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, 1997

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
             For the transition period from __________ to __________

                         Commission file number 1-14462

                            AmeriVest Properties Inc.
                  --------------------------------------------
                 (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: None

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

                          Common Stock, $.001 par value
                          -----------------------------
                                 Title of class

                    Redeemable Common Stock Purchase Warrants
                    -----------------------------------------
                                 Title of class

     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 o f this  Form
10-KSB or any amendment to this Form 10-KSB. [X]

     The issuer's revenues for its most recent fiscal year were: $2,482,182

     The  aggregate  market  value of the issuer's  voting  Common Stock held by
non-affiliates  of the issuer as of March 10, 1998 was  $6,249,432  (computed on
the basis of $4.75 per share which was the  reported  closing  sale price of the
issuer's common stock on the Nasdaq SmallCap Stock Market on March 10, 1998).

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

     The number of shares  outstanding of the issuer's  Common Stock as of March
10, 1998 was 1,429,070

                       DOCUMENTS INCORPORATED BY REFERENCE

     The information required in Items 10 and 12 of this Annual Report are in is
incorporated  by reference  from the Company's  Proxy  Statement  concerning the
Company's May 21, 1998 Annual Meeting Of Stockholders.

     Transitional Small Business Disclosure Format (check one): Yes    No X
                                                                   ---   ---




<PAGE>
<TABLE>
<CAPTION>


                                     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 operates and intends to continue to
operate in a manner so that it qualifies as a self-administered and self-managed
real estate investment trust ("REIT"). Through its subsidiaries,  AmeriVest owns
an  industrial  office  and  showroom  building  (the  "Broadway  Property"),  a
commercial office building (the "Giltedge Office  Building"),  four self-storage
facilities  (the  "Self-Storage   Facilities")  and  three  state-leased  office
buildings (the "Texas  Buildings").  The Broadway Property,  the Giltedge Office
Building, the Self-Storage Facilities,  and the Texas Buildings are collectively
referred to as the  "Properties".  The  Properties  are managed on behalf of the
Company by AmeriCo Realty  Services,  Inc.  ("AmeriCo") and Melsama  Corporation
("Melsama").  See  "--Property  Management  Contracts"  below.  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.

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

Description Of Properties
-------------------------

     The following chart contains a summary of the Properties owned by AmeriVest
as of December 31, 1997:

                                                                                                                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           Arvada, Colorado            October 30, 1996             1975              8,000 office/
Building of                                                                                                     37,000 storage
Arvada, Colorado                                                                                              (249 rental units)
(7117 W. 56th Avenue)
Private Self-Storage of              Thornton, Colorado            October 30, 1996            1975                 55,150
Thornton, Colorado                                                                                            (506 rental units)
(666 W. Thornton Parkway)
Private Self-Storage of               Denver, Colorado             October 30, 1996            1974                 72,490
Denver, Colorado                                                                                              (566 rental units)
(11855 E. 40th Avenue)
Private Self-Storage of             Westminster, Colorado          October 30, 1996            1973                 58,938
Westminster, Colorado                                                                                          (399 rental units)
(7140 Irving Street)
Giltedge Office Building             Appleton, Wisconsin           October 30, 1996            1978                 55,071
McCombs Office Building                 El Paso, Texas              August 28, 1997            1978                 17,900
(9206 McCombs)
Lubbock Office Building                 Lubbock, Texas              August 28, 1997            1986                  8,100
(409 50th Street)
Brookhollow Office Building             El Paso, Texas            September 30, 1997           1988                  8,200
(5929 Brookhollow)

                                       2
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



The following  chart  contains  additional  summary  information  concerning the
Properties:

                                                    Occupancy            Annual Rent Per    Mortgage Loan Balance
Property                         Acreage      as of December 31, 1997      Square Foot     as of December 31, 1997
--------                         -------      -----------------------      -----------     -----------------------
<S>                             <C>                   <C>                    <C>                 <C>
Broadway Property               2.53 acres            100.0%                 $ 4.87              $1,158,977
Private Self-Storage/           2.76 acres             95.0%                 $ 6.62                $827,693
Office Building of
Arvada, Colorado
Private Self-Storage of         4.92 acres             94.6%                 $ 6.28              $1,170,183
Thornton, Colorado
Private Self-Storage of         3.55 acres             99.5%                 $ 6.01              $1,189,206
Denver, Colorado
Private Self-Storage of         3.52 acres             88.2%                 $ 6.13                $903,799
Westminster,  Colorado
Giltedge Office Building        3.90 acres             95.4%                 $14.64              $2,013,218

McCombs Office Building         1.83 acres              100%                 $ 6.70                     -0-

Lubbock Office Building          .69 acres              100%                 $ 7.29                     -0-

Brookhollow Office Building      .81 acres              100%                 $ 9.28                     -0-

</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,
1997 was  $1,158,977.  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).  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 1997,  1996 and 1995.  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 of commercial  products.  In general,
the  principal  businesses  carried on at the  Broadway  Property are office and
showroom.  For 1997,  1996 and 1995,  the average  effective  annual  rental per
square foot for the Broadway Property was $4.87, $4.73 and $4.45,  respectively.
For 1997, real estate taxes for the Broadway  Property were $31,358,  which were
calculated at the rate of 8.2% 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 four  years as all of the  leases  will  expire
during that time period:
<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
     ------------------        ----------------------         ------------------        ----------------------------------

<C>          <C>                     <C>                         <C>                               <C>
1998         2                       23,680                      $114,612                          47.2%
2002         2                       26,600                      $128,400                          52.8%


