-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ElXw8wxD1teiGVOe/+HyMf90D2SlNB+MTofczwqQb5Xn6jCgYh0ycUdbqceNqwht YXmcezqo6IPKOMNXK52I/w== 0000950123-02-008004.txt : 20020814 0000950123-02-008004.hdr.sgml : 20020814 20020814144456 ACCESSION NUMBER: 0000950123-02-008004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCORES HOLDING CO INC CENTRAL INDEX KEY: 0000831489 STANDARD INDUSTRIAL CLASSIFICATION: INVESTORS, NEC [6799] IRS NUMBER: 870426358 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-16665 FILM NUMBER: 02734975 BUSINESS ADDRESS: STREET 1: 150 EAST 58TH STREET STREET 2: SUITE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 212-421-8480 MAIL ADDRESS: STREET 1: 150 EAST 58TH STREET STREET 2: SUITE CITY: NEW YORK STATE: NY ZIP: 33304 FORMER COMPANY: FORMER CONFORMED NAME: OLYMPUS MTM CORP DATE OF NAME CHANGE: 19970215 FORMER COMPANY: FORMER CONFORMED NAME: INTERNET ADVISORY CORP DATE OF NAME CHANGE: 19980904 10QSB 1 y63257e10qsb.txt SCORES HOLDING COMPANY INC. ================================================================================ U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: JUNE 30, 2002 ------------- [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from to ------------ ----------- Commission file number 0-16665 SCORES HOLDING COMPANY INC. ----------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) UTAH 87-042 6358 - --------------------------------- ------------------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.)
150 E. 58TH STREET, NEW YORK, NY 10022 ---------------------------------------- (Address of principal executive offices) (212) 421-8480 --------------------------- (Issuer's telephone number) ---------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 --- --- State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practical date: 15,999,676 AS OF AUGUST 9, 2002 ------------------------------- Transitional Small Business Disclosure Format (check one). Yes ; No X --- --- ================================================================================ SCORES HOLDING COMPANY INC. JUNE 30, 2002 QUARTERLY REPORT ON FORM 10-QSB TABLE OF CONTENTS
Page ---- Special Note Regarding Forward Looking Statements 3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 PART II - OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds 13 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 6. Exhibits and Reports on Form 8-K 14
2 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS To the extent that the information presented in this Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002 discusses financial projections, information or expectations about our products or markets, or otherwise makes statements about future events, such statements are forward-looking. We are making these forward-looking statements in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These risks and uncertainties are described, among other places in this Quarterly Report, in "Management's Discussion and Analysis of Financial Condition and Results of Operations". In addition, we disclaim any obligations to update any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report. When considering such forward-looking statements, you should keep in mind the risks referenced above and the other cautionary statements in this Quarterly Report. 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS PAGE
Page ---- Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001 5 Consolidated Statements of Operations for the three and six months ended June 30, 2002 and June 30, 2001 6 Consolidated Statement of Stockholders' Deficiency for the six months ended June 30, 2002 7 Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and June 30, 2001 8 Notes to Consolidated Financial Statements 9
4 SCORES HOLDING COMPANY INC (FORMERLY INTERNET ADVISORY CORPORATION) CONSOLIDATED BALANCE SHEET
June 30, December 31, 2002 2001 ----------- ------------ (unaudited) (audited) ASSETS CURRENT ASSETS: Cash $ 11,249 $ 18,626 Notes Receivable 10,000 10,000 Interest Receivable 674 - ----------- -------- Total Current Assets 21,923 28,626 FURNITURE AND EQUIPMENT, NET 114,352 48,763 REORGANIZATION VALUE IN EXCESS OF AMOUNTS ALLOCABLE TO IDENTIFIABLE ASSETS 9,814 9,814 OTHER ASSETS: Security Deposits 1,002,667 2,667 ----------- -------- $ 1,148,756 $ 89,870 =========== ======== LIABILITIES AND STOCKHOLDERS' DEFICIENCY CURRENT LIABILITIES: Current portion of prepetition debt $ 14,991 $ 14,991 Current portion of prepetition long term debt - related party 6,875 6,875 Post petition accrued expenses 41,276 - Related party payable 35,000 35,000 Accounts payable and accrued expenses 143,919 94,125 Deposit payable - - Loan payable - - Loan payable - related party 1,210,077 - ----------- -------- Total Current Liabilities 1,452,138 150,991 PREPITITION LONG TERM DEBT 16,714 22,178 STOCKHOLDERS' DEFICIENCY Common stock, $.001 par value; 50,000,000 shares authorized, 15,999,676 and 4,601,794 issued and outstanding, respectively 15,999 4,602 Additional paid-in capital 740,144 - Deficit accumulated during development stage (1,076,239) (87,901) ----------- -------- Total Stockholder's deficiency (320,096) (83,299) ----------- -------- $ 1,148,756 $ 89,870 =========== ========
