SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(MARK ONE)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended November 30, 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 January 20, 2000 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......................................6
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 November 30, 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
<PAGE>
KELLY'S COFFEE GROUP, INC.
UNAUDITED CONDENSED BALANCE SHEETS
November 30, 1999
November 30,
1999
------------------
ASSETS
Current Assets
Cash 3,389
Marketable securities - available for
sale (Note 1) $ 467,237
------------------
Total Current Assets 479,626
------------------
TOTAL ASSETS $ 479,626
==================
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, 51,555,736
shares issued and outstanding 51,556
Additional paid-in capital 2,823,630
Accumulated deficit (4,522,886)
Accumulated deficit from inception of
development stage on March 1, 1998 591,726
-------------------
Total Stockholders' equity (deficit) (1,055,974)
-------------------
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY $ 479,626
===================
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 Nine Months Ended 1998 through
November 30 November 30 November 30,
1999 1998 1999 1998 1999
-------------- ------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Sales $ - $ - $ - $ - $ -
Cost of Sales - - - - -
------------ ------------ --------------- ---------------- ---------------
Gross Margin - - - - -
------------ ------------ --------------- ---------------- ---------------
Operating Expenses
General and Administrative 39,953 314,108 55,760 350,228 405,988
------------ ------------ --------------- ---------------- --------------
Total Operating Expenses 39,953 314,108 55,760 350,228 405,988
------------ ------------ --------------- ---------------- ---------------
Income (Loss) From Operations 39,953 (314,108) 55,760 (350,228) (405,988)
------------ ------------ --------------- ---------------- ---------------
Other Income (Expense)
Gain on Sale of Securities 45,204 - 242,444 - 242,444
Interest Expense - - - - -
Gain from settlement of debt - - 755,270 - 755,270
----------- ------------ --------------- ---------------- ---------------
Total Other Income (Expense) 45,204 - 997,714 - 997,714
------------ ------------ --------------- ---------------- ---------------
Income (Loss) Before Discontinued
Operations 5,251 (314,108) 941,954 (350,228) 591,726
------------ ------------ --------------- ---------------- ---------------
Discontinued Operations (Note 5) - - - - -
------------ ------------ --------------- ---------------- ---------------
Net Income (Loss) $ 5,251 $ (314,108) $ 941,954 $ (350,228) $ 591,726
=========== ============ =============== ================ ===============
Income (Loss) per share
Profit from operations $ 0.00 $ (0.01) $ 0.02 $ (0.01)
Loss from discontinued
operations - - 0.00 0.00
------------ ------------ --------------- ----------------
Basic loss per share $ 0.00 $ (0.01) $ 0.02 $ (0.01)
============ ============ =============== ================
Weighted average shares
outstanding 51,555,736 34,892,629 51,555,736 34,892,629
============ ============ =============== ================
</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 nine months ended Through
November 30, November 30,
1999 1998 1999
------------ ------------- --------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net Income $ 941,954 $ (350,228) $ (591,726)
Adjustments to reconcile net loss to
net cash used in operating activities
(Gain) on Sale of Investment Securities (242,444)
Common stock issued for services 8,000 350,228 350,228
Changes in Operating assets and Liabilities:
Increase (decrease) in net liabilities of
Discontinued operations (775,270) - -
------------ ------------- --------------
Net Cash Provided (Used in) Operating
Activities 67,760 - -
------------ ------------- --------------
Cash flow from Investing Activities:
Proceeds from Sale of Securities 544,876 - -
Purchase of Marketable Securities (473,727) - -
------------ ------------- --------------
Net Cash from Investing Activities 71,149 - -
------------ ------------- --------------
Net Cash (Used) by Financing Activities - - -
------------ ------------- --------------
Net Cash provided by Financing Activities - - -
Net Increase (Decrease) in Cash 3,389 - -
Cash at Beginning of Period - - -
------------ ------------- --------------
Cash at End of Period $ 3,389 $ - $ -
============ ============= ==============
</TABLE>
SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS.
F-4
<PAGE>
<TABLE>
<CAPTION>
KELLY'S COFFEE GROUP, INC.
