UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
x
|
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the Quarterly Period Ended: March 31, 2008
¨
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT
|
For The Transition Period from
to
.
Commission
file number: 001-32208
VCG HOLDING CORP.
(Name of issuer in its charter)
|
|
|
Colorado
|
|
84-1157022
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
390 Union Blvd., Suite 540, Lakewood, Colorado 80228
(Address of principal executive offices, including zip code)
(303) 934-2424
(Issuers telephone number)
Check whether the issuer (1) filed all reports to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
x
No
¨
Indicate by checkmark whether the Registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of accelerated filer, large accelerated filer, and smaller reporting company in Rule12b-2 of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller Reporting Company
x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes
¨
No
x
Applicable only to corporate issuers:
State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date:
As of May 9, 2008, there were 18,025,248 shares of the issuers common stock, $.0001 par value, outstanding.
TABLE OF CONTENTS
2
PART I - FINANCIAL INFORMATION
Item 1.
|
Financial Statements
|
VCG Holding Corp.
Consolidated Balance Sheets
Unaudited
|
|
|
|
|
|
|
|
|
December 31,
2007
|
|
March 31,
2008
|
Assets
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash & cash equivalents
|
|
$
|
2,980,007
|
|
$
|
2,759,723
|
Assets held for sale
|
|
|
372,606
|
|
|
380,472
|
Other receivables
|
|
|
181,632
|
|
|
288,447
|
Inventories
|
|
|
964,595
|
|
|
903,489
|
Prepaid expenses
|
|
|
276,002
|
|
|
819,054
|
Income taxes receivable
|
|
|
272,244
|
|
|
439,275
|
|
|
|
|
|
|
|
Total current assets
|
|
|
5,047,086
|
|
|
5,590,460
|
Property, plant and equipment, net
|
|
|
24,517,181
|
|
|
25,022,323
|
Deposits and prepaid expenses
|
|
|
82,766
|
|
|
615,841
|
Loan fees, net
|
|
|
389,604
|
|
|
339,394
|
Deferred offering costs
|
|
|
37,011
|
|
|
37,011
|
Covenant not to compete
|
|
|
111,000
|
|
|
111,000
|
Intangible assets
|
|
|
64,012,908
|
|
|
64,061,020
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
94,197,556
|
|
$
|
95,777,049
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
Accounts payabletrade
|
|
$
|
764,182
|
|
$
|
1,096,953
|
Accrued expenses
|
|
|
1,646,531
|
|
|
1,106,717
|
Deferred revenue
|
|
|
150,266
|
|
|
122,588
|
Current portion of capitalized leases
|
|
|
9,342
|
|
|
9,612
|
Current portion of long-term debt
|
|
|
9,333,687
|
|
|
8,972,429
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
11,904,008
|
|
|
11,308,299
|
Deferred income tax
|
|
|
1,060,777
|
|
|
1,331,166
|
Capitalized leases
|
|
|
19,112
|
|
|
16,605
|
Long-term debt
|
|
|
21,486,385
|
|
|
20,793,058
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
34,470,282
|
|
|
33,449,128
|
|
|
|
|
|
|
|
|
|
|
Minority Interest Liability
|
|
|
3,662,767
|
|
|
3,605,606
|
|
|
|
|
|
|
|
Stockholders Equity
|
|
|
|
|
|
|
Common stock $.0001 par value; 50,000,000 shares authorized; 17,723,975 (2007) and 17,851,235 (2008) shares issued and outstanding
|
|
|
1,772
|
|
|
1,785
|
Paid-in capital
|
|
|
52,251,847
|
|
|
53,575,990
|
Retained earnings
|
|
|
3,810,888
|
|
|
5,144,540
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
56,064,507
|
|
|
58,722,315
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders Equity
|
|
$
|
94,197,556
|
|
$
|
95,777,049
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements
3
VCG Holding Corp.
Consolidated Statements of Income
Unaudited
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2007
|
|
|
2008
|
|
Revenue
|
|
|
|
|
|
|
|
|
Sales of alcoholic beverages
|
|
$
|
3,160,258
|
|
|
$
|
6,534,618
|
|
Sales of food and merchandise
|
|
|
357,617
|
|
|
|
708,655
|
|
Service revenue
|
|
|
2,029,788
|
|
|
|
5,278,646
|
|
Management fees and other income
|
|
|
839,733
|
|
|
|
804,036
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
6,387,396
|
|
|
|
13,325,955
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
883,616
|
|
|
|
1,848,547
|
|
Salaries and wages
|
|
|
1,374,566
|
|
|
|
3,062,704
|
|
Other general and administrative
|
|
|
|
|
|
|
|
|
Taxes and permits
|
|
|
249,645
|
|
|
|
456,273
|
|
Charge card and bank fees
|
|
|
65,691
|
|
|
|
200,821
|
|
Rent
|
|
|
539,145
|
|
|
|
1,186,347
|
|
Legal and professional
|
|
|
147,629
|
|
|
|
648,166
|
|
Advertising and marketing
|
|
|
257,383
|
|
|
|
805,794
|
|
Insurance
|
|
|
252,276
|
|
|
|
376,013
|
|
Other
|
|
|
983,205
|
|
|
|
1,524,575
|
|
Depreciation & amortization
|
|
|
221,745
|
|
|
|
351,748
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
4,974,901
|
|
|
|
10,460,988
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
1,412,495
|
|
|
|
2,864,967
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(536,672
|
)
|
|
|
(773,504
|
)
|
Interest income
|
|
|
147,789
|
|
|
|
3,572
|
|
Unrealized gain on investments
|
|
|
8,381
|
|
|
|
|
|
Gain on sale of assets
|
|
|
179,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expenses)
|
|
|
(201,313
|
)
|
|
|
(769,932
|
)
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
1,211,182
|
|
|
|
2,095,035
|
|
|
|
|
|
|
|
|
|
|
Income tax expense current
|
|
|
|
|
|
|
332,970
|
|
Income tax expense deferred
|
|
|
150,000
|
|
|
|
317,030
|
|
|
|
|
|
|
|
|
|
|
Total income taxes
|
|
|
150,000
|
|
|
|
650,000
|
|
|
|
|
|
|
|
|
|
|
Minority interest
|
|
|
(33,244
|
)
|
|
|
(111,383
|
)
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
1,027,938
|
|
|
|
1,333,652
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
Loss from operations of discontinued operating segment, net of zero income taxes
|
|
|
(15,085
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,012,853
|
|
|
$
|
1,333,652
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
Basic income per common share
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.07
|
|
|
$
|
0.08
|
|
(Loss) from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
0.07
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
Fully diluted income per common share
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
(Loss) from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
14,606,729
|
|
|
|
17,431,035
|
|
Fully diluted weighted average shares outstanding
|
|
|
15,213,684
|
|
|
|
17,923,402
|
|
The accompanying notes are an integral part of the financial statements
4
VCG Holding Corp.
