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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB
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ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
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COMMISSION FILE NO. 333-67107
HEARTLAND BANCSHARES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
(I.R.S. EMPLOYER IDENTIFICATION NO. 65-0854929)
325 CENTRAL AVENUE
LAKE PLACID, FLORIDA 33852
TELEPHONE: (941) 465-0472
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Securities registered under Section 12(b) of the Securities Exchange Act: None
Securities registered under Section 12(g) of the Securities Exchange Act: None
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Indicate by check mark whether the registrant (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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not 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 of
this Form 10-KSB. X
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Revenue for the fiscal year ended December 31, 1998: $0
As of April 19, 1999, no shares of the common equity of the Registrant were
held by nonaffiliates.registrant. For purposes of this response, officers,
directors and holders of 5% or more of the registrant's common stock are
considered affiliates of the registrant at that date.
As of April 19, 1999, 14,500 shares of the registrant's common stock were
outstanding.
Transitional Small Business Disclosure Format (check one)
Yes No X
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Special Financial Report:
This Report contains only the financial statements
of the Registrant for its fiscal year ended December 31, 1998.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Auditors' Report F-2
Balance Sheet F-3
Statement of Operations F-4
Statement of Shareholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
</TABLE>
F-1
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INDEPENDENT AUDITORS' REPORT
Board of Directors
Heartland Bancshares, Inc.
Sebring, Florida
We have audited the accompanying balance sheet of Heartland Bancshares,
Inc. (a development stage Company) as of December 31, 1998, and the related
statements of operations, shareholders' equity and cash flows for the period
from inception (August 3, 1998) through December 31, 1998. 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, 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 financial position of Heartland
Bancshares, Inc. as of December 31, 1998, and the results of its operations and
its cash flows for the period from inception (August 3, 1998) through December
31, 1998, in conformity with generally accepted accounting principles.
/s/ Osburn, Henning and Company
OSBURN, HENNING AND COMPANY
Orlando, Florida
January 29, 1999
F-2
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HEARTLAND BANCSHARES, INC.
BALANCE SHEET
December 31, 1998
ASSETS
<TABLE>
<S> <C>
Cash $ 20,879
Land costs 645,775
Loan costs 2,875
Deferred offering costs 4,607
--------
Total Assets $674,136
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable $ 18,680
Note payable 737,875
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Total liabilities 756,555
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Commitments and Contingencies (Note 6)
Shareholders' Equity (Deficit)
Common stock - Par value $.10 per share;
10,000,000 shares authorized; 1,000
shares issued and outstanding 100
Preferred stock - $.01 par value; 1,000,000 shares
authorized; no shares issued or outstanding --
Additional paid-in capital 9,900
Accumulated deficit during development stage (92,419)
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Total Shareholders' Equity (Deficit) (82,419)
--------
Total Liabilities and Shareholders' Equity $674,136
========
</TABLE>
See Notes to Financial Statements.
F-3
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HEARTLAND BANCSHARES, INC.
STATEMENT OF OPERATIONS
Inception Through December 31, 1998
<TABLE>
<S> <C>
INCOME $ --
--------
EXPENSES
Organizational costs:
Consulting 30,154
Legal and professional 32,076
Other organizational expenses 22,460
Interest expense 5,945
Miscellaneous expenses 1,784
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Total expenses 92,419
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Net loss $(92,419)
========
Net loss per share $ (92.42)
========
Average shares outstanding 1,000
========
</TABLE>
See Notes to Financial Statements.
F-4
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HEARTLAND BANCSHARES, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
Deficit
Additional During
Common Paid-in Development
Stock Capital Stage
-------- ---------- -----------
<S> <C> <C> <C>
Beginning balance $ -- $ -- $ --
Issuance of 1,000 shares
of common stock at $10
per share 100 9,900 --
Net loss from inception
(August 3, 1998) through
December 31, 1998 -- -- (92,419)
-------- -------- --------
Balance, December 31, 1998 $ 100 $ 9,900 $(92,419)
======== ======== ========
</TABLE>
See Notes to Financial Statements.