UNAUDITED STATEMENT OF SHAREHOLDER'S EQUITY
November 30, 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)
COMMON STOCK ISSUED FOR SERVICES AT
$.001 PER SHARE 8,000,000 8,000
NET PROFIT FOR THE NINE MONTHS ENDED
NOVEMBER 30, 1999 - - - - - 941,954
------------ ---------- ------------ ----------- ------------ --------------
BALANCE, NOVEMBER 30, 1999 - $ - 51,555,736 $ 51,556 $ 2,823,630 $ (3,931,160)
------------ ---------- ------------ ----------- ------------ --------------
</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
November 30, 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 November 30, 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 carryforward has been offset by a
valuation 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 nine months ended November
30, 1999 or 1998. The Company had no sales in for the nine months ended November
30, 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 nine months ended
November 30, 1999 or 1998 because it ceased operations as of February 28, 1998.
General and administrative expenses were $31,953 and $47,760 for the three and
nine months ended November 30, 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. However, the Company paid a total of $31,200 in cash to Hudson
Consulting Group, Inc., a related party, for services rendered in assisting the
Company with the settlement of debt, lawsuits and assistance in the preparation
of various disclosure documents.
The Company recorded net income of $13,251 and $949,954 for the three and nine
months ended November 30, 1999 compared to net losses of $314,108 and $350,228
for the same periods in 1998. The net income recorded for the three months ended
November 30, 1999 were attributable to a $45,204 gain on the sale of marketable
securities. The net income recorded for the nine months ended November 30, 1999
was primarily
4
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attributable to a $755,270 gain on the settlement of debt and a $242,444 gain on
the sale of securities. For more information on the settlement of debt, please
see Item 1. Legal Proceedings in the Company's August 31, 1999 Form 10QSB.
Capital Resources and Liquidity
At November 30, 1999, the Company had current assets of $476,237and total assets
of $479,626 as compared to $ and $ , respectively at February 28, 1999. The
Company had a net working capital deficit of $1,055,974 at November 30, 1999
compared to a working capital deficit of $2,005,928 at February 28, 1999.
Net stockholders' deficit in the Company was $1,055,974 as of November 30, 1999,
compared to $ as of Novebmer 30, 1998.
The Company was able to significantly improve its working capital and
stockholder's deficit as a result of settling $775,270 worth of debt for a cash
payment of $20,000 during the quarter ended August 31, 1999.
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Denver Pavilions, L. P. v. Kelly's Coffe Group, Inc. On January 11, 1999, Denver
Pavilions, a Colorado limited partnership filed this cause of action against the
Company in the District Court, City and County of Denver Colorado, Civil Action
No. 99CV 0203. Service was not made on the suit until October 5, 1999. The
amount of damages sought by the Plaintiff was not specified in the complaint.
The Company has entered into a verbal agreement to settle the litigation upon
the payment to Plaintiff of $5,000 in cash and the transfer of 100,000 shares of
restricted common stock of the company. Drafts of documents to settle the suit
on this basis are being exchanged between the parties at this time.
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
The Company issued Eight Million (8,000,000) shares of its common stock pursuant
to Section 4(2) of the Securities Act of 1933 Richard D. Surber for services
rendered in connection with his role as President of the Company. The Company
valued the shares at $8,000.
ITEM 5. OTHER INFORMATION
Pursuant to a Stock Purchase Agreement dated July 15, 1999, the Company received
27,000,000 shares of restricted shares of AmeriResource Technologies, Inc.
(ARET) for $100,000 in cash on September 15, 1999. The Company purchased the
shares as an investment.
On December 28, 1999 Barry Denslow resigned as Director and Secretary to pursue
other business endeavors. Accordingly, the Company appointed Kevin Schillo and
David Wolfson to the board of directors on January 10, 2000 to fill vacancies on
the Company board of directors.
5
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Kevin J. Schillo, 30, was appointed a Director of the Company on January 10th,
2000. Mr. Schillo has extensive experience in the insurance industry and is
currently employed by Canton Financial Services Corporation in Salt Lake City as
Director of Corporate Development. Mr. Schillo holds a Bachelor of Arts degree
in Politaical Science from Texas Christian University.
David Wolfson was appointed a Director of the Company on January 10, 2000. Mr.
