<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
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Commission file number 333-14355
Decatur First Bank Group, Inc.
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(Exact name of registrant as specified in its charter)
Georgia 58-2254289
- ------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
755 Commerce Drive
Suite 516
Decatur, Georgia 30030
- ------------------------------- ------------------------------------
(Address of principal executive (Zip Code)
offices)
404-373-6548
----------------------
( Telephone Number)
Not Applicable
----------------------
( Former name, former address
and former fiscal year,
if changed since last report)
Check whether the issurer: (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 XX NO
-- --
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
941,544 shares of common stock, $5 par value per share, issued and
outstanding as of July 30, 1997. The registrants' offering of its stock for sale
pursuant to a Registration Statement on form SB-2, which the SEC declared
effective on December 11, 1996, closed on June 30, 1997.
Transitional Small Business Disclosure Format (check one): YES NO XX
-- --
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DECATUR FIRST BANK GROUP, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial statements of Decatur First Bank Group, Inc. (the
"Company") are set forth in the following pages.
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<PAGE>
DECATUR FIRST BANK GROUP, INC.
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET
JUNE 30, 1997
Assets
------
<TABLE>
<S> <C>
Cash $ 82,409
Restricted cash 8,324,940
Other assets 4,500
----------
Current assets 8,411,849
Premises and equipment 566,582
Organization costs 83,313
Deferred offering expenses 37,249
----------
$9,098,993
==========
Liabilities and Stockholder's Equity
------------------------------------
Accounts payable and accrued expenses $ 116,598
Accounts payable - organizers 55,000
Subscribers' deposits 8,324,940
Note payable - line of credit 875,000
----------
Current liabilities 9,371,538
Commitments
Stockholder's equity:
Preferred stock, no par value; 2,000,000 shares
authorized; no shares issued and outstanding -
Common stock, par value $5 per share; 10,000,000
shares authorized; 1 share issued and outstanding 5
Additional paid-in capital 5
Deficit accumulated during the development stage (272,555)
----------
Total stockholder's equity (272,545)
----------
$9,098,993
==========
</TABLE>
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<PAGE>
DECATUR FIRST BANK GROUP, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
AND THE PERIOD FROM AUGUST 2, 1996 (INCEPTION) TO JUNE 30, 1997
<TABLE>
<CAPTION>
Six Months Cumulative
Ended Through
June 30, 1997 June 30, 1997
------------------- ---------------------
<S> <C> <C>
Interest income $ 42,356 42,356
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Expenses:
Salaries and employee benefits 93,024 157,959
Interest 15,130 18,172
Rent 32,119 51,184
Other operating 68,150 87,596
Total expenses 208,423 314,911
-------- -------
Net loss $166,067 272,555
======== =======
Proforma net loss per share $ 0.18 0.29
======== =======
</TABLE>
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<PAGE>
DECATUR FIRST BANK GROUP, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
AND THE PERIOD FROM AUGUST 2, 1996 (INCEPTION) TO JUNE 30, 1997
<TABLE>
<CAPTION>
Six Months Cumulative
Ended Through
June 30, 1997 June 30, 1997
--------------------- -----------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(166,067) (272,555)
Adjustments to reconcile net loss to net cash used by
operating activities:
Change in other assets 28,700 (4,500)
Change in accounts payable and accrued expenses 86,464 116,598
--------- --------
Net cash used by operating activities (50,903) (160,457)
--------- --------
Cash flows from investing activities:
Purchases of premises and equipment (546,389) (566,582)
Organization costs (6,134) (83,313)
Payments for stock offering expenses (13,100) (37,249)
--------- --------
Net cash used by investing activities (565,623) (687,144)
--------- --------
Cash flows from financing activities:
Proceeds from accounts payable - organizers - 55,000
Proceeds from note payable 675,000 875,000
Proceeds from the sale of organization share - 10
--------- --------
Net cash provided by financing activities 675,000 930,010
--------- --------
Net change in cash and cash equivalents 58,474 82,409
Cash and cash equivalents at beginning of period 23,935 -
--------- --------
Cash and cash equivalents at end of period $ 82,409 82,409
========= ========
Supplemental cash flow information:
Cash paid for interest $ 15,130 18,172
========= ========
</TABLE>
Through June 30, 1997 restricted cash increased $8,324,940 as a result of
subscriptions for common stock and corresponding deposits to the escrow acount.
