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, 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
-------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 88-0356200
------ ----------
(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
---------------------------------------------------------
(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 19, 2002 was 104,321,646.
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS..................................................3
Unaudited Consolidated Condensed Balance Sheet as of September 30, 2002........4
Unaudited Consolidated Condensed Statement of Operations for the three and
nine months ended September 30, 2002 and 2001..................................6
Unaudited Consolidated Condensed Statement of Cash Flows for the nine months
ended September 30, 2002 and 2001..............................................7
Notes to Unaudited Consolidated Condensed Financial Statements.................8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS .................................9
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.....................................11
SIGNATURES....................................................................11
INDEX TO EXHIBITS.............................................................12
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
2
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 September 30,
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 7 and are incorporated
herein by this reference.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
3
WICHITA DEVELOPMENT CORPORATION
Unaudited Consolidated Balance Sheet
September 30, 2002
September 30,
2002
------------
ASSETS
Current Assets
Cash $ 107,535
Restricted Cash 20,000
Prepaid expenses 1,235
Notes receivable 75,212
Notes receivable - Related parties 49,014
Securities available for sale - short term 10,027
Income Tax Receivable 27,776
------------
Total Current Assets 290,799
Fixed Assets
Property and equipment, net 1,104,574
Land 200,000
------------
Total Fixed Assets 1,304,574
Other Assets
Securities available for sale - long term 182,945
Other assets 49,082
------------
Total Other Assets 232,027
TOTAL ASSETS $ 1,827,400
============
See accompanying notes to financial statements
4
WICHITA DEVELOPMENT CORPORATION
Unaudited Consolidated Balance Sheet
(continued)
September 30, 2002
September 30,
2002
------------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Accounts payable $ 5,580
Payable to related parties 126,856
Income taxes payable 40,628
Unearned rent 45,561
Current portion of Long-Term debt 619,584
------------
Total Current Liabilities 838,209
Long Term Debt 889,132
Less: Current portion (619,584)
------------
Total Long Term Debt 269,548
TOTAL LIABILITIES 1,107,757
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 661,870
Retained earnings 275,076
Unrealized loss on securities (316,032)
Treasury Stock (450,210 shares at $.012 per share) (5,593)
TOTAL STOCKHOLDERS' EQUITY 719,643
------------
$ 1,827,400
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
============
See accompanying notes to financial statements
5
WICHITA DEVELOPMENT CORPORATION
Unaudited Consolidated Statements of
Operations for the three and nine months ended
September 30, 2002 and 2001
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
------------ ----------- ------------- ------------
Rental revenues $ 71,576 $ 71,842 $ 250,843 $ 251,146
General and administrative expenses 70,876 67,735 250,072 232,760
Interest expense associated with rental revenue 35,794 6,136 86,689 4,537
Net income from rental operations (35,094) (2,029) (85,918) 13,849
------------ ----------- ------------- ------------
Other income (expense)
Interest income (expense) 1,462 - 5,540 -
Gain (loss) on sale of securities (4,027) - (18,219) (3,991)
Unrealized gain (loss) on securities - (47,827) - (39,333)
------------ ----------- ------------- ------------
Total other income (expense) (2,565) (47,827) (12,679) (43,324)
------------ ----------- ------------- ------------
Income (loss) before tax (37,659) (49,856) (98,597) (29,475)
------------ ----------- ------------- ------------
Provision for income taxes 13,934 21,065 8,705 11,163
------------ ----------- ------------- ------------
Net income (loss) $(23,725) $ (28,791) $(62,116) $ (18,312)
============ =========== ============= ============
Net income (loss) per common share $ 0.00 $ 0.00 $ 0.00 $ 0.00
============ =========== ============= ============
Weighted average shares outstanding 104,322,000 24,322,000 104,322,000 23,400,000
============ =========== ============= ============
See accompanying notes to financial statements
6
WICHITA DEVELOPMENT CORPORATION
Unaudited Consolidated Statements of Cash Flows
for the nine months ended
September 30, 2002 and 2001
Nine months ended
September 30,
Cash Flows from Operating Activities: 2002 2001
---------- ----------
Net Income (loss) $ (62,116) $ (18,312)
Adjustments to reconcile loss to net cash used in operating activities:
Depreciation and amortization 19,574 10,990
Closing cost added to loan 6,700 -
Realized loss on sale of securities 18,129 -
