UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 21, 2004

VCG HOLDING CORP.

(Exact name of registrant as specified in its charter)

Colorado	000-50291	84-1157022
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

390 Union Blvd, Suite 540, Lakewood, CO 80228

(Address of principal executive offices, including zip code)

(303) 934-2424

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Item 2. Acquisitions of Assets.

The following event occurred on July 21, 2004:

VCG Holding Corp. (the “Company”) upon completion of due diligence, final approval of the transaction by all of the independent board of directors on July 22, 2004, and approval a liquor license transfer by the City of Glendale, Colorado on July 21, 2004, the Company has acquired the controlling interest in an adult entertainment nightclub known as Penthouse Denver located at 4451 E. Virginia Avenue, Glendale, Colorado (“Penthouse Denver”).

The Company purchased all of the one percent (1%) general partnership interest from WCC Acquisitions, Inc. (a related party) for 200,000 shares of restricted common stock ($600,000) from the Company and a eighty-nine and half percent (89.5%) limited partnership interest from Lowrie Management LLLP. (a related party) for $4,000,000 to be paid per the terms of a promissory note and security agreement executed on July 21, 2004, date of approval of the transfer of the liquor license to the Company, a copy of which is attached along with the Limited Partnership Purchase Agreement hereto as Exhibits 10.18 and 10.19. The purchase was effective on June 30, 2004. Micheal Ocello, the President and a director of the Company is a five percent minority owner of the limited partnership and chose not to sell his interest to the Company. The independent board discussed the other owners of the limited partnership and determined that Mr. Ocello’s minority ownership would not be a conflict.

This acquisition will allow the Company to increase its benefit from the use of its agreement with Penthouse for the use of its name and brand. Consideration for the purchase was determined through arm’s-length value determined by an outside independent CPA from the Company, Lowrie Management LLLP, and WCC Acquisitions, Inc. The acquisition fits with in the Company’s third party model for purchases.

Coming with the third quarter 2004 financial statements, the Company will be able to consolidate the financial statements of Glendale Restaurant Concepts LP for the 2003 and 2004 fiscal periods as it is considered an acquisition of entities under common control and is therefore accounted for similar to a pooling of interests. (see pro forma information)

Item 7. Financial Statements and Exhibits.

(a) Financial statements of business acquired.

The financial statements for Glendale Restaurant Concepts LP for the six months and years ended June 30, 2004, December 31, 2003 and 2002. have been attached.

(b) Pro forma financial information.

The pro forma financial information will be filed by amendment after the Company’s second quarter 10QSB is filed.

(c) Exhibits.

10.18	Limited Partnership Purchase Agreement, executed effective June 30, 2004, by and among VCG Holding Corp., WCC Acquisitions, Inc. and Lowrie Management LLLP.
10.19	Promissory Note and Security Agreement dated July 21, 2004 with Lowrie Management LLLP.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 29, 2004	VCG HOLDING CORP.
	By:	/s/ Donald W. Prosser
		Donald W. Prosser, Director and Chief Financial and Accounting Officer

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EXHIBIT INDEX

10.18	Limited Partnership Purchase Agreement, executed effective June 30, 2004, by and among VCG Holding Corp., WCC Acquisitions, Inc. and Lowrie Management LLLP.
10.19	Promissory Note and Security Agreement dated July 21, 2004 with Lowrie Management LLLP.

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Glendale Restaurant Concepts, LP

Financial Statements

For the six months and years ended June 30, 2004, December 31, 2003 and 2002

with

Independent Auditor’s Report

TABLE O F CONTENTS

	PAGE
Independent Auditor’s Report	1
Balance Sheets	2
Statements of Income	3
Statements of Partners’ Equity	4
Statements of Cash Flows	5
Notes to Financial Statements	6

INDEPENDENT AUDITOR’S REPORT

Partners

Glendale Restaurant Concepts, LP

Denver, Colorado

I have audited the accompanying balance sheets of Glendale Restaurant Concepts, LP as of June 30, 2004, December 31, 2003 and 2002, and the related statements of income, partners’ equity and cash flows for the six months and years then ended. These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audits.

I conducted my audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Glendale Restaurant Concepts, LP as of June 30, 2004, December 31, 2003 and 2002, and the results of its operations and its cash flows for the six months and years then ended in conformity with accounting principles generally accepted in the United States of America.

