SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X]Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended September 30, 2003
[ ]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
-----------
NEXIA HOLDINGS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 84-1062062
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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 November 14, 2003 was 340,902,760.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS................................................2
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS................................3
ITEM 3. CONTROLS AND PROCEDURES.............................................6
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS...................................................7
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS...........................7
ITEM 5. OTHER INFORMATION...................................................8
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K....................................8
SIGNATURES...................................................................9
INDEX TO EXHIBITS...........................................................10
1
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Nexia" refers to Nexia Holdings, Inc., a Nevada
corporation, its subsidiary corporations and predecessors unless otherwise
indicated. The accompanying unaudited, consolidated interim financial statements
have been prepared in accordance with the instructions to Form 10-QSB pursuant
to the Securities and Exchange Commission and, therefore, do not include all
information and footnotes necessary for a complete presentation of our financial
position, results of operations, cash flows and stockholders' equity in
conformity with generally accepted accounting principles in the United States of
America. In the opinion of management, all adjustments considered necessary for
a fair presentation of the results of operations and financial position have
been included and all such adjustments are of a normal recurring nature.
Our unaudited consolidated balance sheet as of September 30, 2003 and the
related unaudited consolidated statements of operations and cash flows for the
three and nine months ended September 30, 2003 are attached hereto as Pages F-1
through F-6 and are incorporated herein by this reference.
THIS SPACE HAS BEEN INTENTIONALLY
LEFT BLANK
2
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Consolidated Balance Sheet.................................................F-2
Consolidated Statements of Operations and Other Comprehensive Income.......F-4
Consolidated Statements of Cash Flows......................................F-5
Notes to Consolidated Financial Statements.................................F-6
THIS SPACE HAS BEEN INTENTIONALLY
LEFT BLANK
F-1
NEXIA HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
(Unaudited)
September 30, 2003
-------------------
ASSETS
Current Assets
Cash $ 44,728
Restricted cash 194,473
Accounts receivable - trade, net of allowance of $34,121 52,805
Accounts and notes receivable - rela ed parties 205,103
Prepaid expenses 6,977
Notes receivable - current 255,000
Securities available for sale 250,745
Total Current Assets 1,009,831
---------------
Fixed Assets
Property and equipment, net 2,602,926
Land 694,241
---------------
Total Fixed Assets 3,297,167
---------------
Other Assets
Loan Costs, net 87,357
Total Other Assets 87,357
---------------
TOTAL ASSETS $ 4,394,355
===============
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
NEXIA HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheet (continued)
(Unaudited)
September 30, 2003
--------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Accounts payable $ 203,477
Accrued liabilities 91,539
Unearned rent 5,023
WVDEP liability 20,000
Deferred revenue 20,113
Refundable deposit 18,583
Deferred gain on sale of subsidiary 121,770
Current portion long-term debt 794,307
Total Current Liabilities 1,274,812
----------------
Long-Term Liabilities
Notes and mortgages payable 2,181,011
Total Long-Term Liabilities 2,181,011
----------------
TOTAL LIABILITIES 3,455,823
----------------
MINORITY INTEREST 227,707
STOCKHOLDERS' EQUITY
Preferred stock - 50,000,000 shares
authorized at $0.001 par, no.shares issued -
Common stock - 1,000,000,000 shares authorized
at $0.001 par; 340,902,760 shares issued and
outstanding 340,903
Paid-in capital 9,913,873
Treasury stock - 22,198,540 shares at cost, (100,598)
Unrealized loss on securities available for sale (1,715)
Accumulated deficit (9,441,638)
----------------
TOTAL STOCKHOLDERS' EQUITY 710,825
----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,394,355
================
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
NEXIA HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Other Comprehensive Loss
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2003 2002 2003 2002
---------- ---------- ---------- ----------
Revenue (Restated) (Restated)
Consulting revenue $ 145,869 $ 20,996 $ 256,702 $ 166,167
Rental revenue 107,426 126,493 346,650 514,165
---------- ---------- ---------- ----------
Total Revenue 253,295 147,489 603,352 680,332
Costs of Revenue
Costs associated with consulting 323,116 6,266 427,486 454,534
revenue
Costs associated with rental revenue 71,255 79,016 241,761 312,465
Interest associated with rental 36,110 30,805 187,097 186,761
revenue
---------- ---------- ---------- ----------
Total Costs of Revenue 430,481 116,087 856,344 953,760
Gross Profit (Deficit)
Gross profit (deficit) from (177,247) 14,730 (170,784) (288,367)
consulting operations
Gross profit (deficit) from real 61 16,672 (82,208) 14,939
estate operations
---------- ---------- ---------- ----------
Gross Profit (Deficit) (177,186) 31,402 (252,922) (273,428)
Expenses
General and administrative expense 88,231 91,446 112,591 335,803
Impairment of marketable securities - - 5,022 -
---------- ---------- ---------- ----------
Total Expenses 88,231 91,446 117,613 335,803
---------- ---------- ---------- ----------
Operating Loss (265,417) (60,044) (370,605) (609,231)
Other Income (Expense)
Interest income 7 1,581 2,092 284
Gain (loss) on sale of property and 4,510 - (5,449) (100,701)
equipment
Gain on sale of subsidiaries - - 279,268 -
Gain (loss) on sale of marketable 20,773 (89,016) (6,840) (116,394)
securities
Other income (13) 23,715 42,841 (10,917)
---------- ---------- ---------- ----------
Total Other Income (Expense) 25,277 (63,720) 311,912 (227,728)
