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February 15, 2002 08:30
Kelly's to Acquire Real Estate and Securities Portfolio
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SALT LAKE CITY--(BUSINESS WIRE)--Feb. 15, 2002--Kelly's Coffee Group, Inc. (OTCBB:KLYS), announced today that it has entered into an agreement with AXIA Group, Inc. (OTCBB:AXIA), to acquire essentially all the assets and liabilities of AXIA in exchange for two hundred fifty-five million one-hundred thousand (255,100,000) shares of Kelly's.
The stock issuance to AXIA will effectively transfer to AXIA approximately 82% of the total shares issued and outstanding in Kelly's.
AXIA's assets include an extensive portfolio of securities, real estate holdings and publicly reporting shell-companies with gross assets of more than $10,000,000 and a net worth exceeding $5,000,000 (estimated valuation is subject to adjustment and consolidation as the December 31, 2001 financials become available). In addition to the acquired assets, the acquisition preserves for Kelly's an estimated $5 million in tax loss carry forwards.
Kelly's management sees the acquisition as a first step in the process of creating a diversified portfolio of real estate and securities designed to ensure the direct participation of our shareholders in future growth. Kelly's president and chief executive officer, Mr. Richard Surber, stated that he intends for Kelly's to become the "goose that lays golden eggs."
Mr. Surber envisions building a company that encourages shareholders to actively participate in Kelly's business plan. This seemingly radical concept involves two business goals.
The first goal is to capitalize on AXIA's real estate holdings, comprised of diversified commercial, residential and retail holdings, and on its real estate acquisition philosophy. AXIA's philosophy is to acquire undervalued real estate using its securities and little or no cash down. Management then improves the properties, puts professional management in-place, increases tenant revenue rolls, and sells the property for a profit. Kelly's market liquidity, combined with AXIA's real estate operations, confers on Kelly's shareholders the benefits of an aggressive real estate acquisition strategy with exponential growth potential.
The acquisition of AXIA's real estate holdings causes Kelly's shareholders to acquire an 80% interest, or better, in the following properties:
-- Salt Lake Development Corporation owns a mixed use,
residential and retail building, located in Ogden, Utah. The
company also owns a 14,000 square foot two story office
building located in Salt Lake City, Utah, that is used as
AXIA's headquarters.
-- Hudson Consulting Group, Inc., owns four hospitality
condominiums located in Brian Head, Utah, an all seasons
recreation area near Zions National Park, in southern Utah.
-- Wasatch Capital Corporation owns a 36,797 square foot mixed
use office, retail, restaurant and potentially residential,
turn of the century building, located in downtown Salt Lake
City, Utah.
-- Downtown Development Corporation owns a 7,000 square foot
building used for office and retail, located in downtown Salt
Lake City, Utah.
-- Wichita Development Corporation (Pink Sheets LLC. WHDV), owns
a 48,800 square foot, seven story office building located in
Wichita, Kansas.
-- Kearns Development Corporation owns an 11,709 square foot
office building in Kearns, Utah with an option on an identical
building on the same lot.
-- West Jordan Real Estate Holdings, Inc., owns a 72,000 square
foot shopping mall known as the Glendale Plaza located in
downtown Salt Lake City, Utah.
-- Canton Tire Recycling West Virginia, Inc., owns an industrial
facility, once used for storing petrochemicals, located in
Parkersburg, West Virginia.
These properties are booked on a "depreciated cost" basis, with fair market values that significantly exceed the booked value.
The second goal, made part of Mr. Surber's vision for Kelly's, seeks to take full advantage of AXIA's portfolio of securities and financial-consulting expertise.
The AXIA securities portfolio is comprised mostly of "micro-cap" stock issued in exchange for services rendered by its consulting division in advising and developing small public businesses. AXIA's portfolio is valued at more than $2,000,000, of which $1,944,448 is in marketable securities. Kelly's shareholders benefit particularly from fourth quarter stock market declines, resulting in a discounted valuation on those same securities. Management believes many of these securities are undervalued.
Kelly's shareholders also benefit from AXIA's sizable vested interests in other publicly traded, and/or reporting, companies, many of which are actively pursuing new business opportunities. The following public companies are among AXIA's holdings:
-- AXIA owns over 80% of Torchmail Communications, Inc. (Pink
Sheets LLC. TOCH). The company was originally quoted on the
NASDAQ National Market System and has an extensive shareholder
base. Torchmail has applied for quotation on the Over the
Counter Bulletin Board ("OTC:BB") and is seeking to acquire an
operating business. Kelly's believes that Torchmail's
extensive shareholder base will provide potential for
significant liquidity as Torchmail acquires operations.
