UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15
(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15
(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-28378
AMERICAN ASSET ADVISERS TRUST, INC.
MARYLAND CORPORATION IRS IDENTIFICATION NO.
76-0410050
8 GREENWAY PLAZA, SUITE 824 HOUSTON, TX 77046
(713) 850-1400
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. X Yes No
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN ASSET ADVISERS TRUST, INC.
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(Unaudited)
ASSETS
CASH & CASH EQUIVALENTS $ 3,344,633
ACCOUNTS RECEIVABLE 20,262
PROPERTY:
Land 5,509,675
Land under development 3,304,425
Buildings 6,471,863
Construction in progress 1,462,950
16,748,913
Accumulated depreciation (296,666)
TOTAL PROPERTY 16,452,247
NET INVESTMENT IN DIRECT FINANCING LEASES 3,158,778
OTHER ASSETS:
Prepaid acquisition costs 301,131
Accrued rental income 140,874
Organization costs, net of accumulated
amortization of $207,984 105,784
Other 89,035
TOTAL OTHER ASSETS 636,824
TOTAL ASSETS 23,612,744
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Note payable 3,375,400
Acquisition fees payable 520,361
Accounts payable 39,765
Compensation payable 150,000
Security deposit 15,050
TOTAL LIABILITIES 4,100,576
MINORITY INTEREST 4,979,293
SHAREHOLDERS' EQUITY
Common stock, $.01 par value, 25,000,000 shares authorized,
1,702,648 shares issued and outstanding 17,026
Additional paid-in capital 15,171,317
Accumulated distributions in excess of earnings (655,468)
TOTAL SHAREHOLDERS' EQUITY 14,532,875
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 23,612,744
See Notes to Consolidated Financial Statements.
2
<TABLE>
AMERICAN ASSET ADVISERS TRUST, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<CAPTION>
Quarter Year to Date
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES
Rental income from operating leases $ 335,572 $ 185,242 $ 859,158 $ 547,704
Earned income from direct financing leases 84,927 33,143 254,653 61,001
Interest income 46,126 40,034 119,473 112,563
TOTAL REVENUES 466,625 258,419 1,233,284 721,268
EXPENSES
Administrative 25,833 8,544 52,833 25,632
Amortization 15,689 16,681 47,066 47,575
Depreciation 41,488 28,459 101,408 85,366
Directors' fees 4,500 3,000 12,000 10,500
Interest - 2,000 6,000 2,000
Legal & professional fees 7,691 12,514 39,773 27,289
State taxes 721 - 12,591 -
Other 7,058 3,085 20,554 11,272
TOTAL EXPENSES 102,980 74,283 292,225 209,634
INCOME BEFORE MINORITY INTEREST IN
NET INCOME OF CONSOLIDATED JOINT VENTURES 363,645 184,136 941,059 511,634
MINORITY INTEREST IN NET INCOME OF
CONSOLIDATED JOINT VENTURES (127,901) (45,739) (322,367) (120,422)
NET INCOME $ 235,744 $ 138,397 $ 618,692 $ 391,212
NET INCOME PER SHARE:
Primary $ 0.14 $ 0.13 $ 0.42 $ 0.38
Fully Diluted $ 0.14 $ 0.12 $ 0.41 $ 0.37
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING:
Primary 1,649,002 1,081,306 1,478,942 1,028,815
Fully Diluted 1,812,598 1,360,675 1,642,538 1,308,184
See Notes to Consolidated Financial Statements.
