SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1997.
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 1-14462
AmeriVest Properties Inc.
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(Exact name of small business issuer as specified in its charter.)
Delaware 84-1240264
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7100 Grandview Avenue, Suite 1
Arvada, Colorado 80002
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(Zip Code)
(303) 421-1224
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(Issuer's telephone number, including area code)
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
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As of August 11, 1997 the Registrant had outstanding 1,382,870 shares of common
stock, par value $.001.
Transitional Small Business Disclosure Format (check one):
Yes No X
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AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
FORM 10-QSB
JUNE 30, 1997
Table of Contents
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Page No.
Part I
Item 1. Financial Statements
Balance Sheets as of December 31, 1996 and
June 30, 1997 3
Statements of Operations for the Three Months and
Six Months Ended June 30, 1996 and 1997 4
Statements of Cash Flows for the Six Months Ended
June 30, 1996 and 1997 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Part II
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
2
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<TABLE>
<CAPTION>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, June 30,
1996 1997
------------ ------------
(Unaudited)
ASSETS
Investment in real estate
<S> <C> <C>
Land $ 2,374,808 $ 2,374,808
Buildings and improvements 11,975,946 11,988,162
Furniture, fixtures and equipment 225,099 231,254
Tenant improvements 512,725 517,951
Less accumulated depreciation and amortization (4,573,871) (4,846,193)
------------ ------------
Net Investment in Real Estate 10,514,707 10,265,982
Cash and cash equivalents 1,230,640 1,091,541
Tenant accounts receivable 30,014 26,060
Deferred financing costs, net 111,139 98,615
Prepaid expenses and other assets 49,580 46,677
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$ 11,936,080 $ 11,528,875
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Mortgage loans $ 7,397,995 $ 7,332,112
Accounts payable and accrued expenses 52,765 21,516
Accrued interest 57,273 56,759
Accrued real estate taxes 240,411 152,613
Prepaid rents and security deposits 99,133 90,548
Dividends payable -- 155,573
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Total Liabilities 7,847,577 7,809,121
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.001 par value
Authorized - 10,000,000 shares
Issued and outstanding - 1,382,870 1,383 1,383
Capital in excess of par value 4,256,101 4,256,101
Distribution in excess of accumulated earnings (168,981) (537,730)
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Total Stockholders' Equity 4,088,503 3,719,754
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$ 11,936,080 $ 11,528,875
============ ============
See accompanying notes to financial statements.
3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended Six Months Ended
June 30, 1997 June 30, 1997
------------------------------- ------------------------------
1996 1997 1996 1997
---- ---- ---- ----
(unaudited) (unaudited)
REAL ESTATE OPERATING REVENUE
Rental revenue
<S> <C> <C> <C> <C>
Commercial properties $ 58,337 $ 241,255 $ 117,425 $ 531,924
Storage properties -- 327,386 -- 640,480
----------- ----------- ----------- -----------
58,337 568,641 117,425 1,172,404
----------- ----------- ----------- -----------
REAL ESTATE OPERATING EXPENSES
Property operating expenses
Operating expenses 1,232 128,929 2,147 249,926
Real estate taxes 8,290 60,122 16,581 120,304
Management fees - related 4,417 30,036 8,871 61,875
General and administrative 39,729 110,065 80,303 197,697
Interest 28,566 170,540 57,540 341,887
Depreciation and amortization 10,143 142,643 20,285 285,138
----------- ----------- ----------- -----------
92,377 642,335 185,727 1,256,827
----------- ----------- ----------- -----------
OTHER INCOME
Interest income 20 13,872 20 26,819
----------- ----------- ----------- -----------
NET (LOSS) $ (34,020) $ (59,822) $ (68,282) $ (57,604)
=========== =========== =========== ===========
NET (LOSS) PER COMMON SHARE $ (.12) $ (.04) $ (.24) $ (.04)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 284,000 1,382,870 284,000 1,382,870
=========== =========== =========== ===========
See accompanying notes to financial statements.
4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended
June 30
-------------------------------------
1996 1997
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(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net (loss) $ (68,282) $ (57,604)
Adjustments to reconcile net (loss) to net cash
provided by operating activities
Depreciation and amortization 20,285 285,138
Changes in assets and liabilities
Decrease in receivables 386 3,955
Decrease in prepaids 24,024 2,610
(Decrease) in accounts payable (16,857) (34,162)
(Decrease) in accruals (9,827) (93,983)
(Increase) in deferred offering costs (76,117) --
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Net cash (used) provided by operating activities (126,388) 105,954
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to investments in real estate -- (23,597)
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Net cash (used) by investing activities -- (23,597)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock warrants 150,000 --
Cost of warrants offering (8,008) --
Payments on mortgage loans (8,821) (65,883)
Dividends paid -- (155,573)
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Net cash provided (used) by financing activities 133,171 (221,456)
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NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 6,783 (139,099)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 7,177 1,230,640
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CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 13,960 $ 1,091,541
=========== ===========
See accompanying notes to financial statements.