                                       3

</TABLE>


<PAGE>


     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 95%, 91%, 95%, 95% and 97% in 1997,  1996,  1995,  1994, and 1993,
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,  contractor  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 1997, 1996, 1995, 1994, and 1993,
the average  effective  annual  rentals per square  foot for the  Property  were
$6.62, $6.50, $6.62, $6.36, and $5.24, respectively. For 1997, real estate taxes
for this Property were $34,850,  which taxes were calculated at the rate of 8.9%
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:
<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
        ------------           ----------------------         ------------------        ----------------------------------

<C>          <C>                     <C>                          <C>                              <C>
1998         4*                      4,800                        $31,416                          56.9%
1999         1                         800                         $6,120                          11.1%
2000         2                       2,400                        $17,640                          32.0%


----------

*    Two of these expiring leases are month-to-month tenancies.
</TABLE>

     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

                                       4

<PAGE>



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 95%, 86%, 91%, 93%, and 95% in 1997,  1996,  1995,  1994, and
1993,  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
1997,  1996,  1995,  1994,  and 1993, the average  effective  annual rentals per
square  foot for the  Property  were  $6.28,  $6.50,  $6.48,  $6.61,  and $6.33,
respectively.  For 1997, real estate taxes for this Property were $47,240, which
taxes were calculated at the rate of 3.1% 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 99%, 75%, 85%, 86%, 85%, and
88% in 1997,  1996,  1995,  1994, and 1993,  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 1997, 1996, 1995, 1994, and 1993, the average
effective  annual  rentals per square foot for the Property  were $6.01,  $5.73,
$6.07,  $6.59,  and $6.19,  respectively.  For 1997,  real estate taxes for this
Property  were $43,454,  which taxes were  calculated at the rate of 7.5% 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,  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 86%, 85%, 89%, 94%, and 95%, in 1997,  1996, 1995, 1994, and 1993,
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 1997, 1996,
1995,  1994, and 1993, the average  effective annual rentals per square foot for
the Property were $6.13, $5.93, $5.51, $5.73, and $5.08, respectively. For 1997,
real estate taxes for this Property were $33,863, which taxes were calculated at
the  rate of 2.5% 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

                                       5

<PAGE>



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, 1997
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      $827,694             $ 8,338             $ 784,114
Building of Arvada,

Private Self-Storage of        $1,170,183             $11,789            $1,108,565
Thornton, Colorado

Private Self-Storage of        $1,189,206             $11,980            $1,126,583
Denver, Colorado

Private Self-Storage of          $903,799             $ 9,105             $ 856,208
Westminster, Colorado

</TABLE>

     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, 1997 was  $2,013,218.  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
96%, 99%, 97%, 99%, and 95%, in 1997, 1996, 1995, 1994, and 1993,  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 1997,  1996,  1995,  1994,  and 1993,  the  average
effective  annual rentals per square foot for the Property were $14.64,  $14.77,
$14.12, $13.65, and $12.85,  respectively.  For 1997, real estate taxes for this
Property  were $66,755,  which taxes were  calculated at the rate of 1.1% 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:


                                       6

<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
          -----------------------    --------------------------    -------------------------   ----------------------------------

<S>                 <C>                        <C>                         <C>                             <C>
  1998              8                          7,658                       $118,560                        15.8%
  1999              8                         14,227                       $215,232                        28.8%
  2000              5                         18,560                       $276,708                        37.0%
  2001              1                          1,703                        $25,548                         3.4%
  2002              5                          8,627                       $112,152                        15.0%


     McCombs Office Building in El Paso, Texas.  AmeriVest Properties Texas Inc.
("APT"), a wholly-owned  subsidiary of the Company, owns fee simple title to the
McCombs Office Building in El Paso,  Texas.  This Property consists of an office
building  located  at 9206  McCombs,  El Paso,  Texas.  This  Property  includes
approximately  1.83  acres of land in two  parcels  and an  office  building  of
approximately  17,900  square feet,  which  includes  14,825  square feet of net
rentable  area.  The  building  is  leased  to the  State of Texas  and is being
occupied 100% by the Department of Human Services. The Company does not have any
present plans for capital  expenditures  on the building and intends to hold the
property for income  purposes.  The State of Texas has leased the building since
September 1984. The effective  annual rental for 1997 was $8.09 per square foot.
This  Property is subject to the  following  competitive  conditions:  there are
several  office  buildings  in the  area,  but  there  is no  dominant  owner or
building.  The real  estate  taxes  for 1997  were  $21,719,  which  taxes  were
calculated  at the rate of 2.8% of the assessed  value as  determined  by the El
Paso County  Assessor.  The following is a schedule of the lease  expiration for
the Property for the next ten years:


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

  2006              1                         14,825                       $120,000                         100%


     Lubbock Office Building in Lubbock, Texas. APT owns fee simple title to the
Lubbock Office Building in Lubbock,  Texas.  This Property consists of an office
building  located  at 409 50th  Street,  Lubbock,  Texas  79404.  This  Property
includes approximately .69 acres of land and an office building of approximately
8,100 square feet,  which  includes  6,070 square feet of net rentable area. The
building  is  leased to the  State of Texas  and is being  occupied  100% by the
Department of Criminal Justice.  The Company does not have any present plans for
capital expenditures on the building and intends to hold the property for income
purposes.  The State of Texas has leased the building  since October  1986.  The
effective  annual  rental for 1997 was $9.73 per square foot.  This  Property is
subject  to the  following  competitive  conditions:  there are  several  office
buildings  in the area,  but there is no dominant  owner or  building.  The real
estate  taxes  were  calculated  at the  rate of 2.4% of the  assessed  value as
determined by the Lubbock  County  Assessor.  The following is a schedule of the
lease expiration for the Property for the next ten years:

