U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter ended: March 31, 1997
Commission File Number:0-24590
SDT Holding Corporation
(Exact name of small business issuer as specified in its charter)
Colorado
(State or other jurisdiction or incorporation or organization)
84-1275559
(IRS Employer Identification No.)
1 Stoke Road
Guildford
Surrey, England
(Address of principal executive offices)
GU1 4HW
(Zip Code)
+44 1483 458300
(Issuer's Telephone Number)
2851 South Parker Road, Suite 720
Aurora, Colorado 80014
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements of the past 90 days:
Yes ___X____, No________.
The number of shares of the registrant's only class of common stock
issued and outstanding, as of March 31, 1997, was 22,000,000
shares.
<PAGE>
PART 1
ITEM 1. FINANCIAL STATEMENTS
The unaudited financial statements for the nine month period ended
March 31, 1997, attached hereto. European Business Group (UK) Plc,
the entity which engaged in the "reverse merger" with the Company
effective October 31, 1996, was not formed until August 1995. As
a result, comparison figures are not available from the years prior
to that time.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Financial Statements and notes thereto included herein.
SDT Holding Corporation (the "Company"), is a company incorporated
pursuant to the laws of the State of Colorado on June 21, 1990.
The Company did not undertake any business activities relevant
thereto and in October 1996, the Company successfully completed a
"reverse merger" with European Business Group (UK) Plc, an English
corporation ("EBG"). The Company's principal business activities
are now within the leasing and billboard business. These
businesses deal mainly with (i) hire-purchase agreements for marine
sea containers, and (ii) license rights to billboards.
Overview
SDT Holding Corp. is a holding company which conducts it operations
through its 100% owned UK subsidiary, EBG, which in turn operates
through 15 wholly owned subsidiaries. The Company's business is as
described in the Financial Statements under notes 1 and 2 and
incorporated herein as if set forth.
EBG came into existence in August 1995 as a result of a merger
between two independent businesses. Therefore comparison figures
are not available for the periods prior to the merger.
The following financial information and discussion covers the
results of the three month period from January 1, 1997 to March 31,
1997. The result of operations compares with a similar period for
EBG prior to the reverse merger. As EBG had not prepared quarterly
reports before October 1996, the comparative figures have been
extracted from the accounting material available and are the only
figures available.
Comparison of Results of Operations for the three months ended
March 31, 1997 and 1996
Revenues for the three month period ended March 31, 1997 were in
pounds sterling 13,908,000.00, which is an increase of Pounds
5,908,000 compared to revenues for the similar period from 1996.
The result
2
<PAGE>
is an increase in revenues of 74% pre-tax for the three months
ended March 31, 1997. This increase in revenue was as a result of
sales of license rights. The increase in net-profitability pre-tax
was 15% and the net result after tax increased by 50%.
During the three month period ended March 31, 1997, cost of sales
remained relatively constant apart from acquisitions of license
rights which have distorted the three month figures. In 1997, cost
of sales was Pounds 10,568,000 compared to Pounds 4,775,000 for the
similar period in 1996, an increase of approximately 121% due
primarily to costs associated with the Company's increased
revenues. Selling, general and administrative expenses decreased
from Pounds 737,000 to Pounds 530,000 for the three month period
ended March 31, 1997, a decrease of approximately 28% due to fewer
legal, professional and consultancy charges. Management believes
the Company's business will continue to expand and increase, but in
management's opinion the administrative apparatus of the business
is in place and it should not be necessary to increase staff
substantially in the future as present staff should be able to cope
with increasing demand.
Comparison of Results of Operations for the nine months ended March
31, 1997 and 1996
Revenues for the nine month period ended March 31, 1997 were in
pounds sterling 29,908,000.00, which is an increase of Pounds
11,908,000 compared to revenues for the similar period from 1996.
The result is an increase in revenues of 66% pre-tax for the nine
months ended March 31, 1997. The increase in net-profitability
pre-tax was 53% and the net result after tax increased by 88%. The
increase in revenue is primarily due to sale of license rights and
the fact that the Company's subsidiary, Lupa Marine (UK) Ltd., was
only purchased in September 1995; hence, the nine month period
ended March 31, 1996 only includes six months of that subsidiary's
revenues.
