SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended August 31, 1999
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from _________to _________.
COMMISSION FILE NUMBER: 33-2128-D
KELLY'S COFFEE GROUP, INC.
--------------------------
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
COLORADO 84-1062062
-------- ----------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
268 WEST 400 SOUTH, SALT LAKE CITY, UTAH 84101
---------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
(801) 575-8073
--------------
(ISSUER'S TELEPHONE NUMBER)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES XX NO
The number of outstanding shares of the issuer's common stock, $0.001
par value (the only class of voting stock), as of December 14, 1999 was
51,555,736.
1
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TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS..................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS..................................4
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.....................................................5
ITEM 5. OTHER INFORMATION.....................................................5
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................5
SIGNATURES.....................................................................6
INDEX TO EXHIBITS..............................................................7
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
2
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ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Kelly's Coffee Group, Inc., a
Colorado corporation and predecessors unless otherwise indicated. Unaudited,
condensed interim financial statements including a balance sheet for the Company
as of the quarter ended August 31, 1999 and statements of operations, and
statements of cash flows for the interim period up to the date of such balance
sheet and the comparable period of the preceding year are attached hereto as
Pages F-1 through F-7 and are incorporated herein by this reference.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY.]
3
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INDEX TO FINANCIAL STATEMENTS
PAGE
Balance Sheet................................................................F-2
Statement of Operations......................................................F-3
Statement of Cash Flows......................................................F-4
Statement of Shareholder's Equity............................................F-5
Notes to Unaudited Financial Statements......................................F-6
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY.]
F-1
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KELLY'S COFFEE GROUP, INC.
UNAUDITED CONDENSED BALANCE SHEETS
AUGUST 31, 1999
August 31,
1999
------------------
ASSETS
Current Assets
Cash 17,022
Marketable securities - available for
sale (Note 1) $ 449,353
------------------
Total Current Assets 466,375
------------------
TOTAL ASSETS $ 466,375
==================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Net Liabilities of
discontinued operations $ 1,535,600
-------------------
Total Current Liabilities 1,535,600
-------------------
TOTAL LIABILITIES 1,535,600
-------------------
Commitments and contingencies (Note 2)
SHAREHOLDERS' EQUITY
Preferred stock, $0.001 par value, 50,000
shares authorized, none issued and
outstanding -
Common stock, $0.001 par value,
100,000,000 shares authorized, 43,555,736
shares issued and outstanding 43,556
Additional paid-in capital 2,823,630
Accumulated deficit (4,522,886)
Accumulated deficit from inception of
development stage on March 1, 1998 586,475
-------------------
Total Stockholders' equity (deficit) (1,069,225)
-------------------
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY $ 466,375
===================
SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS.
F-2
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<TABLE>
<CAPTION>
KELLY'S COFFEE GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED STATEMENT OF OPERATIONS
From
inception of
Development
Stage on
March 1,
For the Quarter Ended For the Six Months Ended 1998 through
August 31 August 31 August 31,
1999 1998 1999 1998 1999
-------------- ------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Sales $ - $ - $ - $ - $ -
Cost of Sales - - - - -
------------ ------------ --------------- ---------------- ---------------
Gross Margin - - - - -
------------ ------------ --------------- ---------------- ---------------
Operating Expenses
General and Administrative 15,807 314,108 15,807 350,228 366,035
------------ ------------ --------------- ---------------- --------------
Total Operating Expenses 15,807 314,108 15,807 350,228 366,035
------------ ------------ --------------- ---------------- ---------------
Income (Loss) From Operations (15,807) (314,108) (15,807) (350,228) (366,035)
------------ ------------ --------------- ---------------- ---------------
Other Income (Expense)
Gain on Sale of Securities 197,240 - 197,240 - -
Interest Expense - - - - -
Gain from settlement of debt 755,270 - 755,270 -
----------- ------------ --------------- ---------------- ---------------
Total Other Income (Expense) 952,510 - 952,510 - -
------------ ------------ --------------- ---------------- ---------------
Income (Loss) Before Discontinued
Operations 936,703 (314,108) 936,703 (350,228) (366,035)
------------ ------------ --------------- ---------------- ---------------
Discontinued Operations (Note 5) - - - - -
------------ ------------ --------------- ---------------- ---------------
Net Income (Loss) $ 936,703 $ (314,108) $ 936,703 $ (350,228) $ (366,035)
=========== ============ =============== ================ ===============
Income (Loss) per share
Profit from operations $ 0.02 $ - $ 0.02 $ (0.01)
Loss from discontinued
operations - - 0.00 0.00
------------ ------------ --------------- ----------------
Basic loss per share $ 0.02 $ - $ 0.02 $ (0.01)
============ ============ =============== ================
Weighted average shares
outstanding 43,555,736 30,722,292 43,555,736 25,784,458
============ ============ =============== ================
</TABLE>
SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS.
F-3
<PAGE>
<TABLE>
<CAPTION>
KELLY'S COFFEE GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED STATEMENT OF CASH FLOWS
From
inception of
Development
Stage on
March 1, 1998
For the six months ended Through
August 31, August 31,
1999 1998 1999
------------ ------------- --------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net Income $ 936,703 $ (350,228) $ (366,035)
Adjustments to reconcile net loss to
net cash used in operating activities
Common stock issued for services 350,228 366,035
Changes in Operating assets and Liabilities:
Increase (decrease) in net liabilities of
Discontinued operations (775,270) - -
------------ ------------- --------------
Net Cash Provided (Used in) Operating
Activities 161,433 - -
------------ ------------- --------------
Cash flow from Investing Activities:
Gain on Sale of Securities 197,240 - -
Purchase of Marketable Securities (341,651) - -
------------ ------------- --------------
Net Cash used in Investing Activities (144,411) - -
------------ ------------- --------------
Net Cash (Used) by Financing Activities - - -
------------ ------------- --------------
Net Cash provided by Financing Activities - - -
Net Increase (Decrease) in Cash 17,022 - -
Cash at Beginning of Period - - -
------------ ------------- --------------
Cash at End of Period $ 17,022 $ - $ -
============ ============= ==============
</TABLE>
SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS.
