SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A1
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1999.
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.)
Maryland 84-1240264
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1800 Glenarm Place Suite 500
Denver, Colorado 80202
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(Zip Code)
(303) 297-1800
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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 May 14, 1999 the Registrant had outstanding 1,658,770 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
MARCH 31, 1999
Table of Contents
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Page No.
Part I
Item 1. Financial Statements
Balance Sheets as of December 31, 1998 and
March 31, 1999 3
Statements of Operations for the Three Months
Ended March 31, 1998 and 1999 4
Statements of Cash Flows for the Three Months Ended
March 31, 1998 and 1999 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6 - 8
Part II
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
2
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<TABLE>
<CAPTION>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, March 31,
1998 1999
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(Unaudited)
<S> <C> <C>
ASSETS
Investment in real estate
Land $ 4,745,754 $ 4,745,754
Buildings and improvements 22,363,656 22,381,607
Furniture, fixtures and equipment 284,993 291,651
Tenant improvements 541,058 553,982
Less accumulated depreciation and amortization (5,837,264) (6,068,732)
------------ ------------
Net Investment in Real Estate 22,098,197 21,904,262
Cash and cash equivalents 441,316 241,256
Tenant accounts receivable 48,615 66,047
Deferred financing costs, net 624,917 612,330
Prepaid expenses and other assets 501,889 423,778
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$ 23,714,934 $ 23,247,673
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Mortgage loans and notes payable $ 18,861,599 $ 18,791,093
Accounts payable and accrued expenses 121,327 141,301
Accrued interest 108,810 29,252
Accrued real estate taxes 558,745 273,719
Prepaid rents and security deposits 214,912 290,325
Dividends payable 199,052 199,107
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Total Liabilities 20,064,445 19,724,797
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STOCKHOLDERS' EQUITY
Common stock, $.001 par value
Authorized - 10,000,000 shares
Issued and outstanding - 1,658,770 shares 1,659 1,659
Capital in excess of par value 5,607,725 5,607,725
Distribution in excess of accumulated earnings (1,958,895) (2,086,508)
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Total Stockholders' Equity 3,650,489 3,522,876
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$ 23,714,934 $ 23,247,673
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3
</TABLE>
<PAGE>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
1998 1999
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REAL ESTATE OPERATING REVENUE
Rental revenue
Commercial properties $ 336,409 $1,001,102
Storage properties 361,896 327,702
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698,305 1,328,804
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REAL ESTATE OPERATING EXPENSES
Property operating expenses
Operating expenses 154,119 334,041
Real estate taxes 74,543 139,645
Management fees 38,679 22,098
General and administrative 104,798 153,918
Interest 176,726 363,564
Depreciation and amortization 147,702 243,781
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696,567 1,257,047
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NET INCOME $ 1,738 $ 71,757
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NET INCOME PER COMMON SHARE $ .001 $ .043
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NET INCOME PER COMMON SHARE
ASSUMING DILUTION $ .001 $ .043
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WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 1,438,070 1,658,770
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WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING ASSUMING DILUTION 1,443,070 1,662,520
========== ==========
4
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<TABLE>
<CAPTION>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
1998 1999
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(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,738 $ 71,757
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation and amortization 147,702 244,428
Changes in assets and liabilities
(Increase) in receivables (19,762) (17,432)
(Increase) decrease in prepaids (276,600) 77,740
Increase (decrease) in accounts payable 844 (7,741)
Increase (decrease) in accruals 12,534 (261,721)
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Net cash (used) provided by operating activities (133,544) 107,031
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CASH FLOWS FROM INVESTING ACTIVITIES
Additions to investments in real estate (21,787) (37,533)
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Net cash (used) by investing activities (21,787) (37,533)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short term borrowings 375,000 --
Payments on mortgage loans (35,746) (70,506)
Dividends paid (160,800) (199,052)
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Net cash provided (used) by financing activities 178,454 (269,558)
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NET INCREASE IN CASH AND
CASH EQUIVALENTS 23,123 (200,060)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 99,334 441,316
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CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 122,457 $ 241,256
========= =========
5
</TABLE>
<PAGE>
AMERIVEST PROPERTIES INC.
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1999
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 31,1998. 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 three months ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999.
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.
Results Of Operations
---------------------
Three Months Ended March 31, 1999 Compared With Three Months Ended March 31,
1998.
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The Company's results of operations for the three months ended March 31,
1999 include 24 operating properties, whereas the March 31, 1998 results of
operations include nine operating properties. Revenues for first quarter 1999
increased approximately $630,500, and operating expenses, real estate taxes,
general and administrative, interest, and depreciation and amortization
increased approximately $179,900, $65,100, $49,100, $186,800 and $96,100,
respectively. All increases resulted primarily from inclusion of the operations
of the 15 new properties since last year, except for general and administrative
expenses which also include additional costs of administrative personnel, of
approximately $20,000. The management fees decreased approximately $16,600 for
the quarter due to the change in 1999 of directly managing six of the properties
as opposed to contracting a third party management company to oversee the day to
day operations
The net income for the three months ended March 31, 1999 was $71,757, or
$.04 per share, as compared to $1,738, or $.00 per share, for the three months
ended March 31, 1998.
