U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-KSB
 (Mark One)
    [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
        EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 1996

    [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                     EXCHANGE ACT OF 1934 [No Fee Required]
            For the transition period from __________ to __________

                         Commission file number 1-14462

                            AmeriVest Properties Inc.
                  --------------------------------------------
                 (Name of small business issuer in its charter)

          Delaware                                          84-1240264
--------------------------------                        ------------------
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                         Identification No.)

                7100 Grandview Avenue, Suite 1, Arvada, CO 80002
                -------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number (303) 421-1224

Securities registered under Section 12(b) of the Exchange Act:

      Title of each class             Name of each exchange on which registered

Common Stock, $.001 par value                  Boston Stock Exchange
-----------------------------         ------------------------------------------

Redeemable Common Stock Purchase Warrants      Boston Stock Exchange
-----------------------------------------   ------------------------------------


Securities registered under Section 12(g) of the Exchange Act:  None

     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
                                                                      ---   ---

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of Regulation S-B is not contained in this form,  and no disclosure  will be
contained,  to be the best of  registrant's  knowledge,  in definitive  proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     The issuer's revenues for its most recent fiscal year were: $1,245,584
                                                                 ---------------

     The  aggregate  market  value of the issuer's  voting  Common Stock held by
non-affiliates  of the issuer as of March 10, 1997 was  $4,667,360  (computed on
the basis of $4.00 per share which was the  reported  closing  sale price of the
issuer's common stock on the Nasdaq SmallCap Stock Market on March 10, 1997).

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

         The number of shares outstanding of the issuer's Common Stock
                       as of March 10, 1997 was 1,382,870
       Transitional Small Business Disclosure Format (check one): Yes    No  X
                                                                      ---   ---

<PAGE>

                                     PART I

ITEMS 1. and 2.  DESCRIPTION OF BUSINESS AND PROPERTY

General
-------

     AmeriVest  Properties Inc.  ("AmeriVest" or the "Company") was incorporated
in 1993 in the State of  Delaware.  AmeriVest  intends to operate in a manner so
that it qualifies as a self-administered and self-managed real estate investment
trust  ("REIT").  See below,  "--Status  As A REIT".  Through its  subsidiaries,
AmeriVest  owns an  industrial  office  and  showroom  building  (the  "Broadway
Property"),  a commercial office building (the "Giltedge Office Building"),  and
four  self-storage  facilities  (the "Self- Storage  Facilities").  The Broadway
Property,  the Giltedge  Office  Building and the  Self-Storage  Facilities  are
collectively  referred to as the "Properties".  In October and November 1996 the
Company sold an aggregate of 1,098,870 shares of Common Stock and 549,435 common
stock purchase  warrants in its initial  public  offering.  The aggregate  gross
proceeds from the offering were  approximately $5.5 million and the net proceeds
to the Company were  approximately  $4.5 million.  The Properties are managed on
behalf  of the  Company  by  AmeriCo  Realty  Services,  Inc.  ("AmeriCo").  See
"--Property Management Contracts" below.

     AmeriVest's  headquarters  are located at 7100 Grandview  Avenue,  Suite 1,
Arvada, Colorado 80002. Its telephone number is (303) 421-1224.

Status As A REIT
----------------

     At the time of  filing  its  U.S.  income  tax  return  for the year  ended
December 31, 1996,  AmeriVest  will make an election  with the Internal  Revenue
Service  ("IRS") to be treated as a REIT beginning as of January 1, 1996.  Based
on advice of its special tax counsel,  the Company believes that it will qualify
as a REIT. As a REIT, a company generally is not taxed at the corporate level on
income  it  currently   distributes  to  its  stockholders,   provided  that  it
distributes  at least 95% of its REIT  taxable  income on a current  basis.  The
income  of a  REIT  is  taxed  directly  to the  REIT's  stockholders,  who  are
responsible  for  taxes  on that  income.  REITs  are  subject  to a  number  of
organizational  and  operational  requirements,  including  having  at least 100
stockholders.  Although  AmeriVest  currently  intends  to  operate  in a manner
designed to qualify as a REIT,  it is possible  that  future  economic,  market,
legal,  tax or other  considerations  may cause the Board Of Directors to revoke
the REIT  election.  See  also,  "--Forward-Looking  Statements  And  Cautionary
Statements--Cautionary Statements--Tax Risks".

Description Of Properties

     The following chart contains a summary of the Properties owned by AmeriVest
as of December 31, 1996:

<TABLE>
<CAPTION>
                                                                                                           Approximate Net
Property                                    Location               Owned Since            Year Built     Rentable Square Feet
--------                                    --------               -----------            ----------     --------------------

<S>                                 <C>                           <C>                       <C>          <C>
Broadway Property                   Adams County, Colorado        July 1, 1995              1968              50,280
(5961 Broadway)
Private Self-Storage/Office
Building of Arvada,                    Arvada, Colorado         October 30, 1996*           1975           8,000 office/
Colorado                                                                                                  37,000 storage
(7117 W. 56th Avenue)                                                                                   (249 rental units)
</TABLE>




                                        2

<PAGE>
<TABLE>
<CAPTION>

<S>                                       <C>                        <C>                       <C>          <C>             <C>   
Private Self-Storage of Thornton,         Thornton, Colorado         October 30, 1996*         1975              55,150
Colorado                                                                                                   (506 rental units)
(666 W. Thornton Parkway)
Private Self-Storage of Denver,            Denver, Colorado          October 30, 1996*         1974              72,490
Colorado                                                                                                   (566 rental units)
(11855 E. 40th Avenue)
Private Self-Storage of Westminster,    Westminster, Colorado        October 30, 1996*         1973              58,938
Colorado                                                                                                   (399 rental units)
(7140 Irving Street)
Giltedge Office Building                 Appleton, Wisconsin         October 30, 1996*         1978              55,071
</TABLE>

---------------

*    On October 30, 1996, the Company  consummated an agreement  effective as of
     July 1, 1996 to acquire these Properties.

         The following chart contains additional summary information  concerning
the Properties:

<TABLE>
<CAPTION>
                                                           Occupancy                 Annual Rent         Mortgage Loan Balance
Property                             Acreage         as of December 31, 1996       Per Square Foot       as of December 31, 1996
--------                             -------         -----------------------       ---------------       -----------------------
<S>                                 <C>                      <C>                        <C>              <C>       
Broadway Property                   2.53 acres               100.0%                     $ 4.73           $1,178,595
Private Self-Storage/               2.76 acres                90.9%                     $ 6.50           $844,875
Office Building of Arvada,
Colorado
Private Self-Storage of Thornton,   4.92 acres                86.0%                     $ 6.50           $1,194,475
Colorado
Private Self-Storage of Denver,     3.55 acres                74.7%                     $ 5.73           $1,213,895
Colorado
Private Self-Storage of
Westminster, Colorado               3.52 acres                84.9%                     $ 5.93           $922,560
Giltedge Office Building            3.90 acres                99.0%                     $14.77           $2,043,595
</TABLE>


     The Company  believes that each of the Properties is adequately  covered by
insurance.  For a discussion of the financial  treatment of the  depreciation of
the  Properties,  see  "Notes To  Financial  Statements"  in "ITEM 7.  FINANCIAL
STATEMENTS."

     Broadway   Property.   AmeriVest   Broadway   Properties  Inc.  ("ABP"),  a
wholly-owned  subsidiary  of the Company,  owns fee simple title to the Broadway
Property.  The Broadway  Property is an industrial  office and showroom building
located at 5961 Broadway, Denver, Colorado 80216. The Broadway Property consists
of approximately 2.53 acres of land and contains  approximately  50,280 rentable
square feet.  The mortgage  balance on the Broadway  Property as of December 31,
1996 was  $1,178,595.  The current  monthly  principal  and interest  payment is
$9,920.40,  the per annum  interest rate is 8.5%,  and the mortgage is amortized
over a 25-year period with the  $1,144,945  balance due at maturity in September
1998  (assuming  no principal  payment has been made in advance).  There is a 1%
mortgage  prepayment  fee if the loan is prepaid from  September 1, 1995 through
September 1, 1997 and no prepayment  fee  thereafter.  The Company does not have
any present  plans for capital  expenditures  on the  Broadway  Property  and it
intends to hold the Broadway Property for income purposes. The Broadway Property
is  subject  to the  following  competitive  conditions:  there are other  light
industrial/warehouse  facilities in the immediate  area,  but no one property or
property owner represents a dominant  competitive  force. The occupancy rate for
the Broadway Property has been 100% in 1996, 1995 and 1994. There are a total of
four tenants, each of whom occupies more than 10% of the rentable square feet of
the  Broadway  Property.  The  principal  business  of each of these  tenants is
warehousing and wholesale sales

                                      3

<PAGE>



of commercial  products.  In general, the principal businesses carried on at the
Broadway Property are office and showroom.  For 1996, 1995 and 1994, the average
effective  annual  rental per square foot for the  Broadway  Property was $4.73,
$4.45 and $4.16,  respectively.  For 1996,  real estate  taxes for the  Broadway
Property  were  $33,233,  which  were  calculated  at the  rate of  12.4% of the
assessed  value as determined by the Adams County  Assessor.  The following is a
schedule of lease expirations for the Broadway Property for the next three years
as all of the leases will expire during that time period:
<TABLE>
<CAPTION>


                                        Total Area (In Square
              Number Of Tenants         Feet) Of The Expiring    Annual Rental Represented     Percentage Of Gross Annual Rental
           Whose Leases Will Expire            Leases               By Expiring Leases         Represented By The Expiring Leases
          --------------------------  ------------------------- --------------------------    -----------------------------------

<S>                   <C>                       <C>                    <C>                                  <C>  
  1997                2                         21,710                 $102,144                             44.8%
  1998                1                         13,540                  $60,780                             26.6%
  2002                1                         15,030                  $65,380                             28.6%
</TABLE>


     For information  concerning certain  contaminants on the Broadway Property,
see below,  "--Forward-Looking  Statements  And Cautionary  Statements--C.  Real
Estate Investment Risks--Possible Environmental Liabilities".

     Private  Self-Storage/Office  Building  Of Arvada,  Colorado.  Consolidated
Storage Properties Inc. ("CSP"), a wholly-owned  subsidiary of the Company, owns
fee  simple  title to the  Private  Self-  Storage/Office  building  in  Arvada,
Colorado.  The Property  consists of a self-storage  facility,  which includes a
strip of rental  offices,  located at 7117 West 56th  Avenue,  Arvada,  Colorado
80002.  This  Property  includes  approximately  2.76 acres of land and contains
rental  offices with  approximately  8,000 square feet of rentable  space.  This
Property also contains eight storage  buildings with a total of 252 rental units
with an  aggregate  of  approximately  37,000  square feet of storage  space.  A
separate building on the premises serves as the manager's  apartment and office.
The mortgage loan for this Property was obtained from the same lender and at the
same time as the mortgage  loans  (collectively,  the "CSP  Mortgages")  for the
private  self-storage  properties in each of Thornton,  Denver, and Westminster,
Colorado.  For a description of the CSP Mortgages,  see "--CSP Mortgages" below.
The Company  does not have any present  plans for capital  expenditures  on this
Property and intends to hold the Property for income purposes.  This Property is
subject to the following competitive  conditions:  there are national,  regional
and independent self-storage facilities in the area; however, no one operator is
a  dominant  competitive  force in this  market.  The  occupancy  rates for this
Property were 91%, 95%, 95%, 97%, and 98% in 1996,  1995,  1994, 1993, and 1992,
respectively.  There  are  seven  tenants  occupying  10% or more of the  office
rentable square feet of the Property.  The principal businesses of these tenants
include real estate, property management,  carpet cleaning,  accounting services
and  chiropractic.  There are no tenants  occupying  10% or more of the rentable
square feet of the  self-storage  units.  In general,  the  Property is used for
self-storage for individuals or companies. For 1996, 1995, 1994, 1993, and 1992,
the average  effective  annual  rentals per square  foot for the  Property  were
$6.50, $6.62, $6.36, $5.24, and $5.75, respectively. For 1996, real estate taxes
for this Property were $28,083,  which taxes were calculated at the rate of 9.5%
of the assessed  value as  determined  by the  Jefferson  County  Assessor.  The
following is a schedule of lease  expirations  for office space at this Property
for the next ten years:


                                      4

<PAGE>
<TABLE>
<CAPTION>

            Number of Tenants Whose     Total Area (In Square Feet)  Annual Rental Represented    Percentage Of Gross Annual Rental
             Leases Will Expire --       Of The Expiring Leases         By Expiring Leases        Represented By The Expiring Leases
                  Office Space
           --------------------------  --------------------------   --------------------------   ----------------------------------

<S>                    <C>                         <C>                      <C>                                <C>   
  1997                 7*                          8,000                    $62,400                            100.0%
</TABLE>

--------
*     Two of these expiring leases are month-to-month tenancies.

     Private  Self-Storage Of Thornton,  Colorado.  CSP owns fee simple title to
Private  Self-Storage  Of  Thornton,  Colorado.  This  Property  consists  of  a
self-storage facility located at 666 West Thornton Parkway,  Thornton,  Colorado
80229. This Property includes  approximately  4.92 acres of land and contains 16
storage  buildings  with a  total  of 510  rental  units  and  an  aggregate  of
approximately  55,150 square feet of storage space.  A separate  building on the
premises  serves as the  manager's  apartment  and office.  This  Property  also
contains 10 parking spaces for vehicle storage.  For information  concerning the
mortgage loan secured by this Property, see "--CSP Mortgages" below. The Company
does not have any present plans for capital  expenditures  on the Property.  The
Company  intends to hold this  Property for income  purposes.  This  Property is
subject to the following competitive  conditions:  There are national,  regional
and independent self-storage facilities in the area; however, no one operator is
a  dominant  competitive  force in this  market.  The  occupancy  rates for this
Property have been 86%, 91%, 93%, 95%, and 95% in 1996,  1995,  1994,  1993, and
1992,  respectively.  There are no tenants occupying 10% or more of the rentable
square  feet of the  Property.  All leases  are on a  month-to-month  basis.  In
general, the Property is used for self-storage by individuals or businesses. For
1996,  1995,  1994,  1993,  and 1992, the average  effective  annual rentals per
square  foot for the  Property  were  $6.50,  $6.48,  $6.61,  $6.33,  and $5.54,
respectively.  For 1996, real estate taxes for this Property were $43,096, which
taxes were  calculated at the rate of 23.8% of the assessed  value as determined
by the Adams County Assessor.

