formsb-2a.htm

 


 Registration No. 333-130849
 

 
UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549
 

 
FORM SB-2/A
 
AMENDMENT NUMBER FOUR
 

 
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 

 
NEXIA HOLDINGS, INC
(Name of small business issuer in its charter)
 

 
Nevada
6510
84-1062062
(State of jurisdiction of
(Primary Standard Industrial
(I.R.S. Employer
incorporation or organization)
Classification Code Number)
Identification No.)
 
Richard Surber, President
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
(801) 575-8073
(Address, including zip code and telephone number of principal executive offices and principal
place of business and name, address and telephone number of agent for service)
 

 
COPIES TO:
Russell C. Weigel, III
Attorney at Law
One Southeast Third Avenue, Suite 1750
Miami, Florida 33131
(786) 888-4567
 

 
 
Approximate date of proposed sale to the public: As soon as practicable from time to time after this registration statement becomes effective. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If the delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.
 
CALCULATION OF REGISTRATION FEE
 
Title of each class of securities to
be registered
Amount of securities to be registered
Dollar
Amount to be registered
Proposed maximum offering price per share (1)
Proposed maximum aggregate
offering price
Amount of registration
fee
 
$.0001
Common
Stock
 
26,400,000,000 shares
 
 
$10,000,000
 
 
$0.00038
 
 
$0.00038
 
 
$1,267.00
 
 
(1) The proposed maximum offering price per share is based on the proposed offering price for the shares of the registrant offered hereby and is based on the market price as reported on June 21, 2007.
 
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
 


 
NEXIA HOLDINGS, INC.
26,400,000,000 shares of $0.0001 par value Common Stock
Purchase Price of $0.0004 per share
The Offering:

Public Price:  $0.0004;  $10,000,000 estimated proceeds.  Underwriting Discounts:  Cash to Nexia Holdings, Inc. from purchases of shares by the Selling Shareholder, estimated:  $9,900,000.
The expenses indicated do not include legal, accounting, printing, and related costs incurred in making this offering.  We will need to pay all such costs, which we estimate to be $100,000.
Nexia Holdings, Inc. is a holding company incorporated in the State of Nevada.  Nexia through its subsidiaries operates a real estate investment, retail fashion and hair salon business.  We currently own and operate several buildings in the greater Salt Lake City, Utah area, and own a majority interest in a beauty and lifestyle salon and a retail fashion operation.
We plan to expand the beauty and lifestyle salon operations and the fashion retail operations.  We plan to buy more investment properties which we believe are undervalued, compared to their cash flows and estimated resale value as revenues and funding permit.

This offering involves a high degree of risk, and the securities offered by this prospectus are highly speculative. You should only buy this stock if you can afford to lose your entire investment. SEE RISK FACTORS (BEGINNING ON PAGE 7) AND DILUTION  (BEGINNING ON PAGE 17) TO READ ABOUT RISKS YOU SHOULD CAREFULLY CONSIDER BEFORE BUYING THIS STOCK.

Our common stock is quoted on the OTC Electronic Bulletin Board under the symbol “NEXA.”  On June 21, 2007, the last reported sale price of the common stock on the OTC Bulletin Board was $0.0004  per share.

Our common stock is deemed to be “penny stock” as that term is defined in Rule 3a51-1 promulgated under the Securities Exchange Act of 1934, as amended.  Broker-Dealers dealing in penny stock are required to provide potential investors with a document disclosing the risks of penny stock.  Broker-dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor.

We will receive no proceeds from the sale of the shares by the selling shareholders.  However, we may receive 95% of the market price per share on the sale of the registered shares to Dutchess Private Equities Fund L.P. (“Dutchess” or “Selling Shareholder”) from the exercise of a funding agreement with Dutchess whereby up to a total of $10,000,000 in purchases may be made over a three year period.  With the exception of Dutchess, which is an “underwriter” within the meaning of the Securities Act of 1933, as amended, no other underwriter or person has been engaged to facilitate the sale of shares of common stock in this offering.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined whether the information in this prospectus is truthful or complete.  Any representation to the contrary is a criminal offense.

The information in this prospectus will be subject to completion or amendment.A registration statement relating to these securities has been filed with the Securities and Exchange Commission.  The Selling Shareholder may not sell these securities, nor may it accept offers to buy, until the registration statement becomes effective.  This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall the Selling Shareholder sell any of these securities, in any state where such offer, solicitation or sale would be unlawful before registration or qualification under such state’s securities laws.
 
2

 
Nexia Holdings, Inc. 
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
(801) 575-8073

Offering of
26,400,000,000 Shares of Common Stock
 
PROSPECTUS
 
June 21, 2007
 
TABLE OF CONTENTS
 
 
 
Page
   
Part I
 
   
4
8
8
19
19
20
20
22
23
24
25
26
28
28
30
33
37
  42
        43
   
Financials Statements
 
   
    F-1
    F-41
 
 
Part II
 
 
 
 99
   106
  107
108

 
PART I

First page of the prospectus

SUMMARY

The following summary highlights the more detailed information and financial statements appearing elsewhere in this prospectus. It is only a summary, it is not complete and does not convey all of the information you should consider prior to investing in the common stock. We urge you to read the entire prospectus carefully, especially the risks of investing in our common stock as discussed in the "Risk Factors" section beginning on page 8.

Our independent auditors have raised substantial doubt as to Nexia’s ability to continue as a going concern in connection with our financial statements for the years ended December 31, 2005 and December 31, 2006. Nexia has since its inception incurred losses that have resulted in an accumulated deficit of $15,568,646 as of December 31, 2006 and Nexia reported a net loss of $1,967,208 for the year ended December 31, 2006.

Nexia’s common stock is deemed to be “penny stock” as that term is defined in Rule 3a51-1 promulgated under the Securities Exchange Act of 1934, as amended. Broker-Dealers dealing in penny stock are required to provide potential investors with a document disclosing the risks of penny stock. Broker-dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor.
 
 
The corporate structure is as set forth in the following chart:
 
 
 
 
 
OUR BUSINESS

Nexia’s current businesses consist of the operation of retail clothing stores, the operation of a salon and the acquisition, leasing and selling of real estate. The Company has acquired the operations of Black Chandelier, a clothing and life style retail operation with four stores, three located in the Salt Lake City, Utah market and one in the Provo, Utah market. Nexia subsidiary, Landis, LLC operates a hair salon that sells Aveda™ products exclusively. Nexia’s subsidiaries currently own and operate a 38,000 square foot retail/office building, an 11,000 square foot office building and a 7,000 square foot retail building. All of these buildings are located in the greater Salt Lake City, Utah area.

THE OFFERING

26,400,000,000 shares of common stock.

Dutchess Private Equities Fund, L.P.
Shares of Common Stock Outstanding.
Before Offering 2,018,995,086
 
After Offering 28,418,995,086

Nexia will not receive any proceeds from the sale of the common stock. We will receive the sale price of any common stock we sell to the selling stockholder under the investment agreement with Dutchess Private Equities Fund.
 
 
This is a resale registration statement of registered shares to be sold by Dutchess Private Equities Fund

Nexia has entered into an investment agreement (the “Investment Agreement”) with Dutchess Private Equities Fund L.P. (Dutchess” or the “Selling Shareholder”); this agreement is also referred to as an equity line of credit. The Investment Agreement provides that, following notice to Dutchess, Nexia may put to Dutchess up to $10 million in shares of our common stock for a purchase price equal to 95% of the lowest closing best bid price on the Over-the-Counter (“OTC”) Bulletin Board of our common stock during the five day period following that notice. The number of shares that we will be permitted to put pursuant to the Investment Agreement will be either: (a) 200% of the average daily volume of our common stock for the ten trading days prior to the applicable put notice, multiplied by the average of the three daily closing “best bid” prices immediately preceding the day we issue the put, or (b) $100,000; provided that in no event will the put amount be more than $1,000,000 with respect to any single put. (Best Bid is a defined term in the Investment Agreement as the highest posted bid price for the common stock.) In turn, Dutchess has indicated that it will resell the shares of common stock in the open market, resell our shares to other investors through negotiated transactions or hold our shares in its portfolio. This prospectus covers the resale of our shares of common stock by Dutchess either in the open market or to other investors through negotiated transactions.

In the event that Nexia fails to timely deliver the shares provided for under the Investment Agreement a daily penalty schedule is set forth that provides that in the event that Nexia should be one day late in the delivery of $1 million worth of shares a penalty of $10,000 would be imposed, for being five days late the penalty would be $50,000 and $100,000 for being 10 days late.  An additional penalty of $200 per day would be added for each day after 10 that the delivery of the shares was delayed.

Any investor owning Nexia’s common stock at the date this registered offering becomes effective will experience an increase in the net book value of his or her investment, depending on how many of these securities are sold to Dutchess by the Company.  Any investor purchasing Nexia’s common stock during this registered offering will likely suffer a dilution of his or her investment, depending on how many of these securities are sold to Dutchess by the Company prior to the purchase by the investor.  For more information on the dilutive effect of this offering, please see the discussions on dilution in this Prospectus located at pages twenty through twenty-three.

Nexia’s Placement Agency Agreement with GunnAllen Financial

Nexia has entered into a Placement Agency Agreement with GunnAllen Financial located in Tampa, Florida, whereby Nexia has agreed to pay GunnAllen a fee of $1,000 from the proceeds from each put submitted to Dutchess under the Investment Agreement up to a total maximum fee of $10,000. In exchange for those payments the placement agent shall render consulting services to Nexia with respect to the Investment Agreement and shall be available for consultation in connection with the advances to be requested by Nexia pursuant to the terms of the Investment Agreement. The Placement Agency Agreement is attached hereto as exhibit 10(iii).

Proceeds    

We will use the proceeds from this offering to: 1. Provide operating capital; 2. Expansion of retail operations; 3. Improve existing real estate holdings; and 4. Fund acquisition of real estate and development properties for retail operations.

Risk Factors 

The stock offered by this prospectus is speculative and involves a high degree of risk. Investors should not buy this stock unless they can afford to lose their entire investment.

Bulletin Board Common Stock Symbol  “NEXA”

 
SUMMARY OF SELECTED FINANCIAL DATA

The information below should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and notes to financial statements included elsewhere in this prospectus.

 
 
Year ended 12/31/2006
   
Year ended 12/31/05
 
STATEMENTS OF OPERATIONS:
 
 
   
(Revised)
 
Revenue
  $
1,834,245
    $
392,414
 
Loss from operations
    (4,425,135 )     (756,822 )
Net loss
    (1,967,208 )     (130,548 )
Income (loss) per common share
    (0.00 )     (0.00 )
Weighted average number of common shares
               
Outstanding
   
517,497,916
     
317,112,939
 
 
               
BALANCE SHEETS DATA:
               
Working capital (deficit)
  $ (990,123 )   $ (951,843 )
Total assets
   
4,734,635
     
4,319,916
 
Total liabilities
   
4,764,239
     
3,130,305
 
Shareholders equity
    (120,948 )    
963,185
 
 

RISK FACTORS

An investment in the common stock the selling shareholders are offering to resell is risky. The stock offered in this prospectus inherently involves a high degree of risk, and you should carefully consider the possibility that you may lose your entire investment. Given this possibility, we encourage you to evaluate the following risk factors and all other information contained in this prospectus before buying the common stock of Nexia. Any of the following risks, alone or together, could adversely affect our business, our financial condition, or the results of our operations, and therefore the value of your Nexia common stock.

Risks Related to Nexia’s Business

There is substantial doubt about Nexia’s ability to continue as a going concern due to insufficient revenues to cover our operating costs, which means that we may not be able to continue operations unless we obtain additional funding.

Our independent auditors added a going concern qualification to their report issued in connection with their audit of our December 31, 2005 and 2006 financial statements. The auditors noted in their report that Nexia generated significant losses from operations, had an accumulated deficit of $15,568,646 and a working capital deficit of $990,123 as of December 31, 2006. These factors raised for the auditors substantial doubt about Nexia’s ability to continue as a going concern. These general conditions continued through the first quarter of 2007, resulting in additional deficits in the operations of the Company.

Management anticipates that Nexia will incur net losses for the year end results of December 31, 2007. To the extent that Nexia does not generate additional revenue from its existing properties, existing retail operations, acquire additional properties that generate revenue, obtain additional funding, that its stock price does not increase, that additional adjustments are not made to decrease operating expenses do not occur, then Nexia may not have the ability to continue as a going concern. The financial statements which accompany this filing do not include any adjustments that might result from the outcome of this uncertainty.
 

Nexia's real estate investments are inherently risky and dependent on rental income.

Real estate investments are inherently risky. The value of a real estate investment company's stock depends largely on the rental income and the capital appreciation generated by the properties which the investment company owns. If our properties do not generate enough cash flow from rental income to meet operating expenses (such as debt service, capital expenditures and tenant improvements), our ability to develop our business and become profitable will be adversely affected.

Income from real estate investments may be adversely affected by a number of factors, including:

w  
the general economic climate and local real estate conditions (such as too much supply or too little demand for rental space, as well as changes in market rental rates);

w  
prospective tenants' perceptions of a building's safety, convenience and attractiveness, or the overall appeal of a particular building;

w  
the property owner's ability to provide adequate management, maintenance and insurance;

w  
expenses for periodically renovating, repairing and re-letting spaces;
 
w  
falling operating costs for competing properties, which would allow them to undercut our rental rates;

w  
rising unemployment rates in the area, which may reduce the demand for rental space;

w  
adverse changes in zoning laws, tax laws, or other laws affecting real estate or businesses in the area;

w  
damage from earthquakes or other natural disasters;

w  
mortgage interest rates and the availability of financing.

Some significant expenses associated with real estate investment (such as mortgage payments, real estate taxes, insurance and maintenance costs) are fixed and generally can not be reduced if circumstances cause lower rental incomes from a building. For example, if we can not meet the mortgage payments, we could lose some or all of our investment in a building due to foreclosure by the holder of the lien on the property.
 
Our real estate investments have limited liquidity and no certainty of capital appreciation.

Our real estate investments have limited liquidity. Real estate investments in general are relatively illiquid. Our ability to vary our portfolio in response to changes in economic and other conditions will be limited. We cannot ascertain whether we will be able to sell an investment when a sale would be advantageous or necessary. The sale price may not be enough to recoup the amount of our investment. Nexia can provide no assurance that the value of its properties will appreciate.

There are numerous uncertainties in estimating real estate values and prospective appreciation value. The estimated values set forth in appraisals are based on various comparisons to other property sales; predictions about market conditions such as demand, vacancy rates, prospective vacancy rates, renewal terms and other factors; assumptions about the property’s condition, conformance with laws and regulations, absence of material defects; estimates of lease revenues and operating expenses; and other factors. Any significant change in these comparisons, predictions, assumptions, and estimates, most of which are beyond our control, could materially and adversely affect the market values and appreciation potential of our properties.
 
 
We compete with substantially larger companies to acquire suitable buildings.

The commercial real estate market is highly competitive. We compete with substantially larger companies for the acquisition, development and operation of properties that fit within the parameters of our business plan. Some of these companies are national or regional companies with far greater resources than ours. The presence of these competitors may significantly impede our business growth or survival.

Nexia's ability to generate enough revenue to operate our business is dependent on the ability to attract tenants and ensure that tenants meet their lease obligations.

Our business would be severely affected resulting from the loss of revenues that would result if our current tenants fail to meet lease obligations or, if upon failure to meet lease obligations, we were unable to enter into new viable leases for the resulting vacant space. Further, if a tenant defaulted on a lease, we might experience a delay before the courts enforced our rights against the tenant. Our ability to lease the space during any court enforced action would be seriously impaired. Failure of a tenant’s business through bankruptcy would also reduce or eliminate our revenue flow. We can provide no assurance that tenants will faithfully meet their lease obligations or that tenants will not be impaired through some form of business failure or otherwise, with the result that our ability to operate our business would be materially and negatively affected. During the first quarter of 2007 the rate of default on tenant’s obligations billed during that period was 20%.  A total of 17,964 square feet of space, or 52% of the rentable square feet available to the Company, are represented by leases that will expire within the next 12 months or are currently being leased on a month to month basis.

