Registration No. 000-29383
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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WICHITA DEVELOPMENT CORPORATION
(Name of small business issuer in its charter)
Nevada 6512 88-0356200
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(State of jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
Richard Surber, President
268 West 400 South, Suite 300, Salt Lake City, Utah 84101 (801) 575-8073
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(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)
Approximate date of proposed distribution to the public: As soon as practicable
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 this Form is a post-effective amendment filed pursuant to Rule
462(d) 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. |_|
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title of each Proposed Proposed
class of Amount of Dollar Amount to maximum maximum Amount of
securities to be securities to be be registered offering price per aggregate registration fee
registered registered share(1) offering price
<S> <C> <C> <C> <C> <C>
Common Stock 18,400,000 shares $478,400 $.026 $0.00. $126.30
================== =================== =================== =================== =================== ====================
</TABLE>
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.
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(1)Estimated solely for purposes of determining the filing fee pursuant to
Rule 457(f)(2) of the Securities Act of 1933.
<PAGE>
[GRAPHIC OMITTED]
Preliminary Prospectus dated November 21, 2000
WICHITA DEVELOPMENT CORPORATION
18,400,000 shares of $0.001 par value Common Stock
$0.00 per share
The Offering:
Per Share Total
Public Price $ 0.00 $ 0.00
Underwriting(1)
Discounts/Commissions(2) $ 0.00 $ 0.00
Proceeds to the Company (3) $ 0.00 $ 0.00
This is a spin-off offering wherein Kelly's Coffee Group, Inc. will distribute
shares on a pro-rata basis to its shareholders at no cost.
There may be a possible tax impact to recipients of shares in this offering. See
"Plan of Distribution" at page 13.
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(1)We are not using an underwriter for the distribution. See "Plan of
Distribution."
(2)The commissions shown do not include legal, accounting, printing and related
costs incurred in connection with the offering, which will be payable by us.
These expenses are estimated to total $12,631.30
(3)There will be no proceeds paid to us from this offering which is a pro-rata
distribution of our shares to the shareholders of our parent, Kelly's Coffee
Group, Inc.
Wichita Development Corporation is a Nevada corporation engaged in the business
of real estate investment. We have acquired one commercial property and intend
to acquire additional properties that we believe are undervalued in relation to
cash flows and the prospective resale value. We intend to acquire additional
properties by assuming favorable financing in place at the time of purchase and
satisfying the balance of any purchase price with nominal cash payments or some
combination of cash and our own common stock.
Prior to this offering, there has been no market for our securities and no
assurance can be given that an active market will develop. Since the shares
offered are to be distributed to shareholders of Kelly's Coffee Group, Inc. on a
pro-rata basis, at no cost to the shareholders, the offering price may not
reflect the value of our shares after the offering.
This is a spin-off to the public of shares of the Company's common stock which
are owned by its parent, Kelly's Coffee Group, Inc. Kelly's Coffee Group, Inc.
will distribute the shares, at no cost to its shareholders, in a pro-rata
distribution to its shareholders. There is no public market for the Company's
securities and no assurance can be given that any such market will develop.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission. We may not distribute these securities until
the registration statement becomes effective. This prospectus is not an offer to
sell or the solicitation of an offer to buy these securities. There can not be
any sale of these securities in any state in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of any such state.
This offering involves a high degree of risk and securities offered hereby are
highly speculative. See "Risk Factors" beginning on Page 8 and "Dilution"
beginning on Page 14.
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Wichita Development
Corporation
Offering of
18,400,000 Shares of Common Stock
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PROSPECTUS
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November 21, 2000
Inside front cover page of prospectus
TABLE OF CONTENTS
Page
Summary ......................................................................4
Summary of Selected Financial Information ....................................6
Risk Factors .................................................................7
Use of Proceeds .............................................................13
Determination of Offering Price .............................................13
Dilution ....................................................................13
Selling Security Holders ....................................................13
Plan of Distribution ........................................................13
Legal Proceedings ............................................................14
Directors, Executive Officers, Promoters &
Control Persons ...........................................................14
Security Ownership of Certain Beneficial
Owners and Managers .......................................................15
Description of Securities ....................................................16
Interest of Named Experts and Counsel .......................................16
Disclosure of Commission Position on
Indemnification for Securities Act Liabilities..............................17
Certain Relationships and Related Transactions................................17
Description of Business ......................................................18
Management's Discussion and Analysis of
Financial Condition and Results of Operations .............................20
Description of Property ......................................................21
Market for Common Equity and Related
Transactions..................................................................24
Executive Compensation .......................................................24
Changes in and Disagreements with Accounts
or Accounting and Financial Disclosure......................................25
Financial Statements .......................................................F-1
Wichita Development Corporation is a fully reporting company and intends to file
all reports and other information as required under the Securities Exchange Act
of 1934 with the Commission. The public may read and copy, at certain prescribed
rates, such material at the Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20439. The Commission maintains a website which you can access
at http://ww.sec.gov that contains reports, proxy, other information statements
and other information regarding issuers that file electronically.
Wichita Development Corporation currently has no public trading market. We
intend to file a Form 15c- (2)(11) in an effort to obtain a listing on the NASD
over the counter bulletin board upon this Form SB-2 becoming effective in an
effort to provide some liquidity for our shareholders and to create a public
market for our securities. However, there is no guarantee that we will obtain a
listing on the NASD over the counter bulletin board or that a public market for
our securities will develop even if a listing on the NASD over the counter
bulletin board is obtained.
Although we do not anticipate that future annual reports will be voluntarily
delivered to our security holders, we will provide at no cost to each security
holder copies of our annual report which will include audited financial
statements. Also, we will provide at no cost to each person who has received a
prospectus, a copy of any information that is incorporated herein by reference.
To request such information, call (801) 575-8073 or write to: Richard D. Surber,
President, Wichita Development Corporation, 268 West 400 South, Suite 300, Salt
Lake City, Utah 84101.
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First page of the prospectus
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this prospectus. As such, you are urged to read the entire prospectus carefully,
especially the risks involved in owning our common stock as discussed under
"Risk Factors."
Wichita Development Corporation
Wichita Development Corporation ("the Company, we, our") was formed under the
laws of the State of Nevada on February 15, 1996 as Cyberbotanical, Inc.
Cyberbotanical, Inc. changed its name to Wichita Development Corporation on
October 12, 2000. Our executive offices are located at 268 West 400 South, Suite
300, in Salt Lake City, Utah, 84101 and our telephone number is (801) 575-8073.
Our registered statutory office is located at 711 South Carson Street, Suite 1,
Carson City, Nevada 89701.
The Company was formed for the purpose of specializing in Internet "virtual
mall" development. The Company was one of over 40 related companies whose plan
was to create a virtual mall with theme based stores to sell merchandise over
the Internet. The Company's virtual store was tentatively set up to sell
botanicals. The Company's former parent, CyberAmerica Corporation, a fully
reporting company under the Exchange Act of 1934, through its now defunct
subsidiary CyberMalls, Inc., was in the process of developing a specialized
search engine. This search engine was designed to assist consumers in the
purchase of products by narrowing the number of responses received when
searching for a specific product. However, due to a lack of necessary funding
CyberMalls, Inc.'s plan to create the search engine were discontinued.
Consequently, CyberMall's Inc.'s plan to create a virtual mall with at least 40
theme based stores was abandoned. The Company became a shell company during the
last quarter of 1996 as a result of CyberAmerica Corporation's decision not to
fund the Company's planned operations. On August 29, 2000, the Company sold
18,400,000 shares of its common stock to Kelly's Coffee Group, Inc. for a cash
payment in the sum of $540,554. On August 30, 2000, the Company used the
proceeds of this sale to acquire title to an office building located in Wichita,
Kansas.
We currently own one office building in Wichita, Kansas known as the Board of
Trade Center. The Board of Trade Center is located in the downtown business
district of Wichita, Kansas, at 120 South Market Street, Wichita, Kansas. The
building is a 48,500 square foot, eight story construction with a current tenant
occupancy rate of 83%. The building is rented at an average cost of
approximately $8.00 a square foot by the current tenants, who include the prior
owners of the building.
The Company intends to acquire additional properties that it believes are
undervalued in relation to cash flows and the prospective resale value. We will
attempt to acquire such properties by assuming existing favorable financing and
satisfying the balance of any purchase price with nominal cash payments or some
combination of cash and an issuance of our common stock. Once properties are
acquired, we intend to lease primarily to commercial tenants. The Company is
prepared to make limited improvements to properties acquired with the objective
of increasing occupancy, improving cash flows and enhancing potential resale
value.
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THE OFFERING
Securities Offered 18,400,000 shares of Common Stock. (See "Plan of
Distribution" beginning on page 15 ).
Shares of Common
Stock Outstanding Before Offering ..........................19,492,000
After Offering.............................19,492,000
Use of Proceeds
by the Company The Company will receive no proceeds from this offering.
Risk Factors The securities offered hereby are speculative and
involve a high degree of risk.
