10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: June 30, 2020

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: 000-16665

SCORES HOLDING COMPANY, INC. 

(Exact name of registrant as specified in its charter)

Utah	87-0426358
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
533-535 West 27th Street, New York, NY	10001
(Address of principal executive offices)	(Zip Code)

212-246-9090 

(Registrant’s telephone number, including area code)

N/A 

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:  None

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

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 ¨ No x

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ¨ No x

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x	Smaller reporting company	x
Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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 the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

As of June 9, 2022 there were 165,186,144 shares of common stock, $0.001 par value per share, outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)	F-1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 3. Quantitative and Qualitative Disclosures about Market Risk	6
Item 4. Controls and Procedures	6
PART II – OTHER INFORMATION	7
Item 1. Legal Proceedings	7
Item 1A. Risk Factors	11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 3. Defaults upon Senior Securities	11
Item 4. Mine Safety Disclosure	12
Item 5. Other Information	12
Item 6. Exhibits	12

2

FORWARD-LOOKING STATEMENTS

Except for historical information, this report contains “forward-looking information” within the meaning of the Private Securities Litigation Reform Act of 1995, and Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “anticipates,” “intends,” “expects,” “projects,” “estimates,” “believes,” “seeks,” “could,” “should,” the negative thereof or comparable terminology. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances taking place after the date of this document, except as required by law.

PART I –FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Unaudited Condensed Consolidated Balance Sheets	F-2
Unaudited Condensed Consolidated Statements of Operations	F-3
Unaudited Condensed Consolidated Statements of Cash Flows	F-4
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Deficit	F-5
Notes to Unaudited Condensed Consolidated Financial Statements	F-6

F-1

SCORES HOLDING COMPANY, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2020			2019
		(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,891		$	9,331
Trade receivables, net of allowance of $0 and $0, respectively		70,305			44,913
Prepaid expenses		88,701			16,519
Total Current Assets		160,897			70,763
TOTAL ASSETS	$	160,897		$	70,763
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	263,037		$	184,144
Accrued expenses, related party		7,500			7,500
Related party payable		37,500			30,000
Total Current Liabilities		308,037			221,644
Related party loan payable - long term		352,581			345,611
Contract Liabilities		208,200			180,200
TOTAL LIABILITIES		868,818			747,455
Commitments and Contingencies (Note 7)		-			-
STOCKHOLDERS' DEFICIT
Preferred stock, $.0001 par value, 10,000,000 shares authorized, -0- share issued and outstanding		-			-
Common stock, $.001 par value; 500,000,000 shares authorized, 165,186,144 shares issued and 165,186,144 shares outstanding, respectively		165,186			165,186
Additional paid-in capital		6,058,117			6,058,117
Accumulated deficit		(6,931,224	)		(6,899,995	)
Total Stockholders' Deficit		(707,921	)		(676,692	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	160,897		$	70,763

See notes to the unaudited condensed consolidated financial statements.

F-2

SCORES HOLDING COMPANY, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
REVENUES
Royalty Revenue	$	9,000		$	183,549			152,642		$	265,847
Total Revenue		9,000			183,549			152,642			265,847
OPERATING EXPENSES
General and Administrative Expenses		64,849			125,731			176,311			291,461
INCOME(LOSS) FROM OPERATIONS		(55,849	)		57,818			(23,669	)		(25,614	)
OTHER INCOME/(EXPENSE)
Litigation Settlement, net		-			40,000			-			85,000
Interest Expense, net		(3,816	)		(4,299	)		(7,560	)		(8,823	)
TOTAL OTHER INCOME/(EXPENSE)		(3,816	)		35,701			(7,560	)		76,177
NET INCOME(LOSS) BEFORE INCOME TAXES		(59,665	)		93,519			(31,229	)		50,563
INCOME TAXES		-			-			-
NET INCOME/(LOSS)	$	(59,665	)	$	93,519			(31,229	)	$	50,563
NET INCOME/(LOSS) PER SHARE-Basic and Diluted		(0.00	)		0.00			(0.00	)		0.00
WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING-Basic and Diluted		165,186,144			165,186,144			165,186,144			165,186,144

See notes to the unaudited condensed consolidated financial statements.

F-3

SCORES HOLDING COMPANY INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
	June 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income/(Loss)	$	(31,229	)	$	50,563
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Recovery of bad debts		(13,750	)		(29,000	)
Changes in operating assets and liabilities:
Trade receivable		(11,642	)		(11,177	)
Prepaid expenses		(72,182	)		(26,489	)
Accounts payable and accrued expenses		78,893			26,466
Accrued expenses, related party		30,000			7,500
Accrued interest, related party		6,970			8,076
Contract liabilities		28,000			2,500
NET CASH PROVIDED BY OPERATING ACTIVITIES		15,060			28,439
CASH FLOW FROM INVESTING ACTIVITES:		-			-
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from related party		-			15,000
Payments to related party		(22,500	)		-
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES		(22,500	)		15,000
NET INCREASE/(DECREASE) IN CASH		(7,440	)		43,439
Cash and cash equivalents - beginning of period		9,331			7,662
Cash and cash equivalents - end of period	$	1,891		$	51,101
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	589		$	746
Cash paid for income taxes	$	-		$	-
Supplemental disclosure of cash flows from noncash investing and financing activities	$	-		$	-

See notes to the unaudited condensed consolidated financial statements.

