U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
Transition Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934
For the Transition Period From April 1, 1997 to June 30, 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)
Former fiscal year end: June 30, 1997
(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 June 30, 1997, was 23,025,000 shares.
<PAGE>
PART 1
ITEM 1. FINANCIAL STATEMENTS
The unaudited financial statements for the twelve month period
ended June 30, 1997, are 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 April 1, 1997 to June 30,
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 is the only
information available.
Comparison of Results of Operations for the Three Months Ended June
30, 1997 and 1996
Revenues for the three month period ended June 30, 1997 were in
Pound/Sterling 3,812,000, which is a decrease of Pound/Sterling
2,740,000 compared to revenues for the similar period from 1996.
The result is a
2
<PAGE>
decrease in revenues of 42% pre-tax for the three months ended June
30, 1997. This decrease in revenue was as a result of no license
rights being sold in the quarter. The increase in net-
profitability pre-tax was 12% and the net result after tax
increased by 478%. This is mainly a result of the dramatic
strengthening of sterling against the Danish Kroner and to a lesser
extent the US dollar.
During the three month period ended June 30, 1997, cost of sales
remained relatively constant compared with the previous three
months. In 1997, cost of sales was 64% compared to 75% for the
similar period in 1996, due primarily to a different mix of revenue
types. Selling, general and administrative expenses decreased from
Pound/Sterling 804,000 to Pound/Sterling 530,000 for the three
month period ended June 30, 1997, a decrease of approximately 34%
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. Nevertheless,
the Company has made arrangements with two senior consultants to
support sales.
Comparison of Results of Operations for the Twelve Months Ended
June 30, 1997 and 1996
Revenues for the twelve month period ended June 30, 1997 were in
Pound/Sterling 33,720,000, which is an increase of Pound/Sterling
9,168,000 compared to revenues for the similar period from 1996.
The result is an increase in revenues of 37% pre-tax for the twelve
months ended June 30, 1997. The increase in net-profitability pre-
tax was 47% and the net result after tax increased by 242%. 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 twelve month period
ended June 30, 1996 only includes nine months of that subsidiary's
revenues.
During the twelve month period ended June 30, 1997, cost of sales
remained relatively constant apart from acquisitions of license
rights which have distorted the twelve month figures. In 1997,
cost of sales was Pound/Sterling 23,691,000 compared to
Pound/Sterling 16,691,000 for the similar period in 1996, an
increase of approximately 42% due primarily to costs associated
with the Company's increased revenues. Selling, general and
administrative expenses for the twelve month period ended June 30,
1997, reduced slightly mainly 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. Nevertheless, the Company has made arrangements with two
senior consultants to support sales.
3
<PAGE>
Liquidity and Capital Resources
As of the date of this report, the Company finances its operation
primarily from the annual proceeds and revenue of its business. At
June 30, 1997, the Company had loans outstanding of Pound/Sterling
8.8 million, including the following:
Loan for the purchase
of Lupa Marine (UK) Ltd Pound/Sterling 5,800,000
Loan from London Trust Bank Plc
(drawn) Pound/Sterling 3,000,000
-----------
Pound/Sterling 8,800,000
===========
EBG has previously entered into two loan agreement with London
Trust Bank Plc acting as agent for a proposed syndicate of banks
for Pound/Sterling 3 million and Pound/Sterling 5 million,
respectively, for the purpose of refinancing its acquisition of ITC
Ltd (Pound/Sterling 2.2 million - see above). The Pound/Sterling
3 million loan is to be repaid in eight equal quarterly
installments which began May 7, 1997. As a result of this
refinancing, there was a net cash flow of Pound/Sterling 900,000 to
be utilized for working capital. No decision has yet been made
upon the utilization of the Pound/Sterling 5,000,000 loan as yet.
Management has considered future cash flow from existing and
expected additional revenue and forecasts that its obligations
under the agreements can be met.
The Pound/Sterling 5 million loan has similar terms, but 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 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 increasing over the past year and
management believes that the same will continue to increase. In
June 1997, the UK Government introduced the new budget and adopted
new tax regulations providing for large incentives for investments
in film rights. This has prompted management to look closer at the
possibilities of exploring and developing investment in such film
rights. It is management's belief and expectation that there will
be a bigger growth in the film rights business than in the
continuation of the billboard concept. Management is optimistic
and believes that the turn-over, in particular the film rights,
will increase in the future and become a more dominant factor in
the accounts whereas the hire-purchase/leasing business has been
the prime income producer up to now. However, there can be no
assurances that the Company's entry into the film rights business
will be profitable in the near future, or at all.
