<PAGE> 1
Definitive Information Statement
Dated: June 30, 1999
REXFORD, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD July 20, 1999
TO THE SHAREHOLDERS OF REXFORD, INC.:
A special meeting of the shareholders (the "Special Meeting") of Rexford,
Inc., the ("Company"), will be held at 3090 East 3300 South, Suite 400, Salt
Lake City, Utah 84109, at 10:00 a.m., Mountain Time, to ratify and approve the
Agreement and Plan of Reorganization (the "Acquisition Proposal")entered into
between the Company and Chicago Map Corporation ("CMC") that provides for
(A) the implementation of a 1-for-70 reverse split of all of the
Company's issued and outstanding shares of common stock;
(B) the issuance of 10,500,000 shares of the Company's post-reverse split
common stock to the CMC shareholders in exchange for all of the CMC common
stock;
(C) changing the name of the Company to "Lexon Technologies, Inc."; and
(D) electing Steven J. Peskaitis, Mike Barnett, Paris Karahalios, James
L. Rooney and Thomas W. Rieck, all nominees of CMC, as directors of the
Company, to serve until the next annual meeting of shareholders or until their
successors are duly elected and qualified.
The approval of the Acquisition Proposal by the shareholders will
constitute approval of each of the foregoing.
At the Special Meeting the shareholders will also transact such other
business as may properly come before the Special Meeting or any adjournment
thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ACQUISITION
PROPOSAL WHICH IS DESCRIBED IN MORE DETAIL IN THE ACCOMPANYING INFORMATION
STATEMENT.
ONLY SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON JUNE 24, 1999 (THE
"RECORD DATE"), ARE ENTITLED TO NOTICE OF AND TO VOTE AT THE SPECIAL MEETING.
MEMBERS OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS WHO, COLLECTIVELY HOLD IN
EXCESS OF 50% OF THE COMPANY'S ISSUED AND OUTSTANDING SHARES, HAVE INDICATED
THEIR INTENTION TO VOTE IN FAVOR OF THE ACQUISITION PROPOSAL. AS A RESULT,
THE ACQUISITION PROPOSAL WILL BE APPROVED WITHOUT THE AFFIRMATIVE VOTE OF ANY
OTHER SHAREHOLDERS. ALTHOUGH MANAGEMENT IS NOT ASKING FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY, SHAREHOLDERS MAY BE PRESENT AT THE SPECIAL
MEETING AND VOTE THEIR SHARES IN PERSON OR BY PROXY. MANAGEMENT DOES,
HOWEVER, ENCOURAGE ALL SHAREHOLDERS TO ATTEND THE SPECIAL MEETING IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
/S/Dennis Blomquist, President
Scottsdale, Arizona
<PAGE> 2
REXFORD, INC.
INFORMATION STATEMENT
This Information Statement is furnished to the shareholders of the
Company in connection with a Special Meeting to be held on July 20, 1999,
at 10:00 a.m., Mountain Time, at 3090 East 3300 South, Suite 400, Salt Lake
City, Utah 84109, and at any adjournment(s) thereof.
At the Special Meeting, the shareholders will consider and vote on the
Acquisition Proposal and ratify and approve the Agreement and Plan of
Reorganization entered into between the Company and Chicago Map Corporation
("CMC") that provides for:
(A) the implementation of a 1-for-70 reverse split of all of the
Company's issued and outstanding shares of common stock;
(B) the issuance of 10,500,000 shares of the Company's post-reverse split
common stock to the CMC shareholders in exchange for all of the CMC common
stock;
(C) changing the name of the Company to "Lexon Technologies, Inc."; and
(D) electing Steven J. Peskaitis, Mike Barnett, Paris Karahalios, James
L. Rooney and Thomas W. Rieck, all nominees of CMC, as directors of the
Company, to serve until the next annual meeting of shareholders and until
their successors are duly elected and qualified.
Approval of the Acquisition Proposal by the shareholders will constitute
approval of each of the foregoing. At the Special Meeting the Shareholders
will also transact such other business as may properly come before the Special
Meeting or any adjournment thereof.
MANAGEMENT IS NOT ASKING FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY, HOWEVER SHAREHOLDERS MAY BE PRESENT AT THE SPECIAL MEETING AND VOTE
THEIR SHARES IN PERSON OR BY PROXY. MANAGEMENT ENCOURAGE ALL SHAREHOLDERS TO
ATTEND THE SPECIAL MEETING IN PERSON.
THIS INFORMATION STATEMENT IS BEING MAILED ON OR ABOUT JUNE 30, 1999 TO ALL
SHAREHOLDERS ENTITLED TO VOTE AT THE SPECIAL MEETING.
Only holders of record of the 70,000,000 shares of Common Stock of the
Company outstanding as of June 24, 1999 (the "Record Date"), are entitled to
vote at the Special Meeting. Each shareholder has the right to one vote for
each share of the Company's common stock owned. Cumulative voting is not
provided for. Holders of more than 50% of the 70,000,000 shares issued and
outstanding must be represented at the Special Meeting to constitute a quorum
for conducting business. Approval of the proposals discussed above requires
the affirmative vote of a majority of the Company's issued and outstanding
shares of Common Stock represented in person or by proxy at the Special
Meeting.
The Company's officers, directors, and principal shareholders owning or
controlling, in the aggregate, greater than 50% of the issued and outstanding
shares of Common Stock on the Record Date have indicated their intention to
vote in favor of the Acquisition Proposal. Accordingly, the Acquisition
Proposal will be approved without the affirmative vote of any other shares.
<PAGE> 3
THE ACQUISITION PROPOSAL: APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION
Terms of the Acquisition
- ------------------------
On March 26, 1999, the Company and CMC entered into an Agreement and Plan
of Reorganization, a copy of which is attached as Appendix A to this
Information Statement (the "Acquisition Agreement"). The following discussion
regarding the terms of the Acquisition Agreement is subject to, and qualified
in its entirety by, the detailed provisions of the Acquisition Agreement and
the any exhibits thereto.
The Acquisition Agreement provides that the 15,000 shares of CMC Common
Stock held by the CMC Shareholders will be exchanged for 10,500,000 shares of
the Company's Common Stock pro rata based on the CMC Shareholders' percentage
ownership of the CMC Common Stock. No fractional shares will be issued to the
CMC Shareholders and the Company will round the number of shares of the
Company's Common Stock to be issued to each CMC Stockholder to the nearest
whole share.
As a condition to the Acquisition Agreement, the Company will effect a 1-
for-70 reverse stock split (the "Reverse Split") of the Company's Common
Stock, so that shareholders of the Company prior to such Reverse Split will
receive 1 share of the Company's Common Stock for each 70 shares of Common
Stock held on the Record Date for the Reverse Split, rounded up to the next
higher whole share. This Reverse Split would reduce the Company's issued and
outstanding stock from 70,000,000 to 1,000,000 shares. After giving effect to
the Reverse Split and the issuance of 10,500,000 shares of Common Stock issued
to the CMC Shareholders in exchange for the 15,000 of CMC Common Stock, the
Company will have 11,500,000 shares issued and outstanding.
Neither the Acquisition Agreement nor the Reverse Split will change the
par value or authorized capitalization of the Company. The rights of the
Company's existing shareholders will not be altered and no shareholders will
be eliminated as a result of the Acquisition Agreement and the Reverse Split.
The Reverse Split will have no effect on the stockholders' equity of the
Company, other than the transfer of approximately $56,106 in stated capital to
additional paid-in capital.
If, as a result of implementation of the Reverse Split, any shareholder
would be entitled to receive a fractional share, the Company will not issue
any fractional shares. Instead, shares will be rounded up to the next higher
whole number. All shares turned in to the Company as a result of the Reverse
Split will be canceled and returned to the status of authorized but unissued
shares. Therefore, after the Reverse Split is implemented, the Company will
still have an authorized capitalization of 100,000,000 shares of Common Stock,
of which 1,000,000 shares will be issued and outstanding and after giving
effect to the issuance of 10,500,000 shares under the terms of the Acquisition
Agreement, 11,500,000 shares will be issued and outstanding. The issuance of
the 10,500,000 shares of the Company's Common Stock will result in a change of
control of the Company and substantial dilution of the Company's existing
shareholders.
Following the implementation of the Reverse Split and approval of the
Acquisition Proposal, each holder of shares of the Company's Common Stock
shall, upon the surrender of the certificate or certificates representing such
shares to the Company's registrar and transfer agent, be entitled to receive a
certificate or certificates evidencing shares of the Company's Common Stock,
reflecting the new shares and name change of the Company.
<PAGE> 4
As a condition precedent to the consummation of the transactions
contemplated by the Acquisition Agreement, the shareholders of the Company are
to adopt and approve all required or necessary resolutions to adopt an
amendment to the Company's certificate of incorporation that provides for
changing the name of the Company to "Lexon Technologies, Inc," and elect
Steven J. Peskaitis, Mike Barnett, Paris Karahalios, James L. Rooney and
Thomas W. Rieck, the nominees of CMC to the Company's Board of Directors, to
replace the Company's current Board of Directors.
As soon as practicable following approval of the Acquisition Proposal by
the Company's shareholders, a Certificate of Amendment and such other
documents as are required by the provisions of the corporate statutes of the
states of Delaware and Illinois to complete the acquisition of CMC are to be
filed with the Secretary of State of States of the state of Delaware and
Illinois. The "Effective Date" of the acquisition shall be the date the
filing of such documents shall become effective.
In connection with Acquisition Proposal, the percentage of ownership
acquired by the CMC shareholders was structured to take into account not only
the Reverse Split but the future issuance of a maximum of 1,709,231 shares of
the Company's common stock through a private placement. Following the issuance
of the maximum number of shares in a private placement, CMC's current
shareholders would still hold approximately 79% of the total issued and
outstanding shares. If less than the maximum shares are issued in the private
placement, CMC's ownership percentage after the private placement will be
proportionately higher than the contemplated 79% of the total issued and
outstanding shares. The only other effect of the issuance of less than the
maximum shares would be slightly less dilution experienced by both CMC's and
the Company's existing shareholders.
A. Name Change
-----------
In connection with the acquisition of CMC, the Company desires to change
the name of the Company to Lexon Technologies, Inc. or such derivation
thereof, as may be acceptable to the Board of Directors and available for use
in the state of Delaware and the jurisdictions in which the activities of the
Company would require the Company to qualify to do business in those
jurisdictions. A copy of the Amended Certificate of Incorporation is attached
to this Information Statement as Appendix B. Management of the Company
believes that the new name will be more reflective of the Company's diverse
activities following the acquisition.
B. Election of Board of Directors
------------------------------
The names of the Company's current executive officers and directors and
the positions held by each of them are set forth below:
Position with Director and/or
Name Age the Company Officer Since
- -------------------- --- --------------------- ------------------
Dennis Blomquist 47 President and Chairman 1992
Ron Featherstone 48 Vice President and Director 1992
Mark A. Scharmann 40 Treasurer and Director 1997
Tom Sollami 48 Secretary and Director 1992
<PAGE> 5
The Company's officers and directors have served in such positions since
the dates indicated above. Such persons will not stand for re-election at the
Special Meeting. In connection with the proposed acquisition of CMC, Steven
J. Peskaitis, Mike Barnett, Paris Karahalios, James L. Rooney and Thomas W.
Rieck, the nominees of CMC, have been nominated for election as directors of
the Company. Certain biographical information with respect to each of such
persons is set forth herein below. Each director, if elected by the
shareholders, will serve until the next annual meeting and until his successor
is duly elected and qualified.
Set forth on the following page is certain information relating to the
business experience of each of CMC's nominees for directors of the Company for
the past five years.
Steven J. Peskaitis, age 24, is a co-founder of CMC and has been its
President since its inception in 1990. Mr. Peskaitis has been influential in
all phases of the Company's operations.
Mike Barnett, age 41, has served as the director of corporate licensing
for CMC since 1996 and recently has been appointed Senior Vice President of
Sales and Marketing. From 1994 through 1996, Mr. Barnett was the director of
sales and marketing for American Technologies, Fond du Lac, Wisconsin, a
manufacturer of software for satellite communications and vehicle monitoring
products for the over-the-road trucking market. Mr. Barnett received a B.S. in
Management from Oregon State University, Corvallis, Oregon.
Paris Karahalios, age 44, is a co-founder of TRIUS, Inc. and has served
as the president and C.E.O. since its inception in August 1990. TRIUS, Inc.,
located in North Andover, Massachusetts, is a developer of mapping technology.
CMC acquired the assets of TRIUS, Inc. in March 1999. Mr. Karahalios was a
M.S. in Nuclear Engineering/Fusion and a B.S. in Nuclear Engineering from the
University of Lowell, Lowell, Massachusetts, in 1977 and 1981, respectively,
and has been published in various software and scientific magazines.
James L. Rooney, age 62, served as president and C.E.O. of Holopak
Technologies from 1997 to 1999. Prior to that, he served as president of
Release International, a division of Rexam, PLC, and president of H.P.Smith
Paper Co., a division of the James River Corporation (now Fort James
Corporation) in Chicago, Illinois. He has also been a member of the American
Forest Product Institute's Executive Committee and a Village Trustee of
Hickory Hills, Illinois. Currently, Mr. Rooney serves as a Board Member of
Fortifiber Corporation of Incline, Nevada, and of Foilmark Corporation in
Newburyport, Massachusetts.
Thomas W. Rieck, age 53, has since 1980 been the president of the law
firm Rieck and Crotty, P.C., Chicago, Illinois, legal counsel to CMC. Since
1992, Mr. Rieck has served as a board member of SigmaTron International, Inc.
(NASDAQ: SGMA), Elk Grove Village, Illinois, a electronics contract assembly
manufacturer. Since 1987, Mr. Rieck has served as a board member for Circuit
Systems, Inc. (NASDAQ: CSYI), Elk Grove Village, Illinois, a manufacturer of
printed circuit boards. Mr. Rieck is a member of both the Chicago and
American Bar Associations.
<PAGE>
<PAGE> 6
Set forth below is biographical information on each of the current directors
of the Company.
Dennis Blomquist has served as an officer and director of the Company
since 1992. For the past five years, Mr. Blomquist has been a self-employed
business consultant providing data base administration, development and
computer related services. From June 1996 to December 1997, Mr. Blomquist
worked for Parami Productions, Inc., Studio City, California, a film and
television development company as director of development.
Ron A. Featherstone has served as an officer and director of the Company
since 1992. Since July 1995, Mr. Featherstone has been the executive vice
president for Investors First Ventures, Ltd, Scottsdale, Arizona, a financial
consulting firm. From 1993 through June 1995, Mr. Featherstone was the area
sales manager for Clarke Publications, Irwindale, California.
Tom Sollami has served as an officer and director of the Company since
1992. Mr. Sollami has been employed as the Security Coordinator of the
Doubletree Hotel, Salt Lake City, Utah, since February 1988.
Mark A. Scharmann has been vice-president and a director of the Company
since February 1997. Since 1979, Mr. Scharmann has been the principal owner
of Troika Capital, Inc., Ogden, Utah, a financial consulting company.
The Company's Reasons for the Acquisition
- -----------------------------------------
The Company has had no operations since 1992. Since 1998, management has
been actively seeking potential business acquisitions or opportunities to
enter into in an effort to commence business operations that will prove to be
beneficial to the Company and its shareholders. In evaluating potential
business opportunities, management has considered various factors including
financial requirements and the availability of additional financing, history
of operations, the nature of present and expected competition, the quality and
experience of management, and the potential for future growth, expansion and
profits. After investigation and evaluation of CMC, management has determined
that the acquisition of CMC provides the best opportunity it has discovered to
date.
CMC's management has presented the Company's management with a business
plan that is focused on emerging opportunities in the business of designing,
developing, producing, licensing and marketing geographical digital map and
related technologies, including Global Positioning System (GPS) products and
navigation systems, Web/Intranet/Internet map displays, digital data
integration and referencing, country-wide digital map sets, professional
software and mobile asset monitoring/tracking systems. CMC's management
intends to aggressively pursue its current business strategy and therefore the
Company's shareholders may be able to benefit from any related increased
market activity in the Company's Common Stock. There are, however, no
assurances that CMC's management will be able to conduct profitable operations
or that the Company's shareholders will benefit from increased market activity
in the Company's Common Stock. The Board of Directors of the Company has not
obtained an independent opinion or other evaluation regarding the fairness of
the terms of the Acquisition Agreement due to the substantial costs in
obtaining such an opinion or evaluation.
<PAGE>
<PAGE> 7
CMC's Reasons for the Acquisition
- ---------------------------------
The Board of Directors and the shareholders of CMC believe that the
Acquisition Agreement offers the CMC stockholders an opportunity to receive
significant value for their shares of CMC Common Stock and to participate in a
reorganization with a public company. In reaching its decision to approve the
Acquisition Proposal, the CMC Board consulted with its financial and legal
advisors and with management and considered a number of factors, including,
without limitation, the following material factors:
- -the strategic and financial alternatives available to CMC, including
remaining a privately held company,
- -the structure of the transaction, which is intended to qualify as a tax-free
"reorganization" under Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended, and the related sections thereunder, and
- -CMC's desire to have its shares publicly traded by using the Company as a
vehicle to accomplish that desire without the time and expense typically
associated with an IPO.
This discussion of the information and factors considered by the CMC
board of Directors and shareholders in making their decision to approve the
Acquisition is not intended to be exhaustive but is believed to include all
material factors considered by the CMC Board and shareholders.
Recommendation of the Company's Management
- ------------------------------------------
THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES THAT THE TRANSACTIONS
CONTEMPLATED BY THE ACQUISITION AGREEMENT ARE DESIRABLE AND IN THE BEST
INTERESTS OF THE COMPANY'S SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" THE ACQUISITION PROPOSAL. MANAGEMENT BELIEVES THAT
ITS SHAREHOLDERS WILL BENEFIT THROUGH THE STRENGTH, EXPERIENCE AND KNOWLEDGE
OF CMC'S SENIOR EXECUTIVE MANAGEMENT IN THE ONGOING DEVELOPMENT OF THE
BUSINESS OF THE COMPANY. (SEE "BUSINESS OF CMC.")
Interest of Certain Persons in the Acquisition
- ----------------------------------------------
In considering the recommendation of the Company's management with
respect to the Acquisition Proposal, neither the Company's management nor
CMC's management will receive any benefits arising from their ownership of the
Company's common stock as a result of the acquisition that will not be equally
extended to all of the Company's and CMC's shareholders. No member of the
Company's management has an ownership interest in CMC and CMC shareholders
have no ownership interest in the Company prior to the completion of the
acquisition.
Special Note Concerning Appraisal Rights
- ----------------------------------------
Holders of shares of the Company's common stock who do not vote in favor
of the adoption of the Acquisition Proposal and who properly demand appraisal
of their shares will be entitled to appraisal rights in connection with the
merger under Section 262 of the Delaware General Corporation Law.
<PAGE> 8
THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW
PERTAINING TO APPRAISAL RIGHTS UNDER THE DELAWARE GENERAL CORPORATION LAW AND
IS QUALIFIED IN ITS ENTIRETY BY THE FULL TEXT OF SECTION 262 WHICH IS ATTACHED
TO THIS INFORMATION AS APPENDIX C. YOU SHOULD READ APPENDIX C IN ITS ENTIRETY.
EXCEPT WHERE THE CONTEXT REQUIRES OTHERWISE, ALL REFERENCES IN SECTION 262 AND
IN THIS SUMMARY TO A "STOCKHOLDER" ARE TO THE RECORD HOLDER OF THE SHARES OF
THE COMPANY'S COMMON STOCK AS TO WHICH APPRAISAL RIGHTS ARE ASSERTED. A PERSON
HAVING A BENEFICIAL INTEREST IN SHARES OF THE COMPANY'S COMMON STOCK HELD OF
RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BROKER OR NOMINEE, MUST ACT
PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW THE STEPS SUMMARIZED BELOW
PROPERLY AND IN A TIMELY MANNER TO PERFECT APPRAISAL RIGHTS.
Under the Delaware General Corporation Law, persons who hold shares of
the Company's common stock who follow the procedures set forth in Section 262
will be entitled to have their shares of The Company common stock appraised by
the Delaware Court of Chancery and to receive payment of the 'fair value' of
such shares, exclusive of any element of value arising from the accomplishment
or expectation of the merger, together with a fair rate of interest, as
determined by such court.
Under Section 262, where a merger is to be submitted for approval at a
meeting of stockholders, as in the case of the adoption of the Acquisition
Proposal by the Company's stockholders, the corporation, not less than 20 days
prior to the meeting, must notify each of its stockholders entitled to
appraisal rights that such appraisal rights are available and include in such
notice a copy of Section 262. THIS INFORMATION STATEMENT SHALL CONSTITUTE SUCH
NOTICE, AND THE APPLICABLE STATUTORY PROVISIONS ARE ATTACHED TO THIS
INFORMATION STATEMENT AS APPENDIX D.
A holder of shares of the Company's common stock wishing to exercise such
holder's appraisal rights must deliver to the Company, before the vote on the
adoption of the Acquisition Proposal at the Special Meeting, a written demand
for the appraisal of their shares, and must not vote in favor of the adoption
of the Acquisition Proposal.
In order not to vote in favor of the adoption of the Acquisition
Proposal, a stockholder must either vote in person against the adoption of the
Acquisition Proposal or register in person an abstention from the Acquisition
Proposal.
A holder of shares of the Company's common stock wishing to exercise such
holder's appraisal rights must hold of record such shares on the date the
written demand for appraisal is made and must continue to hold such shares of
record through the effective time of the merger. A vote against the adoption
of the Acquisition Proposal will not in and of itself constitute a written
demand for appraisal satisfying the requirements of Section 262. The demand
must reasonably inform the Company of the identity of the holder as well as
the intention of the holder to demand an appraisal of the 'fair value' of the
shares held by such holder.
Only a holder of record of shares of the Company's common stock is
entitled to assert appraisal rights for the shares of the Company's common
stock registered in that holder's name. A demand for appraisal in respect of
shares of the Company's common stock should be executed by or on behalf of the
holder of record, fully and correctly, as such holder's name appears on such
holder's stock certificates, and must state that such person intends thereby
to demand appraisal of such holder's shares of the Company's common stock in
connection with the merger. If the shares of the Company's common stock are
<PAGE> 9
owned of record in a fiduciary capacity, such as by a trustee, guardian or
custodian, execution of the demand should be made in that capacity, and if the
shares of the Company's common stock are owned of record by more than one
person, as in a joint tenancy and tenancy in common, the demand should be
executed by or on behalf of all joint owners. An authorized agent, including
two or more joint owners, may execute a demand for appraisal on behalf of a
holder of record; however, the agent must identify the record owner or owners
and expressly disclose the fact that in executing the demand, the agent is
agent for such owner or owners. A record holder such as a broker who holds
shares of the Company's common stock as nominee for several beneficial owners
may exercise appraisal rights with respect to the shares of the Company's
common stock held for one or more beneficial owners while not exercising such
rights with respect to the shares of the Company's common stock held for other
beneficial owners; in such case, however, the written demand should set forth
the number of shares of the Company common stock as to which appraisal is
sought and where no number of shares of the Company's common stock is
expressly mentioned the demand will be presumed to cover all shares of the
Company's common stock held in the name of the record owner. Stockholders who
hold their shares of the Company's common stock in brokerage accounts or other
nominee forms and who wish to exercise appraisal rights are urged to consult
with their brokers to determine the appropriate procedures for the making of a
demand for appraisal by such a nominee.
