U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
XX ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1997
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 0-2864
DIVERSIFIED REALTY, INC.
(Name of small business issuer in its charter)
Montana
(State or other jurisdiction 81-0268110
of incorporation or organization) (I.R.S. Employer Identification Number)
128 Second Street South, Great Falls, Montana 59405
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (406) 727-2600
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange On Which Registered
NONE N/A
Securities registered under Section 12(g) of the Exchange Act:
$.10 Par Value Common Stock
(Title of class)
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 XX No
Check, if 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 10KSB.
State issuer's revenues for its most recent fiscal year $126,838.
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).
As of February 28, 1998, 295,575 shares held by nonaffiliates were
outstanding. The registrant's stock is not traded on any securities
exchange. To registrant's knowledge, bid and asked quotations for
registrant's stock are not reported in any newspapers nor are records kept
of any quotations by securities dealers or the National Quotation Bureau,
Inc. There exists no public market for registrant's common stock.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
5,372,895 shares $.10 par value common stock are outstanding as
of February 28, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the form 10-KSB (e.g., Part I, Part II, etc.)
into which the documents are incorporated: (1) any annual report to security
holders: (2) any proxy or information statement; and (3) any prospectus
filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933
("Securities Act"). The listed documents should be clearly described for
identification.
DOCUMENTS FORM 10-KSB REFERENCE
Annual Report to Shareholders for Part I, Items 1 and 2
the year ended December 31, 1997. Part II, Items 5, 6 and 7
Part III, Item 12
Part IV, Item 13
Transitional Small Business Disclosure Format (check one): Yes ; No X .
<PAGE>
DIVERSIFIED REALTY, INC.
PART I
ITEM 1. DESCRIPTION OF BUSINESS AND
ITEM 2. DESCRIPTION OF PROPERTY
A description of the Company's business and property ownership is set forth
on Page 1 of Exhibit 13, the Annual Report to Shareholders for the year ended
December 31, 1997, which description is incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS
No legal proceedings presently pending by or against Diversified Realty, Inc.
are described herein as management believes that the outcome of such
litigation should not have a material adverse effect on the financial
position of the Company taken as a whole.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A meeting of security holders was held during the fourth quarter of 1997 at
which the Company's entire Board of Directors was elected. Directors elected
to the board were M. A. Arneson, Charles E. Reed and S. M. McCann. The
Company's security holders also adopted Restated Articles of Incorporation
that changed the Company's term of existence, changed the capital structure
of the Company and modernized the Company's charter. The Company's security
holders also authorized the Board of Directors to select an independent
certified public accounting firm to audit the Company's financial statements
for 1997.
I-1
1.
<PAGE>
DIVERSIFIED REALTY, INC.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
ITEM 7. FINANCIAL STATEMENTS
Items 5, 6 and 7 are set forth on Page 12, Pages 1 and 2 and Pages 3 to 11,
respectively, of Exhibit 13, the Annual Report to Shareholders for the year
ended December 31, 1997, which report is incorporated herein by reference.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no disagreements concerning accounting principles or
practices or financial statement disclosures between the Company and the
Company's independent auditor during the two most recent years.
II-1
2.
<PAGE>
DIVERSIFIED REALTY, INC.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The following are the directors and executive officers of the Company.
All directors and officers serve as such until the 1998 annual meeting of
shareholders or until their successors are elected and qualify.
NAME, AGE, AND YEAR ELECTED DIRECTOR POSITION
M. A. Arneson 42, 1997 President and Director
S. M. McCann, 34, 1990 Director
Charles E. Reed, 80, 1974 Vice President and Director
S. M. McCann is the president and a director of UAC, Inc., an affiliate of
the Company, and the president and a director of M Corp.
Family Relationships
S. M. McCann and M. A. Arneson are children of Anne Marie and Paul J. McCann.
Members of the Anne Marie and Paul J. McCann family control a majority of
the common stock of M Corp. Anne Marie McCann and Paul J. McCann each
disclaim beneficial ownership of any shares of stock not owned of record
directly by them. Anne Marie and Paul J. McCann do not personally own any
stock of the Company.
Following are the executive officers of the Company and a description of
their principal business experience.
Name and Position Business Experience During Past 5 Years
M. A. Arneson Investor,
President Billings, Montana
S. M. McCann Attorney at Law, Business Owner
Vice-President Investor
San Luis Obispo, California
Charles E. Reed President, Continental Realty and Escrow,
Butte, Montana.
