**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

 

**FORM10-QSB**

 

| **(MARK  ONE)** |                                                      |
|-----------------|-----------------------------------------------------------|
| ** **      |                                                      |
| **x**           | **QUARTERLY  REPORT UNDER SECTION 13 OR 15(d)**           |
| ** **      | **OF THE  SECURITIES EXCHANGE ACT OF 1934**               |
|            |                                                      |
|            | **For the  Quarterly Period ended September 30, 2007**    |
|            |                                                      |
|            | **OR**                                                    |
|            |                                                      |
| **o**           | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF** |
| ** **      | **THE  SECURITIES EXCHANGE ACT OF 1934**                  |
|            |                                                      |

** **

**For theTransition Period from                    to                    **

 

**CommissionFile No. 333-140768**

 

**SEMORANFINANCIAL CORPORATION**

(Exact name ofsmall business issuer as specified in its charter)

 

 

| **FLORIDA**                   |   | **20-3622467**       |
|-------------------------------|--------|----------------------|
| (State or other  jurisdiction |   | (I.R.S. Employer     |
| of  incorporation)            |   | Identification  No.) |

 

**237FERNWOOD BOULEVARD, SUITE 109**

**FERNPARK, FLORIDA 32730**

(Address ofprincipal executive offices)

 

**(407)401-8295**

(Issuer’stelephone number)

 

----

 

Checkwhether the issuer (1) filed all reports required to be filed by Section 13 or15(d) of the Exchange Act during the past 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days. Yes x  No o

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).

Yeso  No x

 

State the number ofshares outstanding of each of the issuer’s classes of common equity, as of thelatest practicable date: 

10 shares of commonstock, par value $.01 per share, outstanding as of September 30, 2007.

 

Transitional SmallBusiness Disclosure Format (check one):   Yes o No x

 

 

----

 

**SEMORAN FINANCIAL CORPORATION**

**(A Development Stage Company)**

 

**INDEX**

 
| **PART I - FINANCIAL INFORMATION** |                                                                                                                                                                                                                              |
|------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                               |                                                                                                                                                                                                                              |   |
| Item 1.                            | Financial Statements                                                                                                                                                                                                              |   |
|                               |                                                                                                                                                                                                                              |   |
|                               | Condensed Balance Sheets – September  30, 2007 (unaudited) and December 31, 2006                                                                                                                                             |   |
|                               |                                                                                                                                                                                                                              |   |
|                               | Condensed  Statements of Operations – For the three months and nine months ended  September 30, 2007 and 2006 and for the cumulative period from October 11,  2005 (Date of Incorporation) to September 30, 2007 (unaudited) |   |
|                               |                                                                                                                                                                                                                              |   |
|                               | Condensed Statements of  Changes in Stockholders’ Deficit – For the nine months ended September 30,  2007 and 2006 (unaudited)                                                                                          |   |
|                               |                                                                                                                                                                                                                              |   |
|                               | Condensed Statements of Cash  Flows – For the nine months ended September 30, 2007 and 2006 and for the  cumulative period from October 11, 2005 (Date of Incorporation) to September  30, 2007 (unaudited)                  |   |
|                               |                                                                                                                                                                                                                              |   |
|                               | Notes to Condensed Financial Statements (unaudited)                                                                                                                                                                               |   |
|                               |                                                                                                                                                                                                                              |   |
|                               | Review by Independent Registered Public Accounting  Firm                                                                                                                                                                          |   |
|                               |                                                                                                                                                                                                                              |   |
|                               | Report of Independent Registered Public Accounting  Firm                                                                                                                                                                          |   |
|                               |                                                                                                                                                                                                                              |   |
| Item 2.                            | Management’s  Discussion and Analysis or Plan of Operation                                                                                                                                                                   |   |
|                               |                                                                                                                                                                                                                              |   |
| Item 3.                            | Controls and  Procedures                                                                                                                                                                                                          |   |
|                               |                                                                                                                                                                                                                              |   |
| **PART  II - OTHER INFORMATION**   |                                                                                                                                                                                                                              |
|                               |                                                                                                                                                                                                                              |   |
| Item 1.                            | Legal Proceedings                                                                                                                                                                                                                 |   |
|                               |                                                                                                                                                                                                                              |   |
| Item 2.                            | Unregistered  Sales of Equity Securities and Use of Proceeds                                                                                                                                                                      |   |
|                               |                                                                                                                                                                                                                              |   |
| Item 3.                            | Defaults Upon  Senior Securities                                                                                                                                                                                                  |   |
|                               |                                                                                                                                                                                                                              |   |
| Item 4.                            | Submission of  Matters to a Vote of Security Holders                                                                                                                                                                              |   |
|                               |                                                                                                                                                                                                                              |   |
| Item 5.                            | Other Information                                                                                                                                                                                                                 |   |
|                               |                                                                                                                                                                                                                              |   |
| Item 6.                            | Exhibits                                                                                                                                                                                                                          |   |

 

1

----

 

**Part I - Financial Information**

 

**PART I -FINANCIAL INFORMATION**

 