---------- ---------- ---------- ----------
Loss Before Minority Interest (240,140) (123,764) (58,693) (836,959)
Minority Interest in Loss 2,293 20,974 23,308 121,472
---------- ---------- ---------- ----------
Net Loss Before Discontinued Operations (237,847) (102,790) (35,385) (715,487)
Loss from discontinued operations - (69,698) (83,611) (149,432)
---------- ---------- ---------- ----------
Net Loss (237,847) (172,488) (118,996) (864,919)
Other Comprehensive Loss
Change in unrealized holding loss (16,073) (549,939) (1,715) (699,215)
---------- ---------- ---------- ----------
Total Comprehensive Loss $ (253,920) $ (722,427) $(120,711) $(1,564,134)
========== ========== ========== ==========
Net Loss Per Common Share, basic and
diluted
Loss before minority interest $ (0.00) $ (0.00) $ (0.00) $ (0.00)
Minority interest in loss (0.00) (0.00) (0.00) (0.00)
---------- ---------- ---------- ----------
Loss before discontinued operations (0.00) (0.00) (0.00) (0.00)
Loss on discontinued operations (0.00) (0.00) (0.00) (0.00)
---------- ---------- ---------- ----------
Net loss per weighted average
common share outstanding $ (0.00) $ (0.00) $ (0.00) $ (0.00)
========== ========== ========== ==========
========== ========== ========== ==========
Weighted average shares outstanding 322,217,434 310,303,000 315,808,987 296,469,000
basic and diluted
========== ========== ========== ==========
The accompanying notes are an integral part of these consolidated financial
statements
F-4
NEXIA HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30
------------------------
2003 2002
----------- ----------
Cash Flows From Operating Activities (Restated)
Net Income (loss) $ (118,996) $ (864,919)
Adjustments to reconcile net loss to net cash
used in operating activities:
Loss from discontinued operations 83,611 149,432
Loss from sale of investments 6,840 289,388
(Gain) loss from sale of property and equipment 5,449 100,701
(Gain) loss from sale of subsidiaries (279,268)
Impairment of marketable securities 5,022 -
Change in minority interest (210,057) (29,393)
Depreciation 102,213 125,127
Issued common stock for services 247,150 20,500
Changes in operating assets and liabilities:
Increase in restricted cash (194,473) (227,242)
Accounts and notes receivable (8,145) (126,768)
Related party receivables (38,118) (129,578)
Prepaid expenses 16,523 41,585
Other assets 7,846 -
Accounts and notes payable 95,719 69,318
Unearned rent (44,010) 68,183
Deferred revenue (6,388) -
Refundable deposit 12,083 -
Accrued liabilities (1,854) (145,094)
----------- ----------
Net Cash Used by Operating Activities (318,853) (658,760)
Cash Flows From Investing Activities -
Proceeds from sale of securities 11,717 193,702
Purchase of property and equipment (28,419) (420,052)
Proceeds from sale of property and equipment 6,714 391,539
Net cash received (distributed)in
acquisition (sale) transaction (15,351) 18,545
Purchase of marketable securities (5,890) (82,088)
----------- ----------
Net Cash Provided (Used) by Investing Activities (31,229) 101,646
Cash Flows from Financing Activities
Proceeds from long term debt 968,675 465,466
Principal payments on notes and mortgages payable (682,686) (89,822)
Purchases of treasury stock - (15,949)
----------- ----------
Net Cash Provided by Financing Activities 285,989 359,695
----------- ----------
Increase (Decrease) in Cash (64,093) (197,419)
Cash at Beginning of Period 108,821 295,343
----------- ----------
Cash at End of Period $ 44,728 $ 97,924
=========== ==========
Supplemental Disclosures
Interest paid in cash $ 187,097 $ 132,515
Income taxes paid in cash $ - $ -
Supplemental Disclosure of Non-Cash Investing and Financing Activities
----------------------------------------------------------------------
Common stock issued for loan costs $ 50,000 $ -
Office equipment acquired through capital lease $ 19,815 $ -
Common stock issued for services $ 247,150 $ 20,500
The accompanying notes are an integral part of these consolidated financial
statements
F-5
NEXIA HOLDINGS, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 2003
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited consolidated financial statements are those
of Nexia Holdings, Inc. and Subsidiaries (the Company) and have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles in the United
States of America have been condensed or omitted in accordance with
such rules and regulations. The information furnished in the interim
consolidated financial statements includes normal recurring adjustments
and reflects all adjustments, which, in the opinion of management, are
necessary for a fair presentation of such financial statements.
Although management believes the disclosures and information presented
are adequate to make the information not misleading, it is suggested
that these interim consolidated financial statements be read in
conjunction with the Company's most recent audited consolidated
financial statements and notes thereto included in its December 31,
2002 Annual Report on Form 10-KSB. Operating results for the nine
months ended September 30, 2003 are not indicative of the results that
may be expected for the year ending December 31, 2003.
NOTE 2 - GOING CONCERN
The Company's consolidated financial statements are prepared using
accounting principles generally accepted in the United States of
America applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal
course of business. The Company has incurred cumulative operating
losses through September 30, 2003 of $9,441,638 and a working capital
deficit of $264,981 all of which raises substantial doubt about the
Company's ability to continue as a going concern.
Primarily, revenues have not been sufficient to cover the Company's
operating costs. Management's plans to enable the Company to continue
as a going concern include the following:
o Increasing revenues from rental properties by implementing new
marketing programs.
o Making certain improvements to certain rental properties in order to
make them more marketable.
o Reducing negative cash flows by selling rental properties that do not
at least break even.
o Refinancing high interest rate loans.
o Increasing consulting revenues by focusing on procuring clients that
pay for services rendered in cash or highly liquid securities.
o Reducing expenses through consolidating or disposing of certain
subsidiary companies.
o Raising additional capital through private placements of the
Company's common stock.
o Paying for services through the issuance of common stock instead of
cash.
