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, 1999
( ) 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 333-63987
VILLAGE FINANCIAL CORPORATION
------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
New Jersey 22-3562091
- ------------------------------- ---------------------
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification Number
590 Lawrence Square Boulevard, Lawrenceville, New Jersey 08648
- -------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 689-1010
----------------
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 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.
X Yes No
--- ---
As of May 7, 1999, there were 94,850 shares of the Registrant's
common stock, par value $0.10 per share, outstanding. The Registrant has no
other classes of common equity outstanding.
Transitional small business disclosure format:
Yes X No
--- ---
<PAGE>
VILLAGE FINANCIAL CORPORATION
LAWRENCEVILLE, NEW JERSEY
TABLE OF CONTENTS
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - (Unaudited) as of
March 31, 1999 and December 31, 1998.....................................3
Statements of Operations - (Unaudited) for
the three months ended March 31, 1999 and
1998 and for the period from January 16, 1998
(inception) to March 31, 1999............................................4
Statements of Cash Flows - (Unaudited) for the
three months ended March 31, 1999 and 1998 and
for the period from January 16, 1998 (inception)
to March 31, 1999........................................................5
Notes to Unaudited Financial Statements..................................6
Item 2. Management's Discussion and Analysis or
Plan of Operation..................................................7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..................................................8
Item 2. Changes in Securities and Use of Proceeds..........................8
Item 3. Defaults Upon Senior Securities....................................9
Item 4. Submission of Matters to a Vote of Security Holders................9
Item 5. Other Information..................................................9
Item 6. Exhibits and Reports on Form 8-K...................................9
SIGNATURES
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Village Financial Corporation
Balance Sheet
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash $ 59,312 $ 16,475
Short-term investments 138,404 418,312
Premises and equipment 199,631 140,123
Deferred offering costs 165,401 114,894
Other assets 90,546 103,428
-------- --------
Total assets $ 653,294 $ 793,232
======== ========
LIABILITIES
Accounts payable and accrued expenses $ 59,091 $ 38,358
-------- --------
STOCKHOLDERS' EQUITY
Preferred stock, no par value;
1,000,000 authorized; none outstanding 0 0
Common stock, par value $.10;
5,000,000 shares authorized;
94,850 shares issued and outstanding 9,485 9,485
Additional paid-in capital 939,015 939,015
Retained deficit (354,297) (193,626)
-------- --------
Total stockholders' equity 594,203 754,874
-------- --------
Total liabilities and stockholders' equity $ 653,294 $ 793,232
======== ========
</TABLE>
3
<PAGE>
Village Financial Corporation
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Period From
Three Months Three Months January 16, 1998
Ended Ended (Inception) to
March 31, 1999 March 31, 1998 March 31, 1999
-------------- -------------- ----------------
<S> <C> <C> <C>
INCOME
Interest $ 3,084 $ 9 $ 21,280
Other 100 0 100
-------- -------- --------
Total income 3,184 9 21,380
-------- -------- --------
EXPENSES
Salaries and employee benefits 81,667 0 158,133
Occupancy and equipment 25,851 0 59,046
Professional services 39,955 10,000 110,029
Other 16,382 13 48,469
-------- -------- --------
Total expenses 163,855 10,013 375,677
-------- -------- --------
Loss before income taxes (160,671) (10,004) (354,297)
Income taxes 0 0 0
-------- -------- --------
NET LOSS $(160,671) $ (10,004) $(354,297)
======== ======== ========
LOSS PER SHARE $ (1.69) $ N/A $ (3.74)
AVERAGE SHARES OUTSTANDING 94,850 N/A 94,850(1)
</TABLE>
- ----------------------------------
(1) From May 20, 1998, the date of issuance.
See accompanying notes to the financial statements.