Wolfson is currently the owner and Managing Member of David Michael, LLC, a
business consulting firm based in Salt Lake City, Utah. Mr. Wolfson is also a
Director of Premier Brands. Mr. Wolfson earned a Bacheolor of Arts degree from
Emory University in Atlanta, Georgia in 1999.
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.
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 25th day of January 2000.
KELLY'S COFFEE GROUP, INC.
/s/ Richard D. Surber January 25, 2000
- --------------------------------------------------
Richard D. Surber
President and Director
/s/ Wayne Newton January 25, 2000
- ---------------------------------------------------
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
AmeriResource Technologies, Inc. (ARET) for the purchase
of 27,000,000 shares of common stock of ARET for
$100,000 dated July 15, 1999.
27 14 Financial Data Schedule "CE"
7
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("AGREEMENT") IS ENTERED INTO THIS 15TH
day of July, 1999 by and between Kelly's Coffee Group, Inc., ("Kelly's") a
corporation with principal offices located at 268 West 400 South, Suite 300,
Salt Lake City, Utah 84101 and AmeriResource Technologies, Inc.
("AmeriResource") a Delaware corporation with principal offices located at 9319
Santa Fe Drive, Overland Park, Kansas 66212.
WHEREAS, Kelly's desires to acquire from AmeriResource approximately
Twenty Seven Million (27,000,000) restricted shares of the common stock of
AmeriResource, in exchange for One Hundred Thousand dollars ($100,000).
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 will, acquire from AmeriResource, Twenty Seven Million
(27,000,000) restricted shares of the common stock of AmeriResource, in an
exchange wherein AmeriResource shall receive One Hundred Thousand dollars
($100,000).
2. EXCHANGE OF SHARES. On or before the closing date, set herein to be July 16,
1999, the above-mentioned cash is to be delivered to AmeriResource, the shares
are to be delivered on or before September 15, 1999.
3. TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
A. BY KELLY'S OR AMERIRESOURCE:
(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 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 July 16,
1999, or such later date as shall have been approved by
parties hereto, other than for reasons set forth herein.
B. BY AMERIRESOURCE:
(1) If Kelly's 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 representation or warranties
of Kelly's contained herein shall be inaccurate in any
material respect; or
C. BY KELLY'S:
(1) If AmeriResource shall fail to comply in any material
respect with any of its covenants or agreements contained in
this Agreement of if any of the representation or warranties
of AmeriResource 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.
8
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4. REPRESENTATIONS AND WARRANTIES OF AMERIRESOURCE. AmeriResource hereby
represents and warrants that effective this date and the Closing Date, the
following representations are true and correct:
A. CORPORATE AUTHORITY. AmeriResource 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 AmeriResource has duly authorized the execution,
delivery and performance of this Agreement.
B. FINANCIAL STATEMENTS. The latest 10-Q report ("AmeriResource
Financials") has been given to Kelly's prior to closing.
C. 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
AmeriResource to which AmeriResource is a party and has been
duly authorized by all appropriated and necessary action.
D. INFORMATION. The information concerning AmeriResource as set
forth in this Agreement and in the AmeriResource Financials is
complete and accurate in all material respects and does not
contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made in
light of the circumstances under which they were made not
misleading.
E. DELIVERANCE OF SHARES. As of the Closing Date, the
AmeriResource Shares to be delivered to Kelly's will be
restricted and constitute valid and legally issued shares of
AmeriResource, fully paid and non-assessable and equivalent in
all respects to all other issued and outstanding shares of
AmeriResource restricted stock.
F. INFORMATION. The information concerning AmeriResource and set
forth in this Agreement, is complete and accurate in all
material respects and does not contain any untrue statement of
a material fact or omit to state a material fact required to
make the statements made, in light of the circumstances under
which they were made, not misleading.
5. REPRESENTATIONS AND WARRANTIES OF KELLY'S.
Kelly's 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 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 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 to which Kelly's is a party and has been duly
authorized by all appropriated and necessary action.
C. INFORMATION. The information concerning Kelly's as set forth
in this Agreement and in the Kelly's Financials is complete
and accurate in all material respects and does not contain any
untrue statement of a material fact or omit to state a
material fact required to make the statements made in light of
the circumstances under which they were made not misleading.
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 Kelly's.