## **Item 1. Financial Statements**

## ** **

**Condensed Balance Sheets**

 
| ** **                                                                                                                      | ** ** | **September 30,** | ** **    | **December 31,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|---------------|-----------------------|------------|
| ** **                                                                                                                      | ** ** | **2007**               | ** **    | **2006**              | ** ** |
| ** **                                                                                                                      | ** ** | **(Unaudited)**        | ** **    | ** **            | ** ** |
| **Assets**                                                                                                                      |       |                   |          |                  |       |
| Cash                                                                                                                            |       | $                      | 16,577        |                  | $          | 53,615 |   |
| Equipment                                                                                                                       |       | 4,497                  |          | 1,198                 |       |
| Land                                                                                                                            |       | 1,547,132              |          | —                |       |
| Other assets                                                                                                                    |       | 104,630                |          | 83,752                |       |
|                                                                                                                            |       |                   |          |                  |       |
| Total assets                                                                                                                    | ** ** | **$**                  | **1,672,836** | ** **            | **$**      | **138,565** | ** ** |
|                                                                                                                            | ** ** | ** **             | ** **    | ** **            | ** ** |
| **Liabilities  and Stockholders’ Equity**                                                                                  |       |                   |          |                  |       |
| Liabilities:                                                                                                                    |       |                   |          |                  |       |
| Line of credit                                                                                                                  |       | $                      | 313,826       |                  | $          | — |   |
| Other  liabilities                                                                                                              |       | —                 |          | 10,431                |       |
| Organizer  advances                                                                                                             |       | —                 |          | 725,000               |       |
| Borrowings                                                                                                                      |       | 1,476,000              |          | —                |       |
| Total  liabilities                                                                                                              | ** ** | **1,789,826**          | ** **    | **735,431**           | ** ** |
|                                                                                                                            | ** ** | ** **             | ** **    | ** **            | ** ** |
| Stockholders’  Deficit:                                                                                                    |       |                   |          |                  |       |
| Preferred stock,  no par value; 4,725,000 shares authorized; none issued and outstanding                                        |       | —                 |          | —                |       |
| Series A  preferred stock, no par value; 375,000 shares authorized; 81,000 shares  issued and outstanding at September 30, 2007 |       | —                 |          | —                |       |
| Common stock,  $.01 par value; 25,000,000 shares authorized; 10 shares issued and  outstanding                                  |       | —                 |          | —                |       |
| Additional paid  in capital                                                                                                     |       | 810,100                |          | 100                   |       |
| Deficit  accumulated during the development stage                                                                               |       | (926,990               | )             | (596,866              | )          |
| Stock  subscription receivable                                                                                                  |       | (100                   | )             | (100                  | )          |
| Total  stockholders’ deficit                                                                                               | ** ** | **(116,990**           | **)**         | **(596,866**          | **)**      |
|                                                                                                                            | ** ** | ** **             | ** **    | ** **            | ** ** |
| Total  liabilities and stockholders’ deficit                                                                               | ** ** | **$**                  | **1,672,836** | ** **            | **$**      | **138,565** | ** ** |

 

See Accompanying Notes to Condensed Financial Statements.

 

2

----

 

**Condensed Statements of Operations**

**(Unaudited)**

 
| ** **                                             | ** ** | ** **                | ** **   | ** **               | ** ** | ** **               | ** ** | ** **   | ** **   | **For the**                          | ** ** |
|--------------------------------------------------------|------------|---------------------------|--------------|--------------------------|------------|--------------------------|------------|--------------|--------------|-------------------------------------------|------------|
| ** **                                             | ** ** | ** **                | ** **   | ** **               | ** ** | ** **               | ** ** | ** **   | ** **   | **Cumulative**                            | ** ** |
| ** **                                             | ** ** | ** **                | ** **   | ** **               | ** ** | ** **               | ** ** | ** **   | ** **   | **Period From**                      | ** ** |
| ** **                                             | ** ** | ** **                | ** **   | ** **               | ** ** | ** **               | ** ** | ** **   | ** **   | **October 11, 2005 (Date** | ** ** |
| ** **                                             | ** ** | **For the  three months** |         | **For the  nine months** |       | **of Incorporation) to** |       |
| ** **                                             | ** ** | **ended  September 30,**  |         | **ended  September 30,** |       | **September  30,**       |       |
| ** **                                             | ** ** | **2007**                  | ** **   | **2006**                 | ** ** | **2007**                 | ** ** | **2006**     | ** **   | **2007**                                  |       |
| Income—                                           |       |                      |         |                     |       |                     |       |         |         |                                      |       |
| Interest Income                                        |       | $                         | —       |                     | $          | 1,255                    |       | $            | 926          |                                      | $          | 4,794 |   | $ | 7,750 |   |
|                                                   |       |                      |         |                     |       |                     |       |         |         |                                      |       |
| Expenses—                                         |       |                      |         |                     |       |                     |       |         |         |                                      |       |
| Organizational  expenses:                              |       |                      |         |                     |       |                     |       |         |         |                                      |       |
| Travel expense                                         |       | 353                       |         | 2,347                    |       | 1,858                    |       | 4,402        |         | 7,214                                     |       |
| Application fees                                       |       | —                    |         | —                   |       | 3,999                    |       | —       |         | 18,999                                    |       |
| Consulting fees                                        |       | 74                        |         | 3,532                    |       | 2,289                    |       | 42,032       |         | 93,574                                    |       |
| Insurance  expense                                     |       | 4,813                     |         | —                   |       | 4,813                    |       | —       |         | 4,813                                     |       |
| Interest expense                                       |       | 34,941                    |         | —                   |       | 36,842                   |       | —       |         | 36,842                                    |       |
| Lodging                                                |       | 2,153                     |         | 1,926                    |       | 6,460                    |       | 2,568        |         | 11,182                                    |       |
| Marketing and  design                                  |       | 5,454                     |         | 6,775                    |       | 10,913                   |       | 8,136        |         | 22,249                                    |       |
| Meals and  entertainment                               |       | 1,043                     |         | 2,496                    |       | 4,891                    |       | 6,578        |         | 14,127                                    |       |
| Office supplies                                        |       | 1,597                     |         | 1,252                    |       | 2,677                    |       | 4,888        |         | 9,857                                     |       |
| Professional  fees                                     |       | —                    |         | 21,682                   |       | 10,000                   |       | 49,794       |         | 93,056                                    |       |
| Salaries and  employee benefits                        |       | 75,261                    |         | 85,125                   |       | 233,200                  |       | 232,062      |         | 599,086                                   |       |
| Telephone  expense                                     |       | 1,456                     |         | 1,620                    |       | 3,808                    |       | 2,937        |         | 9,217                                     |       |
| Miscellaneous                                          |       | 2,546                     |         | 1,902                    |       | 9,300                    |       | 2,582        |         | 14,524                                    |       |
| **Total  organizational expenses**                     | ** ** | **(129,691**              | **)**        | **(128,657**             | **)**      | **(331,050**             | **)**      | **(355,979** | **)**        | **(934,740**                              | **)**      |
| **Net  loss accumulated during the development stage** | ** ** | **$**                     | **(129,691** | **)**                    | **$**      | **(127,402**             | **)**      | **$**        | **(330,124** | **)**                                     | **$**      | **(351,185** | **)** | **$** | **(926,990** | **)** |