     Private  Self-Storage  Of Denver,  Colorado.  CSP owns fee simple  title to
Private  Self-Storage  Of  Denver,   Colorado.   This  Property  consists  of  a
self-storage facility located at 11855 East 40th Avenue, Denver, Colorado 80239.
This Property includes approximately 3.55 acres of land and contains ten storage
buildings  with a total of 571 rental units and an  aggregate  of  approximately
72,490  square feet of storage  space.  This  Property also contains a manager's
two-bedroom  apartment and office and 35 parking spaces for vehicle storage. For
information  concerning the mortgage loan secured by this  Property,  see "--CSP
Mortgages"  below.  The  Company  does not have any  present  plans for  capital
expenditures  on the  Property.  The Company  intends to hold this  Property for
income  purposes.   This  Property  is  subject  to  the  following  competitive
conditions: there are national, regional and independent self-storage facilities
in the area;  however,  no one operator is a dominant  competitive force in this
market.  The occupancy rates for this Property were 75%, 85%, 86%, 85%, 88%, and
84% in 1996,  1995,  1994,  1993, and 1992,  respectively.  There are no tenants
occupying 10% or more of the rentable  square feet of the  Property.  All leases
are on a month-to-month basis. In general, the Property is used for self-storage
by individuals or businesses.  For 1996, 1995, 1994, 1993, and 1992, the average
effective  annual  rentals per square foot for the Property  were $5.73,  $6.07,
$6.59,  $6.19,  and $5.43,  respectively.  For 1996,  real estate taxes for this
Property  were $38,383,  which taxes were  calculated at the rate of 7.4% of the
assessed value as determined by the Denver County Assessor.

     Private Self-Storage Of Westminster, Colorado. CSP owns fee simple title to
Private  Self-Storage  Of  Westminster,   Colorado.  This  Property  contains  a
self-storage facility located at 7140 Irving Street,

                                     5

<PAGE>

Westminster,  Colorado 80030. This Property consists of approximately 3.52 acres
of land and contains nine storage buildings with a total of 401 rental units and
aggregate storage space of approximately 58,938 square feet. A separate building
on the premises  serves as the manager's  apartment and office.  For information
concerning  the mortgage loan secured by this  Property,  see "--CSP  Mortgages"
below.  The Company does not have any present plans for capital  expenditures on
the Property.  The Company  intends to hold this  Property for income  purposes.
This  Property is subject to the  following  competitive  conditions:  there are
national, regional and independent self-storage facilities in the area; however,
no one operator is a dominant  competitive  force in this market.  The occupancy
rates for this Property were 85%, 89%, 94%, 95%, and 90%, in 1996,  1995,  1994,
1993, and 1992, respectively.  There are no tenants occupying 10% or more of the
rentable square feet of the Property.  All leases are on a month-to-month basis.
In general, the Property is used for self-storage by individuals and businesses.
For 1996, 1995,  1994, 1993, and 1992, the average  effective annual rentals per
square  foot for the  Property  were  $5.93,  $5.51,  $5.73,  $5.08,  and $4.38,
respectively.  For 1996, real estate taxes for this Property were $31,099, which
taxes were  calculated at the rate of 11.9% of the assessed  value as determined
by the Adams County Assessor.

     CSP  Mortgages.  The mortgage loans (the "CSP  Mortgages")  for each of the
Self-Storage Facilities owned by CSP that are described above were obtained from
the same lender.  Each of the Self- Storage  Facilities serves as collateral for
all of the CSP  Mortgages  so that a  default  under  one loan  could  cause the
foreclosure  on one or all of the  Self-Storage  Facilities.  Each CSP  Mortgage
bears  interest at the rate of 9.9% per annum and monthly  payments of principal
and interest  are based upon a 20 year  amortization,  and the maturity  date of
each CSP  Mortgage  is March 1, 2000.  CSP can prepay each CSP  Mortgage  with a
prepayment fee at any time from May 1, 1996 until December 1, 1999 with at least
60 days' prior written  irrevocable  notice.  The prepayment fee is equal to the
amount  prepaid  multiplied by the  difference in yield between the  outstanding
principal  balance and a treasury note in the amount of the prepayment  proceeds
with a term equal to the  remaining  term of the loan, or if no treasury note of
equal term is available,  based upon an interpolation of the yield of notes with
the next longer and shorter term (the  "Treasury  Note  Yield").  The  following
table summarizes the amount of the mortgage loan balance as of December 31, 1996
for each of the  self-storage  properties  owned by CSP, the monthly payment due
with  respect to each loan based on the  20-year  amortization  and 9.9%  annual
interest  rate,  and the  balance  due at the  maturity of each loan on March 1,
2000:

<TABLE>
<CAPTION>


                                                                               Balance Due At Maturity
          Property                 Mortgage Balance           Monthly Payment      (March 1, 2000)
          --------                 ----------------           ---------------      ----------------

<S>                                   <C>                        <C>                   <C>      
Private Self-Storage/Office         $  844,875                   $ 8,338               $ 784,114
Building of Arvada, Colorado

Private Self-Storage of             $1,194,475                   $11,789               $1,108,565
Thornton, Colorado

Private Self-Storage of             $1,213,895                   $11,980               $1,126,583
Denver, Colorado

Private Self-Storage of             $  922,560                   $ 9,105               $  856,208
Westminster, Colorado
</TABLE>

                                       6

<PAGE>

     Giltedge Office Building In Appleton,  Wisconsin. Giltedge Office Building,
Inc. ("GBI"), a wholly-owned subsidiary of the Company, owns fee simple title to
the Giltedge Office Building. This Property contains approximately 3.9 acres and
includes  an office  building  located at 4321 West  College  Avenue,  Appleton,
Wisconsin 54914. The office building contains  approximately  54,871 square feet
of net rentable area and was  constructed  in 1978. The mortgage loan balance on
the  Property  as of  December  31, 1996 was  $2,043,595.  The  current  monthly
principal and interest  payment is  $16,909.80,  the per annum  interest rate is
8.5%,  and the mortgage is amortized  over a 25-year period through its maturity
date of October 1, 2019.  GBI can prepay the loan in full or in part at any time
without  penalty  provided that the  prepayment is accompanied by any unpaid and
accrued  interest.  The  Company  does not have any  present  plans for  capital
expenditures  on the  Property.  The Company  intends to hold the  Property  for
income  purposes.   This  Property  is  subject  to  the  following  competitive
conditions:  there are several  mid-rise office buildings in the area, but there
is no dominant  owner or building.  The  occupancy  rates for this Property were
99%, 97%, 99%, 95%, and 85%, in 1996, 1995, 1994, 1993, and 1992,  respectively.
There are two tenants  occupying 10% or more of the rentable  square feet of the
Property.  The principal businesses of these tenants are  telecommunications and
paper supplies. In general, the principal business carried on at the Property is
office  administration.  For 1996,  1995,  1994,  1993,  and 1992,  the  average
effective  annual rentals per square foot for the Property were $14.77,  $14.12,
$13.65, $12.85, and $12.81,  respectively.  For 1996, real estate taxes for this
Property  were $67,092,  which taxes were  calculated at the rate of 2.2% of the
assessed value as determined by the Outagamie County Assessor.  The following is
a schedule of lease expirations for the Property for the next ten years:

<TABLE>
<CAPTION>


             Number Of Tenants         Total Area (In Square Feet)   Annual Rental Represented    Percentage Of Gross Annual Rental
          Whose Leases Will Expire      Of The Expiring Leases          By Expiring Leases        Represented By The Expiring Leases
         --------------------------   --------------------------    --------------------------   ----------------------------------

<S>                 <C>                        <C>                        <C>                                     <C> 
  1997              5                          3,352                      $ 48,622                                6.5%
  1998              6                          7,329                      $106,048                               14.3%
  1999             12                         19,749                      $269,765                               36.3%
  2000              4                         18,446                      $267,505                               36.0%
  2001              0                              0                      $      0                                  0%
  2002              1                          4,035                      $ 51,446                                6.9%
</TABLE>

     Property  Management  Contracts.  The  Company has  entered  into  property
management  contracts for each of the Properties  with AmeriCo Realty  Services,
Inc.  ("AmeriCo")  pursuant  to which  AmeriCo  will  manage all  aspects of the
operation of the Properties,  including leasing,  maintenance,  bookkeeping, and
other matters.  AmeriCo managed each of the Properties  before their purchase by
the Company. The Company and AmeriCo have agreed that AmeriCo will receive 5% of
the gross rental income, as received,  on the Properties that it manages for the
Company. In addition, the Company will reimburse AmeriCo for the cost of on-site
personnel  and will pay AmeriCo an amount  equal to 5% of the salaries and other
costs  related  to  that  on-site   personnel.   See  also,  "ITEM  12.  CERTAIN
RELATIONSHIPS  AND  RELATED  TRANSACTIONS-Property  Management;   Administrative
Services".

     Property Acquisition;  Brokerage Services.  The Company has entered into an
agreement  with each of  Colorado  Bighorn  Corporation  and Mr.  C. J.  Hedlund
effective as of October 30, 1996.  Pursuant to this  agreement,  Mr. Hedlund and
Colorado Bighorn  Corporation  granted to the Company the right of first refusal
for a period of one year to participate in any real estate  transaction in which
Mr. Hedlund,  Colorado Bighorn Corporation,  or any of their affiliated entities
is involved or for which Mr. Hedlund,

                                       7

<PAGE>

Colorado  Bighorn  Corporation,  or any of their affiliated  entities  otherwise
receives compensation,  except that the right of first refusal does not apply to
any proposed  transaction  that relates  solely to their  serving in a brokerage
function,  such  as a  listing  or  selling  broker.  The  Company  in its  sole
discretion can renew this agreement for five additional  one-year terms. Also as
part of this  transaction,  the Company  entered into broker listing  agreements
with Colorado Bighorn Corporation pursuant to which Colorado Bighorn Corporation
will serve as the  Company's  broker  for all  purchase  and sale  transactions.
Pursuant to these  listing  agreements,  the Company will pay  Colorado  Bighorn
Corporation  a  standard  real  estate  commission  for  each  purchase  or sale
transaction  entered into by the Company,  including those pursuant to the right
of first  refusal  granted to the Company by Mr.  Hedlund and  Colorado  Bighorn
Corporation.  This agreement and the listing  agreements have one year terms but
may be terminated earlier by the Company in the event that either Mr. Hedlund or
Colorado  Bighorn  Corporation  does not perform its duties  satisfactorily,  as
determined by the Board Of Directors of the Company in its sole  discretion.  In
addition, the agreement and the listing agreements may be renewed by the Company
for five  additional  one year terms.  Mr.  Hedlund is the  beneficial  owner of
Colorado  Bighorn  Corporation.  See also, "ITEM 12. CERTAIN  RELATIONSHIPS  AND
RELATED TRANSACTIONS-Property Acquisition; Brokerage Services".

Competition
-----------

     The business of operating  self-storage  facilities is very competitive and
the  Company  will  compete  with  many  larger  companies,  including  national
franchisors,  with  significantly  more  financial and other  resources than the
Company. The business of managing,  leasing, and operating office buildings also
is very  competitive  and the Company  competes  for tenants  with other  office
buildings, including buildings owned by larger companies with more financial and
other  resources  available to them.  The Company  believes  that by focusing on
self-storage  facilities and other  commercial  properties,  the Company will be
well positioned to compete. Competitive conditions with respect to each Property
are described above under "--Description Of Properties".

Employee
--------

     The Company has one  employee,  James F. Etter,  who is the  President  and
Chief Financial Officer of the Company.  Management services with respect to the
Properties  are  performed  by  AmeriCo.  See  above,   "--Property   Management
Contracts".

Environmental Matters
---------------------

     Under various federal,  state and local laws and  regulations,  an owner or
operator of real property may be liable for the costs of removal or  remediation
of certain  hazardous or toxic  substances  on that  property.  These laws often
impose such  liability  regardless  of whether  the owner  caused or knew of the
presence of hazardous or toxic  substances and regardless of whether the storage
of those substances was in violation of a tenant's lease. Furthermore, the costs
of  remediation  or  removal of those  substances  may be  substantial,  and the
presence of hazardous or toxic substances,  or the failure to promptly remediate
those substances,  may adversely affect the owner's ability to sell the property
or to borrow using the property as collateral.  In connection with the ownership
and operation of the Properties,  the Company may be potentially liable for such
costs.

                                       8

<PAGE>

     The  Company  has  obtained  an  environmental  assessment  of  each of the
Properties. Based on those assessments,  management believes that the Properties
are in compliance in all material  respects with all applicable  federal,  state
and local ordinances and regulations regarding hazardous or toxic substances and
other  environmental  matters or that,  to the extent  that a Property is not in
compliance  that the  Company  will not be subject  to  material  liability.  In
addition,  neither the Company nor, to the knowledge of the Company,  any of the
previous  owners  of the  Properties  have  been  notified  by any  governmental
authority  of  any  material  noncompliance,  liability  or  claim  relating  to
hazardous or toxic  substances or other  environmental  substances in connection
with any of the  Properties.  Although  the Company has  obtained  environmental
assessments  of the  Properties,  and  although  the Company is not aware of any
notifications by any governmental authority of any material noncompliance, it is
possible  that  the  Company's  assessments  do  not  reveal  all  environmental
liabilities  or that there are material  environmental  liabilities of which the
Company  is  unaware.  See  below,   "--Disclosure   Regarding   Forward-Looking
Statements And Cautionary Statements--C.  Real Estate Investment Risks--Possible
Environmental Liabilities".

Policies And Objectives With Respect To Certain Activities
----------------------------------------------------------

     The  following is a discussion  of the  Company's  policies with respect to
investment,  financing,  conflicts of interest and certain other activities. The
policies with respect to these  activities have been determined by the Company's
Board Of Directors and,  although the Board  currently does not  contemplate any
changes to these policies,  the Board may change these policies without the vote
of stockholders.

     Acquisition,  Development And Investment  Policies.  The Company's business
and growth  strategies are designed to increase both the Company's cash flow and
the value of the Company and its properties.  The Company's policies contemplate
the  possibility  of each of (i) direct  ownership  of real  estate  properties,
including  ownership  through  wholly-owned  subsidiaries,  focusing  on office,
industrial and  self-storage  properties,  (ii) indirect  participation in those
types of  properties  through  investments  in  corporations,  business  trusts,
general  partnerships,  limited  partnerships,  joint  ventures  and other legal
entities,  and (iii)  development and acquisition of unimproved  property or the
acquisition and conversion of existing structures.  At the present time, all the
Company's  existing and contemplated  investments in real estate  properties are
held through direct ownership as described in clause (i). The Company intends to
retain  ownership of the Properties and any other acquired  properties for their
net operating  income.  The Company will sell any of these  Properties  when the
economic  benefit,  including the income tax  consequences,  to the stockholders
warrants such action. In the case of the sale of the Self-Storage Facilities and
Office  Building,  there are special income tax  considerations  that may affect
this  determination,  and the Company does not intend to sell any of them for 10
years  after the date of  purchase of that  property.  See below,  "--Disclosure
Regarding Forward-Looking Statements And Cautionary Statements--B. Tax Risks".

     Although the Company has no formal  policy as to the  allocation  of assets
among its  investments,  initially  the Company will limit its  investment  in a
single property to a maximum of 25% of the Company's  total assets.  The Company
expects  to fund  future  development  and  acquisitions  utilizing  funds  from
additional  indebtedness,  future  offerings of securities  of the Company,  and
retained cash flow. The Company  believes its capital  structure is advantageous
because it permits  the  Company to  acquire  additional  properties  by issuing
equity  securities  in  whole  or in part  as  consideration  for  the  acquired
properties.  In order to maintain its  qualification as a REIT, the Company must
make  annual  distributions  to its  stockholders  of at  least  95% of its REIT
taxable income (which does not include net capital gains).  This requirement may
impair the Company's ability to use retained cash flow for future acquisitions.