F-4
<PAGE>
<TABLE>
<CAPTION>
KELLY'S COFFEE GROUP, INC.
UNAUDITED STATEMENT OF SHAREHOLDER'S EQUITY
AUGUST 31, 1999
PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------------ ------------------------------ PAID-IN
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
------------ ---------- -------------- ----------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, FEBRUARY 28, 1998 - $ - 21,716,736 $ 21,717 $ 2,190,299 $ (4,522,866)
COMMON STOCK ISSUED FOR SERVICES AT
$.03 PER SHARE 11,450,000 11,450 357,108 -
COMMON STOCK ISSUED FOR MARKETABLE
SECURITIES AT $0.03 PER SHARE 11,000,000 11,000 293,942 -
COMMON STOCK RETURNED TO TREASURY
AT $0.03 PER SHARE FOR SERVICES NOT
PERFORMED (611,000) (611) (17,719) -
NET LOSS FOR YEAR ENDED
FEBRUARY 28, 1999 - - - - - (350,228)
------------ ---------- -------------- ------------- ------------
BALANCE, FEBRUARY 28, 1999 - - 43,555,736 $ 43,556 2,823,630 4,873,114
NET LOSS FOR THE SIX MONTHS ENDED
AUGUST 31, 1999 - - - - - 936,763
------------ ---------- -------------- ------------- --------------- --------------
BALANCE, AUGUST 31, 1999 - $ - 43,555,736 $ 43,556 $ 2,823,630 $ (3,936,351)
------------ ---------- -------------- ------------- --------------- --------------
</TABLE>
SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS.
F-5
<PAGE>
KELLY'S COFFEE GROUP, INC.
(A Development Stage Company)
Notes to the Unaudited Financial Statements
August 31, 1999
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
A. ORGANIZATION
The Company was reclassified as a development stage company on March 1,
1998, as a result of the dissolution of Kelly-Berg.
B. BASIC LOSS PER SHARE
Basic loss per share has been calculated based on the weighted average
number of shares of common stock outstanding during the period.
C. INCOME TAXES
As of August 31, 1999, the Company had a net operating loss
carryforward for federal income tax purposes of approximately
$4,000,000 that may be used in future years to offset taxable income.
The net operating loss carryforward will begin to expire in 2014. The
tax benefit of the cumulative carryforwards has been offset by a valu-
ation allowance of the same amount.
D. ESTIMATES
The preparation of 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 revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
E. MARKETABLE SECURITIES - AVAILABLE FOR SALE
The Company has classified its marketable securities as
"available-for-sale" securities. Trading securities are stated at fair
value. Unrealized gains and losses are reported as a separate component
of equity.
NOTE 2 - BASIS OF PRESENTATION - GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However, the Company
has sustained operating losses since its inception and has a net
capital deficiency. In the interim, shareholders of the Company have
committed to meeting its minimal operating expenses.
F-6
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NOTE 3 - DISCONTINUED OPERATIONS
On February 28, 1998, the Board of Directors of the Company decided to
discontinue the manufacturing and distribution of store fixtures and
merchandise showcases due to a lack of funding and increased losses.
The following is a summary of the loss from discontinued operations.
FOR THE YEAR ENDED FEBRUARY 28, 1998
NET SALES $ 1,209,148
COST OF PRODUCTS SOLD 415,150
GROSS PROFIT 793,998
EXPENSES
General and administrative 581,037
Salaries and wages 827,455
Depreciation and amortization 67,061
Bad debt expense 43,497
Loss on disposal of assets 572,015
------------
TOTAL EXPENSES 2,091,065
LOSS BEFORE INCOME TAXES (1,297,067)
INCOME TAX EXPENSE -
NET LOSS $ (1,297,067)
-----------
BASIC LOSS PER SHARE OF COMMON STOCK $ (0.07)
===============
The Company had liabilities of $2,310,870 which are associated with the
discontinued operations. No income tax benefit has been attributed to
the loss from discontinued operations.
NOTE 4 - BASIS OF REPRESENTATION
The accompanying consolidated unaudited condensed financial statements
have been prepared by management in accordance with the instructions in
Form 10-QSB and, therefore, do not include all information and
footnotes required by generally accepted accounting principles and
should, therefore, be read in conjunction with the Company's Annual
Report to Shareholders on Form 10-KSB for the fiscal year ended
February 28, 1999. These statements do include all normal recurring
adjustments which the Company believes necessary for a fair
presentation of the statements. The interim operations results are not
necessarily indicative of the results for the full year ended February
28, 1999.
F-7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This Quarterly Report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which are intended to be
covered by the safe harbors created thereby. Investors are cautioned that all
forward-looking statements involve risks and uncertainty, including without
limitation, the ability of the Company to continue its expansion strategy,
changes in costs of raw materials, labor, and employee benefits, as well as
general market conditions, competition and pricing. Although the Company
believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward-looking statements
included in this Quarterly Report will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements including
herein, the inclusion of such information should not be regarded as are
presentation by the Company or any other person that the objectives and plans of
the Company will be achieved.
As used herein the term "Company" refers to Kelly's Coffee Group, Inc., a
Colorado corporation and its predecessors, unless the context indicates
otherwise. The Company discontinued its operations on February 28, 1998. The
Company is currently a shell company whose purpose will be to acquire operations
through an acquisition, merger or begin its own start-up business.
