SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
(Mark One)
|X| Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2003 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 1-6844
CALPROP CORPORATION
(Exact name of registrant as specified in its charter)
California 95-4044835
---------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13160 Mindanao Way, Suite 180, Marina Del Rey, California 90292
--------------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (310) 306-4314
------------------
Not Applicable
(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 Section 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 | | NO |X|
Number of shares outstanding of each of Registrant's classes of common stock, as
of December 19, 2003:
Number of Shares
Title of Each Class Outstanding
- ------------------- -----------
Common Stock, no par value 10,239,105
CALPROP CORPORATION
Part I
Item I - Financial Information
Set forth is the unaudited quarterly report for the quarters ended June
30, 2003 and 2002, for Calprop Corporation. The information set forth reflects
all adjustments which were, in the opinion of management, necessary for a fair
presentation.
CALPROP CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
2003 2002
----------- ------------
Investment in Real Estate (Notes 5 and 6)
Real estate under development $13,308,057 $24,166,829
Rental property, (net of accumulated depreciation
of $268,125 and $121,875, respectively) 9,700,000 11,182,886
----------- -----------
Total investment in real estate 23,008,057 35,349,715
Other Assets:
Cash and cash equivalents 1,574,686 3,444,541
Deferred tax assets (Note 2) 6,535,343
Other assets 728,197 745,347
----------- -----------
Total other assets 2,302,883 10,725,231
----------- -----------
Total assets $25,310,940 $46,074,946
=========== ===========
(Continued)
The accompanying notes are an integral
part of these financial statements.
3
CALPROP CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
2003 2002
------------ ------------
Liabilites:
Trust deeds and notes payable $ 14,420,211 $ 19,726,186
Related-party notes 13,865,168 13,987,634
------------ ------------
Total trust deeds, notes payable and related-party notes 28,285,379 33,713,820
Accounts payable and accrued liabilities 1,824,436 2,724,856
Deposit 2,000,000
Warranty reserves 758,050 757,550
------------ ------------
Total liabilities 30,867,865 39,196,226
------------ ------------
Stockholders' equity:
Common stock, no par value
Authorized - 20,000,000 shares
Issued and outstanding - 10,239,105 and 10,235,305
shares at June 30, 2003 and December 31, 2002,
respectively 10,239,105 10,235,305
Additional paid-in capital 25,850,776 25,849,446
Deferred compensation (28,600) (28,600)
Stock purchase loans (538,384) (527,858)
Accumulated deficit (41,079,822) (28,649,573)
------------ ------------
Total stockholders' (deficit) equity (5,556,925) 6,878,720
------------ ------------
$ 25,310,940 $ 46,074,946
============ ============
(Concluded)
The accompanying notes are an integral
part of these financial statements.
4
CALPROP CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Development operations:
Real estate sales $ 7,592,899 $ 43,058,399 $ 12,165,178 $ 64,350,669
Cost of real estate sales 7,337,347 42,305,392 12,440,305 63,502,888
------------ ------------ ------------ ------------
Income (loss) from development operations before
recognition of impairment of real estate 255,552 753,007 (275,127) 847,781
Recognition of impairment of real estate under
development (4,686,150) (1,832,225) (4,686,150) (1,832,225)
------------ ------------ ------------ ------------
Loss from development operations (4,430,598) (1,079,218) (4,961,277) (984,444)
Income from investment in real estate venture (Note 5) 185,022 109,253
Other income:
Rental (Note 6) 258,745 512,527
Gain on sale of investment in real estate venture
(Note 5) 2,000,000
Interest and miscellaneous 12,261 190,251 31,301 252,299
Management fee (Note 5) 207,182
------------ ------------ ------------ ------------
Total other income 271,006 190,251 2,543,828 459,481
Other expenses:
Rental operating (Note 6) 163,187 275,277
Recognition of impairment of rental property (Note 6) 1,342,316 1,342,316
General and administrative 467,112 521,006 952,155 1,076,452
Depreciation 71,138 142,275
Interest 379,930 764,670
------------ ------------ ------------ ------------
Total other expenses 2,423,683 521,006 3,476,693 1,076,452
Minority interests (Note 4) 764 235
------------ ------------ ------------ ------------
Loss before provision for income taxes (6,583,275) (1,224,951) (5,894,906) (1,492,397)
Provision for income taxes (Note 2) 6,260,318 6,535,343
------------ ------------ ------------ ------------
Net loss ($12,843,593) ($ 1,224,951) ($12,430,249) ($ 1,492,397)
============ ============ ============ ============
Basic net loss per share (Note 3) ($1.25) ($0.12) ($1.21) ($0.15)
====== ====== ====== ======
Diluted net loss per share (Note 3) ($1.25) ($0.12) ($1.21) ($0.15)
====== ====== ====== ======
The accompanying notes are an integral
part of these financial statements.