9
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E. INFORMATION. The information concerning Kelly's and set forth
in this Agreement, is complete and accurate in all material
respects and does not contain any untrue statement of a
material fact or omit to state a material fact required to
make the statements made, in light of the circumstances under
which they were made, not misleading.
F. RESTRICTED SHARES. The shares of AmeriResource common stock
which are being acquired for Kelly's own account and for
investment and not with a view to the public resale or
distribution thereof. Kelly's will not sell, transfer or
otherwise dispose of the AmeriResource Shares except in
compliance with the Securities Act of 1933, as amended (the
"Act"), and is aware the AmeriResource Shares are "restricted
securities" as that term is defined in Rule 144 of the General
Rules and Regulations under the Act ("Rule 144")
Kelly's acknowledges and understands that the Shares are
unregistered in reliance of Section 4(2) of the Act and must
be held indefinitely unless they are subsequently registered
under the Act or an exemption from such registration is
available.
Kelly's is fully aware of the applicable limitation on the
resale of the Kelly's Shares. These restrictions for the most
part are set forth in Rule 144. Rule 144 permits sales of
"restricted securities" upon compliance with the requirements
of such rule. If Rule 144 is available to Kelly's, Kelly's may
make only routine sales of securities in limited amounts, in
accordance with the terms and conditions of that Rule.
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 July 16, 1999.
At closing Kelly shall deliver One Hundred Thousand dollars ($100,000)
to AmeriResource and AmeriResource shall deliver the AmeriResource Shares to
Kelly's not later than September 15, 1999.
7. CONDITIONS PRECEDENT OF AMERIRESOURCE TO EFFECT CLOSING. All obligations of
AmeriResource under this Agreement are subject to fulfillment prior to or as of
the Closing Date, of each of the following conditions:
A. The representations and warranties by or on behalf of Kelly's
contained in this Agreement or in any certificate or documents
delivered to AmeriResource 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. Kelly's 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 AmeriResource pursuant to
the provisions hereof shall be reasonably satisfactory to
AmeriResource' legal counsel.
8. CONDITIONS PRECEDENT OF KELLY'S TO EFFECT CLOSING. All obligations of Kelly's
under this Agreement are subject to fulfillment prior to or as of the date of
Closing, of each of the following conditions:
A. The representations and warranties by or on behalf of AmeriResource
contained in this Agreement or in any certificate or documents
delivered to Kelly's 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. AmeriResource 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.
10
<PAGE>
C. All instruments and documents delivered to Kelly's pursuant to the
provisions hereof shall be reasonably satisfactory to Kelly'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 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
unreasonable 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 AmeriResource
shall fail or refuse to deliver any of the AmeriResource 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
AmeriResource and Kelly's 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 AmeriResource.
13. COSTS AND EXPENSES. AmeriResource and Kelly's shall bear their own costs and
expenses in the proposed exchange and transfer described in this Agreement.
AmeriResource and Kelly's have been represented by their own attorney in this
transaction, and shall pay the fees of its attorney, 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 Kelly's:
Kelly's Coffee Group, Inc.
268 West 400 South, Suite 300
Salt Lake City, Utah 84101
To AmeriResource:
11
<PAGE>
AmeriResource Technologies, Inc.
9319 Santa Fe Drive
Overland Park, Kansas 66212
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 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 no 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 is set forth here, have been made by any party.
I. SEVERABILITY. If any part of this Agreement is deemed to be unen-
forceable, the balance of the Agreement shall remain in full force and
effect.
12
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
Kelly's Coffee Group, Inc.
BY: /S/ RICHARD SURBER
ITS: PRESIDENT
AmeriResource Technologies, Inc.
BY: /S/ DELMAR JANOVEC
ITS: CEO
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED NOVEMBER 30, 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> 9-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-START> MAR-1-1999
<PERIOD-END> NOV-30-1999
<EXCHANGE-RATE> 1
<CASH> 3,389
<SECURITIES> 476,237
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 479,626
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 479,626
<CURRENT-LIABILITIES> 1,535,600
<BONDS> 0
0
0
<COMMON> 51,556
<OTHER-SE> (1,107,530)
<TOTAL-LIABILITY-AND-EQUITY> (1,055,974)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 47,760
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 997,714
<INCOME-TAX> 0
<INCOME-CONTINUING> 941,954
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 941,954
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