 

See Accompanying Notes to Condensed Financial Statements.

 

3

----

 

**Statements of Changes in Stockholders’ Deficit**

 
| ** **                                                                                                   | ** ** | ** **    | ** ** | ** ** | ** ** | ** **     | ** ** | **Deficit**         | ** ** | ** **       | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------------------------------------------------|------------|---------------|------------|------------|------------|----------------|------------|---------------------|------------|------------------|------------|------------|------------|
| ** **                                                                                                   | ** ** | ** **    | ** ** | ** ** | ** ** | ** **     | ** ** | **Accumulated**     | ** ** | ** **       | ** ** | ** ** | ** ** |
| ** **                                                                                                   | ** ** | ** **    | ** ** | ** ** | ** ** | **Additional** | ** ** | **during the** | ** ** | **Stock**        | ** ** | ** ** | ** ** |
| ** **                                                                                                   | ** ** | **Preferred** | ** ** | **Common** | ** ** | **Paid in**    | ** ** | **Development**     | ** ** | **Subscription** | ** ** | ** ** |       |
| ** **                                                                                                   | ** ** | **Stock**     | ** ** | **Stock**  | ** ** | **Capital**    | ** ** | **Stage**           | ** ** | **Receivable**   | ** ** | **Total**  |       |
| ** **                                                                                                   | ** ** | ** **    | ** ** | ** ** | ** ** | ** **     | ** ** | ** **          | ** ** | ** **       | ** ** | ** ** |       |
| **Balance  at December 31, 2005**                                                                            |       | $             | —     |       | —     |           | —     |                | (99,877    | )                | —     |       | (99,877    | ) |
| Sale of Common  Stock (unaudited)                                                                            |       | —        |       | —     |       | 100            |       | —              |       | (100             | )          | —     |       |
|                                                                                                         |       |          |       |       |       |           |       |                |       |             |       |       |       |
| Net loss  accumulated during the development stage for the nine months ended September  30, 2006 (unaudited) |       | —        |       | —     |       | —         |       | (351,185            | )          | —           |       | (351,185   | )          |
| **Balance  at September 30, 2006**(unaudited)                                                                |       | —        |       | —     |       | 100            |       | (451,062            | )          | (100             | )          | (451,062   | )          |
|                                                                                                         |       |          |       |       |       |           |       |                |       |             |       |       |       |
| **Balance  at December 31, 2006**                                                                            |       | $             | —     |       | —     |           | 100        |                | (596,866   | )                | (100       | )          | (596,866   | ) |
|                                                                                                         |       |          |       |       |       |           |       |                |       |             |       |       |       |
| Net loss  accumulated during the development stage for the nine months ended September  30, 2006 (unaudited) |       | —        |       | —     |       | —         |       | (330,124            | )          | —           |       | (330,124   | )          |
| Sale of Series A  Preferred Stock (unaudited)                                                                |       | —        |       | —     |       | 810,000        |       | —              |       | —           |       | 810,000    |       |
|                                                                                                         |       |          |       |       |       |           |       |                |       |             |       |       |       |
| **Balance  at September 30, 2007**(unaudited)                                                                |       | $             | —     |       | —     |           | 810,100    |                | (926,990   | )                | (100       | )          | (116,990   | ) |

 

See Accompanying Notes to Condensed Financial Statements.

 

4

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**Condensed Statements of Cash Flows**

