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 March 31, 1997
[ ] 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 81-0268110
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
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 March 31, 1997
No Par Value Common Stock 1,872,915 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
<PAGE>
DIVERSIFIED REALTY, INC.
INDEX
MARCH 31, 1997
Page Number
PART I
Condensed Financial Statements:
Balance Sheet -
March 31, 1997 2
Statements of Income -
Three Months Ended March 31, 1997 and 1996 3
Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996 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 MARCH 31, 1997
ASSETS
Current Assets
Cash $ 975,649
Receivables - Net 1,896
Due From Parent Company 2,600
Total Current Assets 980,145
Noncurrent Receivables 10,974
Property, Plant and Equipment, Net 272,364
TOTAL ASSETS $ 1,263,483
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses $ 31,416
Income Taxes Payable 1,618
Total Current Liabilities 33,034
Stockholders' Equity
Common Stock - No Par Value,
5,000,000 shares authorized,
1,875,000 shares issued 1,416,908
Accumulated Deficit (185,834)
Cost of Common Stock in Treasury (625)
Total Stockholders' Equity 1,230,449
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,263,483
See Notes to Financial Statements
2
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DIVERSIFIED REALTY, INC.
STATEMENTS OF INCOME
For The Three Months Ended
March 31,
1997 1996
Operating Revenues $ 33,519 $ 26,303
Operating Expenses 14,428 17,288
19,091 9,015
Provision for Income Taxes (4,200) (3,700)
Net Income $ 14,891 $ 5,315
Earnings Per Weighted Average
Shares Outstanding (1,872,915
Shares in 1997 and 1,875,000
Shares in 1996) $ .01 $ --
Dividends Per Share $ -- $ --
See Notes to Financial Statements
3
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DIVERSIFIED REALTY, INC.
STATEMENTS OF CASH FLOWS
For The Three Months Ended
March 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By
Operating Activities $ 26,689 $ 17,686
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Received on Principal of
Notes Receivable 447 415
Net Cash Provided By
Investing Activities 447 415
CASH FLOWS FROM FINANCING ACTIVITIES
Net Cash Advances
From (To) Parent Company 600 (600)
Net Cash Provided (Used) By
Financing Activities 600 (600)
NET INCREASE IN CASH 27,736 17,501
CASH - BEGINNING OF PERIOD 947,913 614,560
CASH - END OF PERIOD $ 975,649 $ 632,061
See Notes to Financial Statements
4
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
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 March 31, 1997 and
the results of the Company's operations and cash flows for the three months
ended March 31, 1997 and 1996.
The results of operations for the three months ended March 31, 1997 and 1996
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 STATEMENTS OF INCOME
MARCH 31, 1997
A summary of the period to period changes in items included in the statements
of income is shown below.
COMPARISON OF
Three Months
Ended
March 31,
1997 and 1996
Increases
(Decreases)
Revenues $ 7,216 27.4%
Operating Expenses $ (2,860) (16.5%)
Net Income $ 9,576 180.2%
Revenues increased $7,216, (27.4%) in the first quarter of 1997 as compared
with the first quarter of 1996 due primarily to increases in rental revenues
($2,544, 13.2%) and interest revenues ($4,679, 66.1%). Interest revenues
increased primarily due to an increase in interest-bearing deposits
maintained by the Company. Operating expenses decreased $2,860 (16.5%) in
the first quarter of 1997 as compared with the first quarter of 1996 with
decreases in the provision for depreciation ($622, 15.1%) and decreases in
other operating expenses ($2,274, 17.3%). The decrease in other operating
expenses during the first quarter of 1997 as compared with the first quarter
of 1996 was due primarily to decreases in maintenance expenses and
professional fees. The provision for income tax expense increased $500,
13.5%, due to the increase in pretax income.
6
<PAGE>
DIVERSIFIED REALTY, INC.
PART II
OTHER INFORMATION
MARCH 31, 1997
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
None
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None
7
<PAGE>
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: April 29, 1997 s/K. King
K. King
Assistant
Secretary-Treasurer
Date: April 29, 1997 s/Jerry K. Mohland
Jerry K. Mohland,
Accountant
8
<PAGE>
</TEXT)
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 975,649
<SECURITIES> 0
<RECEIVABLES> 4,496
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 980,145
<PP&E> 272,364
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,263,483
<CURRENT-LIABILITIES> 33,034
<BONDS> 0
<COMMON> 1,416,908
0
0
<OTHER-SE> (189,459)
<TOTAL-LIABILITY-AND-EQUITY> 1,263,483
<SALES> 0
<TOTAL-REVENUES> 33,519
<CGS> 0
<TOTAL-COSTS> 14,428
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 19,091
<INCOME-TAX> 4,200
<INCOME-CONTINUING> 14,891
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,891
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
</TABLE>