Our ability to satisfy fixed operating costs that may rise over time cannot be reduced in response to any decrease in our rental income, or passed through to our tenants.

Our ability to satisfy fixed operating costs associated with our property could be seriously affected by any rise in expenses such as: mortgage payments, insurance, utilities, cleaning, ventilation, air-conditioning, security, landscaping, building repairs and maintenance. While our tenants must often pay a portion of these escalating costs, there can be no assurance that they will agree to any increase in current fixed costs or that any increase in tenant payments would cover increased operating costs. Our current fixed costs for any future time period cannot be reduced in response to any decrease in rental income resulting from vacancies or non payment of rent and our ability to operate would be severely affected by any increase in the costs associated with owning our property.
 
All of Nexia’s material real estate holdings are located in the Salt Lake City, Utah market making the Company vulnerable to changes in economic conditions in that market.

All of Nexia’s material real estate holdings are located in the Salt Lake City, Utah market which creates a greater risk of harm from a downturn in that single market as compared to wider more diversified holdings in several geographic areas. Any significant change in the office or retail space in the Salt Lake City market will directly affect Nexia’s real estate operations.

Nexia may invest in properties in other real estate markets outside of the Salt Lake City, Utah area where the Company has no experience.

Nexia may make selected acquisitions or develop properties outside the area of its current focus of Salt Lake City, Utah as appropriate opportunities are located or as they may arise. No area outside of the Salt Lake City has been identified nor has any market area been excluded from consideration. The historical experience of Nexia is in the Salt Lake City market area, and management may not be able to operate successfully in other market areas. Some of the risks in operating in new market areas would include: a lack of market knowledge and understanding of the local economies, an inability to identify promising acquisition or development opportunities, an inability to obtain qualified development and maintenance personnel, and a lack of familiarity with local government and permitting procedures. Any of these factors could cause Nexia to incur costs greater than anticipated and limit the success of any acquisition and development that may be undertaken, which would reduce the Company’s profitability and limit its growth.
 
 
We are dependent on key personnel, specifically Richard Surber, and have no employment agreement with him.

We are dependent on the services of Richard Surber, our President. We do not have an employment agreement with Mr. Surber, and losing his services would likely have an adverse effect on our ability to conduct business. Mr. Surber serves as an Officer and Director of Nexia. Mr. Surber is currently employed by other businesses, and he will only allocate a portion of his time (estimated at an average of 50 hours per week) to the business of Nexia and its subsidiaries. Therefore, there is a risk that he might not devote enough time to Nexia in fulfilling our business plan. Further, Nexia has a limited number of full time employees.
 
The operation of Landis Lifestyle Salon and Gold Fusion Laboratories operations are each dependent on key personnel.

Our subsidiary Landis, LLC owns Landis Lifestyle Salon. The operations of Landis Lifestyle Salon are dependent on the day to day management of Matthew Landis, the namesake of the salon’s name who works in the salon and trains its personnel. Losing his services would likely have an adverse effect on the operations and business development of the salon business owned and operated by Landis, LLC.

Our subsidiary Gold Fusion Laboratories has acquired the operations of Black Chandelier which is dependent upon the fashion sense and design creations of Jared Gold for its operations. Losing his services would likely have an adverse effect on the design functions, development of new clothing lines and future business growth of Gold Fusion’s planned acquisitions and the related retail operations.

Our ability to provide adequate management, maintenance and insurance.

To provide for adequate management, maintenance and insurance for the properties owned by Nexia, rental income will need to exceed the operating costs for those properties. Vacancies, falling rents, bankruptcy of tenants, unexpectedly higher maintenance costs or a loss not covered by insurance could adversely affect the ability of Nexia to provide adequate management, maintenance and insurance for its properties. If these services are not provided on an adequate basis, deterioration of the property would have a severely negative impact on Nexia.

Risks related to Nexia’s and its predecessors’ operating histories

The current focus of Nexia’s business plan is to take advantage of the inefficiencies in the United States’ real estate market. In the current market, Nexia has not relied upon the sellers of real property to finance its real estate investments. Nexia has obtained the necessary funding on its own. However, Nexia and its predecessors have attempted in recent years to compete in other market trends which were not successful. For example, Nexia signed an agreement to acquire Creative Marketing Group, Inc. which holds a license to market coffee maker filters and ground coffee beans under the “Mr. Coffee” name. In another example, Nexia attempted to close on a manufacturing and repair company. In each of these situations, the executive management of Nexia and its predecessors was the same. In each of these failed attempts, Nexia attempted to acquire an existing business based on the incorrect information that the selling shareholder group would obtain the necessary financing to support the ongoing business of the franchise. Based upon past performance, there is the possibility that Nexia’s executive management may in the future commit resources to an acquisition that ultimately proves to be unsound and damages the Company financially.

We will need new funding, which may not be available, in order to fully execute our real estate business plan.

Our real estate business plan “buying undervalued building” will depend on our ability to raise more money. Management and shareholders have not committed to provide new funding. Except for that funding we hope to obtain as a result of selling our common stock to Dutchess, as detailed in this prospectus, we have not located any other sources, availability, or terms for new funding. There is no assurance that funding will be available from any source or, if available, that it can be obtained on acceptable terms. If we can not obtain new funding, our operations could be severely limited.
 

We project that in 2007 and beyond, our salon and retail store businesses will be able to generate sufficient revenues to meet their internal financial needs and $100,000 annually of excess cash available for our other operations.  We project the cash burn rate for the next twelve months, for the Company’s general needs and rental operations will be approximately $1,020,000.  Funds to cover the burn rate will come from excess cash flow provided by the salon and retail operations, $100,000; reduction in cash employee expenses through stock issuance, $700,000; and sale of stocks from an investment portfolio of at least $360,000.  The total provided to cover the Company’s general needs and the rental operations will be approximately $1,160,000.  These amounts do not include any funds that may be received from the Dutchess equity line of credit.

We believe the proposed sale of 26.4 billion shares of Nexia stock to Dutchess, under the equity line of credit, will probably require three years to complete.  Our planned real estate capital improvements in 2007 of $150,000, to renovate existing space in two of our properties to make it usable and rentable, will come from the internally generated funds and possibly the Dutchess equity line of credit, if needed.
 
We cannot predict our future capital needs and may not be able to secure additional funding.

Nexia’s management estimates that the Company’s current “burn rate,” the current rate at which expenses exceed revenue, is approximately $85,000 per month, or $1,020,000 per year. We will need to raise additional funds within the next twelve months in order to fund the current level of operations of the Company. We expect that the majority of these funds will come from the sale of our common shares to Dutchess or the sale or transfer of some of our preferred shares to private investors. Either method of funding could result in a significant dilution of ownership interests by the holders of our common stock.

Environmental liability could affect our real estate investments.

Various federal, state and local environmental laws make a real estate owner liable for the costs of removal or remediation of certain hazardous or toxic substances on a property. These laws often impose environmental liability regardless of whether the owner was responsible or knew of the presence of hazardous substances. The presence of hazardous substances, or the failure to properly remediate them, may adversely affect our ability to sell or rent a property or to borrow using the property as collateral. No assurance can be given that the environmental assessments of our properties revealed all environmental liabilities, or that a material, adverse environmental condition does not exist on our properties.

We may face an uninsured loss.

Owners of real estate are subject to certain types of losses such as civil disturbance or pollution, which are either uninsurable or too expensive to insure. If an uninsured loss or a loss in excess of insured limits occurs, Nexia's investment in our real properties, as well as anticipated future revenues could be lost. Meanwhile, obligations on any mortgage debt for the properties would continue. Accordingly, any uninsured loss could adversely affect our financial condition and results of operation.

The Americans With Disabilities Act and similar legislation may increase our costs.

The Americans with Disabilities Act of 1980 (ADA) requires that commercial facilities and places of public accommodation be accessible to disabled people. A number of additional federal, state and local laws impose other requirements on owners concerning access by disabled people. We may need to make both structural and non-structural changes to our property in order to comply with the ADA and similar laws. Noncompliance could result in government fines or an award of damages to a private litigant. We have not been informed that any of our properties fail to comply with such laws. However, we may incur costs, which we cannot fully ascertain now, to ensure compliance in the future. While we do not expect the prospective costs of compliance to have a material effect on our operations, a potential for substantial costs exists. If changes are required, our financial condition and results of operations could be adversely affected.
 

Changes in consumer tastes and fashion trends can have a negative impact on our financial performance.

Both Landis, LLC and Gold Fusion Laboratories, Inc. operations could be negatively impacted by unforeseen and unfavorable changes in consumer tastes and fashion trends away from those targeted by the marketing and sales efforts of Landis, LLC and Gold Fusion Laboratories. As these tastes and trends are not predictable and their effect on the operations of either retail operation cannot be estimated in advance great effort is made in the operations of both companies to ensure that their products and services reasonably and adequately anticipate the business operations of each company such changes and that theses changes are in order to insure continued consumer demand for their services and products. However, there is no way to assure success with these efforts.
 
The Series B Preferred Stock held by Richard Surber creates an anti-takeover or change of control limitation. Richard Surber currently holds voting control of Nexia through his ownership of voting preferred stock which could be affected by the purchases of common stock by Dutchess.

The ten million shares of Series B Preferred Stock held by Richard Surber provide him with voting control over any proposal requiring a vote of the shareholders. Through his ownership of 10,000,000 shares of the Series B Preferred Stock of the Company, he holds voting rights equal to 5,000,000,000 shares of common stock. This effectively gives him a veto over any attempt to take over or change control of the Company. Such an event would include a vote by the board of directors to conduct a reverse split of the common stock. The shares held by Mr. Surber thus have a strong anti-takeover effect. His interests may not always conform to the interests of the common stockholders, in general, and thus his voting rights may not always be exercised in the best interests of the common stockholders of the Company. The issuance of 8 million preferred shares was to compensate Mr. Surber for serving as the personal guarantor of the loans used to acquire all of the real estate holdings currently under the Company’s control, and an additional 2 million shares were issued as partial compensation for the transfer of Mr. Surber’s interest in Landis, LLC. In the event that Dutchess should acquire the 26.4 billion shares of common stock being registered under this prospectus and retain those shares it would hold 79.4% of the approximately 33,268,995,086 votes that would be outstanding at that time, that number of votes may provide Dutchess with a controlling interest in the Company. Further, if the share price of the common stock decreases during the period of purchases by Dutchess, the number of shares it could acquire would increase as the price it would have to pay for those shares would decrease.

The Company is currently conducting discussions with the Department of Commerce in the State of Utah concerning private offering made by the Company and their compliance with Utah regulations.

In October of 2006, the State of Utah through its Department of Commerce requested information from the Company to determine the compliance with Utah regulations regarding all offerings made by the Company within the past five years.  Preliminary indications are that some shares have been issued within the State of Utah without full compliance with registration or qualification requirements under the securities laws of Utah.  These discussions have lead to the Company agreeing to offer a right of rescission to all residents of the State of Utah whose purchase of shares from the Company were not made in full compliance with registration or qualification requirements in the State of Utah.  Upon any former shareholder accepting that offer of rescission full disclosure will be made at that time.

Risks Related to Landis, LLC’s Operation of Landis Lifestyle Salon

The operation of Landis Lifestyle Salon operations are each dependent on key personnel.

The operations of Landis Lifestyle Salon are dependent on the day to day management of Matthew Landis, the namesake of the salon’s name who works in the salon and trains its personnel. Losing his services would likely have an adverse effect on the operations and business development of the salon business owned and operated by Landis, LLC.
Our success depends on our ability to attract and retain trained stylists in order to support our existing salon business and to staff future expansion.

Landis is actively recruiting qualified candidates to fill stylist positions for the salon. There is substantial competition for experienced personnel in this area, which we expect to continue. We will compete for experienced candidates with companies who have substantially greater financial resources than we do. If we fail to attract, motivate and retain qualified stylists, it could harm our business and limit our ability to be successful and hamper expansion plans. For example, we will depend upon the expertise and training abilities of Matthew Landis, the principal manager of the salon. Since we do not maintain insurance policies on any of our employees, if we lose the services of any key officers or employees, like Mr. Landis, it could harm our business and results of operations.
 

We face significant competition in the salon business, which could harm our sales and profitability

The primary competition to Landis, LLC operations will come from salons offering above-and-beyond customer service in the Salt Lake Area market. Currently identified as offering this level of competition are salons named, Lunatic Fringe, Salon Zazou and Salon RZ. Landis, LLC will also be in competition with large scale hair cutting operations such as Great Clips, Supercuts, and Fantastic Sams, though these operations do not compete in offering the extra services and products that Landis, LLC offers.
 
The loss of distribution rights to the Aveda™ line of products would damage the operation of the Landis Lifestyle Salon and have a significant and negative impact on its ability to operate and generate revenues.

The Landis, LLC operates the Landis Lifestyle Salon, has a Retail Product Use Agreement with a distributor of the Aveda™ line of products and which are used exclusively in the services provided to customers of the salon and offered for retail sale at the salon location. Loss of the right to sell Aveda product would have a significant and negative impact on the operation of the salon and its ability to generate revenues from either retail sales of health and beauty products or from providing services to consumers at the salon. Landis believes that the high quality and reputation of this line of products is key to its current operations and future success.

Changes in consumer tastes and hairstyling trends can have a negative impact on our financial performance.

Landis, LLC salon operations could be negatively impacted by unforeseen and unfavorable changes in consumer tastes and hairstyling trends away from those targeted by the marketing and sales efforts of Landis. As these tastes and trends are not predictable and their effect on the operations of the salon cannot be estimated in advance great effort is made in the operations of the salon to ensure that its products and services reasonably and adequately anticipate such changes and that theses changes are met with modifications in the salon’s operations to insure continued consumer demand for its services and products. However, there is no way to assure success with these efforts.

Risks Related to Gold Fusion Laboratories Operation of Black Chandelier Clothing Line

The success of the Gold Fusion Laboratories business plan depends in large part on our ability to identify fashion trends and to react to changing customer demand in a timely manner.

Consequently, we depend, in part, upon favorable market response to the creative efforts of the Gold Fusion Laboratories operation.

Failure on our part to anticipate, identify, and respond effectively to changing consumer demands and fashion trends will adversely affect our sales. 

If we are unable to obtain raw materials, or find manufacturing facilities, our financial condition may be harmed. Outside of a small sample room, we do not own any manufacturing facilities, and therefore depend on a limited number of third parties to manufacture our products. We place all of our orders for production of merchandise and raw materials by purchase order and do not have any long-term contracts with any manufacturer or supplier. If we fail to obtain sufficient quantities of raw materials, it could have a harmful effect on the results of our operations. Furthermore, we may receive shipments of products from manufacturers that fail to conform to our quality control standards. In such an event, unless we are able to obtain replacement products in a timely manner, we may lose sales. If we fail to maintain favorable relationships with these production facilities, or fail to obtain an adequate supply of quality raw materials on commercially reasonable terms, it could harm our business and results of operations.
 
Gold Fusion will be dependent on third party manufacturers for production, and its sales may be negatively affected if the manufacturers do not perform acceptably, or if design changes are communicated after the production has begun.

We will develop a significant portion of our merchandise in conjunction with third-party apparel manufacturers. In some cases, we select merchandise directly from these manufacturers’ lines. We do not have long-term contracts with any third party manufacturers and will purchase all of the merchandise from such manufacturers by purchase order. Furthermore, we may receive, in the future, shipments of products from third-party apparel manufacturers that fail to conform to our quality control standards. In such an event, unless we are able to obtain replacement products in a timely manner, we may lose sales. We cannot assure you that third party manufacturers (1) will not supply similar products to our competitors, (2) will not stop supplying products to us completely or, (3) will supply products that satisfy our quality control standards. In addition, certain of our third party manufacturers will store our raw materials. In the event our inventory is damaged or destroyed, and we are unable to obtain replacement raw materials, our ability to generate earnings may be negatively impacted. In addition, if we decide to change a key design element, after the manufacturing process has begun, we may negatively impact the manufacturer's ability to deliver the products on a timely basis, which could impact our ability to generate earnings.
 
