-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JAhX0fkrXWR51qlshTH+JhSQ/acrQXMWfdU5jwXMMc6AHKol/HhVr8LXv9+/tkMi 8QkfTV5enIhCnOqdUlJkoA== 0001145443-02-000723.txt : 20021114 0001145443-02-000723.hdr.sgml : 20021114 20021114171349 ACCESSION NUMBER: 0001145443-02-000723 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALPROP CORP CENTRAL INDEX KEY: 0000016496 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 954044835 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06844 FILM NUMBER: 02826226 BUSINESS ADDRESS: STREET 1: 13160 MINDANAO WAY STREET 2: STE 180 CITY: MARINA DEL REY STATE: CA ZIP: 90292 BUSINESS PHONE: 3103064314 MAIL ADDRESS: STREET 1: 13160 MINDANAO WAY STREET 2: STE 180 CITY: MARINA DEL REY STATE: CA ZIP: 90292 10-Q 1 d11504.txt FORM 10-Q 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 September 30, 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 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 |X| NO |_| Number of shares outstanding of each of Registrant's classes of common stock, as of October 2, 2002: Number of Shares Title of Each Class Outstanding - ------------------------------ ---------------- Common Stock, no par value 10,254,005 CALPROP CORPORATION QUARTERLY REPORT FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 TABLE OF CONTENTS PART I-FINANCIAL INFORMATION Page Item 1. FINANCIAL STATEMENTS (Unaudited) Consolidated Balance Sheets as of September 30, 2002 and 4 December 31, 2001 Consolidated Statements of Operations for the Three and Nine Months 6 Ended September 30, 2002 and 2001 Consolidated Statements of Cash Flows for the Nine Months Ended 7 September 30, 2002 and 2001 Notes to Consolidated Financial Statements 8 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 12 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 13 Item 4. CONTROLS AND PROCEDURES 13 PART II-FINANCIAL INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K 14 SIGNATURES 14 CERTIFICATIONS 15 CALPROP CORPORATION Part I Item I - Financial Information Set forth is the unaudited quarterly report for the quarters ended September 30, 2002 and 2001, 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 September 30, December 31, 2002 2001 ----------- ----------- Real estate under development (Note 5) $24,970,213 $88,789,252 Rental property, (net of accumulated depreciation 10,721,144 of $48,750) (Note 6) Other assets: Cash and cash equivalents 5,140,620 2,079,471 Deferred tax assets (Note 2) 6,535,343 6,535,343 Other assets 803,995 774,882 Receivable from affiliates 5,476 788,752 ----------- ----------- Total other assets 12,485,434 10,178,448 ----------- ----------- Total assets $48,176,791 $98,967,700 =========== =========== (Continued) The accompanying notes are an integral part of these financial statements. 4 CALPROP CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY September 30, December 31, 2002 2001 ------------ ------------ Trust deeds and notes payable $ 20,289,651 $ 51,990,779 Related-party notes 15,637,634 26,219,560 ------------ ------------ Total trust deeds, notes payable and related-party notes 35,927,285 78,210,339 Accounts payable and accrued liabilities 2,931,684 5,334,450 Warranty reserves 751,804 670,115 ------------ ------------ Total liabilities 39,610,773 84,214,904 Stockholders' equity: Common stock, no par value Authorized - 20,000,000 shares Issued and outstanding - 10,254,005 shares at September 30, 2002 and December 31, 2001 10,254,005 10,254,005 Additional paid-in capital 25,845,986 25,845,986 Deferred compensation (51,000) (51,000) Stock purchase loans (522,508) (537,179) Accumulated deficit (26,960,465) (20,759,016) ------------ ------------ Total stockholders' equity 8,566,018 14,752,796 ------------ ------------ $ 48,176,791 $ 98,967,700 ============ ============ (Concluded) The accompanying notes are an integral part of these financial statements. 5 CALPROP CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
---------------------------- ---------------------------- Three Months Ended Nine Months Ended September 30, September 30, ---------------------------- ---------------------------- 2002 2001 2002 2001 ------------ ------------ ------------ ------------ Development operations: Real estate sales $ 21,678,306 $ 18,880,000 $ 86,028,975 $ 69,309,686 Cost of real estate sales 22,626,112 16,688,474 86,129,000 62,692,165 ------------ ------------ ------------ ------------ (Loss) income from development operations before recognition of impairment of real estate (947,806) 2,191,526 (100,025) 6,617,521 Recognition of impairment of real estate development (Note 5) (2,639,468) (2,018,088) (4,471,693) (2,018,088) ------------ ------------ ------------ ------------ (Loss) income from development operations (3,587,274) 173,438 (4,571,718) 4,599,433 Income from investment in real estate venture (Note 5) 109,253 Other income: Rental (Note 6) 43,771 43,771 Interest and miscellaneous 63,004 73,412 315,303 144,031 Management fee (Note 5) 10,931 218,113 ------------ ------------ ------------ ------------ Total other income 117,706 73,412 577,187 144,031 Other expenses: Rental operating (Note 6) 220,500 220,500 General and administrative 775,484 874,734 1,851,936 2,304,921 Depreciation 47,532 47,532 Interest 195,968 195,968 ------------ ------------ ------------ ------------ Total other expenses 1,239,484 874,734 2,315,936 2,304,921 Minority interests (Note 4) 235 (1,825) ------------ ------------ ------------ ------------ (Loss) income before provision for income taxes (4,709,052) (627,884) (6,201,449) 2,440,368 Provision for income taxes (Note 2) 205,544 205,544 ------------ ------------ ------------ ------------ Net (loss) income ($ 4,709,052) ($ 833,428) ($ 6,201,449) $ 2,234,824 ============ ============ ============ ============ Basic net (loss) income per share (Note 3) ($0.46) ($0.08) ($0.61) $0.22 ====== ====== ====== ===== Diluted net (loss) income per share (Note 3) ($0.46) ($0.08) ($0.61) $0.21 ====== ====== ====== =====
