM, Auto AdminTM , MASTM and ShamrockTM product lines. The LegacyTM product line operates on the IBM AS/400 mid-range computer system. The QuestTM product line operates in a single user or small network PC DOS environment. The asyst product line operates in a single user or network Windows environment. The CPSTM, MASTM and ShamrockTM product lines operate in UNIX environments. The Auto AdminTM product line operates in a PC DOS or 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 four 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, purchase orders, fixed assets and comprehensive financial report writer. In addition, the power sports software includes the software modules in the areas of point of sale, inventory, repair orders, finance and insurance and fiche interface.

Public Works

This group includes software modules in the areas of utility billing and collections, hand held meter reading and bank drafting.

General Administration

This group includes software modules in the areas of building permits, animal licenses, business licenses, code enforcement and property tax billing.

Public Safety

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

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

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.

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 are delivered at the customer site, 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, 2004, the Company generated approximately 16% of its revenue from the sale of software, 12% from installation, training and customer support, 61% from software maintenance, and 11% from equipment and supplies sales.

Marketing

The Company markets its products on a nationwide basis in the United States and Canada. Marketing is conducted through its full-time sales staff in Dallas, Texas as well as through the Company's full-time sales representatives located in Lexington, Kentucky, New Orleans, Louisiana, Memphis, Tennessee and London, Ontario.

The Company's customers are primarily municipal governments with populations between 1,000 and 100,000, county governments, police departments, municipal court systems and power sports dealerships. The Company currently has over 2,100 customer installations in North America. USTI proposes to sell computer equipment when selling its software, but the customer may obtain their computer equipment from a hardware manufacturer or dealer and then purchase one or more software modules from the Company.

The typical purchaser's representative is a City Manager, Administrative Manager, Controller, Director of Finance or Dealership owner. 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 annual users' meetings in Dallas, Texas and Waterloo, Ontario. The two-day meetings are 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.

Approximately 25% of the Company's customers are located in Texas and Minnesota, and the remaining customers are located in various states and provinces in the United States and Canada.

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 asyst product line, has a positive impact on its competitive status.

Employees

The Company presently has 34 full-time employees, including its executive officers. In addition, from time to time, the Company engages the services of consultants and part-time employees.

Patents, Copyrights, Trademarks and Royalties

The Company does not believe its products are patentable, and, to date, has not registered any copyright with respect to its products. The Company has federally registered trademarks for its asyst and jUSTInter.net products. The Company believes 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 the Company will be successful in discovering or preventing any such duplication.