The Company is in the process of attempting to identify and acquire a favorable
business opportunity. The Company has reviewed and evaluated a number of
business ventures for possible acquisition or participation by the Company. The
Company has not entered into any agreement, nor does it have any commitment or
understanding to enter into or become engaged in a transaction as of the date of
this filing. The Company continues to investigate, review, and evaluate business
opportunities as they become available and will seek to acquire or become
engaged in business opportunities at such time as specific opportunities
warrant.
RESULTS OF OPERATIONS
The Company had no sales revenues for the three and six months ended August 31,
1999 or 1998. The Company had no sales in for the six months ended August 31,
1999 or 1998 because it ceased operations as of February 28, 1998, as a result
of reoccurring losses.
The Company had no costs of sales revenues for the three and six months ended
August 31, 1999 or 1998 because it ceased operations as of February 28, 1998.
General and administrative expenses were $15,807 and $15,807 for the three and
six months ended August 31, 1999, compared to $314,108 and $350,228 for the same
periods in 1998. The general and administrative expenses decreased for the same
periods in 1999 because the Company hired consultants through the issuance of
its common stock for services rendered in 1998 and did not have similar expenses
in 1999.
The Company recorded net income of $936,763 and $936,763 for the three and six
months ended August 31, 1999 compared to net losses of $314,108 and $350,228 for
the same periods in 1998. The net income recorded for the three and six months
ended August 31, 1999 were attributable to a $197,240 gain on the sale of
marketable securities and a $755,270 gain in the settlement of debt. For more
information on the settlement of debt, please see Item 1. Legal Proceedings
below.
CAPITAL RESOURCES AND LIQUIDITY
At August 31, 1999, the Company had current assets of $466,375 and total assets
of $466,375 as compared to $304,942 and $304,942 , respectively at February 28,
1999. The Company had a net working capital deficit of $1,069,225 at August 31,
1999 compared to a working capital deficit of $2,005,928 at February 28, 1999.
Net stockholders' deficit in the company was $1,069,225 as of August 31, 1999,
compared to $2,005,928 as of August 31, 1998.
The Company improved its working capital and stockholder's deficit as a result
of settling $775,270 worth of debt for a cash payment of $20,000.
4
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PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Irby Industries, Inc. F/k/a Berg Showcase Manufacturing, Inc., Berg Selector
Distributors, Inc. and Terry Irby vs. Mitchel Feinglas, Kelly's Coffee Group,
Inc., Kelly-berg Corporation of Colorado, Inc. and Stuart Benson, Case No.
97-CV-649-3 - In December 1995, the Company purchased the assets of Showcase.
The former owners of Showcase attempted to rescind the agreement in March of
1996 claiming non-performance by the Company and its former officers who signed
as guarantors. The dispute was submitted to binding arbitration. The arbitrators
awarded $775,270 to the former owners, but did not rescind the transaction. The
Company and its officers who signed as guarantors were held jointly and
severally liable for this amount. The entire amount has been recorded as a
liability on the Company's balance sheet because collection from the former
officers is uncertain. On July 21, 1999, the Company entered into a Settlement
Agreement in which the Company was released from all liabilities relating to the
dispute in exchange for a $20,000 cash payment.
For more information on the Company's legal proceedings, please see Part I Item
3. Legal Proceedings of the Company's February 28, 1999 Form 10KSB.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 5. OTHER INFORMATION
On June 23, 1999, the Company underwent a change of control. The Company's
former president and director Terry Buttler sold Hudson Consulting Group, Inc.
3,817,570 shares of his shares of the Company for $40,000. Mr. Butler then
resigned his position as president and director of the Company as did all the
other directors of the Company. Mr. Richard Surber was then appointed as a
director and the president of the Company. Mr. Surber is also the president and
a director of Hudson Consulting Group, Inc.
On August 23, 1999, the Company purchased 100,000 shares of restricted shares of
Eagle Wireless International, Inc. for $100,000 and 180,003 restricted shares of
HealthWatch, Inc. from Hudson Consulting Group, Inc. The Eagle Wireless shares
were trading on the American Stock Exchange for $1.125 on August 23, 1999 and
were purchased at a discount from market at $1.00 per share because of their
restricted status. The HealthWatch shares were trading on the OTCBB for $.5625
on August 23, 1999 and were purchased at a discount from market at $1.00 per
share because of their restricted status. Mr. Surber, by virtue of his
relationship as president and director of both Hudson Consulting Group, Inc. and
the Company, may be deemed as an interested party to the transaction. However,
the transaction was ratified and deemed to be in the best interest of the
Company by a majority of the Company's disinterested directors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS Exhibits required to be attached by Item 601 of
Regulation S-B are listed in the Index to Exhibits on page 7 of
this Form 10-QSB, and are incorporated herein by this reference.
(B) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the
period covered by this Form 10QSB.
-------------------
5
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 15th day of December 1999.
KELLY'S COFFEE GROUP, INC.
/s/ December 15, 1999
----------------------
Richard D. Surber
President and Director
/s/ December 15, 1999
----------------------
Wayne Newton
Controller
6
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INDEX TO EXHIBITS
EXHIBIT PAGE
NO. NO. DESCRIPTION
3(i) * Articles of Incorporation of the Company
(incorporated herein by reference from Exhibit No.
3(i) to the Company's Form S-18 as filed with the
Securities and Exchange Commission on September 16,
1988 ).
3(ii) * Bylaws of the Company, as amended (incorporated
herein by reference from Exhibit 3(ii) of the
Company's Form S-18 as filed with the Securities
and Exchange Commission on September 16, 1988).
4(a) * Form of certificate evidencing shares of "Common
Stock" in the Company (incorporated from Exhibit
4(a) to the Company's Form S-18 as filed with the
Securities and Exchange Commission on September 16,
1988 ).
10 8 Stock Purchase Agreement between the Company and
Hudson Consulting Group, Inc. for the purchase of
Eagle Wireless International, Inc. shares dated
August 23, 1999.
