SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
[ ] Transitional Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended February 29, 2000
Commission File No. 0-25319
CONTEX ENTERPRISES GROUP, INC.
------------------------------
(Name of small business issuer in its charter)
Colorado 84-1191355
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1629 York Street
Suite 101
Denver, Colorado 80206
(303) 320-0457
(Address, including zip code and telephone number, including area
code, of registrant's executive offices)
Securities registered under Section 12(b) of the Exchange Act:
none
Securities registered under to Section 12(g) of the Exchange Act:
Common Stock
------------
(Title of class)
Check whether the issuer (1) 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 Company was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
--- ---
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. x
Issuer's revenues for its most recent fiscal year: $2,500
(Continued on Following Page)
<PAGE>
State the aggregate market value of the voting stock held by non- affiliates,
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: As of June 12, 2000: $0.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of June 12, 2000, there were
2,240,000 shares of the Company's common stock issued and outstanding.
Documents Incorporated by Reference: None
This Form 10-KSB consists of Thirty-Six Pages.
Exhibit Index is Located at Page Thirty-Three.
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TABLE OF CONTENTS
FORM 10-KSB ANNUAL REPORT
CONTEX ENTERPRISE GROUP, INC.
PAGE
----
Facing Page
Index
PART I
Item 1. Description of Business......................................... 4
Item 2. Description of Property......................................... 4
Item 3. Legal Proceedings............................................... 5
Item 4. Submission of Matters to a Vote of
Security Holders............................................ 5
PART II
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters............................. 5
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................................. 6
Item 7 Financial Statements............................................ 12
Item 8. Changes in and Disagreements on Accounting
and Financial Disclosure.................................... 27
PART III
Item 9. Directors, Executive Officers, Promoters
and Control Persons, Compliance with
Section 16(a) of the Exchange Act........................... 27
Item 10. Executive Compensation.......................................... 28
Item 11. Security Ownership of Certain Beneficial
Owners and Management....................................... 29
Item 12. Certain Relationships and Related
Transactions................................................ 30
PART IV
Item 13. Exhibits and Reports of Form 8-K................................ 31
SIGNATURES................................................................. 32
3
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Contex Enterprise Group, Inc. (the "Company") was incorporated on September
16, 1991 under the laws of the State of Colorado. From inception through 1998,
the Company was engaged in opening and commencing a microbrewery in Grand
Junction, Colorado. This enterprise was closed in 1993. From 1993 through
February 1998, the Company was dormant. Thereafter, from March 1998 through
December 1999, the Company was engaged in the publishing and marketing of books
about brewpubs in the Rocky Mountain area. Relevant thereto, in March 1998, the
Company commenced a private offering of its common stock pursuant to Rule 504 of
Regulation D, as promulgated under the Securities Act of 1933, as amended, where
it sold 408 Units, each Unit consisting of 5,000 shares of the Company's common
stock at a price of $2.50 per Unit. The Company closed this offering in May
1998. In December 1999, the Company's Board of Directors and shareholders
elected to change the principal business of the Company to engage in any lawful
corporate undertaking, including, but not limited to, selected mergers and
acquisitions, as a result of less than anticipated response to the Company's
business plan. As a result and as of the date of this report, the Company can be
defined as a "shell" company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity.
In January 1999, the Company filed a Registration Statement with the
Securities and Exchange Commission on Form 10-SB pursuant to the rules and
regulations included under the Securities Exchange Act of 1934, as amended,
wherein the Company caused to be registered its common stock. This Registration
Statement became effective in April 1999.
Employees
During the fiscal year ended February 29, 2000, the Company had no full
time employees. The Company's President and Secretary have agreed to allocate a
portion of their time to the activities of the Company, without compensation.
These officers anticipate that the business plan of the Company can be
implemented by their devoting approximately 20 hours per month to the business
affairs of the Company and, consequently, conflicts of interest may arise with
respect to the limited time commitment by such officers.
ITEM 2. DESCRIPTION OF PROPERTY
Facilities. As of the date of this Report, the Company operates from its
offices at 1629 York St., Suite 101, Denver, Colorado 80206, which space was
provided to the Company by Gerald Trumbule, a shareholder, director and officer
of the Company. The Company pays a monthly rent of $100 pursuant to a verbal
month to
4
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month lease arrangement. This space consists of approximately 100 square feet of
executive office space. The Company's telephone number is (303) 320-0457.
In addition, until December 15, 1999, the Company maintained its principal
place of business at 4155 E. Jewell Ave., Suite 909, Denver, Colorado 80222,
which space was provided by Ed Hawkins, then an officer, director and
shareholder of the Company, on a rent free basis.
It is anticipated that the Company's current arrangement will remain until
such time as the Company successfully consummates a merger or acquisition.
Management believes that this space will meet the Company's needs for the
foreseeable future.
Other Property. The Company has no properties and at this time has no
agreements to acquire any properties. The Company intends to attempt to acquire
assets or a business in exchange for its securities which assets or business is
determined to be desirable for its objectives.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings which are pending or have been
threatened against the Company of which management is aware.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In December 1999, the Company held its annual meeting of shareholders. At
this meeting, the shareholders (i) approved a change of the Company's current
business plan to the plan described herein; (ii)adopted an amendment to the
Company's Articles of Incorporation, changing the name of the Company to "Contex
Enterprise Group, Inc.;" (iii) elected Messrs. Clark and Trumbule as directors
of the Company; (iv) appointed Cordovano and Harvey P.C. as the Company's
independent accountants, to perform a financial audit of the Company for the
fiscal years ended February 29, 2000, which audit appears elsewhere herein; and
(v) ratified the actions of the Company's directors for the prior calendar year.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
(a) Market Information. There is presently no trading market for the common
equity of the Company. In this regard, the Company has caused to be filed an
application to trade its common stock on the OTC Bulletin Board operated by the
National Association of Securities Dealers, Inc. As of the date of this Report,
the relevant application has not been approved. While management is
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optimistic that the application will be approved in the future, there can be no
assurances that said application will be so approved.
