10-Q/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 1 to

FORM 10-Q

[x] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities and Exchange Act of 1934

For the quarterly period ended June 30, 2014

[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________________ to _______________

Commission File No. 2-83291.

DSI REALTY INCOME FUND VII

a California Limited Partnership

California	95-3871044
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6700 E. Pacific Coast Hwy., Long Beach, California 90803

(Address of principal executive offices)

Registrant’s telephone number, including area code (562) 493-8881

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

The issuer is a limited partnership. All 23,753 limited partnership units originally sold for $500.00 per unit. There is no trading market for the limited partnership units.

EXPLANATORY NOTE

The sole purpose of this amendment to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014, originally filed with the Securities and Exchange Commission on August 14, 2014 (the “Original Form 10-Q”), is to furnish the exhibits required by Item 601(b)(101) (Interactive Data File) of Regulation S-K.

No other changes have been made to the Original Form 10-Q and the Original Form 10-Q has not been updated to reflect events occurring subsequent to the original filing date.

ITEM 6. Exhibits

(a) Exhibits

31.1 Rule 13a-14(a)/15d-14(a) Certification: Principal Executive Officer
31.2 Rule 13a-14(a)/15d-14(a) Certification: Principal Financial Officer
32.1 Section 1350 Certification: Principal Executive Officer
32.2 Section 1350 Certification: Principal Financial Officer
101.INS XBRL Instance Document*
101.SCH XBRL Taxonomy Extension Schema Document*
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB XBRL Taxonomy Extension Label Linkbase Document*
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document*

*Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DSI REALTY INCOME FUND VII,
a California Limited Partnership
by: DSI Properties, Inc., a California Corporation, as General Partner

By: /s/ ROBERT J. CONWAY
Dated: August 19, 2014
ROBERT J. CONWAY, President
(Chief Executive Officer and Director)

By: /s/ RICHARD P. CONWAY
Dated: August 19, 2014
RICHARD P. CONWAY, Executive Vice President
(Chief Financial Officer and Director)

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Related Party Transactions

6 Months Ended

Jun. 30, 2014

Notes to Financial Statements

Related Party Transactions

The Partnership has entered into a management agreement with Dahn to operate its mini-storage facilities. The management agreement provides for a management fee equal to 5% of gross revenue from operations, which is defined as the entire amount of all receipts from the renting or leasing of storage compartments and sale of locks. The management agreement is renewable annually. Dahn earned management fees equal to $55,087and $49,673, for the six month periods ended June 30, 2014 and 2013, respectively. Amounts payable to Dahn at June 30, 2014 and December 31, 2013 were $9,770 and $7,739, respectively.

Beginning in July 2011, the General Partner, DSI Properties, Inc. performs all tax related work with respect to the Partnership. These services are paid monthly in the amount of $3,826. Tax fees paid to DSI Properties, Inc. for the six month period ended June 30, 2014 were $22,956.

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Properties

6 Months Ended

Jun. 30, 2014

Notes to Financial Statements

Property

Properties owned by the Partnership are all mini-storage facilities. Depreciation is calculated using the straight-line method over the estimated useful life of 20 years. Property under capital leases is amortized over the lives of the respective leases. The total cost of property and accumulated depreciation at June 30, 2014 and December 31, 2013 were as follows:

	June 30, 2014	December 31, 2013
Land	$ 1,714,700	$ 1,714,700
Buildings and improvements	6,476,310	6,456,123
Rental trucks under capital leases	140,093	140,093
Total	8,331,103	8,310,916
Less accumulated depreciation	(6,580,530)	(6,575,864)
Properties - net	$ 1,750,573	$1,735,052

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Condensed Balance Sheets (Unaudited) (USD $)	Jun. 30, 2014	Dec. 31, 2013
ASSETS:
Cash & Equivalents	$ 342,220	$ 348,465
Property Net	1,750,573	1,735,052
Uncollected Rental Revenue	71,820	55,818
Prepaid Advertising	1,396	1,396
Other Assets	64,395	20,000
TOTAL	2,230,404	2,160,731
LIABILITIES:
Distribution due to Partners	151,515	151,515
Incentive Management Fee Liability	21,398	32,955
Property Management Fee Liability	9,770	7,739
Deferred Income	55,564	55,277
Accrued Expenses	42,477	58,086
Other Liabilities	17,707	11,692
Total Liabilities	298,431	317,264
PARTNERS' EQUITY:
General Partners	(88,451)	(89,336)
Limited Partners	2,020,424	1,932,803
Total Partners' Equity	1,931,973	1,843,467
TOTAL	$ 2,230,404	$ 2,160,731

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General

6 Months Ended

Jun. 30, 2014

Notes to Financial Statements

General

Registrant, DSI Realty Income Fund VII (the "Partnership") is a publicly-held limited partnership organized under the California Uniform Limited Partnership Act pursuant to a Certificate and Agreement of Limited Partnership (hereinafter referred to as "Agreement") dated August 1, 1983. The General Partners are DSI Properties, Inc., a California corporation, and RJC Capital Management, LLC and JWC Capital Management, LLC.

