UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from __________ to ___________
ALLIED BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Georgia | 92-0184877 |
(State of Incorporation) | (I.R.S. Employer Identification No.) |
1800 Market Place Boulevard, Cumming, GA | 30041 |
(Address of principal executive offices) | (Zip Code) |
770-888-0063
(Telephone Number)
N/A
(Former name, former address
and former fiscal year,
if changed since last report)
Check whether the issuer: (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 XNO__
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable
date:
Common stock, $.01 par value per share: 1,500,000 shares
issued and outstanding as of May 10, 2004.
Transitional Small Business Disclosure Format (check one): Yes _ Nox
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ALLIED BANCSHARES, INC.
PART I | FINANCIAL INFORMATION |
|
Item 1. | Financial Statements (Unaudited) |
|
| Condensed Consolidated Balance Sheets as of March 31, 2004 | 3 |
| Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2004 and Cumulative March 31, 2004 | 4 |
| Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2004 and Cumulative March 31, 2004 | 5 |
| Notes to Condensed Consolidated Financial Statements | 6 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operation | 7 |
Item 3. | Controls and Procedures | 8 |
PART II | OTHER INFORMATION |
|
Item 2. | Change in Securities | 9 |
Item 6. | Exhibits and Reports on Form 8-K | 10 |
| SIGNATURES | 11 |
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ITEM 1. Financial Statements
The financial statements of Allied Bancshares, Inc. (the "Company") are set forth in the following pages.
ALLIED BANCSHARES, INC.
(A Development Stage Corporation)
Balance Sheet
(Unaudited)
March 31, 2004
Assets | ||
|
|
|
Cash | $ | 2,322 |
Restricted cash |
| 14,037,861 |
Fixed assets, net of depreciation |
| 376,802 |
Deferred offering expenses |
| 83,332 |
Other assets |
| 61,428 |
|
|
|
| $ | 14,561,745 |
|
|
|
| ||
Liabilities and Stockholder's Deficit | ||
Subscribers' deposits | $ | 14,037,861 |
Line of credit | 974,926 | |
Accrued expenses |
| 170,101 |
|
|
|
Total liabilities |
| 15,182,888 |
|
|
|
Stockholder's deficit: | ||
Common stock, $.10 par value, 10,000,000 shares authorized; |
|
|
1 share issued and outstanding |
| - |
Additional paid-in capital |
| 10 |
Deficit accumulated during the development stage |
| (621,153) |
|
|
|
Total stockholder's deficit |
| (621,143) |
|
|
|
| $ | 14,560,690 |
|
|
|
See accompanying notes to unaudited financial statements.
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ALLIED BANCSHARES, INC.
(A Development Stage Corporation)
Statement of Operations
(Unaudited)
For the three months ended March 31, 2004 and the period from June 4, 2003 (inception) to March 31, 2004
|
| Three Months Ended March 31, 2003 |
| Cumulative Through March 31, 2004 |
Expenses: | ||||
Salaries and benefits | $ | 168,600 | $ | 396,009 |
Legal and consulting |
| 9,077 |
| 49,623 |
Office expenses |
| 34,100 |
| 65,362 |
Regulatory fees |
| 3,500 |
| 28,850 |
Interest expense and loan fees |
| 6,045 |
| 11,672 |
Other expenses |
| 44,150 |
| 69,637 |
Net loss | $ | 265,472 | $ | 621,153 |
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|
See accompanying notes to unaudited financial statements.
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ALLIED BANCSHARES, INC.
(A Development Stage Corporation)
Statement of Cash Flows
(Unaudited)
For the three months ended March 31, 2004 and the period from June 4, 2003 (inception) to March 31, 2004
|
| Three Months Ended March 31, 2004 |
| Cumulative Through March 31, 2004 |
Cash flows from operating activities: |
|
|
|
|
Net loss | $ | (265,472) | $ | (621,153) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
Depreciation |
| 3,047 |
| 8,317 |
Other assets |
| (50,647) |
| (61,428) |
Accrued expenses |
| 162,245 |
| 170,101 |
|
|
|
|
|
Net cash used in operating activities |
| (150,827) |
| (504,163) |
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
Purchase of fixed assets |
| (326,865) |
| (385,119) |
Deferred offering expenses |
| (8,223) |
| (83,332) |
|
|
|
|
|
Net cash used in investing activities |
| (335,088) |
| (468,451) |
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
Proceeds from line of credit |
| 486,730 |
| 974,926 |
Proceeds from issuance of stock |
|
|
| 10 |
|
|
|
|
|
Net cash provided by financing activities |
| 486,730 |
| 974,936 |
|
|
|
|
|
Net change in cash |
| 815 |
| 2,322 |
|
|
|
|
|
Cash at beginning of period |
| 1,507 |
| -0- |
|
|
|
|
|
Cash at end of period | $ | 2,322 | $ | 2,322 |
|
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Supplemental disclosure of amounts paid for interest | $ | 6,045 | $ | 10,082 |
Supplemental disclosure of subscribers deposits and restricted cash | $ | 9,982,961 | $ | 14,037,861 |
See accompanying notes to unaudited financial statements.