                                        9

<PAGE>


     Financing Policies.  The Company intends to make additional  investments in
properties and may incur  indebtedness to make those  investments or to meet the
distribution  requirements  imposed by the REIT  provisions  of the Code, to the
extent that cash flow from the Company's  operations,  investments,  and working
capital is insufficient.  Additional indebtedness incurred by the Company may be
secured  by  part  or all of the  Company's  real  estate  properties  ("Secured
Indebtedness"). The Company has no limitation on the number or amount of Secured
Indebtedness  or  mortgages  which  may be  placed  on any one of the  Company's
properties.

     Secured Indebtedness incurred by the Company may be in the form of purchase
money  obligations  to the sellers of properties,  publicly or privately  placed
debt  instruments,  or financing  from banks,  institutional  investors or other
lenders.  This  indebtedness may be recourse to all or any part of the assets of
the  Company,  or may be  limited  to  the  particular  property  to  which  the
indebtedness  relates.  The proceeds  from any  borrowings by the Company may be
used for  refinancing  existing  indebtedness,  for  financing  development  and
acquisition of properties, for the payment of dividends and for working capital.

     If the Board Of Directors  determines to raise  additional  equity capital,
the Board has the authority,  generally without stockholder  approval,  to issue
additional  Common Stock,  preferred stock or other capital stock of the Company
in any  manner  (and on such  terms  and for  such  consideration)  as it  deems
appropriate,  including in exchange for property.  Existing stockholders have no
preemptive  right  to  purchase  shares  issued  in any  offering,  and any such
offering might cause a dilution of a stockholder's investment in the Company.

Disclosure Regarding Forward-Looking Statements And Cautionary Statements
-------------------------------------------------------------------------

     Forward-Looking  Statements.  This Annual  Report on Form  10-KSB  includes
"forward-looking" statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than
statements of historical facts included in this Annual Report, including without
limitation  statements  under  "ITEMS  1 AND  2.  DESCRIPTION  OF  BUSINESS  AND
PROPERTY--Status  As A REIT",  "--Competition",  "--Environmental  Matters"  and
"--Policies  And Objectives  With Respect To Certain  Activities",  and "ITEM 6.
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR PLAN OF  OPERATION",  regarding  the
Company's  financial  position,  business strategy,  and plans and objectives of
management of the Company for future  operations and capital  expenditures,  are
forward-looking statements.  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.
Additional  statements  concerning  important  factors  that could cause  actual
results  to  differ  materially  from the  Company's  expectations  ("Cautionary
Statements") are disclosed below in the  "--Cautionary  Statements"  section and
elsewhere in this Annual Report. All written and oral forward-looking statements
attributable  to the Company or persons  acting on its behalf  subsequent to the
date of this Annual  Report are  expressly  qualified  in their  entirety by the
Cautionary Statements.

                                       10

<PAGE>

     Cautionary  Statements.  In addition to the other information  contained in
this Annual Report,  the following  Cautionary  Statements  should be considered
when evaluating the forward-looking statements contained in this Annual Report:

     A. General Risks
        -------------

          Competition.   The   commercial   real   estate   industry  is  highly
competitive,  and  the  Company  will be  competing  with  substantially  larger
companies,  including  substantially  larger  REITs,  for  the  acquisition  and
operation  of  properties.  Some of these  companies  are  national  or regional
operators.  The Company's primary competitors are significantly  larger and have
far  greater  resources  than  those  of the  Company.  The  presence  of  these
competitors may be a significant  impediment to the continuation and development
of the Company's business.

          Debt And Mortgage Financing.  The Company has incurred indebtedness in
connection  with the acquisition of the Properties and the Company in the future
may incur new  indebtedness  in connection  with its  acquisition  and operating
activities.  Mortgages of certain of the Properties  also require the payment of
the   mortgage   balances  in  September   1998  and  March  2000.   See  above,
"--Description  Of  Properties".  As a result of the Company's use of debt,  the
Company will be subject to the risks normally  associated  with debt  financing.
The required payments on mortgages and on other  indebtedness are not reduced if
the economic  performance of any property declines.  If any such decline occurs,
the Company's ability to make debt service payments would be adversely affected.
If a property is mortgaged to secure payment of indebtedness  and the Company is
unable to meet mortgage  payments,  that property  could be  transferred  to the
mortgagee with a consequent loss of income and asset value to the Company.

          Government Regulation. The Company is subject to government regulation
of its business  operations in general,  such as  environmental  and other laws,
including  the  Americans  With  Disabilities  Act. See above,  "--Environmental
Matters",   and  see  below  "--C.   Real  Estate   Investment   Risks--Possible
Environmental  Liabilities" and "--Americans With Disabilities Act". There is no
assurance that subsequent  changes in laws and  regulations  will not affect the
Company's operations.

          Dependence On Key  Personnel.  The Company is highly  dependent on the
services of James F. Etter, its president and sole full-time employee.  The loss
of Mr. Etter could have a material  adverse  affect on the  Company.  See above,
"--Employee".

          No Assurance of Dividends.  The Company's  ability to pay dividends in
the future is  dependent  on its ability to operate  profitably  and to generate
cash from its operations. There is no assurance that the Company will be able to
pay dividends on a regular quarterly basis.

     B. Tax Risks
        ---------

          Tax  Liabilities As A Consequence Of The Failure To Qualify As A REIT.
The Company  believes that it will be organized and operated so as to qualify as
a REIT under the Internal Revenue Code of 1986, as amended (the "Code"); however
no assurance can be given that the Company will qualify or remain qualified as a
REIT.  Qualification  as a REIT involves the application of highly technical and
complex  Code   provisions  for  which  there  are  only  limited   judicial  or
administrative

                                       11

<PAGE>


interpretations.  There are no controlling  authorities  that deal  specifically
with many tax issues affecting a REIT that operates self-storage facilities. The
determination of various factual matters and  circumstances  not entirely within
the Company's  control may affect its ability to qualify as a REIT. In addition,
no assurance  can be given that  legislation,  new  regulations,  administrative
interpretations  or court  decisions will not have a substantial  adverse effect
with  respect  to  the  qualification  as a  REIT  or  the  federal  income  tax
consequences of such qualification.

          Although the Company does not intend to sell the Properties  which are
owned by CSP and GBI until at least ten years  after their  acquisition,  if the
Company does sell any of these Properties within ten years of their acquisition,
the Company  will be required  to pay tax at the  highest  applicable  corporate
rates on the difference between their fair market value and their adjusted bases
at the time of the REIT  election.  The amount of this tax could be  substantial
and would be  significantly  more than if the Company  would be permitted to use
its own  adjusted  basis.  There  is a risk  that  the  Company  would  not have
sufficient  cash available to pay the additional  taxes resulting from the lower
adjusted bases of CSP and GBI.

          If the Company were to fail to qualify as a REIT in any taxable  year,
the Company would not be allowed a deduction for  distributions  to stockholders
in  computing  its  taxable  income and would be  subject to federal  income tax
(including  any  applicable  alternative  minimum tax) on its taxable  income at
regular   corporate  rates.   Unless  entitled  to  relief  under  certain  Code
provisions,  the Company also would be disqualified from treatment as a REIT for
the four taxable years  following the year during which REIT  qualification  was
lost. As a result,  the funds  available for  distribution  to the  stockholders
would be reduced for each of the years involved. In addition, failure to qualify
for even one taxable  year would  result in double  taxation and could result in
the Company's  incurring  substantial  indebtedness  or liquidating  substantial
investments  in order  to pay the  resulting  federal  income  tax  liabilities.
Differences  in timing between the receipt of income and payment of expenses and
the  inclusion  of those  amounts in arriving  at taxable  income of the Company
could  make it  necessary  for the  Company  to  borrow  in  order  to make  the
distributions to its stockholders that are necessary to satisfy the distribution
requirements  applicable  to REITs.  Although the Company  currently  intends to
operate in a manner  designed to qualify as a REIT,  it is possible  that future
economic,  market,  legal,  tax or other  considerations  may cause the Board Of
Directors,  with the  consent of a majority of the  stockholders,  to revoke the
REIT election.

          Distributions  to  Stockholders.  In order to qualify  as a REIT,  the
Company  generally will be required each year to distribute to its  stockholders
at least 95% of its REIT taxable income  (excluding any net capital  gains).  In
addition,  the Company will be subject to a 4%  nondeductible  excise tax on the
amount,  if any, by which certain  distributions  paid by it with respect to any
calendar  year are less than the sum of 85% of its  ordinary  income plus 95% of
its capital gain net income for that year.

          The  Company  intends to make  distributions  to its  stockholders  to
comply  with the 95%  distribution  requirement  and to avoid the  nondeductible
excise tax.  The  Company's  income will  consist  primarily of its share of the
income from operating the  Properties.  Differences  in timing  between  taxable
income and cash available for  distribution  could require the Company to borrow
funds on a  short-term  basis to meet the 95%  distribution  requirement  and to
avoid the nondeductible excise tax.

     C. Real Estate Investment Risks
        ----------------------------


                                       12

<PAGE>

          General Risks. Real estate  investments are subject to varying degrees
of risk. The yields  available from equity  investments in real estate depend on
the amount of income and capital  appreciation  generated by the properties held
by the  entity  in  which  the  investment  is  made.  If the  Company  acquires
properties  and they do not  generate  sufficient  operating  cash  flow to meet
operating  expenses,  including debt service,  capital  expenditures  and tenant
improvements,  the  Company's  income  and  ability  to  pay  dividends  to  its
stockholders will be adversely affected. Income from properties may be adversely
affected  by  the  general  economic  climate,  local  conditions,  such  as  an
oversupply  of or reduction in demand for storage  facilities  and office space,
the  attractiveness  of  properties  to  tenants,  zoning  or  other  regulatory
restrictions,  competition  from other available  storage  facilities and office
buildings,  and the ability of the Company to provide  adequate  maintenance and
insurance to control  operating  costs,  including site  maintenance,  insurance
premiums and real estate taxes.  Income from  properties  and real estate values
also are  affected  by such  factors as  applicable  laws,  including  tax laws,
interest   rate  levels  and  the   availability   of   financing.   See  above,
"-Competition".

          No  Assurance  Of Tenants.  Although  the  Properties  currently  have
favorable occupancy rates, there is no assurance that current tenants will renew
their leases upon the expiration of their terms or that current tenants will not
attempt to  terminate  their  leases prior to the  expiration  of their  current
terms.  In such an  instance,  the Company may not be able to locate a qualified
replacement  tenant and, as a result, the Company would lose a source of revenue
while remaining  responsible for the payment of the Company's  obligations.  See
"ITEMS 1 AND 2. DESCRIPTION OF BUSINESS AND PROPERTY-Description Of Properties".

          Illiquidity   Of  Real  Estate  May  Limit  Its  Value.   Real  estate
investments  are  relatively  illiquid.  The  ability of the Company to vary its
portfolio  in  response  to changes in  economic  and other  conditions  will be
limited.  There can be no assurance  that the Company will be able to dispose of
an investment  when it finds  disposition  advantageous or necessary or that the
sale price of any disposition  will recoup or exceed the amount of the Company's
investment.

          Uninsured  And  Underinsured  Losses  Could Result In Loss Of Value Of
Properties.  The  Company  maintains  comprehensive  insurance  on  each  of the
Properties, including liability, fire and extended coverage. Management believes
such coverage is of the type and amount customarily  obtained for or by an owner
on real property assets.  The Company will obtain similar insurance  coverage on
subsequently  acquired facilities.  However,  there are certain types of losses,
generally of a catastrophic  nature, such as earthquakes and floods, that may be
uninsurable or not economically  insurable, as to which the Company's facilities
are at risk in their particular locales.  The Company's  management will use its
discretion in determining amounts,  coverage limits and deductibility provisions
of insurance,  with a view to requiring  appropriate  insurance on the Company's
investments  at a  reasonable  cost and on  suitable  terms.  This may result in
insurance  coverage  that  in the  event  of a  substantial  loss  would  not be
sufficient to pay the full current market value or current  replacement  cost of
the  Company's  lost  investment.  Inflation,  changes in codes and  ordinances,
environmental considerations,  and other factors also might make it not feasible
to use  insurance  proceeds to replace a facility  after it has been  damaged or
destroyed.

          Possible Environmental Liabilities.  Under various federal, state, and
local  environmental  laws,  ordinances and  regulations,  a current or previous
owner or  operator  of real  property  may be liable for the costs of removal or
remediation of hazardous or toxic  substances,  including,  without  limitation,
asbestos-containing  materials  ("ACMs")  that  are  located  on  or  under  the
property. These laws often

                                       13

<PAGE>

impose liability  whether the owner or operator knew of, or was responsible for,
the presence of those substances.  In connection with its proposed ownership and
operation  of the  Properties,  the  Company  may be liable for such  costs.  In
addition,  the  presence of  hazardous  or toxic  substances,  or the failure to
properly  remediate  any  contamination,  may  adversely  affect the  ability to
arrange for financing secured by that real property.

          There  are  three  types  of  environmental  issues  at  the  Broadway
Property.  First, a test well near the northeast corner of the Broadway Property
indicates  the presence of the  contaminants  pentachlorophenol  and  polycyclic
aromatic  hydrocarbons  in the  groundwater  below  the  Broadway  Property.  In
September  1995,  the  Company  obtained  confirmation  from the  United  States
Environmental   Protection   Agency  (the  "EPA")  that  the  facts   concerning
groundwater  contamination  under the  Broadway  Property  were within the EPA's
Policy of not pursuing landowners for such contamination.  However,  even though
the requested  confirmation was received, the EPA's Policy expressly states that
it is  subject  to  change  and not  binding  on the EPA,  and  there  can be no
assurance  that the EPA would not take  enforcement  action  in the  future.  In
November  1995,  the Company  received a letter from the Colorado  Department of
Health (the "Department") stating that the Department was of the opinion that no
further action is required to assure that the Broadway  Property,  when used for
the purposes  intended by the Company,  is  protective  of existing and proposed
uses and also  stating  that the  Broadway  Property  does not appear to pose an
unacceptable  risk to human health or the  environment at the site.  This letter
states that the Department's opinion applies only with respect to the conditions
on the Broadway  Property and the  standards of the State of Colorado that exist
at the time of the Company's  application to the  Department.  The  Department's
letter  indicates  that it should  not be  construed  to limit the  Department's
authority  to take  actions  under  existing  statutes as  necessary  should new
information  come  to  the  attention  of  the  Department.   Second,   Phase  I
Environmental Site Assessments performed in 1990 and 1995 (the "Assessments") on
the Broadway  Property  indicate  the  presence of ACMs in small  amounts at the
Broadway Property,  including asbestos contained in vinyl floor tiles and mastic
adhesive.  The Assessments  indicate these materials are in good condition,  and
the  potential  for  asbestos   fiber  hazards  is  minimal.   Third,   electric
transformers mounted on electric poles that belong to the Public Service Company
of Colorado  ("PSC")  contain PCBs.  According to PSC,  these  transformers  are
contaminated and will be exchanged for non-PCB transformers.  With regard to the
Broadway  Property,  the Company does not believe it will be subject to material
liability but there is no assurance  that this will be true. See "ITEMS 1 AND 2.
DESCRIPTION   OF  BUSINESS   AND   PROPERTY-Description   Of   Properties"   and
"--Environmental Matters".

