SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR FISCAL YEAR ENDED DECEMBER 31, 2002
Commission File Number: 000-30517
AMERICAN COMMUNITY BANCSHARES, INC.
(Exact Name of Registrant as specified in its charter)
NORTH CAROLINA
(State of Incorporation)
56-2179531
(I.R.S. Employer Identification No.)
2593 West Roosevelt Boulevard
Monroe, North Carolina 28110
(Address of Principal Office)
(704) 225-8444
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $1.00 PAR VALUE
Check whether the Registrant (1) has 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 X NO
---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. X
---
The Registrant's revenues for the year ended December 31, 2002 were $13,493,259.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant at December 31, 2002 was approximately $21,942,000.
The number of shares of the Registrant's Common Stock outstanding on December
31, 2002 was 2,824,376.
Documents Incorporated by Reference:
1. Portions of Annual Report to Shareholders for the Fiscal Year Ended
December 31, 2002 (Part I and II).
2. Portions of Registrant's Proxy Statement for the 2003 Annual Meeting
of Shareholders (Part III).
Transitional Small Business Disclosure Format Yes ____ No X
---
1
FORM 10-KSB CROSS-REFERENCE INDEX
PART I PROXY
FORM 10-KSB STATEMENT ANNUAL REPORT
----------- --------- -------------
Item 1 - Description of Business
Item 2 - Property 4
Item 3 - Legal Proceedings 22
Item 4 - Submission of Matters to a Vote of Security Holders N/A 23
PART II
Item 5 - Market for Common Equity and Related Shareholder Matters 24
Item 6 - Management's Discussion & Analysis 25
Item 7 - Financial Statements 42
Item 8 - Changes in and Disagreements with Accountants on N/A
Accounting and Financial Disclosure
PART III
Item 9 - Directors, Executive Officers, Promoters and Control 4-6, 9
Persons; Compliance with Section 16(a) of the
Exchange Act
Item 10 - Executive Compensation 10, 11
Item 11 - Security Ownership of Certain Beneficial Owners 4 3, 4
and Management
Item 12 - Certain Relationships and Related Transactions 6, 12
Item 13 - Exhibits and Reports on Form 8-K 5
Item 14 - Controls and Procedures 6
2
PART I
ITEM 1 - DESCRIPTION OF BUSINESS
The information contained in the section captioned "Business" in the 2002 Annual
Report to Shareholders is incorporated herein by reference.
ITEM 2 - PROPERTIES
The information contained in the section captioned "Business - Properties" in
the 2002 Annual Report to Shareholders is incorporated herein by reference.
ITEM 3 - LEGAL PROCEEDINGS
The information contained in the section captioned "Business - Litigation" in
the 2002 Annual Report to Shareholders is incorporated herein by reference.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NOT APPLICABLE.
PART II
ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information contained in the section captioned "Market for Common Equity and
Related Stockholder Matters" in the 2002 Annual Report to Shareholders is
incorporated herein by reference.
ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The information contained in the section captioned "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the 2002 Annual
Report to Shareholders is incorporated herein by reference.
ITEM 7 - FINANCIAL STATEMENTS
The information contained in the Independent Auditors' Report in the 2002 Annual
Report to Shareholders is incorporated herein by reference.
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
3
Part III
ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The information contained in the sections captioned "Proposal 1: Election of
Directors," "Executive Officers," and "Required Reports of Beneficial Ownership"
in the 2003 Annual Meeting Proxy Statement is incorporated herein by reference.
ITEM 10 - EXECUTIVE COMPENSATION
The information contained in the sections captioned "Director Compensation" and
"Executive Compensation" in the 2003 Annual Meeting Proxy Statement is
incorporated herein by reference.
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained in the sections captioned "Ownership of Voting
Securities" in the 2003 Annual Meeting Proxy Statement is incorporated herein by
reference.
Stock Option Plans
Set forth below is certain information regarding the Registrant's various stock
option plans.