Statement of Stockholders Equity
For the Three Months Ended March 31, 2008
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Total
Stockholders
Equity
|
|
|
Shares
|
|
Amount
|
|
|
|
Balances, December 31, 2007
|
|
17,723,975
|
|
$
|
1,772
|
|
$
|
52,251,847
|
|
$
|
3,810,888
|
|
$
|
56,064,507
|
Issue warrants for services
|
|
|
|
|
|
|
|
30,686
|
|
|
|
|
|
30,686
|
Issue common stock for services
|
|
127,260
|
|
|
13
|
|
|
1,293,457
|
|
|
|
|
|
1,293,470
|
Net income for the three months ended March 31, 2008
|
|
|
|
|
|
|
|
|
|
|
1,333,652
|
|
|
1,333,652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, March 31, 2008
|
|
17,851,235
|
|
$
|
1,785
|
|
$
|
53,575,990
|
|
$
|
5,144,540
|
|
$
|
58,722,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements
5
VCG Holding Corp.
Consolidated Statements of Cash Flows
Unaudited
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
March 31,
|
|
|
|
2007
|
|
|
2008
|
|
Net income
|
|
$
|
1,012,853
|
|
|
$
|
1,333,652
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Stocks and warrants issued for services
|
|
|
23,005
|
|
|
|
99,980
|
|
Depreciation and amortization
|
|
|
316,612
|
|
|
|
401,927
|
|
(Increase) decrease in other receivables
|
|
|
84,848
|
|
|
|
27,065
|
|
(Increase) decrease in inventory
|
|
|
10,495
|
|
|
|
61,106
|
|
(Increase) decrease in prepaid expenses
|
|
|
(14,082
|
)
|
|
|
106,052
|
|
(Gain) loss on disposition of assets
|
|
|
(179,189
|
)
|
|
|
|
|
Unrealized (gain) loss on marketable securities
|
|
|
(8,381
|
)
|
|
|
|
|
Increase (decrease) in trade accounts payable
|
|
|
(385,446
|
)
|
|
|
332,774
|
|
Increase (decrease) in income taxes receivable
|
|
|
|
|
|
|
(167,031
|
)
|
Increase (decrease) in deferred income taxes payable
|
|
|
150,000
|
|
|
|
270,386
|
|
Increase (decrease) in deferred revenue
|
|
|
10,053
|
|
|
|
(27,678
|
)
|
Increase (decrease) in accrued expenses
|
|
|
67,323
|
|
|
|
(539,814
|
)
|
Increase (decrease) in minority interest liability
|
|
|
|
|
|
|
(57,161
|
)
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
1,088,091
|
|
|
|
1,841,258
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
Investments
|
|
|
(4,778,112
|
)
|
|
|
|
|
Assets held for sale
|
|
|
|
|
|
|
(7,866
|
)
|
Goodwill
|
|
|
(7,803,580
|
)
|
|
|
(117,811
|
)
|
Purchases of equipment and leasehold improvements
|
|
|
(933,208
|
)
|
|
|
(856,860
|
)
|
Costs of licenses
|
|
|
(750,000
|
)
|
|
|
|
|
Deposits
|
|
|
(221,259
|
)
|
|
|
(22,183
|
)
|
Proceeds from disposition of assets
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used by investing activities
|
|
|
(14,286,159
|
)
|
|
|
(1,004,720
|
)
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
Cost of loan fees
|
|
|
(16,000
|
)
|
|
|
|
|
Payment on capitalized lease
|
|
|
(31,960
|
)
|
|
|
(2,237
|
)
|
Proceeds from notes payable
|
|
|
7,400,000
|
|
|
|
|
|
Payments on notes payable
|
|
|
(400,867
|
)
|
|
|
(1,054,585
|
)
|
Cash received in acquisitions
|
|
|
442,529
|
|
|
|
|
|
Cash distribution as part of sale
|
|
|
(3,456
|
)
|
|
|
|
|
Proceeds from additional paid in capital
|
|
|
21,170,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by financing activities
|
|
|
28,561,017
|
|
|
|
(1,056,822
|
)
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
15,362,949
|
|
|
|
(220,284
|
)
|
Cash beginning of period
|
|
|
2,011,178
|
|
|
|
2,980,007
|
|
|
|
|
|
|
|
|
|
|
Cash end of period
|
|
$
|
17,374,127
|
|
|
$
|
2,759,723
|
|
|
|
|
|
|
|
|
|
|
Taxes paid
|
|
$
|
|
|
|
$
|
500,000
|
|
Interest paid
|
|
$
|
480,653
|
|
|
$
|
593,565
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Common stock issued for services
|
|
$
|
23,005
|
|
|
$
|
1,324,156
|
|
Purchased general partnership interests for common stock
|
|
$
|
1,837,000
|
|
|
$
|
|
|
Purchase common stock of wholly owned subsidiary for common stock
|
|
$
|
4,392,000
|
|
|
$
|
|
|
Preferred stock converted to common stock
|
|
$
|
325,000
|
|
|
$
|
|
|
The accompanying notes are an integral part of the financial statements.
