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 March 31, 2002.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from to .
Commission file number: 0-29383
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WICHITA DEVELOPMENT CORPORATION
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(Exact name of small business issuer as specified in its charter)
Nevada 88-0356200
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
268 West 400 South, Suite 300, Salt Lake City, Utah 84101
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(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 May 14, 2002 was 104,321,646.
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS..................................................3
Unaudited Balance Sheet as of March 31, 2002...................................4
Unaudited Statement of Operations for the three months ended March 31, 2002 and
2001...........................................................................6
Unaudited Statement of Cash Flows for the three months ended March 31, 2002 and
2001...........................................................................7
Notes to Condensed Financial Statements........................................8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS ................................11
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.....................................13
SIGNATURES....................................................................14
INDEX TO EXHIBITS.............................................................15
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PART I
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Wichita Development Corporation, a
Nevada corporation, and its subsidiaries and predecessors unless otherwise
indicated. Consolidated, unaudited, condensed interim financial statements
including a balance sheet for the Company as of the quarter ended March 31,
2002, and statements of operations, and statements of cash flows for the interim
period up to the date of such balance sheet and the comparable period of the
preceding year are attached hereto as Pages 4 through 9 and are incorporated
herein by this reference.
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WICHITA DEVELOPMENT CORPORATION
Consolidated Unaudited Balance Sheet
March 31, 2002
March 31, 2002
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ASSETS
Current Assets
Cash $ 158,139
Prepaid expenses 3,703
Accounts receivable 4,282
Notes receivable 85,000
Notes receivable - related parties 50,824
Marketable securities - trading 51,751
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Total Current Assets 353,699
Fixed Assets
Property and equipment, net 1,119,484
Land 200,000
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Total Fixed Assets 1,319,484
Other Assets
Related party notes receivable 65,382
Marketable securities - available for sale 220,325
Other assets 49,082
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Total Other Assets 334,789
TOTAL ASSETS $ 2,007,972
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See accompanying notes to financial statements
4
WICHITA DEVELOPMENT CORPORATION
Consolidated Unaudited Balance Sheet
(continued)
March 31, 2002
March 31, 2002
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Accounts payable $ 8,609
Payable to related parties 156,506
Income taxes payable 40,628
Unearned rent 22,462
Current portion of Long-Term debt 620,053
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Total Current Liabilities 848,258
Long Term Liabilities 890,177
Less: Current portion (620,053)
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Total Long Term Liabilities 270,124
TOTAL LIABILITIES 1,118,382
STOCKHOLDERS' EQUITY
Preferred stock - 5,000,000 shares authorized at $0.001 par, none issued
and outstanding - Common stock - 200,000,000 shares authorized at $0.001
par; 104,322
104,321,646 shares issued and outstanding
Paid in capital 661,572
Treasury stock - 100,210 shares @ $.013/ share (1,277)
Unrealized gain (loss) on securities (197,312)
Retained earnings 322,285
TOTAL STOCKHOLDERS' EQUITY 889,590
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,007,972
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See accompanying notes to financial statements
5
WICHITA DEVELOPMENT CORPORATION
Consolidated Statements of Operations
for the three months ended March 31, 2002 and 2001
Three months Three months
ended ended
March 31, 2002 March 31, 2001
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Rental revenues $ 99,148 $ 108,460
General and administrative expenses 94,570 97,928
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Net income from rental operations 4,578 10,532
Other income (expense)
Interest income 1,615 6,233
Interest expense (29,160) -
Gain (loss) on sale of securities (6360) (3,991)
Unrealized holding gain (loss) on securities 3627 18,519
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Total other income (expense) (30,278) 20,761
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Income (loss) before tax (25,700) 31,293
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Provision (benefit) for income taxes 10,793 (14,727)
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Net income (loss) $ (14,907) $ 16,566
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Net income (loss) per common share $ 0.00 $ 0.00
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Weighted average shares outstanding 104,322,000 19,911,089
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See accompanying notes to financial statements