----------------------------------------------------------------------------------------------------------------------
Plan Category Number of securities to be Weighted-average exercise Number of securities
issued upon exercise of price of outstanding remaining available for
outstanding options, options, warrants, and future issuance under
warrants, and rights rights equity compensation plans
(excluding securities
reflected in column (a))
(c)
(a)
(b)
----------------------------------------------------------------------------------------------------------------------
Equity compensation plans 1999 Incentive:
approved by security holders 129,675 $8.39 17,052
1999 Nonstatutory:
164,127 $8.33 -0-
2001 Incentive:
53,158 $7.57 37,042
2002 Nonstatutory:
15,000 $8.35 10,000
----------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders None None None
----------------------------------------------------------------------------------------------------------------------
Total 361,960 $8.24 64,094
----------------------------------------------------------------------------------------------------------------------
4
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained in the sections captioned "Director Relationships" and
"Indebtedness of and Transactions with Management" in the 2003 Annual Meeting
Proxy Statement is incorporated herein by reference.
ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Index to Exhibits
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
3.1 Registrant's Articles of Incorporation *
3.2 Registrant's Bylaws *
4.1 Specimen Stock Certificate*
4.2 Specimen Warrant Certificate**
4.3 Warrant Agreement**
10.1 Employment Agreement of Randy P. Helton*
10.2 1999 Incentive Stock Option Plan*
10.3 1999 Nonstatutory Stock Option Plan*
10.4 401(k) Plan*
10.5(i) Issuance of Trust Preferred Securities by
American Community Capital Trust I Indenture
dated December 31, 2001**
10.5(ii) Issuance of Trust Preferred Securities by
American Community Capital Trust I Expense
Agreement dated December 31, 2001**
10(iii) Issuance of Trust Preferred Securities by
American Community Capital Trust I Amended
and Restated Trust Agreement dated March 1,
2002**
10(iv) Issuance of Trust Preferred Securities by
American Community Capital Trust I
Supplemental Indenture dated March 1, 2002**
10(v) Issuance of Trust Preferred Securities by
American Community Capital Trust I
Subordinated Debenture dated March 1, 2002
($2,061,860) **
5
10(vi) Issuance of Trust Preferred Securities by
American Community Capital Trust I
Subordinated Debenture dated March 1, 2002
($1,546,000) **
10(vii) Issuance of Trust Preferred Securities by
American Community Capital Trust I Amended
and Restated Preferred Securities Guarantee
Agreement dated March 1, 2002**
10.6 2001 Incentive Stock Option Plan***
10.7 2002 Nonstatutory Stock Option plan****
13 2002 Annual Report
21 Subsidiaries of Registrant**
99 Registrant's Definitive Proxy Statement *****
* Incorporated by reference from exhibits to Registrant's
Registration Statement on Form S-4 (File No. 333-31148)
** Incorporated by reference from exhibits to Registrant's
Registration statement on Form SB-2 (File No. 333-84484)
*** Incorporated by reference from exhibit 10.5 to Registrant's
Annual Report for the year ended December 31, 2000 on Form
10-KSB.
**** Incorporated by reference from Registrant's Registration
Statement on Form S-8 (File No. 333-101208)
***** Filed with the Commission pursuant to Rule 14a-6.
(b) Reports on Form 8-K.
None.
ITEM 14. -- CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this report, the Registrant carried out
an evaluation under the supervision and with the participation of the
Registrant's management, including the Registrant's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures pursuant to Securities Exchange
Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the Registrant's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Registrant required to be included in the Registrant's periodic
SEC Filings. There were no significant changes in the Registrant's internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation.