 
Our success depends on our ability to attract and retain key employees in order to support our existing business and future expansion.

We are actively recruiting qualified candidates to fill key executive positions within the Company. There is substantial competition for experienced personnel, which we expect to continue. We will compete for experienced personnel with companies who have substantially greater financial resources than we do. If we fail to attract, motivate and retain qualified personnel, it could harm our business and limit our ability to be successful. For example, we will depend upon the expertise and design talents of Jared Gold, the founder of the Black Chandelier line of products. Since we do not maintain insurance policies on any of our employees, if we lose the services of any key officers or employees, like Mr. Gold, it could harm our business and results of operations.

We face significant competition in the retail and apparel industry, which could harm our sales and profitability.

The retail and apparel industries are highly competitive and are characterized by low barriers to entry. We expect competition in our markets to increase. The primary competitive factors in our markets are: brand name recognition, sourcing strategies, product styling, quality, presentation and pricing, timeliness of product development and delivery, customer service, and convenience. We compete with specialty store retailers, business to consumer websites, off-price retailers and direct marketers for, among other things, raw materials, market share, finished goods, sourcing and personnel. Because many of these competitors are larger and have substantially greater financial, distribution and marketing resources than we do, we may lack the resources to adequately compete with them. If we fail to compete in any way, it could harm our business, financial condition, and future results of operations.

Purchases of the merchandise we sell are generally discretionary and are therefore particularly susceptible to economic slowdowns.

If economic conditions are not favorable or if they should suffer a downward trend, our retail businesses, financial condition, and results of operations could be adversely affected. Consumers are generally more willing to make discretionary purchases, including purchases of fashion products and high-end home products, during periods in which favorable economic conditions prevail.

If we are not able to successfully protect our intellectual property, our ability to capitalize on the value of the Black Chandelier brand name may be impaired.

Even though we intend to take actions to establish, register and protect our trademarks and other proprietary rights, we cannot assure you that these efforts will be successful. These include the use of the existing Black Chandelier trade mark and other product lines developed by Jared Gold that have been acquired by Gold Fusion Laboratories and newly developed products as well.  There is a risk that others will imitate our products or infringe upon our intellectual property rights. In addition, we cannot assure you that others will not resist or seek to block the sale of our products as infringements of their trademark and proprietary rights. We are seeking to register our trademarks in the United States markets and other markets as they develop demand. In some of these markets, obstacles exist that may prevent us from obtaining a trademark for the Black Chandelier or related names. Furthermore, in some jurisdictions, despite successful registration of our trademarks, third parties may allege infringement and bring actions against us. We are not aware of any actual infringement by our products on any other trademarked product.
 
If an independent manufacturer violates labor or other laws, is accused of violating any such laws, or if their labor practices diverge from those generally accepted as ethical, it could harm our business and brand image.

While all our manufacturers are contractually required to comply with ethical labor practices, we cannot control the actions or public perception of such manufacturers, nor can we assure that these manufacturers will conduct their businesses using ethical or legal labor practices. Apparel companies may be held jointly liable for the wrongdoings of those that manufacturer their products. While we do not control independent manufacturer’s employment conditions, or their business practices, people in general act in their own self-interest, and may act in a manner that produces a negative public perception of the Company. Accordingly we could receive negative publicity or perhaps a court determination that we are jointly liable for such improper practices.
 
 
Additional capital is necessary to implement the Company's Business Plan for Gold Fusion Laboratories. 
 
The Company does not believe that it has sufficient cash, cash equivalents and operating income to maintain its business at its existing level through the next 12 months. The Gold Fusion Laboratories’ operation will require significant new capital in order to execute its business plan. The Company’s success in raising this capital will depend upon its ability to access equity capital markets. We may not be able to do so, or do so on acceptable terms. If the Company fails to obtain funds on acceptable terms, it will not be able to execute the Gold Fusion Laboratories business plan and would have to delay or abandon some or all of its plans for growth.

Risks Related to Investment

Nexia expects the price of its common stock to be volatile. As a result, investors could suffer greater market losses in a down market than they might experience with a more stable stock. Volatility in our stock may also increase the risk of having to defend a securities class action suit, which could be expensive and divert management’s attention from managing Nexia’s business.

The market price of Nexia’s common shares has been subject to wide fluctuations in response to several factors, such as:

·
Significant dilution
·
Actual or anticipated variation in the results of operations
·
Announcements of acquisitions
·
Changes in the areas of operations of the company
·
Conditions and trends in the real estate market in Salt Lake City, Utah and nationally

The stock markets generally, and the OTC Bulletin Board in particular, have experienced extreme price and volume fluctuations that are often unrelated and disproportionate to the operating performance of a particular company. These market fluctuations, as well as general economic, political and market conditions such as recessions or interest rate or international currency fluctuations, may adversely affect the market for the common stock of the company. In the past, class action litigation has often been brought against companies after periods of volatility in the market price of their securities. If such a class action suit is brought against the Company it could result in substantial costs and a diversion of management’s attention and resources, which would hurt business operations.

Dutchess will pay less than the then-prevailing market price of our common stock, which may cause our stock price to decline.

The common stock to be issued under our agreement with Dutchess will be purchased at a 5% discount to the lowest closing bid price for the five days immediately following our notice to Dutchess of our election to exercise our put right. These discounted sales could cause the price of our Common Stock to decline, and you may not be able to sell our stock for more than you paid for it. Dutchess will have an immediate incentive to sell the shares it acquires and realize a gain as a result of the discount from market price at which it will purchase shares of Nexia’s commons stock. This incentive to sell will increase as the market price of Nexia’s common stock falls as Dutchess will wish to avoid a loss on the sale of such shares.

Our stock value is dependent on our ability to generate net cash flows.

A large portion of any potential return on our common stock will be dependent on our ability to generate net cash flows.

If we can not operate our commercial property and/or retail operations at a net profit, there will be no return on shareholders’ equity, and this could result in a loss of share value. No assurance can be given that we will be able to operate at a net profit now or in the future.
 
 
Our common stock value may decline after the offering.

Sales of our common stock in the public market following this offering could lower the market price of our common stock. The sales may also make it more difficult for the company or its investors to sell current securities in the future at a time and price that the Company or its current investors deem acceptable or even to sell such securities at all. The risk factors discussed in this "Risk Factors" section may significantly affect the market price of our stock. The low price of our stock may result in many brokerage firms declining to deal in our stock. Even if a buyer finds a broker willing to effect a transaction in our common stock, the combination of brokerage commissions, state transfer taxes, if any, and other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of this stock as collateral for loans. Thus, you may be unable to sell or otherwise realize the value of your investment in our stock.

The number of shares that could be issued to Dutchess could lead to a large number of shares being placed on the market which could exert a downward trend on the prices. Dutchess, who will have purchased its shares at a discount to the market price, will have an incentive to sell the shares to realize its profits resulting from the discount purchase price that it will be receiving. If the supply created by these events exceeds the demand for purchase of the shares the market price for the shares of common stock will decline.

The number of shares to be made available through this registration statement could encourage short sales by third parties, which could contribute to a future decline in the price of our stock.

In our circumstances, the provision of a large number of common shares to be sold to Dutchess has the potential to cause a significant downward pressure on the price of common stock, such as ours, that is traded on the OTC Bulletin Board. This would be especially true if the shares being placed into the market exceeds the market’s ability to take up the increased number of shares or if the Company has not performed in such a manner to encourage additional investment in the market place. Such events could place further downward pressure on the price of the common stock. As a result of the number of shares that could be placed with Dutchess, an opportunity exists for short sellers and others to contribute to the future decline of Nexia’s stock price. Persons engaged in short-sales first sell shares that they do not own and, thereafter, purchase shares to cover their previous sales. To the extent the stock price declines between the time the person sells the shares and subsequently purchases the shares, the person engaging in short-sales will profit from the transaction, and the greater the decline in the stock price the greater the profit to the person engaging in such short-sales. If there are significant short-sales of our stock, the price decline that would result from this activity will cause our share price to decline even further, which could cause any existing shareholders of our stock to sell their shares creating additional downward pressure on the price of the shares. It is not possible to predict how much the share price may decline should a short sale occur. In the case of some companies that have been subjected to short-sales the stock price has dropped to near zero. This could happen to Nexia.

The Investment Agreement entered into with Dutchess does not contain a restriction on short selling. Any significant downward pressure on the price of our common stock could encourage short sales by Dutchess, and others, subject to applicable securities laws. Even if we use the proceeds under the Investment Agreement to grow our revenues and profits or invest in assets, which are materially beneficial to us, the opportunity exists for short sellers and others to contribute to the future decline of our stock price. If there are significant short sales of our stock, the price decline that would result from this activity will cause the share price to decline even more, which, in turn, may cause long holders of the stock to sell their shares thereby contributing to sales of stock in the market. If there is an imbalance on the sell side of the market for the stock, our stock price will decline. In that event, the number of shares of our common stock that are issuable pursuant to the Investment Agreement will increase, which will materially dilute existing stockholders equity and voting rights.
 
Our shareholders may face significant restrictions on the resale of our stock due to state "Blue Sky" laws.
 
Each state has its own securities laws, often called "blue sky laws," which (1) limit sales of stock to a states’ residents unless the stock is registered in that state or qualifies for an exemption from registration and (2) govern the reporting requirements for broker-dealers and stock brokers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or it must be exempt from registration. Also, the broker must be registered in that state. We do not know whether our stock will be registered, or exempt, under the laws of any states except in Utah and Massachusetts where filings have been made with state agencies. A determination regarding any other registration will be made by the broker-dealers, if any, who agree to serve as the market-makers for our stock. There may be significant state blue sky law restrictions on the ability of investors to sell, and on purchasers to buy, our stock.
 
You should consider the resale market for our securities to be limited. Shareholders may be unable to resell their stock, or they may be unable to resell it without the significant expense of state registration or qualification.
 

Our stock may be subject to significant restrictions on resale due to federal penny stock regulations.

Our stock differs from many stocks because it is a penny stock. The Securities and Exchange Commission (“SEC”) has adopted a number of rules to regulate penny stocks. These rules require that a broker or dealer, prior to entering into a transaction with a customer, must furnish certain information related to the penny stock. The information that must be disclosed includes quotes on the bid and offer, any form of compensation to be received by the broker in connection with the transaction and information related to any cash compensation paid to any person associated with the broker or dealer.

These rules may affect your ability to sell our shares in any market that may develop for Nexia stock. Should a market for our stock develop among dealers, it may be inactive. Investors in penny stocks are often unable to sell stock back to the dealer that sold it to them. The mark-ups or commissions charged by broker-dealers may be greater than any profit a seller can make. Because of large dealer spreads, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold it to them. In some cases, the stock value may fall quickly. Investors may be unable to gain any profit from any sale of the stock, if they can sell it at all.

Potential investors should be aware that, according to the SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. These patterns include:

·  
control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

·  
manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

·  
Aboiler room practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;
 
·  
excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

·  
the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

Investors must contact a broker-dealer to trade over-the-counter bulletin board securities. As a result, you may not be able to buy or sell our securities at the times you may wish.

Even though our securities are quoted on the OTC Bulletin Board, they may not permit our investors to sell securities when and in the manner that they wish. Because there are no automated systems for negotiating trades on the OTC Bulletin Board, they are conducted via telephone. In times of heavy market volume, the limitations of this process may result in a significant increase in the time it takes to execute investor orders. When investors place market orders to buy or sell a specific number of shares at the current market price it is possible for the price of a stock to go up or down significantly during the lapse of time between placing a market order and its execution.
 
If we fail to remain current on the reporting requirements that apply to Nexia, we could be removed from the OTC Bulletin Board which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities.

Companies trading on the OTC Bulletin Board, such as Nexia, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. If we fail to remain current on our reporting requirements, shares of our common stock could be removed from the OTC Bulletin Board. As a result of that removal, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.  We filed late on our annual reports for the year ended December 31, 2005 and 2006.  If we file late one more time, within a year on any of our quarterly or annual reports, we will be removed from the board.
 

Investors may experience an immediate and significant dilution of their interest if any securities registered hereunder are sold.

"Dilution" represents the difference between the offering price and the net tangible book value per share immediately after completing this offering. "Net tangible book value" is the amount that results from subtracting total liabilities and intangible assets from total assets. Dilution is caused primarily by our arbitrary determination of the offering price for the shares detailed in this prospectus. Dilution also occurs because of the lower book value of the shares held by our existing shareholders.

As of June 21 2007, the net tangible book value of our shares of common stock was ($2,559,554), or approximately ($0.0013) per share, based on 2,018,995,086 shares outstanding.

Upon completion of this offering, if 100% of the offered shares are sold (26,400,000,000), the net tangible book value of the 28,418,995,086 shares to be outstanding will be $7,440,446 or approximately $0.0003 per share.

Dutchess may not buy all or any of our common stock.

The possibility exists that we will not sell any of the securities to Dutchess detailed in this offering by never submitting a put to Dutchess; or that we will sell only a limited number of securities.  Dutchess has no obligation to buy common stock until a request is received from Nexia and management has reached a decision to make such a request as being in the Company’s best interests.  Nexia has incurred expenses related to this offering. The offering expenses are to be paid from the proceeds of the offering or the sales to Dutchess.  Should Nexia fail to sell, or should Dutchess fail to buy any securities or only a limited number of securities as offered, then offering costs would be paid from our operating budget. The addition of this financial obligation to the operating budget of Nexia would have a negative impact on our ability to continue our operations.

SELLING SHAREHOLDERS

The following table presents information regarding the selling shareholders. None of the selling shareholders holds, or has held a position or office or had any other material relationship with Nexia. Dutchess is not a broker-dealer or an affiliate of a broker-dealer.

Selling Security Holder
Shares held
percentage of shares
shares sold
percentage of
 
Before offering
before offering
in offering
shares after offering
 
 
 
 
 
Dutchess Private Equities
 
 
 
 
Fund L.P.
0
0%
26,400,000,000
93.4%

USE OF PROCEEDS

Nexia will not receive any proceeds from the sale of the shares by Dutchess pursuant to this registration. However, all shares sold to Dutchess pursuant to the Investment Agreement between Nexia and Dutchess will generate cash proceeds from those sales for Nexia. Nexia intends to use the proceeds from those transfers to Dutchess in the following manner, and in the following order of priority.
 
       
Estimated Proceeds from Percentage
of Current Market Price
 
Priority
 
Use of Funds Received
from Dutchess
   
100%
     
75%
     
50%
     
25%
 
                                     
 
1
 
Cost of offering
  $
100,000
    $
100,000
    $
100,000
    $
100,000
 
                                       
 
2
 
Working capital
   
3,400,000
     
3,400,000
     
3,400,000
     
2,400,000
 
                                       
 
3
 
Expansion of retail operations
   
4,800,000
     
2,930,000
     
1,050,000
     
-
 
                                       
 
4
 
Improve existing real estate holdings
   
500,000
     
240,000
     
90,000
     
-
 
                                       
 
5
 
Acquisition of real estate
   
1,200,000
     
730,000
     
260,000
     
-
 
                                       
     
TOTAL PROCEEDS RECEIVED
  $
10,000,000
    $
7,500,000
    $
5,000,000
    $
2,500,000
 
 
 
The numbers in the above table for priority 3, Expansion of retail operations, are based on the following estimates, if 100% of the stock offered is sold:

 
 
 
   
Black
 
 
       
Chandelier
 
 
 
Landis
Lifestyle
   
Retail Clothing
 
 
 
Salons
   
Stores
 
 
 
 
   
 
 
Set up initial store, furniture & equipment
  $
214,700
    $
121,250
 
Inventory
  $
73,450
    $
84,000
 
Marketing & advertising
   
45,000
     
45,000
 
Other nonrecurring costs
   
19,400
     
11,500
 
 
               
TOTAL COST TO SET UP
               
EACH NEW LOCATION
  $
352,550
    $
261,750
 
 
               
Estimated new locations over
               
the next 24 months
   
3
     
8-12
 
 
               
TOTAL EXPANSION COST
  $
1,057,650
    $
3,664,500
 

If 75% of the stock offered is sold, there would be enough funds for 3 new Landis, LLC locations and 7 new Black Chandelier retail stores. If 50% of the stock offered is sold, there would be enough funds for 1 new Landis, LLC location and 3 new Black Chandelier retail store. If 25% of the stock offered is sold, new sources of funding will have to be found for the expansion of retail operations.