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<TABLE>
SUMMARY OF SELECTED FINANCIAL DATA
<CAPTION>
For the Year Ended For the Nine Months Ended
December 31, September 30,
1999 1998 2000 1999
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue:
Rental Income $ - $ - $ 27,264 $ -
-------------- ------------- ------------- -------------
Total Revenue - - 27,264 -
Costs of Revenue
Costs associated with rental revenue - - 20,062 -
Interest expenses associated with rental
revenue - - - -
-------------- ------------- ------------- -------------
Total Costs of Revenue - - 20,062 -
============== ============= ============= =============
Gross Profit - - 7,202 -
Selling, General & Administrative Expenses 1,006 - 7,202 -
-------------- ------------- ------------- -------------
Operating Profit (Loss) (1,006) - 130 -
Other Income (Expense):
Interest income - - - -
Interest expense - - - -
Gain (loss) from sale of investment
securities - - - -
Other income (expense) - - - -
Gain (loss) on foreclosure - - - -
-------------- ------------- ------------- -------------
Total Other Income (Expense) - - - -
============== ============= ============= =============
Net Profit (Loss) (1,006) - 130 -
Provision for income taxes - - - -
Net Income $ (1,006) $ - $ 130 $ -
============== ============= ============= =============
BALANCE SHEET DATA
Working Capital Surplus (deficit) $ 360 $ - $ (835) $ -
Total Assets 360 - 554,639 -
Total Liabilities - - 17,095 -
Shareholders' Equity $ 360 $ - $ 537,544 $ -
============== ============= ============= =============
Income (Loss) per common share
Net income (loss) per weighted average
common share outstanding
Weighted average number of common
shares outstanding 1,042,822 1,000,000 3,092,731 1,000,000
============== ============= ============= =============
</TABLE>
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RISK FACTORS
The securities to be distributed in connection with this offering are highly
speculative in respect to any valuation and are subject to certain risks that
may impact any future prospect of value. Given this possibility, you are
encouraged to evaluate the following risk factors and all other information
contained in this prospectus. Any of the these risks could adversely effect our
business, financial condition and results of operations, and could cause a
complete loss of value for the securities offered.
Risks Related to The Company's Business
1. The Company's Investment in Real Estate is Inherently Risky and Income
Dependent
Real estate investments are inherently risky. The yields available from equity
investments in real estate depend on the amount of income and capital
appreciation generated by the properties held by the entity in which the
investment is made. Should we acquire properties that do not generate sufficient
operating cash flow 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 property investments may be adversely affected by a number of
factors, including:
o the general economic climate and local real estate conditions
(such as oversupply of or reduced demand for space and changes in
market rental rates);
o the perceptions of prospective tenants of the safety, convenience
and attractiveness of the properties and overall appeal of
particular types of properties;
o the ability of the owner of the properties to provide adequate
management, maintenance and insurance;
o the ability to collect on a timely basis all rent from tenants
and interest from borrowers;
o the expense of periodically renovating, repairing and re-letting
spaces;
o increasing operating costs (including real estate taxes and
utilities) which may not be passed through to tenants;
o adverse changes in local conditions and land values, such as
excessive building resulting in an oversupply of commercial units
in an area where our property is located;
o reduction in the cost of operating competing properties or
decreases in employment that reduce the demand for properties in
the area;
o adverse changes in zoning laws, other laws and regulations and
real property tax rates;
o damage from earthquakes or other natural disasters;
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Certain significant expenditures associated with investments in real estate
(such as mortgage payments, real estate taxes, insurance and maintenance costs)
are fixed expenses and generally not reduced when circumstances cause a
reduction in rental revenues from the investment. If a property is mortgaged to
secure the payment of indebtedness and if the borrower is unable to meet its
mortgage payments, a loss could be sustained as a result of foreclosure on the
property or the exercise of other remedies by a mortgagee or secured party. Real
estate values and income from properties are also affected by factors such as
compliance with laws, including tax laws, interest rate levels and the
availability of financing.
The market value of properties is affected by the risk that a lease may not be
renewed, that the space may not be released, and that the terms of renewal or
re-lease (including the cost of required renovations or concessions to tenants)
may be less favorable than current lease terms.
2. The Company's Investment in Real Estate Has Limited Liquidity and No
Certainty of Capital Appreciation
Our real estate investment has 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 dispose of an investment when we find disposition
advantageous or necessary or that the sale price of any disposition will recoup
or exceed the amount of our investment. Accordingly, the Company can provide no
assurance that the value of its property will appreciate.
There are numerous uncertainties in estimating the value of real estate and
prospective appreciation value. The estimated values set forth in appraisals are
based on various comparisons to sales prices of other properties; predictions
about market conditions, 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, and a
variety of numerous other factors; estimates of lease revenues and operating
expenses, and other items. Any significant change in these comparisons,
predictions, assumptions, and estimates, most of which are beyond our control,
could materially and adversely affect estimated market values and appreciation
potential.
3. The Company Competes with Substantially Larger Companies for the Types of
Acquisitions that Fit Within the Parameters of Our Business Plan
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 operators with far greater resources than
ours. The presence of these competitors may be a significant impediment to the
continuation and development of our business.
4. The Company May Encounter Cash Flow and Liquidity Problems
Our operations involve the acquisition, lease and prospective sale of commercial
real estate. We may at some future point experience occasional cash flow
shortages. The Company's cash flow, results of operations and asset value would
be adversely affected if a significant number of tenants of the Company's
property failed to meet lease obligations or if a significant amount of vacant
space was not leased. In the event of a default by a lessee, delays may be
experienced in enforcing lessor rights and substantial costs may be incurred in
protecting the investment. The bankruptcy or insolvency of a major tenant might
have an adverse effect on the property. At any time, a tenant may also seek
protection under the bankruptcy laws, which could result in rejection and
termination of the tenant's lease resulting in a reduction in the property's
8
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cash flow. If a tenant rejects its lease, a claim for breach of the lease would
be treated as a general unsecured claim (absent the availability of collateral
securing the claim). No assurance can be given that the property that we
currently own will not experience significant tenant defaults in the future.
5. The Company's Investment In Real Estate is Subject to Property Operation
Risks
Real estate investments are subject to industry-specific operating risks, any
and all of which may adversely affect income. All properties are subject to
increases in operating expenses such as: cleaning; electricity; heating,
ventilation and air- conditioning; elevator repair and maintenance; insurance
and administrative costs; and other general costs associated with security,
landscaping, repairs, regulatory compliance and maintenance. While commercial
tenants are often obligated to pay a portion of these escalating costs, there
can be no assurance that they will agree to pay these costs in the absence of a
contractual duty or that their payments will fully cover these costs. If
operating expenses increase, the local rental market, governmental regulations
or the lease may limit the extent to which rents may be increased to meet
expenses without decreasing occupancy rates. To the extent rents cannot be
increased or costs controlled, the cash flow and financial condition of the
Company may be adversely affected.
6. The Company is Dependent Upon Key Personnel and Has No Employment Agreements
or Full-Time Employees
We believe that our success depends to a significant extent on the efforts and
abilities of our senior management. Specifically, we are dependent upon the
services of Richard D. Surber, our president, chief executive officer and one of
our directors. We do not have an employment agreement with Mr. Surber and the
loss of his services would likely have an adverse effect on the Company's
ability to conduct its current business. Further, the Company has no full time
employees. We expect to use consultants, managers, attorneys and accountants as
necessary and do not anticipate a need for any full time employees.
7. The Company Will Need New Funding Which May Not Be Available In Order to
Fully Execute Our Business Plan.
The long term implementation of our business plan will depend upon our ability
to raise new funding. No commitments to provide new funding have been made by
management or shareholders. We have not investigated the availability, source or
terms that might govern the procurement of new funding. When new funding is
needed, there is no assurance that funds will be available from any source or,
if available, that funds can be obtained on terms acceptable to The Company.
Should we be unable to obtain new funding, our operations could be severely
limited.
8. The Company's Real Estate Investment May Potentially Be Subject to
Environmental Liability
Under various Federal, state and local environmental laws, ordinances and
regulations, an owner of real estate may be liable for the costs of removal or
remediation of certain hazardous or toxic substances on the property. These laws
often impose environmental liability without regard to whether the owner knew
of, or was responsible for, the presence of hazardous or toxic substances. The
presence of hazardous substances, or the failure to properly remediate them, may
adversely affect the owner's ability to sell or rent the property or to borrow
using the property as collateral. We are unaware of any environmental matters
affecting our property that would have a material adverse effect on our
business, assets or results of operations. No assurance can be given that
existing environmental assessments of our property revealed all environmental
liabilities, or that a prior owner of the property did not create any material
environmental condition not known to us, or that a material environmental
condition does not exist with respect to our property.
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9. The Company May Face the Possibility of Uninsured Loss
We carry comprehensive liability, fire, extended coverage and rental loss
insurance in respect to our real estate, with policy specifications, insured
limits and deductibles customarily carried for similar properties. However,
there are certain types of losses (such as losses arising from civil disturbance
or pollution) that are not generally insured because such losses are either
uninsurable or not economically insurable. Should an uninsured loss or a loss in
excess of insured limits occur, the capital invested in a property as well as
anticipated future revenues could be lost. Meanwhile, obligations on any
mortgage indebtedness and the property would continue. Therefore, any uninsured
loss could adversely affect our financial condition and results of operation.
10. The Company Must Bear the Costs of Compliance with the Americans With
Disabilities Act and Similar Legislation
Under the Americans with Disabilities Act of 1980 (ADA), places of public
accommodations and commercial facilities are required to meet certain
requirements related to access and use by disabled persons. Compliance with ADA
requirements could require both structural and non-structural changes to the
property which we own. Noncompliance could result in fines imposed by the
federal government or an award of damages to private litigants. Although
management believes that our property is substantially in compliance with
present requirements of the ADA, additional costs may be incurred to ensure
compliance in the future. A number of additional federal, state and local laws
exist which impose additional burdens or restrictions on owners with respect to
access by disabled persons. Those laws may require modifications or restrict
renovations to properties in which we have an investment. The ultimate cost of
compliance with the ADA or other related laws is not currently ascertainable.