F-4

SCORES HOLDING COMPANY INC. AND SUBSIDIARY

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S DEFICIT

SIX MONTHS ENDED JUNE 30, 2020 and 2019

					Additional					Total
	Common Stock				Paid in		Accumulated			Stockholders
	Shares		Amount		Capital		Deficit			Deficit
Balance as of December 31, 2018		165,186,144	$	165,186	$	6,058,117	$	(6,894,193	)	$	(670,890	)
Net Loss		-		-		-		(42,956	)		(42,956	)
Balance as of March 31, 2019		165,186,144	$	165,186	$	6,058,117	$	(6,937,149	)	$	(713,846	)
Net Income		-		-		-		93,519			93,519
Balance as of June 30, 2019		165,186,144	$	165,186	$	6,058,117	$	(6,843,630	)	$	(620,327	)
Balance as of December 31, 2019		165,186,144	$	165,186	$	6,058,117	$	(6,899,995	)	$	(676,692	)
Net Income								28,436			28,436
Balance as of March 31, 2020		165,186,144	$	165,186	$	6,058,117	$	(6,871,559	)	$	(648,256	)
Net Loss								(59,665	)		(59,665	)
Balance as of June 30, 2020		165,186,144	$	165,186	$	6,058,117	$	(6,931,224	)	$	(707,921	)

See the notes to the unaudited condensed consolidated financial statements.

F-5

SCORES HOLDING CO., Inc and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Organization

BASIS OF PRESENTATION

Scores Holding Company, Inc. (the “Company”) is a Utah corporation, formed in September 1981 and located in New York, NY. Originally incorporated as Adonis Energy, Inc., the Company adopted its current name in July 2002. The Company is a licensing company that utilizes the “SCORES” name and trademark for licensing options.

These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The consolidated financial statements of the Company include the accounts of Scores Licensing Corp. (“SLC”), its wholly-owned subsidiary.

The Company's condensed consolidated financial statements include the Company's accounts, as well as those of its wholly-owned subsidiary. Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications have no impact on the reported results.The Company's accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP 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 information and footnote disclosures required by U.S. GAAP for complete financial statements. The condensed consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the condensed consolidated results of operations and financial position for the interim periods presented.  All such adjustments are of a normal recurring nature.  These unaudited condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

The preparation of financial statements in conformity with U.S. GAAP requires the Company 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.  The results of operations for the six months ended June 30, 2020 are not necessarily indicative of the results to be expected for any other interim period or for the year ending December 31, 2020.

Note 2. Summary of Significant Accounting Principles

COVID-19

As a result of the COVID-19 virus, during the first quarter of 2020 and ongoing, state and local governments have required all but certain essential businesses to close, including all nine clubs operating under the Scores name. The duration and ultimate extent of the closures of these clubs cannot be predicted at this time, however the impact on such clubs' revenue could be material and result in a significant decline in our royalty revenues.

Going Concern

As of June 30, 2020, the Company has cumulative losses totaling $(6,931,224) and negative working capital of $147,140. Because of these conditions, the Company will require additional working capital to develop business operations. The Company intends to raise additional working capital through the continued licensing of its brand with its current and new operators. There are no assurances that the Company will be able to achieve the level of revenues adequate to generate sufficient cash flow from operations to support the Company’s working capital requirements. To the extent that funds generated from any future use of licensing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not continue its operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financials are issued. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

F-6

SCORES HOLDING CO., Inc and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Revenue Recognition

Under ASC 606, revenue from the initiation fees are recognizable when at a point in time (first month of the contract) and royalty revenues are recognized over time for those contracts with probable collections.

The Company's license fee revenue is generated from royalties earned through intellectual property licensing agreements which permit the licensee to use the recognition and status of the Scores brand in order to promote their businesses. Under ASC 606, revenue is recognized throughout the life of the executed licensing agreement. The Company measures revenue based on consideration specified in a contract with a customer. Furthermore, the Company recognizes revenue when it satisfies a performance obligation by transferring control over the service to its customer.

A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The Company's customers typically receive the benefit of its services as they are performed. Substantially all customer contracts provide that the Company is compensated for services performed to date. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

Nature of goods and services

The following is a description of the Company's products and services from which it generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each:

i. Licensing Revenue

Licensing fees represent the fees the Company receives from the licensing of the Company's Scores trademark. The terms of the royalties earned under these license agreements vary from a flat monthly fee to a percentage of the revenues of the licensee on a monthly basis. The licensing rights are transferred to the Company's customers over time, and the Company recognizes licensing revenue over time because the customer will simultaneously receive and consume the benefit from the license as the performance occurs.

ii. Stand-Ready for Consulting and Club Set-up Services

The Company offers an initial set-up and consultation to new clubs in order to aid in the opening and operation. The services are provided within the first month of any licensing agreements, and sometimes are not requested by the licensee and therefore never provided.

Concentration of Credit Risk

The Company earns royalty revenues from ten licensees.

