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, 1999
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 333-77593
UNITED AMERICAS BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
Georgia 58-2399917
----------------------- ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
3789 Roswell Road
Atlanta, Georgia 30342
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
404-240-0101
-----------------
(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:
Twenty (20) shares of common stock, no par value, issued and outstanding
as of August 26, 1999. Registrant is currently offering its stock for sale
pursuant to a Registration Statement on Form SB-2, which the SEC declared
effective on July 2, 1999
Transitional Small Business Disclosure Format (check one):
YES ____ NO XX
<PAGE>
UNITED AMERICAS BANKSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial statements of United Americas Bankshares, Inc.
(the "Company") are set forth in the following pages.
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<PAGE>
UNITED AMERICAS BANKSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET
JUNE 30, 1999
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Cash $ 9,266
Premises and equipment, net 1,039,076
Deferred offering expenses 430,000
Other assets 2,420
---------
$ 1,480,762
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable and accrued expenses $ 466,826
Note payable - line of credit 1,461,431
---------
Total liabilities 1,928,257
---------
Stockholders' deficit:
Preferred stock, no par value, 1,500,000 shares authorized;
no shares issued or outstanding -
Common stock, no par value, 5,000,000 shares authorized;
20 shares issued and outstanding -
Additional paid-in capital 200
Deficit accumulated during the development stage (447,695)
----------
Total stockholders' deficit (447,495)
----------
$ 1,480,762
==========
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
UNITED AMERICAS BANKSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND
THE PERIOD FROM MAY 14, 1998 (INCEPTION) TO JUNE 30, 1999
(Unaudited)
Six Months Cumulative
Ended Through
JUNE 30, 1999 JUNE 30, 1999
Expenses:
Compensation $138,466 219,790
Professional fees 60,171 108,078
Interest 22,167 22,167
Other operating 41,375 97,660
-------- -------
Total expense 262,179 447,695
-------
Net loss $262,179 413,005
======== =======
Net loss per share $ .22 .37
======== =======
See accompanying notes to financial statements.
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<PAGE>
UNITED AMERICAS BANKSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND
THE PERIOD FROM MAY 14, 1998 (INCEPTION) TO JUNE 30, 1999
(Unaudited)
Six Months Cumulative
Ended Through
JUNE 30, 1999 JUNE 30, 1999
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (262,179) (447,695)
Adjustments to reconcile net loss to net cash used in
operating activities:
Increase in deferred costs (430,000) (430,000)
Decrease (increase) in other assets 57,773 (2,420)
Increase in accounts payable and accrued expenses 466,826 466,826
----------- ----------
Net cash used in operating activities (167,580) (413,289)
----------- ----------
Cash flows from investing activities:
Purchase of premises and equipment (1,035,995) (1,039,076)
----------- ----------
Net cash used in investing activities (1,035,995) (1,039,076)
----------- ----------
Cash flows from financing activities:
Proceeds from note payable 1,206,084 1,461,431
Proceeds from issuance of common stock 200 200
----------- ----------
Net cash provided by financing activities 1,206,284 1,461,631
----------- ----------
Net increase in cash 2,709 9,266
Cash at beginning of period 6,557 --
----------- ----------
Cash at end of period $ 9,266 9,266
=========== ==========
Supplemental disclosure of cash flow information:
Interest paid $ 22,167 22,167
=========== ==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
UNITED AMERICAS BANKSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
(1) Organization
------------
United Americas Bankshares, Inc. (the "Company"), a proposed holding
company for United Americas Bank, N.A. (in organization) (the "Bank"), was
established for the purpose of filing a joint application to charter the
Bank with the Comptroller of the Currency ("OCC") and the Federal Deposit
Insurance Corporation ("FDIC"). On February 22,1999, approval from the OCC
to charter the Bank was received. On March 29, 1999, the FDIC granted its
preliminary approval. Provided the necessary capital is raised, it is
expected that operations will commence in the third quarter of 1999 in the
proposed permanent facility.
Operations through June 30, 1999, relate totally to expenditures on behalf
of the organizers for incorporating and organizing the Company and
beginning banking operations. These activities have been funded through a
line of credit with a bank with a total commitment at June 30, 1999 of
$1,950,000. At June 30, 1999, the line of credit bore interest of prime
(8%), and the line was collateralized by a first mortgage on the land and
buildings acquired by the Company and is personally guaranteed by the
organizers. This line of credit matures in February 2000.