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<PAGE>
DECATUR FIRST BANK GROUP, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Decatur First Bank Group, Inc. (the Company) was incorporated for the
purpose of becoming a bank holding company. The Company intends to acquire
100% of the outstanding common stock of Decatur First Bank (the Bank),
which will operate in the Decatur, Georgia area. The organizers of the Bank
filed a joint application to charter the Bank with the Georgia Department
of Banking and Finance and the Federal Deposit Insurance Corporation. The
Bank has received the required regulatory approvals and anticipates
receiving a permit to begin business from the Department of Banking in the
third quarter of 1997. It is expected that operations will commence shortly
after the Bank receives the permit to begin business. The Company has been
approved by the Federal Reserve Bank of Atlanta as a bank holding company.
Operations through June 30, 1997 relate primarily to expenditures by the
organizers for incorporating and organizing the Company. All expenditures
by the organizers are considered expenditures of the Company.
The Company raised $9,415,440 through an offering of its $5 par value
common stock at $10 per share, of which at least $8,000,000 will be used to
capitalize the Bank. The organizers and directors subscribed for
approximately $1,647,900 of the Company's stock. The offering closed on
June 30, 1997.
Upon chartering of the Bank and approval of the Company as a bank holding
company, the Company and its Bank subsidiary will assume certain
obligations from the organizers, including certain organization costs and
offering expenses. Upon the successful completion of the sale of common
stock, the organizers will be reimbursed from the proceeds of the offering.
The interim financial statements included herein are unaudited but reflect
all adjustments which, in the opinion of management, are necessary for a
fair presentation of the financial position and results of operations for
the interim period presented. All such adjustments are of a normal
recurring nature. The results of operations for the six months ended June
30, 1997 are not necessarily indicative of the results of a full year's
operations.
(2) PROFORMA NET LOSS PER COMMON SHARE
Proforma net loss per common share is calculated by dividing net loss by
941,544 shares, which is the number of common shares which have been sold
in the initial public offering that will be outstanding, as prescribed in
Staff Accounting Bulletin Topic 1:B.
(3) RESTRICTED CASH
At June 30, 1997, subscribers' deposits of $8,324,940 were held in escrow.
The escrow agreement prohibits the release of funds until subscriptions of
$8,100,000 have been received, the Company has obtained regulatory approval
to acquire the stock of the Bank and thereafter become a bank holding
company. The Bank has received preliminary approval for its application for
a charter from the regulatory authorities. All subscriptions will be
returned in full if these conditions are not met. The Bank broke escrow on
July 11, 1997.
(4) LIQUIDITY AND GOING CONCERN CONSIDERATIONS
The Company incurred a net loss of $272,555 for the period from August 2,
1996 (inception) to June 30, 1997. At June 30, 1997, liabilities exceeded
assets by $272,545.
At June 30, 1997, the Company is funded by advances from the organizers and
from a line of credit from a bank. Management believes that the current
level of expenditures is well within the financial capabilities of the
organizers and funding is adequate to meet existing obligations and fund
current operations, but obtaining final regulatory approvals and commencing
banking operations is dependent on successfully completing the stock
offering.
To provide permanent funding for its operation, the Company has sold
941,544 shares of its $5 par value common stock, at $10 per share in an
initial public offering. Costs related to the registration of the Bank's
common stock will be paid from the gross proceeds of the offering. Shares
issued which are outstanding at June 30, 1997 will be redeemed concurrently
with the consummation of the offering.
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<PAGE>
DECATUR FIRST BANK GROUP, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(5) COMMITMENTS
On September 9, 1996 the Company entered into an operating lease agreement
for space which will serve as the main office of the Company and the Bank.
The Company has entered into a sublease agreement with the current lessor
at a rate of $3,200 per month through May of 1997, and $4,500 per month
beginning June 1997. The lease expires June 2002. The lease term also
includes an option to purchase the property at a price of $500,000.
In regards to this lease, certain expenditures for modifications to the
existing structure are anticipated to prepare the building to serve as the
main office of the Company and the Bank. It is management's estimate that
these costs should approximate $510,000.
The Company entered into an employment agreement with its President and
Chief Executive Officer, providing for an initial term of five years
commencing June 1, 1996, and an automatic annual extension subsequent to
that five year period. The agreement provides for a base salary, an
incentive bonus based on five percent of the Company's pre-tax earnings,
and stock options which vest equally over five years at $10 per share equal
to five percent of the number of shares sold in the initial public
offering. Additionally, the Company is to maintain a $1,000,000 key man
life insurance policy, with $500,000 payable to the Company and $500,000
payable to the President's family. The agreement further provides for other
perquisites, and subjects the President to certain non-compete
restrictions.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company was organized on August 2, 1996 (the "Inception"). Since the
Inception, the Company's principal activities have been related to its
organization, the conducting of its initial public offering, the pursuit of
approvals from the Georgia Department of Banking and Finance (the "DBF") and
Federal Deposit Insurance Corporation (the "FDIC") of its application to charter
the Bank, and the pursuit of approvals from the Federal Reserve Board for the
Company to acquire control of the Bank.