(b) Holders. There are forty-one (41) holders of the Company's Common Stock
and one (1) holder of the Company's Series A Preferred Shares.
(c) Dividends.
(1) The Company has not paid any dividends on its Common Stock. The Company
does not foresee that the Company will have the ability to pay a dividend on its
Common Stock in the fiscal year ended February 28, 2001, unless the Company
successfully consummates a merger or acquisition and the relevant candidate has
sufficient assets available to undertake issuance of such a dividend and
management elects to do so, of which there can be no assurance.
Pursuant to the laws of the State of Colorado, a corporation may not issue
a distribution if, after giving its effect, the corporation would not be able to
pay its debts as they became due in the usual course of business, or such
corporation's total assets would be less than the sum of their total liabilities
plus the amount that would be needed, if the corporation were to be dissolved at
the time of the distribution, to satisfy the preferential rights upon
dissolution of shareholders whose preferential rights are superior to those
receiving the distribution. As a result, management does not foresee that the
Company will have the ability to pay a dividend on its Common Stock in the
fiscal year ended February 28, 2001, unless the Company successfully merges with
or acquires an entity with a financial condition that allows for the same and
the then current management of the Company elects to issued such a dividend. See
"Part II, Item 7, Financial Statements."
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
audited financial statements and notes thereto included herein. In connection
with, and because it desires to take advantage of, the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995, the Company cautions
readers regarding certain forward looking statements in the following discussion
and elsewhere in this report and in any other statement made by, or on the
behalf of the Company, whether or not in future filings with the Securities and
Exchange Commission. Forward looking statements are statements not based on
historical information and which relate to future operations, strategies,
financial results or other developments. Forward looking statements are
necessarily based upon estimates and assumptions
6
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that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control
and many of which, with respect to future business decisions, are subject to
change. These uncertainties and contingencies can affect actual results and
could cause actual results to differ materially from those expressed in any
forward looking statements made by, or on behalf of, the Company. The Company
disclaims any obligation to update forward looking statements.
(a) Plan of Operation.
-----------------
The Company intends to seek to acquire assets or shares of an entity
actively engaged in business which generates revenues, in exchange for its
securities. The Company has no particular acquisitions in mind and has not
entered into any negotiations regarding such an acquisition. None of the
Company's officers, directors, promoters or affiliates have engaged in any
preliminary contact or discussions with any representative of any other company
regarding the possibility of an acquisition or merger between the Company and
such other company as of the date of this registration statement.
The Company will not restrict its search to any specific business,
industry, or geographical location and the Company may participate in a business
venture of virtually any kind or nature. This discussion of the proposed
business is purposefully general and is not meant to be restrictive of the
Company's virtually unlimited discretion to search for and enter into potential
business opportunities. Management anticipates that it may be able to
participate in only one potential business venture because the Company has
nominal assets and limited financial resources. See "Financial Statements." This
lack of diversification should be considered a substantial risk to shareholders
of the Company because it will not permit the Company to offset potential losses
from one venture against gains from another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Due to general
economic conditions, rapid technological advances being made in some industries
and shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms
7
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on which additional equity financing may be sought, providing liquidity for
incentive stock options or similar benefits to key employees, providing
liquidity (subject to restrictions of applicable statutes), for all shareholders
and other factors. Potentially, available business opportunities may occur in
many different industries and at various stages of development, all of which
will make the task of comparative investigation and analysis of such business
opportunities extremely difficult and complex.
The Company has, and will continue to have, a very limited amount of
capital with which to provide the owners of business opportunities with any
significant cash or other assets. However, management believes the Company will
be able to offer owners of acquisition candidates the opportunity to acquire a
controlling ownership interest in a publicly registered company without
incurring the cost and time required to conduct an initial public offering. The
owners of the business opportunities will, however, incur significant legal and
accounting costs in connection with acquisition of a business opportunity,
including the costs of preparing Form 8-K's, 10-K's or 10-KSB's, agreements and
related reports and documents. The Securities Exchange Act of 1934 (the "34
Act"), specifically requires that any merger or acquisition candidate comply
with all applicable reporting requirements, which include providing audited
financial statements to be included within the numerous filings relevant to
complying with the 34 Act. Nevertheless, the officers and directors of the
Company have not conducted market research and are not aware of statistical data
which would support the perceived benefits of a merger or acquisition
transaction for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or under
the supervision of, the officers and directors of the Company, none of whom is a
professional business analyst. Management intends to concentrate on identifying
preliminary prospective business opportunities which may be brought to its
attention through present associations of the Company's officers and directors,
or by the Company's shareholders. In analyzing prospective business
opportunities, management will consider such matters as the available technical,
financial and managerial resources; working capital and other financial
requirements; history of operations, if any; prospects for the future; nature of
present and expected competition; the quality and experience of management
services which may be available and the depth of that management; the potential
for further research, development, or exploration; specific risk factors not now
foreseeable but which then may be anticipated to impact the proposed activities
of the Company; the potential for growth or expansion; the potential for profit;
the perceived public recognition of acceptance of products, services, or trades;
name identification; and other relevant factors. Officers and directors of the
Company expect to meet personally with management and key personnel of the
business opportunity as part of their investigation. To the extent
8
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possible, the Company intends to utilize written reports and personal
investigation to evaluate the above factors. The Company will not acquire or
merge with any company for which audited financial statements cannot be obtained
within a reasonable period of time after closing of the proposed transaction.
Management of the Company, while not especially experienced in matters
relating to the new business of the Company, shall rely upon their own efforts
and, to a much lesser extent, the efforts of the Company's shareholders, in
accomplishing the business purposes of the Company. It is not anticipated that
any outside consultants or advisors will be utilized by the Company to
effectuate its business purposes described herein. However, if the Company does
retain such an outside consultant or advisor, any cash fee earned by such party
will need to be paid by the prospective merger/ acquisition candidate, as the
Company has no cash assets with which to pay such obligation. There have been no
contracts or agreements with any outside consultants and none are anticipated in
the future.