While any prospective costs of compliance are not expected to have a material
effect on the result of our operations, a potential for substantial costs
exists. Should changes be required and involve greater expense than currently
anticipated, our financial condition and results of operations could be
adversely affected.
11. The Company Must Bear the Cost of Any Increases in Real Estate Taxes, Income
Taxes and Other Services
Increases in real estate taxes, income taxes and services or other taxes are not
generally passed through to tenants under existing leases. Real estate taxes on
our property my increase or decrease as property tax rates change subject to
ongoing assessments by the relevant tax authorities. Any increases in real
estate taxes, income taxes and other services could adversely affect our cash
flow from operations.
Risks Related to the Board of Trade Building
12. The Company's Significant Tenants Have Leases that Expire Within the Next
Two Years
The three largest tenants of Board of Trade Building have leases that expire
within the next two years. Each of these tenants occupy at least 1 full floor of
our building. Our principal source of revenue is comprised of rent we charge to
tenants. The failure of one or more of these tenants to renew their lease,
without immediate replacement with another qualified tenant, would have a severe
impact on the profitability of the building's operations.
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13. The Company's Real Estate Investment is Located in an Area Experiencing
Economic Downturn
The Board of Trade Building is located in the downtown district of Wichita,
Kansas which is currently experiencing an economic decline. Nonetheless, we
believe that the recent investment of millions of dollars in public and private
development of downtown Wichita will positively affect real estate values in the
area. However, any significant decrease in the level of investment activity in
the downtown area could curtail any enhancement of real estate values.
Therefore, we can provide no assurance that Wichita, Kansas real estate values
will rise, or that, if such values do rise, that the Company will benefit.
14. The Company Has No Assurance that the Trade Center Building Will Remain
Occupied at Current Levels
Our office building is classified as a Class "B" property. In the Wichita
downtown business district, vacancy rates for Class "B" office space have
decreased over the past three years from an average of 24% in 1997 to an average
of 17.8% in 1999. Our vacancy rate is currently at 17%. While vacancy rates for
Class "B" properties have decreased since 1997, vacancy rates in Class "A" and
Class "C" office space have increased. Overall, downtown office space vacancy
rates for all classes has remained relatively constant (19% in 1997, 18.5% in
1998 and 18.8% in 1999). While class "B" office space vacancy rates have not
risen in this period, there can be no assurance that the trend towards more
vacant space in the downtown area will not continue or that it will not affect
class "B" office space in the future.
We believe the decrease in vacancy rates for Class "B" space has resulted from a
willingness to reduce lease rates. We are unable to predict whether we will need
to forego rental increases or reduce rental rates in order to maintain or
increase the level of occupancy in our building. Should our vacancy rate rise,
we may be unable to maintain our tenant base without reducing rental fees, which
would adversely affect the Company's revenues.
Further, we can provide no assurance of continued tenant occupancy. We cannot
presume that current tenants will renew their leases upon expiration of their
terms or that current tenants will not attempt to terminate their leases prior
to the expiration of their lease terms. Should either of these possibilities
occur, we might not be able to locate qualified replacement tenants. Any
increase in our vacancy rate might in turn result in insufficient cash flow to
pay for operating expenses and any debt service that may become associated with
the property.
15. The Company's Share Value Is Dependent Upon Its Ability To Generate Net Cash
Flows
A substantial portion of any potential return on our common stock will be
dependent upon the Company's ability to generate net cash flows. Should we not
be able to operate our commercial property at a net profit, there will be no
return on shareholder's equity, and could well result in a loss in share value.
No assurance can be given that the Company will be able to operate at a net
profit over an extended period of time. We employ a property management company
to manage our building on terms consistent with industry practice. We are
relying on the property management company to lease and maintain the building.
Should the property management company not be effective in its role, any
decrease in our ability to generate net cash flows may leave the Company unable
to remain commercially viable.
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Risks Related to Investment
16. The Company's Common Stock Has No Prior Market, And Value May Decline After
the Offering.
There is no public market for The Company's common stock, and no assurance can
be given that a market will develop or that any shareholder will be able to
liquidate its shares without considerable delay, if at all. The trading market
price of The Company's common stock may decline below the offering valuation. If
a market should develop, the price may be highly volatile. In addition, an
active public market for The Company's common stock may not develop or be
sustained. Factors such as those discussed in this "Risk Factors" section may
have a significant impact on the market price of The Company's securities. Owing
to the low price of the securities, many brokerage firms may not be willing to
effect transactions in the securities. Even if a purchaser finds a broker
willing to effect a transaction in The Company's 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 these securities as collateral for loans. Thus, a purchaser may be
unable to sell or otherwise realize the value acquired in our stock.
17. The Company's 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 state's 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, and the broker must be
registered in that state, or otherwise be exempt from registration. We do not
know whether our stock will be registered under the laws of any states. A
determination regarding registration will be made by the broker-dealers, if any,
who agree to serve as the market-makers for The Company's stock. There may be
significant state blue sky law restrictions on the ability of investors to sell,
and on purchasers to buy, the Company's securities.
Accordingly, shareholders should consider the secondary market for our
securities to be a limited one. Shareholders may be unable to resell their
stock, or may be unable to resell it without the significant expense of state
registration or qualification.
18. Shareholders May Face Significant Restrictions on the Resale of Our Stock
Due To Federal Regulations of Penny Stock.
The Company's stock differs from many stocks, in that it is a "penny stock." The
Securities and Exchange Commission has adopted a number of rules to regulate
"penny stocks." These rules include, but are not limited to, Rules 3a5l-l,
15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and
Exchange Act of 1934, as amended. Because our securities probably constitute
"penny stock" within the meaning of the rules, the rules would apply to The
Company and its securities. The rules may further affect the ability of owners
of The Company's shares to sell their securities in any market that may develop
for them. There may be a limited market for penny stocks, due to the regulatory
burdens on broker-dealers. The market among dealers may not be active. Investors
in penny stock often are unable to sell stock back to the dealer that sold them
the stock. The mark-ups or commissions charged by the broker-dealers may be
greater than any profit a seller may 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 the stock to the investor. In some cases, the stock
may fall quickly in value. Investors may be unable to reap any profit from any
sale of the stock, if they can sell it at all.
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Shareholders should be aware that, according to the Securities and Exchange
Commission Release No. 34- 29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. These patterns include:
o control of the market for the security by one or a few
broker-dealers that are often related to the promoter or issuer;
o manipulation of prices through prearranged matching of purchases
and sales and false and misleading press releases;
o "boiler room" practices involving high pressure sales tactics and
unrealistic price projections by inexperienced sales persons;
o excessive and undisclosed bid-ask differentials and markups by
selling broker-dealers; and
o 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.
USE OF PROCEEDS
The Company will receive no proceeds from this offering which involves the pro
rata distribution to shareholders of Kelly's Coffee Group, Inc., of 18,400,000
of the our shares by the Company's parent, Kelly's Coffee Group, Inc.
DETERMINATION OF OFFERING PRICE
The 18,400,000 shares being registered in this offering will be distributed pro
rata to the shareholders of Kelly's Coffee Group, Inc. at no cost to the said
shareholders.
DILUTION
There will be no dilution of shareholder's interests as a result of the
distribution of shares pursuant to this offering.
SELLING SECURITY HOLDERS
Kelly's Coffee Group, Inc. proposes to offer 18,400,000 shares of the Company's
stock at no cost to its shareholders in a pro rata distribution of the Company's
shares (spin-off). The 18,400,000 shares owned by Kelly's Coffee Group, Inc.
represents approximately ninety five percent(95%) of the issued and outstanding
shares of the Company. After the offering, Kelly's Coffee Group will own no
shares of the Company. All of the shares owned by Kelly's Coffee Group, Inc. are
being distributed to its shareholders in this offering.
PLAN OF DISTRIBUTION.
Kelly's Coffee Group, Inc. proposes to offer 18,400,000 shares of $0.001 par
value common voting stock of the Company to its shareholders in a pro rata
distribution (spin-off) of the shares at no cost to its shareholders. The record
date for the distribution (spin-off) is January 1, 2001.
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<PAGE>
The shares of common stock represented by the offering are registered pursuant
to Section 12 of the Securities Exchange Act of 1934 and, upon this offering
being approved, Section 5 of the Securities Act of 1933.
LEGAL PROCEEDINGS
We are not a party to any pending legal proceeding or litigation, and none of
our property is the subject of a pending legal proceeding. Further, the officers
and directors know of no legal proceedings against us or our property
contemplated by any person, entity or governmental authority
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS & CONTROL PERSONS
The following persons constitute the Company's executive officers and directors
as of the date of this prospectus:
Name Age Position
---- --- --------
Richard D. Surber 27 President and Director
Ruairidh Campbell 37 Vice-President and Director
Richard D. Surber, 27 Mr. Surber was appointed president and a director of the
Company on December 15, 1999. Mr. Surber graduated from the University of Utah
with a Bachelor of Science degree in Finance and then obtained a Juris Doctorate
with an emphasis in corporate law, including securities, taxation, and
bankruptcy. Since 1992, he has had wide experience serving as an officer and
director of numerous small public and private companies.