ALL WRITTEN DEMANDS FOR APPRAISAL PURSUANT TO SECTION 262 SHOULD BE SENT
OR DELIVERED TO THE COMPANY AT 7777 EAST MAIN STREET, SUITE 251, SCOTTSDALE,
ARIZONA 85251 ATTENTION: CORPORATE SECRETARY.
Within ten days after the effective time of the merger, the surviving
corporation must notify each holder of the Company's common stock who has
complied with Section 262 and who has not voted in favor of the adoption of
the Acquisition Proposal of the date that the merger has become effective.
Within 120 days after the effective time of the merger, the surviving
corporation or any holder of the Company's common stock who has so complied
with Section 262 and is entitled to appraisal rights under Section 262 may
file a petition in the Delaware Court of Chancery demanding a determination of
the fair value of such holder's shares of the Company's common stock. The
surviving corporation is under no obligation to and has no present intention
to file such a petition. Accordingly, it is the obligation of the holders of
the Company's common stock to initiate all necessary action to perfect their
appraisal rights in respect of such shares of the Company's common stock
within the time prescribed in Section 262.
Within 120 days after the effective time of the merger, any holder of the
Company's common stock common stock who has complied with the requirements for
exercise of appraisal rights will be entitled, upon written request, to
receive from the surviving corporation a statement setting forth the aggregate
number of shares not voted in favor of the adoption of the Acquisition
Proposal and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such statement must be
mailed within ten days after a written request for the statement has been
received by the surviving corporation or within ten days after the expiration
of the period for delivery of demands for appraisal, whichever is later.
If a petition for an appraisal is timely filed by a holder of shares of
the Company's common stock and a copy of the petition is served upon the
surviving corporation, the surviving corporation will then be obligated within
20 days to file with the Delaware Register in Chancery a duly verified list
containing the names and addresses of all stockholders who have demanded an
<PAGE> 10
appraisal of their shares and with whom agreements as to the value of their
shares have not been reached. After notice to such stockholders as required by
the court, the Delaware Court of Chancery is empowered to conduct a hearing on
such petition to determine those stockholders who have complied with Section
262 and who have become entitled to appraisal rights under Section 262. The
Delaware Court of Chancery may require the holders of shares of the Company's
common stock who demanded payment for their shares to submit their stock
certificates to the Register in Chancery for notation on the certificate of
the pendency of the appraisal proceeding; and if any stockholder fails to
comply with such direction, the Delaware Court of Chancery may dismiss the
proceedings as to such stockholder.
After determining the holders of the Company's common stock entitled to
appraisal, the Delaware Court of Chancery will appraise the 'fair value' of
their shares of the Company's common stock, exclusive of any element of value
arising from the accomplishment or expectation of the merger, together with a
fair rate of interest, if any, to be paid upon the amount determined to be the
fair value. Holders of the Company's common stock considering seeking
appraisal should be aware that the fair value of their shares of the Company's
common stock as so determined could be more than, the same as or less than the
consideration they would receive in the merger if they did not seek appraisal
of their shares of the Company's common stock and that investment banking
opinions as to fairness from a financial point of view are not necessarily
opinions as to fair value under Section 262. The Delaware Supreme Court has
stated that "proof of value by any techniques or methods which are generally
considered acceptable in the financial community and otherwise admissible in
court" should be considered in the appraisal proceedings. In addition,
Delaware courts have decided that the statutory appraisal remedy, depending on
factual circumstances, may or may not be a dissenter's exclusive remedy. The
court will also determine the amount of interest, if any, to be paid upon the
amounts to be received by persons whose shares of the Company's common stock
have been appraised. The costs of the action may be determined by the court
and taxed upon the parties as the court deems equitable. The court may also
order that all or a portion of the expenses incurred by any stockholder in
connection with an appraisal, including, without limitation, reasonable
attorneys' fees and the fees and expenses of experts utilized in the appraisal
proceeding, be charged pro rata against the value of all the shares entitled
to be appraised.
Any holder of shares of the Company's common stock who has duly demanded
an appraisal in compliance with Section 262 will not, after the effective time
of the merger, be entitled to vote the shares of the Company's common stock
subject to such demand for any purpose or be entitled to the payment of
dividends or other distributions on those shares of the Company's common stock
(except dividends or other distributions payable to holders of record of the
Company's common stock as of a record date prior to the effective time of the
merger).
If any stockholder who demands appraisal of such holder's shares of the
Company's common stock under Section 262 fails to perfect, or effectively
withdraws or loses, such holder's right to appraisal, the shares of the
Company's common stock of such stockholder will be converted into the right to
receive the merger consideration. A stockholder will fail to perfect, or
effectively lose or withdraw, such holder's right to appraisal if no petition
for appraisal is filed within 120 days after the effective time of the merger,
or if the stockholder delivers to the surviving corporation a written
withdrawal of such holder's demand for appraisal and an acceptance of the
merger, except that any such attempt to withdraw made more than 60 days after
the effective time of the merger will require the written approval of the
surviving corporation and, once a petition for appraisal is filed, the
appraisal proceeding may not be dismissed as to any holder absent court
approval.
<PAGE> 11
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DELAWARE
GENERAL CORPORATION LAW FOR PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS
OF SUCH RIGHTS.
Accounting Treatment
- --------------------
The proposed acquisition of CMC by the Company will be accounted for
as a recapitalization of CMC because the shareholders of CMC will control the
Company after the acquisition. Therefore, CMC will be treated as the
acquiring entity. There will be no adjustment to the carrying value of the
assets or liabilities of CMC in the share exchange. The Company will be the
acquiring entity for legal purposes and CMC will be the surviving entity for
accounting purposes.
No Legal Opinions or Tax Rulings
- --------------------------------
The proposed acquisition of CMC by the Company is intended to qualify
as a tax-free reorganization under the Internal Revenue Code of 1986. If the
acquisition qualifies as a tax-free reorganization, no gain or loss will be
recognized for income tax purposes by either the Company or CMC as a result
of the acquisition. CMC is an S-Corporation for taxation purposes. After
giving effect to the acquisition, CMC will be converted to a C-Corporation.
Therefore, there are no material effects on the existing CMC shareholders
after the reorganization and CMC will be a wholly owned subsidiary of the
Company. However, neither the Company nor CMC has requested a tax ruling from
the Internal Revenue Service or an opinion of legal counsel
with respect to the acquisition. Accordingly, no assurance can be given that
the acquisition will qualify as a tax-free reorganization.
The shares of the Company's Common Stock to be issued to the CMC
shareholders in connection with the Acquisition will not be registered under
the Securities Act of 1933, as amended (the "Act") and will be deemed
"restricted securities" as that term is defined in the Act. Accordingly, such
shares will be issued in reliance on the exemption from such registration
requirements provided by Section 4(2) of the Act, and Rule 506 of Regulation
D, promulgated thereunder. In order to claim the availability of the
exemptions, each of the CMC shareholders will be required to make
representations to the Company with respect to the acquisition of the
Company's shares, including that he or she is either an "accredited investors"
as that term is defined under Rule 501 of Regulation D of the Act, or has such
knowledge and experience in financial and business matters that he or she is
capable of evaluating the merits and risks of the prospective investment, such
that the Company reasonably believes that each of the CMC shareholders comes
within the scope of the exemption. Such shares will be restricted securities,
and the certificates will bear legends restricting their subsequent resale in
the absence of registration under the Securities Act or the availability of an
exemption therefrom. The CMC shareholders have been provided information
regarding the Company and its business and financial condition including
copies of the Company's registration statement on Form 10-SB and subsequent
periodic reports required to be filed under sections 13 or 15(d) of the
Exchange Act. In addition, CMC shareholders have met and/or were given
opportunity to ask questions of the Company's officers and directors. Within
15 days following the issuance of the Company's common stock to the CMC
shareholders, the Company will file the requisite Notice of Sale of Securities
on Form D with the Commission.
<PAGE> 12
Vote Required
- -------------
The vote of a majority of the issued and outstanding shares of Common
Stock represented in person or by proxy at the Special Meeting is required to
approve the Acquisition Proposal. Members of management and other principal
shareholders holding or controlling the vote of in excess of fifty percent
(50%) of the issued and outstanding stock entitled to vote at the Special
Meeting have indicated their intention to vote in favor of the Acquisition
Proposal. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
THE ACQUISITION PROPOSAL.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Information Statement contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995
with respect to the financial condition, results of operations, business
strategies, operating efficiencies or synergies, competitive positions, growth
opportunities for existing products, plans and objectives of management,
markets for stock of CMC and the Company and other matters. Statements in this
Information Statement that are not historical facts are hereby identified as
"forward-looking statements" for the purpose of the safe harbor provided by
Section 21E of the Exchange Act and Section 27A of the Securities Act. Such
forward-looking statements, including, without limitation, those relating to
the future business prospects, revenues and income, in each case relating to
CMC and the Company, wherever they occur in this Information Statement, are
necessarily estimates reflecting the best judgment of the management of CMC
and the Company and involve a number of risks and uncertainties that could
cause actual results to differ materially from those suggested by the
forward-looking statements. Such forward-looking statements should, therefore,
be considered in light of various important factors, including those set forth
in this Information Statement. Important factors that could cause actual
results to differ materially from estimates or projections contained in the
forward-looking statements include without limitation:
the performance of CMC's products within, and the overall strength of, the
prevailing retail environment
- - customer acceptance of newly-introduced product lines
- - changes in the costs of raw materials, labor and advertising
- - the ability of CMC to secure and protect trademarks and other intellectual
property rights
- - the effects of vigorous competition in the markets in which CMC operates
Words such as 'estimate', 'project', 'plan,' 'intend', 'expect', 'believe' and
similar expressions are intended to identify forward-looking statements. These
forward-looking statements are found at various places throughout this
Information Statement. The Company's stockholders are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date they were made.
<PAGE>
<PAGE> 13
Business of the Company
- -----------------------
The Company's executive offices are located at 7777 East main Street,
Suite 251, Scottsdale, AZ 85251, (602) 945-5343. The Company was incorporated
on February 14, 1983, in the state of Utah under the name Chelsea Energy
Corporation (hereinafter the "Registrant" or the "Company"). In connection
with its formation, a total of 1,047,000 shares of its common stock were
issued to the founders of the Company. In March 1985, the Company sold
3,000,000 shares of its common stock in connection with a public offering at a
price of $0.01 per share. The public offering was registered with the Utah
Securities Division pursuant to Section 61-1-10, Utah Code Annotated, as
amended. The offering was exempt from federal registration pursuant to
Regulation D, Rule 504, promulgated under the Act. The Company was initially
formed to provide professional consulting services to local government units.
In April 1989, the Company formed California Cola Distributing Company,
Inc. ("CCDCI")under the laws of the state of Delaware as a wholly-owned
subsidiary. In May 1989, the Company merged into its subsidiary, CCDCI, in
connection with a reincorporation merger. As a result of the reincorporation
merger, the Company changed its domicile to the state of Delaware from the
state of Utah and changed its name from Chelsea Energy Corporation to
California Cola Distributing Company, Inc. In October 1992, the Company
effected a sale of its wholly-owned subsidiary, CCDCI to California Cola Group
Incorporated, a principal shareholder of the Company and changed the its name
to Rexford, Inc.
Plan of Operation
- ----------------------------
The Company has voluntarily filed a registration statement on Form 10SB
with the U.S. Securities and Exchange Commission (the "Commission")in order to
make information concerning itself more readily available to the public. The
Company is obligated to file with the Commission certain interim and periodic
reports including an annual report containing audited financial statements.
The Company believes that being a reporting company with the Commission will
enhance the Company's potential business acquisitions or opportunities.
Since divesting itself of CCDCI, the Company has had no operations and
has been seeking potential business acquisitions or opportunities in an effort
to commence business operations. The Acquisition Proposal with CMC that is now
being presented to the Company's shareholders has been evaluated by the
Company as a viable business opportunity based on management's business
judgment.
In the previous 12 months, the Company has had limited financial
resources and has relied on loans from Mark A. Scharmann, an officer,
director, and principal shareholder of the Company, to finance the costs and
expenses associated with the preparation and filing of Form 10SB, subsequent
periodic reports, and this information statement (see Certain Relationships
and Related Party Transactions). Following approval of the Acquisition
Proposal, CMC's management has agreed to reimburse Mr. Scharmann for the costs
and expenses of the Company he has paid up to the effective date of the
acquisition. The reimbursement will be made through the issuance of common
stock of the surviving entity at a conversion rate to be negotiated between
CMC and Mr. Scharmann. It is estimated that such cost and expenses will not
exceed $30,000. The Company has not received a formal commitment from Mr.
Scharmann or other officers, directors or shareholders to continue to
<PAGE> 14
finance the Company's expenses. Following approval of the Acquisition
Proposal the operations of the Company will be conducted through CMC as the
Company's wholly owned subsidiary. (See "Business of CMC" and related
"Discussion and Analysis of Financial Condition and Results of Operations"
contained in this Information Statement).
The report of the Company's independent auditor at September 30, 1998,
contains a going concern qualification as to the Company's ability to
continue. Unless the Acquisition Proposal is approved or the Company is able
to obtain significant outside financing, there is substantial doubt about the
Company's ability to continue as a going concern. In the event the Company
does need to raise capital it would most likely rely on additional loans from
or private sales of its securities to its existing officers, directors, and
shareholders. Such private sales would be limited to person exempt under the
Commission's Regulation D or other rules or provisions for exemption, if any
applies. However, no private sales are contemplated by the Company at this
time. If a private sale of the Company securities is deemed appropriate, the
Company will attempt to acquire such funds on the best terms available to the
Company. However, there is no assurance that the Company will be able to
obtain funding when and if need, or that such funding, if available, can be
obtained on terms reasonable or acceptable to the Company.
Year 2000 Computer Problem
- --------------------------
The Year 2000 or Y2K problem concerns the potential failure of certain
computer software to correctly process information because of the software's
inability to calculate dates. The Company has no operations and no equipment
which might be affected by the Y2K computer glitch. Management has considered
the potential Y2K problems associated with the acquisition of CMC as part of
its evaluation of CMC, and is satisfied with CMC's representations concerning
CMC's Y2K preparedness.
Employees
- ---------
The Company does not have any employees and has no plans for retaining
employees until such time as the Company completes the Acquisition Proposal.
On completion of the Acquisition Proposal, all decision regarding employment
will be determined by the Company's new management. (See "Business of CMC").
Facilities
- ----------
The Company currently uses as its principal place of business the
personal residence of its President and Director located in Scottsdale,
Arizona. The Company has no written agreement and pays no rent for the use of
this space. Following approval of the Acquisition Proposal, the Company's
executive offices will be moved to the executive offices of CMC.
<PAGE>
<PAGE> 15
Discussion and Analysis of Financial Condition and Results of Operations
- ------------------------------------------------------------------------
The activities of the Company are subject to several significant risks
which arise primarily as a result of the fact that the Company has no
specific business. Because of the Company's current status having no assets
and no recent operating history, in the event the Company does successfully
acquire or merge with an operating business opportunity, it is likely that the
Company's present shareholders will experience substantial dilution and there
will be a probable change in control of the Company.
Management believes that being a reporting company under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), could provide a
prospective merger or acquisition candidate with additional information
concerning the Company. In addition, management believes that this might make
the Company more attractive to an operating business opportunity as a
potential business combination candidate. As a result of filing its
registration statement on Form 10-SB, the Company is obligated to file with
the Commission certain interim and periodic reports including an annual report
containing audited financial statements. The Company intends to continue to
voluntarily file these periodic reports under the Exchange Act even if its
obligation to file such reports is suspended under applicable provisions of
the Exchange Act.
Liquidity and Capital Resources
- -------------------------------
Although the Company has had only limited expenses, it may have to incur
additional legal and accounting costs to remain current on its financial and
corporate reporting obligations. Management anticipates that the Company will
incur more cost including legal and accounting fees to locate and complete the
merger or acquisition of CMC. At the present time the Company does not have
the assets to meet these financial requirements and certain costs and expenses
associated with the Acquisition Proposal have been paid by Mark A. Scharmann,
an officer, director and principal shareholder of the Company.
At March 31, 1999, the Company had current assets of $229 and current
liabilities of $12,802, for a working capital deficit of $(12,573). The
Company has only incidental ongoing expenses primarily associated with
maintaining its corporate status and professional fees associated with
accounting and legal costs. Mr. Scharmann has advanced money to the Company
from time to time and such advances bear interest at a rate of 10% per annum
and have no maturity date. Prior to March 31, 1999, the balance of the
outstanding advances were converted into shares of common stock of the
Company.
The president of the Company is providing the Company with a location for
its offices on a "rent free basis" and no salaries or other form of
compensation are being paid by the Company for the time and effort required by
management to run the Company. Following approval of the Acquisition
Proposal, the Company's executive offices will be moved to the executive
offices of CMC.
<PAGE>
<PAGE> 16
Results of Operations
- ---------------------
Since discontinuing operations in 1992, the Company has not generated
revenue. For the six month period ended March 31, 1999, the Company has
incurred $27,533 in general and administrative expenses. Since inception, the
Company has an accumulated deficit of $(226,290) after taking into account a
$90,231 gain on the divestiture of discontinued operations.
Selected Financial Data of the Company
- --------------------------------------
The year end financial data included in the table has been selected by
the Company and has been derived from the Company's financial statements
included in the Company's Annual Report on Form 10KSB for its fiscal year
ended September 30, 1998. All financial information for the fiscal years
ended September 30, 1998 and 1997 have been examined by Tanner + Co.,
certified public accountants. The three-month unaudited financial data has
been derived from the Company's financial statements included in the Company's
Quarterly Report on Form 10QSB for the period ended December 31, 1998 and has
been provided by the Company.
Six
Months Ended
March 31,
Year Ended September 30, 1999
1998 1997 (Unaudited)
---- ---- ---------
Statement of
Operations Data:
Revenues $ - $ - $ -
Cost of Sales $ - $ - $ -
Operating Expenses $ 46,350 $ 42,795 $ 27,533
Net (loss) $ (46,350) $ (42,795) $ (27,533)
Net (loss)
per common share $ (0.00) $ (0.01) $ (0.00)
Weighted Average
Shares Outstanding 43,767,000 16,360,000
At
March 31,
Year Ended September 30, 1999
1998 1997 (Unaudited)
---- ---- ---------
Balance Sheet Data:
Current Assets $ 226 $ 540 $ 229
Current Liabilities $ 11,056 $ 590 $ 12,802
Work Capital(Deficit) $ (10,830) $ (50) $ (12,573)
Property &
Equipment (net) $ - $ - $ -
Total Assets $ 226 $ 540 $ 229
Long Term Liabilities $ - $ - $ -
Shareholders' Equity (Deficit)$ (10,830) $ (50) $ (12,573)
<PAGE>
<PAGE> 17
Business of CMC
- ---------------
All information with respect to CMC's business activities has been
provided by the management of CMC and is presented herein without independent
verification. CMC has represented that the information is accurate and
complete in all material respects. Financial information regarding CMC has
been provided in this Information Statement in the section titled
"Selected Financial Data" below.
CMC's executive offices are located at 1401 Brook Drive, Downers Grove,
Illinois 60515 and the telephone number is (630) 916-6196. CMC was
incorporated in July 1992 in the State of Illinois under the name S&S
Publishing, Inc. In March 1994, an amendment was filed to change its name to
Just Softworks, Inc. In July 1995, another amendment was filed to change its
name to Chicago Map Corporation.
CMC's core competency is the development, production, licensing and
marketing of geographical digital map technology. Use of these technologies
are found in products and services such as; consumer-oriented mapping
products, GPS (Global Positioning System) navigation systems,
Web/Internet/Intranet map displays, digital data integration and referencing,
country-wide digital map sets, professional software development, and mobile
asset monitoring/tracking. These application solutions operate in various
Windows(TM) environments. This structure allows customers to access CMC's
technologies across a broad range of markets and throughout various countries.
CMC's mapping technologies make use of detailed geographical databases
that include street addresses, road networks, highways, major geographical
landmarks, hydrographic features, topographical relief tables and
satellite/aerial photography. Individuals, corporations, and government end-
users use these map displays to solve mapping needs.
Historically, CMC's primary focus has been on the creation of a base line
of technologies that can be integrated within a wide range of applications.
This allows CMC and its professional staff to directly or indirectly support
the development of custom mapping software designed around a base framework of
geographic data and development integration tools. This design model works
for both limited and large volume distributions. CMC uses modern programming
languages and creates system development via its own proprietary tools, class
libraries and professional support.
Strategic Plan
- --------------
Mapping is the representation of the Earth's surface drawn to scale. The
history of mapping can be traced to the beginning of time. These images have
long aided in the exploration, discovery and understanding of the world in
which we live. The process of creating maps is known as Cartography.
Cartography is considered both a science and an art. Intertwined with
geography, it is intended to present images of our communities, nation or the
world. This effort, especially in its infancy, required the creative
adaptation of roads, town labeling and landmarks to better aid in referencing
these man-made or geographic points of interest. However, the complex and
technically oriented world in which business, government and people now
operate, has all but eliminated the artistic contribution.
<PAGE> 18
Today's cartographic community is made up primarily of data gathers and
surveyors using sophisticated equipment, such as satellite-aided instruments
and computers to map their world. Paper maps production is generated by
advanced software programs. This shift in technology allows companies capable
of database manipulation and software expertise, such as CMC, to participate
in this shift in cartography. CMC and its partners maintain a solid
background in map software development, CAD (computer aided drafting), GPS
transportation movement monitoring and wireless communications. These
disciplines are necessary to create a broad range of product and service
solutions necessary for the shifting and emerging markets, which demand
absolute precision and accuracy in their maps.
