UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

or

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 000-53490

SGB INTERNATIONAL HOLDINGS INC.
(Exact name of registrant as specified in its charter)

No. 25 Jia He Road, Xinjing Centre, Unit C2606
Siming District, Xiamen City, Fujian Province
PRC China 362300
(Address of principal executive offices) (zip code)

86-13611930299
(Registrant’s telephone number, including area code)

Not applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X]     No [   ]

1

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [   ]     No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
373,793,578 shares of common stock outstanding as of November 13, 2013.

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SGB INTERNATIONAL HOLDINGS INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2013

Table of Contents

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “anticipate,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Quarterly Report on Form 10-Q and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements concerning other matters addressed in this Quarterly Report on Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Quarterly Report on Form 10-Q.

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Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SGB INTERNATIONAL HOLDINGS INC.
AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS
FOR NINE MONTHS ENDED SEPTEMBER 30, 2013

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F-1

The accompanying notes are an integral part of these consolidated financial statements.

F-2

The accompanying notes are an integral part of these consolidated financial statements

F-3

The accompanying notes are an integral part of these consolidated financial statements

F-4

The accompanying notes are an integral part of these consolidated financial statements.

F-5

1 ORGANIZATION AND PRINCIPAL ACTIVITIES

SGB International Holdings Inc. (“SGB” or the “Company”) was incorporated in British Columbia, Canada on November 6, 1997. Through its subsidiary, the Company is engaged in coal production and sales by exploring, developing, and mining coal properties in People’s Republic of China.

On May 11, 2011, the Company completed the acquisition of Dragon International Resources Group Co., Limited (“Dragon International”), a Hong Kong corporation incorporated on October 5, 2010, and its wholly-owned subsidiary through a share exchange which resulted in the former shareholders of Dragon International acquiring the control of SGB. This transaction was accounted for as a reverse takeover transaction (“RTO”) for accounting purpose, as Dragon International was deemed to be the acquirer, and these consolidated financial statements are a continuation of the consolidated financial statements of Dragon International. The carrying amounts of SGB’s assets and liabilities are included in these consolidated financial statements.

Prior to the above noted RTO, and on February 21, 2011, pursuant to a share transfer agreement, Dragon International completed the acquisition of Fujinan Huilong Coal Mine Co., Ltd. (“Fujian Huilong”) (formerly known as Yongding Shangzhai Coal Mine Co., Ltd.), a People’s Republic of China corporation and was incorporated on August 4 2005. Upon the completion of the acquisition, Fujian Huilong became the wholly-owned subsidiary of Dragon International and the control in substance was not changed. For accounting purposes, the acquisition has been accounted for using the continuity of interest method, which recognizes Fujian Huilong as the successor. The net assets of Dragon International prior to the acquisition has been accounted as recapitalization as at the date of acquisition.

The Company and its subsidiaries are considered to be operating in one segment based on its organizational structure and strategic decision making method.

These financial statements have been prepared in accordance with U.S. generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As at September 30, 2013 and December 31, 2012, the Company had working capital deficiency of $1,239,337 and $3,950,472, respectively, and requires additional funds to maintain its operations. In view of the working capital deficiency, the management has reviewed the cash position as at the balance sheet date and the cash flow forecast for the next twelve months and taken into factors that (i) to raise equity financing as required; and (ii) to obtain the principle shareholder’s support in funding the required working capital. After taking the above circumstances and facts into consideration, the management of the Company is satisfied that the Company will have sufficient funds to complete the current development and to meet

F-6

1 ORGANIZATION AND PRINCIPAL ACTIVITIES (Continued)

in full its financial obligation and operations or capital expenditure as they fall due for the foreseeable future.

2 SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and preparation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by generally accepted accounting principles in the United States for complete financial statements. In the opinion of management, all of the normal and recurring adjustments necessary to fairly present the interim financial information set forth herein have been included. The results of operations for interim periods are not necessarily indicative of the operating results of a full year or of future years.

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and, with the exception of new accounting pronouncements described in Note 2, follow the same accounting policies and methods of their application as the most recent annual financial statements. The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. These interim financial statements should be read in conjunction with the financial statements and related footnotes included in the Annual Report on Form 10-K of the Company for the year ended December 31, 2012.