5
CALPROP CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
----------------------------
2003 2002
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($12,430,249) ($ 1,492,397)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Gain on sale of joint venture interest (2,000,000)
Minority interests 764 235
Recognition of impairment of real estate under development 4,686,150 1,832,225
Recognition of impairment of rental property 1,342,316
Income from investment in real estate venture (109,253)
Loss on sale of property and equipment 1,312
Depreciation and amortization 167,309 21,315
Provision for warranty reserves 33,000 175,105
Deferred income taxes 2,208,081
Change in assets and liabilities:
Other assets (81) (82,999)
Deferred tax assets 6,535,343
Receivable from affiliates 621,478
Accounts payable and accrued liabilities (900,420) (3,611,319)
Warranty reserves (32,500) (84,952)
Additions to real estate under development (6,268,447) (28,320,496)
Cost of real estate sales 12,440,305 63,502,888
Accrued interest for executive stock purchase loans (10,526) (10,723)
------------ ------------
Net cash provided by operating activities 3,564,276 34,649,188
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in rental property (5,680)
Proceeds from sale of property and equipment 1,000
Capital expenditures (6,140) (5,482)
------------ ------------
Net cash used by investing activities (10,820) (5,482)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under related-party notes 1,663,977
Payments under related-party notes (122,466) (9,776,494)
Borrowings under trust deeds and notes payable 4,480,825 24,992,491
Payments under trust deeds and notes payable (9,786,800) (50,065,718)
Repayment of stock purchase loans 26,535
Common stock 5,130
------------ ------------
Net cash used in financing activities (5,423,311) (33,159,209)
------------ ------------
Net (decrease) increase in cash and cash equivalents (1,869,855) 1,484,497
Cash and cash equivalents at beginning of period 3,444,541 2,079,471
------------ ------------
Cash and cash equivalents at end of period $ 1,574,686 $ 3,563,968
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (refunded) during the period for:
Interest, net of amount capitalized $764,670
Income taxes ($55,998) $47,351
(Concluded)
The accompanying notes are an integral
part of these financial statements
6
CALPROP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIODS ENDED JUNE 30, 2003 AND 2002
(Unaudited)
Note 1: Basis of presentation and significant accounting policies
The unaudited, condensed, consolidated financial statements included
herein have been prepared by the registrant pursuant to the
instructions to Quarterly Report on Form 10-Q required to be filed with
the Securities and Exchange Commission and do not include all
information and footnote disclosure required by accounting principles
generally accepted in the United States of America for complete
financial statements. The accompanying financial statements have not
been audited by independent auditors in accordance with auditing
standards generally accepted in the United States of America, but in
the opinion of management, such financial statements include all
adjustments, consisting only of normal recurring adjustments necessary
to present fairly the financial position of Calprop Corporation ("the
Company") and its results of operations. The condensed financial
statements should be read in conjunction with the financial statements
and the notes thereto included in the registrant's latest Annual Report
on Form 10-K, particularly with regard to disclosures relating to major
accounting policies.
Based on its agreements with its lenders, the Company believes that it
will have sufficient liquidity to finance its construction projects in
2003 through funds generated from operations, funds available under its
existing bank commitments, funds generated from new lending
institutions, and, if necessary, funds that could be obtained by using
its internally financed real estate development in process as
collateral for additional loans.