**(Unaudited)**

 
| ** **                                                                         | ** ** | ** **         | ** ** | ** **          | ** ** | **Cumulative**                 | ** ** |
|------------------------------------------------------------------------------------|------------|--------------------|------------|---------------------|------------|--------------------------------|------------|
| ** **                                                                         | ** ** | ** **         | ** ** | ** **          | ** ** | **Period**                     | ** ** |
| ** **                                                                         | ** ** | ** **         | ** ** | ** **          | ** ** | **from October 11,** | ** ** |
| ** **                                                                         | ** ** | **Nine Months**    | ** ** | **Nine  Months**    | ** ** | **2005  (Date of**             |       |
| ** **                                                                         | ** ** | **Ended Sept-**    | ** ** | **Ended  Sept-**    | ** ** | **Incorporation)  to**         |       |
| ** **                                                                         | ** ** | **ember 30, 2007** | ** ** | **ember  30, 2006** | ** ** | **September  30, 2007**        |       |
| ** **                                                                         | ** ** | ** **         | ** ** | ** **          | ** ** | ** **                     |       |
| **Cash  flows used in organizational activities during the development stage:**    |       |               |       |                |       |                           |       |
| Net loss  accumulated during the development stage                                 |       | $                  | (330,124   | )                   | (351,185   | )                              | (926,990   | ) |
| Increase in  other assets                                                          |       | (20,878            | )          | (5,580              | )          | (104,630                       | )          |
| Decrease in  other liabilities                                                     |       | (10,431            | )          | (29,641             | )          | —                         |       |
| Cash flows used  in organizational activities during the development stage         |       | (361,433           | )          | (386,406            | )          | (1,031,620                     | )          |
| Cash flows used  in investing activity:                                            |       |               |       |                |       |                           |       |
| Purchase of  equipment                                                             |       | (3,299             | )          | (1,198              | )          | (4,497                         | )          |
| Purchase of land                                                                   |       | (1,547,132         | )          | —              |       | (1,547,132                     | )          |
| Cash flows used  in investing activities                                           |       | (1,550,431         | )          | (1,198              | )          | (1,551,629                     | )          |
| Cash flows from  financing activities:                                             |       |               |       |                |       |                           |       |
| Proceeds  received from Organizers                                                 |       | 85,000             |       | 450,000             |       | 810,000                        |       |
| Proceeds from  line of credit                                                      |       | 313,826            |       | —              |       | 313,826                        |       |
| Proceeds  received from borrowing                                                  |       | 1,476,000          |       | —              |       | 1,476,000                      |       |
| Cash flows from  financing activities                                              |       | 1,874,826          |       | 450,000             |       | 2,599,826                      |       |
| Net (decrease)  increase in cash                                                   |       | (37,038            | )          | 62,396              |       | 16,577                         |       |
| Cash at  beginning of period                                                       |       | 53,615             |       | 126,541             |       | —                         |       |
| Cash at end of  period                                                             |       | $                  | 16,577     |                | 188,937    |                           | 16,577     |   |
|                                                                               |       |               |       |                |       |                           |       |
| Supplemental  disclosures of cash flow information:  Cash paid during periods for: |       |               |       |                |       |                           |       |
| Interest                                                                           |       | $                  | 36,842     |                | —     |                           | 36,842     |   |
| Income taxes                                                                       |       | $                  | —     |                | —     |                           | —     |   |
| Noncash  financing activities:                                                     |       |               |       |                |       |                           |       |
| Receivable  recorded from sale of common stock                                     |       | $                  | 100        |                | 100        |                           | 100        |   |
| Organizer  advances exchanged for preferred stock                                  |       | $                  | 810,000    |                | 640,000    |                           | 810,000    |   |

 

See AccompanyingNotes to Condensed Financial Statements.

 

5

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**Notes to Condensed Financial Statements(Unaudited)**

 

**AtSeptember 30, 2007 and for the Nine Month Periods Ended September 30, 2007 and2006**

 

**(1)   Basisof Presentation**

** **

The accompanyingcondensed financial statements for Semoran Financial Corporation (the “Company”)do not include all disclosures necessary for a complete presentation offinancial condition, results of operations, and cash flows in conformity withgenerally accepted accounting principles. All adjustments, consisting only ofnormal recurring accruals, which are, in the opinion of management, necessaryfor fair presentation of the interim financial statements have been included.The results of operations for the nine month period ended September 30, 2007are not necessarily indicative of the results that may be expected for theentire year. These financial statements do not include all disclosures requiredby generally accepted accounting principles and should be read in conjunctionwith the Company’s audited financial statements and related notes for the yearended December 31, 2006, which was filed in our Registration Statement onForm SB-2.

 

**(2)**   **Summary of Significant Activities**

 

The Company, a Floridacorporation, was established for the purpose of organizing Community Bank ofCentral Florida, in organization (the “Bank”). The Bank is a proposed statebank being organized under the laws of the State of Florida with the purpose ofbecoming a community bank to be principally located in Seminole County, Floridawith a temporary office in Fern Park, Florida. We intend to construct our mainoffice in Casselberry, Florida. The Bank’s organizers have filed applicationswith the Office of Financial Regulation’s Division of Financial Institutionsfor the State of Florida (the “OFR”) to obtain a state bank charter and withthe Federal Deposit Insurance Corporation (the “FDIC”) to obtain insurance forthe Bank’s deposits.

 

The Company is a development stage enterprise asdefined by Statement of Financial Accounting Standards No. 7, *Accounting and Reporting by Development StageEnterprises*, as it devotes substantially all its efforts toestablishing a new business. The Company’s planned principal operations havenot commenced and revenue has not been recognized from the planned principaloperations.

 

On March 24, 2007, when the total organizeradvances were $810,000, the Company authorized for issuance 100,000 shares ofSeries A Preferred Stock (“Series A Stock”) and on March 30,2007, all of the organizers exchanged their right to be reimbursed for advancesonce the bank opens for business for 81,000 shares of the Series A Stock.In May 2007, the Company rescinded the Series A Stock and amended theterms of the Series A Stock to increase the amount of authorized shares ofSeries A Stock to 375,000 and to provide for an automatic conversion on aone-for-one share basis to shares of common stock to occur on April 1,2009. Subsequently, on May 29, 2007, the Company issued 81,000 shares ofSeries A Stock and warrants to purchase 121,500 shares of Series AStock to the organizers, of which 81,000 represent Preferred Risk Warrants and40,500 represent Preferred Share Warrants.

 

The Company filed aregistration statement on Form SB-2 to register the issuance of up to 2,000,000shares including 1,000,000 warrants to be sold in a public offering. Theoffering commenced July 17, 2007. As of September 30, 2007, the Company hadreceived subscriptions of $2,915,500, escrow has not been broken and theCompany has not yet issued any shares or received any proceeds from theoffering.