          Americans With Disabilities Act. Under the Americans with Disabilities
Act of 1990 (the "ADA"), all public  accommodations are required to meet certain
federal  requirements  related to physical  access and use by disabled  persons.
While the Company believes that the Properties  comply in all material  respects
with these physical requirements (or would be eligible for applicable exemptions
from  material  requirements  because  of  adaptive  assistance   provided),   a
determination that the Company is not in compliance with the ADA could result in
imposition of fines or an award of damages to private litigants.  If the Company
were  required  to make  modifications  to comply  with the ADA,  the  Company's
ability to make expected  distributions to its  stockholders  could be adversely
affected; however, management believes that such effect would be minimal.


                                       14

<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

     The  Company is not a party to any  pending  legal  proceeding  (nor is the
Company's  property the subject of a pending legal  proceeding) that the Company
believes would have a material adverse effect on the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable.

                                       15

<PAGE>

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Market  Information.  The Company's Common Stock and Warrants became listed
for  trading  on  the  Nasdaq  SmallCap  Stock  Market  (symbol:  AMVP)  in  the
over-the-counter  market on  November 6, 1996 and on the Boston  Stock  Exchange
(symbol: PTY) in December 1996.

     The high and low sale prices  during the period  November  6, 1996  through
December  31, 1996 as reported by Nasdaq  SmallCap  Market were $5.75 and $2.25,
respectively.  These  quotations  reflect  inter-dealer  prices,  without retail
mark-up,  mark-down or commission and may not reflect actual  transactions.  The
closing sales price for the Common Stock on March 10, 1997 as reported by Nasdaq
SmallCap Stock Market was $4.00 per share.

     The  Company  has been  informed by the Boston  Stock  Exchange  that as of
February 21, 1997 no trades of the Common  Stock had  occurred on that  Exchange
since the  listing of the Common  Stock in  December  1996.  The closing bid and
asked  prices for the Common  Stock on March 10,  1997 as reported by the Boston
Stock Exchange was $4.00.

     Holders.  The number of holders of Common Stock of record on March 10, 1997
was 59. This number does not include stockholders who own Common Stock through a
brokerage firm or other nominee.

     Dividends.  The  Company  paid its first  quarterly  dividend of $.1125 per
share and a one-time  special dividend of $.2175 per share on December 23, 1996.
The  one-time  special  dividend  was  necessitated  by the rules for REITs that
require all of a REIT's previously accumulated corporate earnings and profits to
be paid to stockholders prior to the end of the first year in which a company is
classified as a REIT by the IRS.

     On March 11, 1997 the Company  declared  its second  quarterly  dividend of
$.1125 per share payable on April 9, 1997 to stockholders of record on March 26,
1997.

     Recent  Sales  Of  Unregistered  Securities.  In  June  1996,  the  Company
completed a private offering of Warrants to a limited number of offerees.  Sales
were  made  solely  to  accredited  investors  pursuant  to  an  exemption  from
registration  in accordance  with ss.4(2)  and/or Rule 506 under the  Securities
Act.  An  aggregate  of  1,500,000  Warrants  were  sold at a price  of $.10 per
Warrant.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION

     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 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") (see Note 4 to the financial  statements)  and its  acquisition  of
five properties on October 30, 1996, effective as of July 1, 1996 (see Note 2 to
the financial statements).


                                       16

<PAGE>

Results Of Operations
---------------------

Comparison Of Year Ended December 31, 1996 With Year Ended December 31, 1995.
-----------------------------------------------------------------------------

     The 1996 operating  results  include only six months  revenues and expenses
for the five  properties  acquired  effective as of July 1, 1996. 1995 operating
results include only one property,  the Broadway Property,  for the entire year.
Revenues for 1996 increased $1,022,000, and operating expenses, management fees,
interest and depreciation and amortization increased $280,000, $51,500, $303,000
and $263,000,  respectively,  as compared with 1995. All the increases  resulted
primarily from  operations of the five  properties  acquired as of July 1, 1996.
Actual real estate taxes for each property  remained flat when compared to prior
years' taxes,  except for the Appleton,  Wisconsin property which decreased from
$82,600 in 1995 to $67,100 in 1996.  The  general  and  administrative  expenses
increased approximately $44,000 due primarily to personnel costs associated with
managing the Company's property  portfolio.  Of the $28,000 increase in interest
income, approximately $10,000 is attributable to a portion of IPO proceeds being
available  for  investment  in short  term  investments,  and the  remainder  is
attributable  to a  non-recurring  interest  payment  to CSP and GBI from  their
former  percent  that  accrued  from July 1 to October 30,  1996.  See Note 9 to
Consolidated  Financial Statements.  The revenues and operating expenses for the
Broadway Property remained constant for years ended 1996 and 1995.

     As a result  of the  above  factors,  the net  loss and net loss per  share
decreased in 1995 from  $164,570,  or $.58 per share,  to $137,728,  or $.29 per
share, in 1996.  Assuming on a pro forma basis that the Company had acquired all
six of its  properties  effective  on or before  January  1,  1996 (it  actually
acquired five of the properties effective as of July 1, 1996), the pro forma net
loss and net loss per share for 1996 would be  $27,999  and $.02 (see Note 10 to
financial statements).

Comparison Of Year Ended December 31, 1995 With Year Ended December 31, 1994.
-----------------------------------------------------------------------------

     Revenue  and   operating   expenses  from  real  estate   operations   were
approximately  $112,000 and  $103,000,  respectively,  for 1995.  These  amounts
reflect real estate  operations  for the six months during 1995 that the Company
owned and operated the Broadway  Property.  Operations of the Broadway  Property
resulted in net income of approximately  $9,000, which amount is included in the
consolidated loss for the year of $164,570. General and administrative expenses,
exclusive of those costs associated with the Broadway  Property,  decreased from
$173,751  in 1994 to  $170,879  in 1995.  This change was due to the costs of an
aborted  public  offering  being charged to  operations  in 1994 and  additional
payroll costs in the aggregate  amount of $59,400  associated with the hiring of
the  Company's  president  in  1995.  The  operating  results  for  1995 are not
indicative  of what they would have been had the Company  owned and operated the
Broadway Property for all of 1995.

Liquidity And Capital Resources.
--------------------------------

     AmeriVest's  initial public  offering  resulted in the issuance and sale of
1,098,870 shares of common stock at $5.00 per share and 549,435 warrants at $.10
per warrant (see Note 4 to the financial statements).  The net proceeds from the
offering were approximately $4,538,000;  $3,325,000 was used to acquire the five
properties  that the Company had under contract at the time of the offering (see
Note 2 to the  financial  statements);  $196,000  was used to repay a short term
note to a related party,  and $1,000,000 was set aside for future  acquisitions.
The  $1,000,000  represents  the  major  part of the  increase  in cash and cash
equivalents from December 31, 1995 to December 31, 1996.


                                       17

<PAGE>


     In June 1996, AmeriVest completed a private placement offering of 1,500,000
warrants at $.10 per warrant. The net proceeds from the offering,  approximately
$142,000, was used to help defray the cost of the initial public offering.

     Other changes in stockholders'  equity are the result of two dividends paid
in 1996. One dividend of $300,774,  or $.2175 per share,  was to distribute part
of  pre-REIT  accumulated  earnings  and profits  for  compliance  with IRS code
purposes. The other dividend of $155,573, or $.1125 per share, was the Company's
first regular  quarterly  distribution,  which  included the balance of pre-REIT
accumulated  earnings  and  profits.  See  Note  1 to the  Financial  Statements
included in "ITEM 7. FINANCIAL STATEMENTS".

     Increases in all categories of the  consolidated  balance sheet at December
31, 1996 relate  directly to the five  properties  acquired on October 30, 1996.
The decrease in deferred offering costs of approximately  $133,000 from 1995 was
reflected in the net proceeds  received from the initial public offering.  Other
changes in assets and liabilities were in the normal course of business and were
insignificant.

     At the time of  filing  its  U.S.  income  tax  return  for the year  ended
December 31, 1996,  the Company will make an election with the IRS to be treated
as a REIT  beginning  as of January 1, 1996.  Based on advice of its special tax
counsel,  the Company  believes  that it will  qualify as a REIT.  As a REIT,  a
company generally would not be subject to corporate federal income taxes as long
as it  satisfies  certain  technical  requirements  of the Code,  including  the
requirement  to distribute 95% of its taxable  income to its  stockholders.  See
"ITEMS 1 and 2. DESCRIPTION OF BUSINESS AND PROPERTY--Status As A REIT".

     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.

     The Company does desire to acquire  additional  properties and it does have
approximately  $1,000,000  available for this purpose. It also has approximately
$100,000  of  working  capital  reserves,  but it may need to  raise  additional
capital from the sale of equity securities, incur additional borrowings,  and/or
issue previously  unissued shares of common stock. The Company 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.

     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.


                                     18

<PAGE>


ITEM 7.  FINANCIAL STATEMENTS.

                          INDEX TO FINANCIAL STATEMENTS

AmeriVest Properties Inc. and Subsidiaries

         Independent Auditor's Report                                  F-1

         Consolidated Balance Sheet as of December 31, 1996            F-2

         Consolidated Statements of Operations for the
            years ended December 31, 1995 and 1996                     F-3

         Consolidated Statements of Stockholders' Equity
            for the years ended December 31, 1995 and 1996             F-4

         Consolidated Statements of Cash Flows for the years
            ended December 31, 1995 and 1996                           F-5

         Notes to Consolidated Financial Statements                 F-7-19


                                       19

<PAGE>
                          INDEPENDENT AUDITOR'S REPORT


To The Board of Directors and Stockholders
AMERIVEST PROPERTIES INC.

We have  audited  the  accompanying  consolidated  balance  sheet  of  AmeriVest
Properties  Inc.  and  Subsidiaries  as of December  31,  1996,  and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
each of the two years in the period ended  December 31,  1996.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of AmeriVest Properties
Inc.  and  Subsidiaries  as of  December  31,  1996,  and the  results  of their
operations  and their cash  flows for each of the two years in the period  ended
December 31, 1996 in conformity with generally accepted accounting principles.


                                            Wheeler Wasoff, P.C.


Denver, Colorado
January 31, 1997



                                      F - 1

<PAGE>

                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1996

                                     ASSETS

ASSETS
   Investment in real estate
        Land                                                    $  2,374,808
        Buildings and improvements                                11,975,946
        Furniture, fixtures and equipment                            225,099
        Tenant improvements                                          512,725
        Less accumulated depreciation and amortization            (4,573,871)
                                                                ------------

           Net Investment in Real Estate                          10,514,707

   Cash and cash equivalents                                       1,230,640
   Tenant accounts receivable                                         30,014
   Deferred financing costs, net                                     111,139
   Prepaid expenses and other assets                                  49,580
                                                                ------------

                                                                $ 11,936,080
                                                                ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
   Mortgage loans payable                                       $  7,397,995
   Accounts payable and accrued expenses                              52,765
   Accrued interest                                                   57,273
   Accrued real estate taxes                                         240,411
   Accrued rents and security deposits                                99,133
                                                                ------------

           Total Liabilities                                       7,847,577
                                                                ------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Common stock, $.001 par value
        Authorized - 10,000,000 shares
        Issued and outstanding - 1,382,870 shares                      1,383
   Capital in excess of par value                                  4,256,101
   Distributions in excess of accumulated earnings                  (168,981)
                                                                ------------

           Total Stockholders' Equity                              4,088,503
                                                                ------------

                                                                $ 11,936,080
                                                                ============

                     The accompanying notes are an integral
                 part of the consolidated financial statements.

                                      F - 2

<PAGE>
                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 1995 AND 1996


                                                     1995              1996
                                                  -----------       -----------
REAL ESTATE OPERATING REVENUE
   Rental revenue
        Commercial properties                     $   223,203       $   606,758
        Storage properties                               --             638,826
                                                  -----------       -----------

                                                      223,203         1,245,584
                                                  -----------       -----------

REAL ESTATE OPERATING EXPENSES
   Property operating expenses
        Operating expenses                              8,980           285,165
        Real estate taxes                              33,163           129,045
        Management fees - related                      16,988            72,735
   General and administrative                         170,674           214,784
   Interest                                           105,843           408,614
   Depreciation and amortization                       40,570           303,465
                                                  -----------       -----------

                                                      376,218         1,413,808
                                                  -----------       -----------

OTHER INCOME
   Interest income                                      1,757            30,496
                                                  -----------       -----------

NET (LOSS) FROM OPERATIONS                           (151,258)         (137,728)

INCOME APPLICABLE TO PREDECESSOR
   PARTNERSHIP (NOTE 1)                                13,312              --
                                                  -----------       -----------

NET (LOSS)                                        $  (164,570)      $  (137,728)
                                                  ===========       ===========

NET (LOSS) PER COMMON SHARE                       $      (.58)      $      (.29)
                                                  ===========       ===========

WEIGHTED AVERAGE NUMBER OF COMMON
   SHARES OUTSTANDING                                 284,000           467,145
                                                  ===========       ===========



                     The accompanying notes are an integral
                 part of the consolidated financial statements.

                                      F - 3

<PAGE>
<TABLE>
<CAPTION>
                                    AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                      YEARS ENDED DECEMBER 31, 1995 AND 1996
                                                                                                                       Distributions
                                                                  Common Stock            Capital in                   in Excess of
                                                          --------------------------      Excess of      Accumulated   Accumulated
                                                              Shares        Amount        Par Value        Deficit      Earnings
                                                          -----------    -----------      ---------     ------------   -----------

<S>                                                           <C>        <C>            <C>             <C>             <C>      
Balance, January 1, 1995                                      200,000    $       200    $   412,375     $  (344,212)    $      --

Issuance of common stock for property                          84,000             84         97,137            --              --
Net (Loss)                                                       --             --             --          (164,570)           --
                                                          -----------    -----------    -----------     -----------     -----------

Balance, December 31, 1995                                    284,000            284        509,512        (508,782)           --

Sale of common stock warrants                                    --             --          150,000            --              --
Costs of warrant offering                                        --             --           (8,008)           --              --
Sale of common stock and warrants in initial
   public offering                                          1,098,870          1,099      5,548,205            --              --
Costs of public offering                                         --             --       (1,009,732)           --              --
Dividends paid (Note 1)                                          --             --             --          (425,094)        (31,253)
Adjustment to reflect reorganization as a
   REIT                                                          --             --         (933,876)        933,876            --
Net (Loss)                                                       --             --             --              --          (137,728)
                                                          -----------    -----------    -----------     -----------     -----------

Balance, December 31, 1996                                  1,382,870    $     1,383    $ 4,256,101     $      --       $ ( 168,981)
                                                          ===========    ===========    ===========     ===========     ===========



                                     The accompanying notes are an integral
                                  part of the consolidated financial statements.