6
VCG Holding Corp.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Nature of Business
VCG Holding Corp. (VCG or the Company) is an owner, operator and consolidator of adult nightclubs throughout the
United States. The Company currently owns 19 adult nightclubs and one upscale dance lounge. The nightclubs are located in Indianapolis, IN, E. St. Louis, IL, Denver and Colorado Springs, CO, Dallas and Ft. Worth, TX, Raleigh, NC, Minneapolis, MN,
Louisville, KY, Miami, FL, and Portland, ME.
Basis of Presentation
The accompanying financial statements have been prepared by the Company, without audit. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of
only normal recurring accruals) necessary for fair presentation of the financial position as of December 31, 2007 and March 31, 2008, and the results of operations and cash flows for the periods ended March 31, 2007 and 2008.
The financial statements included herein have been prepared in accordance with the rules of The Securities and Exchange Commission for
Form 10-Q and accordingly do not include all footnote disclosures that would normally be included in financial statements prepared in accordance with generally accepted accounting principles, although the Company believes that the disclosures
presented are adequate to make the information presented not misleading. The unaudited financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Companys Annual Report on Form
10-KSB for the year ended December 31, 2007.
The Company utilizes a December 31 fiscal year, and references herein to
fiscal 2007 relate to the year ended December 31, 2007, and references to the first, second, third, and fourth quarter of a fiscal year relate to the quarters ended
March 31, June 30, September 30 and December 31, respectively, of the related year.
Reclassifications
Certain amounts in the prior year have been reclassified to conform to current years presentation.
Principles of Consolidation
The consolidated
financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All significant inter-company balances and transactions are eliminated in the consolidation.
Net Income Per Common Share
The Company computes net
income (loss) per common share in accordance with Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share (SFAS 128). SFAS 128 provides for the calculation of basic and diluted earnings per share.
Basic earnings per share includes no dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive earnings per share reflect the potential dilution
of securities that could share in the earnings of the Company.
Excluded from the computation of diluted earnings per share as
anti-dilutive for the three months ended March 31, 2007 warrants for the purchase of an aggregate of 725,000 shares of common stock exercisable at a weighted average exercise price of $2.86 per share and an aggregate of 3,580,185 shares of
common stock issuable upon the conversion of convertible debt or convertible preferred stock at a weighted average conversion price of $2.42 per share.
Use of Estimates in the Preparation of Financial Statements
Preparation of the Companys financial statements in
conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the reporting periods. Accordingly, actual results could differ from those estimates.
7
VCG Holding Corp.
Notes to Consolidated Financial Statements (Continued)
2. Discontinued Operations
In January 2007, VCG sold its ownership interest of Epicurean Enterprises, LLC EEP. VCG transferred some of the building improvements
presently attached to or part of the building into VCG Real Estate Holdings, Inc. VCGRE and other equipment, inventory related to the Penthouse name, and the Penthouse license agreement to VCG or subsidiaries as needed for
operations. The board had elected to sell the operations and related partnership, and rent the building on a twenty year lease to an unrelated third party.
The terms of the sale are $200,000 cash and 300,000 shares of VCG stock that was held by an unrelated third party for a total sales price of $2,570,000. VCG had a carrying basis in the partnership of $2,390,811 and a
gain on the transaction of $179,189.
3. Pro forma Information on Acquisitions during 2007
The following combines the pro forma information for all acquisitions in 2007 and includes the information for each of the acquisitions for the three
months ended March 31, 2007. There were no acquisitions during the three months ended March 31, 2008 therefore the pro forma information and the reported information is the same for that period:
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31, 2007
|
|
Three Months
Ended
March 31, 2008
|
Pro forma
|
|
|
|
|
|
|
Revenue
|
|
$
|
13,536,193
|
|
$
|
13,325,955
|
Income from cont. operations before tax
|
|
|
2,550,121
|
|
|
2,095,037
|
Net income
|
|
$
|
1,617,894
|
|
$
|
1,333,652
|
Earnings per share
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.11
|
|
$
|
0.08
|
Loss from discontinued operations
|
|
|
|
|
|
|
Net income per share
|
|
$
|
0.11
|
|
$
|
0.08
|
Weighted average shares
|
|
|
14,640,582
|
|
|
17,431,035
|
4. Property, Plant and Equipment
Property, plant and equipment consist of the following:
|
|
|
|
|
|
|
|
|
December 31,
2007
|
|
March 31,
2008
|
Land
|
|
$
|
856,737
|
|
$
|
856,737
|
Buildings
|
|
|
13,021,812
|
|
|
13,137,201
|
Leasehold Improvements
|
|
|
9,718,761
|
|
|
10,135,929
|
Equipment
|
|
|
2,041,113
|
|
|
2,092,028
|
Signs
|
|
|
312,211
|
|
|
312,211
|
Furniture and fixtures
|
|
|
1,518,659
|
|
|
1,792,046
|
|
|
|
|
|
|
|
|
|
$
|
27,469,293
|
|
$
|
28,326,152
|
Less accumulated depreciation and amortization
|
|
|
2,952,112
|
|
|
3,303,829
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
$
|
24,517,181
|
|
$
|
25,022,323
|
|
|
|
|
|
|
|
Depreciation and amortization expense was $221,745 and $351,748 for the three months ended
March 31, 2007 and 2008, respectively.
