<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OR THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended 30 September 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OR THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission file number 33-98766
AMERICAN EQUITY TRUST INC.
----------------------------
(Exact name of registrant as specified in its charter)
Maryland 95-4509278
--------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2221 Rosecrans Avenue, Suite 110, El Segundo, CA 90245
------------------------------------------------------
(Address of principal executive officer)
(Zip Code)
310-536-0926
------------
(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 Section 13 or 15(d) of the Securities 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 No X
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 274,714 as of September 30,
1996
<PAGE>
AMERICAN EQUITY TRUST, INC.
INDEX
<TABLE>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Balance Sheets at September 30, 1996 and December 31, 1995. 3
Statements of Cash Flows for the Nine Months Ended
September 30, 1996 and 1995............................. 4
Notes to Condensed Financial Statements.................... 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................... 5
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.......................................... 6
Item 2. Changes in Securities...................................... 6
Item 3. Defaults upon Senior Securities............................ 6
Item 4. Submission of Matters to a Vote of Securities Holders...... 6
Item 5. Other Information.......................................... 6
Item 6. Exhibits and Reports on Form 8-K........................... 6
Signature Page............................................. 7
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN EQUITY TRUST, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................... $ 165 $ 19,824
Deferred offering costs............................................ 1,236,782 674,000
Deferred loan costs................................................ 31,422 31,422
Property acquisition costs......................................... 109,520 102,620
Other assets....................................................... 57,407 38,532
---------- --------
Total assets...................................................... $1,435,296 $866,398
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses.............................. $ 336,698 239,300
Notes payable (Note 2)............................................. 730,281 258,281
---------- --------
Total liabilities................................................. 1,066,979 498,081
---------- --------
Common Stock, $0.01 par value; shares authorized -
35,000,000; shares issued and outstanding - 274,714............... 2,747 2,747
1995 Convertible Preferred Stock, shares authorized - 1,100,000;
issued and outstanding - 1,021,500 (liquidation preference is
$0.01 per share).................................................. 10,210 10,210
8% Convertible Preferred Stock, shares authorized - 1,500,000;
issued and outstanding - none (liquidation value $13.20 per
share)............................................................ -- --
Additional paid-in capital......................................... 420,155 420,155
Deficit............................................................ (64,795) (64,795)
---------- --------
Total stockholders' equity......................................... 368,317 368,317
---------- --------
Total liabilities and stockholders' equity......................... $1,435,296 $866,398
========== ========
</TABLE>
Page 3
<PAGE>
AMERICAN EQUITY TRUST, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1996
------------- -----------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................... $ -- $ --
Increase (decrease) in cash from changes in:
Other assets.............................................. 0 (14,868)
Accounts payable and accrued expenses..................... (6,845) (19,955)
--------- --------
Net cash provided by (used for) operating activities........ (6,845) (34,823)
--------- --------
Cash flows from financing activities:
Deferred offering costs..................................... (125,094) (92,979)
Net proceeds from private placements........................ 155,000 130,300
--------- --------
Net cash provided by (used for) financing activities........ 29,906 37,321
--------- --------
Net (decrease) increase in cash and cash equivalents........ (50) 2,498
Cash and cash equivalents, at beginning of period........... 215 35,056
--------- --------
Cash and cash equivalents, at end of period................. $ 165 $ 37,554
========= ========
</TABLE>
Page 4
<PAGE>
AMERICAN EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The financial information included herein is unaudited; however, such
information reflects all adjustments, consisting of only normal recurring
accruals, which are, in the opinion of management, necessary to present fairly
the Company's financial position at September 30, 1996 and the cash flows for
the three months ended September 30, and June 30, 1996. There were no operations
as of September 30, 1996.
The information contained in this Form 10-Q should be read in conjunction with
the audited financial statements as of March 31, 1996 filed as part of the
Company's registration statement on Form S-11 (File No. 33-98766).
NOTE 2 - NOTES PAYABLE
10% Notes
During February through September 1996 the Company issued 10% Notes (New Notes)
in the amount of $480,555 due the earlier of 90 days after the Offering or April
15, 1997. The notes were issued at a 10% discount and the Company received net
proceeds of $432,500.
In addition to the New Notes the Company issued an additional $25,000 note
without discount. This note is due the earlier of September 15, 1997 or 90 days
after the Offering, and bears interest at 10% per annum.
NOTE 3 - INITIAL PUBLIC OFFERING
In June, 1996, the Company obtained permission from the Securities and Exchange
Commission to begin selling stock in conjunction with its initial public
offering.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
In June the Company obtained clearance from the Securities and Exchange
Commission to begin selling stock in conjunction with its initial public
offering. To date, the Company has not acquired any properties nor had any
operations. During the nine months ended September 30, 1996 and 1995, the
Company conducted a series of private placements of debt to provide funds to pay
for costs necessary to complete the initial public offering.
Page 5
<PAGE>
AMERICAN EQUITY TRUST INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is neither currently a party to nor is any of its property
the subject of any legal proceedings which would be material to the
business or financial condition of the Company.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults on Senior Securities.
Not applicable.
Item 4. Submissions of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
A. The following exhibit is included herewith:
Exhibit 27 - Financial Data Schedule.
B. The Company filed no reports on Form 8-K during the quarter for
which this report is filed.
Page 6
<PAGE>
AMERICAN EQUITY TRUST INC.
SIGNATURES
Pursuant to the requirement 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.
Date: October 13, 1996
AMERICAN EQUITY TRUST INC.
/s/ Arthur P. Herring
------------------------------------
Arthur P. Herring
Chairman of the Board of Directors,
Chief Executive Officer, and
Chief Financial Officer
Page 7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
BALANCE SHEETS AS OF SEPTEMBER 30, 1996 (UNAUDITED) AND DECEMBER 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 165
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,435,296
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
10,210
<COMMON> 2,747
<OTHER-SE> 355,360
<TOTAL-LIABILITY-AND-EQUITY> 1,435,296
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
