UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-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, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _____________ to ______________
Commission file number 333-100137
SGC Holdings, Inc.
---------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 86-1047317
------------------- ---------------------
(State or jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
15911 East Sunburst Drive
Fountain Hills, AZ 85268
---------------------------------
(Address of principal executive offices)
(480) 837-6029
--------------------
(Issuer's telephone number)
(Former name, former address and former fiscal
year, if changed since last report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed
by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Common Stock, 2,720,000 shares issued and outstanding as of
October 27, 2003.
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [X]
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TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION 3
Item 1. Financial Statements. 3
Item 2. Management's Discussion and Analysis or Plan of Operation. 11
Item 3. Controls and Procedures 13
PART II - OTHER INFORMATION 14
Item 1. Legal Proceedings. 14
Item 2. Changes in Securities. 14
Item 3. Defaults Upon Senior Securities. 14
Item 4. Submission of Matters to a Vote of Security Holders. 14
Item 5. Other Information. 14
Item 6. Exhibits and Reports on Form 8-K. 14
SIGNATURES 16
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The following unaudited financial statements are included as part
of this report:
* Balance Sheet as of September 30, 2003
* Statements of Operations for the three months and nine
months ended September 30, 2003 and 2002, and for the period
December 5, 2001 (Inception) to September 30, 2003
* Statements of Cash Flows for the nine months ended September
30, 2003 and 2002, and for the Period December 5, 2001
(Inception) to September 30, 2003
* Notes to Financial Statements
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SGC Holdings, Inc.
(a Development Stage Company)
Balance Sheet
as of
September 30, 2003
and
Statements of Operations
for the three months and nine months ended
September 30, 2003 and 2002,
and
for the period
December 5, 2001 (Inception) to September 30, 2003
and
Cash Flows
for the nine months ended
September 30, 2003 and 2002,
and
for the Period
December 5, 2001 (Inception) to September 30, 2003
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TABLE OF CONTENTS
Page
Independent Accountants' Review Report 1
Consolidated Balance Sheet 2
Consolidated Statements of Operations 3
Consolidated Statements of Cash Flows 4
Footnotes 5
-5-
Beckstead and Watts, LLP
Certified Public Accountants
3340 Wynn Road, Suite C
Las Vegas, NV 89102
702.257.1984
702.362.0540 fax
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors
SGC Holdings, Inc.
(a Development Stage Company)
We have reviewed the accompanying balance sheet of SGC Holdings,
Inc. (a Nevada corporation) (a development stage company) as of
September 30, 2003 and the related statements of operations for
the three-months and nine-months ended September 30, 2003 and
2002 and for the period December 5, 2001 (Inception) to September
30, 2003, and statements of cash flows for the nine-months ended
September 30, 2003 and 2002 and for the period December 5, 2001
(Inception) to September 30, 2003. These financial statements
are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data, and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, which will be performed for the full year with the
objective of expressing an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such
an opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to the accompanying financial
statements referred to above for them to be in conformity with
generally accepted accounting principles in the United States of
America.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 2 to the financial statements, the Company has had limited
operations and has not commenced planned principal operations.
This raises substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are
also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of
this uncertainty.
Beckstead and Watts, LLP has previously audited, in accordance
with generally accepted auditing standards, the balance sheet of
SGC Holdings, Inc. (a development stage company) as of December
31, 2002, and the related statements of operations, stockholders'
equity, and cash flows for the year then ended (not presented
herein) and in our report dated February 27, 2003, we expressed
an unqualified opinion on those financial statements.
/s/ Beckstead and Watts, LLP
-----------------------------
October 20, 2003
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SGC Holdings, Inc.
(a Development Stage Company)
Balance Sheet
(unaudited)
September 30,
2003
Assets -------------
Current assets:
Cash $ 19,289
-------------
Total current assets 19,289
-------------
$ 19,289
=============
Liabilities and Stockholders' Equity
Current liabilities: $ -
-------------
Stockholders' equity:
Common stock, $0.001 par value, 25,000,000 shares
authorized, 2,720,000 shares issued and outstanding 2,720
Additional paid-in capital 35,280
(Deficit) accumulated during development stage (18,711)
-------------
19,289
-------------
$ 19,289
=============
The accompanying notes are an integral part of these financial
statements.