There can be no assurance that the Company can or will be successful in
implementing any of its plans or that they will be successful in
enabling the company to continue as a going concern. The Company's
consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
F-6
NEXIA HOLDINGS, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 2003
NOTE 3 - MATERIAL EVENTS
During July 2003, the Company's majority owned subsidiary, Hudson sold
its interest in Unit B112 of the Timberbrook Condominiums in Iron
County, Utah. The purchase price of the unit was $48,000 which resulted
in a profit to Hudson of approximately $4,500.
On July 21, 2003, the Company issued 5,000,000 shares of S-8 common
stock to outside parties for services rendered valued at $10,000, or
$0.002 per share, the market price on the date of grant.
During August, 2003, the Company signed a Binding Letter of Intent to
acquire Black Chandelier, Inc. (BCI) a newly formed corporation, which
owns the licensing rights and controls the Los Angeles based clothing
labels Jared Gold and Black Chandelier. The Company intends to acquire
a 100% interest in BCI for Five Million (5,000,000) shares of its
restricted common stock. BCI assets include several trade marks, a
large volume of perfected digital patterns, sample shop equipment, a
library of silk screens, websites and domain names, a large archive of
past collection and spec samples, and digital artwork for screen
prints. The consummation of the acquisition has been delayed until
certain trade creditors' claims are resolved.
During August, 2003, the Company signed a 6 month contract with The
Company Reporter Inc. for investor relations services in exchange for
3,000,000 shares of its restricted common stock valued at $9,000, or
$0.003 per share, the market price on the date of grant. The Company
Reporter, Inc. is a full service investor relations firm specializing
in growth stocks.
During September, 2003, the Company issued 17,550,000 shares of S-8
common stock to employees for services rendered valued at $228,150, or
$0.013 per share, the market price on the date of grant.
NOTE 4 - SUBSEQUENT EVENTS
On November 10, 2003, Nexia executed a Stock Exchange Agreement with
Richard Bailey and Jeffrey Gray to acquire 90% ownership of Creative
Marketing Group, Inc., (CMG) which holds 100% ownership of Creative
Filter Solutions, LLC (CFS). CMG and CFS hold two license agreements
with Sunbeam Products, Inc. (Sunbeam) to market ground coffee and
coffee filters under the Mr. Coffee brand name.
The Stock Exchange Agreement (Agreement) provides that in exchange for
the assignment and transfer to Nexia of their interests in CMG, Nexia
will issue to Mr. Bailey and Mr. Gray shares of its Series A
Convertible Preferred Stock (Preferred Stock). In exchange for
Bailey's 80% ownership of CMG he will receive 5,100,000 shares of
Preferred Stock and for Mr. Gray's 10% ownership he will receive
1,000,000 shares of Preferred Stock. Each share of Preferred stock is
entitled to voting rights equal to 100 shares of the common stock of
Nexia and has a conversion right into $10 worth of common stock.
F-7
NEXIA HOLDINGS, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 2003
NOTE 5 - RESTATEMENT OF PRIOR PERIOD RESULTS
The amounts reflected in the statement of operations and statement of
cash flows for the period ended September 30, 2002 have been restated to
account for the merger transaction between Nexia and Axia that occurred
on February 15, 2002, as a reverse acquisition. The transaction was
previously accounted for as a merger between entities under common
control. As such, the operations and cash flows previously included
those of Nexia for the six months ended September 30, 2002 and those of
the acquired entities (Diversified Holdings I, Wichita Development
Corporation, Wasatch Capital Corporation, Downtown Development
Corporation, Golden Opportunity Development Corporation, and Canton Tire
Recycling of West Virginia, Inc.) from the date of the acquisition,
February 15, 2002, through September 30, 2002. The restated amounts,
accounting for the transaction as a reverse merger, reflect the
operations and cash flows of the accounting acquirer (Diversified
Holdings I, Wichita Development Corporation, Wasatch Capital
Corporation, Downtown Development Corporation, Golden Opportunity
Development Corporation, and Canton Tire Recycling of West Virginia,
Inc.) for the three months ended September 30, 2002 and those of Nexia
from the date of acquisition, February 15, 2002, through September 30,
2002. The table below reflects the change in revenues, net loss, and net
loss per share due to this restatement:
.
Nine Months Ended September 30, 2002
(Restated) (Originally Reported)
Revenues $ 680,332 $ 622,804
Net loss $ (864,919) $ (744,943)
Net loss per share $ (.00) $ (.00)
F-8
NEXIA HOLDINGS, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 2003
NOTE 6 - DISCONTINUED OPERATIONS
On June 30, 2003, the Company sold its interest in Wichita Development
Corporation (Wichita) and its subsidiaries Salt Lake Development and
Wichita Properties to Diversified Financial Resources Corporation. As a
result, the operations of Wichita have been reflected as discontinued
operations. The following is a summary of the loss from discontinued
operations:
For the nine months ended
September 30,
--------------------------
2003 2002
---------- ------------
Revenues $ 82,005 $ 244,340
Costs of Revenue 150,188 320,407
---------- ------------
Gross Deficit (68,183) (76,067)
Total Operating Expenses 17,399 69,233
---------- ------------
Operating Loss (85,582) (145,300)
Total Other Income (Expense) 1,971 (4,132)
---------- ------------
Net Loss (83,611) (149,432)
========== ============
F-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
The information herein 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 Nexia to continue its expansion strategy,
changes in the real estate markets, labor and employee benefits, as well as
general market conditions, competition, and pricing. Although Nexia 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 the
Form 10QSB will prove to be accurate. In view of the significant uncertainties
inherent in the forward looking statements included herein, the inclusion of
such information should not be regarded as a representation by Nexia or any
other person that the objectives and plans of Nexia will be achieved.
