##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



Form 10-KSB



---



(Mark One)

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



For the fiscal year ended December 31, 2004



| ̈ | 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 000-24594



---



MEREDITH ENTERPRISES, INC.

(formerly West Coast Realty Investors, Inc.)

(Name of small business issuer in its charter)



---



|                                                             |  |                                  
|------------------------------------------------------------ |  | ---------------------------------
|Delaware                                                     |  | 95-4246740                       
|State or other jurisdiction of incorporation or organization |  | (IRS Employer Identification No.)



3000 SAND HILL ROAD
BUILDING 2, SUITE 120

MENLO PARK, CALIFORNIA 94025

(Address of principal executive offices) (Zip Code)



Issuers telephone number (650) 233-7140



---



Securities registered pursuant to Section 12(b) of the Act:



|                             |  |                                          
|---------------------------- |  | -----------------------------------------
|Title of each class          |  | Name of each exchange on which registered
|Common Stock, $.01 par value |  | American Stock Exchange                  



Securities
registered under Section 12(g) of the Exchange Act: None



---



Check whether the issuer (1) filed all reports to be filed by Section 13 or 15 (d) of the Exchange Act during the past 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 ̈



Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB ̈



State issuers revenues for its most recent fiscal year $7,866,052



State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such
common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.) $10,887,962 as of March 17, 2005.



State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date. 968,965
(net of 8,000 shares held in treasury) at March 17, 2005.



DOCUMENTS INCORPORATED BY REFERENCE

None



Transitional Small Business Disclosure Format (Check one):    Yes  x    No ̈



---



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.

(formerly West Coast Realty Investors, Inc.)



ANNUAL REPORT ON FORM 10-KSB

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004



TABLE OF CONTENTS



|         |  |                                                   |  |                                                                                                                 |  |   
|-------- |  | ------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------- |  | --
|         |  | Page No.                                         
|         |  | Special Note Regarding Forward-Looking Statements |  | 1                                                                                                              
|         |  |                                                   | 
|PART I   |  | ITEM 1:                                           |  | Description of Business                                                                                         |  | 2 
|         |  |                                                   |  | Risk Factors That May Affect Future Results                                                                     |  | 5 
|         |  | ITEM 2:                                           |  | Description of Property                                                                                         |  | 18
|         |  | ITEM 3:                                           |  | Legal Proceedings                                                                                               |  | 24
|         |  | ITEM 4:                                           |  | Submission of Matters to a Vote of Security Holders                                                             |  | 25
|         |  |                                                   | 
|PART II  |  | ITEM 5:                                           |  | Market for Common Equity and Related Stockholder Matters                                                        |  | 25
|         |  | ITEM 6:                                           |  | Managements Discussion and Analysis or Plan of Operation                                                       |  | 27
|         |  | ITEM 7:                                           |  | Financial Statements                                                                                            |  | 36
|         |  | ITEM 8:                                           |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                            |  | 59
|         |  | ITEM 8A:                                          |  | Controls and Procedures                                                                                         |  | 59
|         |  | ITEM 8B:                                          |  | Other Information                                                                                               |  | 59
|         |  |                                                   | 
|PART III |  | ITEM 9:                                           |  | Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act |  | 60
|         |  | ITEM 10:                                          |  | Executive Compensation                                                                                          |  | 64
|         |  | ITEM 11:                                          |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                  |  | 66
|         |  | ITEM 12:                                          |  | Certain Relationships and Related Transactions                                                                  |  | 68
|         |  | ITEM 13:                                          |  | Exhibits                                                                                                        |  | 69
|         |  | ITEM 14:                                          |  | Principal Accountant Fees and Services                                                                          |  | 71
|         |  |                                                   |  | Signatures                                                                                                      |  | 72



As used in this Annual Report on Form
10-KSB, unless the context otherwise requires, the terms we, us, or the Company and our refer to Meredith Enterprises, Inc., a Delaware corporation, formerly named West Coast Realty Investors, Inc.



---

##### Table of Contents

Special Note Regarding Forward-Looking Statements



This annual report contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are identified by words such as believes, expects, may,
will, should, seeks, approximately, intends, plans, pro forma, estimates, or anticipates or in their negative form or other variations, or by
discussions of strategy, plans or intentions. Forward-looking statements are based on assumptions, data or methods that may be incorrect, imprecise or incapable of being realized. These statements include our statements of this nature concerning the
following:



| |  |  | the commercial real estate market;
| | - |  | ----------------------------------



| |  |  | our future revenues;
| | - |  | --------------------



| |  |  | our future revenue mix, net operating income and operating results;
| | - |  | -------------------------------------------------------------------



| |  |  | our future cash requirements;
| | - |  | -----------------------------



| |  |  | competition, our competitors and our ability to compete;
| | - |  | --------------------------------------------------------



| |  |  | our financial and managerial controls, reporting systems and procedures, and other systems and processes;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | property values;
| | - |  | ----------------



| |  |  | any particular tenants intentions or financial condition, such as its plans to renew or terminate a property lease, or the likelihood that it will default upon a property
lease;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | vacancies;
| | - |  | ----------



| |  |  | interest rates;
| | - |  | ---------------



| |  |  | our operating costs;
| | - |  | --------------------



| |  |  | our future depreciation expenses;
| | - |  | ---------------------------------



| |  |  | litigation matters and legal proceedings, our defenses to such matters and our contesting of such matters;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | our ability to meet our debt obligations;
| | - |  | -----------------------------------------



| |  |  | the proposed sales of certain properties;
| | - |  | -----------------------------------------



| |  |  | our continuing ability to obtain outside financing;
| | - |  | ---------------------------------------------------



| |  |  | identifying, acquiring and successfully integrating new properties;
| | - |  | -------------------------------------------------------------------



| |  |  | our ability to successfully construct the planned shopping center on 2.5 acres in Garden Grove, California;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | the type and locations of real estate investments we may make;
| | - |  | --------------------------------------------------------------



| |  |  | our ability to qualify as a real estate investment trust under the Internal Revenue Code of 1986, as amended;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | environmental risks;
| | - |  | --------------------



| |  |  | natural disasters and other threats to our properties; and
| | - |  | ----------------------------------------------------------



| |  |  | the economies of the geographic areas where our properties are located.
| | - |  | -----------------------------------------------------------------------



These statements are subject to risks and uncertainties that could cause actual results and events to differ materially. For a detailed discussion of these risks and
uncertainties, see Risk Factors at the end of Item 1, Business. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this annual report.



1



---

##### Table of Contents

PART I



ITEM 1. DESCRIPTION OF BUSINESS



Overview



Meredith Enterprises, Inc. (formerly West Coast Realty Investors, Inc.) is a real estate
company engaged in acquiring, owning and managing, suburban office, retail shopping center and light industrial properties. We were originally incorporated in 1989 under the laws of the State of Delaware. We have elected to be taxed as a real estate
investment trust, or REIT, for federal income tax purposes. To maintain treatment as a REIT, we must, among other things, distribute at least 90% of our taxable income (excluding capital gains) to our stockholders. From inception to
March 31, 2002, West Coast Realty Advisors, Inc. advised us and West Coast Realty Management, Inc. managed our properties. Each of these companies was a wholly owned subsidiary of Associated Financial Group, Inc. Since March 31, 2002, we have been
self-managed and self-administered.



At December 31, 2004, we had a real estate
portfolio of 11 properties, including:



| |  |  | three light industrial properties totaling 151,225 square feet;
| | - |  | ---------------------------------------------------------------



| |  |  | one retail shopping center of 321,621 square feet;
| | - |  | --------------------------------------------------



| |  |  | one restaurant facility of 5,133 square feet;
| | - |  | ---------------------------------------------



| |  |  | five suburban office properties totaling 114,606 square feet; and
| | - |  | -----------------------------------------------------------------



| |  |  | one property held for sale totaling 25,000 square feet.
| | - |  | -------------------------------------------------------



In addition to the above, we own a 2.5 acre parcel of undeveloped land in Garden Grove, California. We have begun construction of a multi-tenant shopping center
comprising approximately 30,000 square feet on this parcel. All of our properties are located in California and Georgia. Because our only Georgia property is our Northlake Festival retail center in Atlanta, any reference in this report to the
location of any other property is to a city in California.



Our executive
offices are located at 3000 Sand Hill Road, Building 2, Suite 120, Menlo Park, California 94025, and our telephone number is (650) 233-7140.



Business Strategies



Our business objective is to increase stockholders long-term total return through dividends and the appreciation in value of our common stock.



We seek to grow our asset base through, as follows:



| |  |  | the acquisition of suburban office, retail shopping center and light industrial properties;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | the acquisition of portfolios of similar properties;
| | - |  | ----------------------------------------------------



| |  |  | the rehabilitation and repositioning of suburban office, retail shopping center and light industrial properties; and
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | purchasing parcels of undeveloped land and constructing suburban office, retail shopping center or light industrial properties on them.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



Our strategy is to operate in markets that demonstrate superior economic
growth and in which the development of similar competing properties is restrained by entitlement limitations. We intend to continue to target selected California and Southeastern markets where we currently own assets, and we believe we can benefit
from our real estate expertise and access to superior properties introduced by high quality brokers. Specific strategies include:



| |  |  | increasing cash flow through new net leases for existing properties;
| | - |  | --------------------------------------------------------------------



2



---

##### Table of Contents

| |  |  | evaluating and refinancing of existing and new properties;
| | - |  | ----------------------------------------------------------



| |  |  | development of suburban office, retail shopping center and light industrial properties;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | rehabilitation, repositioning and disposing non-strategic properties;
| | - |  | ---------------------------------------------------------------------



| |  |  | reinvesting sales proceeds into new properties; and
| | - |  | ---------------------------------------------------



| |  |  | expanding our sources of private and institutional real estate capital for future acquisition purposes.
| | - |  | -------------------------------------------------------------------------------------------------------



Significant Recent Events



| |  |  | On February 1, 2005, we amended the contract for the $2,300,000 sale of our Riverside property to extend the closing date to as late as April 15, 2005. On January 9, 2005, our
tenant in this property ceased operations at the site, and the tenant has not paid the rent due under the lease for January as of the date hereof, February and March 2005 totaling $107,770.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On February 1, 2005, the board of directors declared a dividend of $0.25 per common share to holders of record on February 15, 2005, payable on March 1, 2005.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On January 31, 2005, we amended our lease for our corporate office to extend the term for two years to January 2007 with monthly payments of approximately $7,000.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



Significant Events During 2004



| |  |  | In December 2004, we extended the due date on the loan secured by our Banco Popular property to November 2005 at the same variable interest rate and interest only payments and
secured a construction loan for our Garden Grove development project at the same variable interest rate and, with interest accruing;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In September 2004, we sold our Fresno property for a net gain of $344,314.
| | - |  | --------------------------------------------------------------------------



| |  |  | On March 2, 2004, we paid the $2,764,432 balance due at maturity on the loan secured by our Ontario property.
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | We paid quarterly dividends of $0.25 per share for each quarter in 2004.
| | - |  | ------------------------------------------------------------------------



Significant Events During 2003



| |  |  | On December 19, 2003, we sold our property in Cerritos for a gross sales price of $3,740,000.
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | Wherehouse Entertainment, Inc., a tenant in our Fresno property (which was sold September 2004) declared bankruptcy in January 2003 and vacated the premises on November 30, 2003.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On November 25, 2003, we sold our vacant property in Chino for gross sales price of $2,300,000.
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | On August 12, 2003, we sold our vacant Vacaville property for gross sales price of $2,100,000.
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | On June 23, 2003, we paid $1,500,000 to acquire a 4,880 square foot office building on a 0.5 acre parcel on a corner surrounded by the land we purchased in Garden Grove in March
2003.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The tenant in our Chino property vacated the premises when the lease ended in early April 2003 and owes approximately $48,000 in rent;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On March 26, 2003, we acquired a 2.5-acre parcel of undeveloped land in Garden Grove for $2,200,000. We have begun construction of a multi-tenant shopping center comprising
approximately 30,000 square feet on this parcel.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On March 24, 2003, we changed our name from West Coast Realty Investors, Inc. to Meredith Enterprises, Inc.
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | We paid quarterly dividends of $0.30 per share for each of the first, second and third quarters of 2003, and $0.25 per share for the fourth quarter of 2003.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------





3



---

##### Table of Contents

Significant Events During 2002



| |  |  | We became a self managed REIT upon the March 31, 2002 termination of our agreements with West Coast Realty Advisors, Inc., which advised us, and West Coast Realty Management, Inc.,
which managed our properties.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We sold the Huntington Beach and Corona properties for a total gain of $733,424.
| | - |  | --------------------------------------------------------------------------------



| |  |  | We refinanced four loans totaling approximately $15,000,000 in principal amount to a base fixed interest rate of 6.97%. These loans may be assigned to another party, including a
conduit loan arrangement. We received net proceeds of approximately $6,500,000 from this refinancing.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We listed our common stock on the American Stock Exchange under the symbol MPQ.
| | - |  | ---------------------------------------------------------------------------------



| |  |  | We restated our certificate of incorporation to implement the 1:3 reverse stock split.
| | - |  | --------------------------------------------------------------------------------------



| |  |  | We purchased the Northlake Festival Shopping Center in Atlanta for approximately $21,000,000.
| | - |  | ---------------------------------------------------------------------------------------------



Business Development



We were incorporated in Delaware in 1989. In March 2003, we changed our name from West Coast Realty Investors, Inc. to Meredith Enterprises, Inc. We have not declared
bankruptcy or sought protection from creditors in a similar proceeding. In October 2002, we purchased the Northlake Festival property for approximately $21,000,000, which represented an increase of over 50% of our assets from December 31, 2001.



Competition



The real estate business is highly competitive. Our properties compete for tenants with
similar properties located in the same markets primarily on the basis of location, rent charged, suitability, services provided and the design and condition of improvements. This competition could harm our ability to lease our properties and could
negatively affect the rents we charge. We also compete with other real estate investors for real estate investment opportunities. These real estate investors may include other REITs, life insurance companies, pension trusts, trust funds,
partnerships and individual investors, many of whom have greater resources than we do. This competition could negatively affect our ability to expand our property portfolio with desirable properties.



Employees



As of December 31, 2004, we had four full time employees. None of these employees is covered by any collective bargaining agreements.



Company Website



To view links to our SEC reports on changes in beneficial ownership free of charge, please
go to our website at www.meredithreit.com.



Tax Status



We believe we are organized and operate so as to qualify as a real estate
investment trust, or REIT, under Sections 856-860 of the Internal Revenue Code of 1986, as amended. We have elected to be taxed as a REIT for federal income tax purposes, which requires, among a number of other organizational and



4



---

##### Table of Contents

operational requirements, that we distribute at least 90% of our taxable income (excluding capital gains) to our
stockholders. If we fail to qualify as a REIT, our taxable income may be subject to income tax at regular corporate rates.



Investment Properties



See Items 2, 6 and 7 in this annual report for a description of our individual properties and significant developments during the year with respect to these properties.



Industry Segments



We have one reportable segment- real estate. We do not have foreign operations and our business is not seasonal. Statement of Financial
Accounting Standards No. 131 (SFAS No. 131) establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to stockholders. See Notes to Consolidated Financial Statements which are part of this annual report, for further discussion.



Insurance



We carry (or require our tenants to carry on our behalf) comprehensive general liability, fire, extended coverage and rental loss insurance
on all of our properties, with policy specifications, insured limits and deductibles customarily carried for similar properties. We intend to carry similar insurance with respect to our properties under construction, but with appropriate exceptions
given the nature of these properties.



The Terrorism Risk Insurance Act of 2002
was signed into law on November 26, 2002. The law provides that losses resulting from certified acts of terrorism will be partially reimbursed by the United States after the insurance company providing coverage pays a statutory deductible. The law
also requires that the insurance company offer coverage for terrorist acts for an additional premium. Our policies in effect during 2003 and 2004 did not exclude coverage for terrorist acts and we paid no additional premium for coverage under the
Terrorism Risk Insurance Act of 2002, although we may pay additional amounts in the future for such coverage.



We believe that our properties are adequately covered by insurance. There are, however, some types of losses (such as losses arising from civil unrest or acts of war) that are not generally insured because they are
either uninsurable or not economically insurable. We do not carry flood and earthquake insurance for our properties, nor do we carry insurance coverage for environmental liabilities. If an uninsured loss or a loss in excess of insured limits occurs,
we could lose our capital invested in a property, as well as the anticipated future revenues from the property, and we would continue to be obligated on any mortgage indebtedness or other obligations related to the property. Any loss of that kind
would adversely affect us.



RISK FACTORS THAT MAY AFFECT FUTURE RESULTS



Stockholders should carefully consider the risks described below. These risks are not the only ones we face. Additional risks not presently known to us or that we currently consider immaterial may also materially impair our business
operations and hinder financial performance, including our ability to pay dividends to our stockholders.



5



---

##### Table of Contents

Risks Related to our Stock



We cannot assure stockholders that we will be able to make future dividend payments at any particular rate, or at all.



While we have declared quarterly dividends on our common stock regularly in the past, the
declaration and payment of dividends is subject to the discretion of our board of directors. Any determination as to the payment of dividends, as well as the level of those dividends, will depend on, among other items, our financial results and
condition, general economic and business conditions, our strategic plans and contractual, legal and regulatory restrictions on our ability to pay dividends. On September 30, 2003, our board of directors reduced the dividend for the quarter ended
September 30, 2003 to $0.25 per share, and we have subsequently paid dividends at the $0.25 per share rate. During 2004, as compared to 2003, our revenues have been reduced by:



| |  |  | the sale in December 2003 of our 48,351 square foot Cerritos property;
| | - |  | ----------------------------------------------------------------------



| |  |  | the expiration on May 31, 2004 of the lease with AMC Theatres for 26,900 square feet in our Northlake Festival property; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | the expiration on September 30, 2004 of the lease with Cucina Holdings, Inc. for a total of 19,800 square feet in our two Sacramento properties.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



In 2005, we anticipate that our revenues as compared to 2004 will be reduced by the following
factors:



| |  |  | The 26,900 square foot space previously occupied by AMC Theatres in our Northlake Festival property will produce no revenue.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | The space previously occupied by Cucina Holdings, Inc., as to a total of 19,800 square feet in our two Sacramento properties will produce revenue only on the 1,575 square feet they
continue to rent on a month-to-month basis.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The leases on our Riverside and Tustin properties expire on September 30, 2005, as to 25,000 and 37,740 square feet, respectively.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | The tenant in our Riverside property has not paid rent for the months of JanuaryMarch 2005.
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | We anticipate additional costs in consulting, legal and audit fees in 2005 to comply with the provisions of the Sarbanes Oxley Act of 2002.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



For these reasons, we cannot assure stockholders that we will maintain the current quarterly
dividend level or that we will pay dividends in any future period. The preceding statements are forward-looking statements within the meaning of the federal securities laws.



The market value of our common stock could decrease based on our performance and market perception and conditions.



Our common stock has been listed on the American Stock Exchange since October 31, 2002.
Trading volumes to date have been relatively light, and the market price may not reflect the fair market value of our common stock at any particular moment. Stockholders are cautioned that prior sales data do not necessary indicate the prices at
which our common stock would trade in a more active market. The market value of our common stock may be based primarily upon the markets perception of our growth potential and current and future cash dividends, and may be secondarily based
upon the real estate market value of our underlying assets. The market price of our common stock can also be influenced by the dividend on our common stock relative to market interest rates. Rising interest rates may lead potential buyers of our
common stock to expect a higher dividend rate, which would adversely affect the market price of our common stock. In addition, the value of our common stock could be adversely affected by general market conditions or market conditions of real estate
companies in general.



We may change some of our policies without obtaining
the approval of our stockholders.



Our board of directors determines some
of our operating and financial policies, including our policies with respect to acquisitions, growth, operations, leverage, capitalization and dividends. Accordingly, stockholders will have little direct control over these policies.



6



---

##### Table of Contents

Additional issuances of equity securities may be dilutive to current stockholders.



The interests of our existing stockholders could be diluted if we issue additional equity
securities to finance future developments and acquisitions instead of incurring additional debt. In November 2004, we amended our certificate of incorporation to allow for the issuance of preferred stock. Our ability to execute our business strategy
depends on our access to an appropriate blend of debt financing, which could include a line of credit and other forms of secured and unsecured debt, equity financing, including common and preferred equity, or joint ventures.



Risks Due to Investment in Real Estate



Decreased yields from an investment in real property may result from factors that may
cause a decrease in revenues or values or an increase in operating expenses.



Real property investments are subject to varying degrees of risk. The yields available from equity investments in real estate depend upon the amount of revenues generated and expenses incurred. If our properties do not generate revenues
sufficient to meet operating expenses, debt service and capital expenditures, our results of operations and ability to pay dividends to stockholders and to pay amounts due on our debt will be adversely affected. The performance of the economy in
each of the areas in which the properties are located can affect occupancy, market rental rates and expenses, which in turn can affect the revenues from the properties and their underlying values. The financial results of major local employers may
also affect the revenues and value of some properties. Other factors include:



| |  |  | the general economic climate;
| | - |  | -----------------------------



| |  |  | local conditions in the areas in which properties are located, such as an oversupply of properties like ours or a reduction in the demand for properties like ours;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the attractiveness of the properties to tenants; and
| | - |  | ----------------------------------------------------



| |  |  | competition from other properties like ours.
| | - |  | --------------------------------------------



Our tenants may go bankrupt.



Our tenants may file for bankruptcy protection or become insolvent in the future. Currently, one of our tenants has filed for bankruptcy protection. We cannot evict a
tenant solely because of its bankruptcy. A court might authorize the tenant to reject and terminate its lease with us. For example, the bankruptcy court rejected our lease with one tenant in our Fresno property, and the tenant vacated the premises
in November 2003. When a lease is terminated by the bankruptcy court, our claim against the bankrupt tenant for unpaid, future rent is subject to a statutory cap that can be substantially less than the remaining rent actually owed under the lease,
and, even so, our claim for unpaid rent will likely not be paid in full.



Our tenants may not renew their leases.



We cannot predict
whether current tenants will renew their leases when they expire or attempt to terminate their leases before they expire. Because the tenants in our Irvine and Tustin properties are either subletting the property or not fully using the property for
their operations, they may be less likely to re-lease the properties when the leases expire in December 2007 and September 2005, respectively, or they may seek to re-lease a smaller space from us. Further, our lease on two Sacramento properties (717
and 721 West Del Paso Road) expired in July 2004, and the tenant continued to lease the space through September 30, 2004 on a month-to-month basis. On October 1, 2004, the tenant vacated the 721 West Del Paso property. Although the tenant continues
to lease a small portion of the 717 West Del Paso



7



---

##### Table of Contents

property on a month-to-month basis, the tenant could move out at any time. We may incur significant costs to re-lease these spaces. If we are unable to
promptly sell significant vacant properties or re-lease or renew the leases for them, or if the rental rates upon such renewal or re-leasing are significantly lower than expected rates, then our ability to pay dividends to stockholders and to pay
amounts due on our debt may be adversely affected.



We may be unable to
lease vacant space in our properties.



To lease vacant space, we may need
to pay substantial leasing commissions and renovation costs. We may acquire properties that are not fully leased, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with those
properties until they are fully leased. Operating costs, including real estate taxes, insurance and maintenance costs, and mortgage payments, if any, do not, in general, decline when circumstances cause a reduction in income from a property from a
vacancy or other reason. In addition, many of our leases are triple-net leases, i.e., the tenant is responsible for property taxes, insurance and maintenance. If the tenant no longer leases the property for any reason, we, and not the
tenant, must bear those costs. In addition, if a property is mortgaged to secure payment of indebtedness and we are unable to meet our mortgage payments we could sustain a loss as a result of foreclosure on the property. As a result, our ability to
pay dividends to our stockholders could be adversely affected.



Investments
in newly acquired properties may not perform as we expect.



In the normal
course of business, we typically evaluate potential acquisitions, enter into non-binding letters of intent, and may, at any time, enter into contracts to acquire and may acquire additional properties. We can give no assurance, however, that we will
have the financial resources to make suitable acquisitions or that properties that satisfy our investment policies will be available for acquisition. The acquisition of property entails risks that investments will fail to perform in accordance with
expectations. Those risks may include financing not being available on favorable terms or at all. Estimates of the costs of improvements to bring an acquired property up to standards established for the market position intended for that property
might prove inaccurate. Although we evaluate the physical condition of each new property before we acquire it, we may not detect some defects or necessary repairs until after we acquire the property. This could significantly increase our total
acquisition cost, which could have a material adverse effect on us and our ability to pay dividends to stockholders and to pay amounts due on our debt.