5
</TABLE>
<PAGE>
AMERIVEST PROPERTIES INC.
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1997
General
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The unaudited financial statements included herein were prepared from the
records of the Company in accordance with Generally Accepted Accounting
Principles and reflect all adjustments which are, in the opinion of management,
necessary to provide a fair statement of the results of operations and financial
position for the interim periods. Such financial statements generally conform to
the presentation reflected in the Company's Form 10-KSB filed with the
Securities and Exchange Commission for the year ended December 31,1996. The
current interim period reported herein should be read in conjunction with the
Company's Form 10-KSB subject to independent audit at the end of the year.
The results of operations for the six months ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997.
Subsequent Events
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In August 1997, the Company entered into contracts to acquire three office
buildings in Texas for approximately $1,150,000 and up to 56,200 shares of the
Company's Common Stock, subject to future upward adjustment based on the trading
price of the Company's Common Stock. Two of the buildings are in El Paso and the
other one is in Lubbock. Although there is no assurance, the three buildings are
expected to close before the end of September.
The Company has also entered into a commitment letter for a Revolving Line
of Credit with Norwest Bank Colorado, N.A. for $400,000. The closing on the
commitment is expected to be completed by the end of August.
With respect to the Company's previously announced letter of intent to
acquire an office building in Amarillo, Texas, negotiations have been suspended
indefinitely. The Company intends to pursue the possibility of recommencing
negotiations in the near future, although there is no assurance that this will
occur.
6
<PAGE>
AMERIVEST PROPERTIES INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
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The following discussion and analysis of the consolidated financial
condition and results of operations should be read in conjunction with the
Consolidated Financial Statements and notes thereto included in the Company's
Form 10-KSB and elsewhere. These financial statements present the operations of
the Company prior and subsequent to the consummation of the Company's initial
public offering on October 29, 1996 (the "IPO") and its acquisition of five
properties on October 30, 1996, effective as of July 1, 1996.
Results Of Operations
---------------------
Three Months Ended June 30, 1997, Compared With Three Months Ended June 30,
1996.
- --------------------------------------------------------------------------------
The Company's results of operations for the three months ended June 30,
1997 include six operating properties, whereas the three months ended June 30,
1996 results of operations include only one operating property. Revenues for
second quarter 1997 increased approximately $510,000, and operating expenses,
management fees, interest, and depreciation and amortization increased
approximately $128,000, $26,000, $142,000 and $133,000 respectively, as compared
with second quarter 1996. All increases resulted primarily from including the
operations of five new properties as of July 1, 1996. The general and
administrative expenses increased approximately $70,000 due primarily from the
addition of the five new properties and costs associated with public relations,
appraisal fees and travel. The Company also had interest income of $14,000 for
the 1997 quarter, primarily as a result of investment funds being held for real
estate acquisitions.
The net loss for the three months ended June 30, 1997 was $59,822, or $.04
per share, as compared to a net loss of $34,020, or $.12 per share, for the
three months ended June 30, 1996.
Six Months Ended June 30, 1997, Compared With Six Months Ended June 30, 1996.
- -----------------------------------------------------------------------------
The Company's results of operations for the six months ended June 30, 1997
include six operating properties, whereas the June 30, 1996 results of
operations include only one operating property. Revenues for 1997 increased
approximately $1,055,000, and operating expenses, management fees, interest, and
depreciation and amortization increased approximately $247,000, $53,000,
$284,000 and $265,000 respectively, as compared with 1996. All increases
resulted primarily from including the operations of five new properties as of
July 1, 1996. All real estate taxes for each property remained flat when
7
<PAGE>
compared to prior year's taxes, except for the Appleton, Wisconsin office
property for which Real Estate taxes decreased on an annualized basis by
$15,000. The general and administrative expenses increased approximately
$117,000 due primarily from the addition of the five new properties and costs
associated with public relations, appraisal fees and travel. The Company also
had interest income of $27,000 for 1997, primarily as a result of investment
funds being held for real estate acquisitions.
The net loss for the six months ended June 30, 1997 was $57,604, or $.04
per share, as compared to a net loss of $68,282, or $.24 per share, for the six
months ended June 30, 1996.
Financial Condition, Liquidity And Capital Resources
----------------------------------------------------
The consolidated financial condition of the Company evidenced the following
changes from December 31, 1996 to June 30, 1997. Net investment in Real Estate
decreased approximately $249,000, primarily due to depreciation for the six
month period. The completion of the Company's IPO in October 1996 included
approximately $1,000,000 of cash which was set aside primarily for future
acquisitions.