6
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
March 28, 2003 /s/ Randy P. Helton
-------------------
Randy P. Helton
President and Chief Executive Officer
7
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Randy P. Helton March 28, 2003
-------------------
Randy P. Helton, President,
Chief Executive Officer and Director
/s/ Dan R. Ellis, Jr. March 28, 2003
---------------------
Dan R. Ellis, Jr., Chief Financial Officer
/s/ Robert G. Dinsmore March 28, 2003
----------------------
Robert G. Dinsmore, Director
/s/ Frank L. Gentry March 28, 2003
-------------------
Frank L. Gentry
/s/ Thomas J. Hall March 28, 2003
------------------
Thomas J. Hall, Director
/s/ Larry S. Helms March 28, 2003
------------------
Larry S. Helms, Director
________________________
Peter A. Pappas, Director
/s/ L. Steven Philips March 28, 2003
---------------------
L. Steven Phillips, Director
---------------------
Alison J. Smith, Director
_________________________
L. Carlton Tyson, Director
_________________________
David D. Whitley, Director
/s/ Gregory N. Wylie March 28, 2003
--------------------
Gregory N. Wylie, Director
8
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
3.1 Registrant's Articles of Incorporation *
3.2 Registrant's Bylaws *
4.1 Specimen Stock Certificate*
4.2 Specimen Warrant Certificate**
4.3 Warrant Agreement**
10.1 Employment Agreement of Randy P. Helton*
10.2 1999 Incentive Stock Option Plan*
10.3 1999 Nonstatutory Stock Option Plan*
10.4 401(k) Plan*
10.5(i) Issuance of Trust Preferred Securities by
American Community Capital Trust I Indenture
dated December 31, 2001**
10.5(ii) Issuance of Trust Preferred Securities by
American Community Capital Trust I Expense
Agreement dated December 31, 2001**
10(iii) Issuance of Trust Preferred Securities by
American Community Capital Trust I Amended
and Restated Trust Agreement dated March 1,
2002**
10(iv) Issuance of Trust Preferred Securities by
American Community Capital Trust I
Supplemental Indenture dated March 1, 2002**
10(v) Issuance of Trust Preferred Securities by
American Community Capital Trust I
Subordinated Debenture dated March 1, 2002
($2,061,860) **
10(vi) Issuance of Trust Preferred Securities by
American Community Capital Trust I
Subordinated Debenture dated March 1, 2002
($1,546,000) **
10(vii) Issuance of Trust Preferred Securities by
American Community Capital Trust I Amended
and Restated Preferred Securities Guarantee
Agreement dated March 1, 2002**
9
10.6 2001 Incentive Stock Option Plan***
10.7 2002 Nonstatutory Stock Option plan****
13 2002 Annual Report
21 Subsidiaries of Registrant**
99 Registrant's Definitive Proxy Statement *****
* Incorporated by reference from exhibits to Registrant's Registration
Statement on Form S-4 (File No. 333-31148)
** Incorporated by reference from exhibits to Registrant's Registration
statement on Form SB-2 (File No. 333-84484)
*** Incorporated by reference from exhibit 10.5 to Registrant's Annual Report
for the year ended December 31, 2000 on Form 10-KSB.
**** Incorporated by reference from Registrant's Registration Statement on
Form S-8 (File No. 333-101208)
***** Filed with the Commission pursuant to Rule 14a-6.
10
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Randy P. Helton, certify that:
1. I have reviewed this annual report on Form 10-KSB of American
Community Bancshares, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act 13a-14 and 15-d-14) for the registrant and
have:
a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation
Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
upon our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors:
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: March 28, 2003 By: /s/ Randy P. Helton
-------------------
Randy P. Helton
President and Chief Executive Officer
11
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Dan R. Ellis, Jr., certify that:
1. I have reviewed this annual report on Form 10-KSB of American
Community Bancshares, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act 13a-14 and 15-d-14) for the registrant and
have:
a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation
Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
upon our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors:
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: March 28, 2003 By: /s/ Dan R. Ellis, Jr.
---------------------
Dan R. Ellis, Jr.
Chief Financial Officer
12
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
The undersigned hereby certifies that, to his knowledge, (i) the Form 10-KSB
filed by American Community Bancshares, Inc. (the "Issuer") for the year ended
December 31, 2002, fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, and (ii) the information contained
in that report fairly presents, in all material respects, the financial
condition and results of operations of the Issuer on the dates and for the
periods presented therein.
American Community Bancshares, Inc.
Date: March 28, 2003 By: /s/ Randy P. Helton
-------------------
Randy P. Helton
President and Chief Executive Officer
Date: March 28, 2003 By: /s/ Dan R. Ellis, Jr.
---------------------
Dan R. Ellis, Jr.
Chief Financial Officer
13