The Company will not restrict its search for any specific kind of firms,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is impossible to predict at this time the status of any business in
which the Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which the Company may offer. However, the Company
does not intend to obtain funds in one or more private placements to finance the
operation of any acquired business opportunity until such time as the Company
has successfully consummated such a merger or acquisition.
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan described herein. Because the Company has
limited capital with which to pay these anticipated expenses, present management
of the Company will pay these charges with their personal funds, as interest
free loans to the Company. However, the only opportunity which management has to
have these loans repaid will be from a prospective merger or acquisition
candidate. Management has agreed among themselves that the repayment of any
loans made on behalf of the Company will not impede, or be made conditional in
any manner, to consummation of a proposed transaction.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may also
acquire stock or assets of an existing business. On the consummation of a
9
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transaction, it is probable that the present management and shareholders of the
Company will no longer be in control of the Company. In addition, the Company's
directors may, as part of the terms of the acquisition transaction, resign and
be replaced by new directors without a vote of the Company's shareholders.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, of which there can be
no assurance, it will be undertaken by the surviving entity after the Company
has successfully consummated a merger or acquisition and the Company is no
longer considered a "shell" company. Until such time as this occurs, the Company
will not attempt to register any additional securities. The issuance of
substantial additional securities and their potential sale into any trading
market which may develop in the Company's securities may have a depressive
effect on the value of the Company's securities in the future, if such a market
develops, of which there is no assurance.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In order to
obtain tax-free treatment under the Code, it may be necessary for the owners of
the acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company, would retain less than
20% of the issued and outstanding shares of the surviving entity, which would
result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis of verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise. The manner in which the
Company participates in an opportunity will depend on the nature of the
opportunity, the respective needs and desires of the Company and other parties,
the management of the opportunity and the relative negotiation strength of the
Company and such other management.
With respect to any merger or acquisition, negotiations with target company
management is expected to focus on the percentage of
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the Company which the target company shareholders would acquire in exchange for
all of their shareholdings in the target company. Depending upon, among other
things, the target company's assets and liabilities, the Company's shareholders
will in all likelihood hold a substantially lesser percentage ownership interest
in the Company following any merger or acquisition. The percentage ownership may
be subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants, will set forth remedies
on default and will include miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge with any
entity which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. The Company
is subject to all of the reporting requirements included in the 34 Act. Included
in these requirements is the affirmative duty of the Company to file independent
audited financial statements as part of its Form 8-K to be filed with the
Securities and Exchange Commission upon consummation of a merger or acquisition,
as well as the Company's audited financial statements included in its annual
report on Form 10-K (or 10-KSB, as applicable). If such audited financial
statements are not available at closing, or within time parameters necessary to
insure the Company's compliance with the requirements of the 34 Act, or if the
audited financial statements provided do not conform to the representations made
by the candidate to be acquired in the closing documents, the closing documents
will provide that the proposed transaction will be voidable, at the discretion
of the present management of the Company. If such transaction is voided, the
agreement will also contain a provision providing for the acquisition entity to
reimburse the Company for all costs associated with the proposed transaction.
The Company has no full time employees. The Company's President and
Secretary have agreed to allocate a portion of their time to the activities of
the Company, without compensation. These officers anticipate that the business
plan of the Company can be implemented by their devoting approximately 20 hours
per month to the business affairs of the Company and, consequently, conflicts of
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interest may arise with respect to the limited time commitment by such officers.
Because the Company presently has nominal overhead or other material
financial obligations, management of the Company believes that the Company's
short term cash requirements can be satisfied by existing capital resources, as
well as management injecting whatever nominal amounts of cash into the Company
to cover additional incidental expenses. There are no assurances whatsoever that
any additional cash will be made available to the Company through any means.
Year 2000 Disclosure
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the recent change in the century. If not corrected, many computer
applications were expected to fail or create erroneous results by or at the Year
2000. As a result, many companies were required to undertake major projects to
address the Year 2000 issue. The Company did not incur any negative impact as a
result of this problem and no problems in this regard are anticipated in the
future.
ITEM 7. FINANCIAL STATEMENTS
12
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CONTEX ENTERPRISE GROUP, INC.
Financial Statements
February 29, 2000 and February 28, 1999
(With Independent Auditors' Report Thereon)
13
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Item 8. Financial Statements
CONTEX ENTERPRISE GROUP, INC.
Index to Financial Statements
Page
----
Independent Auditors' Reports .......................................... F-2
Balance sheet at February 29, 2000 ..................................... F-4
Statements of Operations for each of the years ended February 29,
2000 and February 28, 1999, and for the period from September 16,
1991 (inception) through February 29, 2000 .......................... F-5
Statement of Changes in Shareholders' Deficit from September 16,
1991 (inception) through February 29, 2000 .......................... F-6
Statements of Cash Flows for each of two years ended February 29,
2000 and February 28, 1999, and for the period from September 16,
1991 (inception) through February 29, 2000 .......................... F-7
Notes to Financial Statements .......................................... F-8
F-1
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Independent Auditors'Report
The Board of Directors and Shareholders
Contex Enterprise Group, Inc.:
We have audited the accompanying balance sheet of Contex Enterprise Group, Inc.
(formerly Mesa County Brewing Company) (the "Company") as of February 29, 2000,
and the related statements of operations, shareholders' equity (deficit), and
cash flows for the year 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 audit.
We conducted our audit 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 that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Contex Enterprise Group, Inc.
as of February 29, 2000, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
s/Cordovano & Harvey, P.C.
Cordovano & Harvey, P.C.