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

  2003              1                          6,070                        $59,040                         100%



                                       7

<PAGE>


     Brookhollow Office Building in El Paso, Texas. APT owns fee simple title to
the Brookhollow  Office Building in El Paso,  Texas.  This Property  consists of
approximately  .81 acres of land and an office building of  approximately  8,200
square feet, which includes 6,100 square feet of net rentable area. The building
is leased to the State of Texas and is being  occupied 100% by the Department of
Criminal  Justice.  The  Company  does not have any  present  plans for  capital
expenditures  on the  building  and  intends  to hold the  property  for  income
purposes.  The State of Texas has leased the building  since  February 1989. The
effective  annual  rental for 1997 was $12.39 per square foot.  This Property is
subject  to the  following  competitive  conditions:  there are  several  office
buildings  in the area,  but there is no dominant  owner or  building.  The real
estate taxes for 1997 was $13,179,  which taxes were  calculated  at the rate of
2.8% of the assessed value, as determined by the county assessor.  The following
schedule of the lease expiration for the Property for the next ten years:


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

  2003              1                          6,100                        $75,600                           100%


     Property  Management  Contracts.  The  Company has  entered  into  property
management  contracts for each of the Properties other than the Texas Properties
with AmeriCo  pursuant to which AmeriCo  manages all aspects of the operation of
those  Properties,  including  leasing,  maintenance,   bookkeeping,  and  other
matters. The management fee paid to AmeriCo is 5% of the gross rental income, as
received,  on  those  Properties,  reimbursement  of the  cost  of  any  on-site
personnel,  and an amount  equal to 5% of the total  costs  related  to  on-site
personnel.  In addition,  AmeriCo receives an administrative  fee equal to 2% of
the gross rental income from the Texas  Properties for  accounting,  bookkeeping
and other  administrative  services  with respect to the Texas  Properties.  See
"ITEM 12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS".  The Company has
entered  into  property  management  contracts  with  Melsama  pursuant to which
Melsama manages all aspects of the operation of the Texas Properties. Melsama is
paid a management fee equal to 3% of the gross rental income, as received,  from
the Texas Properties.

Proposed Purchase Of Eleven Office Buildings In Texas
-----------------------------------------------------

     The Company has executed  eleven  contracts to purchase eleven small office
buildings located in Texas that are leased to various Texas government agencies.
The  acquisition  of these  properties  is expected to be completed on or before
July 1, 1998. The aggregate  purchase price for these buildings is approximately
$7,300,000.  A portion of the purchase  price will be paid by the issuance of up
to 204,300 shares of the Company's  Common Stock at the rate of $5.00 per share.
Additional shares may be issued to the respective sellers in the future based on
the Company's stock price and the occupancy levels of certain of the properties.
The Company  currently is pursuing  debt  financing  for the cash portion of the
purchase  price.  Although  no binding  commitment  has been  received  for this
financing, the Company believes that it will be able to obtain the financing for
these  acquisitions  during the second  quarter  of 1998.  However,  there is no
assurance that this will occur.

                                       8

</TABLE>

<PAGE>


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".

Employees
---------

     The Company has two employees,  James F. Etter, who is the President, Chief
Executive  Officer and Chief Financial  Officer of the Company,  and a part time
administrative assistant. Management services with respect to the Properties are
performed by AmeriCo and Melsama. See above, "--Proper ty 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.

     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.


                                       9

<PAGE>



     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
the Giltedge Office Building,  there are special income tax considerations  that
may affect this determination,  and the Company does not intend to sell them for
10 years from the date of their  purchase.  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.

     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,  invest ments, 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 par t 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.


                                       10

<PAGE>


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") and Section 27A of the
Securities Act of 1933, as amended (the "Securities  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-- Description Of Properties", "-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.

     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  Ris  ks--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.


                                       11

<PAGE>


        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,
"--Employees".

        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 has been 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  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.


                                       12

<PAGE>


        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% nondeducti  ble 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 be tween 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
        ----------------------------

        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 expirat ion 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


                                       13

<PAGE>


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 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 t o 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


                                       14

<PAGE>


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.

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 (symbol: AMVP) and Warrants
(symbol: AMVPW) became listed for trading on the Nasdaq SmallCap Stock Market in
the over-the-counter market on November 6, 1996.

     The range of high and low bid prices of the Common  Stock and  Warrants for
each quarterly  period during the period  commencing  November 6, 1996 and ended
December 31, 1997, as reported by the Nasdaq SmallCap market, is as follows:

                                  Common Stock                   Warrants
                             -----------------------     -----------------------
Quarter Ended                 High            Low         High           Low
-------------                 ----            ---         ----           ---

December 31, 1996            $5.75           $2.25       $1.50           $.50

March 31, 1997                4.75            3.00         .75            .25

June 30, 1997                 4.5625          3.75         .3125          .25

September 30, 1997            4.9375          4.0625       .28125         .15625

December 31, 1997             5.00            4.25         .34375         .21875



     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,  1998 as  reported  by Nasdaq
SmallCap Stock Market was $4.75 per share.

     Holders.  The number of holders of Common Stock of record on March 10, 1998
was 324. This number does not include  stockholders who own Common Stock through
a brokerage firm or other nominee.

     Dividends.  The Company paid $.1125 per share  dividend in each of the four
quarters in 1997. The annualized dividend per share was $.45.