The Company plans to raise $12,000,000 through an offering of 1,200,000
shares of its common stock. The organizers, directors and officers expect
to subscribe for a minimum of approximately $1,930,000 (193,000 shares) of
the Company's common stock. Additionally, the organizers, directors and
officers are expected to receive an aggregate of 225,000 warrants and
options to acquire 225,000 shares of the Company's stock at $10 per share.
These warrants and options will vest ratably over five years and expire
after ten years.
(2) Significant Accounting Policies
-------------------------------
BASIS OF PRESENTATION
The accompanying financial statements have been presented in conformity
with generally accepted accounting principles ("GAAP") for a development
stage corporation. Preparing financial statements in conformity with GAAP
requires that management make certain estimates that may effect the
amounts recorded in the financial statements, and actual results could
differ from those estimates.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation.
Major additions and improvements are capitalized while maintenance and
repairs that do not improve or extend the useful lives of the assets are
expensed. When assets are retired or otherwise disposed of, the cost and
related accumulated depreciation are removed from the accounts, and any
gain or loss is reflected in earnings for the period.
PRE-OPENING EXPENSES
All pre-opening expenses are expensed as incurred.
DEFERRED OFFERING EXPENSES
Costs incurred in connection with the stock offering, consisting of
direct, incremental costs of the offering, are deferred and will be offset
against the proceeds of the stock sale as a charge to additional paid in
capital.
PROFORMA NET LOSS PER COMMON SHARE
Proforma net loss per common share was calculated by dividing net loss by
the number (1,200,000) of common shares outstanding as a result of the
offering.
INCOME TAXES
The Company accounts for deferred income taxes using the liability
approach, and when this approach results in a net deferred tax asset,
management evaluates the likelihood of being able to realize that asset.
When management determines that some or all of the net deferred tax asset
is not realizable, a valuation allowance is recorded for that amount. At
June 30, 1999, the Company's only significant deferred tax attribute was
its net operating loss since inception, and this deferred tax asset has
been fully reserved.
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<PAGE>
UNITED AMERICAS BANKSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(3) Liquidity and Going Concern Considerations
------------------------------------------
Management believes the current available borrowing on the Company's line
of credit is adequate to fund the anticipated costs to be incurred by the
Company during its development stage, but the funding of banking
operations is dependent on obtaining final regulatory approval and the
successful completion of the stock offering.
As stated above, to provide permanent funding for its operation, the
Company plans to sale 1,200,000 shares of its common stock at $10 per
share in an initial public offering. Costs related to the organization and
registration of the Company's common stock will be paid from the gross
proceeds of the offering. Should sufficient subscriptions for the offering
not be obtained, amounts paid by subscribers with their subscriptions will
be returned and the offer withdrawn.
(4) Commitments
-----------
The Company has entered into employment arrangements with the individuals
who will serve as its President, its Chief Lending Officer and its Chief
Financial Officer. The agreements would provide for initial annual
salaries for these individuals of $315,000 in the aggregate and entitles
them to the receipt of certain options and warrants upon the occurrence of
certain future events.
Additionally, on August 23, 1999, the Company entered into a contract to
acquire a modular banking facility for $100,000. A site location has not
yet been identified.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company was organized on May 14, 1998 (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 Office of the Comptroller of the Currency (the "OCC") 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, 1999, the Company had total assets of $1,480,762. These assets
consisted principally of deferred offering costs of $430,000 and premises and
equipment of $1,039,076. Premises and equipment consists primarily of Bank's
main office site. Additionally, subsequent to June 30, 1998, the Company
entered into a contract to purchase a modular banking facility for $100,000. The
building is expected to be utilized as a branch site, however, a site has not
yet been identified.
The Company's liabilities at June 30, 1999 were $1,928,257 and consisted of
advances under a line of credit from a bank of $1,461,431 and accounts payable
and accrued expenses of $466,826. The Company's line of credit with The Bankers
Bank is in the amount of $1,950,000, and the balance of $488,569 is available to
fund future operational expenses and improvements to be made to the building.
The Company had a stockholder's deficit of $412,805 at June 30, 1999.
The Company had a net loss of $262,179 for the six months ended June 30,
1999, and $447,695 cumulatively from Inception through June 30, 1999, or a pro
forma net loss of $.22 per share for the six months ended June 30, 1999 and $.37
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 OCC 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 OCC, 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 "SEC"), 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 $11,000,000 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 $560,000, 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. 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.