                                                      F - 4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                 AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   YEARS ENDED DECEMBER 31, 1995 AND 1996


                                                                          1995               1996
                                                                      -----------        -----------
<S>                                                                   <C>                <C>   
CASH FLOWS FROM OPERATING ACTIVITIES
   Net (loss)                                                         $  (151,258)       $  (137,728)
   Adjustments to reconcile net (loss) to net cash
            (used) provided by operating activities
        Depreciation and amortization                                      40,570            303,465
        Changes in assets and liabilities
            Decrease in receivables                                        21,112             34,169
            (Increase) in prepaids                                        (21,858)            (2,656)
            Decrease in related party receivables                          20,881               --
            Increase (decrease) in accounts payable                        35,720            (26,470)
            Increase in accruals                                           12,674             91,827
        Other                                                              21,317            (13,005)
                                                                      -----------        -----------

   Net cash (used) provided by operating activities                       (20,842)           249,602
                                                                      -----------        -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Additions to investments in real estate                                   --               (4,883)
   Acquisition of subsidiaries, net of cash acquired (Note 2)                --           (2,769,152)
   Loans to predecessor parent of subsidiaries acquired                      --             (385,000)
                                                                      -----------        -----------

   Net cash (used) by investing activities                                   --           (3,159,035)
                                                                      -----------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from sale of common stock and warrants                           --            5,549,304
   Common stock offering costs                                           (104,376)          (905,356)
   Proceeds from sale of common stock warrants                               --              150,000
   Cost of warrants offering                                                 --               (8,008)
   Cash distributed to predecessor partners                               (23,000)              --
   Loan proceeds - related                                                125,000             75,000
   Re-payment of loan to related party                                       --             (200,000)
   Payments on mortgage loans payable                                     (16,560)           (71,697)
   Dividends paid                                                            --             (456,347)
                                                                      -----------        -----------

   Net cash (used) provided by financing activities                       (18,936)         4,132,896
                                                                      -----------        -----------

NET (DECREASE) INCREASE IN CASH AND
   CASH EQUIVALENTS                                                       (39,778)         1,223,463

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                               46,955              7,177
                                                                      -----------        -----------

CASH AND CASH EQUIVALENTS, END OF YEAR                                $     7,177        $ 1,230,640
                                                                      ===========        ===========


                                 The accompanying notes are an integral
                             part of the consolidated financial statements.

                                               F - 5
</TABLE>


<PAGE>

                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                     YEARS ENDED DECEMBER 31, 1995 AND 1996


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

During the years ended  December  31, 1995 and 1996,  the Company  paid cash for
interest on mortgage loans payable of $102,485 and $396,030, respectively.


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

In August  1995,  the Company  issued  84,000  shares of its common  stock to an
affiliated partnership in exchange for real estate, property, and equipment. The
common stock  issued has been  recorded at  predecessor  basis of the net assets
acquired, as follows:


        Current assets                                    $     52,545
        Real estate, property, and equipment, net            1,302,294
        Mortgage assumed                                    (1,205,074)
        Current liabilities                                    (49,447)
        Net cash distributed                                    (3,097)
                                                         -------------

        Value of stock issued                             $     97,221
                                                          ============


In October 1996,  as effective  July 1, 1996,  the Company  acquired 100% of the
issued and outstanding  common stock of Consolidated  Storage  Properties,  Inc.
(CSP) and Giltedge Office Building,  Inc. (GBI), for an aggregate purchase price
of $3.8 million (See Note 2). The amount by which the Company's  purchase  price
exceeded the book value of the net assets  acquired has been  recorded as a $4.5
million increase to the cost basis of the properties.



                     The accompanying notes are an integral
                 part of the consolidated financial statements.

                                      F - 6

<PAGE>
                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION

     AmeriVest  Properties Inc. (the Company) was incorporated under the laws of
     the State of Delaware on August 25, 1993.  Effective  January 1, 1996,  and
     upon  completion of an initial  public  offering of its common  stock,  the
     Company  commenced  operating as a real estate investment trust ("REIT") as
     defined in the Internal  Revenue Code and will file an election to be taxed
     as a REIT with the Internal  Revenue Service at the time of filing its U.S.
     income tax return for the year ended  December 31,  1996.  The Company owns
     and  operates,   through  its  wholly  owned   subsidiaries,   self-storage
     facilities and an industrial warehouse in the Denver, Colorado metropolitan
     area and an office building in Appleton, Wisconsin.

     Effective July 1, 1995, the Company  acquired an industrial  warehouse from
     Consolidated  Broadway Properties,  Ltd. (CBP), an affiliated  partnership.
     The property was  immediately  conveyed to  AmeriVest  Broadway  Properties
     Inc., (ABP), a wholly owned subsidiary of the Company.  The general partner
     of CBP beneficially  owned 57% of CBP and was a 34% beneficial  stockholder
     of the  Company  at the  time of the  exchange.  The  acquisition  has been
     accounted  for in a manner  similar  to a  pooling  of  interests,  and all
     historical information has been reflected at predecessor cost.

     Effective July 1, 1996, the Company acquired 100% of the outstanding common
     stock of both  Consolidated  Storage  Properties,  Inc.  (CSP) and Giltedge
     Office  Building,  Inc.  (GBI)  pursuant to a purchase  and sale  agreement
     entered into July 14, 1995, as amended April 24, 1996. The  acquisition was
     accounted for as a purchase (Note 2).

     BASIS OF PRESENTATION

     The  accompanying  consolidated  financial  statements  for the year  ended
     December 31, 1995 include the  consolidated  operations  of the Company and
     ABP from July 1, 1995 to December 31, 1995 combined with the  operations of
     CBP for the period  January 1, 1995 to June 30,  1995.  These  consolidated
     financial  statements  are  presented  on a pro forma  combined  basis in a
     manner  similar to a pooling of interests.  The  accompanying  consolidated
     financial  statements  as of December  31, 1996 and for the year then ended
     include the consolidated operations of the Company and ABP for 1996 and the
     operations of CSP and GBI for the period July 1, 1996 to December 31, 1996.

     All significant intercompany accounts and transactions have been eliminated
     in consolidation.

     INVESTMENT IN REAL ESTATE

     Real estate,  property, and equipment are stated at cost.  Depreciation and
     amortization  are  computed  on a  straight-line  basis over the  estimated
     useful lives as follows:

                                      F - 7

<PAGE>

                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Description                 Estimated Useful Lives

     Land                        Not depreciated
     Buildings                   15 to 27 1/2 years
     Equipment                   5 to 7 years
     Tenant Improvements         Corresponding term of tenant's lease

     Maintenance  and repairs are  expensed as  incurred  and  improvements  are
     capitalized. The cost of assets sold or retired and the related accumulated
     depreciation  and/or  amortization  are removed  from the  accounts and the
     resulting  gain or loss is reflected in  operations  in the period in which
     such sale or retirement occurs.

     The Company has adopted Statement of Financial Accounting Standard ("SFAS")
     121 "Accounting for the Impairment of Long-Lived  Assets and for Long-Lived
     Assets to Be Disposed of" which requires that long-lived  assets to be held
     and  used  be  reviewed  for  impairment  whenever  events  or  changes  in
     circumstances  indicate  that the  carrying  amount  of an asset may not be
     recoverable.  The  adoption  of  SFAS  121 has  not  had an  impact  on the
     Company's consolidated financial statements.

     REVENUE RECOGNITION

     Rental  revenue from real estate  operations is recognized as earned,  on a
     monthly basis.

     ORGANIZATION COSTS

     Costs related to the  organization of the Company have been capitalized and
     are being amortized over a period of five years.

     INCOME TAXES

     Prior to completion of the Company's  initial public  offering,  operations
     were conducted through the Company and a wholly owned  subsidiary,  ABP. No
     provision  for income taxes was required at December 31, 1995 as losses had
     been incurred through that date.

     At the time of  filing  its  U.S.  income  tax  return  for the year  ended
     December, 31, 1996, the Company will make an election to be taxed as a REIT
     under  Sections  856 through 860 of the Internal  Revenue Code of 1986,  as
     amended (the "Code"), beginning January 1, 1996. Based on the advice of its
     special counsel,  the Company believes that it will qualify as a REIT. As a
     REIT, the Company generally would not be subject to federal income taxation
     at the corporate  level to the extent it distributes  annually at least 95%
     of its REIT taxable income, as defined

                                      F - 8

<PAGE>
                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     in the Code, to its stockholders and satisfies certain other  requirements.
     Accordingly,  no  provision  has been made for federal  income taxes in the
     accompanying consolidated 1996 financial statements.

     Certain of the Company's  subsidiaries  are subject to certain state excise
     taxes. The provision for such state taxes has been reflected in general and
     administrative  expense in the consolidated statement of operations and has
     not been separately stated due to its insignificance.

     For federal income tax purposes, the cash dividend paid to stockholders may
     be  characterized  as  ordinary  income,   return  of  capital   (generally
     non-taxable)  or capital gains.  Dividends paid for the year ended December
     31, 1996 totaling  $456,347 are  characterized  93.15% ($.307 per share) as
     ordinary  income  and 6.85%  ($.023 per  share) as return of  capital.  The
     dividends paid as ordinary  income  represent a distribution of earning and
     profits (as defined under the Code) of the Company's  subsidiaries prior to
     their inclusion in the REIT.

     SHARE BASED COMPENSATION

     In October 1995, SFAS No. 123 "Accounting for Stock-Based Compensation" was
     issued.  This new standard  defines a fair value based method of accounting
     for an employee stock option or similar equity  instrument.  This statement
     gives  entities a choice of  recognizing  related  compensation  expense by
     adopting the new fair value  method or to continue to measure  compensation
     using the intrinsic value approach under Accounting  Principles Board (APB)
     Opinion  No.  25.  The  Company  has  elected  to  utilize  APB No.  25 for
     measurement;  and will,  pursuant to SFAS No. 123, disclose  supplementally
     the pro forma effects on net income and earnings per share of using the new
     measurement criteria.  During the year ended December 31, 1996, the Company
     issued options to purchase  10,000 shares of its common stock (Note 5). The
     effect of this  issuance on pro forma net income and  earnings per share is
     not material.

     DEFERRED FINANCING COSTS

     Deferred  financing  costs  include  fees  and  costs  incurred  to  obtain
     long-term  financing.  These  fees and costs are being  amortized  over the
     terms of the respective  loans on a basis which  approximates  the interest
     method. Accumulated amortization of deferred financing costs was $46,955 at
     December 31, 1996. Unamortized deferred financing fees are written-off when
     debt is retired before the maturity date.

     CASH EQUIVALENTS

     For  purposes of  reporting  cash  flows,  the  Company  considers  as cash
     equivalents all highly liquid  investments  with a maturity of three months
     or less at the time of purchase. On occasion, the Company has cash in banks
     in excess of federally insured amounts.


                                      F - 9

<PAGE>
                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     USE OF ESTIMATES

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported amounts of assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements and reported  amounts of revenues and expenses during
     the reporting period. Actual results could differ from those estimates.

     LOSS PER COMMON SHARE

     Loss per common share is computed  based on the weighted  average number of
     common shares outstanding during each period. Common shares issued prior to
     completion  of  the  Company's   initial  public  offering  are  considered
     outstanding for all periods presented. Common stock equivalents, consisting
     of warrants and options,  are not considered in the calculation of net loss
     per share as their inclusion would be antidilutive.

     RECLASSIFICATIONS

     Certain  reclassifications have been made to the 1995 amounts to conform to
     classifications adopted in 1996.


NOTE 2 - INVESTMENTS IN REAL ESTATE

     On August 23, 1995, pursuant to a purchase and sale agreement, effective as
     of July 1, 1995,  the Company  issued an aggregate of 84,000  shares of its
     common  stock  to CBP in  exchange  for an  industrial  warehouse  property
     located in Denver, Colorado (the Broadway property),  and assumption of the
     underlying  mortgage on that property.  Upon consummation of the agreement,
     the Company  immediately  conveyed  the property to ABP which was formed to
     own and operate the Broadway  property as a wholly owned  subsidiary of the
     Company.

     The  acquisition has been accounted for in a manner similar to a pooling of
     interests, and all historical information has been reflected at predecessor
     cost.  The  general  partner of CBP was a  thirty-four  percent  beneficial
     stockholder  of the  Company  at the time of the  exchange.  Of the  shares
     issued to acquire the Broadway property, CBP transferred 14,000 shares as a
     real  estate  commission  to a real  estate  brokerage  firm  owned  by the
     beforementioned general partner/ stockholder.


                                     F - 10

<PAGE>
                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - INVESTMENTS IN REAL ESTATE (CONTINUED)

     In October 1996, upon completion of the Company's  initial public offering,
     and  effective  as of  July  1,  1996,  the  Company  acquired  100% of the
     outstanding  common  stock of both CSP and GBI  pursuant to a purchase  and
     sale agreement  entered into July 14, 1995, as amended April 24, 1996, with
     Consolidated   American   Properties,   Ltd.  (CAP),  a  Colorado   limited
     partnership.  The purchase price for the shares is an aggregate  $3,325,000
     allocated  $2,604,000 to the CSP shares and $721,000 to the GBI shares.  At
     closing, the Company paid $3,017,541, as follows:


     Purchase price, per contract              $ 3,325,000
     Closing adjustments                           482,505
                                               -----------

     Purchase price                              3,807,505
     Note receivable from CAP                     (789,964)
                                              ------------

     Cash paid at closing                        3,017,541
     Cash acquired                                (248,389)
                                               -----------

     Cash paid, net of cash acquired           $ 2,769,152
                                               ===========


     Depreciation  expense  related to the investment in real estate was $40,469
     and $290,620 for the years ended December 31, 1995 and 1996, respectively.


NOTE 3 - MORTGAGES PAYABLE

     Mortgages  payable are  collateralized  by substantially all properties and
     require monthly principal and interest payments.  Following is a summary of
     the Company's mortgages payable at December 31, 1996:

     Mortgage payable to United Companies Lending Corp. Interest
       at 8.5%, due in monthly installments of $9,920 through
       September 1998, at which time a balloon payment of
       $1,144,945 is due.  Collateralized by the industrial
       warehouse property in Denver, Colorado.                    $ 1,178,595

     Mortgage  payable  to Fox  Cities  Bank,  maturing
       October  1, 2019. Interest at 8.5% through
       October 1997, with an annual adjustment thereafter
       not to exceed 1%;  current monthly installment of
       $16,910. Collateralized by an office
       building in Appleton, Wisconsin.                             2,043,595


                                     F - 11

<PAGE>
                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - MORTGAGES PAYABLE (CONTINUED)

      Mortgages payable to AIG Mortgage Finance Company, Inc.
        Interest at 9.9%, due in monthly  installments of
        $41,212 based on a 20 year amortization  through
        March  1,  2000 at which  time a  balloon payment
        of $3,875,470 is due. Collateralized by four
        self-storage facilities in Denver, Colorado.                4,175,805
                                                                  -----------

                                                                  $ 7,397,995
                                                                  ===========


     As of December 31, 1996, the scheduled  maturities of all mortgages payable
     are as follows:

                    1997                         $   134,833
                    1998                           1,285,670
                    1999                             139,319
                    2000                           3,932,778
                    2001                              42,508
                    Thereafter                     1,862,887
                                                 -----------

                                                 $ 7,397,995
                                                 ===========

NOTE 4 - STOCKHOLDERS' EQUITY

     In August  1995 the Company  issued  84,000  shares of its common  stock in
     exchange for an industrial warehouse property (See Note 2). Under the terms
     of the  acquisition  agreement,  the transferror was entitled to return the
     84,000 shares received if a public offering of the Company common stock was
     not completed by December 31, 1996. Accordingly, the shares issued had been
     classified as "redeemable common stock" at December 31, 1995.