Denver, Colorado
June 8, 2000
F-2
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Independent Auditors'Report
The Board of Directors and Shareholders
Contex Enterprise Group, Inc.:
We have audited the accompanying balance sheet of Mesa County Brewing Co. (now
known as Contex Enterprise Group, Inc.) (a Development Stage Company), at
February 28, 1999 (not separately included herein), and the related statement of
operations, shareholders' deficit, and cash flows for the year ended February
28, 1999 and the period September 16, 1991 (inception) through February 28,
1999. 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 audit.
We conducted our audit 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 the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mesa County Brewing Co. at
February 28, 1999 and the results of its operations and its cash flows for the
year ended February 28, 1999 and the period September 16, 1991 (inception)
through February 28, 1999, in conformity with generally accepted accounting
principles.
s/Kish, Leake & Associates, P.C.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
March 30, 1999
F-3
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<TABLE>
CONTEX ENTERPRISE GROUP, INC.
(A Development Stage Company)
Balance Sheet
February 29, 2000
<CAPTION>
Assets
<S> <C>
Current assets:
Cash ............................................................ $ 42,311
--------
Total current assets .................................... 42,311
========
Liabilities and Stockholders' Deficit
Current liabilities:
Accrued expenses (Note 2) ....................................... $ 5,894
--------
Total current liabilities ............................... 5,894
Long-term debt, related party (Note 4) ............................ 30,000
--------
Total liabilities ....................................... 35,894
--------
Stockholders' deficit:
Class A Preferred Stock, no par value, non-voting,
authorized 2,500,000 shares, issued and outstanding
20,000 shares (Note 3) ........................................ 20,000
Class B Preferred Stock, no par value, non-voting,
authorized 2,500,000 shares, issued and outstanding
-0- shares (Note 3) ........................................... -
Common Stock, no par value, authorized 50,000,000 shares,
issued and outstanding 2,240,000 shares (Note 3) .............. 1,120
Additional paid-in capital ...................................... 2,400
Deficit accumulated during the development stage ................ (17,103)
--------
Total stockholders' deficit ............................. 6,417
--------
Total liabilities and stockholders' deficit ............. $ 42,311
========
See accompanying notes to financial statements
F-4
</TABLE>
17
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<TABLE>
CONTEX ENTERPRISE GROUP, INC.
(A Development Stage Company)
Statements of Operations
<CAPTION>
September
16, 1991
For the Year Ended (inception)
-------------------------- Through
February 29, February 28, February 29
2000 1999 2000
-------- ------- --------
<S> <C> <C> <C> <C>
Revenue (Note 5) .................................... $ 2,500 $ - $ 2,500
-------- ------- --------
Selling, general and administrative expense
Bank charges .................................... 90 34 124
Filing fees ..................................... 125 355 685
Printing ........................................ 1,297 605 1,902
Professional fees ............................... 5,973 3,276 9,249
Stock transfer fees ............................. 1,349 - 1,349
Officer salaries ................................ 3,500 - 3,500
Rent, related party (Note 4) .................... 1,200 1,200 2,400
-------- ------- --------
Total selling, general and
administrative expense .................. 13,534 5,470 19,209
-------- ------- --------
Loss before income taxes and interest ............... (11,034) (5,470) (16,709)
Interest expense ................................ 394 - 394
-------- ------- --------
Loss before income taxes ........ (11,428) (5,470) (17,103)
Income tax provision (Note 6) ................... - - -
-------- ------- --------
Net loss ........................ $(11,428) $(5,470) $(17,103)
======== ======= ========
See accompanying notes to financial statements
F-5
</TABLE>
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<TABLE>
CONTEX ENTERPRISE GROUP, INC.
(A Development Stage Company)
Statement of Changes in Shareholders' Deficit
September 16, 1991 (inception) through February 29, 2000
<CAPTION>
Deficit
Class A Class B accumulated
Preferred Stock ---------------- --------------- Common Stock Additional during the
---------------- Preferred Stock Preferred Stock ----------------- paid-in development
Shares Amount Shares Amount Shares Amount Shares Amount Capital Stage Total
------- ------ ------- ------- ------ ------- --------- ------ ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
September 16,
1991 and
February 29,
1992, February
28, 1993, 1994,
and 1995,
February 29,
1996, and
February 28,
1997 ........... - $ - - $ - - $ - - $ - $ - $ - -
February 3, 1998
issued 200,000
shares of no par
value Common
Stock for cash of
$100 or $.0005
per share ...... - - - - - - 200,000 100 - - 100
February 5, 1998
issued 40,000
shares of no par
value Preferred
Stock for cash
of $4,000 or $.10
per share ...... 40,000 4,000 - - - - - - - - 4,000
Net loss ........ - - - - - - - - - (205) (205)
------- ------ ------- ------- ------ ------- --------- ------ ------- -------- --------
Balance at
February 28, 1998 40,000 4,000 - - - - 200,000 100 - (205) 3,895
19
<PAGE>
CONTEX ENTERPRISE GROUP, INC.
(A Development Stage Company)
Statement of Changes in Shareholders' Deficit
(Continued)
September 16, 1991 (inception) through February 29, 2000
<CAPTION>
Deficit
Class A Class B accumulated
Preferred Stock ---------------- --------------- Common Stock Additional during the
---------------- Preferred Stock Preferred Stock ----------------- paid-in development
Shares Amount Shares Amount Shares Amount Shares Amount Capital Stage Total
------- ------ ------- ------- ------ ------- --------- ------ ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
May 1998 issued
2,040,000 shares
of no par value
Common Stock for
cash of $1,020
or $.0005 per
share .......... - - - - - - 2,040,000 1,020 - - 1,020
Net loss ........ - - - - - - - - - (5,470) (5,470)
------- ------ ------- ------- ------ ------- --------- ------ ------- -------- --------
Balance at
February 28, 1999 40,000 4,000 - - - - 2,240,000 1,120 - (5,675) (555)
January 13, 2000
cancellation of
preferred stock
issued 20,000
shares of no par
value Class A
Preferred Stock
for $16,000 cash
and $4,000
previously paid
for the preferred
stock or $1.00
per share
(Note 3) ....... (40,000) (4,000) 20,000 20,000 - - - - - - 16,000
Contributed Rent - - - - - - - - 2,400 - 2,400
(Note 4) .......