Plans have been made to improve the vacant spaces and ready them for more aggressive marketing.  These plans would include paving and striping for parking of the vacant lot adjacent to the property on State Street.  The two upper floors of the Bennett Building would be renovated to make the area rentable for light manufacturing and storage.  The total cost for these actions is estimated to be $150,000 and plans are to complete this work during 2007.

DETERMINATION OF OFFERING PRICE

The shares of Nexia common stock are being offered for sale by the selling stockholder at prices established on the OTC Bulletin Board or in negotiated transactions during the term of this offering. These prices will fluctuate based on the demand for the shares.

DILUTION

“Dilution” represents the difference between the offering price and the net tangible book value per share immediately after completing this offering. “Net tangible book value” is the amount that results from subtracting total liabilities and intangible assets from total assets. Dilution arises mainly because we have arbitrarily determined the offering price for the shares offered in this prospectus. Dilution may occur in the event of reductions in the book value of shares held by our existing stockholders.
 

These calculations are assumptions based upon an estimate of prices and sales that may never be realized. Actual prices to be paid by Dutchess to the Company will not be determined until the time of sale. All of the following information is premised upon those assumptions and estimated prices. Actual results may vary materially from those presented in the following information as a result of the sale and transfer of the shares registered hereunder.

As of June 21, 2007, the net tangible book value of our shares of common stock was ($2,559,554), or approximately ($0.0013) per share, based on 2,018,995,086 shares outstanding.

Upon completion of this offering, if 100% of the offered shares are sold (26,400,000,000), the net tangible book value of the 28,418,995,086 shares to be outstanding will be $7,440,446 or approximately $0.0003 per share. The net tangible book value of the shares held by our existing stockholders will change.  You will experience an immediate increase of $0.0016 in the net tangible book value per share of common stock.

Upon completion of this offering, if 75% of the offered shares are sold (19,800,000,000), the net tangible book value of the 21,818,995,086 shares to be outstanding will be $4,940,446 or approximately $0.0002 per share. The net tangible book value of the shares held by our existing stockholders will be increased by $0.0015 per share without any additional investment on their part.  You will incur an immediate increase of $0.0015 per share.

Upon completion of this offering, if 50% of the offered shares are sold (13,200,000,000), the net tangible book value of the 15,218,995,086 shares to be outstanding will be $2,440,446 or approximately $0.0002 per share. The net tangible book value of the shares held by our existing stockholders will be increased by $0.0015 per share without any additional investment on their part.  You will incur an immediate increase of $0.0015 per share.

Upon completion of this offering, if 25% of the offered shares are sold (6,600,000,000), the net tangible book value of the 8,618,995,086 shares to be outstanding will be ($59,554) or approximately ($0.0000) per share. The net tangible book value of the shares held by our existing stockholders will be increased by $0.0013 per share without any additional investment on their part.  You will incur an immediate increase of $0.0013 per share.

Upon completion of this offering, if 5% of the offered shares are sold (1,320,000,000), the net tangible book value of the 3,338,995,086 shares to be outstanding will be ($2,059,554) or approximately ($0.0006) per share. The net tangible book value of the shares held by our existing stockholders will be decreased by ($0.0007) per share without any additional investment on their part.  You will incur an immediate idecrease of ($0.0007) per share.

The following table compares the number shares outstanding before and after the offering and the number of shares held by our existing stockholders.
 
 
NUMBER OF SHARES ISSUED AND OUTSTANDING
 
 
 
 
 
26,400,000,000
19,800,000,000
13,200,000,000
6,600,000,000
1,320,000,000
           
Description
100%
75%
50%
25%
5%
 
 
 
 
 
 
Number of common shares outstanding before public offering
 
 
 
 
 
2,018,995,086
2,018,995,086
2,018,995,086
2,018,995,086
2,018,995,086
 
 
 
 
 
 
Number of shares in public offering
 26,400,000,000
19,800,000,000
  13,200,000,000
    6,600,000,000
    1,320,000,000
 
 
 
 
 
 
Total number of shares outstanding after public offering
 
 
 
 
 
28,418,995,086
21,818,995,086
15,218,995,086
8,618,995,086
3,338,995,086
Shares held by affiliates after public offering
 
 
 
 
 
(209,934,746)
(209,934,746)
(209,934,746)
(209,934,746)
(209,934,746)
Number of shares, after public offering, held by public investors
 
       
28,209,060,340
21,609,060,340
15,009,060,340
8,409,060,340
3,129,060,340
 
 
 
 
 
 
Percentage of public ownership after public offering
99.26%
99.04%
98.62%
97.56%
93.71%
 
 
EXISTING STOCKHOLDERS:
 
 
 
 
 
 
 
Price per share
 
$
0.0004
 
Net tangible book value per share before offering
 
$
(0.0013
Net tangible book value per share after offering, assuming
 
 
 
 
all shares are sold
 
$
0.0003
 
Net increase in tangible book value to existing stockholders after offering, assuming all shares are sold
 
0.0016
 
 
 
     
Number of shares outstanding before the offering
 
 
2,018,995,086
 
Number of shares after offering held by existing stockholders
 
 
2,018,995,086
 
Percentage of ownership after offering
 
 
7.10
%
 
 
       
Decrease in net tangible
   
 
       
 
 
Price
per
   
Book value
   
Capital
   
Held by
public
 
 
 
share
   
per share
   
contributions
   
investors
 
PURCHASERS OF SHARES IN THIS OFFERING:
 
 
   
 
   
 
   
 
 
 
 
 
   
 
   
 
   
 
 
Purchasers of shares in this offering if all shares sold
  $
0.0004
    $
0.0001
    $
10,000,000
     
28,209,060,340
 
 
                               
Purchasers of shares in this offering if 75% of shares sold
  $
0.0004
    $
0.0002
    $
7,500,000
     
21,609,060,340
 
 
                               
Purchasers of shares in this offering  if 50% of shares sold
  $
0.0004
    $
0.0002
    $
5,000,000
     
15,009,060,340
 
 
                               
Purchasers of shares in this offering if 25% of shares sold
  $
0.0004
    $
0.0004
    $
2,500,000
     
8,409,060,340
 
 
                               
Purchasers of shares in this offering if 5% of shares sold
  $
0.0004
    $
0.0010
    $
500,000
     
3,129,060,340
 
 
PLAN OF DISTRIBUTION

The Selling Shareholder has told us they intend to sell the common stock covered by this prospectus from time to time in the OTC Bulletin Board market or in any other market where our shares of common stock are quoted.  The Selling Shareholder, or brokers, dealers or agents that participate in the distribution of the common stock, will be deemed to be underwriters, and any discounts on the sale of common stock by them and any discounts, concessions, or commissions they receive will be deemed to be underwriter discounts and commissions under the Securities Act.

Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. We will inform the Selling Shareholder that any underwriters, brokers, dealers or agents effecting transactions on behalf of the selling shareholder must be registered to sell securities in all 50 states. In addition, in some states the shares of common stock may not be sold unless the shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and there is compliance with those exemptions.
 

Nexia will pay all the expenses of the registration, offering, and sale of the shares of common stock to the public under this prospectus other than commissions, fees, and discounts of underwriters, brokers, dealers or agents. We have agreed to indemnify the Selling Shareholder and their controlling persons against certain liabilities, including liabilities under the Securities Act. We estimate the expenses of the offering, to be borne by Nexia, will be approximately $100,000. We will not receive any proceeds from the sale of the shares of common stock by the Selling Shareholder. We will, however, receive proceeds from the sale of common stock to Dutchess pursuant to the Investment Agreement.

The Selling Shareholder should be aware that the anti-manipulation provisions of Regulation M under the Exchange Act will affect purchases and sales of common stock by the selling shareholder and that there are restrictions on market-making activities by persons engaged in the distribution of the shares. Under Regulation M, the Selling Shareholder or its agents may not bid for or purchase, or attempt to induce any person to bid for or purchase, shares of our common stock while they are distributing shares covered by this prospectus. Accordingly, except as noted below, the selling shareholder is not permitted to cover short sales or purchasing shares while the distribution is taking place. We will advise the Selling Shareholder that if a particular offer of common stock is to be made on terms materially different from the information set forth in the above Plan of Distribution, that a post-effective amendment to the accompanying registration statement must be filed with the Securities and Exchange Commission.
 
Dutchess Private Equities Fund, L.P.

On August 15, 2005, the Company executed the Investment Agreement with Dutchess Private Equities Fund, L.P., (“Dutchess” or the “Selling Shareholder”) a Delaware limited partnership with its principal office located at 50 Commonwealth Avenue, Suite 2, Boston, Massachusetts 02116. The Company reported the execution of this agreement on Form 8-K.

The Investment Agreement provides for Dutchess to extend to the Company up to $10,000,000 in equity financing. The term of the financing extends for up to a three year period, during which the Company can receive funds through the sale of its common stock to Dutchess. The purchase price of the shares is stipulated to be at 95% of the lowest closing bid price for the five trading days after a request is received by Dutchess from the Company.

The financing will only become available to the Company after the filing and subsequent effectiveness of this SB-2 Registration Statement.

LEGAL PROCEEDINGS

The following civil actions may have a material impact on Nexia:

Nexia Holdings, Inc., a Nevada Corporation vs. Richard Bailey, Individually and Creative Marketing Group, Inc., a Nevada Corporation.  This action was filed on September 28, 2004, in the Third Judicial District Court of Salt Lake County, State of Utah, Civil Case No. 040920424.  Nexia filed this cause of action to recover its damages that resulted from the failure of the named defendants to perform the terms and conditions of a Stock Purchase Agreement and Plan of Reorganization signed on or about November 10, 2003.  This agreement provided for Nexia to acquire a controlling interest in the defendant corporation which the Defendants have subsequently failed and refused to perform, despite Nexia having tendered full performance on its part.  Both defendants were served with process in the case and failed to make an appearance before the Court; entry of default against each defendant has been signed by the court.  A judgment in the sum of $88,036, attorney’s fees of $13,205, plus interest and cost of suit has been granted to the Company.  Both named defendants have filed Chapter 7 bankruptcy cases in Nevada and no recovery from the judgment is expected as no recoverable assets are reported in either party’s case.
 
 
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS & CONTROL PERSONS

The following persons are officers and directors of Nexia as of the date of this prospectus:

Name
Age
Position(s) and Office(s)
 
 
 
Richard Surber
34
President and Director
Gerald Einhorn
67
Vice President, Secretary and Director
Adrienne Bernstein
62
Director
 
Richard D. Surber, 34, graduated from the University of Utah with a Bachelor of Science degree in Finance and then with a Juris Doctorate with an emphasis in corporate law, including securities, taxation and bankruptcy.  He has served as President and Director of the Company since May of 1999.  He also served as an officer and director of the Company's former parent corporation, Axia Group, Inc. (president and director from 1992 until control transferred in 2004).  He has been an officer and director of several public companies, including:  Golden Opportunity Development Corporation ("GODC"), a majority owned subsidiary of Nexia until December 31, 2004, (president and director from September 1999 to December 19, 2001).  GODC's operations (until January 4, 2002) consisted of operating a 134 room motel in Baton Rouge, Louisiana.

Mr. Surber is licensed to practice law in the State of California and occasionally represents corporate clients on various corporate matters and to which he occasionally devotes a significant amount of time.  Mr. Surber has disclosed the fact that he, on occasion, does act as counsel to several companies for which he receives fees for the legal or consulting services provided.

In 2004, the SEC instituted administrative proceedings to de-register fourteen shell companies affiliated directly or indirectly with Mr. Surber over the last six years.  Four of these companies were majority owned affiliates of Nexia.  All of the companies de-registered by the SEC were inactive shell companies.  Mr. Surber was not named as a respondent in any of those SEC proceedings.

Gerald Einhorn, 67, was appointed to the board in June of 2002 as a Director, Vice-President and Secretary of Nexia. He was employed by Hudson Consulting Group, Inc. (formerly a subsidiary of Nexia) in its legal department from February 1996 to November 2003 as an attorney working in the areas of real estate, corporate and securities matters. Prior to that time, Mr. Einhorn was self employed for more than 20 years in Long Island, New York as a wholesale distributor of fresh produce and frozen foods to retail and institutional end users. He is a member of the New York Bar and practiced in New York State for a period of 10 years before entering the food distribution business.

Adrienne Bernstein, 62, was appointed to the Board of Directors in June 2002. Ms. Bernstein had previously been a director of Axia Group, Inc. from 1999 through 2001. From 1988 to 1994, Ms. Bernstein was the Assistant Director of Human Resources for the Love Stores, a chain of retail health and beauty stores. In this capacity, Ms. Bernstein was responsible for hiring and training all employees and for preparing management and employee seminars. Prior to her position with the Love Stores, Ms. Bernstein served as a Vice President for Leucadia National Corporation, a NYSE traded company specializing in finance, insurance and manufacturing. In this capacity, Ms. Bernstein's primary emphasis involved real estate management and sales activities.

Directors are appointed for terms that expire upon a shareholders meeting being held at which an election of directors is held.

No other person is expected to make a significant contribution to Nexia who is not identified in this prospectus as an executive officer or director of Nexia.

All executive officers are appointed by the board and hold office until the board appoints their successors or they resign.
 
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information concerning the ownership of the Company's common stock as of June 21, 2007, with respect to: (i) each person known to the Company to be the beneficial owner of more than five percent of the Company's common stock; (ii) all directors; and (iii) directors and executive officers of the Company as a group. The notes accompanying the information in the table below are necessary for a complete understanding of the figures provided below. As of June 21, 2007, there were 2,018,995,086 shares of common stock issued and outstanding. All numbers reflect a 1 for 10 reverse split of the common stock that was effective as of February 20, 2007.

TITLE OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER
AMOUNT &NATURE
OF BENEFICIAL OWNERSHIP
 
PERCENT OF CLASS
       
 
Preferred Series
"B" Stock
($0.001par value)
 
 
Richard Surber, President & Director
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
 
 
10,000,000 (3)
 
 
100%
 
Preferred Series “A” Stock ($0.001 par value)
Richard Surber, President & Director
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
145,000(4)
96.67%
 Common Stock
($0.0001 par
value)
 
Richard Surber, President & Director
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
 
 9,931,194 Direct
200,001,256 Indirect(1)
 
 
10.40%
 
Common Stock
($0.0001 par
value)
 
Gerald Einhorn, VP & Director
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
 
 
1,000
 
 
>0.001%
 
Common Stock
($0.0001 par
value)
 
Adrienne Bernstein, Director
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
 
 
1,296
 
 
>0.001%
 
Common Stock
($0.0001 par
value)
 
Oasis International Hotel & Casino, Inc.
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
 
 
266(2)
 
 
>0.001%
 
Common Stock
($0.0001 par
value)
 
Diversified Holdings I, Inc.
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
 
 
991(2)
 
 
>0.001%
 
Common Stock
($0.0001) par Value
Directors and Executive Officers as a Group
 
 
209,934,746
 
 
10.40%
 
(1)
The shares owned by Diversified Holdings I, Inc., Diversified Holdings X, Inc. and Oasis International Hotel & Casino, Inc., are attributed beneficially to Richard D. Surber due to his position as an officer and director in each of the said corporations.
(2)
Richard Surber may be deemed a beneficial owner of 1,256 shares of the Company's common stock by virtue of his position as an officer and director of Diversified Holdings I, Inc. (991 shares), Diversified Holdings X, Inc. (200,000,000 shares) and Oasis International Hotel & Casino, Inc. (266 shares). Mr. Surber personally owns 2,009,194 shares of common stock.
(3)
Series "B" preferred stock has voting rights of 500 to 1 of the common stock, these shares give Mr. Surber 5,000,000,000 votes in any shareholder vote and his personal vote of these shares may not always be exercised in the best interest of the balance of the common stock shareholders.
(4)
Series “A” preferred stock has voting rights of 100 to 1 of the common stock, these shares give Mr. Surber 14,500,000 votes in any shareholder votes and his personal vote of these shares may not always be exercised in the best interest of the balance of the common stock shareholders.