The value of our property interests depends in part on conditions beyond our control.



General and local economic conditions, neighborhood values, competitive overbuilding, weather, casualty losses and other factors beyond our
control may adversely affect real property income and capital appreciation. We are unable to determine the precise effect, if any, the performance of the worldwide or U.S. economies will have on us or on the value of our common stock.



The lack of liquidity of real estate may reduce economic returns to investors.



Because real estate investments are relatively illiquid, our ability to
adjust our portfolio in response to changes in economic or other conditions is somewhat limited. Additionally, the Internal Revenue Code places certain limits on the number of properties a REIT may sell without adverse tax consequences. To effect
our current operating strategy, we will seek to raise funds, both through outside financing and through the orderly disposition of assets that no longer meet our investment criteria. Depending upon interest rates, current acquisition opportunities
and other factors, generally we will reinvest the proceeds in suburban office, retail shopping center and light industrial properties, although we may use those proceeds for other purposes.



8



---

##### Table of Contents

We may be unable to reinvest in attractive properties, which may affect our returns to stockholders.



We face considerable buying competition from other real estate companies, many of whom
may have greater resources, experience or expertise than we do. In many cases, this competition for acquisition properties has resulted in an increase in property prices and a corresponding decrease in property yields. We can give no assurances that
we can reinvest the proceeds realized from the disposition of assets into new assets that will produce economic returns comparable to those being realized from the properties disposed of, or that we will be able to acquire properties meeting our
investment criteria. To the extent that we are unable to reinvest those proceeds, or if the properties we acquire with those proceeds produce a lower rate of return than the properties we disposed, those results may have a material adverse effect on
us.



If we are unable to reinvest sales or refinancing proceeds as quickly
as we expect, our returns to stockholders may be adversely affected.



A
delay in reinvestment of sales or refinancing proceeds may have a material adverse effect on us. We may seek to structure future dispositions as tax-free exchanges, where appropriate, using the non-recognition provisions of Section 1031 of the
Internal Revenue Code to defer income taxation on the disposition of the exchanged property. For an exchange to qualify for tax-free treatment under Section 1031 of the Internal Revenue Code, we must meet certain technical requirements. Given the
competition for properties meeting our investment criteria, it may be difficult for us to identify suitable properties within the required time frames to meet the requirements of Section 1031.



Substantial competition among properties and real estate companies may adversely affect
our rental revenues and acquisition opportunities.



All of our properties
are located in developed areas where we face substantial competition from other properties and from other real estate companies that may develop or renovate competing properties. The number of competitive properties and real estate companies could
have a material adverse effect on our ability to rent our properties, the rents we charge and our acquisition opportunities. The activities of these competitors, our ability to rent our properties, the rents we charge and acquisition opportunities
could cause us to pay a higher price for a new property than we otherwise would have paid or may prevent us from purchasing a desired property at all, which could have a material adverse effect on us and our ability to pay dividends to stockholders
and to pay amounts due on our debt.



Our geographic concentration of
properties in California and Georgia may adversely affect us.



Our
portfolio is located entirely in California and Georgia. Economic conditions in, and other factors relating to, California and Georgia, including supply and demand for properties, zoning and other regulatory conditions and competition from other
properties, could adversely affect our performance. In that regard, these regions have in the past experienced economic recessions and depressed conditions in the local real estate markets. To the extent general economic or social conditions in any
of these areas deteriorate or any of these areas experiences natural disasters, the value of the portfolio, our results of operations and our ability to pay dividends to stockholders and to pay amounts due on our debt could be materially adversely
affected.



9



---

##### Table of Contents

We depend on single tenants in many of our properties, and some of them represent a significant percentage of our
revenues.



Many of our properties are leased to a single tenant, and some
of these single tenant properties are individually significant to our total revenue. During the year ended December 31, 2004, the tenant in our Tustin property, Safeguard Business Systems, Inc., accounted for approximately 10% of our total rental
revenue, including discontinued operations. Further, the California Independent System Operator Corporation, a tenant in our Folsom property, directly accounted for over 7% of our total rental revenue, including discontinued operations. That tenant
also subleases space from another tenant in our Folsom property that accounted for another 4% of our total rental revenue, including discontinued operations. A tenant may attempt to terminate its lease before its scheduled term, or we may be unable
to renew the lease with the tenant. In that event, we may be unable to re-lease the space to another anchor tenant of similar or better quality upon expiration of the current lease on similar or better terms, and we could experience material adverse
consequences such as higher vacancy rates, re-leasing on less favorable economic terms and reduced net income. Similarly, if one or more of our single tenants goes bankrupt, we could experience material adverse consequences like those described
above. There can be no assurance that our sole tenants will renew their leases when they expire or will be willing to renew on similar economic terms.



Northlake Festival represents approximately 50% of our revenues.



In 2004, the Northlake Festival property accounted for approximately 50% of our total rental revenues, including discontinued operations. At December 31, 2004, the
occupancy for Northlake Festival was 88% compared to 97% at December 31, 2003. The decrease was primarily due to the expiration of the lease with AMC Theaters for 26,900 square feet. We do not expect to lease this space in 2005. If economic
conditions in the area of Northlake Festival become depressed and the performance of that center is adversely affected, our overall financial condition and results of operations will be adversely affected as well.



Construction and development risks could adversely affect our profitability.



We currently are renovating some of our properties and may in the future
renovate or build other properties, including tenant improvements required under leases. Further, in March 2003, we acquired undeveloped land and are building an approximately 30,000 square foot shopping center on the land. We may incur renovation
or development costs for a property that exceed our original estimates due to increased costs for materials or labor or other costs that are unexpected. We also may be unable to complete renovation or development of a property on schedule, which
could result in increased debt service expense or construction costs and loss of rents until the property is ready for occupancy. Additionally, the time required to recoup our renovation and construction costs and to realize a return, if any, on
such costs can often be lengthy.



We may be unable to implement our growth
strategy and may fail to identify, acquire or integrate new acquisitions.



Our future growth depends on a number of factors, including our ability to identify acceptable properties for acquisition, complete acquisitions on favorable terms, successfully integrate acquired properties and obtain financing to support
expansion. We can give no assurances that we will be successful in implementing our growth strategy, that growth will indeed occur at all or that any expansion will improve operating results. The failure to identify, acquire and integrate new
properties effectively could have a material adverse effect on us and our ability to pay dividends to stockholders and to pay amounts due on our debt. We intend to acquire properties that meet our investment criteria. Acquisitions of properties
entail risks that investments will fail to perform in accordance with expectations. Estimates of the costs of improvements to bring an acquired property up to standards established for the market position intended for that property may prove
inaccurate.



10



---

##### Table of Contents

We may suffer uninsured and underinsured losses, and our insurance coverage may be limited.



We carry (or require our tenants to carry on our behalf) liability, fire, extended coverage
and rental loss insurance on our properties. This insurance has policy specifications, limits and deductibles. We do not carry flood and earthquake insurance for our properties. In addition, some types of extraordinary losses (such as those
resulting from civil unrest or acts of war) are not generally insured (or fully insured against) because they are either uninsurable or not economically insurable. Further, we do not carry insurance coverage for environmental liabilities. If an
uninsured or underinsured loss occurs to a property, we could be required to use our own funds for restoration or lose all or part of our investment in, and anticipated revenues from, the property and would continue to be obligated on any mortgage
indebtedness on the property. Any loss of that nature could have a material adverse effect on us and our ability to pay dividends to stockholders and pay amounts due on our debt.



Adverse changes in laws may affect our potential liability relating to the properties and our operations.



Increases in real estate taxes and income, service and transfer taxes cannot always be
passed through to tenants in the form of higher rents (or charges on triple-net leases), and may adversely affect our cash available for distribution and our ability to pay dividends to stockholders and to pay amounts due on our debt. Similarly,
changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions, as well as changes in laws affecting construction and safety requirements, may
result in significant unanticipated expenditures, which could have a material adverse effect on us and our ability to pay dividends to stockholders and pay amounts due on our debt.



Compliance with laws benefiting disabled persons may increase our costs and adversely affect our performance.



A number of federal, state and local laws (including the Americans with Disabilities Act)
and regulations may require modifications to existing buildings or restrict certain renovations by requiring improved access to such buildings by disabled persons and may require other structural features that add to the cost of buildings under
construction. Legislation or regulations adopted in the future may impose further burdens or restrictions on us with respect to improved access by disabled persons. The costs of compliance with these laws and regulations may be substantial, and
restrictions on construction or completion of renovations may limit implementation of our investment strategy in certain instances or reduce overall returns on our investments, which could have a material adverse effect on us and our ability to pay
dividends to stockholders and to pay amounts due on our debt. We are a defendant in one California civil lawsuit in which the plaintiffs have alleged violations of the Americans with Disabilities Act, and we cannot determine the likelihood of an
unfavorable outcome or range of potential loss, if any.



We may have
liability under environmental laws.



Under federal, state and local
environmental laws, ordinances and regulations, we may be required to investigate and clean up the effects of releases of hazardous or toxic substances or petroleum products at our properties, regardless of our knowledge or responsibility, simply
because of our current or past ownership or operation of the real estate. Thus, we may have liability with respect to properties we have already sold. If unidentified environmental problems arise, we may have to take extensive measures to remediate
the problems, which could adversely affect our cash flow and our ability to pay dividends to our stockholders because:



| |  |  | we may have to pay for property damage and for investigation and clean-up costs incurred in connection with the contamination;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



11



---

##### Table of Contents

| |  |  | the law typically imposes clean-up responsibility and liability regardless of whether the owner or operator knew of or caused the contamination;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | even if more than one person may be responsible for the contamination, each person who shares legal liability under the environmental laws may be held responsible for all of the
clean-up costs; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | governmental entities or other third parties may sue the owner or operator of a contaminated site for damages and costs.
| | - |  | ------------------------------------------------------------------------------------------------------------------------



These costs could be substantial and in extreme cases could exceed the value of the
contaminated property. The presence of hazardous or toxic substances or petroleum products and the failure to properly remediate that contamination may materially and adversely affect our ability to borrow against, sell or rent an affected property.
In addition, applicable environmental laws create liens on contaminated sites in favor of the government for damages and costs it incurs in connection with a contamination.



We face particular environmental risks related to asbestos and liability risk related to mold.



Environmental laws also govern the presence, maintenance and removal of asbestos. Those laws
require that owners or operators of buildings containing asbestos:



| |  |  | properly manage and maintain the asbestos;
| | - |  | ------------------------------------------



| |  |  | notify and train those who may come into contact with asbestos; and
| | - |  | -------------------------------------------------------------------



| |  |  | undertake special precautions, including removal or other abatement, if asbestos would be disturbed during renovation or demolition of a building.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



Those laws may impose fines and penalties on building owners or operators who fail to comply
with these requirements and may allow others to seek recovery from owners or operators for personal injury associated with exposure to asbestos fibers. Some of our properties are located in urban, industrial and previously developed areas where fill
or current or historic industrial uses of the areas may have caused site contamination.



Recently, there has been an increasing number of lawsuits against owners and managers of properties alleging personal injury and property damage caused by the presence of mold in real estate. Some of these lawsuits have resulted in
substantial monetary judgments or settlements. Although our insurance policy currently does not exclude mold-related claims we cannot assure you that we will be able to obtain coverage in the future for those claims at a commercially reasonable
price or at all. The presence of significant mold could expose us to liability to tenants and others if property damage, health concerns, or allegations of that nature, arise.



Our environmental due diligence may be inadequate.



Our policy is to retain independent environmental consultants to conduct Phase I environmental site assessments and asbestos surveys of
properties we intend to acquire. These assessments generally include a visual inspection of the properties and the surrounding areas, an examination of current and historical uses of the properties and the surrounding areas and a review of relevant
state, federal and historical documents. To date, we have not used invasive techniques such as soil and ground water sampling. In future acquisitions, where we consider it appropriate, on a property-by-property basis, we may have these consultants
conduct additional testing, including sampling for asbestos, for lead in drinking water, for soil contamination where underground storage tanks are or were located or where other past site usages create a potential environmental problem, and for
contamination in groundwater.



Notwithstanding these environmental
assessments, we still face the risk that:



| |  |  | the environmental assessments and updates did not identify all potential environmental liabilities;
| | - |  | ---------------------------------------------------------------------------------------------------



12



---

##### Table of Contents

| |  |  | a prior owner created a material environmental condition that is not known to us or the independent consultants preparing the assessments;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | new environmental liabilities have developed since the environmental assessments were conducted; or
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | future uses or conditions, such as changes in applicable environmental laws and regulations, could result in environmental liability for us.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



We may acquire properties that are subject to liabilities for which we have no recourse,
or only limited recourse, against the seller.



These liabilities can
include:



| |  |  | claims by tenants, vendors or other persons dealing with the former owners of the properties;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | liabilities incurred in the ordinary course of business; and
| | - |  | ------------------------------------------------------------



| |  |  | claims for indemnification by directors, officers and others indemnified by the former owners of the properties.
| | - |  | ----------------------------------------------------------------------------------------------------------------



If we are required to spend time and money to deal with these claims, our intended returns
from the affected property may be materially reduced.



Risks Due to Real
Estate Financing



We have a significant amount of indebtedness. As of
December 31, 2004, we had total assets of $54,308,310, total secured indebtedness of $35,490,095, total liabilities of $36,659,191 and a debt-to-total assets ratio of 65%, using amounts calculated on the basis of generally accepted accounting
principles. Because this calculation method reflects accumulated depreciation and does not reflect any appreciation of the properties beyond their cost, it may result in assets being valued at less than their fair market values as determined by the
board of directors. Further, this calculation excludes the effects, if any, of the ground lease on the Northlake Festival property.



We anticipate that future acquisitions and properties we develop, if any, will be financed under a line of credit, construction loans, and other forms of secured or
unsecured financing or through our issuing additional debt or equity. We expect to review periodically our financing options regarding the appropriate mix of debt and equity financing. If we use equity, rather than debt, to finance future
acquisitions, it could have a dilutive effect on the interests of our existing stockholders.



Increased debt and leverage can reduce cash available for distribution and cause losses.



Using debt, whether with recourse to us generally or only with respect to a particular property, to acquire properties creates an opportunity for increased net income,
but at the same time creates risks. We use debt to fund investments only when we believe it will enhance our risk-adjusted returns. We cannot be sure, however, that our use of leverage will prove to be beneficial. Additional leverage may:



| |  |  | increase our vulnerability to general adverse economic and industry conditions,
| | - |  | -------------------------------------------------------------------------------



| |  |  | limit our flexibility in planning for, or reacting to, changes in our business and the REIT industry, which may place us at a competitive disadvantage compared to our competitors
that have less debt, and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limit, along with the possible financial and other restrictive covenants in our indebtedness, our ability to borrow additional funds.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



13



---

##### Table of Contents

Any of the foregoing could have a material adverse effect on us and our ability to pay dividends to stockholders and to
pay amounts due on our debt.



We may be unable to renew, repay or refinance
our debt financing.



We are subject to the normal risks associated with
debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest, the risk that we will not be able to renew, repay or refinance our debt when it matures or that the terms of any renewal
or refinancing will not be as favorable as the existing terms of that debt. Two of our loans, totaling approximately $3,329,710, are scheduled to mature during the first and fourth quarters of 2005. On November 8, 2004, we extended the maturity date
of the loan secured by our Riverside property to March 8, 2005 and are in negotiations to further extend the maturity date to June 2005. In many of the mortgage notes on our properties, the mortgage payment terms do not fully amortize the loan
balance, and a balloon payment of the balance will be due upon its maturity. If we are unable to refinance our indebtedness on acceptable terms, or at all, we might be forced to dispose of one or more of the properties on disadvantageous terms,
which might result in losses to us. Those losses could have a material adverse effect on us and our ability to pay dividends to stockholders and pay amounts due on our debt. Furthermore, if a property is mortgaged to secure payment of indebtedness
and we are unable to meet mortgage payments, the mortgagee could foreclose upon the property, appoint a receiver and receive an assignment of rents and leases or pursue other remedies, all with a consequent loss of our revenues and asset value.
Foreclosures could also create taxable income without accompanying cash proceeds, thereby hindering our ability to meet the REIT distribution requirements of the Internal Revenue Code.



The cost of our indebtedness may increase due to rising interest rates.



We have incurred and may in the future again incur debt that bears interest at a variable
rate. As of December 31, 2004, we have a $2,272,497 loan that bears interest at a variable rate. Accordingly, increases in interest rates would increase our interest costs, which could have a material adverse effect on us and our ability to pay
dividends to stockholders. In addition, an increase in market interest rates may lead holders of our common shares to expect a higher dividend yield, which could adversely affect the market price of our common stock.



We may incur additional debt and related debt service.



We intend to fund the acquisition of additional properties partially through borrowings and
from other sources such as sales of properties that no longer meet our investment criteria or the contribution of property to joint ventures or other financing methods. Our organizational documents do not limit the amount of debt that we may incur.



If we incur additional debt, the agreement governing our debt could contain
various covenants that limit our discretion in the operation of our business.



Any additional debt we incur will be governed by an agreement with our lenders. Typically, these types of agreements contain various provisions that could limit our discretion in the operation of our business by restricting our ability to:



| |  |  | incur additional debt and issue preferred stock;
| | - |  | ------------------------------------------------



| |  |  | pay dividends and make other distributions;
| | - |  | -------------------------------------------



| |  |  | make investments and other payments;
| | - |  | ------------------------------------



| |  |  | redeem or repurchase our capital stock;
| | - |  | ---------------------------------------



| |  |  | consolidate or merge;
| | - |  | ---------------------



14



---

##### Table of Contents

| |  |  | create liens;
| | - |  | -------------



| |  |  | sell assets; or
| | - |  | ---------------



| |  |  | enter into certain transactions with our affiliates.
| | - |  | ----------------------------------------------------



Further, the loan documents from our August 5, 2002 refinancing contain cross-collateral provisions. If one of the four loans is in default and the lender forecloses on
the property securing that loan, and the proceeds from the foreclosure are not sufficient to repay the defaulted loan in full, the lender can foreclose upon one or more of the other properties to recover the loan. Previously, we had no such
cross-collateral provisions in our loans. In addition, the construction loan on the development of our Garden Grove Festival shopping center and our Banco Popular property is also secured by our 717 West Del Paso Road property.



If we are unable to pay our obligations to our secured lenders, they could proceed against
any or all of the collateral securing our indebtedness to them. In addition, a breach of the restrictions or covenants contained in our loan documents could cause an acceleration of our indebtedness. We may not have, or be able to obtain, sufficient
funds to repay our indebtedness in full upon acceleration.



Provisions
that Could Limit a Change in Control or Deter a Takeover



Restrictions in our organizational documents and Delaware law could limit a change in control or deter a takeover.



A number of the provisions in our certificate of incorporation and bylaws have or may have the effect of deterring a takeover of the company. These provisions include:



| |  |  | REIT protective provisions that limit stock ownership to 2.5% for anyone other than Mr. Allen Meredith, our President, Chairman and Chief Executive Officer or persons who owned more
than 2.5% prior to the amendment of our certificate of Incorporation on November 15, 2004;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a classified board of directors with staggered, three-year terms;
| | - |  | -----------------------------------------------------------------



| |  |  | provisions giving the board of directors sole power to set the number of directors;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | provisions giving stockholders the right to remove directors only for cause and only by the affirmative vote of a majority of the total voting power of the outstanding shares;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | prohibition on stockholders from calling special meetings of stockholders; and
| | - |  | ------------------------------------------------------------------------------



| |  |  | advance notice requirements for stockholder proposals and nominations for election to the board of directors at stockholder meetings.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



In addition, Section 203 of the Delaware General Corporation Law provides, in relevant part,
that the corporation shall not engage in any business combination with an interested stockholder for a period of three years following the time on which such stockholder first becomes an interested stockholder unless:



| | (a) | before the stockholder first becomes an interested stockholder, the board of directors of the corporation approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder (the board of directors has approved Mr. Meredith becoming an interested stockholder);
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | upon becoming an interested stockholder, the stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced
(excluding certain shares); or
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | on or after the time on which the stockholder becomes an interested stockholder, the business combination is approved by the board of directors and authorized at an
annual or special meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



15



---

##### Table of Contents

These provisions may prevent our stockholders from receiving the benefit from any premium to the market price of our
common stock offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover
attempts in the future. These provisions may facilitate management entrenchment that may delay, defer or prevent a change in our control, which may not be in the best interests of our stockholders.



Change of control agreements could deter a change of control.



We have entered into change of control agreements with Mr. Meredith, our President, Chairman
and Chief Executive Officer, and Mr. Wingard, our Vice President and Chief Financial Officer, providing for the payment of money to them upon the occurrence of a change of control, as defined in these agreements. If, within one year following a
change of control, either Mr. Meredith or Mr. Wingard resigns or is terminated, we will make a severance payment equal to a portion of the executives base salary, his average bonus over last three years and medical and other benefits. Based
upon their current salaries and benefit levels, this provision would result in payments totaling at least $210,000 to Mr. Meredith and $133,875 to Mr. Wingard. The agreements with Mr. Meredith and Mr. Wingard may deter changes of control because of
the increased cost for a third party to acquire control of us, thus limiting the opportunity for stockholders to receive a premium for our common stock over then-prevailing market prices.



Tax Risks



Although we believe we are organized and are operating to qualify as a REIT under the Internal Revenue Code, we cannot give assurances that we have in fact operated or
will be able to continue to operate in a manner so as to qualify or remain so qualified.



We may incur tax liabilities as a consequence of failure to qualify as a REIT.



Qualification as a REIT involves both the application of highly technical and complex Internal Revenue Code provisions for which there are only limited judicial or
administrative interpretations and the determination of various factual matters and circumstances not entirely within our control. For example, to qualify as a REIT in 2004, at least 95% of our taxable gross income in any year must be derived from
qualifying sources and we must pay dividends to stockholders aggregating annually at least 90% of our REIT taxable income (excluding net capital gains). Thus, to the extent revenues from non-qualifying sources represent more than 5% of our gross
income in any taxable year, we will not satisfy the 95% income test and may fail to qualify as a REIT, unless certain relief provisions apply. Even if those relief provisions apply, a tax would be imposed with respect to excess net income, which
could have a material adverse effect on us and our ability to pay dividends to stockholders and to pay amounts due on our debt. We cannot give assurances that new legislation, new regulations, administrative interpretations or court decisions will
not change the tax laws with respect to qualification as a REIT or the federal income tax consequences of such qualification. If we fail to qualify as a REIT, we will be subject to federal income tax (including any applicable alternative minimum
tax) on our taxable income at corporate rates, which would likely have a material adverse effect on us and our ability to pay dividends to stockholders and to pay amounts due on our debt. In addition, unless entitled to relief under certain
statutory provisions, we would also be disqualified from treatment as a REIT for the four taxable years following the year during which REIT qualification is lost. This treatment would reduce funds available for investment or distributions to
stockholders because of the additional tax liability to us for the year or years involved. In addition, we would no longer be required to make, and indeed may not make, distributions to stockholders. To the extent that distributions to stockholders
would have been made in anticipation of



16



---

##### Table of Contents

qualifying as a REIT, we might be required to borrow funds or to liquidate certain investments to pay the applicable tax. Further, to maintain our real
estate investment trust status, we may borrow funds on a short-term basis to meet the real estate investment trust distribution requirements, even if the then-prevailing market conditions are not favorable for these borrowings.



Gain on disposition of assets deemed held for sale in the ordinary course is subject to
100% tax.



We currently classify one of our properties as held for sale
and may attempt to sell other properties. If we sell any of our properties, the Internal Revenue Service may determine that the sale is a disposition of an asset held primarily for sale to customers in the ordinary course of a trade or business.
Gain from this kind of sale generally will be subject to a 100% tax. Whether an asset is held primarily for sale to customers in the ordinary course of a trade or business depends on the particular facts and circumstances of the sale.
Although we will attempt to comply with the terms of safe-harbor provisions in the Internal Revenue Code prescribing when asset sales will not be so characterized, we cannot assure stockholders that we will be able to do so.