Net Loss ........ - - - - - - - - - (11,428) (11,428)
------- ------ ------- ------- ------ ------- --------- ------ ------- -------- --------
Balance at
February 29, 2000 - $ - 20,000 $20,000 - $ - 2,240,000 $1,120 $ 2,400 $(17,103) 6,417
======= ====== ======= ======= ====== ======= ========= ====== ======= ======== ========
See accompanying notes to financial statements
F-6
</TABLE>
20
<PAGE>
<TABLE>
CONTEX ENTERPRISE GROUP, INC.
(A Development Stage Company)
Statements of Cash Flows
<CAPTION>
September
16, 1991
For the Year Ended (inception)
-------------------------- Through
February 29, February 28, February 29
2000 1999 2000
-------- ------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income/loss .................................. $(11,428) $(5,470) $(17,103)
Adjustments to reconcile net loss to net cash
used by operating activities:
Contributed rent (Note 4) ............. 2,400 - 2,400
Changes in operating assets and liabilities:
Accrued liabilities (Note 2) .......... 4,694 1,200 5,894
-------- ------- --------
Net cash used by
operating activities ......... (4,334) (4,270) (8,809)
-------- ------- --------
Cash flows from financing activities:
Proceeds from note payable (Note 4) .............. 30,000 - 30,000
Proceeds from short-term working capital
advance from officer (Note 4) ................. 1,900 - 1,900
Repayment of short-term working capital
advance from officer (Note 4) ................. (1,900) - (1,900)
Proceeds from issuance of Common Stock (Note 3) - 1,020 1,120
Proceeds from issuance of Class A Preferred
Stock (Note 3) ................................ 16,000 - 20,000
-------- ------- --------
Net cash provided by
financing activities ......... 46,000 1,020 51,120
-------- ------- --------
Net increase (decrease) in cash
and cash equivalents ......... 41,666 (3,250) 42,311
Cash and cash equivalents:
Beginning period ................................. $ 645 $ 3,895 $ -
-------- ------- --------
End of period .................................... $ 42,311 $ 645 $ 42,311
======== ======= ========
Non-cash investing and financing activities:
Return and cancellation of 40,000 shares of
preferred stock (Note 3) ....................... $ (4,000) - $ (4,000)
======== ======= ========
Issuance of 4,000 shares of Class A preferred
stock in exchange for cash previously paid for
former preferred stock (Note 3) ................ $ 4,000 - $ 4,000
========= ======== ========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest ....................................... $ - - -
========= ======== ========
Income Taxes ................................... $ - - -
========= ======== ========
See accompanying notes to financial statements
F-7
</TABLE>
21
<PAGE>
CONTEX ENTERPRISE GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
(1) Summary of Significant Accounting Policies
(a) Organization and Basis of Presentation
Mesa County Brewing Company (the "Company") was incorporated
on September 16, 1991 under the laws of Colorado to engage in
the business of publishing and marketing books about breweries
in the Rocky Mountain area. The Company may also engage in any
business which is permitted by the Colorado Business
Corporation Act, as designated by the board of directors of
the Company. On September 15, 1999 the president and secretary
of the Company, who also served as the Company's directors,
resigned from the Company. A new president and secretary were
appointed and became the directors of the Company. On December
15, 1999 the Company changed its name to Contex Enterprise
Group, Inc. and began searching for a suitable merger
candidate. Contex Enterprise Group, Inc. is in the development
stage in accordance with Financial Accounting Standards Board
Statements of Financial Accounting Standards (SFAS) No. 7
"Accounting and Reporting by Development Stage Enterprises".
(b) Use of Estimates
The preparation of financial statements in accordance with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
(c) Cash and Cash Equivalents
The Company considers all highly liquid securities with
original maturities of three months or less when acquired to
be cash equivalents. The Company had no cash equivalents at
February 29, 2000.
(d) Income Taxes
The Company accounts for income taxes under the provisions of
Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS 109). SFAS 109 requires
recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been
included in the financial statements or tax returns. Under
this method, deferred tax liabilities and assets are
determined based on the difference between the financial
statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the
differences are expected to reverse.
(e) Loss per share
The Company reports loss per share using a dual presentation
of basic and diluted earnings per share. Basic loss per share
excludes the impact of common stock equivalents. Diluted loss
per share utilizes the average market price per share when
applying the treasury stock method in determining common stock
equivalents. However, the Company has a simple capital
structure for the period presented and, therefore, there is no
variance between the basic and diluted loss per share.
(f) Revenue Recognition
Revenue for sales is recognized at the time the product is
delivered.
F-8
22
<PAGE>
CONTEX ENTERPRISE GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
(g) Year-end
The Company selected the last day of the month of February as
its accounting and tax year-end.
(h) Recent Accounting Pronouncements
The Company has adopted the following accounting
pronouncements for the year ended February 29, 2000. There was
no effect on the financial statements presented from the
adoption of the new pronouncements.
Statement of Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income". SFAS No. 130 requires the
Company to report in its financial statements, in addition to
its net income (loss), comprehensive income (loss), which
includes all changes in equity during a period from non-owner
sources including, as applicable, foreign currency items,
minimum pension liability adjustments and unrealized gains and
losses on certain investments in debt and equity securities.
In April 1998, the American Institute of Certified Public
Accountants issued Statement of Position 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for
Internal Use" ("SOP 98-1). SOP 98-1 provides guidance for
determining whether computer software is internal-use software
and on accounting for the proceeds of computer software
originally developed or obtained for internal use and then
subsequently sold to the public. It also provides guidance on
capitalization of the costs incurred for computer software
developed or obtained for internal use.