6
WICHITA DEVELOPMENT CORPORATION
Consolidated Statements of Cash Flows
for the three months ended
March 31, 2002 and 2001
Three months ended March 31,
Cash Flows from Operating Activities: 2002 2001
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Net Income (loss) $ (14,907) $ 16,566
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization 4,664 3,663
Closing costs added to loan 3,981 -
Realized loss on sale of securities 6,360 -
Unrealized holding gain on trading securities (3,627) -
Decrease (increase) in prepaid expenses (3,703) (3,089)
Decrease (increase) in accounts receivable 16,631 -
Decrease (increase) in securities - (445,266)
Increase (decrease) in accounts payable 8,609 (7,810)
Increase (decrease) in accrued liabilities (7,145) -
Increase (decrease) in unearned rent (11,231) -
Increase (decrease) in income tax payable (10,793) 14,727
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Net Cash Provided by/(Used in) Operating Activities (11,161) (421,209)
Cash Flows from Investing Activities:
Decrease (increase) in notes receivable (54,801) (55,000)
Proceeds from sale of securities 7,187 -
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Net Cash Provided by/(Used in) Investing Activities (47,614) (55,000)
Cash Flows from Financing Activities:
- ------------------------------------
Increase in (payment of) long-term debt (3,465) 274,825
Issued stock for securities - 104,763
Purchase of treasury stock (1,277) -
Increase in amount due to related party 26,700 (99,838)
Issued stock for debt settlement - 147,591
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Net Cash Provided by/(Used in) Financing Activities 21,958 427,341
Net Increase(decrease) in Cash (36,817) (48,868)
Beginning Cash Balance 194,956 480,483
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Ending Cash Balance $ 158,139 $ 431,615
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Supplemental Disclosure Information:
Cash paid during the year for interest $ 29,159 $ 2,514
Cash paid during the year for income taxes $ 0 $ 0
See accompanying notes to financial statements
7
WICHITA DEVELOPMENT CORPORATION
Notes to Unaudited Financial Statements
March 31, 2002
NOTE 1 Summary of Significant Accounting Policies
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Nature of Operations
Wichita Development Corporation was organized under the laws of the
State of Nevada on February 15, 1996 as Cyberbotanical, Inc. The
Company was in development stage until August 30, 2000, at which time
it purchased a building in Wichita, Kansas, known as the Board of
Trade Center. On October 12, 2000, the Company changed its name to
Wichita Development Corporation. On October 17, 2001, the Company
purchased Kearns Development Corporation, a majority owned subsidiary
of Axia Group, Inc. in exchange for issuing 80,000,000 shares of
common stock to Axia Group, Inc. As a result of the transaction,
Kearns became an 85.6 % owned subsidiary of the Company and the
Company has become an 85.5% owned subsidiary of Axia Group, Inc. The
consolidated financial statements include the accounts of Wichita
Development Corporation (Wichita), its wholly- owned subsidiary
Wichita Properties, Inc. (WPI), and its 85.6% owned subsidiary Kearns
Development, Inc. (Kearns) (collectively the Company). All significant
intercompany account balances have been eliminated in consolidation.
The Company is engaged in the operation of real estate to produce
rental income.
Net Income Per Common Share
Net income per common share is based on the weighted average number of
shares outstanding.
NOTE 2 Comprehensive Income
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Comprehensive income was $77,772 and $16,566 for the three months
ended March 31, 2002 and 2001, respectively.
NOTE 3 Basis of Presentation
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The accompanying consolidated unaudited condensed finanical statements
have been prepared by management in accordance with the instructions
in Form 10-QSB and, therefore, do not include all information and
footnotes required by generally accepted accounting principles in the
United States and should, therefore, be read in conjunction with the
Company's Annual Report to Shareholders on form 10-KSB for the fiscal
year ended December 31, 2001. These statements do include all normal
recurring adjustments which the Company believes necessary for a fair
presentation of the statements. The interim operations results are not
necessarily indicative of the results for the full year ended December
31, 2002.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the Financial Statements and
accompanying notes and the other financial information filed in the Form 10-KSB
for the period ended December 31, 2001.
General
Our business plan for the next twelve months involves the continued operation of
our office building in Wichita Kansas coupled with our ongoing attempts to
locate and acquire additional commercial office space in the Wichita area and
elsewhere.
Results of Operations
The Company recorded $99,148 and $108,460 in rental revenues for the quarters
ended March 31 2002 and 2001, respectively. The decrease is attributable to the
loss of a major tenant in the Wichita building.
Income / Losses
Net loss for the quarter ended March 31 2002, was $14,907 compared to a net
income of $16,566 for the quarter ended March 31, 2001. The reason for the
change in net income is due to the addition of interest expenses from the
financing obtained on the Wichita building not present in the previous year
coupled with the decrease in revenue noted above.