Other



If our internal control over financial reporting is not considered effective, investors could lose confidence in our financial reports and
our stock price could be adversely affected.



To comply with Section 404 of the
Sarbanes-Oxley Act of 2002, we must furnish a report by our management on our internal control over financial reporting with our annual report on Form 10-KSB for our fiscal year ending December 31, 2006. The report will contain, among other matters,
an assessment of the effectiveness of our internal control over financial reporting as of the end of that fiscal year, including a statement as to whether or not our internal control over financial reporting is effective. This assessment must
include disclosure of any material weaknesses in our internal control over financial reporting. Material weakness in internal controls over financial reporting is defined as a significant deficiency, or a combination of significant
deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The report will also contain a statement that our auditors have issued an
attestation report on managements assessment of our internal controls. We currently expect to begin testing of our internal controls during the second quarter of fiscal 2006. This testing includes documenting our procedures and an analysis of
the segregation of duties. Because we currently have only four employees we may not be able to achieve an adequate segregation of duties without hiring additional personnel and incurring additional costs. In the course of our evaluation and testing
of internal controls, we may identify areas for improvement in the documentation, design and effectiveness of our internal controls, and these areas of improvement may be material. We may elect or be required to disclose those weaknesses before we
have remediated them. Any disclosure of this nature may adversely affect our stock price. We cannot assure you that we will not disclose material weaknesses we discover in the course of our testing.



Given the risks inherent in the design and operation of internal controls over financial
reporting, we can provide no assurance at this time regarding our conclusions, or regarding the conclusions of our independent auditor, as of December 31, 2006 with respect to the effectiveness of our internal controls over financial reporting. In
any event, we expect to incur material costs in complying with Section 404.



17



---

##### Table of Contents

ITEM 2. DESCRIPTION OF PROPERTY



General



In addition to the information in this Item 2, additional information on
our properties and encumbrances is contained in our financial statements under Item 3 and Item 6 in this annual report. As of December 31, 2004 and 2003, all of our properties were located in California and Georgia.



Since 2001, we have evaluated the properties in our portfolio on an ongoing basis to
determine whether continued ownership of any specific property is consistent with our strategic plan, or we believed that future appreciation prospects were limited relative to other opportunities. In addition, in some cases, we have sold properties
that we have not previously designated as held for sale because we believed the sale would be advantageous in that specific situation.



As of January 2002, we designated seven properties held for sale: Fresno; Huntington Beach; Roseville; Riverside; Vacaville; and two Sacramento properties
(717 and 721 West Del Paso Road), in addition to any property sold subsequent to January 2002. We sold the Huntington Beach property in April 2002 and the Corona property in September 2002. We sold the Vacaville property in August 2003. On September
30, 2003, we designated the Chino property as held for sale and removed the Roseville property from the held for sale category. In November 2003, we sold the Chino property. In December 2003, we sold the Cerritos property. The Corona and Cerritos
property were sold prior to the properties being classified as held for sale, since the properties were not for sale and we accepted an offer made by an unrelated third party. These properties were properly classified as discontinued operations in
our consolidated statement of income for the years presented.



During the
second quarter of 2004, we determined that the two Sacramento properties (717 and 721 West Del Paso Road) and the Fresno property no longer met the required criteria for classification as held for sale. Accordingly we removed them from that category
in our financial statements. During September 2004, we sold the Fresno property and we re-designated the Fresno property as held for sale. As of December 31, 2004, the Riverside property is classified as held for sale.



Property taxes on our properties are assessed on asset values based on the valuation method
and tax rate used by the respective jurisdiction. During 2004, the rates were approximately 1.1%, and in many cases, the tenant paid those taxes directly, in accordance with the lease.



Meredith Enterprises, Inc.

Summary of Properties Owned

December 31, 2004



|                    |  |                     |  |                |  |            |  |                                                    |  |           |   |  |                     
|------------------- |  | ------------------- |  | -------------- |  | ---------- |  | -------------------------------------------------- |  | --------- | - |  | --------------------
|Property            |  | Rentablesquare feet |  | Propertytype   |  | Leasetype* |  | Primary Tenant                                     |  | Occupancy |   |  | Next leaseexpiration
|Rental real estate: |  |                     |  |                |  |            |  |                                                    |  |           |   |  |                     
|                    |  |                     |  |                |  |           
|Atlanta, Georgia    |  | 321,621             |  | Retail         |  | Gross      |  | Various                                            |  | 88        | % |  | Various             
|                    |  |                     |  |                |  |           
|Folsom              |  | 52,186              |  | SuburbanOffice |  | Gross      |  | California Independent System Operator Corporation |  | 100       | % |  | Various;largely 2006
|                    |  |                     |  |                |  |           
|Garden Grove        |  | 4,880               |  | SuburbanOffice |  | NNN        |  | Banco Popular North America                        |  | 100       | % |  | 5/1/11              
|                    |  |                     |  |                |  |           
|Irvine              |  | 63,225              |  | Lt.Industrial  |  | NNN        |  | Tycom Corporation                                  |  | 100       | % |  | 12/31/07            
|                    |  |                     |  |                |  |           
|Ontario             |  | 40,000              |  | Lt.Industrial  |  | NNN        |  | Adelphia Communication Corp.                       |  | 100       | % |  | 8/14/13             



18



---

##### Table of Contents

|                                             |  |        |  |                       |  |       |  |                                  |  |     |   |  |               
|-------------------------------------------- |  | ------ |  | --------------------- |  | ----- |  | -------------------------------- |  | --- | - |  | --------------
|                                             |  |        |  |                       |  |      
|Roseville                                    |  | 5,133  |  | RestaurantFacility    |  | NNN   |  | Knox & Associates, Inc.          |  | 100 | % |  | 9/30/17       
|                                             |  |        |  |                       |  |      
|Sacramento (Horn Road)                       |  | 48,000 |  | Lt.Industrial         |  | Gross |  | Laufen International, Inc.       |  | 100 | % |  | 3/31/06       
|                                             |  |        |  |                       |  |      
|Tustin                                       |  | 37,740 |  | SuburbanOffice        |  | NNN   |  | Safeguard Business Systems, Inc. |  | 100 | % |  | 9/30/05       
|                                             |  |        |  |                       |  |      
|Sacramento (Java City 717 W. Del Paso Road) |  | 11,200 |  | SuburbanOffice        |  | NNN   |  | Cucina Holdings, Inc.            |  | 14  | % |  | Month-to-Month
|                                             |  |        |  |                       |  |      
|Sacramento (Java City- 721 W. Del Paso Road) |  | 8,600  |  | SuburbanOffice        |  | NNN   |  | Cucina Holdings, Inc.            |  | 0   | % |  |              
|                                             |  |        |  |                       |  |      
|Rental real estate held for sale:            |  |        |  |                       |  |       |  |                                  |  |     |   |  |               
|                                             |  |        |  |                       |  |      
|Riverside                                    |  | 25,000 |  | Retail (Heldfor Sale) |  | NNN   |  | Sanborn Theaters, Inc.           |  | 100 | % |  | 9/30/05       

---

|* | In the table above, NNN represents a triple net lease where the tenant is responsible for taxes, insurance and maintenance; Gross represents a lease where we
are responsible for paying for those items, although we may be reimbursed, subject to limitations, by the tenant.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A discussion of circumstances in specific properties follows:



Ontario



Our tenant, Adelphia Communications, Inc. has filed for bankruptcy protection. Presently, the rent is current. Certain companies have claimed amounts due for remodeling work and other work ordered by Adelphia on our
property. These companies have filed mechanics liens on our property. We have not yet determined the validity of these liens, and there may be defenses to these claims. If our lease with Adelphia is affirmed in the bankruptcy proceeding, then
Adelphia would be responsible for the discharge of these claims. If our lease with Adelphia is not affirmed in the bankruptcy proceeding, and the bankruptcy proceedings do not fully pay these creditors, then we would be responsible for these claims
to the extent they are valid, if at all.



Riverside



The tenant sublet the property for several years, but resumed direct operation of the
theater in August 2004. The lease expires on September 30, 2005. We do not believe the current tenant will renew the lease upon expiration. The tenant ceased operating the property in January 2005 and owes rent and other items from January to
present and remains liable under the lease. We have entered into a contract to sell this property for $2,300,000 and expect to close the sale on or in the second quarter of 2005. The buyer has made deposits of $150,000, characterized as
non-refundable, to escrow and that entire amount has been released to us pursuant to the purchase agreement. If the sale does not close and if we are successful in obtaining a new tenant upon the expiration of the existing lease, we believe the
rental



19



---

##### Table of Contents

payments are likely to be lower than under the current lease. In September 2001, we amended the lease, to among other
items, accelerate the lease expiration to September 30, 2005 and to reduce the monthly payments. We also agreed to accept some of the tenants assets in satisfaction of unpaid rent and late charges totaling approximately $287,000. During the
year ended 2004, we recorded impairment charges of $167,568 against the property and as of December 31, 2004 the net book value of the property was $1,602,432.



Sacramento (Horn Road)



In April 2003, we executed two new leases: one with the previous tenant, Laufen International, Inc., for approximately 32,000 square feet; and a separate lease with
Laufens previous subtenant. Under the previous lease, Laufen International, Inc., leased the entire 48,000 square feet and sublet approximately one-half the space.



Sacramento (717 and 721 W. Del Paso Road)



At December 31, 2004, the 717 W. Del Paso Road property is largely vacant and 721 Del Paso Road property is 100% vacant. For the tenant that is leasing about 14% of
total square footage in the 717 Del Paso Road property at December 31, 2004, in 2003, we extended the term of the lease to March 31, 2004, and subsequently extended the term to July 31, 2004. The tenant continued to lease the space through September
30, 2004. On October 1, 2004, the tenant vacated the 721 West Del Paso property and continues to lease a portion of the 717 West Del Paso property on a month-to-month basis. The tenant could move out at any time, and we may incur significant costs
as we attempt to re-lease these spaces. We may be unable to re-lease space in a timely manner. The 717 Del Paso Road property is used as cross collateral on one of our indebtedness to a bank at December 31, 2004.



Tustin



The tenant has sublet the entire property and remains liable under the lease. The lease for approximately 38,000 square feet on our Tustin
property expires on September 30, 2005, and we may not be able to re-lease the space at the same rent level, or for the entire square footage in the property.



Atlanta  Northlake Festival



We acquired the 321,621 square foot Northlake Festival Shopping Center in October 2002. It is currently approximately 88% occupied. Tenants include Toys R Us,
OfficeMax, PETsMART, Havertys and Bally Total Fitness. During 2003, we completed significant work to improve the property, including painting and new monument signage. Two tenants, Michaels and Kids R Us, which occupy 16,056
and 13,493 square feet, respectively, of the property, have vacated the premises but continue to pay rent, however it may be less likely that a tenant that has vacated a property will continue to meet their rent obligation. The lease with AMC
Theaters comprising 26,900 square feet expired in May 2004. We are evaluating various options to re-lease the space, including renovation for a different usage, and we anticipate such a renovation would involve significant costs. The land under the
Northlake Festival is owned by an unrelated third party and is subject to a separate ground lease that extends through 2057. See Notes to Consolidated Financial Statements which are part of this annual report, for further discussion of
amounts due the ground lessor.



20



---

##### Table of Contents

Significant Tenants



During 2004, one tenant, Safeguard Business Systems, Inc., represented 10% or more of our total rental revenue including discontinued operations.



During 2003, no single tenant represented 10% or more of our total rental revenue including
discontinued operations, although one tenant accounted for 9%.



Headquarters



We currently lease our 1,080 square foot headquarters at 3000 Sand Hill
Road, Building 2, Suite 120, Menlo Park, California, 94025 under a amended lease dated January 31, 2005 for a two-year period at approximately $7,000 per month. We previously leased office space on a under a lease dated January 7, 2003 for
approximately $7,000 per month. In addition to our headquarters, we lease office space and are provided other office services at 5933 West Century Blvd., Suite 900, Los Angeles, California, 90045 on a month-to-month basis at $1,000 per month.



Our Policies for Investment, Financing, and Conflicts of Interest



Our bylaws do not restrict the types of transactions that we may enter
into and do not restrict transactions between affiliates and the company. Our investment policies, financing policies and conflict of interest policies are set by our board of directors. The board of directors has adopted the policies summarized
below, as well as the Code of Business Conduct and Ethics we adopted on March 22, 2004 pursuant to new requirements of the American Stock Exchange. Our board may amend or revise them from time to time, however, without a vote of our stockholders,
except that



| | (1) | changes in our conflict of interest policies must be approved by a majority of the independent directors and otherwise be consistent with legal requirements; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | if we decide to change our policy to increase the percentage of debt we incur above 65% of our overall portfolio fair market value, we will implement the change only after we seek
and obtain the approval of the holders of a majority in voting power of our outstanding shares.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Investment Policies



Investments in Real Estate or Interests in Real Estate. Our business objective is to increase stockholders long-term total return through increases in the
dividend and the appreciation in value of our common stock. We seek to grow our asset base through:



| | (1) | acquiring suburban office, retail shopping center and light industrial properties, both within and outside California;
| | --- | ----------------------------------------------------------------------------------------------------------------------



| | (2) | acquiring portfolios of similar properties;
| | --- | -------------------------------------------



| | (3) | rehabilitating and repositioning suburban office, retail shopping center and light industrial properties; and
| | --- | -------------------------------------------------------------------------------------------------------------



| | (4) | purchasing parcels of undeveloped land and constructing suburban office, retail shopping center or light industrial properties on them.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------



We intend to operate in markets that demonstrate superior economic growth and which the
development of similar competing properties is restrained by entitlement limitations.



We also intend to maximize our value to our stockholders by increasing cash flow by:



| | (1) | internal growth of triple net leases from our existing properties and leasing vacant space;
| | --- | -------------------------------------------------------------------------------------------



21



---

##### Table of Contents

| | (2) | evaluating and refinancing debt arrangements with lenders;
| | --- | ----------------------------------------------------------



| | (3) | rehabilitating, repositioning and disposing of some of our retail properties and possibly other properties that are not consistent with our strategy, and recycling the proceeds from
sales into new properties; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | seeking out and expanding our sources of private and institutional real estate capital for future acquisition purposes.
| | --- | -----------------------------------------------------------------------------------------------------------------------



Our October 2002 acquisition of the Northlake Festival Shopping Center in Atlanta, Georgia
represented a change in our business focus, which had previously been to acquire, own and manage suburban office, retail shopping center and light industrial properties in California.



Securities of or Interests in Persons Primarily Engaged in Real Estate Activities and Other Issuers. We also may invest in securities
of other entities engaged in real estate activities or invest in securities of other issuers, including investments for the purpose of exercising control over those entities. We may acquire all or substantially all of the securities or assets of
other REITs or similar entities where those investments would be consistent with our investment policies. We do not currently intend to invest in the securities of other issuers, and federal tax laws place restrictions on such ownership by a REIT.
In making any of the investments described in this paragraph we intend to comply with the percentage of ownership limitations and gross income tests necessary for REIT qualification under the Internal Revenue Code. Also, we will not make any
investments if the proposed investment would cause us to be an investment company under the Investment Company Act of 1940.



No Investments in Mortgages. We do not own any mortgages and do not currently intend to invest in mortgages or to engage in originating, servicing or warehousing
mortgages.



Financing Policies



Our organizational documents do not limit the amount of debt we may incur. We have adopted a
policy that we shall not incur any additional liabilities if, after giving effect to the additional liabilities, total liabilities would exceed 65% of what the board of directors believes is the fair market value of our total portfolio. Fair market
value for this purpose may differ from the amounts reported on our December 31, 2004 financial statements prepared under generally accepted accounting principles because the financial statements reduce the value of the assets by accumulated
depreciation and do not record any appreciation in value above the cost of the property. We may, however, from time to time re-evaluate our borrowing policies in light of then current economic conditions, relative costs of debt and equity capital,
market value of our real estate assets, growth and acquisition opportunities and other factors. If we decide to change this policy to increase the percentage of debt we incur, we will implement the change only after we seek and obtain the approval
of the holders of a majority in voting power of our outstanding shares. Modification of this policy may adversely affect the interests of our stockholders.



To the extent that the board of directors determines to seek additional capital, we may raise capital through additional equity offerings, debt financing or retention of
cash flow or a combination of these methods. Our retention of cash flow is subject to provisions in the Internal Revenue Code requiring a REIT to distribute a specified percentage of taxable income, and we must also take into account taxes that
would be imposed on undistributed taxable income.



We have not established any
limit on the number or amount of mortgages on any single property or on our portfolio as a whole.



22



---

##### Table of Contents

Conflict of Interest Policies



Our board of directors is subject to provisions of Delaware law that are designed to eliminate or minimize potential conflicts of interest.
We can give no assurances, however, that these policies will always eliminate the influence of those conflicts. If these policies are not successful, the board could make decisions that might fail to reflect fully the interests of all stockholders.



Under Delaware law, a director may not misappropriate corporate opportunities
that he or she learns of solely by serving as a member of the board of directors. In addition, under Delaware law, no contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any other
corporation, partnership, association, or other organization in which one or more of its directors or officers, are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the board or committee which authorizes the contract or transaction, or solely because any such directors or officers votes are counted for such purpose, if:



| | (1) | the material facts as to the directors or officers relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or
the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | the material facts as to the directors or officers relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled
to vote on the matter, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | the contract or transaction is fair as to the company as of the time it is authorized, approved or ratified, by the board of directors, a committee or the stockholders.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our board of directors has adopted a policy that all conflicting
interest transactions must be authorized by a majority of the disinterested directors, but only if there are at least two directors who are disinterested with respect to the matter at issue. In addition, under the applicable rules of the American
Stock Exchange, related party transactions are subject to appropriate review and oversight by the our Audit Committee, which is composed of John H. Redmond (its chair) and James P. Moore.



Our bylaws contain a provision providing in summary as follows: Any director, affiliate, officer, employee or agent of the company may
acquire, own, hold, and dispose of shares of the companys capital stock for his individual account, and may exercise all rights of a stockholder to the same extent and in the same manner as if he were not a director, officer, employee, or
agent of the company. Any director, affiliate, officer, employee, or agent of the company may have personal business interests and may engage in personal business activities. These interests and activities may include the acquisition, syndication,
holding, management, operation or disposition, for his own account or for the account of others, of interests in mortgages, interests in real property including, but not limited to, real property investments presented to and rejected by the company,
or interests in persons engaged in the real estate business. Any director, officer, employee, or agent of the company may (a) be interested as director, officer, director, stockholder, partner, member, advisor, or employee of or otherwise have a
direct or indirect interest in any person who may be engaged to render advice or services to the company, and (b) receive compensation from that person as well as compensation as director, affiliate, officer, or otherwise from the company. None of
these activities shall be deemed to conflict with his duties and powers as director, officer, employee, or agent. Any director, affiliate, officer, employee, or agent of the company may engage with or for others in business activities of types
conducted by the company and shall not have any obligation to present to the company any investment opportunities which come to them other than in their capacities as directors, officers, employees, or agents, regardless of whether those



23



---

##### Table of Contents

opportunities are within the companys investment policies. Notwithstanding the foregoing, each director must
disclose to the company any interest he has in any investment opportunity presented to the company and any interest he knows to be held by any person of which he is an affiliate, and in the event of a conflict between the foregoing policy and our
Code of Business Conduct and Ethics described below, the code shall govern.



Other Policies



We have authority to
offer our securities and to repurchase and otherwise reacquire our securities, and we have purchased our securities in the past and may engage in those activities in the future. We may also make loans to joint ventures in which we participate to
meet working capital needs. We have not engaged in trading, underwriting, agency distribution or sale of securities of other issuers, and we do not intend to do so. We intend to make investments in a manner so that we will not be treated as an
investment company under the Investment Company Act of 1940.



At all times, we
intend to make investments in a manner to be consistent with the requirements of the Internal Revenue Code for us to qualify as a REIT unless, because of changing circumstances or changes in the Internal Revenue Code or in applicable regulations,
the board of directors decides that it is no longer in our best interests to qualify as a REIT and obtains the necessary approval of the holders of a majority in voting power of the outstanding shares of our capital stock at a meeting of
stockholders called for that purpose.



For a description of our code of
business ethics and conduct, see Item 9.



ITEM 3. LEGAL PROCEEDINGS



We are a defendant in
a lawsuit entitled John Lonberg; Ruthee Goldkorn v. Sanborn Theaters, Inc. and So-Cal Cinema, Inc.; Salts, Troutman and Kaneshiro, Inc.; West Coast Realty Investors, Inc., in the U.S. District Court for the Central District of California (Case
#CV-97-6598AHM(JGx)). We were added as a defendant in the plaintiffs First Amended Complaint filed May 7, 1998.



The plaintiffs alleged violations of the federal Americans with Disabilities Act and the California Unruh Civil Rights Act with respect to their movie-going experiences,
including inadequate physical accommodations for individuals with disabilities and insensitive theater personnel. Sanborn Theaters, Inc (Sanborn) is the tenant and theater operator. Salts, Troutman and Kaneshiro, Inc. is the architect
who designed the theater and its interiors.



The plaintiffs seek actual damages
of $1,000 for each violation of law; three times actual damages; and attorneys fees, expenses and costs. The plaintiffs also seek mandatory injunctive relief requiring the defendants to reconfigure the theater.



The plaintiffs have agreed to dismiss their claims under the Unruh Civil Rights Act.



The U.S. Department of Justice, Civil Rights Division (DOJ) filed
a Motion to Intervene in the case on March 1, 1999. DOJ has sued Sanborn only, and preliminary discussions have been held between the DOJ and Sanborn. Sanborn intends to vigorously defend against the DOJ.



We cannot determine the likelihood of an unfavorable outcome or range of potential loss, if
any. We believe we have complied with all applicable provisions of law and intend to vigorously defend against the allegations contained in the lawsuit. We believe that the lawsuit will not have a material impact on our continuing operations or
overall financial condition.



24



---

##### Table of Contents

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



We held our 2004 annual meeting of stockholders on October 29, 2004. For a description of the matters considered at the meeting and the results of the voting, we incorporate by reference the text of Item 8.01 of our
Current Report on Form 8-K dated October 29, 2004.



PART II



ITEM 5. MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS



Our common stock has been listed on the
American Stock Exchange under the symbol MPQ since October 31, 2002. As of March 17, 2005, there were 976,965 shares of our common stock outstanding including 8,000 shares held in treasury and 425 record holders. The number of record
holders does not include shares held of record by a broker or clearing agency. Stockholders are cautioned that prior sales data should not be used to determine the value of our common stock nor should it be used to anticipate the prices at which our
common stock might trade in an active market.



|               |  |                          |       |                  |   |       |  |     |       |  |   |      
|-------------- |  | ------------------------ | ----- | ---------------- | - | ----- |  | --- | ----- |  | - | -----
|               |  | Years ended December 31,
|               |  | 2004 Stock Price         |       | 2003 Stock Price
|               |  | High                     |       | Low              |   | High  |  | Low
|First quarter  |  | $                        | 16.10 |                  | $ | 14.65 |  | $   | 13.11 |  | $ | 9.85 
|Second quarter |  | $                        | 15.80 |                  | $ | 12.65 |  | $   | 11.50 |  | $ | 9.15 
|Third quarter  |  | $                        | 14.30 |                  | $ | 12.55 |  | $   | 12.99 |  | $ | 10.74
|Fourth quarter |  | $                        | 17.59 |                  | $ | 13.25 |  | $   | 15.89 |  | $ | 11.80



During 2004, our board of directors
declared and we paid the following dividends:



|                 |  |                   |  |                 |      |               |   |        
|---------------- |  | ----------------- |  | --------------- | ---- | ------------- | - | -------
|Record Date      |  | OutstandingShares |  | AmountPer Share |      | TotalDividend
|February 4, 2004 |  | 975,298           |  | $               | 0.25 |               | $ | 243,825
|May 6, 2004      |  | 976,965           |  |                 | 0.25 |               |   | 244,241
|August 6, 2004   |  | 976,965           |  |                 | 0.25 |               |   | 244,241
|October 29, 2004 |  | 956,965           |  |                 | 0.25 |               |   | 239,241
|                 |  |                   |  |                 |      |               |   |        
|Total            |  |                   |  | $               | 1.00 |               | $ | 971,548
|                 |  |                   |  |                 |      |               |   |        





25



---

##### Table of Contents

During 2003, our board of directors declared and we paid the following dividends:



|                 |  |                   |  |                 |      |               |   |          
|---------------- |  | ----------------- |  | --------------- | ---- | ------------- | - | ---------
|Record Date      |  | OutstandingShares |  | AmountPer Share |      | TotalDividend
|January 10, 2003 |  | 975,298           |  | $               | 0.30 |               | $ | 292,589  
|April 25, 2003   |  | 975,298           |  |                 | 0.30 |               |   | 292,589  
|August 28, 2003  |  | 975,298           |  |                 | 0.30 |               |   | 292,589  
|October 27, 2003 |  | 975,298           |  |                 | 0.25 |               |   | 243,827  
|                 |  |                   |  |                 |      |               |   |          
|                 |  |                   |  | $               | 1.15 |               | $ | 1,121,594
|                 |  |                   |  |                 |      |               |   |          



Our board of directors has the
authority to pay dividends based on such considerations as the board of directors may deem necessary. As a REIT, we are required to distribute at least 90% of our taxable income (excluding capital gains) to our stockholders. Even if we determine to
pay a dividend or make a distribution on our common stock, there can be no assurance that we will generate sufficient cash flow to pay that dividend, or that we will maintain the current dividend payment levels.