</TABLE>
3
<TABLE>
AMERICAN ASSET ADVISERS TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<CAPTION>
Quarter Year to Date
1997 1996 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net income $ 235,744 $ 138,397 $ 618,692 $ 391,212
Adjustments to reconcile net income
to net cash flows from operating activities:
Amortization 15,689 16,681 47,066 47,575
Depreciation 41,488 28,459 101,408 85,366
Decrease (increase) in accounts receivable (20,262) 3,700 (15,143) -
Increase (decrease) in accounts payable 5,321 45,557 3,530 (3,621)
Cash receipts from direct financing leases
less than income recognized (2,369) (3,661) (6,981) (2,185)
Decrease in escrow deposits, net of minority
interest partners - 51,900 38,250 -
Increase in accrued rental income (27,303) (11,916) (66,249) (34,319)
Increase in organization costs - (31,033) - (212,878)
Increase in other assets (41,952) - (89,035) -
Increase in minority interest 127,901 45,739 322,367 120,422
NET CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES 334,257 283,823 953,905 391,572
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate:
Accounted for under the operating
lease method (100) (845,272) (1,519,104) (845,272)
Accounted for under the direct
financing lease method - (1,342,805) - (1,342,805)
Land under development (3,304,425) - (3,304,425) -
Construction in progress (942,589) - (942,589) -
Change in prepaid acquisition costs (71,095) 67,151 (226,795) (17,237)
NET CASH FLOWS USED IN INVESTING ACTIVITIES (4,318,209) (2,120,926) (5,992,913) (2,205,314)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock, net 1,353,375 876,492 4,496,846 2,673,871
Proceeds from note payable 3,375,400 - 3,375,400 -
Distributions paid to shareholders (288,928) (186,453) (774,966) (530,098)
Distributions to minority interest partners (131,525) (49,403) (329,950) (133,959)
NET CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES 4,308,322 640,636 6,767,330 2,009,814
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 324,370 (1,196,467) 1,728,322 196,072
CASH and CASH EQUIVALENTS at beginning
of period 3,020,263 2,957,500 1,616,311 1,564,961
CASH and CASH EQUIVALENTS at end of
period $ 3,344,633 $ 1,761,033 $ 3,344,633 $ 1,761,033
See Notes to Consolidated Financial Statements.
</TABLE>
4
<TABLE>
AMERICAN ASSET ADVISERS TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<CAPTION>
Quarter Year to Date
1997 1996 1997 1996
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING ACTIVITIES:
<S> <C> <C> <C> <C>
Accrued acquisition costs included
in construction in progress $ 520,361 $ - $ 520,361 $ -
SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING ACTIVITIES:
Real estate contributed by partners of the
consolidated joint ventures $ - $ - $ 1,391,780 $ -
See Notes to Consolidated Financial Statements.
</TABLE>
5
AMERICAN ASSET ADVISERS TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
American Asset Advisers Trust, Inc. ("the Company") was incorporated on
August 17, 1993 as a Maryland corporation. The initial issuance of
20,001 shares of stock for $200,010 was to American Asset Advisers
Realty Corporation ("AAA"). Commencing March 17, 1994, the Company
offered up to 2,000,000 additional shares of common stock together with
1,000,000 warrants. The warrants are exercisable at $9 per share until
March 15, 1998. As of September 30, 1997, 504,126 warrants were
outstanding. The offering period of the initial public offering
terminated on March 15, 1996 with 1,008,252 shares being issued. On
June 18, 1996, the Company commenced a follow-on offering of up to
2,853,659 additional shares of its common stock. The offering will
terminate June 17, 1998, unless terminated earlier. As of September
30, 1997, 674,395 shares in this second offering were issued, bringing
the total shares issued and outstanding to 1,702,648 shares.
The Company was formed with the intention to qualify and to operate as
a real estate investment trust under federal tax laws. The Company
will acquire commercial and industrial properties using invested and
borrowed funds. AAA, a related party, manages the selection,
acquisition and supervision of the operation of properties.
The consolidated financial statements include the accounts of American
Asset Advisers Trust, Inc. and its majority interest in five joint
ventures.
The financial records of the Company are maintained on the accrual
basis of accounting whereby revenues are recognized when earned and
expenses are reflected when incurred.
For purposes of the statement of cash flows the Company considers all
highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents. There has been no cash paid for
income taxes during 1997 or 1996. For the three and nine months ended
September 30, 1997, the Company paid interest of $14,889 which was
capitalized on properties under construction. There was no other cash
paid for interest during 1997 or 1996.