Property and equipment owned and pledged as collateral under capital leases was as follows:
|
|
|
|
|
|
|
|
|
December 31,
2007
|
|
March 31,
2008
|
Capital leases:
|
|
|
|
|
|
|
Equipment and signs
|
|
$
|
49,737
|
|
$
|
49,737
|
Less accumulated amortization
|
|
|
23,683
|
|
|
24,942
|
|
|
|
|
|
|
|
Net book value
|
|
$
|
26,054
|
|
$
|
24,795
|
|
|
|
|
|
|
|
8
VCG Holding Corp.
Notes to Consolidated Financial Statements (Continued)
5. Intangible Assets
Intangible assets consist of the following:
|
|
|
|
|
|
|
|
|
December 31,
2007
|
|
March 31,
2008
|
License costs
|
|
$
|
3,204,734
|
|
$
|
3,204,734
|
Goodwill
|
|
|
58,964,473
|
|
|
59,280,658
|
Plans and drawings
|
|
|
75,628
|
|
|
75,628
|
Deferred acquisition costs
|
|
|
268,073
|
|
|
|
Intellectual property
|
|
|
1,500,000
|
|
|
1,500,000
|
|
|
|
|
|
|
|
Total Intangible Assets
|
|
$
|
64,012,908
|
|
$
|
64,061,020
|
|
|
|
|
|
|
|
6. Stock Option Activity
Transactions for the 2004 Stock Option and Appreciation rights plan as of December 31, 2007 and March 31, 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Option price
per share
|
|
Weighted-average
exercise price
|
Outstanding December 31, 2006
|
|
|
|
|
|
|
|
|
|
Granted
|
|
195,500
|
|
|
$
|
10.00
|
|
$
|
10.00
|
Exercised
|
|
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
(65,000
|
)
|
|
|
10.00
|
|
|
10.00
|
|
|
|
|
|
|
|
|
|
|
Oustanding December 31, 2007
|
|
130,500
|
|
|
$
|
10.00
|
|
$
|
10.00
|
Granted
|
|
172,000
|
|
|
|
13.00
|
|
|
13.00
|
Exercised
|
|
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
(34,500
|
)
|
|
|
10.00 - $13.00
|
|
|
12.48
|
|
|
|
|
|
|
|
|
|
|
Oustanding March 31, 2008
|
|
268,000
|
|
|
$
|
10.00 - $13.00
|
|
$
|
11.43
|
|
|
|
|
|
|
|
|
|
|
Fully vested and exercisable at December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fully vested and exercisable at March 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average remaining contractual term as of March 31, 2008 is 7.1 years for the outstanding options
disclosed above. There is no aggregate intrinsic value as of March 31, 2008 because the fair market value is below the weighted average exercise price.
During the period ending March 31, 2008, there was no option activity in the 2002 Stock Option and Stock Bonus Plan and 2003 Stock Option and Stock Bonus Plan.
7. Income Taxes
At December 31, 2006 and 2007, the Company had a net operating tax loss carry
forward of approximately $2,312,000 and $0. Additionally, the Company had carried back $591,749 from 2004 to Federal and State income taxes generating $280,664 in income tax refunds. The Company has unused tax credits of $0. In addition, the Company
has a capital loss carry forward of approximately $1,400,000 in 2006 and $20,000 in 2007.
8. Segment Reporting
We previously classified the Companys operations into two reportable segments; the operations of the Clubs and the management of non-owned adult
nightclubs. Effective March 1, 2007, we purchased the remaining non-owned Clubs to which we had provided management services for fees. Thus, effective January 1, 2008, the Company has one reportable segment which owns and operates the
Clubs.
9
VCG Holding Corp.
Notes to Consolidated Financial Statements (Continued)
9. Subsequent Event
Purchase of Manana Enterprises, Inc.
On October 29, 2007, the Company entered into a stock purchase agreement with Manana Enterprises, Inc. d/b/a Jaguars Gold Club Dallas (Manana), and Bryan S. Foster to purchase (a) 100% of
the issued and outstanding shares of capital stock of Manana for $3,520,000 and (b) the building in which Manana operated an adult entertainment nightclub commonly known as Jaguars Gold Club of Dallas, with all its contents,
including improvements, fixtures and personal property, for $3,000,000. The Companys payment obligation is evidenced by a promissory note dated October 29, 2007 in the principal amount of $6,520,000 payable to the seller as follows:
$4,020,000 at closing and a $2,500,000 10-year amortized note @ 12% interest, payable $500,000 on May 1, 2008 and the balance in 23 monthly payments with the full amount payable on the 24
th
payment. The transaction closed into escrow from October 29, 2007 to April 14, 2008 at which time the City of Dallas, Texas issued the necessary licenses and the Company
completed the transaction and began paying the promissory note and began operating the nightclub.