Expenses
General and administrative expenses for the quarter ended March 31, 2002, were
$94,570 compared to $97,928 for the comparable period in 2001. The decrease in
general and administrative expenses resulted from efforts to streamline
operations. Note that in the current year there are two buildings, the Kearns
building and the Wichita building, being operated for less than the Wichita
building alone in the previous year.
The Company had $4,664 in depreciation and amortization expense for the quarter
ended March 31, 2002, and $3,663 for the comparable period in 2001.
Impact of Inflation
The Company believes that inflation may have a negligible effect on future
operations. The Company believes that it may be able to offset inflationary
increases in the cost of sales by increasing sales and improving operating
efficiencies.
Liquidity and Capital Resources
The Company's had a net working capital deficit of $494,559 on March 31, 2002,
compared to a working capital deficit of $497,416 at December 31, 2001. The
decrease in working capital deficit was attributable to the current portion of
long term debt attributable to our subsidiary company's loan with Brighton Bank.
The loan is due to be refinanced, but until that is completed, it is reflected
as a current liability.
Cash flow used in operating activities were $11,161 for the quarter ended March
31, 2002, and $421,209 for the comparable period in 2001. The decrease was due
to a lack of changes in securities.
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Cash flow used by investing activities was $47,614 for the quarter ended March
31, 2002 and $55,000 for the comparable period in 2001.
Cash flow generated from financing activities was $21,958 for the quarter ended
March 31, 2002, and $427,341 for the comparable period in 2001. The decrease was
due to not incurring long term debt financing and a lack of issuances of stock
for debt settlement and securities purchases.
Expected Cash Requirements
On March 31, 2002, we had $158,139 in cash on hand. One of our subsidiaries,
Kearns Development, has a mortgage note that comes due on May 28, 2002. Efforts
to refinance the note are currently proceeding with two separate financing
entities. It is anticipated that the note will be refinanced for with a 20 year
amortization and a 10 year balloon payment at prevailing rates. However, since
the financing is not yet completed, the Company is reflecting the entire payoff
amount as a current liability and there can be no guarantee that the note
refinancing will be completed. In the event this occurs, the Company will need
to liquidate assets to satisfy the note and may have to sell assets at a
significant discount to obtain sufficient liquidity There can also be no
guarantee that operating costs will remain constant through the end of the year
2002.
In the event we acquire additional rental properties during the coming year, our
cash requirements to fund operations could increase. While we have no present
intention to raise equity capital for operations in the next twelve month
period, the acquisition of, or opportunity to acquire additional commercial real
estate could create a need to raise additional capital.
Product Research and Development
We do not plan to conduct any significant research or development activities in
the coming twelve month period.
Expected Purchase or Sale of Plant and Equipment
We have no current plan for the purchase of any specific additional plant or
equipment. However, we are investigating the feasibility of purchasing
additional commercial real estate. We are using the services of a licensed real
estate broker to suggest potential properties for our consideration. We have
investigated a number of potential properties and are continuing to consider the
purchase of additional office properties.
Expected Changes in Number of Employees
We currently have one part-time employee, Edward T. Wells. The Trade Center
Building is currently managed by a resident property management company and the
Kearns building is being managed by a subsidiary of Axia Group, Inc., our parent
corporation. We do not expect to hire any additional employees in the coming
twelve month period.
PART II
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 10 of this Form 10QSB, and
are incorporated herein by this reference.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
period covered by this Form 10-QSB.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, hereunto duly
authorized, this 15th day of May, 2002.
WICHITA DEVELOPMENT CORPORATION.
/s/ Edward T. Wells Date: May 15, 2002
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Edward T. Wells
President and Director
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INDEX TO EXHIBITS
EXHIBIT PAGE
NO. NO. DESCRIPTION
3(i) * Articles of Incorporation of the Company
(incorporated herein by reference from
Exhibit No. 3(i) of the Company's Form 10-SB
as filed with the Securities and Exchange
Commission on February 8, 2000).
3(ii) * Bylaws of the Company, as amended
(incorporated herein by reference from
Exhibit 3(ii) of the Company's Form 10-SB as
filed with the Securities and Exchange
Commission on February 8, 2000).
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