With regards to June 30, 2020, concentrations of sales from four licensees range from 11% to 41%, totaling 99%. There are receivables from two licensee totaling 100%. There are no sales from licensees that are considered related parties. There are no receivables from these licensees that are considered related parties.

With regards to June 30, 2019, concentrations of sales from five licensees range from 11% to 23%, totaling 78%. There are receivables from three licensees ranging from 14% to 64%, totaling 96%. There are no sales from licensees that are considered related parties. There are no receivables from these licensees that are considered related parties.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Inter-company items and transactions have been eliminated in consolidation.

F-7

SCORES HOLDING CO., Inc and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Cash and cash equivalents

The Company considers all highly liquid temporary cash investments, with a maturity of three months or less when purchased, to be cash equivalents. There are times when cash may exceed $250,000, the FDIC insured limit. At June 30, 2020 and December 31, 2019, the uninsured balance amounted to $-0- and $-0-, respectively.

Income per Share

Under ASC 260-10-45, “Earnings Per Share”, basic income (loss) per common share is computed by dividing the income (loss) applicable to common stockholders by the weighted average number of common shares assumed to be outstanding during the period of computation. Diluted income (loss) per common share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. As of June 30, 2020, there are no outstanding stock equivalents. . Accordingly, the weighted average number of common shares outstanding for the periods ended June 30, 2020 and 2019, respectively, is the same for purposes of computing both basic and diluted net income per share for such years.

Fair Value of Financial Instruments

The carrying value of cash and accrued expenses, if applicable, approximate their fair values based on the short-term maturity of these instruments. The carrying amounts of debt were also estimated to approximate fair value.

The Company utilizes the methods of fair value measurement as described in ASC 820 to value its financial assets and liabilities. As defined in ASC 820, fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2:  Observable prices that are based on inputs not quoted on active markets, but corroborated by market data or quoted prices in active markets for similar assets or liabilities.

Level 3:  Unobservable inputs are used when little or no market data is available including the Company’s own assumptions in determining the fair value. The fair value hierarchy gives the lowest priority to Level 3 inputs.

Recently Issued Accounting Standards Update

Leases

In March 2019, the FASB issued ASU No. 2019-01, Leases (Topic 842): Codification Improvements. ASU 2019-01 aligns the guidance for fair value of the underlying asset by lessors with existing guidance in Topic 842. The ASU requires that the fair value of the underlying asset at lease commencement is its cost reflecting in volume or trade discounts that may apply. However, if there has been a significant lapse of time between the date the asset was acquired and the lease commencement date, the definition of fair value as outlined in Topic 820 should be applied. In addition, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We have evaluated the impact of this ASU on the Company’s consolidated financial statements and there is no effect.

F-8

SCORES HOLDING CO., Inc and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Credit loss

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendment to the initial guidance: ASU 2018-19 (collectively, Topic 326). ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact on the Company’s consolidated financial statements.

All new accounting pronouncements issued but not yet effective or adopted have been deemed not to be relevant to us, hence are not expected to have any impact once adopted.

Note 3. Disaggregation of Revenue

Disaggregation of revenue

In the following table, revenue is disaggregated by major products/service lines, and timing of revenue recognition:

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2020		2019		2020		2019
Major products/service lines
Licensing fees - royalty revenue	$	9,000	$	183,549	$	152,642	$	265,847
Total Revenue	$	9,000	$	183,549	$	152,642	$	265,847
Timing of revenue recognition
Products transferred at a point in time	$		$	-	$		$	-
Products and services transferred over time		9,000		183,549		152,642		265,847
	$	9,000	$	183,549	$	152,642	$	265,847

Contract balances

The following table provides information about receivables and liabilities from contracts with customers:

	June 30, 2020		December 31, 2019
Assets
Trade receivables, net	$	70,305	$	44,913
Liabilities
Contract liabilities	$	208,200	$	180,200

F-9

SCORES HOLDING CO., Inc and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Contract liabilities	June 30, 2020		December 31, 2019
Opening	$	180,200	$	112,500
Addditions		28,000		120,200
Transfer to revenue		-		52,500
Ending	$	208,200	$	180,200

Contract receivables are recorded at the invoiced amount and do not bear interest. Credit is extended based on the evaluation of a customer’s financial condition and collateral is not required.

The contract liabilities primarily relate to deferred revenue. Amounts billed in advance of performance obligations being satisfied are booked as deferred revenue.

Practical Expedients and Exemptions

The Company did not apply any practical expedients during the adoption of ASC 606.

Note 4. Related-Party Transactions

Transactions with Common ownership affiliates:

On January 24, 2006, the Company entered into a licensing agreement with AYA International, Inc. (“AYA”) granting AYA the right to use the Company's trademarks in connection with its online video chat website, “Scoreslive.com.” The agreement with AYA provides for royalty payments to be made directly to the Company at the rate of 4.99% of weekly gross revenues from all revenue sources within the AYA website. On December 21, 2009, AYA transferred all of its rights in Scoreslive.com and in its licensing agreement with the Company to Swan Media Group, Inc. (“Swan”), a newly formed New York corporation whose majority owner (80%) is Robert M. Gans, who is also the majority shareholder and chief executive officer of the Company. The Company is owed $0 and $0 in unpaid royalties and expenses as of June 30, 2020 and December 31, 2019, respectively.