10
Item 2.
|
Managements Discussion and Analysis of Financial Condition and Results of Operations
|
The information set forth hereunder, Managements Discussion and Analysis of Financial Condition and Results of Operations (the
MD&A), presents significant factors affecting our consolidated operating results, financial condition, liquidity and capital resources that occurred during the three months that ended March 31, 2007 and 2008. Likewise, the
MD&A should be read in conjunction with the financial statements appearing elsewhere in this Form 10-Q (this Report). In conjunction with this Report, the MD&A discussed in Form 10-KSB for the year ended December 31, 2007
and filed with The Securities and Exchange Commission (SEC) on April 15, 2008, should be referred to when reading this Report.
Safe
Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act: Statements made in this Report that
relate to future operating periods are subject to important risks and uncertainties that could cause actual results to differ materially. These risks could affect certain nightclubs, while certain other risks could affect all of the Companys
nightclubs and/or other business segments.
Forward-looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, are based on the exercise of business judgment as well as assumptions made by, and information currently available to us. When used in this MD&A, the words
may, will, anticipate, believe, estimate, expect, intend, and other words of similar import, are intended to help identify forward-looking statements. One should not
place undue reliance on these forward-looking statements. Such statements reflect our current view of future events and are subject to certain risks and uncertainties as noted below. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, the Companys actual results could differ materially from those anticipated in these forward-looking statements. Although, we believe that our expectations are based on reasonable assumptions;
however, we cannot give any assurance, whatsoever, that our expectations will materialize.
Forward looking statements made herein are
based on our current expectations that could involve a number of risks and uncertainties and therefore, such expectations should not be considered guarantees of future performance. Certain of those risk factors that could cause actual results to
differ materially, include, without limitation, the following:
|
|
|
Dependence on key management personnel.
|
|
|
|
Competitors with greater financial resources.
|
|
|
|
The impact of competitive pricing.
|
|
|
|
The timing of openings of competitors clubs.
|
|
|
|
The ability of management to execute acquisition and expansion plans and motivate personnel in the execution of such plans.
|
|
|
|
Interruptions or cancellation of existing contracts.
|
|
|
|
Adverse publicity related to the company, or the industry.
|
|
|
|
Changes in the laws governing the operation of adult entertainment businesses.
|
|
|
|
An inability to arrange additional debt or equity financing.
|
|
|
|
Adverse claims relating to our use of trademarks and/or tradenames.
|
|
|
|
The adoption of new, or changes in, accounting principles.
|
|
|
|
The costs inherent with complying with new statutes and regulations applicable to public reporting companies, such as the Sarbanes-Oxley Act of 2002.
|
Actual results
may differ materially from those set forth in forward-looking statements as a result of certain of those factors set forth above, including such factors disclosed under Risk Factors, or any factors as may be included elsewhere in this
Report. More information about factors that potentially could affect our financial results is included in the Companys filings with the SEC; however, we are under no obligation, nor do we intend to update, revise or otherwise publicly release
any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of any unanticipated events.
General Overview
It is our desire to provide all parties who may read this MD&A an
understanding of the Companys past performance, its financial condition and its prospects of going forward in the future. Accordingly, we will discuss and provide our analysis of the following:
|
|
|
Overview of the business.
|
|
|
|
Critical accounting policies.
|
|
|
|
Liquidity and capital resources.
|
|
|
|
New accounting pronouncements.
|
11
The Company was incorporated under the laws of the State of Colorado in 1998, but did not begin its
operations until April, 2002. The Company is engaged in owning and operating nightclubs which provide quality live adult entertainment, food and beverage services. Currently, we operate nineteen adult entertainment nightclubs and one upscale dance
club (collectively referred to as the Clubs). Three of the Clubs offer full service restaurants with fine dining and have VIP facilities for its members. Sixteen Clubs serve alcoholic beverages.
We believe maximum profitability and sustained growth in the industry can only be obtained from owning and operating upscale adult entertainment
nightclubs. Our current strategy is to acquire and upgrade existing adult nightclubs. It is our intent to develop and build upscale nightclubs in areas that are not market saturated and are open to well-managed upscale clubs.
The Company owns International Entertainment Consultants, Inc. (IEC), which provides management services to our nightclubs. IEC was
originally formed in 1980; at the time of acquisition in October, 2003, IEC was owned by Troy H. Lowrie, our Chairman of the Board and Chief Executive Officer. IEC provides the Clubs with management and supervisory personnel to oversee operations,
hire and contract for all operating personnel, establish Club policies and procedures, compliance monitoring, purchasing, accounting and payroll services and other administrative services, and prepares financial, operating reports, and income tax
returns. IEC charges the Clubs a management fee based on the Companys common expenses incurred in maintaining these functions.
In
June, 2002, the Company formed VCG Real Estate Holdings, Inc., a wholly owned subsidiary, that purchased the land and buildings which house four of our Clubs.
Management has substantial experience in owning and operating successful adult entertainment nightclubs and our management has gained an in-depth knowledge of the industry in which the Company does business.