General
Nexia had no substantial operations from January 2, 2001 until February 15,
2002. On February 15, 2002, Nexia entered into a Stock Purchase Agreement
("Agreement") with Axia Group, Inc. ("Axia"), pursuant to which Nexia issued to
Axia 255,100,000 restricted shares of Nexia's common stock in exchange for
essentially all of the assets and liabilities of Axia including a portfolio of
securities, real estate holdings and publicly reporting shell-companies. Nexia
intends to manage the interests acquired from Axia as a result of this
transaction in a manner similar to that previously followed by Axia. For more
information on this transaction, see the Company's Form 10-KSB filed May 30,
2003.
Nexia operates in two primary areas of business: Nexia acquires, leases and
sells real estate; and, Nexia provides financial consulting services. The
following discussion examines Nexia's financial condition as a result of
operations for the nine months ended September 30, 2003, and compares those
results with the comparable period from last year.
The amounts reflected in the statement of operations and statement of cash
flows for the period ended September 30, 2002 have been restated to account for
the merger transaction between Nexia and Axia that occurred on February 15,
2002 as a reverse acquisition. See footnote 5 to the consolidated financial
statements.
Real Estate Operations
Nexia's objective, with respect to real estate operations, is to acquire,
through subsidiaries, properties which management believes to be undervalued
and which Nexia is able to acquire with limited cash outlays. Nexia will
consider properties anywhere within the continental United States. Nexia
attempts to acquire such properties by assuming existing favorable financing
and paying the balance of the purchase price with nominal cash payments or
through the issuance of shares of common stock. Once such properties are
acquired, Nexia leases them to primarily commercial tenants. Nexia also makes
limited investments to improve the properties with the objective of increasing
occupancy and cash flows. Management believes that, with limited improvements
and effective management, properties can be sold at a profit within a
relatively short period of time.
Nexia recorded rental revenues of $107,426 and $346,650 for the three and nine
months ended September 30, 2003 respectively, as compared to $124,493 and
$514,165 for the same periods in 2002. The decrease in rental revenues was due
to a significant decrease in occupancy rates in the Glendale shopping center.
3
Nexia had a gain from real estate operations of $61 and a loss of $82,208 for
the three and nine months ended September 30, 2003, compared to gains of
$16,672 and $14,939 for the same periods in 2002. The increase in loss is
attributable primarily to the decrease in occupancy.
Nexia will continue efforts to improve profitability and cash flow by working
to increase occupancy and rental income from those properties which have a high
vacancy rate as well as focusing on properties with the highest per square foot
rental rates. Nexia also intends to continue to purchase real estate primarily
for appreciation purposes. Accordingly, Nexia hopes to not only minimize any
real estate cash flow deficit, but also generate sufficient cash to record a
substantial profit upon property disposition.
Consulting Operations
Nexia, through its majority owned subsidiary, Hudson Consulting Group, Inc.,
("Hudson") provides a variety of financial consulting services to a wide range
of clients. The primary service performed by Hudson involves assisting clients
in structuring mergers and acquisitions. This includes locating entities
suitable to be merged with or acquired by Hudson's clients, as well as
providing general advice related to the structuring of mergers or acquisitions.
Hudson also assists clients in restructuring their capital formation, advises
with respect to general corporate problem solving and provides shareholder
relations services designed to expose its clients to the investment community.
Nexia's consulting subsidiary generates revenues through consulting fees
payable in the client's equity securities, cash, other assets or some
combination of the three. The primary form of compensation received is the
equity securities of clients. When payment is made in the form of restricted
equity securities, the number of shares to be paid is usually dependent upon
the price of the client's common stock (if such price is available) and the
extent of consulting services provided. When stock is received as payment it is
booked as deferred revenue at its currently quoted market value. After the
stock is sold, it is then booked as revenue.
Nexia generates cash flow, in part, by liquidating non-cash assets (equity
securities) received as fees for consulting services. As most fees are paid in
the form of equity, the revenues and cash flows realized by Nexia are somewhat
tied to the price of its clients' securities and Nexia's ability to sell such
securities. A decline in the market price of a client's stock can affect the
total asset value of Nexia's balance sheet and can result in Nexia incurring
substantial losses on its income statement.
Nexia's portfolio consists primarily of restricted and unrestricted shares of
common stock in micro to small cap publicly traded companies. This portfolio
currently consists of shares of common stock in over 25 different companies
whose operations range from that of high-tech to oil and gas companies. The
Company's ownership in the above publicly traded companies is less than 20% and
thus accounts for them as investments available for sale at the lower of cost
or market. Nonetheless, Nexia's portfolio is considered extremely volatile.
Revenues from Nexia's financial consulting operations increased for the quarter
ended September 30, 2003, as compared to the comparable period in 2002. Nexia
recorded $145,869 and $256,702 in revenues for the three months and nine months
ended September 30, 2003, respectively, from its financial consulting
operations as compared to $20,996 and $166,167 for the same periods of 2002.
Nexia experienced a loss from consulting operations of $177,247 for the three
months ended September 30, 2003, and a loss of $170,784 for the nine months
ended September 30, 2003 as compared to a gain of $14,730 for the three months
ended September 30, 2002 and a loss of $288,367 for the nine months ended
September 30, 2002.