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SGC Holdings, Inc.
(a Development Stage Company)
Statements of Operations
(unaudited)
December 5,
Three Months Ended Nine Months Ended 2001
September 30, September 30, (Inception) to
2003 2002 2003 2002 September 30,
2003
Revenue $ - $ - $ - $ - $ -
----------- ----------- ----------- ----------- ------------
Expenses:
General and administrative expenses 1,198 296 8,665 331 17,211
General and administrative expenses
- related party - - - - 1,500
----------- ----------- ----------- ----------- ------------
Total expenses 1,198 296 8,665 331 18,711
----------- ----------- ----------- ----------- ------------
Net (loss) $ (1,198) $ (296) $ (8,665) $ (331) $ (18,711)
=========== =========== =========== =========== ============
Weighted average number of
common shares outstanding
- basic and fully diluted 2,720,000 2,245,275 2,720,000 2,082,059
=========== =========== =========== ===========
Net (loss) per share - basic & fully diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00)
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial
statements.
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SGC Holdings, Inc.
(a Development Stage Company)
Statements of Cash Flows
(unaudited)
Nine Months Ended December 5, 2001
September 30, (Inception) to
2003 2002 September 30, 2003
----------- ----------- -----------
Cash flows from operating activities
Net (loss) $ (8,665) $ (331) $ (18,711)
Shares issued for services - - 1,500
Adjustments to reconcile net (loss) to
net cash (used) by operating activities:
(Decrease) in accounts payable (504) - -
----------- ----------- -----------
Net cash (used) by operating activities (9,169) (331) (17,211)
----------- ----------- -----------
Cash flows from financing activities
Issuances of common stock - 36,000 36,500
----------- ----------- -----------
Net cash provided by financing activities - 36,000 36,500
----------- ----------- -----------
Net increase (decrease) in cash (9,169) 35,669 19,289
Cash - beginning 28,458 218 -
----------- ----------- -----------
Cash - ending $ 19,289 $ 35,887 $ 19,289
=========== =========== ===========
Supplemental disclosures:
Interest paid $ - $ - $ -
=========== =========== ===========
Income taxes paid $ - $ - $ -
=========== =========== ===========
Non-cash investing and financing activities:
Shares issued for services provided $ - $ - $ 1,500
=========== =========== ===========
Number of shares issued for services - - 1,500,000
=========== =========== ===========
The accompanying notes are an integral part of these financial
statements.
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SGC Holdings, Inc.
(a Development Stage Company)
Notes
Note 1 - Basis of presentation
The interim financial statements included herein, presented in
accordance with United States generally accepted accounting
principles and stated in US dollars, have been prepared by the
Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations, although the Company believes that the
disclosures are adequate to make the information presented not
misleading.
These statements reflect all adjustments, consisting of normal
recurring adjustments, which, in the opinion of management, are
necessary for fair presentation of the information contained
therein. It is suggested that these interim financial statements
be read in conjunction with the financial statements of the
Company for the year ended December 31, 2002 and notes thereto
included in the Company's Form SB-2/A. The Company follows the
same accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative
of annual results.
Note 2 - Going concern
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As shown in the
accompanying financial statements, the Company has incurred a net
loss of $18,711 for the period from December 5, 2001 (inception)
to September 30, 2003, and has no sales. The future of the
Company is dependent upon its ability to obtain financing and
upon future profitable operations from the development of its new
business opportunities. Management believes that it has raised
enough funds to sustain operations for a period of twelve months.
The financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets, or
the amounts of and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern. These financial
statements do not include any adjustments that might arise from
this uncertainty.
Note 3 - Related party transactions
Office space is provided without charge by an officer, director
and shareholder. Such costs are immaterial to the financial
statements and, accordingly, have not been reflected therein.
The officers and directors of the Company are involved in other
business activities and may, in the future, become involved in
other business opportunities. If a specific business opportunity
becomes available, such persons may face a conflict in selecting
between the Company and their other business interests. The
Company has not formulated a policy for the resolution of such
conflicts.
-10- F5
Item 2. Management's Discussion and Analysis or Plan of
Operation.
This section must be read in conjunction with unaudited financial
statements included in this report.