Small Business Issuer Purchases of Equity Securities



|              |  |                                               |     |  |                                        |       |                                                                                            |   |                                                                                                                    |     |    
|------------- |  | --------------------------------------------- | --- |  | -------------------------------------- | ----- | ------------------------------------------------------------------------------------------ | - | ------------------------------------------------------------------------------------------------------------------ | --- | ---
|Period        |  | (a) Total number ofshares (or units)purchased |     |  | (b)Averageprice paidper share(or unit) |       | (c) Total number of shares(or units) purchased aspart of publiclyannounced plans orprogram |   | (d) Maximumnumber (orappropriate dollarvalue) of shares(or units) thatmay yet bepurchased underthe plans orprogram |    
|October 2004  |  | 20,000                                        | (1) |  | $                                      | 13.52 |                                                                                            |  |                                                                                                                    | N/A |    
|November 2004 |  |                                              |     |  |                                        | N/A   |                                                                                            |  |                                                                                                                    | N/A |    
|December 2004 |  |                                              |     |  |                                        | N/A   |                                                                                            |  |                                                                                                                    |     | (2)
|              |  |                                               |     |  |                                        |       |                                                                                            |   |                                                                                                                    |     |    
|Total         |  | 20,000                                        |     |  | $                                      | 13.52 |                                                                                            |  |                                                                                                                    | N/A |    
|              |  |                                               |     |  |                                        |       |                                                                                            |   |                                                                                                                    |     |    

---

|(1) | During October 2004, we purchased 20,000 shares of our common stock at the then fair market value, plus brokerage commissions, for a total of $13.52 per share. We made this purchase
in a private transaction, not under a publicly announced plan or program.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | On December 7, 2004, we announced that we intend to buy back shares in the open market or in privately negotiated transactions from time to time through December 7, 2005. We did not
specify a maximum number of shares or maximum dollar value of shares we might repurchase.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On November 12, 2004, we sold 12,000 shares of our common stock, $0.01 par value, held in treasury to Meredith III, LLC (an affiliate of Mr. Allen K. Meredith, our president and CEO), for $13.52 per share, or a total
of $162,240. This sale was a private transaction and no underwriters were involved. These shares are not convertible or exchangeable into other securities. The sale was exempt from registration as a private placement under section 4(2) of the
Securities Act of 1933. Given Mr. Merediths roles as a co-manager of the limited liability company, the company had adequate access to information about us.

|
|



26



---

##### Table of Contents

ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION



Overview



We are a real estate company
engaged in acquiring, owning and managing suburban office, retail shopping center and light industrial properties. We have elected to be taxed as a REIT for federal income tax purposes, which requires, among a number of other organizational and
operational requirements, that we distribute at least 90% of our taxable income (excluding capital gains) to our stockholders. From inception to March 31, 2002, we were advised and managed by West Coast Realty Advisors, Inc. and West Coast Realty
Management, Inc. Since March 31, 2002, we have been self-managed and self-administered.



At December 31, 2004, we had a real estate portfolio of 11 properties, including:



| |  |  | three light industrial properties totaling 151,225 square feet;
| | - |  | ---------------------------------------------------------------



| |  |  | one retail shopping center of 321,621 square feet;
| | - |  | --------------------------------------------------



| |  |  | one restaurant facility of 5,133 square feet;
| | - |  | ---------------------------------------------



| |  |  | five suburban office properties totaling 114,606 square feet; and
| | - |  | -----------------------------------------------------------------



| |  |  | one property held for sale totaling 25,000 square feet.
| | - |  | -------------------------------------------------------



Until 2002, our business focus was the ownership and operation of suburban office properties and light industrial buildings. We have broadened our focus to include large
shopping centers and properties outside of California. We acquired an Atlanta, Georgia shopping center in October 2002.



In addition to the above, we own a 2.5-acre parcel of undeveloped land in Garden Grove, California. We are constructing a multi-tenant shopping center comprising
approximately 30,000 square feet on this parcel.



All of our properties are
located in California and Georgia. Because our only Georgia property is our Northlake Festival retail center in Atlanta, any reference in this report to the location of any other property is to a city in California. Many of our leases are
triple-net leases where the tenant is responsible for maintenance, taxes and insurance.



Other than our becoming self-managed and self-advised as noted above, the most significant factors affecting our recent historical financial results are the following sales:



| |  | Sale of Fresno Property. On September 27, 2004, we sold our Fresno property for a gross sales price of $900,000 and a gain of $344,314. During 2004, the direct expenses in
excess of direct revenue from the Fresno property reduced our net income by approximately $78,600, excluding the gain on sale.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sale of Cerritos Property. On December 19, 2003, we sold our Cerritos property for a gross sales price of $3,740,000 and a gain of $1,264,614. During 2003, the direct
revenues in excess of direct expenses from the Cerritos property contributed approximately $50,000 to our net income excluding the gain on the sale.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sale of Chino Property.On November 25, 2003, we sold our vacant property in Chino for a gross sales price of $2,300,000 and a gain of $452,157. During 2003, the direct
expenses in excess of direct revenues from the Chino property decreased our net income by approximately $160,000, excluding the gain on the sale.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



27



---

##### Table of Contents

| |  | Sale of Vacaville Property. On August 13, 2003, we sold our vacant Vacaville property for a gross sales price of $2,100,000 and a gain of $406,728. This gain incorporates a
significant write-down in the carrying value of the property made in 2001. During 2003, the direct expenses in excess of direct revenues from the Vacaville property decreased our net income by approximately $190,000, excluding the gain on the sale.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Although some of these sales have improved our operating results
by relieving us of assets whose direct expenses exceeded their direct revenues, the sales have diminished the overall value of our portfolio.



We believe that the following factors and events will pose particular challenges for us in 2005 and beyond. The following statements are forward-looking statements within
the meaning of the federal securities laws, and these factors and others are addressed in more detail in Item 1, Business  Risk Factors That May Affect Future Results.



| |  | Existing and Anticipated Vacancies. At present, our portfolio is approximately 91% leased, although some tenants have vacated the lease premises and continue to pay rent. In
May 2004, our lease with AMC Theaters, comprising 26,900 square feet in our Northlake Festival property, expired. AMC Theaters has not occupied the space since 2002, and we do not expect to be able to lease this space in 2005. We are exploring
options to reconfigure the space to be suitable for other uses, and we may incur significant costs to complete such a renovation, including the lack of income during a construction and lease up period. Another two tenants have vacated approximately
16,000 and 13,500 square feet but are still liable under the lease through September 2005 and January 2019, respectively. Our lease on two Sacramento properties expired in 2004 on 19,800 square feet, although the tenant continues to lease 1,575
square feet on a month-to-month basis. We may incur significant costs as we attempt to re-lease these spaces. We may be unable to re-lease space in a timely manner. The lease for approximately 38,000 square feet on our Tustin property expires on
September 30, 2005, and we may not be able to re-lease the space at the same rent level, or for the square footage. Further, the lease on our Riverside property also expires on September 30, 2005 and we may not be able to re-lease the space at the
same rent level, if we are unable to close the sale of the property by the second quarter of 2005 as we currently expect. The buyer has made deposits of $150,000, characterized as non-refundable, to escrow and that entire amount has been released to
us pursuant to the purchase agreement. The tenant in our Riverside property has not paid rent for the period January 2005 to the present.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Loss of Revenues from Disposed Properties. We will no longer receive any revenues from the properties we have recently sold.
|- |  | ----------------------------------------------------------------------------------------------------------------------------



| |  | Development of Garden Grove Property. Part of our business plan and growth strategy involves divesting vacant and other select properties and redeploying the net cash
proceeds into new properties where we expect the yield and long-term growth to be greater. Consistent with that strategy, we have sold several properties as noted above. We purchased a 2.5-acre parcel of undeveloped land in Garden Grove and we have
begun the construction of a multi-tenant shopping center comprising approximately 30,000 square feet on this parcel. We believe that our cash flow from operations will begin to improve as we finish the development and complete the leasing process.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Debt maturities.Two of our loans mature in 2005, with total balloon payments of approximately $3,329,710. We are planning to pay off or extend the maturity dates of those
loans as described in the Liquidity and Capital Resources below, but we may not be able to do so as we expect.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Lease with Adelphia Communications, Inc. in our Ontario property.Adelphia has filed for bankruptcy protection, and although it is current in its lease payments with us, a
bankruptcy court
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



28



---

##### Table of Contents

could terminate the lease. Further, various companies have filed liens against the property for
remodeling work ordered by Adelphia. If the bankruptcy court terminates our lease, the payments to the creditors from the bankruptcy proceedings are less than their claims and the liens are indeed valid, then we would be responsible for the
obligations.



As a result of property sales in 2003 and 2004 and the purchase
of land held for development in 2003, as of December 31, 2004, we had total assets of $54,308,310, total secured indebtedness of $35,490,095, total liabilities of $36,659,191 and a debt-to-total assets ratio of 65%, calculated on the basis of
generally accepted accounting principles. Because this calculation method reflects accumulated depreciation and does not reflect any appreciation of the properties beyond their cost, it may result in assets being valued at less than their fair
market values as determined by the board of directors. Further, this calculation excludes the effects, if any, of the ground lease on the Northlake Festival property.



We adopted SFAS No. 144 as of January 1, 2002. As of December 31, 2003, we designated four properties as held for sale. We sold the
Vacaville property in August 2003. On September 30, 2003, we designated the Chino property as held for sale and removed the Roseville property from the held for sale category. In November and December 2003, we sold the Chino and Cerritos properties,
respectively.



During the second quarter of 2004, we determined that the two
Sacramento properties (717 and 721 West Del Paso Road) and the Fresno, California property no longer met the required criteria for classification as held for sale, since we were unable to negotiate a potential sale and no firm commitment was
obtained. Accordingly we removed them from that category in our financial statements. During September 2004, we sold the Fresno property.



In accordance with SFAS No.144, we have reclassified the results of two Sacramento properties (717 and 721 West Del Paso Road) from discontinued operations to continuing
operations. Further, results for the recently sold Fresno property and the Riverside property, designated as held for sale at current balance sheet date, are included in discontinued operations for the years ended December 31, 2004 and 2003.



Results of Operations



2004 Compared to 2003



Operations for the years ended December 31, 2004 and 2003 represented full quarters of
rental operations for all of our properties we classify as continuing operations, except for the Banco Popular property in Garden Grove, which we acquired in June 2003. We have designated our Riverside property as held for sale at December 31, 2004
and 2003, in addition to those properties sold in the two years then ended. All properties classified as held for sale are included in the line items under income (loss) from discontinued operations with revenues netted against expenses.



Rental revenue increased by $80,831 (1%) for the year ended December 31, 2004,
as compared to the year ended December 31, 2003. This increase is due to a full year of rental revenue from our Garden Grove (Banco Popular) property during 2004, which we acquired in June 2003, offset in part by vacancies at out Northlake Festival
property and two Sacramento properties (717 and 721 West Del Paso Road).



Tenant reimbursements decreased by $151,611 (13%) for the year ended December 31, 2004, as compared to the year ended December 31, 2003, mainly due to $204,980 of lower insurance costs and other expenses at our Northlake property, which was
offset in part by a $45,045 increase in reimbursable expenses at our Folsom property.



Interest expense decreased by $260,170 (10%) for the year ended December 31, 2004, as compared to the year ended December 31, 2003, due to:



| | (a) | a full year of capitalized interest on the Garden Grove Festival development property we acquired during June 2003; and
| | --- | -----------------------------------------------------------------------------------------------------------------------



29



---

##### Table of Contents

| | (b) | lower interest expense on debt secured by our Ontario property, which we repaid in full on March 1, 2004.
| | --- | ---------------------------------------------------------------------------------------------------------



These decreases in interest expense were offset in part by an increase in interest for a full year of the $1,500,000 debt related to our
Garden Grove (Banco Popular) property.



General and administrative costs
decreased by $58,978 (4%) for the year ended December 31, 2004, as compared to the year ended December 31, 2003. This decrease was principally due (a) to lower legal expenses in 2004 versus 2003, related to our defense costs of the James Prock claim
settled in 2003, and (b) the cost to move our corporate offices in 2003. These decreases were offset in part by higher corporate legal fees during 2004.



Depreciation expense increased by $181,174 (18%) for the year ended December 31, 2004, as compared to the year ended December 31, 2003, due largely to reclassifying the
two Sacramento properties (717 and 721 West Del Paso Road) to the operating category in June 2004 and charging depreciation expense for those properties in 2004 but not 2003. Further, as required, we computed depreciation expense on those properties
as if they have never been classified as held for sale, the catching up the depreciation that was not expensed in prior periods, which totaled approximately $200,000. Depreciation expense also increased from the addition of our Garden
Grove (Banco Popular) property in 2004. The increases were partially offset by a decrease from reclassifying the Roseville property to the operating category in September 2003 and charging depreciation expense $62,033 for that property in 2003 but
not in 2004, to catch up the depreciation that was not expensed in prior periods as required.



Operating expenses decreased by $141,841 (14%) in the year ended December 31, 2004, as compared to the year ended December 31, 2003, due primarily to lower insurance costs at our Northlake Festival property.



Property tax expense increased $36,060 (7%) in the year ended December 31,
2004, as compared to the year ended December 31, 2003, primarily due to the addition of our Garden Grove (Banco Popular) property and tax rate increases in some of our property locations.



Gain on sale of rental real estate held for sale was $344,314 for the year ended December 31, 2004 from the sale of the Fresno property.
Gain on sale of rental real estate held for sale was $2,123,499 for the year ended December 31, 2003 from the sales of the Vacaville, Chino and Cerritos properties.



Loss from discontinued operations decreased by $29,135 (33%) for the year ended December 31, 2004 compared to December 31, 2003, primarily
due to lower interest expense at our Riverside and Fresno properties. We paid off the Fresno loan when we sold the property in September 2004.



Net income for the year ended December 31, 2004 was $861,157, compared to $2,442,604 for the year ended December 31, 2003. This decrease was due primarily to the gain on
sale of rental real estate held for sale of $2,123,499 recognized during 2003 versus a gain on sale of rental real estate held for sale of $344,314 recognized during 2004.



The diluted weighted average number of shares outstanding was 1,010,428 and 1,002,167 for the years ended December 31, 2004 and 2003,
respectively. For the reasons explained in the preceding paragraph, diluted net income per share decreased to $0.85 for the year ended December 31, 2004 from $2.44 for the year ended December 31, 2003.



30



---

##### Table of Contents

Liquidity and Capital Resources



Our primary source of liquidity to fund distributions, principal payments on notes payable and minor capital expenditures is our cash flows
from operating activities. To qualify as a REIT for federal income tax purposes, among other requirements, we must distribute annually at least 90% of our REIT taxable income (excluding capital gains). Accordingly, we currently intend to continue to
make, but have not contractually bound ourselves to make, regular quarterly distributions to holders of our common stock.



While we have declared quarterly dividends on our common stock regularly in the past, the declaration and payment of dividends is subject to the discretion of our board
of directors. Any determination as to the payment of dividends, as well as the level of those dividends, will depend on, among other items, our financial results and condition, general economic and business conditions, our strategic plans and
contractual, legal and regulatory restrictions on our ability to pay dividends. On September 30, 2003, our board of directors reduced the dividend for the quarter ended September 30, 2003 to $0.25 per share, and we have subsequently paid dividends
at the $0.25 per share rate. During 2004, as compared to 2003, our revenues have been reduced by:



| |  |  | the sale of the Cerritos property in December 2003 as to 48,351 square feet;
| | - |  | ----------------------------------------------------------------------------



| |  |  | the expiration of the lease on May 31, 2004 with AMC Theatres for 26,900 square feet in our Northlake Festival property; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | the expiration of the lease on September 30, 2004 with Cucina Holdings, Inc. for a total of 19,800 square feet in our two Sacramento properties.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



In 2005, we anticipate that our revenues as compared to 2004 will be reduced by the following
factors:



| |  |  | The 26,900 square foot space previously occupied by AMC Theatres in our Northlake Festival property will produce no revenue.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | The space previously occupied by Cucina Holdings, Inc., as to a total of 19,800 square feet in our two Sacramento properties will produce revenue only on the 1,575 square feet they
continue to rent on a month-to-month basis. As of March 17, 2005, we have not been able to re-lease this space.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The leases on our Riverside and Tustin properties expire on September 30, 2005, as to 25,000 and 37,740 square feet, respectively.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | The tenant in our Riverside property has not paid rent for the months of January - March 2005.
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | We anticipate additional costs in consulting, legal and audit fees in 2005 to comply with the provisions of the Sarbanes Oxley Act of 2002.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



See discussion below for future debt maturities.



For these reasons, we cannot assure stockholders that we will maintain the current quarterly
dividend level or that we will pay dividends in any future period. The preceding statements are forward-looking statements within the meaning of the federal securities laws.



We believe our properties are in good condition without significant deferred maintenance obligations, and many are leased under
triple-net leases, which reduce the risk pertaining to excessive maintenance and operating costs. As a policy, we keep cash balances on hand for reserves for unexpected cash requirements. Our primary sources for liquidity to fund asset
acquisitions, major capital expenditures and balloon payments on notes payable are refinancing selected existing notes payable and the proceeds from selling selected properties. Further, we may attempt to obtain funding by issuing additional equity
either in the form of common stock or through joint ventures.



31



---

##### Table of Contents

Cash Flows in 2004



Our cash resources decreased $3,038,304 during the year ended December 31, 2004. During 2004, cash provided by operating activities was
$1,953,836, primarily from net income adjusted for non-cash items such as depreciation and amortization. Investing activities in 2004 used $933,097 of cash resources primarily as a result of $1,738,470 of development expenditures for the Garden
Grove Festival property, which was offset in part by proceeds of $884,314 from the sale of our Fresno property. For the year ended December 31, 2004, financing activities used $4,059,043 of our cash resources, due largely (a) to the payoff of the
loans on our Ontario and Fresno properties and (b) dividends paid of $971,548. These uses were offset in part by proceeds from our loan in relation to the Garden Grove Festival property.



Cash Flows in 2003



Our cash resources increased $775,129 during the year ended December 31, 2003. During 2003, cash provided by operating activities was
$1,679,790, primarily from net income adjusted for non-cash items such as depreciation and amortization. Investing activities in 2003 resulted in a $2,917,580 source of cash resources primarily from proceeds from the sale of the Vacaville, Chino and
Cerritos properties, offset in part by (a) the acquisition of land held for development and related costs and (b) the purchase of the Banco Popular property. For the year ended December 31, 2003, financing activities used $3,822,241 of cash
resources, due largely to the payoff of loans secured by properties sold and dividends paid.



The following table presents our contractual cash obligations as of December 31, 2004:



|                                                                                  |  |                        |            |                 |   |              |  |              |           |              |   |            |  |   |           
|--------------------------------------------------------------------------------- |  | ---------------------- | ---------- | --------------- | - | ------------ |  | ------------ | --------- | ------------ | - | ---------- |  | - | ----------
|                                                                                  |  | Payments Due by Period
|Contractual Obligations                                                           |  | Total                  |            | Less than 1year |   | 1 to 3 Years |  | 3 to 5 Years |           | Over 5 Years
|Notes payable secured by rental real estate and real estate held for sale(1)      |  | $                      | 35,490,095 |                 | $ | 3,806,930    |  | $            | 1,067,386 |              | $ | 15,986,026 |  | $ | 14,629,753
|Minimum payments due under the ground lease at the Northlake Festival property(2) |  |                        | 31,650,000 |                 |   | 600,000      |  |              | 1,200,000 |              |   | 1,200,000  |  |   | 28,650,000
|Other                                                                             |  |                        | 162,000    |                 |   | 81,000       |  |              | 81,000    |              |   |           |  |   |          
|                                                                                  |  |                        |            |                 |   |              |  |              |           |              |   |            |  |   |           
|Total Contractual Cash Obligations                                                |  | $                      | 67,302,095 |                 | $ | 4,487,930    |  | $            | 2,348,386 |              | $ | 17,186,026 |  | $ | 43,279,753
|                                                                                  |  |                        |            |                 |   |              |  |              |           |              |   |            |  |   |           

---

|(1) | See Note 6 Notes Payable, of the notes to the financial statements included in this report for a detailed description of our notes payable.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------

|(2) | See Note 10 Commitments and Contingencies of the notes to the financial statements included in this report for a description of the terms of this ground lease.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition to the payments due in the table above, we also have
employment contracts with our two officers.



During 2005, two of our loans are
scheduled to mature, totaling approximately $3,329,710. Specifically, we have extended the term of the $2,272,497 loan secured by our Garden Grove (Banco Popular) property to November 2005, and we believe we will be able to extend the term of that
loan further if needed. We are in negotiations to extend the maturity date of the $1,057,213 loan secured by our Riverside property to June 2005. We have agreed to sell the Riverside property $2,300,000 in the second quarter of 2005, and if we do so
as we expect, we will pay off the loan secured by that property.



32



---

##### Table of Contents

If our efforts described in the previous paragraph to repay or extend the two loans are unsuccessful, we anticipate using
a combination of existing cash balances, refinancing (including borrowing on unencumbered properties) and/or property sales to meet the scheduled 2005 loan maturities. We cannot assure you we will be successful in those efforts. We do not believe we
will be able to use our Ontario property as security for a loan until the bankruptcy court accepts our lease with the tenant (if the lease is accepted at all), and we do not believe that a formal acceptance or rejection of the lease will occur by
June 2005, if then.



In addition to the maturing loans in 2005 described above,
we anticipate the following significant needs for cash during the remainder of 2005 and 2006:



| |  |  | We are constructing an approximate 30,000 square foot shopping center on our parcel of land in Garden Grove using a construction loan. We anticipate using the remaining portion of
our $6,500,000 construction loan to fund the construction costs.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We may renovate the 26,900 square foot space vacated by AMC Theaters for a use other than a theater at a significant cost.
| | - |  | --------------------------------------------------------------------------------------------------------------------------



We believe that our liquidity and various sources of capital are sufficient to fund our
operations in the short-term (2005), including capital expenditures, leasing commissions, debt service payments and required dividends under the Internal Revenue Code for REIT status. Further, we believe that we will be able to extend the maturity
dates of the two loans that mature during 2005. Beyond 2005, however, we anticipate that we will continue to require outside sources of financing to meet our liquidity needs, such as scheduled debt repayments (including balloon payments on our debt)
and additional investments in suburban office, retail shopping center and light industrial properties, although we may make other types of investments. We believe that those sources for longer-term liquidity are likely to include the proceeds from
(a) refinancing selected existing mortgage debt to higher balances as the maturity date of the mortgage approaches, (b) obtaining mortgages on properties we own free and clear and (c) asset sales. We may consider other possible funding sources,
including joint ventures. To increase our financial flexibility, we may seek to obtain a revolving line of credit, although there can be no assurance we will be successful.



Critical Accounting Policies



The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates and assumptions on an ongoing basis based on a combination of
historical information and various other assumptions that we believe are reasonable under the particular circumstances. Actual results may differ from these estimates based on different assumptions or conditions. We define critical accounting
policies as those that require managements most difficult, subjective or complex judgments. A summary of our critical accounting policies follows. Additional discussion of accounting policies that we consider significant, including further
discussion of the critical accounting policies described below, can be found in the notes to our consolidated financial statements.