Decrease (increase) in prepaid expenses (1,235) (1,030)
Decrease (increase in accounts receivable 20,913 -
Decrease (Increase) in income taxes payable (27,776) -
Increase (decrease) in accounts payable 5,580 (6,853)
Increase (decrease in accrued liabilities (7,145) -
Increase (decrease) in unearned rent 11,868 -
Increase (decrease) in income tax payable (10,793) (11,163)
---------- ----------
Net Cash Used in Operating Activities (26,302) (26,368)
Cash Flows from Investing Activities:
Decrease (increase) in notes receivable (46,075) (146,725)
Decrease (increase) in securities - (386,306)
Proceeds from sale of securities 20,729 -
---------- ----------
Net Cash Provided by/(Used in) Investing Activities (25,346) (533,031)
Cash Flows from Financing Activities:
- ------------------------------------
Increase in (payment of) long-term debt (7,229) -
Increase (decrease) in notes payable - 273,926
Increase (decrease) in amount due to shareholder - (6,730)
Purchase of treasury stock (5,593) -
Increase in amount due to related party (2,951) -
---------- ----------
Net Cash Provided by/(Used in) Financing Activities (15,773) 267,196
Net Decrease in Cash (67,421) (292,203)
Beginning Cash Balance 194,956 480,483
---------- ----------
Ending Cash Balance $ 127,535 $ 188,280
========== ==========
Supplemental Disclosure Information:
Cash paid during the period for interest $ 86,689 $ 17,567
Cash paid during the period for income taxes - -
See accompanying notes to financial statements
7
WICHITA DEVELOPMENT CORPORATION
Notes to Unaudited Financial Statements
September 30, 2002
NOTE 1 Summary of Significant Accounting Policies
Nature of Operations
Wichita Development Corporation ("Wichita") 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. Axia Group, Inc. in a restructuring, transferred these shares
to Nexia Holdings, Inc. a holding company subsidiary of Axia, making the
Company a subsidiary of Nexia Holdings, Inc. The consolidated financial
statements include the accounts of 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 (Loss) Per Common Share
Net income (loss) per common share is based on the weighted average number
of shares outstanding.
NOTE 2 Basis of Presentation
The accompanying consolidated unaudited financial statements have been
prepared by management in accordance with the instructions in Form 10-QSB
and, therefore, do not include all information and footnotes required by
accounting principles generally accepted 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
NOTE 3 Debt Settlement
On June 14 , 2002, the Company entered into a settlement agreement with
Axia Group, Inc. and West Jordan Real Estate Holdings, Inc. to settle debts
owed by each of these companies in exchange for restricted shares of the
common stock of Axia Group, Inc. to be valued at a 50% discount to the
closing price on the date of the agreement. Total debt, including accrued
interest, of $68,253.54 was settled in exchange for the issuance of
1,365,070 restricted shares of the common stock of Axia Group, Inc. to the
Company. Axia is a parent corporation to the Company and West Jordan is a
subsidiary of Axia. The settlement of these debts were treated as
settlement of related party debts and are reflected in the financial
statements for September 30, 2002.
8
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 buildings in Wichita, Kansas and Kearns, Utah coupled with our
ongoing attempts to locate and acquire additional commercial office space.
Results of Operations
The Company recorded $71,576 and $71,842 in rental revenues for the quarters
ended September 30, 2002 and 2001, respectively. While the addition of the
Kearns property in the fourth quarter of 2001 resulted in additional rents of
approximately $50,000 per quarter, vacancies in the Wichita property have more
than offset the Kearns additions in the current quarter. Since the beginning of
2002, our rents generated from the Wichita property have fallen from
approximately $23,000 per month to approximately $13,000 per month.
On June 14, 2002 the Company agreed to resolve debts owed to the Company by Axia
Group, Inc., a parent corporation to the Company and West Jordan Real Estate
Holdings, Inc. a subsidiary of Axia Group as well. The terms of the settlement
are that the Company agreed to accept restricted shares of Axia Group, Inc.
common stock valued at 50% of the lowest bid price in settlement of a total of
$68,253.54 in debts owed to the Company by the named companies. The total number
of shares of Axia common stock to be delivered to the Company pursuant to the
agreement to settle these debts has been calculated to be 1,365,070 shares. The
transaction was approved by all members of the board of directors.
Income / Losses
Net loss for the quarter ended September 30, 2002, was $23,725 compared to a net
loss of $28,791 for the quarter ended September 30, 2001. The reason for the
change in net loss is due to the addition of interest expenses from the
financing obtained on the Wichita building and the Kearns building not present
in the previous year coupled with the increase in overhead related to loan
renegotiations.