A. Management's Discussion
SGC Holdings, Inc. was incorporated in the State of Nevada on
December 5, 2001. To date, SGC Holdings, Inc. has:
* secured initial capitalization through equity offerings,
* developed a business plan,
* completed a financial feasibility study, and
* incorporated its first subsidiary "St. George Clipper One,
Inc." to open first restaurant.
In the initial approximately twenty-two months operating period
from December 5, 2001 (inception) to September 30, 2003, SGC
Holdings, Inc. generated no revenues and incurred $18,711 in
total general and administrative expenses. The resulting
cumulative net loss for the period from December 5, 2001
(inception) to September 30, 2003 was $18,711, or approximately
$0.01 per share. That loss is attributable primarily to the
costs of start-up operations.
SGC Holdings, Inc. financed its initial operations by issuing
common stock in exchange for cash and services.
B. Plan of Operation
SGC Holdings, Inc.'s start-up plan included a feasibility study,
which is already complete. SGC Holdings, Inc. incorporated its
first wholly owned subsidiary "St. George Clipper One, Inc." SGC
has begun talks with different investment banks in order to
obtain financing of either debt or equity in order to open our
first restaurant Once financing is complete demographic studies
aimed at selecting the location for the new St. George Clipper
restaurant will begin. Depending on the results of such studies,
SGC Holdings, Inc. plans to develop specific
kitchen/architectural plans and take steps towards opening the
new St. George Clipper. Such steps may include the purchase or
lease of an existing structure. In order to finance these steps,
SGC Holdings, Inc. will need additional financing. SGC Holdings,
Inc. needs $2 million to finance its first restaurant but as of
yet has no funding sources available for the $2 million. If such
funding is not secured, SGC Holdings, Inc. will not be able to
conduct business operations or open its first restaurant.
During the next twelve months, SGC Holdings, Inc. plans to
satisfy its cash requirements by additional equity financing.
This will be in the form of private placements of restricted
common stock. There can be no assurance that SGC Holdings, Inc.
will be successful in raising additional equity financing, and,
thus, be able to satisfy its cash requirements, which primarily
consist of legal and accounting fees at the present time. SGC
Holdings, Inc. currently does not have enough cash to satisfy the
opening of its first restaurant.
SGC Holdings, Inc. has no current material commitments. SGC
Holdings, Inc. depends upon capital to be derived from future
financing activities such as subsequent offerings of its stock.
There can be no assurance that SGC Holdings, Inc. will be
successful in raising the capital it requires. SGC Holdings,
Inc. does not expect to achieve liquidity or profitability within
the first 12 months of operation.
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SGC Holdings, Inc. does not expect the purchase or sale of plant
or any significant equipment, except for the initial purchase of
restaurant equipment for the prototype, and it does anticipate
hiring at least 24 minimum wage employees and three full time
managers to run the prototype restaurant.
On April 1, 2003, SGC Holdings, Inc. contracted GEC Consultants,
an independent consulting firm, to perform a feasibility study.
The main part of the study addressing financial requirements,
break-even analysis, and projections was completed in June 2003.
The cost of the study was $4,000.
The preliminary estimates indicated that SGC Holdings, Inc. would
need approximately $2,000,000 to satisfy its cash requirements to
open the first restaurant of approximately 10,000 sq. ft. in the
next 12 months. With this amount of capital, SGC Holdings, Inc.
intends to establish its first prototype fast food restaurant,
using the SGC Holdings, Inc. theme. The following table presents
a summary breakdown of this cash requirement:
Professional Development $300,145.00
Location Site Realty $600,000.00
Fixtures, Equipment, and Furnishings $397,900.00
Buildout & Improvements $489,269.00
Working Capital $212,686.00
--------------
Total Facilities Cost $2,000,000.00
The specific steps required to open the first restaurant are
(timeframes are included in parentheses):
1) Feasibility study (already complete).
2) Additional capital raise (the next three to six months).
3) Determination of a location in Fountain Hills, Scottsdale,
or Phoenix in Maricopa County, Arizona (three to six months after
funding).
4) Demographic study of location selected (to be completed once
location is found).
5) Development of kitchen/architectural plans (to be completed
once location and demographic study are completed).
6) Construction (four to twelve months after completion of step 5).
