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, 2002
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
------------------
FIRST EQUITY PROPERTIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in the charter)
Nevada 95-6799846
- --------------------------------------------- -------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1800 Valley View Lane, Suite 160, Dallas, Texas 75234
-----------------------------------------------------
(Address of principal executive offices)
214-750-5800
----------------------------------------------------
(Registrant's telephone number, including area code)
--------------------------------------------------------------------------
(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, 2002, registrant had 10,570,944 shares of Common Stock
issued and outstanding.
FIRST EQUITY PROPERTIES, INC. & SUBSIDIARIES
FORM 10-Q
March 31, 2002
INDEX
<Table>
<Caption>
Part I Financial Information: Page No.
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 2002 (Unaudited) and December 31, 2001......................3
Consolidated Statement of Earnings (Unaudited)
Three Months Ended March 31, 2002 and 2001............................4
Consolidated Statement of Cash Flows (Unaudited)
Three Months Ended March 31, 2002 and 2001............................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
</Table>
2
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<Table>
<Caption>
March 31, 2002 December 31,
(Unaudited) 2001
-------------- ------------
Cash and cash equivalents $ 7,191 $ 8,985
Accounts receivable - affiliate 885,265 851,946
Investments 46,421,719 46,421,719
----------- -----------
$47,314,175 $47,282,650
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable - trade $ 5,548,224 $ 5,548,224
Accounts payable - affiliate 3,612,977 3,622,977
----------- -----------
Total liabilities 9,161,201 9,171,201
Minority interest in limited partnership 547,498 547,498
Shareholders' equity
Common stock, $0.01 par, 40,000,000 shares
authorized, 10,570,944 shares issued and outstanding 105,710 105,710
Capital in excess of par value 1,281,548 1,281,548
Retained earnings 36,218,218 36,176,693
----------- -----------
Total shareholders' equity 37,605,476 37,563,951
----------- -----------
$47,314,175 $47,282,650
=========== ===========
</Table>
3
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
For the three months ended March 31, 2002 and 2001
(Unaudited)
<Table>
<Caption>
2002 2001
----------- ------------
Revenue
Management fees $ 44,959 $ --
Interest income 19 44,822
----------- ------------
44,978 44,822
Operating expenses
General and administrative 852 752
Legal and professional fees 2,601 8,907
----------- ------------
Total operating expenses 3,453 9,659
----------- ------------
Earnings from operations 41,525 35,163
Other expenses
Interest expense -- (29,108)
----------- ------------
NET EARNINGS $ 41,525 $ 6,055
=========== ============
Earnings per share $ -- $ --
=========== ============
Weighted average shares outstanding 10,570,944 10,570,944
=========== ============
</Table>
4
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2002 and 2001
(Unaudited)
<Table>
<Caption>
2002 2001
-------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 41,525 $ 6,055
Adjustments to reconcile net income to net cash
provided by (used for) operating activities
(Increase) decrease in
Accounts receivable - affiliate (33,319) --
Increase (decrease) in
Accounts payable - affiliate (10,000) --
-------- -----------
Net cash provided by (used for) operating activities (1,794) 6,055
CASH FLOWS FROM INVESTING ACTIVITIES
Collections from note receivable -- 1,584,329
-------- -----------
Net cash provided by investing activities -- 1,584,329
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt -- (1,577,110)
-------- -----------
Net cash used for financing activities -- (1,577,110)
-------- -----------
Net increase (decrease) in cash and cash equivalents (1,794) 13,274
Cash and cash equivalents at beginning of period 8,985 44,679
-------- -----------
Cash and cash equivalents at end of period $ 7,191 $ 57,953
======== ===========
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
</Table>
5
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(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, 2002. For further information,
refer to the Company's annual report on Form 10-K for the year ended
December 31, 2001.
6
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, 2002 compared to three months ended March 31, 2001
Revenues were $44,978 versus prior year of $44,822. Total operating expenses
decreased to $3,453 in 2002 from $9,659 in 2001.
The decrease in interest expense was due to debt payoff in 2001.
Financial Condition and Liquidity
At March 31, 2002, the Company had total assets of $47,314,175 compared to
$47,282,650 at December 31, 2001. Cash and cash equivalents were $7,191.
Total liabilities were $9,161,201 versus $9,171,201 at December 31, 2001.
Part II Other Information
Item 6. Exhibits and Reports on Form 8 - K
(a) Exhibits - none
(b) Reports on Form 8-K - None
7
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 10, 2002 /s/ Ronald E. Kimbrough, Director,
Vice President and Treasurer
8