If all shares proposed to be registered are sold to Dutchess and it retains those shares it will hold 26.4 billion shares out of a total of 28,418,995,086 issued and outstanding or 92.90% of the common stock or 79.00% of all voting rights issued and outstanding, including the voting rights of preferred stock holders as set forth above.
 
 
DESCRIPTION OF SECURITIES
Common Stock

As of June 21, 2007, the number of issued and outstanding shares of the Company's common stock was 2,018,995,086. The number of common stock shares authorized is 50,000,000,000. The common stock holds voting rights of one vote per share; it has neither dividend nor preemptive rights. The Company filed an amendment to its articles of incorporation that as of September 18, 2006 increased the number of shares of authorized common stock to 50,000,000,000 from 10,000,000,000 and changed the stated par value of each share to $0.0001.

Effective as of November 1, 2004, pursuant to shareholder consent, a reverse split of the Company's common stock was carried out on a 1 for 1,000 basis which is reflected by the current number of shares issued and outstanding.

Effective as of February 20, 2007, pursuant to shareholder consent, a reverse split of the Company’s common stock was carried out on a 1 for 10 basis which is reflected throughout this document as to the number of shares issued and outstanding.

Shareholders: As of June 21, 2007, there were approximately 816 shareholders of record.

Dividends: The Company has not declared a cash dividend during fiscal years ending 2004, 2005 or 2006.

In August of 2006, the Company announced the approval of the board of directors and of a majority of the voting rights of the shareholders to increase the number of authorized shares of the Company’s common stock from 10 billion up to 50 billion. Notice of the approved proposal was mailed to shareholders of record on August 28, 2006. Final action to carry out these changes was filed with the Nevada Secretary of State’s office on the 18th of September, 2006.

Preferred Stock

The Company has 50,000,000 authorized shares of convertible preferred stock, portions of which are designated as Classes A, B, and C.

As of September 8, 2006, the number of shares of Series A Convertible Preferred Stock issued and outstanding is 150,000. Richard Surber holds a total of 145,000 shares of Series A and Seth Bullough holds the other 5,000 shares of series A. Each named individual received the shares of Series A stock in exchange for the transfer of assets or stock to Diversified Holdings I, Inc. The Series A Convertible Preferred Shares have voting rights which equate to 100 shares of common stock for every 1 Series A Preferred share and may be converted into $10 worth of common stock. A total of 10,000,000 shares have been designated and authorized as Series A Preferred Shares of a total number of 50,000,000 authorized shares of preferred stock.

On August 25, 2004, the Company filed with the Nevada Secretary of State a Certificate of Designation of the Rights and Preferences of Preferred Stock of Nexia Holdings, Inc. This designation created 10,000,000 shares, par value $0.001, of Series B Convertible Preferred Stock, out of the 50,000,000 authorized shares of preferred stock of the Company. The Series B Preferred Stock holds voting rights equal to 500 shares of common stock for each share of the Series B Preferred Stock issued. The shares do not have any conversion rights into common stock or any other class of stock of the Company. The Company reported this event on Form 8-K filed on August 31, 2004.

On September 28, 2004 the Company authorized the issuance of 8,000,000 shares of Series B Convertible Preferred Stock to the president of the Company, Richard Surber. The shares were issued as compensation for both his service as president of the Company and for acting as a guarantor on real estate mortgages for subsidiaries of the Company. The shares were issued in a private transfer exempt from registration under section 4(2) of the Securities Act of 1933. This issuance was reported on a Form 8-K filing made on September 28, 2004. The Series B Preferred shares are given the same voting rights as Common Shares on a five hundred-for-one (500 to 1) basis. The 8,000,000 shares held by Mr. Surber give him voting right equal to 4,000,000,000 shares of common stock. 
 
 
On November 8, 2004, the Company filed with the Nevada Secretary of State a Certificate of Designation of the Rights and Preferences of Preferred Stock of Nexia Holdings, Inc. designated as Series C Preferred Stock. The designation of 5,000,000 shares of the 50,000,000 authorized as Series C Preferred Stock provides that the Series C shares will hold conversion rights into shares of the common stock of the Company equal in value to $5.00 per share and are subject to redemption by the Company upon a $5.00 cash payment. The Series C Preferred Shares hold no voting rights. The Company reported this event on Form 8-K filed on November 10, 2004.

On November 10, 2004 an agreement was entered into with Joseph Corso, Jr. to sell him 100,000 shares of its Series C Preferred Stock in exchange for a cash payment of $50,000. These shares had not been registered for sale and the exchange was handled as a private sale exempt from registration under section 4(2) of the Securities Act of 1933. The Company reported this exchange on Form 8-K filed on November 12, 2004.

On July 18, 2006, the Company’s subsidiary Diversified Holdings I, Inc. (“DHI”) executed an agreement with Richard Surber to acquire Mr. Surber’s 60% ownership interest in Landis, LLC, a Utah limited liability company. In exchange for his 60% ownership interest in Landis, LLC, Mr. Surber received the following compensation, (1) a promissory note in the amount of $250,000, bearing interest at the rate of 24% per annum, payments are due in five annual payments of principal and interest, (2) 75,000 shares of Nexia’s Class A Preferred stock, and (3) 2,000,000 shares of Nexia’s Class B Preferred stock.

On July 13, 2006, DHI signed an agreement with Seth Bullough to acquire his 5% ownership interest in Landis, LLC. In exchange for the transfer of that interest, the Company agreed to delivery to Mr. Bullough 5,000 shares of its Series A Preferred Stock.

On August 15, 2006, Gold Fusion Laboratories, Inc., a wholly owned subsidiary of the Company, signed an Asset Purchase Agreement with Richard Surber to acquire ownership of the assets, inventory and receivables of the fashion operations of Diversified Holdings X, Inc., a corporation owned by Mr. Surber, which owned and operated the Black Chandelier and related clothing operations. The consideration for this transaction was a promissory note in the amount of $300,000, bearing interest at the rate of 24% per annum, with payment due in five annual installments and 70,000 shares of Nexia’s Class A Preferred stock.

On September 21, 2006, the Company authorized the issuance of 7,500 shares of Nexia’s Series C Preferred Stock to John E. Fry, Jr. in exchange for service provided to Gold Fusion Laboratories, Inc. and the potential expansion and development of the business plans for Black Chandelier and its retail outlets. Series C Preferred Stock provides that the Series C shares will hold conversion rights into shares of the common stock of the Company equal in value to $5.00 per share and are subject to redemption by the Company upon a $5.00 cash payment. The Series C Preferred Shares hold no voting rights.

On June 1, 2007, the Company entered into a contract to deliver 240,000 shares of Nexia’s Series C Preferred Stock to NFC Escrow Holdings or its designee, in exchange for a thirty month contract to provide services to the Company including but not limited to development, implementation and maintenance of an investor awareness campaign on a national level, including press release distribution, mailings and assistance with developing a website presence.

Dividends: The Company has not declared a cash dividend for the Series A Convertible Preferred Stock during the fiscal years ended December 31, 2003, 2004 or 2005. 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: 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 designation of the Series C Preferred Stock provides that the Series C shares will hold conversion rights into shares of the common stock of the Company equal in value to $5.00 per share and are subject to redemption by the Company upon a $5.00 cash payment. The Series B Preferred Stock have no right to conversion into shares of common stock.

At the current market price of $0.0004 per share on June 21, 2007, one share of Series A Preferred Stock would convert into 25,000 shares of common stock and one share of Series C Preferred Stock would convert into 12,500 shares of common stock.
 
 
INTEREST OF NAMED EXPERTS AND COUNSEL

No "Expert" or "Counsel" (as defined by Item 509 of Regulation S-B promulgated pursuant to the Securities Act of 1933) whose services were used in the preparation of this Form SB-2 was hired on a contingent basis or will receive a direct or indirect interest in Nexia.

Legal Matters

The validity of the shares of common stock offered hereby have been passed upon for Nexia by Mr. Russell C. Weigel, III, an attorney admitted in the District of Columbia, and the States of Florida and New York.
 
Experts

On December 1, 2005, HJ & Associates, L.L.C. (the “Former Accountant”) resigned as the auditors for the Company.

On January 26, 2006, De Joya Griffith & Company of 2580 Anthem Village Drive, Henderson, Nevada 89052 was retained as the auditors for the Company. The financial statements of Nexia as of December 31, 2005 and 2006 were audited by De Joya Griffith & Company, as stated in their report dated, March 21, 2007, as appearing herein in their report dated, June 1, 2007.  On May 21, 2007 De Joya Griffith & Company resigned as the auditors for the Company.

Refer to the “CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES” section, on page II-1, for further discussion.


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company has entered into the following related party transactions:

Richard Surber has at various times been appointed to serve as an officer or director for former clients of Nexia. These appointments have been disclosed to the disinterested members of the board, and the approval of the board of directors has been granted in each of these cases. As payment for services provided to these corporations, Surber has received securities of those corporations, and these transactions have been disclosed to the board of directors in each case.
 
Mr. Surber is licensed to practice law in the State of California and occasionally represents corporate clients on various corporate matters. Mr. Surber has disclosed the fact that he, on occasion, does act as counsel to several companies for which he receives fees for the legal services provided.

The end result of the agreements was to resolve and settle all claims against Axia Group, Inc. held by the named entities, all subsidiaries of Nexia Holdings, Inc. Richard Surber, President of the Company, was formerly an officer and director of Axia Group, Inc. The purpose of the above described transaction was to settle the various claims and resolve the debts and obligations that existed between Axia and the Company and its subsidiaries.

On September 28, 2004 the Company authorized the issuance of 8,000,000 shares of Series B Convertible Preferred Stock to the president of the Company, Richard Surber. The shares were issued as compensation for both his service as president of the Company and for acting as a guarantor on real estate mortgages for subsidiaries of the Company. The shares were issued in a private transfer exempt from registration under Section 4(2) of the Securities Act of 1933. This issuance was reported on a Form 8-K filing made on September 28, 2004. The shares were valued at $8,000.

On November 2, 2005, the Company’s subsidiary, Diversified Holdings I, Inc. invested $100,000 in Landis, LLC in exchange for a 20% interest in the LLC. Landis, LLC has opened an upscale hair salon located at the corner of 900 East and 1300 South in Salt Lake City, Utah. Richard Surber, president and director of the company held a 60% ownership interest in Landis, LLC at that time.
 

On July 13, 2006, the Company approved, and its subsidiary Diversified Holdings I, Inc. (“DHI”) executed an agreement with Richard Surber to acquire Mr. Surber’s 60% ownership interest in Landis, LLC, a Utah limited liability company. Richard Surber is the president of the Company and was the proposing party for the transaction. The independent directors of the Company both approved of the deal and an independent valuation of Landis, LLC has been received by the Company that supports the value paid to Mr. Surber for his interest. In exchange for his 60% ownership interest in Landis, LLC Mr. Surber will receive the following compensation, (1) a promissory note in the amount of $250,000, bearing interest at the rate of 24% per annum, payments are due in five annual payments of principal and interest, (2) 75,000 shares of Nexia’s Class A Preferred stock and (3) 2,000,000 shares of Nexia’s Class B Preferred stock.

Landis, LLC is the operator of the Landis Lifestyle Salon located at the corner of 13th East and 900 South in Salt Lake City, Utah. This salon features the Aveda™ line of products. Due to the Company’s prior existing ownership interest in Landis, LLC and Mr. Surber’s position as the managing member of the LLC, the Company previously reported financial results included the operations of Landis, LLC on a consolidated basis, and those results will continue to be consolidated in the Company’s financial reports as a result of this acquisition. The assets and inventory interests acquired by DHI have been consolidated into Nexia’s balance sheet as of the date of closing and valued in accordance with the independent valuation that was performed.

On August 15, 2006, Gold Fusion Laboratories, Inc., a wholly owned subsidiary of the Company, signed an Asset Purchase Agreement with Richard Surber to acquire ownership of the assets, inventory and receivables of the fashion operations of Diversified Holdings X, Inc., a corporation owned by Mr. Surber that owned and operated the Black Chandelier and related clothing operations. The consideration for this transaction was a promissory note in the amount of $300,000, bearing interest at the rate of 24% per annum, payments are due in five annual installment and 70,000 shares of Nexia’s Class A Preferred stock. On September 18, 2006 an addendum to this agreement was approved by the parties that provided for the issuance of 200,000,000(post reverse split 2-20-2007) shares of the Company’s restricted common stock be issued to Diversified Holdings X, Inc. as compensation for the transfers made to Gold Fusion Laboratories.

On October 5, 2006, the Company gave a promissory note to Michael Clark in the amount of $250,000 in exchange for a loan to the company in that same amount, the note carries a due date of February 15, 2007 and an interest rate of 20% per annum until paid in full.  Before the due date an agreement to extend the due date for a period of 90 days (May 17, 2007) was reached in exchange for the payment of the then due interest on the note.  The note is secured by $500,000 of the Series C Preferred Stock of Nexia.  The note also carries a right of conversion into either the common or Series C Preferred stock at the option of the Holder of the note.

Between the dates of October 5, 2006 and November 22, 2006, the Company entered into three promissory notes with its president Richard Surber with the following terms:  October 5, 2006, $20,000, due on January 5, 2007, interest rate of 20% per annum;  November 7, 2006, $31,025, due on January 25, 2007, interest rate of 20% per annum; and November 22, 2006, $20,000, due on March 22, 2007, interest rate of 20% per annum.  Each of the notes was given in exchange for a loan to the Company in the amount of the stated principal.  Each of the notes was approved by the full board of directors.  The due dates of each of the notes were extended to September 30, 2007 in an extension agreement executed February 23, 2007.

The Company issued three notes to Mr. Surber on the following terms, January 17, 2007 in the amount of $20,500, due on May 22, 2007, interest rate of 20% per annum, another note on January 17, 2007 in the amount of $15,000, due on March 31, 2007, interest rate of 20% per annum and on January 25, 2007 a note in the amount of $20,000, due on January 28, 2008, interest rate of 20% per annum.  Each of the notes was approved by the full board of directors.  Before March 31, 2007, the $15,000 note to Mr. Surber had been repaid in full.

On February 23, 2007, an agreement was signed to extend the due dates of four notes held by Mr. Surber, the October 5, November 7, and November 22 of 2006 and the January 17, 2007 note.  Each of the four notes had its due date extended to September 30, 2007 by mutual agreement of the Company and Mr. Surber.

During the first quarter of 2007, Mr. Surber advanced the Company $65,500 to help cover operating expenses.  This was carried as a payable to Mr. Surber. As of March 31, 2007, the Company had repaid Mr. Surber $20,000 of the total amount mentioned above.
 
 
DESCRIPTION OF BUSINESS

This prospectus contains forward-looking statements which involve risks and uncertainties, including trends in the real estate investment market, projected leasing and sales and future prospects. Actual results could differ materially from those discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in "Risk Factors."

General

Our business plan for the next twelve months involves the continued operation of our office buildings in Salt Lake City, Utah coupled with our ongoing attempts to locate and acquire additional commercial space in the greater Salt Lake area and elsewhere and to locate suitable buyers for the properties as the circumstances may permit. We recently acquired 85% of Landis, LLC and have plans to open two more locations over the next 12 months. We also operate four Black Chandelier stores and have plans to open at least three more in the Western United States by July 1, 2008. We anticipate opening an additional six locations over the next 18 to 24 months.
 