Purchase of TRIUS Assets
- ------------------------
For the past seven years (1992-1999) CMC had engaged in an exclusive
development/licensing relationship with TRIUS, Inc. The licensed materials
included unique mapping software, used by CMC to develop a variety of map
software products. The management of CMC sought to obtain this software
through a purchase agreement with TRIUS, Inc. to better influence the
direction of TRIUS' software development. After CMC's proposal for purchase
was accepted and approved by both TRIUS shareholders and TRIUS Board members,
the purchase was enacted on March 12, 1999 between the two parties. The
specific acquired assets include:
-Source codes used to produce Precision Mapping Streets, Precision Mapping
Lite, USA Mapping control MAPOCX.OCX and MAPPRO.OCX, codes for processing
programs for the Tiger data set and the GNIS data set, programs to produce the
South African Mapping control SMAF.OCX and the Canadian Mapping control
CANMAP.OCX, codes for processing programs for the MID/MIF data sets for the
above South African and Canadian mapping controls, codes to produce the 16-bit
USA Mapping control PMAP16.DLL, codes used to produce utility program,
processing programs and any other software related to mapping, and all rights
to all the above source codes, including compiled versions, plus all existing
registered copyrights to any of the above software and source codes.
In addition, CMC acquired certain tangible assets including computer
systems, office furniture systems and equipment, miscellaneous office and
computer peripheral equipment, and miscellaneous reference materials and
commercial computer software programs.
Products
- --------
CMC offers the following categories of products:
PROFESSIONAL DEVELOPMENT TOOLS - CMC has created a range of countrywide and
worldwide development tools. These tools allow software programmers to
integrate quality map displays into third-party applications. The map-imaging
tool can represent a portion of the application or an isolated feature. Prior
to any internal or external distribution of customized applications, a
developer must first establish a distribution licensing arrangement with CMC.
The following products are marketed as part of the CMC's Professional
Development Tool product line:
MapOCX (USA): Full-featured map display tool that includes a detailed street-
level map database of the entire United States.
<PAGE> 19
MapOCX Pro (USA): Advanced development tools that include a detailed street-
level map database of the entire United States. All basic capabilities of the
MapOCX (USA) are also accessible within the Pro product.
MapOCX (Canada): This product includes the integration of street-level map
data for all of Canada within an independent development tool. The database
includes road information for cities with a population of 5,000 or more.
MapOCX (South Africa): Integration of street-level map data for select major
metropolitan cities and major road networks of South Africa. CMC and other
companies market this development tool.
MapOCX (World): Low resolution map display of the entire world. Data
includes country-level highway networks, population centers and political
boundaries. Raster and vector image integration can offer enhanced detailing.
MapOCX (Geocoder - USA): CMC provides a tool to assign X,Y coordinates to
geographically reference US data sets. Referencing is based on existing
Postal Service routes.
TECHNOLOGY LICENSING - CMC actively licenses its technologies and map display
engines throughout the world. This distribution of applications and
development tools has allowed CMC to participate in select geographical
markets. The current number of CMC's active accounts represents a small
portion of the overall market opportunity. Most of this opportunity remains
uncommitted due to a lack of product awareness within the marketplace.
PROGRAMMING AND CUSTOMER DEVELOPMENT SERVICES - These services include:
CUSTOM PROGRAMMING: CMC provides programming services for creating,
customizing and altering software applications. Programming languages used by
CMC's staff include all major Windows(TM) visual development languages,
excluding Windows CE(TM). Market specialization includes GPS, wireless
communication, geocoding, fleet tracking and other transportation and
geographical referencing applications.
TECHNICAL CONSULTING: Assisting companies in the design and development phase
of third-party applications. This fills a void in a company that may lack
some of the background and knowledge base requirements demanded in geographic
map development.
TECHNICAL WRITING: CMC participates in a variety of technical writing
services. These services include Help files creation and the drafting of
programming specifications.
GOVERNMENT CONTRACTS: CMC seeks to participate in various geographic
development projects with State and Federal agencies. These agreements will
allow CMC to use its development tools in connection with databases maintained
by these various government agencies to develop geographic products and
solutions for the markets CMC services. The only such project currently under
development is the Cooperative Research and Development Agreement
("CRADA")between the United States Geological Survey and CMC described below.
<PAGE>
<PAGE> 20
THE NATIONAL ATLAS OF THE UNITED STATES OF AMERICA
- --------------------------------------------------
On April 1, 1999, CMC entered into a Cooperative Research and Development
Agreement ("CRADA")with the United States Geological Survey ("USGS") to
develop a range of business, government and consumer products that fall within
the scope of the National Atlas of the United States of America project. The
USGS falls under the direction of the Department of the Interior. The
following descriptive information is found within the signed agreement
document used to manage the CRADA.
Purpose - Background
In 1970, the USGS participated in the publication of a printed map book
distributed as the National Atlas of the United States of America (the
"National Atlas"). This book had limited distribution, but was well received
as an authoritative reference of geographical information about America.
Twenty-eight years since its initial release, this book is still being used
and maintained by many schools, libraries and other research institutions
throughout the country due to its quality and detail. The book's success
clearly shows the demand for geographic data and information, which can be
supplied by the government. In 1996, the United States Congress authorized
the production of a new National Atlas. The USGS, as the lead Federal agency
for this activity, has been actively seeking private sector partners who would
be willing to participate in the creation of a new National Atlas through a
CRADA agreement. The new National Atlas will utilize current technologies
such as computers, the Internet, CD-ROM, and DVD. These new technologies also
make it possible to broaden the scope and coverage of the National Atlas as a
major reference resource for the American people. The National Atlas should
become the means through which the American people can easily access
information (pictures, maps, animation, text) collected from the multiple
government agencies.
Reasons for Cooperation
The USGS provides the Nation with reliable, impartial information to
describe and understand the Earth. This information is used to: minimize the
loss of life and property from natural disasters; manage water, biological,
energy and mineral resources; enhance and protect the quality of life; and
contribute to wise economic and physical development. The scope of the
National Atlas project extends beyond the mission and leadership of the USGS
to encompass the breadth of national spatial data collection and integration
activities underway throughout the Federal government. This project may
result in the largest effort ever to assemble and integrate geographic
information at the Federal level. The USGS recognizes that the presentation
of this integrated information in ways that have broad market appeal is at
least as important and significant as the actual data collection.
CMC has been in the business of obtaining and using such information,
provided in an electronic form, and converting it into usable software
applications for consumer, business and government use. By working with CMC
under a CRADA, the USGS and CMC can jointly create numerous worthwhile
applications and information resources for the American people. CMC's
knowledge and solid experience in creating map software programs and
professional GIS development tools will provide the ability to discern the
needs of the American public as they relate to geographic reference resources.
CMC will provide marketing, promotion and distribution capabilities for the
National Atlas in ways that the USGS may not be able.
<PAGE> 21
The primary purpose of this effort is to design, develop, distribute and
maintain a new version of the National Atlas for the American people. Since
the initial release, many new technologies have arisen that make it feasible
and appropriate for the National Atlas to be released through a greater number
of formats and market channels. By extending the National Atlas beyond the
format of a print publication, CMC seeks to create an interactive multi-media,
multi-formatted electronic platform for the use and integration of Government
data. This should allow access to a vast library of geo-referenced data
sources from within the same application. CMC's participation in the National
Atlas program is intended to result in the creation of various products and
services that can and will be marketed by CMC and its licensees to both the
private and public sector. Design of these products will be based principally
upon market research into the interests and desires of the buying sector.
Terms of the CRADA Agreement
- ----------------------------
Duties of CMC
The duties of CMC will be, in cooperation with the USGS, to oversee the
market research, design, development, production, marketing, support and
maintenance of the various products that fall within the scope of the National
Atlas project. The staff at CMC will lead technology development, product
design that includes user interface, data manipulation/integration, platform
determination and other key performance and product feature decisions.
Market Research
This activity will be one of the first to take place under the CRADA in
order to quickly determine the interests and needs of National Atlas
customers. The USGS and CMC will cooperatively plan, conduct, evaluate, and
refine customer research to better understand the current and future markets
for both core National Atlas products and additional commercial products. The
market research will be conducted during the first six-month period of the
CRADA during which the initial concepts of core National Atlas products and
additional commercial products will be clarified and refined in a
comprehensive product development plan.
CMC's Projection of National Atlas Products and Services
- --------------------------------------------------------
The CRADA agreement authorizes CMC to conduct research and development
efforts that is intended to culminate in the release of commercial products
under the umbrella of the National Atlas over the next five-years. Product
releases may include distribution of electronic media, Internet, print and
television products. The CRADA allows CMC the right to influence and direct
the distribution and availability of both existing and future government
collected and government maintained data that can be geographically
referenced. Data may include geographic, historical, environmental, social,
economic and other types of national and regional information.
Limited research indicates that there are immediate market opportunities
for the National Atlas project in general education, advanced social research,
public and private libraries and corporations that base critical decisions on
changes in national trends. The extent of these market opportunities can not
be properly determined at this time. A market research effort of the National
Atlas project is planned for and will be conducted between CMC and the USGS as
part of their joint partnership.
<PAGE> 22
Additional commercial products, which are related to the core National
Atlas may be developed to provide additional software functionality. Although
not considered part of the core National Atlas, these additional products may
bear the National Atlas trademark upon written approval by the USGS. These
products will be targeted for consumer's needs, various industries and/or
commercial applications. These additional products, produced by CMC, would
provide an increased revenue stream for the USGS. The USGS will provide
assistance to CMC in the definition and development of such products.
In addition to creating core National Atlas products and additional
commercial products that will be used directly by the end-user, CMC plans to
develop new technology in parallel with these product development efforts that
will result in the creation of new development tools (the "Development Tools")
used specifically to access, display or manipulate various forms of USGS-
supplied data which has been processed into CMC format. The creation,
copyright and ownership of the Development Tools lies solely with CMC.
USGS and CMC will work together to schedule the production of all
products to take advantage of market situation which will enhance the value
and potential customer impact of the products. USGS and CMC recognize that
the scheduling of product production may be impacted by special mission
related requirement or special market opportunities and agree that the
production schedule may be modified to accommodate such special circumstances.
Copyrights
CMC shall have copyright options for all core National Atlas products and
additional commercial products created in whole or in part by CMC under this
CRADA. USGS and CMC shall negotiate the complete terms and conditions for
copyright royalties in an amendment to this CRADA.
Resources - Estimated Expenditures
CMC anticipates expenditures in excess of $7 million for the first two
years of the CRADA. This includes, but may not be limited to, travel,
software development, product marketing, research and administrative expenses.
USGS anticipates expenditures of approximately $4 million for the same period.
All such expenditures are for in-kind resources of the respective parties.
Term
The CRADA is for a term of 5 years, from March 15, 1999 to March 15,
2004. It is mutually recognized that the contemplated time periods and phases
of development of the project are subject to adjustment by the mutual
agreement of the parties to fit the circumstances. Either party may terminate
the CRADA upon thirty days written notice.
INTERNATIONAL MAP DATA - CMC believes that there is a market for international
digital map data. There are few companies that currently offer data and
development solutions similar to products marketed by CMC. CMC will seek to
obtain licenses to resell or license countrywide data for countries where
adequate market opportunity exists. The following countries have been
identified for expansion in the next twelve months:
Canada Mexico (Under development)
South Africa (Under development) North America (Under development)
South America Western Europe
World data (Under development)
<PAGE> 23
CONSUMER RETAIL - Historically, CMC has been actively involved in the
distribution of its map technology to the Consumer Retail market. Products
have been sold through software distribution channels to major software
retailers. Recent changes have altered CMC's usage of these channels as they
have ceased to be a cost-effective means of generating revenue. CMC currently
uses direct relationships with software retailers, such as Micro Center. In
addition, CMC has licensed the duplication and marketing of its consumer
retail products to companies that actively participate in the consumer retail
market, such as COSMI and GT Interactive. Over the past few years, additional
distribution has also included direct and mail-order sales, cooperatively
marketed with companies such as Trailer Life and Tik-Soft. CMC will continue
to pursue these distribution efforts in addition to the newly developing E-
commerce over the Internet. CMC will continue to develop new products and
updates to existing products to satisfy the end-user's demand for map software
products.
Current retail products distributed by CMC include:
Precision Mapping Streets: This application is a mapping program that includes
features that allow the user to locate specific locations on the map, create
custom images and print maps.
Precision Mapping Traveler: A point to point routing program that generates
travel information for the end-user. It also accepts and plots Global
Positioning System ("GPS") data, provided by GPS receivers that are connected
to a PC, displayed in real time on the screen.
Precision Mapping Quick-Finder: A low cost, simple mapping program that is
sold direct by CMC and is licensed to licensees.
Precision Mapping Quick-Router: A budget software program that uses CMC's
routing technology to generate a travel route between any two US cities.
PROFESSIONAL RETAIL - Products within this category are considered advanced
mapping applications designed for specific markets or industries. At this
time only one product, Land Analysis, falls within this product line. Others
are under consideration at this time. Land Analysis is a multi-layered
application designed for the real estate evaluation industry. It includes
flood water determination, topographic relief, toxic waste sites, road
locations and wetland data.
INTERNET MAPPING - CMC has developed a mapping product line specifically for
the Web. The products listed below represent the current applications:
MapMania: CMC's first effort in developing a Web-based mapping application.
Used by companies to help guide customers to key locations or for address or
city searching throughout the US.
Internet MapOCX (USA): CMC's Web development tool to meet the needs of
programmers who require map images on their Web sites. This product includes
a street-level database of the US.
Internet MapOCX (Canada): CMC markets a Web development tool that includes a
street-level database of Canada. The application is used on select Intranet
sites at this time to assist companies that deliver vehicle tracking services
in Canada.
<PAGE> 24
Internet MapOCX (World): A Web development tool that generates geographic maps
in an electronic format. This application is comprehensive in that it offers
details for every country in the world.
Markets
- -------
Computerized map software allows electronic maps to contain more
information than standard paper maps. This additional data includes
information within the map database that facilitates the use of these images
for broad dissemination. Considering the market demand for digital maps,
CMC's products are able to service a variety of industries and organizations.
CMC has also been influential in the US and select international marketplaces.
At this time, CMC's technologies are being used in a wide variety of
markets and industries including the following:
Aerial/Satellite Imagery Consumer Retail
Consumer Vehicle Tracking and Recovery Delivery Systems
Demographic Analysis Direct Mail
Emergency Response Entertainment
Fleet Vehicle Tracking Flood Water Analysis
Geo-Science Research Hazardous Waste Management
Insurance Planning & Adjustments Integrated Phone Information
Marine (Inland and Coastal Waterways) Marketing Analysis and Research
Mobile Asset Management Motivational Marketing
OEM GPS Manufacturers Oil and Gas Research
In-Vehicle Navigation Pipeline Management
Portable Navigation Devices Public Safety
Presentation Maps Real Estate Property Analysis
Surveying Telecommunications
Thematic Mapping Topographic Determination
Transportation Utility Management
Weather Maps Web/Internet/Intranet Applications
CMC has historically targeted the US marketplace for a majority of its
sales. However, in recent years there has been a shift to introduce sales of
non-US products into other countries. The licensing and acquisition of global
and international data sets has enabled CMC to develop products that could
support many non-US mapping software markets. CMC will continue to address
and give attention to the US market while pursuing a broader international
presence. CMC's map technology is able to integrate map data sets from a
variety of sources along with a specialized map viewing engine that is
appropriate for consumer and professional products.
Competition
- -----------
CMC offers a variety of geographic electronic software products. These
applications are used in a variety of markets and industries. These programs
compete with other existing products and software companies.
In the retail market, where CMC has recently minimized its focus, there
is a wide range of mapping software products similar in features to those of
the CMC product line. Major competitors within the retail consumer market
include Rand McNally, DeLorme, and Microsoft. CMC has decided to use direct
mail as the principal means of marketing its consumer products, as it has
found other means of reaching its customers to be dominated by competition and
unprofitable.
<PAGE> 25
In the custom development and professional tools market, there are a
variety of Geographic Information System ("GIS") companies, which offer
comparable services and capabilities. CMC has sought to distinguish itself
from competitors by offering easy-to-use tools, extensive customer support,
flexible licensing and competitive pricing. Unlike its competitors, products
offered by CMC are also distinguished by its bundling of a complete national
map data set within its professional products. Competitors within this
product line include MapInfo, ESRI and other smaller companies.
The National Atlas project is unique to both CMC and the general
marketplace. CMC is well positioned to be a primary data provider for a
variety of consumers and companies seeking to obtain data that is associated
with the National Atlas project. Competitors will find development and
acquisition challenges in assembling similar data offerings and feature
capabilities. At this point, there are not competitors identified in this
market.
Distribution of Product
- -----------------------
CMC currently distributes the majority of its consumer and professional
products through direct sales with its customers. There have been limited
sales made through electronic-commerce and catalog sales with its existing
product line. As the company has shifted away from direct consumer sales, it
has placed greater emphasis on the development of business-to-business
relationships using in-house sales personnel.
The company will have the ability to distribute a broader range of
products through its National Atlas commitment. Distribution rights have been
authorized under the CRADA agreement for electronic media, Internet, print and
television. CMC will continue to distribute sales through direct sales, but
will seek to establish additional relationships with companies that can
support markets, such as print and television, to obtain market presence in
these areas.
Government Regulation
- ---------------------
The company is not subject to any government regulations other than those
that normally apply to other software manufacturers, such as copyright and
trademarks laws. The relationship with the USGS is guided by the terms
outlined within the Cooperative Research and Development Agreement regarding
the National Atlas project.
Research and Development
- ------------------------
CMC has a staff of developers that management believes is sufficient and
capable of handling current R&D efforts. In 1997, CMC spent approximately
$298,000 on R&D, and approximately $357,000 in 1998. The Company foresees the
need to expand the number of employees that will support its future R&D
efforts, and has forecasted its projections as part of internal planning
procedures. The number and qualification of those employees that the company
will hire, will be carefully managed between the Senior Vice-President of
Product Development and the Human Resource Department.
<PAGE> 26
Funds have been allocated to offset current and future R&D efforts. The
amount of funding is monitored though internal forecast methods and is
coordinated between the Development and Accounting Departments. The costs of
research and development activities are not borne directly by customers,
although R&D expenses are indirectly incorporated into product prices.
Employees
- ---------
The company currently employees 20 full-time employees and no part-time
employees. All hiring is coordinated through the CMC's Human Resource
Department. CMC has been able to hire a sufficient number of qualified
employees in the local area to meet its current and anticipated needs for the
next 12 months. CMC provides any specialized training, if required, based on
the employee's job descriptions and requisite skill levels.
Sales and Marketing
- -------------------
CMC has developed a marketing strategy that has allowed it to carve out a
solid niche for itself in the map software industry. Its product line ranges
from budget consumer software applications to high-end professional
development tools. This provides sales opportunities for a broad range of
customers. It is not atypical for customers to "grow" into a more advanced
products.
The retail, mail order and direct sales efforts by CMC have proven to be
a positive way to educate its customer base on the technologies, capabilities
and quality of CMC's products. CMC has also promoted its products and
corporate image through advertising in industry publications and
attendance/exhibiting at trade shows and seminars. CMC personnel have
participated at industry specific events that require a map industry
specialist. These strategies have resulted in numerous opportunities for CMC
to expose its products to potential customers. CMC's competitive position in
the marketplace is due to its flexibility in delivering cost-effective
solutions and broad product offerings.
Customer Dependence
- -------------------
Due to the nature of CMC's marketing practices and the diverse markets it
serves, clients rarely represent a large percentage of CMC's sales on an
ongoing basis. At this time no company or individual account represents more
than 5% of annual sales.
Patents, Copyrights and Trademarks
- ----------------------------------
CMC owns or has properly filed for all of the necessary patents,
copyrights and trademarks for its unique software applications, development
tools and proprietary map databases. CMC does not currently license any
components offered by third-party developers or companies that require
sublicensing arrangements prior to distribution. This allows CMC to remain
independent of licensing relationships that may hinder the distribution of
products or negatively effect profitability.
CMC has established two marketing relationship with companies that offer
unique countrywide data for its non-US products. These licenses are long-term
and are established with companies such as Metropolis (South Africa), Desktop
Mapping (Canada).
<PAGE> 27
Discussion and Analysis of Financial Condition and Results of Operations
- ------------------------------------------------------------------------
YEAR 2000 COMPLIANCE
- --------------------
Background
- ----------
Many currently installed computer systems are not capable of correctly
processing 21st century dates. As a result, computer systems, software and
other computer controlled processes used by many companies in a very wide
variety of applications will experience operating difficulties unless they are
modified or upgraded to adequately process information involving, related to,
or dependent upon the century change. Significant uncertainty exists
concerning the scope and magnitude of problems associated with the century
change.
What the Company is Doing
- -------------------------
The Company recognizes the need to take appropriate action so that its
operations will not be adversely impacted by Year 2000 computer failures and
has established a project team, consisting of dedicated employees, to address
Year 2000 risks. The project team is coordinating the identification and
implementation of changes to computer hardware and software applications that
will attempt to ensure availability and integrity of the Company's information
systems, operational systems and critical business processes. An appropriate
program of assessment, remediation and testing for both products and internal
systems is underway, but is not yet complete. The Company is also assessing
the potential overall risks of the impending century change on its business
partners, results of operations and financial position.
The Company's State of Readiness
- --------------------------------
Company Products
The Company's saleable products do not rely on external software
applications. The Company has designed and tested the most current versions
of its saleable products and believes that such products are Year 2000
compliant, as they do not use or access date-based files. It should be noted
that despite these efforts, there can be no assurances that the Company's
current products do not contain undetected errors or defects associated with
Year 2000 date functions that may result in additional costs to the Company.
Status of Internal Systems
The Company is in the process of conducting a company-wide assessment of
its internal computer systems and operations infrastructure to identify
computer hardware, software and process control systems that are not Year 2000
compliant. Based on this assessment, the Company believes that its principal
accounting system is Year 2000 compliant. CMC has received statements of
verification from its accounting system vendor that the application has been
properly tested and found to be compliant. Many systems will be remediated
as a consequence of normal and previously planned business improvement and
system replacement projects. Other systems, such as personal computers and
office productivity software, will be remediated specifically for Year 2000
<PAGE> 24
issues, in many cases through low cost or free upgrades provided by the
product vendors. The Company presently believes that its business-critical
computer systems that are not presently Year 2000 compliant will be replaced,
upgraded or modified prior to 2000.
Status of the Company's Customers and Partners
The Company faces risk to the extent that suppliers of products, services
and systems important to its business operations, and others, with whom the
Company transacts business on a worldwide basis, may not comply with Year 2000
requirements. The Company has initiated formal communications with
significant suppliers to determine the extent to which these parties have
addressed their own Year 2000 issues. To date, all inquiries have responded
that Year 2000 compliance is in process and should be completed prior to 2000.