10 8 Stock Purchase Agreement between the Company and
Hudson Consulting Group, Inc. for the purchase of
Health Watch, Inc. shares dated August 23, 1999.
10 14 Release of Judgement dated July 1999 between the
Company and Irby Industries, Inc. f/k/a Berg
Showcase Manufacturing, Inc., Berg Selector Dist-
ributors, Inc. and Terry Irby
27 22 Financial Data Schedule "CE"
7
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is entered into this 23rd
day of August, 1999 by and between Hudson Consulting Group, Inc. ("Hudson") a
Nevada corporation with principal offices located at 268 West 400 South, Suite
300, Salt Lake City, Utah 84101, and Kelly's Coffee Group, Inc., a Colorado
corporation ("Kelly's Coffee") with principal offices located at 268 West 400
South, Suite 300, Salt Lake City, Utah 84101.
WHEREAS, Hudson desires to sell to Kelly's Coffee One Hundred Thousand
(100,000) restricted shares of the common stock of Eagle Wireless International,
Inc. ("Eagle Wireless Shares").
WHEREAS, Hudson also desires to acquire from Kelly's Coffee all the
necessary records of Kelly's Coffee Group, Inc. ("Kelly's Coffee ") which will
allow Hudson to assist Kelly's Coffee in bringing current all of the reports
required under all applicable state and federal securities law ("Records");
WHEREAS, Hudson owns or will own the Eagle Wireless Shares and requires
in its possession all the Records which would allow Hudson to assist Kelly's
Coffee in bringing current all of the reports required under all applicable
state and federal securities laws; and
WHEREAS, Kelly's Coffee will pay One Hundred Thousand Dollars
($100,000) to Hudson in exchange for delivery of all certificates in negotiable
form representing the Eagle Wireless Shares; and Kelly's Coffee will deliver to
Hudson all the necessary Records.
NOW, THEREFORE with the above being incorporated into and made a part
hereof for the mutual consideration set out herein and, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. EXCHANGE. Kelly's Coffee will wire transfer $100,000 to Hudson or assigns
on August 27, 1999 and Hudson will:
a. Overnight the Eagle Wireless Shares represented by the
following certificate No. EW 0765 with all the necessary
executed medallion stock powers and corporate resolutions
transferring ownership to Kelly's Coffee for delivery no later
than August 31, 1999; and
b. Kelly's Coffee will overnight the Records necessary for Hudson
to assist Kelly's Coffee in bringing current all of Kelly's
Coffee 's state and federal securities filings.
2. EXCHANGE OF SHARES. On or before the closing date, set herein to be August
27, 1999 the above-mentioned Eagle Wireless Shares and the Records shall be
delivered to Kelly's Coffee.
3. TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
A. BY HUDSON OR KELLY'S COFFEE:
(1) If 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
judgement of such Board of
8
<PAGE>
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) If the Closing shall have not occurred prior to August 31,
1999, or such later date as shall have been approved by
parties hereto, other than for reasons set forth herein.
B. BY KELLY'S COFFEE:
(1) If Hudson 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 Hudson contained herein shall be inaccurate in any material
respect; or
C. BY HUDSON:
(1) If Kelly's Coffee 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 Kelly's Coffee contained herein shall be inaccurate in any
material respect;
In the event this Agreement is terminated pursuant to this Paragraph,
this Agreement shall be of no further force or effect, no obligation, right, or
liability shall arise hereunder, and each party shall bear its own costs as well
as the legal, accounting, printing, and other costs incurred in connection with
negotiation, preparation and execution of the Agreement and the transactions
herein contemplated.
4. REPRESENTATIONS AND WARRANTIES OF HUDSON. Hudson hereby represents and
warrants that effective this date and the Closing Date, the following
representations are true and correct:
A. AUTHORITY. Hudson has the full power and authority to enter
this Agreement and to carry out the transactions contemplated
by this Agreement.
B. 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
Hudson to which Hudson is a party and has been duly authorized
by all appropriate and necessary action.
C. DELIVERANCE OF SHARES. As of the Closing Date, the Eagle
Wireless Shares to be delivered to Kelley's Coffee will be
restricted and constitute valid and legally issued shares of
Eagle Wireless, fully paid and non-assessable and equivalent
in all respects to all other issued and outstanding shares of
Eagle Wireless restricted stock.
D. NO CONFLICT WITH OTHER INSTRUMENT. The execution of this
agreement will not violate or breach any document, instrument,
agreement, contract or commitment material to Hudson.
E. NO REPRESENTATIONS AS TO THE FINANCIAL CONDITION OF HUDSON.
Hudson makes no representations as to the financial condition
of Eagle Wireless International,Inc.
9
<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF KELLY'S COFFEE.
Kelly's Coffee hereby represents and warrants that, effective this date
and the Closing Date, the representations and warranties listed below are true
and correct.
A. CORPORATE AUTHORITY. Kelly's Coffee has the full corporate
power and authority to enter this Agreement and to carry out
the transactions contemplated by this Agreement. The Board of
Directors of Kelly's Coffee has duly authorized the execution,
delivery, and performance of this Agreement.
B. 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
Kelly's Coffee to which Kelly's Coffee is a party and has been
duly authorized by all appropriate and necessary action.
C. NO CONFLICT WITH OTHER INSTRUMENT. The execution of this
agreement will not violate or breach any document, instrument,
agreement, contract or commitment material to Kelly's Coffee.
D. NO ACTION AGAINST HUDSON. Kelly's Coffee will not take any
legal action against Hudson for any actions Hudson took as a
result of its role as a controlling shareholder, director or
officer of Eagle Wireless, International.
6. CLOSING. The Closing as herein referred to shall occur upon such
date as the parties hereto may mutually agree upon, but is expected to be on or
before August 31, 1999.