During the nine month period ended March 31, 1997, cost of sales
remained relatively constant apart from acquisitions of license
rights which have distorted the nine month figures. In 1997, cost
of sales was Pounds 21,268,000 compared to Pounds 11,775,000 for
the similar period in 1996, an increase of approximately 81% due
primarily to costs associated with the Company's increased
revenues. Selling, general and administrative expenses for the
nine month period ended March 31, 1997, remained relatively
constant. Management believes the Company's business will continue
to expand and increase, but in management's opinion the
administrative apparatus of the business is in place and it should
not be necessary to increase staff substantially in the future as
present staff should be able to cope with increasing demand.
Liquidity and Capital Resources
As a result of the refinancing of Pounds 3,000,000 from London
Trust Bank on April 10, 1997, as described below, there was a net
cash flow of
3
<PAGE>
Pounds 900,000 to be utilized for working capital. No decision has
yet been made upon the utilization of the Pounds 5,000,000 loan as
yet.
As of the date of this report, the Company finances its operation
primarily from the annual proceeds and revenue of its business. At
August 31, 1996, the Company had loans outstanding of Pounds 10
million in respect of the acquisition of subsidiary undertakings,
including the following:
Loan for the purchase of
Lupa Marine (UK) Ltd Pounds 7,800,000
Loan for the purchase of Industrial
& Trade Consultants Ltd Pounds 2,200,000
-----------
Pounds 10,000,000
===========
The original loan terms were:
The loan shall be repayable on demand and in any event not later
than 3 years from the date of the loan agreement.
Date of Agreements Name of Lender Amount of Loan
September 4, 1995 Holmes Finance Inc. Pounds 2,200,000
September 4, 1995 Stiedl Foundation Pounds 7,800,000
-----------
Pounds 10,000,000
===========
Both lenders have stated that they will not seek repayment until
such time as the Company has surplus cash available.
On December 4, 1996, an agreement was entered into with Northbridge
Finance Ltd and Roseworth Financial Services Ltd whereby EBG
assigned an amount of Pounds 1,410,000 due to EBG by Nadelar
Business Corporation. As consideration for the assignment, EBG was
released from its obligations under a loan agreement for Pounds 2
million.
Subsequent Events
On April 10, 1997, EBG entered into two loan agreements with London
Trust Bank Plc acting as agent for a proposed syndicate of banks
for Pounds 3 million and Pounds 5 million, respectively, for the
purpose of refinancing its acquisition of ITC Ltd (Pounds 2.2
million - see above). The remainder is to be utilized for working
capital purposes.
Management has considered future cash flow from existing and
expected additional revenue and forecast that its obligations under
the agreements can be met. The Pounds 3 million loan is to be
repaid in eight equal quarterly installments after the drawdown
date (expected to be on or about May 1, 1997).
The Pounds 5 million loan has similar terms but it is not expected
to be utilized unless the right investment opportunity arises. As
a result of these loans, the Company does not foresee at present
any
4
<PAGE>
circumstances that would require it to raise any additional capital
in the market over the next 12 months.
Trends
The sales of the Company's products, particularly Hire Purchase /
Leasing products, have been on the increase over the past year and
seems to continue to increase. At the same time, the UK businesses
are operating in the billboard market and are presently exploring
and developing opportunities for the billboard concept. The
management is optimistic and believes that the turn-over related to
the billboard licenses will increase in the future and be more
dominant in the accounts where the hire-purchase/leasing business
has been the prime income producer up to now. However, there can
be no assurances that the Company's billboard licensing business
will be profitable in the near future, or at all.
PART 11. OTHER INFORMATION
ITEM 1. Legal Proceedings - None
ITEM 2. Changes in Securities - None
ITEM 3. Defaults upon senior securities - None
ITEM 4. Submission of matter to a vote of security holders -
None
ITEM 5. Other information - Effective April 14, 1997, Carsten
Iversen tendered his resignation as President of the
Company and was replaced by Bjorn Stiedl. Mr. Iversen
continues to hold a position as a director of the
Company. In this connection, the Company was also
informed that an Indictment has been issued against Mr.
Stiedl by the Danish Courts in connection with tax
charges of Danish companies with which Mr. Stiedl was
involved relating to deferred tax issues. However, Mr.