Mr. Surber has served as an officer and/or director of several public companies
which include: CyberAmerica Corporation (president and director from 1992 to the
present). CyberAmeriuca Corporation is a holding company whose subsidiaries
invest in real estate and provide financial consulting services; Chattown.com
Network (f.k.a. Vaxcel, Inc.), which is unrelated to the Company (president and
director from June, 1999 to April 10, 2000); Chattown.com Network, Inc. is an
Internet company; Kelly's Coffee Group, Inc., the Company's parent corporation
(president and director from May, 1999 to the present); Innovative Property
Development Corporation (n.k.a. ChinaMallUSA.com., Inc.) which is unrelated to
the Company (president and director from 1992 to June, 1999); ChinaMallUSA.com,
Inc. is currently a non-reporting Chinese Internet company; Area Investment
Development Company ("AIDC"), a company unrelated to the Company (president and
director 1994-1996), AIDC has recently acquired an Internet company whose
content revolves around religious events; Youthline USA, Inc., (f.k.a. Ult-i-Med
Health Centers, Inc.), a company that acquired an educational company which
distributes education newspapers to children in grades K-12 (secretary and
director from April 6, 1999 to July 29,1999); Power Exploration, Inc. an oil and
gas company (director January 28, 2000 to June 23, 2000); Cathay Online f/k/a/
Premier Brands, Inc., an Internet company (president and director April, 1998 -
September, 1998); and Golden Opportunity Development Corporation ("GODC")
(president and director from September, 1999 to present). GODC's operations
consist of operating a 134 room motel in Baton Rouge, Louisiana. Mr. Surber is
also serving as officer and director of several fully reporting shell companies.
Ruairidh Campbell, 37 Mr. Campbell was elected as an officer and director of the
Company on September 29, 2000. He will serve until the next annual meeting of
the Company's shareholders and his successor is elected and qualified.
Thereafter, directors will be elected for one-year terms at the annual
shareholders meeting. Officers will hold their positions at the pleasure of the
board of directors, absent any employment agreement.
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Mr. Campbell graduated from the University of Texas at Austin with a Bachelor of
Arts in History and then from the University of Utah College of Law with a Juris
Doctorate with an emphasis in corporate law, including securities and taxation.
Over the past five years he has been an officer and director of several public
companies that include: NovaMed, Inc., a manufacturer of medical devices
(President and Director from 1995 to present), Bren-Mar Minerals, Ltd., a
Canadian mineral resource development company (President and Director 1995 to
present), and Allied Resources Inc., a Canadian based oil and gas development
company (President and Director 1998 to present). Mr. Campbell is also the
President and a Director of Aswan Investments, Inc., Cairo Acquisitions, Inc.
and Alexandria Holdings, Inc., three shell companies that are fully reporting.
Mr. Campbell also serves as the President and a Director of EnterNet, Inc., a
company seeking to become a wholesale distributor of vitamins through the
Internet. EnterNet recently (September 27, 2000) filed a SB-2/A Registration
Statement with the Small Business Division of the Securities and Exchange
Commission. He is also the President and a Director of InvestNet, Inc., a
mineral exploration company. InvestNet recently (August 3, 2000) filed a SB-2
Registration Statement with the Small Business Division of the Securities and
Exchange Commission.
No other person is expected to make a significant contribution to the Company
who is not an executive officer or director of the Company.
All executive officers are elected by the board and hold office until the next
annual meeting of shareholders and until their successors are elected and
qualify.
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 November 15, 2000, 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 November 15, 2000, there were 19,492,000 shares of
common stock issued and outstanding.
<TABLE>
<CAPTION>
Title of Class Name and Address Nature of Amount of Percent
Ownership Ownership of class
-------------- ----------------- --------- --------- -------
<S> <C> <C> <C> <C>
Common Stock Richard Surber Beneficial 19,400,000 99.52%
($0.001 par value) 268 West 400 South, # 300
Salt Lake City, Utah 84101
Common Stock Kelly's Coffee Group, Inc. Legal 18,400,000 94.39%
($0.001) par value 268 West 400 South, # 300
Salt Lake City, Utah 84101
Common Stock CyberAmerica Corporation 268 Legal 1,000,000 5.13%
($0.001) par value West 400 South, # 300
Salt Lake City, Utah 84101
Common Stock Ruairidh Campbell Legal 50,000 0%
($0.001) par value 600 Westwood Terrace
Austin, Texas 78746
Common Stock All Directors and Executive Legal and 19,450,000 99.78%
($0.001) par value Officers as a Group Beneficial
</TABLE>
15
<PAGE>
DESCRIPTION OF SECURITIES
General
The Company's authorized capital stock consists of 200,000,000 shares of common
stock, par value $0.001, of which 19,492,000 are issued and outstanding as of
November 21, 2000. There are no options, warrants or other instruments
convertible into shares outstanding.
Shares of Common Stock
The shares of common stock offered are presently restricted under Rule 144.
Following the effective date of this offering, the shares will be freely
transferable and will be distributed pro rata to Kelly's shareholders. Each
holder of common stock is entitled to one vote for each share owned of record on
all matters voted upon by stockholders, and a majority vote is required for all
actions to be taken by stockholders. In the event of a liquidation, dissolution
or wind-up of the Company, the holders of common stock are entitled to share
equally and ratably in the assets of the Company, if any, remaining after the
payment of all debts and liabilities of the Company and the liquidation
preference of any outstanding preferred stock. There are no dividend, voting,
preemptive or other rights associated with the Company's common stock, except
those generally provided under state law.
The Company has not paid any cash dividends in the last two fiscal years and
does not anticipate doing so in the near future. The future payment of cash and
non-cash dividends, if any, on the common stock is within the discretion of the
board of directors and will depend on the Company's earnings, capital
requirements, financial condition and other relevant factors. No assurances can
be made that any cash or non-cash dividends will be paid on the common stock in
the future.
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 the Company.
Legal Matters
The validity of the shares of common stock offered hereby will be passed upon
for the Company by Michael Golightly, an attorney licensed in the states of
Texas and Utah.
Experts
The financial statements of the Company as of December 31, 1998 and December 31,
1999 included in this prospectus have been audited by Anderson Anderson and
Strong, Certified Public Accountants, our independent auditors, as stated in
their reports appearing herein and have been so included in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
16
<PAGE>
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
The Company's articles of incorporation provide that it will indemnify its
officers and directors to the full extent permitted by Nevada state law. The
Company's bylaws provide that it will indemnify and hold harmless each person
who was, or is threatened to be made a party to or is otherwise involved in any
threatened proceedings by reason of the fact that he or she is or was a director
or officer of the Company, or is or was serving at the request of the Company as
a director, officer, partner, trustee, employee, or agent of another entity,
against all losses, claims, damages, liabilities and expenses actually and
reasonably incurred or suffered in connection with such proceeding.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 16, 1999, the Company issued shares of its $0.001 par value common
stock to Richard D. Surber (1,000,000), Wayne Newton (5,000), Allan Merrill
(500) and Kevin Schillo (500) for services rendered to the Company.
On August 29, 2000, the Company sold eighteen million four hundred thousand
(18,400,000) shares of its common voting stock to Kelly's Coffee Group, Inc., a
Nevada Corporation, for a cash price of five hundred forty thousand five hundred
fifty four dollars($540,554). Richard D. Surber, the Company's president is also
the president of Kelly's Coffee Group, Inc. The proceeds of this offering were
used to purchase the Company's office property in Wichita, Kansas. Richard D.
Surber had no personal interest in the transaction.
On September 15, 2000, the Company entered into a stock purchase agreement with
its president, Richard D. Surber. Under the terms of the agreement, the Company
purchased from Mr. Surber, one million of its $0.001 par value common shares for
the sum of five thousand dollars ($5,000.) The shares purchased by the Company
were delivered to Mr. Surber on December 12, 1999 as payment for services
rendered to the Company as its president and as a director. Because of Mr.
Surber's position as a member of the Company's Board of Directors, the
transaction is not considered to be an arms-length transaction. [See Exhibit
10(a).]
On October 17, 2000, the Company entered into a purchase agreement with its
parent corporation, Kelly's Coffee Group, Inc., a Nevada Corporation
("Kelly's"). Under the terms of the agreement, all of Kelly's Coffee Group,
Inc.'s assets, except for the shares it owns in the Company, were sold to us in
exchange for the agreement of the Company to assume all liabilities of Kelly's
Coffee Group, Inc.. The assets being transferred and liabilities being assumed
are listed as Kelly's Coffee Group, Inc. assets and liabilities on its Form
10-QSB for the quarter ended August 31, 2000. As part of the agreement, the
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<PAGE>
Company agreed to indemnify Kelly's Coffee Group, Inc. from the liabilities
being assumed pursuant to the agreement. The Company is a subsidiary of Kelly's
Coffee Group, Inc.. Kelly's Coffee Group, Inc. owns 94.39% of the issued and
outstanding stock of the Company. Richard D. Surber, the Company's president is
also the president of Kelly's Coffee Group, Inc. Richard D. Surber had no
personal interest in the transaction.
On September 29, 2000, the Company issued 50,000 shares of common stock to
Ruairidh Campbell for services as an officer and director of the Company
The Company hopes to profit from this transaction by engaging in attempts to
negotiate reductions in the amounts owed for cash payments, or otherwise
compromise or eliminate the assumed debt. Should the Company be successful in
such efforts, it expects to realize a profit on the assets minus the liabilities
that were transferred to the Company from Kelly's Coffee Group, Inc.
DESCRIPTION OF BUSINESS
General
Wichita Development Corporation was formed as a Nevada corporation under the
name "Cyberbotanical, Inc." on February 15, 1996, for the purpose of
specializing in Internet "virtual mall" development. The Company was one of over
40 related companies whose plan was to create a virtual mall with theme based
stores to sell merchandise over the Internet. The Company's virtual store was
tentatively set up to sell botanicals. The Company's former parent, CyberAmerica
Corporation, a fully reporting company under the Exchange Act of 1934, through
its now defunct subsidiary CyberMalls, Inc. was in the process of developing a
specialized search engine. This search engine was designed to assist consumers
in the purchase of products by narrowing the number of responses received when
searching for a specific product. However, due to a lack of necessary funding
CyberMalls, Inc.'s plans to create the search engine were discontinued.