DSI Properties, Inc. is an affiliate of Diversified Securities, Inc., a wholly-owned subsidiary of DSI Financial, Inc. The General Partners provide similar services to other partnerships. Through its public offering of Limited Partnership Units, the Partnership sold twenty-four thousand (24,000) units of limited partnership interests, aggregating Twelve Million Dollars ($12,000,000). The General Partners have retained a one percent (1%) interest in all profits, losses and distributions (subject to certain conditions), without making any capital contribution to the Partnership. The General Partners are not required to make any capital contributions to the Partnership in the future.

The Partnership owns mini-storage facilities located in Chico, Fairfield, LaVerne, and Riverside, California and Littleton, Colorado. All facilities were purchased from Dahn Corporation ("Dahn"). Dahn is not affiliated with the Partnership. Dahn is affiliated with other partnerships in which DSI Properties, Inc. is a general partner.

The accompanying unaudited interim financial statements have been prepared by the Partnership's management in accordance with accounting principles generally accepted in the United States of America ("GAAP") and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the unaudited interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited interim financial statements reflect all adjustments of a normal and recurring nature which are considered necessary for a fair presentation of the results for the interim periods presented. However, the results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. These unaudited interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Partnership's annual report on Form 10-K for the year ended December 31, 2013.

Significant Accounting Policies

Comprehensive income - The Partnership has adopted Accounting Standards Update 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. For the six months ended June 30, 2014 and 2013 comprehensive income equaled net income, as the Partnership had no other comprehensive income. As of June 30, 2014 and December 31, 2013, accumulated other comprehensive income was $0.

Fair value of financial instruments - ASC 825-10 (formerly SFAS 107, “Disclosures about Fair Value of Financial Instruments”) defines financial instruments and requires disclosure of the fair value of financial instruments held by the Partnership. The Partnership considers the carrying amount of cash, accounts receivable, other receivables, accounts payable and accrued liabilities, to approximate their fair values because of the short period of time between the origination of such instruments and their expected realization.

Revenue recognition - Revenue is recognized using the accrual method based on contractual amounts provided for in the lease agreements, which approximates recognition on a straight-line basis. The term of the lease agreements is usually less than one year.

Recent Accounting Pronouncements

In April 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-07 Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting in order to clarify when an entity should apply the liquidation basis of accounting. In addition, the guidance provides principles for the recognition and measurement of assets and liabilities and requirements for financial statements prepared using the liquidation basis of accounting. The amendments are effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. The Partnership does not expect the adoption of the standard update to have a material impact on its financial position or results of operations. 

In February 2013 the FASB issued ASU 2013-04 Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date, in order to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. generally accepted accounting principles (GAAP). The amendments in the Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Partnership does not expect the adoption of the standard update to have a material impact on its financial position or results of operations.

In February 2013, the FASB issued ASU 2013-02 Comprehensive Income (Topic 220): Reporting Amounts Reclassified Out of Accumulated Other Comprehensive Income, in order to improve the reporting of reclassifications out of accumulated other comprehensive income. The amendments in this Update seek to attain the objective by requiring an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in the net income if the amount being reclassified is required under U.S. generally accepted accounting principles (GAAP) to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirey to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is reclassified to a balance sheet account (for example, inventory) instead of directly to income or expense in the same reporting period. The amendments are effective prospectively for reporting periods beginning after December 15, 2012. The Partnership considers the adoption of the standard update does not impact its financial position or results of operations.

In July 2013, the FASB has issued ASU No. 2013-11, Income Taxes (Topic 740)-Presentation of an Unrecognized Tax Benefit When a Net Operatiing Loss Carryforward or Tax Credit Carryforward Exists (a consensue of the FASB Emerging Issues Task Force), which finalized Proposed ASU No. EITF-13C, and provides explicit guidance regarding the presentation in the statement of financial position of an unrecognized tax benefit when a net operating loss or tax credit carryforward exists. ASU No. 2013-11 applies prospectively to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. Restrospective application is also permitted. Further, ASU No. 2013-11 is effictive for fiscal years, and interim periods within those years, beginning December 15, 2013. Early adoption is permitted. the Partnership considers the adoption of the standard update will not impact its financial position or results of operations.