Revenue Recognition. We recognize minimum rents on the straight-line method over the terms of the leases, as required under Statement of Financial Accounting
Standard No. 13. Some of our leases also provide for additional revenue based on contingent percentage income. We record this revenue on an accrual basis once the tenant achieves the targeted percentage of income. The leases also typically provide
for tenant recoveries of common area maintenance, real estate taxes and other operating expenses. These recoveries are recognized as revenue in the period the applicable costs are incurred, except for several tenants where the revenue is recognized
when the revenue is billable to the tenant



33



---

##### Table of Contents

under the lease. Rents due, but not yet collected, are recognized to the extent determined by management to be
collectible. While we believe that the likelihood of collection of amounts over six months past due is low, we reserve for uncollectible accounts on a case-by-case basis. As of December 31, 2004, we had approximately $110,500 in receivables over 90
months old and we have provided approximately $77,000 for uncollectible receivables.



Real Estate. We record real estate assets at the lower of cost or fair value if impaired. We evaluate the recoverability of our investment in real estate whenever events or changes in circumstances indicate that the carrying amount
of an asset may be impaired. Our assessment of recoverability of our real estate assets includes, but is not limited to recent operating results, expected cash flows and our plans for future operations.



We segregate properties classified as held for sale are segregated from rental real estate in
our financial statement presentation. We stop recording depreciation on a property once it is classified as held for sale.



On January 1, 2002, we adopted Statement of Financial Accounting Standards (SFAS) SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets which requires that the assets and liabilities and the results of operations of any properties which have been sold during 2002, or otherwise qualify as held for sale as of December 31, 2002, be presented as discontinued operations in
our consolidated financial statements in both current and prior periods presented. The property specific real estate classified as held for sale is stated at the lower of its carrying amount or estimated fair value less disposal costs.



In accordance with SFAS No. 144, we carry our investments in real estate at cost and are
periodically evaluate them for indicators of impairment. The evaluation of impairment and the determination of values are based on several factors, and future events could occur which would cause management to conclude that indicators of impairment
exist and a reduction in carrying value to estimated fair value is warranted.



Critical Accounting Estimates. We believe the critical accounting estimates we make relate to the valuation of our properties for impairment and legal and other contingencies. We believe these estimates are judgmental and not subject
to strict, quantifiable analysis. As appropriate, we engage counsel and other parties, to assist us in making these estimates.



New Accounting Pronouncements



In December 2004, the FASB issued SFAS No. 123 (R), Share-Based Compensation. It replaces SFAS No. 123, Accounting for Stock Issued to Employees.
SFAS No. 123 (R) requires the compensation cost relating to share-based payment transactions be recognized in financial statements. It is required to be applied by us beginning January 1, 2006, and applies to options which vest on or after that
date. All options we have issued to date have completely vested by February 2005 and under our current option plan, we are able to issue additional options to purchase 4,996 shares. We do not anticipate issuing any options during 2005. Further,
under stock exchange rules, we must submit any plan for additional options for stockholder approval; we do not expect to submit a plan for stockholder approval during 2005. To the extent we do not propose a new option plan, we do not expect the
adoption of SFAS 123(R) to have a material adverse impact on our net income and net income per share.



In December 2004, the FASB issued SFAS No. 153, Exchange of Nonmonetary Assets, an amendment of APB Opinion No. 29. The amendments made by SFAS No. 153 are based on the principle that exchanges of
nonmonetary assets should be measured on the fair value of assets exchanged. The statement eliminates the exception for nonmonetary exchanges of similar productive assets and replaces it with a broader exception for exchanges of nonmonetary assets
that do not have commercial substance.



34



---

##### Table of Contents

The statement is effective for nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005 and we do
not expect the adoption of SFAS No. 153 to have a material effect on our financial statements.



Off-Balance Sheet Arrangements



We have
no off-balance sheet arrangements



35



---

##### Table of Contents

ITEM 7. FINANCIAL STATEMENTS



|                                                                                               |  |     
|---------------------------------------------------------------------------------------------- |  | ----
|                                                                                               |  | Page
|BDO Seidman, LLP, Independent Registered Public Accounting Firm                                |  | 37  
|                                                                                               | 
|Consolidated Balance Sheets - December 31, 2004 and 2003                                       |  | 38  
|                                                                                               | 
|Consolidated Statements of Income for the years ended December 31, 2004 and 2003               |  | 39  
|                                                                                               | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2004 and 2003           |  | 40  
|                                                                                               | 
|Consolidated Statements of Stockholders Equity for the years ended December 31, 2004 and 2003 |  | 41  
|                                                                                               | 
|Summary of Accounting Policies                                                                 |  | 42  
|                                                                                               | 
|Notes to Consolidated Financial Statements                                                     |  | 46  



36



---

##### Table of Contents

REPORT OF BDO SEIDMAN, LLP,Independent Registered Public Accounting Firm



To the Board of Directors and Stockholders of Meredith Enterprises, Inc.

Menlo Park, California



We have audited the accompanying consolidated balance sheets of Meredith Enterprises, Inc.
(the Company, formerly West Coast Realty Investors, Inc.) as of December 31, 2004 and 2003 and the related consolidated statements of income, cash flows and stockholders equity for the years then ended. These consolidated financial
statements and schedules are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.



We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedules are free of material misstatement. The Company has determined that it is
not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements and schedules, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements and schedules. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Meredith Enterprises, Inc., at December 31, 2004 and 2003 and the results of its
operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.



/s/ BDO SEIDMAN, LLP



San Francisco, California

February 11, 2005



37



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                          |  |      |            |   |      |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|December 31,                                                                                                                                                              |  | 2004 |            |   | 2003 |  
|Assets                                                                                                                                                                    |  |      |            |   |      |   |            |  
|                                                                                                                                                                          |  |     
|Rental real estate, less accumulated depreciation (Notes 2 and 4)                                                                                                         |  | $    | 44,515,439 |   |      | $ | 43,957,479 |  
|Rental real estate held for sale, net (Notes 2 and 4)                                                                                                                     |  |      | 1,602,432  |   |      |   | 4,098,703  |  
|Other assets  rental real estate held for sale                                                                                                                           |  |      | 30,618     |   |      |   | 17,688     |  
|Construction in progress (Note 2)                                                                                                                                         |  |      | 4,429,801  |   |      |   |           |  
|Land held for development (Note 2)                                                                                                                                        |  |      |           |   |      |   | 2,691,331  |  
|Cash and cash equivalents                                                                                                                                                 |  |      | 1,660,748  |   |      |   | 4,699,052  |  
|Deferred rent, net of allowance of $339,670 and $0 in 2004 and 2003, respectively                                                                                         |  |      | 543,979    |   |      |   | 515,644    |  
|Accounts receivable, net of allowance of $77,029 and $25,079 in 2004 and 2003, respectively                                                                               |  |      | 105,094    |   |      |   | 115,223    |  
|Loan origination fees, net of accumulated amortization of $199,768 and $130,001 in 2004 and 2003, respectively                                                            |  |      | 545,281    |   |      |   | 615,048    |  
|Other assets                                                                                                                                                              |  |      | 874,918    |   |      |   | 667,197    |  
|                                                                                                                                                                          |  |      |            |   |      |   |            |  
|Total assets                                                                                                                                                              |  | $    | 54,308,310 |   |      | $ | 57,377,365 |  
|                                                                                                                                                                          |  |      |            |   |      |   |            |  
|Liabilities and Stockholders Equity                                                                                                                                      |  |      |            |   |      |   |            |  
|                                                                                                                                                                          |  |     
|Liabilities                                                                                                                                                               |  |      |            |   |      |   |            |  
|Notes payable secured by rental real estate (Note 6)                                                                                                                      |  | $    | 34,432,882 |   |      | $ | 36,878,369 |  
|Notes payable secured by rental real estate held for sale (Note 6)                                                                                                        |  |      | 1,057,213  |   |      |   | 1,608,147  |  
|Accounts payable and accrued liabilities                                                                                                                                  |  |      | 931,040    |   |      |   | 805,887    |  
|Security deposits and prepaid rent                                                                                                                                        |  |      | 223,888    |   |      |   | 225,272    |  
|Other liabilities  rental real estate held for sale                                                                                                                      |  |      | 14,168     |   |      |   | 28,666     |  
|                                                                                                                                                                          |  |      |            |   |      |   |            |  
|Total liabilities                                                                                                                                                         |  |      | 36,659,191 |   |      |   | 39,546,341 |  
|                                                                                                                                                                          |  |      |            |   |      |   |            |  
|Commitments and contingencies(Note 10)                                                                                                                                    |  |      |            |   |      |   |            |  
|                                                                                                                                                                          |  |     
|Stockholders equity (Note 5)                                                                                                                                             |  |      |            |   |      |   |            |  
|Common stock $.01 par value; 4,000,000 and 15,000,000 shares authorized; 976,965 and 975,298 shares issued and outstanding as of December 31,
2004 and 2003, respectively |  |      | 9,770      |   |      |   | 9,753      |  
|Preferred stock; $.01 par value; 1,000,000 and 0 shares authorized; 0 shares issued and outstanding as of December 31, 2004 and 2003,
respectively                        |  |      |           |   |      |   |           |  
|Treasury stock at cost; 8,000 and 0 shares at December 31, 2004 and 2003, respectively                                                                                    |  |      | (108,160   | ) |      |   |           |  
|Additional paid-in capital                                                                                                                                                |  |      | 27,193,876 |   |      |   | 27,157,247 |  
|Dividends in excess of retained earnings                                                                                                                                  |  |      | (9,446,367 | ) |      |   | (9,335,976 | )
|                                                                                                                                                                          |  |      |            |   |      |   |            |  
|Total stockholders equity                                                                                                                                                |  |      | 17,649,119 |   |      |   | 17,831,024 |  
|                                                                                                                                                                          |  |      |            |   |      |   |            |  
|Total liabilities and stockholders equity                                                                                                                                |  | $    | 54,308,310 |   |      | $ | 57,377,365 |  
|                                                                                                                                                                          |  |      |            |   |      |   |            |  



See accompanying
summary of accounting policies and notes to consolidated financial statements.



38



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



CONSOLIDATED STATEMENTS OF INCOME



|                                                     |  |      |           |   |      |   |           |  
|---------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|Years ended December 31,                             |  | 2004 |           |   | 2003 |  
|Revenues                                             |  |      |           |   |      |   |           |  
|Rental (Notes 2 and 4)                               |  | $    | 6,829,383 |   |      | $ | 6,748,552 |  
|Tenant reimbursements                                |  |      | 1,023,231 |   |      |   | 1,174,842 |  
|Interest                                             |  |      | 13,438    |   |      |   | 10,244    |  
|                                                     |  |      |           |   |      |   |           |  
|                                                     |  |      | 7,866,052 |   |      |   | 7,933,638 |  
|                                                     |  |      |           |   |      |   |           |  
|Cost and expenses                                    |  |      |           |   |      |   |           |  
|Interest                                             |  |      | 2,367,319 |   |      |   | 2,627,489 |  
|General and administrative                           |  |      | 1,399,895 |   |      |   | 1,458,873 |  
|Depreciation                                         |  |      | 1,209,684 |   |      |   | 1,028,510 |  
|Ground rent (Note 10)                                |  |      | 930,264   |   |      |   | 922,698   |  
|Operating                                            |  |      | 845,621   |   |      |   | 987,462   |  
|Property tax                                         |  |      | 536,459   |   |      |   | 500,399   |  
|                                                     |  |      |           |   |      |   |           |  
|                                                     |  |      | 7,289,242 |   |      |   | 7,525,431 |  
|                                                     |  |      |           |   |      |   |           |  
|Income from continuing operations                    |  |      | 576,810   |   |      |   | 408,207   |  
|                                                     |  |      |           |   |      |   |           |  
|Income (loss) from discontinued operations (Note 3): |  |      |           |   |      |   |           |  
|Gain on sale of rental real estate held for sale     |  |      | 344,314   |   |      |   | 2,123,499 |  
|Loss from discontinued operations                    |  |      | (59,967   | ) |      |   | (89,102   | )
|                                                     |  |      |           |   |      |   |           |  
|Net income                                           |  | $    | 861,157   |   |      | $ | 2,442,604 |  
|                                                     |  |      |           |   |      |   |           |  
|Net income per sharebasic (Note 1):                 |  |      |           |   |      |   |           |  
|Income from continuing operations                    |  | $    | 0.59      |   |      | $ | 0.42      |  
|Discontinued operations:                             |  |      |           |   |      |   |           |  
|Gain on sale of rental real estate held for sale     |  | $    | 0.35      |   |      | $ | 2.18      |  
|Loss from discontinued operations                    |  | $    | (0.06     | ) |      | $ | (0.10     | )
|                                                     |  |      |           |   |      |   |           |  
|Net income per share- Basic                          |  | $    | 0.88      |   |      | $ | 2.50      |  
|                                                     |  |      |           |   |      |   |           |  
|Weighted average shares outstanding - Basic          |  |      | 974,089   |   |      |   | 975,298   |  
|                                                     |  |      |           |   |      |   |           |  
|Net income per share diluted (Note 1):              |  |      |           |   |      |   |           |  
|Income from continuing operations                    |  | $    | 0.57      |   |      | $ | 0.41      |  
|Discontinued operations:                             |  |      |           |   |      |   |           |  
|Gain on sale of rental real estate held for sale     |  | $    | 0.34      |   |      | $ | 2.12      |  
|Loss from discontinued operations                    |  | $    | (0.06     | ) |      | $ | (0.09     | )
|                                                     |  |      |           |   |      |   |           |  
|Net income per share - Diluted                       |  | $    | 0.85      |   |      | $ | 2.44      |  
|                                                     |  |      |           |   |      |   |           |  
|Weighted average shares outstanding - Diluted        |  |      | 1,010,428 |   |      |   | 1,002,167 |  
|                                                     |  |      |           |   |      |   |           |  



See accompanying
summary of accounting policies and notes to consolidated financial statements.



39



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                    |  |      |            |   |      |   |            |  
|----------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|Years ended December 31,                                                            |  | 2004 |            |   | 2003 |  
|Cash flows from operating activities                                                |  |      |            |   |      |   |            |  
|                                                                                    |  |     
|Net income                                                                          |  | $    | 861,157    |   |      |   | 2,442,604  |  
|                                                                                    |  |     
|Adjustments to reconcile net income to net cash provided by operating activities:   |  |      |            |   |      |   |            |  
|Depreciation expense                                                                |  |      | 1,209,684  |   |      |   | 1,085,458  |  
|Interest expense due to amortization of loan origination fees                       |  |      | 69,767     |   |      |   | 87,849     |  
|Impairment adjustment to property carrying value                                    |  |      | 167,568    |   |      |   |           |  
|Gain on sale of rental real estate held for sale                                    |  |      | (344,314   | ) |      |   | (2,123,499 | )
|Expense on treasury stock transaction                                               |  |      | 19,560     |   |      |   |           |  
|Increase (decrease) in cash flows from changes in operating assets and liabilities: |  |      |            |   |      |   |            |  
|Deferred rent                                                                       |  |      | (28,335    | ) |      |   | (24,448    | )
|Accounts receivable                                                                 |  |      | 10,129     |   |      |   | 87,222     |  
|Other assets                                                                        |  |      | (204,493   | ) |      |   | (39,994    | )
|Other assets- rental real estate held for sale                                      |  |      | 83,842     |   |      |   | 463,345    |  
|Accounts payable and accrued liabilities                                            |  |      | 125,153    |   |      |   | (101,753   | )
|Due to related party                                                                |  |      |           |   |      |   | (30,077    | )
|Security deposits and prepaid rent                                                  |  |      | 13,409     |   |      |   | (119,336   | )
|Other liabilities - rental real estate held for sale                                |  |      | (29,291    | ) |      |   | (47,581    | )
|                                                                                    |  |      |            |   |      |   |            |  
|Net cash provided by operating activities                                           |  |      | 1,953,836  |   |      |   | 1,679,790  |  
|                                                                                    |  |      |            |   |      |   |            |  
|Cash flows from investing activities                                                |  |      |            |   |      |   |            |  
|Capital expenditures on rental real estate                                          |  |      | (78,941    | ) |      |   | (491,216   | )
|Payments for construction in progress                                               |  |      | (1,738,470 | ) |      |   |           |  
|Purchase of rental real estate                                                      |  |      |           |   |      |   | (1,505,988 | )
|Purchases of land held for development                                              |  |      |           |   |      |   | (2,691,331 | )
|Proceeds from sale of rental real estate                                            |  |      | 884,314    |   |      |   | 7,606,115  |  
|                                                                                    |  |      |            |   |      |   |            |  
|Net cash (used in) provided by investing activities                                 |  |      | (933,097   | ) |      |   | 2,917,580  |  
|                                                                                    |  |      |            |   |      |   |            |  
|Cash flows from financing activities                                                |  |      |            |   |      |   |            |  
|Dividends                                                                           |  |      | (971,548   | ) |      |   | (1,121,594 | )
|Proceeds from notes payable                                                         |  |      | 772,497    |   |      |   | 1,500,000  |  
|Payments on notes payable secured by rental real estate                             |  |      | (3,217,984 | ) |      |   | (468,601   | )
|Payments on notes payable secured by rental real estate held for sale               |  |      | (550,934   | ) |      |   | (3,714,422 | )
|Payments for purchase of treasury stock                                             |  |      | (270,400   | ) |      |   |           |  
|Proceeds from sale of treasury stock                                                |  |      | 162,240    |   |      |   |           |  
|Proceeds from exercise of stock options                                             |  |      | 17,086     |   |      |   |           |  
|Increase in loan origination fees                                                   |  |      |           |   |      |   | (17,624    | )
|                                                                                    |  |      |            |   |      |   |            |  
|Net cash used in financing activities                                               |  |      | (4,059,043 | ) |      |   | (3,822,241 | )
|                                                                                    |  |      |            |   |      |   |            |  
|Net (decrease) increase in cash and cash equivalents                                |  |      | (3,038,304 | ) |      |   | 775,129    |  
|Cash and cash equivalents, beginning of year                                        |  |      | 4,699,052  |   |      |   | 3,923,923  |  
|                                                                                    |  |      |            |   |      |   |            |  
|Cash and cash equivalents, end of year                                              |  | $    | 1,660,748  |   |      | $ | 4,699,052  |  
|                                                                                    |  |      |            |   |      |   |            |  



See accompanying
summary of accounting policies and notes to consolidated financial statements.



40



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Years Ended December 31, 2004 and 2003



|                                              |  |              |  |                |       |        |                           |   |                                       |   |          |       |  |   |            |  |   |             |   |  |   |            |  
|--------------------------------------------- |  | ------------ |  | -------------- | ----- | ------ | ------------------------- | - | ------------------------------------- | - | -------- | ----- |  | - | ---------- |  | - | ----------- | - |  | - | ---------- | -
|                                              |  | Common Stock |  | Treasury Stock |       |        | AdditionalPaid in Capital |   | Dividends inExcess ofRetainedEarnings |   |          | Total | 
|                                              |  | Shares       |  | Amount         |       | Shares |                           |   | Amount                                |   |          |       | 
|Balance, December 31, 2002                    |  | 975,298      |  | $              | 9,753 |        |                          |   |                                       | $ |         |       |  | $ | 27,157,247 |  | $ | (10,656,986 | ) |  | $ | 16,510,014 |  
|Net income                                    |  |             |  |                |      |        |                          |   |                                       |   |         |       |  |   |           |  |   | 2,442,604   |   |  |   | 2,442,604  |  
|Dividends declared ($1.15 per share) (Note 1) |  |             |  |                |      |        |                          |   |                                       |   |         |       |  |   |           |  |   | (1,121,594  | ) |  |   | (1,121,594 | )
|                                              |  |              |  |                |       |        |                           |   |                                       |   |          |       |  |   |            |  |   |             |   |  |   |            |  
|Balance, December 31, 2003                    |  | 975,298      |  |                | 9,753 |        |                          |   |                                       |   |         |       |  |   | 27,157,247 |  |   | (9,335,976  | ) |  |   | 17,831,024 |  
|Net income                                    |  |             |  |                |      |        |                          |   |                                       |   |         |       |  |   |           |  |   | 861,157     |   |  |   | 861,157    |  
|Dividends declared ($1.00 per share) (Note 1) |  |             |  |                |      |        |                          |   |                                       |   |         |       |  |   |           |  |   | (971,548    | ) |  |   | (971,548   | )
|Options exercised                             |  | 1,667        |  |                | 17    |        |                          |   |                                       |   |         |       |  |   | 17,069     |  |   |            |   |  |   | 17,086     |  
|Purchase of treasury stock                    |  |             |  |                |      |        | 20,000                    |   |                                       |   | (270,400 | )     |  |   |           |  |   |            |   |  |   | (270,400   | )
|Sale of treasury stock                        |  |             |  |                |      |        | (12,000                   | ) |                                       |   | 162,240  |       |  |   | 19,560     |  |   |            |   |  |   | 181,800    |  
|                                              |  |              |  |                |       |        |                           |   |                                       |   |          |       |  |   |            |  |   |             |   |  |   |            |  
|Balance, December 31, 2004                    |  | 976,965      |  | $              | 9,770 |        | 8,000                     |   |                                       | $ | (108,160 | )     |  | $ | 27,193,876 |  | $ | (9,446,367  | ) |  | $ | 17,649,119 |  
|                                              |  |              |  |                |       |        |                           |   |                                       |   |          |       |  |   |            |  |   |             |   |  |   |            |  



See accompanying
summary of accounting policies and notes to consolidated financial statements.



41



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



SUMMARY OF ACCOUNTING POLICIES



Business



Meredith Enterprises, Inc. (formerly West Coast Realty Investors, Inc.) was originally
organized in October 1989 under the laws of the State of Delaware. We have elected tax status as a Real Estate Investment Trust (REIT) for federal and state income tax purposes since 1991. Our portfolio consists of light industrial,
retail, suburban office properties and a restaurant property. As of December 31, 2004, all of our properties were located in California and Georgia, and we did not own any residential properties. Most of our leases are triple-net leases
where the tenant is responsible for maintenance, taxes and insurance, either by directly paying such costs or reimbursing us for those costs through additional rental payments.



Rental Real Estate, Rental Real Estate Held for Sale and Depreciation



Assets are stated at lower of cost or net realizable value. Depreciation is computed using the straight-line method over the assets
estimated useful lives of 31.5 to 39 years, or the term of the lease for tenant improvements, if shorter, for financial reporting purposes.



In the event that facts and circumstances indicate that the cost of an asset may be impaired, an evaluation of recoverability would be performed. If an evaluation is
required, the estimated future undiscounted cash flows associated with the asset would be compared to the carrying amount to determine if a write-down to fair value is required.



Real estate classified as held for sale is stated at the lower of its carrying amount or estimated fair value less disposal
costs. Depreciation is not recorded on assets classified as held for sale. If we determine that we should no longer classify an asset as held for sale, we recompute depreciation such that the accumulated depreciation on the asset at the
time of the reclassification is the same as if it were never classified as held for sale.



In the normal course of business, we may receive offers for sale of our properties, either solicited or unsolicited. For those offers that are accepted, the prospective buyer will usually require a due diligence
period before consummation of the transaction. It is not unusual for matters to arise that result in the withdrawal or rejection of the offer during this process. As a result, real estate is not classified as held for sale until it is
likely, in the opinion of management, that a property will be disposed of in the near term, even if sales negotiations for such property are currently under way. Properties classified as held for sale are segregated from rental real estate in our
financial statement presentation. As of December 31, 2004, there was one property classified as held for sale, as they were listed for sale with real estate brokers and we believed there was a high likelihood of sale in the near term.
There can be no assurance that the properties held for sale will be sold in the near term, at prices we consider acceptable, or at all.



Rental Income, Operating Expense and Capitalized Costs



We recognize rental revenue on a straight-line basis to the extent that rental revenue is deemed collectible. Percentage rents in the two years ended December 31, 2004
were immaterial, and recognized when received. We capitalize improvements and betterments that increase the value of the property or extend its useful life.



