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Preliminary Information Statement
Dated: April 12, 1999
REXFORD, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 3, 1999
TO THE SHAREHOLDERS OF REXFORD, INC.:
A special meeting of the shareholders (the "Special Meeting") of Rexford,
Inc., the ("Company"), will be held at 3090 East 3300 South, Suite 400, Salt
Lake City, Utah 84109, at 10:00 a.m., Mountain Time, to ratify and approve the
Agreement and Plan of Reorganization (the "Acquisition Proposal")entered into
between the Company and Chicago Map Corporation ("CMC") that provides for
(A) the implementation of a 1-for-70 reverse split of all of the
Company's issued and outstanding shares of common stock;
(B) the issuance of 10,500,000 shares of the Company's post-reverse split
common stock to the CMC shareholders in exchange for all of the CMC common
stock;
(C) changing the name of the Company to "Lexon Technologies, Inc."; and
(D) electing Steven J. Peskaitis, Mike Barnett, Paris Karahalios, and
Thomas W. Rieck, all nominees of CMC, as directors of the Company, to serve
until the next annual meeting of shareholders or until their successors are
duly elected and qualified.
The approval of the Acquisition Proposal by the shareholders will
constitute approval of each of the foregoing.
At the Special Meeting the shareholders will also transact such other
business as may properly come before the Special Meeting or any adjournment
thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ACQUISITION
PROPOSAL WHICH IS DESCRIBED IN MORE DETAIL IN THE ACCOMPANYING INFORMATION
STATEMENT.
ONLY SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON MARCH 26, 1999 (THE
"RECORD DATE"), ARE ENTITLED TO NOTICE OF AND TO VOTE AT THE SPECIAL MEETING.
MEMBERS OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS WHO, COLLECTIVELY HOLD IN
EXCESS OF 50% OF THE COMPANY'S ISSUED AND OUTSTANDING SHARES, HAVE INDICATED
THEIR INTENTION TO VOTE IN FAVOR OF THE ACQUISITION PROPOSAL. AS A RESULT,
THE ACQUISITION PROPOSAL WILL BE APPROVED WITHOUT THE AFFIRMATIVE VOTE OF ANY
OTHER SHAREHOLDERS. ALTHOUGH MANAGEMENT IS NOT ASKING FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY, SHAREHOLDERS MAY BE PRESENT AT THE SPECIAL
MEETING AND VOTE THEIR SHARES IN PERSON OR BY PROXY. MANAGEMENT DOES,
HOWEVER, ENCOURAGE ALL SHAREHOLDERS TO ATTEND THE SPECIAL MEETING IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
/S/Dennis Blomquist, President
Scottsdale, Arizona
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REXFORD, INC.
INFORMATION STATEMENT
This Information Statement is furnished to the shareholders of the
Company in connection with a Special Meeting to be held on May 3, 1999,
at 10:00 a.m., Mountain Time, at 3090 East 3300 South, Suite 400, Salt Lake
City, Utah 84109, and at any adjournment(s) thereof.
At the Special Meeting, the shareholders will consider and vote on the
Acquisition Proposal and ratify and approve the Agreement and Plan of
Reorganization entered into between the Company and Chicago Map Corporation
("CMC") that provides for:
(A) the implementation of a 1-for-70 reverse split of all of the
Company's issued and outstanding shares of common stock;
(B) the issuance of 10,500,000 shares of the Company's post-reverse split
common stock to the CMC shareholders in exchange for all of the CMC common
stock;
(C) changing the name of the Company to "Lexon Technologies, Inc."; and
(D) electing Steven J. Peskaitis, Mike Barnett, Paris Karahalios, and
Thomas W. Rieck, all nominees of CMC, as directors of the Company, to serve
until the next annual meeting of shareholders and until their successors are
duly elected and qualified.
Approval of the Acquisition Proposal by the shareholders will constitute
approval of each of the foregoing. At the Special Meeting the Shareholders
will also transact such other business as may properly come before the Special
Meeting or any adjournment thereof.
MANAGEMENT IS NOT ASKING FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY, HOWEVER SHAREHOLDERS MAY BE PRESENT AT THE SPECIAL MEETING AND VOTE
THEIR SHARES IN PERSON OR BY PROXY. MANAGEMENT ENCOURAGE ALL SHAREHOLDERS TO
ATTEND THE SPECIAL MEETING IN PERSON.
THIS INFORMATION STATEMENT IS BEING MAILED ON OR ABOUT APRIL 23, 1999 TO ALL
SHAREHOLDERS ENTITLED TO VOTE AT THE SPECIAL MEETING.
Only holders of record of the 70,000,000 shares of Common Stock of the
Company outstanding as of March 26, 1999 (the "Record Date"), are entitled to
vote at the Special Meeting. Each shareholder has the right to one vote for
each share of the Company's common stock owned. Cumulative voting is not
provided for. Holders of more than 50% of the 70,000,000 shares issued and
outstanding must be represented at the Special Meeting to constitute a quorum
for conducting business. Approval of the proposals discussed above requires
the affirmative vote of a majority of the Company's issued and outstanding
shares of Common Stock.
The Company's officers, directors, and principal shareholders owning or
controlling, in the aggregate, greater than 50% of the issued and outstanding
shares of Common Stock on the Record Date have indicated their intention to
vote in favor of the Acquisition Proposal. Accordingly, the Acquisition
Proposal will be approved without the affirmative vote of any other shares.
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THE ACQUISITION PROPOSAL: APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION
Terms of the Acquisition
- ------------------------
On March 26, 1999, the Company and CMC entered into an Agreement and Plan
of Reorganization, a copy of which is attached as Exhibit A to this
Information Statement (the "Acquisition Agreement"). The following discussion
regarding the terms of the Acquisition Agreement is subject to, and qualified
in its entirety by, the detailed provisions of the Acquisition Agreement and
the any exhibits thereto.
The Acquisition Agreement provides that the 15,000 shares of CMC Common
Stock held by the CMC Shareholders will be exchanged for 10,500,000 shares of
the Company's Common Stock. No fractional shares will be issued to the CMC
Shareholders and the Company will round the number of shares of the Company's
Common Stock to be issued to such stockholder to the nearest whole share.
As a condition to the Acquisition Agreement, the Company will effect a 1-
for-70 reverse stock split (the "Reverse Split") of the Company's Common
Stock, so that shareholders of the Company prior to such Reverse Split will
receive 1 share of the Company's Common Stock for each 70 shares of Common
Stock held on the Record Date for the Reverse Split, rounded downward to the
nearest whole share. This Reverse Split would reduce the Company's issued and
outstanding stock from 70,000,000 to 1,000,000 shares. After giving effect to
the Reverse Split and the issuance of 10,500,000 shares of Common Stock issued
to the CMC Shareholders in exchange for the 15,000 of CMC Common Stock, the
Company will have 11,500,000 shares issued and outstanding.
The Reverse Split will not change the par value or authorized
capitalization of the Company. The rights of existing shareholders will not be
altered and no shareholders will be eliminated as a result of the Reverse
Split. The Reverse Split will have no effect on the stockholders' equity of
the Company, other than the transfer of approximately $56,106 in stated
capital to additional paid-in capital.
If, as a result of implementation of the Reverse Split, any shareholder
would be entitled to receive a fractional share, the Company will not issue
any fractional shares. Instead, shares will be rounded downward to the
nearest whole number. All shares turned in to the Company as a result of the
Reverse Split will be canceled and returned to the status of authorized but
unissued shares. Therefore, after the Reverse Split is implemented, the
Company will still have an authorized capitalization of 100,000,000 shares of
Common Stock, of which 1,000,000 shares will be issued and outstanding and
after giving effect to the issuance of 10,500,000 shares under the terms of
the Acquisition Agreement, 11,500,000 shares will be issued and outstanding.