Consequently, the plans to create a virtual mall with at least 40 theme based
stores, including the Company's theme based virtual store were abandoned. The
Company became a shell company during the last quarter of 1996 as a result of
CyberAmerica Corporation's decision not to fund the Company's planned
operations.
During the period after becoming a shell corporation, the Company's management
sought to identify a business that would create value for the shareholders. The
intent being to complete a merger or acquisition with a private entity whose
business presented an opportunity for the Company's shareholders. Upon careful
consideration, the Company's management decided to become involved in the
business of operating and investing in real estate. The plan being to acquire a
piece of commercial real estate based on which the Company could develop a real
estate investment strategy. Subsequent to reviewing prospective acquisitions
from around the country, the Company identified a commercial office building
located in downtown Wichita, Kansas as a possible business opportunity. The
Company then sold 18,400,000 shares to Kelly's Coffee Group, Inc. for $540,554
in order to fund the purchase of the building known as the Trade Center
Building. The Company purchased the Trade Center Building for $540,554 on August
30, 2000 and currently holds clear title to the property. On October 12, 2000,
the Company changed its name to Wichita Development Corporation.
Trade Center Building
The Trade Center Building is a 48,800 square foot, eight story office building
located in the central business district of Wichita, Kansas which encloses
48,541 of rentable space. Occupancy rates at the building currently exceed 83%.
The building is rented at an average of approximately $8.00 a square foot by the
current tenants, who include the prior owners of the building. The property is
considered class "B" space. The Trade Center Building is 79 years old.
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<PAGE>
The Company's decision to purchase the Trade Center Building was influenced by
the relatively consistent occupancy rate, the cost of new construction in the
area and the City of Wichita's efforts to revitalize the downtown area.
The City of Wichita has experienced a significant expansion of available
commercial office space over the past five to ten years. The trend has been
towards building new space outside of the downtown area. Despite this trend, the
overall vacancy rate for class "B" office space has increased since 1997. The
average vacancy rates for class "B" space was 24% in 1997 and was approximately
18% in 1999. However, vacancy rates for class "A" and class "C" space has
increased since 1997(2). Overall, the vacancy rate in the downtown area has
remained relatively consistent at 19% since 1997. The Trade Center Building
enjoys a 17% vacancy rate in line with other similar properties in the area. The
Company believes that this consistency in occupancy will enable it to move
forward with its plans to acquire additional properties without the problems
associated with negative cash flows that result from low occupancy.
We are aware that new office space is being built in suburban areas of Wichita.
These newer buildings continue to draw tenants from office space located in
downtown Wichita. Wilson Estates Office Park located in Northeast Wichita opened
its fifth new building in 1999, and since their development began in 1997, have
filled over 200,000 square feet of office space in the development. The
continued development of suburban office space is expected to provide continued
competition for tenants. However, we believe that the Company will be able to
maintain a competitive niche in the downtown Wichita area as a lower priced
alternative to the newer constructed space. New office space built in the
Wichita area is costs approximately $100 per square foot. Our cost for the Trade
Center Building was roughly $11.15 per square foot. The result being that
comparable office space in the downtown area leases for significantly less than
space in the newer suburban developments.
The City of Wichita has been involved in an aggressive redevelopment effort to
revitalize Wichita's downtown business area. The City recently finished a major
renovation of Douglas Street, the city's main thoroughfare in the downtown area.
The "Old Town" area has been extensively renovated with restaurants, clubs,
shops and a farm and art market. The City is actively working to save historic
structures and reinvigorate the downtown area. Public and private funds spent
since 1990 in redevelopment efforts are approaching the half billion dollar
mark, including the sixty million dollar Exploration Place Science Center which
opened in 1999(3). We believe that the City's commitment to redevelopment will
contribute to the continued viability of the downtown area, which will encourage
tenants to move into and remain in office space located downtown.
Acquisition of Other Properties
The Company intends to acquire additional properties that it believes are
undervalued in relation to cash flows and prospective resale. We will attempt to
acquire such properties by assuming existing favorable financing and satisfying
the balance of any purchase price with nominal cash payments or some combination
of cash and an issuance of our common stock. Once properties are acquired, we
intend to lease primarily to commercial tenants. The Company is prepared to make
limited improvements to properties acquired with the objective of increasing
occupancy, improving cash flows and enhancing potential resale value. The
Company does not intend to limit the geographical location in which it may
acquire properties. However, given the Company's current financial condition, we
will most likely seek to acquire properties in the Wichita area.
--------
(2)Real Estate Market Summary, Wichita, Kansas, "Forecast 2000" at 7.
Published by J.P. Weigand & Sons, Inc. Wichita, Kansas.
(3) Id. At 3
19
<PAGE>
The Company through its officers and consultants is actively seeking to acquire
additional real estate investments. However, we have not yet entered into any
agreement or commitment to acquire additional properties. Rather, we continue to
identify, review and evaluate various real estate opportunities as such become
available.
Employees
As of November 15, 2000, the Company had no full time employees, one part time
employee, and employs R.E. & C.N. Black, Inc. of Wichita, Kansas, a property
management company, to manage the Trade Center Building located in Wichita,
Kansas.
Reports to Security Holders
The Company is not required to deliver an annual report to security holders and
will not voluntarily deliver a copy of the annual report to the security
holders. Should the Company choose to create an annual report, it will contain
audited financial statements. The Company intends to file all of its required
information with the Securities and Exchange Commission ("SEC"). The Company
plans to file its 10KSB, 10QSB and all other forms that are or may become
applicable to the Company with the SEC.
The public may read and copy any materials that are filed by the Company with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
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. The statements
and forms filed by the Company with the SEC have been filed electronically and
are available for viewing or copy on the SEC maintained 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 can be found at 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 building in Wichita Kansas coupled with our ongoing attempts to
locate and acquire additional commercial office space in the Wichita area.
Expected Cash Requirements
On September 30, 2000 we had $16,260.24 cash on hand. Our current monthly
revenues from our office building are $27,264. Monthly expenses average $14,000.
This creates a net monthly profit of approximately $13,264. We believe that
rental income will be sufficient to meet our cash requirements for operations
for the next twelve months. With operations at the present level it is estimated
that we will have a net profit from building operations of $159,168 during the
next twelve month period. This estimate is based upon the assumption that
monthly operating rental income and operating costs will remain relatively
constant. An unexpected increase or decrease in rental income or operating costs
could cause this estimate to vary. There can be no guarantee that operating
costs will remain constant through the end of the year 2001.
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<PAGE>
In the event we acquire additional rental properties during the coming year, our
cash requirements to fund operations could increase. While we have no present
intention to raise equity capital for operations in the next twelve month
period, the acquisition of, or opportunity to acquire additional commercial real
estate could create a need to raise additional capital.
Product Research and Development
We do not plan to conduct any significant research or development activities in
the coming twelve month period.
Expected Purchase or Sale of Plant and Equipment
We have no current plan for the purchase of any specific additional plant or
equipment. However, we are investigating the feasibility of purchasing
additional commercial real estate in the Wichita area. We are using the services
of a licensed real estate broker in the Wichita area to suggest potential
properties for our consideration. We have investigated a number of potential
properties and are continuing to consider the purchase of additional office
properties in the Wichita area.
Expected Changes in Number of Employees
We currently have one part-time employees, Richard D. Surber. The Trade Center
Building is currently managed by a resident property management company. We do
not expect to hire any additional employees in the coming twelve month period.
DESCRIPTION OF PROPERTY
Location and Description
We own an office building in Wichita, Kansas known as the Trade Center Building.
The building was purchased for $540,554 on August 30, 2000. We hold clear title
to the property. The Trade Center Building, which opened in 1921, is located in
the downtown business district of Wichita, Kansas, at 120 South Market Street,
Wichita, Kansas. The building is a 48,500 square foot, eight story office
building. Occupancy rates currently exceed 83%. One of the prior owners of the
Trade Center Building has been retained to continue operation of the building.
The building is rented at an average of approximately $8.00 a square foot by the
current tenants, who include the prior owners.
Description of Real Estate and Operating Data
The operation of the Trade Center Building is overseen by R.E. & C.N. Black,
Inc. pursuant to a management agreement entered into on August 19th , 1997, and
renewed effective September 1, 2000. One of the principals of R.E. & C.N. Black,
Inc. is one of the prior owners and a current tenant of the Trade Center
Building. We agreed to compensate R.E. & C.N. Black, Inc. at the rate of $1,500
per month plus 3% of lease value for leasing new space, in addition to 2.5% of
value for lease renewals. R.E. & C.N. Black, Inc. agreed to manage the property,
provide maintenance and collect rent. R.E. & C.N. Black, Inc. is also solely
responsible for renting the vacant space in the building.
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<PAGE>
The Company has no present plans to renovate the building or otherwise carry out
any capital improvements to the property. We intend to continue to rent the
existing space without renovation or improvement, unless such renovations or
improvements are paid for by existing or prospective tenants.
The Trade Center Building generates average monthly lease and rental revenues of
twenty-seven thousand two hundred sixty-four dollars ($27,264). Five thousand
one hundred twenty eight dollars ($5,128) per month is received from tenants
occupying 9,307 square feet of space on a month to month basis, twenty-one
thousand six hundred ninety six dollars ($21,696) is generated from leases of
31,000 square feet, and four hundred thirty eight dollars ($438) per month is
received from rental of storage space on the premises.