42



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



SUMMARY OF ACCOUNTING POLICIES



Acquisition Costs



We expense internal acquisition costs, in accordance with Emerging Issues Task Force 97-11, Accounting for Internal Costs Relating to Real Estate Property
Acquisitions.



Loan Origination Fees



Loan origination fees are capitalized and amortized over the life of the loan and are
included in interest expense or construction in progress if the funds from the loan is used for construction in progress.



Cash and Cash Equivalents



We consider cash in the bank, liquid money market funds and all highly liquid certificates of deposit, with original maturities of three months of less, to be cash and
cash equivalents. We place funds in what we believe are creditworthy, high-quality financial institutions. Cash and cash equivalent balances are held with various financial institutions and at times exceeds the Federal Deposit Insurance Corporation
limit of $100,000.



Consolidation



The accompanying consolidated financial statements include the accounts of Meredith
Enterprises, Inc. and other subsidiaries that hold title to individual properties. All significant intercompany balances and transactions have been eliminated in consolidation. Included in the accompanying consolidated financial statements are the
assets of wholly owned entities whose assets are not available to satisfy debts and other obligations other than those incurred by such entities.



Use of Estimates



The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Our significant
estimates include the assessment of fair value on property held for investment and or for sale. It is reasonably possible that actual results could be materially different than our estimates.



Net Income Per Share



We calculate net income per share by dividing the net income by the weighted average number of shares outstanding for the period. In 2004
and 2003, we granted stock options, and their dilutive effect, if any, is included in our calculation of net income per shares.



43



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



SUMMARY OF ACCOUNTING POLICIES



Comprehensive Income



Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income, as promulgated by the Financial Accounting Standards Board
(FASB), establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. Comprehensive income is comprised of net income and all changes to
stockholders equity except those due to investments by owners and distributions to owners. We do not have any components of comprehensive income in the years ended December 31, 2004, and 2003, other than net income.



Reclassifications



Certain reclassifications have been made to the prior years financial statements for our properties held for sale, to conform to the
presentation of the current years financial statements.



Descriptive
Information About Reportable Segments



Statement of Financial Accounting
Standards No. 131, Disclosures about Segments of an Enterprise and Related Information requires certain descriptive information to be provided about an enterprises reportable segments. We have determined that we have one operating
and reportable segment, rental real estate and rental real estate held for sale, which comprised 93% and 88% of our total assets at December 31, 2004 and 2003, respectively and over 99.8% of our total revenues (including discontinued operations) for
the two years ended December 31, 2004 and 2003. All the rental real estate we own is located in California and Georgia. We do not use reporting by geographic region.



All revenues are from external customers, and there are no revenues from transactions with other segments. See Note 2 for tenants that
contributed 10% or more of our total revenues for the years ended December 31, 2004 and 2003. Interest expense on debt is not allocated to individual properties, even if such debt is secured by a specific property. Because we are organized as a
REIT, we owe no federal or state income taxes and have accordingly made no provision for those taxes; see Note 7.



New Accounting Pronouncements



In December 2004, the FASB issued SFAS No. 123 (R), Share-Based Compensation. It replaces SFAS No. 123, Accounting for Stock Issued to Employees.
SFAS No. 123 (R) requires the compensation cost relating to share-based payment transactions be recognized in financial statements. It is required to be applied by us beginning January 1, 2006, and applies to options which vest on or after that
date. All options we have issued to date have completely vested by February 2005 and under our current option plan, we are able to issue additional options to purchase 4,996 shares. We do not anticipate issuing any options during 2005. Further,
under stock exchange rules, we must submit any plan for additional options for stockholder approval; we do not expect to submit a plan for stockholder approval during 2005. To the extent we do not propose a new option plan, we do not expect the
adoption of SFAS 123(R) to have a material adverse impact on our net income and net income per share.



In December 2004, the FASB issued SFAS No. 153, Exchange of Nonmonetary Assets, an amendment of APB Opinion No. 29. The amendments made by SFAS No. 153 are based on the principle that exchanges of
nonmonetary assets should be measured on the fair value of assets exchanged. The



44



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



SUMMARY OF ACCOUNTING POLICIES



statement eliminates the exception for nonmonetary exchanges of similar productive assets and replaces it with a broader exception for
exchanges of nonmonetary assets that do not have commercial substance. The statement is effective for nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005 and we do not expect the adoption of SFAS No. 153 to have a
material effect on our financial statements.



45



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1NET
INCOME AND DIVIDENDS PER SHARE



Dividends are declared by the board of
directors and based on a variety of factors, including the previous quarters net (loss) income from operations before depreciation and amortization, cash requirements to meet REIT distribution tests, other cash requirements and other factors
as the board of directors deems appropriate.



We computed net income per share
using the weighted average number of outstanding shares of 1,010,428 and 1,002,167 for the years ended December 31, 2004 and 2003, respectively. In 2004 and 2003, we granted options to purchase our common stock, and the dilutive effect is included
in the weighted average shares in 2004 and 2003 used to compute diluted net income per share.



The 2002 Stock Incentive Plan provides for the issuance of incentive stock options, non-qualified stock options, restricted shares and other grants. The maximum number of shares that may be issued under the plan is
150,000. The option price may not be less than the fair market value of a share on the date that the option is granted, and the options generally vest either immediately or over two years.



Our stockholders approved and adopted the 2002 Stock Incentive Plan in September 2002.
Changes in options outstanding during the twelve months ended December 31, 2004 and 2003 were as follows:



|                                                                                                       |  |                   |         |   |                              |   |       
|------------------------------------------------------------------------------------------------------ |  | ----------------- | ------- | - | ---------------------------- | - | ------
|                                                                                                       |  | Sharesunderoption |         |   | Weightedaverageexerciseprice
|Balance at December 31, 2002                                                                           |  |                   |        |   |                              |   |      
|Granted                                                                                                |  |                   | 91,669  |   |                              | $ | 10.25 
|Exercised                                                                                              |  |                   |        |   |                              |   |      
|Cancelled                                                                                              |  |                   |        |   |                              |   |      
|                                                                                                       |  |                   |         |   |                              |   |       
|Balance at December 31, 2003                                                                           |  |                   | 91,669  |   |                              | $ | 10.25 
|Granted                                                                                                |  |                   | 53,335  |   |                              | $ | 16.00 
|Exercised                                                                                              |  |                   | (1,667  | ) |                              | $ | 10.25 
|Cancelled                                                                                              |  |                   |        |   |                              |   |      
|                                                                                                       |  |                   |         |   |                              |   |       
|Balance at December 31, 2004                                                                           |  |                   | 143,337 |   |                              | $ | 12.39 
|                                                                                                       |  |                   |         |   |                              |   |       
|Exercisable                                                                                            |  |                   | 132,086 |   |                              | $ | 12.08 
|                                                                                                       |  |                   |         |   |                              |   |       
|Shares available for future grants at December 31, 2004 and 2003, respectively                         |  |                   | 4,996   |   |                              |   | 58,331
|                                                                                                       |  |                   |         |   |                              |   |       
|Estimated fair value of options granted during the year ended December 31, 2004 and 2003, respectively |  | $                 | 1.80    |   |                              | $ | 0.32  
|                                                                                                       |  |                   |         |   |                              |   |       



At December 31, 2004, the weighted
average exercise price of exercisable shares under option was $12.08. The exercise price of all options granted in the year ended December 31, 2004 was equal to the market price on the date of grant. The options expire in 2013 and 2014, and the
weighted average remaining contractual life of these options is approximately 9 years.



46



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Pro forma information regarding net income and earnings per share required by SFAS No. 148 was determined as if we had accounted for the
employee and non-employee director stock options granted in the period ended December 31, 2004 under the fair value method of that Statement. The fair value for these options was estimated as of the date of grant using a Black-Scholes option pricing
model, with the following weighted average assumptions for the twelve months December 31, 2004 and 2003:



|                             |  |          |   |  |          |  
|---------------------------- |  | -------- | - |  | -------- | -
|                             |  | 2004     |   |  | 2003     |  
|Risk-free interest rate      |  | 4.00     | % |  | 3.90     | %
|Dividend yield               |  | 6.40     | % |  | 10.80    | %
|Volatility                   |  | 24.00    | % |  | 22.00    | %
|Weighted average option life |  | 10 years |   |  | 10 years |  



The Black-Scholes option-pricing model
was developed for use in estimating the fair market value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected
stock price volatility. Because the above stock option plans have characteristics significantly different from those of traded options, and because, in managements opinion, changes in the subjective input assumptions can materially affect the
fair value estimate, the existing models do not necessarily provide a reliable single measure of the fair value of the above stock option plans.



For purposes of pro forma disclosures, the estimated fair value of the options is amortized over the options vesting periods. Our pro forma information, as if we
had adopted SFAS No. 123 as discussed above, follows:



|                                                                                           |  |                                     |         |                                     |   |          
|------------------------------------------------------------------------------------------ |  | ----------------------------------- | ------- | ----------------------------------- | - | ---------
|                                                                                           |  | Twelve monthsended December 31,2004 |         | Twelve monthsended December 31,2003
|Net income, as reported                                                                    |  | $                                   | 861,157 |                                     | $ | 2,442,604
|Less  total stock-based compensation expense determined under the fair value based method |  |                                     | 75,793  |                                     |   | 29,509   
|                                                                                           |  |                                     |         |                                     |   |          
|Pro forma net income                                                                       |  | $                                   | 785,364 |                                     | $ | 2,413,095
|                                                                                           |  |                                     |         |                                     |   |          
|Net income per share:                                                                      |  |                                     |         |                                     |   |          
|Basic - as reported                                                                        |  | $                                   | 0.88    |                                     | $ | 2.50     
|                                                                                           |  |                                     |         |                                     |   |          
|Basic  pro forma                                                                          |  | $                                   | 0.81    |                                     | $ | 2.48     
|                                                                                           |  |                                     |         |                                     |   |          
|Diluted  as reported                                                                      |  | $                                   | 0.85    |                                     | $ | 2.44     
|                                                                                           |  |                                     |         |                                     |   |          
|Diluted - pro forma                                                                        |  | $                                   | 0.78    |                                     | $ | 2.41     
|                                                                                           |  |                                     |         |                                     |   |          



47



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The following table sets forth the computation of basic and diluted earnings per share with respect to net income:



|                                                                                |  |                                  |           |   |      |   |           |  
|------------------------------------------------------------------------------- |  | -------------------------------- | --------- | - | ---- | - | --------- | -
|                                                                                |  | Twelve months ended December 31, |          
|                                                                                |  | 2004                             |           |   | 2003 |  
|Numerator:                                                                      |  |                                  |           |   |      |   |           |  
|Net income from continuing operations                                           |  | $                                | 576,810   |   |      | $ | 408,207   |  
|Gain on sale of rental real estate held for sale                                |  |                                  | 344,314   |   |      |   | 2,123,499 |  
|Net loss from discontinued operations                                           |  |                                  | (59,967   | ) |      |   | (89,102   | )
|                                                                                |  |                                  |           |   |      |   |           |  
|Net income                                                                      |  | $                                | 861,157   |   |      | $ | 2,442,604 |  
|                                                                                |  |                                  |           |   |      |   |           |  
|Denominator for basic earnings per shares  weighted average shares             |  |                                  | 974,089   |   |      |   | 975,298   |  
|Effect of dilutive securities  stock options                                   |  |                                  | 36,339    |   |      |   | 26,869    |  
|                                                                                |  |                                  |           |   |      |   |           |  
|Denominator for diluted earnings per share adjusted for weighted average shares |  |                                  | 1,010,428 |   |      |   | 1,002,167 |  
|                                                                                |  |                                  |           |   |      |   |           |  
|Basic earnings per share:                                                       |  |                                  |           |   |      |   |           |  
|Net income from continuing operations                                           |  | $                                | 0.59      |   |      | $ | 0.42      |  
|Income per share from gain on sale of rental real estate held for sale          |  | $                                | 0.35      |   |      | $ | 2.18      |  
|Net income (loss) per share from discontinued operations                        |  | $                                | (0.06     | ) |      | $ | (0.10     | )
|                                                                                |  |                                  |           |   |      |   |           |  
|Basic earnings per share                                                        |  | $                                | 0.88      |   |      | $ | 2.50      |  
|                                                                                |  |                                  |           |   |      |   |           |  
|Diluted earnings per share:                                                     |  |                                  |           |   |      |   |           |  
|Net income from continuing operations                                           |  | $                                | 0.57      |   |      | $ | 0.41      |  
|Income per share from gain on sale of rental real estate held for sale          |  | $                                | 0.34      |   |      | $ | 2.12      |  
|Net (loss) income per share from discontinued operations                        |  | $                                | (0.06     | ) |      | $ | (0.09     | )
|                                                                                |  |                                  |           |   |      |   |           |  
|Diluted earnings per share                                                      |  | $                                | 0.85      |   |      | $ | 2.44      |  
|                                                                                |  |                                  |           |   |      |   |           |  



The tax status of dividends per share
for the years ended December 31, 2004 and 2003 follows:



|                        |  |      |      |      |   |     
|----------------------- |  | ---- | ---- | ---- | - | ----
|December 31,            |  | 2004 |      | 2003
|Taxable ordinary income |  | $    | 1.00 |      | $ | 0.08
|Taxable capital gains   |  |      |     |      |   | 0.86
|Return of capital       |  |      |     |      |   | 0.21
|                        |  |      |      |      |   |     
|                        |  | $    | 1.00 |      | $ | 1.15
|                        |  |      |      |      |   |     





48



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 2RENTAL REAL ESTATE



Our major categories of rental real estate are:



|                              |  |      |            |   |      |   |            |  
|----------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|December 31,                  |  | 2004 |            |   | 2003 |  
|Land                          |  | $    | 9,133,297  |   |      | $ | 8,319,091  |  
|Buildings and improvements    |  |      | 40,102,366 |   |      |   | 39,009,131 |  
|                              |  |      |            |   |      |   |            |  
|                              |  |      | 49,235,663 |   |      |   | 47,328,222 |  
|Less accumulated depreciation |  |      | (4,720,224 | ) |      |   | (3,370,743 | )
|                              |  |      |            |   |      |   |            |  
|Net rental real estate        |  | $    | 44,515,439 |   |      | $ | 43,957,479 |  
|                              |  |      |            |   |      |   |            |  



Our major categories of rental real
estate held for sale are:



|                                     |  |      |           |   |      |   |           |  
|------------------------------------ |  | ---- | --------- | - | ---- | - | --------- | -
|December 31,                         |  | 2004 |           |   | 2003 |  
|Land                                 |  | $    | 668,667   |   |      | $ | 1,747,804 |  
|Buildings and improvements           |  |      | 1,439,570 |   |      |   | 3,181,446 |  
|                                     |  |      |           |   |      |   |           |  
|                                     |  |      | 2,108,237 |   |      |   | 4,929,250 |  
|Less accumulated depreciation        |  |      | (505,805  | ) |      |   | (830,547  | )
|                                     |  |      |           |   |      |   |           |  
|Net rental real estate held for sale |  | $    | 1,602,432 |   |      | $ | 4,098,703 |  
|                                     |  |      |           |   |      |   |           |  



In addition, during 2003 we purchased
land that was held for future development, valued at its cost of $2,691,331 as of December 31, 2003. During 2004, we began the development of our Garden Grove Festival Center, a multi-tenant shopping center. As of December 31, 2004, we had
construction in progress, which includes land valued at its cost plus development expenditures, capitalized interest and accrued interest of $4,429,801. We estimate to have approximately $2,100,000 of additional development expenditures, to be
expended until the project is complete in late 2005 or early 2006. We expect to fund the development cost from the construction loan secured by our Garden Grove property (Banco Popular), land we begun to develop in Garden Grove and our 717 West Del
Paso Road property.



During 2004, one tenant represented 10% or more of our
total rental revenue including discontinued operations. During 2003, no one tenant represented 10% or more of our total rental revenue including discontinued operations, although one tenant represented 9%.



49



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 3DISCONTINUED OPERATONS



On January 1, 2002, we adopted SFAS No. 144, whereby net income (loss) and gain on sale of real estate for properties sold or considered held for sale are reflected in
our consolidated statements of income as discontinued operations for all periods presented. In addition, we have determined to separately reflect the assets and liabilities of properties held for sale or sold in the current period as
Rental real estate held for sale, Other assets-rental real estate held for sale, Notes payable secured by rental real estate held for sale and Other liabilities-rental real estate held for sale in the
balance sheets for all periods presented.



On September 30, 2003, we designated
the Chino property as held for sale and removed the Roseville property from the held for sale category. In August, November and December 2003, we sold our Vacaville, Chino and Cerritos properties, respectively, for a net gain of $2,123,499.



During the second quarter of 2004, we determined that the two Sacramento
properties (717 and 721 West Del Paso Road) and the Fresno property no longer met the required criteria for classification as held for sale. Accordingly, we removed them from that category in our financial statements. In September 2004, we sold our
Fresno property for a net gain of $344,314.



In accordance with SFAS No. 144,
we have reclassified the results of two Sacramento properties (717 and 721 West Del Paso Road) from discontinued operations to continuing operations, for all periods presented. As required, we computed depreciation expense on those properties as if
they have never been classified as held for sale, catching up the depreciation that was not expensed in prior periods. Further, results for the properties we have sold and the Riverside property that we have agreed to sell are included
in discontinued operations for the years ended December 31, 2004 and 2003 as follows:



|                                                             |  |      |         |   |      |   |           |  
|------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | --------- | -
|Years ended December 31,                                     |  | 2004 |         |   | 2003 |  
|Revenues                                                     |  |      |         |   |      |   |           |  
|Rental                                                       |  | $    | 325,931 |   |      | $ | 625,245   |  
|Tenant Reimbursements                                        |  |      | 34,550  |   |      |   | 56,664    |  
|Interest                                                     |  |      |        |   |      |   | 219       |  
|                                                             |  |      |         |   |      |   |           |  
|                                                             |  |      | 360,481 |   |      |   | 682,128   |  
|                                                             |  |      |         |   |      |   |           |  
|Cost and expenses                                            |  |      |         |   |      |   |           |  
|Interest                                                     |  |      | 122,475 |   |      |   | 544,424   |  
|General and administrative                                   |  |      | 79      |   |      |   | 193       |  
|Depreciation                                                 |  |      | 42,958  |   |      |   | 56,948    |  
|Operating                                                    |  |      | 78,872  |   |      |   | 128,995   |  
|Property tax                                                 |  |      | 8,496   |   |      |   | 40,670    |  
|Impairment loss                                              |  |      | 167,568 |   |      |   |          |  
|                                                             |  |      |         |   |      |   |           |  
|                                                             |  |      | 420,448 |   |      |   | 771,230   |  
|                                                             |  |      |         |   |      |   |           |  
|Loss before gain on sale of rental real estate held for sale |  |      | (59,967 | ) |      |   | (89,102   | )
|Gain on sale of real estate held for sale                    |  |      | 344,314 |   |      |   | 2,123,499 |  
|                                                             |  |      |         |   |      |   |           |  
|Net income from discontinued operations                      |  | $    | 284,347 |   |      | $ | 2,034,397 |  
|                                                             |  |      |         |   |      |   |           |  



50



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 3DISCONTINUED OPERATONS, Continued



In the year ended December 31, 2004, we recorded impairment write-downs on the Riverside property that totaled $167,568. As of December 31,
2004, we believe the Riverside property is properly valued in our accounts. This value is based on both the value of the property itself and the value of the future lease payments. The lease on this property expires in September 2005, thus without
an increase in the value of the property itself or a new lease, the value of the property may decrease in the future as the value of the future lease payments decrease as the expiration of the lease becomes closer in time.



NOTE 4FUTURE MINIMUM RENTAL INCOME



As of December 31, 2004, future minimum rental income under the existing leases for rental
real estate and rental real estate held for sale that have remaining noncancelable terms in excess of one year are as follows:



|                          |  |        |           
|------------------------- |  | ------ | ----------
|Years ending December 31, |  | Amount
|2005                      |  | $      | 6,184,550 
|2006                      |  |        | 4,902,469 
|2007                      |  |        | 3,995,526 
|2008                      |  |        | 2,786,926 
|2009                      |  |        | 2,123,259 
|Thereafter                |  |        | 10,562,348
|                          |  |        |           
|Total                     |  | $      | 30,555,078
|                          |  |        |           



Future minimum rental income does not
include lease renewals or new leases that may result after a noncancelable-lease expires.



NOTE 5RELATED PARTY TRANSACTIONS



We acquired 2.5 acres of land in March 2003 and intend to build an approximate 30,000 square foot shopping center on the land. The firm owned by Mr. Gary Coursey, one of our directors, provides architectural services for this project.
During 2004 and 2003, we paid $70,056 and $134,698, respectively, to Mr. Courseys firm.



In conjunction with the purchase of the Northlake Festival Shopping Center, we have retained Isakson-Barnhart Properties, Inc. as the property manager of that shopping center. Isakson-Barnhart Properties manages over
1.0 million square feet of retail and office space in Georgia, North Carolina and Tennessee. Mr. E. Andrew Isakson, one of our directors, is president of Isakson-Barnhart Properties, Inc. Under the property management agreement, Isakson-Barnhart
Properties manages, maintains and operates the shopping center for us. In return for its services, we pay a monthly property management fee to Isakson-Barnhart



51



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Properties equal to the greater of (a) 3% of the gross income of the property actually collected for that month or (b) $2,500. In addition,
we pay Isakson-Barnhart Properties a leasing commission, in the range of $2.00 to $4.50 per square foot depending on the size of the space and whether there is a co-broker, on new leases or expansion of current leases. We also pay a construction
maintenance fee of 5% of the total cost of tenant improvements or other construction where Isakson-Barnhart Properties supervises the project. Under this agreement, we paid Isakson-Barnhart Properties a total of $200,083 in 2004 and $239,145 in
2003. The agreement is renewable annually, and either party is allowed to terminate the agreement upon 30 days prior written notice to the other.



During October 2004, we purchased 20,000 shares of our common stock at the fair market value, plus brokerage commissions for a total of $13.52 per share. During November
2004, we sold 12,000 shares of our common stock at $13.52 to a company that is co-managed by Mr. Allen K. Meredith, our President and Chief Executive Officer. We recorded an expense of $19,560 related to that sale, which represents the difference
between the fair market value of our stock and the sales price on the date of sale. We and Mr. Meredith have entered into an agreement that Mr. Meredith or his affiliates will purchase the remaining 8,000 shares we hold as treasury stock at $13.52
per share, our cost for such shares, on or before March 31, 2005.