Gold Fusion Laboratories

In August of 2006, Gold Fusion Laboratories, Inc., a 100% owned subsidiary of the Company signed an asset purchase agreement with Diversified Holdings X, Inc. to acquire the rights, assets, inventories and receivables of the Black Chandelier clothing lines. Diversified Holdings X, Inc. is controlled by Richard Surber and is deemed an affiliate of Nexia currently. Included in Gold Fusion Laboratories operations are the four retail outlets operated under the Black Chandelier label, in Trolley Square and Gateway shopping centers located in Salt Lake City, as well as the on line shopping site, www.blackchandelier.com.

Black Chandelier designs, produces and manufactures a majority of all items sold in its stores that are sold under the trademarks, Black Chandelier, Jared Gold, Olfactory Surrealism and Pink Chandelier. The stores also carry merchandise from Kill City Jeans, Le Sportsac, Taschen books, Lomography Cameras, 7 Diamonds, Seychelle Shoes, and Tokidoki Italy.

The first Black Chandelier retail location has been in operation for over three years at the Trolley Square location. Jared Gold designed a pilot store to be used as a model for the opening of additional stores; this newly designed Black Chandelier is located in the Gateway Shopping Center in downtown Salt Lake City. A virtual tour of this store can be viewed at http://www.blackchandelier.com/Gateway.html.

For the year 2006, Black Chandelier had gross revenues of $634,000, including the period before the Black Chandelier operations were acquired by Gold Fusion.  Reported revenues for the three months ended March 31, 2007 were $268,000.  The Company has announced plans to explore the potential for opening additional stores in the US and abroad over the next 3 to 5 years.

Black Chandelier is a lifestyle company that produces clothing, candles and active wear. The mission of Black Chandelier is to offer products designed with deliberateness and wild inspiration that indulge an individual’s innate drive to be unique. The overarching concept is to provide the consumer with an affordable alternative to ‘mass-market” offerings by extending a product that conveys a sense of eccentricity that stands apart in quality, style and price, from most of the homogenous fare being offered consumers by the mainstream apparel market. The clothing items are produced in small runs keeping merchandise offered in the stores fresh.

Black Chandelier stands in a unique position to establish a niche market among its customers. The clothing, accessories and other products are designed with an edgy sophistication that allows customers to fulfill their need to express their uniqueness. The consumer base of Black Chandelier has a very large age range. Female shoppers vary in age from 15 to 65. The income ranges vastly among this large age spread, however the average is $37,000. This typical consumer is fashion conscious and follows current trends and subscribes to or reads several fashion oriented women’s magazines. The expanding men’s division has garnered a large fan base in the age group from 15 to 35. These consumers read weekly entertainment guides and local underground publications and fanzines.
 

The operations of Black Chandelier are subject to normal government regulation at the federal, state and local level. Black Chandelier must comply with governmental regulation regarding employment, wages, access for handicapped and disabled persons and other laws, rules, regulations and ordinances. Although there are no anticipated changes in existing local, state or federal regulations, if changes should occur, Black Chandelier operations would adapt to such new regulations without any significant effect on revenues or operations. However, no assurances can be made that compliance or failure to comply with future regulations will not have a materially adverse effect on the business, operating results or financial situation of Black Chandelier.
 
The Company believes that local competition for the Black Chandelier retail is Lollabella and JMR. This assumption is based on their marketing and customer demographics. Nationally Black Chandelier will face Diesel, Urban Outfitters and Anthropologie. These specialty retailers manufacture their own goods as well as sell third party product, are nationally marketed, and maintain company operated boutiques in most major cities. Black Chandelier’s edge over its competition is its sales of exclusive product in a market that is presently saturated with larger brands. Ancillary items are purchased from other vendors in small amounts and with studied curation, in order to keep merchandise on the cutting edge. Although the apparel industry is mature and slow growing, it exists in a dynamic and competitive environment. The apparel industry is extremely competitive and highly fragmented. The power of the big retailers is a major challenge to any new designer and manufacturer; however, specialized product with limited distribution can create a unique identity among retailers.

Landis Salon

Nexia currently owns 85% of Landis, LLC (“Landis”). In November 2005, the Company acquired a 20% equity interest in Landis for a $100,000 cash payment. Landis operates an AvedaTM lifestyle salon that features AvedaTM products for retail sale. Landis is controlled by Nexia’s Chief Executive Officer. Nexia has consolidated Landis for accounting purposes as of June 30, 2006, because of its ownership interest and common control with our president. Nexia, subsequent to the end of the second quarter, signed an agreement to acquire Mr. Surber’s 60% ownership interest in Landis. As consideration for that acquisition Nexia and Diversified Holdings I, Inc. delivered to Mr. Surber (1) a promissory note in the amount of $250,000, bearing interest at the rate of 24% per annum, due in five annual payments, (2) issuance of 75,000 shares of Nexia’s Class A Preferred Stock and (3) issuance of 2,000,000 shares of Nexia’s Class B Preferred Stock. A 5% interest was acquired from Seth Bullough in exchange for the issuance by Nexia of 5,000 shares of Class A Preferred Stock. Landis Salon has a single location in Salt Lake City, Utah and reported revenue of $424,863 during the three months ended March 31, 2007. Additional information on the Landis Salon can be found on its website at www.landissalon.com.

Landis intends to limit the services offered in its salons to hair and makeup only. The current salon consists of three major components, an Aveda ™ retail store, an advanced hair salon and a training academy (for the training of future staff about the culture, services and products provided by Landis). Pricing of hair services will reflect the experience level of the stylists with the training academy ranging from $16 to $25 and the advanced hair salon from $30 to $75. The design of the studio is intended to look clean, comfortable and modern, appealing to both genders and all age groups.

The target market for Landis is 70% female and 30% male, seeking customers with high expectations at a reasonable cost. The average customer is expected to visit the salon 7-9 times a year, spending an average of $47 on services and purchasing $15 of retail Aveda™ product with each visit. The current location was selected for its central location to the Salt Lake market area, the high income demographics available within easy driving distance and the trendy, upwardly mobile nature of the area. The primary marketing efforts of Landis will be word of mouth, supplemented by carefully selected advertising campaigns and seeking referrals from the existing customer base.
 
The operations of Landis are subject to normal government regulation at the federal, state and local level. Landis must comply with governmental regulation regarding employment, wages, access for handicapped and disabled persons and other laws, rules, regulations and ordinances. Although there
 
are no anticipated changes in existing local, state or federal regulations, if changes should occur, Landis Salon operations would adapt to such new regulations without any significant effect on revenues or operations. However, no assurances can be made that compliance or failure to comply with future regulations will not have a materially adverse effect on the business, operating results or financial situation of Landis.
 
Primary competition will come from salons offering above-and-beyond customer service in the Salt Lake Area market. Currently identified as offering this level of competition are salons named, Lunatic Fringe, Salon Zazou and Salon RZ. Landis will also be in competition with large scale hair cutting operations such as Great Clips, Supercuts, and Fantastic Sams, though these operations do not compete in offering the extra services and products that Landis offers.
 

Overview of the Salt Lake City Real Estate Market

Trends in the current Salt Lake City real estate market are favorable in some respects to the Company’s real estate holdings. In general, these trends are as follows: the significant growth of retail sales in the city; increased interest in Salt Lake from specialty retailers; relatively low vacancy rates for retail space in the area; estimated slowdowns in the rate of new retail space construction; and Utah economic indicators pointing to above-average retail sales.

For purposes of the following discussion Class A office space is defined as a building that has excellent location and access, attracts high quality tenants and are managed professionally. Rents are competitive with other new buildings. Class B buildings have good locations, management, and construction and tenant standards are high. Buildings have very little functional obsolescence and deterioration. Class C buildings are typically 15 to 25 years old but are maintaining steady occupancy and demand lower rent than Class B buildings.

Significant Growth. According to the Year-End 2006 Market Review of Commerce CRG published by national real estate broker Cushman & Wakefield, the Salt Lake City office market Amore than 1.45 million square feet of office space were absorbed in the Salt Lake valley in 2005. This change represents greater absorption numbers than in the last three years combined.” The overall vacancy rate was 10.28% in 2006, a 0.53% drop from 2005 figures and a drop of 4.97% from 2004 figures. The closing of a major office center in the central business district has reduced available space and could provide additional impetus for the construction of new projects. Salt Lake City has, during the recent past, attracted new attention from national tenants seeking space in the area.

These reported trends have not, however, lead to significant increased occupancy in Class C office buildings or retail space which would cover the holdings of Nexia at the present time, excluding a portion of the Wallace building that we own which is Class A office space. Vacancies in such buildings have remained much higher as the higher class buildings have completed tenant improvements to their space to attract new tenants, Class C vacancy rates were reported at 25.14% for the year of 2006 compared to an overall vacancy rate of 9.88% for the central business district. However, for retail space, lease rates for Class A space have reached record highs and may encourage local retailers to move into Class B and C spaces with their lower lease rates.

All of the retail space in the Wallace/Bennett buildings owned by our subsidiary Wasatch Capital is currently leased. A 2,500 square foot portion of a total of 7,000 square feet of the retail space in the buildings located at 1374 South State Street is leased and the balance is unoccupied at this time. The balance of the Company’s holdings in the Salt Lake City market are of office or studio space. Plans have been made to improve the vacant spaces and ready them for more aggressive marketing.
 
Our Plan to Acquire and to Sell Commercial Properties

Our business plan is to buy more properties that we believe are undervalued compared to their cash flows and estimated resale value. We are looking for properties with sufficient rental income to enable us to cover the operating costs of our overall portfolio. We will sell properties when market conditions are favorable.

Our strategy is to identify properties with a favorable financing arrangement already in place, assume that financing, and satisfy any new down-payment with a relatively nominal cash payment. We plan to lease primarily to commercial tenants. We are prepared to make limited improvements to our properties so that we can increase occupancy, improve cash flows, and enhance potential resale value. We do not plan to limit the geographical area in which we buy properties; however, given our current financial condition, we will most likely seek properties in the Salt Lake City area.

From time to time, we will sell our commercial properties when favorable market conditions enable us to do so. While we are actively seeking tenants for all our properties, our real estate agents are also seeking buyers for those properties. Our goal ultimately is to maximize profits and not necessarily to be landlords.
 

Employees 

Nexia currently employees 7 people on a full time basis and from time to time hires outside contractors to perform various services as required by the operations of the Company. Landis employs approximately 33 employees and Gold Fusion Laboratories employs approximately 40 employees.

Reports to Security Holders

We are not required to deliver an annual report to security holders and do not plan to send a copy of the annual report to them. If we choose to create an annual report, it will contain audited financial statements. We intend to file all required information with the SEC. We plan to file with the SEC our Forms 10KSB, 10QSB and all other forms that are or may become applicable to us.

The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. We have filed all statements and forms with the SEC electronically, and they are available for viewing or copy on the SEC's Internet site, that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The Internet address for this site is http://www.sec.gov.

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 appearing elsewhere in this prospectus. Our fiscal year end is December 31.

General

Our business plan for the next twelve months involves the continued operation of our office buildings in Salt Lake City, Utah coupled with our ongoing attempts to locate and acquire additional commercial space in the greater Salt Lake area and elsewhere and to locate suitable buyers for the properties as the circumstances may permit. We increased our investment in Landis from 20% to 85% in 2006. We operate one location, and we have plans to open three more locations over the next 24 months.  We also acquired the Black Chandelier operations in 2006. We operate four Black Chandelier stores, and we anticipate opening an additional eight to twelve locations over the next 24 months.

Results of Operations

Revenues

Year ended December 31, 2006. Gross revenues for the fiscal years ended December 31, 2005 and 2006 were $392,414 and $1,834,245, respectively. This represents a $1,441,831 or 367% increase from 2005 to 2006.

Gross rental revenues for the fiscal years ended December 31, 2005 and 2006 were $257,627 and $184,230, respectively. This was a decrease of $73,397 or 28% from 2005 to 2006. We do not expect rental revenues to substantially increase until such time as Nexia is able to successfully raise a substantial amount of capital which will provide the means to purchase additional properties to replace those which have been sold over the last few years.
 
The revenues attributable to sales from Landis and Gold Fusion totaled $1,649,365 for the year ended December 31, 2006 compared to $124,262 of sales generated by Landis for the two months ended December 2005. There are no comparable revenue figures for 2005 because Landis commenced operations in November 2005.

Three months ended March 31, 2007. Gross revenues for the three month period ended March 31, 2007 was $692,841 compared to $265,241 for the same period in 2006. The increase in the three month revenues of $427,600, or 161% respectively, is due to primarily the inclusion of sales revenues from the operation of the Black Chandelier retail sales in the sums of $267,978. The acquisition of the Black Chandelier was on September 20, 2006.
 

Expenses

Year ended December 31, 2006. Total expenses for the fiscal years ended December 31, 2005 and 2006 were $844,266 and $5,422,272, respectively. This is a $4,578,006 increase or a 542% increase from 2005 to 2006. The increase was attributable primarily to the amount of costs incurred for consulting fees, $2,288,793 and promotional and marketing expenses of $360,328, incurred during 2006 and the increased expenses resulting from the expansion of operations by Landis and Gold Fusion of $1,012,654.  Payroll incresed by $181,938 with additions to staff in DH1 and $437, 050 was for a one time expense related to intercompany debt forgiven for dissolution of two subsidiary companies during 2006.

Depreciation and amortization expenses for the year ended December 31, 2006, were $166,874 compared to $125,489 for same period in 2005. The increase in expense of $41,385, or 33%, was primarily the result of the acquisition of assets by Landis and Gold Fusion over the course of the year 2006.  The primary causes for this increase are as follows: Landis’s operations increased by $35,494, because there were only two months of operations in 2005.  Gold Fusion’s operations began in 2006 resulting in an increase of total depreciation of $16,950.  In 2005, West Jordan Real Estate Holdings sold a building creating an $18,864 decrease in depreciation for the year ended December 31, 2006.  Salt Lake Development sold a building in 2006 creating a decrease of $1,293 in depreciation for 2006.

Nexia expects expenses as a percent of revenues to continue to increase through 2007 as Nexia steps up its effort to expand its retail operations as well as acquire additional properties.
 
The net increase in the general and administrative expenses from December 31, 2005 to 2006 is explained in detail in the table below:
 
   
Increase
 
 
     
Increase for Landis, LLC G&A (Landis was open for less then two months in 2005)
  $
701,668
 
Increase for Gold Fusion Laboratories G&A expenses (no Gold Fusion expense in 2005)
   
310,986
 
Increase in marketing Company stock expense
   
360,328
 
Intercompany debt forgiven for disolution of two subsidiary companies
   
437,050
 
Increase in payroll expenses
   
181,938
 
Adjustment to convertible debenture derivative
   
62,052
 
Stock subscriptions receivable
   
47,222
 
Bad debt expense
   
44,036
 
Licenses and Permits
   
30,155
 
Consulting option shares
   
30,000
 
Medical insurance
   
18,361
 
Other miscellaneous expense increases
   
19,564
 
NET INCREASE FROM 2005 TO 2006
  $
2,243,360
 
 
Three months ended March 31, 2007. Operating expenses for the three month period ended March 31, 2007, was $1,712,843 compared to $417,201 for the same period in 2006. The increase in three month expenses of $1,295,642, or 311% respectively, was the result of the increase in promotional marketing of Nexia stock of $206,625, stock subcriptions receivable expense of $434,410, increase in consulting fees of $132,000, increase in payroll expenses of $96,607 and $289,934 of expenses from Gold Fusion Laboratories, Inc. which was acquired after the first quarter of 2006.
 

The net increase in the three months general and administrative expenses from March 31, 2006 to 2007 of $1,130,142 is explained in detail in the table below:
 
 
Increase
 
   
(Decrease)
 
       
Increase for Landis, LLC G & A expenses
  $
109,355
 
Increase for Black Chandelier G&A expenses (no Black Chandelier expense in first quarter of 2006)
   
289,934 
 
Increase in consulting/professional fees
   
132,000
 
Increase in marketing Company stock expense
   
206,625
 
Increase in stock subscriptions receivale expense
   
434,410
 
Other miscellaneous expense decreases
    (42,182 )
NET THREE MONTH INCREASE FROM 2006 TO 2007
  $
1,130,142
 
      
Depreciation and amortization expenses for the three months ended March 31, 2007, were $51,902 compared to $43,766 for same periods in 2006. The increase in the three month expense of $8,136, or 19%, was attributable primarily to the addition of Gold Fusion Laboratories, Inc. acquired in September of 2006.