     On  October  17,  1995 the  Company  effected  a  2-for-1  stock  split and
     increased  the  authorized  number of  common  shares  to  10,000,000  from
     6,000,000.  The  Company  did not change  the par value of the  stock.  All
     information  in these  notes and the  accompanying  consolidated  financial
     statements gives retroactive effect to the 2-for-1 stock split.

     In June  1996  the  Company  completed  a  private  placement  offering  of
     1,500,000  Warrants to purchase  common  stock of the Company at a purchase
     price of $.10 per warrant. Each warrant entitles the holder to purchase one
     share of  restricted  common  stock of the Company at an exercise  price of
     $5.40 per share.  The warrants are  exercisable for a period of four years,
     commencing  November 13, 1996.  Proceeds from the offering  were  $150,000,
     before offering costs of $8,008.


                                     F - 12

<PAGE>

                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4 - STOCKHOLDERS' EQUITY (CONTINUED)

     In  October  1996,  the  Company  completed  the sale of  common  stock and
     warrants in its initial public  offering,  at offering  prices of $5.00 and
     $.10,  respectively.  The warrants are  exercisable at a price of $5.40 per
     share  for a period  of four  years,  commencing  November  13,  1996.  The
     aggregate  net proceeds  from the offering  were  $4,539,572  for 1,098,870
     shares of common  stock  and  549,435  warrants.  In  conjunction  with the
     offering, the Company sold to the underwriter,  at a nominal cost, warrants
     to purchase  164,831  shares of common stock at a price of $8.25 per share,
     for a period of four years commencing October 29, 1996.


NOTE 5 - STOCK OPTION PLAN

     In May 1995,  the Board of  Directors  approved  the 1995 Stock Option Plan
     (the "Option  Plan").  Pursuant to the Option  Plan,  the Company may grant
     options to purchase an aggregate of 130,000 shares of the Company's  common
     stock  to key  employees,  directors,  and  other  persons  who have or are
     contributing to the success of the Company. The options granted pursuant to
     the Option Plan may be either incentive  options  qualifying for beneficial
     tax treatment for the recipient or non-qualified options. Directors who are
     not also employees of the Company ("Outside") automatically receive options
     to purchase  12,000 shares pursuant to the Option Plan at the time of their
     election as an Outside  Director.  None of these options are exercisable at
     the time of grant.  Options to purchase 4,000 shares become exercisable for
     each  Outside  Director  on  December  30 of each of the first  three years
     immediately  following  the date of grant of the  options  to that  Outside
     Director.  The exercise price for options  granted to Outside  Directors is
     the fair  market  value of the common  stock on the date of grant,  and all
     options  granted to Outside  Directors  expire  five years from the date of
     grant. On the date that all of an Outside  Director's options have expired,
     options  to  purchase  an  additional  12,000  shares,  none  of  which  is
     exercisable at that time, shall be granted to that Outside Director.

     At December 31, 1996 the status of outstanding  options granted pursuant to
     the Company's Stock Option Plan was as follows:

<TABLE>
<CAPTION>
                                                                                Unvested
                           Grant        Options     Options       Options       Exercise
                           Date         Granted      Vested     Outstanding      Price
                           ----         -------      ------     -----------      -----

<S>                    <C>              <C>          <C>           <C>            <C>
Outside Directors      May 20, 1995     36,000       24,000        12,000         $5

Director / Officer     May 20, 1995     20,000        8,000        12,000         $5
                       Dec. 9, 1996     10,000        2,000         8,000         $5




                                   F - 13
</TABLE>

<PAGE>
                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - LEASE AGREEMENTS

     The  following  table  summarizes  future  minimum base rent to be received
     under noncancelable tenant leases for the Company's  commercial  properties
     expiring each year, as of December 31, 1996:

                    1997                      $  955,831
                    1998                         783,726
                    1999                         516,444
                    2000                         238,845
                    2001                         129,480
                    Thereafter                    43,013
                                              ----------

                                              $2,667,339
                                              ==========


     The leases also provide for additional rent based on increases in operating
     expenses.  These increases are generally payable annually in the succeeding
     year. The Company's self-storage facilities are generally leased on a month
     to month basis, and are therefore not included in the above table.


NOTE 7 - FINANCIAL INSTRUMENTS

     FAIR VALUE

     The Company's financial instruments include short-term investments,  tenant
     accounts receivable,  accounts payable, other accrued expenses and mortgage
     loans  payable.  The fair values of these  financial  instruments  were not
     materially different from their carrying or contract values.

     CONCENTRATIONS OF CREDIT RISK

     The Company leases office and warehouse facilities to commercial businesses
     in Colorado and Wisconsin.  The terms of the leases generally require basic
     rent payments at the beginning of each month.  Credit risk  associated with
     the lease  agreements  is limited to the  amount of rents  receivable  from
     tenants less any related  security  deposits.  The  Company's  self-storage
     facilities are generally leased on a monthly basis.  Credit risk associated
     with these leases is limited to the amounts of rents receivable.

     Financial   instruments   which   potentially   subject   the   Company  to
     concentrations  of  credit  risk  consist  principally  of  cash  and  cash
     equivalents.   The  Company   maintains  cash  accounts  at  two  financial
     institutions.  The Company periodically  evaluates the credit worthiness of
     these  financial  institutions,  and maintains  cash accounts only in large
     high quality financial

                                     F - 14

<PAGE>
                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7 - FINANCIAL INSTRUMENTS (CONTINUED)

     institutions,  thereby  minimizing  exposure  for  deposits  in  excess  of
     federally insured amounts. Cash equivalents consist of commercial paper and
     repurchase  agreements of large credit worthy companies thereby  minimizing
     exposure to credit risk.


NOTE 8 - COMMITMENTS

     On July 14, 1995,  as amended April 24, 1996,  the Company  entered into an
     agreement  with a real  estate  brokerage  firm  beneficially  owned  by an
     individual who is the special  representative  to CAP and is an approximate
     4.9% beneficial stockholder of the Company.  Pursuant to the agreement, the
     Company shall have the first right of refusal to participate in any and all
     real estate  transactions  involving  commercial and industrial real estate
     which has been offered to the real estate brokerage firm or the individual.
     The agreement is for a period of one year,  commencing  upon the closing of
     the initial public offering of the Company's common stock unless terminated
     at an earlier date.

     Effective  as of January  1,  1996,  the  Company  entered  into a one year
     employment  agreement with its President.  This agreement  subsequently was
     extended through December 31, 1997. Pursuant to the agreement,  during 1997
     the  President  will be paid an  annual  salary  of  $100,000  and  medical
     reimbursement of up to $6,000  annually.  In 1996, the President was paid a
     salary of $90,000  together  with a one-time  bonus of $5,000  based on the
     Company's  securities becoming registered under the Securities Exchange Act
     of 1934.


NOTE 9 - RELATED PARTY TRANSACTIONS

     The Company's properties are managed,  under a management agreement,  by an
     entity whose beneficial  majority  shareholder is a founder of the Company.
     The entity manages all aspects of property  operations,  including leasing,
     bookkeeping,  and other matters. For these services, the Company is charged
     a fee of 5% of gross  revenues plus 5% of all personnel  costs.  During the
     years ended December 31, 1995 and 1996, $10,988 and $66,735,  respectively,
     were incurred under the management agreement.

     During the years ended  December 31, 1995 and 1996,  the Company paid a fee
     for  accounting  and  clerical  services  of $500 per  month  to an  entity
     controlled by the former  president/present  stockholder and founder of the
     Company.

     On June 15, 1995 the Company executed a promissory note with  Electro-Media
     of Colorado,  Inc. (Electro) to borrow up to $125,000.  Electro was, and is
     still,  owned and controlled by the spouse of an individual who was a major
     beneficial  shareholder  of the Company at the time such loan was made. The
     note is unsecured and was due, with interest at 11% per annum, on


                                     F - 15

<PAGE>
                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - RELATED PARTY TRANSACTIONS (CONTINUED)

     or before December 31, 1996. As of December 31, 1995,  $125,000 in advances
     had been made on the note and $3,451 in accrued  interest  thereon was due.
     An  additional  $75,000  was  loaned to the  Company in 1996 under the same
     terms and conditions as the original loan. The total amount due,  including
     interest of $16,125, was repaid in October 1996.

     The Company's  subsidiaries,  CSP and GBI, loaned their former parent, CAP,
     an aggregate $385,000 during the period July 1, 1996, effective date of the
     acquisition,  through October 29, 1996, date of closing of the acquisition.
     The amount loaned,  including  loans made prior to July 1, 1996, was repaid
     together  with  interest at 9% per annum as an  adjustment  to closing (See
     Note 2).


NOTE 10 - PRO FORMA FINANCIAL INFORMATION (UNAUDITED)


     The following  pro forma  condensed  statement of  operations  for the year
     ended  December  31, 1996 is  presented  as if the initial  offering of the
     Company's common stock and related transactions and acquisitions of CSP and
     GBI had  occurred  at  January  1, 1996 and  therefore  includes  pro forma
     information. The pro forma information is based upon historical information
     and does not  purport to present  what actual  results  would have been had
     such  transactions,  in fact,  occurred  at January 1, 1996,  or to project
     results for any future period.

     Pro Forma Condensed Statement of Operations (Unaudited)

     Total revenues                                    $ 2,367,444
                                                       -----------

     Property expenses                                     778,509
     General and administrative expense                    344,504
     Interest expense                                      706,046
     Depreciation and amortization                         566,384
                                                       -----------

     Total expenses                                      2,395,443

     Net (loss)                                        $   (27,999)
                                                       ===========

     Net (loss) per common share                       $      (.02)
                                                       ===========

     Weighted average number of common
        shares outstanding                               1,382,870
                                                        ==========



                                     F - 16

<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

     On April  10,  1995,  the  Company  engaged  Wheeler  Wasoff,  P.C.  as the
     Company's  independent  accountant to replace HEIN + ASSOCIATES  LLP, which
     was dismissed by the Company on that date.  The change of  accountants  was
     approved by the Board of Directors of the  Company.  HEIN + ASSOCIATES  LLP
     had not issued a report on the Company's financial  statements.  There have
     been  no  disagreements  with  HEIN  +  ASSOCIATES  LLP on  any  matter  of
     accounting  principles  or  practices,  financial  statement  disclosure or
     auditing scope or procedure.

                                       20

<PAGE>

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

Directors And Executive Officers
--------------------------------

     The officers and directors of the Company are as follows:

Name                       Age            Positions
----                       ---            ---------
James F. Etter              53            President; Chief Financial Officer;
                                          and Director
Charles R. Hoffman          60            Chairman Of The Board
John A. Labate              48            Director
Robert J. McFann            79            Director; and Secretary


     James F. Etter has served as President of the Company  since May 1995, as a
director since December  1995, and as Chief  Financial  Officer since July 1996.
From 1994 until he joined the  Company,  Mr.  Etter acted as a  consultant  with
respect to  acquisitions.  Mr.  Etter served as  President  and Chief  Executive
Officer of Recycling  Management  Company from 1990 until 1994.  From 1988 until
1990,  Mr.  Etter acted as a real estate  consultant,  completing  an  intensive
review and evaluation of financial and data  processing  needs for Litchfield By
The Sea, a prominent real estate  development/resort  project and establishing a
new real estate and property management company near the Wild Dunes Resort. From
1985 until 1988, Mr. Etter served as Vice President, Chief Financial Officer for
Resort Operations,  and President of Wild Dunes Real Estate, Inc. Mr. Etter also
assisted in establishing a chain of restaurants  when he served as President and
Chief Executive Officer of BEST Food Systems,  Inc., a franchisee of GD Ritzy's.
He also  served as Vice  President  of Finance  for  Braswell  Shipyards,  Inc.,
assisting with  negotiations for a $28 million  financing  package with multiple
lenders.  In  addition,  Mr. Etter has been the chief  financial  officer of Sam
Solomon & Company,  a public company which  subsequently was acquired by Service
Merchandise & Company,  and a principal at Arthur Young & Company,  now known as
Ernst & Young, an international  accounting firm. Mr. Etter received his Masters
of Business Administration and his Bachelors of Business Administration from the
University of Cincinnati.

     Charles R.  Hoffman has served as a director of the  Company  since  August
1994. Mr. Hoffman has served as a member of the Audit  Committee of the Board of
Directors  since July 1995. In July 1994,  Mr.  Hoffman  retired as President of
Texaco Pipeline Inc. In that capacity he had executive  responsibility  for more
than 1200 employees and over 2,900 miles of pipeline.  He also has experience in
the crude oil terminal and transportation  business with companies such as Getty
Pipeline,  Inc., Getty Trading And Transportation Company, and Skelly Pipe Line,
Inc. He has served on the boards of  directors  of a number of pipeline  systems
and as president of two pipeline  systems.  Mr. Hoffman received his Bachelor of
Science and  Masters of  Science/Civil  Engineering  degrees  from the  Missouri
School Of Mines And Metallurgy.

     John A. Labate has served as a director of the Company since May 1995.  Mr.
Labate  has  served  as a  member  of each  of the  Audit  Committee  and of the
Acquisition  Committee of the Board of Directors since July 1995. Mr. Labate has
served as Chief Financial Officer since June 1995 and since


                                       21

<PAGE>

January 1992 as the Vice President - Finance,  Secretary, and Treasurer of Crown
Resources Corporation,  a publicly traded, Denver,  Colorado based international
gold mining and exploration  company.  From 1987 through 1991, Mr. Labate served
as  Corporate  Controller  of Bond  International  Gold,  Inc., a New York Stock
Exchange  listed  international  mining and processing  company based in Denver,
Colorado.  Prior to 1987,  Mr. Labate served as controller  and manager of other
mining companies and equipment manufacturing  companies. Mr. Labate received his
Bachelor of Science degree in accounting from San Diego State University.

