<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM 10-KSB
ANNUAL REPORT
--------------------
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 COMMISSION FILE NO. 000-21383
APPALACHIAN BANCSHARES, INC.
(Name of Small Business Issuer in Its Charter)
GEORGIA 58-2242407
(State of Incorporation) (I.R.S. Employer Identification Number)
315 INDUSTRIAL BOULEVARD 30540
ELLIJAY, GEORGIA (Zip Code)
(Address of Principal Executive Offices)
(706) 276-8000
(Issuer's Telephone Number, Including Area Code)
--------------------
SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:
TITLE OF EACH CLASS NAME OF EXCHANGE ON WHICH REGISTERED
------------------- ------------------------------------
None N/A
SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:
Common Stock, $5.00 par value per share
Check whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
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 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 the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
The issuer's revenues for its most recent fiscal year were $9,527,799.
There is no established trading market for the registrant's capital
stock. The aggregate market value of the stock held by non-affiliates of the
registrant at June 30, 1998 was $10,748,850, based on a per share price of
$12.50 (after giving effect to a 2 for 1 stock split), which is the price of the
last trade of which management is aware as of such date. Although directors and
executive officers of the registrant were assumed to be "affiliates" of the
registrant for purposes of this calculation, the classification is not to be
interpreted as an admission of such status.
At June 30, 1998, there were 1,149,220 shares of the registrant's
Common Stock outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ]
No [X]
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<PAGE> 2
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-KSB for
the year ended December 31, 1997, as set forth below:
Item 13(a) of the above-referenced Form 10-KSB is amended to include as
Exhibit 99 the information required by Form 11-K with respect to the
Appalachian Bancshares, Inc. Section 401(k) Profit Sharing Plan (the
"Plan"), which exhibit is filed as part of the above-referenced Form
10-KSB in lieu of a separate filing of an annual report on Form 11-K
for the Plan for the fiscal year ended December 31, 1997, in accordance
with Rule 15d-21 under the Securities Exchange Act of 1934.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused Amendment No. 1 to this
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
APPALACHIAN BANCSHARES, INC.
By: /s/ Tracy R. Newton
------------------------------
Tracy R. Newton, President
Date: July 13, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
Amendment No. 1 to this Report has been signed below by the following persons on
behalf of the Registrant in the capacities and on the dates indicated.
<TABLE>
<S> <C>
/s/ Tracy R. Newton Date: July 13, 1998
- -----------------------------------------------------
Tracy R. Newton, President, Chief
Executive Officer and Director
[Principal Executive Officer]
/s/ Kent W. Sanford Date: July 13, 1998
- -----------------------------------------------------
Kent W. Sanford, Executive Vice President,
Chief Financial Officer and Chief Operating Officer
[Principal Financial and Accounting Officer]
- -----------------------------------------------------
Alan S. Dover, Director
- -----------------------------------------------------
Charles A. Edmondson, Director
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
/s/ Roger E. Futch Date: July 13, 1998
- ------------------------------------------------------
Roger E. Futch, Director
- ------------------------------------------------------
Joseph C. Hensley, Director
/s/ Frank E. Jones Date: July 13, 1998
- ------------------------------------------------------
Frank E. Jones, Director
/s/ J. Ronald Knight Date: July 13, 1998
- ------------------------------------------------------
J. Ronald Knight, Director
/s/ P. Joe Sisson Date: July 13, 1998
- ------------------------------------------------------
P. Joe Sisson, Director
/s/ Kenneth D. Warren Date: July 13, 1998
- ------------------------------------------------------
Kenneth D. Warren, Director
</TABLE>
<PAGE> 4
AMENDMENT TO
EXHIBIT 99
Information Required by Form 11-K with Respect to the
Appalachian Bancshares, Inc. Section 401(k) Profit Sharing Plan
(a) The following financial statements for the Appalachian Bancshares, Inc.
Section 401(k) Profit Sharing Plan for the fiscal year ended December
31, 1997:
Independent Auditors' Report
Statements of Net Assets Available for Benefits as of
December 31, 1997 and 1996;
Statements of Changes in Net Assets
Available for Benefits for the Years
ended December 31, 1997, 1996 and 1995;
Notes to Financial Statements;
Schedule of Assets held for Investment; and
Schedule of Reportable Transactions.
(b) Exhibits:
Consent of Independent Certified Public Accountants
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Administrative Committee of the Appalachian Bancshares, Inc.
Section 401(k) Profit Sharing Plan has caused this annual report to be signed on
its behalf by the undersigned, thereunto duly authorized.