Based solely on its review of reports of persons subject to Section 16 of
the Securities and Exchange Act, the Company believes that required reports
were filed in a timely manner disclosing transactions involving the
Company's common stock.
III-1
3.
<PAGE>
DIVERSIFIED REALTY, INC.
ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation Table. The following table shows the cash compensation
paid by the Company to its President and Chief Executive Officer for 1997,
1996 and 1995. No officer or director of the Company received cash
compensation exceeding $250 during 1997, 1996 or 1995.
Summary Compensation Table
Name of individual Calendar Total Cash
and Position Year Compensation
M. A. Arneson 1997 $ 0
President, Director 1996 $ 0
L. H. LaValley 1996 $ 0
President, Director 1995 $ 0
The Company has no pension plan, no stock option or stock appreciation rights
plans and no long-term incentive plans and there was no other material
compensation paid during the years ended December 31, 1997, 1996 and 1995.
The Company has not adopted a formal plan for the compensation of directors.
During 19976 the Company did not pay directors fees to any director.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
Set forth below is certain information concerning persons who are known by
the Company to own beneficially more than 5% of the Company's voting shares
on February 28, 1998.
Title of Class No Par Value
Common Stock
Name and Address M Corp
of Beneficial Owner 110 Second Street South
Great Falls, Montana
Amount and Nature 5,073,442 (1)
of Beneficial Direct
Ownership
Percent 94.4%
of Class
(1) S. M. McCann, M. A. Arneson and other members of the Anne Marie and Paul
J. McCann family own directly or indirectly a majority of the outstanding
stock of M Corp, which company owns 5,073,442 shares (94.4%) of the
outstanding common stock of the Company. Members of the Anne Marie and Paul
J. McCann family own directly 3,033 shares (.06%) of the Company's stock.
Anne Marie and Paul J. McCann, parents of S. M. McCann and M. A. Arneson,
each disclaim beneficial ownership of any shares of stock not owned
of record directly by them. Neither Anne Marie nor Paul J. McCann personally
own any shares of stock in the Company.
III-2
4.
<PAGE>
DIVERSIFIED REALTY, INC.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -
Continued
(b) Security Ownership of Management
The following table sets forth as of February 28, 1998, information concerning
the beneficial ownership of the Company's common stock by each director, each
executive officer named in the Company's Summary Compensation Table and by
all directors and executive officers of the Company as a group:
Amount and Nature
Name of of Beneficial
Beneficial Owner Ownership Percent
Charles E. Reed 20 Direct -
M. A. Arneson - (1) -
S. M. McCann - (1) -
All Directors and Officers
as a Group 20 (1) -
(1) See Note (1) Item 11(a) on preceding page.
(c) Changes In Control
The Company knows of no contractual arrangements which may at a subsequent
date result in a change in control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with the Company's parent company, M Corp and its other
subsidiaries, are disclosed in Note 5 of the notes to financial statements
in the Annual Report to Shareholders for the year ended December 31, 1997,
which note is incorporated herein by reference. M Corp owns approximately
94.4% of the Company's outstanding common stock.
III-3
5.
<PAGE>
DIVERSIFIED REALTY, INC.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
No. 13 - Diversified Realty, Inc., Annual Report to Shareholders for the
year ended December 31, 1997, incorporated by reference in this Annual Report
on Form 10-KSB.
No. 27 - Financial Data Schedule
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed by the Company during the three
months ended December 31, 1997.
IV-1
6.
<PAGE>
DIVERSIFIED REALTY, INC.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
DIVERSIFIED REALTY, INC.
Date: February 27, 1998 By:s/M. A. Arneson
M. A. Arneson, President
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities indicated
on February 27, 1998.
Director s/M. A. Arneson
M. A. Arneson
Director s/S. M. McCann
S. M. McCann
Principal Accountant s/Jerry K. Mohland
Jerry K. Mohland
IV-2
7.
<PAGE>
DIVERSIFIED REALTY, INC.
ANNUAL REPORT
1997
<PAGE>
DIVERSIFIED REALTY, INC.
ANNUAL REPORT
DESCRIPTION AND LINES OF BUSINESS
Diversified Realty, Inc. (herein referred to as "DRI" or the "Company") is a
majority-owned subsidiary of M Corp, a financial holding company. As of
December 31, 1997, M Corp owned approximately ninety-four percent of the
outstanding common stock of the Company.
