SECURITIES AND EXCHANGE COMMISSIONPRIVATE
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 September 30, 1997.
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
-------------- --------------
Commission file number 1-14462
AmeriVest Properties Inc.
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter.)
Delaware 84-1240264
- ------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
7100 Grandview Avenue, Suite 1 80002
Arvada, Colorado ----------------------------
- ------------------------------ (Zip Code)
(303) 421-1224
----------------------------------------------
(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
----- -----
As of November 14, 1997 the Registrant had outstanding 1,429,070 shares of
common stock, per value $.001.
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
<PAGE>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
FORM 10-QSB
SEPTEMBER 30, 1997
Table of Contents
-----------------
Page No.
Part I
Item 1. Financial Statements
Balance Sheets as of December 31, 1996 and
September 30, 1997 3
Statements of Operations for the Three Months and
Nine Months Ended September 30, 1997 and 1996 4
Statements of Cash Flows for the Nine Months Ended
September 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
<PAGE>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, September 30,
1996 1997
------------ ------------
(Unaudited)
ASSETS
Investment in real estate
Land $ 2,374,808 $ 2,644,018
Buildings and improvements 11,975,946 13,071,525
Furniture, fixtures and equipment 225,099 246,867
Tenant improvements 512,725 517,951
Less accumulated depreciation
and amortization (4,573,871) (4,988,076)
------------ ------------
Net Investment in Real Estate 10,514,707 11,492,285
Cash and cash equivalents 1,230,640 116,573
Tenant accounts receivable 30,014 47,363
Deferred financing costs, net 111,139 92,354
Prepaid expenses and other assets 49,580 36,807
------------ ------------
$ 11,936,080 $ 11,785,382
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Mortgage loans payable $ 7,397,995 $ 7,297,998
Lines of credit -- 160,000
Accounts payable and accrued expenses 52,765 45,482
Accrued interest 57,273 56,759
Accrued real estate taxes 240,411 200,621
Prepaid rents and security deposits 99,133 116,732
Dividends payable -- 159,450
------------ ------------
Total Liabilities 7,847,577 8,037,042
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.001 par value
Authorized - 10,000,000 shares
Issued and outstanding - 1,382,870
(1996) 1,429,070 (1997) 1,383 1,429
Capital in excess of par value 4,256,101 4,452,405
Distribution in excess of accumulated
earnings (168,981) (705,494)
------------ ------------
Total Stockholders' Equity 4,088,503 3,748,340
------------ ------------
$ 11,936,080 $ 11,785,382
============ ============
See accompanying notes to financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
1996 1997 1996 1997
---------- ----------- ----------- -----------
(unaudited) (unaudited)
REAL ESTATE OPERATING REVENUE
Rental revenue
<S> <C> <C> <C> <C>
Commercial properties $ 59,561 $ 287,610 $ 176,986 $ 819,534
Storage properties -- 355,477 -- 995,957
----------- -----------
59,561 643,087 176,986 1,815,491
----------- ----------- ----------- -----------
REAL ESTATE OPERATING EXPENSES
Property operating expenses
Operating expenses 10,249 147,590 28,977 397,516
Real estate taxes 35,043 65,049 115,346 185,353
Management fees (related at 9/30/96) 25,186 32,612 75,868 94,487
General and administrative 4,230 97,629 11,088 295,326
Interest 4,478 170,013 13,349 511,900
Depreciation and amortization 10,143 148,286 30,428 433,424
----------- ----------- ----------- -----------
89,329 661,179 275,056 1,918,006
----------- ----------- ----------- -----------
(29,768) (18,092) (98,070) (102,515)
OTHER INCOME
Interest income 7 9,780 27 36,599
NET (LOSS) $ (29,761) $ (8,312) $ (98,043) $ (65,916)
=========== =========== =========== ===========
NET (LOSS) PER COMMON SHARE $ (.10) $ (.01) $ (.34) $ (.05)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 284,000 1,412,670 284,000 1,393,137
=========== =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
4
<PAGE>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended
September 30,
--------------------------
1996 1997
----------- -----------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (98,043) $ (65,916)
Adjustments to reconcile net (loss)
to net cash provided by operating
activities
Depreciation and amortization 30,428 433,424
Changes in assets and liabilities
(Increase) in receivables (114) (17,349)
Decrease in prepaids 24,638 12,337
Increase (decrease) in accounts payable 89,215 (7,282)
Increase (decrease) in accruals 3,381 (22,705)
(Increase) in deferred offering costs (230,860) --
----------- -----------
(181,355)
Net cash (used) provided by operating
activities (181,355) 332,509
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to investments in real estate -- (1,195,433)
----------- -----------
Net cash (used) by investing activities -- (1,195,433)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock warrants 150,000 --
Cost of warrants offering (8,008) --
Loan proceeds - related 55,000 --
Short term borrowings -- 160,000
Payments on mortgage loans payable (13,373) (99,997)
Dividends paid -- (311,146)
----------- -----------
Net cash provided (used) by financing
activities 183,619 (251,143)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 2,264 (1,114,067)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 7,177 1,230,640
----------- -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 9,441 $ 116,573
=========== ===========
See accompanying notes to financial statements.