4
Company Operations as a Whole
Revenues
Gross revenues for the three and nine month periods ended September 30, 2003,
were $253,295 and $603,352 respectively as compared to $147,489 and $680,332
for the same periods in 2002. The decrease in nine month revenues of $76,980 is
due to the issues stated above.
Losses
Nexia recorded operating losses of $265,417 and $370,605 for the three and nine
month periods, respectively ended September 30, 2003, compared to losses of
$60,044 and $609,231 for the comparable periods in the year 2002.
Nexia recorded net losses of $237,847 and $118,996 for the three and nine
months ended September 30, 2003, as compared to net losses of $172,488 and
$864,919 for the same periods in the previous year. The decreased losses are
attributable primarily to the gain on the sale of Wichita as well as cost
cutting efforts implemented by Nexia.
Nexia does not expect to operate at a profit through fiscal 2003. Since Nexia's
activities are closely tied to the securities markets and the ability to
operate its real estate properties at a profit, future profitability or its
revenue growth tends to follow changes in the securities and real estate market
place. There can be no guarantee that profitability or revenue growth can be
realized in the future.
Expenses
General and administrative expenses for the three and nine months ended
September 30, 2003, were $88,231 and $112,591, respectively, compared to
$91,446 and $335,803 for the same periods in 2002. The decrease in expenses is
due to cost-cutting measures implemented by Nexia.
Depreciation and amortization expenses for the nine months ended September 30,
2003 and September 30, 2002, were $102,213 and $125,127, respectively. The
decrease was due primarily to the permanent impairment of one of Nexia's
properties for the year ended December 31, 2002, which therefore caused a
significant decrease in its depreciable base, as well as the sale of its former
subsidiary Wichita Development Corporation, on June 30, 2003.
Capital Resources and Liquidity
On September 30, 2003, Nexia had current assets of $1,009,831 and $4,394,355 in
total assets. Nexia had a net working capital deficit of $264,981 at September
30, 2003. The working capital deficit is due primarily to mortgages which will
or may come due in the next twelve months based on call provisions presented in
the mortgages.
Net cash used in operating activities was $318,853 for the nine months ended
September 30, 2003, compared to $658,760 for the nine months ended September
30, 2002.
Cash used by investing activities was $31,229 for the nine months ended
September 30, 2003, compared to cash flow provided by investing activities of
$101,646 for the same period in 2002.
Cash provided by financing activities was $285,989 for the nine months ended
September 30, 2003, compared to $359,695 for the nine months ended September
30, 2002.
Due to Nexia's debt service on real estate holdings, willingness to acquire
properties with negative cash flow shortages and acceptance of non-cash assets
for consulting services, Nexia may experience
5
occasional cash flow shortages. To cover these shortages we may need to sell
securities from time to time at a loss. In addition, the Company is currently
experiencing challenges with regard to cash flows. We are looking at several
options to improve this situation, including the private placement of Nexia
common stock.
Impact of Inflation
Nexia believes that inflation has had a negligible effect on operations over
the past three years. Nexia believes that it can offset inflationary increases
in the cost of materials and labor by increasing sales and improving operating
efficiencies.
Known Trends, Events, or Uncertainties
General Real Estate Investment Risks
Nexia's investments are subject to varying degrees of risk generally incident
to the ownership of real property. Real estate values and income from Nexia's
current properties may be adversely affected by changes in national or local
economic conditions and neighborhood characteristics, changes in interest rates
and in the availability, cost and terms of mortgage funds, the impact of
present or future environmental legislation and compliance with environmental
laws, the ongoing need for capital improvements, changes in governmental rules
and fiscal policies, civil unrest, acts of God, including earthquakes and other
natural disasters which may result in uninsured losses, acts of war, adverse
changes in zoning laws and other factors which are beyond the control of Nexia.
Value and Illiquidity of Real Estate
Real estate investments are relatively illiquid. The ability of Nexia to vary
its ownership of real estate property in response to changes in economic and
other conditions is limited. If Nexia must sell an investment, there can be no
assurance that Nexia will be able to dispose of it in the time period it
desires or that the sales price of any investment will recoup the amount of
Nexia's investment.
Property Taxes
Nexia's real property is subject to real property taxes. The real property
taxes may increase or decrease as property tax rates change and as the property
is assessed or reassessed by taxing authorities. If property taxes increase,
Nexia's operations could be adversely affected.
ITEM 3. CONTROLS AND PROCEDURES
Nexia's president acts both as the Company's chief executive officer and chief
financial officer ("Certifying Officer") and is responsible for establishing
and maintaining disclosure controls and procedures for Nexia. The Certifying
Officer has concluded (based on his evaluation of these controls and procedures
as of a date within 90 days of the filing of this report) that the design and
operation of Nexia's disclosure controls and procedures (as defined in Rule
13a-14(c) under the Securities Exchange Act of 1934) are effective. No
significant changes were made in Nexia's internal controls or in other factors
that could significantly affect those controls subsequent to the date of the
evaluation, including any corrective actions with regard to slight deficiencies
and material weaknesses. Due to the Certifying Officer's dual role as chief
executive officer and chief financial officer, Nexia has no segregation of
duties related to internal controls.
6
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Since the filing of Nexia's 10-KSB for the period ended December 31, 2002 no
material changes have occurred to the legal proceedings reported therein,
except as noted below. For more information please see Nexia's Form 10-KSB for
the year ended December 31, 2002, filed May 30, 2003.
