EDGAR 10-K Filing

Company CIK: 726516
Filing Year: 2021
Filename: 726516_10-K_2021_0001010549-21-000037.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS
As used herein, the terms (“FEPI”, “we”, “us”, “our”, or “the Company”) refer to First Equity Properties, Inc. a Nevada corporation organized on December 19, 1996. FEPI is the successor-in-interest to WESPAC Investors Trust III, a California real estate investment trust (“WESPAC”) originally established August 22, 1983. The Company’s fiscal year ends December 31 of each year.
Prior to January 1, 1997, the Company’s business consisted of the management and operation of three motel properties in the Spokane, Washington area. During the fiscal years ended December 31, 1998 and 1999, the Company, through its subsidiaries, engaged in property management, and real estate brokerage services. Between October 1999 and May 2004, the Company and its subsidiaries conducted no substantial business, but remained available to engage in property management and real estate brokerage activities.
Effective May 1, 2004, the Company sold all of the issued and outstanding common stock of a subsidiary company known as Carmel Realty, Inc., a Texas corporation (“Carmel”) and a 99% limited partnership interest in Carmel Realty Services, Ltd., a Texas limited partnership (“CRSL”) for an aggregate sale price of $2,072,540 (a basis equivalent to ten times capitalization of the management fees collected by Carmel and CRSL during 2003) to Regis. Regis paid cash of $250,000 to the Company and delivered a promissory note dated May 1, 2004 in the stated principal amount of $1,822,540 payable to the order of the Company on demand or, if no demand is made prior thereto, on December 31, 2011, with interest payable monthly as it accrues. This loan has been extended to December 31, 2021. Such promissory note is secured by a pledge of the common stock of Carmel and the partnership interest of CRSL sold.
Beginning in 1999 the principal source of revenue for the Company was interest income on notes receivable due from affiliated and/or related parties.
Management of the Company is exploring alternatives, seeking to establish or acquire new business operations for the Company. Management cannot predict or give any assurance that any new business enterprise will be acquired by the Company at any time in the near future.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
An investment in equity securities of the Company involves a high degree of risk as there is no active trading market for our securities and liquidity is not assured. You should carefully consider the following information keeping in mind that the matters described below are not the only potential risks that may affect the Company. Additional risks, which we do not presently consider material or of which we are not currently aware, may also have an adverse impact upon us.
We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business and across our portfolio. While we did not experience significant disruptions during 2020 from the COVID-19 pandemic, we are unable to predict the impact the COVID-19 pandemic will have on its financial condition, results of operations and cash flows due to numerous uncertainties.
Our governing documents contain anti-takeover provisions that make it difficult for a third party to seek to acquire control of the Company.
Certain provisions of the Articles of Incorporation, Bylaws and Nevada law could, together or separately, discourage, delay or prevent a third party from acquiring the Company, even if doing so might benefit stockholders. The provisions may also affect the price investors might be able to receive for their shares of the Company’s common stock. Examples of these provisions are:
• The right of our Board of Directors to issue preferred stock with rights and privileges, which are senior to the common stock, without prior stockholder approval.
• Certain limitations upon the stockholders to make, adopt, alter, amend, change, or repeal the Bylaws of the Corporation except by a vote of 66 2/3% of the holders of record of shares outstanding.
• So-called business combination “control” requirements when the combination involves the Company and a person that beneficially owns 20% or more of the outstanding common stock, except under certain circumstances.
There is no established independent trading market for the shares of common stock of the Company.
No trading market presently exists for the shares of common stock and its value is therefore not determinable. Holders of our common stock do not have a vested right to redeem their shares, and therefore may not be able to liquidate their investment in the event of an emergency or otherwise. There simply is no active trading market for the shares of common stock, and accordingly, the transferability of such shares is limited at best.
The Company is managed by the Board of Directors.
Management has established the operating policies and procedures of the Company, which may be modified or waived by the Board of Directors without stockholder approval. The ultimate effect of any such changes may adversely affect future operations. The Company’s business is conducted so as not to become a regulated investment company under the Investment Company Act, which exempt entities that are “primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interest in real estate”.
The Company’s primary source of income is from affiliated entities.