The Company also faces risk to the extent that major customers do not
comply with Year 2000 requirements in their own organizations and suffer
business disruption as a result. To the extent Year 2000 issues cause
significant delays in or cancellation of purchases of the Company's products
or services, the Company's business, results of operations and financial
position could be materially adversely affected. The Company has initiated
formal communications with its largest customers and channel partners to
determine the extent to which the Company is vulnerable to any such
third-party's failure to remediate their own Year 2000 issues.
Costs to Address the Company's Year 2000 Issues
- -----------------------------------------------
The Company has not yet completed its estimate of Year 2000 costs at this
stage of the project, but expects to complete the estimates as the assessment
and remediation planning tasks are completed in the near term. It is
currently estimated that the aggregate cost of the Company's Year 2000 efforts
will be approximately $10,000 to $20,000 for calendar years 1999, of which
less than $3,000 has been expended to date. To the extent that equipment is
deemed obsolete as a result of the Year 2000 issue, the applicable costs and
accumulated depreciation will be removed from the accounts and the resulting
loss, if any, will be recognized in the income statement. The Year 2000 costs
have not been, and are not anticipated to be, material to the Company's
financial position or its results of operations.
The Company does not have any products being used by customers that are
not Year 2000 compliant.
Risks of the Company's Year 2000 Issues
- ---------------------------------------
The Company expects to complete its Year 2000 project during 1999. Based
on currently available information and remediation plans, the Company does not
believe any material exposure to significant business interruption exists as a
result of Year 2000 compliance issues. Although the Company does not believe
that it will incur any material costs or experience material disruptions in
its business associated with preparing its internal systems for the year 2000,
there can be no assurances that the Company will not experience serious
unanticipated negative consequences and/or material costs caused by undetected
errors or defects in the technology used in its internal systems, which are
composed of third-party software, third-party hardware that contains embedded
software and the Company's own software products. The most reasonably likely
worst case scenario would include: (i) corruption of data contained in the
<PAGE> 29
Company's internal information systems, (ii) hardware failure, and (iii)
delays in shipping the Company's saleable products.
The Company's Contingency Plans
- -------------------------------
The Company is in the process of developing a contingency plan to address
situations that may result if the Company is unable to achieve Year 2000
readiness of its critical operations, as anticipated, in a timely manner.
These costs are considered minimal and the timing in which the Company
plans to complete its Year 2000 modification and testing processes are based
on management's best estimates. However, there can be no assurance that the
Company will timely identify and remediate all significant Year 2000 problems,
that remedial efforts may not involve significant time and expense, or that
such problems will not have a material adverse effect on the Company's
business, results of operations or financial position.
The discussion of the Company's efforts, and management's expectations,
relating to Year 2000 compliance are forward-looking statements. The
Company's ability to achieve Year 2000 compliance and the level of incremental
costs associated therewith, could be adversely impacted by, among other
things, the availability and cost of programming and testing resources,
vendors' ability to modify proprietary software, and unanticipated problems
identified in the ongoing compliance review.
Results of Operations
- ---------------------
General
- -------
In order to increase its profitability, CMC made a conscious decision in
late 1997 to defocus its efforts in the consumer retail market due to
declining margins (high volume/low value) and redirect its efforts towards the
sales of professional development tools and custom development services which
carry a higher margin (lower volume/high value). Although this decision
negatively impacted sales revenue for fiscal year 1998 ($1,175,295 as compared
to $1,934,433 for fiscal year 1997), CMC's costs of sales as a percentage of
sales decreased from 45% in 1997 ($890,585)to 28% in 1998 ($333,357). In
addition, CMC's income from operations as a percent of sales increased to
6.52% for fiscal year 1998 as opposed to (1.92)% for fiscal year 1997. CMC's
net income for fiscal year 1998 was $63,636, while CMC incurred a net loss of
$(37,116) for fiscal year 1997. Although CMC will continue to maintain a
presence in the consumer retail market, CMC will focus its main sales and
marketing thrust in the higher margin commercial areas.
Quarter ended March 31, 1999
- ----------------------------
Revenues and Costs of Sales. For the quarter, CMC had revenues of
$186,780 with cost of sales of $95,492, or approximately 51% of revenues, for
a gross profit of $91,288. Management of CMC believes that the reduction in
revenue during the period and the increase in the cost of sales during the
period as a percent of revenues is reflective of the timing of the release of
various updated versions of the Company's software and therefore, not
necessarily indicative of the revenues and cost of sales as a percent of
revenues anticipated for the entire year. Management expects revenues to
<PAGE> 30
increase and costs of sales as a percent of revenues to be consistent with
that experienced for CMC's year ended December 31, 1998 or approximately 28%.
General and Administrative Expense. For the quarter, total operating
expenses were $208,631, resulting in a loss from operations of $(117,343).
After taking into account an income tax benefit of $39,571, CMC had a net loss
of $(77,772).
Liquidity and Capital Resources
- -------------------------------
Historically, CMC has financed its operations through cash flow derived
from operations. At March 31, 1999, CMC had a working capital deficit of
$(89,277) based on current assets of $177,090, consisting mainly of cash
($64,093) and accounts receivable ($68,318), and current liabilities of
$266,367, consisting mainly of accounts payable ($38,700) and accrued
liabilities ($227,667).
CMC has several new traditional mapping products in advanced stages of
development. However, sufficient working capital has to be generated from
continuing operations or outside sources to launch these products into the
marketplace. Recently, CMC entered into a Cooperative Research and
Development Agreement with the U.S. Geological Survey agency (the "CRADA
Agreement") to produce the next National Atlas of the United States. Although
the project is consistent with CMC's technological capabilities, the
development and distribution of a product of this significance (initially to
be sold to all schools and libraries in the United States) will require
significant external financing. CMC views the National Atlas product to be a
high gross margin business with an 80-90% level of recurring revenue (sold on
a periodic "subscription" basis) over the long term.
CMC proposes to finance its needs for additional working capital during
the year through both debt and equity. Initially, CMC has entered into an
interim loan agreement with Mark A. Scharmann, an officer and director of the
Company, wherein Mr. Scharmann has loaned CMC $100,000. The note is due July
26, 1999 and bears interest on the principal balance at 1% per month. In
addition, on May 14, 1999, CMC entered into an interim loan agreement with
Steven J. Peskaitis, a principal shareholder of CMC, wherein Mr. Peskaitis
loaned CMC $100,000. The note is due September 14, 1999, and bears interest
on the principal balance at 1% per month. (See CMC Interim Loan Agreements.)
On completion of the acquisition, the surviving corporation "Lexon
Technologies, Inc." intends to offer restricted shares of common stock in a
private placement. The proceeds of the proposed private placement will be
utilized to repay the interim loans, meet initial capital requirements under
the CRADA Agreement and continue the introduction of CMC's products into the
marketplace. No assurance can be given that any common stock will be sold or
that the surviving corporation will be able to raise additional working
capital.
Commitments for Expenditures and Sources of Capital
- ---------------------------------------------------
In order to launch its traditional products and the National Atlas
product, CMC is expanding its leased facilities and has budgeted $250,000 in
additional capital expenditures for office equipment and computer hardware
during the year ended December 31, 1999. With respect to CMC's capital
expenditures related to the CRADA Agreement, CMC is committed to expend
<PAGE> 31
approximately $7.5 million over the next two years in support of the National
Atlas Project. Funds to cover this commitment will be derived in part a
proposed private placement following completion of the Acquisition. However,
proceeds from the proposed private placement will are not intended to be
sufficient to meet the entire CRADA Agreement commitment. The balance of the
funds necessary to meet the CRADA Agreement commitment are expected to come
from cash derived from operations during the two year period. CMC cannot
predict with any degree of certainty whether the National Atlas Project will
generate any additional revenues for CMC during the initial two year period.
However, the pursuit of the National Atlas Project does require CMC to make
the up front expenditures. If proceeds from the proposed private placement
and cash from operations are not adequate to meeting CMC's CRADA Agreement
commitment, CMC may need to seek alternative funding.
In the event CMC does need to raise capital it would most likely seek
debt financing from traditional lending sources, loans from or private sales
of its securities to its existing officers, directors, and shareholders, or
such other debt or equity offerings that may be available to CMC at that time.
Any offering of debt or equity securities would most likely be limited to
persons exempt under the Commission's Regulation D or other rules or
provisions for exemption, if any applies. There is no assurance that CMC will
be able to obtain funding when and if need, or that such funding, if
available, can be obtained on terms reasonable or acceptable.
<PAGE>
<PAGE> 32
Selected Financial Data of CMC
- ------------------------------
The year end financial data included in the table has been selected by
CMC and has been derived from the CMC's balance sheets at December 31, 1998
and 1997 and statements of operations for its fiscal years ended December 31,
1998, 1997 and 1996. All financial information for the fiscal years ended
December 31, 1998 and 1997 has been examined by Hutton Nelson & McDonald LLP,
certified public accountants. The three month unaudited financial data has
been derived from the Company's March 31, 1999 financial statements and has
been provided by the Company.
Three Months
Year Ended December 31, Ended
1998 1997 1996 March 31, 1999
---- ---- ---- --------------
Statement of (Unaudited)
Operations Data:
Revenues $1,175,295 $1,934,433 $1,597,616 $ 186,780
Cost of Sales $ 333,357 $ 890,586 $ 759,662 $ 95,492
Operating Expenses $ 765,202 $1,081,036 $ 708,002 $ 208,631
Net income(loss) $ 63,636 $ (38,116) $ 128,086 $ (77,772)
Net earnings (loss)
per common share $ 6.36 $ (3.81) $ 12.81 $ (5.18)
Weighted Average
Shares Outstanding 10,000 10,000 10,000 15,000
At December 31, At March 31,
1998 1997 1999
---- ---- ----
Balance Sheet Data: (Unaudited)
Current Assets $ 177,714 $ 188,679 $ 177,090
Current Liabilities $ 13,471 $ 14,550 $ 266,367
Work Capital (Deficit) $ 164,243 $ 174,138 $ (89,277)
Property & Equipment (net) $ 32,132 $ 51,705 $ 47,533
Total Assets $ 264,696 $ 262,414 $ 327,871
Long Term Liabilities $ - $ - $ 100,000
Shareholders' Equity (Deficit) $ 251,225 $ 247,864 $ (38,496)
<PAGE>
<PAGE> 33
Market Price of the Company's Common Stock and Dividends
- --------------------------------------------------------
The following table sets forth, for the respective periods indicated,
the prices of the Company's Common Stock in the over the counter market as
reported by a market maker on the NASD'S OTC Bulletin Board. Such over the
counter market quotations are based on inter-dealer bid prices, without
markup, markdown or commission, and may not necessarily represent actual
transactions. At June 17, 1999, the bid and ask quotations for the
Company's Common Stock as quoted on the OTC Bulletin Board were $0.02 and
$0.10 respectively.
Bid Quotation
-------------
Fiscal Year 1999 High Bid* Low Bid*
- ---------------- -------- -------
Quarter ended 12/31/98 $0.10 $0.02
Quarter ended 3/31/99 $0.10 $0.02
Fiscal Year 1998 High Bid Low Bid
- ---------------- -------- -------
Quarter ended 12/31/97 $ N/A $ N/A
Quarter ended 3/31/98 $ N/A $ N/A
Quarter ended 6/30/98 $ N/A $ N/A
Quarter ended 9/30/98 $ N/A $ N/A
Fiscal Year 1997 High Bid Low Bid
- ---------------- -------- -------
Quarter ended 12/31/96 $ N/A $ N/A
Quarter ended 3/31/97 $ N/A $ N/A
Quarter ended 6/30/97 $ N/A $ N/A
Quarter ended 9/30/97 $ N/A $ N/A
To the best knowledge of management of the Company, prior to September
30, 1998, there was no reported bid or ask prices for the Company's Common
Stock and there was no trading of the Company's Common Stock during is fiscal
years ended September 30, 1998 and September 30, 1997.
The number of shareholders of record of the Company's Common Stock as of
June 24, 1999, was approximately 75.
The Company has not paid any cash dividends to date and following the
acquisition of CMC does not anticipate paying dividends in the foreseeable
future.
Market Price of CMC's Stock and Dividends
- -----------------------------------------
There is not now and there has never been a public market for CMC's
securities. CMC has operated as an S-corporation, with periodic distributions
to its stockholders. There are a total of six stockholders who collectively
own 100% of the 15,000 CMC shares issued and outstanding, all of the same
class.
CMC has paid cash dividends in each of the last two fiscal years ending
December 31, 1998 and 1997 of $62,420 or $6.24 per share, and $60,275 or $6.03
per share. CMC shareholders received an additional dividend of $212,449 or
$14.16 per share in the interim period ended March 31, 1999.
<PAGE> 34
PRO FORMA FINANCIAL INFORMATION
- --------------------------------
REXFORD, INC. AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------
HISTORICAL(a) ACQUISITION(b) OTHER PRO FORMA
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash $ 229 $ 64,093 $ - $ 64,322
Accounts receivable - 68,318 - 68,318
Inventories - 5,108 - 5,108
Deferred income tax benefit - 39,571 - 39,571
------------ ------------ ----------- ------------
Total Current Assets 229 177,090 - 177,319
------------ ------------ ----------- ------------
Property and equipment - 128,662 - 128,662
Accumulated depreciation - 81,129 - 81,129
------------ ------------ ----------- ------------
- 47,533 - 47,533
------------ ------------ ----------- ------------
Other assets - 103,248 - 103,248
------------ ------------ ----------- ------------
Total Assets $ 229 $ 327,871 $ - $ 328,100
============ ============ =========== ============
LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable $ 10,580 $ 38,796 $ - $ 49,376
Accrued liabilities - 227,571 - 227,571
Advance from related party 2,222 - - 2,222
------------ ------------ ----------- ------------
Total current liabilities 12,802 266,367 - 279,169
------------ ------------ ----------- ------------
Long-term debt - 100,000 - 100,000
------------ ------------ ----------- ------------
Stockholders' equity (deficit)
Common Stock 1,000 1,500 (1,500)(c) 11,500
10,500 (c)
Additional paid-in capital 212,717 36,818 (235,290)(c) 14,245
Retained earnings (226,290) (76,814) 226,290 (c) (76,814)
------------ ------------ ----------- ------------
Total stockholders' equity (deficit) (12,573) (38,495) - (51,069)
------------ ------------ ----------- ------------
Total liabilities and
stockholders' equity (deficit) $ 229 $ 327,871 $ - $ 328,100
============ ============ =========== ============
<FN>
(a) The historical balance sheet of the Company reflects the declaration of a 1 for 70 reverse
stock split by the stockholders of Rexford, Inc. prior to the acquisition of the common stock of
Chicago Map Corporation. Subsequent to the reverse stock split the Company had 1,000,000 shares
of common stock outstanding, valued at $1,000 based on the par value $0.001 per share for the
common stock of Rexford, Inc.
(b) To reflect the acquisition of all of the issued and outstanding shares of common stock of
Chicago Map Corporation through an exchange of common stock. Undistributed retained earnings at
the date of acquisition have been reclassified to additional paid-in capital.
(c) To account for the acquisition as a recapitalization of Rexford, Inc. As the transaction is
deemed to be a reverse acquisition, Chicago Map Corporation is treated as the accounting acquiror
and Rexford, Inc. is considered to be the acquired entity for financial reporting purposes. As
part of the acquisition, Rexford, Inc. exchanged 10,500,000 shares of common stock for 15,000
shares of common stock of Chicago Map Corporation. Subsequent to the acquisition, the Company
had 11,500 shares of common stock outstanding, valued at $11,500 based on the par value of $0.001
per share for the common stock of Rexford, Inc.
</FN>
</TABLE>
<PAGE>
<PAGE> 35
PRO FORMA FINANCIAL INFORMATION
- -------------------------------
REXFORD, INC. AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
SIX MONTHS ENDED MARCH 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------
HISTORICAL ACQUISITION(a) PRO FORMA
------------ ------------ ------------
<S> <C> <C> <C>
Sales $ - $ 509,790 $ 509,790
Cost of sales - 194,257 194,257
------------ ------------ ------------
Gross profit - 315,533 315,533
Administrative expense 27,533 404,385 431,918
------------ ------------ ------------
Loss before income tax benefit (27,533) (88,852) (116,385)
Income tax benefit - 39,571 39,571
------------ ------------ ------------
Net loss $ (27,533) $ (49,281) $ (76,814)
============ ============ ============
Average common shares outstanding 11,500,000
============
Loss per common share $ (0.01)
============
<FN>
(a) To reflect the acquisition of all of the issued and outstanding shares of common stock of
Chicago Map Corporation as if the transaction had been completed at the beginning of the period.
</FN>
</TABLE>
<PAGE>
<PAGE> 36
PRO FORMA FINANCIAL INFORMATION
- -------------------------------
REXFORD, INC. AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
YEAR ENDED SEPTEMBER 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------
HISTORICAL ACQUISITION(a) OTHER PRO FORMA
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $ - $ 1,175,295 $ - $ 1,175,295
Cost of sales - 333,357 - 333,357
------------ ------------ ------------ ------------
Gross profit - 841,938 - 841,938
Administrative expense 46,350 765,202 2,833(b)(c) 814,385
------------ ------------ ------------ ------------
Income (loss) from operations (46,350) 76,736 (2,833) 27,553
Other expense - (13,100) - (13,100)
------------ ------------ ------------ ------------
Income (loss) before income taxes (46,350) 63,636 (2,833) 14,453
Income taxes - 4,914 - 4,914
------------ ------------ ------------ ------------
Net income (loss) $ (46,350) $ 58,722 $ (2,833) $ 9,539
============ ============ ============ ============
Average common shares outstanding 11,500,000
============
Earnings per common share $ 0.00
============
<FN>
(a) To reflect the acquisition of all of the issued and outstanding shares of common stock of
Chicago Map Corporation as if the transaction had been completed at the beginning of the period.
(b) To reflect the depreciation and amortization of $2,553 in connection with the acquisition of
certain assets of Tirus, Inc. by Chicago Map Corporation as if the transaction had been completed
at the beginning of the period.
(c) To reflect stock bonus of $280 to an officer and an employee of Chicago Map Corporation as if
the transaction had been completed at the beginning of the period.
</FN>
</TABLE>
<PAGE>
<PAGE> 37
EXECUTIVE COMPENSATION
The Company has not had a bonus, profit sharing, or deferred compensation
plan for the benefit of its employees, officers or directors. The Company has
not paid any salaries or other compensation to its officers, directors or
employees for the years ended September 30, 1998, 1997 and 1996, nor at any
time during 1998, 1997 or 1996. Further, the Company has not entered into an
employment agreement with any of its officers, directors or any other persons.
As of the date hereof, no such persons have accrued any compensation from the
Company.
Summary Compensation Table
- --------------------------
The following tables set forth certain summary information concerning
the compensation paid or accrued for each of the Company's last three
completed fiscal years to the Company's chief executive officer and each of
its other executive officers that received compensation in excess of $100,000
during such period (as determined at September 30, 1998) the end of the
Company's last completed fiscal year:
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Name and Principal Restricted
Position Bonus Other Annual Stock Options/ LTIP All Other
- ------------------ Year Salary ($) Compensation Awards SARs Payout Compensation
---- ------ ----- ------------ ---------- ------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dennis Blomquist,
President & C.E.O. 1998 $-0- $-0- $ -0- $-0- $-0- $-0- $-0-
1997 $-0- $-0- $ -0- $-0- $-0- $-0- $-0-
1996 $-0- $-0- $ -0- $-0- $-0- $-0- $-0-
</TABLE>
<PAGE>
<PAGE> 38
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table set forth as of June 24, 1999, the name and address
and number of shares of the Company's Common Stock held of record or
beneficially by each person who held of record, or was known by the Company to
own beneficially, more than 5% of the 70,000,000 shares of Common Stock issued
and outstanding, and the name and shareholdings of each director and of all
officers and directors as a group. The table also indicates the number of
shares and percent of class to be held following the acquisition by each
person nominated for election as a director of the Company. All such persons
are directors of CMC.
Prior to Reorganization After Reorganization (2)
----------------------- ------------------------
Number of Percent Number of Percent
Name and Address Shares (1) of Class Shares Owned of Class
- ---------------- ------------ -------- -------------- --------
Principal Shareholders:
Dennis Blomquist 9,644,212 13.78 137,774 1.20
7777 East Main St. #251
Scottsdale, AZ 85251
Mark A. Scharmann 55,109,000 (3) 78.72 787,271 6.84
1661 Lakeview Circle
Ogden, UT 84403
Current Officers and Directors:
Dennis Blomquist --------See Table Above--------
Ron A. Featherstone 150,000 .21 2,143 .02
Mark A. Scharmann --------See Table Above--------
Tom Sollami 150,000 .21 2,143 .01
---------- ----- ------- ----
All Officers and Directors
as a Group (4 Persons) 65,053,212 92.93 929,331 8.08
========== ===== ======= ====
Nominees of Election of Directors:
Steven J. Peskaitis - - 7,235,970 62.92
Mike Barnett - - 448,700 3.90
Paris Karahalios - - 730,000 6.35
James L. Rooney - - - -
Thomas W. Rieck - - - -
---------- ----- ---------- -----
All Nominees for Election
as a Group (5 Persons) - - 8,414,670 73.17
========== ===== ========== =====
- --------------------------------
(1) All shares are owned directly or indirectly, beneficially and of record
and the shareholder has sole voting, investment and dispositive power.
(2) Gives effect to the 1-for-70 Reverse Split.
(3) Includes 10,000 shares of Common Stock beneficially held of record by
Troika Capital Investment, of which Mr. Scharmann is the principal owner and
shareholder and 50,000 shares beneficially held of record by Rachel Leslie,
the spouse of Mr. Scharmann, and which Mr. Scharmann disclaims beneficial
ownership.
<PAGE> 39
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Compliance with Section 16(a) of the Securities Exchange Act of 1934
- --------------------------------------------------------------------
The Company's Common Stock was recently registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and in connection therewith, directors, officers, and beneficial owners of
more than 10% of the Company's Common Stock are required to file on a timely
basis certain reports under Section 16 of the Exchange Act as to their
beneficial ownership of the Company's Common Stock. The following table sets
forth as of April 9, 1999, the name and position of each person that
failed to file on a timely basis any reports required pursuant to Section 16
of the Exchange Act.
Report to
Name of Person Position be Filed
- -------------- -------- ------------
None N/A N/A
Shareholder Advances and Debt Conversion
- ----------------------------------------
Mark A. Scharmann, an officer and director of the Company, has
periodically advanced money to the Company during the years ended September
30, 1998 and 1997 and the six-month period ended December 31, 1998. Any
outstanding advances made by Mr. Scharmann bear interest at a rate of 10% and
have no maturity date. At September 30, 1997, the Company issued 23,024,015
shares of Common Stock, valued at approximately $0.002 per share, to Mark A.