On January 27, 2009, the Company entered into a licensing agreement with its affiliate through common ownership I.M. Operating LLC (“IMO”) for the use of the Scores brand name “Scores New York”. Robert M. Gans is the majority owner (72%) of IMO and is also the Company’s majority shareholder and chief executive officer and Howard Rosenbluth, the Company’s Treasurer and a Director, owns 2%. IMO owes the Company a royalty receivable of $0 and $0 as of June 30, 2020 and December 31, 2019, respectively.

On August 31, 2017, IMO entered into an agreement to sell all of its assets to Club Azure LLC (“CA”). Effective September 1, 2017, IMO no longer operated Scores New York and terminated its licensing agreement with the Company. Mark Yackow, an unrelated party, is the sole owner (100%) of CA and former Chief Operating Officer of IMO. Effective September 1, 2017, the Company granted an exclusive, non-transferable license for the use of the “Scores New York” to CA for its gentlemen’s club in New York City. Royalties under this license are payable at a rate of $5,000 per month, commencing in September 2017, and the license is for a term of five years, with five successive five-year renewal terms.

The Company also leases office space directly from Westside Realty of New York, Inc. (WSR), the owner of the West 27th Street Building. The majority owner of WSR (80%) is Robert M. Gans. Since April 1, 2009, the monthly rent has been $2,500 per month including overhead costs. The Company incurred rent expense of $15,00 for the periods ending June 30, 2020 and 2019. The Company owed WSR $15,000 and $7,500 in unpaid rents as of June 30, 2020 and December 31, 2019, respectively.

F-10

SCORES HOLDING CO., Inc and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Effective January 1, 2013, the Company entered into a management services agreement with Metropolitan Lumber Hardware and Building Supplies, Inc. (“Metropolitan”) pursuant to which Metropolitan provides management and other services to the Company, including the services of Robert M. Gans and Howard Rosenbluth to act as executive officers of the Company. In consideration of the services, the Company paid Metropolitan a fee in the amount of $30,000 per year. Effective May 5, 2015, the agreement was amended increasing the annual fee to $90,000. Effective January 1, 2017, the agreement was further amended to remove the requirement that the services of Robert M. Gans to be provided under the agreement. In addition, Metropolitan shall be eligible for a discretionary cash bonus. The agreement may be terminated by either party upon ten days written notice. Mr. Gans is the sole owner of Metropolitan. The Company incurred management fees of $45,000 for the periods ending June 30, 2020 and 2019. The Company owed $22,500 and $22,500 in unpaid management services as of June 30, 2020 and December 31, 2019, respectively.

As of June 30, 2020, the Company has accrued expenses of $7,500 due to Metropolitan. The balance was repaid at the end of 2021. The Company owed $7,500 and $7,500 as of June 30, 2020 and December 31, 2019, respectively.

Effective July 1, 2018, after the gentlemen’s club in New Jersey had been closed from August 15, 2016 to June 28, 2018, the Company terminated the previous licensing agreement and granted an exclusive, non-transferable license for the use of the “Scores Atlantic City” name to Star Light Events LLC (“Star Light”) for its gentlemen’s club in Atlantic City, New Jersey. Royalties under this license are payable at the rate of $5,000 per month, commencing in July 2018, and the license is for a term of five years, with five successive five-year renewal terms. Pursuant to the written agreement, the Company also granted Star Light a non-exclusive, non-transferable license to sell certain licensed products bearing the Company's trademarks. Star Light will purchase the licensed products from the Company or its affiliates at cost plus 25%. Robert M. Gans, the Company's President, Chief Executive Officer and a Director, is the majority owner (92.165%) of Star Light and Howard Rosenbluth, the Company's Secretary, Treasurer and a Director, owns 1%. Star Light owes the Company a royalty receivable of $0 and $0 as of June 30, 2020 and December 31, 2019, respectively.

On December 9, 2013, the Company entered into a license agreement with its subsidiary, SLC, granting SLC the exclusive right to use certain trademarks, including the “Scores” stylized trademark, in connection with certain goods and services. The grant of license also includes the right to issue sublicenses to third parties, subject to the approval of the Company. Pursuant to the agreement, SLC shall pay to the Company a royalty, as determined by the Company, such as a percentage of net revenue or a flat fee, received in connection with the provision of services and/or sale of goods using the trademarks. SLC may also pay a percentage, as determined by the Company, of all royalties received by SLC under any sublicense agreements. SLC and any sublicensees are to adhere to quality standards as set by the Company, and the Company has the right to inspect all facilities and approve all promotional and marketing materials as well as any related packaging. The agreement has a one-year term with automatic one-year renewals, subject to either party’s election to terminate the agreement at least thirty days prior to such renewal. The Company also has the right to terminate the agreement, with immediate effect, upon the occurrence of certain events. The license is subject to any pre-existing license agreements as of the date of the agreement.