At closing Kelly's Coffee will deliver $100,000 and its Records to
Hudson, and Hudson will deliver the Eagle Wireless Shares and records to Kelly's
Coffee.
7. CONDITIONS PRECEDENT OF KELLY'S COFFEE TO EFFECT CLOSING. All obligations of
Kelly's Coffee under this Agreement are subject to fulfillment prior to or as of
the Closing Date, as follows:
A. The representations and warranties by or on behalf of Kelly's
Coffee contained in this Agreement or in any certificate or
documents delivered to Kelly's Coffee pursuant to the
provisions hereof shall be true in all material respects as of
the time of Closing as though such representations and
warranties were made at and as of such time.
B. Kelly's Coffee 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.
C. All instruments and documents delivered to Kelly's Coffee
pursuant to the provisions hereof shall be reasonably
satisfactory to Kelly's Coffee's legal counsel.
8. CONDITIONS PRECEDENT OF HUDSON TO EFFECT CLOSING. All obligations of Hudson
under this Agreement are subject to fulfillment prior to or as of the date of
Closing, as follows:
10
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A. The representations and warranties by or on behalf of Hudson
contained in this Agreement or in any certificate or documents
delivered to Hudson pursuant to the provisions hereof shall be
true in all material respects at end as of the time of Closing
as though such representations and warranties were made at and
as of such time.
B. Hudson 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.
C. All instruments and documents delivered to Hudson pursuant to
the provisions hereof shall be reasonably satisfactory to
Hudson's legal counsel.
9. DAMAGES AND LIMIT OF LIABILITY. Each party shall be liable, for any material
breach of the representations, warranties, and covenants contained herein which
results in a failure to perform any obligation under this Agreement, only to the
extent of the expenses incurred in connection with such breach or failure to
perform Agreement.
10. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and covenants made by any party in this Agreement shall survive the
Closing hereunder. 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.
11. INDEMNIFICATION PROCEDURES. If any claim is made by a party which would give
rise to a right of indemnification under this paragraph, the party seeking
indemnification (Indemnified Party) will promptly cause notice thereof to be
delivered to the party from whom indemnification is sought (Indemnifying Party).
The Indemnified Party will permit the Indemnifying Party to assume the defense
of any such claim or any litigation resulting from the claims. Counsel for the
Indemnifying Party which will conduct the defense must be approved by the
Indemnified Party (whose approval will not be unreasonable withheld), and the
Indemnified Party may participate in such defense at the expense of the
Indemnified Party. The Indemnifying Party will not in the defense of any such
claim or litigation, consent to entry of any judgement or enter into any
settlement without the written consent of the Indemnified Party (which consent
will not be unreasonably withheld). The Indemnified Party will not, in
connection with any such claim or litigation, consent to entry of any judgement
or enter into any settlement without the written consent of the Indemnifying
Party (which consent will not be unreasonably withheld). The Indemnified Party
will cooperate fully with the Indemnifying Party and make available to the
Indemnifying Party all pertinent information under its control relating to any
such claim or litigation. If the Indemnifying Party refuses or fails to conduct
the defense as required in this Section, then the Indemnified Party may conduct
such defense at the expense of the Indemnifying Party and the approval of the
Indemnifying Party will not be required for any settlement or consent or entry
of judgement.
12. DEFAULT AT CLOSING. Notwithstanding the provisions hereof, if Hudson shall
fail or refuse to deliver any of the Eagle Wireless Shares, or shall fail or
refuse to consummate the transaction described in this Agreement prior to the
Closing Date, such failure or refusal shall constitute a default by Hudson and
Kelly's Coffee at its
11
<PAGE>
option and without prejudice to its rights against such defaulting party, may
either (a) invoke any equitable remedies to enforce performance hereunder
including, without limitation, an action or suit for specific performance, or
(b) terminate all of its obligations hereunder with respect to Hudson.
13. COSTS AND EXPENSES. Kelly's Coffee and Hudson shall bear their own costs and
expenses in the proposed exchange and transfer described in this Agreement.
Kelly's Coffee and Hudson have been represented by their own attorneys in this
transaction, and shall pay the fees of their attorneys, except as may be
expressly set forth herein to the contrary.
14. NOTICES. Any notice under this Agreement shall be deemed to have been
sufficiently given if sent by registered or certified mail, postage prepaid,
addressed as follows:
To Hudson:
Hudson Consulting Group, Inc.
268 West 400 South, Suite 300
Salt Lake City, Utah 84101
To Kelly's Coffee:
Kelly's Coffee Group, Inc.
268 West 400 South, Suite 300
Salt Lake City, Utah 84101
15. 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 additional steps 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. BROKERS. Neither party has employed any brokers or finders with
regard to this Agreement not disclosed herein.
D. HEADINGS. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
E. 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.
F. GOVERNING LAW. This Agreement was negotiated and is being contracted
for in the State of Utah, and shall be governed by the laws of the State of
Utah, notwithstanding any conflict-of-law provision to the contrary. Any suit,
action or legal proceeding arising from or related to this Agreement shall be
submitted for binding arbitration resolution to the American Arbitration
Association, in Salt Lake City, Utah, pursuant to their Rules of Procedure or
any other mutually agreed upon arbitrator. The parties agree to abide
12
<PAGE>
by decisions rendered as final and binding, and each party irrevocably and
unconditionally consents to the jurisdiction of such Courts in such suit, action
or legal proceeding and waives any objection to the laying of venue in, or the
jurisdiction of, said Courts.
G. 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.
H. ENTIRE AGREEMENT. The Agreement contains the entire agreement
between the parties hereto and supersedes any and all prior agreements,
arrangements or understandings 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.
