<PAGE> 1
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, 2000
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.)
10670 N. Central Expressway, Suite 410, Dallas, Texas 75231
---------------------------------------------------------
(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 . 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, 2000, registrant had 10,570,944 shares of Common Stock
issued and outstanding.
<PAGE> 2
FIRST EQUITY PROPERTIES, INC. & SUBSIDIARIES
FORM 10-Q
March 31, 2000
INDEX
<TABLE>
<CAPTION>
Part I Financial Information: Page No.
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 2000 (Unaudited) and December 31, 1999...................3
Consolidated Statement of Earnings (Unaudited)
Three Months Ended March 31, 2000 and 1999.........................4
Consolidated Statement of Cash Flows (Unaudited)
Three Months Ended March 31, 2000 and 1999.........................5
Notes to Consolidated Financial Statements...........................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................8
Part II Other Information:
Item 6. Exhibits and Reports on Form 8-K............................8
</TABLE>
2
<PAGE> 3
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 31, 2000 December 31,
(Unaudited) 1999
-------------- -----------
<S> <C> <C>
Cash and cash equivalents $ 11,106 $ 550
Investments 55,512,710 55,512,710
Notes receivable 3,446,552 3,457,617
----------- -----------
$58,970,368 $58,970,877
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $ 2,206,224 $ 2,234,040
Notes payable - affiliate 3,390,010 --
Accounts payable - trade 5,548,224 5,548,224
Accounts payable - affiliate -- 3,370,010
Income taxes payable 72,000 72,000
----------- -----------
Total liabilities 11,216,458 11,224,274
Minority interest in limited partnership 10,074,437 10,074,447
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 36,292,215 36,284,898
----------- -----------
Total shareholders' equity 37,679,473 37,672,156
----------- -----------
$58,970,368 $58,970,877
=========== ===========
</TABLE>
3
<PAGE> 4
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
For the three months ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
Revenue
Commission income $ -- $ 2,218,837
Management fee income -- 1,772,888
Consulting fee income -- 1,067,062
Interest income 69,596 76,700
Other 1,876 326,162
------------ ------------
71,472 5,461,649
Operating expenses
Salaries and wages -- 1,341,741
Minority interest in earnings of limited partnership -- 407,393
General and administrative 607 386,859
Insurance and taxes -- 160,560
Other operating expenses 7,500 153,074
Legal and professional fees 3,209 89,185
Depreciation and amortization -- 33,969
Telephone and utilities -- 15,622
Repairs and maintenance -- 3,025
Advertising and promotion -- 1,414
------------ ------------
Total operating expenses 11,316 2,592,842
------------ ------------
Earnings from operations 60,156 2,868,807
Other expenses
Interest expense (52,839) (116,973)
------------ ------------
Earnings before income taxes 7,317 2,751,834
Income tax benefit (expense)
Deferred -- --
Current -- (940,000)
------------ ------------
-- (940,000)
------------ ------------
NET EARNINGS $ 7,317 $ 1,811,834
============ ============
Earnings per share $ -- $ .17
============ ============
Weighted average shares outstanding 10,570,944 10,570,944
============ ============
</TABLE>
4
<PAGE> 5
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 7,317 $ 1,811,834
Adjustments to reconcile net income to net cash
provided by (used for) operating activities
Depreciation and amortization -- 33,969
Minority interest in limited partnership (10) 407,393
(Increase) decrease in
Accounts receivable - trade -- 25,511
Accounts receivable - affiliate -- (3,781,749)
Notes receivable -- (8,939)
Other assets -- (1,882)
Increase (decrease) in
Accounts payable -- 125,468
Accrued expenses -- (289,196)
Accounts payable - affiliate 20,000 599,289
Income taxes payable -- 940,000
----------- -----------
Net cash provided by (used for) operating activities 27,307 (138,302)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment -- (31,439)
Collections from note receivable 11,065 --
----------- -----------
Net cash provided by (used for) investing activities 11,065 (31,439)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable - related parties -- 51,713
Payments on long term debt (27,816) (25,739)
----------- -----------
Net cash provided by (used for) financing activities (27,816) 25,974
----------- -----------
Net increase (decrease) in cash and cash equivalents 10,556 (143,767)
Cash and cash equivalents at beginning of period 550 325,699
----------- -----------
Cash and cash equivalents at end of period $ 11,106 $ 181,932
=========== ===========
</TABLE>
5
<PAGE> 6
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
For the three months ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---------- ---------
<S> <C> <C>
Exchange of account payable from affiliate for
a note payable from affiliate $3,390,010 $ ---
</TABLE>
6
<PAGE> 7
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
(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, 2000. For further information,
refer to the Company's annual report on Form 10-K for the year ended
December 31, 1999.
7
<PAGE> 8
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, 2000 compared to three months ended March 31, 1999
Revenues decreased to $71,472 versus prior year of $5,461,649. The decrease was
due to lower commission income, lower consulting fee income and lower motel
revenue. In the fourth quarter of 1999, all property management and brokerage
contracts were cancelled. Total operating expenses decreased to $11,316 in 2000
from $2,592,842 in 1999.
The decrease in income tax expense was due to lower operating income.
Financial Condition and Liquidity
At March 31, 2000, the Company had total assets of $58,970,368 compared to
$58,970,877 at December 31, 1999. Cash and cash equivalents were $11,106.
Total liabilities were $11,216,458 versus $11,224,274 at December 31, 1999.
Part II Other Information
Item 6. Exhibits and Reports on Form 8 - K
(a) Exhibits
Exhibit Number Description of Exhibit
-------------- -----------------------------------------
27 Financial Data Schedules, filed herewith
(b) Reports on Form 8-K - None
8
<PAGE> 9
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, 1999 /s/ F. Terry Shumate, Director,
Vice President, Secretary and
Treasurer
9
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 11,106
<SECURITIES> 0
<RECEIVABLES> 3,446,552
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 58,970,638
<CURRENT-LIABILITIES> 0
<BONDS> 5,596,234
0
0
<COMMON> 105,710
<OTHER-SE> 37,573,763
<TOTAL-LIABILITY-AND-EQUITY> 37,679,473
<SALES> 0
<TOTAL-REVENUES> 71,472
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,316
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 52,839
<INCOME-PRETAX> 7,317
<INCOME-TAX> 0
<INCOME-CONTINUING> 7,317
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,317
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
