Beacon Equity Research Initiates Coverage On NEXH

Nexia Holdings, Inc. (OTCBB: NEXH )

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FINANCIAL SUMMARY

Exchange/ Symbol
OTCBB / NEXH

Coverage Initiated
June 23, 2006

Current Price
$0.0003

Rating
Speculative Buy

Price Target
$0.0016

Market Cap.
$1.17 million

52-Week Range
$0.008-$0.0001

Average 30-Day Volume
24.33 million

INVESTMENT HIGHLIGHTS

In addition to a proven successful model with its real
estate operations, Nexia is now identifying additional business
opportunities in different sectors. Some of the key investment highlights
that are expected to help the Company post impressive revenues and
earnings are discussed in detail below:

- Real Estate Operations - Nexia’s real estate operations in
Utah have yielded significant returns in the past.

- Financial Fundingz - Nexia has executed an investment
agreement with Dutchess Private Equities Fund, L.P., for $10 million in
equity funding.

- Landis LLC - Nexia Holdings’ recent 20% acquisition of Landis
LLC (operator of the Landis Lifestyle Salon located in Salt Lake City)
marks a positive development for the Company.

- Black Chandelier -

- - Nexia is currently planning to acquire the assets of
Diversified Holdings X, Inc. (DHX), which operates a fashion design,
manufacturing and retail clothing enterprise under the brand name of
Black Chandelier.

- Diversified Financial Resources Corp. - Nexia has recently
received 25 million shares of Diversified Financial Resources Corp.
(OTCBB: DVFN ), of
which the Company plans to retain 5 million shares.

COMPANY BACKGROUND

Nexia Holdings, Inc., (OTCBB: NEXH ) based
in Salt Lake City, Utah, is a real-estate holding company primarily
engaged in the acquisition, lease and sale of real estate properties in
the United States. Since 1987, Nexia has been acquiring undervalued
property in Salt Lake City. After acquisition, the Company conducts
significant repairs and upgrades the property to increase market value and
cash flow potential. The Company’s current property portfolio in Utah
includes the Wallace-Bennett Building (a multistory office building in
Salt Lake City), a one-story retail building in Salt Lake City, and one
office building located on West Sams Boulevard. The Company also owns six
small parcels of undeveloped raw land in Utah and Kansas.

Nexia is now diversifying from operating as a real estate
operator to include other business operations as well. The Company
currently holds a 20% interest in Landis LLC, which operates a lifestyle
salon in Salt Lake City. Management plans to increase its stake in this
subsidiary by the year-end. Additionally, the Company also has a joint
venture agreement with Black Chandelier, a designer fashion company with
retail operations in Salt Lake City. Nexia plans to acquire this company
in the near future. In the recent quarter ended March 2006, the Company
generated over 80% of its revenues from its salon and real estate
operations.

VALUATION

At the time of this report, Nexia’s stock closed at
$0.0003 (July 7, 2006), which is near the middle of its 52-week range of
$.0001 to $.0008 in the last year. The future prospects for Nexia appear
to be encouraging, especially relative to its market cap, considering that
the Company may post strong revenue growth and emerge from the red in the
near future. The recent steps to diversify from real estate to include
retail as well as lifestyle salon operations appear to be a step in the
right direction. Additionally, Nexia’s core retail operations are expected
to show positive trends due to the availability of several valuable
commercial real estate properties in Salt Lake City. As management remains
focused on locating undervalued properties, the value of the stock may
climb as they are able to increase shareholder value.

Nexia forms part of the business service industry, which
is highly competitive with a large number of players offering diversified
services. Several companies in this industry are known to expand
operations to include several business offerings. Since Nexia is currently
generating losses and it would take time to emerge from the red, we have
attempted to value the stock of the company on a Price to Sales model
(P/S). According to Bloomberg, companies in the business service industry
are expected to trade at a P/S ratio of 4x FY2007 sales. In the last
report quarter, Nexia generated revenues close to $320,000. Management is
currently growing the company both organically and through acquisitions.
Nexia expects to generate annual revenues of $1.5 million in the near
future. Based on a conservative P/S ratio of 4x on this projected revenue
figure, we arrive at our target price of $0.0016, which represents a
considerable appreciation from the current levels.

CONCLUSION

The real estate scenario in Utah appears promising given
the high demand for commercial real estate space. Nexia, which is
primarily a real estate holding company with operations concentrated in
Salt Lake City, should therefore benefit from a continued real estate boom
in its area of operations. The Company’s management appears focused on
acquiring undervalued properties in the area. Nexia has recently secured
additional lines of financial funding which would help the Company carry
out its acquisition plans. Furthermore, the recent diversification of
business operations to include a lifestyle salon as well as a fashion
house reduces Nexia’s risk profile and increases business
opportunities.

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Beacon Equity Research Disclosure

The analysts contributing to this report do
not hold any shares of Nexia Holdings, Inc. (NEXH). Additionally, the
analysts contributing to this report certify that the views expressed
herein accurately reflect the analysts' personal views as to the subject
securities and issuers. The analyst(s) writing this report recognize and
aspire to all of the CFA Institute Guidelines for Independent Research.
Beacon Equity Research ("Beacon") certifies that no part of the analysts'
compensation was, is, or will be, directly or indirectly, related to the
specific recommendation or views expressed by the analysts in the report.
Beacon has directly been compensated $6,000 by Nexia Holdings for
enrollment in its research program. This report is based on data obtained
from sources we believe to be reliable, but is not guaranteed as to
accuracy and does not purport to be complete. As such, the report should
not be construed as advice designed to meet the particular investment
needs of any investor. Any opinions expressed herein are subject to
change.

July 11, 2006 Nexia
Holdings, Inc. Rated 'Speculative Buy,' Target $.0016 by Beacon Equity
Research

June 21, 2006 Nexia
Reports Release of Lien

June 14, 2006 Nexia
Holdings Director of Business Development Featured in Exclusive Interview
With WallSt.net

More news
...

Beacon
Equity Research
Jeff Bishop
469-252-3035
[email protected]
http://www.beaconequityresearch.com/

or

Nexia
Holdings Inc.
Richard Surber
801-575-8073 ext. 106
http://www.nexiaholdings.com/

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