Following the implementation of the Reverse Split and approval of the
Acquisition Proposal, each holder of shares of the Company's Common Stock
shall, upon the surrender of the certificate or certificates representing such
shares to the Company's registrar and transfer agent, be entitled to receive a
certificate or certificates evidencing shares of the Company's Common Stock,
reflecting the new shares and name change of the Company.
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As a condition precedent to the consummation of the transactions
contemplated by the Acquisition Agreement, the shareholders of the Company are
to adopt and approve all required or necessary resolutions to adopt an
amendment to the Company's certificate of incorporation that provides for
changing the name of the Company to "Lexon Technologies, Inc," and elect
Steven J. Peskaitis, Mike Barnett, Paris Karahalios, and Thomas W. Rieck, the
nominees of CMC to the Company's Board of Directors, to replace the Company's
current Board of Directors.
As soon as practicable following approval of the Acquisition Proposal by
the Company's shareholders, a Certificate of Amendment and such other
documents as are required by the provisions of the corporate statutes of the
states of Delaware and Illinois to complete the acquisition of CMC are to be
filed with the Secretary of State of States of the state of Delaware and
Illinois. The "Effective Date" of the acquisition shall be the date the
filing of such documents shall become effective.
A. Name Change
-----------
In connection with the acquisition of CMC, the Company desires to change
the name of the Company to Lexon Technologies, Inc. or such derivation
thereof, as may be acceptable to the Board of Directors and available for use
in the state of Delaware and the jurisdictions in which the activities of the
Company would require the Company to qualify to do business in those
jurisdictions. Management of the Company believes that the new name will be
more reflective of the Company's diverse activities following the acquisition.
B. Election of Board of Directors
------------------------------
The names of the Company's current executive officers and directors and
the positions held by each of them are set forth below:
Position with Director and/or
Name Age the Company Officer Since
- -------------------- --- --------------------- ------------------
Dennis Blomquist 47 President and Chairman 1992
Ron Featherstone 48 Vice President and Director 1992
Mark A. Scharmann 40 Treasurer and Director 1992
Tom Sollami 48 Secretary and Director 1992
The Company's officers and directors have served in such positions since
the dates indicated above. Such persons will not stand for re-election at the
Special Meeting. In connection with the proposed acquisition of CMC, Steven
J. Peskaitis, Mike Barnett, Paris Karahalios, and Thomas W. Rieck, the
nominees of CMC, have been nominated for election as directors of the Company.
Certain biographical information with respect to each of such persons is set
forth herein below. Each director, if elected by the shareholders, will serve
until the next annual meeting and until his successor is duly elected and
qualified.
Set forth on the following page is certain information relating to the
business experience of each of CMC's nominees for directors of the Company for
the past five years.
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Steven J. Peskaitis, age 24, is a co-founder of CMC and has been its
President since its inception in 1990. Mr. Peskaitis has been influential in
all phases of the Company's operations.
Mike Barnett, age 41, has served as the director of corporate licensing
for CMC since 1996. From 1994 through 1996, Mr. Barnett was the director of
sales and marketing from American Technologies, Fond du Lac, Wisconsin, a
manufacturer of software for satellite communications and vehicle monitoring
products for the over-the-road trucking market. Mr. Barnett received a B.S. in
Management from Oregon State University, Salem, Oregon in _____.
Paris Karahalios, age 44, is a co-founder of TRIUS, Inc. and has served
and the president and C.E.O. since its inception in August 1990. TRIUS, Inc.,
located in North Andover, Massachusetts, is a developer of mapping technology.
CMC acquired the assets of TRIUS, Inc. in March 1999. Mr. Karahalios was a
M.S. in Nuclear Engineering/Fusion and a B.S. in Nuclear Engineering from the
University of Lowell, Lowell, Massachusetts, in 1977 and 1981, respectively,
and has been published in various software and scientific magazines.
Thomas W. Rieck, age 53, has since 1980 been the president of the law
firm Rieck and Crotty, P.C., Chicago, Illinois, legal counsel to CMC. Since
1992, Mr. Rieck has served as a board member of SigmaTron International, Inc.
(NASDAQ: SGMA), Elk Grove Village, Illinois, a electronics contract assembly
manufacturer. Since 1987, Mr. Rieck has served as a board member for Circuit
Systems, Inc. (NASDAQ: CSYI), Elk Grove Village, Illinois, a manufacturer of
printed circuit boards. Mr. Rieck is a member of both the Chicago and
American Bar Associations.
Set forth below is biographical information on each of the current directors
of the Company.
Dennis Blomquist has served as an officer and director of the Company
since 1992. For the past five years, Mr. Blomquist has been a self-employed
business consultant providing data base administration, development and
computer related services. From June 1996 to December 1997, Mr. Blomquist
worked for Parami Productions, Inc., Studio City, California, a film and
television development company as director of development.
Ron A. Featherstone has served as an officer and director of the Company
since 1992. Since July 1995, Mr. Featherstone has been the executive vice
president for Investors First Ventures, Ltd, Scottsdale, Arizona, a financial
consulting firm. From 1993 through June 1995, Mr. Featherstone was the area
sales manager for Clarke Publications, Irwindale, California.
Tom Sollami has served as an officer and director of the Company since
1992. Mr. Sollami has been employed as the Security Coordinator of the
Doubletree Hotel, Salt Lake City, Utah, since February 1998.
Mark A. Scharmann has been vice-president and a director of the Company
since February 1997. Since 1979, Mr. Scharmann has been the principal owner
of Troika Capital, Inc., Ogden, Utah, a financial consulting company.
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Recommendation of Management
- ----------------------------
THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES THAT THE TRANSACTIONS
CONTEMPLATED BY THE ACQUISITION AGREEMENT ARE DESIRABLE AND IN THE BEST
INTERESTS OF THE COMPANY'S SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" THE ACQUISITION PROPOSAL. MANAGEMENT BELIEVES THAT
ITS SHAREHOLDERS WILL BENEFIT THROUGH THE STRENGTH, EXPERIENCE AND KNOWLEDGE
OF CMC'S SENIOR EXECUTIVE MANAGEMENT IN THE ONGOING DEVELOPMENT OF THE
BUSINESS OF THE COMPANY. (SEE "BUSINESS OF CMC.")
CMC's management has presented the Company's management with a business
plan that is focused on emerging opportunities in the business of designing,
developing, producing, licensing and marketing geographical digital map
technology, including Global Positioning System (GPS) products and navigation
systems, Web/Intranet/Internet map displays, digital data integration and
referencing, country-wide digital map sets, professional software and mobile
asset monitoring/tracking systems. CMC's management intends to aggressively
pursue its current business strategy and therefore the Company's shareholders
may be able to benefit from any related increased market activity in the
Company's Common Stock. There are, however, no assurances that CMC's
management will be able to conduct profitable operations or that the Company's
shareholders will benefit from increased market activity in the Company's
Common Stock. The Board of Directors of the Company has not obtained an
independent opinion or other evaluation regarding the fairness of the terms of
the Agreement due to the substantial costs in obtaining such an opinion or
evaluation.
Accounting Treatment
- --------------------
The proposed acquisition of CMC by the Company will be accounted for
as a recapitalization of CMC because the shareholders of CMC will control the
Company after the acquisition. Therefore, CMC will be treated as the
acquiring entity. There will be no adjustment to the carrying value of the
assets or liabilities of CMC in the share exchange. The Company will be the
acquiring entity for legal purposes and CMC will be the surviving entity for
accounting purposes.