Property, equipment and mine development costs

Property, plant and equipment, are stated at cost less depreciation and amortization and accumulated impairment loss. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Depreciation of property, plant and equipment is calculated to write off the cost, less their estimated residual value, if any, using the straight-line method over their estimated useful lives. The estimated useful lives are as follows:

F-7

2 SIGNIFICANT ACCOUNTING POLICIES (Continued) Property, equipment and mine development costs (Continued)

Costs for mineral properties and mine development incurred to expand capacity of operating mines or to develop new mines are capitalized and charged to operations using the units-of-production method over the estimated proven and probable reserve tons directly benefiting from the capital expenditures but up to the Company’s allowable quotas set by the local government. Mine development costs include costs incurred for site preparation and development of the mines during the development stage.

Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefitted. Maintenance and repairs are expensed as incurred. When equipment is retired or disposed, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposal is recognized in cost of coal sales.

Intangible asset represents the coal mining right and is recorded at cost less accumulated amortization. Amortization is provided using the units-of-production method over the estimated proven and probable reserve tons directly benefiting from the capital expenditures but up to the Company’s allowable quotas set by the local government.

Recent accounting pronouncements adopted

In December 2011, the FASB issued ASU 2011-11, “Balance Sheet (Topic 210), Disclosures about Offsetting Assets and Liabilities”. The guidance in this update requires the Company to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The pronouncement is effective for fiscal years and interim periods beginning on or after January 1, 2013 with retrospective application for all comparative periods presented. The Company adopted ASU 2011-11 on January 1, 2013 and the adoption of the new standard did not have a material effect on the Company’s consolidated financial position or results of operations.

F-8

2 SIGNIFICANT ACCOUNTING POLICIES (Continued)

In July, 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic). ASU 2012-02 amends the required annual impairment testing of indefinite-lived intangible assets by providing an entity an option to first assess qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived asset is less than its carrying amount. If, after assessing the totality of events and circumstances, an entity determines it is not more likely than not that the fair value of the indefinite-lived asset is less than its carrying amount, then performing the two-step impairment test under Topic 350-30 is unnecessary. However, if an entity concludes otherwise, then it is required to perform the impairment testing under Topic 350-30-35-18F by calculating the fair value of the reporting unit and comparing the results with the carrying amount. If the fair value exceeds the carrying amount, then the entity must perform the second step test of measuring the amount of the impairment test under Topic 350-30-35-19. An entity has the option to bypass the qualitative assessment and proceed directly to the two step goodwill impairment test. Additionally, the entity has the option to resume with the qualitative testing in any subsequent period. The pronouncement is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012 and early adoption is permitted. The Company adopted ASU 2012-02 on January 1, 2013 and the adoption of the new standard did not have a material effect on the Company’s consolidated financial position or results of operations.

In October 2012, the FASB issued ASU 2012-04 "Technical corrections and improvements". This ASU makes certain technical correction to the FASB Accounting Standards Codification. The new guidance will be effective for fiscal years beginning after December 15, 2012. The Company adopted ASU 2012-04 on January 1, 2013 and the adoption of the new standard did not have a material effect on the Company’s consolidated financial position or results of operations.

F-9

2 SIGNIFICANT ACCOUNTING POLICIES (Continued)

In February 2013, the FASB issued ASU 2013-02, "Comprehensive Income (Topic 220), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income". The amendments do not change the current requirements for reporting net income or oother comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S.GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The Company adopted ASU 2013-02 on January 1, 2013 and the adoption of the new standard did not have a material effect on the Company’s consolidated financial position or results of operations.

Recent issued accounting pronouncements

Other accounting pronouncements that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s financial statements upon adoption.

3 CASH AND CASH EQUIVALENTS

As at September 30, 2013 and December 31, 2012, the Company has cash and cash equivalents placed with banks or held by its subsidiary in the People’s Republic of China denominated in Chinese Renminbi (“RMB”) as at September 30, 2013 amounting to RMB 237,182 (December 31, 2012: RMB 2,742,227) where the remittance of funds to jurisdictions outside the PRC is subject to certain government rules and regulations on foreign currency controls. Under the People’s Republic of China’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Company is permitted to exchange RMB for foreign currencies but may require approval of governmental authorities or designated banks in the PRC.

F-10

4 RECEIVABLES

Notes:

5 PREPAID EXPENSES, DEPOSITS AND OTHER RECEIVABLES

F-11

5 PREPAID EXPENSES, DEPOSITS AND OTHER RECEIVABLES (Continued)

Notes:

6 PROPERTY, EQUIPMENT AND MINE DEVELOPMENT COSTS

F-12

6 PROPERTY, EQUIPMENT AND MINE DEVELOPMENT COSTS (Continued)

During the nine months ended September 30, 2013 and 2012, the Company charged amortization and depreciation expenses of $928,072 and $889,506 to the cost of revenue and $137,719 and $135,045 to the depreciation and amortization expenses, respectively.