Management's plan, with respect to managing cash flow includes the
following components: pay off debt that is coming due in 2003, minimize
operating expenses, and maintain control over costs. With regard to the
debt coming due in 2003, management expects to extend the maturity
dates of various loans and pay the remaining loans off through cashflow
from operations, prior to their maturity date. With regard to
minimizing operating expenses, management plans to achieve this by
continuing to closely examine overhead items. Management anticipates
that the funds generated from operations, including borrowings from
existing loan commitments, will be adequate to allow the Company to
continue operations throughout 2003.
The results of operations for the three months ended June 30, 2003 may
not be indicative of the operating results for the year ending December
31, 2003.
Note 2: Income taxes
As of December 31, 2002, the Company had gross deferred tax assets of
$11,065,083 offset by a deferred tax asset valuation allowance of
$11,065,083. The Company has assessed its past earnings history and
trends, sales backlog, budgeted sales, and expiration dates of net
operating loss carryforwards and has determined that it is more likely
than not that the $11,065,083 of deferred tax assets will not be
realized. As a result, the Company increased the valuation allowance by
$6,535,343 during the three months ended June 30, 2003.
As of June 30, 2003, the Company had net operating loss carryforwards
for federal and state income tax purposes of approximately $23,776,000
and $9,301,000, respectively. For federal tax purposes, net operating
loss carryforwards expire from 2013 through 2022. For state tax
purposes, net operating loss carryforwards expire from 2005 through
2008.
7
Note 3: Earnings per share
The following table sets forth the computation of basic and diluted net
loss income per share:
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------------------------------
2003 2002 2003 2002
---------------------------------------------------------
Net loss ($12,843,593) ($1,224,951) ($12,430,249) ($1,492,397)
---------------------------------------------------------
Numerator for basic and diluted net loss per share ($12,843,593) ($1,224,951) ($12,430,249) ($1,492,397)
=========================================================
Denominator for basic net loss per share
(weighted average outstanding shares) 10,239,105 10,254,005 10,238,451 10,254,005
Effect of dilutive stock options
---------------------------------------------------------
Weighted average shares for dilutive net income
per share 10,239,105 10,254,005 10,238,451 10,254,005
=========================================================
Basic net loss per share ($1.25) ($0.12) ($1.21) ($0.15)
=========================================================
Diluted net loss per share ($1.25) ($0.12) ($1.21) ($0.15)
=========================================================
Note 4: Consolidation
The Company has consolidated the financial statements of the following
entities:
---------------------------------------------------------------------------------------------------------------------------
Entity Ownership interest at Development
June 30, 2003
---------------------------------------------------------------------------------------------------------------------------
Colorado Pacific Homes, Inc. 100% Real estate in the state of Colorado
DMM Development, LLC ("DMM") 67% Cierra del Lago and Antares projects,
California
Parkland Farms Development Co., LLC 99% 115 lots in Healdsburg, California
("Parkland")
RGCCLPO Development Co., LLC ("RGCCLPO") 100% 382 lots in Milpitas, California
PWA Associates, LLC 100% 68-unit apartment project in Milpitas,
California
---------------------------------------------------------------------------------------------------------------------------
DMM: The Company is entitled to receive two-thirds of the profits of
DMM, and the other owner, RGC Courthomes, Inc. ("RGC"), is entitled to
receive the remaining one-third of the profits.
Parkland: Pursuant to the operating agreement of Parkland, the Company
is entitled to receive ninety-nine percent of the profits of Parkland,
and the other member, an officer of the Company, is entitled to receive
the remaining one percent of the profits.
During the six months ended June 30, 2003, $2,931 of the total loss of
$3,695 incurred by the entities related to the minority interest was
not allocated to the minority interest because the minority interest
had a deficit interest in those entities. The Company does not reflect
the deficit for the minority interest because the minority owners are
not responsible for losses incurred beyond their equity. The
unrecognized minority interest in deficit of the Company as of June 30,
2003 and December 31, 2002
8
was $71,290 and $68,359, respectively. As a result, the Company has no
minority interest as of June, 30, 2003 and December 31, 2002.