No Legal Opinions or Tax Rulings
- --------------------------------
The proposed acquisition of CMC by the Company is intended to qualify
as a tax-free reorganization under the Internal Revenue Code of 1986. If the
acquisition qualifies as a tax-free reorganization, no gain or loss will be
recognized for income tax purposes by either the Company or CMC as a result
of the acquisition. However, neither the Company nor CMC has requested a
tax ruling from the Internal Revenue Service or an opinion of legal counsel
with respect to the acquisition. Accordingly, no assurance can be given that
the acquisition will qualify as a tax-free reorganization.
The shares of the Company's Common Stock to be issued to the CMC
shareholders will not be registered under the Securities Act of 1933, as
amended (the "Act") in reliance on the exemptions from such registration
requirements provided by Sections 3(b) and 4(2) of the Act for certain small
offerings and for transactions not involving any public offering. In order to
claim the availability of such exemptions, the CMC shareholders will be
required to make representations to the Company with respect to their
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acquisition of the Company's shares, such shares will be restricted
securities, and the certificates will bear legends restricting their
subsequent resale in the absence of registration under the Securities Act or
the availability of an exemption therefrom.
Vote Required
- -------------
The vote of a majority of the issued and outstanding shares of Common
Stock represented in person or by proxy at the Special Meeting is required to
approve the Acquisition Proposal. Members of management and other principal
shareholders holding or controlling the vote of in excess of fifty percent
(50%) of the issued and outstanding stock entitled to vote at the Special
Meeting have indicated their intention to vote in favor of the Acquisition
Proposal. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
THE AQUISITION PROPOSAL.
Business of the Company
- -----------------------
The Company was incorporated on February 14, 1983, in the state of Utah
under the name Chelsea Energy Corporation (hereinafter the "Registrant" or the
"Company"). In connection with its formation, a total of 1,047,000 shares of
its common stock were issued to the founders of the Company. In March 1985,
the Company sold 3,000,000 shares of its common stock in connection with a
public offering at a price of $0.01 per share. The public offering was
registered with the Utah Securities Division pursuant to Section 61-1-10, Utah
Code Annotated, as amended. The offering was exempt from federal registration
pursuant to Regulation D, Rule 504, promulgated under the Securities Act of
1933, as amended. The Company was initially formed to provide professional
consulting services to local government units.
In April 1989, the Company formed California Cola Distributing Company,
Inc. ("CCDCI")under the laws of the state of Delaware as a wholly-owned
subsidiary. In May 1989, the Company merged into its subsidiary, CCDCI, in
connection with a reincorporation merger. As a result of the reincorporation
merger, the Company changed its domicile to the state of Delaware from the
state of Utah and changed its name from Chelsea Energy Corporation to
California Cola Distributing Company, Inc. In October 1992, the Company
effected a sale of its wholly-owned subsidiary, CCDCI to California Cola Group
Incorporated, a principal shareholder of the Company and changed the its name
to Rexford, Inc.
Current Business Activities
- ----------------------------
Since divesting itself of CCDCI, the Company has had no operations and
has been seeking potential business acquisitions or opportunities in an effort
to commence business operations. The Acquisition Proposal now being presented
to the Company's shareholders has been evaluated by the Company as a viable
business opportunity based on management's business judgment. Because of the
Company's current status having no assets and no recent operating history, the
Company has voluntarily filed a registration statement on Form 10SB with the
U.S. Securities and Exchange Commission in order to make information
concerning itself more readily available to the public. The Company is
obligated to file with the Commission certain interim and periodic reports
including an annual report containing audited financial statements.
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The Company is considered a development stage company with no assets or
capital and with no operations or income since approximately 1992. The costs
and expenses associated with the preparation and filing of this information
statement and other operations of the Company have been paid for by
shareholders of the Company, specifically Mark A. Scharmann (see Security
Ownership of Certain Beneficial Owners and Management). The Company has not
received a formal commitment from its shareholders and officers or directors
to continue to finance the Company's expenses and unless the Acquisition
Proposal is approved or the Company is able to obtain significant outside
financing, there is substantial doubt about the Company's ability to
continue as a going concern.
Selected Financial Data of the Company
- --------------------------------------
The year end financial data included in the table has been selected by
the Company and has been derived from the Company's financial statements
included in the Company's Annual Report on Form 10KSB for its fiscal year
ended September 30, 1998. All financial information for the fiscal years
ended September 30, 1998 and 1997 have been examined by Tanner + Co.,
certified public accountants. The three-month unaudited financial data has
been derived from the Company's financial statements included in the Company's
Quarterly Report on Form 10QSB for the period ended December 31, 1998 and has
been provided by the Company.
Three
Months Ended
December 31,
Year Ended September 30, 1998
1998 1997 (Unaudited)
---- ---- ---------
Statement of
Operations Data:
Revenues $ - $ - $ -
Cost of Sales $ - $ - $ -
Operating Expenses $ 46,350 $ 42,795 $ 6,606
Net (loss) $ (46,350) $ (42,795) $ (6,606)
Net (loss)
per common share $ (0.00) $ (0.01) $ (0.00)
Weighted Average
Shares Outstanding 43,767,000 16,360,000 57,106,420
At
December 31,
Year Ended September 30, 1998
1998 1997 (Unaudited)
---- ---- ---------
Balance Sheet Data:
Current Assets $ 226 $ 540 $ -
Current Liabilities $ 11,056 $ 590 $ 17,436
Work Capital(Deficit) $ (10,830) $ (50) $ (17,436)
Property &
Equipment (net) $ - $ - $ -
Total Assets $ 226 $ 540 $ -
Long Term Liabilities $ - $ - $ -
Shareholders' Equity (Deficit)$ (10,830) $ (50) $ (17,436)
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Business of CMC
- ---------------
All information with respect to CMC's business activities has been
provided by the management of CMC and is presented herein without independent
verification. CMC has represented that the information is accurate and
complete in all material respects. Financial information regarding CMC has
been provided in this Information Statement in the section titled
"Selected Financial Data" below.
CMC was incorporated in July 1992 in the state of Illinois under the name
S&S Publishing, Inc. In March 1994, an amendment was filed to change its name
to Just Softworks, Inc. In July 1995, another amendment was filed to change
its name to Chicago Map Corporation.
CMC's core competency is the development, production, licensing and
marketing of geographical digital map technology. Use of these technologies
are found in products and services such as; consumer-oriented mapping
products, GPS (Global Positioning System) navigation systems,
Web/Internet/Intranet map displays, digital data integration and referencing,
country-wide digital map sets, professional software development, and mobile
asset monitoring/tracking. These application solutions operate in various
Windows(TM) environments, allowing customers to apply and utilize CMC
technologies across a broad range of markets and throughout various countries.
CMC's versatile mapping technologies make use of numerous detailed and
comprehensive geographical databases that include street addresses, road
networks, highways, major geographical landmarks, hydrographic features,
topographical relief tables and satellite/aerial photography. These full
featured displays are complete, flexible and comprehensive enough to meet the
mapping needs of individual, corporate, and government users and essentially
eliminate the need for standard paper maps.
Historically, CMC's primary focus has been on the creation of a base line
of technologies that can be easily and cost-effectively integrated within a
wide range of applications. This allows CMC and its professional staff to
directly and indirectly support the development of custom mapping software
designed around a base framework of quality data and integration tools. This
design model works efficiently for both limited distribution and large
volumes. CMC takes advantage of modern programming languages and simplifies
and speeds system development via its own proprietary tools, class libraries
and professional support.