Stiedl denies any wrongdoing and intends to vigorously
defend against these allegations.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EX-27 Financial Data Schedule
(b) Reports on Form 8-K
None
5
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
SDT Holding Corporation
(Registrant)
Dated: May 15, 1997
By: s/Bjorn Stiedl
Bjorn Stiedl
President
6
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Balance Sheet
- -----------------------------------------------------------------
<CAPTION>
March 31st 1997 1996
- ------------- ----------- -----------
<S> <C> <C>
Pounds '000 Pounds '000
Assets
Current Assets:
Cash 121 26
Accounts receivable - trade 299 114
Accounts receivable - other 7,491 3,356
Inventories - marine containers 8,588 0
Current maturities of instalment
contracts receivable 25,281 21,192
Prepaid expenses and other 167 163
----------- -----------
Total current assets 41,947 24,851
----------- -----------
Property and equipment
Marine containers 42,996 39,393
Office furniture and equipment 178 120
Leasehold improvements 55 50
Vehicles 23 0
----------- -----------
43,252 39,563
Less accumulated depreciation
and amortisation 1,978 600
----------- -----------
Property and equipment, net 41,274 38,963
----------- -----------
Other assets:
Installments contracts receivable,
less current maturities 138,615 97,562
License rights 59,000 59,000
Goodwill, net of accumulated
amortisation of Pounds 78,848 793 853
Other 37 37
----------- -----------
Total other assets 198,445 157,452
----------- -----------
281,666 221,266
=========== ===========
</TABLE>
7
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Balance Sheet
- -----------------------------------------------------------------
<CAPTION>
March 31st 1997 1996
- ------------- ----------- -----------
<S> <C> <C>
Pounds '000 Pounds '000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable - trade 162 689
Accounts payable - other 7,739 10,000
Accruals and deferred income 19,013 16,333
Taxes and other 1,703 1,635
Current portion of capital
lease obligations 13,585 8,423
----------- -----------
Total current liabilities 42,202 37,080
Capital lease obligations,
less current portion 137,070 91,645
Accruals and deferred income 36,167 37,243
Deferred income taxes 5,194 1,668
----------- -----------
Total liabilities 220,633 167,636
----------- -----------
Commitments
Stockholders' equity:
Common stock - Pounds 1 shares;
70,000,000 shares authorized
and 59,050,000 shares issued 59,050 59,050
Foreign currency translation
adjustment 3,000 1,200
Accumulated deficit (1,017) (6,620)
----------- -----------
Total stockholders' equity 61,033 53,630
----------- -----------
281,666 221,266
=========== ===========
</TABLE>
8
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Statement of Operations
- -----------------------------------------------------------------
<CAPTION>
3 months ended March 31st 1997 1996
- ---------------------------- ----------- -----------
<S> <C> <C>
Pounds '000 Pounds '000
Revenues 13,908 8,000
Cost of revenues 10,568 4,775
----------- -----------
Gross profit 3,340 3,225
Administrative expenses 530 737
Amortisation expense 15 15
----------- -----------
Income from operations 2,795 2,473
Interest income and similar income 0 65
Interest expense 0 (115)
----------- -----------
Income before taxes on income 2,795 2,423
Taxes on income (1,000) (1,250)
----------- -----------
Net income 1,765 1,173
=========== ===========
</TABLE>
9
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Statement of Operations
- -----------------------------------------------------------------
<CAPTION>
9 months ended March 31st 1997 1996
- ---------------------------- ----------- -----------
<S> <C> <C>
Pounds '000 Pounds '000
Revenues 29,908 18,000
Cost of revenues 21,268 11,775
----------- -----------
Gross profit 8,640 6,225
Administrative expenses 1,450 1,487
Amortisation expense 45 35
----------- -----------
Income from operations 7,145 4,703
Interest income and similar income 120 140
Interest expense (210) (240)
----------- -----------
Income before taxes on income 7,055 4,603
Taxes on income (3,000) (2,450)
----------- -----------
Net income 4,055 2,153
=========== ===========
</TABLE>
10
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Cash Flow Statement
- -----------------------------------------------------------------
<CAPTION>
3 months ended March 31st 1997 1996
- ---------------------------- ----------- -----------
<S> <C> <C>
Pounds '000 Pounds '000
Net cash inflow from operating
activities 338 122
Returns on investments and
