U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-2864
DIVERSIFIED REALTY, INC.
(Exact name of small business issuer as specified in its charter)
Montana
(State or other jurisdiction of incorporation or organization)
81-0268110
(IRS Employer Identification No.)
128 Second Street South, Great Falls, Montana 59405
(Address of principal executive offices)
(406) 727-2600
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Class Outstanding at September 30, 1996
No Par Value Common Stock 1,873,038 Shares
Transitional Small Business Disclosure Format (Check One): Yes No X
<PAGE>
DIVERSIFIED REALTY, INC.
INDEX
SEPTEMBER 30, 1996
Page Number
PART I
Condensed Financial Statements:
Balance Sheet
September 30, 1996 2
Statements of Income -
Three Months and Nine Months Ended
September 30, 1996 and 1995 3
Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 4
Notes to Financial Statements 5
Management's Discussion and Analysis
of the Statements of Income 6
PART II
Other Information 7
Signatures 8
1
<PAGE>
DIVERSIFIED REALTY, INC.
BALANCE SHEET
AS OF SEPTEMBER 30, 1996
ASSETS
Current Assets
Cash $ 647,243
Marketable Securities, at market 6
Receivables - Net 1,814
Due From Parent Company 304,425
Total Current Assets 953,488
Noncurrent Receivables 11,942
Property, Plant and Equipment, Net 282,122
TOTAL ASSETS $ 1,247,552
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses $ 9,748
Total Current Liabilities 9,748
Stockholders' Equity
Common Stock - No Par Value, 5,000,000 shares
authorized, 1,873,038 shares issued and
outstanding 1,416,319
Accumulated Deficit (178,515)
Total Stockholders' Equity 1,237,804
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,247,552
See Notes to Financial Statements
2
<PAGE>
<TABLE>
DIVERSIFIED REALTY, INC.
<CAPTION>
STATEMENTS OF INCOME
For The Three For The Nine
Months Months
Ended Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Operating Revenues $ 27,344 $ 24,917 $ 77,842 $ 78,378
Operating Expenses 20,470 16,117 57,977 53,548
Operating Income 6,874 8,800 19,865 24,830
Provision for Income Taxes (1,500) (1,850) (4,400) (5,400)
Net Income $ 5,374 $ 6,950 $ 15,465 $ 19,430
Earnings Per Weighted Average
Share Outstanding: (1,874,257
Shares in 1996 and 1,875,000
Shares in 1995) $ -- $ -- $ .01 $ .01
Dividends Per Share $ -- $ -- $ -- $ --
</TABLE>
See Notes to Financial Statements
3
<PAGE>
DIVERSIFIED REALTY, INC.
STATEMENTS OF CASH FLOWS
For The Nine
Months Ended
September 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 30,209 $ 46,106
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Received on Principal of
Notes Receivable 1,263 1,140
Net Cash Provided By Investing Activities 1,263 1,140
CASH FLOWS FROM FINANCING ACTIVITIES
Net Cash Received From Parent Company 1,800 1,800
Cash Purchases of Treasury Stock (589) -
Net Cash Provided By Financing
Activities 1,211 1,800
NET INCREASE IN CASH 32,683 49,046
CASH - BEGINNING OF PERIOD 614,560 558,236
CASH - END OF PERIOD $ 647,243 $ 607,282
See Notes to Financial Statements
4
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
In the opinion of management, all adjustments necessary (consisting of
only normal recurring accruals) have been made to the unaudited financial
statements to present fairly the financial position as of September 30, 1996
and the results of the Company's operations for the three months and nine
months ended September 30, 1996 and 1995 and cash flows for the nine months
ended September 30, 1996 and 1995.
The results of operations for the three months and nine months ended
September 30, 1996 and 1995 are not necessarily indicative of the results to
be expected for the full year.
Parent -
M Corp, Great Falls, Montana owns approximately 84% of the outstanding
shares of the Company.
5
<PAGE>
DIVERSIFIED REALTY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
SEPTEMBER 30, 1996
A summary of the period to period changes in items included in the
statements of income is shown below.
COMPARISON OF
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 AND 1995 1996 AND 1995
INCREASES (DECREASES)
Revenues $ 2,427 9.7% $ (536) (.7%)
Expenses 4,353 27.0% 4,429 8.3%
Net Income (1,576) (22.7%) (3,965) (20.4%)
Revenues devreased $536, .7%, in the first nine months of 1996 as compared
with the first nine months of 1995 with a decrease of $1,276 (2.3%) in rent
revenues partially offset by an increase of $765 (3.5%) in interest revenues.
The decrease in rent revenues in the first nine months of 1996 as compared
with the first nine months of 1995 was due primarily to an increase in
vacancies, partially offset by an increase in rental rates.
Expenses increased $4,429 (8.3%) in the first nine months of 1996 as
compared with the first nine months of 1995 with increases in payroll and
payroll costs and increases in other classifications of expenses partially
offset by a decrease in the provision for depreciation.
The decrease in revenues and the increase in expenses in the first nine
months of 1996 as compared with the first nine months of 1995 are the primary
reasons for the decrease in net income.
6
<PAGE>
DIVERSIFIED REALTY, INC.
PART II
OTHER INFORMATION
SEPTEMBER 30, 1996
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
third quarter of 1996, however, on October 22, 1996, a meeting of
shareholders was held at which the Company's entire Board of
Directors was elected. Directors elected to the Board were L. H.
LaValley, Charles E. Reed and S. M. McCann. The Company's
shareholders also authorized the Board of Directors to select an
independant certified public accounting firm to audit the Compamy's
financial statements for 1996.
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None
7
<PAGE>
DIVERSIFIED REALTY, INC.
SIGNATURES
In accordance with the requirements of the Exchange
Act, the registrant caused this report to be signed on
its behalf by the undersigned, thereunto duly
authorized.
DIVERSIFIED REALTY, INC.
Registrant
Date: October 30, 1996 s/Kathleen King
Kathleen King
Secretary-Treasurer
Date: October 30, 1996 s/Jerry K. Mohland
Jerry K. Mohland,
Accountant
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statements contained in the company's Form 10-QSB and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 647,243
<SECURITIES> 6
<RECEIVABLES> 306,239
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 953,488
<PP&E> 282,122
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,247,552
<CURRENT-LIABILITIES> 9,748
<BONDS> 0
<COMMON> 1,416,319
0
0
<OTHER-SE> (178,515)
<TOTAL-LIABILITY-AND-EQUITY> 1,247,552
<SALES> 0
<TOTAL-REVENUES> 77,842
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 57,977
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 19,865
<INCOME-TAX> 4,400
<INCOME-CONTINUING> 15,465
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,465
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