Strategic Plan
- --------------
Mapping is the representation of the Earth's surface drawn to scale. The
history of mapping can be traced to the beginning of time and have long aided
in the exploration, discovery and understanding of the world in which we live.
The process of creating maps is known as Cartography.
Cartography is considered both a science and an art. Intertwined with
geography, it is intended to present images of our communities, nation or the
world. This effort, especially in its infancy, required the creative
adaptation of roads, town labeling and landmarks to better aid in referencing
these man-made or geographic points of interest. However, the complex and
technically oriented world in which business, government and people now
operate, has all but eliminated the artistic contribution.
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Today's cartographic community is made up primarily of data gathers and
surveyors using sophisticated equipment; such as satellite-aided instruments
and computers to map their world. Paper maps are being replaced with or are
being generated by advanced software programs. This shift in technology has
allowed companies with database manipulation and software expertise, such as
CMC, to step forward and help influence and lead this shift in cartography.
CMC and its partners continue to maintain a solid background in map software
development, CAD (computer aided drafting), GPS transportation movement
monitoring and wireless communications. These disciplines have resulted in
the creation of a broad range of product and service solutions necessary for
the shifting and emerging markets, which demand absolute precision and
accuracy in their maps.
Products
- --------
CMC offers the following categories of products:
PROFESSIONAL DEVELOPMENT TOOLS - CMC has created a range of countrywide and
worldwide development tools. These tools allow software programmers to
integrate quality map displays into third-party applications. The map-imaging
tool can represent a significant portion of the application or an isolated
feature. Prior to any internal or external distribution of customized
applications, a company must first establish a distribution licensing
arrangement with CMC. The following products are marketed as part of the
CMC's Professional Development Tool product line:
MapOCX (USA): Full-featured map display tool that includes a detailed street-
level map database of the entire United States.
MapOCX Pro (USA): Advanced development tools that include a detailed street-
level map database of the entire United States. Capabilities of the MapOCX
(USA) are also accessible within the Pro product.
MapOCX (Canada): Integration of street-level map data for all of Canada
within an independent development tool. First software effort to market a
national map database and display engine into the Canadian market.
MapOCX (South Africa): Integration of street-level map data for select major
metropolitan cities and major road networks of South Africa. First
development tool released into the South African market that includes detailed
map data and display engine.
MapOCX (World): Low resolution map display of the entire world. Data
includes country-level highway networks, population centers, political
boundaries and much more. Raster image integration provides enhanced
detailing.
MapOCX (Geocoder - USA): CMC provides a tool to accurately assign X,Y
coordinates to geographically reference US data sets. Referencing is based on
existing postal routes.
TECHNOLOGY LICENSING - CMC actively licenses its technologies and map display
engines throughout the world. This wide spread distribution of applications
and development tools has allowed CMC to achieve market dominance in many key
markets. Research has shown that the current number of active accounts
represents a very small portion of the overall market opportunity. Most of
this opportunity remains uncommitted due to a lack of awareness within the
marketplace.
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PROGRAMMING AND CUSTOMER DEVELOPMENT SERVICES - These services include:
CUSTOM PROGRAMMING: CMC provides programming services for creating,
customizing and altering software applications. Programming languages include
all major Windows(TM) visual development languages. Specialization includes
GPS, wireless communication, geocoding, fleet tracking and other
transportation and geographical referencing applications.
TECHNICAL CONSULTING: Assisting companies in the design and development phase
of third-party applications. Often, companies find that they lack some of the
background and knowledge base requirements demanded in geographic map
development. Involvement is limited by the needs of the customer.
TECHNICAL WRITING: CMC participates in a variety of technical writing tasks.
These tasks include Help files creation and the drafting of programming
specifications.
GOVERNMENT CONTRACTS - CMC was recently awarded a key development project with
the United States Geological Survey (USGS). Acquiring this contract will
allow CMC to influence the distribution and availability of existing and
future government collected geographic data. This effort has been reborn
after years of inactivity, and is poised to leverage new technologies into one
of the greatest data transfers involving the US government.
The National Atlas of the United States of America: The primary purpose of
this effort is to design, develop, distribute and maintain a new version of
The National Atlas of the United States of America(TM) for the American
people. New technologies make it possible to broaden the scope and coverage
of the National Atlas as a major reference resource for the American people.
By extending the National Atlas beyond that of static print publication, CMC
envisions interactive multi-media, multi-formatted electronic platform for the
use and integration of Government data. This allows access to the vast
library of geo-referenced data sources to be contained within the same
application.
CMC's participation in the National Atlas program is intended to result in the
creation of products and services that can and will be marketed by CMC and its
licensees, to both the private and public sector. Design of these products
will be based principally upon market research looking into the interests and
desires of the buying sector.
The future opportunity and potential of this project is both difficult and
challenging to fully define at this point. It is without question that with
proper and well-conceived planning this project will certainly extend beyond
the limits of a single retail CD-ROM application or any single Web-site.
INTERNATIONAL MAP DATA - CMC has determined that there is an untapped demand
for international digital maps and that there are few companies that offer
adequate solutions. CMC will continue to obtain key licenses to resell or
license countrywide data for countries where adequate market opportunity
exists. The following countries have been identified for expansion in the
next twelve months:
Canada
Mexico (Under development)
South Africa (Under development)
North America (Under development)
South America
Western Europe
World data (Under development)
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CONSUMER RETAIL - Historically, CMC has been actively involved in the
distribution of its map technology to the Consumer Retail market. Products
have been sold through software distribution channels to major software
retailers. Over the past few years, additional distribution has included
direct and mail-order sales. CMC will continue to pursue these distribution
efforts in addition to the newly developing E (electronic)-commerce over the
Internet. CMC will develop products to satisfy the demands for quality map
products. Current products distributed by CMC include:
Precision Mapping Streets: This is the first mass-market product developed by
CMC. It includes features that allow the user to locate specific locations on
the map, create custom images and print an endless variety of maps.
Precision Mapping Traveler: Integrating CMC's new routing technology, this
software will help anyone in getting between any two points within the US.
Additional features make it possible to interface GPS data showing the user's
current location. Create and maintain a detailed database of destinations and
beginning points.
Precision Mapping Quick-Finder: Distributed through a number of strategic
licensing relations, Quick-Finder is the most widely distributed mapping
application in the US. It is a simplified version of the Precision Mapping
Streets program.
Precision Mapping Quick-Router: Similar to the Quick-Finder, Quick-Router is a
budget software program. Using CMC's routing technology, the program will
quickly generate a series of routes between any two US cities.
PROFESSIONAL RETAIL - Products within this category are considered advanced
mapping applications designed for specific markets or industries. At this
time only one product falls within this product line. Others are under
consideration at this time.
LAND ANALYSIS: A multi-layered application designed for the real estate
industry. It allows anyone involved in the sale, lease or transfer of
property or land to determine key conditions that may negatively impact future
values. These include floodwater determination, topographic relief, toxic
waste sites, road locations and more.
INTERNET MAPPING - With the rapid growth and expansion of the Internet, CMC
has taken major efforts to develop a mapping product line specifically for the
Web. The products listed below represent a sampling of current applications:
MapMania: CMC's first effort in developing a Web-based mapping application.
Used by companies to help guide customers to key locations or for searching
addresses and cities throughout the US. Based on CMC's US data set, nothing
has been sacrificed to ensure quality images.
Internet MapOCX (USA): CMC has recently created a Web development tool
specifically to meet the needs of programmers needing map images on their Web
sites. This product includes a complete street-level database of the US.