Financial Condition, Liquidity And Capital Resources
----------------------------------------------------
From December 31, 1998 to March 31, 1999, net investment in real estate
decreased by approximately $194,000, primarily due to depreciation for the three
month period of $230,000, which was partially offset by approximately $37,000 of
additional capital improvements.
6
<PAGE>
At March 31, 1999, the Company had approximately $241,000 of cash available
for working capital. Tenant accounts receivables increased by approximately
$17,400 in March as a result of additional billings to tenants for prior year's
operating costs. Prepaid expenses and other assets decreased by approximately
$78,000 primarily as a result of real estate property tax payments being made
from the escrow accounts held by the mortgage lenders.
Mortgage loans and accrued real estate taxes decreased by $70,500 and
$285,000, respectively. Accounts payable and accrued expenses increased by
$20,000; these changes were reflective of normal business occurrences. Accrued
interest decreased by $79,600 due to the April payment on mortgage loans being
paid in March.
In May 1999, the Company entered into a purchase and sale agreement for the
acquisition of three office buildings located in Indianapolis, Indiana. The
aggregate purchase price for the three office buildings is approximately
$7,944,000. The purchase will be made with approximately 561,000 shares of
common stock valued at $4.75 per share or approximately $2,665,000 of additional
equity, and the assumption of the existing mortgage on the properties of
approximately $5,279,000. The acquisition is subject to stockholder approval and
is expected to close in the third quarter of 1999.
The Company desires to acquire additional properties and, in order to do
so, it may need to raise additional debt or equity capital. 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.
The Company intends to meet its near-term working capital liquidity
requirements through cash flows provided from operations. The Company has a
short-term revolving credit line from Norwest Bank Colorado in the amount of
$300,000. At March 31, 1999 the Company had no outstanding balance on the line
of credit.
Year 2000 Compliance
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Year 2000 compliance is the ability of computer hardware and software to
respond to the problems posed by the fact that computer programs traditionally
have used two digits rather than four digits to define an applicable year. As a
consequence, any of the Company's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
interruption of operations, including temporary inability to send invoices or
engage in normal business activities or to operate equipment such as elevators,
air conditioning units, and external security systems installed in the Company's
buildings. The Company currently is working with its service contractors to
review the operation of elevators, air conditioners, and other equipment
installed in the Company's buildings to confirm that this equipment is Year 2000
compliant. Although the service contractors have responded with respect to most
of these systems indicating that they are Year 2000 compliant, the review of all
the systems is not yet complete. The Company believes that this review will be
completed prior to June 30, 1999 and that the cost of this review will be
included in the cost of the Company's service contracts for this equipment.
7
<PAGE>
The Company also intends to contact its major tenants to determine their
Year 2000 compliance. Failure of tenants to be Year 2000 compliant may lead to
delays in payment of rent to the Company and delayed revenue to the Company. The
Company intends to complete its review of tenant compliance in the second
quarter of 1999.
The Company has purchased new accounting and tenant service software that
is Year 2000 compliant. The Company would have purchased new software to meet
its needs regardless of potential Year 2000 issues with its prior system. The
Company installed and received training concerning this new software and the
approximate cost was less than $25,000.
Management believes that inflation should not have a material adverse
effect on the Company. Many of 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 pressures 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 Securities
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.
8
<PAGE>
Part II. Other Information
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 March 31, 1999, the Registrant did not
file any reports on Form 8-K.
SIGNATURES
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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.
Date: February 28, 2000 By: /s/ James F. Etter
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James F. Etter, President
Date: February 28, 2000 By: /s/ D. Scott Ikenberry
------------------------------------
D. Scott Ikenberry
Chief Financial Officer
(Principal Financial Officer)
9
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<ARTICLE>5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 241,256
<SECURITIES> 0
<RECEIVABLES> 66,047
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 27,972,994
<DEPRECIATION> (6,058,732)
<TOTAL-ASSETS> 23,247,673
<CURRENT-LIABILITIES> 0
<BONDS> 18,791,093
0
0
<COMMON> 1,659
<OTHER-SE> 3,521,217
<TOTAL-LIABILITY-AND-EQUITY> 23,247,673
<SALES> 1,328,804
<TOTAL-REVENUES> 1,328,804
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 893,483
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 303,564
<INCOME-PRETAX> 71,757
<INCOME-TAX> 71,757
<INCOME-CONTINUING> 71,757
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,757
<EPS-BASIC> .04
<EPS-DILUTED> .04
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