NOTE
6NOTES PAYABLE



Notes payable consist of the following:



|                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |      |           |      |   |          
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|December 31,                                                                                                                                                                                                                                                                                                                                                                                                                     |  | 2004 |           | 2003
|Notes payable secured by rental real estate:                                                                                                                                                                                                                                                                                                                                                                                     |  |      |           |      |   |          
|6.97% promissory note secured by our Folsom property, monthly principal and interest payments of $32,567 due September 1, 2009 with a balloon
payment of $4,479,793.                                                                                                                                                                                                                                                             |  | $    | 4,792,021 |      | $ | 4,846,690
|Variable rate interest only promissory note secured by our Garden Grove property (Banco Popular), land we have begun to develop in Garden
Grove and our 717 West Del Paso Road property. The note bears interest rate at prime plus 1.25% (6.25% At December 31, 2004), is due November 29, 2005 and is a construction loan for the improvements on the land we hold in Garden Grove under which we
may borrow up to $6,500,000. |  |      | 2,272,497 |      |   | 1,500,000
|6.97% promissory note secured by our Irvine property, monthly principal and interest payments of $25,105 due September 1, 2009 with a balloon
payment of $3,453,364.                                                                                                                                                                                                                                                             |  |      | 3,694,053 |      |   | 3,736,196



52



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 6 NOTES PAYABLE  continued



|                                                                                                                                                                                                                                                                                                                  |  |      |            |      |   |           
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|December 31,                                                                                                                                                                                                                                                                                                      |  | 2004 |            | 2003
|7.64% promissory note secured by our Atlanta, GA property (Northlake Festival Shopping Center), monthly principal and interest payments of
$124,753 fully amortizing with the final payment due December 1, 2027. Starting December 2010, year 13 of the note, the interest rate increases to a minimum of 9.64%. |  |      | 16,195,254 |      |   | 16,444,541
|7.50% promissory note secured by a deed of trust on the Ontario property, monthly principal and interest payments are $22,390, due March 1,
2004. We paid off this loan in March 2004.                                                                                                                            |  |      |           |      |   | 2,773,414 
|8.33% promissory note secured by our Roseville property, monthly principal and interest payments are $11,510 due July 1, 2008                                                                                                                                                                                     |  |      | 1,306,036  |      |   | 1,334,083 
|6.97% promissory note secured by our Sacramento property (Horn Road), monthly principal and interest payments of $11,276 due September 1, 2009
with a balloon payment of $1,551,049.                                                                                                                              |  |      | 1,659,152  |      |   | 1,678,080 
|6.97% promissory note secured by our Tustin property, monthly principal and interest payments of $30,677 due September 1, 2009 with a balloon
payment of $4,219,765.                                                                                                                                              |  |      | 4,513,869  |      |   | 4,565,365 
|                                                                                                                                                                                                                                                                                                                  |  |      |            |      |   |           
|Subtotal  notes payable secured by rental real estate                                                                                                                                                                                                                                                            |  |      | 34,432,882 |      |   | 36,878,369
|                                                                                                                                                                                                                                                                                                                  |  |      |            |      |   |           
|Notes payable secured by rental real estate held for sale:                                                                                                                                                                                                                                                        |  |      |            |      |   |           
|                                                                                                                                                                                                                                                                                                                  |  |     
|8.25% promissory note secured by our Fresno property. We sold this property September 27, 2004 and paid off the loan.                                                                                                                                                                                             |  |      |           |      |   | 529,520   
|8.25% promissory note secured by our Riverside property, monthly principal and interest payments are $9,116, due March 8, 2005. We are in
negotiations to extend the maturity date of this loan to June 2005.                                                                                                     |  |      | 1,057,213  |      |   | 1,078,627 
|                                                                                                                                                                                                                                                                                                                  |  |      |            |      |   |           
|Subtotal  notes payable secured by rental real estate held for sale                                                                                                                                                                                                                                              |  |      | 1,057,213  |      |   | 1,608,147 
|                                                                                                                                                                                                                                                                                                                  |  |      |            |      |   |           
|Total notes payable                                                                                                                                                                                                                                                                                               |  | $    | 35,490,095 |      | $ | 38,486,516
|                                                                                                                                                                                                                                                                                                                  |  |      |            |      |   |           



The aggregate fair value of the notes
is approximately $37,047,520 and $40,800,000 for 2004 and 2003 respectively, based on current lending rates, which are the approximate industry lending rates on these types of properties and these locations.



During the year ended December 31, 2004 and 2003, we incurred interest expense of $2,367,319
and $2,627,489 and capitalized interest of $209,988 and $132,967, respectively.



Many of our notes payable contain significant penalties should we pay the loan prior to its scheduled maturity. Some of these notes also contain cross collateral provisions where the note holder has security rights against
properties other than the primary property securing the note.



53



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The aggregate annual future maturities at December 31, 2004 of notes payable secured by rental real estate and notes payable secured by
rental real estate held for sale are as follows:



|                          |  |        |           
|------------------------- |  | ------ | ----------
|Years ending December 31, |  | Amount
|2005                      |  | $      | 3,806,930 
|2006                      |  |        | 513,925   
|2007                      |  |        | 553,461   
|2008                      |  |        | 1,763,425 
|2009                      |  |        | 14,222,601
|Thereafter                |  |        | 14,629,753
|                          |  |        |           
|Total                     |  | $      | 35,490,095
|                          |  |        |           



NOTE 7TAXES ON INCOME



We have elected to be taxed as a REIT under Sections 856-860 of the
Internal Revenue Code of 1986, as amended (the Code) for federal income tax purposes. This requires, among a number of other organizational and operational requirements, that we distribute at least 90% of our taxable income (excluding
capital gains) to our stockholders. In addition, California and Georgia, the states in which we own and operate real estate properties have provisions equivalent to the federal REIT provisions. Accordingly, we have made no provision for federal or
state income taxes in the accompanying financial statements.



As of December
31, 2004, the gross basis in our assets for financial reporting purposes was approximately $8,656,000 lower than our basis for federal income tax purposes (unaudited). As of December 31, 2004, we had approximately $320,000 in capital loss
carry-forward.



At December 31, 2004, we do not pass the 90 percent
distribution requirement for dividends declared and paid during 2004. We declared a dividend in February 2005 and utilized IRC §858 to meet the 90 percent distribution requirement for the tax year 2004.



54



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 8SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION



A supplemental disclosure of cash flow information follows:



|                                                                                                        |  |      |           |      |   |          
|------------------------------------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|Years ended December 31,                                                                                |  | 2004 |           | 2003
|Cash paid during the period for interest                                                                |  | $    | 2,578,804 |      | $ | 3,086,935
|Supplemental disclosure of non-cash investing activities:                                               |  |      |           |      |   |          
|Transfer of assets to rental real estate held for sale                                                  |  |      |          |      | $ | 4,036,290
|Transfer of assets from rental real estate held for sale to rental real estate                          |  | $    | 1,623,757 |      | $ | 1,842,841
|Transfer of assets to other assets -rental real estate held for sale                                    |  |      |          |      | $ | 85,419   
|Transfer of assets from other assets -rental real estate held for sale to other assets                  |  | $    | 3,228     |      | $ | 194,201  
|Transfer of liabilities to other liabilities -rental real estate held for sale                          |  |      |          |      | $ | 38,947   
|Transfer of liabilities from other liabilities -rental real estate held for sale to other liabilities   |  | $    | 14,793    |      | $ | 23,773   
|Transfer of liabilities to notes payable secured by rental real estate held for sale                    |  |      |          |      | $ | 2,041,380
|Transfer of liabilities from notes payable secured by rental real estate held for sale to notes payable |  |      |          |      | $ | 1,359,897
|Transfer of land held for development to construction in progress                                       |  | $    | 2,691,331 |      |   |         



NOTE 9RETIREMENT PLAN



In 2003, we established a defined contribution retirement plan covering
all employees with more than three months of continuous full-time employment. In addition to employee elective deferrals, we matched 100% of the employees deferral up to 3% of the employees compensation. The aggregate amount contributed
and recognized as expense was $11,205 and $1,900 for the years ended December 31, 2004 and 2003, respectively.



NOTE 10COMMITMENTS AND CONTINGENCIES



We purchased the Northlake Festival Shopping Center in October 2002 and assumed the existing ground lease. The ground lease expires in October 2057, and any improvements on the property revert back to the ground lessor. The ground lease
provides for fixed rent and additional rent calculated on 7% of the gross rents received from tenants. The fixed rent may escalate based on appraisals, with the following limitations:



|                             |  |                                                                                                                        
|---------------------------- |  | -----------------------------------------------------------------------------------------------------------------------
|January 2005  October 2007  |  | Fixed at $600,000 per year                                                                                             
|November 2007  October 2032 |  | Subject to appraisal, but not less than $600,000 per year, nor more than $1,200,000 per year                           
|November 2032  October 2057 |  | Subject to appraisal, but not less than nor more than twice amount payable for the period November 2007 to October 2032



55



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



We have entered into a employment agreements with our President and Chief Executive Officer and Chief Financial Officer under which we would
be obligated to make severance payments to either or both of them upon their termination or resignation for certain reasons, of one years salary plus bonus, if any.



We and Mr. Allen K. Meredith, our President and Chief Executive Officer, have entered into an agreement that Mr. Meredith or his affiliates
will purchase the 8,000 shares we hold as treasury stock at $13.52 per share, our cost for such shares, on or before March 31, 2005.



We are a defendant in a lawsuit entitled John Lonberg & Ruthee Goldkorn v. Sanborn Theaters, Inc., a California Corporation Doing Business as Marketplace Cinema and
So-Cal Cinema, Inc., a California Corporation; and Salts-Troutman-Kaneshiro, Inc., West Coast Realty Investors, Inc., USDC Central District of California, Eastern Division Case No. CV-97-6598AHM (JGx). This is an Americans with Disabilities Act
claim brought against the Market Place Cinema, our property located in Riverside. We own the theater and have leased it to Sanborn Theaters, Inc., which operates it. Plaintiffs allege certain features of the theater discriminated against them and
violated state and federal disabled access laws. Plaintiffs demand statutory damages, damages for emotional distress, a lodestar multiplier, attorneys fees and punitive damages. Although Plaintiffs have not quantified their
damages, we expect that Plaintiffs claims will exceed $300,000. The United States Department of Justice has intervened in this suit. This case has now been stayed pending the outcome of a similar case filed against AMC Theaters. We cannot determine
the likelihood of an unfavorable outcome or range of potential loss, if any. We believe we have complied with all applicable provisions of law and intend to vigorously defend the allegations contained in the lawsuit. We believe that the lawsuit will
not have a material impact on our continuing operations, future cash flows or overall financial condition.



The tenant in our Ontario property, Adelphia Communications, Inc., has filed for bankruptcy protection. Presently, the rent is current. Several companies have claimed amounts due for remodeling work and other work
ordered by Adelphia on our property, and they have filed mechanics liens on our property. We have not yet determined the validity of these liens, and there may be defenses to these claims. If our lease with Adelphia is affirmed in the
bankruptcy proceeding, then Adelphia would be responsible for the discharge of these claims. If our lease with Adelphia is not affirmed in the bankruptcy proceeding, and the bankruptcy proceedings do not fully pay these creditors, then we would be
responsible for these claims to the extent they are valid, if at all. We believe that these liens will not have a material impact on our continuing operations or overall financial condition.



We lease our corporate office in Menlo Park and have committed to pay rent of approximately
$81,000 per year for 2005 and 2006. We lease office space and obtain related services in Los Angeles on a month-to-month basis at $1,000 per month.



NOTE 11LOAN ORIGINATION FEES



Loan origination fees are recorded at cost, less accumulated amortization. Gross loan origination fees as of December 31, 2004 and 2003 are $745,049, with accumulated
amortization of $199,768 and $130,001, respectively.



56



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The estimated future amortization expense is as follows:



|                          |  |        |        
|------------------------- |  | ------ | -------
|Years ending December 31, |  | Amount
|2005                      |  | $      | 69,768 
|2006                      |  |        | 69,768 
|2007                      |  |        | 69,768 
|2008                      |  |        | 69,768 
|2009                      |  |        | 48,192 
|Thereafter                |  |        | 218,017
|                          |  |        |        
|Total                     |  | $      | 545,281
|                          |  |        |        



NOTE 12QUARTERLY FINANCIAL
DATA (UNAUDITED)



Quarterly summary financial information follows:



For the year ending December 31, 2004:



|                                           |  |             |           |   |             |   |           |             |  |   |             |   |  |   |           |  
|------------------------------------------ |  | ----------- | --------- | - | ----------- | - | --------- | ----------- |  | - | ----------- | - |  | - | --------- | -
|                                           |  | 1st Quarter |           |   | 2nd Quarter |   |           | 3rd Quarter |  |   | 4th Quarter |  
|Total revenue                              |  | $           | 2,083,111 |   |             | $ | 1,979,101 |             |  | $ | 2,008,450   |   |  | $ | 1,795,390 |  
|Income (loss) from operations              |  | $           | 154,182   |   |             | $ | 200,492   |             |  | $ | 234,977     |   |  | $ | (12,841   | )
|Income (loss) from discontinued operations |  | $           | (3,391    | ) |             | $ | (47,876   | )           |  | $ | 328,334     |   |  | $ | 7,280     |  
|Net income (loss)                          |  | $           | 150,791   |   |             | $ | 152,616   |             |  | $ | 563,311     |   |  | $ | (5,561    | )
|Net income (loss) per share, diluted       |  | $           | 0.15      |   |             | $ | 0.15      |             |  | $ | 0.56        |   |  | $ | (0.01     | )
|                                           |  |             |           |  
|For the year ending December 31, 2003:     |  |             |           |   |             |   |           |             |  |   |             |   |  |   |           |  
|                                           |  |             |           |  
|                                           |  | 1st Quarter |           |   | 2nd Quarter |   |           | 3rd Quarter |  |   | 4th Quarter |  
|Total revenue                              |  | $           | 1,935,243 |   |             | $ | 1,967,286 |             |  | $ | 1,939,300   |   |  | $ | 2,091,809 |  
|Income (loss) from operations              |  | $           | 1,070     |   |             | $ | 54,657    |             |  | $ | (1,838      | ) |  | $ | 354,318   |  
|Income (loss) from discontinued operations |  | $           | (36,820   | ) |             | $ | 31,534    |             |  | $ | 349,433     |   |  | $ | 1,690,250 |  
|Net (loss) income                          |  | $           | (35,750   | ) |             | $ | 86,191    |             |  | $ | 347,595     |   |  | $ | 2,044,568 |  
|Net (loss) income per share, diluted       |  | $           | (0.04     | ) |             | $ | 0.08      |             |  | $ | 0.36        |   |  | $ | 2.04      |  



57



---

##### Table of Contents

MEREDITH ENTERPRISES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 13  SUBSEQUENT EVENTS



We are in negotiations with the lender to extend the maturity date of the note secured by our Riverside property to June 2005. The lender has offered to extend the term
of the loan to June 2005 in consideration of increasing the interest rate from 8.25% to 8.50% and our reducing the principal balance by $100,000. To date, we have not accepted this offer.



On February 1, 2005, the board of directors declared a dividend of $0.25 per common share to holders of record on February 15, 2005, payable
on March 1, 2005.



On January 31, 2005, we amended our lease for our corporate
office to extend the term for two years to January 2007 with monthly payments of approximately $7,000.



On January 9, 2005, the tenant in our Riverside property ceased operations at the site. Further, the tenant has not paid to date amounts due under the lease for January, February and March 2005.



Effective January 1, 2005, our contribution to our 401(k) plan increase to match 100% of the
first 3% of the employees contribution plus 50% of the next 2% of salary the employee contributes.



58



---

##### Table of Contents

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE



None.



ITEM 8A. CONTROLS AND PROCEDURES



As of December
31, 2004, the end of the fiscal year covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure
controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were
effective as of December 31, 2004.



To comply with Section 404 of the
Sarbanes-Oxley Act of 2002, we must furnish a report by our management on our internal control over financial reporting with our annual report on Form 10-KSB for our fiscal year ending December 31, 2006. The report will contain, among other matters,
an assessment of the effectiveness of our internal control over financial reporting as of the end of that fiscal year, including a statement as to whether or not our internal control over financial reporting is effective. This assessment must
include disclosure of any material weaknesses in our internal control over financial reporting. Material weakness in internal controls over financial reporting is defined as a significant deficiency, or a combination of significant
deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The report will also contain a statement that our auditors have issued an
attestation report on managements assessment of our internal controls. We currently expect to begin testing of our internal controls during the second quarter of fiscal 2006. This testing includes documenting our procedures and an analysis of
the segregation of duties. Because we currently have only four employees we may not be able to achieve an adequate segregation of duties without hiring additional personnel and incurring additional costs. In the course of our evaluation and testing
of internal controls, we may identify areas for improvement in the documentation, design and effectiveness of our internal controls, and these areas of improvement may be material. We cannot assure you that we will not disclose material weaknesses
we discover in the course of our testing.



Given the risks inherent in the
design and operation of internal controls over financial reporting, we can provide no assurance at this time regarding our conclusions, or regarding the conclusions of our independent auditor, as of December 31, 2006 with respect to the
effectiveness of our internal controls over financial reporting. In any event, we expect to incur material costs in complying with Section 404.



The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any
design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.



ITEM 8B. OTHER INFORMATION



None.



59



---

##### Table of Contents

PART III



ITEM 9. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT



Our directors, their ages and their principal business occupation for the last five years are as follows:



|                                                                              |  |     |  |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|----------------------------------------------------------------------------- |  | --- |  | ------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name                                                                          |  | Age |  | Term                |  | Position and Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Class III Directors - term expires at the 2005 Annual Meeting of Stockholders |  |    
|                                                                              |  |     | 
|Gary B. Coursey                                                               |  | 65  |  | June 2003-Present   |  | Director. Mr. Coursey has been the President of Gary B. Coursey and Associates, Inc. since its founding in 1971. He is a member of the American Institute of Architects and has over 30 years of
experience in architecture, interior design and space planning. Mr. Courseys work has been recognized with numerous awards. Mr. Coursey has a Bachelors degree in Architecture from the Georgia Institute of Technology and an A.S. in
Building Construction from Southern Polytechnic State University.                      
|                                                                              |  |     | 
|Patricia F. Meidell                                                           |  | 64  |  | August 2001-Present |  | Director. Ms. Meidell is the President of American Retirement Planners since 1996. She is a Certified Financial Planner and NASD Registered Principal with Associated Securities Corp. and serves
on the Advisory Board of Associated Financial Group, Inc. She earned her first securities license in 1972 and has owned a financial services business since 1982. She received her B.S. from Idaho State University, an M.S. from the University of
Arizona, and she has done post-graduate work in counseling.                
|                                                                              |  |     | 
|Neal E. Nakagiri                                                              |  | 50  |  | August 2001-Present |  | Director. Mr. Nakagiri was Chief Executive Officer and President of Associated Financial Group, Inc. (AFG) in January 2000 to December 2004. Mr. Nakagiri was also a director of AFG.
He is a member of the State Bar of California and the Compliance and Legal Division of the Securities Industry Association. Mr. Nakagiri serves on the NASD National Adjudicatory Council. Mr. Nakagiri has a B.A. degree in Economics from the
University of California at Los Angeles and a J.D. from Loyola Law School of Los Angeles.



60



---

##### Table of Contents

|                                                                            |  |    |  |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--------------------------------------------------------------------------- |  | -- |  | ---------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Class I Directors - term expires at the 2006 Annual Meeting of Stockholders |  |   
|                                                                            |  |    | 
|E. Andrew Isakson                                                           |  | 53 |  | September 2002-Present |  | Director. Mr. Isakson has served as one of our directors since September 2002. Mr. Isakson has served as President of Isakson-Barnhart Properties, Inc. (and predecessor companies) since 1982 and
is General Partner of Isakson-Barnhart Development Co., LLC. He has over 25 years of experience in commercial real estate in Atlanta and the Southeast developing, owning and managing office and retail space. Currently, Isakson-Barnhart Properties
manages over 1.0 million square feet of retail and office space in Georgia, North Carolina and Tennessee. Isakson-Barnhart Development Co., LLC has developed over 2.2 million square feet of retail space its inception. Mr. Isakson has been a licensed
real estate broker since 1974 and received a B.A. from Vanderbilt University.
|                                                                            |  |    | 
|John H. Redmond                                                             |  | 63 |  | August 2001-Present    |  | Director. Mr. Redmond has been active as a real state advisor for over 30 years. From 1995 to the present, Mr. Redmond has served as President of John H. Redmond, Real Property Advisors, a real
estate consulting firm in San Francisco. Prior to 1995, Mr. Redmond was associated with Coldwell Banker & Company, Grubb & Ellis Real Estate Services and was a founder of The Rubicon Group. Mr. Redmond has a B.A. from the University of
Scranton and an M.S. from Boston University.                                                                                                                                                                                                                                                                                                       



61



---

##### Table of Contents

|                                                                             |  |    |  |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---------------------------------------------------------------------------- |  | -- |  | ------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Class II Directors - term expires at the 2007 Annual Meeting of Stockholders |  |   
|                                                                             |  |    | 
|Allen K. Meredith                                                            |  | 56 |  | August 2001-Present |  | Chairman of the Board, President and Chief Executive Officer Before joining our company, Mr. Meredith had over 23 years of experience in the real estate business. Since 1994, Mr. Meredith
has served as President and Chief Executive officer of Meredith Partners, where he specialized in acquiring, rehabilitating and managing suburban office and industrial commercial properties in California, including the recent acquisition and
rehabilitation of the one million square-foot former Firestone Tire manufacturing facility in Los Angeles. From 1991 to 1994, Mr. Meredith was President and Chief Executive Officer of the Northwest Region of Trammell Crow Company, a real estate
development company, where he oversaw property development, acquisition and disposition, facility and construction management, and leasing and property management for 33.1 million square feet of high-rise, office, shopping center and industrial
properties. Mr. Meredith has an M.B.A. from Harvard University and a B.A. in Economics from Stanford University.
|                                                                             |  |    | 
|James P. Moore                                                               |  | 49 |  | August 2001-Present |  | Director. Mr. Moore joined Citibank in November 2004 as an SVP, Sales Manager for the Southern California region in their Commercial Real Estate Group. He is responsible for all new commercial
Real Estate Mortgages originated on Southern California property (5 unit or larger multifamily and all commercial properties) owned by Real Estate investors. From 2002 to 2004, he was the principal of Moore Associates, LLC, a Southern California
based real estate investment and development firm. Prior to forming Moore Associates, LLC, Mr. Moore was a Senior Vice President of Banc One Capital Markets, Inc. (previously First Chicago Capital Markets, Inc.). He spent 17 years with the
organization, including 5 years as head of their Western Division of the Real Estate Department. Mr. Moore holds a B.S. in Business Administration (Finance and Real Estate) from the University of Southern California.                                                                                                                                         



There are no family relationships
among our directors or executive officers. All of our directors terms will expire at the annual meeting of stockholders the year indicated, or upon their resignation or removal, if earlier.



We have two executive officers: Allen K. Meredith, whose biographical and business
information is provided above, and Charles P. Wingard, our Chief Financial Officer, Vice President and Secretary.



62



---

##### Table of Contents

Mr. Wingard, 47, was appointed to his current position as Secretary, Vice President and Chief Financial Officer of the
Company in July 2002. From October 2001 to July 2002, he was Vice President and Acting Chief Financial Officer. From August 2000 to September 2001, Mr. Wingard served as senior vice president and Chief Financial Officer of VelocityHSI, Inc. a
publicly traded provider of high-speed Internet services to the apartment industry that was spun-off from BRE Properties, Inc. in August 2000. In August 2001, VelocityHSI, Inc. filed for protection under Chapter 7 of the U.S. Bankruptcy Code. From
August 1996 to August 2000, Mr. Wingard was Vice President and Director of Financial Reporting for BRE Properties, Inc., a publicly traded real estate investment trust with over $1.5 billion in assets, where he was responsible for securities filings
and compliance, loan administration and financial reporting. Mr. Wingard is a Certified Public Accountant and holds a B.S. in Accounting and Finance from the University of California, Berkeley.



Audit Committee



We have established a separately-designated audit committee of our board of directors in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934. The audit committee is composed of John H. Redmond (its chair) and James P. Moore. The board of directors has determined that Mr. Moore is an audit committee financial expert and is
independent as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934.



Code of Business Conduct and Ethics



On March 22, 2004, our board of directors adopted a Code of Business Conduct and Ethics as required by the rules of the American Stock Exchange and the federal
Sarbanes-Oxley Act. Our code is designed to deter wrongdoing and to promote:



| | (1) | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other public communications we make;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | compliance with applicable governmental laws, rules and regulations;
| | --- | --------------------------------------------------------------------



| | (4) | the prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
| | --- | -----------------------------------------------------------------------------------------------------------------------



| | (5) | accountability for adherence to the code.
| | --- | -----------------------------------------



We have posted a copy of the code on our corporate website,www.meredithreit.com.



Section 16 Beneficial Ownership Reporting Compliance



Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than ten
percent of a registered class of our equity securities, to file initial reports of ownership and reports of changes in ownership of common stock and our other equity securities with the SEC and to provide us with copies of these filings. To our
knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required during the year ended December 31, 2004, each of our officers, directors and greater than ten percent
beneficial owners who are obligated to file certain reports under Section 16(a) of the 1934 Act complied with the applicable filing requirements.



63



---

##### Table of Contents

ITEM 10. EXECUTIVE COMPENSATION



Summary



The following table summarizes the compensation paid to our Chief
Executive Officer and our sole officer other than our Chief Executive Officer whose salary and bonus exceeded $100,000 or would exceed $100,000 on an annualized basis. We refer to the executive officers listed below as the named executive
officers.