SOP 98-5, "Reporting on the Costs of Start-Up Activities"
provides, among other things, guidance on the reporting of
start-up costs and organization costs. It requires costs of
start-up activities and organization costs to be expensed as
incurred.
In June 1997, the FASB issued SFAS No. 131, "Disclosure About
Segments of an Enterprise and Related Information." SFAS No.
131 establishes standards for the way that public business
enterprises report information about operating segments. It
also establishes standards for related disclosures about
products and services, geographic area and major customers.
SFAS No. 131 is effective for fiscal years beginning after
December 15, 1997.
SFAS No. 132, "Employers' Disclosures about Pensions and Other
Post-retirement Benefits," which requires additional
disclosures about pension and other post- retirement benefit
plans, but does not change the measurement or recognition of
those plans.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards for derivative
instruments, including derivative instruments embedded in
other contracts, and for hedging activities. SFAS No. 133
requires an entity to recognize all derivatives as either an
asset or liability and measure those instruments at fair
value, as well as identify the conditions for which a
derivative may be specifically designed as a hedge. SFAS No.
133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999.
In June 1999, the FASB issued SFAS No. 137, which amended the
implementation date for SFAS No. 133 to be effective for all
fiscal quarters of all fiscal years beginning after June 15,
2000.
The Company will continue to review these new accounting
pronouncements over time to determine if any additional
disclosures are necessary based on evolving circumstances.
F-9
23
<PAGE>
CONTEX ENTERPRISE GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
(i) Basis of presentation
Contex Enterprise Group, Inc. is in the development stage in
accordance with Financial Accounting Standards Board
Statements of Financial Accounting Standards (SFAS) No 7
"Accounting and Reporting by Development Stage Enterprises".
The Company's future success will be dependent upon its
ability to locate and consummate a merger or acquisition with
a private entity. During the year ended February 29, 2000 the
Company raised $30,000 through debt financing, and another
$16,000 from the issuance of its Class A Preferred Stock. The
Company's officers may also, from time to time, advance the
Company additional funds needed to finance the Company's
operations.
(2) Balance Sheet Components
Accrued Expenses
Accrued interest $ 394
Accrued accounting fees 2,000
Accrued officer compensation 3,500
----------
$ 5,894
==========
(3) Capital Stock
a) Common stock
The Company's Articles of Incorporation initially authorized
1,000,000 shares of no par value common stock. On January 29,
1997 the Company amended its Articles of Incorporation to
increase the number of authorized shares to 50,000,000. On
February 3, 1998 the Company issued 200,000 shares of no par
common stock for cash of $100 or $.0005 per share.
In May 1998 the Company issued 2,040,000 shares of no par
common stock for cash of $1,020 or $.0005 per share as part of
a plan to offer for sale up to 4,000 units (the "Units") at
$2.50 per Unit, or $.0005 per share through its officers and
directors to Colorado residents and non-United States citizens
only. Each Unit was comprised of 5,000 shares of no par value
common stock. The minimum purchase was 5 Units for a total
offering of $10,000. These shares of common stock contained in
the Units were offered pursuant to an exemption from
registration under Section 3(b) and Regulation D, Rule 50, of
the Securities Act of 1933, as amended, and to an exemption
from registration provided by Section 11-51-308(1)(p) of the
Colorado Securities Act.
b) Preferred stock
On January 29, 1997 the Company amended its Articles of
Incorporation to increase the authorized shares to 5,000,000
shares of no par, non-voting preferred stock where the
Directors of the Company were given the right to assign
preferences.
On February 5, 1998 the Company issued 40,000 shares of its no
par value preferred stock for $4,000 or $.10 per share. The
Directors assigned the following preferences to the issued and
outstanding shares of Preferred Stock: (i) the Preferred Stock
shall be non-voting, (ii) the holders of the stock as a group
have the right to receive, prorata, upon dissolution or
winding up of the Company, 10 percent of the assets of the
Company prior to division and distribution of assets to the
holders of the Company's Common Stock.
F-10
24
<PAGE>
CONTEX ENTERPRISE GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
On January 13, 2000 the Company's 40,000 outstanding shares of
preferred stock were returned to the Company and cancelled.
Also on January 13, 2000, the board of directors terminated
the preferences for the Company's preferred stock and created
two classes of preferred stock, Class A and Class B. The
directors assigned the previous preferences to the Class A
preferred stock in addition to the following preferences: (i)
the Class A preferred stock shall be entitled to a preference
consisting of the right to receive 10 percent of the Company's
annual gross profit as computed by the Company's accounting
firm to be paid within 10 days of the filing of the Company's
annual federal tax return or April 30, whichever comes
earlier, and further (ii) to receive a seat on the board of
directors upon the written request of the holder of the Class
A preferred stock. The board of directors resolved that the
preferences for the Company's Class B preferred stock would be
assigned at the time of issuance.
On January 13, 2000, the Company issued 20,000 shares of its
Class A preferred stock in exchange for $16,000 cash and
$4,000 which was previously paid for the former preferred
stock. Total consideration for the 20,000 Class A preferred
stock was $20,000, or $1.00 per share.
The Company has declared no dividends through February 29,
2000.
(4) Related Party Transactions
a) Long-term debt
The Company issued a $30,000 promissory note to the holder of
its Class A preferred stock in order to provide the Company
with working capital until a suitable merger candidate can be
found. The promissory note has an eighteen month maturity and
accrues interest at the rate of ten percent per year. Payment
for the principal and interest on the note is due on July 13,
2001.
b) Short-term borrowings
During the year ended February 29, 2000, an officer and
director of the Company loaned the Company a total of $1,900
for short-term working capital advances. The Company repaid
the entire $1,900 before year end.
c) Rent expense
During the year ended February 29, 2000 the Company moved its
principal offices to 1629 York Street - Suite 101, Denver,
Colorado 80206. An officer and director continues to provide
office space to the Company. Rent expense is recognized at
$100 per month based on the fair value of the space received
and is considered contributed rent since the officer does not
expect to be repaid.