Since the Company began its operations, we have acquired the following Clubs:
|
|
|
PTs
®
Showclub in Indianapolis, Indiana (acquired 2002)
|
|
|
|
PTs
®
Brooklyn in East Saint Louis, Illinois (acquired
2002)
|
|
|
|
PTs
®
Nude in Denver, Colorado (acquired 2004)
|
|
|
|
The Penthouse Club in Denver, Colorado (acquired 2004)
|
|
|
|
Diamond Cabaret in Denver, Colorado (acquired 2004)
|
|
|
|
The Penthouse Club in Phoenix, Arizona (opened 2004 and sold in January, 2007)
|
|
|
|
Tabu (Dance club) in Denver, Colorado (opened June, 2005)
|
|
|
|
PTs
®
Appaloosa in Colorado Springs, Colorado (acquired
October, 2006)
|
|
|
|
PTs
®
Showclub in Denver, Colorado (acquired December,
2006)
|
|
|
|
PTs
®
Showclub in Louisville, Kentucky (acquired
January, 2007)
|
|
|
|
Roxys in East Saint Louis, Illinois (acquired February, 2007)
|
|
|
|
PTs
®
Showclub in East Saint Louis, Illinois (acquired
February, 2007)
|
|
|
|
PTs
®
Sports Cabaret St. Louis in East Saint Louis,
Illinois (acquired March, 2007)
|
|
|
|
Penthouse Club St. Louis in East Saint Louis, Illinois (acquired March, 2007)
|
|
|
|
The Mens Club
®
in Raleigh, North Carolina (acquired
April, 2007)
|
|
|
|
Schieks Palace Royale in Minneapolis, Minnesota (acquired May 2007)
|
|
|
|
Platinum Plus in Portland, Maine (acquired September, 2007)
|
|
|
|
Jaguars Gold Club in Ft. Worth, Texas (acquired September, 2007)
|
|
|
|
Platinum Plus in Miami, Florida (acquired October, 2007)
|
|
|
|
LaBoheme Gentlemens Club in Denver, Colorado (acquired December, 2007)
|
|
|
|
Jaguars Gold Club in Dallas, Texas (acquired April, 2008)
|
The majority of the Clubs operate under the branded names PTs
®
, Diamond Cabaret and The Penthouse Club, which are pursuant to non-exclusive licensing agreements.
The
aggregate cost of acquisition for the nineteen operating clubs was approximately $91.5 million.
We previously classified the
Companys operations into two reportable segments; the operations of the Clubs and the management of non-owned adult nightclubs. Effective March 1, 2007, we purchased the remaining non-owned Clubs to which we had provided management
services for fees. Thus, effective January 1, 2008, the Company has one reportable segment which owns and operates the Clubs.
Critical
Accounting Policies
The following discussion and analysis of the results of operations and financial condition are based on the
Companys consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America. Our significant accounting policies are more fully described in Note 2 of the
Notes to the Consolidated Financial
12
Statements, which is included in our Annual Report, Form 10-KSB for the year ended December 31, 2007. However, certain accounting policies and
estimates are particularly important to the understanding of our financial position and results of operations and require the application of significant judgment by us. Further, such accounting policies and estimates can be materially affected by
changes from period to period in economic factors or conditions that are outside our control. As a result, our accounting policies and estimates are subject to an inherent degree of uncertainty. In applying these policies, we use our judgment to
determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on our historical operations, future business plans and projected financial results and the terms of existing contracts, observance
of trends in the industry, information provided by our customers, and information available from other outside sources, as may be appropriate. Actual results may differ from these estimates. Those critical accounting policies are discussed in
Managements Discussion and Analysis of Financial Position and Results of Operations Critical Accounting Policies, which is a part of our Annual report found on Form 10-KSB for the year ended December 31, 2007.
Results of Operations - First Quarter ended March 31, 2007 Compared to March 31, 2008
Results of Continuing Operations
The following
sets forth a comparison of the components of the results of our continuing operations for the three months ended March 31, 2007 and 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
Percentage
change
|
|
|
|
2007
|
|
|
2008
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Sales of alcoholic beverages
|
|
$
|
3,160,258
|
|
|
$
|
6,534,618
|
|
|
106.8
|
%
|
Sales of food and merchandise
|
|
|
357,617
|
|
|
|
708,655
|
|
|
98.2
|
%
|
Service revenue
|
|
|
2,029,788
|
|
|
|
5,278,646
|
|
|
160.1
|
%
|
Management fees and other income
|
|
|
839,733
|
|
|
|
804,036
|
|
|
(4.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
6,387,396
|
|
|
|
13,325,955
|
|
|
108.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
883,616
|
|
|
|
1,848,547
|
|
|
109.2
|
%
|
Salaries and wages
|
|
|
1,374,566
|
|
|
|
3,062,704
|
|
|
122.8
|
%
|
Other general and administrative
|
|
|
|
|
|
|
|
|
|
|
|
Taxes and permits
|
|
|
249,645
|
|
|
|
456,273
|
|
|
82.8
|
%
|
Charge card and bank fees
|
|
|
65,691
|
|
|
|
200,821
|
|
|
205.7
|
%
|
Rent
|
|
|
539,145
|
|
|
|
1,186,347
|
|
|
120.0
|
%
|
Legal and professional
|
|
|
147,629
|
|
|
|
648,166
|
|
|
339.1
|
%
|
Advertising and marketing
|
|
|
257,383
|
|
|
|
805,794
|
|
|
213.1
|
%
|
Insurance
|
|
|
252,276
|
|
|
|
376,013
|
|
|
49.0
|
%
|
Other
|
|
|
983,205
|
|
|
|
1,524,573
|
|
|
55.1
|
%
|
Depreciation & amortization
|
|
|
221,745
|
|
|
|
351,748
|
|
|
58.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
4,974,901
|
|
|
|
10,460,986
|
|
|
110.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
1,412,495
|
|
|
|
2,864,969
|
|
|
102.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(536,672
|
)
|
|
|
(773,504
|
)
|
|
44.1
|
%
|
Gain on sale of assets
|
|
|
179,189
|
|
|
|
|
|
|
*
|
|
Unrealized gain on investments
|
|
|
8,381
|
|
|
|
|
|
|
*
|
|
Interest income
|
|
|
147,789
|
|
|
|
3,572
|
|
|
(97.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Income (Expenses)
|
|
|
(201,313
|
)
|
|
|
(769,932
|
)
|
|
282.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
1,211,182
|
|
|
|
2,095,037
|
|
|
73.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense current
|
|
|
|
|
|
|
332,971
|
|
|
*
|
|
Income tax expense deferred
|
|
|
150,000
|
|
|
|
317,031
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income taxes
|
|
|
150,000
|
|
|
|
650,002
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest
|
|
|
(33,244
|
)
|
|
|
(111,383
|
)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
1,027,938
|
|
|
$
|
1,333,652
|
|
|
29.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
Revenue sources generated by the Clubs include: (i) the sale of alcoholic beverages; (ii) food and merchandise; (iii) service revenues, which include fees
paid by entertainers to the Clubs for the opportunity to perform at the Clubs, fees charged for admission to the Clubs; (iv) and ATM fees, and other ancillary revenues (collectively referred to as Total Revenue). Total Revenue
increased 108.6% to approximately $13.3 million for the first quarter of 2008, compared with a year ago. The increase in Total Revenue was
13
due primarily to the Companys continued success in being able to acquire quality clubs. The same store revenue, which is represented by twelve stores,
increase represented approximately 6.4% of the increase of 108.6% for the first quarter 2008.