Internet MapOCX (Canada): Expanding its presence in Canada, CMC offers a Web
development tool that includes a street-level database of the country. The
application is used primarily on select Intranet sites at this time due to
licensing restrictions.
Internet MapOCX (World): A Web development tool for displaying worldwide
geographic maps. Using the highest quality data available, the product is
designed to interface third-party data with low-resolution country data.
13
Markets
- -------
Computerized-mapping technologies can contain a limitless amount of
geographic information and geographically referenced content. This
facilitates and encourages the use of this electronic medium into a broad
range of industries and markets. After carefully researching the broad demand
for electronic mapping technology, CMC has positioned itself to service a
variety of companies and organizations. Furthermore, considering the diverse
nature of CMC's products and their utility when matched with generalized
third-party data, CMC is well positioned to be influential in the US and
numerous international marketplaces to meet this growing demand.
At this time, CMC's technologies are being used across a wide variety of
markets and industries including the following:
Aerial/Satellite Imagery Consumer Retail
Consumer Vehicle Tracking and Recovery Delivery Systems
Demographic Analysis Direct Mail
Emergency Response Entertainment
Fleet Vehicle Tracking Flood Water Analysis
Geo-Science Research Hazardous Waste Management
Insurance Planning & Adjustments Integrated Phone Information
Marine (Inland and Coastal Waterways) Marketing Analysis and Research
Mobile Asset Management Motivational Marketing
OEM GPS Manufacturers Oil and Gas Research
In-Vehicle Navigation Pipeline Management
Portable Navigation Devices Public Safety
Presentation Maps Real Estate Property Analysis
Surveying Telecommunications
Thematic Mapping Topographic Determination
Transportation Utility Management
Weather Maps Web/Internet/Intranet Applications
Although CMC has historically targeted the US marketplace, there is a
significant shift to incorporate sales into other countries. The strategic
licensing and acquisition of global and international data sets has enabled
CMC to develop products that effectively support non-US mapping software
markets. In 1997, approximately 99% of CMC's revenues were generated within
the United States while the remaining 1% was generated in international
markets. CMC is one of the few that are capable of integrating international
map data sets and a map viewing engine that is appropriate for both consumer
and professional products. Recent developments include a data set for the
World, Canada, Mexico, South Africa and South America. These will continue to
improve CMC's international presence and diversify its product and customer
mix.
Competition
- -----------
CMC's products, services, and innovative map technologies are well
received in the many markets it supports. The mapping industry recognizes the
CMC's strong position as its clients, strategic partners, and competitors
acknowledge their superior product capabilities, broad industry appeal, and
solution-oriented focus. CMC delivers practical cost-effective results to
fulfill its customer's varied needs. This is achieved through flexible (CMC
provides custom programming services and applications), comprehensive (CMC
14
offers a variety of solutions for both broad range and vertical niches within
the worldwide digital mapping industry) and cost-effective (CMC's products are
appropriate for large quantity and limited distribution) products and
services. For the past six years extensive development efforts have been put
in place that now allow CMC to establish strategic relationships and release
numerous products and services that can efficiently support a number of
divergent and varied markets both within and outside of the US. At this time,
CMC does not recognize any direct competitor that offers similar capabilities
as those supported by CMC.
Sales and Marketing
- -------------------
CMC has developed an overall marketing strategy that has allowed CMC to
carve out a solid niche for itself in the emerging map software industry.
With a product line that ranges from various consumer software applications to
professional development tools and beyond, the sales force is afforded
numerous applications and options to offer each customer. It is typical for
many customers to "grow" into a more advanced product. Initial introduction
often begins with a basic retail application and later blossomed into
customized applications adjusted to meet the specific needs of the customer.
The retail, mail order and direct sales efforts by CMC have proven to be
a positive way to educate companies and end user on the capabilities and
quality of CMC's technologies. CMC has also promoted its products and
corporate image through advertising in industry publications and
attendance/exhibiting at numerous trade shows and seminars. CMC personnel are
often sought after for appearance at industry specific events that require a
well-proven knowledge of the market place. These strategies have resulted in
numerous referrals and more business than CMC can handle with its existing
staff. CMC's competitive position in the marketplace is well positioned due
to flexibility in delivering cost-effective solutions and broad product
offerings.
As the sales cycle is a high-level process, a team is required to make
sales presentations as needed when pursuing leads and referrals. The entire
staff is, however, responsible for developing client contacts and maintaining
CMC's excellent reputation.
Customer Dependence
- -------------------
Due to the nature of CMC's marketing practices and the diverse markets it
serves, clients rarely represent a large percentage of CMC's sales on an
ongoing basis. At this time no company or individual account represents more
than 5% of annual sales.
Patents, Copyrights and Trademarks
- ----------------------------------
CMC owns or has properly filed for all of the necessary patents,
copyrights and trademarks for its applications, development tools and
proprietary map databases. Unlike most software development companies that
use components created by third-party developers, CMC has chosen to create all
necessary programming tools for its products. This eliminates any reliance on
other companies for updates, maintenance as well as eliminating any licensing
or royalty requirements. The only exception has been the licensing of map
data used in the Canadian, South African and World Atlas products. These
databases are licensed from well-established companies through long-term
agreements, which are beneficial to CMC.
15
Selected Financial Data of CMC
- ------------------------------
The year end financial data included in the table has been selected by
CMC and has been derived from the CMC's balance sheets at December 31, 1998
and 1997 and statements of operations for its fiscal years ended December 31,
1998, 1997 and 1996. All financial information has been examined by Hutton
Nelson & McDonald LLP, certified public accountants.
Year Ended December 31,
1998 1997 1996
---- ---- ----
Statement of
Operations Data:
Revenues $1,175,295 $1,934,433 $1,597,616
Cost of Sales $ 333,357 $ 890,586 $ 759,662
Operating Expenses $ 765,202 $1,081,036 $ 708,002
Net income(loss) $ 63,636 $ (38,116) $ 128,086
Net earnings (loss)
per common share $ 6.36 $ (3.81) $ 12.81
Weighted Average
Shares Outstanding 10,000 10,000 10,000
At December 31,
1998 1997
---- ----
Balance Sheet Data:
Current Assets $ 177,714 $ 188,679
Current Liabilities $ 13,471 $ 14,550
Work Capital $ 164,243 $ 174,138
Property & Equipment (net) $ 32,132 $ 51,705
Total Assets $ 264,696 $ 262,414
Long Term Liabilities $ - $ -
Shareholders' Equity $ 251,225 $ 247,864
16
Market Price of the Company's Common Stock
- ------------------------------------------
The following table sets forth, for the respective periods indicated,
the prices of the Company's Common Stock in the over the counter market as
reported by a market maker on the NASD'S OTC Bulletin Board. Such over the
counter market quotations are based on inter-dealer bid prices, without
markup, markdown or commission, and may not necessarily represent actual
transactions. At April 9, 1999, the bid and ask quotations for the
Company's Common Stock as quoted on the OTC Bulletin Board were $0.02 and
$0.10 respectively.
Bid Quotation
-------------
Fiscal Year 1999 High Bid* Low Bid*
- ---------------- -------- -------
Quarter ended 12/31/98 $0.10 $0.02
Quarter ended 3/31/99 $0.10 $0.02
Fiscal Year 1998 High Bid Low Bid
- ---------------- -------- -------
Quarter ended 12/31/97 $ N/A $ N/A
Quarter ended 3/31/98 $ N/A $ N/A
Quarter ended 6/30/98 $ N/A $ N/A
Quarter ended 9/30/98 $ N/A $ N/A
Fiscal Year 1997 High Bid Low Bid
- ---------------- -------- -------
Quarter ended 12/31/96 $ N/A $ N/A
Quarter ended 3/31/97 $ N/A $ N/A
Quarter ended 6/30/97 $ N/A $ N/A
Quarter ended 9/30/97 $ N/A $ N/A
To the best knowledge of management of the Company, prior to September
30, 1998, there was no reported bid or ask prices for the Company's Common
Stock and there was no trading of the Company's Common Stock during is fiscal
years ended September 30, 1998 and September 30, 1997.