See notes to consolidated financial statements. 5 SCORES HOLDING COMPANY INC (FORMERLY INTERNET ADVISORY CORPORATION) CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Ended June 30, Three Months Ended June 30, ----------------------------- ---------------------------- 2002 2001 2002 2001 ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited) NET SALES $ 56,250 $ 175,979 $ 6,250 $ 56,749 COST OF GOODS SOLD - 88,761 0 33,369 ----------- ----------- ----------- ----------- GROSS PROFIT 56,250 87,218 6,250 23,380 GENERAL AND ADMINISTRATIVE EXPENSES 925,613 187,710 711,001 265 ----------- ----------- ----------- ----------- NET PROFIT (LOSS) FROM OPERATIONS (869,363) (100,492) (704,751) 23,115 INTEREST INCOME (EXPENSE) 674 (257) 337 (106) ----------- ----------- ----------- ----------- NET LOSS BEFORE INCOME TAXES (868,689) (100,749) (704,414) 23,009 PROVISION FOR INCOME TAXES - - - - ----------- ----------- ----------- ----------- NET PROFIT (LOSS) $ (868,689) $ (100,749) (704,414) 23,009 =========== =========== =========== =========== NET LOSS PER SHARE $ (0.05) $ (0.01) (0.04) 0.00 =========== =========== =========== =========== WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING 15,826,343 14,445,018 15,826,343 14,445,018 =========== =========== =========== ===========
See notes to consolidated financial statements. 6 SCORES HOLDING COMPANY INC (FORMERLY INTERNET ADVISORY CORPORATION) CONSOLIDATED STATEMENT OF STOCKHOLDER'S DEFICIENCY
Common Stock Additional Total ---------------------- Paid in Accumulated Stockholders Shares Amount Capital Deficit Deficit ---------- ------- ---------- ------------ ------------ Balance as of December 31, 2001 (audited) 4,601,794 $ 4,602 $ - $ (87,901) $ (83,299) Issuance of shares resulting from the acquisition 10,000,000 10,000 (10,000) - - Recapitalization resulting from the acquisition - - 10,000 (119,649) (109,649) Forward stock split 650,382 650 (650) - Converted debt 15,000 15 14,985 - 15,000 Issuance of shares for services 732,500 732 725,809 726,541 Net loss - - - (868,689) (868,689) ---------- ------- -------- ----------- --------- Balance as of June 30, 2002 (unaudited) 15,999,676 $15,999 $740,144 $(1,076,239) $(320,096) ========== ======= ======== =========== =========
See notes to consolidated financial statements. 7 SCORES HOLDING COMPANY INC (FORMERLY INTERNET ADVISORY CORPORATION) CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended June 30, --------------------------- 2002 2001 ----------- ----------- (unaudited) (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (868,689) $(100,749) Adjustments to reconcile net loss to net cash provided by (used) in operating activities: Depreciation 6,500 71,676 Converted debt 15,000 - Accounts receivable - (73) Interest receivable (674) - Prepitition debt - - Post petition accrued expenses 41,276 - Accounts payable and accrued expenses 49,794 (791,475) Deposit payable - - Debt restructuring - 867,242 Deferred revenue - (14,912) ----------- --------- NET CASH PROVIDED BY (USED) IN OPERATIONS (756,793) 31,709 ----------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of capital expenditures (72,089) - Security deposits (1,000,000) - ----------- --------- NET CASH USED IN INVESTING ACTIVITIES (1,072,089) - ----------- --------- CASH PROVIDED BY FINANCING ACTIVITIES: Issuance of shares resulting from the acquisition 10,000 - Issuance of shares 732 Additional paid in capital 725,809 Recapitalization resulting from the acquisition (119,649) - Prepetition long term debt (5,464) - Loan payable - Loan payable - related party 1,210,077 - Proceeds from officer loan - (30,500) ----------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 1,821,505 (30,500) ----------- --------- NET DECREASE IN CASH (7,377) 1,209 CASH, beginning of the period 18,626 21,031 ----------- --------- CASH, end of the period $ 11,249 $ 22,240 =========== ========= Supplemental disclosures of cash flow information: Interest paid $ - $ - Taxes paid - - Non cash financing activities: Common stock issued for services $ 726,541 -
See notes to consolidated financial statements. 8 SCORES HOLDING COMPANY INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) PART I. FINANCIAL INFORMATION Item 1. Financial Statements Note 1: Basis of Presentation The accompanying unaudited consolidated financial statements of Scores Holding Company Inc., formerly Internet Advisory Corporation, (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation (consisting of normal recurring accruals) have been included. The preparation of 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating results expected for the six months ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2001. Per share data for the periods are based upon the weighted average number of shares of common stock outstanding during such periods, plus net additional shares issued upon exercise of options and warrants. Note 2: Equity Transactions During the first quarter the Company declared a forward 3 for 1 stock split for shares not owned by a principal shareholder. The forward stock split resulted in 650,382 shares of common stock being issued. In March 2002, the Company issued 15,000 shares of common stock at $1.00 per share for an outstanding legal debt. In April 2002, the Company issued 12,500 shares of common stock for an outstanding consulting fee. 9 In April 2002, the Company issued 60,000 shares of common stock for an outstanding legal debt. In April 2002, the Company issued 400,000 shares of common stock for an outstanding consulting fee. In June 2002, the Company issued 60,000 shares of common stock for an outstanding consulting fee. In June 2002, the Company issued 200,000 