Effective February 28, 2017 (the “Effective Date”), the Company entered into separate Settlement Agreements (each, a “Settlement Agreement”) with three licensees, IMO, Star Light and Swan (are sometimes referred to individually as a “Licensee” and collectively as the “Licensees”) controlled by Robert M. Gans, the Company's President, Chief Executive Officer and a member of its Board of Directors.

As of the Effective Date, IMO owed the Company an aggregate of $255,406 in unpaid royalties and other fees. Under its Settlement Agreement, IMO has agreed to pay the entire amount owed to the Company, in full settlement of all claims the Company may have against it. The settlement amount is payable pursuant to a promissory note in 22 consecutive monthly installments commencing March 1, 2017 and bears simple interest at the rate of 4% per year. Included as an event of default under the note is a requirement that IMO remain current in its obligations to the Company under its license agreement from and after the Effective Date. This obligation was satisfied under the terms of the Offset Agreement as discussed further below.

As of the Effective Date, Star Light owed the Company an aggregate of $250,000 in unpaid royalties and other fees. Star Light is currently inactive and has no revenue. Under its Settlement Agreement, Star Light has agreed to pay the Company $75,000, in full settlement of all claims the Company may have against it. The settlement amount is payable pursuant to a promissory note in 10 consecutive monthly installments commencing March 1, 2017 and bears simple interest at the rate of 4% per year. This obligation was satisfied under the terms of the Offset Agreement as discussed further below.

F-11

SCORES HOLDING CO., Inc and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

As of the Effective Date, Swan owed the Company an aggregate of $166,000 in unpaid royalties and other fees. Swan is currently unprofitable. Under its Settlement Agreement, Swan has agreed to pay the Company $50,000, in full settlement of all claims the Company may have against it. The settlement amount is payable pursuant to a promissory note in 10 consecutive monthly installments commencing March 1, 2017 and bears simple interest at the rate of 4% per year. Included as an event of default under the note is a requirement that Swan remain current in its obligations to the Company under its license agreement from and after the Effective Date. This obligation was satisfied under the terms of the Offset Agreement as discussed further below.

On August 4, 2018, the Company settled the Plaintiffs (as defined below) claims in the Voronina matter for $1,310,000. See Note 7 for additional information. The Company had insufficient liquid resources to enable it to make a portion of the settlement payments called for by the Voronina Settlement Agreement. Metropolitan, made loans to the Company in the aggregate amount of $770,000 to enable the Company to make the payments under the Voronina Settlement Agreement. In addition to the aforementioned loan and as discussed further in Note 7, the Company filed a third-party complaint against certain licensees. During the period of August 16, 2018, thru July 19, 2019, the amount of money paid to the Company by settling with Third-Party Defendants and the Company’s insurance carrier was $505,660.

The Company previously entered into the three Royalty Settlement Agreements noted above where Robert M. Gans is a majority owner of the equity of each of the Licensees. Robert M. Gans guaranteed the payment of each Licensee’s obligations under each of the 3 Settlement Documents. The Licensees were not current with respect to their obligations under the Settlement Documents and the Company did not call upon Mr. Gans to honor his Guaranties.

The past due amounts under the Royalty Settlement Agreements were $382,259 as of December 1, 2018. On this date the Company entered into an agreement to offset the Royalty Amount against the Voronina Amount, thereby reducing the amount owed by the Company to Metropolitan to $399,139 pursuant to the terms of a certain Settlement and Offset Agreement made by and among the Company, Star Light, Swan, Metropolitan and Robert M. Gans.

The Licensees did not remain current with respect to their obligations under the Royalty Settlement Agreements, and the Company did not call upon Robert M. Gans to honor his guarantees. The past due amounts under the Royalty Settlement Agreements aggregated $382,259 (the “Aggregate Royalty Amount”) as of December 1, 2018. As of such date, the Company, the Licensees, Metropolitan and Robert M. Gans entered into a Settlement and Offset Agreement (the “Offset Agreement”) pursuant to which the Aggregate Royalty Amount was offset against the Voronina Amount, thereby reducing the amount owed by the Company to Metropolitan to $404,488 (the “Net Voronina Amount”). The Net Voronina Amount is payable pursuant to a promissory note (the “Voronina Note”), which bears simple interest at the rate of 4% per annum, in 86 consecutive monthly installments of $5,000, and a final installment of $1,370, with the initial installment due and payable on January 1, 2019 (or the first business day thereafter). The Company may prepay the Voronina Note at any time, in whole or in part without premium or penalty. The Offset Agreement also provides for the immediate termination of the Royalty Settlement Agreements and the related promissory notes and guarantees.

The total amounts due to the various related parties as of June 30, 2020, and December 31, 2019, was $352,581 and $383,111 respectively and the total amounts due to the Company from the various related parties as of June 30, 2020, and December 31, 2019, was $0 and $0, respectively.

Note 5. Licensees

As of June 30, 2020, the Company has ten license agreements which were obtained between 2003 and 2020.