Note 5: Real estate under development
Investment of real estate venture-In 1999, the Company formed RGC
Carmel Country Associates, LLC, a California limited liability company,
("RGC Carmel") with RGC to develop, construct and lease a 181 townhome
project. The profits and losses of RGC Carmel were distributed between
the members as follows: 50% to RGC and 50% to the Company. During 2000,
RGC Carmel admitted additional members in the following proportions:
The John L. Curci Trust as to a 12.5% interest, The Janet Curci Living
Trust No. Il as to a 12.5% interest, and an officer of the Company as
to a 25% interest in exchange for financing for the project as follows:
$2,000,000 in equity and $2,000,000 in notes payable. As a result, the
Company's interest in RGC Carmel was reduced to 25%, which is accounted
for under the equity method of accounting. During 2002, the Company
transferred .5% of its interest in RGC Carmel to Calprop Andalucia, a
100% wholly owned subsidiary of the Company. In January 2003, the
Company sold the remaining 24.5% of its interest in RGC Carmel to
related parties in the following proportions: The Janet Curci Living
Trust No. II as to a 6.125% interest, JAMS Management as to a 6.125%
interest, and an officer of the Company as to a 12.25% interest. The
Company's interest was sold for $2,000,000 in cash, which was received
in 2002 and resulted in recording a deposit of $2,000,000 as of
December 31, 2002. The gain on sale of investment in joint venture is
recognized in the first quarter of 2003. The gain equals the proceeds
received of $2,000,000 as the Company had no basis in the investment
sold. As a result, the Company's interest in RGC Carmel was reduced to
.5%.
The Company recognized management fees of $207,182 for the six months
ended June 30, 2002 related to the joint venture.
Note 6: Rental property
During the third quarter of 2002, the Company completed construction of
a 68-unit apartment project and the related costs recorded as real
estate under development were transferred to rental property. The
Company started leasing the apartment during the third quarter of 2002.
As of June 30, 2003, the apartment project was 98.5% leased and
stabilized its operations. Based upon such operations, the Company
tested the project for recoverability and determined the carrying
amount of the project was not fully recoverable and recorded an
impairment loss of $1,342,316; the amount by which the carrying amount
of the project exceeded its estimated fair value as determined by a
third party appraiser.
Rental property at June 30 is summarized as follows:
Land $1,500,000
Building and improvements 9,810,441
Impairment write-down (1,342,316)
----------------
Total rental property 9,968,125
Accumulated depreciation (268,125)
----------------
Rental property, net $9,700,000
================
Depreciation expense for building and improvements for the six months
ended June 30, 2003 was $146,250.
9
Note 7: Segment Disclosure
The Company's reportable segments consist of two types of real estate
properties for which management internally evaluates operating
performance and financial results: residental homes for sale and
residental rental property for lease. The Company also has certain
corporate level activities including accounting, finance, and
management information systems, which are not considered separate
segments.
The Company evaluates the performance of its segments based upon
contribution to income. The following table provides financial
information regarding revenues from customers, loss and total assets
for the Company's business segments and also provides a reconciliation
to the Company's consolidated total:
Three Months Ended June 30, 2003
------------------------------------------------
Revenues Contribution to Assets
Loss
------------------------------------------------
Residential homes $7,592,899 ($4,897,710) $15,610,940
Rental property 258,745 (1,246,758) 9,700,000
------------------------------------------------
7,851,644 (6,144,468) 25,610,940
Interest and other, net 12,261 (6,699,125)
------------------------------------------------
$7,863,905 ($12,843,593) $25,310,940
================================================
Six Months Ended June 30, 2003
------------------------------------------------
Revenues Contribution to Assets
Loss
------------------------------------------------
Residential homes $12,165,178 ($5,913,432) $15,610,940
Rental property 512,527 (1,105,066) 9,700,000
------------------------------------------------
12,677,705 (7,018,498) 25,310,940
Interest and other, net 2,031,301 (5,411,751)
------------------------------------------------
$14,709,006 ($12,430,249) $25,310,940
================================================
During the six months of 2002, the Company operated under one
reportable segment of residential homes for sale.