Deferred financing costs, net, decreased approximately $12,000 due to
amortization for the six months ended June 30, 1997. Mortgage loans decreased by
approximately $66,000 due to normal payments over the period. Accounts payable
and accrued expenses, accrued real estate taxes, and prepaid rents decreased
approximately $31,000, $88,000 and $9,000 respectively, all of which result from
timing differences in the course of normal operations during the first six
months of 1997. Dividends payable increased by $156,000 over the same period in
1996, since no dividends were declared until December 1996.
At June 30, 1997, the Company had approximately $1,090,000 of cash and cash
equivalents. The Company held approximately $156,000 of cash in reserve for a
stockholder dividend distribution which was paid on July 9, 1997 and the balance
of $934,000 was available for acquisitions and working capital.
The Company desires to acquire additional properties and, in order to do
so, it may need to raise additional debt or equity capital. The Company also
intends to obtain credit facilities for short and long-term borrowing with
commercial banks or other financial institutions. The issuance of such
securities or increase in debt for additional properties, of which there is no
assurance, could adversely affect the amount of dividends paid to stockholders.
As indicated in Item 5 and elsewhere herein, the Company has entered into three
separate contracts to acquire three office buildings in Lubbock (one) and El
Paso (two), Texas for approximately $1,150,000 and up to 56,200 shares of the
Company's Common Stock, subject to future upward adjustment based on the trading
price of the Company's Common Stock, and negotiations have been suspended
indefinitely concerning the possible acquisition of an office building in
Amarillo, Texas.
8
<PAGE>
Management believes that the cash flow from the Properties will be
sufficient to meet the Company's working capital needs for the next year. All
Properties have been maintained on an ongoing basis so that additional capital
resources to upgrade the facilities in the near future are not anticipated.
Management believes that inflation should not have a material adverse
effect on the Company. The Company's leases of office and showroom space require
the tenants to pay increases in operating expenses, and the self-storage leases
are short-term so that there are not contractual restraints against increasing
rents to attempt to respond to inflationary pressures, if any inflationary
pressure should materialize.
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, and Section 21E of the Exchange Act
of 1934. Although the Company believes that the expectations reflected in the
forward-looking statements and the assumptions upon which the forward-looking
statements are based are reasonable, it can give no assurance that such
expectations and assumptions will prove to have been correct. See the Company's
Annual Report on Form 10-KSB for additional statements concerning important
factors, including occupancy and rental rates and operating costs, that could
cause actual results to differ materially from the Company's expectations.
9
<PAGE>
Part II. Other Information
Item 5. Other Information
-----------------
In August 1997, the Company entered into three separate contracts to
acquire three office buildings in Lubbock (two) and El Paso (one), Texas for
approximately $1,150,000 and up to 56,200 shares of the Company's Common Stock,
subject to future upward adjustment based on the trading price of the Company's
Common Stock. Although there is no assurance, the three acquisitions are
expected to close before the end of September. In addition, negotiations have
been suspended concerning the Company's possible acquisition of a 10-story
office building in Amarillo, Texas. Although there is no assurance that it will
be able to do so, the Company intends to pursue the possibility of recommencing
negotiations in the near future.
The Company also has entered into a commitment letter for a Revolving Line
of Credit with Norwest Bank Colorado, N.A. for $400,000. The closing for the
commitment is expected to be completed by the end of August.
Item 6. Exhibits And Reports On Form 8-K.
---------------------------------
(a) The following Exhibit is filed as part of this Quarterly Report
on Form 10-QSB:
27. Financial Data Schedule
(b) During the quarter ended June 30,1997, the Registrant did not
file any reports on Form 8-K.
SIGNATURES
----------
Pursuant to the requirements of the Securities And Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERIVEST PROPERTIES INC.
August 14, 1997 By: /S/ JAMES F. ETTER
---------------------------------
James F. Etter, President and
Principal Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> JUN-30-1997 JUN-30-1997
<CASH> 1,091,541 1,091,541
<SECURITIES> 0 0
<RECEIVABLES> 26,060 26,060
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,117,601 1,117,601
<PP&E> 15,112,175 15,112,175
<DEPRECIATION> 4,846,193 4,846,193
<TOTAL-ASSETS> 11,528,875 11,528,875
<CURRENT-LIABILITIES> 477,009 477,009
<BONDS> 0 0
0 0
0 0
<COMMON> 1,383 1,383
<OTHER-SE> 3,718,371 3,718,371
<TOTAL-LIABILITY-AND-EQUITY> 11,528,875 11,528,875
<SALES> 568,641 1,172,404
<TOTAL-REVENUES> 568,641 1,172,404
<CGS> 0 0
<TOTAL-COSTS> 471,795 914,940
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 170,540 341,887
<INCOME-PRETAX> (59,822) (57,604)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (59,822) (57,604)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (59,822) (57,604)
<EPS-PRIMARY> (.04) (.04)
<EPS-DILUTED> (.04) (.04)
</TABLE>