Hudson Consulting Group, Inc. v. Ohana Enterprises, Inc., Isaac P. Simmons,
Kathryn A. Christmann, Gerard Nolan, David Cronshaw, Interactive Ideas,
Jonathan Thomas and Phillip Crawford. Suit was filed on March 17, 2003 in the
Third Judicial District Court in and for Salt Lake County, State of Utah, Case
No. 030905949. Suit was filed by Hudson to seek payment under an August 27,
2002 Stock Purchase Agreement, wherein the named defendants purchased a
controlling interest in a Delaware corporation known as Torchmail
Communications, Inc. which changed its name subsequent to the transfer to Ohana
Enterprises, Inc. The total sales price was $300,000 of which only the first
$100,000 has been paid. The defendants have claimed that Hudson misrepresented
the status of Ohana prior to the transfer and are denying any further
obligation to make payments. Suit has been filed and attempts are ongoing to
resolve the dispute through either the return of control of the corporation or
through payment of the outstanding obligation. Six of the defendants have made
an appearance in case filing a counterclaim and naming Axia Group, Inc.,
Richard Surber, Ed Haidenthaller and Ruairidh Campbell as third party
defendants. Hudson denies any misrepresentation with regard to the corporation
and its status and believes that the claims of the defendants are an attempt to
alter the terms of the written agreement. Hudson, Surber and Axia have filed a
response to the counterclaims denying any wrongdoing and asserting their
defenses to the claims asserted by the defendants. Discovery and settlement
discussions are both ongoing at the present time.
Interbay Funding, LLC v. Wichita Development Corporation and Richard D. Surber.
Suit was filed on May 21, 2003 in the District Court of Sedgwick County,
Kansas, Case No. 03CV2074. The suit seeks to foreclose on the mortgage held by
Interbay Funding on the office building operated by Wichita Development in
Wichita, Kansas. The suit alleges that mortgage payments are delinquent as of
and from February 1, 2002 and that the sum of $270,470.57 is sought to satisfy
the outstanding mortgage on the building. The claims alleged in this suit have
been resolved and the litigation has been dismissed.
Subsequent to the end of the quarter ending September 30, 2003 the following
legal matter was resolved:
Hudson Consulting Group, Inc. v. Technical Ventures, Inc. Suit was filed by
Hudson Consulting Group, Inc. on October 10, 2001 against Technical Ventures,
Inc. in the Third Judicial District Court of Salt Lake County, State of Utah,
and assigned civil cause No. 010908909. Hudson has filed suit seeking recovery
of fees owed to it arising from an Advisory Agreement entered into in July of
1999. The suit alleges that 575,000 shares of Technical Ventures, Inc. common
stock has not been delivered to Hudson as required by the agreement. The
parties have agreed to a mutual dismissal and release of all claims and have
submitted to the court for entry an agreed Order to Dismiss the litigation with
prejudice. Each party has agreed to pay their own costs arising from the
litigation.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On August 25, 2003, Nexia issued Three Million (3,000,000) shares of common
stock to The Company Reporter, Inc. in exchange for a six-month contract for
investor relations services. The Company Reporter Inc. is a full service
investor relations firm specializing in growth stock. The shares were issued
pursuant to Section 4(2) of the Securities Act of 1933.
On November 7, 2003, Nexia approved for filing with the Secretary of State for
Nevada a "Certificate of Determination of the Rights and Preferences of
Preferred Stock of Nexia Holdings, Inc." This document sets forth and
designates the rights and privileges of the Preferred Stock of Nexia that is
designated as
7
Series A Convertible Preferred Stock and authorized in the amount of 10,000,000
shares, out of the total number of 50,000,000 preferred shares authorized by
Nexia's Articles of Incorporation.
The Series A Convertible Preferred Stock is designated as having a par value of
$0.001 per share and designated as senior to the Common Stock of Nexia. In the
event of liquidation the shares have a priority right to $10.00 per share in
any distribution as a result of liquidation. These shares are given the same
voting rights as Common Shares on a one hundred-for-one basis.
Rights to dividends are granted to the Series A Convertible Preferred Stock
equal to those of the Common Stock, when, as and if declared by the Directors
of Nexia, to be paid in cash or in common stock equal to market value at the
election of the Company. Conversion rights into shares of Common Stock are
given to the Series A Convertible Preferred Stock based upon that number of
shares of the Company's Common Stock equal in market value to $10.00 at the
time of conversion.
The information provided herein above is merely a synopsis of the basic terms
of the determination document referenced above, which descriptions are
qualified in their entirety by the terms of the document itself, which document
is attached hereto as an exhibit and thereby incorporated herein by reference.
ITEM 5. OTHER INFORMATION
During the quarter ending September 30, 2003, Nexia's subsidiary, Hudson
Consulting Group, Inc.,temporarily discontinued cash payments to its employees.
Consequently, Nexia has relied upon the issuance of S-8 shares to pay certain
employees and consultants. On July 21, 2003, Nexia issued 5,000,000 shares of
S-8 common stock to Jared Gold for services rendered valued at $10,000, or
$0.002 per share, the market price on the date of grant. In September, 2003
Nexia issued 17,550,000 shares of its common stock to employees under its S-8
Registration Statements for its Employee Benefit Plans. Michael Golightly, an
attorney employed by the Company was issued 7,550,000 shares as compensation
for past services to the Company and in partial settlement of obligations
related to his employment. Shane Stone, serving as accounting manager for the
Company was issued 10,000,000 shares as compensation for his services in
working on financial and quarterly reports for the Company and in partial
settlement of obligations related to his employment.
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 9 of this Form 10-QSB, and are
incorporated herein by this reference.
(b) Reports on Form 8-K During the period covered by this report, Nexia filed
several Form 8-K reports.
1) On July 18, 2003, the Company filed a Form 8-K announcing that it
had entered into a Stock Purchase Agreement with Diversified
Financial Resources Corporation on June 30, 2003.
