10-Q 1 form10q.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2003 OR [ ] 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: 0-6103 WATERMARK INVESTORS REALTY TRUST (Exact name of registrant as specified in its charter.) Texas 75-1372785 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 227 West Trade Street, Suite 2320, Charlotte, NC 28202 (Address of principal executive offices) (Zip Code) (704)343-9334 (Registrant's telephone number, including area code) (Former Name, Former Address and Former Fiscal Year, if changed) 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. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: As of September 30, 2003, there were outstanding 542,413 shares of beneficial interest of the registrant. PART I. - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The accompanying financial statements have not been audited by independent accountants, but in the opinion of management, all adjustments (which consist of normal recurring accruals) necessary for a fair presentation of results of operations, financial position and cash flows at the dates and for the periods indicated have been included. WATERMARK INVESTORS REALTY TRUST CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

The accompanying notes are an integral part of these financial statements. WATERMARK INVESTORS REALTY TRUST CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these financial statements. WATERMARK INVESTORS REALTY TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

The accompanying notes are an integral part of these financial statements. WATERMARK INVESTORS REALTY TRUST NOTES TO FINANCIAL STATEMENTS (Unaudited) SEPTEMBER 30, 2003 Note A - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Rule S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments were of a normal recurring nature. For further information refer to the financial statements and footnotes thereto included as Item 14 to Corporation's annual report on Form 10-K for the year ended December 31, 2002. Note B - Subsequent agreement to sale land In August 2003, the Trustees voted to sell the land, and a sale agreement was executed in the fourth quarter of 2003 for the amount of $510,000. The sale is expected to close in the first quarter of 2004. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources - At September 30, 2003, existing current liabilities exceed available cash by $346,660. Balance Sheet Changes - Assets increased by $12,117 for the quarter. Accrued liabilities increased by $33,898 for the quarter. Assets increased by $19,276 for the nine months ended September 30, 2003. Accrued liabilities increased by $66,001 for the nine months ended September 30, 2003. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Management does not believe the Company has any exposure to market risk other than the risks commonly associated with ownership of real property. ITEM 4. CONTROLS AND PROCEDURES (a) As of the end of the period covered by this quarterly report, based on an evaluation of the Company's disclosure controls and procedures (as such term is defined in Exchange Rules 13a-15(e) and 15d-15(e)), Principal Executive Officer and Principal Financial Officer David S. Givner has concluded that the disclosure controls and procedures are effective in recording, processing, summarizing and reporting on a timely basis information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended. (b) There have been no changes in our internal controls over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the fiscal quarter to which this report relates that have materially affect, or are reasonably likely to materially affect, our internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS None. ITEM 5. OTHER INFORMATION At September 30, 2003, Watermark Investors Realty Trust's (herein referred to as the "Trust" or "Watermark") only significant asset was its ownership interest in its subsidiary, Watermark Texas One, Inc., a Maryland corporation, which owns a parcel of unimproved land consisting of approximately 3.5 acres located on Parker Road in Houston, Harris County, Texas (the "Property"). On August 29, 2003, the Trustees voted to sell the Property, and an sale agreement was executed on October 16, 2003 between Watermark Texas 1, Inc. and The Peterson Group, Inc., to sell the property to the Peterson Group, Inc. for $510,000. The sale is expected to close in the first quarter of 2004. The Trustees intend to use the proceeds of the sale to pay down the Trust's debts. At the August 29, 2003 meeting, the Trustees also decided to discuss at a later date to be determined, any possible real estate investments that could be found. At that time, the Trustees will determine the long term plans for Watermark, which may include investing in a new real estate investment or liquidating the Trust. The sale agreement is attached to this Form as Exhibit 10.1. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits 10.1 Contract of Sale and Purchase of Real Property, by and between Watermark Texas One, Inc. and The Peterson Group, Inc., dated as of October 16, 2003. 31.1 Certification of David S. Givner, Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of David S. Givner, Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of David S. Givner, Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of David S. Givner, Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. b. Reports on Form 8-K None. WATERMARK INVESTORS REALTY TRUST 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. WATERMARK INVESTORS REALTY TRUST Date: November 14, 2003 By: /s/ David S. Givner -------------------------------- David S. Givner Principal Executive Officer and Principal Financial Officer (An Authorized Officer) EXHIBIT INDEX Exhibit No Description 10.1 Contract of Sale and Purchase of Real Property, by and between Watermark Texas One, Inc. and The Peterson Group, Inc., dated as of October 16, 2003. 31.1 Certification of David S. Givner, Principal Executive Officer of Watermark Investors Realty Trust, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of David S. Givner, Principal Financial Officer of Watermark Investors Realty Trust, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of David S. Givner, Principal Executive Officer of Watermark Investors Realty Trust, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of David S. Givner, Principal Financial Officer of Watermark Investors Realty Trust, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

WATERMARK INVESTORS REALTY TRUST 10-Q