The Trade Center Building currently houses ten unrelated tenants. Four of these
tenants rent a total of 9,307 feet on a month-to-month basis. Five tenants have
leases expiring December 31, 2001, which leases represent 19,109 square feet or
39% of the available space. One tenant has a lease on 8,809 square feet which
expires August 31, 2002, which lease represents 18% of the available space. One
tenant has a lease on 3,082 square feet which expires February 28, 2003, which
lease represents 6% of the available space.
Three of our current tenants occupy more than 10% each of our available rental
space in the Building. The nature of the business of each of these tenants and
the principal provisions of their leases are outlined below:
1. Southwest Internet Access, Inc. is an Internet service provider
which rents 8,809 square feet of building space (18%) for $7,792
per month pursuant to a lease which expires August 31, 2002.
2. New England Life Insurance Company is an insurance company which
rents 9,537 square feet of building space (20%) for $6,786 per
month pursuant to a lease which expires December 31, 2001.
3. The Office and Technology Center is a secretarial service which
rents 4,321 square feet of building space pursuant to a lease
which expires December 31, 2001 and rents 4,724 feet of building
space on a month-to-month basis (a total of 18%) for a total
rental of $3,725.
The Trade Center Building is located in the downtown business area of Wichita,
Kansas. The downtown area vacancy rate for class "B" office space, similar to
that space found in the Trade Center Building,, currently averages 17.8%, and
has dropped in recent years from 24% in 1997 to 17.8% in 1999(4). Overall,
vacancy rates for all office space in the downtown area has remained relatively
constant over the past three years averaging between 18.5% and 19% in the years
1997 through 1999(5). While vacancy rates on class "A" and "C" office space have
risen, the vacancy rate for class "B" office space has declined leading to
little change in vacancy rates downtown(6).
--------
(4) Id. At 7.
(5) Id.
(6) Id.
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Nonetheless, there has been an out-migration of tenants from the downtown area
to suburban office space in recent years. This trend will most likely continue
as new office space is built in suburban areas of Wichita. However, since per
square foot rental rates in the downtown area are often as much as 50% less than
similar suburban office space, there continues to be a demand for space in
downtown office buildings(7).
While we believe that lower rental rates and aggressive marketing of its office
space will allow it to keep its space filled at or above the market level, there
can be no assurance that vacancy rates will not rise in the downtown area as
more suburban office space becomes available, or that the Company will be able
to maintain its current level of occupancy in its building.
The federal tax basis for the Trade Center Building is five hundred forty
thousand five hundred fifty-four dollars ($540,554). The mill rate in 1999 was
.099131% based on an assessed valuation of $112,500. The annual realty taxes for
1999 were $11,152. The assessed valuation of the Trade Center Building for the
year 2000 is $125,000 the mill rate has not been set as of the date of this
filing. The Company is depreciating the property over a 39 year period and uses
the straight line method of accounting for depreciation purposes. The Company is
of the opinion that the Trade Center Building is adequately covered by
insurance.
Investment Policies
Our investment policy is to actively pursue the acquisition of real estate for
investment income and appreciation in property value. We intend to place an
emphasis on acquiring property which management feels is undervalued. Rather
than limiting itself to specific types of real estate, our policy will be to
focus primarily on terms of financing and potential return on capital. We intend
to look for properties that can be purchased by assuming existing favorable
financing and satisfying the balance of any purchase price with nominal cash
payments or some combination of cash and an issuance of our common stock. Once
properties are acquired, we intend to lease primarily to commercial tenants. The
Company is prepared to make limited improvements to properties acquired with the
objective of increasing occupancy, improving cash flows and enhancing potential
resale value.
We have no present intention to invest in first or second mortgages, interests
in real estate investment trusts or real estate limited partnerships. However,
our board of directors is not precluded in the future from considering or
participating in such investments
The Company currently has no limitations on the percentage of assets which may
be invested in any one investment, or the type of securities or investment in
which it may invest. However, the board of directors in its discretion may set
policies without a vote of the Company's securities holders regarding the
percentage of assets which may be invested in any one investment, or type of
investment. The Company's current policy is to evaluate each investment based
upon its potential capital return to the Company on a relatively short term
basis. Furthermore, the Company does not plan to enter into the business of
originating, servicing or warehousing mortgages or deeds of trust, except as may
be incidental to its primary purpose of acquiring real estate.
--------
(7) Wichita Business Journal, Fall 2000 Leasing and Office Design Guide, at 9.
23
<PAGE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company currently has no public trading market. In an effort to provide some
liquidity for the Company's shareholders and create a public market for its
securities, the Company intends to file a Form 15c2-11 so that it may obtain a
listing on the NASD over the counter bulletin board upon this offering becoming
effective. However, we can provide no assurance that the Company will obtain a
listing on the NASD over the counter bulletin board or that a public market for
the Company' securities will develop even if a listing on the NASD over the
counter bulletin board is obtained.
Record Holders
As of November 21, 2000, there were approximately 78 shareholders of record
holding a total of 19,492,000 shares of common stock. The holders of the common
stock are entitled to one vote for each share held of record on all matters
submitted to a vote of stockholders. Holders of the common stock have no
preemptive rights and no right to convert their common stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
common stock.
Rule 144 Sales
As of the date of this offering, the Company has one million six thousand shares
of its $0.001 par value common stock outstanding which are available for resale,
subject to the provisions and restrictions of Rule 144. One million of these
shares were purchased by CyberAmerica Corporation for cash on April 9, 1996. Six
thousand shares were issued to Company employees on December 16, 1999 pursuant
to Rule 701. In the event a public market for our shares develops in the future,
the holders could sell these shares, subject to Rule 144, in the public market.
Dividends
The Company has not declared any cash dividends since inception and does not
anticipate paying any dividends in the foreseeable future. The payment of
dividends is within the discretion of the board of directors and will depend on
the Company's earnings, capital requirements, financial condition, and other
relevant factors. There are no restrictions that currently limit the Company's
ability to pay dividends on its common stock other than those generally imposed
by applicable state law.
EXECUTIVE COMPENSATION
No compensation in excess of $100,000 was awarded to, earned by, or paid to any
executive officer or employee of the Company during the years 1998 through 2000.
The following table and the accompanying notes provide summary information for
each of the last three fiscal years concerning cash and non-cash compensation
paid or accrued by Richard Surber, the Company's chief executive officer for the
past three years.
24
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long Term Compensation
Awards Payouts
Securities
Name and Salary Bonus Other Annual Restricted Stock Underlying LTIP All Other
Principal Year ($) ($) Compensation Award(s) Options payouts Compensation
Position ($) ($) SARs(#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard Surber 2000 - - - - - - -
President & 1999 - - $1,000* - - - -
Director 1998 - - - - - - -
* 1,000,000 shares of common stock of the Company valued at $0.001 (par value) per share.
</TABLE>
Compensation of Directors
The Company's directors are not currently compensated for their services as
directors of the Company.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with the Company's Accountants on
accounting and financial disclosure
[THIS SPACE INTENTIONALLY LEFT BLANK]
25
<PAGE>
FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Wichita Development Corporation,
formerly known as Cyberbotanical, Inc., a Nevada corporation, and its
subsidiaries and predecessors unless otherwise indicated. The Company's
financial statements for the fiscal years ended December 31, 1999 and 1998 are
attached hereto as pages F-1 through F-8. Consolidated, unaudited, condensed
interim financial statements including a balance sheet for the Company as of the
three and nine month periods ended September 30, 1999 and 2000 and statements of
operations, statements of shareholders equity and statements of cash flows for
the interim period up to the date of such balance sheet and the comparable
period of the preceding year are attached hereto as Pages F-9 through F-13 and
are incorporated herein by this reference.
CONTENTS
Page No.
Independent Auditors Report..................................................F-2
Balance Sheets...............................................................F-3
Statements of Operations.....................................................F-4
Statements of Shareholders Equity............................................F-5
Statements of Cash Flows.....................................................F-6
Notes to the Financial Statements............................................F-7
F-1
<PAGE>
ANDERSEN ANDERSEN & STRONG, L.C. 941 East 3300 South, Suite 202
Certified Public Accountants and Salt Lake City, Utah 84106
Business Consultants Telephone 801-486-0096
Member SEC Practice Section of the AICPA Fax 801-486-0098
E-mail [email protected]
Board of Directors
Cyberbotanical, Inc.
Salt Lake City, Utah
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheets of Cyberbotanical, Inc, (a
development stage company) at December 31, 1999, and the related statements of
operations, stockholders' equity, and cash flows for the years ended December
31, 1999 and 1998, and the period from February 15 1996 (date of inception) to
December 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall balance sheet presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cyberbotanical, Inc. at
December 31, 1999, and the results of operations and cash flows for the years
ended December 31, 1999 and 1998, and the period from February 15, 1996 (date of
inception) to December 31, 1999, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has suffered recurring
losses from operations from its inception and does not have the necessary
working capital for any future planned activity which raises substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are described in Note 4. These financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Andersen, Andersen & Strong
Salt Lake City, Utah
February 3, 2000
F-2
<PAGE>
<TABLE>
CYBERBOTANICAL, INC.