     Recent Sales Of  Unregistered  Securities.  On August 28 and  September 30,
1997, the Company issued 34,200 and 12,000 shares of Common Stock, respectively,
as part of the purchase consideration of the Texas Properties that were acquired
on those dates.  The issuance of these shares of Common Stock was made  pursuant
to an exemption  from  registration  in  accordance  with Section 4(2) under the
Securities Act.

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  in  "ITEM 7.
FINANCIAL STATEMENTS".  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).


                                       16

<PAGE>


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

Comparison Of Year Ended December 31, 1997 With Year Ended December 31, 1996
----------------------------------------------------------------------------

     In August and September  1997,  the Company  acquired  three  properties in
Texas  (the  "1997  Acquired  Properties").  The  Company  owned a total of nine
properties  at December  31, 1997.  Revenues  increased  $1,236,598,  or 99%, to
$2,481,182 for 1997 as compared to $1,245,584 for 1996. The increase in revenues
was due  primarily to the revenues of the 1997  Acquired  Properties of $105,934
being  included  for five months in 1997 and the  revenues of the 1996  Acquired
Properties (defined below) of $1,123,812 being included for the entire year. The
growth  in  revenues  was  directly  related  to the  Company's  acquisition  of
properties subsequent to its IPO.

     Property  operations,  real  estate  taxes,  management  fees,  general and
administrative,   interest  expense,   and  depreciation  and  amortization  all
increased  in  1997 to  $274,139,  $153,815,  $68,401,  $185,592,  $276,815  and
$266,842,  respectively.  All of the  increases  primarily  resulted from the in
clusion of the expenses  attributable  to each of the 1996  Acquired  Properties
(defined  below)  for a full  year and the  1997  Acquired  Properties  for five
months.  As a result of the above  factors,  the net loss and net loss per share
decreased  from  $137,728 or $.29 per share,  to $120,452,  or $.09 per share in
1997 from 1996.

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  (the  "1996
Acquired Properties"). The 1995 operating results include only one property, the
Broadway Property,  for the entire year. Revenues for 1996 increased $1,022,200,
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 operation of
the 1996 Acquired  Properties  as of July 1, 1996.  Actual real estate taxes for
each property remained flat when compared to prior year's taxes,  except for the
Giltedge  Office  Building  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 parent that accrued from July
1 to October 30, 1996. See Note 9 to the 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 ( the 1996 Acquired
Properties were acquired  effective as of July 1, 1996),  the pro forma net loss
and net loss per share for 1996 would be $27,999 and $.02, respectively.

Liquidity and Capital Resources
-------------------------------

     AmeriVest's  IPO 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,  of  which  $3,325,000  was used to acq uire 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>


     The Company has under  contract  eleven  office  buildings  in Texas for an
aggregate purchase price of approximately  $7,300,000. A portion of the purchase
consideration  will be paid by the issuance of 204,300  shares of the  Company's
common stock at $5.00 per share. The remaining  portion will be financed through
long-term debt. The acquisition is expected to be completed on or before July 1,
1998.  See  "ITEMS 1 AND 2.  DESCRIPTION  OF  BUSINESS  AND  PROPERTY - Proposed
Purchase Of Eleven Office Buildings In Texas".

     During the third quarter of 1997,  AmeriVest  issued an aggregate of 46,200
shares of its Common Stock, valued at $207,900, as partial consideration for the
acquisition  of the 1997 Acquired  Properties.  Other  changes in  stockholders'
equity are the result of dividends  paid in 1997.  The tota l dividends for 1997
were $631,396,  of which $160,801 ($.1125 per share) was paid on January 9, 1998
to stockholders of record on December 26, 1997.

     The  Company  intends  to meet  its near  term  working  capital  liquidity
requirements  through cash flows  provided  from  operations.  The Company has a
short-term  revolving  credit line from Norwest  Bank  Colorado in the amount of
$400,000.  At December 31, 1997,  the Company had available  $250,000 under that
line of credit.

     The  Company  expects to continue  its  acquisition  strategy of  acquiring
properties,  but to do so the Company will need to raise additional capital from
the sale of securities,  incur  additional  borrowings,  and/or issue previously
unissued shares of common stock.  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  restraint s against increasing
rents to  attempt  to respond to  inflationary  pressures,  if any  inflationary
pressure should materialize.

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, 1997                F-2
      Consolidated Statements of Operations for the
         years ended December 31, 1996 and 1997                         F-3
      Consolidated Statements of Stockholders' Equity
         for the years ended December 31, 1996 and 1997                 F-4
      Consolidated Statements of Cash Flows for the years
         ended December 31, 1996 and 1997                             F-5-6
      Notes to Consolidated Financial Statements                     F-7-17


                                       18

<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,  1997,  and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
each of the two years in the period ended  December 31,  1997.  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, eviden ce 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,  1997,  and the  results  of their
operations  and their cash  flows for each of the two years in the period  ended
December 31, 1997 in conformity with generally accepted accounting principles.


                                            Wheeler Wasoff, P.C.