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ALLIED BANCSHARES, INC.
(A Development Stage Corporation)
Notes to Financial Statements
(1)Organization
Allied Bancshares, Inc. (the "Company") was incorporated for the purpose of becoming a bank holding company. The Company acquired 100% of the outstanding common stock of First National Bank of Forsyth County (the "Bank") on April, 5, 2004, which operates in Forsyth and Hall counties in Georgia. The organizers of the Bank filed an application to charter the Bank with the Office of the Comptroller of Currency on August 4, 2003. Also on August 4, 2003, the organizers filed an application with the Federal Deposit Insurance Corporation for insurance on the deposits of the Bank. Operations commenced April 5, 2004.
Operations through March 31, 2004 relate primarily to expenditures by the organizers for incorporating and organizing the Company and the Bank. All expenditures by the organizers are considered expenditures of the Company.
The Company raised $15,000,000 through an offering of its common stock at $10 per share, of which $10,000,000 will be used to capitalize the Bank. The organizers and directors have subscribed for $3,334,280 (333,428 shares) of the Company's stock.
In connection with the Company's formation and initial offering, warrants to purchase shares of common stock at $10 per share will be issued to the organizers. Each organizer will be awarded one warrant for each share purchased. However, the total warrants issued will not exceed 20% of the outstanding stock upon completion of the offering. The warrants are exercisable on each of the three succeeding anniversaries of the date of the close of the initial offering and expire ten years after the date of grant.
(2)Summary of Significant Accounting Policies
Organization Costs
Costs incurred for the organization of the Company and the Bank (consisting principally of legal, accounting, consulting and incorporation fees) are being expensed as incurred.
Deferred Offering Expenses
Costs incurred in connection with the stock offering, consisting of direct, incremental costs of the offering, are being deferred and will be offset against the proceeds of the stock sale as a charge to additional paid in capital. As of March 31, 2004, deferred offering expenses amounted to $83,332.
Pre-Opening expenses
Costs incurred for overhead and other operating expenses are included in the current period's operating results.
Commitments
The Company has entered into an agreement to acquire a parcel of land in Forsyth County, Georgia that will be used for the Bank's main office. In exchange for land, the Company will issue 85,000 shares of common stock to the owner of the land. The Company has obtained a third party appraisal related to this exchange that resulted in an "as is" value of $850,000.
Subsequent to March 31, 2004 the bank subsidiary of Allied Bancshares, Inc. entered into a contract to construct a main office facility in Cumming, Georgia. The bank has entered into an agreement to construct a 10,000 square building for approximately $1,450,000. Approximately $114,000 has been expended to date for construction related services.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Since its inception on June 4, 2003, the Company's principal activities have been related to its organization, the conducting of its initial public offering, and obtaining approvals from regulatory agencies to form a bank holding company and establish a National bank. Approvals to establish the bank and its application for Federal deposit insurance were granted on April 5, 2004 by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, respectively. The Federal Reserve Bank approved the Company's application to establish a bank holding company on February 27, 2004 and the Department of Banking and Finance similarly approved the formation of a bank holding company on February 24, 2004.
The Company raised $15,000,000 in its stock offering, of which $10,000,000 will be used to capitalize the Bank. The Company believes this amount will be sufficient to fund the activities of the Bank until it becomes cumulatively profitable and able to generate sufficient income from operations to fund its activities on an ongoing basis. The remaining $5,000,000 will be used by Company to absorb the operating deficit and offering expenses incurred in the organization stage, fund its operation and provide additional capital to the Bank such it be necessary.