(5) Major Customer
The Company earned 100 percent of its $2,500 in revenue for the year ended
February 29, 2000 from a single customer.
F-11
25
<PAGE>
CONTEX ENTERPRISE GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
(6) Income Taxes
A reconciliation of the U.S. statutory federal income tax rate to the effective
rate is as follows:
February 29,
2000
------------
U.S. federal statutory rate .................................. -15.00%
State income tax rate,
net of federal benefit ..................................... 5.46%
Net operating loss for which no tax
benefit is currently available ............................. 9.54%
------------
0.00%
============
At February 29, 2000, deferred taxes consisted of a net tax asset of $3,256, due
to operating loss carryforwards of $17,103, which was fully allowed for in the
valuation allowance of $3,256. The valuation allowance offsets the net deferred
tax asset for which there is no assurance of recovery. The change in the
valuation allowance for the year ended February 29, 2000 was $2,176. Net
operating loss carryforwards will begin to expire in 2012.
The valuation allowance will be evaluated at the end of each year, considering
positive and negative evidence about whether the asset will be realized. At that
time, the allowance will either be increased or reduced; reduction could result
in the complete elimination of the allowance if positive evidence indicates that
the value of the deferred tax asset is no longer impaired and the allowance is
no longer required.
Should the Company undergo an ownership change, as defined in Section 382 of the
Internal Revenue Code, the Company's tax net operating loss carryforwards
generated prior to the ownership change will be subject to an annual limitation
which could reduce or defer the utilization of those losses.
F-12
26
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
In December 1999, the Company filed a Form 8-K with the Securities and
Exchange Commission, advising that the firm of Kish, Leake & Associates P.C. had
resigned and been replaced with the firm of Cordovano & Harvey, P.C., who have
audited the Company's financial statements included herein. The Company filed an
amendment to the aforesaid Form 8-K in February 2000. There were no
disagreements between management and the firm of Kish, Leake & Associates P.C.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Directors are elected for one-year terms or until the next annual meeting
of shareholders and until their successors are duly elected and qualified.
Officers continue in office at the pleasure of the Board of Directors.
The Directors and Officers of the Company as of the date of this report are
as follows:
Name Age Position
-------------------- --- -----------------------
Gary G. Clark 57 President and Director
Gerald H. Trumbule 60 Secretary and Director
All Directors of the Company will hold office until the next annual meeting
of the shareholders and until successors have been elected and qualified.
Officers of the Company are elected by the Board of Directors and hold office
until their death or until they resign or are removed from office.
There are no family relationships among the officers and directors. There
is no arrangement or understanding between the Company (or any of its directors
or officers) and any other person pursuant to which such person was or is to be
selected as a director or officer.
(b) Resumes:
Gary G. Clark, President and a director. Mr. Clark has held his positions
with the Company since September 1999. In addition, since November 1997, he has
been a sales associate at Circuit City, Denver, Colorado. From 1994 through
April 1999, Mr. Clark was President of Applied Capital Funding Inc., Denver,
Colorado, a privately held Colorado corporation engaged in residential mortgage
brokerage services. He devotes only such time as necessary to the
27
<PAGE>
business of the Company, which is not expected to exceed 20 hours per month.
Gerald H. Trumbule, Secretary and a director. Mr. Trumbule has held his
positions with the Company since September 1999. In addition, since 1984, Mr.
Trumbule has been President of ECC, Inc., a privately held Colorado corporation
engaged in corporate computer training. Mr. Trumbule received a Masters degree
from the University of Pennsylvania in 1966 and a Bachelor of Science degree
from the University of Maryland in 1965. He devotes only such time as necessary
to the business of the Company, which is not expected to exceed 20 hours per
month.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and person who own more than 10% of the Company's Common
Stock to file reports of ownership and changes in ownership with the Securities
and Exchange Commission, provided that there were any changes to such persons
respective stock holdings in the Company during the previous fiscal year. Based
upon information provided to the Company, both Messrs. Clark and Trumbule did
not file a Form 3 with the SEC upon assuming their respective positions with the
Company in December 1999 within the time parameters required, but have
subsequently filed the same. Also, Messrs. Turner and Hawkins filed a Form 5
with the SEC advising of their resignation in December 1999, but filed this
report late. According to the aforesaid Forms, there were no changes in the
securities holdings of any person during the past fiscal year.
ITEM 10. EXECUTIVE COMPENSATION.
Neither of the Company's officers and directors receive any compensation
for their respective services rendered unto the Company, nor have they received
such compensation in the past. Current management have agreed to act without
compensation until authorized by the Board of Directors, which is not expected
to occur until the Company has generated revenues from operations after
consummation of a merger or acquisition. None of the directors are accruing any
compensation pursuant to any agreement with the Company.
It is possible that, after the Company successfully consummates a merger or
acquisition with an unaffiliated entity, that entity may desire to employ or
retain one or a number of members of the Company's management for the purposes
of providing services to the surviving entity or otherwise provide other
compensation to such persons. However, the Company has adopted a policy whereby
the offer of any post-transaction remuneration to members of management will not
be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be
28
<PAGE>
paid to them by any entity which proposes to undertake a transaction with the
Company and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors is offered
compensation in any form from any prospective merger or acquisition candidate,
the proposed transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to affirmatively approve
such a transaction.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for their
referral in the form of a finder's fee. It is anticipated that this fee will be
either in the form of restricted common stock issued by the Company as part of
the terms of the proposed transaction, or will be in the form of cash
consideration. However, if such compensation is in the form of cash, such
payment will be tendered by the acquisition or merger candidate, because the
Company has insufficient cash available. The amount of such finder's fee cannot
be determined as of the date of this Report, but is expected to be comparable to
consideration normally paid in like transactions. No member of management of the
Company will receive any finders fee, either directly or indirectly, as a result
of their respective efforts to implement the Company's business plan outlined
herein.