I. SEVERABILITY. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
Hudson Consulting Group, Inc.
a Nevada corporation
By:___/s/_______________________
Saundra Mc Fadden,
Its: Vice President
Kelly's Coffee Group, Inc.,
a Colorado corporation
By:__/s/_______________________
Richard Surber
Its: President
13
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is entered into this 23rd
day of August, 1999 by and between Hudson Consulting Group, Inc. ("Hudson") a
Nevada corporation with principal offices located at 268 West 400 South, Suite
300, Salt Lake City, Utah 84101, and Kelly's Coffee Group, Inc., a Colorado
corporation ("Kelly's Coffee") with principal offices located at 268 West 400
South, Suite 300, Salt Lake City, Utah 84101.
WHEREAS, Hudson desires to sell to Kelly's Coffee One Hundred Eighty
Thousand and Three (180,003) restricted shares of the common stock of
HealthWatch, Inc. ("HealthWatch Shares");
WHEREAS, Hudson also desires to acquire from Kelly's Coffee all the
necessary records of Kelly's Coffee Group, Inc. ("Kelly's Coffee ") which will
allow Hudson to assist Kelly's Coffee in bringing current all of the reports
required under all applicable state and federal securities law ("Records");
WHEREAS, Hudson owns or will own the HealthWatch Shares and requires in
its possession all the Records which would allow Hudson to assist Kelly's Coffee
in bringing current all of the reports required under all applicable state and
federal securities laws; and
WHEREAS, Kelly's Coffee will pay Sixty Eight Thousand Dollars ($68,000)
to Hudson in exchange for delivery of all certificates in negotiable form
representing the HealthWatch Shares; and Kelly's Coffee will deliver all the
necessary Records.
NOW, THEREFORE with the above being incorporated into and made a part
hereof for the mutual consideration set out herein and, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. EXCHANGE. Kelly's Coffee will wire transfer $68,000 to Hudson or
assigns on August 27, 1999 and Hudson will:
a. Overnight the HealthWatch Shares with all the necessary
executed medallion stock powers and corporate resolutions
transferring ownership to Kelly's Coffee for delivery no later
than August 31, 1999; and
b. Kelly's Coffee will overnight the Records necessary for Hudson
to assist Kelly's Coffee in bringing current all of Kelly's
Coffee 's state and federal securities filings.
2. EXCHANGE OF SHARES. On or before the closing date, set herein to be August
27, 1999 the above-mentioned HealthWatch Shares and the Records shall be
delivered to Kelly's Coffee.
3. TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
A. BY HUDSON OR KELLY'S COFFEE:
(1) If 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
judgement of such Board of
14
<PAGE>
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) If the Closing shall have not occurred prior to August 31,
1999, or such later date as shall have been approved by
parties hereto, other than for reasons set forth herein.
B. BY KELLY'S COFFEE:
(1) If Hudson 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 Hudson contained herein shall be inaccurate in any material
respect; or
C. BY HUDSON:
(1) If Kelly's Coffee 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 Kelly's Coffee contained herein shall be inaccurate in any
material respect;
In the event this Agreement is terminated pursuant to this Paragraph,
this Agreement shall be of no further force or effect, no obligation, right, or
liability shall arise hereunder, and each party shall bear its own costs as well
as the legal, accounting, printing, and other costs incurred in connection with
negotiation, preparation and execution of the Agreement and the transactions
herein contemplated.
4. REPRESENTATIONS AND WARRANTIES OF HUDSON. Hudson hereby represents and
warrants that effective this date and the Closing Date, the following
representations are true and correct:
A. AUTHORITY. Hudson has the full power and authority to enter
this Agreement and to carry out the transactions contemplated
by this Agreement.
B. 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
Hudson to which Hudson is a party and has been duly authorized
by all appropriate and necessary action.
C. DELIVERANCE OF SHARES. As of the Closing Date, the HealthWatch
Shares to be delivered to Kelly's Coffee will be restricted
and constitute valid and legally issued shares of HealthWatch,
Inc., fully paid and non-assessable and equivalent in all
respects to all other issued and outstanding shares of
HealthWatch, Inc. restricted stock.
D. NO CONFLICT WITH OTHER INSTRUMENT. The execution of this
agreement will not violate or breach any document, instrument,
agreement, contract or commitment material to Hudson.
E. NO REPRESENTATIONS AS TO THE FINANCIAL CONDITION OF
HEALTHWATCH. Hudson makes no representations as to the
financial condition of HealthWatch, Inc.
5. REPRESENTATIONS AND WARRANTIES OF KELLY'S COFFEE.
Kelly's Coffee hereby represents and warrants that, effective this date
and the Closing Date, the representations and warranties listed below are true
and correct.
15
<PAGE>
A. CORPORATE AUTHORITY. Kelly's Coffee has the full corporate
power and authority to enter this Agreement and to carry out
the transactions contemplated by this Agreement. The Board of
Directors of Kelly's Coffee has duly authorized the execution,
delivery, and performance of this Agreement.
B. 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
Kelly's Coffee to which Kelly's Coffee is a party and has been
duly authorized by all appropriate and necessary action.
C. NO CONFLICT WITH OTHER INSTRUMENT. The execution of this
agreement will not violate or breach any document, instrument,
agreement, contract or commitment material to Kelly's Coffee.
D. NO ACTION AGAINST HUDSON. Kelly's Coffee will not take any
legal action against Hudson for any actions Hudson took as a
result of its role as a controlling shareholder, director or
officer of HealthWatch, Inc.
6. CLOSING. The Closing as herein referred to shall occur upon such
date as the parties hereto may mutually agree upon, but is expected to be on or
before August 31, 1999.
At closing Kelly's Coffee will deliver $68,000 and its Records to
Hudson, and Hudson will deliver the HealthWatch Shares and records to Kelly's
Coffee.