Our primary source of income is from related party entities. If any of these entities were to become insolvent or unable to pay their obligations, it could have a material adverse effect on our financial statements.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
The Company’s principal office is located at 1603 LBJ Freeway, Suite 800, Dallas, Texas 75234 in approximately 4,288 square feet of commercial office space. The space is suitable and adequate for the purposes for which it is utilized.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
None.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Pursuant to the requirements of NRS 78.2055, on June 7, 2004, the members of the Board of Directors of the Company proposed and recommended to the stockholders a reverse-split on a 1-for-10 basis of the shares of Common Stock, par value $0.01 per share without any adjustment to the par value per share and without any reduction in the authorized number of shares of Common Stock at the same par value. The recommendation was submitted to the holder of approximately 75% of the outstanding Common Stock, Nevada Sea Investments, Inc. (“Nevada Sea”), which executed a written consent dated June 8, 2004, pursuant to NRS 78.320 adopting and approving the 1-for-10 reverse stock-split of the shares of Common Stock without any change in the par value and without any reduction in the authorized number of shares of Common Stock of the Company pursuant to the Articles of Incorporation. The 1-for-10 reverse stock split was ultimately effective July 12, 2004, following the distribution of an Information Statement on Schedule 14C to the other stockholders of the Company, and following the filing of an amendment to the Certificate of Incorporation of the Company with the Secretary of State of Nevada. The CUSIP Number for the post-split shares is 320097-20-7.
Under the approved action, based upon the 10,570,944 old shares outstanding on the effective date of July 12, 2004, the 1-for-10 reverse stock-split decreased the number of outstanding shares by approximately 90% which, after giving effect to an upward adjustment or “rounding up” for any fractional shares, added 534 shares to result in 1,057,628 post-split shares outstanding. The 1-for-10 reverse stock-split did not adversely affect any stockholder’s proportionate equity interest in the Company, subject to the provisions for elimination of fractional shares by rounding up to the next whole share which slightly increased the proportionate holdings of all stockholders other than Nevada Sea. Each post-split share continues to be entitled to one vote, as was the case with each outstanding old share.
In connection with the implementation of a 1-for-10 reverse stock-split, no certificate or script representing any fractional share interest was issued, but a holder of the old shares received in lieu of any fraction of a post-split share to which the holder would otherwise have been entitled a single, whole post-split share on a “rounding up” basis without regard to any price. The result of this “rounding up” process increased slightly the holdings of those stockholders who held a number of old shares which were not evenly divisible by ten, resulting in an increase of 534 shares.
FEPI’s old shares of Common Stock, while available for trading in the over-the-counter market, to the knowledge of Management, have not had any material trading activity since their initial issuance in 1997. The old shares were issued pursuant to the terms of the Modified Plan in the bankruptcy proceeding styled In Re: WESPAC Investors Trust III, Case No. 94-00228-K-11 in the United States Bankruptcy Court for the Eastern District of Washington. The CUSIP Number of the old shares was 320097-10-8. The shares of beneficial interest of WESPAC Investors Trust III traded through the first quarter of 1988, and at one time, were quoted on the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”). Since the cessation of trading on NASDAQ, there has been no established, independent trading market for the shares of beneficial interest of WESPAC or the old shares of Common Stock of FEPI as the successor, or the new shares of Common Stock of the Company after giving effect to the 1-for-10 reverse stock split
No cash dividends have been declared or paid during the period from January 1, 1994 to the present on either the shares of Beneficial Interest of the Trust or the old shares of Common Stock of FEPI as the successor or the new shares of Common Stock after giving effect to the 1-for-10 reverse stock split.
As of December 31, 2020, the 1,057,628 post-split shares of Common Stock of FEPI issued and outstanding were held by approximately 600 holders of record.
During the three years ended December 31, 2020, FEPI did not issue or sell any securities, nor did FEPI purchase any of its equity securities. The Board of Directors has not authorized any stock repurchase program.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
The selected historical financial data presented below for the five fiscal years ended December 31, 2020, are derived from the audited financial statements.