shares of common stock for an outstanding legal debt. Note 3: Acquisition On March 11, 2002 the Company exchanged 10,000,000 shares of capital stock for all of the outstanding stock of Go West Entertainment, Inc. (Go West) whose primary asset is a lease on New York City retail space with a deposit of $750,000. Go West has had no operations. Due to related management and ownership of both Internet Advisory and Go West, for accounting purposes the transaction has been treated as a transaction between entities under common control as described in paragraphs D11 to D18 of Financial Accounting Standard 141 - Business Combinations. The acquisition has been recorded as of January 1, 2002 using the carrying values of the assets of each company as of that date. The statements of operations and cash flows represent the operations of both companies' from January 1, 2002. Note 4. Real Estate Lease Go West entered into on October 3, 2001 for the rental of a building in New York City to be converted to an entertainment club. The term of the lease is for twenty years commencing on June 1, 2002. Go West is entitled to 50% base rental deferral in the first year or the period commencing on June 1, 2002 and ending the day operations begin if no default occurs. The amount deferred shall be payable as additional rent during the second year of operations. The rental commitments for the next five years are as follows:
Year ended December 31, 2002 408,333 2003 728,000 2004 757,120 2005 787,405 2006 818,904
The Company has the option to acquire the building with a related party. The Company paid $750,000 as security deposit through March 31, 2002 and remaining $250,000 on May 15, 2002. 10 On July 10, 2002, the Company transferred its data center assets located at 2455 East Sunrise Blvd., Fort Lauderdale, Florida to Worldwide Connect, Inc., pursuant to an installment sale arrangement between the Company and Worldwide Connect Inc., and Lonnie Divine, the principal of Worldwide Connect. The assets consist of bay routers and computer hardware equipment previously utilized by the Company in its Internet operations. In connection with the sale, Worldwide Connect will make 24 monthly payments to the Company in the aggregate amount of $200,000 followed by a nominal payment of $100 to complete the purchase. The Company will pay the rental obligation to the landlord through the termination of the lease, February 28, 2003. The rental obligation, including security deposit of $666.67 per month is $6,184.43 per month. The security deposit will be returned to the Company upon termination of the lease. The sale of the data center assets concludes the Internet related business for the Company and allows the Company to devote all of its resources to its proposed adult entertainment business. Note 5: Loan payable - related party The Company borrowed $1,210,077 from six related party entities. 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS On March 11, 2002 we entered into an Acquisition Agreement with Go West Entertainment Inc., a New York corporation ("Go West"), and the shareholders of Go West. Pursuant to the Acquisition Agreement, we acquired all of the issued and outstanding capital stock of Go West from the Go West Shareholders, making Go West a wholly owned subsidiary of ours in exchange for 10,000,000 shares of our restricted common stock. Our unaudited consolidated financial statements as of June 30, 2002 and for the six-month period ended June 30, 2002 reflect such acquisition. RESULTS OF OPERATIONS For the three-month period ended June 30, 2002 and June 30, 2001, we had revenues of $6,250 and $56,749, respectively. For the six-month period ended June 30, 2002 and June 30, 2001, we had revenues of $56,250 (all of which were attributable to our month to month contract with Scores Entertainment, Inc., a related party) and $175,979, respectively. The decrease in revenue was attributable to the Internet operations being ceased in the beginning of the second quarter. Our cost of goods sold was $0 for the three-month period ended June 30, 2002 and $33,369 for the three-month period ended June 30, 2001, respectively. Our cost of goods sold was $0 for the six-month period June 30, 2002 and $88,761 for the six-month period ended June 30, 2001. The decrease in cost of goods sold was attributable to the Internet operations being ceased in the beginning of the second quarter. We incurred general and administrative expenses of $704,751 for the three-month period ended June 30, 2002 and $265 for the three-month period ended June 30, 2001. We incurred general and administrative expenses of $869,363 for the six-month period ended June 30, 2002 and $187,710 for the six-month period ended June 30, 2001. The increase in general and administrative expenses was primarily attributable to legal and consulting expenses incurred by Go West. For the three-month period ended June 30, 2002, we had a net loss of $704,414 or approximately $.04 per share as compared to a net profit of $23,009, for the three-month period ended June 30, 2001. For the six-month period ended June 30, 2002, we had a net loss of $868,689 or approximately $.05 per share as compared to a net loss of $100,749 or approximately $.01 per share for the six-month period ended June 30, 2001. We recognize revenues as they are earned, not necessarily as they are collected. Direct costs such as hosting expense, design cost and server expense are classified as cost of goods