servicing of financing
Interest paid 0 0
Interest received 0 0
Interest element of finance lease
rental payments (130) (70)
----------- -----------
Net cash outflow from returns on
investments and servicing of
finance (130) (70)
Taxation
UK corporation tax paid 0 0
----------- -----------
Tax paid 0 0
Investing activities
Purchase of tangible fixed assets 0 (31)
Purchase of subsidiary undertaking
(net of cash and cash equivalents) 0 0
Net cash outflow from investing
activities 0 (31)
----------- -----------
Net cash inflow / (outflow)
before financing 208 (21)
Financing
Capital element of finance lease
rental payments (91) (47)
----------- -----------
Net cash outflow from financing (91) (47)
----------- -----------
Increase in cash and cash equivalents 117 (26)
=========== ===========
</TABLE>
11
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Cash Flow Statement
- -----------------------------------------------------------------
<CAPTION>
9 months ended March 31st 1997 1996
- ---------------------------- ----------- -----------
<S> <C> <C>
Pounds '000 Pounds '000
Net cash inflow from operating
activities 1,138 522
Returns on investments and
servicing of financing
Interest paid 0 0
Interest received 5 3
Interest element of finance lease
rental payments (335) (173)
----------- -----------
Net cash outflow from returns on
investments and servicing of
finance (330) (170)
Taxation
UK corporation tax paid 0 0
----------- -----------
Tax paid 0 0
Investing activities
Purchase of tangible fixed assets (15) (602)
Purchase of subsidiary undertaking
(net of cash and cash equivalents) 0 (195)
Net cash outflow from investing
activities (15) (797)
----------- -----------
Net cash inflow / (outflow)
before financing 793 (445)
Financing
Capital element of finance lease
rental payments (136) (71)
----------- -----------
Net cash outflow from financing (136) (71)
----------- -----------
Increase in cash and cash equivalents 657 (516)
=========== ===========
</TABLE>
12
<PAGE>
SDT HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(unaudited)
1. Unaudited Interim
Financial
Statements The accompanying unaudited financial statements have been
prepared in accordance with the instructions for Form
10-Q and do not include all of the information and
footnotes required by generally accepted accounting
principles for complete financial statements. In the
opinion of management, all adjustments, consisting only
of normal recurring adjustments considered necessary for
a fair presentation, have been included. Operating
results for any quarter are not necessarily indicative
of the results for any quarter or for the full year.
These statements should be read in conjunction with the
financial statements of European Business Group (UK) Plc.
and notes thereto for the year ended August 31, 1996,
included in the SDT Holding Corp.'s (the "Company")
Amendment No. 1 to Form 8-K dated April 16, 1997.
2. History and
business
activity SDT Holding Corporation (the "Company"), was incorporated
on June 21, 1990 under the laws of the State of Colorado,
to engage in any lawful corporate undertaking, including,
but not limited to, selected mergers and acquisitions.
Until consummating the transaction described below, the
Company had not conducted and material business
operations since its inception. The Company is a public
reporting company under the Securities Exchange Act of
1934, as amended, but its securities do not trade as of the
date of this report.
3. Business
Combination Effective October 30, 1996 SDT Holding Corporation
acquired the stock of European Business Group (UK), Plc,
("EBG") in a reverse acquisition in which EBG's
stockholders acquired voting control of SDT. The
acquisition was accomplished through an exchange of stock
in which SDT exchanged 18,000,000 shares of newly issued
common stock for 100% of the outstanding common stock of
EBG, resulting in ownership by the stockholders of EBG of
approximately 82% of the combined company.
The transaction is accounted for as a reverse acquisition
and recapitalization with EBG as the acquiring company
because EBG's stockholders acquired a majority of the
voting rights in the combined company. Under this method
of accounting, SDT's assets and liabilities are recorded
at their fair values which approximates historical cost
and historical financial results reported by SDT are
those of EBG with SDT operations reported from the date of
acquisition forward.
4. Subsidiaries
and
Acquisitions The following were subsidiaries at March 31, 1997, and
have all been included in the consolidated financial
statements.