Year Ended December 31,
2017
STATEMENT OF OPERATIONS DATA:
Revenues $ - $ - $ - $ - $ -
General and administrative 132,441 127,402 137,107 127,415 121,946
Other income - - - - -
Income from continuing operations (132,441 ) (127,402 ) (137,107 ) (127,415 ) (121,946 )
Gain on sale - - - - -
Interest income 150,581 155,327 159,661 205,445 206,007
Interest expense (53,632 ) (58,436 ) (67,112 ) (81,638 ) (81,861 )
Income (loss) before taxes (35,492 ) (30,511 ) (44,558 ) (3,608 ) 2,200
Income tax benefit (expense) - - - - -
Net income (loss) applicable to common shareholders $ (35,492 ) $ (30,511 ) $ (44,558 ) $ (3,608 ) $ 2,200
Weighted average earnings per share:
Income from continuing operations $ (0.03 ) $ (0.03 ) $ (0.04 ) $ - $ -
Loss from discontinued operations - - - - -
Net income loss applicable to common shareholders $ (0.03 ) $ (0.03 ) $ (0.04 ) $ - $ -
Weighted average shares outstanding 1,057,628 1,057,628 1,057,628 1,057,628 1,057,628
BALANCE SHEET DATA:
Total Assets $ 778,041 $ 1,763,288 $ 1,793,475 $ 2,107,143 $ 2,107,129
Total Liabilities $ 2,494 $ 952,249 $ 951,925 $ 1,221,035 $ 1,217,413
Stockholders' Equity $ 779,817 $ 811,039 $ 841,550 $ 886,108 $ 889,716

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion is not an all-inclusive discussion of our operations. The information provided relates to significant items, which Management believes is relevant to an assessment and understanding of the Company’s results of operations and financial condition. The discussion should be read in conjunction with the financial statements presented and the notes to the financial statements as included in this Form 10K.
Results of Operations
FEPI’s sole source of income is from the interest received on related party receivables and its operating expenses are professional and administrative fees.
Results of operations for the year ended December 31, 2020 as compared to the same period ended 2019.
The Company recognized net loss of ($35,492) in 2020 compared to net loss of ($30,511) in 2019. The increase in net loss is primarily due to an increase in general and administrative expenses.
Results of operations for the year ended December 31, 2019 as compared to the same period ended 2018.
The Company recognized net loss of ($30,511) in 2019 compared to net loss of ($44,558) in 2018. The decrease in net loss is primarily due to the decrease in interest expense - related parties due to principal pay down on the notes payable.
A substantial asset concentration relates to notes receivables from related party entities which is the primary source of income consisting of interest on such receivables. Any adverse conditions affecting the financial condition of any of these entities, specifically their ability to service the debt obligation owed, could have a severe adverse impact upon the financial statements of the Company. However, as the entities are “related parties” to the Company, management of the Company is generally aware of the related parties’ financial condition. The entities are currently not in default on their obligations and management does not consider it necessary at this time to provide other financial information for such entities. However, management of the Company is aware of the circumstances and any conditions that might impact the ability of such “related parties” to meet their respective obligations. Management of the Company considers the collectability of such obligations to not be a question at this time.
Financial Condition, Capital Resources and Liquidity
General
Our primary source of liquidity is from proceeds from accrued interest on notes receivables from related party entities. At December 31, 2020, we had total assets of $778,041. Total assets decreased in 2020 due to the decrease in the notes receivable. In December 2020 the related party note payable, account payable, notes receivable, and accounts receivable were assigned into one note receivable to restructure and simplify the accounting for the company. We feel that our cash from operations is sufficient to provide for our current cash flow needs.
Cash flow analysis
The following summary discussion of our cash flows are based on the Statements of Cash Flows as presented in this Form 10-K and is not meant to be an all-inclusive discussion of the changes in our cash flows.
2020 as compared to 2019 - The overall cash flow decreased as compared to the year ended 2019 due to short term funding to a related party and lower interest income recognized on the note receivable due to a decrease in principal.
2019 as compared to 2018 - The overall cash flow decreased as compared to the year ended 2018 due to short term funding to a related party.
Contractual obligations
We do not have any further contractual obligations and commitments in regards to payments of operating leases.
Environmental Matters
Under various federal, state and local environmental laws, ordinances and regulations, the Company may be potentially liable for removal or remediation costs, as well as certain other potential costs, relating to hazardous or toxic substances (including governmental fines and injuries to persons and property) where any property-level manager in the employee of a subsidiary of the Company may have arranged for the removal, disposal or treatment of hazardous or toxic substances. Management is not aware of any environmental liability relating to the above matters that would have a material adverse effect on the Company’s business, assets, or results of operations.