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion relates to the consolidated financial
statements of the Company and should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report. Statements
contained in this "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that are not historical facts may be forward-looking
statements. Such statements are subject to certain risks and uncertainties,
which could cause actual results to differ materially from those projected. You
are cautioned not to place undue reliance on these forward-looking statements.
10
Liquidity and capital resources
As of June 30, 2003, the Company had remaining loan commitments from
financial institutions of approximately $8,640,000, which may be drawn down by
the Company upon the satisfaction of certain conditions. The Company continues
to seek joint venture partners and additional financing to fund its operations.
As of June 30, 2003, the Company had two remaining projects in various
stages of development (High Ridge Court and Saddlerock). During 2003, the
Company had three projects producing revenues from completed homes and
townhomes: Parc Metropolitan, High Ridge Court and Saddlerock. As of June 30,
2003, the Company has 40 homes under construction, of which 6 are in escrow to
be sold, and 4 model units. Additionally, the Company has an inventory of 78
lots under development of which 50 are contracted to sell (see below). In
addition, the Company has a 68-unit apartment building that is substantially
leased as of June 30, 2003 which also contributed to revenues for the six month
period.
As of June 30, 2003, the Company had 6 units in escrow ("backlog")
compared with a backlog of 56 units as of June 30, 2002. The gross revenues of
such backlog was $1,714,000 and $19,517,000 as of June 30, 2003 and 2002,
respectively.
Based on its agreements with its lenders, the Company believes that it
will have sufficient liquidity to finance its construction projects in 2003
through funds generated from operations, funds available under its existing bank
commitments, funds generated from new lending institutions, and, if necessary,
funds that could be obtained by using its internally financed real estate
development in process as collateral for additional loans.
Management's plan, with respect to managing cash flow includes the
following components: pay off debt that is coming due in 2003, minimize
operating expenses, and maintain control over costs. With regard to the debt
coming due in 2003, management expects to extend the maturity dates of various
loans and pay the remaining loans off through cashflow from operations, prior to
their maturity date. With regard to minimizing operating expenses, management
plans to achieve this by continuing to closely examine overhead items.
Management anticipates that the funds generated from operations, including
borrowings from existing loan commitments, will be adequate to allow the Company
to continue operations throughout 2003.
Results of operations
Real estate sales for the three months ended June 30, 2003 decreased
467% to $7,592,899 from $43,058,399 for the three months ended June 30, 2002.
For the six months ended June 30, 2003, real estate sales decreased 429% to
$12,165,178 from $64,350,669 in the year-earlier period. The decrease in real
estate sales for the three and six months periods in 2003 was primarily due to
the low volume of inventory of completed homes available for sale in 2003
compared to completed homes available for sale in 2002. In the second quarter of
2003, the Company sold 21 homes with an average sales price of $361,500, a 438%
decrease in the volume of home sales compared to 113 homes with an average sales
price of $381,050 for the second quarter of 2002. During the six months of 2003,
the Company sold 33 homes with an average sales price of $368,600, a 418%
decrease in the volume of home sales compared to 171 homes with an average sales
price of $376,000 for the six months of 2002.
The Company had income from development operations before recognition
of impairment of real estate of $255,552 in the second quarter of 2003 as
compared to income of $753,007 in the second quarter of 2002. For the six months
ended June 30, 2003, the Company had a loss from development operations before
recognition of impairment of real estate of $275,127 as compared to income of
$847,781 for the six months ended June 30, 2002. The significant decrease of
income from development operations during the second quarter of 2003 and six
months ended June 30, 2002 resulted from the Company selling homes with previous
impairment write-downs.
During the second quarter of 2003, the Company recorded an impairment
loss on real estate under development of $4,232,281 in the Saddlerock project.
The project consisted of 94 homes with five product lines in
11
Aurora, Colorado. The lack of demand of the product lines resulted in a slower
absortion rate. The Company introduced three new product lines and converted
certain upgrades as standards to increase the absorption rate. The introduction
of the new product lines increased direct construction cost, marketing,
production overhead and interest costs. In addition to increased costs, due to
the slow absorption rate, the Company entered into escrow to sell 50 developed
lots and as a result the Company recorded an impairment loss on real estate
under development. These lots are expected to close in August of 2003.