For the past several years, the Company has been primarily engaged in the
ownership and rental of real property. As of December 31, 1997, DRI owned
property in Florida and Montana.
Information as of December 31, 1997, concerning the gross carrying amount of
real property, accumulated depreciation and encumbrances on a property by
property basis is presented in Note 6, Investments in Real Estate, of the
Notes to Financial Statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Net income increased $34,427 in 1997 from a net loss in 1996 of $6,745 to net
income of $27,682 in 1997. The increase in net income in 1997 as compared
with 1996 was due in part to an increase in revenues and in part to a
decrease in expenses.
Rent income decreased $134 (.2%) in 1997 as compared with 1996. Interest
income increased $16,989 (51.6%) in 1997 as compared with 1996. The increase
in interest income in 1997 as compared with 1996 was due primarily to an
increase in interest-bearing deposits.
1
<PAGE>
DIVERSIFIED REALTY, INC.
ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
Operating expenses in total, decreased $23,456 (22.3%) in 1997 as compared
with 1996. Maintenance expenses decreased $13,046 (28.9%) in 1997 as compared
with 1996 due primarily to decreases in maintenance costs. The provision for
depreciation decreased $4,621 (24.8%) in 1997 as compared with 1996 due to
some of the Company's assets being fully depreciated during 1997 and 1996.
Income tax expense increased $10,950 (114.7%) in 1997 as compared with 1996
due to the increase in pre-tax income. The Company files a consolidated
income tax return with the Company's parent company and other affiliated
companies.
Transactions with the Company's parent company and its affiliates during 1997
and 1996 are disclosed in Note 5, Related Party Transactions, of the Notes to
Financial Statements.
The Company is considering acquisitions which would deplete the Company's
available cash and thus affect the liquidity of the Company.
2
<PAGE>
DIVERSIFIED REALTY, INC.
FINANCIAL REPORT
DECEMBER 31, 1997
CONTENTS
PAGE
AUDITOR'S REPORT 4
FINANCIAL STATEMENTS
Balance Sheets as of December 31, 1997 and 1996 5
Statements of Income and Accumulated Deficit for
the Years Ended December 31, 1997 and 1996 6
Statements of Cash Flows for the Years
Ended December 31, 1997 and 1996 7
Notes to Financial Statements 8-11
OTHER INFORMATION 12
3
<PAGE>
Report of Independent Auditors
To The Board of Directors
Diversified Realty, Inc.
Great Falls, MT 59405
We have audited the accompanying balance sheets of Diversified Realty, Inc.,
as of December 31, 1997 and 1996 and the related statements of income and
accumulated deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsiblity is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides
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 Diversified Realty, Inc.,
as of December 31, 1997 and 1996 and the results of its operations and its
cash flows for the years then ended, in conformity with generally accepted
accounting principles.
DWYER & KEITH, CPA's, P.C.
March 20, 1998
Great Falls, Montana
4
<PAGE>
DIVERSIFIED REALTY, INC.
BALANCE SHEETS
DECEMBER 31, 1997 and 1996
1997 1996
ASSETS
Current Assets
Cash (Note 2) $ 2,065,193 $ 947,913
Income Tax Prepayments 182 2,582
Current Portion of Contract Receivable (Note 3) 2,026 1,854
Due from Parent Company - 3,200
Total Current Assets 2,067,401 955,549
Long-Term Contract Receivable, Less Current
Portion Included Above (Note 3) 9,440 11,463
Investments in Property and Property, Plant
and Equipment (Notes 1 and 6)
Land 14,261 14,261
Buildings 392,975 392,975
Furniture, Fixtures and Equipment 71,124 71,124
478,360 478,360
Less Accumulated Depreciation (216,499) (202,495)
261,861 275,865
Total Assets $ 2,338,702 $ 1,242,877
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities-
Accounts Payable and Accrued Liabilities $ 29,268 $ 27,319
Due To Parent Company 16,200 -
Total Current Liabilities 45,468 27,319
Stockholders' Equity
Common Stock - $.10 Par Value,
11,000,000 shares authorized,
5,375,000 shares issued in 1997
and 1,875,000 shares issued in 1996 537,500 187,500
Additional Paid-In-Capital 1,929,408 1,229,408
Accumulated Deficit (173,043) (200,725)
Cost of Common Stock in Treasury (2,105
shares in 1997 and 2,085 shares in 1996) (631) (625)
Total Stockholder's Equity 2,293,234 1,215,558
Total Liabilities and
Stockholders' Equity $ 2,338,702 $ 1,242,877
See Notes to Financial Statements.