7. CONDITIONS PRECEDENT OF KELLY'S COFFEE TO EFFECT CLOSING. All obligations of
Kelly's Coffee under this Agreement are subject to fulfillment prior to or as of
the Closing Date, as follows:
A. The representations and warranties by or on behalf of Kelly's
Coffee contained in this Agreement or in any certificate or
documents delivered to Kelly's Coffee pursuant to the
provisions hereof shall be true in all material respects as of
the time of Closing as though such representations and
warranties were made at and as of such time.
B. Kelly's Coffee 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.
C. All instruments and documents delivered to Kelly's Coffee
pursuant to the provisions hereof shall be reasonably
satisfactory to Kelly's Coffee's legal counsel.
8. CONDITIONS PRECEDENT OF HUDSON TO EFFECT CLOSING. All obligations of Hudson
under this Agreement are subject to fulfillment prior to or as of the date of
Closing, as follows:
A. The representations and warranties by or on behalf of Hudson
contained in this Agreement or in any certificate or documents
delivered to Hudson pursuant to the provisions hereof shall be
true in all material respects as of the time of Closing as
though such representations and warranties were made at and as
of such time.
B. Hudson 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.
16
<PAGE>
C. All instruments and documents delivered to Hudson pursuant to
the provisions hereof shall be reasonably satisfactory to
Hudson's legal counsel.
9. DAMAGES AND LIMIT OF LIABILITY. Each party shall be liable, for any material
breach of the representations, warranties, and covenants contained herein which
results in a failure to perform any obligation under this Agreement, only to the
extent of the expenses incurred in connection with such breach or failure to
perform Agreement.
10. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and covenants made by any party in this Agreement shall survive the
Closing hereunder. 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.
11. INDEMNIFICATION PROCEDURES. If any claim is made by a party which would give
rise to a right of indemnification under this paragraph, the party seeking
indemnification (Indemnified Party) will promptly cause notice thereof to be
delivered to the party from whom indemnification is sought (Indemnifying Party).
The Indemnified Party will permit the Indemnifying Party to assume the defense
of any such claim or any litigation resulting from the claims. Counsel for the
Indemnifying Party which will conduct the defense must be approved by the
Indemnified Party (whose approval will not be unreasonably withheld), and the
Indemnified Party may participate in such defense at the expense of the
Indemnified Party. The Indemnifying Party will not in the defense of any such
claim or litigation, consent to entry of any judgement or enter into any
settlement without the written consent of the Indemnified Party (which consent
will not be unreasonably withheld). The Indemnified Party will not, in
connection with any such claim or litigation, consent to entry of any judgement
or enter into any settlement without the written consent of the Indemnifying
Party (which consent will not be unreasonably withheld). The Indemnified Party
will cooperate fully with the Indemnifying Party and make available to the
Indemnifying Party all pertinent information under its control relating to any
such claim or litigation. If the Indemnifying Party refuses or fails to conduct
the defense as required in this Section, then the Indemnified Party may conduct
such defense at the expense of the Indemnifying Party and the approval of the
Indemnifying Party will not be required for any settlement or consent or entry
of judgement.
12. DEFAULT AT CLOSING. Notwithstanding the provisions hereof, if Hudson shall
fail or refuse to deliver any of the HealthWatch Shares, or shall fail or refuse
to consummate the transaction described in this Agreement prior to the Closing
Date, such failure or refusal shall constitute a default by Hudson and Kelly's
Coffee at its option and without prejudice to its rights against such defaulting
party, may either (a) invoke any equitable remedies to enforce performance
hereunder including, without limitation, an action or suit for specific
performance, or (b) terminate all of its obligations hereunder with respect to
Hudson.
13. COSTS AND EXPENSES. Kelly's Coffee and Hudson shall bear their own costs and
expenses in the proposed exchange and transfer described in this Agreement.
Kelly's Coffee and Hudson have been represented by their own attorneys in this
transaction, and shall pay the fees of their attorneys, except as may be
expressly set forth herein to the contrary.
14. NOTICES. Any notice under this Agreement shall be deemed to have been
sufficiently given if sent by registered or certified mail, postage prepaid,
addressed as follows:
17
<PAGE>
To Hudson:
Hudson Consulting Group, Inc.
268 West 400 South, Suite 300
Salt Lake City, Utah 84101
To Kelly's Coffee:
Kelly's Coffee Group, Inc.
268 West 400 South, Suite 300
Salt Lake City, Utah 84101
15. 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 additional steps 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. BROKERS. Neither party has employed any brokers or finders with
regard to this Agreement not disclosed herein.
D. HEADINGS. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
E. 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.
F. GOVERNING LAW. This Agreement was negotiated and is being contracted
for in the State of Utah, and shall be governed by the laws of the State of
Utah, notwithstanding any conflict-of-law provision to the contrary. Any suit,
action or legal proceeding arising from or related to this Agreement shall be
submitted for binding arbitration resolution to the American Arbitration
Association, in Salt Lake City, Utah, pursuant to their Rules of Procedure or
any other mutually agreed upon arbitrator. The parties agree to abide by
decisions rendered as final and binding, and each party irrevocably and
unconditionally consents to the jurisdiction of such Courts in such suit, action
or legal proceeding and waives any objection to the laying of venue in, or the
jurisdiction of, said Courts.
G. 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.
H. ENTIRE AGREEMENT. The Agreement contains the entire agreement
between the parties hereto and supersedes any and all prior agreements,
arrangements or understandings 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.
18
<PAGE>
I. SEVERABILITY. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
Hudson Consulting Group, Inc.
a Nevada corporation
By:___/s/_______________________
Saundra Mc Fadden,
Its: Vice President
Kelly's Coffee Group, Inc.,
a Colorado corporation
By:__/s/_____________________
Richard Surber
Its: President
19
RELEASE OF JUDGMENT
THIS RELEASE OF JUDGMENT ("RELEASE") is entered into this Day of July,
1999, by and between Irby Industries, Inc. f/k/a Berg Showcase Manufacturing,
Inc., Berg Selector Distributors, Inc. and Terry Irby ("Creditors") two corp-
orations and one individual and Kelly's Coffee Group, Inc. ("Kelly's") a
Colorado corporation.