Net loss for the nine months ended September 30, 2002, was $89,892 compared to a
net loss of $18,312 for the nine months ended September 30, 2001. The losses are
attributable to a decrease in occupancy rates and the additional interest
expenses from the financing obtained on the Wichita building not present in the
previous year coupled with the increase in overhead related to loan
renegotiations.
Expenses
General and administrative expenses along with costs associated with rental
revenue for the quarter ended September 30, 2002, were $106,670 compared to
$72,871 for the comparable period in 2001. This increase in expenses resulted
from costs related to renegotiating the Kearns Development property loans of
approximately $5,000. Note that in the current year there are two buildings, the
Kearns building and the Wichita building being operated as compared to the
Wichita building alone in the previous year.
General and administrative expenses and costs associated with rental revenue for
the nine months ended September 30, 2002, were $236,761 compared to $237,297 for
the comparable period in 2001.
9
The Company had $7,456 in depreciation and amortization expense for the quarter
ended September 30, 2002, and $3,664 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 547,410 on September 30,
2002, compared to a working capital deficit of $497,416 at December 31, 2001.
The decrease is due to the mortgage on the Kearns building becoming due within
the next twelve months. The Company plans to refinance the mortgage on this
building within the current quarter.
Cash flow used in operating activities were $26,302 for the quarter ended
September 30, 2002, and $412,674 for the comparable period in 2001.
Cash flow used by investing activities was $25,346 for the quarter ended
September 30, 2002, and $146,725 for the comparable period in 2001.
Cash flow used in financing activities was $15,773 for the quarter ended
September 30, 2002, compared to cash flow generated by financing activities of
$267,196 for the comparable period in 2001. The decrease was due to a lack of
proceeds from long term debt financing and a lack of issuances of stock for debt
settlement and securities purchases.
Expected Cash Requirements
On September 30, 2002, we had $127,535 in cash on hand. One of our subsidiaries,
Kearns Development, had a mortgage note that came due on June 28, 2002. The note
with Brighton Bank was refinanced on July 11, 2002, for two years in the amount
of $619,000, however such loan may be called by the bank at any time. The terms
of the note extension provide for interest at 9% per annum, a monthly payment of
$5,631.80 with a final payment due on July 12, 2004 of $601,757 and that the
Company establish a money market account with the bank in the sum of $50,000 to
serve as collateral for the loan.
Efforts to refinance the note with a longer term are proceeding. We are
attempting to refinance the note with a 15 year amortization at prevailing
rates, however there can be no guarantee that we will be successful in such
efforts. There can 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.
10
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 Nexia Holdings, Inc., our
parent corporation. We do not expect to hire any additional employees in the
coming twelve month period.
Appointment of Director
On April 10, 2002, the Board of Directors appointed Richard D. Surber to the
board as a director and additionally appointed him as a vice-president of the
Company. Mr. Surber is currently the President of the Company's parent
corporations Nexia Holdings Inc. and Axia Group, Inc.
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 12 of this Form 10-QSB, and
are incorporated herein by this reference.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
period covered by this Form 10-QSB.
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 19th day of November, 2002.
WICHITA DEVELOPMENT CORPORATION.
/s/ Edward T. Wells Date: November 19 , 2002
- -----------------------
Edward T. Wells
President and Director
11
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Edward T. Wells, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Wichita Development
Corporation, 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, the results of operations and
cash flows of Wichita Development Corporation as of, and for, the periods
presented in this quarterly report.
4. I am responsible for establishing and maintaining internal controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for Golden
Opportunity Development Corporation and have:
(a) designed such internal controls and procedures to ensure that material
information relating to Golden Opportunity Development Corporation,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of Golden Opportunity Development
Corporation's internal controls and procedures as of a date within 90
days prior to the filing date of this quarterly report (the
"Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the internal controls and procedures based on our
evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to Wichita
Development Corporation's auditors and the audit committee of Wichita
Development Corporation's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect Wichita Development
Corporation's ability to record, process, summarize and report
financial data and have identified for Wichita Development
Corporation's auditors any material weaknesses in internal controls;
and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in Wichita Development
Corporation's internal controls; and
6. I have indicated in this quarterly report whether there were significant
changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 19, 2002
/s/ Edward T.Wells
- -------------------------------------
Edward T. Wells
Wichita Development Corporation, Chief Executive Officer
12
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).