On March 18, 2016, the Company (through its subsidiary SLC.) entered into a Trademark License (the “Trademark License”) with Michael Blutrich, an unrelated party. The Trademark License grants Mr. Blutrich the non-exclusive use of the Company’s registered trademarks, related logos and other intellectual property in connection with the development, production, and distribution of a potential scripted television series, mini-series, or movie of the week (the “Series”). Under the Trademark License, the Company will receive three percent of all fees, contingent compensation and other consideration that Mr. Blutrich receives in connection with the Series. Mr. Blutrich is permitted to assign the Trademark License without consideration to third-parties. The term of the Trademark License is for one year, which term may and has been extended through December 31, 2020. Effective March 18, 2016, the Company and Mr. Blutrich entered into an addendum to the Trademark License, extending the license to a book about Scores.

F-12

SCORES HOLDING CO., Inc and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

See Note 7 for litigation relating to a few of the Company’s license agreements.

IMO’s members are the Company's majority shareholder, Robert M. Gans (72%), and Secretary and Director, Howard Rosenbluth (2%) hence making IMO a related party. The building occupied by IMO is owned by Westside Realty of New York Inc., of which the majority owner is Robert M. Gans (80%). IMO accounted for 0% and 0% of the Company's royalty revenues for the six months ended June 30, 2020 and 2019, respectively. Mr. Gans is also the majority owner (80%) of Swan, which accounted for 0% and 0% of the Company royalty revenues for the six months ended June 30, 2020 and 2019, respectively. Mr. Gans is also the majority owner (92.165%) of Star Light, which accounted for 0% and 0% of the Company's royalty revenues for the six months ended June 30, 2020 and 2019, respectively.

Note 6. Contract liabilities

License agreements sometimes include Initiation/Inception Fees. Please see Note 3 for a detailed discussion of this matter.

Note 7. Commitments and Contingencies

The Company records $7,500 a month as rent, overhead, and services due to Metropolitan for services rendered by the management of the Company. The Company incurred management fees of $45,000 for the periods ending June 30, 2020 and 2019. Mr. Gans is the sole owner of Metropolitan.

The Company currently leases office space from the Westside Realty of New York which is owned and operated by Robert Gans, the Company's majority shareholder, for $2,500 a month. The Company incurred rent expense of $15,000 for the periods ending June 30, 2020 and 2019.

On April 3, 2016, 50 individuals purporting to be professional models and/or actresses collectively, the “Plaintiffs”) filed a civil suit in the United States District Court for the Southern District of New York against the Company, I.M. Operating, LLC, The Executive Club, LLC, and Robert M. Gans, collectively the (“Defendants”) alleging that images of Plaintiffs were used without their consent for commercial purposes on websites and social media outlets to promote gentlemen’s clubs operated by the Defendants or licensees of the Defendants (the “Lawsuit”). The Lawsuit further alleged that the unauthorized use of these images created, among other things, the false impression that these individuals either worked at, or endorsed, one or more of such clubs. The Lawsuit asserted causes of action under Section 43 of the Lanham Act, 28 U.S.C. § 1125(a)(1), premised on a theory of false endorsement and/or association; New York Civil Rights Law §§ 50-51; New York’s Deceptive Trade Practices Act, New York General Business Law § 349; as well as various common law torts, namely defamation, negligence, conversion, unjust enrichment and quantum meruit. The Lawsuit sought unspecified compensatory damages, punitive damages, as well as attorneys’ fees and costs. The Lawsuit also sought an injunction permanently enjoining the use of the individuals’ images to promote, via any medium, any of the clubs. On April 20, 2017, as a result of the claims asserted in the Lawsuit, the Company filed a third-party complaint (the “Third-Party Complaint”) against certain licensees, namely CG Consulting, LLC; Anthony Quaranta; High Five Management Group, Inc.; Club 2000 Eastern Avenue, Inc.; SCMD, LLC; David Baucom; Manhattan Fashion L.L.C.; Stone Park Entertainment, Inc.; Silver Bourbon, Inc.; Tampa Food & Entertainment, Inc.; Fuun House Productions, L.L.C.; Norm A Properties, LLC; Southeast Show Clubs, LLC; Michael Tomkovich; Palm Spring Grill LLC; Houston KP LLC; and Star Light Events LLC (collectively, “Third-Party Defendants”) asserting causes of action for breach of contract, breach of warranty, contractual indemnification, common law indemnification, contribution and breach of contract for failure to procure insurance. The Company maintained in the Third-Party Complaint, among other things, that pursuant to the Third-Party Defendants’ respective license agreements, each of the Third-Party Defendants are expressly obligated to indemnify, defend and hold the Company harmless in connection with the conduct giving rise to the claims asserted by Plaintiffs in the Lawsuit. Third-Party Defendants Club 2000 Eastern Avenue, Inc., Fuun House Productions, L.L.C., and Norm A Properties, LLC (collectively the “Defaulting Third-Party Defendants”) failed to respond to the Third-Party Complaint.