Denver, Colorado
February 7, 1998


                                      F - 1


<PAGE>





                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1997

                                     ASSETS

ASSETS
   Investment in real estate
        Land                                                       $  2,668,758
        Buildings and improvements                                   13,064,287
        Furniture, fixtures and equipment                               248,667
        Tenant improvements                                             519,945
        Less accumulated depreciation and amortization               (5,118,271)
                                                                   ------------

           Net Investment in Real Estate                             11,383,386

   Cash and cash equivalents                                             99,334
   Tenant accounts receivable                                            34,625
   Deferred financing costs, net                                         85,956
   Prepaid expenses and other assets                                     38,767
                                                                   ------------

                                                                   $ 11,642,068
                                                                   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
   Mortgage loans and notes payable                                $  7,413,077
   Accounts payable and accrued expenses                                 48,543
   Accrued interest                                                      56,219
   Accrued real estate taxes                                            298,074
   Accrued rents and security deposits                                  120,799
   Dividends payable                                                    160,801
                                                                   ------------

           Total Liabilities                                          8,097,513
                                                                   ============

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Common stock, $.001 par value
        Authorized - 10,000,000 shares
        Issued and outstanding - 1,429,070 shares                         1,429
   Capital in excess of par value                                     4,463,955
   Distributions in excess of accumulated earnings                     (920,829)
                                                                   ------------
           Total Stockholders' Equity                                 3,544,555
                                                                   ------------

                                                                   $ 11,642,068
                                                                   ============


                 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, 1996 AND 1997


                                                     1996               1997
                                                     ----               ----
REAL ESTATE OPERATING REVENUE
   Rental revenue
        Commercial properties                     $   606,758       $ 1,132,849
        Storage properties                            638,826         1,349,333
                                                  -----------       -----------

                                                    1,245,584         2,482,182
                                                  -----------       -----------

REAL ESTATE OPERATING EXPENSES
   Property operating expenses
        Operating expenses                            285,165           559,304
        Real estate taxes                             129,045           282,860
        Management fees - related                      72,735           141,136
   General and administrative                         214,784           400,376
   Interest                                           408,614           685,429
   Depreciation and amortization                      303,465           570,307
                                                  -----------       -----------

                                                    1,413,808         2,639,412
                                                  -----------       -----------

OTHER INCOME
   Interest income                                     30,496            36,778
                                                  -----------       -----------

NET (LOSS)                                        $  (137,728)      $  (120,452)
                                                  ===========       ===========

NET (LOSS) PER COMMON SHARE                       $      (.29)      $      (.09)
                                                  ===========       ===========

WEIGHTED AVERAGE NUMBER OF COMMON
   SHARES OUTSTANDING                                 467,145         1,397,270
                                                  ===========       ===========



                   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, 1996 AND 1997


                                                                                                                 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, 1996                                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)

Issuance of common stock for properties                  46,200             46        207,854            --              --

Dividends declared (Note 1)                                --             --             --              --          (631,396)

Net (Loss)                                                 --             --             --              --          (120,452)
                                                    -----------    -----------    -----------     -----------     -----------

Balance, December 31, 1997                            1,429,070    $     1,429    $ 4,463,955     $      --       $  (920,829)
                                                    ===========    ===========    ===========     ===========     ===========


                                         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, 1996 AND 1997


                                                                          1996              1997
                                                                          ----              ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                  <C>                <C>
   Net (loss)                                                        $  (137,728)       $  (120,452)
   Adjustments to reconcile net (loss) to net cash
             provided by operating activities
        Depreciation and amortization                                    303,465            570,307
        Changes in assets and liabilities
            Decrease (increase) in receivables                            34,169             (4,611)
            (Increase) decrease in prepaids                               (2,656)            11,588
            (Decrease) in accounts payable                               (26,470)            (4,221)
            Increase in accruals                                          91,827             78,276
        Other                                                            (13,005)            (1,500)
                                                                     -----------        -----------

   Net cash provided by operating activities                             249,602            529,387
                                                                     -----------        -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Additions to investments in real estate                                (4,883)        (1,205,179)
   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)        (1,205,179)
                                                                     -----------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from sale of common stock and warrants                     5,549,304               --
   Common stock offering costs                                          (905,356)              --
   Proceeds from sale of common stock warrants                           150,000               --
   Cost of warrants offering                                              (8,008)              --
   Proceeds from bank loan                                                  --              260,000
   Repayment of bank loan                                                   --             (110,000)
   Loan proceeds - related                                                75,000               --
   Re-payment of loan to related party                                  (200,000)              --
   Payments on mortgage loans                                            (71,697)          (134,918)
   Dividends paid                                                       (456,347)          (470,596)
                                                                     -----------        -----------

   Net cash provided (used) by financing activities                    4,132,896           (455,514)
                                                                     -----------        -----------

NET INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS                                                    1,223,463         (1,131,306)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                               7,177          1,230,640
                                                                     -----------        -----------

CASH AND CASH EQUIVALENTS, END OF YEAR                               $ 1,230,640        $    99,334
                                                                     ===========        ===========

                            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, 1996 AND 1997


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

During the years ended  December  31, 1996 and 1997,  the Company  paid cash for
interest of $396,030 and $686,450 respectively.


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

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.

In 1997 the  Company  issued an  aggregate  46,200  shares of its common  stock,
valued at $207,900,  as partial  consideration  for the  acquisition by a wholly
owned  subsidiary  of the Company of three  commercial  properties in Texas (See
Note 2).





                  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  self-administered  and self-managed rea l
     estate  investment trust ("REIT").  The Company owns and operates,  through
     its wholly owned  subsidiaries,  self-storage  facilities and an industrial
     warehouse in the Denver,  Colorado metropolitan area, an office building in
     Appleton, Wisconsin and three commercial office properties in Texas.