The accompanying notes are an integral part of these financial statements. 6 CALPROP CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, --------------------------- 2002 2001 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income ($ 6,201,449) $ 2,234,824 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Minority interests 235 (1,825) Recognition of impairment of real estate development 4,471,693 2,018,088 Income from investment in real estate venture (109,253) Depreciation and amortization 79,695 35,115 Provision for warranty reserves 237,105 223,596 Deferred income taxes Change in assets and liabilities: Other assets (46,665) (65,650) Receivable from affiliates 783,276 Accounts payable and accrued liabilities (2,402,766) (2,478,500) Warranty reserves (155,416) (146,250) Additions to real estate under development (37,441,312) (54,631,981) Cost of real estate sales 86,129,000 62,692,165 Accrued interest for executive stock purchase loans (16,077) (11,780) ----------- ----------- Net cash provided by operating activities 45,328,066 9,867,802 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (14,611) (5,066) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under related-party notes 1,663,977 7,440,000 Payments under related-party notes (12,245,903) (4,463,073) Borrowings under trust deeds and notes payable 29,459,073 53,180,517 Payments under trust deeds and notes payable (61,160,201) (64,169,340) Repayment of stock purchase loans 30,748 Purchase of common stock (28,290) ----------- ----------- Net cash used in financing activities (42,252,306) (8,040,186) ----------- ----------- Net increase in cash and cash equivalents 3,061,149 1,822,550 Cash and cash equivalents at beginning of period 2,079,471 2,394,310 ----------- ----------- Cash and cash equivalents at end of period $ 5,140,620 $ 4,216,860 =========== =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid (refunded) during the period for: Interest, net of amount capitalized $ 195,968 Income taxes ($ 45,131) $ 142,741
The accompanying notes are an integral part of these financial statements 7 CALPROP CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS PERIODS ENDED SEPTEMBER 30, 2002 AND 2001 (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. The results of operations for the three and nine months ended September 30, 2002 may not be indicative of the operating results for the year ending December 31, 2002. Note 2: Income taxes As of September 30, 2002, the Company had gross deferred tax assets of $9,644,969 offset by a deferred tax asset valuation allowance of $3,109,626. During the nine months ended September 30, 2002, the Company increased the deferred tax asset valuation allowance by $1,704,803 which offset the net current benefit for the period. 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 $6,535,343 of deferred tax assets will be realized. As of September 30, 2002, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $21,665,000 and $6,450,000, respectively. For federal tax purposes, net operating loss carryforwards expire from 2013 through 2022. For state tax purposes, net operating loss carryforwards expire from 2003 through 2012. 8 Note 3: Earnings per share The following table sets forth the computation of basic and diluted net (loss) income per share:
Three Months Ended Nine Months Ended September 30, September 30, ---------------------------------------------------------- 2002 2001 2002 2001 ---------------------------------------------------------- Net (loss) income ($4,709,052) ($833,428) ($6,201,449) $2,234,824 ---------------------------------------------------------- Numberator for basic and diluted net (loss) income per share ($4,709,052) ($833,428) ($6,201,449) $2,234,824 ========================================================== Denominator for basic net (loss) income per share (weighted average outstanding shares) 10,254,005 10,285,284 10,254,005 10,288,778 Effect of dilutive stock options 152,444 ---------------------------------------------------------- Weighted average shares for dilutive net income per share 10,254,005 10,285,284 10,254,005 10,441,222 ========================================================== Basic net (loss) income per share ($0.46) ($0.08) ($0.61) $0.22 ========================================================== Diluted net (loss) income per share ($0.46) ($0.08) ($0.61) $0.21 ==========================================================
Note 4: Consolidation The Company has consolidated the financial statements of the following entities:
- --------------------------------------------------------------------------------------------------------------- Ownership interest at Entity September 30, 2002 Development - --------------------------------------------------------------------------------------------------------------- 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 nine months ended September 30, 2002, $1,817 of the total loss of $2,052 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 September 30, 2002 and December 31, 2001 was $67,682 and $65,865, respectively. As a result, the Company has recorded minority interest of $0 as of September 30, 2002 and December 31, 2001. 9 Note 5: Real estate under development Impairment of real estate under development-During the third quarter of 2002, the Company recorded an impairment loss on real estate under development of $1,231,948 in the Saddlerock project. The project consisted of 94 homes with five product lines in 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 and as a result the Company recorded an impairment loss on real estate under development. Additionally, during the third quarter of 2002, the Company recorded an impairment loss on real estate under development of $1,407,520 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. Investment in real estate venture-The Company has a 25 percent interest in RGC Carmel Country, LLC, the "Joint Venture". The Joint Venture consists of 181 townhomes available for lease in San Diego. The Company's allocable share of losses, if any, from investments in real estate ventures are recognized in the financial statements until the related investment account is reduced to a zero balance. Losses incurred after the investment account is reduced to zero are not recongized. The cumulative amount of unrecognized equity in losses of unconsolidated real estate ventures was $469,690 and $0 as of September 30, 2002 and December 31, 2001, respectively. Distributions received by the Company from the real estate ventures are accounted for as a return of capital until the investment balance is reduced to zero. Additionally, the Company recognized management fees of $10,931 and $218,113 for the three and nine months ended September 30, 2002, respectively, related to the joint venture. Note 6: Rental property 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 owned by RGCCLPO. Construction was completed in August 2002 and the 68 units were available for lease. As of September 30, 2002, the apartment project was 50% leased. 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: 10 Three Months Ended September 30, 2002 ---------------------------------------------- Revenues Contribution to Assets Loss --------------------------------------------- Residential homes $21,678,306 ($4,362,758) $37,406,983 Rental property 43,771 (176,729) 10,769,808 --------------------------------------------- 21,722,077 (4,539,487) 48,176,791 Interest and other, net 73,935 (169,565) --------------------------------------------- $21,796,012 ($4,709,052) $48,176,791 ============================================= Nine Months Ended September 30, 2002 --------------------------------------------- Revenues Contribution to Assets Loss --------------------------------------------- Residential $86,028,975 ($6,423,654) $37,406,983 Rental property 43,771 (176,729) 10,769,808 --------------------------------------------- 86,072,746 (6,600,383) 48,176,791 Interest and other, net 533,416 398,934 --------------------------------------------- $86,606,162 ($6,201,449) $48,176,791 ============================================= Prior to the three and nine month period September 30, 2002, the Company operated under one reportable segment. 11 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. Liquidity and capital resources As of September 30, 2002, the Company had remaining loan commitments from financial institutions of approximately $9,191,000, 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 September 30, 2002, the Company had four residential housing projects in various stages of development, with all four producing revenues from completed homes and townhomes: Parc Metropolitan, High Ridge Court, Saddlerock, and Montserrat Classics. As of September 30, 2002, the Company has 58 homes under construction, of which 11 are in escrow to be sold, and 6 model units. Additionally, the Company has an inventory of 106 lots under development. In addition to the construction and sale of single-family and multifamily housing, the Company is engaged in the development of apartments and townhomes available for lease. As of September 30, 2002, the Company had an apartment project and a townhome project available for lease (one project consists of a 25% equity interest in a real estate venture), the total projects consist of 249 units available for lease. As of September 30, 2002, the Company had 11 units in escrow ("backlog") compared with a backlog of 59 units as of September 30, 2001. The gross revenues of such backlog was $4,275,000 and $20,400,000 as of September 30, 2002 and 2001, respectively. Based on its agreements with its lenders, the Company believes that it will have sufficient liquidity to finance its