Ronald R. Chadwick PC, CPA

2851 S. Parker Road, Suite 720

Aurora, Colorado 80014

July 12, 2004

Aurora, Colorado

Glendale Restaurant Concepts, LP

Balance Sheets

	June 30,			December 31,
	2004			2003			2002
Assets
Current Assets
Cash & cash equivalents	$	65,219		$	36,567		$	28,503
Other receivables		9,333			53,547			23,796
Inventories		66,528			42,685			57,314
Total Current Assets		141,080			132,799			109,613
Equipment and Leasehold Improvements
Equipment		391,617			193,214			103,230
Furniture & fixtures		266,997			260,074			115,928
Signs		20,727			12,365			36,739
Leasehold improvements		821,402			453,974			436,154
Less accumulated depreciation and amortization		(492,266	)		(411,420	)		(350,585	)
Net equipment and leasehold improvements		1,008,477			508,206			341,466
Other Assets
Goodwill		762,920			762,920			762,920
Less accumculated amortization		(152,583	)		(152,583	)		(152,583	)
Total Other Assets		610,337			610,337			610,337
Total Assets	$	1,759,894		$	1,251,343		$	1,061,416
Liabilities and Partners’ Equity
Current Liabilities
Accounts payable - trade	$	71,910		$	22,182		$	48,744
Accrued expenses		44,775			59,795			38,446
Current portion of capitalized lease		27,372			—			—
Current portion of long-term debt		—			—			—
Due to related party		200,000			100,000			—
Total current liabilities		344,057			181,977			87,190
Long-term Debt
Capitalized lease		52,306			—			—
Long-term debt		—			—			—
Total long-term debt		52,306			—			—
Partners’ Equity		1,363,531			1,069,366			974,226
Total Liabilities and Partners’ Equity	$	1,759,894		$	1,251,343		$	1,061,416

See notes to financial statements

2

Glendale Restaurant Concepts, LP

Statements of Income

For the six months and years ended,

	June 30,		December 31,
	2004		2003			2002
Revenues
Sales of Alcoholic beverages	$	918,953	$	1,547,272		$	1,772,458
Sales of food and merchandise		81,150		46,631			49,459
Service revenue		513,726		611,707			699,412
Other		145,651		243,711			238,884
Total Revenue		1,659,480		2,449,321			2,760,213
Operating Expenses
Cost of goods sold		312,171		446,368			457,921
Salaries and wages		308,581		507,369			561,231
Management fee		10,800		35,216			49,654
Other general and administrative
Taxes and permits		37,263		66,837			57,624
Charge card and bank fees		24,472		37,555			41,458
Rent		82,200		120,400			175,104
Legal and professional		29,509		74,974			54,250
Advertising and marketing		141,050		132,242			100,443
Royalities		78,459		—			—
Other		259,964		429,646			347,844
Depreciation and amortization		80,846		86,874			137,902
Total Operating Expenses		1,365,315		1,937,481			1,983,431
Income (loss) from operations		294,165		511,840			776,782
Other income (expenses)
Interest expense		—		—			—
Interest income		—		—			—
Gain (loss) on sale/dispostion of assets		—		(10,700	)		—
Other		—		—			—
Total Other Income (Expenses)		—		(10,700	)		—
Net income (loss)	$	294,165	$	501,140		$	776,782

See notes to financial statements

3

Glendale Restaurant Concepts, LP

Statement of Partners’ Equity

For the six months and years ended June 30, 2004, December 31, 2003 and 2002

Balance, December 31, 2001		1,088,444
Distribution		(891,000	)
Net income		776,782
Balance, December 31, 2002		974,226
Capital contribution		—
Distribution		(406,000	)
Net income		501,140
Balance, December 31, 2003		1,069,366
Distribution		—
Net income		294,165
Balance, June 30, 2004	$	1,363,532

See notes to financial statements

4

Glendale Restaurant Concepts, LP

Statements of Cash Flows

For the six months and years ended,

	June 30,			December 31,
	2004			2003			2002
Net income (loss)	$	294,165		$	501,140		$	776,782
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		80,846			86,874			137,902
(Increase) decrease in other receivables		44,214			(29,751	)		(16,144	)
(Increase) decrease in inventory		(23,843	)		14,629			(31,828	)
(Gain) loss on disposition of equipment		—			10,700			—
Increase (decrease) in trade accounts payable		49,728			(26,564	)		39,253
Increase (decrease) in due to related party		100,000			100,000			—
Increase (decrease) in accrued expenses		(15,020	)		21,349			(13,319	)
Net cash provided by operating activities		530,090			678,377			892,646
Investing Activities
Purchases of equipment and leasehold improvements		(581,116	)		(264,313	)		(58,476	)
Purchase of goodwill		—			—			—
Proceeds from disposition of equipment		—			—			—
Net cash used by investing activities		(581,116	)		(264,313	)		(58,476	)
Financing Activities
Issuance of capital lease		95,014			—			—
Payments on capital lease		(15,336	)		—			—
Distribution		—			(406,000	)		(891,000	)
Net cash provided by financing activities		79,678			(406,000	)		(891,000	)
Net increase (decrease) in cash		28,652			8,064			(56,830	)
Cash beginning of year		36,567			28,503			85,333
Cash end of year	$	65,219		$	36,567		$	28,503

See notes to financial statements

5

Glendale Restaurant Concepts, LP

Notes to Financial Statements

June 30, 2004, December 31, 2003 and 2002

1) Organization

The Company formed as a Colorado Limited Partnership in January 1999. The Company is in the business of owning and operating a nightclub which provides premium quality live adult entertainment, restaurant and beverage services in an up-scale environment to affluent patrons. The Company operates the nightclub in a suburb of Denver, Colorado.