The number of shareholders of record of the Company's Common Stock as of
March 26, 1999, was approximately 75.
The Company has not paid any cash dividends to date and does not
anticipate paying dividends in the foreseeable future.
17
Proforma Combined Financial Data
- --------------------------------
REXFORD, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
(Unaudited)
PRO FORMA ADJUSTMENTS
---------------------
HISTORICAL ACQUISITION(S) OTHER PRO FORMA
------------ ------------ ------------ ------------
ASSETS
Current assets
Cash $ - $ 71,526 $ (62,300)(c) $ 9,226
Accounts receivable - 98,175 98,175
Inventories - 8,013 8,013
------------ ------------ ----------- ------------
Total Current Assets - 177,714 (62,300) 115,414
------------ ----------- ------------
Property and equipment - 111,762 12,300 (c) 124,062
Accumulated depreciation - 79,625 879 (c) 80,504
------------ ------------ ----------- ------------
- 32,137 11,421 43,558
------------ ------------ ----------- ------------
Other assets - 54,845 48,546 (c) 103,391
------------ ------------ ----------- ------------
Total Assets $ - $ 264,696 $ (2,333) $ 262,363
============ ============ =========== ============
LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Bank overdraft $ 3,765 $ - $ - $ 3,765
Accounts payable 1,750 5,740 - 7,490
Accrued liabilities - 7,731 209,774 (b) 217,505
Advance from related party 11,921 - - 11,921
------------ ------------ ----------- ------------
Total current liabilities 17,436 13,471 209,774 240,681
------------ ------------ ----------- ------------
Stockholders' equity (deficit)
Common Stock 57,106 (45,106) 500(c)(d) 11,500
Additional paid-in capital 130,821 84,724 - 215,545
Retained earnings (205,363) 212,607 (212,607)(b)(c) (205,363)
------------ ------------ ----------- ------------
Total stockholders' equity (deficit) (17,436) 251,225 (212,107) 21,682
------------ ------------ ----------- ------------
Total liabilities and
stockholders' equity (deficit) $ - $ 264,696 $ (2,333) $ 262,363
============ ============ =========== ============
<FN>
(a) To reflect the acquisition of all of the issued and outstanding shares of common stock of
Chicago Map Corporation through an exchange of common stock subsequent to a 1 for 70 reverse
stock split by Rexford, Inc.
(b) To reflect the declaration by the board of directors of Chicago Map Corporation of a cash
dividend of $209,774 on all outstanding shares of common stock as of January 4, 1999.
(c) To reflect the purchase of certain assets of TRIUS, Inc. on March 12, 1999 for $62,300 in
cash and the issuance of 2,198 shares of common stock of Chicago Map Corporation.
(d) To reflect the issuance of 2,802 shares of common stock of Chicago Map Corporation in
connection with stock bonus to an officer and an employee of the Company.
</FN>
/TABLE
18
REXFORD, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
YEAR ENDED SEPTEMBER 30, 1998
(Unaudited)
PRO FORMA ADJUSTMENTS
---------------------
HISTORICAL ACQUISITION(S) OTHER PRO FORMA
------------ ------------ ------------ ------------
Sales $ - $ 1,175,295 $ - $ 1,175,295
Cost of sales - 333,357 - 333,357
------------ ------------ ------------ ------------
Gross profit - 841,938 - 841,938
Administrative expense 46,350 765,202 2,833(b)(c) 814,385
------------ ------------ ------------ ------------
Income (loss) from operations (46,350) 76,736 (2,833) 27,553
Other expense
Loss on disposition of assets - (13,100) - (13,100)
------------ ------------ ------------ ------------
Net income (loss) $ (46,350) $ 63,636 $ (2,833) $ 14,453
============ ============ ============ ============
Average common shares outstanding 43,767,000 (32,267,000) - 11,500,000
============ ============ ============ ============
Earnings (loss) per common share $ (0.00) $ 0.00
============ ============
<FN>
(a) To reflect the acquisition of all of the issued and outstanding shares of common stock of
Chicago Map Corporation as if the transaction had been completed at the beginning of the period.
(b) To reflect the depreciation and amortization in connection with the acquisition of certain
assets of Tirus, Inc. by Chicago Map Corporation as if the transaction had been completed at the
beginning of the period.
(c) To reflect stock bonus to an officer and an employee of Chicago Map Corporation as if the
transaction had been completed at the beginning of the period.
</FN>
19
REXFORD, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
THREE MONTHS ENDED DECEMBER 31, 1998
(Unaudited)
PRO FORMA ADJUSTMENTS
---------------------
HISTORICAL ACQUISITION(S) OTHER PRO FORMA
------------ ------------ ------------ ------------
Sales $ - $ 323,010 $ - $ 323,010
Cost of sales - 98,765 - 98,765
------------ ------------ ------------ ------------
Gross profit - 224,245 - 224,245
Administrative expense 6,606 195,753 918(b)(c) 203,277
------------ ------------ ------------ ------------
Net income (loss) $ (6,606) $ 28,492 $ (918) $ 20,968
============ ============ ============ ============
Average common shares outstanding 43,767,000 (32,267,000) - 11,500,000
============ ============ ============ ============
Earnings (loss) per common share $ (0.00) $ 0.00
============ ============
<FN>
(a) To reflect the acquisition of all of the issued and outstanding shares of common stock of
Chicago Map Corporation as if the transaction had been commpleted at the beginning of the period.
(b) To reflect the depreciation and amortization in connection with the acquisition of certain
assets of Tirus, Inc. by Chicago Map Corporation as if the transaction had been completed at the
beginning of the period.
(c) To reflect stock bonus to an officer and an employee of Chicago Map Corporation as if the
transaction had been completed at the beginning of the period.
</FN>
The unaudited pro forma condensed consolidated financial statements have
been prepared by management based upon assumptions deemed proper by it. The
unaudited pro forma condensed consolidated financial statements presented
above are shown for illustrative purposes only and are not necessarily
indicative of the future financial position or future financial results of
operations or of the financial position or results of operations that would
have actually occurred had the transaction between the Company and CMC been in
effect as of the date or for the periods presented. In addition, it should be
noted that the Company's financial statements will reflect the acquisition
only from the closing date of the acquisition.
The unaudited pro forma condensed consolidated financial statements
should be read in conjunction with the historical financial statements and
related notes of the Company and Chicago Map Corporation.
20
EXECUTIVE COMPENSATION
The Company has not had a bonus, profit sharing, or deferred compensation
plan for the benefit of its employees, officers or directors. The Company has
not paid any salaries or other compensation to its officers, directors or
employees for the years ended September 30, 1998, 1997 and 1996, nor at any
time during 1998, 1997 or 1996. Further, the Company has not entered into an
employment agreement with any of its officers, directors or any other persons.
As of the date hereof, no such persons have accrued any compensation from the
Company.