     Robert J. McFann has served as a director of the Company  since August 1994
and as  Secretary  since  May 1995.  Mr.  McFann  has  served as a member of the
Acquisition  Committee of the Board of Directors  since July 1995. Mr. McFann is
presently retired after selling Hy Grade Meat Company, a family company,  to his
sons. Hy Grade grew to a mid-sized  hotel and restaurant  supply house under his
direction.  Prior to this,  he  worked  for  Cudahy  Meat  Company  in its sales
department as well as other  positions.  He has served on the Board of Directors
of the Bank Of Aurora  and for  several  years  managed a diverse  family  owned
investment  portfolio of commercial  real estate,  family owned  businesses  and
other investments.

Committees
----------

     The Board Of Directors  maintains  an Audit  Committee  and an  Acquisition
Committee.  The Audit  Committee was formed to perform the following  functions:
recommend to the Board Of  Directors  the  independent  auditors to be employed;
discuss the scope of the independent auditors' examination; review the financial
statements and the independent  auditors' report;  solicit  recommendations from
the independent  auditors regarding internal controls and other matters;  review
all related  party  transactions  for  potential  conflicts  of  interest;  make
recommendations  to the Board Of  Directors;  and perform other related tasks as
requested by the Board.  The  Acquisitions  Committee  was formed to perform the
following functions:  recommend to the Board Of Directors an acquisitions policy
and  strategy;   review  and  update  the   acquisitions   policy  and  strategy
periodically; review proposed acquisitions and make recommendations to the Board
concerning those acquisitions; review past acquisitions and make recommendations
to the Board;  and perform other  related  tasks as requested by the Board.  The
current members of the Audit Committee are Messrs.  Hoffman and Labate,  and the
current members of the Acquisition Committee are Messrs. Labate and McFann.

Classification Of The Board Of Directors
----------------------------------------

     The Board Of  Directors  of the  Company  is divided  into  three  classes,
designated  Class 1, Class 2 and Class 3.  Directors from each class are elected
once every three years for a three-year  term. John Labate and James Etter serve
as the Class 1 directors,  Charles  Hoffman serves as the Class 2 director,  and
Robert McFann serves as the Class 3 director.


                                       22

<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION.

Summary Compensation Table
--------------------------

     The following  table sets forth in summary form the  compensation  received
during each of the Company's last three completed  fiscal years by the Company's
current and former  President.  No employee of the Company received total salary
and bonus exceeding $100,000 during any of the last three fiscal years.

<TABLE>
<CAPTION>
                                                Annual Compensation

                                                                           Long-Term
                                                                            Compen-           Other Annual
Name and                 Fiscal Year             Salary         Bonus       sation             Compen-
Principal Position       Ended                   ($)(1)         ($)         Options           sation ($)
------------------       -----------             -------        -----       -------           ----------
<S>                      <C>                     <C>            <C>         <C>               <C>      
James F. Etter,          1996                    $90,000        5,000       10,000            $6,000(2)
President
                         1995                    $42,000          -0-       20,000            $17,400(3)

                         1994                    $    -0-         -0-           -0-                -0-

C.J. Hedlund, Former     1996                    $    -0-         -0-           -0-                -0-
President
                         1995                    $    -0-         -0-           -0-                -0-

                         1994                    $ 6,000          -0-           -0-                -0-
</TABLE>

---------------
(1)  The dollar value of base salary (cash and non-cash) received.
(2)  $6,000 to reimburse for medical insurance coverage.
(3)  $15,000 to  reimburse  for moving  expenses  and  $2,400 to  reimburse  for
     medical insurance coverage.

Option Grants Table

     The following table sets forth information  concerning individual grants of
stock  options  made  during the  fiscal  year ended  December  31,  1996 to the
Company's  President.  See "-Employment  Contracts And Termination Of Employment
And  Change-In-Control  Arrangements-1995  Stock  Option  Plan",  and  "--Option
Grants", below.

<TABLE>
<CAPTION>
                               Option Grants For Fiscal Year Ended December 31, 1996

                                          % of Total
                                         Options Granted
                         Options         to Employees in        Exercise or Base        Expiration
Name                     Granted (#)     Fiscal Year            Price ($/Sh)            Date
----                     -----------     -----------            ------------            ----
<S>                      <C>             <C>                    <C>                     <C>   <C>
James F. Etter           10,000          100%                   $5.00/share             12-31-01
  President

                                       23
</TABLE>

<PAGE>

Aggregated Option Exercises And Fiscal Year-End Option Value Table.
-------------------------------------------------------------------

     The  following  table sets forth  information  concerning  each exercise of
stock  options  during the fiscal year ended  December 31, 1996 by the Company's
President,  and the fiscal  year-end  value of  unexercised  options held by the
President.
<TABLE>
<CAPTION>
                                            Aggregated Option Exercises
                                      For Fiscal Year Ended December 31, 1996
                                            And Year-End Option Values
                                                                                          Value of
                                                                                          Unexercised
                                                                  Number of               In-The-Money
                                                                  Unexercised Options     Options at
                                                                  at Fiscal               Fiscal Year-End
                                                                  Year-End (#)(3)         ($) (4)
                     Shares
                     Acquired on           Value                  Exercisable/            Exercisable/
Name                 Exercise (#) (1)      Realized ($) (2)       Unexercisable           Unexercisable
-------------------- ----------------      -------------------    ----------------        -------------
<S>                   <C>                   <C>                   <C>                    <C>
James F. Etter       -0-                   -0-                    10,000/20,000           Not applicable(5)
  President
</TABLE>


----------------

(1)  The number of shares  received upon  exercise of options  during the fiscal
     year ended December 31, 1996.

(2)  With respect to options  exercised  during the Company's  fiscal year ended
     December 31, 1996,  the dollar value of the  difference  between the option
     exercise  price and the market value of the option shares  purchased on the
     date of the exercise of the options.

(3)  The total  number of  unexercised  options  held as of  December  31,  1996
     separated  between  those options that were  exercisable  and those options
     that were not exercisable.

(4)  For all  unexercised  options held as of December 31, 1996,  the  aggregate
     dollar  value of the  excess is the  market  value of the stock  underlying
     those options over the exercise  price of those  unexercised  options.  For
     purposes of this table,  the market  value used for the Common Stock is its
     closing  sales price on December  31, 1996 of $3.4375 per share as reported
     on the Nasdaq SmallCap Stock Market.

(5)  The option  exercise  price of $5.00 per share is greater  than the closing
     sales  price of  $3.4375  for the  Common  Stock on  December  31,  1996 as
     reported on the Nasdaq  SmallCap  Stock  Market.  The  unexercised  options
     therefore  were not  "in-the-money"  and did not have any value on December
     31, 1996.

Employment  Contracts  And  Termination  Of  Employment  And   Change-In-Control
Arrangements
--------------------------------------------------------------------------------

     Employment  Agreement  With James F.  Etter.  The Company  entered  into an
Employment  Agreement with James F. Etter effective as of January 1, 1996, which
was  amended  effective  as of  January  1,  1997.  Pursuant  to the  Employment
Agreement,  Mr. Etter will serve as the President and Chief Executive Officer of
the Company and will devote  substantially all his business time to the Company.
For the 1996 fiscal year, the Employment  Agreement  provided for the payment of
salary at

                                       24

<PAGE>

the rate of  $7,500  per month and a bonus of $5,000 to be paid at the time that
the Company's securities became publicly traded. This occurred in November 1996.
The Agreement  also provides that the Company will reimburse Mr. Etter for up to
$500 per month of medical insurance premiums paid by Mr.
Etter.

     Pursuant to the  amendment  to the  Employment  Agreement  effective  as of
January 1, 1997,  Mr.  Etter's  salary was increased to $8,333 per month and the
Company  agreed to consider  paying Mr. Etter a bonus at the end of each year of
the Employment Agreement, which bonus will be at the discretion of the Board and
will be based on criteria  determined by the Board.  At the time of amending the
Employment  Agreement,  the Board also granted to Mr. Etter  options to purchase
10,000 shares of Common Stock. See below, "--Option Grants".

     If the Company is acquired by another company, and if the acquiring company
does not offer Mr.  Etter a position in the Denver area at a salary  level equal
to or greater than his then current salary,  then all unexercised  stock options
held by Mr. Etter would immediately  become  exercisable,  and the Company would
pay Mr. Etter a bonus equal to one year's salary.

     As  the  Company's  operations  are  instituted,  it  is  anticipated  that
additional personnel and outside consultants may be hired.

     1995 Stock Option Plan.  Pursuant to the  Company's  1995 Stock Option Plan
(the "Option  Plan"),  the Company may grant options to purchase an aggregate of
130,000 shares of the Company's  common stock to key employees,  directors,  and
other persons who have or are  contributing  to the success of the Company.  The
options granted pursuant to the Option Plan may be incentive options  qualifying
for  beneficial  tax treatment  for the  recipient or they may be  non-qualified
options.  With respect to options granted to persons other than directors of the
Company  who  are  not  also  employees  of the  Company,  the  Option  Plan  is
administered  by an option  committee  that  determines the terms of the options
subject to the requirements of the Option Plan. Directors of the Company who are
not also employees of the Company ("Outside  Directors")  automatically  receive
options to  purchase  12,000  shares  pursuant to the Option Plan at the time of
their election as an Outside  Director.  These options held by Outside Directors
are not  exercisable at the time of grant,  but options to purchase 4,000 shares
become exercisable for each Outside Director on December 30 of each of the first
three  years  immediately  following  the date of grant of the  options  to that
Outside Director. The exercise price for options granted to Outside Directors is
the fair market value of the Common Stock on the date of grant,  and all options
granted to Outside  Directors  expire five years from the date of grant.  On the
date that all of an Outside Director's options have become exercisable,  options
to purchase an additional  12,000 shares,  which are not exercisable at the time
of grant,  shall be granted to that Outside  Director.  In May 1995, the Outside
Directors  were granted an aggregate of 48,000 options with an exercise price of
$5.00  per share  pursuant  to the  Option  Plan,  12,000 of which  subsequently
expired without being exercised.

     Compensation  Of Outside  Directors.  Outside  Directors  are paid $250 per
month plus $300 for each  meeting of the Board Of  Directors  that they  attend.
Directors  also will be reimbursed for expenses  incurred in attending  meetings
and for other  expenses  incurred on behalf of the Company.  In  addition,  each
director  who is not an  employee  automatically  receives  options to  purchase
shares of Common  Stock  pursuant to the Option  Plan.  See above,  "-1995 Stock
Option Plan".


                                       25

<PAGE>

     Option  Grants.  In addition to the automatic  grants of options to Outside
Directors described above in "-1995 Stock Option Plan",  incentive stock options
have been granted to Mr. Etter  pursuant to the  Company's  Stock Option Plan on
two occasions.  In May 1995, the Company granted to Mr. Etter options to acquire
up to 20,000 shares of the Company's Common Stock at an exercise price of $5 per
share.  4,000 of these options  became  exercisable on each of December 30, 1995
and 1996, an additional  4,000 of these options  become  exercisable  on each of
December 30, 1997,  1998 and 1999,  and all of these  options  expire on May 20,
2000. On December 9, 1996, the Company  granted to Mr. Etter options to purchase
up to an additional 10,000 shares of Common Stock at an exercise price of $5 per
share. The last sale price for the Company's Common Stock on the Nasdaq SmallCap
Stock  Market on  December  9, 1996 was  $4.50.  2,000 of these  options  became
exercisable  on December 30, 1996, an additional  2,000 of these options  become
exercisable on each of December 30, 1997,  1998, 1999 and 2000, and all of these
options expire on December 9, 2001.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following  table  summarizes  certain  information as of March 10, 1997
with respect to the  beneficial  ownership of the Company's  common stock (i) by
the Company's directors,  (ii) by stockholders known by the Company to own 5% or
more of the Company's Common Stock, and (iii) by all officers and directors as a
group.



                                                As Of March 10, 1997
                                        -------------------------------------

                                                           Percentage Of Class
Name And Address Of Beneficial Owner    Number Of Shares    Beneficially Owned
------------------------------------    ----------------    ------------------

Charles R. Hoffman                           40,300(1)            2.3%
208 Somerset
Bentonville, Arizona 72712

John A. Labate                                8,000(1)            0.6%
5260 South Beeler Court
Englewood, Colorado  80111

Robert J. McFann                             87,000(1)            6.2%
3260 Zephyr Court
Wheat Ridge, Colorado 80033

James F. Etter                               32,600(2)            2.3%
7100 Grandview Avenue
Suite 1
Arvada, Colorado 80002

C.J. Hedlund                                118,130(3)            8.4%
2296 Augusta Drive
Evergreen, Colorado 80439

S. Kris Bandal                               98,000(4)            7.1%
6043 Hudson Road, #140
Woodbury, Minnesota 55126

Weston Associates Inc.                      146,200(5)           10.3%
855 S. Newcombe Way
Denver, Colorado 80226


                                       26

<PAGE>

All Officers And Directors
As A Group (Four Persons)                  167,900(1)(2)         11.8%

-----------

(1)  Includes or consists of options to purchase  8,000  shares of Common  Stock
     that currently are exercisable,  that were granted to each Outside Director
     pursuant to the Option  Plan.  See "ITEM 10.  EXECUTIVE  COMPENSATION--1995
     Stock Option Plan." Also includes 4,000 currently  exercisable common stock
     purchase warrants ("Warrants") for Robert J. McFann.

(2)  Consists  of an  aggregate  of 17,100  shares of Common  Stock owned by Mr.
     Etter, his wife, and minor daughter, 10,000 shares of Common Stock issuable
     upon one exercise of  currently  exercisable  options,  and 4,000 shares of
     Common  Stock  issuable  upon the  exercise  of  Warrants.  See  "ITEM  10.
     EXECUTIVE  COMPENSATION--Employment Contracts And Termination Of Employment
     And Change-In-Control Arrangements--Option Grants".

(3)  Includes  8,090 shares over which Mr.  Hedlund has sole voting power and an
     additional  91,540 over which he has shared  voting power as disclosed in a
     Schedule  13D dated March 5, 1997  provided to the Company by Mr.  Hedlund.
     Also  includes  18,500  shares  issuable upon the exercise of Warrants over
     which Mr. Hedlund has shared voting power.

(4)  Consists of 98,000  shares over which Mr.  Bandal has sole voting  power as
     disclosed in a Schedule 13D dated March 5, 1997  provided to the Company by
     Mr. Bandal.

(5)  Includes  108,000 shares over which Weston  Associates Inc.  ("Weston") has
     sole voting power as  disclosed  in a Schedule  13D dated  November 5, 1996
     provided to the Company by Weston.  Also includes  38,200  shares  issuable
     upon the exercise of Warrants over which Weston has sole voting power.



                                       27

<PAGE>



ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The  Company  has been  involved  in the  following  transactions  with its
current and past  directors  and officers and by persons known by the Company to
be the beneficial owners of 5% or more of the Company's Common Stock.

     Transactions With Founder. C.J. Hedlund was a founder, former President and
a former  director of the Company and currently is the beneficial  owner of 8.4%
of the Company's  Common Stock.  See,  "ITEM 11.  Security  Ownership Of Certain
Beneficial  Owners And Management".  He resigned from his positions as President
and from his  position of a director in March 1994 in order to reduce  conflicts
of interest  with the  Company  and to pursue  other  matters.  Mr.  Hedlund has
interests in certain of the  transactions  with the Company  that are  described
below.