Inflation
The effects of inflation on the Company’s operations are not quantifiable. To the extent that inflation affects interest rates, the Company’s earnings from any short-term investments and the cost of new financings as well as the cost of variable rate financing will be affected.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in interest rates, which may adversely affect its financial position, results of operations and cash flows. In seeking to minimize the risks from interest rate fluctuations, the Company manages exposures through its regular operating activities. The Company does not use financial instruments for trading or other speculative purposes and is not a party to any leveraged financial instruments.
Based upon the Company’s market risk sensitive instruments (including variable rate debt) outstanding at December 31, 2020, the Company has determined that there was no material market risk exposure to the Company’s financial position, results of operations or cash flows as of such date.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements, together with an index thereto, are attached hereto following the signature page to this report.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PRCEDURES
A review and evaluation was performed by management under the supervision and with the participation of the Principal Executive Officer and Chief Financial Officer of the effectiveness of the Company’s disclosure controls and procedures, as required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of December 31, 2020. Based upon that most recent evaluation, which was completed as of the end of the period covered by this Form 10-K, the Principal Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at December 31, 2020 to ensure that information required to be disclosed in reports that the Company files submits under the Securities Exchange Act is recorded, processed, summarized and reported within the time period specified by the Securities and Exchange Commission (“SEC”) rules and forms. As a result of this evaluation, there were no significant changes in the Company’s internal control over financial reporting during the period ended December 31, 2020 that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act Rules 13a-15(f). The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our Chief Financial and Accounting Officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2020. The assessment was based on criteria established in the framework Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2020.
Changes in Internal Control Over Financial Reporting
There has been no change in the Registrant’s internal control over financial reporting during the year ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
Not applicable.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
The business affairs of the Company are managed by or under the direction of the Board of Directors. The Board of Directors is responsible for the general investment policies of the Company and for such general supervision of the business of the Company conducted by its officers, agents, employees, advisors or independent contractors as may be necessary to ensure that such business conforms to policies adopted by the Board of Directors. Pursuant to Article III, Section 3.1, of the Bylaws of the Company, there shall not be less than three (3) nor more than fifteen (15) directors of the Company. The number of directors shall be determined from time to time by resolution of the directors, and the last count of that number of directors was at three (3) at the time of creation of the Company. The initial three directors were the three members of the Board of Trustees of the Trust. The term of office of each director is one year and until the election and qualification of his or her successor. Directors may succeed themselves in office and are to be elected at an annual meeting of stockholders or appointed by the Company’s incumbent Board of Directors.
The two current directors of the Company (both of whom are also executive officers) are listed below, together with their ages, all positions and offices with the Company, their principal occupation, business experience and directorship with other companies during the last five years or more. A vacancy currently exists on the Board of Directors.
The names, ages and positions of the directors as of December 31, 2020 are set forth below.
Name
Age
Position with the Company
R. Neil Crouch II	 Director, President and Treasurer
Cecelia K. Maynard	 Director, Vice President and Secretary
R. Neil Crouch II, 68
Director, President and Treasurer of the Company since November 1, 2018.
Mr. Crouch has been employed since May 2006 as Vice President and Chief Financial Officer of Balkan Energy Company, a Dallas, Texas based entity involved in the energy industry in Bulgaria, Ghana and Nigeria. From August 1, 2006 to March 24, 2009, he served as a director and from February 23, 2007 to March 24, 2009, as Chairman of the Board of Income Opportunity Realty Investors, Inc., a Nevada corporation, which has its common stock listed and traded on the NYSE American under the symbol “IOR.”
Cecelia K. Maynard, 69
Director, Vice President and Secretary of the Company since May 31, 2018.
Ms. Maynard was employed by Pillar Income Asset Management, Inc. (“Pillar”) from January 2011 through December 31, 2018. Pillar is a Nevada corporation which provides management services to other entities.
Meetings and Committees of Directors; Code of Ethics for Senior Financial Officers
The Company’s Board of Directors held no formal meetings in 2020 but acted by written consent. The Board of Directors has no standing audit, nominating or compensation committee.
The Board of Directors adopted, on February 23, 2004, a Code of Ethics policy for Senior Financial Officers that applies to the principal executive officer, president, principal financial officer, chief financial officer, principal accounting officer and controller. FEPI does not have a website, but a copy of such document may be obtained by written request to the Secretary of FEPI. Those requests should be sent to Secretary, First Equity Properties, Inc., 1603 LBJ Freeway, Suite 800, Dallas, Texas 75234.