Material Contracts
10(i) 14 Change in Terms Agreement, Brighton Bank
and the Company to extend term of a mortgage
note in the sum of $619,995.31 through July
12, 2004 at 9% interest.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY
13
CHANGE IN TERMS AGREEMENT
Borrower: Kearns Development Corporation, previously Lender: Brighton Bank
known as Cyberstudio, Inc. City Center Office
286 West 400 South, Ste. 300 311 South State Street
Salt Lake City, Utah 84101 Salt Lake City, UT 84111
- --------------------------------------------------------------------------------
Principal Amount: $619,995.31 Interest Rate: 9.000%
Date of Agreement: July 11, 2002
FOR VALUABLE CONSIDERATION, Lender and Borrower agree to the following changes
in Borrower's obligation:
DESCRIPTION OF EXISTING INDEBTEDNESS. Promissory Note dated November 29, 2000 in
the principal amount of $625,000.00 maturing on December 2, 2001.
DESCRIPTION OF COLLATERAL. Deed of Trust dated November 29, 2000 on property
located at 4115 West Sams Boulevard, Kearns, Utah 84118 and Assignment of
Deposit Account dated November 29, 2000.
DESCRIPTION OF CHANGE IN TERMS. The maturity date is changed to July 12, 2004,
the rate is changed from a fixed rate of 9.25% to a fixed rate of 9.00% and the
balance in the Money Market Account #61-90848-9 will be increased to $50,000.00
with a minimum balance of $20,000.00 to remain permanently as collateral.
PROMISE TO PAY. Kearns Development Corporation previously known as Cyberstudio,
Inc. ("Borrower") promises to pay to BRIGHTON BANK ("Lender"), or order, in
lawful money of the United States of America, the principal amount of Six
Hundred Nineteen Thousand Nin Hundred Ninety-five & 31/100 Dollars
($619,995.31), together with interest at the rate of 9.00% per annum on the
unpaid principal balance from July 12, 2002, until paid in full.
PAYMENT. Borrower will pay this loan on demand. Payment in full is due
immediately upon Lender's demand. If no demand is made, Borrower will pay this
loan in 23 regular payments of $5,631.80 each and one irregular last payment
estimated at $601,757.15. Borrower's first payment id due August 12, 2002, and
all subsequent payments are due on the same day of each month after that.
Borrower's final payment will be due on July 12, 2004, and will be for all
principal and all accrued interest not yet paid. Payments include principal and
interest. Interest on this Agreement is computed on a 365/360 simple interest
basis; that is, by applying the ratio of the annual interest rate over a year of
360 days, multiplied by the outstanding principal balance, multiplied by the
actual number of days the principal balance is outstanding. Borrower will pay
Lender at Lender's address shown above or at such place as Lender may designate
in writing.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan will not be subject to refund upon
early payment (whether voluntary or as a result of default), except as otherwise
required by law. Except for the foregoing, Borrower may pay without penalty all
or a portion of the amount owed earlier than it is due. Early payments will not,
unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation
to continue to make payments under the payment schedule. Rather, early payments
will reduce the principal balance due and may result in Borrower's making fewer
payments. Borrower agrees not to send Lender payments marker "paid in full",
"without recourse", or similar language. If Borrower sends such a payment,
Lender may accept it without losing any of Lender's rights under this Agreement,
and Borrower will remain obligated to pay any further amount owed to Lender. All
written communication concerning disputed amounts, including any check or other
payment instrument that indicates that the payment constitutes "payment in full"
of the amount owed or that is tendered with other conditions or limitations or
as full satisfaction of a disputed amount must be mailed or delivered to:
BRIGHTON BANK, 7101 South Highland Drive, Salt Lake, UT 84121.
14
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $25.00, whichever is greater.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the interest rate on this Agreement 2.000 percentage points. The
interest rate will not exceed the maximum rate permitted by applicable law.
LENDER'S RIGHTS. Upon Lender's demand, Lender may declare the entire principal
balance on this Agreement and all accrued unpaid interest immediately due, and
then Borrower will pay that amount.
ATTORNEY'S FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Agreement if Borrower does not pay. Borrower will pay Lender that amount.
This includes, subject to any limits under applicable law, Lender's reasonable
attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit,
including without limitation all reasonable attorneys' fees and legal expenses
for bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), and appeals. If not prohibited by applicable law, Borrower
will pay any court costs, in addition to all other sums provided by law.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender or Borrower against
the other.