SUMMARY COMPENSATION TABLE



|                                                             |  |              |  |                       |  |                             |  |                                |  |                                   
|------------------------------------------------------------ |  | ------------ |  | --------------------- |  | --------------------------- |  | ------------------------------ |  | ----------------------------------
|                                                             |  |              |  | Annual Compensation   |  | Long TermCompensationAwards
|Name and Principal Position                                  |  | Year         |  | Salary($)             |  | Bonus($)(1)                 |  | Other AnnualCompensation($)(2) |  | SecuritiesUnderlyingOptions/SAR(#)
|Allen K. Meredith President and Chief ExecutiveOfficer       |  | 200420032002 |  | 200,000200,000200,000 |  | 30,00030,00020,000          |  | 6,9001,000                    |  | 33,33366,667                     
|                                                             |  |              |  |                       | 
|Charles P. Wingard Vice President and ChiefFinancial Officer |  | 200420032002 |  | 127,500125,000125,000 |  | 19,12518,75012,500          |  | 2,463625                      |  | 10,00016,667                     

---

|(1) | Paid in following year for prior year performance.
|--- | --------------------------------------------------

|(2) | Consists of our contribution to the executives 401(k) retirement plan, which we established in 2003.
|--- | -----------------------------------------------------------------------------------------------------



Option Grants



The following table provides information concerning each grant of stock options to the named executive officers during the year ended
December 31, 2004 (we have never granted any SARs):



|                   |  |                                                       |     |  |                                                          |   |  |                             |       |                |        
|------------------ |  | ----------------------------------------------------- | --- |  | -------------------------------------------------------- | - |  | --------------------------- | ----- | -------------- | -------
|                   |  | Option Grants in Last Fiscal Year (Individual Grants)
|Name               |  | Number of SecuritiesUnderlying OptionsGranted (#)     |     |  | Percent ofTotal OptionsGranted toEmployees inFiscal Year |   |  | Exercise orBase Price($/Sh) |       | ExpirationDate
|Allen K. Meredith  |  | 33,333                                                | (1) |  | 74                                                       | % |  | $                           | 16.00 |                | 5/10/14
|Charles P. Wingard |  | 10,000                                                | (1) |  | 22                                                       | % |  | $                           | 16.00 |                | 5/10/14

---

|(1) | These options were granted on February 10, 2004 and became vested and exercisable 25% each quarter thereafter, with the final 25% vesting on February 10, 2005.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



64



---

##### Table of Contents

The following table provides information regarding the exercisability of options and the number of options held by the
named executive officers who have been granted stock options, as of December 31, 2004:



Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values



|                   |  |                                 |  |                    |  |                                                                 |  |                                                         |  |             |         |               |   |      
|------------------ |  | ------------------------------- |  | ------------------ |  | --------------------------------------------------------------- |  | ------------------------------------------------------- |  | ----------- | ------- | ------------- | - | -----
|                   |  | Shares Acquired on Exercise (#) |  | Value Realized ($) |  | Number of SecuritiesUnderlying Unexercised Optionsat FY-End (#) |  | Value of Unexercised In-the-Money Options at FY-End ($)
|Name               |  |                                 |  |                    |  | Exercisable                                                     |  | Unexercisable                                           |  | Exercisable |         | Unexercisable
|Allen K. Meredith  |  |                                |  |                   |  | 91,667                                                          |  | 8,333                                                   |  | $           | 429,169 |               | $ | 4,167
|Charles P. Wingard |  |                                |  |                   |  | 24,167                                                          |  | 2,500                                                   |  | $           | 107,919 |               | $ | 1,250



Employment Contracts and
Termination of Employment and Change in Control Arrangements



Mr. Allen K. Meredith



Effective August 22, 2001, and amended
and restated on March 21, 2002, we entered into an employment agreement with Allen K. Meredith to serve as our Chairman of the Board of Directors, President and Chief Executive Officer for an initial term of one year, with automatic renewal on a
year-to-year basis thereafter unless terminated in accordance with its terms. Certain material terms of this agreement follows:



Base Salary. Mr. Meredith currently receives a base salary of $210,000. The base salary will be subject to negotiation yearly.



Annual Cash Bonus. Mr. Meredith shall be eligible to receive an annual cash bonus in
an amount, if any, to be determined in the sole discretion of the board of directors.



Stock Options.Mr. Meredith shall be granted an option to purchase 66,667 shares of our common stock at an exercise price equal to the fair market value per share on the date of grant. After one year of service, 33,334 of the shares
subject to his option shall vest in full and the remaining 33,333 shares shall vest at a rate of 25% per quarter thereafter, provided Mr. Meredith continues to provide services to us. These options were granted on March 3, 2003 with vesting dates
calculated as if the options had been granted on August 22, 2001.



Certain Severance Benefits. If, at any time during any automatic one-year renewal period, the employment of Mr. Meredith is terminated, he shall be entitled to receive the benefits described below.



Termination Other Than In Connection with a Change in Control:



Termination by Us Without Cause or by Mr. Meredith for
Good Reason. If Mr. Meredith is terminated Without Cause or Mr. Meredith terminates for Good Reason, he will a receive a lump sum payment equal to his then-annual base salary plus an amount equal to the average of his annual bonus over the most
recent three years, if any.



Termination
Due to Death or Disability.Upon termination due to death or disability, Mr. Meredith or his estate will receive all salary accrued but unpaid to the date of termination.



Voluntary Termination or Termination for Cause. Mr. Meredith may resign at any time upon 30 days
written notice. Upon voluntary termination without Good Reason or if we terminate Mr. Meredith for Cause, no further compensation will be payable to Mr. Meredith



65



---

##### Table of Contents

Termination Following a Change in Control.If Mr. Meredith is terminated or resigns within one year from a Change
in Control, he will receive a lump sum payment equal to his then base salary plus an amount equal to the average of his annual bonus over the most recent three years, if any.



Mr. Charles P. Wingard



Effective April 7, 2003, we entered into an employment agreement with Charles P. Wingard to serve as our Chief Financial Officer. Mr. Wingards agreement is
substantially identical to Mr. Merediths agreement other than Mr. Wingards current salary is $133,875 per year and Mr. Wingard received 16,667 options to purchase our common stock



Audit Committee



The audit committee of our board of directors is composed of John H. Redmond (its chair) and James P. Moore. The board has determined that
Mr. Moore is an audit committee financial expert and is independent as that term is used in Item 7(d)3(iv) of Schedule 14A under the Securities Exchange Act of 1934.



Director Compensation



Our independent directors receive $500 for each board meeting they attend in person, $200 for each telephonic meeting and $200 for each
committee meeting attended, except for Mr. Isakson and Mr. Coursey, who receive $500 per board meeting to avoid the cost of travel from their business location. During 2004, we paid a total of $7,950 to our non-employee directors, exclusive of
reimbursements for expenses. In 2004, Mr. Nakagiri and Ms. Meidell declined to accept fees for their service on the board of directors.



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS



The following table provides, as of March 17, 2005, information regarding the shares of our common stock beneficially owned by each person who is known by the to own
beneficially more than 5% of the common stock, by each director, by each named executive officer and by all directors and executive officers as a group. The amounts shown are based on information provided by the individuals named.



66



---

##### Table of Contents

|                                         |  |                                            |  |                 |  
|---------------------------------------- |  | ------------------------------------------ |  | --------------- | -
|Name and Address of Beneficial Owner (1) |  | Amount andNature ofBeneficialOwnership (2) |  | Percent ofClass |  
|Allen K. Meredith (3)                    |  | 308,223                                    |  | 28.8            | %
|Kim Meredith (4)                         |  | 196,223                                    |  | 20.3            | %
|Meredith I LLC                           |  | 124,223                                    |  | 12.8            | %
|Meredith III LLC                         |  | 72,000                                     |  | 7.4             | %
|Gary B. Coursey (5)                      |  | 1,667                                      |  |                 | *
|E. Andrew Isakson (6)                    |  | 3,334                                      |  |                 | *
|Patricia F. Meidell (7)                  |  | 2,166                                      |  |                 | *
|James P. Moore (8)                       |  | 4,834                                      |  |                 | *
|John H. Redmond (6)                      |  | 3,334                                      |  |                 | *
|Charles P. Wingard (9)                   |  | 26,667                                     |  | 2.7             | %
|                                         |  |                                            |  |                 |  
|Directors and officers as a group (10)   |  | 350,225                                    |  | 31.6            | %
|                                         |  |                                            |  |                 |  

---

|* | Less than 1%
|- | ------------

|(1) | The business address for each of these individuals is c/o Meredith Enterprises, Inc., 3000 Sand Hill Road, Building 2, Suite 120, Menlo Park, CA 94025.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | To our knowledge, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to
community property laws where applicable. Percentage figures are based upon 968,965 shares of common stock outstanding as of March 17, 2005, net of 8,000 shares held in treasury.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | For Mr. Meredith, includes (a) 12,000 shares he owns directly; (b) 100,000 shares that he may purchase upon exercising stock options that are currently exercisable or that will
become exercisable on or before May 16, 2005; and (c) 124,223 shares held by Meredith I LLC and (d) 72,000 shares held by Meredith III LLC (he is co-manager of both of those entities).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | For Mrs. Meredith, includes 124,223 shares held by Meredith I LLC and 72,000 shares held by Meredith III, LLC (she is co-manager of both of those entities).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | For Mr. Coursey, includes 1,667 shares that he may purchase upon exercising stock options that are currently exercisable.
|--- | -------------------------------------------------------------------------------------------------------------------------

|(6) | For Mr. Isakson and Mr. Redmond, includes 3,334 shares that each may purchase upon exercising of stock options that are currently exercisable.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------

|(7) | For Ms. Meidell, includes 499 shares she owns directly and 1,667 shares that she may purchase upon exercising of stock options that are currently exercisable.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | For Mr. Moore, includes 1,500 shares he owns directly and 3,334 shares that he may purchase upon exercising of stock options that are currently exercisable.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | For Mr. Wingard, includes 26,667 shares that he may purchase upon exercising of stock options that are currently exercisable or that will become exercisable on or before May 16,
2005.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Includes 140,003 shares that may be purchased upon the exercise of stock options that are currently exercisable or that will become exercisable on or before May 16, 2005.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



67



---

##### Table of Contents

The following table provides equity compensation plan information at December 31, 2004.



Equity Compensation Plan Information



|                                                           |  |                                                                                         |  |                                                                          |       |                                                                                                                                       |      
|---------------------------------------------------------- |  | --------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------ | ----- | ------------------------------------------------------------------------------------------------------------------------------------- | -----
|Plan Category                                              |  | Number ofsecurities to be issued upon exercise ofoutstandingoptions, warrantsand
rights |  | Weighted-average exercise price ofoutstandingoptions, warrantsand rights |       | Number of securities remaining available for futureissuances under equity compensation plans (excludingsecurities reflected in column
|                                                           |  | (a)                                                                                     |  | (b)                                                                      |       | (c)                                                                                                                                  
|Equity compensation plans approved by security holders     |  | 143,337                                                                                 |  | $                                                                        | 12.39 |                                                                                                                                       | 4,996
|                                                           |  |                                                                                         | 
|Equity compensation plans not approved by security holders |  | N/A                                                                                     |  |                                                                          | N/A   |                                                                                                                                       | N/A  
|                                                           |  |                                                                                         |  |                                                                          |       |                                                                                                                                       |      
|Total                                                      |  | 143,337                                                                                 |  | $                                                                        | 12.39 |                                                                                                                                       | 4,996
|                                                           |  |                                                                                         |  |                                                                          |       |                                                                                                                                       |      



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



Mr. Gary Coursey, one of our directors, provides architectural services to us. For these services, we paid Mr. Courseys firm a total of (a) $0 January 1, 2005 through March 17, 2005; (b) $70,056 in 2004 related to our building an
approximate 30,000 square foot shopping center on 2.5-acres of land we own in Garden Grove; and (c) $134,698 in 2003 that related to our Northlake Festival shopping center.



We have retained Isakson-Barnhart Properties, Inc. as the property manager of our Northlake Festival shopping center. Isakson-Barnhart
Properties manages over 1.0 million square feet of retail and office space in Georgia, North Carolina and Tennessee. Mr. E. Andrew Isakson, one of our directors, is president of Isakson-Barnhart Properties, Inc. Under the property management
agreement, Isakson-Barnhart Properties manages, maintains and operates the shopping center for us. In return for its services, we pay a monthly property management fee to Isakson-Barnhart Properties equal to the greatest of (a) 3% of the gross
income of the property actually collected for that month or (b) $2,500. In addition, we pay Isakson-Barnhart Properties a leasing commission, in the range of $2.00 to $4.50 per square foot depending on the size of the space and whether there is a
co-broker, on new leases or expansion of current leases. We also pay a construction maintenance fee of 5% of the total cost of tenant improvements or other construction where Isakson-Barnhart Properties supervises the project. Under this agreement,
we paid Isakson-Barnhart Properties a total of (a) $63,641 from January 1, 2005 through March 17, 2005; (b) $200,083 in 2004; and (c) $239,145 in 2003. The agreement is renewable annually, and either party is allowed to terminate the agreement upon
30 days prior written notice to the other. In addition, Mr. Isakson owns a 50% interest in a retail shopping center that is located adjacent to the retail shopping center.



During October 2004, we purchased 20,000 shares of our common stock at the fair market value, plus brokerage commissions for a total of
$13.52 per share. During November 2004, we sold 12,000 of these shares to a company that is co-managed by Mr. Meredith our President and Chief Executive Officer, and his spouse. We recorded a charge of $19,560 in connection with the sale, which
represents the difference between the fair market value of our stock and the sales price on the date of sale. Mr. Meredith, has committed that he or his affiliates will purchase the 8,000 shares we hold as treasury stock at $13.52 per share, our
cost for such shares, on or before March 31, 2005.



68



---

##### Table of Contents

ITEM 13. EXHIBITS



INDEX TO
EXHIBITS



|              |  |                                                                                                                                                                                                                                                                                                                         
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                                                                                                                                                                                  
|3.1           |  | Restated Certificate of Incorporation, as Amended.                                                                                                                                                                                                                                                                      
|              | 
|3.2           |  | Amended and Restated Bylaws dated November 15, 2002. (Incorporated by reference to Exhibit 3.2.6 to the registrants Annual Report on Form 10-K for the year ended December 31,
2002).                                                                                                                                  
|              | 
|4.1           |  | Form of Share Certificate.                                                                                                                                                                                                                                                                                              
|              | 
|10.1.1        |  | Employment Agreement dated August 22, 2001 as revised March 21, 2002, between the Company and Allen K. Meredith, the registrants Chief Executive Officer. (Incorporated by reference to
Exhibit 10.13 to the registrants Annual Report on Form 10-K For the year ended December 31, 2001).                            
|              | 
|10.1.2        |  | Employment Agreement dated April 7, 2003 between the Company and Charles P. Wingard. (Incorporated by reference to Exhibit 10.1 to the registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003).                                                                                                 
|              | 
|10.1.3        |  | Form of indemnification agreement for directors and officers. (Incorporated by reference to the registrants Quarterly Report on Form 10-Q for the quarter ended June 30,
2002).                                                                                                                                        
|              | 
|10.1.4        |  | Meredith Enterprises, Inc. 2002 Stock Incentive Plan (amended and restated June 30, 2003). (Incorporated by reference to Exhibit 10.2 to the registrants Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003).                                                                                           
|              | 
|10.1.5        |  | Summary of bonuses for 2004 performance and salaries for 2005 for Mr. Allen K. Meredith, the registrants Chief Executive Officer, and Mr. Charles P. Wingard, the registrants Chief
Financial Officer. (Incorporated by reference to Item 1.01 of the registrants Current Report on Form 8-K dated February 2, 2005).
|              | 
|10.2.1        |  | Standard Industrial Lease - Net between BRS-Tustin Safeguard Associates and Safeguard Business Systems, Inc. (Incorporated by reference to Exhibit 10.15.1 to the registrants Current
Report on Form 8-K dated May 22, 1995).                                                                                          
|              | 
|10.3.1        |  | Deed of Trust Note for the registrants Folsom property. (1) (Incorporated by reference to Exhibit 10.2 of the registrants Current Report on Form 10-Q dated September 30,
2002).                                                                                                                                      
|              | 
|10.3.2        |  | Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing for the registrants Folsom property. (1) (2) (Incorporated by reference to Exhibit 10.1 to the
registrants Current Report on Form 10-Q dated September 30, 2002).                                                                



69



---

##### Table of Contents

|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.3.3        |  | Deed of Trust Note for the registrants Irvine property. (1) (Incorporated by reference to Exhibit 10.3 to the registrants Current Report on Form 10-Q dated September 30,
2002).                                                                                                                                                                                                                                                                                                  
|              | 
|10.3.4        |  | Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing for the registrants Irvine property. (1) (2) (Incorporated by reference to Exhibit 10.3 to the
registrants Current Report on Form 10-Q dated September 30, 2002).                                                                                                                                                                                                                            
|              | 
|10.3.5        |  | Deed of Trust Note for the registrants Sacramento (Horn Road) property. (1) (Incorporated by reference to Exhibit 10.3 to the registrants Current Report on Form 10-Q dated
September 30, 2002).                                                                                                                                                                                                                                                                                  
|              | 
|10.3.6        |  | Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing for the registrants Sacramento (Horn Road) property. (1) (2) (Incorporated by reference to Exhibit
10.3 to the registrants Current Report on Form 10-Q dated September 30, 2002).                                                                                                                                                                                                            
|              | 
|10.3.7        |  | Deed of Trust Note for the registrants Tustin property. (1) (Incorporated by reference to Exhibit 10.3 to the registrants Current Report on Form 10-Q dated September 30,
2002).                                                                                                                                                                                                                                                                                                  
|              | 
|10.3.9        |  | Leasehold Deed to Secure Debt and Security Agreement between BSRT/M&J Northlake Limited Partnership and General Electric Capital Corporation dated November 12, 1997, Loan Agreement
between General Electric Capital Corporation and BSRT/M&J Northlake Limited Partnership dated November 12, 1997 and Promissory Noted dated November 12, 1997. (Incorporated by reference to Exhibit 10.18 in the registrants Annual Report on
Form 10-K for the year ended December 31, 2002).
|              | 
|10.4          |  | Ground Lease Agreement between Cox Communications, Inc. and Crow-Atlanta Retail, LTD. dated October 4, 1982, Amendment to Ground Lease Agreement dated April 27, 1983, Second amendment to
Ground Lease Agreement dated December 24, 1983 and Third amendment to Ground Lease Agreement dated October 15, 2002. (Incorporated by reference to Exhibit 10.19 in the registrants Annual Report on Form 10-K for the year ended December 31,
2002).                                   
|              | 
|21            |  | Subsidiaries of the Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|              | 
|23.1          |  | Consent of BDO Seidman, LLP, Independent Registered Public Accounting Firm                                                                                                                                                                                                                                                                                                                                                                                                          
|              | 
|31.1          |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes- Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                 
|              | 
|31.2          |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes- Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                 



70



---

##### Table of Contents

|              |  |                                                                                                    
|------------- |  | ---------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                             
|32.1          |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
|              | 
|32.2          |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes- Oxley Act of 2002

---

|(1) | These four properties are cross-collateralized.
|--- | -----------------------------------------------

|(2) | The registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Commission upon request.
|--- | -------------------------------------------------------------------------------------------------------------------------



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES



Audit Fees. The aggregate fees billed by BDO Seidman, LLP for professional services rendered for the audit of our annual financial statements for the fiscal year ended December 31, 2004, and for the reviews of the financial
statements included in our Quarterly Reports on Form 10-Q for the first, second and third quarters of that fiscal year, were $127,560. For the year ended December 31, 2003, the aggregate fees billed by BDO Seidman for professional services rendered
for the audit of our annual financial statements for the fiscal year ended December 31, 2003, and for the reviews of the financial statements included in our Quarterly Reports on Form 10-Q for that fiscal year, were $103,160.



Audit Related Fees. BDO Seidman billed no fees for professional services rendered that
were reasonably related to the performance of the audit of our 2004 and 2003 financial statements, but which were not reported in the previous paragraph.



Tax Fees. For the fiscal year ended December 31, 2004, the aggregate fees billed by BDO Seidman for professional services rendered related to tax compliance, tax
advice and tax planning were $17,065. For the year ended December 31, 2003, the aggregate fees billed by BDO Seidman for professional services rendered related to tax compliance, tax advice, and tax planning were $16,295. In each year, these
tax-related fees were for preparing tax returns and providing tax advice for the classification of the dividend for reporting to stockholders.



All Other Fees. Other than as described in the preceding paragraphs, BDO Seidman rendered no other services to us for the fiscal years ended December 31, 2004 and
2003.



Policy on Audit Committee Pre-Approval of Audit and Non-Audit
Services of Independent Auditor



Our audit committee pre-approval
guidelines with respect to pre-approval of audit and non-audit services are summarized below.



General. The audit committee is required to pre-approve the audit and non-audit services performed by the independent auditor in order to assure that the provision of such services does not impair the
auditors independence. Unless a type of service to be provided by the independent auditor has received general pre-approval, it will require specific pre-approval by the audit committee. Any proposed services exceeding pre-approved cost levels
requires specific pre-approval by the audit committee.



Audit Services.
The annual audit services engagement terms and fees are subject to the specific pre-approval of the audit committee. In addition to the annual audit services engagement specifically approved by the audit committee, the audit committee has granted
general pre-approval for other audit services, which are those services that only the independent auditor reasonably can provide.



Audit-related Services. Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of our
financial statements and that are traditionally performed by the independent auditor. The audit committee believes that the provision of audit-related services does not impair the independence of the auditor.



Tax Services. The audit committee believes that the independent auditor can provide
tax services to us, such as tax compliance, tax planning and tax advice without impairing the auditors independence. The audit committee will not permit the retention of the independent auditor in connection with a transaction initially
recommended by the independent auditor, the purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations.



71



---

##### Table of Contents

All Other Services. The audit committee has granted pre-approval to those permissible non-audit services
classified as all other services that it believes are routine and recurring services, and would not impair the independence of the auditor.



SIGNATURES



Pursuant to the
requirements of the 13 or 15(d) 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: March 24, 2005 |  | Meredith Enterprises, Inc.                  
|                     |  | (formerly West Coast Realty Investors, Inc.)
|                     |  |                                             
|                     |  | By:                                          |  | /s/ Allen K. Meredith                 
|                     |  |                                              |  | (Chairman of the Board of Directors,  
|                     |  |                                              |  | President and Chief Executive Officer)



POWER OF ATTORNEY



KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints jointly and severally, Allen K. Meredith and Charles P. Wingard, and each one of them, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any and
all amendments to this Annual Report on Form 10-KSB and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.



|                     |  |  |  |                                                                            
|-------------------- |  |  |  | ---------------------------------------------------------------------------
|Date: March 24, 2005 |  |  |  | /s/ Allen K. Meredith                                                      
|                     |  |  |  | ALLEN K. MEREDITH                                                          
|                     |  |  |  | (Chairman of the Board of Directors, President and Chief Executive Officer)
|                     |  | 
|Date: March 24, 2005 |  |  |  | /s/ Charles P. Wingard                                                     
|                     |  |  |  | CHARLES P. WINGARD                                                         
|                     |  |  |  | (Vice President/ Treasurer,                                                
|                     |  |  |  | Principal Financial Officer and                                            
|                     |  |  |  | Principal Accounting Officer)                                              
|                     |  | 
|Date: March 24, 2005 |  |  |  | /s/ E. Andrew Isakson                                                      
|                     |  |  |  | E. ANDREW ISAKSON                                                          
|                     |  |  |  | (Director)                                                                 
|                     |  | 
|Date: March 24, 2005 |  |  |  | /s/ Gary B. Coursey                                                        
|                     |  |  |  | GARY B. COURSEY                                                            
|                     |  |  |  | (Director)                                                                 



72



---

##### Table of Contents

|                     |  |  |  |                        
|-------------------- |  |  |  | -----------------------
|Date: March 24, 2005 |  |  |  | /s/ Patricia F. Meidell
|                     |  |  |  | PATRICIA F. MEIDELL    
|                     |  |  |  | (Director)             
|                     |  | 
|Date: March 24, 2005 |  |  |  | /s/ James P. Moore     
|                     |  |  |  | JAMES P. MOORE         
|                     |  |  |  | (Director)             
|                     |  | 
|Date: March 24, 2005 |  |  |  | /s/ Neal E. Nakagiri   
|                     |  |  |  | NEAL E. NAKAGIRI       
|                     |  |  |  | (Director)             
|                     |  | 
|Date: March 24, 2005 |  |  |  | /s/ John H Redmond     
|                     |  |  |  | JOHN H. REDMOND        
|                     |  |  |  | (Director)             



73