 

The offering (minimum) is expected to raise$12,340,000 net of estimated offering expenses. The directors and executiveofficers of the Company plan to purchase approximately 359,000 shares of commonstock at $10 per share, for a total investment of approximately $3,590,000. Uponthe opening of the Bank, the Company will issue stock warrants to the directorsand executive officers to purchase one share of common stock for $11.50 pershare for every two shares they purchase in the offering and to the directorsonly  to purchase one share of commonstock for $10 per share for every share they purchase in the offering, which wecurrently anticipate to be an aggregate of warrants to purchase 508,500 sharesof common stock, of which 179,500 represent Shareholder Warrants and 339,000represent Common Risk and Director Warrants. The Company plans to use at least$10,750,000 of the proceeds to capitalize the proposed bank. The Companyanticipates the offering will be completed by March 31, 2008*.*

 

The Company was established and commenced activitieson October 11, 2005. The Company has prepared financial statements toinclude financial information from the date of inception. Activities sinceinception have consisted primarily of the Company’s organizers engaging inorganizational and pre-opening activities necessary to prepare the applicationsfor regulatory approvals and to prepare to commence business as a financialinstitution.

 

6

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**(3)   Commitmentsand Related Party Transactions**

** **

The Company purchased1.06 acres of land at 386 State Road 436, Casselberry, FL 32707. The totalacquisition cost was $1,476,000. This lot will be the location of the Company’smain office.

 

The Company entered intoamended and restated consulting agreements with each of Lloyd J. Weber andMalcom S. MacDiarmid on March 30, 2007. The agreements provide for amonthly salary of $8,000, reimbursement of business-related expenses, includinguse of automobile, meals, supplies, and similar items, and medical insurance upto $750 per month. The agreements are to expire on the earlier of(i) March 31, 2008; (ii) the date the bank opens for business;(iii) the date the Company abandons its efforts to obtain a charter; (iv) thedate the Company terminates the agreement for cause; or (v) death ordisability.

 

The Company will enterinto employment agreements with each of Lloyd J. Weber and Malcom S. MacDiarmidwhen the Bank opens for business, which provide for an annual base salary of$150,000 and $140,000, respectively. The proposed employment agreements providefor a bonus of not less than 10% of base salary if certain performance criteriaare met, reimbursement of business-related expenses, including use ofautomobile, meals, travel expenses, and similar items, term life insurancecoverage of at least $200,000, and options to purchase up to 40,000 shares ofcommon stock at $10 per share, vesting ratably over three years plus options topurchase 2,000 shares of common stock at each anniversary of the effective dateof employment.

 

**(4)**   **Borrowings**

 

OnJune 7, 2007, the Company borrowed $1,476,000 at the rate of prime to purchasethe land on which the future main office will be built. The single payment notebears interest at a variable rate equal to the Wall Street Journal prime ratewith interest payable monthly and principal due on June 7, 2008.

 

**(5)   Lineof Credit**

** **

In April 2007, theCompany obtained a line of credit of up to $750,000 with Nexity Bank at therate of prime minus 1.00%. At September 30, 2007, $313,826 was outstandingunder the line of credit.

 

7

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**Review by Independent Registered Public AccountingFirm**

 

Hacker, Johnson &Smith PA, the Company’s independent registered public accounting firm, has madea limited review of the financial data as of September 30, 2007, and for thethree-month and nine-month periods ended September 30, 2007, and for theamounts included in the cumulative amounts from October 11, 2005 (date ofincorporation) to September 30, 2007 presented in this document, in accordancewith the standards established by the Public Company Accounting OversightBoard.

 

The report of Hacker,Johnson & Smith PA furnished pursuant to Article 10 of Regulation S-X isincluded herein.

 

8

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**Report of Independent RegisteredPublic Accounting Firm**

 

Semoran Financial Corporation

Fern Park, Florida:

 

We have reviewed the accompanying condensed balancesheet of Semoran Financial Corporation (the “Company”) as of September 30,2007, and the related condensed statements of operations for the three-monthand nine-month periods ended September 30, 2007, the related condensedstatements of stockholders’ deficit and cash flows for the nine-month periodended September 30, 2007 and the amounts included in the cumulative amountsfrom October 11, 2005 (date of incorporation) to September 30, 2007. Theseinterim financial statements are the responsibility of the Company’smanagement.

 

We conducted our review in accordance with thestandards of the Public Company Accounting Oversight Board (United States). Areview of interim financial information consists principally of applyinganalytical procedures and making inquiries of persons responsible for financialand accounting matters. It is substantially less in scope than an auditconducted in accordance with the standards of the Public Company AccountingOversight Board (United States), the objective of which is the expression of anopinion regarding the financial statements taken as a whole. Accordingly, we donot express such an opinion.

 

Based on our review, we are not aware of any materialmodifications that should be made to the interim condensed financial statementsreferred to above for them to be in conformity with U.S. generally acceptedaccounting principles.

 

We have previously audited, in accordance with thestandards of the Public Company Accounting Oversight Board (United States), thebalance sheet of the Company as of December 31, 2006 and the related statementsof operations, stockholders’ deficit and cash flows for the year then ended(not presented herein), and in our report dated January 29, 2007, except forNote 9, as to which the date is March 30, 2007, we expressed an unqualifiedopinion on those financial statements. In our opinion, the information setforth in the accompanying condensed balance sheet as of December 31, 2006 isfairly stated, in all material respects, in relation to the balance sheet fromwhich it has been derived.