F-13

SCORES HOLDING CO., Inc and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On January 5, 2017, the Court issued an Order granting in part, and denying in part, Defendants’ motion to dismiss the Complaint. The Court dismissed Plaintiffs’ claims sounding in negligence, conversion, unjust enrichment and quantum meruit. The remaining claims were not dismissed at that time. On August 4, 2018, the Court dismissed Plaintiffs’ claims against Defendants, including the Company, with prejudice, at Plaintiffs’ request following settlement with Defendants. During 2018, the Company paid $1,310,000 to Plaintiffs in connection with the settlement. Between August 4, 2018 and October 9, 2018, the Court dismissed with prejudice the Company’s claims against the Third-Party Defendants, other than the Defaulting Third-Party Defendants, at the Company’s request following settlement with those Third-Party Defendants. The total amount of money paid to the Company by the settling Third-Party Defendants, and the Company’s insurance carrier, is $505,660, paid thru September 30, 2019 and $90,000 received during the nine months ended September 30, 2019. Scores has obtained Default Orders against Fuun House Productions, L.L.C. and Norm A Properties, LLC. The value of the Company’s claims against Fuun House Productions, L.L.C. and Norm A Properties, LLC are all that remain to be determined in the action. The Company became aware during the week of December 17, 2018 that Fuun House Productions, L.L.C. has filed for bankruptcy protection.

On January 3, 2017, the Company, together with its subsidiary SLC, filed an action against CJ NYC Inc. in the United States District Court for the Southern District of New York. Defendant utilizes the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club in Woodside, New York. In this action the Company sought damages for breach of contract in the amount of $85,000 and the issuance of a preliminary and permanent injunction prohibiting the defendant from using the “Scores” name and trademark with respect to the Woodside, New York club and all websites and social media sites controlled by Defendant. The defendant failed to appear and on February 27, 2017, the Company filed a motion for judgment by default. The court heard the Company motion on April 5, 2017, and on May 25, 2017, the court granted the Company's motion for a Judgment by default, granting a permanent injunction and awarding damages in the amount of $85,000 to SLC and $14,333 in damages and $530 in costs to the Company. All signage has been removed and the Company is attempting to collect on the default judgment, but it believes that Defendant no longer has any assets, leaving the Company unable to collect on the default judgment.

On January 31, 2017, the Company, together with its subsidiary SLC, filed an action against Funn House Productions LLC in the United States District Court for the Southern District of New York. Defendant utilizes the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club in New Haven, Connecticut. In this action the Company sought damages for breach of contract in the amount of $45,000 and the issuance of a preliminary and permanent injunction prohibiting the defendant from using the “Scores” name and trademark with respect to the New Haven, Connecticut club and all websites and social media sites controlled by Defendant. The Defendant failed to appear and on February 28, 2017, the Court granted Plaintiffs’ motion for a Judgment by default, granting a permanent injunction and awarding damages in the amount of $60,000. The parties negotiated a settlement agreement, which included a payment schedule, but then Defendant did not sign the proposed settlement agreement. The Company is attempting to collect on the default judgment, but it believes that Defendant no longer has any assets, leaving the Company unable to collect on the default judgment.

On July 25, 2017, plaintiff Dislenia Munoz, who formerly performed as an adult entertainer at Scores New York, owned in its entirety by I.M. Operating LLC, commenced a putative class action lawsuit against the Company, IMO, Robert Gans and Mark Yackow in the Supreme Court of the State of New York, County of New York. Plaintiff alleged that she and other similarly situated entertainers at Scores New York were misclassified as independent contractors, that they should have been classified as employees, and as a result, the Defendants violated, among other things, applicable state wage and hour laws. The Lawsuit sought unspecified compensatory damages, liquidated damages, as well as attorneys’ fees and costs. On June 22, 2018, Plaintiff (1) amended her complaint in the Lawsuit to excise her class allegations, and (2) discontinued the Lawsuit, without prejudice. Plaintiff has brought her claims in the Lawsuit in another forum against the Defendants, other than the Company, which is no longer a subject of Plaintiff’s claims.

F-14

SCORES HOLDING CO., Inc and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On October 8, 2018, the Company was served with a Summons and Complaint in the action entitled Luisa Santos de Oliveira v. Scores Holding Company, Inc.; Club Azure, LLC; Robert Gans; Mark S. Yackow; Howard Rosenbluth, Docket No. 1:18-cv-06769-GBD, in the United States District Court of the Southern District. Plaintiff claims that the Defendants violated the minimum wage and overtime provisions of the Fair Labor Standards Act (“FLSA”); violated the New York Minimum Wage Act and the overtime provisions of the New York State Labor Law (“NYLL”); violated the Spread of Hours Wage Order of the New York Commissioner of Labor; violated the Notice and Recordkeeping requirements of the NYLL; violated the wage statement provisions of the NYLL; recovery of equipment costs in violation of the FLSA and NYLL; and unlawful deductions from tips in violation of the NYLL. Plaintiff brought this action as a class action and seeks certification of this action as a collective action on behalf of herself and all other similarly situated employees and former employees of Defendants. The Company has submitted an Answer to Plaintiff’s claims and the case is currently in the discovery phase. The Company, along with the Co-defendants, intends to vigorously defend itself against the claims asserted against it in this lawsuit. The likelihood of an unfavorable outcome is remote because the Company’s records show, inter alia, that the Plaintiff never worked more than 25 hours per week. The case was assigned to a Magistrate Judge.  There was a conference on March 2, 2021 and a Scheduling Order was entered.  On March 26, 2021, a Stipulation of Discontinuance was so-ordered by the Federal Court, discontinuing all claims against the Company.