     Stock  Transactions  With  Promoters,   Initial  Officers,   Directors  And
Affiliates. In August 1993, the Company issued an aggregate of 100,000 shares of
Common  Stock at a  purchase  price of $.005  per share in  connection  with the
formation  of the  Company.  62,000 of these shares were issued to C. J. Hedlund
and certain  persons with whom he is affiliated,  and 4,000 of these shares were
issued  to each of Mr.  Hedlund's  two adult  sons.  Subsequently,  Mr.  Hedlund
returned 32,000 shares to the Company,  Mr. Hedlund's wife returned 6,000 shares
to the Company,  and an unrelated party returned an additional  12,000 shares to
the  Company.  The  shares  were  returned  to the  Company in order to make the
Company's  capital  structure  more  desirable  for a public  offering,  and the
Company did not  compensate  the  transferors.  In December  1995, the Maxine G.
Hedlund Trust, a living trust of which Maxine Hedlund, the wife of C.J. Hedlund,
is the  beneficiary,  sold 33,000 shares of the Company's Common Stock to Robert
J. McFann and Wandeline McFann for $4.50 per share. Mr. McFann is a director and
the Secretary of the Company.

     Ownership  Of  Consolidated  Broadway  Properties,  Ltd.  In  August  1995,
pursuant  to a Purchase  And Sale  Agreement  (the  "Broadway  Agreement")  with
Consolidated  Broadway  Properties,  Ltd.  ("CBP"),  the  Company  acquired  the
industrial  office/showroom  building  located at 5961  Broadway,  Adams County,
Colorado (the "Broadway Property").  As consideration for the Broadway Property,
the  Company  issued  84,000  shares of its  Common  Stock to CBP and  assumed a
mortgage in the original  face amount of  $1,232,000,  which had an  outstanding
principal  balance of $1,205,000 at July 1, 1995.  CBP  previously had purchased
the  Broadway  Property  on  October  1,  1993 for  aggregate  consideration  of
$1,332,000,  consisting  of a cash  payment of  $83,418  and the  assumption  of
$1,232,000  in  debt.  The  price  paid by CBP in 1993  was  determined  through
negotiations between CBP and the prior owner. Mr. Hedlund is the general partner
of CBP.  Continental  Western  Services,  Inc., an entity of which Mr. Hedlund's
wife is the President,  a director and a 34 percent shareholder,  owned 56.8% of
CBP at the time of the Company's  acquisition of the Broadway Property.  Also at
that time,  Charles Hoffman and Robert McFann, who are directors of the Company,
owned approximately 2.2% and 2.5%,  respectively,  of CBP. In December 1995, the
84,000 shares of the Company's  Common Stock received by CBP in exchange for the
Broadway  Property were  assigned pro rata to the partners of CBP. Mr.  Hoffman,
together with his wife received 6,300 shares of the Company's  Common Stock, and
Mr.  McFann  received  7,000  shares,  from the pro rata assigned made by CBP in
December 1995. In December  1995,  Continental  Western  Services,  Inc.,  which
received  55,160  shares of the  Company's  Common  Stock  from the CBP pro rata
assignment,  sold 53,620 of those shares to three purchasers,  one of whom was a
former  director of the Company and one of whom already was a shareholder of the
Company at that time. The purchase price paid was $4.50 per share.

                                       28

<PAGE>

     Property Management;  Administrative Services. The Company has entered into
property management  contracts pursuant to which AmeriCo manages the Properties.
These agreements are effective as of each date on which the Company acquired the
respective  Property.  Although the property management contracts do not provide
for changes to their terms, the Company can terminate any of them after one year
from their  respective  effective  dates.  AmeriCo  will receive 5% of the gross
rental income, reimbursement of the cost of any on-site personnel, and an amount
equal to 5% of the total costs related to on-site personnel. See above "ITEMS 1.
and 2. DESCRIPTION OF BUSINESS AND PROPERTY-Property  Management Contracts".  In
addition,  the Company has entered  into an agreement  with AmeriCo  pursuant to
which AmeriCo provides the Company with accounting and clerical services as well
as general office support,  including telephone, fax, and other services, for an
aggregate  cost of $500 per month.  C.J.  Hedlund  beneficially  owns 51% of the
outstanding common stock of AmeriCo.

     Property  Acquisition;  Brokerage Services.  C.J. Hedlund, the Company, and
Colorado  Bighorn  entered  into an  agreement  effective as of October 30, 1996
pursuant to which Mr.  Hedlund and Colorado  Bighorn have granted to the Company
the right of first  refusal to  participate  in any real estate  transaction  in
which Mr. Hedlund,  Colorado  Bighorn,  or any of their  affiliated  entities is
involved or for which Mr. Hedlund,  Colorado Bighorn, or any of their affiliated
entities otherwise receives compensation, except that the right of first refusal
will not apply to any proposed  transaction that relates solely to their serving
in a brokerage  function,  such as a listing or selling broker.  Also as part of
this  transaction,  the Company  entered  into broker  listing  agreements  with
Colorado  Bighorn pursuant to which Colorado Bighorn will serve as the Company's
broker  for  all  purchase  and  sale  transactions  during  the  period  of the
agreement.  Pursuant to these listing agreements,  the Company will pay Colorado
Bighorn a standard real estate  commission for each purchase or sale transaction
entered  into by the  Company,  including  those  pursuant to the right of first
refusal  granted to the  Company  by Mr.  Hedlund  and  Colorado  Bighorn.  This
agreement and the listing agreements are for one year terms beginning on October
30, 1996. The agreement may be terminated by the Company earlier than the end of
the one year  period in the event that either Mr.  Hedlund or  Colorado  Bighorn
Corporation  does not perform its duties  satisfactorily,  as  determined by the
Board of Directors  of the Company in its sole  discretion.  In  addition,  this
agreement  and the  listing  agreements  may be renewed by the  Company,  at its
election,  for five  additional  one year terms.  Mr.  Hedlund is the beneficial
owner of Colorado Bighorn.

     Purchase Of The Stock Of CSP And GBI. The Purchase  Agreement,  to purchase
the stock of CSP, which owned the Self-Storage Facilities, and the stock of GBI,
which owned the Giltedge  Office  Building,  could be deemed to be the result of
non-arms-length  negotiations  although  the current  Board Of  Directors of the
Company,  which is not under the direct or  indirect  control  of C.J.  Hedlund,
believes its terms were fair to the Company.  The Purchase Agreement  originally
was entered into in July 1995 when C.J. Hedlund beneficially owned approximately
25% of the Company's  outstanding  Common Stock and therefore was  considered an
affiliate  of the Company.  Pursuant to the terms of the  Purchase  Agreement as
originally  executed  in July 1995,  if the  Company  did not obtain  sufficient
financing by June 30, 1996 to consummate the  transactions  contemplated  by the
Purchase  Agreement,  then the Purchase  Agreement would have terminated without
any  obligations or liabilities  accruing to the Company.  In 1996, the Company,
under the direction of a Board Of Directors  that was acting  independently  and
that was not under the direct or indirect control of C.J. Hedlund, and at a time
after C.J. Hedlund's interests had been reduced to less than five percent of the
Company's  outstanding Common Stock,  determined to amend and extend the closing
deadline date under the Purchase  Agreement  from June 30, 1996 to September 30,
1996 and again to December  31, 1996  because the Board  believed  the  Purchase
Agreement

                                       29

<PAGE>

was in the best interests of the Company.  If the Board had concluded  otherwise
(i.e., that the Purchase Agreement was not in the Company's best interests),  it
could have let the Purchase  Agreement  terminate by its terms on June 30, 1996.
The respective purchase prices were $2,604,000 for the stock of CSP and $721,000
for the stock of GBI. C. J. Hedlund is the former general  partner,  the current
representative,  and a 0.83%  beneficial owner of the entity that was the Seller
of the stock of CSP and GBI, and two directors of the Company,  Messrs.  Hoffman
and McFann, beneficially owned 2.4% and 1.0%, respectively, of the Seller of the
stock of CSP and GBI.

     Loans To The Company. During 1993 and 1994, Electro-Media of Colorado, Inc.
("Electro- Media") advanced the Company a total of $219,290 for  organizational,
operational,  and other  expenses.  This  amount was  repaid,  with  interest of
$10,157,  in July 1994. During 1995,  Electro-Media  loaned the Company $125,000
for the  Company's  operating  expenses  prior to  completion  of the  Company's
initial  Public  Offering.  The  loan  accrued  interest  at 11% per  annum.  An
additional  $75,000 was loaned to the Company in 1996 at the same  interest rate
of 11% per annum. The loans from  Electro-Media  totalling $200,000 were repaid,
with  interest  of  $16,125  as of  October  30,  1996.  At the  time  of  these
transactions,  C.J. Hedlund was the Chairman of the Board of Directors,  and his
wife was the majority shareholder, of Electro-Media.

     Conflicts Of Interest  Policies.  The Company's  Board of Directors and its
officers are subject to certain provisions of Delaware law which are designed to
eliminate or minimize the effects of certain potential conflicts of interest. In
addition,  the Bylaws  provide that any  transaction  between the Company and an
interested  party must be fully disclosed to the Board Of Directors,  and that a
majority of the directors not otherwise interested in the transaction (including
a  majority  of  independent  directors)  must  make a  determination  that such
transaction is fair,  competitive and  commercially  reasonable and on terms and
conditions  not  less  favorable  to  the  Company  than  those  available  from
unaffiliated third parties.

     All future  transactions  between the Company and the  Company's  officers,
directors and 5 percent  stockholders  will be on terms no less  favorable  than
could be  obtained  from  independent  third  parties  and will be approved by a
majority of the independent, disinterested directors of the Company. The Company
believes  that by  following  these  procedures  it will be able to mitigate the
possible effects of these conflicts of interest.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

     (a) Exhibits.
         ---------

                                  Exhibit Index

         Number            Description
         ------            -----------

         3.1(a)     Certificate  Of   Incorporation   filed  with  the  Delaware
                    Secretary  Of State on August 25,  1993 is  incorporated  by
                    reference from Registrant's  Registration  Statement on Form
                    SB-2 dated August 30, 1996 (Registration No. 333-5114-D).

         3.1(b)     Amended and Restated Certificate Of Incorporation filed with
                    the  Delaware  Secretary  Of State on  January  17,  1996 is
                    incorporated by reference from

                                       30

<PAGE>

                    Registrant's  Registration  Statement  on  Form  SB-2  dated
                    August 30, 1996 (Registration No. 333-5114-D).

         3.2        Bylaws  are  incorporated  by  reference  from  Registrant's
                    Registration  Statement  on Form SB-2 dated  August 30, 1996
                    (Registration No. 333-5114-D).

         10.1(a)    First  Amended  And  Restated  Purchase  And Sale  Agreement
                    effective  as of August 18,  1995  between  the  Company and
                    Consolidated   Broadway   Properties,    Ltd.   ("CBP")   is
                    incorporated  by reference  from  Registrant's  Registration
                    Statement on Form SB-2 dated  August 30, 1996  (Registration
                    No. 333-5114-D).

         10.1(b)    Amendment No. 1 To First  Amended And Restated  Purchase And
                    Sale Agreement  between the Company and CBP is  incorporated
                    by reference  from  Registrant's  Registration  Statement on
                    Form  SB-2  dated   August  30,   1996   (Registration   No.
                    333-5114-D).

         10.2       Form of Storage/Office Building Management Agreement between
                    the   Company   and  Americo   Realty   Services,   Inc.  is
                    incorporated  by reference  from  Registrant's  Registration
                    Statement on Form SB-2 dated  August 30, 1996  (Registration
                    No. 333-5114-D).

         10.3(a)    First Amended And Restated Purchase  Agreement  effective as
                    of July  14,  1995  between  the  Company  and  Consolidated
                    American   Properties,   Ltd.  ("CAP")  is  incorporated  by
                    reference from Registrant's  Registration  Statement on Form
                    SB-2 dated August 30, 1996 (Registration No. 333-5114-D).

         10.3(b)    Amendment  No.  1 To First  Amended  And  Restated  Purchase
                    Agreement  between the Company  and CAP is  incorporated  by
                    reference from Registrant's  Registration  Statement on Form
                    SB-2 dated August 30, 1996 (Registration No. 333-5114-D).

         10.4(a)    Agreement  dated as of July 14,  1995  between and among the
                    Company,  C.J. Hedlund,  and Colorado Bighorn Corporation is
                    incorporated  by reference  from  Registrant's  Registration
                    Statement on Form SB-2 dated  August 30, 1996  (Registration
                    No. 333-5114-D).

         10.4(b)    Amendment No. 1 To Agreement  between and among the Company,
                    C.J.   Hedlund   and   Colorado   Bighorn   Corporation   is
                    incorporated  by reference  from  Registrant's  Registration
                    Statement on Form SB-2 dated  August 30, 1996  (Registration
                    No. 333-5114-D).

         10.5(a)    Promissory  Note dated as of June 15,  1995 from the Company
                    to  Electro-Media  Of  Colorado,  Inc.  is  incorporated  by
                    reference from Registrant's  Registration  Statement on Form
                    SB-2 dated August 30, 1996 (Registration No. 333-5114-D).


                                       31

<PAGE>

         10.5(b)    Amended  And  Restated  Promissory  Note from the Company to
                    Electro-Media of Colorado, Inc. is incorporated by reference
                    from Registrant's  Registration Statement on Form SB-2 dated
                    August 30, 1996 (Registration No. 333-5114-D).

         10.6       Form of  Employment  Agreement  dated as of  January 1, 1996
                    between the Company  and James F. Etter is  incorporated  by
                    reference from Registrant's  Registration  Statement on Form
                    SB-2 dated August 30, 1996 (Registration No. 333-5114-D).

         16.1       Letter  to  Securities  And  Exchange  Commission  from  the
                    Company's former independent  accountant,  HEIN + ASSOCIATES
                    LLP  is   incorporated   by  reference   from   Registrant's
                    Registration  Statement  on Form SB-2 dated  August 30, 1996
                    (Registration No. 333-5114-D).

         27.1       Financial Data Schedule

     (b) Reports On Form 8-K.  The  Registrant  did not file any reports on Form
8-K during the last quarter of the fiscal year ended December 31, 1996.


                                       32

<PAGE>

                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                       AMERIVEST PROPERTIES INC.


Date:  March 17, 1997                  By: /s/ James F. Etter
                                          -------------------------------------
                                           James F. Etter, President


     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.


Signature                          Title                               Date
---------                          -----                               ----



  /s/ James F. Etter          President (Principal Executive     March 17, 1997
----------------------------- Officer); Chief Financial
James F. Etter                Officer (Principal Financial
                              and Accounting Officer) and
                              Director



  /s/ Charles R. Hoffman      Director                           March 17, 1997
-----------------------------
Charles R. Hoffman



  /s/ John A. Labate          Director                           March 17, 1997
-----------------------------
John A. Labate



  /s/ Robert J. McFann        Director                           March 17, 1997
-----------------------------
Robert J. McFann