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Subsequent Events

6 Months Ended

Jun. 30, 2014

Notes to Financial Statements

Subsequent Events

Events subsequent to June 30, 2014, have been evaluated through the date these unaudited interim financial statements were issued to determine whether they should be disclosed to keep the unaudited interim financial statements from being misleading. Consequently, management is providing the following information:

In November of last year we notified you of our intent to seek a current market valuation of the Properties within your Fund. The financial advisor we retained, Bancap, helped us complete this procedure and we have entered into a preliminary purchase and sale agreement with a third party. That third party is currently conducting its due diligence on the properties. We will notify you of the terms and conditions of the transactions, as any sale would require approval by the holders of a majority of the Limited Partnership Units. We anticipate that the due diligence stage will be finalized in August of 2014 and we will communicate further with you regarding the situation prior to year-end.

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Condensed Statements of Income (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
REVENUES:
Self-storage rental income	$ 538,200	$ 475,652	$ 1,045,454	$ 920,215
Ancillary operating revenue	30,145	34,773	55,013	68,803
Interest and other income	0	0	0	0
TOTAL	568,345	510,425	1,100,467	989,018
EXPENSES:
Depreciation	2,346	3,147	4,667	6,330
Operating	205,318	228,391	452,813	443,893
General and administrative	67,295	88,019	160,338	164,502
General partners' incentive management fee	21,398	14,154	30,426	25,991
Property management fee	29,091	25,202	55,087	49,673
Total	325,448	358,913	703,331	690,389
NET INCOME	242,897	151,512	397,136	298,629
AGGREGATE INCOME ALLOCATED TO:
General partners	2,429	1,515	3,971	2,986
Limited partners	240,468	149,997	393,165	295,643
TOTAL	$ 242,897	$ 151,512	$ 397,136	$ 298,629
Weighted average limited partnership units outstanding	24,000	24,000	24,000	24,000
NET INCOME ATTRIBUTABLE TO THE PARTNERSHIP PER LIMITED PARTNERSHIP UNIT	10.02	6.25	16.38	12.32

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Properties - Summary of Property and Equipment (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Properties, net
Land	$ 1,714,700	$ 1,714,700
Buildings and improvements	6,476,310	6,456,123
Rental trucks under capital leases	140,093	140,093
Total	8,331,103	8,310,916
Less accumulated depreciation	6,580,530	6,575,864
Properties - net	$ 1,750,573	$ 1,735,052

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Document and Entity Information (USD $)	6 Months Ended
	Jun. 30, 2014
Document And Entity Information
Entity Registrant Name	DSI Realty Income Fund VII
Entity Central Index Key	0000719581
Document Type	10-Q
Document Period End Date	Jun. 30, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	No
Entity Filer Category	Smaller Reporting Company
Entity Public Float	$ 12,000,000
Entity Common Stock, Shares Outstanding	24,000
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2014

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Condensed Statements of Partners' Equity (Unaudited) (USD $)	General Partners	Limited Partners	Total
BALANCE, Beginning at Dec. 31, 2013	$ (89,336)	$ 1,932,803	$ 1,843,467
Net Income Allocation	3,971	393,165	397,136
Distributions	3,086	305,544	308,630
BALANCE, Ending at Jun. 30, 2014	$ (88,451)	$ 2,020,424	$ 1,931,973

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General (Policies)

6 Months Ended

Jun. 30, 2014

Notes to Financial Statements

Nature of Operations

Registrant, DSI Realty Income Fund VII (the "Partnership") is a publicly-held limited partnership organized under the California Uniform Limited Partnership Act pursuant to a Certificate and Agreement of Limited Partnership (hereinafter referred to as "Agreement") dated August 1, 1983. The General Partners are DSI Properties, Inc., a California corporation, and RJC Capital Management, LLC and JWC Capital Management, LLC.

DSI Properties, Inc. is an affiliate of Diversified Securities, Inc., a wholly-owned subsidiary of DSI Financial, Inc. The General Partners provide similar services to other partnerships. Through its public offering of Limited Partnership Units, the Partnership sold twenty-four thousand (24,000) units of limited partnership interests, aggregating Twelve Million Dollars ($12,000,000). The General Partners have retained a one percent (1%) interest in all profits, losses and distributions (subject to certain conditions), without making any capital contribution to the Partnership. The General Partners are not required to make any capital contributions to the Partnership in the future.