APPALACHIAN BANCSHARES, INC.
SECTION 401(K) PROFIT SHARING PLAN
By: /s/ Kent W. Sanford
---------------------------------------
Kent W. Sanford
Executive Vice President, Chief
Financial Officer and Member
of Administrative Committee
Date: July 13, 1998
<PAGE> 5
APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
<PAGE> 6
APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
CONTENTS
<TABLE>
<S> <C>
Independent Auditors' Report 2
Financial Statements
Statements of net assets available for benefits 3
Statements of changes in net assets available for benefits 4
Notes to financial statements 5-8
Supplemental Schedules
"Item 27a - Schedule of assets held for investment" 10
"Item 27d - Schedule of reportable transactions" 11
</TABLE>
<PAGE> 7
[BRICKER & MELTON, P.A. LETTERHEAD]
CERTIFIED PUBLIC ACCOUNTANTS
3700 CRESTWOOD PARKWAY
SUITE 590
DULUTH, GEORGIA 30136
(770) 717-1175
INDEPENDENT AUDITORS' REPORT
Appalachian Bancshares, Inc.
Section 401(k) Profit Sharing Plan
Ellijay, Georgia
We have audited the accompanying statement of net assets available for benefits
of Appalachian Bancshares, Inc. Section 401(k) Profit Sharing Plan (the "Plan")
as of December 31, 1997, and the related statement of changes in net assets
available for benefits for the year ended December 31, 1997. These financial
statements are the responsibility of the Plan'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.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997, and the changes in net assets available for benefits for the
year ended December 31, 1997, in conformity with generally accepted accounting
principles.
Our audit was performed for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedules of the Plan are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements, but are supplementary information required by
the Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employment Retirement Income Security Act of 1974. The supplemental
schedules have been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Bricker & Melton, P.A.
--------------------------
BRICKER & MELTON, P.A.
Duluth, Georgia
June 20, 1998
FAX (770) 717-8354
MEMBERS: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
SEC PRACTICE SECTION
2
<PAGE> 8
APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
============================================================================================
December 31, 1997 1996
(unaudited)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
SSETS
Investments, at fair value:
Common stocks:
Appalachian Bancshares, Inc. common stock* $643,725 $ --
Mutual funds 110,712 438,101
Cash and money market 42,601 --
- --------------------------------------------------------------------------------------------
TOTAL ASSETS 797,038 438,101
LIABILITIES -- --
- --------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $797,038 $438,101
============================================================================================
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
*Party-in-Interest
3
<PAGE> 9
APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
=========================================================================================================================
Years ended December 31, 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <S>
ADDITIONS TO NET ASSETS ATTRIBUTED TO
Investment income:
Net appreciation in fair value of investments:
Common stocks:
Appalachian Bancshares, Inc.* $158,717 $ -- $ --
Mutual funds 15,230 23,727 1,328
Interest 3,028 743 92
Contributions:
Employer 101,939 36,694 --
Employee 57,565 46,888 29,079
Employee rollover 30,690 303,096 --
- -------------------------------------------------------------------------------------------------------------------------
Total additions 367,169 411,148 30,499
- -------------------------------------------------------------------------------------------------------------------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO
Benefits paid to participants 6,214 3,546 --
Other distributions to participants 2,018 -- --
- -------------------------------------------------------------------------------------------------------------------------
Total deductions 8,232 3,546 --
- -------------------------------------------------------------------------------------------------------------------------
NET INCREASE 358,937 407,602 30,499
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year 438,101 30,499 --
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS, end of year $797,038 $438,101 $30,499
=========================================================================================================================
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
*Party-in-Interest
4
<PAGE> 10
APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. DESCRIPTION The following brief description of the Appalachian
OF PLAN Bancshares, Inc. Section 401(k) Profit Sharing Plan
(the "Plan") provides only general information.
Participants should refer to the Plan agreement for a
more complete description of the Plan's provisions.
a. General - The Gilmer County Bank's Board of
Directors authorized the adoption of the
Georgia Bankers Association's Master Section
401(k) Profit Sharing Plan and Trust
Adoption Agreement as the Gilmer County
Bank's 401(k) plan effective January 1,
1995. The Gilmer County Bank Section 401(k)
Profit Sharing Plan was amended on April 22,
1997. Appalachian Bancshares, Inc. became
the adopting company and sponsor of the
Plan, entitled "Appalachian Bancshares, Inc.
Section 401(k) Profit Sharing Plan." The
Georgia Bankers Association administers the
trust and provides actuarial services to the
Plan through third-party contracts.