Scharmann, in exchange for the conversion of $46,048 of advances and accrued
interest payable by the Company. On June 29, 1998, the Company issued an
additional 17,785,406 shares of its Common Stock, valued at approximately
$0.002 per share, to Mr. Scharmann, in exchange for the conversion of
approximately $35,571 of advances and accrued interest payable by the Company.
At December 31, 1998, the advances made by Mr. Scharmann totaled $11,921.
Subsequent to September 30, 1998, the Company issued 12,893,580 shares of
Common Stock to Mr. Scharmann in exchange for the conversion of all advances
and accrued interest payable by the Company.
The securities issued in the foregoing transactions were issued in
reliance on the exemption from registration and the prospectus delivery
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
set forth in section 3(b) and/or section 4(2) of the Securities Act and the
regulations promulgated thereunder. The individual receiving the shares is an
officer and director of the Registrant and is deemed to be an "accredited
investor" as that term is defined under Rule 501 of the Regulation D of the
Securities Act.
CMC Interim Loan Agreements
- ---------------------------
CMC has entered into a loan agreement with Mark A. Scharmann, an officer,
director and principal shareholder of the Company, in the principal sum of
$100,000. CMC is applying all of the loan proceeds for general corporate
purposes associated with its business operation. The loan is being made in
anticipation of the acquisition by the Company, of all the issued and
outstanding common stock of CMC pursuant to the Acquisition Agreement
described more fully herein. The loan bears interest on the unpaid balance at
1% per month from the date of the note until paid in full. The entire amount
<PAGE> 40
loaned under the Note, including principal and interest is due and payable
within 4 months from the date of the loan, or from the proceeds of an
anticipated private placement offering following the completion of the
reorganization contemplated under the Acquisition Agreement, or immediately in
the event of default. As an inducement to Mr. Scharmann to make the loan, on
completion of the reorganization contemplated under the Acquisition Agreement,
Mr. Scharmann will be issued a common stock purchase warrant to purchase up to
100,000 shares of the common stock of the surviving entity, Lexon
Technologies, Inc. ("Lexon") at an exercise price of $2.50 per share.
CMC has entered into an identical loan agreement for the same amount and
the same repayment terms with Steven J. Peskaitis, who expects to become a
controlling principal of the Company following the Acquisition Agreement.
Other Relationships
- -------------------
Thomas W. Rieck, a partner in the law firm of Rieck and Crotty which has
performed legal services for CMC, is a nominee for director of the Company in
connection with the merger.
Dennis Blomquist, the president of the Company, has been providing the
Company with a location for its offices on a "rent-free" basis. Following
approval of the Acquisition Proposal, the Company's executive offices will be
moved to the executive offices of CMC.
During the three month period ended March 31, 1999, the Board of
Directors of CMC issued a stock bonus of 2,161 shares of CMC's common stock to
an Steve Peskaitis, officer, director and principal shareholder of CMC and 641
shares of CMC's common stock to Mike Barnett, an officer and employee of CMC.
The aggregate value attributed to the issuance of the common stock was $280
based on the stated value of $0.10 per share for CMC's no par common stock.
Paris Karahalios, a nominee for director of the Company, is a co-founder
of TRIUS, Inc., and was the president and C.E.O. of TRIUS, Inc. prior to its
acquisition by CMC on March 12, 1999.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Tanner + Co. has been the independent certified public accountant who has
examined the Company's financial statements for the fiscal years ended
September 30, 1998 and 1997.
Hutton Nelson & McDonald, LLP has been the certified public accountant
who has examined CMC's financial statements for the fiscal years ended
December 31, 1998 and 1997.
The Company's Board of Directors does not anticipate that a
representative of Tanner + Co. or Hutton Nelson & McDonald, LLP will be
present at the Meeting for purposes of making a statement or responding to
questions.
SHAREHOLDER PROPOSALS
No proposals have been submitted by shareholders of the Company for
consideration at the Special Meeting. It is anticipated that the next annual
meeting of shareholders will be held during March 2000. Shareholders may
present proposals for inclusion in the Information Statement to be mailed in
<PAGE> 41
connection with the next annual meeting of shareholders of the Company,
provided such proposals are received by the Company no later than 90 days
prior to such meeting, and are otherwise in compliance with applicable laws
and regulations and the governing provisions of the articles of incorporation
and bylaws of the Company.
LEGAL MATTERS
Integrated GPS Technologies v. CMC
- ----------------------------------
CMC is a defendant in a trademark infringement action which is pending in
the United States District Court for the Southern District of Texas in
Houston. The complaint alleges that CMC has committed trademark infringement
and has engaged in a variety of acts of false advertising and unfair
competition under both federal and Texas State law in connection with CMC's
Precision Mapping (TM) software. The plaintiff, Integrated GPS Technologies
("IGT"), Houston, Texas, is seeking unspecified monetary damages. IGT's
product, marketed under the name GPS-Link, performs substantially different
functions and is marketed to a substantially different consuming public.
CMC's management believes it to be unlikely that CMC could be found likely to
infringe IGT's alleged trademark. A trial date has been set for August 3,
1999. Because the cause of action is a federal trademark infringement action
no specific amount of monetary damages has been sought. The parties are
engaged in settlement talks and CMC hopes to resolve this matter out of court
in the immediate future. The settlement amount has been agreed upon between
IGT and CMC's attorney (Hunt and Associates) and insurance carrier (Hanover
Insurance). Hanover Insurance has agreed to pay the settlement amount and
therefore, CMC's management anticipates that the settlement will not impose
any financial or court obligations on CMC. However, if no settlement is
reached prior to the trial date and CMC does not prevail at trial, it is
possible that the monetary damages awarded could have a material adverse
impact on CMC's financial condition .
OTHER MATTERS
Management does not know of any business other than referred to in the
Notice which may be considered at the meeting. If any other matters should
properly come before the Special Meeting, such matters will be properly
addressed and resolved and those in attendance will vote on such matters in
accordance with their best judgment.
REXFORD, INC.
By order of the Board of Directors
/S/ Dennis Blomquist, President
Salt Lake City, Utah
June 30, 1999
<PAGE>
<PAGE> 42
Rexford, Inc.
(A Development Stage Company)
Balance Sheet
March 31, 1999
(Unaudited)
- ------------------------------------------------------------------------------
ASSETS
Cash $ 229
-----------
TOTAL ASSETS $ 229
-----------
- ------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 10,580
Related party payable 2,222
-----------
TOTAL CURRENT LIABILITIES 12,802
-----------
STOCKHOLDERS' DEFICIT
Common stock - par value $.001 per share.
Authorized - 1,000,000 shares; issued
and outstanding 70,000,000 shares 70,000
Additional paid-in capital 143,717
Deficit accumulated during the development stage (226,290)
-----------
TOTAL STOCKHOLDERS' DEFICIT (12,573)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 229
-----------
See accompanying notes to financial statements
<PAGE>
<PAGE> 43
Rexford, Inc.
(A Development Stage Company)
Statement of Operations
(Unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31, Cumulative
1999 1998 1999 1998 Amounts
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Revenue - Interest $ - $ - $ - $ - $ 10,000
Expenses:
General and administrative expenses 20,928 11,990 27,533 20,392 132,115
---------- ---------- ---------- ---------- ---------
Loss from operations (20,928) (11,990) (27,533) (20,392) (122,115)
Gain on divestiture of discontinued
operations, net tax - - - - 90,231
---------- ---------- ---------- ---------- ---------
Net loss before income taxes (20,928) (11,990) (27,533) (20,392) (31,884)
Income tax expense - - - - -
---------- ---------- ---------- ---------- ---------
Net loss $ (20,928) $ (11,990) $ (27,533) $ (20,392) $ (31,884)
========== ========== ========== ========== =========
Loss per share $ (.00) $ (.00) $ (.00) (.00) (.00)
========== ========== ========== ========== =========
Weighted average number of shares
outstanding 63,553,000 39,321,000 61,404,000 39,321,000 29,395,000
========== ========== ========== ========== =========
</TABLE>
See accompanying notes to financial statements
<PAGE>
<PAGE> 44
Rexford, Inc.
(A Development Stage Company)
Statement of Cash Flows
(Unaudited)
- ------------------------------------------------------------------------------
Six Months Ended
March 31, Cumulative
1999 1998 Amounts
---------- ---------- ----------
Cash flows from operating activities:
Net loss $ (27,533) $ (20,392) $ (31,884)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Interest recognized on related
party payable 141 - 141
Gain on disposal of discontinued
segment - - (90,231)
Increase in:
Cash overdraft - - -
Accounts payable and accrued
liabilities 8,830 245 19,886
---------- --------- ---------
Net cash used in
operating activities (18,562) (20,147) (102,088)
---------- --------- ---------
Cash flows from investing activities: - - -
Cash flows from financing activities:
Proceeds from the issuance of stock - - 13,750
Change in related party payables 18,565 19,713 88,567
---------- ---------- ----------
Net cash provided by
financing activities 18,565 19,713 102,317
---------- ---------- ----------
Net decrease in cash 3 (434) 229
Cash, beginning of period 226 540 -
---------- ---------- ----------
Cash, end of period $ 229 $ 106 $ 229
========== ========== ==========
See accompanying notes to financial statements
<PAGE>
<PAGE> 45
Rexford, Inc.
(A Development Stage Company)
Notes to Financial Statements
- ------------------------------------------------------------------------------
(1) The unaudited financial statements include the accounts of Rexford,
Inc. and include all adjustments (consisting of normal recurring items) which
are, in the opinion of management, necessary to present fairly the financial
position as of March 31, 1999 and the results of operations and changes in
financial position for the three months and six months ended March 31, 1999
and 1998, and cumulative amounts since inception. The results of operations
for the six months ended March 31, 1999 are not necessarily indicative of the
results to be expected for the entire year.
(2) Loss per common share is based on the weighted average number of
shares outstanding during the period.
(3) During the six months ended March 31, 1999, the Company issued common
stock in exchange for a related party payable of $25,790.
<PAGE>
<PAGE> 46
Independent Auditors' Report
To the Board of Directors and Stockholders of Rexford, Inc.
We have audited the accompanying balance sheet of Rexford, Inc. (a
development stage company) as of September 30, 1998 and 1997, and the related
statements of operations, stockholders' deficit and cash flows for the years
then ended and the cumulative amounts since October 1, 1992. 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 that 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 financial position of Rexford, Inc., as of
September 30, 1998 and 1997, and the results of its operations and cash flows
for the years then ended and the cumulative amounts since October 1, 1992, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in note 1, the
Company's history of operating losses and stockholders' deficit raise
substantial doubt about its ability to continue as a going concern.
Management's plan in regard to this matter are also described in note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/S/Tanner + Co.
December 19, 1998
Salt Lake City, UT
<PAGE>
<PAGE> 47
Rexford, Inc.
(A Development Stage Company)
Balance Sheet
September 30
- ------------------------------------------------------------------------------
Assets 1998 1997
------ ---------- ----------
Current assets - Cash $ 226 $ 540
---------- ----------
$ 226 $ 540
========== ==========
Liabilities and Stockholders' Deficit
-------------------------------------
Current liabilities:
Accounts payable $ 1,750 $ 590
Payable to related party 9,306 -
---------- ----------
Total current liabilities 11,056 590
---------- ----------
Commitments and contingencies - -
Stockholders' deficit:
Common stock $.001 par value. Authorized
100,000,000 shares; issued and outstanding
57,106,420 and 39,321,015 shares,
respectively 57,106 39,321
Additional paid-in capital 130,821 113,036
Accumulated deficit (198,757) (152,407)
---------- ----------
Total stockholders' deficit (10,830) (50)
---------- ----------
$ 226 $ 540
========== ==========
See accompanying notes to financial statements
<PAGE>
<PAGE> 48
Rexford, Inc.
(A Development Stage Company)
Statement of Operations
Years Ended September 30,1998 and 1997
and Cumulative Amounts Since October 1, 1992
(Date of Commencement of Development Stage)
- ------------------------------------------------------------------------------
Cumulative
1998 1997 Amounts
---------- ---------- ----------
Revenue $ - $ - $ 10,000
General and administrative expenses 46,350 42,795 104,582
---------- ---------- ----------
Net loss from operations (46,350) (42,795) (94,582)
Gain on divestiture of discontinued
operations, net on tax - - 90,231
---------- ---------- ----------
Net loss before provision
for income taxes (46,350) (42,795) (4,351)
Provision for income taxes - - -
---------- ---------- ----------
Net loss $ (46,350) $ (42,795) $ (4,351)
========== ========== ==========
Net loss per common
share $ (.00) $ (.01) $ (.00)
========== ========== ==========
Weighted average number of shares
outstanding 43,767,000 16,360,000 20,209,000
========== ========== ==========
See accompanying notes to financial statements
<PAGE>
<PAGE> 49
Rexford, Inc.
(A Development Stage Company)
Statement of Stockholders' Deficit
For the Period October 1, 1992
(Date of Commencement of Development Stage)
Through September 30, 1998
- ------------------------------------------------------------------------------
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
---------- ---------- ---------- ----------- ----------
Balance at
October 1, 1992 12,297,000 $ 12,297 $ 85,734 $ (194,406) $ (96,375)
October 1992,
Divestiture of
CCDCI (6,000,000) (6,000) (4,000) - (10,000)
October 1992,
issuance of
8,000,000 shares
for cash 8,000,000 8,000 5,750 - 13,750
Net income - - - 89,617 89,617
---------- ---------- ---------- ----------- ----------
Balance at
September 30,
1993 14,297,000 $ 14,297 $ 87,484 $ (104,789) $ (3,008)
Conversion of
Debt to common
stock 2,000,000 2,000 2,528 - 4,528
Net loss - - - (4,073) (4,073)
---------- ---------- ---------- ----------- ----------
Balance at
September 30,
1994 16,297,000 $ 16,297 $ 90,012 $ (108,862) $ (2,553)
Net loss - - - (3,497) (3,497)
---------- ---------- ---------- ----------- ----------
Balance at
September 30,
1995 16,297,000 $ 16,297 $ 90,012 $ (112,359) $ (6,050)
Net income - - - 2,747 2,747
---------- ---------- ---------- ----------- ----------
Balance at
September 30,
1996 16,297,000 $ 16,297 $ 90,012 $ (109,612) $ (3,303)
Conversion of
debt to common
stock 23,024,015 23,024 23,024 - 46,048
Net loss - - - (42,795) (42,795)
---------- ---------- ---------- ----------- ----------
<PAGE> 50
Rexford, Inc.
(A Development Stage Company)
Statement of Stockholders' Deficit
Continued
For the Period October 1, 1992
(Date of Commencement of Development Stage)
Through September 30, 1998
- ------------------------------------------------------------------------------
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
---------- ---------- ---------- ----------- ----------
Balance at
September 30,
1997 39,321,015 $ 39,321 $ 113,036 $ (152,407) $ (50)
Conversion of
debt to
common stock $17,785,405 $ 17,785 $ 17,785 $ - $ 35,570
Net loss - - - (46,350) (46,350)
---------- ---------- ---------- ----------- ----------
Balance at
September
30, 1998 $57,106,420 $ 57,106 $ 130,821 $ (198,757) $ (10,830)
========== ========== ========== =========== ==========
See accompanying notes to the financial statements.
<PAGE>
<PAGE> 51
Rexford, Inc.
(A Development Stage Company)
Statement of Cash Flows
Years Ended September 30, 1998 and 1997
and Cumulative Amounts Since October 1, 1992,
(Date of Commencement of Development Stage)
- ------------------------------------------------------------------------------
Cumulative
1998 1997 Amounts
---------- ---------- ----------
Cash flows from operating activities:
Net loss $ (46,350) $ (42,795) $ (4,351)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Gain on disposal of discontinued
segment - (90,231)
Increase (decrease) in:
Cash overdraft - (282)
Accounts payable 10,466 (306) 11,056
---------- ---------- ----------
Net cash used in
operating activities (35,884) (43,383) (83,526)
---------- ---------- ----------
Cash flows from investing activities: - - -
---------- ---------- ----------
Cash flows from financing activities:
Increase in payable to related
parties - 42,348 70,002
Decrease increase in receivable
from related party - 1,575
Issuance of common stock 35,570 - 13,750
---------- ---------- ----------
Net cash used in
financing activities 35,570 43,923 83,752
---------- ---------- ----------
Net increase decrease in cash (314) 540 226
Cash, beginning of period 540 - 540
---------- ---------- ----------
Cash, end of period $ 226 $ 540 $ 226
========== ========== ==========
See accompanying notes to financial statements
<PAGE>
<PAGE> 52
Rexford, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 1998 and 1997
- ------------------------------------------------------------------------------
1. Summary of Business and Significant Accounting Policies
Organization (B)
- ---------------
The Company was organized under the laws of the state of Utah on February 14,
1983 under the name of Chelsea Energy Corporation. The Company was initially
formed to provide professional consulting services to local government units.
The Company subsequently changed its business direction when, in May 1989, the
Company acquired California Cola Distributing Company Incorporated (CCDCI), a
privately held California corporation. The Company issued 7,950,000 shares of
its common stock to the former shareholders of California Cola Distributing
Company Incorporated in connection with the acquisition and 300,000 shares of
common stock for services rendered in connection with the acquisition. The
Company's sole business was the operation of its subsidiary, California Cola
Distributing Company Incorporated, a California Corporation. In connection
with the acquisition, the Company changed its domicile to the state of
Delaware from the state of Utah and changed its name from Chelsea Energy
Corporation to California Cola Distributing Company, Inc.
Effective October 1, 1992, the Company divested its interest in CCDCI an
changed its name to Rexford, Inc. (the Company).
Development Stage Company
- -------------------------
Effective October 1, 1992, the Company is considered a development stage
company as defined in SFAS No. 7. The Company has, at the present time, not
paid any dividends and any dividends that may be paid in the future will
depend upon the financial requirements of the Company and other relevant
factors.
Going Concern
- -------------
The Company has incurred significant operating losses from its inception
through September 30, 1998 and continuation of the Company as a going concern
and payment of its liabilities are dependent upon the Company's ability to
attain profitable operations and additional working capital. Management's
plans with respect to this uncertainty include obtaining debt or equity
funding to finance the Company's operations. However, there can be no
assurance that the Company will be successful in doing so. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amounts and classification of
liabilities that might be necessary should the Company be unable to continue
as a going concern.
Cash and Cash Equivalents
- -------------------------
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments with a maturity of three months or less to be cash
equivalents.
<PAGE>
<PAGE> 53
Rexford, Inc.
(A Development Stage Company)
Notes to Financial Statements
Continued
1. Summary of Business and Significant Accounting Policies (Continued)
Loss Per Share
- --------------
Loss per share of common stock is computed based on the weighted average
number of shares of common stock outstanding during the period.
Use of Estimates
- ----------------
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and the expenses during the
reporting period. Actual results could differ from those estimates.
2. Related Party Transactions
The Company's payable to related party consists of advances from certain
shareholders of the Company. The advances bear interest at 10% and are
expected to be satisfied within the current period.
3. Income Taxes
The benefit for income taxes is different than amounts which would be provided
by applying the statutory federal income tax rate to loss before provision for
income taxes for the following reasons:
Year Ended
September 30,
Cumulative
1998 1997 Amounts
---------- ---------- ----------
Income tax benefit at
statutory rate $ 15,000 $ 15,000 $ 1,000
Change in valuation allowance (15,000) (15,000) (1,000)
---------- ---------- ----------
$ - $ - $ -
========== ========== ==========
Deferred tax assets at September 30, 1998 and 1997 are comprised of the
following:
September 30,
1998 1997
---------- ----------
Operating loss carryforwards $ 67,000 $ 52,000
Valuation allowance (67,000) (52,000)
---------- ----------
$ - $ -
========== ==========
<PAGE> 54
Rexford, Inc.
(A Development Stage Company)
Notes to Financial Statements
Continued
At September 30, 1998, the Company had net operating loss carryforwards of
approximately $198,000 available to offset future taxable income which begin
to expire in 2004. The amount of loss which may be used each year is limited
based on several factors which include changes in Company ownership, the fair
value of the Company and the federal discount rate.
No deferred tax assets have been provided for the tax benefit of loss
carryforwards due to uncertainty concerning their ultimate realization.
4. Supplemental Disclosure of Cash Flow Information
During the year ended September 30, 1998 and 1997, the Company converted
$35,570 and $46,048 of advances and interest payable to an officer/shareholder
of the Company for 17,785,405 shares and 23,024,015 shares of common stock,
respectively.
During the year ended September 30, 1994, the Company converted $4,528 of
notes payable to officers of the Company for 2,000,000 shares of common stock.
No amounts were paid for interest and income taxes during the period ended
September 30, 1998 and 1997 and since October 1, 1992.
5. Fair Value of Financial Instruments
None of the Company's financial instruments are held for trading purposes. The
Company estimates that the fair value of all financial instruments at
September 30, 1998, does not differ materially from the aggregate carrying
values of its financial instruments recorded in the accompanying balance
sheet. The estimated fair value amounts have been determined by the Company
using available market information and appropriate valuation methodologies.
Considerable judgement is necessarily required in interpreting market data to
develop the estimates of fair value, and, accordingly, the estimates are not
necessarily indicative of the amount that the Company could realize in a
current market exchange.
<PAGE>
<PAGE> 55
CHICAGO MAP CORPORATION
BALANCE SHEET
MARCH 31, 1999
ASSETS
Current assets
Cash $ 64,093
Accounts receivable 68,318
Inventories 5,108
Deferred tax assets 39,571
------------
Total current assets 177,090
------------
Property and equipment
Leasehold improvements 5,190
Furniture and equipment 123,472
------------
128,662
Accumulated depreciation 81,129
------------
47,533
------------
Other assets
Computer software costs 48,446
Intangible assets 49,802
Deposit 5,000
------------
103,248
------------
$ 327,871
============
The accompanying note is an integral part of these financial statements.
<PAGE>
<PAGE> 56
CHICAGO MAP CORPORATION
BALANCE SHEET
(Continued)
MARCH 31, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 38,796
Accrued liabilities
Payroll taxes 17,797
Distributions to stockholders 209,774
------------
Total current liabilities 266,367
------------
Long-term debt
Note payable 100,000
------------
Stockholders' equity (deficit)
Common stock 1,500
Retained earnings (deficit) (39,996)
------------
(38,496)
------------
$ 327,871
============
The accompanying note is an integral part of these financial statements.