RECITALS
WHEREAS, the parties wish to reach an agreement to release the judgment
held by the Creditors against Kelly's and from any and all claims arising out
their relationship of whatever nature;
WHEREAS, Creditors filed a civil action in the District Court, Boulder
County, State of Colorado, in 1997, Irby Industries, Inc. F/k/a Berg Showcase
Manufacturing, Inc., Berg Selector Distributors, Inc. and Terry Irby vs.
Mitchel Feinglas, Kelly's Coffee Group, Inc., Kelly-Berg Corporation of
Colorado, Inc. and Stuart Benson, Case No.
97-CV-649-3, naming Kelly's as a party defendant;
WHEREAS, On June 6, 1997 the Court entered judgment in favor of the
Creditors against Kelly's and the other named Defendants;
WHEREAS, Kelly's and the Creditors have reached an agreement for the
release of the Judgment as to Kelly's Coffee Group, Inc. in exchange for the
payment in cash of Twenty Thousand dollars ($20,000) and the release to be for
Kelly's only and as to none of the other named Defendants in the above
referenced litigation;
NOW THEREFORE, in consideration of the premises which are specifically
incorporated herein and for other good and reliable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. The Creditors, for himself or itself and his and its heirs, personal
representatives, officers, directors, employees, successors and assigns, hereby
releases Kelly's from any and all liability whatsoever from any and all claims,
demands, damages, actions, causes of action, or suits of any kind or nature
whatsoever, known or unknown, contingent or mature, which each had against the
other from the beginning of time until the date of this instrument, including
specifically the release of all claims arising from the Judgment in Case NO.
97-CV-649-3 filed in the District Court, Boulder County, State of Colorado, in
which the parties hereto are named.
2. Creditors agree to file any form required for the release of the
Judgment in the above-described cause of action filed in the District Court,
Boulder County, State of Colorado.
3. Kelly's agrees to pay to Creditors the sum of Twenty Thousand
dollars ($20,000), to paid in full within ten (10) days after the execution of
this release by all of the Creditors and being so informed by counsel for the
Creditors. Payment shall be forward in trust to said counsel and the executed
release and payment shall be distributed at the same time. All payments shall be
made payable to Terry Irby and the Creditors have agreed that they shall bear
the obligation of division, if any, of the payments amongst themselves.
4. The parties understand that this Release is final and binding when
executed by all parties.
5. The provisions of this Release are severable, and if any part of it
be found unenforceable, the other parts shall remain fully valid and
enforceable.
6. This Release was negotiated and is being contracted for in Colorado,
and shall be governed by the laws of the State of Colorado, and the United
States of America, notwithstanding any conflict-of-law provision to the
contrary.
7. This Release shall be binding upon the parties hereto and inure to
the benefit of the parties, their respective heirs, administrators, executors,
successors, and assigns.
8. This Release contains the entire agreement between the parties
hereto and supersedes any and all prior agreements, arrangements, or
understandings between the parties relating to the subject matter of this
Release. No oral understandings, statements, promises, or inducements contrary
to the terms of this Release exist. No representations, warranties, covenants,
or conditions, express or implied, other than as set forth herein, have been
made by any party.
20
<PAGE>
EXECUTED THIS DAY OF JULY, 1999.
Irby Industries, Inc. f/k/a Berg Showcase Manufacturing, Inc.
BY: /s/
---------------------------
PRINT NAME AND TITLE:
Berg Selector Distributors, Inc.
BY: /s/
--------------------------
PRINT NAME AND TITLE:
TERRY IRBY:
Kelly's Coffee Group, Inc.
BY: /s/
--------------------------
PRINT NAME AND TITLE:
STATE OF )
ss.
COUNTY OF )
On the____ day of July, 1999 before me, a Notary Public, personally
appeared (Office), who is personally known
----------------,--------------------
to me and that said document was signed on behalf of Irby Industries, Inc. f/k/a
Berg Showcase Manufacturing, Inc.
-----------------------
Notary Public
STATE OF )
ss.
COUNTY OF )
On the____ day of July, 1999 before me, a Notary Public, personally
appeared (Office), who is personally known
----------------,--------------------
to me and that said document was signed on behalf of Berg Selector Distributors,
Inc.
-----------------------
Notary Public
STATE OF )
ss.
COUNTY OF )
ON THE day of July, 1999 before me, a Notary Public, personally
appeared Terry Irby who is personally known to me and that said document was
signed by him personally.
-----------------------
Notary Public
STATE OF )
ss.
COUNTY OF )
On the____ day of July, 1999 before me, a Notary Public, personally
appeared (Office), who is personally known
----------------,--------------------
to me and that said document was signed on behalf of Kelly's Coffee Group, Inc..
-----------------------
Notary Public
22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED May 31, 1999 THAT
WERE FILED WITH THE COMPANY'S REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000833209
<NAME> Kelly's Coffee Group, Inc
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-START> MAR-1-1999
<PERIOD-END> AUG-31-1999
<EXCHANGE-RATE> 1
<CASH> 17,022
<SECURITIES> 449,353
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 466,375
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 466,375
<CURRENT-LIABILITIES> 1,535,600
<BONDS> 0
0
0
<COMMON> 43,556
<OTHER-SE> (1,112,781)
<TOTAL-LIABILITY-AND-EQUITY> (1,069,225)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 15,807
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 936,703
<INCOME-TAX> 0
<INCOME-CONTINUING> 936,703
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 936,703
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>