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: June 30, 2004 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 incorporation or (I.R.S. Employer Identification No.) organization)~~

100 N. Tryon Street, Suite 5500, 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 June 30, 2004, 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 SIX MONTHS ENDED JUNE 20, 2004 AND 2003

The accompanying notes are an integral part of these financial statements. WATERMARK INVESTORS REALTY TRUST NOTES TO FINANCIAL STATEMENTS (Unaudited) JUNE 30, 2004 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, 2003. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources - At June 30, 2004, existing current liabilities exceed available cash by $402,644. Balance Sheet Changes - Assets increased by $3,519 for the quarter. Accrued liabilities increased by $29,051 for the quarter. For the three months and six months ended June 30, 2004, the net loss was more than the same periods in 2003 due to increased professional fees related to the termination of the contract for the sale of the land, higher interest expense due to the additional debt and an increase in landscape fees. 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 June 30, 2004, the only significant asset of Watermark Investors Realty Trust (herein referred to as the "Trust" or "Watermark" or the "Registrant") was its ownership interest in its subsidiary, Watermark Texas 1, Inc., which owns a parcel of unimproved land consisting of approximately 4.5 acres located on Parker Road in Houston, Harris County, Texas. In the 3rd quarter of 2003 the Trust entered into a contract to sell this property. The sales contract was filed with Watermark's Form 10-Q for the period ended September 30, 2003. However, the buyer elected to terminate the contract in January 2004. Currently, no other offers are being pursued and the Trust continues to hold the land as its asset. The Board will meet in the 3rd quarter of 2004 to decide what course of action is appropriate. If the Board should decide to pursue a sale of the Parker Road property, the proceeds of the sale will most likely be used to pay down the Trust's debts. The anticipated carrying costs associated with the Parker Road property are currently limited to property taxes and maintenance. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits 31.1 Certification of the Principal Executive Officer of Watermark Investors Realty Trust, pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 31.2 Certification of the Principal Financial Officer of Watermark Investors Realty Trust pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 32.1 Certification of the Principal Executive Officer of Watermark Investors Realty Trust furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 32.2 Certification of the Principal Financial Officer of Watermark Investors Realty Trust furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). b. Reports on Form 8-K None. WATERMARK INVESTORS REALTY TRUST SIGNATURES SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, on this the 10th day of August, 2004. WATERMARK INVESTORS REALTY TRUST By: ____________________________ David S. Givner Trustee, President and Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Signature Title Date ___________________ Trustee, President and Treasurer August 10, 2004 David S. Givner (Principal Executive Officer and Principal Financial and Accounting Officer) ___________________ Trustee, Vice President and Secretary August 10, 2004 Michael S. Verruto EXHIBIT INDEX Exhibit No Description 31.1 Certification of the Principal Executive Officer of Watermark Investors Realty Trust, pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 31.2 Certification of the Principal Financial Officer of Watermark Investors Realty Trust pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 32.1 Certification of the Principal Executive Officer of Watermark Investors Realty Trust furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 32.2 Certification of the Principal Financial Officer of Watermark Investors Realty Trust furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

WATERMARK INVESTORS REALTY TRUST 10-Q