Real estate is leased to others on a net lease basis whereby all
operating expenses related to the properties including property taxes,
insurance and common area maintenance are the responsibility of the
tenant. The leases are accounted for under the operating method or the
direct financing method.
Under the operating lease method, the properties are recorded at cost.
Rental income is recognized ratably over the life of the lease and
depreciation is charged based upon the estimated useful life of the
property.
Under the direct financing lease method, properties are recorded at
their net investment. Unearned income is deferred and amortized to
income over the life of the lease so as to produce a constant periodic
rate of return.
6
Expenditures related to the development of real estate are carried at
cost plus capitalized carrying charges, acquisition costs and
development costs. Carrying charges, primarily interest and loan
acquisition costs, and direct and indirect development costs related to
buildings under construction are capitalized as part of construction in
progress. Buildings are depreciated using the straight-line method
over an estimated useful life of 39 years.
Organization costs incurred in the formation of the Company are
amortized on a straight-line basis over five years.
Syndication costs incurred in the raising of capital through the sale
of common stock are treated as a reduction of shareholders' equity.
The Company is qualified as a real estate investment trust ("REIT")
under the Internal Revenue Code of 1986, and is, therefore, not subject
to Federal income taxes provided it meets all conditions specified by
the Internal Revenue Code for retaining its REIT status, including the
requirement that at least 95% of its real estate investment trust
taxable income is distributed by March 15 of the following year.
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and do not include all
of the disclosures required by generally accepted accounting
principles. The financial statements reflect all normal and recurring
adjustments which are, in the opinion of management, necessary to
present a fair statement of results for the three and nine month
periods ended September 30, 1997 and September 30, 1996.
The financial statements of American Asset Advisers Trust, Inc.
contained herein should be read in conjunction with the financial
statements included in the Company's annual report on Form
10-K for the year ended December 31, 1996.
2. RELATED PARTY TRANSACTIONS
AAA owns 20,001 shares of the Company's stock. The common stock of AAA
is wholly owned by the president and director of the Company. In
addition, the Company has entered into an Omnibus Services Agreement
with AAA whereby AAA provides property acquisition, leasing,
administrative and management services for the Company. Administrative
fees of $25,107 and $52,107 were incurred to AAA for the three and nine
months ended September 30, 1997, respectively. Administrative fees of
$8,544 and $25,632 were incurred and paid to AAA for the three and nine
months ended September 30, 1996, respectively.
AAA has incurred certain costs in connection with the organization and
syndication of the Company. Reimbursement of these costs become
obligations of the Company in accordance with the terms of the
offering. Costs of $38,156 and $124,996 were incurred by AAA for the
three and nine months ended September 30, 1997, respectively, in
connection with the issuance and marketing of the Company's stock.
Cost of $23,390 and $78,050 were incurred by AAA for the three and nine
months ended September 30, 1996, respectively, in connection with the
issuance and marketing of the Company's stock. These costs are
reflected as syndication costs and are recorded as a reduction to
additional paid-in capital.
7
Acquisition fees, including real estate commissions, finders fees,
consulting fees and any other non-recurring fees incurred in connection
with locating, evaluating and selecting properties and structuring and
negotiating the acquisition of properties are included in the basis of
the properties. Acquisition fees of $589,879 and $826,654 were incurred
to AAA for the three and nine months ended September 30, 1997,
respectively of which $520,361 was unpaid as of September 30, 1997.
Acquisition fees of $47,064 and $129,748 were incurred and paid to AAA
for the three and nine months ended September 30, 1996, respectively.