 

 
| /s/ Hacker, Johnson & Smith, PA |   |
|-------------------------------------|--------|
| HACKER, JOHNSON & SMITH PA      |
| Tampa, Florida                      |
| November 9, 2007                    |

 

9

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## **Item 2. Management’s Discussion and Analysis or Planof Operation**

## ** **

The following is ourdiscussion and analysis of certain significant factors that have affected ourfinancial position and operating results and those of our subsidiary, CommunityBank of Central Florida (in organization), during the periods included in theaccompanying financial statements. This commentary should be read inconjunction with the financial statements and the related notes and the otherstatistical information included in this report.

 

This report contains “forward-lookingstatements” relating to, without limitation, future economic performance, plansand objectives of management for future operations, and projections of revenuesand other financial items that are based on the beliefs of management, as wellas assumptions made by and information currently available to management. Thewords “may,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,”“expect,” “estimate,” “continue,” “may,” and “intend,” as well as other similarwords and expressions of the future, are intended to identify forward-lookingstatements. Our actual results may differ materially from the results discussedin the forward-looking statements, and our operating performance each quarteris subject to various risks and uncertainties that are discussed in detail inour filings with the Securities and Exchange Commission, including, withoutlimitation:

 
| • |   | our lack of operating history;                                                                                                                                                                                     |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | potential delays in the opening date of the bank;                                                                                                                                                                  |
| • |   | significant increases in competitive pressure in the  banking and financial services industries;                                                                                                                   |
| • |   | changes in the interest rate environment which could  reduce anticipated or actual margins;                                                                                                                        |
| • |   | changes in political conditions or the legislative  or regulatory environment;                                                                                                                                     |
| • |   | general economic conditions, either nationally or  regionally and especially in primary service area, becoming less favorable  than expected resulting in, among other things, a deterioration in credit  quality; |
| • |   | changes occurring in business conditions and  inflation;                                                                                                                                                           |
| • |   | changes in technology;                                                                                                                                                                                             |
| • |   | the level of allowance for loan loss and the lack of  seasoning of our loan portfolio, once we open;                                                                                                               |
| • |   | the rate of delinquencies and amounts of  charge-offs, once we open;                                                                                                                                               |
| • |   | the rates of loan growth, once we open;                                                                                                                                                                            |
| • |   | adverse changes in asset quality and resulting  credit risk-related losses and expenses;                                                                                                                           |
| • |   | changes in monetary and tax policies;                                                                                                                                                                              |
| • |   | loss of consumer confidence and economic disruptions  resulting from terrorist activities;                                                                                                                         |
| • |   | changes in the securities markets; and                                                                                                                                                                             |
| • |   | other risks and uncertainties detailed from time to  time in our filings with the Securities and Exchange Commission.                                                                                              |

 

**General**

** **

We are in thedevelopment stage and will remain in that stage until our initial publicoffering is completed. Semoran was incorporated in Florida on October 11,2005 to serve as a holding company for the Bank. Throughout our organization,our main activities have been:

 

•       seeking,interviewing and selecting our officers;

•       preparingour business plan;

•       applying fora state bank charter under the laws of the State of Florida;

•       applying forFDIC deposit insurance;

•       applying tobecome a bank holding company;

•       identifyingthe sites for our banking facilities; and

•       raisingequity capital through our private placement and initial public offering.

 

10

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**FinancialResults and Plan of Operation**

** **

From October 11,2005, the date we began our organizational activities, through September 30,2007, our net loss amounted to $926,990. Our estimated net loss for the periodfrom October 11, 2005 through our anticipated closing date of our publicoffering of December 31, 2007 is $977,062. The losses set forth above areattributable to the following estimated expenses: 

 
| ** **                                                | ** ** | **October 11, 2005 -  September 30, 2007** | ** ** | **October 11, 2005 - December 31, 2007** | ** ** |
|-----------------------------------------------------------|------------|---------------------------------------------------------------------|------------|------------------------------------------------------------------------|------------|
| Employee  compensation and benefits                       |       | $                                                                   | (599,086   | )                                                                      | $          | (674,347 | ) |
| Consulting &  professional fees & costs |       | (186,630                                                            | )          | (187,812                                                               | )          |
| Lodging, travel,  meals & entertainment expense  |       | (32,523                                                             | )          | (36,072                                                                | )          |
| Telephone  expenses and supplies                          |       | (19,074                                                             | )          | (32,127                                                                | )          |
| Marketing and  printing expense                           |       | (22,249                                                             | )          | (28,236                                                                | )          |
| Application fees                                          |       | (18,999                                                             | )          | (18,999                                                                | )          |
| Other  pre-opening expenses(1)                            |       | (56,179                                                             | )          | (98,479                                                                | )          |
| Interest income                                           |       | 7,750                                                               |       | 99,010                                                                 |       |
| Total                                                     |       | $                                                                   | (926,990   | )                                                                      | $          | (977,062 | ) |

 

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(1)             Includesinterest expense, rent and other miscellaneous expenses.

 

Our financial statementsand related notes, which are included in this report, provide additionalinformation relating to the discussion of our financial condition.

 

We expect to completeour organizational activities and begin banking operations in the first quarterof 2008. Our current plans consist of operating the bank from a 4,000 squarefoot leased facility in Fern Park, Florida until the first quarter of 2009 andthen relocating to the newly constructed 5,000 square foot building with athree-lane drive-through facility, in Casselberry, Florida. The bank plans toopen a branch office sometime within the second year of operation.