As disclosed in the Company’s filling from 8-K dated October 4, 2013, during the quarter the board of the Company approved to dispose all of the fixed assets. The disposal of the fixed assets, which includes but not limited to equipment and plants, is to set off the debts of Fujian HuiLong. During the quarter, the Company recorded a loss of US 901,806 on disposal of the aforesaid fixed assets.

7 INTANGIBLE ASSETS

The following is a summary of intangible asset:

During the nine months ended September 30, 2013 and 2012, the Company charged amortization expenses of $11,669 and $26,611 to the cost of revenue, respectively.

8 ACCOUNT PAYABLE AND ACCRUED LIABILITIES

The following is a summary of accounts payable and accrued liabilities:

F-13

9 ASSET RETIREMENT OBLIGATION

The following is a summary of asset retirement obligation:

The Asset Retirement Obligation is associated with the Ecological Environment Rehabilitation fee of about RMB3.86 million payable to the Fujian Provincial Land and Resources Bureau for operating the coal mine. As of December 27, 2010, a payment extension has been applied and approved till April 2015 for the full settlement of approximately RMB2.7 million. The Company is not required to pay any interest on the postponed payment for the Ecological Environment Rehabilitation fee. The Company accounted the remaining asset retirement obligation by applying the relative discounted rate of 10%.

10 AMOUNTS DUE TO A RELATED PARTY

F-14

11 LOAN PAYABLE

The following is a summary of term loan:

F-15

12 STOCKHOLDERS’ EQUITY

Authorized:

Unlimited number of common shares without par value Unlimited number of preferred shares without par value

Issued and outstanding

As at September 30, 2013 and December 31, 2012, 373,793,578 common stocks issued and outstanding which were derived from the following transactions:

Prior to the RTO with Dragon International and as at May 11, 2011, SGB had 24,502,446 common shares issued and outstanding.

On May 11, 2011, SGB completed a reverse acquisition transaction with the shareholders of Dragon International pursuant to which SGB acquired 100% of the issued and outstanding capital stock of Dragon International in exchange for an aggregate of 220,522,000 common shares of SGB, which constituted 90% of SGB’s issued and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of the reverse acquisition. Prior to the acquisition, SGB has no business with a minimal assets and liabilities which did not meet the definition of a business, therefore, the reverse take-over of SGB by Dragon International has been accounted for as a capital transaction which is deemed Dragon International acquired SGB by issuance of 24,502,446 common shares (issued and outstanding prior to the RTO) for its net assets of $10,789.

Prior to the RTO and on February 21, 2011, Dragon International completed the acquisition of Fujian Huilong and for accounting purpose, the acquisition has been accounted for using the continuity of interest method, which recognizes Fujian Huilong as the successor. The net assets of Dragon International totaling $1,277,694 as at the date of acquisition have been accounted as recapitalization into Fujian Huilong.

Fujian Huilong has a registered and paid-in capital of $123,913 (RMB 1,000,000) prior to being acquired by Dragon International.

F-16

12 STOCKHOLDERS’ EQUITY (Continued)

As the consolidated financial statements is the continuation of Fujian Huilong, therefore, the share capital of Fujian Huilong has been restated to reflect the 220,522,000 common shares that effected the RTO for the purpose of financial statements presentation and earnings per share calculation.

On September 21, 2011, Fujian Huilong’s registered and paid-in capital was increased by $1,925,447 (RMB 12,278,945) to a total of $2,049,360 (RMB 13,278,945) as at December 31, 2012.

On December 29, 2011, the Company settled $7,726,148 by agreeing to issue 128,769,132 shares of the common stock of the Company at a deemed price of $0.06 per share. The Company has allotted and issued the shares in 2012.

13 RELATED PARTY TRANSACTIONS

During the nine months ended September 30, 2013 and 2012, the Company engaged following related party transactions:

• Accrued or paid $ nil (September 30, 2012: $85,690) in salaries and bonus to senior officers and directors of the Company;

As at September 30, 2013 and December 31, 2012, following receivable and payable were outstanding:

• Included in accounts payable and accrued liabilities, $Nil (December 31, 2012: $406,252) were payable to the senior officers and directors of the Company

• Included in receivable, $3,253 was receivable (December 31, 2012: $3,175) from a senior officer and director of the Company.