Cost of Goods Sold
Cost of goods sold consists of alcohol, food, and merchandise. For the three months ended March 31, 2008, cost of goods sold increased from 25.1% to
25.5%, which is the percent of cost of the combined revenues from the sales of alcohol, food and merchandise. The relationship of our cost of goods sold to our revenue from the sale of alcohol, food and merchandise varies from club to club depending
on various factors, including the variety of food offered, whether the club has a merchandise boutique, and the percentage of sales of wine and champagne to other types of alcohol. In general, upscale clubs will have a greater variety of
food offered, a boutique and higher percentage of wine and champagne sales.
Salaries and Wages
Salaries and wages consist of all labor costs incurred throughout the entire organization. Labor costs increased by approximately 122.8% for the first
quarter 2008 when compared to the same period in 2007. This increase is a result of the acquisitions that we made in 2007 and annual salary increases. The percentage of salaries and wages to total revenue is 22.9% for the three months ended
March 31, 2008 and 21.5% for the same period 2007. The increase reflects a cost integrating the acquisitions into the system and we expect the on going percentage to be approximately 21.5% of Total Revenue.
Other General and Administrative Expenses
Taxes and permits increased by approximately 82.8% for the first quarter 2008, compared to the same period in 2007. The increases in taxes and permits were primarily a result of new acquisitions.
Rent increased approximately 120.0% for the first quarter of 2008, compared to the same periods in 2007.
Legal and professional expenses increased by approximately 339.1% for the first quarter of 2008, when compared to the same period for 2007. The increases
are due to acquisitions, SOX compliance and additional costs related to our growth.
Advertising and marketing expenses increased by
approximately 213.1% for the first quarter, compared to the same periods in 2007. The increase is related to acquisitions and additional marketing in new markets.
Insurance expense increased by approximately 49.0% for the first quarter of 2008, as compared to the quarter of 2007. These increases are due to the acquisitions in 2007 and reflect the savings related to the
economies of scale.
Other general and administrative (G&A) expenses increased approximately 55.1% in the first quarter
ending 2008, compared to the same period in 2007. These increases are due to the acquisitions during 2007.
Depreciation and Amortization
Depreciation and amortization increased by 58.6% the first quarter 2008, compared to the same period in 2007. This increase is related
primarily to the acquisitions of new clubs and $850,000 in capital expenditures in 2008.
Interest Expense
Interest expense increased approximately 44.1% during the first quarter 2008, compared to the same period in 2007. The increase in interest expense is a
primary result of financing approximately half of the 2007 club acquisitions with debt.
Interest Income
Interest income decreased by approximately $145,000 for the first quarter of 2008, as compared to the same period in 2007. The decrease in interest income
is primarily a result of use of cash from an equity raise in the first quarter of 2007 and the cash flow from our clubs to acquire new clubs resulting in a smaller amount of free cash flow in 2008.
Income Tax Expense - Current
The income tax expense
current represents the portion of income taxes that are due in cash for the three months ended March 31, 2008 as compared to no cash taxes due in the first quarter ended March 31, 2007.
14
Deferred Income Taxes
Deferred income taxes represent the estimate of income taxes due based on the difference between book net income and income tax for the period ending March 31, 2008. The deferred income taxes for period ending
March 31, 2007 were partially reduced by the remaining net operating loss carry-forward and income tax credits earned. The deferred income tax expense for the first quarter 2008 was $317,031, as compared to $150,000 for the three months ended
March 31, 2007.
Net Income and Earnings Per Share
For the first quarter of 2008 net income is approximately $1.3 million or $0.08 per share, as compared to $1.0 million or $0.07 per share. The weighted average shares outstanding increased by $2.8 million, or 19%,
from the prior year due to using common stock to fund acquisitions and pay for certain services.