5
<PAGE>
DIVERSIFIED REALTY, INC.
STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1997 and 1996
1997 1996
Income
Rent $ 71,796 $ 71,930
Interest 49,936 32,947
Other 5,106 40
126,838 104,917
Expenses
Salaries and Payroll Costs 321 1,410
Property Taxes and Licenses 14,625 15,379
Depreciation 14,004 18,625
Directors' Fees - 100
Interest - 1,616
Other Expenses 49,736 64,982
78,686 102,112
Income Before Income Taxes 48,182 2,805
Income Taxes (Notes 1 and 4) (20,500) (9,550)
NET INCOME (LOSS) 27,682 (6,745)
Accumulated Deficit, Beginning of Year (200,725) (193,980)
Accumulated Deficit, End of Year $ (173,043) $ (200,725)
See Notes to Financial Statements.
6
<PAGE>
DIVERSIFIED REALTY, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 and 1996
INCREASE (DECREASE) IN CASH
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash Received From Customers $ 78,622 $ 71,314
Cash Paid to Suppliers and Employees (64,423) (61,282)
Interest Received in Cash 49,936 32,947
Interest Paid In Cash - (1,616)
Income Tax Payments Made in Cash (18,100) (12,132)
Net Cash Provided By
Operating Activities 46,035 29,231
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash Proceeds From Sales
of Current Investments - 20
Cash Received on Principal of
Notes Receivable 1,851 1,702
Net Cash Provided By
Investing Activities 1,851 1,722
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash Purchases of Treasury Stock (6) (625)
Issuance of Common Stock For Cash 1,050,000 -
Net Cash Advances From (To) Parent Company 19,400 303,025
Net Cash Provided By
Financing Activities 1,069,394 302,400
NET INCREASE IN CASH 1,117,280 333,353
CASH - BEGINNING OF YEAR 947,913 614,560
CASH - END OF YEAR $2,065,193 $ 947,913
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES
Net Income (Loss) $ 27,682 $ 38,122
Adjustments to Reconcile Net Income to Net
Cash Provided By Operating Activities
Depreciation 14,004 18,625
(Gain) on Sales of Current Investments - (16)
Changes in Operating Assets and Liabilities
(Increase) in Income Tax Prepayments 2,400 (2,582)
Increase in Accrued Liabilities 1,949 19,949
NET CASH PROVIDED BY OPERATING
ACTIVITIES $ 46,035 $ 29,231
See Notes to Financial Statements.
7
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Nature of Operations, Risks and Uncertainties
The Company is engaged in the ownership and rental of properties located
primarily in Yellowstone County, Montana.
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the reported amounts of certain types of assets, liabilities,
revenues and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements. Actual
results could differ from those estimates.
(b) Depreciation
Depreciation for the various classifications of rental property, plant and
equipment is computed using the straight-line and accelerated methods over the
estimated useful lives of the assets as follows:
Buildings 15 - 27 Years
Furniture, Fixtures and Equipment 3 - 10 Years
(c) Income Taxes
The Company files a consolidated income tax return with its parent company.
Income taxes are allocated to the Company based upon the ratio of the
Company's pre-tax income to total consolidated pre-tax income.
(d) Policy of Cash Equivalents
For the purposes of the statement of cash flows, cash equivalents include time
deposits, certificates of deposit and money market accounts, all with original
maturities of three months or less.
(e) Reclassifications
Certain reclassifications have been made to the prior year amounts to make
them comparable to the 1997 presentation. These changes had no impact on
previously reported results of operations or shareholders' equity.
2.CASH BALANCES
The Company maintains cash accounts with various stock brokerage firms.
Cash balances are insured up to $100,000 by the Securities Investor
Protection Corporation ("SIPC"). At December 31, 1997, a cash balance
totaling $1,844,048 was uninsured by the SIPC.
8
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
3. CONTRACT RECEIVABLE
The contract receivable at December 31 consists of the following:
1997 1996
9% Contract For Deed, due in monthly
installments of $248 including interest to
September, 2002 $ 11,466 $ 13,317
Less Current Portion 2,026 1,854
Long-Term Contract Receivable $ 9,440 $ 11,463
The above contract receivable is secured by real property, the sale of which
resulted in the receivable. In the event the receivable becomes uncollectible
and the underlying collateral is completely worthless, the Company would
incur a loss in the amount of the receivable.