Stockholders may also send communications to Board members by either sending a communication to the Board or a particular Board member, in care of the Secretary of First Equity Properties, Inc., 1603 LBJ Freeway, Suite 800, Dallas, Texas 75234.
Compliance With Section 16(a) of the 1934 Act.
Under the securities laws of the United States, the Company’s directors, executive officers and any person holding more than 10% of the Company’s shares of common stock are required to report their ownership of the Company’s shares and any changes in ownership to the Commission. Specific due dates for these reports have been established, and the Company is required to report any failure to file by the date. All the filing requirements were satisfied by the Company’s directors, executive officers and 10% holders during 2020. In making these statements, the Company has relied on the written representations of its directors, executive officers and 10% holders and copies of the reports that they filed with the Commission, both with respect to the Trust, as a predecessor to the Company, and the Company.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
Neither the executive officers nor directors received salaries or cash compensation from the Company for acting in such capacity during the year ended December 31, 2020.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The Company’s voting securities consist of the shares of common stock, par value $0.01 per share. As of February 19, 2021, according to the stock transfer records of the Company and other information available to the Company, the following persons were known to be the beneficial owners of more than five percent (5%) of the outstanding shares of common stock of the Company:
Title of Class
Name and Address
of Beneficial Owner
Amount and Nature of
Beneficial Ownership
Percent of
Class (1)
common stock,
par value $0.01 per share
Nevada Sea Investments, Inc.
1603 LBJ Freeway, Suite 800
Dallas, Texas 75234 396,411 (2)
shares 37.48 %
common stock,
par value $0.01 per share
TPS Income, Inc.
1809 Lakecrest Court
Carrollton, Texas 75006 396,410 (2)
shares 37.48 %
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(1) Based on 1,057,628 shares of common stock outstanding on March 12, 2021.
(2) On October 24, 2018, Nevada Sea Investments, Inc. sold to TPS Income, Inc. 396,410 shares as a single block in a privately negotiated transaction for an aggregate purchase price of $332,113.05 (approximately $0.8378019 per share).
As of March 12, 2021, according to the stock transfer records of the Company and other information available to the Company, each of the directors and executive officers of the Company and all present executive officers and directors, as a group, beneficially own the following shares:
Title of Class
Name and Address
of Beneficial Owner
Amount and Nature of
Beneficial Ownership
Percent of
Class (a)
common stock,
par value $0.01 per share
R. Neil Crouch II
1603 LBJ Freeway, Suite 850
Dallas, Texas 75234 0 %
common stock,
par value $0.01 per share
Cecelia Maynard
1603 LBJ Freeway, Suite 850
Dallas, Texas 75234 0 %
common stock,
par value $0.01 per share
All officers and directors as a group (2 persons) 0 %
________________________
(a) Based on 1,057,628 shares of common stock outstanding on March 12, 2021.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The Company has historically engaged in and likely will continue to engage in certain business transactions with related parties. Transactions involving related parties cannot be presumed to be carried out on an arm’s length basis due to the absence of premarket forces that naturally exist in business dealings between two or more unrelated entities. Related party transactions may not always be favorable to our business and may include terms, conditions and agreements that are not necessarily beneficial to or in the best interest of our Company.
All of our Notes Receivable are issued by entities which, in the past, had some interest in the Company, either as a stockholder or through another business transaction. Similarly, our Notes Payable included a note issued by the Company to a Trust, the beneficiaries of which may also have an interest in the entities which are the issuers of our Notes Receivable. At December 31, 2020, the Company had notes receivable due from the related parties of $750,523. During the year ended December 31, 2020, the Company recognized interest income of $150,581 through the payment of quarterly installments of interest. See Note B to the Financial Statements.
During the fiscal year ended December 31, 2020, the Company paid $29,138 through the payment of interest quarterly on the Notes Payable due to related parties. On December 1, 2020 the parties agreed to restructure the Note Payable and assign to the holder of the Note Receivable and therefore reduced the Note Receivable principal balance. See Note C to the Financial Statements.