Income / Losses

Year ended December 31, 2006. Nexia recorded an operating loss of $756,822 at December 31, 2005, as compared to an operating loss of $4,425,135 for the comparable period in 2006. Nexia's losses increased as a result of the Company’s increase in operating expenses which were partly offset by a $2,301,967 gain on marketable securities.  Details of the expenses are listed in the ”Expenses” section above.

Operating Losses
 
Nexia recorded an operating loss of $4,425,135 for the year ended December 31, 2006 compared to a loss of $756,822 for the comparable period in the year 2005. The increase in operating loss of $3,668,313 or a 485% increase, was the result of the increased operating expenses related to the operation of the Landis Salon, Black Chandelier costs of expansion and a large expense related to the use of shares of China Fruits Corporation (CHFR) for the payment of various consulting expenses with non reoccurring amounts of $2,265,000 and $360,328 for investor relations, promotional and marketing related fees paid during the year ended December 31, 2006.
 
Net Losses

Nexia recorded a net loss of $1,967,208 for the year ended December 31, 2006, as compared to a net loss of $130,548 for the year ended 2005. The increase in net loss represents a change of $1,836,660, or 1407% increase, compared to the same period in 2005, reported above. The largest contributing factor to the significant increase in operating losses and net losses was the result of a one time payment for various consulting expenses in the form of shares of a newly reorganized company named China Fruits Corporation (OTCBB: CHFR) which were expensed in the amounts of $2,265,000. The value of the CHFR shares paid for such services was determined based upon the market price as quoted on the over the counter bulletin board on the date of payment for such services.
 
Nexia does not expect to operate at a profit through fiscal 2007. Since Nexia's activities in the past were tied to its ability to operate its real estate properties at a profit, future profitability or its revenue growth tended to follow changes in the real estate market place. The recent diversification into retail operations represented by its investment in Landis, LLC and Gold Fusion Laboratories will broaden Nexia’s operations and make it less dependent on the real estate market and its fluctuations. There can be no guarantee that profitability or revenue growth will be realized in the future.

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 revenue by increasing revenue and improving operating efficiencies.
 

Liquidity and Capital Resources

On December 31, 2006, Nexia had current assets of $1,022,549 and $4,734,635 in total assets compared to current assets of $532,278 and total assets of $4,319,916 as of December 31, 2005. Nexia had net working capital deficit of $990,123 at December 31, 2006, as compared to a net working capital deficit of $951,843 at December 31, 2005. The increase in working capital deficit of $38,280 is due primarily to increases in accounts payable and accrued expenses.

On June 1, 2006, Diversified Holdings I, Inc., (“DHI”) a subsidiary of the Company, signed a Settlement Agreement and Release with Diversified Financial Resources Corporation (“CHFR”) whereby DHI released all claims remaining under a June 30, 2003 Stock Purchase Agreement between the two parties in exchange for the delivery of 2,000,000 shares of CHFR common stock without a restrictive legend. DHI has agreed to deliver 1.6 million of those shares to three different recipients in exchange for various services to be provided to DHI resulting in pre-paid expenses reported on the balance sheet of the Company. DHI has retained 400,000 shares which had a market value of $220,000 at December 31, 2006. (The shares of CHFR are thinly traded with a closing fair market value of $0.55 as of the last reported trade price on December 31, 2006.) The obligation of CHFR to DHI had earlier been written off as unlikely to be collected, and the receivable was not included in the financial statements as of December 31, 2005 and for the first quarter ended March 31, 2006. (All share numbers reflect a 1 for 12.5 reverse stock split by CHFR effective July 12, 2006.)  Subsequent to the end of the year, the majority of the CHFR shares were sold, generating net proceeds of $319,819 for the quarter ended March 31, 2007.

Cash used by operating activities was $676,667 for the year ended December 31, 2006, compared to cash used by operating activities of $360,949 for the comparable period in 2005. The increase in cash used of $315,718 was attributable to the increases in accounts payable and accrued liabilities. The increase in expenses generated by its newly acquired retail operations created an overall Company increase in accounts payable and accrued liabilities compared to no such costs during the year ended December 31, 2005.

Net cash provided by investing activities was $306,668 for the year ended December 31, 2006, compared to net cash provided by investing activities of $239,153 for the year ended December 31, 2005. The increase in cash of $67,515 was attributable primarily to the sales of two real estate properties and marketable securities. The supplemental schedules of non-cash investing activities show transactions requiring no cash.

Cash provided by financing activities was $319,455 for the year ended December 31, 2006, compared to cash provided of $49,745 for the year ended December 31, 2005.  The increase of $269,710 in cash provided by financing activities was due primarily to the net proceeds from the issuance of new long-term debt, mortgage refinancing, the issuance of short term notes for cash received, and the sale of a commercial property, recognized during the year ended December 31, 2006.

We project that in 2007 and beyond our salon and retail store businesses will be able to generate sufficient revenues to meet their internal financial needs and $100,000 annually of excess cash available for our other operations.  We project the cash burn rate for the next twelve months, for the Company’s general needs and rental operations, will be approximately $1,020,000.  Funds to cover the burn rate will come from excess cash flow provided by the salon and retail operations, $100,000; reduction in cash employee expenses through stock issuance, $700,000; and sale of stocks from an investment portfolio of at least $360,000.  The total provided to cover the Company’s general needs and the rental operations will be approximately $1,160,000.  These amounts do not include any funds that may be received from the Dutchess equity line of credit as described in the Company’s SB-2 Registration Statements and amendments thereto as filed with the Securities and Exchange Commission.

We believe the proposed sale of 26.4 billion shares of Nexia stock to Dutchess, under the equity line of credit, will probably require three years to complete.  Our planned real estate capital improvements in 2007 of $150,000, to renovate existing space in two of our properties to make it usable and rentable, will come from the internally generated funds and possibly the Dutchess equity line of credit, if needed.  Nexia may experience occasional cash flow shortages due to debt service on real estate holdings and willingness to acquire properties with negative cash flow. To cover these shortages, Nexia may need to issue shares of its common stock in payment for services rendered. The Company is currently experiencing challenges with regard to cash flows. We are looking at several options to improve this situation, including having signed for an equity line of credit with Dutchess Private Equities Fund. The agreement with Dutchess provides that, following notice to Dutchess, Nexia may put to Dutchess up to $10 million in shares of our common stock for a purchase price equal to 95% of the lowest closing best bid price on the Over-the-Counter (“OTC”) Bulletin Board of our common stock during the five day period following that notice. The number of shares that we will be permitted to put pursuant to the agreement will be either: (a) 200% of the average daily volume of our common stock for the ten trading days prior to the applicable put notice, multiplied by the average of the three daily closing “best bid” prices immediately preceding the day we issue the put, or (b) $100,000; provided that in no event will the put amount be more than $1,000,000 with respect to any single put. (Best Bid is a defined term in the agreement as the highest posted bid price for the common stock.) In turn, Dutchess has indicated that it will resell the shares of common stock in the open market; resell our shares to other investors through negotiated transactions or hold our shares in its portfolio. These shares are made the subject of this SB-2/A Registration Statement.
 

The following is a summary schedule of stockholders' equity and changes,    
for the three months ended March 31, 2007 and the year ended December 31, 2006. 
             
   
Three
       
   
Months
   
Year
 
   
Ended
   
Ended
 
   
March 31,
   
December 31
 
   
2007
   
2006
 
   
(Unaudited)
       
             
BALANCE DECEMBER 31, 2006 AND 2005
  $ (120,948 )   $
963,185
 
Intrinsic and fair value of options issued
           
60,750
 
Common stock issued for options exercised
   
905,773
     
638,250
 
Straight stock issued to an employee for services
   
35,000
     
-
 
Straight stock issued to a contractor applied to Accounts Payable
   
35,000
     
-
 
Increase in stock subscriptions receivable
    (656,830 )     (546,750 )
Receipt of cash for Stock Subscriptions Receivable
   
321,741
     
152,046
 
Stock certificate from a previous year returned and cancelled
   
-
      (11,800 )
Common stock issued for services
   
-
     
12,448
 
Cash received from sale of common stock at amount
               
   in excess of market value when the stock was issued
   
-
      (1,576 )
Net credit balance from forgiving intercompany debt
               
   added to common paid-in capital
   
-
     
7,118
 
Preferred stock issued for increased investment in Landis
   
-
      (74,499 )
Preferred stock issued for acquisition of Black Chandelier net assets
               
    from DHX, Inc.
   
-
     
241,612
 
Preferred stock issued for acquisition of Black Chandelier net assets
               
    from DHX, Inc. and making loan to Nexia Holdings, Inc.
   
-
     
15,000
 
Adjust Stock Subscriptions Receivable for stock sales proceeds
               
   less than market value when the stock was issued
   
434,410
     
40,767
 
Common stock issued to Diversified Holdings X, Inc. re. acquisition
               
    of net assets of Black Chandelier operation from DHX, Inc. (restricted)
   
-
     
41,903
 
Common stock issued as compensation for a loan to Nexia Holdings, Inc.
   
-
     
30,000
 
Common stock issued for partial conversion of convertible debenture
   
-
     
52,500
 
Change in comprehensive income
    (230,388 )    
225,306
 
Net consolidated loss
    (1,243,212 )     (1,967,208 )
                 
BALANCE MARCH 31,2007 AND DECEMBER 31, 2006
  $ (519,454 )   $ (120,948 )
 

DESCRIPTION OF PROPERTY

Location and Description

Each of our properties competes with other general retail or office space in the greater Salt Lake City market. Occupancy rates for the area as a whole will most significantly impact our properties and the efforts to improve and upgrade the properties will enhance our ability to obtain tenants and maintain occupancy rates that will sustain the operating costs of the properties themselves.

Wasatch Capital Corporation ("Wasatch")

Wasatch, a 100% owned subsidiary of Nexia, owns the Wallace-Bennett Building, located at 55-65 West 100 South, Salt Lake City, Utah. The building is a 36,797 square foot, turn-of-the-century multi-story office building. The building was acquired in November of 1994 for a price of $800,000.
 

At the beginning of the year 2004 only the ground level was suitable for rent as retail space. The ground level comprises 7,577 square feet or 47% of the Building. A portion of this space is currently leased to Richard Wirick, the owner of the Oxford Shoe Shop, a retail outlet for men's shoes, for a monthly rental of $1,024 for 1350 square feet. A lounge occupies 1,900 square feet of the ground floor retail space at a monthly rental of $2,850 for the first year of a five year term ending March 31, 2012. A restaurant and an art gallery occupy the balance of the ground floor space. The average annual effective rental for the rentable ground level space is $14.96 per square foot or $113,340 in gross rental income. Tenants by contract are liable for their pro-rata shares of the taxes and insurance on the building and each tenant is liable for its own utilities.

In late 2004, the Company occupied a portion of the second floor as its main offices for which remodeling work was mostly completed during the year ended 2004. The Company occupies a total of 3,600 square feet and has space that includes a conference room and office space for the legal, accounting and executive employees of the Company. As of September 30, 2006 a total of $560,000 was spent to renovate the second floor.

In early 2003, Wasatch refinanced the main loan on the Wallace-Bennett Building. The terms of this loan package provided for a loan in the total amount of $850,000, an interest rate on the loan of 7.5%, with monthly payments of $8,800. The loan had a term of three years, and was due on August 10, 2006. The loan was personally guaranteed by Richard D. Surber, Nexia's President and C.E.O. Of the loan proceeds $202,920 was set aside for construction or capital improvements to the buildings securing the loan, all of which have been utilized during the second floor renovation and other upgrades to the building.

Wasatch, on or about August 25, 2006, closed on a $1,000,000 refinancing of the Wallace-Bennett Building with a new loan secured by the building. The terms of the loan include a total loan in the sum of $1,000,000; a term of 10 years, with an interest rate of 7.125% fixed for ten years and would provide for monthly payments based upon a 30 year amortization. The loan was personally guaranteed by Richard D. Surber, Nexia's President and C.E.O. Proceeds from the new financing were used to retire the prior loan secured by the building in the sum of $812,053 and included a cash payment of $149,572 to Wasatch. Wasatch intends to improve the remaining upper floor space as office space, studio locations and production space for low impact business. The terms set forth above, reclassify the loan held by Wasatch Capital from short-term debt to long-term debt which has substantially increased Nexia’s working capital.  The loan balance as of December 31, 2006 was $997,786 and, as of March 31, 2007, $995,336.

Management believes that the building is adequately insured.
 
Downtown Development, Corp. ("DDC")

DDC, a 99.08% owned subsidiary of Nexia, owns a one story retail building located at 1374 South State Street, Salt Lake City, Utah, which it purchased on December 1, 1999 for $535,000. The balance on the financing owing at December 15, 2005 was $366,032. The building was appraised at $600,000 in November of 2002. In December of 2002, DDC obtained permanent financing with Community First National Bank; the loan bears interest at the rate of 7.16% per annum, with monthly payments of $3,061, with a final balloon payment due on December 5, 2012 (estimated amount $260,800). The loan was personally guaranteed by Richard D. Surber, Nexia's President and C.E.O. The building is 7,000 square feet, one story tall and constructed in the late 1960's. A bakery currently occupies 2,500 square feet of retail space under a lease in the building. DDC expended $34,100 through March 31, 2004 in renovations to the space occupied by the bakery in the property. The tenant is liable for its pro-rata shares of the taxes and insurance for the building as well as its use of utilities. This figure does not include substantial improvements made by the tenant to the same portion of the property. The balance of the space in the building is currently not occupied and the search for a tenant is ongoing. DDC believes the property is adequately insured. The retail space in the building competes for tenants with other retail space on State Street which is a commercial zone for over one mile in each direction from the property.
 
On August 18, 2006, DDC closed on the purchase of a lot immediately adjacent to the above described property and building located at 1374 South State Street. The total purchase price for the property was $250,000. This purchase price was financed with a short term (90 days) loan. The additional property will provide ample parking for current and future tenants of the building. DDC intends to make renovations to the entire property to take advantage of the added property and the potential for additional use by prospective tenants.
 
On September 21, 2006 DDC closed on refinancing and a consolidation into a single loan of the outstanding loans on the building and lot on South State Street.  A loan in the sum of $568,000 was secured from Cyprus Credit Federal Credit Union, the loan bears interest at the rate of 7% per annum, with monthly payments of $3,778.92, with a final balloon payment due on September 22, 2016 (estimated amount $440,261). The loan was personally guaranteed by Richard D. Surber, Nexia’s president. The remaining loan balance due to Rich Investment, LLC of $57,000 was restated in a new note bearing interest at the rate of 12% per annum.  The $57,000 was paid in full by March 31, 2007.  The Cyprus loan balance as of December 31, 2006 was $565,906 and, as of March 31, 2007, $563,896.
 

Management believes the property held by DDC is adequately insured.

On August 18, 2006, DDC closed on the purchase of a lot immediately adjacent to the above described property and building located at 1374 South State Street. The total purchase price for the property was $250,000. This purchase price was financed with a short term (90 days) loan. The additional property will provide ample parking for current and future tenants of the building. DDC intends to make renovations to the entire property to take advantage of the added property and the potential for additional use by prospective tenants.

On September 21, 2006 DDC closed on refinancing of the loans on the building and lot on South State Street. A loan in the sum of $568,000 was secured from Cyprus Credit Federal Credit Union, the loan bears interest at the rate of 7% per annum, with monthly payments of $3,778.92, with a final balloon payment due on September 22, 2016 (estimated amount $440,261). The loan was personally guaranteed by Richard D. Surber, Nexia’s president. The remaining loan balance due to Rich Investment, LLC of $57,000 was restated in a new note bearing interest at the rate of 12% per annum.  The $57,000 was paid in full by March 31, 2007.  The Cyprus loan balance as of December 31, 2006 was $565,906 and, as of March 31, 2007, $563,896.

Management believes the property held by DDC is adequately insured.
 