5
<PAGE>
AMERIVEST PROPERTIES INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1997
General
- -------
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 nine months ended September 30, 1997 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1997.
6
<PAGE>
AMERIVEST PROPERTIES INC.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations.
--------------
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 and the acquisition
of three properties effective as of August 1, 1997.
Results Of Operations
---------------------
Three Months Ended September 30, 1997 Compared With Three Months Ended September
- --------------------------------------------------------------------------------
30, 1996.
- ---------
The Company's results of operations for the three months ended September
30, 1997 include six operating properties for the entire period and three
additional properties for the last two months of the period, whereas the
September 30, 1996 results of operations include only one operating property.
Revenues for the third quarter of 1997 increased approximately $583,500, and
operating expenses, management fees, interest, and depreciation and amortization
increased approximately $137,300, $7,400, $165,500 and $138,000, respectively,
as compared with the third quarter of 1996. All increases resulted primarily
from including the operations of five new properties for the entire period and
an additional three new properties beginning as of August 1, 1997. The general
and administrative expenses increased approximately $93,000 due primarily to the
addition of the new properties and from costs associated with public relations,
appraisal fees and travel. The Company also had interest income of $9,800 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 September 30, 1997 was $8,312, or
$.01 per share, as compared with a net loss of $29,761, or $.10 per share, for
the three months ended September 30, 1996.
Nine Months Ended September 30, 1997 Compared With Nine Months Ended September
- --------------------------------------------------------------------------------
30, 1996.
- ---------
The Company's results of operations for the nine months ended September 30,
1997 include six operating properties for the entire period and three additional
properties for the last two months of the period, whereas the September 30, 1996
results of operations include only one operating property. Revenues for the nine
7
<PAGE>
months ended September 30, 1997 increased approximately $1,638,500, and
operating expenses, management fees, interest, and depreciation and amortization
increased approximately $368,500, $18,600, $498,500 and $403,000, respectively,
as compared with the nine months ended September 30, 1996. All increases
resulted primarily from the added operations of the new properties during the
1997 period. All real estate taxes for each property remained flat when compared
to the prior year's taxes, except for the Appleton, Wisconsin property for which
Real Estate taxes decreased on an annualized basis by $15,000. The general and
administrative expenses increased approximately $284,000 due primarily from the
addition of the new properties and costs associated with public relations,
appraisal fees and travel. The Company also had interest income of $36,600 for
1997, primarily resulting from investment funds being held for real estate
acquisitions.
The net loss for the nine months ended September 30, 1997 was $65,916, or
$.05 per share, as compared with a net loss of $98,043, or $.34 per share, for
the nine months ended September 30, 1996.
Financial Condition, Liquidity And Capital Resources
----------------------------------------------------
The consolidated financial condition of the Company evidenced the following
changes from December 31, 1996 to September 30, 1997. Net investment in real
estate increased approximately $977,600, primarily due to the acquisition of
three office properties as of August 1, 1997 for $1,391,800, less depreciation
of $415,000 on all properties for the nine month period. The Company acquired
the three properties, effective as of August 1, 1997, for approximately
$1,195,000 of cash and the issuance of 46,200 shares of common stock.
Deferred financing costs, net, decreased approximately $18,800 due to
amortization for the nine months ended September 30, 1997. Mortgage loans
decreased by approximately $100,000 due to normal payments over the period.
Accounts payable and accrued expenses and accrued real estate taxes decreased
approximately $7,300 and $40,000, respectively, and prepaid rents increased
$17,600, all of which resulted from timing differences in the course of normal
operations during the first nine months of 1997. Dividends payable increased by
$159,500 over the same period in 1996, since no dividends were declared until
December 1996.
The Company finalized its $400,000 Revolving Line of Credit with Norwest
Bank Colorado, N.A. in August, 1997. At September 30, 1997 the Company had drawn
down $160,000 on the line. The remaining balance on the line was available for
future acquisition of properties and/or 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
8
<PAGE>
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.
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
- -------------------------
None
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 September 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.
November 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 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> SEP-30-1997 SEP-30-1997
<CASH> 116,573 116,572
<SECURITIES> 0 0
<RECEIVABLES> 47,363 47,363
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 293,097 293,097
<PP&E> 16,480,361 16,480,361
<DEPRECIATION> (4,988,076) (4,988,076)
<TOTAL-ASSETS> 11,785,382 11,785,382
<CURRENT-LIABILITIES> 739,044 739,044
<BONDS> 0 0
0 0
0 0
<COMMON> 1,429 1,429
<OTHER-SE> 3,746,911 3,746,911
<TOTAL-LIABILITY-AND-EQUITY> 11,785,382 11,785,382
<SALES> 643,087 1,815,491
<TOTAL-REVENUES> 643,087 1,815,491
<CGS> 0 0
<TOTAL-COSTS> 491,166 1,622,680
<OTHER-EXPENSES> (9,780) (36,599)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 170,013 295,326
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (8,312) (65,916)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (8,312) (65,916)
<EPS-PRIMARY> (.01) (.05)
<EPS-DILUTED> (.01) (.05)
</TABLE>
