-----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, PMLdmXYpJs/8/nBTKUQaKnbrLlLIyoj9vdgHNyx7E9C8vEyjSsaT5gd1YG38f5kv 0yklgNLT3jix6U7+b/FPPw== 0001193125-06-226614.txt : 20061107 0001193125-06-226614.hdr.sgml : 20061107 20061107155310 ACCESSION NUMBER: 0001193125-06-226614 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060930 FILED AS OF DATE: 20061107 DATE AS OF CHANGE: 20061107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST EQUITY PROPERTIES INC CENTRAL INDEX KEY: 0000726516 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 956799846 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11777 FILM NUMBER: 061193937 BUSINESS ADDRESS: STREET 1: 1800 VALLEY VIEW LANE STREET 2: SUITE 300 CITY: DALLAS STATE: TX ZIP: 75234 BUSINESS PHONE: 2147505800 MAIL ADDRESS: STREET 1: 1800 VALLEY VIEW LANE STREET 2: SUITE 300 CITY: DALLAS STATE: TX ZIP: 75234 FORMER COMPANY: FORMER CONFORMED NAME: WESPAC INVESTORS TRUST III DATE OF NAME CHANGE: 19970123 10-Q 1 d10q.htm FORM 10-Q Form 10-Q
Table of Contents

FORM 10-Q

 


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED SEPTEMBER 30, 2006

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 000-11777

 


FIRST EQUITY PROPERTIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

 


 

Nevada   95-6799846

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

1800 Valley View Lane, Suite 300

Dallas, Texas 75234

(Address of principal executive offices)

(Zip Code)

(469) 522-4200

(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 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  ¨.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  ¨.    No  x.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of accelerated filer in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer  ¨    Accelerated filer  ¨    Non-accelerated filer   x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨.    No x.

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  ¨.

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.

 

Common Stock, $.01 par value   1,057,628
(Class)   (Outstanding at September 30, 2006)

 



Table of Contents

FIRST EQUITY PROPERTIES, INC.

FORM 10-Q

TABLE OF CONTENTS

 

          PAGE
PART I: FINANCIAL INFORMATION   
Item 1.    Financial Statements   
   Balance Sheets at September 30, 2006 (Unaudited) and December 31, 2005    3
   Statements of Earnings for the three and nine months ended September 30, 2006 and 2005 (Unaudited)    4
   Statements of Stockholders Equity for the nine months ended September 30, 2006 (Unaudited)    5
   Statements of Cash Flows for the nine months ended September 30, 2006 and 2005 (Unaudited)    6
   Notes to Financial Statements    7
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations    8
Item 4.    Controls and Procedures    8
PART II. OTHER INFORMATION   
Item 6.    Exhibits    9
SIGNATURE PAGES    10

 

2


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FIRST EQUITY PROPERTIES, INC.

BALANCE SHEETS

 

    

September 30,

2006

   

December 31,

2005

 
     (Unaudited)        
Assets   

Cash and cash equivalents

   $ 6,763     $ 4,029  

Notes and interest receivable

     2,407,540       2,468,224  

Deferred tax asset

     3,400       —    
                
   $ 2,417,703     $ 2,472,253  
                
Liabilities and Stockholders’ Equity     

Accounts payable

   $ —       $ 7,320  

Federal income taxes payable

     43,758       —    

Accounts payable – affiliate

     1,847,980       2,053,980  
                

Total liabilities

     1,891,738       2,061,300  

Shareholders’ equity

    

Preferred stock, $0.01 par, 4,960,000 shares authorized, none issued and outstanding

     —         —    

Common stock, $0.01 par, 40,000,000 shares authorized, 1,057,628 shares issued and outstanding

     10,576       10,576  

Additional paid-in capital

     1,376,682       1,376,682  

Retained earnings (deficit)

     (861,293 )     (976,305 )
                

Total stockholders’ equity

     525,965       410,953  
                
   $ 2,417,703     $ 2,472,253  
                

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

3


Table of Contents

FIRST EQUITY PROPERTIES, INC.