2) On July 30, 2003, the Company filed a Form 8-K/A restating and
clarifying information related to its change of certifying
independent auditors on March 24, 2003.
3) On November 10, 2003, the Company filed a Form 8K disclosing the
rights of certain preferred shares set forth pursuant to a
Certification of Designation.
8
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized, this 12th day of November 2003.
Nexia Holdings, Inc.
/s/ Richard Surber
--------------------------
Richard Surber, President and Director
9
INDEX TO EXHIBITS
EXHIBIT PAGE
NO. NO. DESCRIPTION
3(i) * Articles of Incorporation of Nexia (incorporated
herein by reference from Exhibit No. 3(i) to Nexia's
Form S-18 as filed with the Securities and Exchange
Commission on September 16, 1988 ).
3(ii) * Bylaws of Nexia, as amended (incorporated herein by
reference from Exhibit 3(ii) of Nexia's Form S-18 as
filed with the Securities and Exchange Commission on
September 16, 1988).
3(iii) * Articles of Incorporation of Nexia (incorporated
herein by reference from Appendix B of Nexia's Form 14-A
as filed with the Securities and Exchange Commission on
August 17, 2000 .)
4(a) * Form of certificate evidencing shares of "Common
Stock" in Nexia (incorporated from Exhibit 4(a) to
Nexia's Form S-18 as filed with the Securities and
Exchange Commission on September 16, 1988 ).
Material Contracts
10(i) * Stock Purchase Agreement with Diversified Financial
Resources Corporation dated June 30, 2003, providing for
the transfer of control of Wichita Development
Corporation and Salt Lake Development Corporation
(incorporated from Exhibit 10(i) to Nexia's Form 10-QSB
as filed with the Securities and Exchange Commission on
September 19,2003).
10(ii) 13 Advisory Agreement between Nexia and Jared Gold dated
August 12,2003.
99(i) * Certificate of Determination of the Rights and
Preferences of Preferred Stock of Nexia Holdings, Inc.
(incorporated by reference from Exhibit 4 to Nexia's
Form 8K filed on November 10, 2003 with the Securities
and Exchange Commission).
Certifications
31(i) 11 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS
ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-
OXLEY ACT OF 2002.
32(i) 12 CERTIFICATION PURSUANT TO 18 U.S.C.ss.1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002.
* Previously filed as indicated and incorporated herein by reference
from the referenced filings previously made by Nexia.
10
Exhibit 31(i)
I, Richard Surber, certify that:
1. I have reviewed this quarterly Report on Form 10-QSB for Nexia Holdings,
Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-15(e)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under my supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to me by others within those entities,
particularly during the period in which this quarterly report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report my conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: November 12, 2003
/s/ Richard Surber
--------------------------------
Richard Surber the President, CEO & CFO of Nexia Holdings, Inc.
11
Exhibit 32(i)
CERTIFICATION
I, Richard Surber, Chief Executive and Financial Officer of Nexia Holdings, Inc.
(the "Registrant"), do hereby certify, pursuant to 18 U.S.C.ss. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my
knowledge:
(1) the Quarterly Report of Form 10-QSB of the Registrant, to which this
certification is attached as an exhibit (the "Report") fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934
(15 U.S.C. 78m); and
(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Registrant.
12
2003 by and between Jared Gold whose address is XXXXXXXXXXXXX,
Salt Lake City, UT XXXXX ("Advisor") and Nexia Holdings, Inc., a
corporation with its offices located 268 West 400 South, Salt Lake
City, Utah 84101 (the "Company").
WHEREAS, Advisor has experience in both high-end and junior market apparel
design.
Advisor also maintains extensive resources in promotional design and
distribution, large scale promotional events, and all aspects of
clothing manufacture, conversion, and shipping.
WHEREAS, the Company desires to retain Advisor to advise and assist the Company
in its efforts to manage the Jared Gold/Black Chandelier Labels for Nexia
Holdings, Inc. on the terms and conditions set forth below.
agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company, and Advisor agree as follows:
1. Engagement
The Company hereby retains Advisor, effective as of the date hereof ( the
"Effective Date") and continuing for a period of twelve (12) months, as provided
herein, to assist the Company in its efforts to develop the Clothing Labels (the
"Services").
o Design clothing: at least two collections per year for both collections. Black
Chandelier- jeans and t-shirts Jared Gold - high end and luxury goods
o Oversee pattern making, fitting, corrections, and production fit
o Design screen prints as well as other treatments and conversions
o Design promotional implements and press releases
o Organize and maintain marketing and sales teams
o Oversee costing and acquisitions of goods and equipment
o Design and direct web sites and internet marketing o Oversee product
placement and distribution
o Manage both creative and production staffs
o Organize and produce runway shows and promotional events
The Services are to be provided on a "best efforts" basis directly and through
Advisor's officers or others employed or retained and under the direction of
Advisor ("Advisor's Personnel");
This Agreement shall have an initial term of twelve (12) months (the "Primary
Term"), commencing with the Effective Date. At the conclusion of the Primary
Term this Agreement may be extended by mutual consent of the parties on such
terms as to which they may mutually agree.
Advisor shall allocate time and Advisor's Personnel as it deems necessary to
provide the
13
Services. The particular amount of time may vary from day to day or week to
week. Additionally, in the absence of willful misfeasance, bad faith, negligence
or reckless disregard for the obligations or duties hereunder by Advisor,
neither Advisor nor Advisor's Personnel shall be liable to the Company or any of
its shareholders for any act or omission in the course of or connected with
rendering the Services.