Liquidity and Capital Resources
The level of current assets and liabilities for the nightclub operations does not materially fluctuate and is very predictable. We anticipate that the
cash flow from our existing operations will be sufficient to fund our current level of operations for the next twelve months, the primary source of our liquidity, since we began our operations in April, 2002. We have acquired eighteen existing
nightclub operations, eleven of which we acquired in the 2007, for a total cost of approximately $91.5 million. We funded these acquisitions primarily through issuances of our common and preferred stock (approximately $53 million) and assumptions of
indebtedness (approximately $36 million). We have sold two clubs and closed one since we began our operations and are pursuing additional acquisitions. We presently have the cash to purchase the club under contract and being completed April 14,
2008. We are in the process of negotiating a line of credit, getting commitments for financing on our other acquisitions, and with current cash flow believe we are in position to execute our plan for acquisitions in each of fiscal 2008 and fiscal
2009. The acquisition of additional clubs beyond the present plan will require us to obtain additional debt and/or equity capital. There can be no assurance that such capital will continue to be available upon terms that are acceptable to us, if
such financing is available at all. An inability to obtain such additional financing could have an effect on our strategy of growth through the acquisition of clubs, the upgrade of existing clubs and the development of clubs in areas that are not
market saturated and already receptive to well-managed upscale clubs.
Working Capital
At March 31, 2008 and December 31, 2007, the Company had cash and cash equivalents of approximately $2.8 million and $3.0 million and total
current assets of approximately $5.6 million and $5.0 million, respectively. Our current liabilities exceeded our current assets by approximately $5.7 million at March 31, 2008, compared to the current liabilities exceeding our current assets
by approximately $6.9 million at December 31, 2007.
Capital Resources
We had stockholders equity of approximately $58.7 million on March 31, 2008 and approximately $56.1 million at December 31, 2007. The
change is the result of income recognized during the first three months of 2008, and services performed in exchange for common stock.
The
net cash provided by operating activities was approximately $1.8 million for the three months ending 2008 and $1.1 million for the first three months of 2007. The decrease in the cash flow provided by operations was due to the increase in our net
income for the period, changes related to the assets, and increases in accounts payable, income taxes and decreases in accrued expenses and deferred revenue.
Net cash used by investing activities for the three months ending 2008 was approximately $1.0 million, whereby such use of cash was primarily for the purchase of fixed assets. The net cash used by investing activities
for the three months ended March 31, 2007 was $14,286,159. $933,208 was for equipment and improvements; $4,778,112 was for short term investments, $8,553,580 for acquisition of clubs, $221,259 for deposits paid for contracts to purchase
acquisitions. This was offset by $200,000 of investing cash inflows from our sale of EEP. The net investing cash outflows for the three months ended March 31, 2007 were financed from sale of common stock and borrowing.
Net cash used by financing activities for the three months ending 2008 was approximately $1.1million. The majority of the use of cash from financing
activities was for the payment of debt service. Cash provided by financing activities for the three months ended March 31, 2007 was $28,561,017. We used $400,876 to repay debt, $31,960 to make payments on capital leases, and $16,000 for loan
fees. These were offset by $21,170,771 received in the sale of common stock, net of offering costs, $7,400,000 in financing from Lowrie Management LLLP, and cash received as part of the acquisition of clubs.
Off Balance Sheet Arrangements
We do not
currently have any off balance sheet arrangements falling within the definition of Item 303(c) of Regulation S-B.
Inflation
To date, inflation has not had a material impact on our operations.
15
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
N/A
Item 4.
|
Controls and Procedures
|
As of March 31, 2008
our Chief Executive Officer and Chief Financial Officer (the Certifying Officers) conducted evaluations of our disclosure controls and procedures. As defined under Sections 13a-15(e) and 15d-15(e) of the Exchange Act, the term
disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required
to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuers management, including the Certifying Officers, to allow timely decisions regarding required disclosure.
Based on this evaluation, the Certifying Officers have concluded that our disclosure controls and procedures were effective to ensure that material information is recorded, processed, summarized and reported by our management on a timely basis in
order to comply with our disclosure obligations under the Exchange Act and the rules and regulations promulgated thereunder.
Further,
there were no changes in our internal control over financial reporting during the first fiscal quarter that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
16
PART II OTHER INFORMATION
Item 1.
|
Legal Proceedings
|
Other than as set forth in the
Companys annual report, we are not aware of any pending legal proceedings against the Company, individually or in the aggregate, that would have a material adverse affect on our business, results of operations or financial condition.
N/A
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
None
Item 3.
|
Default Upon Senior Securities
|
None
Item 4.
|
Submission of Matters to a Vote of Security Holders
|
None
Item 5.
|
Other Information
|
None
|
|
|
Exhibit No.
|
|
Exhibit
|
|
|
31.1
|
|
Certification of Troy H. Lowrie, Chairman of the Board and Chief Executive Officer of VCG Holding Corp., pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.
|
|
|
31.2
|
|
Certification of Donald W. Prosser, Interim Chief Financial and Accounting Officer of VCG Holding Corp., pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.
|
|
|
32.1
|
|
Certification Statement of Troy H. Lowrie, Chairman of the Board and Chief Executive Officer of VCG Holding Corp., pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.
|
|
|
32.2
|
|
Certification Statement of Donald W. Prosser, Interim Chief Financial and Accounting Officer of VCG Holding Corp., pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
|
17
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
VCG HOLDING CORP.
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date:
|
|
May 12, 2008
|
|
|
|
By:
|
|
/s/ Troy H. Lowrie
|
|
|
|
|
|
|
|
|
Troy H. Lowrie, Chairman of the Board
and Chief
Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
Date:
|
|
May 12, 2008
|
|
|
|
By:
|
|
/s/ Donald W. Prosser
|
|
|
|
|
|
|
|
|
Donald W. Prosser,
|
|
|
|
|
|
|
|
|
Interim Chief Financial and Accounting Officer
|
18
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