Also see note 10 and 11.

14 COMMITMENTS

The Company has entered into an operating lease for its office and employee accommodation in Xiamen, Fujian, PRC expiring in August, 2016. Annual leased payments are as follows:

F-17

15 COMPARATIVE FIGURE

Certain comparative figures have been reclassified to conform to the presentation adopted in current period.

F-18

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following discussion and analysis should be read in conjunction with: (i) the accompanying unaudited condensed consolidated financial statements and notes thereto for the three and nine months ended September 30, 2013, (ii) the consolidated financial statements and notes thereto for the year ended December 31, 2012 included in our Annual Report on Form 10-K (“Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on April 8, 2013 and (iii) the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K. Aside from certain information as of December 31, 2012, all amounts herein are unaudited. Unless the context otherwise indicates, references to “SGB,” “we,” “our,” “us” and the “Company” refer to SGB International Holdings Inc.and its subsidiaries on a consolidated basis.

Forward-Looking Statements

In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See “Forward-Looking Statements.” Our results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Item 1A. Risk Factors” of our most recent Form 10-K.

Foreign Private Issuer Status

We are a foreign private issuer as defined under Rule 3b-4 promulgated under the Exchange Act, but voluntarily file our periodic reports on U.S. domestic forms Form 10-K, Form 10-Q, and Form 8-K.

As a foreign private issuer, we are not required to use U.S. domestic company forms such as Form 10-K, Form 10-K or Form 8-K to comply with our reporting requirements under Section 13 of the Exchange Act. Instead, we can file an annual report on Form 20-F each year with the Securities and Exchange Commission and furnish our interim financial statements and management’s discussion and analysis and reports about material changes to our Company, in the forms required by Canadian securities legislation, with the Securities and Exchange Commission on Form 6-K.

We have elected to voluntarily file our annual, quarterly, and current reports on U.S. domestic company forms and, we intend to continue to comply with our reporting requirements under Section 13 of the Exchange Act using the U.S. domestic company forms.

Corporate Overview

We were incorporated in the province of British Columbia, Canada under the name “Slocan Valley Minerals Ltd.” on November 6, 1997 with an authorized share capital of 10,000,000 common shares without par value. Following our incorporation we were not actively engaged in any business activities.

On June 1, 2004 we increased our authorized share capital from 10,000,000 common shares without par value to an unlimited number of common shares without par value. On June 11, 2004 we changed our name to “Orca International Language Schools Inc.”

Effective March 3, 2009, we changed our name from “Orca International Language Schools Inc.” to “SGB International Holdings Inc.” and we created a new class of preferred stock. As a result, our authorized capital consists of an unlimited amount of common shares without par value and an unlimited amount of preferred shares without par value. We have not issued any preferred shares.

On May 11, 2011, we completed a reverse acquisition transaction with Dragon International Resources Group Co., Limited (the “Dragon International”), the shareholders of Dragon International, and the subsidiary of Dragon International, Fujian Huilong Coal Mine Co., Ltd. (formerly Yongding Shangzhai Coal Mine Co., Ltd.) (“Fujian Huilong”), pursuant to which we acquired 100% of the issued and outstanding capital stock of Dragon International in exchange for an aggregate of 220,522,000 common shares of our company, which constituted 90% of our issued and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of the reverse acquisition.

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Prior to the date of our reverse acquisition, we were considered as a “shell company” under the Rule 405 promulgated under the Securities Act of 1933 and Rule 12b-2 promulgated under the Securities Exchange Act of 1934 because we had nominal operations and nominal assets.

Dragon International was incorporated in the Hong Kong on October 5, 2010, and is a holding company for Fujian Huilong. Fujian Huilong was incorporated in the People’s Republic of China on August 4, 2005.

Our Business

Prior to our reverse acquisition of Dragon International, our goal originally was to provide management services to schools in the international education industry. We searched for a school as the initial client but we were not successful in finding any client. Because we incurred losses since November 6, 1997, in March 2009 our board of directors decided to explore the possibility of adopting a different business plan.

As a result of the above described reverse acquisition, we have assumed the business and operations of Fujian Huilong, a wholly-owned subsidiary of Dragon International. Fujian Huilong is engaged in coal production and sales by exploring, developing and mining coal properties. Fujian Huilong owns and operates a coal mine, located in Shangzhai Village, Yongding County, Longyan City of Fujian Province, People’s Republic of China.

