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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to
Commission file number 0-11777
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FIRST EQUITY PROPERTIES, INC.
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(Exact name of registrant as specified in the charter)
Nevada 95-6799846
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1800 Valley View Lane, Suite 160, Dallas, Texas 75234
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(Address of principal executive offices)
214-750-5800
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X]. No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS.
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [X]. No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of March 31, 2001, registrant had 10,570,944 shares of Common Stock
issued and outstanding.
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FIRST EQUITY PROPERTIES, INC. & SUBSIDIARIES
FORM 10-Q
March 31, 2000
INDEX
Page No.
Part I Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 2001 (Unaudited) and December 31, 2000.................................................3
Consolidated Statement of Earnings (Unaudited)
Three Months Ended March 31, 2001 and 2000.......................................................4
Consolidated Statement of Cash Flows (Unaudited)
Three Months Ended March 31, 2001 and 2000.......................................................5
Notes to Consolidated Financial Statements.........................................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................................................7
Part II Other Information:
Item 6. Exhibits and Reports on Form 8-K..........................................................7
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FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2001 December 31,
(Unaudited) 2000
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Cash and cash equivalents $ 57,953 $ 44,679
Accounts receivable - affiliate 966,359 966,359
Investments 45,836,720 51,137,790
Notes receivable 1,526,261 3,110,588
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$48,387,293 $55,259,416
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LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $ 471,449 $ 2,048,559
Accounts payable - trade 5,548,224 5,548,224
Accounts payable - affiliate 4,253,202 27,322
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Total liabilities 10,272,875 7,624,105
Minority interest in limited partnership 547,499 10,074,447
Shareholders' equity
Common stock, $0.01 par, 40,000,000 shares
authorized, 10,570,944 shares issued and ou 105,710 105,710
Capital in excess of par value 1,281,548 1,281,548
Retained earnings 36,179,661 36,173,606
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Total shareholders' equity 37,566,919 37,560,864
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$48,387,293 $55,259,416
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FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
For the three months ended March 31, 2001 and 2000
(Unaudited)
2001 2000
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Revenue
Interest income $ 44,822 $ 69,596
Other --- 1,876
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44,822 71,472
Operating expenses
General and administrative 752 607
Other operating expenses --- 7,500
Legal and professional fees 8,907 3,209
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Total operating expenses 9,659 11,316
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Earnings from operations 35,163 60,156
Other expenses
Interest expense (29,108) (52,839)
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Earnings before income taxes 6,055 7,317
Income tax benefit (expense)
Deferred --- ---
Current --- ---
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NET EARNINGS $ 6,055 $ 7,317
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Earnings per share $ --- $ ---
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Weighted average shares outstanding 10,570,944 10,570,944
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FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2001 and 2000
(Unaudited)
2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 6,055 $ 7,317
Adjustments to reconcile net income to net cash
provided by operating activities
Minority interest in limited partnership --- (10)
Increase (decrease) in
Accounts payable - affiliate --- 20,000
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Net cash provided by operating activities 6,055 27,307
CASH FLOWS FROM INVESTING ACTIVITIES
Collections from note receivable 1,584,329 11,065
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Net cash provided by investing activities 1,584,329 11,065
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt (1,577,110) (27,816)
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Net cash used for financing activities (1,577,110) (27,816)
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Net increase in cash and cash equivalents 13,274 10,556
Cash and cash equivalents at beginning of period 44,679 550
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Cash and cash equivalents at end of period $ 57,953 $ 11,106
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Noncash investing and financing activities:
Exchange of account payable from affiliate for minority interest in
subsidiary and effective writedown of investment due to application
of purchase method of accounting for the acquisition of
minority interest $ 4,225,879 $ ---
Exchange of account payable from affiliate for
a note payable from affiliate $ --- $3,390,010
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FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2001
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. Operating results for the interim period
presented are not necessarily indicative of the results that may be
expected for the year ended December 31, 2001. For further information,
refer to the Company's annual report on Form 10-K for the year ended
December 31, 2000.
NOTE B - ACQUISITION OF MINORITY INTEREST IN SUBSIDIARY
The Company acquired the 17.4% ownership interest of Carmel Realty
Services, Ltd., a consolidated subsidiary, from a related party in
exchange for a payable to the related party in the amount of
$4,225,879. This acquisition increases the Company's ownership interest
in Carmel Realty Services, Ltd. from 81.6% to 99%. This subsidiary will
continue to be consolidated with the Company.
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FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Three months ended March 31, 2001 compared to three months ended March 31, 2000
Revenues decreased to $44,822 versus prior year of $71,472. The decrease was due
to lower interest income. Total operating expenses decreased to $9,659 in 2001
from $11,316 in 2000.
The decrease in interest expense was due to lower debt.
Financial Condition and Liquidity
At March 31, 2001, the Company had total assets of $48,387,293 compared to
$55,259,416 at December 31, 2000. The decrease in total assets resulted
primarily from the write-down of investments due to the application of the
purchase method of accounting for the acquisition of the minority interest. Cash
and cash equivalents were $57,953.
Total liabilities were $10,272,875 versus $7,624,105 at December 31, 2000.
Part II Other Information
Item 6. Exhibits and Reports on Form 8 - K
(a) Exhibits - none
(b) Reports on Form 8-K - None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to he signed on its behalf by the
undersigned thereunto duly authorized.
FIRST EQUITY PROPERTIES, INC.
May 11, 2001 /s/ F. Terry Shumate, Director,
Vice President, Secretary and Treasurer
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