 

We will incursubstantial expenses in establishing the Bank as a going concern. Typically newbanks are not profitable in their first year of banking operations and, in somecases are not profitable for several years. Once we begin banking operations,our future results will be determined primarily by our ability to manageeffectively interest income and expense, to minimize loan and investmentlosses, to generate non-interest income, and to control non-interest expenses.Since interest rates will be determined by market forces and economicconditions beyond our control, our ability to generate net interest income willbe dependent upon our ability to maintain an adequate spread between the rateearned on earning assets, such as loans and investment securities, and the ratepaid on interest-bearing liabilities, such as deposits and borrowings.

 

**Liquidityand Interest Rate Sensitivity**

** **

***OrganizationalPeriod.******  ***During ourorganizational period, our cash requirements have consisted principally offunding our pre-opening expenses, described above, as well as capitalexpenditures for the acquisition of the site for our initial main officefacility.

 

Since October 11,2005, our pre-opening expenses have been funded through cash advances from thedirectors and draws from a line of credit. We initially funded our operationsthrough advances totaling $810,000 made to us from our directors. Theseadvances were exchanged for 81,000 shares of Series A Preferred Stock in May2007. Additionally, in April 2007, we entered into a line of credit, guaranteedby our directors, with Nexity Bank in the amount of $750,000 at prime minus1.00% (which was 6.75% as of September 30, 2007). As of September 30, 2007,$313,826 was outstanding under the line of credit. We believe that ourorganizational expenses will continue to be funded through the proceedsobtained from the sale of Series A Preferred Stock to our directors and thisline of credit through our Bank’s opening date. The shares of Series APreferred Stock will remain outstanding after the completion of our initialpublic offering. We plan to repay the line of credit, after the close of ourinitial public offering, by using a portion of the proceeds. After all of theconditions to the offering have been satisfied, Nexity Bank will have releasedfunds from the subscription escrow account to us so that we can capitalize theBank and commence operations.

 

We expect to completeour organizational activities and begin banking operations in the first quarterof 2008. Any delay in beginning our banking operations will increase ourpre-opening expenses and postpone our realization of potential revenues. Such adelay may occur as a result of, among other things, delays in receivingrequisite regulatory approvals or our 

 

11

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inability to achieve theminimum offering of $12,500,000. In the event we experience an extended delayin beginning our banking operations, we may be required to exhaust the entire$750,000 available under the line of credit and even to seek additionalborrowings or equity investments. There can be no assurance that we will beable to obtain such additional financing on satisfactory terms.

 

***Commencementof Banking Operations.******  ***Since wehave been in the development stage, there are no operating results to presentat this time. Nevertheless, once we begin banking operations, net interestincome, our primary source of earnings, will fluctuate with significantinterest rate movements. To lessen the impact of these margin swings, we intendto structure our balance sheet so we will have regular opportunities to “reprice”or change the interest rates on our interest-bearing assets and liabilities.Imbalance in these repricing opportunities at any point in time constitutesinterest rate sensitivity.

 

Interest ratesensitivity refers to the responsiveness of interest-bearing assets andliabilities to changes in market interest rates. The rate sensitive position,or gap, is the difference in the volume of rate sensitive assets andliabilities at a given time interval. The general objective of gap managementis to actively manage rate sensitive assets and liabilities in order to reducethe impact of interest rate fluctuations on the net interest margin. We willgenerally attempt to maintain a balance between rate sensitive assets andliabilities as the exposure period is lengthened to minimize our overallinterest rate risks.

 

We will evaluateregularly our balance sheet’s asset mix in terms of several variables,including yield, credit quality, appropriate funding sources and liquidity. Toeffectively manage our balance sheet’s liability mix, we plan to focus on expandingour deposit base and converting assets to cash as necessary.

 

As we continue to grow,we will restructure our rate sensitivity position in an effort to hedge againstrapidly rising or falling interest rates. Our Asset/Liability/InvestmentCommittee will meet on a quarterly basis to develop a strategy for the upcomingperiod.

 

For an operating bank,liquidity represents the ability to provide steady sources of funds for loancommitments and investment activities, as well as to maintain sufficient fundsto cover deposit withdrawals and payment of debt and operating obligations.Initially, we expect that a portion of the net proceeds of the public offeringwill be available for working capital purposes and will provide funds for thesepurposes. In addition, we can obtain these funds by converting assets to cashor by attracting new deposits. Through our banking operations, our ability tomaintain and increase deposits will serve as our primary source of liquidity.To provide additional sources of liquidity, we plan to maintain a federal fundsborrowed line of credit with one or more correspondent banks and to apply formembership to the Federal Home Loan Bank of Atlanta.

 

Other than our publicoffering and as discussed above, we know of no trends, demands, commitments,events or uncertainties that should result in, or are reasonably likely toresult in, our liquidity increasing or decreasing in any material way in theforeseeable future.

 

**CapitalAdequacy**

** **

There are now twoprimary measures of capital adequacy for banks and bank holding companies:(i) risk-based capital guidelines and (ii) the leverage ratio.

 

The risk-based capitalguidelines measure the amount of a bank’s required capital in relation to thedegree of risk perceived in its assets and its off-balance sheet items. Underthe risk-based capital guidelines, capital is divided into two “tiers.” Tier 1capital consists of common shareholders’ equity, noncumulative and cumulativeperpetual preferred stock, and minority interests. Goodwill is subtracted fromthe total. Tier 2 capital consists of the allowance for loan losses, hybridcapital instruments, term subordinated debt and intermediate term preferredstock. Banks are required to maintain a minimum risk-based capital ratio of 8%,with at least 4% consisting of tier 1 capital. For the first three years ofoperation, the bank will be required to maintain an 8% tier 1 capital ratio.