PART 11. OTHER INFORMATION
ITEM 1. Legal Proceedings - None
4
<PAGE>
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 - The Company entered into a
consulting agreement in June 1997 with Alison Jax & Co.
Ltd. ("Alison"), a British Virgin Island corporation.
Alison shall assist the Company in locating and
evaluating potential real estate and other investments
and ideas for new products and services and shall
advise with respect to strategic planning, financing
opportunities, the preparation of business plans and
related matters. This agreement provides for the
Company to issue 1,000,000 shares of its restricted
common stock in favor of Alison.
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: August 18, 1997
By: s/Bjorn Stiedl
Bjorn Stiedl
President
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<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Balance Sheet
- -----------------------------------------------------------------
<CAPTION>
June 30th 1997 1996
- ------------- ----------- -----------
Pound/Sterling'000
<S> <C> <C>
Assets
Current Assets:
Cash 922 (25)
Accounts receivable - trade 548 444
Accounts receivable - other 9,803 21,869
Inventories - marine containers 19,574 11,658
Current maturities of instalment
contracts receivable 25,175 28,023
Prepaid expenses and other 2,149 2,000
----------- -----------
Total current assets 51,171 63,969
----------- -----------
Property and equipment
Marine containers 57,549 42,996
Office furniture and equipment 227 150
Leasehold improvements 55 50
Vehicles 23 0
----------- -----------
57,854 43,196
Less accumulated depreciation
and amortisation 2,675 600
----------- -----------
Property and equipment, net 55,179 42,596
----------- -----------
Other assets:
Installments contracts receivable,
less current maturities 134,507 108,969
License rights 59,000 59,000
Goodwill, net of accumulated
amortisation of Pound/Sterling
78,848 779 839
Other 37 37
----------- -----------
Total other assets 194,323 168,845
----------- -----------
307,673 275,410
=========== ===========
</TABLE>
7
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Balance Sheet
- -----------------------------------------------------------------
<CAPTION>
June 30th 1997 1996
- ------------- ----------- -----------
Pound/Sterling'000
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable - trade 11 17
Accounts payable - other 7,480 10,000
Accruals and deferred income 11,020 13,272
Taxes and other 2,323 1,200
Current portion of loan 1,730 -
Current portion of capital
lease obligations 15,741 13,154
----------- -----------
Total current liabilities 38,305 37,643
Loan, less current portion 1,270 -
Capital lease obligations,
less current portion 152,590 133,079
Accruals and deferred income 39,067 43,511
Deferred income taxes 3,848 2,748
----------- -----------
Total liabilities 235,080 216,981
----------- -----------
Commitments
Stockholders' equity:
Common stock - no par value;
100,000,000 shares authorized
and 23,025,000 shares issued 59,050 59,050
Preferred Stock - no par value;
2,000,000 authorized, none
issued 0 0
Accumulated fund/(deficit) 13,543 (621)
----------- -----------
Total stockholders' equity 72,593 58,429
----------- -----------
307,673 275,410
=========== ===========
</TABLE>
8
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Statement of Operations
- -----------------------------------------------------------------
<CAPTION>
3 months ended June 30th 1997 1996
- ---------------------------- ----------- -----------
Pound/Sterling'000
<S> <C> <C>
Revenues 3,812 6,552
Cost of revenues 2,423 4,916
----------- -----------
Gross profit 1,389 1,636
Administrative expenses 530 804
Amortisation expense 14 14
----------- -----------
Income from operations 845 818
Interest income and similar income (72)* 52
Interest expense 98 * (94)
----------- -----------
Income before taxes on income 871 776
Foreign currency translation adjustment 11,138 ** 2,500
Taxes on income (400) (850)
----------- -----------
Net income 11,609 2,426
=========== ===========
<FN>
* Interest income and expense incorrectly analyzed in previous
months, 12 months' figures are correct resulting in an adjustment
in the three months.
** As a result of converting the Danish Kronar and US dollar
denominated capital lease obligations into sterling at June 30,
1997 rates.
Note
Depreciation on Marine Containers has now been re-allocated to Cost of
Revenues from Administrative Expenses.