GOVERNING LAW. This Agreement will be governed by, construed and enforced in
accordance with federal law and the laws of the State of Utah. This Agreement
has been accepted by Lender in the State of Utah.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $20.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, os some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.
COLLATERAL. Borrower acknowledges this Agreement is secured by Deed of Trust
dated November 29, 2000 on property located at 4115 West Sams Boulevard, Kearns,
Utah 84118 and a Assignment of Deposit Account dated December 28, 2001 (Brighton
Bank Money Market Account $61-90848-9 for $20,000.00).
CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the original obligations, including all agreements evidenced or securing the
obligation(s), remain unchanged and in full force and effect. Consent by Lender
to this Agreement does not waive Lender's right to strict performance of the
obligation(s) as changed, nor obligate Lender to make any future change in
terms. Nothing in this Agreement will constitute a satisfaction of the
obligation(s). It is the intention of lender to retain as liable parties all
makers and endorsers of the original obligation(s), including accommodation
parties, unless a party is expressly released by Lender in writing. Any maker or
endorser, including accommodation makers, will not be released by virtue of this
Agreement. If any person who signed the original obligation does not sign this
Agreement below, then all persons signing below acknowledge that this Agreement
is given conditionally, based on the representation to Lender that the
non-signing party consents to the changes and provisions of this Agreement or
otherwise will not be released by it. This waiver applies not only to any
initial extension, modification or release, but also to all such subsequent
actions.
15
FINANCIAL STATEMENTS. Borrower will furnish Lender with a Balance Sheet and
Income Statement as of the end of each fiscal year, as soon as it becomes
available, but in no event later than sixty (60) days after the end of that
fiscal year.
MONEY MARKET ACCOUNT. The borrower may use up to $30,000.00 of the $50,000.00
from the Brighton Bank Money Market Account #61-90848-9 during the term of the
loan. $20,000 in account #61- 90848-9 will be permanent collateral.
PRIOR NOTE. a Promissory Note dated November 29, 2000 from Cyberstudio, Inc. to
Brighton Bank.
SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this Agreement on
transfer of Borrower's interest, this Agreement shall be binding upon and inure
to the benefit of the parties, their successors and assigns. If ownership of the
Collateral becomes vested in persons other than Borrower, Lender, without notice
to Borrower, may deal with Borrower's successors with reference to this
Agreement and the Indebtedness by way of forbearance or extension without
releasing Borrower from the obligations of this Agreement or liability under the
Indebtedness.
NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.
Please notify us if we report any inaccurate information about your account(s)
to a consumer reporting agency. Your written notice describing the specific
inaccuracy(ies) should be sent to us at the following address: Brighton Bank
7101 South Highland Drive Salt Lake, UT 84121.
MISCELLANEOUS PROVISIONS. Lender may delay or forgo enforcing any of its rights
or remedies under this Agreement without losing them. Borrower and any other
person who signs, guarantees or endorses this Agreement, to the extent allowed
by law, waive presentment, demand for payment, and notice of dishonor. Upon any
change in the terms of this Agreement, and unless otherwise expressly stated in
writing, no party who signs this Agreement, whether as maker, guaranty,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan or release any party or guarantor or collateral; or impair, fail
to realize upon or perfect Lender's security interest in the collateral; and
take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made. The obligations under this Agreement are joint and
several.
FINAL AGREEMENT. Borrower understands that this Agreement and the related loan
documents are the final expression of the agreement between Lender and Borrower
and may not be contradicted by evidence of any alleged oral agreement.
PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS AGREEMENT, BORROWER AGREES TO THE TERMS OF THE AGREEMENT.
CIT SIGNERS:
KEARNS DEVELOPMENT CORPORATION PREVIOUSLY KNOWN AS CYBERSTUDIO, INC.
By: /s/ Richard D. Surber
-------------------------
Richard D. Surber, President of Kearns Development Corporation
previously known as Cyberstudio, Inc.
LENDER:
BRIGHTON BANK
/s/ Authorized signer
----------------------
Authorized Signer
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CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Wichita Development
Corporation (the" Company") on Form 10-QSB for the period ending June
30, 2002 as filed with the Securities and Exchange Commission on the
date hereof (the"Report"), I, Edward T. Wells, sole Executive Officer
of the Company, certify, pursuant to 18 U.S.C. S 1350, as adopted
pursuant to S 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The financial information contained in the Report fairly
presents, in all material respects, the financial condition and
result of operations of the Company.
/s/ Edward T.Wells
---------------------------------
Edward T. Wells
Sole Executive Officer
November 19, 2002
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