The Company maintains a policy whereby the directors of the Company may be
compensated for out of pocket expenses incurred by each of them in the
performance of their relevant duties. The Company did not reimburse any director
for such expenses during the fiscal year ended February 29, 2000.
The Company reimburses each executive officer for expenses incurred on
behalf of the Company on an out-of-pocket basis. However, the Company did not
reimburse any expenses during the fiscal year ended February 29, 2000.
There are no bonus or incentive plans in effect, nor are there any
understandings in place concerning additional compensation to the Company's
officers.
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs have been adopted by the Company for the benefit of
its employees.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The table below lists the beneficial ownership of the Company's voting
securities by each person known by the Company to be the beneficial owner of
more than 5% of such securities, as well
29
<PAGE>
as by all directors and officers of the issuer. Unless otherwise indicated, the
shareholders listed possess sole voting and investment power with respect to the
shares shown.
Name and Amount and
Address of Nature of
Title Beneficial Beneficial Percent of
of Class Owner Owner Class
-------- ------------------------- ---------- ----------
Common Gary G. Clark(1) 60,000 2.7%
1530 S. Eudora St.
Denver, CO 80222
Common Gerald Trumbule(1) 60,000 2.7%
1629 York St.
Denver, CO 80206
Common Eastbury Consultants Ltd. 200,000 8.9%
54-58 Athol St. 4th Floor
Douglas, Isle of Man 1MI IJD
British Isles
Common All Officers and 120,000 5.4%
Directors as a
Group (2 persons)
-----------------
(1) Officer and director of the Company
The balance of the Company's outstanding Common Shares are held by 39
persons.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company currently operates from its offices at 1629 York St., Suite
101, Denver, Colorado 80206. This space is provided to the Company by Gerald
Trumbule, an officer and director of the Company, and the Company is obligated
to pay a monthly rental charge of $100 to Mr. Trumbule, which charge is accrued
by the Company. It is anticipated that this arrangement will remain until such
time as the Company successfully consummates a merger or acquisition.
Also, during the fiscal years ended February 28, 1999 and until December
15, 1999, the Company's principal place of business was provided by Ed Hawkins,
an officer of the Company during the applicable time. This space was provided to
the Company on a rent free basis by Mr. Hawkins.
During the fiscal year ended February 29, 2000, the Company issued a
$30,000 promissory note to the holder of its Class A Preferred Stock in order to
provide the Company with working
30
<PAGE>
capital until a suitable merger or acquisition is consummated. This note is due
on or before July 13, 2001 and accrues interest at the rate of 10% per annum.
In addition, during the fiscal year ended February 29, 2000, Gerald
Trumbule, an officer and director of the Company, loaned the Company a total of
$1,900 for short term working capital advances. The entire balance was repaid
prior to February 29, 2000.
There have been no other related party transactions, or any other
transactions or relationships required to be disclosed pursuant to Item 404 of
Regulation S-B.
PART IV
Item 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
3.1* Certificate and Articles of Incorporation
3.2* Bylaws
3.3* Restated Articles of Incorporation
3.4 Articles of Amendment to Articles of Incorporation
EX-27 Financial Data Schedule
* Filed with the Securities and Exchange Commission in the Exhibits to Form
10-SB, filed on January 29, 1999, and are incorporated by reference herein.
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated December 22, 1999, advising
that the Company had received a letter of resignation from Kish, Leake &
Associates, P.C., the Company's independent accountant for the fiscal years
ended February 29, 1999 and 1998. This firm was replaced by the firm of
Cordovano & Harvey, P.C., who have audited the Company's financial statements
included herein. The Company filed an amendment to this Form 8-K on February 14,
2000.
31
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Company caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on June 13, 2000.
CONTEX ENTERPRISE GROUP, INC.
(Registrant)
By:s/ Gary G. Clark
----------------------------
Gary G. Clark, President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities
indicated on June 13, 2000.
s/ Gary G. Clark
--------------------------
Gary G. Clark,
President and Director
s/ Gerald H. Trumbule
--------------------------
Gerald H. Trumbule
Secretary and Director
32
<PAGE>
CONTEX ENTERPRISE GROUP, INC.
EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-KSB
FOR THE FISCAL YEAR ENDED FEBRUARY 29, 2000
EXHIBITS Page No.
EX-3.4 Articles of Amendment
to Articles of Incorporation...................................34
EX-27 Financial Data Schedule...........................................36
33
<PAGE>
ARTICLES OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
19991237733 C
OF $ 25.00
SECRETARY OF STATE
MESA COUNTY BREWING CO. 12-17-1999 16:09:06
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to the
Articles of Incorporation. These Articles set forth provisions of the Articles
of Incorporation, as amended, and supercedes those Articles being amended.
FIRST: The name of the corporation is Mesa County Brewing Co.
SECOND: The amendments to Articles I and VII of the Articles of
Incorporation were adopted by a vote of the board of directors
and the shareholders on December 15, 1999. The number of
shares voted for the amended Articles of Incorporation was
sufficient for approval. Article I and Article VII are hereby
amended to read as follows:
ARTICLE I
Name
----
The name of the Corporation is Contex Enterprise Group, Inc.
ARTICLE VII
Registered and Principal Office and Registered Agent
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The registered office and principal office of the Corporation is located at
1629 York Street, Denver, Colorado 80206, and the name of the registered agent
of the Corporation at such address is Gerald H. Trumbule.
All other Articles of the Articles of Incorporation remain unchanged.
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IN WITNESS WHEREOF, the undersigned has set his hand and seal this 15th day
of December, 1999.
FOR THE BOARD OF DIRECTORS:
s/Gerald H. Trumbule
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Gerald H. Trumbule, Director
CONSENT OF AGENT
The undersigned hereby consents to continue acting as agent for this
corporation under Article 105 of the Colorado Business Corporation Act, until
such time as he resigns such position.
s/Gerald H. Trumbule
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Gerald H. Trumbule, 1629 York Street, Denver, Colorado 80206
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