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Microcap & Penny Stocks : USXX IS UP @.34 CENTS WITH 400,000 SHARES TODAY!! -- Ignore unavailable to you. Want to Upgrade?

To: CAPT.DAN who wrote (112)	2/11/1998 1:44:00 PM
From: Hawkmoon	Read Replies (2) \| Respond to of 348

Hey all!! I was just preparing to walk out the door this morning when who should return my call from yesterday?? Yes, our very own favorite CEO of the moment, Ken Smith... :0) Primarily this is the jist of the conversation: USXX has two current business models for their prison inmate operations, one service oriented (see CSM article posted by C.King several weeks ago) and their assembly/manufacturing model such as exists in their current facility in Lockheart, TX. Their services model focuses on providing a variety of services such as telemarketing... etc. USXX has a goal of generating revenue of $2 million+ from service oriented facilities with a goal of 30% gross profit margins. USXX has a goal of generating up to $12 million per annum from their assembly/manufacturing facilities with a gross margin of 15% being their goal. They are only currently looking at prisons which have established facilities and infrastructure to house their operations. They have identified a number of institutions which already have building of approximately 30,000 sq/ft which had originally been intended for in-house PIE operations. These will be the locations that they focus on. Service oriented facilities require relative little in capital and start-up costs and provide the highest potential for profits. Inmates will work for free for a 21 day train-up period which will neutralize ramp-up costs in this area. Sales personel with USXX offices will be responsible for selling the service for which their reimbursement will be mainly on a commission basis, which creates incentive to get out there and sell the business. Manufacturing/assembly operations will be relatively more capital intensive depending on the type of service they provide and equipment required. Regarding the convertible debentures. Mr. Smith stated that they took this opportunity to place a limited quantity of shares to meet some outstanding obligations left by prior managment. USXX currently possesses an $8 million tax-loss carry forward, so they won't be paying taxes for a while. The Mercedes: Ken asked me to make mention about the ribbing he has received about the Mercedes. He stated that the vehicle is valued at approx $40,000 and that he placed the down-payment on the vehicle from personal funds. Btw, Ken was good-natured about this, but recognized that people might construe this perquisite as being overly extravagant. Since both my wife's and my personal vehicles are valued over $34,000, I don't see this as any form of issue. He pointed out the fact that none of USXX's management currently have any stock options nor a option's compensation plan in place. He and other insiders hold a substantial # of shares (they injected $1.5 million in personal capital in 1996 into this company) and most of the O/S shares are held by long-term investors. Thus, they have a vested interest in increasing shareholder value and it is a consideration in any business decisions they make, according to Mr. Smith. Finally, they have hired BDO to be their corporate accountants, an international "Big Five" accounting firm. When asked if they were still on target for 7 new facilities in operation for 1998, he stated that this figure was not much a stretch and quite possible. Florida has over 25+ potential facilities and even more available in California. Furthermore, he would not comment on the record, but did not correct my perspective of the long-term value of USXX to a private corrections company like Wackenhut.. etc. The theory being that they would provide the "foot in the door" to having further gov't facilities converted to private ownership. Overall, we had a very pleasant and open conversation about the company, corporate interaction with us SI "fanatics", and the perception of being completely disclosing and above board with regard to filing requirements. USXX, according to Mr. Smith, is a fully reporting company and has emphasized that it will be fully disclosing with regard to material information and insider buy/sell activities in the stock. Hope this helps. Regards, Ron