Director Independence
Although the Company is not a listed issuer, the Board of Directors has determined to utilize a definition of independence from the NYSE American exchange standard. Utilizing that standard, the Board of Directors, which consists of only two individuals who are also executive officers of the Company, has each separately determined that each Director is “independent,” utilizing the standards of the NYSE American exchange.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table sets forth the aggregate fees for professional services rendered to FEPI for the years 2020 and 2019 by FEPI’s principal accounting firm, Swalm & Associates, P.C.:
Swalm &
Associates, P.C.
Type of Fees
Audit fees $ 35,500 $ 33,799
Audit related fees - -
Tax fees -preparation of corporate federal income tax returns 2,100 1,900
All other fees - -
Total $ 37,600 $ 35,699
There is currently no standing Audit Committee. The Board of Directors fulfills that responsibility. As a result, there are no Audit Committee pre-approval policies and procedures in existence.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements. The following documents are filed as part of this report:
Page
Reports of Independent Registered Public Accounting Firm
Balance Sheets as of December 31, 2020 and 2019
Statements of Operations for the years ended December 31, 2020, 2019 and 2018
Statements of Changes in Shareholders Equity for the years ended December 31, 2020, 2019 and 2018
Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
Notes to Financial Statements
23-26	
All other schedules and financial statements are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
(b) Exhibits. The following documents are filed herewith as exhibits or incorporated by the references indicated below:
Exhibit
Designation
Description of Exhibit
2.1 Plan of Reorganization (as modified) dated March 22, 1996 (incorporation by reference is made by Exhibit 2.1 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
2.2 First Amended Disclosure Statement (as modified) dated March 22, 1996 (incorporation by reference is made to Exhibit 2.2 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
2.3 Order Confirming Plan of Reorganization dated May 15, 1996 entered May 20, 1996 (incorporation by reference is made to Exhibit 2.3 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
2.4 First Modification to Plan of Reorganization (as modified) dated October 29, 1996 (incorporation by reference is made to Exhibit 2.4 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
2.5 Ex parte Order approving modification to Plan of Reorganization (as modified) entered October 29, 1996 (incorporation by reference is made to Exhibit 2.5 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
2.6 Certificate of Substantial Consummation dated January 21, 1997 (incorporation by reference is made to Exhibit 2.6 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
2.7 Final Decree issued by the Court on February 11, 1997 (incorporation by reference is made to Exhibit 2.7 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.1 Articles of Incorporation of WESPAC Property Corporation as filed with and endorsed by the Secretary of State of California on December 16, 1996 (incorporation by reference is made to Exhibit 3.1 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
Exhibit
Designation
Description of Exhibit
3.2 Articles of Incorporation of First Equity Properties, Inc. filed with and approved by the Secretary of State of Nevada on December 19, 1996 (incorporation by reference is made to Exhibit 3.2 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.3 Bylaws of First Equity Properties, Inc. as adopted December 20, 1996 (incorporation by reference is made to Exhibit 3.3 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.4 Agreement and Plan of Merger of WESPAC Property Corporation and First Equity Properties, Inc. dated December 23, 1996 (incorporation by reference is made to Exhibit 3.4 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.5 Articles of Merger of WESPAC Property Corporation into First Equity Properties, Inc. as filed with and approved with the Secretary of State in Nevada December 24, 1996 (incorporation by reference is made to Exhibit 3.5 to Form 8-K of First Equity Properties, Inc. for event reported June 19, 1996).
3.6 Certificate of Designation of Preferences and Relative Participating or Optional of Other Special Rights and Qualifications, Limitations or Restrictions thereof of the Series A 8% Cumulative Preferred Stock (incorporation by reference is made to Exhibit 3.6 to Form 10-KSB of First Equity Properties, Inc. for the fiscal year ended December 31, 1996).
3.7 Certificate of Amendment to Articles of Incorporation as filed with the Secretary of State of Nevada on July 12, 2004 (incorporation by reference is made to Exhibit 3.3 to Current Report on Form 8-K of First Equity Properties, Inc. for event reported May 1, 2004).
Code of Ethics for Senior Financial Officers (incorporation by reference is made to Exhibit 14 to Form 10-K of First Equity Properties, Inc. for the fiscal year ended December 31, 2003).
31.1*
31.2*
Certification of Principal Executive Officer.
Certification of Principal Financial and Accounting Officer.
32.1* Rule 1350 Certification by Principal Executive Officer and Principal Financial and Accounting Officer.
* filed herewith