Kearns Development Corporation. ("Kearns")

Kearns, a 99% owned subsidiary of Nexia, owns one office building located on West Sams Boulevard in Kearns, Utah (a suburb of the Greater Salt Lake area). The building contains approximately 11,709 square feet of total floor space in a single story. The building was purchased on November 29, 2000 for a total price of $750,000. The purchase was financed with a $625,000 first mortgage from Brighton Bank with an initial variable rate of 10.97% amortized over 25 years and monthly payments of $5,632. The loan was personally guaranteed by Richard D. Surber, Nexia's President and C.E.O. This property was refinanced on January 10, 2003, $660,000 by Community First Bank, at an interest rate of 7.16%. Monthly payments are $5,223 based upon a 20 year amortization with a balloon payment of the remaining balance due on January 10, 2013 (estimated amount of $441,325). The balance owing on this loan as of December 31, 2006 was $565,906 and, as of March 31, 2007, $563,896. At the time of the refinancing, the building was appraised at $980,000.

The building is leased to a tenant occupying 35% of the office space and generating monthly rentals of $3,452 at an average rate of $10.25 per square foot, the gross annual rental income from the building is $41,420. Kearns has no present plans to renovate or improve the building. Management believes that the building is adequately insured. The building competes for tenants with other office space in the Kearns area.

Management believes that this building is adequately insured.

None of the financing for the above described properties provide for pre-payment penalties.

       
RENTABLE
       
PORTION OF
   
 SQUARE
LEASE
LEASES EXPIRING/
NEXIA SUBSIDIARY
TENANT
 FEET
EXPIRATION
EXPIRED
Downtown
       
Development
La Brioche
            2,500
month-to-month
35.71%
 
Empty - Negotiating a Lease
            4,500
2 year lease
 
Downtown Totals:
 
            7,000
 
35.71%
         
         
Kearns
       
Development
Deseret Mutual Benefit Administrators
            4,041
31-Mar-08
43.39%
 
Empty
            3,550
   
 
Empty
            2,395
   
 
Common Area
            1,723
   
Kearns Totals:
 
          11,709
 
43.39%
         
         
Wasatch
       
Development
Caffe Molise
            2,558
30-Apr-12
 
 
Mynt Martini
            1,900
31-Mar-12
 
 
Oxford Shop
            1,350
month-to-month
8.50%
 
Utah Artist Hands
            1,769
31-Jan-07
11.14%
 
Diversified Holdings X
            4,704
31-Dec-07
29.62%
 
Nexia Holdings Inc.
            3,600
31-Dec-07
22.67%
 
Common Area
              200
   
Wasatch Totals:
 
          16,081
 
71.93%
 

PROJECTED OCCUPANCY 
       
Description of Information:
2007
2008
2009
2010
2011
           
DOWNTOWN DEVELOPMENT 
       
Occupancy Rate:
100%
100%
100%
100%
100%
# of tenants occupying 10%+
2
2
2
2
2
Type of businesses
bakery and other retail
bakery and other retail
bakery and other retail
bakery and other retail
bakery and other retail
Average rent/square ft.
$8.68
$8.94
$9.21
$9.48
$9.77
Schedule of lease expirations
see attached schedule
see attached schedule
see attached schedule
see attached schedule
see attached schedule
# of leases to expire
0
0
1
1
0
Sq. ft. of leases to expire
N/A
N/A
4,500
2,500
N/A
Annual rents of expiring leases
N/A
N/A
$40,579.44
$24,576.00
N/A
Percentage of leases expiring
N/A
N/A
50%
50%
N/A
Federal tax basis
$719,817
       
Rate
2.56% - 16.7%
       
Method
S.L.
       
Life claimed prospectively
6 - 39 years
       
Annual realty taxes
$7,030
       
 
 
       
           
KEARNS DEVELOPMENT 
       
Occupancy Rate:
34.51%
35.71%
34.51%
34.51%
34.51%
# of tenants occupying 10%+
1
1
1
1
1
Type of businesses
office
office
office
office
office
Average rent/square ft.
$10.25
$10.25
$10.25
$10.25
$10.25
Schedule of lease expirations
see attached schedule
see attached schedule
see attached schedule
see attached schedule
see attached schedule
# of leases to expire
0
1
1
1
1
Sq. ft. of leases to expire
4,041
4,041
4,041
4,041
4,041
Annual rents of expiring leases
$41,420.40
$41,420.40
$41,420.40
$41,420.40
$41,420.40
Percentage of leases expiring
100%
100%
100%
100%
100%
Federal tax basis
$665,277
 
     
Rate
2.56%
       
Method
S.L.
       
Life claimed prospectively
39 years
       
Annual realty taxes
$10,476
       
           
           
WASATCH CAPITAL CORP. 
       
Occupancy Rate:
100%
100%
100%
100%
100%
# of tenants occupying 10%+
5
5
5
5
5
Type of businesses
office, retail, café, lounge
office, retail, café, lounge
office, retail, café, lounge
office, retail, café, lounge
office, retail, café, lounge
Average rent/square ft.
$11.60
$12.59
$12.97
$13.36
$13.76
Schedule of lease expirations
see attached schedule
see attached schedule
see attached schedule
see attached schedule
see attached schedule
# of leases to expire
3
0
0
3
2
Sq. ft. of leases to expire
10,073
N/A
N/A
10,073
4,458
Annual rents of expiring leases
$98,534
N/A
N/A
$107,670.72
$93,821.40
Percentage of leases expiring
50%
N/A
N/A
50%
33.33%
Federal tax basis
$1,299,052
 
     
Rate
2.56% - 16.7%
       
Method
S.L.
       
Life claimed prospectively
6 - 39 years
       
Annual realty taxes
$18,256
       
 
Contractual Obligations

Contractual Obligations
                               
                                       
As of March 31, 2007, we were subject to certain material contractual payment obligations as described in the table below.
       
                                           
   
Total
   
2007
   
2008
   
2009
   
2010
   
2011
   
Thereafter
 
Mortgage debt
  $
2,147,790
    $
24,652
    $
39,362
    $
42,260
    $
45,371
    $
48,711
    $
1,947,434
 
Promissory notes
   
962,615
     
455,053
     
130,330
     
130,034
     
132,865
     
114,333
     
-
 
Vehicle contract
   
7,094
     
7,094
     
-
     
-
     
-
     
-
     
-
 
Convertible debenture
   
119,521
     
119,521
     
-
     
-
     
-
     
-
     
-
 
Convertible debenture-derivative
   
51,944
     
51,944
     
-
     
-
     
-
     
-
     
-
 
Total contractual debt less operating leases
  $
3,288,964
    $
658,264
    $
169,692
    $
172,294
    $
178,236
    $
163,044
    $
1,947,434
 
Operating leases
   
1,749,399
     
244,604
     
242,915
     
249,300
     
225,960
     
101,568
     
685,052
 
Total contractual debt
  $
5,038,363
    $
902,868
    $
412,607
    $
421,594
    $
404,196
    $
264,612
    $
2,632,486
 
                                                         
Property Acquisitions and Dispositions:
 
There was one property acquisition and two property dispositions during the year 2006.
 
On August 18, 2006 our subsidiary Downtown Development Corporation acquired one-third of an acre adjacent to the existing building it owns on State Street in Salt Lake City. The newly acquired property has no buildings or other improvements and will be used for parking to enhance the existing building’s potential uses. The purchase price of $250,000 had short term financing and has been combined with the existing building in a long-term loan package on both properties that closed on September 21, 2006.
 
In April 2006, a 15,000 square foot office building in Salt Lake City, Utah, owned by Salt Lake Development Corporation, a subsidiary of the Company, was sold. The mortgage pay off was $545,071. In the same month, a condominium at Brian Head, a mountain recreation area near Cedar City, Utah, was sold. The mortgage pay off was $25,369.
 

Detail of Costs Associated With Rental Revenue,
       
Years Ended December 31, 2006 and 2005:
                   
   
Years Ended December 31,
   
Change
 
Expense Description
 
2006
   
2005
   
$
     
%
 
Mortgage interest
  $
142,591
    $
144,876
    $ (2,285 )     (1.58 )
Depreciation
   
91,053
     
104,798
      (13,745 )     (13.12 )
Payroll - mgt. and maintenance
   
10,392
     
48,823
      (38,431 )     (78.71 )
Utilities
   
21,524
     
46,928
      (25,404 )     (54.13 )
Property taxes
   
36,512
     
63,131
      (26,619 )     (42.16 )
Maintenance and repairs
   
10,107
     
29,552
      (19,445 )     (65.80 )
Advertising
   
-
     
15,516
      (15,516 )     (100.00 )
Insurance
   
7,857
     
5,658
     
2,199
     
38.87
 
                                 
    $
320,036
    $
459,282
    $ (139,246 )     (30.32 )
 

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's common stock is quoted on the OTC Bulletin Board under the symbol, "NEXA". Trading in the common stock in the over-the-counter market has been limited and sporadic and the quotations set forth below are not necessarily indicative of actual market conditions. Further, these prices reflect inter-dealer prices without retail mark-up, mark-down, or commission and may not necessarily reflect actual transactions. The high and low bid prices for the common stock for the quarters indicated below for the years ended December 31, 2005, 2006 and the quarter ending March 31, 2007 are as follows:

YEAR
PERIOD ENDING
HIGH
LOW
 
 
 
 
2005
March 31, 2005
$0.006
$0.001
 
 
 
 
 
June 30, 2005
$0.002
$0.001
 
 
 
 
 
September 30, 2005
$0.003
$0.001
 
 
 
 
 
December 31, 2005
$0.003
$0.001
 
 
 
 
2006
March 31, 2006
$0.006
$0.001
 
 
 
 
 
June 30, 2006
$0.006
$0.002
 
 
 
 
 
September 30, 2006
$0.004
$0.002
 
 
 
 
 
December 31, 2006
$0.004
$0.002
       
2007
March 31, 2007
$0.003
$0.0005

150,000 Shares of Series A Preferred Stock are issued and outstanding.

There is only one holder of Series B Preferred Stock, Richard Surber, who holds 10 million shares.

There are four holders of Series C Preferred Stock, Joseph Corso, who holds 100,000 shares, John E. Fry, Jr. who holds 7,500 shares, Jared Gold who holds 50,000 shares, and Sean Pasinsky who holds 30,000.

Effective February 20, 2007 a 1 for 10 reverse stock split of the common stock was declared effective.

 
EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION TABLE
 
                   
Annual Compensation
 
Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earning
All Other
Compen-
sation
($)
 
           
Non-Equity
Incentive
Plan
Compen-sation
 
 
             
Name and
Principal
Position
Year
 
Salary
 
Bonus ($)
 
Stock
Awards
 
Option
Award(s)
($)
 
 
 
Total
                   
Richard Surber
2006
$150,000(1)
0
2,000(3)
0
0
0
0
$152,000
President and PFO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Richard Surber
2005
$150,000(2)
0
0
0
0
0
0
$150,000
President and PFO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Richard Surber
2004
$150,000(4)
0
8,000(3)
0
0
0
0
$158,000
President and PFO
               
 

(1)  
Of this amount $19,479 represents salary paid during 2006 and $130,521 is accrued but unpaid salary due to Mr. Surber as of December 31, 2006.
(2)  
Of this amount $121,154 represents salary paid during 2005 and $28,846 represents 2005 accrued salary paid to Mr. Surber during 2006.
(3)  
The board of directors awarded Mr. Surber 8,000,000 shares of Class B Preferred Stock with a value of $8,000 during 2004 and 2,000,000 shares with a value of $2,000 during 2006 as part    of the compensation for the acquisition of the Black Chandelier operations from DHX.
(4)  
During the year ended December 31, 2004, Mr. Surber was paid a salary by Hudson Consulting Group, Inc. which was acquired as a subsidiary of the Company in February 2002.

There were no grants of plan-based awards, equity awards or option awards granted or held by any executive officer of the Company during the years ended December 31, 2004, 2005 and 2006.

Compensation of Directors
 
In August of 2005, the Company made cash payments in the sum of $2,000 each to Mr. Einhorn and Ms. Bernstein as compensation for their services as directors of the Company. No set amount of compensation is set for the directors of the Company and compensation is paid based upon the time and effort required of directors on an as needed basis. The most recent compensation delivered to directors prior to these cash payments was the issuance of 10,000 shares of restricted common stock in the first quarter of 2004 to Mr. Surber, Mr. Einhorn, Ms. Bernstein and to John E. Fry, Jr. Mr. Fry is no longer a director of the Company.
 
DIRECTOR COMPENSATION TABLE
 
   
Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earning
All Other
Compen-
sation
($)
 
           
Non-Equity
Incentive
Plan
Compen-sation
 
 
             
Name and
Principal
Position
Year
 
Fees Earned of Paid in Cash ($)
Stock
Awards
 
Option
Award(s)
($)
 
 
 
Total
Gerald Einhorn
2006
$ 0
0
0
0
0
0
$ 0
Adrienne Bernstein
2006
$ 0
0
0
0
0
0
$ 0
 
 
NEXIA HOLDINGS, INC.

CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2006

C  O  N  T  E  N  T  S

 
Report of independent registered public accounting firm
F-3
 
 
Consolidated balance sheets
F-4
 
 
Consolidated statements of operations and other comprehensive income (loss)
F-6
 
 
Consolidated statements of stockholders’ equity (deficit)
F-9
 
 
Consolidated statements of cash flows
F-13
 
 
Notes to the consolidated financial statements
F-17

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
Nexia Holdings, Inc. and Subsidiaries
Salt Lake City, Utah


We have audited the accompanying consolidated balance sheets of Nexia Holdings, Inc. and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of operations and other comprehensive income (loss), stockholders' equity (deficit) and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, based on our audits of the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nexia Holdings, Inc. and Subsidiaries as of December 31, 2006 and 2005, and the results of their consolidated operations and other comprehensive income (loss) and cash flows for the years ended December 31, 2006 and 2005, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the accompanying consolidated financial statements, the Company has incurred cumulative operating losses through December 31, 2006 of $15,568,646 and has a working capital deficit of $990,123 at December 31, 2006 all of which raise substantial doubt about its ability to continue as a going concern.  Management's plan in regard to these matters is also discussed in Note 2. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ De Joya Griffith & Company, LLC
CERTIFIED PUBLIC ACCOUNTANTS
Henderson, NV

March 21, 2007

 
 
NEXIA HOLDINGS, INC. AND SUBSIDIARIES 
Consolidated Balance Sheets 
             
   
As of
   
As of
 
   
December 31,
   
December 31,
 
ASSETS
 
2006
   
2005
 
         
(Restated)
 
             
CURRENT ASSETS
           
             
Cash and cash equivalents
  $
124,158
    $
160,440
 
Accounts and notes receivable, trade - net of allowance
               
of $103,732 and $18,870, respectively
   
32,841
     
36,833
 
Accounts receivable - related parties (Note 3)
   
12,070
     
7,342
 
Notes receivable - net of allowance of $90,000 and
               
   $345,000, respectively  (Note 4)
   
10,142
     
13,164
 
Inventory
   
370,639
     
35,435
 
Prepaid expenses
   
207,167
     
28,191
 
Marketable securities - available for sale (Note 5)
   
265,532
     
250,873
 
                 
TOTAL CURRENT ASSETS
   
1,022,549
     
532,278
 
                 
PROPERTY AND EQUIPMENT
               
                 
Property and equipment, net (Note 6)
   
3,033,228
     
2,478,434
 
Land (Note 6)
   
633,520
     
389,295
 
Property, net - held for sale (Note 11)
   
-
     
915,939
 
                 
TOTAL NET PROPERTY AND EQUIPMENT
   
3,666,748
     
3,783,668
 
                 
OTHER ASSETS
               
                 
Loan costs, net
   
43,958
     
3,970
 
Trademarks
   
1,380
     
-
 
                 
TOTAL OTHER ASSETS
   
45,338
     
3,970
 
                 
TOTAL ASSETS
  $
4,734,635
    $
4,319,916
 
                 
                 
The accompanying notes are an integral part of these consolidated financial statements     

F-3

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