Capability of Data Processing Software to Accommodate the Year 2000
- -------------------------------------------------------------------
Like many financial institutions, we rely upon computers for the daily
conduct of our business and for information systems processing. There is concern
among industry experts that on January 1, 2000, computers will be unable to
"read" the new year and there may be widespread computer malfunctions. In June
1996, the Federal Financial Institutions Examination Council alerted the banking
industry that serious challenges could be encountered with Year 2000 issues. In
addition, the OCC and the FDIC have issued guidelines to require compliance with
Year 2000 issues. In accordance with these guidelines, we have developed and are
executing a plan to ensure that our computer and telecommunication systems do
not have these Year 2000 problems. We generally rely on software and hardware
developed by independent third parties for our information systems. We are a new
company and therefore, despite our reliance upon third parties for many of our
information systems, we believe that by following the procedures that are
outlined below, we have the ability to minimize our Year 2000 risk.
-8-
<PAGE>
Capability of Data Processing Software to Accommodate the Year 2000, Continued
- ------------------------------------------------------------------------------
We have entered into an agreement with Fiserv to provide our mission
critical hardware and software and to perform all overnight processing and
reconciliation of our daily transaction data. Fiserv is a well-established
company which provides similar systems and services to thousands of financial
institutions in the United States. Fiserv has completed testing the system we
will be using with generic data which has been artificially "aged" to simulate
all critical Year 2000 related dates. Banking regulators have approved this type
of testing as a valid means of testing. We have reviewed these tests and are
satisfied that the system tested is similar to ours and that the Fiserv system
did not encounter any Year 2000 problems. We therefore do not expect to
encounter any Year 2000 issues in the Fiserv system. Our agreements with Fiserv
include warranties that their system is Year 2000 compliant in all respects,
although the remedies available under such agreements are limited and
specifically exclude special, incidental, indirect, and consequential damages.
We will require all other significant vendors to provide similar test
results and warranties regarding Year 2000 compliance. Because we have chosen
our information systems and software with the Year 2000 in mind, we do not
believe we will have any significant expenses associated with Year 2000 issues.
CONTINGENCY PLANS. We have developed contingency plans to be implemented as
part of our efforts to identify and correct any Year 2000 problems affecting our
internal systems. Depending on the systems affected, these plans include (a)
accelerated replacement of affected equipment or software; (b) short term use of
backup equipment and software; (c) increased work hours for our personnel or use
of contract personnel to correct, on an accelerated schedule, any Year 2000
problems which arise; and (d) other similar approaches. If we are required to
implement any of these contingency plans, these plans could have a material
adverse effect on our business.
-9-
<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
On July 2, 1999 the Company's Registration Statement, File No.
333-77593, on Form SB-2 registering 1,200,000 shares of the Company's
common stock, no par value, was declared effective by the Securities
and Exchange Commission. The offering commenced on July 6, 1999 and
will continue until the earlier of September 3, 1999 (unless extended
until May 29, 2000), or the date that the Company sells 1,200,000
shares at $10.00 per share. GMA Partners, Inc. is acting as sales
agent in the offering. The aggregate offering price is $12,000,000.
The estimated expenses to be incurred in the offering are $464,690,
$359,000 of which constitutes a sales fee payable to GMA Partners,
Inc. The net estimated offering proceeds are $11,535,310, of which
$11,000,000 will be used to capitalize United Americas Bank, N.A. and
$535,310 will be used for working capital.
Reinaldo Pascual, an organizer and director of the Company, is an
attorney with Kilpatrick Stockton, LLP, counsel to the Company in the
offering. Legal fees and expenses payable to Kilpatrick Stockton, LLP
in connection with the offering are estimated to equal $75,000.
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, 1999.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
None
<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.
UNITED AMERICAS BANKSHARES, INC.
/s/ Jorge L. Forment
Jorge L. Forment
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0001084915
<NAME> UNITED AMERICAS BANKSHARES, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 9,266
<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> 1,515,452
<DEPOSITS> 0
<SHORT-TERM> 1,461,431
<LIABILITIES-OTHER> 466,826
<LONG-TERM> 0
0
0
<COMMON> 200
<OTHER-SE> (413,005)
<TOTAL-LIABILITIES-AND-EQUITY> 1,515,452
<INTEREST-LOAN> 0
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<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 22,167
<INTEREST-INCOME-NET> (22,167)
<LOAN-LOSSES> 0
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<INCOME-PRETAX> 0
<INCOME-PRE-EXTRAORDINARY> (227,489)
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<NET-INCOME> (227,489)
<EPS-BASIC> 0.19
<EPS-DILUTED> 0.19
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</TABLE>