F-5
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HEARTLAND BANCSHARES, INC.
STATEMENT OF CASH FLOWS
Inception Through December 31, 1998
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net loss $(92,419)
Increase in accounts payable 18,680
--------
Net Cash Used In Operating Activities (73,739)
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INVESTING ACTIVITIES
Acquisition of land and land related costs (645,775)
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Net Cash Used In Investing Activities (645,775)
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FINANCING ACTIVITIES
Sale of common stock 10,000
Net proceeds from note payable 735,000
Deferred offering costs (4,607)
Net Cash Provided By Financing Activities 740,393
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Net Increase in Cash 20,879
Beginning Cash --
--------
Ending Cash $ 20,879
========
</TABLE>
See Notes to Financial Statements.
F-6
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HEARTLAND BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATIONAL BACKGROUND AND PROPOSED TRANSACTION
Heartland Bancshares, Inc. (the Company) is a Florida corporation with
headquarters in Sebring, Florida. The Company is a development stage
company formed August 3, 1998, for the purpose of raising up to $6.5
million in equity capital through a common stock offering, and
investing at least $5.6 million of proceeds therefrom in the
capitalization of a proposed banking subsidiary, Heartland National
Bank (Bank). The Bank would be organized as a National banking
institution and is expected to open with headquarters in Sebring and a
branch in Lake Placid, Florida. The Company filed its application for a
national bank charter with the Office of the Comptroller of the
Currency (OCC) on October 6, 1998. Funding during the development stage
has come from organizer loans, sale of common stock to the organizers,
and two lines of credit from an unrelated banking institution. The
Company has not realized any revenue during this initial development
stage.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Organizational Activities
The Company's efforts have been directed exclusively to obtaining the
necessary regulatory approvals for both the Company and the Bank, and
the raising of capital sufficient to meet other organizational
requirements. During this phase, the Company has incurred, or will
incur, costs generally allocable to either organizational costs,
pre-opening expense, or deferred offering costs. In addition, the
Company will acquire, on behalf of the Bank, banking premises and other
capital items necessary for operating the Bank.
Organizational costs are expected to consist principally of the cost
incurred in raising capital, outside consulting and legal fees, and
regulatory application fees requisite to formation of the Company and
the Bank. These costs are charged to expense as incurred.
Pre-opening costs are costs that would ordinarily be expensed, even if
the Company were not a development stage company. Such costs (none of
which have yet been incurred) are expected to consist principally of
salaries, rent, utilities, dues and memberships and other expenses.
These costs will be expensed as incurred.
Certain costs of the Company's pending public offering have been
capitalized as deferred offering costs. These costs will be charged
against additional paid-in capital when the offering is complete.
F-7
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HEARTLAND BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Organizational Activities (Continued)
Capital items are expected to consist of land in Sebring, Florida and a
second parcel in Lake Placid (currently under contract), a building yet
to be constructed, and furnishings and equipment. It is expected the
Company will acquire such items, including the incurrence of debt
therefor, and ultimately transfer such items to the Bank in return for
Bank reimbursement of the Company's costs.
Use of Accounting Estimates
The process of preparing financial statements in conformity with
generally accepted accounting principles requires the use of estimates
and assumptions regarding certain types of assets, liabilities,
revenues and expenses. For the Company, such estimates affect the
amount at which certain assets are carried and the likelihood and
timing of realization of such assets. Such estimates relate to
unsettled transactions and events as of the date of the financial
statements and, accordingly, upon settlement it is possible that actual
amounts will differ from currently estimated amounts.
Income Taxes
The Company and the Bank (when formed) will use the liability method of
accounting for deferred income tax. Under this method, deferred income
taxes reflect the net tax effects of temporary differences between the
carrying amount of assets and liabilities for financial reporting
purposes, and the amounts used for income tax purposes. Deferred tax
assets and liabilities are reflected at currently existing tax rates,
and any net deferred tax asset is evaluated as to its realization
likelihood through a valuation allowance. For the Company, no current
tax is due in view of the absence of taxable income, and the net
deferred tax asset has been fully reserved by a valuation allowance.