The Company has selected December 31 as its year end.

2) Summary of Accounting Policies

Use of Estimates in the Preparation of Financial Statements

Preparation of the Company’s financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Inventories

Inventories, consisting principally of liquor and food products, are stated at the lower of cost or market (first-in, first-out method).

Property and Equipment

Property and equipment are stated at cost. Cost of property renovations or improvements are capitalized; costs of property maintenance and repairs are charged against operations as incurred. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the individual assets, as follows:

Leasehold improvements	2-5 years
Equipment	5-7 years

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Glendale Restaurant Concepts, LP

Notes to Financial Statements (Continued)

June 30, 2004, December 31, 2003, and 2002

2) Summary of Accounting Policies (Continued)

Revenue Recognition

The Company recognizes all revenues at point-of-sale upon receipt of cash, check or charge card sale. This includes VIP Room Memberships, since the memberships are non-refundable and the Company has no material obligation for future performance.

Income Taxes

No income tax provision has been included in the financial statement since income or loss of the Partnership is required to be reported by the respective partners on their individual tax returns.

Advertising and Marketing

The advertising and marketing costs are expenses as incurred.

Goodwill

The Company adopted the Statement of Financial Accounting Standards (“SFAS”) No. 142 “Goodwill and other Intangible Assets” on January 1, 2002. Under the guidance of Statement 142, goodwill is no longer subject to amortization over its estimated useful life. Rather, goodwill will be subject to at least an annual assessment for impairment by applying a fair value base test. The adoption of this statement did not have a material effect on the financial position or results of operations of the Company, as no adjustments were needed at June 30, 2004, December 31, 2003 and 2002.

2) Obligation under Capital Lease

The Company has a capital lease obligation and as of June 30, 2004 the information is summarized as follows:

Equipment	$	95,014
Less accumulated depreciation		(6,787	)
	$	88,227

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Glendale Restaurant Concepts, LP

Notes to Financial Statements (Continued)

June 30, 2004, December 31, 2003, and 2002

2) Obligation under Capital Lease (Continued)

The capital lease requires a monthly payment of $3,095.56 including effective interest of 15.491% per annum through December 2006.

Future minimum lease payments under capital leases at December 31 are as follows:

Years Ending December 31:
2004	$	40,242
2005		37,146
2006		40,242
		117,631
Less: amount representing interest		22,617
Present value of future minimum lease payment		95,014
Less: current maturities		28,529
Long-term capital lease obligation	$	66,485

4) Leasehold improvements

The following is disclosure required under FSAB 142 by year:

•      June 30, 2004
a). Amount of expenditure during year.	$	367,429
b). Weighted average amortization period.		20.0 years
c). Gross carrying amount at end of year and accumulated amortization.
Total Leasehold Improvements	$	788,043
Accumulated Amortization		(271,130	)
Net Leasehold Improvements	$	516,913
d). Amortization expense for period.	$	30,265
e). Estimated amortization next five years:

2004	$	60,530
2005		50,925
2006		50,482
2007		50,482
2008		50,482
	$	262,901

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Glendale Restaurant Concepts, LP

Notes to Financial Statements (Continued)

June 30, 2004, December 31, 2003, and 2002

•      December 2003
a). Amount of expenditure during year.	$	8,866
b). Weighted average amortization period.		8.8 years
c). Gross carrying amount at end of year and accumulated amortization.
Total Leasehold Improvements	$	420,614
Accumulated Amortization		(240,865	)
Net Leasehold Improvements	$	179,549
d). Amortization expense for year.	$	41,549

•      December 2002
a). Amount of expenditure during year.	$	14,692
b). Weighted average amortization period.		3.5 years
c). Gross carrying amount at end of year and accumulated amortization.
Total Leasehold Improvements	$	411,748
Accumulated Amortization		(199,316	)
Net Leasehold Improvements	$	212,432
d). Amortization expense for year.	$	80,498

5) Related Party Transaction

The Company rents its facility from Lowrie Management LLLP, one of the partners. The following are the amounts of rent paid to Lowrie Management LLLP each year:

Year ended
December 31, 2004	$	144,000
December 31, 2003	$	103,633
December 31, 2002	$	157,704

6) Commitments

The Company has several operating leases for parking and a lease on the facility (note 5). The future minimum lease commitment as of December 31, 2003 for these leases is as follows:

Year ended	Parking		Facility		Total
December 31, 2004	$	21,039	$	144,000	$	165,039
December 31, 2005	$	21,420	$	144,000	$	165,420
December 31, 2006	$	21,813	$	144,000	$	165,813
December 31, 2007	$	3,378	$	144,000	$	147,378
December 31, 2008	$	—	$	144,000	$	144,000

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