<PAGE>
<PAGE> 57
CHICAGO MAP CORPORATION
STATEMENT OF INCOME (LOSS)
THREE MONTHS ENDED MARCH 31, 1999
Sales $ 186,780
Cost of sales 95,492
------------
Gross profit 91,288
Administrative expense 208,631
------------
Loss before income tax benefit (117,343)
Income tax benefit 39,571
------------
Net loss $ (77,772)
============
The accompanying note is an integral part of these financial statements.
<PAGE>
<PAGE> 58
CHICAGO MAP CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
THREE MONTHS ENDED MARCH 31, 1999
Common Stock Retained
--------------------------- Earnings
Shares Amount (Deficit)
------------ ------------ ------------
Balance, January 1, 1999 10,000 $ 1,000 $ 250,225
Net loss (77,772)
Issuance of common stock 5,000 500
Distributions to stockholders
Cash (2,675)
Accrued (209,774)
------------ ------------ ------------
Balance, March 31, 1999 15,000 $ 1,500 $ (39,996)
============ ============ ============
The accompanying note is an integral part of these financial statements
<PAGE>
<PAGE> 59
CHICAGO MAP CORPORATION
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999
Cash flows from operating activities:
Cash received from customers $ 216,637
Cash paid to suppliers and employees (249,775)
------------
Net cash used in operating activities (33,138)
------------
Cash flows from investing activities:
Capital expenditures (16,900)
Acquisition of intangible assets (50,220)
Payment of deposit (5,000)
------------
Net cash used in investing activities (72,120)
------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 100,000
Issuance of common stock 500
Cash distributions paid to stockholders (2,675)
------------
Net cash provided by financing activities 97,825
------------
Net decrease in cash (7,433)
Cash at beginning of period 71,526
------------
Cash at end of period $ 64,093
============
The accompanying note is an integral part of these financial statements.
<PAGE>
<PAGE> 60
CHICAGO MAP CORPORATION
STATEMENT OF CASH FLOWS
(Continued)
THREE MONTHS ENDED MARCH 31, 1999
Reconciliation of net loss to net cash used in
operating activities:
Net loss $ (77,772)
------------
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation 1,504
Amortization 6,817
Change in assets (increase) decrease:
Accounts receivable 29,857
Inventories 2,905
Deferred tax assets (39,571)
Change in liabilities increase:
Accounts payable 33,056
Accrued liabilities 10,066
------------
Total adjustments 44,634
------------
Net cash used in operating activities $ (33,138)
============
The accompanying note is an integral part of these financial statements.
<PAGE>
<PAGE> 61
CHICAGO MAP CORPORATION
NOTE TO FINANCIAL STATEMENTS
MARCH 31, 1999
ACQUISITION AND STOCK BONUS
On March 12, 1999, the Company acquired certain assets of TRIUS, Inc. for
$62,300 in cash and 2,198 shares of common stock of Chicago Map Corporation
(the "Company"). The 2,198 shares of common stock are included in the 15,000
shares of common stock of the Company outstanding at March 31, 1999. The value
attributed to the issuance of the common stock was $220 based on management's
estimate of $0.10 per share as the fair value of the Company's no par common
stock. The principal business of TRIUS, Inc. is the development of computer
software technologies.
In connection with this acquisition, the Board of Directors approved a stock
bonus of 2,802 shares to an officer and an employee of the company. The 2,802
shares of common stock are included in the 15,000 shares of common stock of
the Company outstanding at March 31, 1999. The value attributed to the
issuance of the common stock was $280 based on management's estimate of $0.10
per share as the fair value of the Company's no par common stock.
The fair value of the Company's no par common stock was estimated by
management as there is no established market for the Company's common stock.
Management believes the fair value of the Company's no par common stock
approximates its stated value of $0.10 per share considering the Company's
negative working capital and retained earnings deficit.
<PAGE>
<PAGE> 62
Hutton Nelson & McDonald LLP
Certified Public Accountants
1815 South Meyers Road Suite 550
Oakbrook Terrace, Illinois 60181-5230
630/495-5400 FAX 630/495-0561
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Chicago Map Corporation
We have audited the accompanying balance sheets of Chicago Map
Corporation as of December 31, 1998 and 1997, and the related statements of
income (loss), changes in shareholders' equity, and cash flows for each of the
three years ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statement 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 that 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 financial position of Chicago Map
Corporation as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years ended December 31,
1998, in conformity with generally accepted accounting principles.
/S/Hutton, Nelson & McDonald LLP
Oakbrook Terrace, Illinois
March 17, 1999
<PAGE>
<PAGE> 63
CHICAGO MAP CORPORATION
BALANCE SHEETS
ASSETS
December 31,
1998 1997
------- -------
Current assets
Cash $ 71,526 $ 76,091
Accounts receivable, less allowance for
doubtful accounts of $25,000 and $100,000 98,175 89,501
Inventories 8,013 19,287
Prepaid expenses - 3,800
------ ------
Total current assets 177,714 188,679
======= =======
Property and equipment
Leasehold improvements 3,971 16,072
Furniture and equipment 107,791 102,604
------- -------
Accumulated depreciation 32,137 51,705
------ ------
Other asset
Computer software costs, net of accumulated
amortization of $16,343 in 1998 54,845 22,030
------ ------
$264,696 $262,414
======= =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 64
CHICAGO MAP CORPORATION
BALANCE SHEETS
(continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
1998 1997
------- -------
Current liabilities
Accounts payable $ 5,740 $ 2,123
Accrued liabilities
Payroll taxes 7,731 11,500
Income taxes - 927
----- ------
Total current liabilities 13,471 14,550
------ ------
Shareholders' equity
Common stock, no par value; authorized
100,000 shares; issued and outstanding
10,000 shares 1,000 1,000
Retained earnings 250,225 246,864
------- -------
251,225 247,864
------- -------
$264,696 $262,414
======= =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 65
CHICAGO MAP CORPORATION
STATEMENTS OF INCOME (LOSS)
Year Ended December 31
1998 1997 1996
--------- --------- ---------
Sales $1,175,295 $1,934,433 $1,597,616
Cost of sales 333,357 890,586 759,662
--------- --------- ---------
Gross profit 841,938 1,043,847 837,954
Administrative expense 765,202 1,081,036 708,002
------- --------- -------
Income (loss) from operations 76,736 (37,189) 129,952
Other expense
Interest Expense - - (138)
Loss on disposition of assets (13,100) - -
------ ------ -------
Income (loss) before income taxes 63,636 (37,189) 129,814
Income taxes - 927 1,728
------ ------ -------
Net income (loss) $ 63,636 $ (38,116) $ 128,086
====== ====== =======
Average common shares outstanding 10,000 10,000 10,000
====== ====== ======
Earnings (loss) per common share $ 6.36 $(3.81) $12.81
====== ====== ======
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 66
CHICAGO MAP CORPORATION
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Common Stock Retained
Shares Amount Earnings
------ ------ --------
Balance, January 1, 1996 10,000 $1,000 $287,949
Net income 128,086
Cash distributions (68,635)
------ ----- -------
Balance, December 31, 1996 10,000 $1,000 347,400
Net income (38,116)
Cash distributions (62,420)
------ ----- -------
Balance, December 31, 1997 10,000 $1,000 246,864
Net income 63,636
Cash distributions (60,275)
------ ----- -------
Balance, December 31, 1998 10,000 $1,000 $250,225
====== ===== =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 67
CHICAGO MAP CORPORATION
STATEMENTS OF CASH FLOWS
Year Ended December 31
1998 1997 1996
--------- --------- ---------
Cash flows from operating activities:
Cash received from customers $1,141,761 $1,775,213 $1,748,237
Cash paid to suppliers and employees (1,028,544) (1,859,751) (1,389,739)
Interest paid - - (138)
Income taxes paid (927) (1,728) (2,613)
--------- --------- ---------
Net cash provided by (used in)
operating activities 112,290 (86,266) 355,747
------- ------ -------
Cash flows from investing activities:
Proceeds from sale of equipment 425 - -
Capital expenditures (7,847) (17,880) (47,958)
Payment of computer software costs (49,158) (22,030) -
------ ------ ------
Net cash used in investing
activities (56,580) (39,910) (47,958)
------ ------ ------
Cash flows from financing activities:
Payments on loan from shareholder - - (6,827)
Cash distributions paid to shareholders (60,275) (62,420) (68,635)
------ ------ ------
Net cash used in financing
activities (60,275) (62,420) (75,462)
------ ------ ------
Net increase (decrease) in cash (4,565) (188,596) 232,327
Cash at beginning of year 76,091 264,687 32,360
------ ------- -------
Cash at end of year $ 71,526 $ 76,091 $264,687
====== ====== =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 68
CHICAGO MAP CORPORATION
STATEMENTS OF CASH FLOWS
(continued)
Year Ended December 31
1998 1997 1996
--------- --------- ---------
Reconciliation of net income (loss)
to net cash provided by (used in)
operating activities:
Net income (loss) $ 63,636 $(38,116) $ 128,086
------ ------ -------
Adjustment to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation 13,890 13,222 5,893
Amortization of computer software costs 16,343 - -
Amortization of organization costs - 17 25
Loss on disposition of assets 13,100 - -
Change in assets (increase) decrease:
Accounts receivable (8,674) (36,550) 281,423
Inventories 11,274 12,812 (7,638)
Prepaid expenses 3,800 - (3,800)
Changes in liabilities increase
(decrease):
Accounts payable 3,617 (38,732) (52,006)
Accrued liabilities (4,696) 1,081 3,764
------ ------ ------
Total adjustments 48,654 (48,150) 227,661
------ ------ -------
Net cash provided by (used in)
operating activities $112,290 $(86,266) $355,747
======= ====== =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 69
CHICAGO MAP CORPORATION
NOTES TO FINANCIAL STATEMENTS
NATURE OF OPERATIONS
The Company creates technologies and software tools which provide for the
design and development of mapping and geographic products sold to customers
located throughout the world.
SUMMARY OF ACCOUNTING POLICIES
Revenue Recognition - The Company records sales and related profits as
product is shipped and services are rendered. Revenue from licensing of
software is based on sales of copies of software products in accordance with
distribution agreements with licensed developers and recognized as licensing
fees accrue. Costs for post-contract customer support, upgrades and
enhancements are billed separately from other charges and are not included in
revenue from licensing of software. Accordingly, no licensing arrangements
required deferral of revenue during 1998, 1997, and 1996.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Inventories - Inventories are priced at the lower of cost, determined by
the first-in, first-out method, or market.
Property and Equipment - Property and equipment are recorded at cost.
Expenditures for renewals and betterments which extend the life of such assets
are capitalized. Maintenance and repairs are charged to expense as incurred.
Differences between amounts received and net carrying value of assets retired
or disposed of are charged or credited to income.
Depreciation - Depreciation is charged to income using straight-line and
accelerated methods based on the estimated useful lives of the assets.
Computer Software Costs - Costs related to the purchase and development
of computer software are capitalized from the time technological feasibility
is established until the software is available for sale. Capitalized costs
are amortized on a straight-line basis over twenty-four months, the estimated
economic life of the software. Amortization expense charged to income was
$16,343 in 1998. No amortization was charged to income in 1997 and 1996.
Unamortized computer software costs determined to be in excess of the net
realizable value of the software are expensed immediately.
Income Taxes - The Company has elected S corporation status for income
tax purposes. Under this election, the Company is not liable for federal
income taxes, but is liable for certain state income and replacement taxes.
Federal taxable income and tax credits flow through to the shareholders to be
reported on their individual income tax returns.
Earnings Per Common Share - Earnings (loss) per common share are computed
by dividing net income (loss) by the weighted average number of common shares
outstanding during the year.
CASH
During 1998 and 1997, the Company maintained an operating account with a
bank which at times exceeded the federally insured limit of $100,000. The
bank has a strong credit rating and management considers any risk to be
minimal.
<PAGE>
<PAGE> 70
CHICAGO MAP CORPORATION
NOTES TO FINANCIAL STATEMENTS
(continued)
DEPRECIATION
Depreciation was charged to income, based on the estimated useful lives
of the assets, in the following amounts:
1998 1997 1996 Estimated Life-Years
---- ---- ---- --------------------
Leasehold improvements $ 260 $ 428 $ 194 31-39
Furniture and equipment 13,630 12,794 5,699 5-7
------ ------ -----
$13,890 $13,222 $ 5,893
====== ====== =====
TRANSACTION WITH RELATED PARTY
The Company leases office facilities on a month-to-month basis from a
shareholder at a monthly rental of $3,000. Rent expense charged to income
amounted to $36,000 in 1998, 1997 and 1996.
SUBSEQUENT EVENTS
On January 4, 1999, the Board of Directors declared a $240,000 cash
distribution to the shareholders provided such amount does not exceed the
Company's Accumulated Adjustment Account which is part of retained earnings as
shown on the Balance Sheets.
On March 12, 1999, the Company acquired certain assets of TRIUS, Inc. for
$62,300 in cash and 2,198 shares of common stock of Chicago Map Corporation.
The principal business of TRIUS, Inc. is the development of computer software
technologies. In connection therewith, the Board of Directors approved a
stock bonus of 2,802 shares to be issued to an officer and an employee of the
Company.
<PAGE>
<PAGE> A-1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization is entered into this 25th day
of March 1999, by and between Rexford, Inc., a Delaware corporation
("Acquiror"); Chicago Map Corporation, an Illinois corporation ("Acquiree");
and the persons listed in Exhibit "A" attached hereto and by this reference
made a part hereof, representing all of the stockholders of Acquiree
("Stockholders").
RECITALS
Stockholders own all of the issued and outstanding capital stock of
Acquiree. Acquiror desires to acquire all of the issued and outstanding
shares of capital stock of Acquiree, making Acquiree a wholly-owned
subsidiary of Acquiror, and Stockholders desire to make a tax-free exchange of
their shares in Acquiree solely for shares of Acquiror's common stock, $0.001
par value, as described herein.
NOW, THEREFORE, for the mutual consideration set out herein and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
AGREEMENT
1. Plan of Reorganization. Stockholders of Acquiree are the owners of
all of the issued and outstanding shares of capital stock of Acquiree. It is
the intention of the parties hereto that all of the issued and outstanding
shares of capital stock of Acquiree shall be acquired by Acquiror in exchange
solely for Acquiror's voting common stock. It is the intention of the parties
hereto that this transaction qualify as a tax-free reorganization under
Section 368 (a) (1) (B) of the Internal Revenue Code of 1986, as amended, and
related sections thereunder.
2. Exchange of Shares. Acquiror and Stockholders agree that all of
the issued and outstanding shares of capital stock of Acquiree will consist,
at the Closing Date, of 15,000 shares of common stock, will be exchanged with
Acquiror for 10,500,000 shares of restricted common stock of Acquiror. As an
integral part of the stock-for-stock exchange agreed to herein, Acquiror shall
effect a 1 for 70 reverse split of its issued and outstanding shares of common
stock. The 10,500,000 shares of Acquiror's common stock to be issued to
Stockholders pursuant to this Agreement shall be issued subsequent to the date
on which such 1 for 70 reverse split is effected and shall represent at least
68.8% of all issued and outstanding shares of Acquiror's common stock
immediately following such split (and after giving effect to the private
placement of a maximum of 1,709,231 shares of the Acquiror's common stock).
The Acquiror shares will, on the Closing Date, as hereafter defined, be
delivered to the Stockholders in exchange for their shares in Acquiree.
Stockholders represent and warrant that they will hold such shares of common
stock of Acquiror for investment purposes and not for further public
distribution and agree that the shares shall be appropriately restricted.
3. Delivery of Shares. On or before the Closing Date, Stockholders
will deliver certificates representing all of the issued and outstanding
shares of Acquiree, duly endorsed so as to make Acquiror the sole holder
thereof, free and clear of all claims and encumbrances. Such shares of
Acquiree will be appropriately restricted as to transfer. On such Closing
Date, delivery of the Acquiror shares, which will be appropriately restricted
<PAGE> A-2
as to transfer, will be made to the Stockholders as set forth herein. The
transaction contemplated herein shall not close unless all of the issued and
outstanding shares of Acquiree are delivered at Closing and the owners thereof
execute this Agreement. A list of shares of Acquiree, the owner thereof and
shares of Acquiror to be received by each Stockholder is attached hereto as
Exhibit "A". Each Stockholder shall sign Exhibit "B", attached hereto and by
this reference made a part hereof, evidencing his or her intent to be a party
to this Agreement and bound hereby.
4. Termination.
A. This Agreement may be terminated by action of the Board of
Directors of Acquiror, or by the Stockholders of Acquiree at any time prior to
the Closing Date if:
(1) There shall be any actual or threatened action or
proceeding by or before any court or any other
governmental body which shall seek to restrain,
prohibit, or invalidate the transactions contemplated
by this Agreement and which, in the judgment of such
Board of Directors made in good faith and based upon
the advice of legal counsel, makes it inadvisable to
proceed with the transactions contemplated by this
Agreement; or
(2) The Closing shall not have occurred prior to March 31,
1999, or such later date as shall have been approved by
parties hereto, other than for reasons set forth in
paragraph B or C below.
In the event of termination pursuant to this Section 4 (A) , no
obligation, right, or liability shall arise hereunder and each party shall
bear all of the expenses incurred by them in connection with the negotiation,
drafting, and execution of this Agreement and the consummation of the
transactions herein contemplated.
B. This Agreement may be terminated at any time prior to the
Closing Date by action of Acquiror if:
(1) Acquiree or the Stockholders shall fail to comply in
any material respect with any of its or their covenants
or agreements contained in this Agreement or if any of
the representations or warranties of Acquiree or the
Stockholders contained herein shall be inaccurate in
any material respect; or
(2) There shall have been any material change after
December 31, 1998, in the assets, properties, business,
or financial condition of Acquiree taken as a whole
which could have a materially adverse effect on the
value of the business of Acquiree except any changes
disclosed in any exhibits or schedules attached hereto.
In the event this Agreement is terminated pursuant to this Section 4 (B),
this Agreement shall be of no further force or effect, no obligation, right,
or liability shall arise hereunder, and Acquiree shall bear its own costs as
well as the legal, accounting, printing, and other costs incurred by Acquiror
in connection with the negotiation, preparation, and execution of this
<PAGE> A-3
Agreement and the transactions herein contemplated.
C. This Agreement may be terminated at any time prior to the
Closing Date by action of the Board of Directors of Acquiree or by the
Stockholders of Acquiree if:
(1) Acquiror shall fail to comply in any material respect
with any of its covenants or agreements contained in this Agreement or if any
of the representations or warranties of Acquiror contained herein shall be
inaccurate in any material respect; or
(2) There shall have been any material adverse change
after December 31, 1998, in the assets, properties, business, or financial
condition of Acquiror as a whole which could have a materially adverse effect
on the value of the business of Acquiror taken as a whole except any changes
disclosed in any exhibit or schedule attached hereto.
In the event this Agreement is terminated pursuant to this Section 4 (C),
this Agreement shall be of no further force or effect, no obligation, right,
or liability shall arise hereunder, and Acquiror shall bear its own costs as
well as the legal, accounting, printing, and other costs incurred by Acquiree
and the Stockholders in connection with negotiation, preparation, and
execution of this Agreement and the transactions herein contemplated.
5. Representations and Warranties of Stockholders and Acquiree.
A. The Stockholders and Acquiree hereby represent and warrant
that, effective this date and the Closing Date, the representations and
warranties listed below are true and correct.
(1) Stockholders of Acquiree. The Stockholders are the
owners of all of the issued and outstanding shares of the capital stock of
Acquiree; such shares are free from claims, liens, or other encumbrances; and
Stockholders have the unqualified right to sell, transfer, and dispose of such
shares subject to the laws of bankruptcy, insolvency, and general creditors'
rights. Each Stockholder represents and warrants, that in regards to his or
her shares of Acquiree, such Stockholder has the full right and authority to
execute this Agreement and to transfer his or her shares of Acquiree to
Acquiror.
(2) Restricted Shares to be Issued. The
Stockholders understand and are aware that the issuance of Acquiror's shares
hereunder is being made without registration under the Securities Act of 1933,
as amended (the "Act"), or any state securities laws and that the shares so
issued may not be sold or transferred without registration under the Act and
under applicable state, securities laws, or unless an exemption from such
registration is available. The Stockholders understand that the investment in
the shares of Acquiror is speculative and may remain so for an indefinite
period and acknowledge that the Stockholders are able to bear the economic
risk of their investment in the shares of Acquiror. All certificates
evidencing Acquiror's common stock to be issued to Stockholders shall bear
appropriate restrictive legends.
B. The Principal Stockholders of Acquiree (defined for purposes
of this Agreement as owners of 2% or more of Acquiree Shares) and Acquiree
hereby represent and warrant that, effective this date and the Closing
Date, the representations and warranties listed below are true and correct.
<PAGE> A-4
(1) Corporate Authority. Acquiree has the full corporate
power and authority to enter into this Agreement and (subject to any
requisite approval by the holders of Acquiree common shares) to carry out the
transactions contemplated by this Agreement. The Board of Directors of
Acquiree has duly authorized the execution, delivery, and performance of
this Agreement.
(2) Financial Statements.
(a) The audited balance sheet of Acquiree as of
December 31, 1998 and 1997 and the related
statements of income (loss), changes in
shareholders' equity and, cash flows, and
stockholders' equity for the three years ended
December 31, 1998, 1997 and 1996, including the
notes thereto, and the accompanying report of
Hutton Nelson & McDonald, LLP, certified public
accountants, have been delivered to Acquiror
("Acquiree Financial Statements"). To the best
knowledge of Acquiree and Principal
Stockholders, except as set forth in Acquiree's
Schedules, such financial statements contain all
adjustments (all of which are normal recurring
adjustments) necessary to present fairly the
results of operations and financial position for
the periods and as of the dates indicated.
(b) The audited financial statements delivered
pursuant to subparagraph (a) have been prepared
in accordance with United States generally
accepted accounting principles consistently
applied throughout the periods involved and,
when required to be audited, have been audited
by a certified public accountants licensed to
practice in the United States and before the
Securities and Exchange Commission. The audited
financial statements have been presented in
accordance with the requirements of Regulation
S-X promulgated by the SEC regarding the form
and content of and requirements for financial
statements to be filed with the SEC. The
Acquiree Financial Statements present fairly,
the financial position of Acquiree. Acquiree
did not have, as of the date of the Acquiree
Financial Statements, except as and to the
extent reflected or reserved against therein,
any liabilities or obligations (absolute or
contingent) which should be reflected in any
financial statements or the notes thereto
prepared in accordance with generally accepted
accounting principles, and all assets reflected
therein present fairly the assets of Acquiree,
in accordance with generally accepted accounting
principles. The statements of revenue and
expenses and cash flows present fairly the
financial position and result of operations of
Acquiree as of their respective dates and for
the respective periods covered thereby.
