<PAGE>
DRAFT DATE May 9, 1997
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 March 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _______ to _______
Commission file number 333-14355
Decatur First Bank Group, Inc.
------------------------------------------
(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:
One (1) share of common stock, $5 par value per share, issued and outstanding
as of May 8, 1997. Registrant is currently offering its stock for sale pursuant
to a Registration Statement on Form SB-2, which the SEC declared effective on
December 11, 1996.
Transitional Small Business Disclosure Format (check one): YES NO XX
-- --
<PAGE>
DRAFT DATE May 9, 1997
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.
-2-
<PAGE>
DRAFT DATE May 9, 1997
DECATUR FIRST BANK GROUP, INC.
(A Development Stage Corporation)
Balance Sheet
March 31, 1997
Assets
------
<TABLE>
<CAPTION>
<S> <C>
Cash $ 9,503
Restricted cash 3,514,930
Other assets 33,200
-----------
Current assets 3,557,633
Premises and equipment 173,653
Organization costs 90,369
Deferred offering expenses 47,938
-----------
$ 3,869,593
===========
Liabilities and Stockholder's Equity
------------------------------------
Accounts payable and accrued expenses $ 130,756
Accounts payable - organizers 55,000
Subscribers' deposits 3,514,930
Note payable - line of credit 350,000
-----------
Current liabilities 4,050,686
-----------
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 5
outstanding
Additional paid-in capital 5
Deficit accumulated during the (181,103)
development stage -----------
Total stockholder's equity (181,093)
-----------
$ 3,869,593
===========
</TABLE>
-3-
<PAGE>
DRAFT DATE May 9, 1997
DECATUR FIRST BANK GROUP, INC.
(A Development Stage Corporation)
Statements of Operations
For the Three Months Ended March 31, 1997
and the Period from August 2, 1996 (inception) to March 31, 1997
<TABLE>
<CAPTION>
Three Months Cumulative
Ended Through
March 31, 1997 March 31, 1997
-------------- --------------
<S> <C> <C>
Expenses:
Salaries and employee benefits $ 38,724 103,659
Interest 3,708 6,750
Rent 17,546 36,611
Other operating 14,637 34,083
------ -------
Net loss $ 74,615 181,103
====== =======
Proforma net loss per $ 0.09 0.22
share ====== =======
</TABLE>
-4-
<PAGE>
DRAFT DATE May 9, 1997
DECATUR FIRST BANK GROUP, INC.
(A Development Stage Corporation)
Statements of Cash Flows
For the Three Months Ended March 31, 1997
and the Period from August 2, 1996 (inception) to March 31, 1997
<TABLE>
<CAPTION>
Three Months Cumulative
Ended Through
March 31, 1997 March 31, 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (74,615) (181,103)
Adjustments to reconcile net loss to
net cash provided (used) by
operating activities:
Increase in other assets - (33,200)
Increase in accounts payable and
accrued expenses 100,622 130,756
------- -------
Net cash provided (used) by
operating activities 26,007 (83,547)
------- -------
Cash flows from investing activities:
Purchases of premises and equipment (153,460) (173,653)
Organization costs (13,190) (90,369)
Payments for stock offering expenses (23,789) (47,938)
------- -------
Net cash used by investing
activities (190,439) (311,960)
------- -------
Cash flows from financing activities:
Proceeds from accounts payable -
organizers - 55,000
Proceeds from note payable 150,000 350,000
Proceeds from the sale of organization
share - 10
------- -------
Net cash provided by financing
activities 150,000 405,010
------- -------
Net change in cash and cash equivalents (14,432) 9,503
Cash and cash equivalents at beginning
of period 23,935 -
------- -------
Cash and cash equivalents at end of
period $ 9,503 9,503
======= =======
Supplemental cash flow information:
Cash paid for interest $ 4,940 6,750
======== =======
</TABLE>
Through March 31, 1997 restricted cash increased $3,514,930 as a result of
subscriptions for common stock and corresponding deposits to the escrow acount.