Additionally, during the second quarter of 2003, the Company recorded
an impairment loss on real estate under development of $453,869 in the High
Ridge Court project which is located in Thorton, Colorado as the absortion rate
was slower than anticipated. The decrease in absorption rate increased
marketing, production and interest costs and as a result the Company recorded an
impairment.
The Company developed and constructed a 68-unit affordable apartment,
the Parc West Apartment Homes located in Milpitas, California, adjacent to the
Parc Metropolitan project. Construction was completed in August 2002 and the 68
units were available for lease. As of June 30, 2003, the apartment building was
substantially leased. For the three months ended June 30, 2003, the apartment
generated $258,745 of rental income and $163,187 of rental operating expenses.
For the six months ended June 30, 2003, the apartment generated $512,527 of
rental income and $275,277 of rental operating expenses. As of June 30, 2003,
the apartment project was 98.5% leased and stabilized its operations. Based upon
such operations, the Company tested the project for recoverability and
determined the carrying amount of the project was not fully recoverable and
recorded an impairment loss of $1,342,316; the amount by which the carrying
amount of the project exceeded its estimated fair value as determined by a third
party appraiser.
In January 2003, the Company sold its 24.5% interest in RGC Carmel
Country, LLC, the ("Joint Venture") to related parties. The Joint Venture
consisted of 181 townhomes available for lease in San Diego. The Company's basis
in the Joint Venture was $0. The proceeds from the sale, in the amount of
$2,000,000, was received in 2002 and was recorded as a deposit at December 31,
2002. The gain was recorded in January 2003.
General and administrative expenses decreased to $467,112 in the three
months ended June 30, 2003 from $521,006 in the corresponding period. For the
six months ended June 30, 2003, general and administrative expenses decreased to
$952,155 from $1,076,452 in the corresponding 2002 period. The decrease is due
to the focus efforts to decrease corporate overhead costs and a decrease in
sales volume.
Item 3 Quantitative and Qualitative Disclosure about Market Risk
The Company's exposure to market risk has not materially changed from
what was reported on the Company's Form 10-K for the year ended December 31,
2002.
Item 4 Controls and Procedures
The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the Company's
reports required to be filed under the Securities Exchange Act of 1934, as
amended, is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, and that
such information is accumulated and communicated to the Company's management,
including its Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure, except
during the period from August 2003 - December 2003 where the accounting
department was short of the required personnel needed to file its required
reports timely. The Company is in the process of taking corrective measures to
ensure timely filing of its required reports under the Securitites Exchange Act
of 1934. In designing and evaluating the disclosure controls and procedures,
management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, and management is required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures.
As of June 30, 2003, the end of the quarter covered by this report, the
Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive
12
Officer and the Company's Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
on the foregoing, the Company's Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures were
effective.
There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect the internal
controls subsequent to the date the Company completed its evaluation.
Part II
6 Exhibits and Reports on Form 8-K
(a) Exhibits -
In accordance with SEC Release No. 33-8212, the following
exhibit is being furnished, and is not being filed as part of this
Report or as a separate disclosure document, and is not being
incorporated by reference into any Securities Act of 1933 registration
statement:
31.1 Rule 13a-14(a)/15d-14(a) Certification of CEO
31.2 Rule 13a-14(a)/15d-14(a) Certification of CFO
32. Certification of Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. Section 1350,
as created by Section 906 of the Sarbanes-Oxley Act
of 2002.
(b) Reports on Form 8-K
A Current Report on Form 8-K dated June 20, 2003 was filed
with the Securities and Exchange Commission (the "Commission") and
included under item 7(a) its unaudited consolidated financial
statements for the quarter ended March 31, 2003, and under item 7(c) a
press release announcing Calprop Corporations' first quarter results.
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CALPROP CORPORATION
By: /s/ Mark F. Spiro .
---------------------------------------------
Mark F. Spiro
Vice President/Secretary/Treasurer
(Chief Financial and Accounting Officer)
December 19, 2003
14