Summary Compensation Table
- --------------------------
The following tables set forth certain summary information concerning
the compensation paid or accrued for each of the Company's last three
completed fiscal years to the Company's chief executive officer and each of
its other executive officers that received compensation in excess of $100,000
during such period (as determined at September 30, 1998) the end of the
Company's last completed fiscal year:
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Name and Principal Restricted
Position Bonus Other Annual Stock Options/ LTIP All Other
- ------------------ Year Salary ($) Compensation Awards SARs Payout Compensation
---- ------ ----- ------------ ---------- ------- ------ ------------
Dennis Blomquist,
President & C.E.O. 1998 $-0- $-0- $ -0- $-0- $-0- $-0- $-0-
1997 $-0- $-0- $ -0- $-0- $-0- $-0- $-0-
1996 $-0- $-0- $ -0- $-0- $-0- $-0- $-0-
21
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table set forth as of March 26, 1999, the name and address
and number of shares of the Company's Common Stock held of record or
beneficially by each person who held of record, or was known by the Company to
own beneficially, more than 5% of the 70,000,000 shares of Common Stock issued
and outstanding, and the name and shareholdings of each director and of all
officers and directors as a group. The table also indicates the number of
shares and percent of class to be held following the acquisition by each
person nominated for election as a director of the Company. All such persons
are directors of CMC.
Prior to Reorganization After Reorganization (2)
----------------------- ------------------------
Number of Percent Number of Percent
Name and Address Shares (1) of Class Shares Owned of Class
- ---------------- ------------ -------- -------------- --------
Principal Shareholders:
Dennis Blomquist 9,644,212 13.78 137,774 1.20
777 East Main St. #210
Scottsdale, AZ 85251
Mark A. Scharmann 55,109,000 (3) 78.72 787,271 6.84
1661 Lakeview Circle
Ogden, UT 84403
Current Officers and Directors:
Dennis Blomquist --------See Table Above--------
Ron A. Featherstone 150,000 .21 2,143 .02
Mark A. Scharmann --------See Table Above--------
Tom Sollami 150,000 .21 2,143 .01
---------- ----- ------- ----
All Officers and Directors
as a Group (4 Persons) 65,053,212 92.93 929,331 8.08
========== ===== ======= ====
Nominees of Election of Directors:
Steven J. Peskaitis - - 7,235,970 62.92
Mike Barnett - - 448,700 3.90
Paris Karahalios - - 730,000 6.35
Thomas W. Rieck - - - -
---------- ----- ---------- -----
All Nominees for Election
as a Group (4 Persons) - - 8,414,670 73.17
========== ===== ========== =====
- --------------------------------
(1) All shares are owned directly or indirectly, beneficially and of record
and the shareholder has sole voting, investment and dispositive power.
(2) Gives effect to the 1-for-70 Reverse Split.
(3) Includes 10,000 shares of Common Stock beneficially held of record by
Troika Capital Investment, of which Mr. Scharmann is the principal owner and
shareholder and 50,000 shares beneficially held of record by Rachel Leslie,
the spouse of Mr. Scharmann, and which Mr. Scharmann disclaims beneficial
ownership.
22
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Compliance with Section 16(a) of the Securities Exchange Act of 1934
- --------------------------------------------------------------------
The Company's Common Stock was recently registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and in connection therewith, directors, officers, and beneficial owners of
more than 10% of the Company's Common Stock are required to file on a timely
basis certain reports under Section 16 of the Exchange Act as to their
beneficial ownership of the Company's Common Stock. The following table sets
forth as of April 9, 1999, the name and position of each person that
failed to file on a timely basis any reports required pursuant to Section 16
of the Exchange Act.
Report to
Name of Person Position be Filed
- -------------- -------- ------------
None N/A N/A
Shareholder Advances and Debt Conversion
- ----------------------------------------
Mark A. Scharmann, an officer and director of the Company, has
periodically advanced money to the Company during the years ended September
30, 1998 and 1997 and the six-month period ended December 31, 1998. Any
outstanding advances made by Mr. Scharmann bear interest at a rate of 10% and
have no maturity date. At September 30, 1997, the Company issued 23,024,015
shares of Common Stock, valued at approximately $0.002 per share, to Mark A.
Scharmann, in exchange for the conversion of $46,048 of advances and accrued
interest payable by the Company. On June 29, 1998, the Company issued an
additional 17,785,406 shares of its Common Stock, valued at approximately
$0.002 per share, to Mr. Scharmann, in exchange for the conversion of
approximately $35,571 of advances and accrued interest payable by the Company.
At December 31, 1998, the advances made by Mr. Scharmann totaled $11,921.
Subsequent to September 30, 1998, the Company issued 12,893,580 shares of
Common Stock to Mr. Scharmann in exchange for the conversion of all advances
and accrued interest payable by the Company.
The securities issued in the foregoing transactions were issued in
reliance on the exemption from registration and the prospectus delivery
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
set forth in section 3(b) and/or section 4(2) of the Securities Act and the
regulations promulgated thereunder. The individual receiving the shares is an
officer and director of the Registrant and is deemed to be an "accredited
investor" as that term is defined under Rule 501 of the Regulation D of the
Securities Act.
23
SHAREHOLDER PROPOSALS
No proposals have been submitted by shareholders of the Company for
consideration at the Special Meeting. It is anticipated that the next annual
meeting of shareholders will be held during March 2000. Shareholders may
present proposals for inclusion in the Information Statement to be mailed in
connection with the next annual meeting of shareholders of the Company,
provided such proposals are received by the Company no later than 90 days
prior to such meeting, and are otherwise in compliance with applicable laws
and regulations and the governing provisions of the articles of incorporation
and bylaws of the Company.
OTHER MATTERS
Management does not know of any business other than referred to in the
Notice which may be considered at the meeting. If any other matters should
properly come before the Special Meeting, such matters will be properly
addressed and resolved and those in attendance will vote on such matters in
accordance with their best judgment.
REXFORD, INC.
By order of the Board of Directors
/S/ Dennis Blomquist, President
Salt Lake City, Utah
April __, 1999
24
CHICAGO MAP CORPORATION
REPORT ON EXAMINATION
YEARS ENDED DECEMBER 31, 1998 AND 1997
25
Hutton Nelson & McDonald LLP
Certified Public Accountants
1815 South Meyers Road Suite 550
Oakbrook Terrace, Illinois 60181-5230
630/495-5400 FAX 630/495-0561
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Chicago Map Corporation
We have audited the accompanying balance sheets of Chicago Map
Corporation as of December 31, 1998 and 1997, and the related statements of
income (loss), changes in shareholders' equity, and cash flows for each of the
three years ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statement based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Chicago Map
Corporation as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years ended December 31,
1998, in conformity with generally accepted accounting principles.
/S/Hutton, Nelson & McDonald LLP
Oakbrook Terrace, Illinois
March 17, 1999
26
CHICAGO MAP CORPORATION
BALANCE SHEETS
ASSETS
December 31,
1998 1997
------- -------
Current assets
Cash $ 71,526 $ 76,091
Accounts receivable, less allowance for
doubtful accounts of $25,000 and $100,000 98,175 89,501
Inventories 8,013 19,287
Prepaid expenses - 3,800
------ ------
Total current assets 177,714 188,679
======= =======
Property and equipment
Leasehold improvements 3,971 16,072
Furniture and equipment 107,791 102,604
------- -------
Accumulated depreciation 32,137 51,705
------ ------
Other asset
Computer software costs, net of accumulated
amortization of $16,343 in 1998 54,845 22,030
------ ------
$264,696 $262,414
======= =======
The accompanying notes are an integral part of these financial statements.