STATEMENTS OF EARNINGS

(Unaudited)

 

    

For the Three Months

Ended September 30,

  

For the Nine Months

Ended September 30,

     2006     2005    2006     2005

Revenue

         

Interest income

   $ 60,767     $ 60,683    $ 180,154     $ 180,071

Operating expenses

         

General and administrative

     1,737       1,428      3,894       3,318

Legal and professional fees

     4,187       5,156      20,891       14,575
                             

Total operating expenses

     5,924       6,584      24,785       17,893
                             

Operating income

     54,843       54,099      155,369       162,178

Corporate income tax expense

     (19,757 )     —        (53,957 )     —  

Deferred tax benefit

     —         —        13,600       —  
                             

NET EARNINGS

   $ 35,086     $ 54,099    $ 115,012     $ 162,178

Earnings per share

         

Net earnings

   $ 0.03     $ 0.05    $ 0.11     $ 0.15
                             

Weighted average shares outstanding

     1,057,628       1,057,628      1,057,628       1,057,628

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

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FIRST EQUITY PROPERTIES, INC.

STATEMENTS OF STOCKHOLDERS EQUITY

For the Nine Months Ended September 30, 2006

(Unaudited)

 

     Preferred Stock    Common Stock   

Paid-in

Capital

  

Retained
Earnings

(deficit)

   

Stockholders’

Equity

     Shares    Amount    Stock    Capital        

Balance, January 1, 2006

   —      $ —      1,057,628    $ 10,576    $ 1,376,682    $ (976,305 )   $ 410,953

Net income (loss)

   —        —      —        —        —        115,012       115,012
                                             

Balance, September 30, 2006

   —      $ —      1,057,628    $ 10,576    $ 1,376,682    $ (861,293 )   $ 525,965
                                             

The accompanying notes are an integral part of these Financial Statements.

 

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Table of Contents

FIRST EQUITY PROPERTIES, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

    

For the Nine Months

Ended September 30,

 
     2006     2005  
     (dollars in thousands)  

Cash Flows from Operating Activities

    

Net earnings

   $ 115,012     $ 162,178  

Adjustments to reconcile net income to net cash provided by operating activities

    

(Increase) decrease in

    

Interest receivable

     60,684       219,048  

Deferred tax asset

     (3,400 )     —    

Increase (decrease) in

    

Accounts payable

     (7,320 )     —    

Federal income taxes payable

     43,758       —    

Accounts payable – affiliate

     (206,000 )     (379,223 )
                

Net cash provided by operating activities

     2,734       2,003  
                

Net increase in cash and cash equivalents

     2,734       2,003  

Cash and cash equivalents at the beginning of period

     4,029       4,621  
                

Cash and cash equivalents at the end of period

   $ 6,763     $ 6,624  
                

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

6


Table of Contents

FIRST EQUITY PROPERTIES, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE A. - BASIS OF PRESENTATION

The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States of America for complete financial statements. In the opinion of management of First Equity Properties, Inc., all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of First Equity Properties, Inc.’s balance sheet, statement of earnings and statement of cash flows, have been included.

The financial statements for the period September 30, 2006 do not include all of the information and footnotes required by generally accepted accounting principals in the United States of America for complete financial statements. You should read these financial statements in conjunction with the financial statements and footnotes thereto in our annual report on Form 10-K for the year ended December 31, 2005. Hereafter in this document, First Equity Properties, Inc. is referred to as FEPI.

Operating results for the nine-month period ended September 30, 2006, are not necessarily indicative of the results that may be expected for the year ended December 31, 2006.

NOTE B. FEDERAL INCOME TAXES

The accompanying unaudited 2006 financial statements contain an accrual for current federal income taxes calculated using annualized net income of approximately of $200,000. Using an estimated tax rate of 34%, the estimated tax liability for the year would be approximately $68,000, of this $53,957 is included as current income tax expense in the accompanying unaudited 2006 financial statements, which represents three quarters of the estimated tax liability for the year. There are no significant differences between the Company’s net income for financial and income tax reporting.

The Company has determined that it would be able to use its prior year net operating loss carryforward in the current year. The valuation allowance account that offsets the deferred tax asset associated with the $40,000 net operating loss was removed. This resulted in an estimated deferred tax benefit of $13,600 as reflected in the accompanying unaudited 2006 financial statements. Of this amount, $10,200 has been used to offset the current estimated tax liability.

 

7


Table of Contents

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

The sole source of income is from interest on notes receivables from affiliated entities. The average income received from interest is approximately $60,000 and $180,000 for the three and nine months ended September 30, 2006, respectively.

The major operating expenses are related to the professional fees required to maintain the organization. These expenses are relatively consistent and comparable to prior periods. The increase in income tax expense is due to the company using all of its net operating loss (NOL) tax credit carryforwards except for $40,000. The Company is using a tax rate of 34% to estimate the effect of the NOL to offset the current income tax expense.