     Effective July 1, 1996, the Company acquired 100% of the outstanding common
     stock of both  Consolidated  Storage  Properties,  Inc. and Giltedge Office
     Building,  Inc. 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 include the consolidated
     operations of the Company and its wholly owned subsidiaries, as follows:

                    AmeriVest Broadway Properties, Inc. (ABP)
                    Consolidated Storage Properties, Inc. (CSP)
                    Giltedge Office Building, Inc. (GBI)
                    AmeriVest Properties Texas Inc. (APT)

     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:

        Description                   Estimated Useful Lives

        Land                          Not depreciated
        Buildings                     15 to 35 years
        Equipment                     5 to 7 years
        Tenant Improvements           Corresponding term of tenant's lease

                                     F - 7

<PAGE>


                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     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.

     Effective  January 1, 1996 the Company  elected to be taxed as a REIT under
     Sections 856 through 860 of the Internal  Revenue Code of 1986,  as amended
     (the  "Code").  As a REIT,  the Company  generally  would not be subject to
     federal  income  taxation  at the  corporate  level to the extent it distri
     butes annually at least 95% of its REIT taxable  income,  as defined 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 financial statements.

     Certain of the Company's  subsidiaries  are subject to certain state excise
     and franchise  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
     ordin ary income and 6.85%  ($.023  per  share) as return of  capital.  The




                                      F - 8

<PAGE>


                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     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. Dividends for the year ended December 31, 1997
     totaling $631,396 are characterized  100% as return of capital and includes
     the dividend  decl ared in the fourth  quarter of 1997 of $160,801  ($.1125
     per share) which was paid January 9, 1998.

     SHARE BASED COMPENSATION

     In October 1995, SFAS No. 123 "Accounting for Stock-Based Compensation" was
     issued.  This 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.

     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 $71,778 at
     De cember 31, 1997.  Unamortized  deferred  financing fees are  written-off
     when debt is retired before the maturity date.

     TENANT LEASING COSTS

     Fees and costs incurred in the  successful  negotiation of leases have been
     deferred and are being amortized on a straight-line basis over the terms of
     the respective leases.

     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.  At December 31, 1997 there were no
     cash equivalents.


                                      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,  consist
     ing of warrants and options,  are not considered in the  calculation of net
     loss per share as their inclusion would be antidilutive.

     In February 1997 SFAS No. 128,  "Earnings  Per Share" was issued  effective
     for periods  ending  after  December  15,  1997.  There is no impact on the
     Company's financial statements from adoption of SFAS No. 128.

     NEW TECHNICAL PRONOUNCEMENTS

     In February 1997 SFAS No. 129,  "Disclosure  of  Information  about Capital
     Structure" was issued effective for periods ending after December 15, 1997.
     The Company has adopted the disclosure provisions of SFAS No. 129 effective
     with the fiscal year ended December 31, 1997.

     In June 1997 SFAS No.  130,  "Reporting  Comprehensive  Income"  was issued
     effective for fiscal years  beginning after December 31, 1997, with earlier
     application  permitted.  The  Company  has  elected  to adopt  SFAS No. 130
     effective  with the fiscal year ended  December 31, 1998.  Adoption of SFAS
     No.  130  is not  expected  to  have a  material  impact  on the  Company's
     financial statements.

     In June 1997 SFAS No. 131,  "Disclosure about Segments of an Enterprise and
     Related  Information" was issued effective for fiscal years beginning after
     December 31,  1997,  with earlier  application  permitted.  The Company has
     elected to adopt SFAS No. 131 effective with the fiscal year ended December
     31,  1998.  Adoption  of SFAS No.  131 is not  expected  to have a material
     impact on the Company's financial statements.

                                     F - 10

<PAGE>


                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - INVESTMENTS IN REAL ESTATE

     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
                                                   ===========


     Effective August 1, 1997 the Company,  through its wholly owned subsidiary,
     APT,  acquired three real estate  properties in Texas.  The properties were
     acquired for an aggregate  $1,149,700  and an  aggregate  46,200  shares of
     common stock, under separate purchase  contracts.  Pursuant to the purchase
     agreements and related subscription  agreements executed by the seller, the
     seller will be issued  additional  shares of common stock if either (a) the
     average  last sales price of the  Company's  common  stock is not $4.50 per
     share  or  higher  during  the 60  days  immediately  preceding  the  first
     anniversary  of the closing date or (b) the last sale price of common stock
     is not  $4.50  higher  on  the 15  consecutive  business  days  immediately
     preceding the first anniversary of the closing date of the properties.  The
     additional shares to be issued will be based on the difference  between the
     amounts as calculated in (a) or (b) above and $4.50 per share. Accordingly,
     the shares issued were valued at $4.50 per share.

     Depreciation  expense related to the investment in real estate was $290,620
     and $544,400 for the years ended December 31, 1996 and 1997, respectively.




                                     F - 11

<PAGE>



                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - MORTGAGES AND NOTES 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 and notes payable at December 31, 1997:


     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.                             $ 1,158,977

     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.                                                  2,013,218

     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.          4,090,882

     Note payable to Norwest Bank Colorado,  N.A. (Norwest),
          $400,000  revolving line of credit secured by four
          private  self  storage   facilities  in  Colorado,
          interest at Norwest prime plus 1% payable monthly.
          The  note  matures  in May,  1998.  The  year  end
          weighted  average  interest  rate at December  31,
          1997 was 9.5%.  $250,000 was  available for use at
          December 31, 1997.                                            150,000
                                                                     ----------

                                                                     $7,413,077
                                                                     ==========

     As of December 31, 1997,  the  scheduled  maturities  of all  mortgages and
     notes payable are as follows:

                   1998                                $ 1,435,670
                   1999                                    139,319
                   2000                                  3,932,778
                   2001                                     42,508
                   2002                                     46,265
                   Thereafter                            1,816,537
                                                       -----------
                                                       $ 7,413,077
                                                       ===========


                                     F - 12

<PAGE>


                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4 - STOCKHOLDERS' EQUITY

     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.