27
CHICAGO MAP CORPORATION
BALANCE SHEETS
(continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
1998 1997
------- -------
Current liabilities
Accounts payable $ 5,740 $ 2,123
Accrued liabilities
Payroll taxes 7,731 11,500
Income taxes - 927
----- ------
Total current liabilities 13,471 14,550
------ ------
Shareholders' equity
Common stock, no par value; authorized
100,000 shares; issued and outstanding
10,000 shares 1,000 1,000
Retained earnings 250,225 246,864
------- -------
251,225 247,864
------- -------
$264,696 $262,414
======= =======
The accompanying notes are an integral part of these financial statements.
28
CHICAGO MAP CORPORATION
STATEMENTS OF INCOME (LOSS)
Year Ended December 31
1998 1997 1996
--------- --------- ---------
Sales $1,175,295 $1,934,433 $1,597,616
Cost of sales 333,357 890,586 759,662
--------- --------- ---------
Gross profit 841,938 1,043,847 837,954
Administrative expense 765,202 1,081,036 708,002
------- --------- -------
Income (loss) from operations 76,736 (37,189) 129,952
Other expense
Interest Expense - - (138)
Loss on disposition of assets (13,100) - -
------ ------ -------
Income (loss) before income taxes 63,636 (37,189) 129,814
Income taxes - 927 1,728
------ ------ -------
Net income (loss) $ 63,636 $ (38,116) $ 128,086
====== ====== =======
Average common shares outstanding 10,000 10,000 10,000
====== ====== ======
Earnings (loss) per common share $ 6.36 $(3.81) $12.81
====== ====== ======
The accompanying notes are an integral part of these financial statements.
29
CHICAGO MAP CORPORATION
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Common Stock Retained
Shares Amount Earnings
------ ------ --------
Balance, January 1, 1996 10,000 $1,000 $287,949
Net income 128,086
Cash distributions (68,635)
------ ----- -------
Balance, December 31, 1996 10,000 $1,000 347,400
Net income (38,116)
Cash distributions (62,420)
------ ----- -------
Balance, December 31, 1997 10,000 $1,000 246,864
Net income 63,636
Cash distributions (60,275)
------ ----- -------
Balance, December 31, 1998 10,000 $1,000 $250,225
====== ===== =======
The accompanying notes are an integral part of these financial statements.
30
CHICAGO MAP CORPORATION
STATEMENTS OF CASH FLOWS
Year Ended December 31
1998 1997 1996
--------- --------- ---------
Cash flows from operating activities:
Cash received from customers $1,141,761 $1,775,213 $1,748,237
Cash paid to suppliers and employees (1,028,544) (1,859,751) (1,389,739)
Interest paid - - (138)
Income taxes paid (927) (1,728) (2,613)
--------- --------- ---------
Net cash provided by (used in)
operating activities 112,290 (86,266) 355,747
------- ------ -------
Cash flows from investing activities:
Proceeds from sale of equipment 425 - -
Capital expenditures (7,847) (17,880) (47,958)
Payment of computer software costs (49,158) (22,030) -
------ ------ ------
Net cash used in investing
activities (56,580) (39,910) (47,958)
------ ------ ------
Cash flows from financing activities:
Payments on loan from shareholder - - (6,827)
Cash distributions paid to shareholders (60,275) (62,420) (68,635)
------ ------ ------
Net cash used in financing
activities (60,275) (62,420) (75,462)
------ ------ ------
Net increase (decrease) in cash (4,565) (188,596) 232,327
Cash at beginning of year 76,091 264,687 32,360
------ ------- -------
Cash at end of year $ 71,526 $ 76,091 $264,687
====== ====== =======
The accompanying notes are an integral part of these financial statements.
31
CHICAGO MAP CORPORATION
STATEMENTS OF CASH FLOWS
(continued)
Year Ended December 31
1998 1997 1996
--------- --------- ---------
Reconciliation of net income (loss)
to net cash provided by (used in)
operating activities:
Net income (loss) $ 63,636 $(38,116) $ 128,086
------ ------ -------
Adjustment to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation 13,890 13,222 5,893
Amortization of computer software costs 16,343 - -
Amortization of organization costs - 17 25
Loss on disposition of assets 13,100 - -
Change in assets (increase) decrease:
Accounts receivable (8,674) (36,550) 281,423
Inventories 11,274 12,812 (7,638)
Prepaid expenses 3,800 - (3,800)
Changes in liabilities increase
(decrease):
Accounts payable 3,617 (38,732) (52,006)
Accrued liabilities (4,696) 1,081 3,764
------ ------ ------
Total adjustments 48,654 (48,150) 227,661
------ ------ -------
Net cash provided by (used in)
operating activities $112,290 $(86,266) $355,747
======= ====== =======
The accompanying notes are an integral part of these financial statements.
32
CHICAGO MAP CORPORATION
NOTES TO FINANCIAL STATEMENTS
NATURE OF OPERATIONS
The Company creates technologies and software tools which provide for the
design and development of mapping and geographic products sold to customers
located throughout the world.
SUMMARY OF ACCOUNTING POLICIES
Revenue Recognition - The Company records sales and related profits as
product is shipped and services are rendered.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Inventories - Inventories are priced at the lower of cost, determined by
the first-in, first-out method, or market.
Property and Equipment - Property and equipment are recorded at cost.
Expenditures for renewals and betterments which extend the life of such assets
are capitalized. Maintenance and repairs are charged to expense as incurred.
Differences between amounts received and net carrying value of assets retired
or disposed of are charged or credited to income.
Depreciation - Depreciation is charged to income using straight-line and
accelerated methods based on the estimated useful lives of the assets.
Computer Software Costs - Costs related to the purchase and development
of computer software are amortized on a straight-line basis over twenty-four
months. Amortization expense charged to income was $16,343 in 1998. No
amortization was charged to income in 1997 and 1996.
Income Taxes - The Company has elected S corporation status for income
tax purposes. Under this election, the Company is not liable for federal
income taxes, but is liable for certain state income and replacement taxes.
Federal taxable income and tax credits flow through to the shareholders to be
reported on their individual income tax returns.
Earnings Per Common Share - Earnings (loss) per common share are computed
by dividing net income (loss) by the weighted average number of common shares
outstanding during the year.
CASH
During 1998 and 1997, the Company maintained an operating account with a
bank which at times exceeded the federally insured limit of $100,000. The
bank has a strong credit rating and management considers any risk to be
minimal.
33
CHICAGO MAP CORPORATION
NOTES TO FINANCIAL STATEMENTS
(continued)
DEPRECIATION
Depreciation was charged to income, based on the estimated useful lives
of the assets, in the following amounts:
1998 1997 1996 Estimated Life-Years
---- ---- ---- --------------------
Leasehold improvements $ 260 $ 428 $ 194 31-39
Furniture and equipment 13,630 12,794 5,699 5-7
------ ------ -----
$13,890 $13,222 $ 5,893
====== ====== =====
TRANSACTION WITH RELATED PARTY
The Company leases office facilities on a month-to-month basis from a
shareholder at a monthly rental of $3,000. Rent expense charged to income
amounted to $36,000 in 1998, 1997 and 1996.
SUBSEQUENT EVENTS
On January 4, 1999, the Board of Directors declared a $240,000 cash
distribution to the shareholders provided such amount does not exceed the
Company's Accumulated Adjustment Account which is part of retained earnings as
shown on the Balance Sheets.
On March 12, 1999, the Company acquired certain assets of TRIUS, Inc. for
$62,300 in cash and 2,198 shares of common stock of Chicago Map Corporation.
The principal business of TRIUS, Inc. is the development of computer software
technologies. In connection therewith, the Board of Directors approved a
stock bonus of 2,802 shares to be issued to an officer and an employee of the
Company.