KELLYS COFFEE GROUP INC
10QSB, 1999-12-17
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                       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


<PAGE>



                                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


<PAGE>



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


<PAGE>



                          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


<PAGE>



                           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


<PAGE>


<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


<PAGE>



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


<PAGE>



                            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


<PAGE>



                                   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


<PAGE>



                                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

<PAGE>



         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>


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