 

The second measure ofcapital adequacy relates to the leverage ratio. The FDIC has established a 3%minimum leverage ratio requirement. The leverage ratio is computed by dividingtier 1 capital into total assets. In the case of the Bank and other banks thatare experiencing growth or have not received the highest regulatory rating fromtheir primary regulator, the minimum leverage ratio should be 3% plus anadditional cushion of at least 1% to 2%, depending upon risk profiles and otherfactors.

 

We believe that the netproceeds of our public offering will satisfy our capital requirements for atleast the next 12 months following the opening of the bank. Currently, wehave 4 employees and expect this number to increase to approximately 11employees by the beginning of the first quarter of 2008.

 

12

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**Item 3.Controls and Procedures**

 

As of the end of theperiod covered by this report, we carried out an evaluation, under thesupervision and with the participation of our management, including our ChiefExecutive Officer and Chief Financial Officer, of the effectiveness of our disclosurecontrols and procedures as defined in Exchange Act Rule 15d-15(e). Based uponthat evaluation, our Chief Executive Officer and Chief Financial Officer haveconcluded that our current disclosure controls and procedures are effective asof September 30, 2007. There have been no significant changes in our internalcontrols over financial reporting during the fiscal quarter ended September 30,2007 that have materially affected, or are reasonably likely to materiallyaffect, our internal controls over financial reporting.

 

The design of any systemof controls and procedures is based in part upon certain assumptions about thelikelihood of future events. There can be no assurance that any design willsucceed in achieving its stated goals under all potential future conditions,regardless of how remote.

 

13

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**PART II -OTHER INFORMATION**

 

**Item 1.Legal Proceedings**

 

There are nopending legal proceedings to which we are a party or of which any of ourproperty is the subject.

 

**Item 2.Unregistered Sales of Equity Securities and Use of Proceeds**

 

On May 29, 2007, weissued 81,000 shares of Series A Preferred Stock and warrants to purchase121,500 shares of Series A Preferred Stock to our organizers under an exemptioncontained in Section 4(2) of the Securities Act of 1933 and Rule 506 ofRegulation D under the Securities Act. Our organizers exchanged their right ofrepayment of advances made to us for shares of Series A Preferred Stock at$10.00 per share. The shares of Series A Preferred Stock are non-voting andwill automatically convert into shares of common stock on April 1, 2009. Wehave used the proceeds of the private placement to fund a portion of ourorganizational, pre-opening, and offering expenses.

 

Our RegistrationStatement on Form SB-2 (File no. 333-140768), which registered the issuance ofthe shares to be sold in our initial public offering, was declared effectiveJuly 16, 2007. The offering commenced on July 17, 2007 and has been extended toclose on December 31, 2007, subject to our right to extend the offering for onemore period to March 31, 2008. The maximum offering size is $20,000,000, or2,000,000 shares at $10.00 per share. We registered the issuance of a total of2,000,000 shares in the offering and 1,557,500 warrants. The warrants will beissued to each subscriber, including the directors and executive officers ofthe bank.

 

We will use at least$10,750,000 of the proceeds to capitalize the proposed bank. The directors andexecutive officers plan to purchase a total of 359,000 shares in the offeringat an aggregate purchase price of approximately $3,590,000.

 

Through September 30,2007, we incurred $88,167 in capitalized expenses in connection with theproposed issuance and distribution of the common stock in the offering. All ofthese expenses were paid directly or indirectly to persons or entities otherthan directors, officers, persons owning 10% or more of the company’ssecurities, or affiliates of the company. As of September 30, 2007, we had receivedsubscriptions for $2,915,500 in the offering. We have not broken escrow andhave not yet issued any shares or received any net proceeds in the offering.

 

**Item 3.Default Upon Senior Securities**

 

Not applicable

 

**Item 4.Submission of Matters to a Vote of Security Holders**

 

Not applicable

 

**Item 5.Other Information**

 

Not applicable

 

**Item 6.Exhibits**

 
| 31.1   |   | Rule 15d-14(a)  Certification of the Principal Executive Officer. |
|--------|--------|-------------------------------------------------------------------|
|   |   |                                                              |
| 31.2   |   | Rule 15d-14(a)  Certification of the Principal Financial Officer. |
|   |   |                                                              |
| 32     |   | Section  1350 Certifications.                                     |

 

14

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**(ACOMPANY IN THE DEVELOPMENT STAGE)**

 

 

# **SIGNATURES**

# ** **

In accordance with therequirements of the Securities Exchange Act of 1934, the Registrant caused thisreport to be signed on its behalf by the undersigned thereunto duly authorized.

 

 
| Date:  November 14, 2007 |
|-------------------------------|
|                          |   |
|                          |   |
| By:                           | /s/ Lloyd J. Weber |   |
|                          | Lloyd J. Weber |
|                          | Chief Executive  Officer, and |
|                          | Principal Executive  Officer |
|                               |  |  |  |

 
| Date:  November 14, 2007 |
|-------------------------------|
|                          |   |
|                          |   |
| By:                           | /s/ Donald J. Bugea, Jr. |   |
|                          | Donald J. Bugea, Jr. |
|                          | Chief Financial  Officer, and |
|                          | Principal Financial  Officer |
|                               |  |  |  |

 

15

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**EXHIBITINDEX**

 
| **Exhibit  Number** | ** ** | **Description**                                               |
|---------------------|------------|---------------------------------------------------------------|
|                |       |                                                          |
| 31.1                |       | Rule 15d-14(a)  Certification of the Chief Executive Officer. |
|                |       |                                                          |
| 31.2                |       | Rule 15d-14(a)  Certification of the Chief Financial Officer. |
|                |       |                                                          |
| 32                  |       | Section 1350  Certifications.                                 |

 

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