On August 22, 1995, the Board of Directors approved a special
compensation payment for the president in the amount of $150,000 for
services provided from August 1993 through August 1995. In connection
therewith, the Company executed a demand note payable at the earlier of
July 15, 1996 or the receipt of $10,000,000 from the Company's initial
stock offering. The note shall be payable in cash or stock depending
on the availability of cash for such payment. No compensation
arrangements were considered by the Directors prior to August 22, 1995,
because in their judgement, the Company had not raised sufficient funds
to award such compensation. The compensation had not been accrued prior
to August 22, 1995 because its payment was uncertain and the level of
compensation had not been determined until the August 1995 Board
meeting. As of the termination of the initial public offering in March
1996, the Company had sold in excess of $10,000,000. Although the
president can demand payment on the note, such demand has not been
made. The Board of Directors will make the decision regarding the
nature of the payment, whether in stock or cash, at the time the
president demands payment. In consideration that no payment has been
demanded by the president for the special compensation payment, the
Board of Directors approved at its August 1, 1996 meeting the payment
of interest to the president at an annual rate of 8%. This interest
payment will be paid in cash or in stock. As of September 30, 1997,
$14,000 of interest has been accrued related to this note.
On August 8, 1997, the Company entered into a loan agreement as the
lender with AmReit Development Corp., an affiliate, in the amount of
$2,247,254 for the purpose of developing a property in Lake Jackson,
Texas that will be acquired by the Company upon completion of the
property. As of September 30, 1997, $593,997 was outstanding on the
loan. The loan bears interest at the prime lending rate and matures on
May 1, 1998.
On September 18, 1997, the Company entered into a loan agreement as the
lender with Centurion Video, Ltd. in the amount of $1,153,794 for the
purpose of developing a property in Ridgeland, Mississippi that will be
acquired by the Company upon completion of the property. AAA Net
Developers, Ltd., an affiliate, is the limited partner in Centurion
Video, Ltd. As of September 30, 1997, $480,870 was outstanding on the
loan. The loan bears interest at the prime lending rate plus .5% and
matures on March 15, 1998.
On February 11, 1997, the Company entered into a joint venture with AAA
Net Realty XI, Ltd., an affiliated entity. The joint venture was
formed for the purchase of a property, which is being operated as a
Just For Feet retail store in Baton Rouge, Louisiana. The property was
purchased on June 9, 1997 after the construction was completed. The
Company's interest in the joint venture is 51%.
8
On September 23, 1996, the Company entered into a joint venture with
AAA Net Realty XI, Ltd., an affiliated entity. The joint venture was
formed for the purchase of a parcel of land in The Woodlands, Texas
upon which the tenant, Bank United, constructed a branch bank building
at its cost. At the termination of the lease the improvements will be
owned by the joint venture. The Company's interest in the joint
venture is 51%.
On April 5, 1996, the Company entered into a joint venture with AAA Net
Realty Fund XI, Ltd. and AAA Net Realty Fund X, Ltd., affiliated
partnerships, for the purchase of a property which is being operated as
a Just For Feet retail store in Tucson, Arizona. The property was
purchased on September 11, 1996 after the construction was completed.
The Company's interest in the joint venture is 51.9%.
On September 12, 1995, the Company entered into a joint venture
agreement with AAA Net Realty Fund XI, Ltd. for the purchase of a
property, which is being operated as a Blockbuster Music Store in
Wichita, Kansas. The Company's interest in the joint venture is 51%.
3. NOTE PAYABLE
On August 1, 1997, the Company entered into an unsecured revolving
credit agreement with a bank for up to $7,500,000 through February 1999
(the "Credit Agreement"). The actual amount available to the Company
is dependent on certain covenants such as the value of unencumbered
assets. The Credit Agreement currently bears interest at 2.00% over
the London Interbank Offered Rate ("LIBOR"). The Credit Agreement will
be used to acquire additional properties. As of September 30, 1997,
$3,375,400 was outstanding under the Credit Agreement. For the three
and nine months ended September 30, 1997, interest of $14,889 was
capitalized on properties under construction.