4
<PAGE>
Village Financial Corporation
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Period From
Three Months Three Months January 16, 1998
Ended Ended (Inception) to
March 31, 1999 March 31, 1998 March 31, 1999
-------------- -------------- ----------------
<S> <C> <C> <C>
OPERATING INCOME
Net loss $ (160,671) $ (10,004) $ (354,297)
Adjustments to reconcile net loss to net cash
used for operating activities:
Depreciation and amortization 6,299 0 11,402
Net increase in prepaid organization
expenses (2,976) 0 (90,546)
--------- --------- ---------
Net cash used for operating activities (157,348) (10,004) (433,441)
--------- --------- ---------
INVESTING ACTIVITIES
Purchase of premises and equipment (65,807) 0 (211,033)
--------- --------- ---------
FINANCING ACTIVITIES
Deferred offering costs paid (13,916) 0 (106,310)
Proceeds from sale of common stock 0 0 948,500
Advances from organizers(1) 0 17,300 0
--------- --------- ---------
Net cash provided by (used for) financing
activities (13,916) 17,300 842,190
--------- --------- ---------
Increase (decrease) in cash and cash
equivalents (237,071) 7,296 197,716
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 434,787 0 0
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 197,716 $ 7,296 $ 197,716
========= ========= =========
</TABLE>
(1) During the second quarter of 1998, certain organizers received common
stock, at $10 per share, in lieu of reimbursement for funds advanced.
These funds advanced earned no interest.
See accompanying notes to the financial statements.
5
<PAGE>
VILLAGE FINANCIAL CORPORATION
NOTES TO UNAUDITED FINANCIAL STATEMENTS.
Note 1 - Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and, therefore, do not necessarily include
all information that would be included in audited financial statements. The
information furnished reflects all adjustments that are, in the opinion of
management, necessary for a fair statement of the results of operations. All
such adjustments are of a normal recurring nature. As of the date of these
financial statements, Village Financial Corporation's ("Company") operations
have been limited to in-formation procedures: raising capital, recruiting
officers and staff, obtaining banking facilities and working towards obtainment
of regulatory approval. Since the Company's planned principal operations have
not yet been commenced, no significant revenue has been derived therefrom. The
results of operations for the interim periods are not indicative of the results
that may be expected for a full year and could be materially different if the
company was not an "in-formation" entity and operation.
6
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
---------------------------------------------------------
Cautionary Statement. Certain statements contained in this filing are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, such statements relating to
financial results and plans for future business development activities,
and are thus prospective. Such forward-looking statements are subject
to risks, uncertainties and other factors, which could cause actual
results to differ materially from future results expressed or implied
by such forward-looking statements. Potential risks and uncertainties
include, but are not limited to; economic conditions, competition and
other uncertainties detailed from time to time in the Company's
Securities and Exchange Commission filings.
Plan of Operation. Village Financial Corporation (the "Company") is
conducting a subscription offering of 425,000 to 1,200,000 shares of
its common stock, par value $.10 per share, for a purchase price of
$10.00 per share (the "Subscription Offering") pursuant to its
Registration Statement on Form SB-2 (File No. 333-63987) declared
effective by the Securities and Exchange Commission ("SEC") on February
3, 1999. The Subscription Offering expired March 26, 1999, but was
extended by the Company. A new termination date for the Subscription
Offering has not been set by the Company. The Subscription Offering may
not extend beyond December 7, 1999, without certain regulatory
approvals. The Company previously raised $948,500 in a private offering
of 94,850 shares of its common stock at a purchase price of $10.00 per
share. These funds have been, and will continue to be, used to pay for
the offering costs and preopening expenses of Village Bank (in
organization) (the "Bank"), a proposed Federal savings bank to be
wholly-owned by the Company. The Company anticipates that the funds
raised in the private offering will be exhausted by July 31, 1999, if
the Subscription Offering has not been completed on or prior to that
date. If the Subscription Offering has not been completed prior to the
time the funds received in the private offering are depleted, the
Company will attempt to secure additional funds from various sources to
pay for the continued preopening expenses through the date of
completion of the Subscription Offering. However, there can be no
assurance that Company will be able to secure additional operating
funds or that any funds obtained will be sufficient to cover preopening
and operating expenses through the completion of the Subscription
Offering. Furthermore, the Company reserves the right to terminate the
Subscription Offering at any time prior to its completion, in
accordance with the terms stated in the Company's Prospectus dated
February 3, 1999, and Prospectus Supplement dated March 12, 1999.