     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.

     In 1997 the Company  issued an aggregate  46,200 shares of its common stock
     as partial compensation for the acquisition of three commercial  properties
     in Texas (see Note 2).


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  Directors")  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.




                                     F - 13

<PAGE>



                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 - STOCK OPTION PLAN (CONTINUED)


     The status of outstanding  options granted  pursuant to the Company's Stock
     Option Plan was as follows:

                                             Number     Weighted      Weighted
                                               of        Average       Average
                                             Shares   Exercise Price  Fair Value
                                             ------   --------------  ----------

  Options Outstanding - January 1, 1996      56,000      $   5.00
  Granted                                    10,000      $   5.00       $   .08
                                            -------

  Options Outstanding - December 31, 1996    66,000      $   5.00
          (34,000 exercisable)
  Granted                                    56,000      $   4.44       $   .43
                                            -------

  Options Outstanding - December 31, 1997   122,000      $   4.74
          (57,000 exercisable)              =======



     The Company has adopted the disclosure-only provisions of SFAS No. 123. Had
     compensation cost for the Company's stock option plan been determined based
     on the fair value at the grant date  consistent with the provisions of SFAS
     No. 123, the Company's net loss and loss per share for 1997 would have been
     increased to the pro forma amounts indicated below:

Net (loss) applicable to common stockholders - as reported          $  (120,452)
                                                                    ===========
Net (loss) applicable to common stockholders - pro forma            $  (122,741)
                                                                    ===========
(Loss) per share - as reported                                      $      (.09)
                                                                    ===========
(Loss) per share - pro forma                                        $      (.09)
                                                                    ===========
Weighted average fair value of options granted in 1997              $       .43
                                                                    ===========

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes  option-pricing model with the following weighted-average
     assumptions used for grants: dividend yield of 9.5%; expected volatility of
     25.52%; discount rate of 5.50%; and expected lives of 5 years.

     At December  31,  1997 the number of options  exercisable  was 57,000,  the
     weighted  average  exercise price of these options was $4.95,  the weighted
     average  contractual  life of the  options  was 5 years  and the  range  of
     exercise prices was $4.44 to $5.00 per share.




                                     F - 14

<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, 1997:

                    1998                                 $ 1,242,371
                    1999                                     976,876
                    2000                                     664,278
                    2001                                     513,996
                    2002                                     393,918
                    Thereafter                               292,112
                                                          ----------

                                                          $4,083,551
                                                          ==========


     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 tenant accounts  receivable,
     accounts  payable,  other  accrued  expenses and  mortgage  loans and notes
     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 and state  governmental units in Texas. 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  instit utions,  and maintains cash accounts only in large
     high  quality  financial  institutions,  thereby  minimizing  exposure  for
     deposits in excess of federally insured amounts.




                                     F - 15

<PAGE>


                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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,  founder  of the
     Company, and was an approximate 4.9% beneficial  stockholder of the Company
     at December 31, 1996 (approximately 2.6% at December 31, 1997). Pursuant to
     the  agreement,  the founder of 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, and month to
     month thereafter.

     In November 1997 the Company  entered into purchase and sale agreements for
     the  acquisition of eleven  commercial  real estate  properties  located in
     Texas.  The  aggregate   purchase  price  for  the  eleven   properties  is
     $7,316,500,  comprised of $6,103,000 cash,  204,300 shares of the Company's
     common  stock,  valued at $5.00 per  share,  and a  promissory  note in the
     amount of $192,000  due with  interest  at the rate of 8.5% per annum.  The
     Company paid a $5,000 earnest money deposit on each of the eleven  separate
     purchase  agreements  (an  aggregate  $55,000)  in  1998.  Pursuant  to the
     agreements,  closing on the  acquisition  of the  properties  will be on or
     before July 1, 1998.

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 2% to 5% of gross revenues plus 5% of all personnel costs.  During
     the  years  ended  December  31,  1996  and  1997,  $66,735  and  $141,136,
     respectively,  were incurred under the  management  agreement and for other
     administrative services.

     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 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 re paid
     together  with  interest at 9% per annum as an  adjustment  to closing (See
     Note 2).


                                     F - 16

<PAGE>

                   AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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 - 17


<PAGE>



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

     Not applicable.



                                       19


<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                55          President; Chief Executive Officer;
                                           Chief Financial Officer; and Director
Charles R. Hoffman            61          Chairman Of The Board
John A. Labate                49          Director
Robert J. McFann              81          Director; and Secretary


     James F. Etter has served as President of  AmeriVest  since May 1995,  as a
director since December 1995, as Chief Executive Officer since January 1997, 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 for real estate  development/resort  projects in South Carolina. From
1985 until 1988, Mr. Etter served as Vice President, Chief Financial Officer for
Wild Dunes Resort, 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.  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  degrees from the
University of Cincinnati.

     Charles R. Hoffman has served as a director of AmeriVest  since August 1994
and as Chairman of the Board since May 1995.  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 1,200 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  AmeriVest  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 Vice President and Chief Financial  Officer of GeoBiotics,  Inc. since
August 1997, a Denver based  mining  technology  company.  From 1992 to 1997 Mr.
Labate served as the Chief Financial Officer,  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.




                                       20

<PAGE>

     Robert J. McFann has served as a director of  AmeriVest  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 has
been retired since 1996. He previously was the principal  owner and President of
Hy Grade Meat Company,  a private  company  which grew to a mid-sized  hotel and
restaurant supply house under his direction. Prior to this, he worked for Cudahy
Meat Company in its salesdepartment 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.

Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------

     Section  16(a) of the  Securities  Exchange  Act of 1934,  as amended  (the
"Exchange  Act"),  requires  the  Company's  directors,  executive  officers and
holders  of more  than  10% of the  Company's  common  stock  to file  with  the
Securities And Exchange  Commission  initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company.
The Company believes that during the year ended December 31, 1997, its officers,
directors  and holders of more than 10% of the Company's  common stock  complied
with all Section  16(a) filing  requirements.  In making these  statements,  the
Company  has  relied  upon the  written  representations  of its  directors  and
officers and the  Company's  review of the monthly  statements  of changes filed
with the Company by its officers and directors.


                                       21


<PAGE>





ITEM 10.  EXECUTIVE COMPENSATION.

     The  information  required for Item 10 is  incorporated  by reference  from
"EXECUTIVE  COMPENSATION"  in  the  Company's  Proxy  Statement  concerning  the
Company's May 21, 1998 Annual Meeting Of Stockholders.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following  table  summarizes  certain  information as of March 10, 1998
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, 1998
                                    --------------------------------------------
Name And Address Of                                          Percentage Of Class
Beneficial Owner                    Number Of Shares         Beneficially Owned
----------------                    ----------------         ------------------


Charles R. Hoffman                      67,500(1)                    4.7%
208 Somerset
Bentonville, Arizona 72712


John A. Labate                          12,000(1)                     *
5260 South Beeler Court
Englewood, Colorado  80111


Robert J. McFann                        64,800(1)                    4.5%
3260 Zephyr Court
Wheat Ridge, Colorado 80033


James F. Etter                          43,600(2)                    3.0%
7100 Grandview Avenue
Suite 1
Arvada, Colorado 80002


All Officers And Directors              187,900(1)(2)               12.5%
As A Group (Four Persons)


S. Kris Bandal                          98,000(3)                    6.9%
6043 Hudson Road, #140
Woodbury, Minnesota 55126


Rimrock Partners LLC                    122,256(4)                   8.6%
1136 East Stuart, Suite 4203
Fort Collins, Colorado 80525-1193

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

*Less than one percent.

(1)  Includes or consists of options to purchase  12,000  shares of Common Stock
that  currently  are  exercisable  that were  granted to each  Outside  Director
pursuant to the Company's 1995 Stock Option Plan. The number of shares indicated
also includes the following  number of shares  underlying  common stock purchase
warrants  ("Warrants")  that currently are exercisable  that are held by each of
the following persons: Charles Hoffman, 8,000; and Robert J. McFann, 4,000.

(2)  Consists  of an  aggregate  of 17,100  shares of Common  Stock owned by Mr.
Etter, his wife, and minor daughter, 21,000 shares of Common Stock issuable upon
one exercise of currently  exercisable options, and an aggregate of 5,500 shares
of Common Stock  issuable  upon the exercise of Warrants  owned by Mr. Etter and
his wife.


                                       22

<PAGE>



(3)  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.

(4) Includes 122,256 shares over which Rimrock Partners LLC ("Rimrock") has sole
voting power as disclosed in a Schedule 13D dated March 17, 1998 provided to the
Company by Rimrock.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The  information  required for Item 12 is  incorporated  by reference  from
"TRANSACTIONS WITH MANAGEMENT AND PRINCIPAL STOCKHOLDERS" in the Company's Proxy
Statement concerning the Company's May 21, 1998 Annual Meeting Of Stockholders.

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  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 (Registrati on No. 333-5114-D).

                                       23

<PAGE>



         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).

         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 effective 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).

         10.7       Form of Employment Agreement effective as of January 1, 1997
                    between the Company and James F. Etter.

         10.8       Form of Employment Agreement effective as of January 1, 1998
                    between the Company and James F. Etter.

         10.9       1995 Stock Option Plan.

         10.10      1998 Stock Option Plan is incorporated by reference from the
                    Company's Proxy  Statement  concerning the Company's May 21,
                    1998 Annual  Meeting Of  Stockholders  filed with the SEC on
                    March 30, 1998.

         27.1       Financial Data Schedule.

     (b) Reports On Form 8-K.  The  Registrant  did not file any reports on Form
8-K during the fiscal year ended December 31, 1997.


                                       24


<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 30, 1998                     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, Chief Executive       March 30, 1998
--------------------------      Officer (Principal Executive
James F. Etter                  Officer); Chief Financial
                                Officer (Principal Financial
                                and Accounting Officer)
                                and Director

 /s/ Charles R. Hoffman         Director                         March 30, 1998
--------------------------
Charles R. Hoffman



 /s/ John A. Labate             Director                         March 30, 1998
--------------------------
John A. Labate



 /s/ Robert J. McFann           Director                         March 30, 1998
--------------------------
Robert J. McFann




<PAGE>


         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  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 (Registrati on 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).




<PAGE>


         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).

         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 effective 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).

         10.7       Form of Employment Agreement effective as of January 1, 1997
                    between the Company and James F. Etter.

         10.8       Form of Employment Agreement effective as of January 1, 1998
                    between the Company and James F. Etter.

         10.9       1995 Stock Option Plan.

         10.10      1998 Stock Option Plan is incorporated by reference from the
                    Company's Proxy  Statement  concerning the Company's May 21,
                    1998 Annual  Meeting Of  Stockholders  filed with the SEC on
                    March 30, 1998.

         27.1       Financial Data Schedule.