The Company agrees to pay to Advisor, as a fee and for services rendered
pursuant to this agreement, a total of Five Million (5,000,000) shares of the
common stock of the Company which shall be issued without restriction pursuant
to an S-8 registration as an initial retainer. With respect to the above
referenced issuances, the Company stipulates that shares are being issued for
services that were not in connection with the offer or sale of securities in a
capital-raising transaction, and do not directly, or indirectly, promote or
maintain a market for the Company's securities. The Company further stipulates
that Jared Gold is not an officer, director, or otherwise control person of the
Corporation. Upon Nexia's aquiring Black Chandelier Inc., Mr. Gold and the
company agree that he will be entitled to 25% of the net profits generated by
Black Chandlier Inc. This agreement will span the duration of 12 months unless
otherwise agreed to by both parties in writing.
The Services provided by Advisor or Advisor's Personnel hereunder will be
performed at Advisor's offices except as otherwise mutually agreed by Advisor
and the Company.
Advisor and Advisor's Personnel will act as an independent contractor in the
performance of its duties under this Agreement. Accordingly, Advisor will be
responsible for payment of all federal, state, and local taxes on compensation
paid under this Agreement, including income and social security taxes,
unemployment insurance, and any other taxes due relative to Advisor's Personnel,
and any and all business license fees as may be required. This Agreement neither
expressly nor impliedly creates a relationship of principal and agent, or
employee and employer, between Advisor's Personnel and the Company. Neither
Advisor nor Advisor's Personnel are authorized to enter into any agreements on
behalf of the Company.
This Agreement neither expressly nor impliedly creates a relationship of
principal and agent between the Company and Advisor, or employee and employer as
between Advisor's Personnel and the Company.
Subject to the provisions herein, the Company and Advisor agree to indemnify,
defend and hold each other harmless from and against all demands, claims,
actions, losses, damages, liabilities, costs and expenses, including without
limitation, interest, penalties and attorneys' fees and expenses asserted
against or imposed or incurred by either party by reason of or resulting from
any action or a breach of any representation, warranty, covenant, condition, or
agreement of the other party to this Agreement.
14
9. Remedies
Advisor and the Company acknowledge that in the event of a breach of this
Agreement by either party, money damages would be inadequate and the
non-breaching party would have no adequate remedy at law. Accordingly, in the
event of any controversy concerning the rights or obligations under this
Agreement, such rights or obligations shall be enforceable in a court of equity
by a decree of specific performance. Such remedy, however, shall be cumulative
and nonexclusive and shall be in addition to any other remedy to which the
parties may be entitled.
(A) Subsequent Events. Advisor and the Company each agree to notify the other
party if, subsequent to the date of this Agreement, either party incurs
obligations which could compromise its efforts and obligations under this
Agreement.
(B) Amendment. This Agreement may be amended or modified at any time and in any
manner only by an instrument in writing executed by the parties hereto.
(C) Further Actions and Assurances. At any time and from time to time, each
party agrees, at its or their expense, to take actions and to execute and
deliver documents as may be reasonably necessary to effectuate the purposes of
this Agreement.
(D) Waiver. Any failure of any party to this Agreement 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. The failure of any party to this
Agreement to enforce at any time any of the provisions of this Agreement shall
in no way be construed to be a waiver of any such provision or waiver of the
right of such party thereafter to enforce each and every such provision. No
waiver of any breach of or noncompliance with this Agreement shall be held to be
a waiver of any other or subsequent breach or noncompliance.
(E) Assignment. Neither this Agreement nor any right created by it shall be
assignable by either party without the prior written consent of the other or as
stated herein.
(F) Notices. Any notice or other communication required or permitted by this
Agreement must be in writing and shall be deemed to be properly given when
delivered in person to an officer of the other party, when deposited in the
United States mails for transmittal by certified or registered mail, postage
prepaid, or when deposited with a public telegraph company for transmittal, or
when sent by facsimile transmission charges prepaid, provided that the
communication is addressed:
(i) In the case of the Company: Nexia Holdings, Inc.
268 West 400 South, Suite 300
Salt Lake City, Utah 84101
Telephone: (801) 575-8073
Telefax:: (801) 575-8092
(ii) In the case of Advisor: Jared Gold
xxxxxxxxxx
Salt Lake City, UT xxxx
Telephone: (xxx) xxxxxxx
15
or to such other person or address designated in writing by the Company or
Advisor to receive notice.
(G) 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.
(H) Governing Law. This Agreement was negotiated and is being contracted for in
Utah, and shall be governed by the laws of the State of Utah, and the United
States of America, notwithstanding any conflict-of-law provision to the
contrary.
(I) 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.
(J) Entire Agreement. This 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 of this
Agreement. No oral understandings, statements, promises, or inducements contrary
to the terms of this Agreement exist. No representations, warranties, covenants,
or conditions, express or implied, other than as set forth herein, have been
made by any party.
(K) Severability. If any part of this Agreement is deemed to be unenforceable
the balance of the Agreement shall remain in full force and effect.
(L) Counterparts. A facsimile, telecopy, or other reproduction of 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, by one or more parties hereto and such executed copy may be
delivered by facsimile or similar instantaneous electronic transmission device
persuant to which the signature of or behalf of such party can be seen. In this
event, such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all parties
agree to execute an original of this Agreement as well as any facsimile,
telecopy, or other reproduction hereof.
16
(M) Time is of the Essence. Time is of the essence of this Agreement and of each
and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date above
written.
The "Company" "Advisor"
Nexia Holdings, Inc. Jared Gold
A Nevada Corporation An Individual
By: /s/ Richard Surber /s/ Jared Gold
---------------------- --------------
Richard Surber, President Jared Gold
The "Company" "Advisor"