Upon the successful completion of the Subscription Offering and the
receipt of final regulatory approval, the Company will become the
holding company for the Bank. The Bank will commence operations as soon
as possible thereafter. There is no change to the anticipated plan of
operation of the Company and the Bank as stated in the Prospectus and
the Prospectus Supplement.
7
<PAGE>
Year 2000. A great deal of information has been disseminated about the
global effect the year 2000 may have on computers. Many computer
programs that can only distinguish the final two digits of the year
entered (a common programming practice in earlier years) are expected
to read entries for the year 2000 as the year 1900 and compute payment,
interest or delinquency based on the wrong date, or are expected to be
unable to compute payment, interest or delinquency. Rapid and accurate
data processing will be essential to the Bank's operation. Data
processing is also essential to most other financial institutions and
many other companies. A third party service bureau will be providing
the material data processing that could be affected by this problem.
The Bank's prospective service bureau has stated that it is
substantially compliant and it expects to resolve this potential
problem before the year 2000. However, if the service bureau is unable
to resolve all facets of this potential problem in time, the Bank would
likely experience significant data processing delays, mistakes or
failures. These delays, mistakes or failures could have a significant
adverse impact on the Company's financial condition and results of
operation. In order to determine that the service bureau is year 2000
compliant, management has developed a test plan, which is expected to
be completed in the first half of 1999. The Company may incur
additional operating expenses during the balance of 1999 relating to
designing and performing tests of the Bank's computer systems.
Management does not expect that the total costs that will be incurred
to become year 2000 compliant will be material to the Company and its
proposed banking subsidiary.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None.
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
(d) Use of Proceeds
(1) The Company filed a Registration Statement on Form SB-2
(File No. 333-63987) which became effective February 3, 1999
relating to the Subscription Offering.
(2) The Subscription Offering commenced immediately following
the effective date of the Registration Statement.
(4) (i) the Subscription Offering has not yet terminated;
(iii) the offering consists of shares of the Company's
common stock;
(iv) the Subscription Offering consists of 425,000 shares
shares to 1,200,000 shares of the Company's common
stock for a purchase price of
8
<PAGE>
$10.00 per share. To date the Company has sold
122,560 shares ($1,225,600).
(v) Expenses of the Subscription Offering incurred from
February 3, 1999 to March 31, 1999 which were direct
or indirect payments to others were accrued for as
of December 31, 1998, based on reasonable estimates
for such expenses. These costs approximate $160,000
and cover such items as legal, marketing, printing
and registration services. There were no additional
expenses incurred during the three months ended March
31, 1999.
(vi) There have been no offering proceeds from the
Subscription Offering paid to the Company to date.
The offering proceeds remain in escrow pending
completion or termination of the Subscription
Offering.
(vii) See response to (vi).
(viii) See response to (vi).
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
On March 24, 1999, the Company held its annual meeting of stockholders
(the "Meeting"). At the Meeting, stockholders reelected Paul J. Russo
and George M. Taber as directors of the Company each for a three-year
term and until their successors are elected and qualified. No other
business was conducted at the Meeting.
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) None.
(b) Reports on Form 8-K
None.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Village Financial Corporation
Date: May 7, 1999 By /s/Kenneth J. Stephon
--------------------------------------------
Kenneth J. Stephon, President
(Principal Executive and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL INFORMATION.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 59
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 138
<INVESTMENTS-MARKET> 138
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 653
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 59
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0
0
<COMMON> 948
<OTHER-SE> (354)
<TOTAL-LIABILITIES-AND-EQUITY> 653
<INTEREST-LOAN> 0
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<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 21
<LOAN-LOSSES> 0
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<EXPENSE-OTHER> 376
<INCOME-PRETAX> (354)
<INCOME-PRE-EXTRAORDINARY> (354)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (354)
<EPS-PRIMARY> (3.74)
<EPS-DILUTED> 0
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</TABLE>