At June 30, 1997, the Company had total assets of $9,098,993. These
assets consisted principally of restricted cash from stock subscriptions of
$8,324,940, organization costs of $83,313, cash of $82,409, premises and
equipment of $566,582, and other deferred charges. The organization costs relate
to the organization of the Company and the Bank and have been capitalized and
will be amortized over five years. Premises and equipment consists primarily of
architectural fees, improvements to the Bank's main office site, and certain
equipment purchases.
The Company's liabilities at June 30, 1997 were $9,371,538, and
consisted primarily of subscribers' deposits of $8,324,940, advances under a
line of credit from a bank of $875,000, advances from the organizers of $55,000
and accounts payable and accrued expenses of $116,598. The advances are non-
interest bearing loans and are not callable by the organizers but are to be
repaid from the proceeds of the Offering. The Company's line of credit with The
Bankers Bank is in the amount of $900,000, with the balance available to fund
future organization expenses and improvements to be made to the building. The
Company had a stockholder's deficit of $272,545 at June 30, 1997.
The Company had a net loss of $166,067 for the six months ended June 30,
1997, and $272,555 cumulatively from Inception through June 30, 1997, or a pro
forma net loss of $.18 per share for the six months ended June 30, 1997 and $.29
per share cumulatively since Inception (assuming the sale of the 941,544 shares
in the offering were outstanding during the entire period). This loss resulted
from expenses incurred in connection with activities related to the organization
of the Company and the Bank. These activities included (without limitation) the
preparation and filing of an application with the DBF and the FDIC to charter
the Bank, the preparation of an application with the Federal Reserve Board for
approval of the Company to acquire the Bank, responding to questions and
providing additional information to the DBF, the FDIC and the Federal Reserve
Board in connection with the application process, preparation of a Prospectus
and filing a Registration Statement with the Securities and Exchange Commission,
the selling of the Company's common stock, meetings and discussions among
various organizers regarding application and SEC filing information, target
markets and capitalization issues, hiring qualified personnel to work for the
Bank, conducting public relation activities on behalf of the Bank, developing
prospective business contacts for the Bank and the Company, and taking other
actions necessary for a successful bank opening. Because the Company was in the
organization stage, it had no operations from which to generate revenues other
than the interest earned on the subscribers' deposits.
A minimum of $8,000,000 of the proceeds of the Offering will be used to
capitalize the Bank and the remainder will be used to pay organization expenses
of the Company and provide working capital, including additional capital for
investment in the Bank, if needed. The Company believes this amount will be
sufficient to fund the activities of the Bank in its initial stages of
operations, and that the Bank will generate sufficient income from operations to
fund its activities on an ongoing basis. For purposes of its charter application
with the DBF, the organizers estimated the Company's deficit when the Bank opens
to be approximately $196,000, although the actual deficit may be significantly
higher or lower. The Company believes that income from the operations of the
Bank will be sufficient to fund the activities of the Company on an ongoing
basis; however, there can be no assurance that either the Bank or the Company
will achieve any particular level of profitability. The Company has obtained a
$900,000 line of credit guaranteed by the organizers to provide the necessary
funding to cover costs and expenses the Company is expected to incur prior to
the completion of the Offering.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company is a
party or of which any of their property is the subject.
ITEM 2. CHANGES IN SECURITIES
(a) Not applicable
(b) Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to security holders for a vote during the
six months ended June 30, 1997.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
None
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DECATUR FIRST BANK GROUP, INC.
By: /s/ Judy B. Turner
-------------------------------
Judy B. Turner
President, Chief Executive Officer
and Principal Financial Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 82,409
<INT-BEARING-DEPOSITS> 8,324,940
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 9,098,993
<DEPOSITS> 0
<SHORT-TERM> 875,000
<LIABILITIES-OTHER> 8,496,538
<LONG-TERM> 0
0
0
<COMMON> 10
<OTHER-SE> (272,555)
<TOTAL-LIABILITIES-AND-EQUITY> 9,098,993
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 42,356
<INTEREST-TOTAL> 42,356
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 15,130
<INTEREST-INCOME-NET> 27,226
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 193,293
<INCOME-PRETAX> (166,067)
<INCOME-PRE-EXTRAORDINARY> (166,067)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (166,067)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> (.18)
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