(A Development Stage Company)
Balance Sheet
As Of December 31, 1999 and 1998
<CAPTION>
1999 1998
-------------- ---------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Stock subscription receivable $ 360 $ -
-------------- ---------------
Total Current Assets $ 360 $ -
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
None $ - $ -
-------------- ---------------
Total Current Liabilities - -
-------------- ---------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value; authorized 5,000,000 shares; no
shares issued - -
Common stock, $.001 par value; authorized 20,000,000 shares;
shares issued and outstanding: 2,042,000 and 1,000,000 2,042 1,000
Additional paid-in capital 324 -
Accumulated deficit during
development stage (2,006) (1,000)
-------------- ---------------
Total stockholders' equity 360 -
-------------- ---------------
$ 360 $ -
============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements
F-3
<PAGE>
<TABLE>
CYBERBOTANICAL, INC.
(A Development Stage Company)
Statement of Operations
Years Ended December 31, 1999 and 1998
February 15, 1996 (Date of Inception) to December 31, 1999
<CAPTION>
Inception
through Dec.
1999 1998 31, 1999
---------------- -------------- ----------------
<S> <C> <C> <C>
Revenue:
None $ - $ - $ -
---------------- -------------- ----------------
- - -
---------------- -------------- ----------------
Expenses:
General and administrative costs 1,006 - 2,006
---------------- -------------- ----------------
1,006 - 2,006
---------------- -------------- ----------------
Net loss (1,006) - (2,006)
---------------- -------------- ----------------
Provision for income taxes
Net loss
Net loss per common share - basic $ - $ - $ -
================ ============== ================
Weighted average number of shares outstanding - basic $ 1,042,822 $ 1,000,000 $ -
================ ============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
<PAGE>
<TABLE>
CYBERBOTANICAL, INC.
(A Developmental Stage Company)
Statement of Changes in Stockholders' Equity
February 15, 1996 (Date of Inception) to December 31, 1999
<CAPTION>
Common Stock
Additional
Paid-in Accumulated
Shares Amount Capital Deficit Total
-------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Issuance of common stock to incorporators
for cash - April 9, 1996 at $0.001 1,000,000 $ 1,000 $ - $ - $ 1,000
Net loss for the period from February 15,
1996 (date of inception) to December 31, 1997 - - - (1,000) (1,000)
-------------- ---------------- ------------- ----------- ----------
Balance December 31, 1997 1,000,000 1,000 - (1,000) -
-------------- ---------------- ------------- ----------- ----------
Results of operations year ended December 31, 1998 - - - - -
-------------- ---------------- ------------- ----------- ----------
Balance December 31, 1998 1,000,000 1,000 - (1,000) -
-------------- ---------------- ------------- ----------- ----------
Issuance of common shares for services -
December 16, 1999 at $0.001 1,006,000 1,006 - - 1,006
Shares subscribed - December 16, 1999 at
$0.01 (cash received February 3, 2000) 36,000 36 324 - 360
Results of operations year ended December 31, 1999 - - - (1,006) (1,006)
-------------- ---------------- ------------- ----------- ----------
Balance December 31, 1999 2,042,000 $ 2,042 $ 324 $ (2,006) $ 360
============== ================ ============= =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-5
<PAGE>
<TABLE>
CYBERBOTANICAL, INC.
(A Developmental Stage Company)
Statement of Cash Flows
February 15, 1996 (Date of Inception) to December 31, 1999
<CAPTION>
Inception
through Dec.
1999 1998 31,1999
-------------- ------------ ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net (loss) $ (1,006) $ - $ (2,006)
-------------- ------------ ---------------
Adjustments to reconcile net (loss) to net cash used by operating
activities:
Services and expenses paid with common stock 1,006 - 1,006
-------------- ------------ ---------------
Total adjustments 1,006 - 1,006
-------------- ------------ ---------------
Net cash provided (used) by operating activities - - (1,000)
-------------- ------------ ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions by incorporators - - 1,000
-------------- ------------ ---------------
Net cash provided by financing activities - - 1,000
-------------- ------------ ---------------
Net increase in cash - - -
Cash, beginning - - -
-------------- ------------ ---------------
Cash, ending $ - $ - $ -
============== ============ ===============
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Issuance of common stock for services and expenses $ 1,006 $ - $ 1,006
============== ============ ===============
</TABLE>
The accompanying notes are an integral part of these financial statements
F-6
<PAGE>
CYBERBOTANICAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on February
15, 1996 with the name of "Cyberbotanical, Inc." with authorized common stock of
20,000,000 shares at $0.001 par value, and authorized preferred stock of
5,000,000 shares at $0.001 par value,
The Company is in the development stage and has not commenced any significant
operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognized income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not adopted a policy regarding payment of dividends.
Income Taxes
At December 31, 1999, the Company had a net operating loss carryforward of
$2,006. The tax benefit from the loss carry forward has been fully offset by a
valuation reserve because use of future tax benefit is undeterminable since the
Company has no operations. The net operating loss will expire starting in 2011
through 2019.
Earnings (Loss) Per Share
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding in accordance with FASB No. 128.
Financial Instruments
The carrying amounts of financial instruments are considered by management to be
their estimated fair values.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
F-7
<PAGE>
CYBERBOTANICAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
3. RELATED PARTY TRANSACTIONS
The statement of changes in stockholders' equity shows 2,042,000 of common stock
outstanding of which 2,000,000 shares were issued to related parties.
4. GOING CONCERN
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital for any future planned activity and management of the
Company will be required to develop a strategy which will accomplish this
objective. There can be no assurance that the Company can be successful in this
effort.
F-8
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Unaudited Balance Sheet as of September 30, 2000............................F-10
Unaudited Statement of Operations for the three and nine months ended
September 30, 2000 and 1999.................................................F-11
Unaudited Statement of Cash Flows for the three and nine months ended
September 30, 2000 and 1999.................................................F-12
Notes to Condensed Financial Statements.....................................F-13
F-9
<PAGE>
<TABLE>
CYBERBOTANICAL, INC.
(A Development Stage Company until August 30, 2000)
Balance Sheets
As of September 30, 2000
<CAPTION>
(Unaudited)
September 30, 2000
-----------------------
<S> <C>
ASSETS
CURRENT ASSETS:
Cash $ 16,260
-----------------------
TOTAL CURRENT ASSETS 16,260
Property, Plant & Equipment (net) 538,379
-----------------------
TOTAL ASSETS $ 554,639
=======================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable - Related Parties 9,319
Accrued Expenses 7,776
-----------------------
TOTAL CURRENT LIABILITIES 17,095
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value; authorized 5,000,000 shares; no
shares issued -
Common stock, $.001 par value; authorized 200,000,000 shares;
shares issued and outstanding: 19,492,000 on September 30, 2000 19,492
Additional paid-in capital 519,927
Accumulated deficit (1,875)
-----------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) 537,544
-----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 554,639
=======================
</TABLE>
The accompanying notes are an integral part of these financial statements
F-10
<PAGE>
<TABLE>
CYBERBOTANICAL, INC.
(A Development Stage Company until August 30, 2000)
Unaudited Statements of Operations
For the Nine Months Ended September 30, 2000 and 1999
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue:
Rental Income $ 27,264 $ - $ 27,264 $ -
-------------- ------------- ------------- -------------
Expenses
Costs associated with rental income 20,062 - 20,062 -
-------------- ------------- ------------- -------------
Gross Rental Profit (Loss) 7,202 - 7,202 -
Selling, General & Administrative Expenses 6,112 - 7,071 -
-------------- ------------- ------------- -------------
Operating Profit (Loss) 1,090 - 131 -
-------------- ------------- ------------- -------------
Provision for income taxes - - - -
Net Income (Loss) $ 1,090 $ - $ 131 $ -
============== ============= ============= =============
Net loss per common share - basic $ - - $ - $ -
============== ============= ============= =============
Weighted average number of shares
outstanding - basic 8,146,945 1,000,000 4,076,981 1,000,000
============== ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements
F-11
<PAGE>
<TABLE>
CYBERBOTANICAL, INC.
(A Developmental Stage Company until August 30, 2000)
Unaudited Statements of Cash Flows
For the Nine Months Ended September 30, 2000 and 1999
<CAPTION>
For the Three Months For the Nine Months
Ended Ended
September 30, September 30,
2000 1999 2000 1999
------------ ---------- ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C> <C> <C>
Net Income (Loss) $ 1,090 $ - $ 131 $ -
------------ ---------- ------------ ------------
Adjustments to reconcile net (loss) to net
cash used by operating activities:
Decrease in accounts receivable - - 360 -
Increase in accounts payable 8,309 - 9,319 -
Increase in accrued expenses 7,776 - 7,776 -
Stock issued for services 1,500 - 1,500 -
------------ ---------- ------------ ------------
Total adjustments 17,585 - 18,955 -
------------ ---------- ------------ ------------
Net cash provided (used) by operating activities 18,675 - 19,086 -
CASH FLOWS FROM INVESTING ACTIVITIES
Capital purchases (Board of Trade building) (538,379) - (538,370) -
------------ ---------- ------------ ------------
Net cash provided (used) by investing activities (538,379) - (538,370) -
CASH FLOWS FROM FINANCING
ACTIVITIES:
Common stock issued for cash 540,553 540,553
Common stock bought back for cash (5,000) - (5,000) -
------------ ---------- ------------ ------------
Net cash provided by financing activities 535,553 - 535,553 -
Net increase (decrease) in cash 15,849 - 16,260 -
------------ ---------- ------------ ------------
Cash, beginning 411 - - -
------------ ---------- ------------ ------------
Cash, ending $ 16,260 $ - $ 16,260 $ -
============ ========== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
F-12
<PAGE>
CYBERBOTANICAL, INC
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
September 30, 2000
1. Basis of Presentation
The accompanying consolidated unaudited condensed financial statements have been
prepared by management in accordance with the instructions in Form 10-QSB and,
therefore, do not include all information and footnotes required by generally
accepted accounting principles and should, therefore, be read in conjunction
with the Company's initial registration statement on Form 10-SB, filed with the
Securities and Exchange Commission on February 8, 2000. These statements do
include all normal recurring adjustments which the Company believes necessary
for a fair presentation of the statements. The interim operations results are
not necessarily indicative of the results for the full year ended December 31,
2000.