13
<PAGE>
Proportion
of voting
rights
and
ordinary
share
capital
Name held Nature of business
_______________________________ ____ ___________________
W Limited 100% Asset leasing
Lupa Marine (UK) Ltd 100% Purchase and sale of
marine containers
EBB Company Finance Limited 100% Business consulting
Crisum Corporate Consulting
Limited 100% Asset leasing and
group administration
Industrial & Trade Consultants Ltd 100% Asset leasing and
advertising,
partnership
investment
EBB Company Management
Limited 100% Marketing of licenses
EBB Trade Management
Limited 100% Advertising agent
EBG Trade Management
Limited 100% Dormant
EBG Corporate Consulting
Limited 100% Dormant
EBG Finance Limited 100% Dormant
EBG License Trade (UK)
Limited 100% Dormant
EBG License Trade (INT)
Limited 100% Dormant
EBG Company Leasing
Limited 100% Dormant
EBG Partner Limited 100% Dormant
EBG Timecharter Limited 100% Dormant
i) Acquisitions in the year
During fiscal 1996 the Company acquired the following
subsidiaries, all of which have been included in the
consolidated accounts using the principles of acquisition
accounting:
Date of % of Consideration
Subsidiary Acquisition Holding (Fair Value)
(Pounds)
___________________ _________________ _______ ___________
Lupa Marine (UK) Ltd September 4, 1995 100% 7,800,000
loan debt
Industrial & Trade 2,200,000
Consultants Limited September 4, 1995 100% loan debt
W Limited October 1, 1995 100% 1 cash
EBB Company Finance
Limited September 4, 1995 100% 225,000 cash
Crisum Corporate
Consulting Limited September 4, 1995 100% 225,000 cash
EBB Trade Management
Limited June 3, 1996 100% 2 cash
EBG Trade Management
Limited September 4, 1995 100% 2 cash
14
<PAGE>
Date of % of Consideration
Subsidiary Acquisition Holding (Fair Value)
(Pounds)
___________________ _________________ _______ ___________
EBG Corporate
Consulting Limited October 6, 1995 100% 2 cash
EBB Company
Management Limited September 4, 1995 100% (Acquired via
Industrial
& Trade
Consultants
The amount paid for the acquisitions exceeded the fair value
of net assets acquired, which also approximated historical
costs, by Pounds 10,421,770. However of this amount
Pounds 9,534,729 was attributed to net assets acquired from
persons who also own substantial portions of SDT Holding
Corporation. Therefore the Pounds 9,534,729 was written off
against the stockholders' equity of the Company leaving a
balance Pounds 887,041 which was assigned to Goodwill.
Unaudited pro forma results of operations as if the
acquisitions occurred at the beginning of each of the fiscal
years 1996 and 1995 are presented below. The unaudited pro
forma results have been prepared for comparative purposes only
and are not necessarily indicative of what would have occurred
had the acquisitions been completed as of those dates or of
any results that may occur in the future.
1996 1995
(Pounds) (Pounds)
__________ _________
Revenue 30,701,688 8,986,742
Net income (loss) 4,762,898 (4,097,293)
The amounts for fiscal year 1996 are approximately the same as
the consolidated statement of operations for fiscal year 1996
since the acquisitions of the operating companies took place
approximately at the beginning of fiscal year 1996.
5. Stock
Split The Board of Directors declared an eight for one forward
split of the Company's issued and outstanding common stock,
effective for stockholders of record on September 19, 1996.
The share distribution date was October 31, 1996.
6. Commitments On December 5, 1996 the Company entered into an agreement with
Northridge Finance Limited and Roseworth Financial Services
Limited whereby the Company assigned an amount of Pounds
1,410,000 due to the Company by Nadelar Business
Corporation. As consideration for the assignment the
Company was released from its obligations under a loan
agreement for Pounds 2 million.
15
<PAGE>
SDT HOLDING CORPORATION
Exhibit Index to Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 1997
EXHIBITS Page No.
EX-27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . 17
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FILED WITH FORM 10-Q FOR THE FISCAL QUARTER ENDED
MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> POUNDS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1.6917
<CASH> 121
<SECURITIES> 0
<RECEIVABLES> 7,790
<ALLOWANCES> 0
<INVENTORY> 8,588
<CURRENT-ASSETS> 41,947
<PP&E> 43,252
<DEPRECIATION> (1,978)
<TOTAL-ASSETS> 281,666
<CURRENT-LIABILITIES> 42,202
<BONDS> 0
0
0
<COMMON> 59,050
<OTHER-SE> 1,983
<TOTAL-LIABILITY-AND-EQUITY> 281,666
<SALES> 29,908
<TOTAL-REVENUES> 29,908
<CGS> 21,268
<TOTAL-COSTS> 21,268
<OTHER-EXPENSES> 1,495
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,055
<INCOME-TAX> (3,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,055
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