4. MAJOR TENANTS
The following schedule summarizes rental income by lessee for the three
and nine months ended September 30, 1997 and September 30, 1996:
Quarter Year to Date
1997 1996 1997 1996
Tandy Corporation $27,225 $27,225 $81,675 $81,675
America's Favorite Chicken Co. 24,481 23,027 73,445 68,929
Blockbuster Music Retail, Inc. 94,475 94,575 283,427 283,725
One Care Health Industries, Inc. 50,409 50,409 151,227 151,227
Just For Feet, Inc. 184,451 22,536 405,681 22,536
Bank United 39,458 613 118,356 613
420,499 218,385 1,113,811 608,705
5. NET INCOME PER SHARE
The number of shares used in primary net income per share calculations
are based on the weighted average number of shares of common stock
outstanding. The number of shares used in the fully diluted net income
per share calculations are based on the weighted average number of
shares of common stock outstanding and the assumption that the warrants
were exercised using the treasury stock method.
9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The Company was organized on August 17, 1993 to acquire, either directly
or through joint venture arrangements, undeveloped, newly constructed and
existing net-lease real estate that is located primarily on corner or out-
parcel locations in strong commercial corridors, to lease on a net-lease
basis to tenants having a minimum net worth of $40 million and to hold the
properties with the expectation of equity appreciation producing a
steadily rising income stream for its shareholders.
LIQUIDITY AND CAPITAL RESOURCES
The initial issuance of 20,001 shares of stock for $200,010 was to AAA.
On March 17, 1994, the Company commenced an offering of 2,000,000 Shares
of Common Stock, together with 1,000,000 Warrants (collectively
"Securities"). Until the completion of the offering in March 1996, the
Securities were offered on the basis of two (2) Shares of Common Stock and
one (1) Warrant for a total purchase price of $20.00. The Shares and
Warrants are separately transferable by an investor. Each Warrant
entitles the holder to purchase one Share for $9.00 until March 15, 1998.
As of September 30, 1997, 504,126 warrants were outstanding. The offering
period for the initial public offering terminated on March 15, 1996 with
gross proceeds totaling $10,082,520 (1,008,252 shares). On June 18, 1996,
the Company commenced a follow-on offering of up to $29,250,000 (2,853,659
shares) of additional shares of its common stock. The offering will
terminate June 17, 1998 unless terminated earlier. As of September 30,
1997, gross proceeds had been received for $6,912,555 (674,395 shares) in
this second offering bringing the total gross proceeds to $17,195,085
(1,702,648 shares).
On August 1, 1997, the Company entered into an unsecured revolving credit
agreement with a bank for up to $7,500,000 through February 1999 (the
"Credit Agreement"). The actual amount available to the Company is
dependent on certain covenants such as the value of unencumbered assets.
The Credit Agreement currently bears interest at 2.00% over the London
Interbank Offered Rate ("LIBOR"). The Credit Agreement will be used to
acquire additional properties. As of September 30, 1997, $3,375,400 was
outstanding under the Credit Agreement. These funds were advanced to
third parties and affiliates to develop properties that will be acquired
by the Company upon completion.
The Company has an investment strategy of acquiring properties and leasing
them under net-leases to corporations having a minimum net worth of $40
million, which strategy minimizes the Company's operating expenses. The
Company believes that the leases will continue to generate cash flow in
excess of operating expenses. Due to low operating expenses and ongoing
cash flow, the Company does not believe that large working capital
reserves are necessary at this time. In addition, because all leases of
the Company's Properties are and are intended to continue to be on a
net-lease basis, it is not anticipated that a large reserve for
maintenance and repairs will be necessary. The Company intends to
distribute a significant portion of its funds from operations unless it
becomes necessary to maintain additional reserves.