-5-
<PAGE>
DRAFT DATE May 9, 1997
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.
Provided that the application is timely approved and necessary capital is
raised, it is expected that operations will commence in the third quarter
of 1997. The Company has filed an application to become a bank holding
company with the Federal Reserve Bank of Atlanta.
Operations through March 31, 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 plans to raise between $8,100,000 and $12,000,000 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 expect to subscribe for a minimum of approximately $1,647,900 of
the Company's stock.
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 from the
offering; if the offering is not successful, all of these expenses will be
absorbed by the organizers and will not become an obligation of the
Company.
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 quarter ended March 31,
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
the minimum number (810,000) of common shares which could be sold in the
initial public offering, which would be outstanding should the offering be
successful, as prescribed in Staff Accounting Bulletin Topic 1:B.
(3) Restricted Cash
---------------
At March 31, 1997, subscribers' deposits of $3,514,930 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, and 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.
(4) Liquidity and Going Concern Considerations
------------------------------------------
The Company incurred a net loss of $181,103 for the period from August 2,
1996 (inception) to March 31, 1997. At March 31, 1997, liabilities exceeded
assets by $181,093.
At March 31, 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 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 is currently
offering a minimum of 810,000 and a maximum of 1,200,000 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 March 31, 1997 will be redeemed concurrently with the
consummation of the offering. Should subscriptions for the minimum offering
not be obtained, amounts paid by the subscribers with their subscriptions
will be returned and the offer withdrawn.
-6-
<PAGE>
DRAFT DATE May 9, 1997
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.
Through May of 1997, the Company has entered into a sublease agreement with
the current lessor at a rate of $3,200 per month, but from June 1997
through June 2002 the Company has committed to a monthly rental of $4,500.
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
exisiting 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.
-7-
<PAGE>
DRAFT DATE May 9, 1997
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 March 31, 1997, the Company had total assets of $3,869,593. These assets
consisted principally of restricted cash from stock subscriptions of $3,514,930,
organization costs of $90,369, cash of $9,503, premises and equipment of
$173,653, 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 and improvements to the Bank's main office site, for which
the Company plans to spend approximately $510,000 in total improvements to the
current leased structure.
The Company's liabilities at March 31, 1997 were $4,050,686, and consisted
primarily of subscribers' deposits of $3,514,930, advances under a line of
credit from a bank of $350,000, advances from the organizers of $55,000 and
accounts payable and accrued expenses of $130,756. 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 $800,000, and the balance of $450,000 is available to fund
future organization expenses and improvements to be made to the building. The
Company had a stockholder's deficit of $181,093 at March 31, 1997.
The Company had a net loss of $74,615 for the quarter ended March 31, 1997,
and $181,103 cumulatively from Inception through March 31, 1997, or a pro forma
net loss of $.09 per share for the quarter ended March 31, 1997 and $.22 per
share cumulatively since Inception (assuming the sale of the minimum number of
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.
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 an
$800,000 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. In the event the proceeds of the Offering are
insufficient to provide the minimum initial funding needed for regulatory
approval, the proceeds from the Offering will be returned to the investors, the
Offering withdrawn, and the organizers will assume the obligations of the
Company.
-8-
<PAGE>
DRAFT DATE May 9, 1997
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
three months ended March 31, 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
-9-
<PAGE>
DRAFT DATE May 9, 1997
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
-10-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 9,503
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 3,869,593
<DEPOSITS> 0
<SHORT-TERM> 405,000
<LIABILITIES-OTHER> 130,756
<LONG-TERM> 0
0
0
<COMMON> 10
<OTHER-SE> (181,103)
<TOTAL-LIABILITIES-AND-EQUITY> 3,869,593
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 3,708
<INTEREST-INCOME-NET> (3,708)
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 70,907
<INCOME-PRETAX> (74,615)
<INCOME-PRE-EXTRAORDINARY> (74,615)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (74,615)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> 0
<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>