SouthTrust Asset Management Company is the
trustee of the Plan's assets. This Plan is a
defined contribution plan covering all
full-time employees of Appalachian
Bancshares, Inc. (the "Company") who have
one year of service and are age twenty-one
or older. It is subject to the provisions of
the Employee Retirement Income Security Act
of 1974 ("ERISA").
b. Contributions - Each year, participants may
contribute up to 16 percent of pretax annual
compensation as defined in the Plan.
Participants may also contribute amounts
representing distributions from other
qualified defined benefit or contribution
plans. The Company contributes 50 percent of
the first 6 percent of base compensation
that a participant contributes to the Plan.
Additional amounts may be contributed at the
option of the Company's board of directors.
Employer contributions are invested in
Appalachian Bancshares, Inc. common stock.
Contributions are also subject to certain
other limitations.
c. Participant Accounts - Each participant's
account is credited with the participant's
contribution and allocations of (a) the
Company's contribution and (b) Plan
earnings. Allocations are based on
participant earnings, as defined. The
benefit to which a participant is entitled
is the benefit that can be provided from the
participant's vested account.
d. Vesting - Participants are immediately
vested in their contributions plus actual
earnings thereon. Vesting in the Company's
matching and discretionary contribution
portion of their account plus actual
earnings thereon is based on the following
schedule:
5
<PAGE> 11
APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
<TABLE>
<CAPTION>
Years of
Credited Percent
Service Vested
---------------------------------------
<S> <C>
Less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
</TABLE>
e. Investment Options - Upon enrollment in the
Plan, a participant may direct employee
contributions in any of six investment
options.
(1) Current Income - This portfolio
consists primarily of short- and
intermediate-term bond funds. These
investments generally earn more
income than money market
instruments or certificates of
deposit, but they also experience
greater price volatility.
(2) Capital Preservation - This
portfolio's primary goal is to
safeguard principal, or the amount
of money invested. To do so, it
invests primarily in government and
corporate bond funds for income
with relative stability in the
price of fund shares. This
portfolio also contains a small
stock component which provides some
potential for growth.
(3) Moderate Growth - This portfolio
consists of a balanced mix of stock
and bond funds for a
well-diversified approach in
seeking moderate growth of its
assets. The strong commitment to
bond funds provides some current
income potential and helps
stabilize the portfolio from large
swings in value.
(4) Wealth Building - This portfolio
invests in a diversified mix of
stock and bond funds in an attempt
to build wealth and protect against
inflation over the long run.
(5) Aggressive Appreciation - This
portfolio invests exclusively in
stock funds. Stocks have more
frequent price changes than other
securities and, along with the
opportunity for significant gains,
the highest degree of risk.
6
<PAGE> 12
APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
(6) Appalachian Bancshares, Inc. Common
Stock - This consists of investment
in common stock of the Company, a
party in interest.
Participants may change their investment
options semiannually.
f. Payment of Benefits - Upon termination of
service due to death, disability or
retirement, a participant may elect to
receive a lump sum amount equal to the value
of the participant's vested interest in his
or her account, or annual installments over
a period elected by the participant. For
termination of service due to other reasons,
a participant may receive the value of the
vested interest in his or her account as a
lump-sum distribution.
g. Forfeitures - Forfeitures shall be allocated
to eligible participants' accounts pursuant
to the master plan.
2. SUMMARY OF BASIS OF ACCOUNTING
ACCOUNTING POLICIES
The financial statements of the Plan are prepared
under the accrual method of accounting.
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 the reported amounts of revenues and expenses
during the reporting period. Actual results could
differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value.
Shares of registered investment companies are valued
at quoted market prices which represent the net asset
value of shares held by the Plan at year-end. The
Company's stock is valued at its most recent market
price, as determined by a third-party valuation.
Purchases and sales of securities are recorded on a
trade-date basis. Interest income is recorded on the
accrual basis. Dividends are recorded on the
ex-dividend date.
7
<PAGE> 13
APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
PAYMENTS OF BENEFITS
Benefit distributions to participants are recorded
when paid.
3. INVESTMENTS Investment activity is summarized as follows:
<TABLE>
<CAPTION>
Reliance Reliance Reliance Reliance
Trust Trust Trust Trust Appalachian
Company Company Company Company Bancshares,
Current Moderate Wealth Aggressive Inc.