sold. General and administrative expenses include accounting, advertising, contract labor, bank charges, depreciation, entertainment, equipment rental, insurance, legal, supplies, payroll taxes, postage, professional fees, telephone and travel. LIQUIDITY AND CAPITAL RESOURCES We have incurred losses since the inception of our business. Our net loss of $868,689 for the six-month period is primarily due to the inclusion of Go West operating expenses. Since our inception, we have been dependent on acquisitions and funding from lenders and investors to conduct operations. As of June 30, 2002 we had an accumulated deficit of $1,076,239. As of June 30, 2002, we had total current assets of $21,923 and total current liabilities of $1,452,138 or negative working capital of $1,430,215. At December 31, 2001, we had total current assets of 12 $28,626 and total current liabilities of $150,991 or negative working capital of $122,365. We currently have no material commitments for capital expenditures other than those related to the renovation of our leased property at 533-535 West 27th Street, New York, New York, (the "Leased Property") at which we intend to operate an adult entertainment nightclub commencing during the fourth quarter of 2002. The increase in the amount of our negative working capital is primarily attributable to payables incurred in connection with payment of the security deposit on the Leased Property, including payables due to related parties. We will continue to evaluate possible acquisitions of or investments in businesses, products and technologies that are complimentary to ours. These may require the use of cash, which would require us to seek financing. We may sell equity or debt securities or seek credit facilities to fund acquisition-related or other business costs. Sales of equity or convertible debt securities would result in additional dilution to our stockholders. We may also need to raise additional funds in order to support more rapid expansion, develop new or enhanced services or products, respond to competitive pressures, or take advantage of unanticipated opportunities. Our future liquidity and capital requirements will depend upon numerous factors, including the success of our adult entertainment nightclub business. PART II - OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS On April 3, 2002 we issued 12,500 shares of our restricted common stock to Monte Weiner in consideration of $12,500 in consulting fees. The shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On April 16, 2002 we issued an aggregate of 400,000 shares of our restricted common stock to 7 persons in consideration of $400,000 in consulting fees. All of these issuances were made in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On April 3, 2002 we issued 10,000,000 shares of our restricted common stock to Interauditing Srl pursuant to a Collateral Loan Agreement in which the shares were issued to collateralize a loan. Due to an administrative problem that prevented the loan from being made, on May 10, 2002 the shares were returned and cancelled. The shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On May 10, 2002 we issued an aggregate of 10,000,00 shares of our restricted common stock to Richard Goldring, Elliot Osher and William Osher, the 3 former shareholders of Go West Entertainment Inc. ("Go West"), pursuant to the March 11, 2002 Acquisition Agreement among us, Go West and the Go West shareholders, in consideration for all of the issued and outstanding capital stock of Go West. The shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. 13 On June 24, 2002 we issued 60,000 shares of our restricted common stock to 3rd Millenium Management, LLC, our financial public relations firm in consideration of $60,000 in consulting fees. The shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. No other restricted equity securities were sold by us during the period covered by this Report. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On May 23, 2002, stockholders holding 10,891,668 (approximately 69.2%) of our outstanding common shares consented in writing to amend our certificate of incorporation to change our name to Scores Holding Company Inc. On July 9, 2002, following the mailing of a Definitive Information Statement to shareholders of recording as at May 23, 2002, the name change was effected by the filing of a Certificate of Amendment to our Certificate of Incorporation with the Delaware Secretary of State. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (b) Reports on Form 8-K During the period covered by this Report on May 29, 2002, we filed a Current Report on Form 8-K/A dated March 11, 2002. Item 7 of the Form 8-K/A contained audited and pro forma financial statements respecting Go West Entertainment Inc., a company acquired by us on March 11, 2002. 14 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. Scores Holding Company Inc. Dated: August 14, 2002 By: /s/ Richard Goldring ------------------------------------ Richard Goldring President, Chief Executive and Financial Officer The undersigned, the Chief Executive and Accounting Officer of the Registrant, certifies that this Report complies with all of the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, and the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: August 14, 2002 By: /s/ Richard Goldring ------------------------------------ Richard Goldring 15 -----END PRIVACY-ENHANCED MESSAGE-----