Cash Flows
The Company has paid interest of $5,073 during the development stage
period. No income taxes have been paid.
F-8
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HEARTLAND BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net Loss Per Share
The net loss per share has been computed considering the average number
of common shares outstanding during the period. There were no dilutive
securities as of December 31, 1998.
NOTE 3 - LINES OF CREDIT ARRANGEMENT
The Company has both a $300,000 and a $2,000,000 line of credit with a
bank to be used, respectively, towards the organizational process and
to acquire the land and construct the facilities to be used by the
Bank. The lines bear interest at LIBOR plus 1.7% and require payment of
interest monthly and principal at maturity, August 25, 1999. The lines
are guaranteed by the Company's organizers. The balances outstanding
under these lines are $112,875 and $625,000, respectively, at December
31, 1998.
NOTE 4 - DIVIDEND RESTRICTIONS
The ability of the Company to pay dividends to its shareholders is
dependent upon the ultimate profitability of the Bank and, in turn, the
Bank's ability to pay dividends to its shareholder (the Company). The
payment of dividends by a national bank is subject to regulations of
the Comptroller of the Currency which require, among other things, that
dividends be paid only from net profits, subject to certain
limitations, adjustments and other restrictions. Accordingly, there can
be no assurance that either the Bank or the Company will pay dividends
in the foreseeable future, if ever.
F-9
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HEARTLAND BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - EMPLOYMENT CONTRACT AND STOCK OPTION PLAN
The Company has entered into a five-year employment agreement with its
CEO to pay an executive salary commencing with the date the Bank
receives preliminary approval. This agreement also grants the CEO
options to acquire up to 3,000 shares per year, at $10 per share, for
each of the five years after the Bank opens. Each 3,000 option grant
will vest evenly over a five year period following the date of grant,
and expire ten years after the grant date if not exercised. The
organizers plan to establish, subject to certain regulatory and
shareholder approvals, an Incentive Stock Option plan for these
options, as well as for grants of options to other officers and key
employees.
In addition to the Incentive Stock Option plan discussed above, the
organizers plan to establish, also subject to certain regulatory and
shareholder approvals, a stock option plan under which each of the ten
organizers will be granted options to acquire up to 5,000 shares of the
Company's stock for $10 per share, the initial offering price. Such
options will vest at the rate of 34% the first year, and 33% in each of
the second and third year after grant, and expire ten years after the
grant date if not exercised.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
The Company has entered into agreements for professional services with
various groups involved in the Company's formation, capital offering
and Bank application process. In addition, the Company has entered into
a contract to purchase the Lake Placid bank site from a related party
for $246,000. The Company plans to enter into a construction contract
to construct banking facilities once the Bank has received preliminary
approval from the OCC.
F-10
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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, in the City of Lake Placid, State of Florida, on the
21st day on April, 1999.
HEARTLAND BANCSHARES, INC.
By: /s/ James C. Clinard
----------------------------------------
James C. Clinard
President and Chief Executive Officer
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.
<TABLE>
<CAPTION>
Signature Title Date
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<S> <C> <C>
/s/ James C. Clinard President, Chief Executive April 21, 1999
- -------------------------------------------- Officer and Director
James C. Clinard (principal executive officer)
/s/ Lawrence B. Wells
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Lawrence B. Wells Director (principal April 21, 1999
financial and accounting
officer)
Director
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William R. Grigsby
/s/ William R. Handley Director April 21, 1999
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William R. Handley
/s/ Bert J. Harris, III Director April 21, 1999
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Bert J. Harris, III
/s/ Issac G. Nagib Director April 21, 1999
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Issac G. Nagib
/s/ S. Allen Skipper Director April 21, 1999
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S. Allen Skipper
/s/ Edward L. Smoak Director April 21, 1999
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Edward L. Smoak
/s/ Malcolm C. Watters, Jr. Director April 21, 1999
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Malcolm C. Watters, Jr.
</TABLE>