-- AXIA owns over 80% of Wichita Development Corporation. (Pink
Sheets LLC., WHDV). Wichita has applied for quotation on the
OTC:BB. Kelly's expects that Wichita will act as one of the
vehicles through which it will pursue an aggressive real
estate roll-up strategy.
-- AXIA owns over 80% of Golden Opportunity Development
Corporation. Until recently, Golden owned a 134-room motel
located in Baton Rouge, Louisiana, and is in the process of
identifying hospitality properties in the South Eastern United
States for prospective acquisition. It is a fully reporting
company, under the Securities Exchange Act of 1934, and is
currently seeking a stock quotation on the OTC:BB.
-- AXIA owns 100% of Downtown Development Corporation. Downtown
owns real estate in Utah and is conducting an SB-2 offering
for $400,000. Once the offering is completed, Downtown expects
to pursue a quotation on the OTC:BB.
AXIA also owns a significant interest in at least twelve "shell corporations" that report on an annual and quarterly basis to the Securities and Exchange Commission ("SEC"). "Shell companies" offer operating companies a way to gain access to public markets. Shell companies also produce consulting revenues. After completing a transaction known as a "reverse merger," the acquiring company often will retain AXIA's consulting group to assist it in filing required registration statements and guiding it through the process for obtaining a public quote. The process usually works as follows:
-- The "shell company" identifies a target business opportunity.
-- The "shell company" enters into an acquisition agreement under
which it acquires all the issued and outstanding shares of the
private business in exchange for an agreed number of the
shares in the "shell company".
-- The acquisition transaction places the management of the
private business in control of the "shell company" that now
has operations.
-- Shares in the "shell company" are then distributed to the
shareholders of AXIA through filing a registration statement
with the SEC. Once the registration statement is effective,
shareholders of AXIA directly become shareholders in the new
entity. Kelly's may assume this role.
-- New management may then requests a market maker to submit the
new reporting company for public quotation.
Kelly's sees this process as the method by which to bring direct participation to its shareholders by creating a portfolio of public companies in which its shareholders have an interest. Mr. Surber knows that the shareholders of Kelly's are extremely valuable and it is his belief that giving back some of Kelly's value directly to its shareholders will benefit the company's long-term growth. He has commented, "(i)f I could make our shareholders appreciate just one thing about this transaction it would be that holding stock in Kelly's will entitle each of our shareholders to stock in new public companies, as dividends are distributed. The possible ramifications of this process, which enables shareholders in Kelly's to own shares in several public companies purely by virtue of owning shares of Kelly's, are mind boggling. I know of no other organization that has committed to bring this form of direct participation in a business to its shareholders."
Kelly's is a holding company, which before this transaction, had no operations and no significant assets. Investors are strongly encouraged not to make any investment that they cannot afford to lose. Kelly's strongly encourages the public to read the above information in conjunction with its Form 10KSB for December 31, 2000, and 10QSB for September 30, 2001, AXIA Group, Inc.'s Form 10KSB for December 31, 2000, and 10QSB for September 30, 2001, Wichita Development Corporation's Form 10KSB for December 31, 2000, 10QSB for September 30, 2001, and 8K/A dated December 4, 2001, and Golden Opportunity Development Corporation's Form 10KSB for December 31, 2000, and 10QSB for September 30, 2001, and 8K dated January 14, 2002, Torchmail Communications, Inc.'s Form 10KSB for March 31, 2000, and 10QSB for September 30, 2002, and Downtown Developments Post Effective Amendment to its SB2 filed February 1, 2002. All these disclosures can be viewed at www.sec.gov. We further advise our readers to visit the AXIA Group, Inc. website at www.axiagroupinc.com.
A number of statements contained in this press release are forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, notwithstanding the fact that such Act may not be available to Kelly's. These forward-looking statements involve a number of risks and uncertainties, including the timely development, and market acceptance of products and technologies, competitive market conditions, successful integration of acquisitions and the ability to secure sufficient financing to complete the transaction. The actual results that Kelly's may achieve could differ materially from any forward-looking statements due to such risks and uncertainties.
CONTACT: Hudson Consulting Group Inc.
Richard Surber, 801/575-8073
Fax - 801/575-8092
email - hudconsult@aol.com
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