2. Related Party Transactions
At the conclusion of the third quarter, Hudson Consulting Group, Inc. billed the
Company $935.00 for services rendered in preparing disclosure documents and
general administrative tasks with regards to day to day operations. Richard
Surber is president of both Hudson Consulting Group, Inc. and the Company.
3. Additional footnotes included by reference
Except as indicated in Notes above, there have been no other material changes in
the information disclosed in the notes to the financial statements included in
the Company's initial registration statement on Form 10-SB, filed with the
Securities and Exchange Commission on February 8, 2000. Therefore, those
footnotes are included herein by reference.
F-13
<PAGE>
Outside back cover of prospectus.
No dealer, salesman or other person has been authorized to give any information
or to make any representations not contained in this prospectus. If given or
made, such information or representation must not be relied upon as having been
authorized by the Company. This prospectus does not constitute an offer to sell,
or a solicitation of an offer to buy, the common stock in any jurisdiction
where, or to any person to whom, it is unlawful to make such offer or
solicitation. Neither the delivery of this prospectus nor any sale hereunder
shall, under any circumstances, create an implication that there has not been
any change in the facts set forth in this prospectus or in the affairs of the
Company since the date hereof.
Until 40 days after the first date upon which the security was bona fide offered
to the public by the issuer or by or through an underwriter (Item 503(e)) all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments and
subscriptions.
26
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers
The Company's bylaws and section 78.751 of the Nevada Revised Statutes provide
for indemnification of the Company's officers and directors in certain
situations where they might otherwise personally incur liability, judgments,
penalties, fines and expenses in connection with a proceeding or lawsuit to
which they might become parties because of their position with the Company.
Section 78.751 of the Nevada Revised Statutes provides for indemnification of
the Company's officers and directors in certain situations where they might
otherwise personally incur liability, judgments, penalties, fines and expenses
in connection with a proceeding or lawsuit to which they might become parties
because of their position with the Company.
Section 78.751 of the Nevada Revised Statutes states the following:
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the action, suit
or proceeding if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding,
he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys' fees actually
and reasonably incurred by him in connection with the defense or settlement
of the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter
as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to
the corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action or suit
was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person
is fairly and reasonable entitled to indemnity for such expenses as the
court deems proper.
27
<PAGE>
3. To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in subsections 1 and 2, or in defense of any
claim, issue or matter therein, he must be indemnified by the corporation
against expenses, including attorneys' fees, actually and reasonably
incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by a court or
advanced pursuant to subsection 5, must be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances.
The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting
of directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were
not parties to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the
act, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
5. The articles of incorporation, the bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding must
be paid by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined by a court of competent jurisdiction that he
is not entitled to be indemnified by the corporation. The provisions of
this subsection do not affect any rights to advancement of expenses to
which corporate personnel other than directors or officers may be entitled
under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or ordered by
a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under
the articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either
an action in his official capacity or an action in another
capacity while holding his office, except that indemnification,
unless ordered by a court pursuant to subsection 5, may not be
made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law
and was material to the cause of action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
To the extent that indemnification may be related to liability arising under the
Securities Act, the Securities and Exchange Commission takes the position that
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
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Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses of this offering, all of
which will be paid by the Company:
SEC Registration Fee $ 126.30
Accounting Fees and Expenses 2,555.00
Legal Fees and Expenses 7,000.00
Printing and Engraving Expenses 1,200.00
Transfer Agent and Registrar Fees and Expenses 1,800.00
Miscellaneous 250.00
-----------
Total $12,631.30
Recent Sales of Unregistered Securities
On April 9, 1996, the Company issued 1,000,000 shares of common stock to
CyberAmerica Corporation at par value ($0.001) for a total of $1,000. The
Company relied on exemptions provided by Section 4(2) of the Securities Act of
1933, as amended. The Company made this offering based on the following factors:
(1) the issuance was an isolated private transaction by the Company which did
not involve a public offering; (2) there was only one offeree who was a
consultant to the Company; (3) the offeree did not resell the stock but
continued to hold it for at least two years; (4) there were no subsequent or
contemporaneous public offerings of the stock; (5) the stock was not broken down
into smaller denominations; and (6) the negotiations for the sale of the stock
took place directly between the offeree and the Company.
On December 16, 1999, the Company completed a private placement of 36,000 shares
of Common Stock to 72 non-U.S. persons at a purchase price of $0.01 per share.
The Company relied on exemptions provided by Regulation S of the Securities Act
of 1933, as amended, for the issuance of the 36,000 shares of common stock to
these non-U.S. persons.
On December 16, 1999, the Company issued 1,006,000 shares of common stock to
Richard Surber (1,000,000), Wayne Newton (5,000), Allan Merrill (500) and Kevin
Schillo (500), valued at par($0.001) for services rendered pursuant to Rule 701
of the Securities Act of 1933. The Company relied on the following facts in
determining that Rule 701 was available: (a) the shares were issued pursuant to
a written compensatory benefit plan issued by the Company, (b) the individuals
listed rendered bonafide services not in connection with the offer or sale of
securities in capital raising transaction, (c) the shares were issued pursuant
to a written contract relating to the issuance of shares paid as compensation
for services rendered, and (d) the amount of shares offered and sold in reliance
on Rule 701 did not exceed $500,000 and all securities sold in the last 12
months have not exceeded $5,000,000.
On August 29, 2000, the Company issued 18,400,000 shares of common stock at
$0.293 per share to Kelly's Coffee Group, Inc. for cash pursuant to section 4(2)
of the Securities Act of 1933 in an isolated private transaction by the Company
which did not involve a public offering. The Company made this offering based on
the following factors: (1) The issuance was an isolated private transaction by
the Company which did not involve a public offering; (2) there was only one
offeree who was issued stock for cash; (3) the offeree did not resell the stock
but has continued to hold it since the date of the transaction; (4) there were
no subsequent or contemporaneous public offerings of the stock; (5) the stock
was not broken down into smaller denominations; and (6) the negotiations for the
sale of the stock took place directly between the offeree and the Company.
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On September 29, 2000, the Company issued 50,000 shares of common stock to
Ruairidh Campbell for services as an officer and director of the Company
pursuant to section 4(2) of the Securities Act of 1933 in an isolated private
transaction by the Company which did not involve a public offering. The Company
made this offering based on the following factors: (1) The issuance was an
isolated private transaction by the Company which did not involve a public
offering; (2) there was only one offeree who was issued stock for services; (3)
the offeree did not resell the stock but has continued to hold it since the date
of the transaction; (4) there were no subsequent or contemporaneous public
offerings of the stock; (5) the stock was not broken down into smaller
denominations; and (6) the negotiations for the sale of the stock took place
directly between the offeree and the Company.
Index to Exhibits
Exhibit
Number Page Description
3(i) * Articles of Incorporation of Cyberbotanical, Inc., a Nevada
corporation, filed with the State of Nevada on February 15,
1996 (Incorporated by reference from Form 10-SB filed
February 8, 2000).
3(ii) 33 Amendment to Articles of Incorporation filed October 12,
2000 changing the name of the Company to Wichita Development
Corporation.
3(iii) * By-laws of the Company adopted on April 9, 1996
(Incorporated by reference from Form 10-SB filed February 8,
2000).
4 * Excerpts defining shareholder rights from Articles of
Incorporation (Articles IV and VI) and By-Laws (Sections 2
and 6) (Incorporated by reference from Form 10-SB filed
February 8, 2000).
5 34 Legal Opinion and Consent of Counsel.
10(i) 37 Stock Purchase Agreement dated September 15, 2000 between
the Company and Richard D. Surber.
10(ii) * Purchase agreement dated 10/17/00 between the Company and
its parent, Kelly's Coffee Group, Inc. (Incorporated by
reference from Form 8-K filed October 19, 2000).
23 42 Consent of Independent Certified Public Accountant.
27 * Financial Data Schedule "CE" (Incorporated by reference from
Form 10- SB/A-4 filed June 23, 2000 and Form 10-QSB filed
November 14, 2000).
* Incorporated by reference from previous filings as indicated.
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Undertakings
A. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses
incurred or paid by a director, officer or controlling person of the
small business issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the small business
issuer will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
B. The Company will:
(1) For determining any liability under the Securities Act, treat
the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the small
business issuer under Rule 424(b) (1) or (4) or 497(h) under
the Securities Act as part of this registration statement at
the time the Commission declared it effective.
(2) For determining any liability under the Securities Act, treat
each post-effective amendment that contains a form of
prospectus as a new registration statement for the securities
offered in the registration statement, and that Offering of
the securities at that time as the initial bona fide Offering
of those securities.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Salt Lake, State of Utah, on November 21, 2000
Wichita Development Corporation
/s/Richard D. Surber
------------------------------------------
Richard D. Surber, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
Signature Title Date
/s/ Richard D. Surber President and Director November 21, 2000
----------------------------
Richard D. Surber
/s/ Ruiaridh Campbell Director November 21, 2000
---------------------------
Ruairidh Campbell
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