At March 31, 2004, the Company had total assets of $14,561,000. These assets consisted primarily of restricted cash from its stock offering of $14,038,000, fixed assets of $377,000, deferred offering expenses of $83,000 and other assets, including cash, of $63,000.
The Company's liabilities at March 31, 2004 were $15,182,000 consisting of subscribers' deposits of $14,037,000, advances under two lines of credit totaling $975,000 and accrued expenses of $170,000. The Company had a stockholder's deficit of $621,000 at March 31, 2004.
The Company had a net loss of $265,000 for the three months ended March 31, 2004, and a net loss of $621,000 cumulatively from inception through March 31, 2004. This loss resulted from expenses related to the organization of the Company and the Bank. These activities included the preparation and filing of regulatory applications to establish a bank holding company and the Bank, selling common stock, hiring personnel, preparing for the bank's operation in two locations including such as activities as establishing office locations and establishing polices, procedures, and data processing systems. In addition public relations activities and other activities to develop prospective business contacts were conducted. Because the Company was in the organization stage, it had no operations from which to generate revenue.
After the Company received regulatory approvals to begin operations, it was allowed to break escrow whereby it had access to funds collected in the stock solicitation effort. The debt incurred in the organization stage was immediately repaid and the Bank was capitalized on its opening day, April 5, 2004.
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Item 3. Controls and Procedures.
As of the end of the period, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2004 the Company's disclosure controls and procedures are effective in timely alerting them to information relating to the Company required to be included in the Company's SEC filings. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchang e Commission's rules and forms.
There have been no changes in the Company's internal control over financial reporting during our fiscal quarter ended March 31, 2004 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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ALLIED BANCSHARES, INC.
PART II. OTHER INFORMATION
Item 2. Changes in Securities.
(d) The following information is required by Item 701(f) of Regulation S-B.
The Company completed its initial public offering of its common stock in April, 2004. In June, 2003, the Company issued one share of common stock to its President and Chief Executive officer, Andrew K. Walker. That share was redeemed upon completion of the offering. As of March 31, 2004, the Company had received subscriptions and subscription payments for 1,401,972 shares, and completed the sale of all 1,500,000 shares offered on April 27, 2004. The subscriptions represent approximately 600 shareholders. The Company broke escrow on April 5, 2004, in order to capitalize and open the First National Bank of Forsyth County for business.
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Item 6. Exhibits and Reports on Form 8-K
a.Exhibits
Exhibit Number | Sequential Exhibit Page | Sequential Page |
3.1 | Articles of Incorporation as Amended and Restated(1) -- | -- |
3.2 | Bylaws(1) -- | -- |
4.1 | See Exhibits 3.1 and 3.2 for provisions of the Articles of Incorporation and Bylaws defining rights of holders of the Common Stock | -- |
10.1 | Real Estate Agreement (main office property) dated September 18,2003 (1) | -- |
10.2 | Lease of branch bank office(3) | -- |
10.3* | Employment Agreement of Andrew K. Walker (1) | -- |
10.4* | Form of Warrant Agreement(1) | -- |
10.5* | Employment Agreement of Sam R. Story, III(2) | -- |
10.6* | Employment Agreement of Richard E. Bell(1) | -- |
10.7* | Stock Warrant Plan(2) | -- |
31 | Rule 13a-14(a)/15d-14(a) Certifications | 12 |
32 | Section 1350 Certifications | 14 |
_______________________________
* Indicates a compensatory plan or contract.
(1) Previously filed as an exhibit to the registrant's Registration Statement on Form SB-2 (Registration No. 333-109462), as filed with the SEC on October 3, 2003.
(2) Previously filed as an exhibit to the registrant's Amendment No. 1 to Registration Statement on Form SB-2 (Registration No. 333-109462), as filed with the SEC on December 4, 2003.
(3) Previously filed as an exhibit to the registrant's annual report on Form 10-KSB for the year ended December 31, 2004 (SEC File No. 333-109462).
b. Reports on Form 8-K
No reports on Form 8-K were filed during the Company's first quarter of its fiscal year ended December 31, 2004.
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ALLIED BANCSHARES, INC.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 14, 2004
Date: May 14, 2004 | ALLIED BANCSHARES, INC. By:s/Andrew K. Walker Andrew K. Walker, President and C.E.O. By:s/Richard E. Bell Richard E. Bell, C.A.O. and C.F.O. |
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