Results of Operations

For the three months ended September 30, 2013 and 2012

The following table sets forth the consolidated results of our operations for our Company, including those of Dragon International and Fujian Huilong for the three months ended September 30, 2013 (“2013 Q3”) and September 30, 2012 (“2012 Q3”):

Revenues

Our revenues are derived from the sales of coal produced from our property. The overall revenue decreased by $1,317,245 or 57% from $3.04 million in 2012 Q3 to $1.72 million in 2013 Q3, principally due to the on-going construction of the new shafts (later suspended during 2013 Q3) which has slowed down the current production coupled with the decreasing demand in coal as a result of the slowing down in the growth of the Chinese economy.

Cost of Sales and Gross Profit

In line with the decreased revenue, our cost of sales decreased by $613,591 or 28% from $2.21 million in 2012 Q3 to $1.60 million in 2013 Q3. Meanwhile, because our cost of sales per tons increased from average $62.28 per ton in 2012 Q3 to average $83.17 per ton in 2013 Q3 principally due to the higher labor and material costs, our company recorded a lower gross profit margin of 27% in 2013 Q3 as compared to 43% in 2012 Q3.

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Operating Expenses

Our operating expenses for the three months ended September 30, 2013 and 2012 were as follows:

Our operating expenses increased by $65,806 or 10% from $664,621 in 2012 Q3 to $730,427 in 2013 Q3, principally due to the increase in tax liabilities incurred from disposal of the fixed assets.

Other Expenses and Income Tax

Our other expenses and income tax increased by $911,377 from $70,630 in Q3 2012 to $982,007 in Q3 2013. The increase in other expenses was primarily caused by the significant increase in the loss of disposal by $901,806.

Net Income/(Loss)

As a result of the above, our net income decreased by $16,870,209 from a net income of $95,191 in 2012 Q3 to a net loss of $16,775,018 in 2013 Q3.

Impact of Inflation

We believe that inflation has had a net negative impact on our results of operations in 2013 Q3, especially on the labor costs and raw materials. The inflation risk remained relatively high in China during 2013 Q3. Chinese government has carried out a serial of financial and monetary policies to control the increasing inflation.

For the nine months ended September 30, 2013 and 2012

The following table sets forth the consolidated results of our operations for our Company, including those of Dragon International and Fujian Huilong for the nine months ended September 30, 2013 (“9M 2013”) and September 30, 2012 (“9M 2012”):

Revenues

Our revenues are derived from the sales of coal produced from our property. The overall revenue decreased by $1,754,747 or 20% from $8.8 million in 9M 2012 to $7.0 million in 9M 2013 principally due to the on-going construction of the new shafts (later suspended during 2013 Q3) which has slowed down the current production coupled with a decreasing demand in coal as a result of the slowing down of the growth of the Chinese economy.

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Cost of Sales and Gross Profit

In line with the decreased revenue, our cost of sales decreased by $588,050 or 10% from $6.1 million in 9M 2012 to $5.5 million in 9M 2013. Meanwhile, because our cost of sales per tons increased from average $67.88 per ton in 9M 2012 to average $79.20 per ton in 9M 2013 principally due to the higher labor and material costs, our Company recorded a lower gross profit margin of about 31% in 9M 2013 as compared to 36% in 9M 2012.

Operating Expenses

Our operating expenses for the nine months ended September 30, 2013 and 2012 were as follows:

Our operating expenses decreased by $353,066 or 18% from $2.0 million in 9M 2012 to $1.6 million in 9M 2013, principally attributable to the decrease in the general and administrative expenses by $274,075 or 22% as a result of the decreased staff salary.

Other Expenses and Income Tax

Other expenses and income tax increased by $1,606,033 or 734% from $218,667 in 9M 2012 to $1,824,700 in 9M 2013. The increase in other expenses was primarily caused by the significant increase in the loss of disposal by $1,699,609.

Net Income/(Loss)

As a result of the above, our net income decreased by $17,520,203 from a net income of $455,001 in 9M 2012 to a net loss of $17,065,202 in 9M 2013.

Impact of Inflation

We believe that inflation has had a net negative impact on our results of operations in 9M 2013, especially on the labor costs and raw materials. The inflation risk remained relatively high in China during 9M 2013. Chinese government has carried out a serial of financial and monetary policies to control the increasing inflation.

