Direct Investment Holdings Group, Inc. - Quarter Report: 2008 March (Form 10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008

Or

FOR THE TRANSITION PERIOD FROM                     TO                    

Commission File Number 000-11777

FIRST EQUITY PROPERTIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

1800 Valley View Lane, Suite 300

Dallas, Texas 75234

(Address of principal executive offices)

(Zip Code)

(469) 522-4200

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ.    No  ¨.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated file, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE

PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  ¨.    No  ¨.

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

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FIRST EQUITY PROPERTIES, INC.

FORM 10-Q

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PART 1. FINANCIAL INFORMATIOIN

FIRST EQUITY PROPERTIES, INC.

BALANCE SHEETS

(unaudited)

The accompanying notes are an integral part of these financial statements.

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FIRST EQUITY PROPERTIES, INC.

STATEMENTS OF EARNINGS

(unaudited)

The accompanying notes are an integral part of these financial statements.

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FIRST EQUITY PROPERTIES, INC.

STATEMENT OF SHAREHOLDERS’ EQUITY

For The Three Months Ended March 31, 2008

(unaudited)

The accompanying notes are an integral part of these financial statements.

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FIRST EQUITY PROPERTIES, INC.

STATEMENTS OF CASH FLOWS

(unaudited)

The accompanying notes are an integral part of these financial statements.

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FIRST EQUITY PROPERTIES, INC.

Notes to Financial Statements

NOTE A. BASIS OF PRESENTATION

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

The financial statements for the period March 31, 2008 do not include all of the information and footnotes required by generally accepted accounting principals in the United States of America for complete financial statements. You should read these financial statements in conjunction with the financial statements and footnotes thereto in our annual report on Form 10-K for the year ended December 31, 2007. Hereafter in this document, First Equity Properties, Inc. is referred to as FEPI.

Operating results for the three-month period ended March 31, 2008, are not necessarily indicative of the results that may be expected for the year ended December 31, 2008.

NOTE B. FEDERAL INCOME TAXES

The accompanying unaudited 2008 financial statements contain an estimated accrual for current federal income taxes calculated using the graduated tax rate as published by the Internal Revenue Service (IRS), which was 15% for the first quarter of 2008. There are no significant differences between the Company’s net income for financial and income tax reporting.

The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. We caution investors that any forward-looking statements presented in this report, or which management may make orally or in writing from time to time, are based on beliefs and assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “result,” “should,” “will” and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements. Such statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected by the forward-looking statements. We caution you that while forward-looking statements reflect our good-faith beliefs when we make them, they are not guarantees of future performance and are impacted by actual events when they occur after we make such statements. Accordingly, investors should use caution in relying on forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.

Results of Operations

Comparison of the three months ended March 31, 2008 to the three months ended March 31, 2007.

The Company’s sole source of income is from interest on notes receivables from affiliated entities. As the balance on these notes have not been paid down, the income from these notes for the three months ended March 31, 2008 of $60,000 is comparable to $59,000 for the same period ended 2007.

Our major operating expenses are related to the professional fees required to maintain the organization. These expenses are relatively consistent from period to period. General and administrative expenses were $1,172 and $735 for the three months ended March 31, 2008 and 2007, respectively. Legal and professional fees were $8,345 and $7,710 for the three months ended March 31, 2008 and 2007, respectively.

In the first quarter of 2008, we incurred interest expense on our affiliated payables balances. The parties to these payables demanded that interest be paid on the outstanding balances. Interest on these balances is being accrued at a rate of prime plus 1 percent. Our estimated interest expense on these liabilities was approximately $30,000 for the first quarter ended March 31, 2008.

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The decrease in our estimated income tax expense from $20,000 in 2007 to $6,000 in 2008 is due to incurring interest expense on our outstanding affiliated payables. In addition, in an attempt to more closely approximate the actual expense as reported to the internal revenue service, we are using the graduated tax rate as published by the IRS (which is currently 15%) to estimate our liability. There are currently no differences (timing or permanent) between the taxes reported and booked.

Liquidity and Capital Resources

General

Our principal liquidity needs for the next twelve months are funding of normal recurring expenses; including accounting, interest expense, legal and federal income tax payments. Our principal source of cash is proceeds from interest income on our notes receivables.

As of March 31, 2008 and December 31, 2007, the company had total assets of 2,481,249 and 2,480,193, respectively. Of that amount $73,709 and $72,653 was held in cash as of March 31, 2008 and December 31, 2007, respectively. We anticipate that cash provided by operating activities will be sufficient to provide for our cash needs.

The Company’s significant assets consist of two notes receivables of $1,822,540 and $585,000 from affiliated parties totaling $2,407,540.

Cash flow Summary

The following summary discussion of our cash flows is based on the statements of cash flows as presented in ITEM 1. and is not meant to be an all inclusive discussion of the changes in our cash flow.

Our operating activities provided us with a $1,056 cash inflow. Our principal source of cash is proceeds received from interest income of $60,000. The majority of our cash was used to pay our federal income tax expense of $55,000. In addition we paid cash of $2,000 for normal recurring operating expenses and $2,000 to pay down our affiliated payables.

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

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SIGNATURE PAGE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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