<PAGE> A-5
(c) The books and records, financial and otherwise,
of Acquiree are in all material respects
complete and correct and have been maintained in
accordance with sound business and bookkeeping
practices so as to accurately and fairly
reflect, in reasonable detail, the transactions
and dispositions of the assets of Acquiree.
(d) Proper and accurate amounts of taxes have been
withheld by or on behalf of Acquiree with
respect to all material compensation paid to
employees of Acquiree for all periods ending on
or before the date hereof, and all deposits
required with respect to compensation paid to
such employees have been made, in complete
compliance with the provisions of all material
accrual or material arrangement for or payment
of bonuses or special compensation applicable
under tax and other laws. There are no tax liens
upon any of the assets of Acquiree.
(3) Absence of Certain Changes or Events. Except as set
forth in this Agreement or the Acquiree Schedules attached hereto, since
December 31, 1998, the date of the Acquiree Financial Statements,:
(a) There has not been (1) any material adverse
change in the business, operations,
properties, level of inventory, assets,
or financial condition of Acquiree taken as a
whole; or (2) any damage, destruction, or loss
to Acquiree (whether or not covered by
insurance) materially and adversely affecting
the business, operations, properties, assets,
or conditions of Acquiree;
(b) Acquiree has not (1) amended its Articles of
Incorporation or Bylaws; (2) declared or made,
or agreed to declare to make, any payment of
dividends or distributions of any assets of
any kind whatsoever to Stockholders or
purchased or redeemed, or agreed to purchase
or redeem, any of their capital stock; (3)
waived any rights of value which in the
aggregate are extraordinary or material
considering the business of Acquiree; (4) made
any material change in its method of
management, operation, or accounting; (5)
entered into any other material transactions
not in the ordinary course of business except
as otherwise contemplated by this Agreement
including, but not limited to, Acquiree's
acquisition of certain assets of Trius, Inc.
and the issuance of common stock of Acquiree
related thereto; (6) made any accrual or
arrangement for or payment of bonuses or
special compensation of any kind or any
severance or termination pay to any present or
former officer or employee; (7) increased the
<PAGE> A-6
rate of compensation payable or to become
payable by it to any of its officers or
directors or any of its employees whose
monthly compensation exceeds $5,000; or (8)
made any increase in any profit sharing,
bonus, deferred compensation, insurance,
pension, retirement, or other employee benefit
plan, payment, or arrangement made to, for,
or with its officers, directors, or employees;
(c) Acquiree has not (1) granted or agreed to
grant any options, warrants, or other rights
for its stocks, bonds, or other corporate
securities calling for the issuance
thereof except as described in the Schedules
attached hereto; (2) borrowed or agreed to
borrow any funds or incurred, or become
subject to, any material obligation or
liability (absolute or contingent) except
liabilities incurred in the ordinary course of
business; (3) paid any material obligation
or liability (absolute or contingent) other
than current liabilities reflected in or shown
on the balance sheet contained in the Acquiree
Financial Statement and current liabilities
incurred since that date in the ordinary
course of business; (4) sold or transferred,
or agreed to sell or transfer, any of its
assets, property, or rights (except assets,
property, or rights held as inventory or
canceled or agreed to cancel, any debts or
claims (except debts or claims which in the
aggregate are of a value of less than
$25,000); (5) made or permitted any amendment
or termination of any contract, agreement, or
license to which it is a party if such
amendment or termination is material,
considering the business of Acquiree taken as
a whole; or (6) issued, delivered, or agreed
to issue or deliver any stock, bonds, or other
corporate securities including debentures
(whether authorized and unissued or held as
treasury stock) except for the shares of
common stock in Acquiree issued in connection
with Acquiree's acquisition of certain assets
of Trius, Inc.; and
(d) To the best knowledge of Acquiree, it has not
become subject to any law or regulation which
materially and adversely affects, or in the
future may adversely affect, its business,
operations, properties, assets, or condition.
(4) Litigation and Proceedings. Acquiree is not
involved in any pending litigation or governmental investigation or proceeding
not reflected in such financial statements, or otherwise disclosed in the
Acquiree Schedules and, to the best knowledge of Acquiree and Principal
Stockholders, no litigation, claims, assessments, or governmental
<PAGE> A-7
investigation or proceeding is threatened against Acquiree, its Principal
Stockholders, or properties.
(5) Organization.
(a) As of the Closing Date, Acquiree will be in good
standing in its state of incorporation, and will
be in good standing and duly qualified to do
business in each state and jurisdiction where
the failure to qualify would have a material
adverse effect on Acquiree.
(b) To the best knowledge of Acquiree and Principal
Stockholders, Acquiree has complied with all
state, federal, and local laws in connection
with its formation, issuance of securities,
capitalization, and operations, and no
contingent liabilities have been threatened or
claims made, and no basis for the same exists
with respect to said operations, formation, or
capitalization, including claims for violation
of any state or federal securities laws except
where any noncompliance would not materially
affect the business or property of the Acquiree.
(6) Compliance with Laws, Rules and Regulations.
Acquiree and Principal Stockholders represent and warrant that Acquiree
complies with all applicable federal laws, rules and regulations; and all
applicable State laws, rules and regulations relating to the operation of its
business and the sale of Acquiree's products except to the extent that non-
compliance would not materially and adversely affect the business, operations,
properties, assets, or condition of Acquiree or except to the extent that non-
compliance would not result in the incurrence of any material liability for
Acquiree.
(7) Tax Returns. Acquiree has filed all federal, state,
county, and local income, excise, property, sales, and other tax returns,
forms, or reports, which are due or required to be filed by it prior to the
date hereof and have paid or made adequate provisions for the payment of all
taxes, penalty fees, or assessments which have or may become due pursuant to
such returns or pursuant to any assessments received.
(8) Subsidiaries. Acquiree has no subsidiaries and does
not own any capital stock, security, partnership interest, or other
interest of any kind in any corporation, partnership, joint venture,
association, or other entity.
(9) No Conflict With Other Instruments. The execution
of this Agreement will not violate or breach any document, instrument,
agreement, contract, or commitment material to the business of Acquiree to
which Acquiree or Principal Stockholders are a party and has been duly
authorized by all appropriate and necessary action.
(10) Capitalization. The authorized capital stock of
Acquiree consists of 100,000 shares of common stock having no par value, of
which 15,000 shares have been validly issued and are now outstanding, and of
which 15,000 will be outstanding at the Closing Date. There are no outstanding
convertible securities, warrants, options, or commitments of any nature which
<PAGE> A-8
may cause authorized but unissued shares to be issued to any person, except as
described in the schedules attached hereto. All issued and outstanding shares
are legally issued, fully paid, and non-assessable, and are not issued in
violation of the pre-emptive or other right of any person.
(11) Title and Related Matters. Acquiree has good and
marketable title to all of its licenses, copyrights, trademarks, trade
secrets, patents, patents pending, properties, inventory, interests in
properties, and other assets, real and personal, which are reflected in the
Acquiree Financial Statements, or acquired after that date (except properties,
interest in properties, and assets sold or otherwise disposed of since such
date in the ordinary course of business), free and clear of all mortgages,
liens, pledges, charges, or encumbrances except (i) statutory liens or
claims not yet delinquent; (ii) such imperfections of title and easements as
do not and will not materially detract from or interfere with the present or
proposed use of the assets or properties subject thereto or affected
thereby or otherwise materially impair present business operations on such
properties or in connection with such assets; and (iii) as described in
Acquiree Financial Statements or in the Acquiree Schedules. Acquiree owns,
free and clear of any liens, claims, encumbrances, royalty interests, or other
restrictions or limitations of any nature whatsoever, any and all procedures,
techniques, business plans, methods of management, or other information
utilized in the conduct of its business or operations, whether or not the
value thereof is reflected in the most recent balance sheet included in the
Acquiree Schedules. The assets and equipment of Acquiree that are necessary
or used in the operations of its business are in good operating condition and
repair, normal wear and tear excepted.
(12) Contracts.
(a) Except as included or described in the Acquiree
Schedules, there are no material contracts,
agreements, franchises, license agreements, or
other commitments to which Acquiree is a party
or by which it or any of its properties or
assets are bound.
(b) Subject to the laws of bankruptcy,
insolvency, general creditor's rights, and
equitable principles, all contracts, agreements,
franchises, license agreements, and other
commitments to which Acquiree is a party or by
which its properties or assets are bound and
which are material to its operations taken as a
whole, are valid and enforceable in all
respects.
(c) Acquiree is not a party to or bound by, and the
assets of Acquiree are not subject to, any
contract, agreement, other commitment or
instrument; any charter or other corporate
restriction; or any judgment, order, writ,
injunction, or decree which materially and
adversely affects, or in the future may (as far
as Acquiree can now foresee), materially and
adversely affect, the business, operations,
properties, assets, or condition of Acquiree.
<PAGE> A-9
(d) Except as included or described in the Acquiree
Schedules or reflected in the most recent
Acquiree Financial Statements, Acquiree is not
a party to any oral or written (a) contract for
employment of any officer or employee which is
not terminable on 30 days (or less) notice; (b)
profit sharing, bonus, deferred compensation,
stock option, severance pay, pension benefit,
or retirement plan, agreement, or arrangement
covered by Title IV of the Employee Retirement
Income Security Act, as amended; (c) agreement,
contract, or indenture relating to the borrowing
of money exceeding $50,000; (d) guaranty of any
obligation, other than one on which Acquiree is
a primary obligor, for the borrowing of money or
otherwise, excluding endorsements made for
collection and other guarantees of obligations,
which, in the aggregate do not exceed $50,000;
(e) consulting or other similar contract with an
unexpired term of more than one year of
providing for payment in excess of $50,000 in
the aggregate; (f) collective bargaining
agreement, (g) agreement with any present or
former officer or director of Acquiree or its
subsidiaries; or (h) contract, agreement, or
other commitment involving payments by it of
more than $50,000 in the aggregate.
(13) Material Contract Defaults. To the best knowledge
of Acquiree and Principal Stockholders, Acquiree is not in default in any
material respect under the terms of any outstanding contract, agreement,
lease, or other commitment which is material to the business, operations,
properties, assets, or condition of Acquiree, and there is no event of default
or other event which, with notice or lapse of time or both, would constitute a
default in any material respect under any such contract, agreement, lease, or
other commitment in respect of which Acquiree has not taken adequate steps to
prevent such a default from occurring.
(14) Acquiree Schedules. Acquiree has delivered to
Acquiror the following schedules which are collectively referred to as the
"Acquiree Schedules" and which consist of separate schedules dated as of the
date of execution of this Agreement and instruments and data as of such date,
all certified by the chief executive officer of Acquiree and the Principal
Stockholders, as complete, true, and correct:
(a) A schedule containing complete and correct
copies of the Articles of Incorporation and
Bylaws of Acquiree in effect as of the date of
this Agreement;
(b) A schedule including the financial statements
of Acquiree identified in paragraph 5(b) (2).
(c) A schedule containing a complete and correct copy
of the stock ledger of Acquiree;
(d) A schedule containing a description of all real
property owned or leased by Acquiree together
<PAGE> A-10
with a description of every mortgage, deed of
trust, pledge, lien, agreement, encumbrance,
claim, or equity interest of any nature
whatsoever in such real property with copies of
the underlying documentation;
(e) A schedule containing copies of all material
contracts, promissory notes, profit sharing
arrangements, options, warrants, employment
agreements, licenses, agreements, or other
instruments to which Acquiree is a party or by
which it or its properties or assets are bound;
(f) A schedule describing all governmental licenses,
permits, and other governmental authorizations
(or requests or applications therefor) pursuant
to which Acquiree carries on or propose to carry
on its business (except those which, in the
aggregate, are immaterial to the present or
proposed business of Acquiree;
(g) A schedule setting forth a description of any
material adverse change in the business,
operations, property, inventory, assets, or
condition of Acquiree since the date of the
Acquiree Financial Statements;
(h) A schedule of all litigation or governmental
investigation or proceeding which is pending or
which, to the best knowledge of management,
is threatened or contemplated;
(i) A schedule of all other documents,
disclosures, or representations required to be
disclosed by this Agreement or required to be
disclosed in order to set forth all material
facts regarding Acquiree.
(15) Information. The information concerning
Acquiree set forth in this Agreement and in the Acquiree Schedules is complete
and accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact required to make
the statements made in light of the circumstances under which they were made
not misleading.
(16) Compliance With Blue Sky Laws. Acquiree shall
prepare and caused to be filed, all required notices, forms, reports, filing
fees and other documents in order to comply with all applicable blue sky law,
rule or regulation in connection with the stock-for-stock exchange
contemplated herein. Acquiror shall provide Acquiree such information and sign
such documents as may be necessary to permit Acquiree to complete its
obligations under this paragraph 16.
6. Representations and Warranties of Acquiror. Acquiror hereby
represents and warrants that effective this date and the Closing Date, the
following representations are true and correct:
A. Issuance of Shares. As of the Closing Date, the Acquiror
shares to be delivered to the Stockholders, will constitute valid and legally
<PAGE> A-11
issued shares of Acquiror, fully-paid and non-assessable, and will be legally
equivalent in all respects to the common stock of Acquiror issued and
outstanding as of the date hereof.
B. Authorization. The officers of Acquiror are duly authorized
to execute this Agreement and have taken all action required by law and
agreements, charters, Bylaws, etc., to properly and legally execute this
Agreement.
C. Financial Statements.
(1) The audited balance sheets of Acquiror as of September
30, 1998 and 1997, and the related statements of
operations, cash flows, and stockholders' equity for
the years ended December 31, 1998 and 1997, and the
cumulative amounts since October 1, 1992 (date of
commencement of development stage), including the notes
thereto, and the accompanying Independent Auditor's
Report of Tanner + Co., have been delivered to
Acquiror. Further, the unaudited balance sheet of
Acquiror as of December 31, 1998, and the related
statements of operations and cash flows for the three
months ended December 31, 1998 and 1997 and the
cumulative amounts from commencement of development
stage, including the notes thereto ("Acquiror Financial
Statements"). To the best knowledge of Acquiror,
except as set forth in Acquiror's Schedules, such
financial statements contain all adjustments (all of
which are normal recurring adjustments) necessary to
present fairly the results of operations and financial
position for the periods and as of the dates indicated.
(2) The audited financial statements delivered pursuant to
subparagraph (1) have been prepared in accordance with
United States generally accepted accounting principles
consistently applied throughout the periods involved
and, when required to be audited, have been audited by
a certified public accountants licensed to practice in
the United States and before the Securities and
Exchange Commission. The audited financial statements
have been presented in accordance with the requirements
of Regulation S-X promulgated by the SEC regarding the
form and content of and requirements for financial
statements to be filed with the SEC. The Acquiror
Financial Statements present fairly the financial
position of Acquiror. Acquiror did not have, as of the
date of the Acquiror Financial Statements, except as
and to the extent reflected or reserved against
therein, any liabilities or obligations (absolute or
contingent) which should be reflected in any financial
statements or the notes thereto prepared in accordance
with generally accepted accounting principles, and all
assets reflected therein present fairly the assets of
Acquiror, in accordance with generally accepted
accounting principles. The statements of revenue and
expenses and cash flows present fairly the financial
position and result of operations of Acquiror as of
their respective dates and for the respective periods
<PAGE> A-12
covered thereby.
(3) The books and records, financial and otherwise, of
Acquiror are in all material respects complete and
correct and have been maintained in accordance with
sound business and bookkeeping practices so as to
accurately and fairly reflect, in reasonable detail,
the transactions and dispositions of the assets of
Acquiror.
(4) Proper and accurate amounts of taxes have been withheld
by or on behalf of Acquiror with respect to all
material compensation paid to employees of Acquiror for
all periods ending on or before the date hereof, and
all deposits required with respect to compensation paid
to such employees have been made, in complete
compliance with the provisions of all material accrual
or material arrangement for or payment of bonuses or
special compensation applicable under tax and other
laws. There are no tax liens upon any of the assets of
Acquiror.
D. Absence of Certain Changes or Events. Except as set forth
in this Agreement or the Acquiror Schedules, since December 31, 1998:
(1) There has not been (a) any material adverse change in
the business, operations, properties, assets, or
financial condition of Acquiror (whether or not
covered by insurance) materially and adversely
affecting the business, operations, properties,
assets, or conditions of Acquiror;
(2) Acquiror has not (a) amended its Articles of
Incorporation or Bylaws; (b) declared or made, or
agreed to declare or make, any payment of
dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed, or
agreed to purchase or redeem any of its capital stock;
(c) waived any rights or value which in the
aggregate are extraordinary or material considering
the business of Acquiror; (d) made any material change
in its method of management, operation, or accounting;
(e) entered into any other material transactions; (f)
made any accrual or arrangement for or payment of
bonuses or special compensation of any kind or any
severance or termination pay to any present or former
officer or employees (g) increased the rate of
compensation payable or to become payable by it to any
of its officers or directors of any of its employees;
or (h) established or made any increase in any profit
sharing, bonus, deferred compensation, insurance,
pension, retirement, or other employee benefit plan,
payment, or arrangement made to, for, or with its
officers, directors, or employees;
(3) Acquiror has not (a) granted or agreed to grant any
options, warrants, or other rights for its stocks,
bonds, or other corporate securities calling for the
issuance thereof; (b) borrowed or agreed to borrow any
<PAGE> A-13
funds or incurred, or become subject to, any material
obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of
business; (c) paid any material obligation or liability
(absolute or contingent) other than current liabilities
reflected in or shown on the Acquiror balance sheet as
of September 30, 1998, and current liabilities incurred
since that date in the ordinary course of business; (d)
sold or transferred, or agreed to sell or transfer, any
of its assets, property, or rights, (e) made or
permitted any amendment or termination of any contract,
agreement, or license to which it is a party if such
amendment or termination is material, considering the
business of Acquiror; or (f) issued, delivered, or
agreed to issue or deliver any stock, bonds, or other
corporate securities including debentures (whether
authorized and unissued or held as treasury stock); and
(4) To the best knowledge of Acquiror, it has not become
subject to any law or regulation which materially and
adversely affects, or in the future may adversely
affect, the business, operations, properties, assets,
or condition of Acquiror.
E. Litigation and Proceedings. To the best knowledge of
Acquiror it is not involved in any pending litigation, claims, or
governmental investigation or proceeding not reflected in such financial
statements or otherwise disclosed in the Acquiror Schedules and there are no
lawsuits, claims, assessments, investigations, or similar matters, to the best
knowledge of management,. threatened or contemplated against Acquiror, its
management, or properties.
F. Organization. As of the Closing Date Acquiror shall be duly
organized, validly existing, and in good standing under the laws of the State
of Delaware; it has the corporate power to own its property and to carry on
its business as now being conducted and is duly qualified to do business in
any jurisdiction where the failure to qualify would have a material adverse
effect on Acquiror.
G. Tax Returns. Acquiror has filed all federal, state, county,
and local income, excise, property, and other tax returns, forms, or reports,
which are due or required to be filed by it prior to the date hereof.
Acquiror has paid or made adequate provisions for the payment of all taxes,
penalty fees, or assessments which have or may become due pursuant to such
filed returns or pursuant to any assessments received.
H. Contracts.
(1) Except as included or referred to in the Acquiror
Schedules, there are no material contracts, agreements,
franchises, license agreements, or other commitments to
which Acquiror is a party or by which it or any of its
properties are bound.
(2) Subject to the laws of bankruptcy, insolvency, general
creditor's rights, and equitable principles, all
contracts, agreements, franchises, license agreements,
and other commitments to which Acquiror is a party or
by which it or its properties are bound, and which are
<PAGE> A-14
material to the operations of Acquiror, are valid and
enforceable by Acquiror in all respects.
(3) Acquiror is not a party to any contract, agreement,
commitment, or instrument or subject to any charter or
other corporate restriction or any judgment, order,
writ, injunction, decree, or aware which
materially and adversely affects, or in the future may
(as far as Acquiror can now foresee) materially and
adversely affect, the business, operations, properties,
assets, or condition of Acquiror.
(4) Except as included or referred to in the Acquiror
Schedules or reflected in the latest Acquiror balance
sheet, Acquiror is not a party to any material oral or
written (a) contract for the employment of any officer
or employee; (b) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension,
benefit, or retirement plan, agreement, or arrangement
covered by Title IV of the Employee Retirement Income
Security Act, as amended; (c) agreement, contract, or
indenture relating to the borrowing of money; (d)
guaranty of any obligation, other than one which
Acquiror is a primary obligor, for the borrowing of
money or otherwise, excluding endorsements made for
collection and other guarantees of obligations, which,
in the aggregate do not exceed $10,000; (e) consulting
or other similar contract with an unexpired term of
more than one year or providing for payments in excess
of $10,000 in the aggregate; (f) collective
bargaining agreement; (g) agreement with any present
or former officer or director of Acquiror; or (h)
contract, agreement or other commitment involving
payments by it of more than $10,000 in the aggregate.
I. Material Contract Defaults. To the best of its knowledge,
Acquiror has not materially breached, nor has it any knowledge of any pending
or threatened claims or any legal basis for a claim that Acquiror has
materially breached, any of the terms of conditions of any agreements,
contracts, or commitments to which it is a party or is bound and the execution
and performance hereof will not violate any provisions of applicable law of
any agreement to which Acquiror is subject.
J. Capitalization. The capitalization of Acquiror is, as of the
date hereof, comprised of 100,000,000 shares of authorized common stock, $.00l
par value, of which 70,000,000 shares are issued and outstanding. As an
integral part of the stock-for-stock exchange provided for herein, Acquiror
shall effect a 1 for 70 reverse split of its issued and outstanding shares
thereby reducing the number of such shares from 70,000,000 to 11,500,000
(including all shares to be issued to Acquiree and others in connection with
the transactions contemplated herein). All outstanding shares have been duly
authorized, validly issued, and fully-paid, and there are no outstanding or
presently authorized securities, warrants, options, or related
commitments of any nature not disclosed in the Acquiror's financial statements
or in the Acquiror's Prospectus, proxy statement or in the Acquiror Schedules
attached hereto. All of the outstanding shares are non-assessable and free of
cumulative voting or pre-emptive rights.
K. Subsidiaries. Acquiror has no subsidiaries and does not own
<PAGE> A-16
any capital stock, security, partnership interest, or other interest of any
kind in any corporation, partnership, joint venture, association, or other
entity.
L. Corporate Records. The corporate financial records, minute
books, and other documents and records of Acquiror are to be available to
present management of Acquiree prior to the Closing Date and turned over to
new management in their entirety at Closing or as soon thereafter as
practicable.
M. No Conflict with Other Instrument. The execution of this
Agreement will not violate or breach any document, instrument, agreement,
contract, or commitment material to the business of Acquiror, to which
Acquiror is a party.