construction projects in 2002 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 2002, minimize operating expenses, and maintain control over costs. With regard to the debt coming due in 2002, 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. Results of operations Real estate sales for the three months ended September 30, 2002 increased 14.8% to $21,678,306 from $18,880,000 for the three months ended September 30, 2001. For the nine months ended September 30, 2002, real estate sales increased 24.1% to $86,028,975 from $69,309,686 in the year-earlier period. The increase in real estate sales for the three and nine month periods of 2002 was primarily due to the high volume of inventory of completed homes available for sale in 2002 compared to completed homes available for sale in 2001. In the third quarter of 2002, the Company sold 62 homes with an average sales price of $349,650, a 34.8% increase in the volume of home sales compared to 46 homes with an average sales price of $410,400 for the third quarter of 2001. During the first nine months of 2002, the Company sold 233 homes with an average sales price of $369,223, a 22.6% increase in the volume of home sales compared to 190 homes with an average sales price of $364,800 for the nine months of 2001. The Company had a loss from development operations before recognition of impairment of real estate $947,806 in the third quarter of 2002 as compared to income of $2,191,526 in the third quarter of 2001. For the 12 nine months ended September 30, 2002, the Company had a loss from development operations before recognition of impairment of real estate of $100,025 as compared to income of $6,617,521 in the third quarter of 2001. The significant decrease of income from development operations during the third quarter of 2002 and nine months ended September 30, 2002 resulted from a slower absorption rate, and increased production overhead costs. The increased sales price was not sufficient to offset the increased direct construction cost, marketing and sales incentives, production overhead and interest costs. During the third quarter of 2002, the Company recorded an impairment loss on real estate under development of $1,231,948 in the Saddlerock project. The project consisted of 94 homes with five product lines in 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 and as a result the Company recorded an impairment loss on real estate under development. Additionally, during the third quarter of 2002, the Company recorded an impairment loss on real estate under development of $1,407,520 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 owned by RGCCLPO. Construction was completed in August 2002 and the 68 units were available for lease. As of September 30, 2002, the apartment project was 50% leased. As of September 30, 2002, the apartment project generated $43,771 of rental income and $350,358 of rental expenses. General and administrative expenses decreased to $775,484 in the three months ended September 30, 2002 from $874,734 in the corresponding 2001 period. For the nine months ended September 30, 2002, general and administrative expenses decreased to $1,851,936 from $2,304,921 in the corresponding 2001 period. The decrease is due to the focus efforts to decrease corporate overhead costs. 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, 2001. 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. 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. Within 90 days prior to the date of 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 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. 13 Part II 6 Exhibits and Reports on Form 8-K (a) Exhibits - None (b) Reports on Form 8-K A Current Report on Form 8-K dated April 1, 2002 was filed with the Securities and Exchange Commission (the "Commission") and included under item 7(a) its audited consolidated financial statements for the year ended December 31, 2001 and unaudited consolidated financial statements for the quarter ended December 31, 2001, and under item 7(c) a press release announcing Calprop Corporations' 2001 annual and fourth quarter results. A Current Report on Form 8-K dated May 15, 2002 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, 2002, and under item 7(c) a press release announcing Calprop Corporations' first quarter results. A Current Report on Form 8-K dated August 14, 2002 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 June 30, 2002, and under item 7(c) a press release announcing Calprop Corporations' first quarter results. 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) November 8, 2002 14 CERTIFICATIONS I, Victor Zaccaglin, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Calprop Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 8, 2002 /s/ Victor Zaccaglin ---------------------------------------- Victor Zaccaglin Chairman of the Board Chief Executive Officer 15 CERTIFICATIONS I, Mark F. Spiro, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Calprop Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 8, 2002 /s/ Mark F. Spiro ---------------------------------------- Mark F. Spiro VicePresident/Secretary/Treasurer (Chief Financial and Accounting Officer) 16 -----END PRIVACY-ENHANCED MESSAGE-----