4. INCOME TAXES
Income tax expense consists of the following, all currently payable:
1997 1996
U.S. Income Taxes $ 17,000 $ (3,200)
State Income Taxes 3,500 12,750
$ 20,500 $ 9,550
The income tax expense reflected in the financial statements differs from the
amounts that would normally be expected by applying the U.S. Federal income
tax rates to income before income taxes. The reasons for these differences
are as follows:
1997 1996
Computed "Expected" Tax Expense $ 16,400 $ 900
State Income Taxes 3,500 8,650
Other 600 -
$ 20,500 $ 9,550
9
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
5. RELATED PARTY TRANSACTIONS
During 1997 and 1996 the Company received managerial assistance from its
parent company at no cost to the Company. In addition, the Company has had
transactions with its parent company or subsidiaries of its parent company,
as follows:
1997 1996
Net Cash Transfers To (From) Parent $ - $ (303,825)
Income Tax Allocation (17,000) 3,200
3,500,000 Shares Common Stock Issued to
Parent for Cash 1,050,000 -
Was Charged For Insurance (2,400) (2,400)
10
<PAGE>
DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
<TABLE>
<CAPTION>
6. INVESTMENTS IN REAL ESTATE
GROSS AMOUNT CARRIED
ON BALANCE SHEET
DATE AT DECEMBER 31, 1997 ACCUMULATED AMOUNT OF
DESCRIPTION CONSTRUCTED LAND BUILDINGS TOTAL DEPRECIATION ENCUMBRANCE
<S> <C> <C> <C> <C> <C>
Investment
Property
Florida 1988 $ - $122,000 $122,000 $31,268 $ -
Rental Unit
Florida 1975 1,500 46,950 48,450 46,950 -
Rental Units
Montana Var. - 224,025 224,025 67,491 -
Miscellaneous
Properties 12,761 - 12,761 - -
Totals $14,261 $392,975 $407,236 $ 131,929 $ -
</TABLE>
Reconciliations Of Total Real Estate Carrying Value For The Two Years Ended
December 31, 1997 are as follows:
1997 1996
Balance, Beginning of Year $407,236 $407,236
Add Acquisitions, at Cost -- --
Less Cost of Property Recovered or Sold -- --
Balance, End of Year $407,236 $407,236
Reconciliations Of Accumulated Depreciation For The Two Years Ended
December 31, 1997 are as follows:
1997 1996
Balance, Beginning of Year $131,929 $114,867
Add Provision for Depreciation 13,780 17,062
Balance, End of Year $145,079 $131,929
11
<PAGE>
DIVERSIFIED REALTY, INC.
DIRECTORS AND OFFICERS
NAME OCCUPATION
M. A. Arneson Investor
President and Billings, Montana
Director
S. M. McCann Attorney at Law, Investor,
Director San Luis Obispo, California
Charles E. Reed Real Estate Broker,
Vice President Butte, Montana
and Director
MARKET INFORMATION
The common stock of Diversified Realty, Inc. is not traded on any securities
exchange, nor are records kept of any quotations by securities dealers or the
National Quotation Bureau, Inc. To the best knowledge of the Company, bid and
asked quotations for Diversified Realty, Inc., common stock are not reported
in any newspapers.
No dividends were paid in 1997 or 1996.
There are approximately 2,250 holders of record of the Company's common stock.
A copy of the Form 10-KSB Annual Report may be obtained upon written request
to the Company.
DIVERSIFIED REALTY, INC.
P.O. Box 2249
110 Second Street South
Great Falls, MT 59403-2249
12
<PAGE>
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 2065193
<SECURITIES> 0
<RECEIVABLES> 2208
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2067401
<PP&E> 478360
<DEPRECIATION> 216499
<TOTAL-ASSETS> 2338702
<CURRENT-LIABILITIES> 45468
<BONDS> 0
0
0
<COMMON> 537500
<OTHER-SE> 1755734
<TOTAL-LIABILITY-AND-EQUITY> 2338702
<SALES> 0
<TOTAL-REVENUES> 126838
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 78656
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 48182
<INCOME-TAX> 20500
<INCOME-CONTINUING> 27682
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<NET-INCOME> 27682
<EPS-PRIMARY> .00
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