Financial Condition and Liquidity

Total assets as of September have decreased from $2,472,253 to $2,417,703 for 2005 and 2006, respectively. The decrease was due to the receipt of interest accrued on the notes. The Company’s significant assets consist of two notes receivables from affiliated parties which total $2,407,540.

The Company is anticipating paying federal income taxes of $68,000 and has accrued a liability of $43,758, net of tax credits to date. The increase in tax liability is due to the company using its remaining tax credits in prior year to offset its prior year tax expense.

The payable as of September 30 consists of affiliated payables of $2,053,980 and $1,847,980 for 2005 and 2006, respectively. The Company has paid down $206,000 of this obligation for the nine month period ended September 30, 2006.

ITEM 4. CONTROLS AND PROCEDURES

 

(a) As of the end of the period 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 Vice President, Treasurer, Chief Financial and Accounting Officer and Acting Principal Executive Officer of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based upon that evaluation, the Company’s Vice President, Treasurer, Chief Financial and Accounting Officer and Acting Principal Executive Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting him to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings.

 

(b) There have been no changes in the Company’s internal controls over financial reporting during the quarter ended September 30, 2006, that have materially affected or are reasonably likely to materially affect the Company’s internal controls over financial reporting.

 

8


Table of Contents

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS

The following exhibits are filed with this report or incorporated by reference as indicated;

 

Exhibit

Number

 

Description

3.1   Articles of Incorporation of Wespac Property Corporation as filed with and endorsed by the Secretary of State of California on December 16, 1996 (incorporation by reference is made to Exhibit 3.1 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.2   Articles of Incorporation of First Equity Properties, Inc. filed with and approved by the Secretary of State of Nevada on December 19, 1996 (incorporation by reference is made to Exhibit 3.2 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.3   Bylaws of First Equity Properties, Inc. as adopted December 20, 1996 (incorporation by reference is made to Exhibit 3.3 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.4   Agreement and Plan of Merger of Wespac Property Corporation and First Equity Properties, Inc. dated December 23, 1996 (incorporation by reference is made to Exhibit 3.4 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.5   Articles of Merger of Wespac Property Corporation into First Equity Properties, Inc. as filed with and approved with the Secretary of State in Nevada December 24, 1996 (incorporation by reference is made to Exhibit 3.5 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.6   Certificate of Designation of Preferences and Relative Participating or Optional of Other Special Rights and Qualifications, Limitations or Restrictions thereof of the Series A 8% Cumulative Preferred Stock (incorporation by reference is made to Exhibit 3.6 to Form 10-KSB of First Equity Properties, Inc. for the fiscal year ended December 31, 1996.)
31.1*   Certification of Acting Principal Executive Officer and Chief Financial and Accounting Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934
32.1*   Rule 1350 Certification of Acting Principal Executive Officer and Chief Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350

* Filed herewith.

 

9


Table of Contents

SIGNATURE PAGE

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.

 

  FIRST EQUITY PROPERTIES, INC.
Date: November 7, 2006   By:  

/s/ Steven A. Abney

    Steven A. Abney
   

Vice President, Treasurer, Chief Financial and Accounting

Officer, and Acting Principal Executive Officer

 

10

EX-31.1 2 dex311.htm SECTION 302 CEO AND CFO CERTIFICATION Section 302 CEO and CFO Certification

EXHIBIT 31.1

CERTIFICATION

I, Steven Abney, Vice President, Treasurer, Chief Financial and Accounting Officer, and Acting Principal Executive Officer of First Equity Properties, Inc. (“FEPI”), certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of FEPI;

 

2. Based on my knowledge, this 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 report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

 

4. I am responsible for establishing and maintaining internal controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d-15(f) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to insure 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 report is being prepared;

 

  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrants internal control over financial reporting; and

 

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 7, 2006  

/s/ Steven A. Abney

  Steven A. Abney
 

Vice President, Treasurer, Chief Financial and Accounting

Officer and Acting Principal Executive Officer

EX-32.1 3 dex321.htm SECTION 906 CEO AND CFO CERTIFICATION Section 906 CEO and CFO Certification

EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of First Equity Properties, Inc. (the “Company”), on Form 10-Q for the period ended September 30, 2006, as filed with Securities Exchange Commission on the date hereof (the “Report”), I, Steven A. Abney, Vice President, Treasurer, Chief Financial and Accounting Officer and Acting Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

Date: November 7, 2006   By:  

/s/ Steven A. Abney

    Steven A. Abney
   

Vice President, Treasurer and Chief Financial and

Accounting Officer and Acting Principal Executive Officer

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