On August 22, 1995, the Board of Directors approved a special compensation
payment for the president in the amount of $150,000 for services provided
from August 1993 through August 1995. The president has received no other
compensation from the Company for serving as its president. In connection
with the special compensation payment, the Company executed a demand note
in the amount of $150,000, the payment of which could not be demanded
prior to the earlier of July 15, 1996 or the receipt of $10,000,000 from
the Company's initial public offering. The note is payable in cash or
shares depending on the availability of cash for such payment. No
compensation arrangements were considered by the Directors prior to August
10
22, 1995, because in their judgement, the Company had not raised
sufficient funds to award such compensation. The compensation had not
been accrued prior to August 22, 1995 because its payment was uncertain
and the level of compensation had not been determined until the August
1995 meeting of the Board of Directors. As of the termination of the
initial public offering in March 1996, the Company had raised in excess of
$10,000,000. Although the president can demand payment on the note, such
demand has not been made. The decision regarding the nature of the
payment, whether in stock or cash, will be made by the Board of Directors
at the time the president demands payment. In consideration that no
payment has been demanded by the president for the special compensation
payment, the Board of Directors approved at its August 1, 1996 meeting the
payment of interest to the president on the outstanding note at an annual
rate of 8%. This interest payment will be paid in cash or in stock. As of
September 30, 1997, $14,000 of interest has been accrued related to this
note. Should the note and interest be paid in cash, such payment would
reduce the funds from operations available for distribution and,
therefore, would decrease the distributions to shareholders.
As of September 30, 1997, the Company had acquired four Properties
directly and five Properties through joint ventures with related parties
and had invested $10,119,298, including certain acquisition expenses
related to the Company's investment in these properties. These
expenditures resulted in a corresponding decrease in the Company's
liquidity.
Until the Company acquires Properties, proceeds are held in short-term,
highly liquid investments that the Company believes to have appropriate
safety of principal. This investment strategy has allowed, and continues
to allow, high liquidity to facilitate the Company's use of these funds to
acquire properties at such time as properties suitable for acquisition are
located. At September 30, 1997, the Company's cash and cash equivalents
totaled $3,344,633.
Inflation has had very little effect on income from operations. Management
expects that increases in store sales volumes due to inflation as well as
increases in the Consumer Price Index (C.P.I.), may contribute to capital
appreciation of the Company Properties. These factors, however, also may
have an adverse impact on the operating margins of the tenants of the
Properties.
RESULTS OF OPERATIONS
Revenues for the three months ended September 30, 1997 were comprised of
$420,499 from the Company's real estate operations and $46,126 from
interest income. This represents an increase of $202,114 in rental income
over the three months ended September 30, 1996 and an increase of $6,092
in interest income. The Company's rental income was generated from nine
properties during the third quarter of 1997 compared to seven properties
during the third quarter of 1996. The increase in activity also resulted
in a corresponding increase in expenses from $74,283 during the third
quarter of 1996 to $102,980 during the third quarter of 1997. The Company
recorded net income of $235,744 for the three months ended September 30,
1997 as compared to $138,397 for the three months ended September 30,
1996.
For the nine months ended September 30, 1997, the Company's total revenues
of $1,233,284 were comprised of $1,113,811 from real estate operations and
$119,473 from interest income. The Company owned nine properties during
the first nine months of 1997 while seven properties were owned during the
first nine months of 1996. Expenses increased from $209,634 for the nine
months ended September 30, 1996 to $292,225 for the nine months ended
September 30, 1997 primarily as a result of the increase in activity. The
Company recorded net income of $618,692 for the nine months ended
September 30, 1997 as compared to $391,212 for the nine months ended
September 30, 1996.
11
Revenues for the three months ended September 30, 1996 were comprised of
$218,385 from the Company's real estate operations and $40,034 from
interest income. This represented an increase of $109,515 in rental
income over the three months ended September 30, 1995 and a decrease of
$6,715 in interest income. The Company owned five properties for the
entire third quarter of 1996 and the sixth and seventh properties were
acquired in September of 1996 while four properties were owned for the
entire third quarter of 1995 and the fifth property was acquired in
September of 1995. The Company's operating expenses decreased from
$206,134 for the third quarter of 1995 to $74,283 for the third quarter of
1996 primarily from executive compensation of $150,000 for the period from
August 1993 through August 1995. The Company recorded net income of
$138,397 for the three months ended September 30, 1996 as compared to a
net loss of $70,420 for the three months ended September 30, 1995.