Cash Requirements

We believe our cash on hand, and cash generated from the mining operations will satisfy our working capital needs, and other liquidity requirements associated with our existing operations through the remainder of this year. We will continue to seek opportunities to expand our existing mining operations and acquire additional coal mining rights, and we expect to finance such acquisitions through the issuance of debt or equity securities.

We estimate our general administrative expenses and working capital requirements for the next 12-month period to be as follows:

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If we require additional financing to fund our operations, we expect to obtain funds through the equity or debt financing. Raising additional financing by issuing equity securities will dilute our existing stockholders' ownership interests in our company. Obtaining commercial or other loans will increase our liabilities and future cash commitments.

There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will not be able to invest in additional equipment or upgrading the current production facilities to increase the production capacity.

Liquidity and Capital Resources

Working Capital as at September 30, 2013 and December 31, 2012

Current asset decreased by $438,326 or 82% from $536,127 as at December 31, 2012 to $97,801 as at September 30, 2013, principally due to the decrease of the cash balance directly related to the payment of the capital expenditures on the daily operation.

Current liabilities decreased by $3,050,372 or 68% from $4,486,599 as at December 31, 2012 to $1,436,227 at September 30, 2013, principally a result of the settlement of all the account payable and accrued liabilities by the proceeds from the sales of the fixed assets.

As a result of the above, we have a working capital deficiency of $1.34 million as at September 30, 2013 as compared to $3.95 million as at December 31, 2012.

In view of the working capital deficiency, our management has reviewed the cash position as at the balance sheet date and the cash flow forecast for the next twelve months and taken into factors that (1) the current mining operation is able to continue in generating positive operating cash flows; (2) stable client in Fujian Province is expected to support continued revenue from the existing coal mine operation; (3) we are looking for opportunity to raise equity or debt financing; and (4) we are seeking the principal shareholder’s support in funding the required working capital. After taking the above circumstances and facts into consideration, the management of the Company believes that the Company will have sufficient funds to complete the current development and to meet in full its financial obligation and operations or capital expenditure as they fall due for the next six months.

Cash Flows

For the nine months ended September 30, 2013 and 2012 respectively:

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The following summarizes cash provided by or used in each of the indicated types of activities during the nine months ended September 30, 2013 and 2012:

Due to the decreased revenue in 9M 2012, we generated a lower net cash from operating activities of $621,899 in 9M 2013 as compared to $1,899,143 in 9M 2012.

The net cash used in investing activities decreased from $1,676,747 in 9M 2012 to $725,777 in 9M 2013. The net cash used in investing activities was mainly in connection to the capital expenditure used on the construction of the mine shafts and related mining facilities. The decrease was principally due to the suspension in the construction of mine shaft in light of the decrease in demand for coal in China and the reduction of our revenue level. .

The net cash generated from financing activities of $253,050 in 9M 2013 was principally due to the increase of term loan by $102,211 and increase in the amount advanced from the third party by $121,380.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Smaller reporting companies are not required to provide the information required by this item.

ITEM 4T. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures”, as that term is defined in Rule 13a-15(e), promulgated by the Securities and Exchange Commission pursuant to the Exchange Act. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company's reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal accounting officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by paragraph (b) of Rules 13a-15 under the Exchange Act, our management, with the participation of our principal executive officer and principal financial officer, evaluated our company’s disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our management concluded that as of the end of the period covered by this quarterly report on Form 10-Q, our disclosure controls and procedures were effective.

Our management continues to review processes and intend make necessary changes to strengthen our system of internal controls over financial reporting.

A material weakness is a deficiency or a combination of control deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

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Limitations on Effectiveness of Controls

Our principal executive officer and principal financial officer do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additional controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2013 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

To the best of our knowledge, there are no material pending legal proceedings to which we are a party or of which any of our property is the subject or proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS.

There were no material changes to the Risk Factors disclosed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2012. For more information concerning our risk factors, please see “Item 1A. Risk Factors” of our Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

Exhibits required by Item 601 of Regulation S-K:

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* In accordance with SEC Release 33-8238, Exhibits 32.1 is furnished and not filed.

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 thereunto duly authorized.

SGB INTERNATIONAL HOLDINGS INC.

By:
/s/ Shibi Chen
Shibi Chen
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 26, 2013

By:
/s/ Peifeng Huang
Peifeng Huang
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
Date: November 26, 2013

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