The feasibility study concluded that a loan package of $1,750,000
at 7% interest for a period of 240 months together with equity
from shareholders of $250,000 should permit the project to
proceed. If the dining rooms can maintain at least a 60%
customer capacity for every meal period, the restaurant should
provide a positive cash flow for the first full year's operation
and for the next two years thereafter. The break-even proforma
using the smallest cash flow as the break-even determinant, shows
that at about 45% customer capacity the restaurant should break-
even.
SGC Holdings, Inc. will not be able to operate if it does not
obtain equity financing. SGC Holdings, Inc. has approached
several investment banks regarding debt or equity financing.
These investment banks indicated that, once the company is
publicly traded, the financing options would be easier to
determine. However, it is yet unknown, which financing route is
best for the company. At this time, SGC Holdings, Inc. cannot
estimate the financing time frames.
SGC Holdings, Inc. is still considered to be a development stage
company, with no significant revenue, and is dependent upon the
raising of capital through placement of its common stock. There
can be no assurance that SGC Holdings, Inc. will be successful in
raising the capital it requires through the sale of its common
stock.
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SGC Holdings, Inc.'s long-term objective is to expand its St.
George Clipper restaurant concept by opening company-operated
units in strategically desirable markets. SGC Holdings, Inc.
intends to concentrate on the development of certain identified
markets to achieve penetration levels deemed desirable by SGC
Holdings, Inc., thereby improving the SGC Holdings, Inc.'s
competitive position, marketing potential, and profitability.
As of September 30, 2003, SGC Holdings, Inc. had $19,289 in
current assets (consisting entirely of cash) and no liabilities.
Thus, the working capital as of September 30, 2003 was equal to
$19,289. SGC Holdings, Inc. believes that its current working
capital will be sufficient to continue as a going concern for the
next twelve months. However, the independent auditors of SGC
Holdings, Inc. issued a going concern opinion despite SGC
Holdings, Inc.'s positive working capital position.
Item 3. Controls and Procedures
Based on his most recent review, which was completed within
ninety days of the filing of this report, the Company's Chief
Executive Officer and Principal Financial Officer has concluded
that the Company's disclosure controls and procedures are
effective to ensure that information required to be disclosed by
the Company in the reports it files or submits under the
Securities Exchange Act of 1934, as amended, is accumulated and
communicated to the Company's management, including its Chief
Executive Officer and Principal Financial Officer, as appropriate
to allow timely decisions regarding required disclosure and are
effective to ensure that such information is recorded, processed,
summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms. There were
no significant changes in the Company's internal controls or in
other factors that could significantly affect those controls
subsequent to the date of the evaluation.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required by Item 601 of Regulation S-B
Exhibit Name and/or Identification of Exhibit
Number
3. Articles of Incorporation & By-Laws
(a) Articles of Incorporation of SGC Holdings, Inc.
filed on December 5, 2001, previously filed with the
SEC on September 27, 2002 as an exhibit to the
Registration Statement on Form SB-2.
(b) Bylaws of SGC Holdings, Inc. adopted on November
27, 2001, previously filed with the SEC on September
27, 2002 as an exhibit to the Registration Statement on
Form SB-2.
10. Material Contracts
(a) Agreement for Feasibility Study, previously filed
with the SEC on April 14, 2003 as an exhibit to the
Registration Statement on Form SB-2, as amended.
(b) Development Cost Analysis for Feasibility Study,
previously filed with the SEC on April 14, 2003 as an
exhibit to the Registration Statement on Form SB-2, as
amended.
99. Additional Exhibits
Certification Pursuant to Title 18, United States Code,
Section 1350, as Adopted Pursuant to Section 906 Of The
Sarbanes-Oxley Act Of 2002.
(b) Reports on Form 8-K
No reports were filed on Form 8-K during the quarter for which
this Report is filed.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SGC Holdings, Inc.
--------------------
(Registrant)
Signature Title Date
------------- --------- ------------
/s/ Christos E. Loukas President & CEO, November 03, 2003
---------------------- Director
Christos E. Loukas
/s/ Christos E. Loukas Principal Financial November 03, 2003
---------------------- Officer
Christos E. Loukas
/s/ Christos E. Loukas Principal Accounting November 03, 2003
---------------------- Officer
Christos E. Loukas
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