Income Growth Building Appreciation Common
Fund Fund Fund Fund Stock* Total
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Market value, $ 20,470 $ 108,388 $ 305,346 $ 3,897 $ -- $ 438,101
December 31, 1996
Net investment
income, unrealized
Gains and losses,
forfeitures 693 5,575 11,250 132 158,478 176,128
Contributions,
net of withdrawals (175) 317 42,338 880 96,848 140,208
Interfund transfers (20,102) (100,652) (262,898) 4,747 388,399 --
--------------------------------------------------------------------------------------------------------
Market value,
December 31, 1997 $ 886 $ 13,628 $ 96,036 $ 162 $643,725 $ 754,437
========================================================================================================
</TABLE>
*Party-in-Interest
4. PLAN TERMINATION Although it has not expressed any intent to do so,
PROVISIONS the Company has the right under the Plan to
discontinue its contributions at any time and to
terminate the Plan subject to the provisions of
ERISA. In the event of Plan termination, participants
become 100 percent vested in their accounts.
5. TAX STATUS The Internal Revenue Service has determined and
informed the Company by a letter dated August 27,
1996, that the Plan and related trust are designed in
accordance with applicable sections of the Internal
Revenue Code (IRC). The Plan has been amended since
receiving the determination letter. However, the Plan
administrator and the Plan's tax counsel believe that
the Plan is designed and is currently being operated
in compliance with the applicable requirements of the
IRC.
8
<PAGE> 14
SUPPLEMENTAL SCHEDULES
9
<PAGE> 15
APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
"ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT"
DECEMBER 31, 1997
<TABLE>
<CAPTION>
==========================================================================================================================
(b) (e)
Identity of (c) (d) Current
(a) Issuer Description of Investment Cost Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reliance Trust 7.16 shares of Reliance Trust Company
Company Current Income Fund $ 622 $ 886
Reliance Trust 91.02 shares of Reliance Trust Company
Company Moderate Growth Fund 12,263 13,628
Reliance Trust 597.12 shares of Reliance Trust Company
Company Wealth Building Fund 92,790 96,036
Reliance Trust .94 shares of Reliance Trust Company
Company Aggressive Appreciation 127 162
* Appalachian 28,610 shares of Appalachian Bancshares,
Bancshares, Inc. Inc. common stock
Common Stock 485,860 643,725
- -------------------------------------------------------------------------------------------------------------------------
$ 591,662 $ 754,437
==========================================================================================================================
</TABLE>
The above information has been certified by the Trustee as being complete and
accurate.
*Party-in-interest
10
<PAGE> 16
APPALACHIAN BANCSHARES, INC.
SECTION 401(K)
PROFIT SHARING PLAN
"ITEM 27B - SCHEDULE OF REPORTABLE TRANSACTIONS"
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
==================================================================================================================================
(h) (i)
(a) (c) (d) (g) Value at Net
Identity of (b) Purchase Selling Cost of Transaction Gain
Issuer Description of Asset Price Price Asset Date or (Loss)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Reliance Purchases and sales of
Trust GBA Moderate Growth
Company Portfolio $ 77,371 $ 84,597 $ 83,017 $ 84,597 $1,580
Reliance Purchases and sales of
Trust GBA Wealth Building
Company Portfolio 266,667 291,795 285,937 291,795 5,858
Reliance Purchases and sales of
Trust GBA Moderate Growth
Company Portfolio 13,799 14,497 14,381 14,497 116
Appalachian Purchase of Appalachian
Bancshares, Bancshares, Inc.
Inc.* common stock 485,860 -- 485,860 485,860 --
==================================================================================================================================
</TABLE>
The above investment activity information has been certified by the Trustee as
being complete and accurate.
*Party-in-Interest
11
<PAGE> 17
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Appalachian
Bancshares, Inc. Annual Report on Form 10-KSB of our report dated June 20, 1998
with respect to the consolidated financial statements and schedules of the
Appalachian Bancshares, Inc. Section 401(k) Profit Sharing Plan.
We also consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 333-27127) pertaining to the Appalachian Bancshares,
Inc. 1997 Directors' Non-Qualified Stock Option Plan, 1997 Employee Stock
Incentive Plan and Section 401(k) Profit Sharing Plan, of our report dated June
20, 1998, with respect to the consolidated financial statements and schedules of
the Appalachian Bancshares, Inc. Section 401(k) Profit Sharing Plan included in
this Amendment No. 1 to the Appalachian Bancshares, Inc. Annual Report on Form
10-KSB for the year ended December 31, 1997.
/s/ Bricker & Melton, P.A.
--------------------------
BRICKER & MELTON, P.A.
Duluth, Georgia
July 10, 1998