For the nine months ended September 30, 1996, the Company's total revenues
of $721,268 were comprised of $608,705 from real estate operations and
$112,563 from interest income. The Company owned five properties for the
entire first nine months of 1996 and the sixth and seventh properties were
acquired in September of 1996 while three properties were owned for the
entire first nine months of 1995 and the fourth and fifth properties were
acquired in the third quarter of 1995. The Company's operating expenses
decreased from $297,614 for the first nine months of 1995 to $209,634 for
the first nine months of 1996 primarily from executive compensation of
$150,000 discussed above partially offset by an increase in administrative
expenses and depreciation which resulted from the overall increase in the
activity of the Company. The Company recorded net income of $391,212 for
the nine months ended September 30, 1996 as compared to $56,766 for the
nine months ended September 30, 1995.
12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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
Exhibit 11 - Computation of Earnings Per Share
Exhibit 27 - Financial Data Schedule
13
SIGNATURES
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.
American Asset Advisers Trust, Inc.
(Registrant)
November 14, 1997 /s/ H. Kerr Taylor
Date H. Kerr Taylor, President
November 14, 1997 /s/ L. Larry Mangum
Date L. Larry Mangum (Principal Accounting
Officer)
14
<TABLE>
EXHIBIT 11
AMERICAN ASSET ADVISERS TRUST, INC.
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997
<CAPTION>
Quarter Year to Date
1997 1996 1997 1996
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Weighted average number of shares of
common stock outstanding 1,649,002 1,081,306 1,478,942 1,028,815
Additional shares assuming exercise of
stock warrants (1) 0 0 0 0
Total weighted average common and
common equivalent shares outstanding 1,649,002 1,081,306 1,478,942 1,028,815
Net income $ 235,744 $ 138,397 $ 618,692 $ 391,212
Earnings per common and common
equivalent share $ 0.14 $ 0.13 $ 0.42 $ 0.38
FULLY DILUTED EARNINGS PER SHARE:
Weighted average number of shares of
common stock outstanding 1,649,002 1,081,306 1,478,942 1,028,815
Additional shares assuming exercise of
stock warrants 163,596 279,369 163,596 279,369
Total weighted average common and
common equivalent shares outstanding 1,812,598 1,360,675 1,642,538 1,308,184
Net income (2) $ 250,136 $ 167,710 $ 675,879 $ 489,842
Earnings per common and common
equivalent share $ 0.14 $ 0.12 $ 0.41 $ 0.37
(1) Not applicable in 1997 or 1996 as computations of
primary earnings per share exclude common stock
equivalents for any period in which their inclusion
would increase the income per share amount otherwise computed.
(2) Includes adjustment for additional interest income
from assumed net proceeds from exercise of warrants using
Modified Treasury Stock Method as follows:
Quarter Year to Date
1997 1996 1997 1996
$ 14,392 $ 29,313 $ 57,187 $ 98,630
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,344,633
<SECURITIES> 0
<RECEIVABLES> 20,262
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,364,895
<PP&E> 16,748,913
<DEPRECIATION> 296,666
<TOTAL-ASSETS> 23,612,744
<CURRENT-LIABILITIES> 4,085,526
<BONDS> 0
0
0
<COMMON> 17,026
<OTHER-SE> 14,515,849
<TOTAL-LIABILITY-AND-EQUITY> 23,612,744
<SALES> 1,113,811
<TOTAL-REVENUES> 1,233,284
<CGS> 0
<TOTAL-COSTS> 292,225
<OTHER-EXPENSES> 322,367
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 618,692
<INCOME-TAX> 0
<INCOME-CONTINUING> 618,692
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 618,692
<EPS-PRIMARY> .42
<EPS-DILUTED> .41
</TABLE>