N. Securities Laws. Acquiror is a public company and represents
that to the best of its knowledge it has no existing or threatened
liabilities, claims, lawsuits, or basis for the same with respect to its
original stock issuance to its founders, its public offering, or any dealings
with its Stockholders, the public, brokers, the Securities and Exchange
Commission, state agencies, or other persons. Acquiror is required to file
Reports under Section 15(d) of the Securities Exchange Act of 1934, as
amended. Acquiror represents that all reports required to be filed pursuant
to Section 15(d) of the Securities Act of 1934 as of the date of closing have
been or will have been filed.
O. Compliance With Laws and Regulations. Acquiror has complied
with all applicable statutes and regulations of any federal, state, or other
applicable governmental entity or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the business,
operations, properties, assets, or condition of Acquiror or except to the
extent that noncompliance would not result in the incurrence of any material
liability including, but not limited to, the Blue Sky regulations of this
proposed acquisition and issuance of Acquiror common stock.
P. Acquiror Schedules. Acquiror has delivered to Acquiree the
following schedules, which are collectively referred to as the "Acquiror
Schedules," which are dated the date of this Agreement, all certified by an
officer of Acquiror and the officers of Acquiror to be complete, true, and
accurate:
(1) A schedule containing complete and accurate copies of
the Articles of Incorporation and Bylaws of Acquiror as in effect as of the
date of this Agreement and copies of all Board of Directors and Shareholders
Resolutions, Minutes and Consents.
(2) A schedule containing copies of all financial
statements referred to in paragraph 6(c);
(3) A schedule containing the Prospectus of any previous
public offering of common stock of Acquiror;
(4) A schedule containing a list of the shareholders of
Acquiror as of March 1, 1999;
(5) A schedule describing all outstanding warrants to
purchase shares of Acquiror's common stock;
<PAGE> A-17
(6) A schedule setting forth a description of any material
adverse change in the business, operations, property, inventory, assets, or
conditions of Acquiror since December 31, 1998;
(7) A schedule of all litigation or governmental
investigation or proceeding which is pending or which, to the best knowledge
of management, is threatened or contemplated;
(8) A schedule containing copies of all contracts to which
the Company is a party;
(9) A schedule containing all reports filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended;
(10) A schedule of all other documents, disclosures, or
representations required to be disclosed by this Agreement or required to be
disclosed in order to set forth all material facts regarding Acquiror.
R. Information. The information concerning Acquiror set forth
in this Agreement and in the Acquiror Schedules is complete and accurate in
all material respects and does not contain any untrue statement of a material
fact or omit to state a material fact require to make the statements made, in
light of the circumstances under which they were made, not misleading.
7. Information Statement, Meeting of Rexford Shareholders. As
promptly as practicable after the execution of this Agreement, Acquiror shall
prepare and file with the Securities and Exchange Commission ("SEC"), a
preliminary information statement including a notice of special meeting of its
stockholders and related material (the "Information Statement") relating to
the approval of this Agreement and the transactions contemplated hereunder, as
promptly as practicable following receipt of the SEC's comments thereon (or,
should no SEC comments be forthcoming or the lapse of the period of time
during which SEC comments are required to be furnished, promptly following a
determination that no comments are forthcoming or the lapse of such period),
Acquiree shall file with the SEC and mail to its stockholders of record a
definitive Information Statement relating to such matters. The Information
Statement shall set a date of record for all shareholders entitled to vote on
this Agreement and shall include the recommendation of the Acquiree's board of
directors in favor of such matters.
8. Additional Financial Statements. To the extent required, Acquiree
and Acquiror shall utilize their best efforts and cooperate to provide the
financial information necessary to present the pro forma consolidated
financial statements, including a pro forma consolidated balance sheet, pro
forma consolidated income statements, for all periods required to be
presented, including the notes thereto, and in the form and manner required
for use in the Form 8-K and/or Information Statement or any other document
required to be filed with the SEC, requiring the presentation of the
Acquiror's financial statements under generally accepted accounting
principles.
9. Closing Date. The Closing Date herein referred to shall be upon
such date as the parties hereto may mutually agree upon, but is expected to be
on or about March 31, 1999, but not later than April 30, 1999. At the
Closing, Acquiror shall deliver and the Stockholders will be deemed to have
accepted delivery, the certificate of stock to be issued in his or her name,
and in connection therewith, will make delivery of his or her stock in
<PAGE> A-18
Acquiree to Acquiror. Certain opinions, exhibits, etc., may be delivered
subsequent to the Closing Date upon the mutual agreement of the parties
hereto.
10. Conditions Precedent to the Obligations of Acquiree and the
Stockholders. All obligations of Acquiree and Stockholders under this
Agreement are subject to the fulfillment, by Acquiror, prior to or as of the
Closing Date, of each of the following conditions:
A. The representations and warranties by or on behalf of
Acquiror contained in this Agreement or in any certificate or documents
delivered to Acquiree pursuant to the provisions hereof shall be true in all
material respects at and as of the time of Closing as though such
representations and warranties were made at and as of such time.
B. Acquiror shall have performed and complied with all
covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing on the Closing
Date.
C. Acquiror shall take all corporation action necessary to
issue the shares to Stockholders pursuant to this Agreement.
D. The election or appointment of all of Acquiree's nominees
to the Board of Directors of Acquiror as directed by Acquiree and the
resignation of the existing officers and directors of Acquiror and the
transfer of the office of Registered Agent to such party as is designated by
Acquiree.
E. Stockholders of Acquiror approving this Agreement and
Acquiror's performance hereof;
F. Stockholders of Acquiror approving a 1 for 70 reverse split
of the Acquiror's issued and outstanding shares of common stock.
G. Stockholders of Acquiror approving a proposal to amend
Acquiror's Articles of Incorporation to change Acquiror's name to Lexon
Technologies, Inc.
H. All instruments and documents delivered to
Stockholders pursuant to the provisions hereof shall be reasonably
satisfactory to legal counsel for Stockholders.
I. Acquiror shall have delivered to Stockholders and Acquiree
an opinion of its counsel dated the Closing Date to that effect that
(1) Acquiror is a corporation duly organized, validly
existing, and in good standing under the laws of the
State of Delaware;
(2) Acquiror has the corporate power to carry on its
business as now being conducted;
(3) This Agreement has been duly authorized, executed,
and delivered by Acquiror and is a valid and binding
obligation of Acquiror; and
(4) The shares to be issued to Stockholders hereunder
<PAGE> A-19
will, when issued, be duly and validly issued, fully
paid, and non-assessable.
11. Conditions Precedent to the Obligations of Acquiror. All
obligations of Acquiror under this Agreement are subject to the fulfillment,
by Acquiree and Stockholders, prior to or as of the Closing Date, of each of
the following conditions:
A. The representations and warranties by Acquiree and
Stockholders contained in this Agreement or in any certificate or document
delivered to Acquiror pursuant to the provisions hereof shall be true at and
as of the time of Closing as though such representations and warranties were
made at and as of such time.
B. Acquiree and Stockholders shall have performed and complied
with all covenants, agreements, and conditions required by this Agreement to
be performed or complied with by it prior to or at the Closing; including the
delivery of all of the outstanding stock of Acquiree.
C. The acquisition and proposed issuance of Acquiror common
stock can be effected as a non-public offering pursuant to provisions of
applicable federal and state securities laws. Acquiree shall cause to be
prepared and filed all forms, notices, fees and reports necessary to comply
with any and all blue sky laws, rules and regulations relating to the stock-
for-stock exchange contemplated herein. Acquiror shall sign, as required, any
and all notices, forms, reports or other documents so prepared by Acquiree.
D. Stockholders shall deliver to Acquiror a letter commonly
known as an "investment letter" agreeing that the shares of stock in Acquiror
are being acquired for investment purposes, and not with a view to public
resale and that the materials, including current financial statements prepared
and delivered by Acquiror to Stockholders, have been read and understood by
Stockholders, that he is familiar with the business of Acquiror, that he is
acquiring the Acquiror shares under Section 4(2), commonly known as the
private offering exemption of the Securities Act of 1933, and that the shares
are restricted and may not be resold, except in reliance of an exemption under
the Act.
E. Acquiree shall have delivered to Acquiror an opinion of
counsel dated the Closing Date to the effect that:
(1) Acquiree is duly organized, validly existing and in
good standing under the laws of the State of Illinois;
(2) Acquiree has the corporate power to carry on its
business as now being conducted, and is duly
qualified to do business in the State of Illinois and
in any jurisdiction where so required where the non
qualification to do business in any jurisdiction would
not materially adversely affect the business and
properties of Acquiree; and
(3) This Agreement has been duly authorized, executed,
and delivered by Acquiree and Stockholders.
12. Indemnification. Within the period provided in paragraph 13
herein and in accordance with the terms of that paragraph, each party to this
Agreement shall indemnify and hold harmless each other party at all times
after the date of this Agreement against and in respect of any liability,
<PAGE> A-20
damage, or deficiency, all actions, suits, proceedings, demands,
assessments, judgments, costs, and expenses which exceed $10,000 including
attorney's fees incident to any of the foregoing, resulting from any
misrepresentations, breach of covenant, or warranty or nonfulfillment
of any agreement on the part of such party under this Agreement or from any
misrepresentation in or omission from any certificate furnished or to be
furnished to a party hereunder. Subject to the terms of this Agreement, the
defaulting party shall reimburse the other party or parties on demand, for any
reasonable payment made by said parties at any time after the Closing, in
respect of any liability of claim to which the foregoing indemnity relates, if
such payment is made after reasonable notice to the other party to defend or
satisfy the same and such party failed to defend or satisfy the same. No
liability shall arise for party hereof regarding a settlement of any claim
unless such settlement was previously approved by such party.
13. Nature and Survival of Representations. All representations,
warranties, and covenants made by any party in this Agreement shall survive
the Closing hereunder and the consummation of the transactions contemplated
hereby for two years from the date hereof. All of the parties hereto are
executing and carrying out the provisions of this Agreement in reliance solely
on the representations, warranties, and covenants and agreements contained in
this Agreement or at the Closing of the transactions herein provided for and
not upon any investigation upon 'which it might have made or any
representations, warranty, agreement, promise, or information, written or
oral, made by the other party or any other person other than as specifically
set forth herein.
14. Documents at Closing. At the Closing the following transactions
shall occur, all of such transactions being deemed to occur simultaneously:
A. Stockholders will deliver, or cause to be delivered, to
Acquiror the following:
(1) Stock certificates for all of the issued and
outstanding stock of Acquiree being tendered and
duly endorsed;
(2) All corporate records of Acquiree, including
without limitation, corporate minute books
(which shall contain copies of the Articles of
Incorporation and Bylaws, as amended to the
Closing), stock ledgers, stock transfer books,
corporate seals, and other such corporate books
and records as may reasonably be requested for
review by Acquiror and its counsel;
(3) The opinion of counsel for Acquiree as set forth
herein;
(4) A certificate executed by the Principal
Stockholders to the effect that all
representations and warranties made by Acquiree
under this Agreement are true and correct as of
the Closing, the same as though originally given
to Acquiror on said date;
(5) A certificate from the Secretary of State of its
incorporation dated within 45 days of the
<PAGE> A-21
Closing Date to the effect that Acquiree is in
good standing under the laws of said state;
(6) An investment letter from the Stockholders
representing that they are acquiring shares of
Acquiror for investment purposes only and not
with a view to further distribution;
(7) Such other instruments, documents, and
certificates, if any, as are required to be
delivered pursuant to the provision of this
Agreement or which may be reasonably requested
in furtherance of the provisions of this
Agreement.
B. Acquiror will deliver or cause to be delivered to the
Stockholders and Acquiree:
(1) Stock certificates for common stock to be issued
as part of the exchange as listed on Exhibit
"A";
(2) A certificate of the president and secretary of
Acquiror to the effect that all representations
and warranties of Acquiror made under this
Agreement are reaffirmed on the Closing Date,
the same as though originally given to
Stockholders on said date;
(3) The opinion of Acquiror's counsel set forth
herein;
(4) Certified copies of resolutions by Acquiror's
Board of Directors and Stockholders authorizing
this transaction;
(5) A certificate from the Secretary of State of
Acquiror's state of incorporation dated within
45 days of the Closing Date that Acquiror is in
good standing under the laws of said state;
(6) Such other instruments and documents as are
required to be delivered pursuant to the
provisions of this Agreement.
15. Additional Covenants. Between the date hereof and the Closing
Date, except with the prior written consent of the other party:
A. Acquiror and Acquiree shall conduct their business only in
the usual and ordinary course and the character of such business shall not be
changed nor any different business be undertaken.
B. No change shall be made in the Articles of
Incorporation or Bylaws of Acquiror or Acquiree, except as described in the
Acquiree Schedules attached hereto.
C. No change shall be made in the authorized or issued shares
of Acquiror or Acquiree.
<PAGE> A-22
D. Neither Acquiror nor Acquiree shall discharge or satisfy
any lien or encumbrance or obligation or liability, other than current
liabilities shown on the financial statements heretofore delivered and
current liabilities incurred since that date in the ordinary course of
business.
E. Neither Acquiror nor Acquiree shall make any payment or
distribution to their respective stockholders or purchase or redeem any shares
or capital stock.
F. Neither Acquiror nor Acquiree shall mortgage, pledge, or
subject to lien or encumbrance any of its assets, tangible or intangible.
G. Neither Acquiror nor Acquiree shall cancel any debts or
claims or waive any rights.
H. Present management of Acquiror agree that after the Closing
they will continue to furnish new management with such additional
documentation and information regarding Acquiror as is reasonably requested.
16. Miscellaneous.
A. Further Assurances. At any time and from time to time,
after the effective date, each party will execute such additional instruments
and take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise to
carry out the intent and purposes of this Agreement.
B. Waiver. Any failure on the part of any party hereto to
comply with any of its obligations, agreements, or conditions hereunder may
be waived in writing by the party to whom such compliance is owed.
C. Payment of Expenses. Acquiror shall pay for all of its
own legal, accounting and other expenses associated with the consummation of
the transactions contemplated under this Agreement, including those costs
associated with the preparation, filing, and mailing of the Information
Statement to the Acquiror's stockholders and holding a special meeting of the
Acquiror's stockholders. Acquiree shall pay for all of its own legal,
accounting and other expenses associated with the consummation of the
transactions contemplated under this Agreement.
D. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered in
person or sent by prepaid first class registered or certified mail, return
receipt requested.
E. Headings. The section and subsection heading in this
Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
F. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
G. Facsimile Transmission. Facsimile transmission of any
signed original document, and retransmission of any signed facsimile
transmission, shall be the same as delivery of an original. At the request of
<PAGE> A-23
any party hereto, the parties will confirm facsimile transmitted signatures by
signing an original document.
H. Governing Law. This Agreement was negotiated and is being
contracted for in the State of Illinois, and shall be governed by the laws
of the State of Illinois, not withstanding any Illinois or other
conflict-of-law provision to the contrary, and the securities being issued
herein are being issued and delivered in the State of Illinois in accordance
with isolated transaction and non-public offering exemption.
I. Binding Effect. This Agreement shall be binding upon the
parties hereto and inure to the benefit of the parties, their respective
heirs, administrators, executors, successors, and assigns.
J. Entire Agreement. This Agreement contains the entire
agreement between the parties hereto and supersedes any and all prior
agreements, arrangements, or under-standings between the parties relating to
the subject matter hereof. No oral understandings, statements, promises, or
inducements contrary to the terms of this Agreement exist. No
representations, warranties, covenants, or conditions, express or implied,
other than as set forth herein, have been made by any party.
[Signatures appear on the next page following].
<PAGE>
<PAGE> A-24
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
ATTEST: Rexford, Inc., a Delaware corporation
By /s/ Tom Sollami By /s/ Dennis Blomquist
__________________________________ ________________________________
Secretary President
ATTEST: Chicago Map Corporation,
an Illinois corporation
By /s/ Mike Barnett By /s/ Steven J. Peskaitis
__________________________________ ________________________________
Secretary President
STOCKHOLDERS
(See Exhibit "B" attached hereto in counterparts.)
<PAGE>
<PAGE> A-25
Exhibit A
CHICAGO MAP CORPORATION
List of Stockholders
Number of Shares of Number of Rexford, Inc.
Chicago Map Shares to be Received
Name of Shareholder Corporation Percent in Exchange
- ------------------- ----------- ------- -----------
Steven J. Peskaitis 10,337 66.767 7,235,970
Stanley Peskaitis 1,824 12.160 1,276,800
Mike Barnett 641 4.273 448,700
David A. Schulz 1,044 6.960 730,800
David A. Leonard 110 .733 77,000
Paris Karahalios 1,044 6.960 730,800
------ ------ -----------
Total Percentage/Shares 15,000 100.00 10,500,000
====== ====== ==========
<PAGE>
<PAGE> A-26
Exhibit B
CHICAGO MAP CORPORATION
Stockholders
Counterpart Signature Page
Date: Signature:
3/23/99 /s/ Steven J. Peskaitis
3/23/99 /s/ Stanley Peskaitis
3/2/99 /s/ Mike Barnett
<PAGE>
<PAGE> B-1
APPENDIX B
AMENDED
CERTIFICATE OF INCORPORATION
OF
REXFORD, INC.
(a Delaware corporation)
FIRST: REXFORD, INC., a corporation organized and existing under the
General Corporation Laws (the "GCL") of the state of Delaware (the
"Corporation"), does hereby certify that:
SECOND: The Certificate of Incorporation of the Corporation was filed in
the office of the Secretary of State of the State of Delaware on the 21st day
of April 1989, and a certified copy thereof was thereafter recorded in the
office of the recorder of the County of New Castle.
THIRD: At a special meeting of shareholder of the Corporation held the
20th day of July 1999 (the "Special Meeting"), the following amendment to the
Corporation's Certificate of Incorporation was duly adopted by the affirmative
vote of the holders of a majority of the stock of the Corporation entitled to
vote thereon in accordance with the provisions of Section 242 of the GCL of
the State of Delaware, to-wit:
ARTICLE I
NAME
The name of the Corporation is: LEXON TECHNOLOGIES, INC.
FOURTH: The number of shares of the Corporation outstanding at the time
of the adoption of such amendment was 70,000,000 and the number of shares
entitled to vote thereon was 70,000,000.
FIFTH: The designation and number of outstanding shares of each class
entitled to vote thereon as a class were as follows, to-wit:
CLASS NUMBER OF SHARES
---------- ----------------
Common 70,000,000
SIXTH: The number of shares voted for such amendment was __________,
with __________ opposing and __________ abstaining.
SEVENTH: At the Special Meeting a plan of recapitalization providing for
a 1-for-70 reverse split of the 70,000,000 issued and outstanding shares of
common stock of the Corporation was adopted by the affirmative vote of the
holders of a majority of the stock of the Corporation entitled to vote thereon
in accordance with the provisions of Section 242 of the GCL of the State of
Delaware, so that the issued and outstanding shares of common stock of the
Corporation was reduced from 70,000,000 to 1,000,000.
EIGHTH: The number of shares voted for the plan of recapitalization was
__________, with __________ opposing and __________ abstaining.
NINTH: The amendments do not effect a change in the stated capital of
the corporation.
<PAGE> B-2
IN WITNESS WHEREOF, the Corporation has caused this Amended Certificate
to be duly executed by the undersigned, an officer of the Corporation
thereunto duly organized as of this 20th day of July, 1999.
REXFORD, INC.
/S/Dennis Blomquist, President
STATE OF UTAH )
ss.
COUNTY OF SALT LAKE )
On this 20th day of July, 1999, personally appeared before me Dennis
Blomquist, whose identity is personally known to me and who by me duly sworn,
did say that he is the president of Rexford, Inc., and that being duly
authorized by the Corporation, he signed such instrument on behalf of the
corporation.
WITNESS MY HAND AN OFFICIAL SEAL.
____________________________________
Notary Public
<PAGE>
<PAGE> C-1
APPENDIX C
DELAWARE CODE
TITLE 8. CORPORATIONS
CHAPTER 1. GENERAL CORPORATION LAW
SUBCHAPTER IX. MERGER OR CONSOLIDATION
SECTION 262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in writing pursuant
to Section 228 of this title shall be entitled to an appraisal by the Court of
Chancery of the fair value of the stockholder's shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word 'stockholder' means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words 'stock' and 'share' mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words 'depository receipt' mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series
of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by more than
2,000 holders; and further provided that no appraisal rights shall be
available for any shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in subsection (f) of
Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation pursuant to Sections 251,
252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a) Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b) Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of
<PAGE> C-2
the merger or consolidation will be either listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more
than 2,000 holders;
c) Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a) and b) of this
paragraph; or
d) Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a), b) and c) of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting f
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for such
meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder electing to
demand the appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of such stockholder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal
of such stockholder's shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein provided.
Within 10 days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of the date that
the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to Section 228 or
Section 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
<PAGE> C-3
constituent corporation who are entitled to appraisal rights of the approval
of the merger or consolidation and that appraisal rights are available for any
or all shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this section; provided
that, if the notice is given on or after the effective date of the merger or
consolidation, such notice shall be given by the surviving or resulting
corporation to all such holders of any class or series of stock of a
constituent corporation that are entitled to appraisal rights. Such notice
may, and, if given on or after the effective date of the merger or
consolidation, shall, also notify such stockholders of the effective date of
the merger or consolidation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of such notice, demand in writing
from the surviving or resulting corporation the appraisal of such holder's
shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a
second notice before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of such
constituent corporation that are entitled to appraisal rights of the effective
date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or within
10 days after such effective date; provided, however, that if such second
notice is sent more than 20 days following the sending of the first notice,
such second notice need only be sent to each stockholder who is entitled to
appraisal rights and who has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the secretary or assistant
secretary or of the transfer agent of the corporation that is required to give
either notice that such notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be not
more than 10 days prior to the date the notice is given, provided, that if the
notice is given on or after the effective date of the merger or consolidation,
the record date shall be such effective date. If no record date is fixed and
the notice is given prior to the effective date, the record date shall be the
close of business on the day next preceding the day on which the notice is
given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger
or consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the
merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting
from the consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholder's written request for such a
statement is received by the surviving or resulting corporation or within 10
<PAGE> C-4
days after expiration of the period for delivery of demands for appraisal
under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail
and by publication shall be approved by the Court, and the costs thereof
shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted such stockholder's
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be enforced
<PAGE> C-5
as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of such stockholder's demand for an appraisal and an acceptance of the merger
or consolidation, either within 60 days after the effective date of the merger
or consolidation as provided in subsection (e) of this section or thereafter
with the written approval of the corporation, then the right of such
stockholder to an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