The Partnership owns mini-storage facilities located in Chico, Fairfield, La Verne, and Riverside, California and Littleton, Colorado. All facilities were purchased from Dahn Corporation ("Dahn"). Dahn is not affiliated with the Partnership. Dahn is affiliated with other partnerships in which DSI Properties, Inc. is a general partner.

Comparability to Prior Year Data

The accompanying unaudited interim financial statements have been prepared by the Partnership's management in accordance with accounting principles generally accepted in the United States of America ("GAAP") and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the unaudited interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited interim financial statements reflect all adjustments of a normal and recurring nature which are considered necessary for a fair presentation of the results for the interim periods presented. However, the results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. These unaudited interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Partnership's annual report on Form 10-K for the year ended December 31, 2013.

Comprehensive Income

Comprehensive income - The Partnership has adopted Accounting Standards Update 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. For the three months ended March 31, 2014 and 2013 comprehensive income equaled net income, as the Partnership had no other comprehensive income. As of March 31, 2014 and December 31, 2013, accumulated other comprehensive income was $0.

Fair Value Disclosures

Fair value of financial instruments - ASC 825-10 (formerly SFAS 107, “Disclosures about Fair Value of Financial Instruments”) defines financial instruments and requires disclosure of the fair value of financial instruments held by the Partnership. The Partnership considers the carrying amount of cash, accounts receivable, other receivables, accounts payable and accrued liabilities, to approximate their fair values because of the short period of time between the origination of such instruments and their expected realization.

Revenue Recognition

Revenue recognition - Revenue is recognized using the accrual method based on contractual amounts provided for in the lease agreements, which approximates recognition on a straight-line basis. The term of the lease agreements is usually less than one year.

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Net Income Per Limited Partnsership Unit

6 Months Ended

Jun. 30, 2014

Notes to Financial Statements

Net Income Per Limited Partnsership Unit

Net income per limited partnership unit is calculated by dividing the net income allocated to the limited partners by the number of limited partnership units outstanding during the period.

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General (Details Narrative) (USD $)	6 Months Ended
	Jun. 30, 2014
Notes to Financial Statements
Public Float	$ 12,000,000
General Partner Percent Ownership Percentage	1.00%

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Properties (Tables)

6 Months Ended

Jun. 30, 2014

Notes to Financial Statements

Summary of Property and Equipment

	June 30, 2014	December 31, 2013
Land	$ 1,714,700	$ 1,714,700
Buildings and improvements	6,476,310	6,456,123
Rental trucks under capital leases	140,093	140,093
Total	8,331,103	8,310,916
Less accumulated depreciation	(6,580,530)	(6,575,864)
Properties - net	$ 1,750,573	$1,735,052

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Allocations of Profits and Losses (Details Narrative)	6 Months Ended
	Jun. 30, 2014
Notes to Financial Statements
General Partner Percentage	1.00%
General Partner Incentive Fee	.09

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Related Party Transactions (Details Narrative) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Notes to Financial Statements
Management Fee	$ 29,091	$ 25,202	$ 55,087	$ 49,673
Payable To Dahn	9,770		9,770		7,739
Tax Fee to General Partner			$ 22,956

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Condensed Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income attributable to the Partnership	$ 397,136	$ 298,629
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	4,667	6,330
Changes in assets and liabilities:
Other assets	(60,397)	(24,340)
Incentive management fee payable to General Partners	(11,557)	(5,524)
Property management fees payable	2,031	285
Customer deposits and other liabilities	(9,308)	(73,445)
Net cash provided by operating activities	322,572	201,935
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property	(20,187)	0
Net cash used in investing activities	(20,187)	0
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners	(308,630)	(308,630)
Net cash used in financing activities	(308,630)	(308,630)
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS	(6,245)	(106,695)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	348,465	412,303
CASH AND CASH EQUIVALENTS AT END OF PERIOD	342,220	305,608
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	0	0
NON CASH INVESTING AND FINANCING ACTIVITIES:
Distributions due partners included in partners' equity	$ 151,515	$ 151,515

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Allocations of Profits and Losses

6 Months Ended

Jun. 30, 2014

Notes to Financial Statements

Allocations of Profits and Losses

Under the Agreement of Limited Partnership, the general partners are to be allocated 1% of the net profits or losses from operations, and the limited partners are to be allocated the balance of the net profits or losses from operations in proportion to their limited partnership interests. The general partners are also entitled to receive a percentage, based on a predetermined formula, of any cash distribution from the sale, other disposition, or refinancing of the project.

In addition, the general partners are entitled to receive an incentive management fee for supervising the operations of the Partnership. The fee is to be paid in an amount equal to 9% per annum of the cash available for distribution on a cumulative basis, calculated as cash generated from operations less capital expenditures.