</TABLE>
9
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Statement of Operations
- -----------------------------------------------------------------
<CAPTION>
12 months ended June 30th 1997 1996
- ---------------------------- ----------- -----------
Pound/Sterling'000
<S> <C> <C>
Revenues 33,720 24,552
Cost of revenues 23,691 16,691
----------- -----------
Gross profit 10,029 7,861
Administrative expenses 1,980 2,291
Amortisation expense 59 49
----------- -----------
Income from operations 7,990 5,521
Interest income and similar income 48 192
Interest expense (112) (334)
----------- -----------
Income before taxes on income 7,926 5,379
Foreign currency translation adjustment 11,138* 2,500
Taxes on income (3,400) (3,300)
----------- -----------
Net income 15,664 4,579
=========== ===========
<FN>
* As a result of converting the Danish Kroner and US dollar
denominated capital lease obligations into sterling at June 30,
1997 rates.
Note
Depreciation on Marine Containers has now been re-allocated to Cost of
Revenues from Administrative Expenses.
</TABLE>
10
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Cash Flow Statement
- -----------------------------------------------------------------
<CAPTION>
3 months ended June 30th 1997 1996
- ---------------------------- ----------- -----------
Pound/Sterling'000
<S> <C> <C>
Net cash inflow/(outflow) from
operating activities (515) 245
Returns on investments and
servicing of financing
Interest paid 0 0
Interest received 0 0
Interest element of finance lease
rental payments (170) (170)
----------- -----------
Net cash outflow from returns on
investments and servicing of
finance (166) (170)
Taxation
UK corporation tax paid 0 0
----------- -----------
Tax paid 0 0
Investing activities
Purchase of tangible fixed assets (17) (16)
Purchase of subsidiary undertaking
(net of cash and cash equivalents) 0 0
Net cash outflow from investing
activities (17) (16)
----------- -----------
Net cash inflow / (outflow)
before financing (698) 59
Financing
Net loan receipt (London Trust Bank) 1,099 0
Capital element of finance lease
rental payments (111) (144)
----------- -----------
Net cash outflow from financing 988 (114)
----------- -----------
Increase in cash and cash equivalents 290 (55)
=========== ===========
</TABLE>
11
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Cash Flow Statement
- -----------------------------------------------------------------
<CAPTION>
12 months ended June 30th 1997 1996
- ---------------------------- ----------- -----------
Pound/Sterling'000
<S> <C> <C>
Net cash inflow from operating
activities 623 767
Returns on investments and
servicing of financing
Interest paid 0 0
Interest received 9 3
Interest element of finance lease
rental payments (505) (343)
----------- -----------
Net cash outflow from returns on
investments and servicing of
finance (496) (340)
Taxation
UK corporation tax paid 0 0
----------- -----------
Tax paid 0 0
Investing activities
Purchase of tangible fixed assets (32) (618)
Purchase of subsidiary undertaking
(net of cash and cash equivalents) 0 (195)
Net cash outflow from investing
activities (32) (813)
----------- -----------
Net cash inflow / (outflow)
before financing 95 (386)
Financing
Net loan receipt (London Trust Bank) 1,099 0
Capital element of finance lease
rental payments (247) (185)
----------- -----------
Net cash inflow/(outflow)
from financing 852 (185)
----------- -----------
Increase in cash and cash equivalents 947 (571)
=========== ===========
</TABLE>
12
<PAGE>
SDT HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
(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 any 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.
13
<PAGE>
SDT HOLDING CORPORATION
Exhibit Index to Transition Report on Form 10-Q
For the Transition Period April 1, 1997 to June 30, 1997
EXHIBITS Page No.
EX-27 Financial Data Schedule . . . . . . . . . . . . . 15
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE TRANSITION PERIOD APRIL 1, 1997 TO JUNE
30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> BRITISH POUND
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> APR-1-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.72
<CASH> 922
<SECURITIES> 0
<RECEIVABLES> 170,033
<ALLOWANCES> 0
<INVENTORY> 19,574
<CURRENT-ASSETS> 51,171
<PP&E> 57,854
<DEPRECIATION> 2,675
<TOTAL-ASSETS> 307,673
<CURRENT-LIABILITIES> 38,305
<BONDS> 0
0
0
<COMMON> 59,050
<OTHER-SE> 13,543
<TOTAL-LIABILITY-AND-EQUITY> 307,673
<SALES> 3,812
<TOTAL-REVENUES> 3,812
<CGS> 2,423
<TOTAL-COSTS> 2,423
<OTHER-EXPENSES> 544
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26
<INCOME-PRETAX> 871
<INCOME-TAX> 400
<INCOME-CONTINUING> 11,609
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,609
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