On October 10, 2018, the Company, filed an action against SCMD, LLC, in the Supreme Court of the State of New York, County of New York. Defendant utilized the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club located in Baltimore, Maryland and paid royalty fees to the Company up through and including July of 2017 but did not abandon its use of the Scores name and trademarks until September of 2018. In this action, the Company sought damages for breach of contract in the amount of $160,000. On December 5, 2018, the case was removed to the United States District Court for the Southern District of New York. On February 19, 2019, an Amended Complaint was filed. On March 8, 2019, Defendant’s counsel requested permission from the Court to submit a motion to dismiss the Company’s amended complaint. The Court finally granted Defendant’s request on November 6, 2019 and gave a briefing schedule. Defendant’s motion to dismiss was denied on August 14, 2020. In September of 2020, the parties settled this matter for $50,000, of which $5,000 remains due and outstanding. SCMD, LLC has since been dissolved. We are still trying to collect the remaining $5,000 that is due to the Company, but we are not confident that we will be successful given that SCMD, LLC has been dissolved.

On September 14, 2018, the Company and its subsidiary Scores Licensing Corp. (“SLC”), filed an action against New 4125, LLC and Mike Taraska in the Supreme Court of the State of New York, County of New York. Defendants utilized the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club located in Phoenix, Arizona. In this action, the Company sought damages for breach of contract in the amount of $47,500. Defendants filed an Answer to the Complaint but it was not submitted by an attorney notwithstanding the fact that corporations must be represented by counsel. A motion to vacate the Answer based on the fact that the corporate defendant is not represented by counsel is pending.

On April 22, 2018, the Company together with its subsidiary SLC filed a civil action in Supreme Court of New York, New York County against 1715 Northside Drive, Inc., the former licensee of SCORES Atlanta. The action was settled and paid in full during the 3rd quarter 2018.

On May 4, 2018, we together with our subsidiary SLC filed a civil action in Supreme Court of New York, New York County against Bonkers Space Coast Inc. and Ken Fees, the former licensee of the SCORES Green Bay, for unpaid royalties in the amount of $80,000. The Defendants have not appeared and Plaintiffs have filed a motion for judgment by default. A motion for default judgement was granted and judgement was entered on November 26, 2019. The Company has found real property owned by the Defendant and we are in the process of attaching same. We filed an exemplified copy of the default judgment with the State Court in Wisconsin, to collect licensing fees. A judgment was docketed on June 12, 2020 in Manitowoc County, WI for $82,330.34. The real property is valued at approximately $97,000 but the Wisconsin Homestead Act allows the debtor to exempt as much as $75,000 of equity. There is also a prior mortgage and tax lien totaling approximately $45,000. We have therefore ceased attempts to collect on the judgment because there is no remaining equity left in the real property.

F-15

SCORES HOLDING CO., Inc and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On April 20, 2018, the Company together with its subsidiary SLC filed a civil action in Supreme Court of New York, New York County against The Cadillac Lounge LLC and Dick Shappy, the former licensee of SCORES Rhode Island for unpaid royalty fees. The action was settled for $50,000 and has been paid in full during the 2nd quarter 2018.

On April 25, 2018, the Company together with its subsidiary SLC filed a civil action in Supreme Court of New York, New York County against South East Show Clubs LLC and Michael Tomkovich, the license of SCORES Jacksonville and SCORES Savannah, for unpaid royalties in the amount of $60,000. The action was settled and has been paid in full during the 4th quarter of 2018.

On August 3, 2018, the Company and its subsidiary SLC, filed an action against Silver Bourbon, Inc. in the Supreme Court of the State of New York, County of New York. Defendant utilized the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club located in New Orleans, Louisiana. In this action, the Company seeks damages for breach of contract in the amount of $145,500. The parties were in the process of negotiating a settlement but then the club permanently closed after it lost its lease and was forced to close in March of 2020 due to the global pandemic. We have therefore ceased all attempts to collect this debt.

On July 13, 2018, the Company and its subsidiary SLC, filed an action against Manhattan Fashions, LLC in the Supreme Court of the State of New York, County of New York. Defendant utilized the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club located in Harvey, Louisiana. In this action, the Company sought damages for breach of contract in the amount of $84,000. Defendant did not appear, and On February 6, 2019, the Court granted the Company’s motion for default judgment. The parties were in the process of negotiating a settlement agreement but then ceased all attempts to settle this matter after the club was forced to permanently close in March of 2020 due to the global pandemic. We have therefore ceased all attempts to collect this debt.

On September 5, 2019, the Company together with its subsidiary SLC filed a civil action in Supreme Court of New York, New York County against Scores Alabama. A cease and desist letter was sent. The Company finally entered into a license agreement as of March 5, 2020 with Cheetah Club, LLC for a club located in Huntsville, Alabama.

The Company had been in the process of negotiating a license agreement with an adult entertainment club that started using the “Scores” name and trademark in connection with an adult entertainment club located in Huntsville, Alabama without a proper licensing agreement in place. The Company’s subsidiary, SLC, ended up entering into a license agreement in March of 2020.

In July 2018, the Company entered into a confidential settlement agreement (the “Settlement Agreement”) in the Voronina litigation, and in August 2018, the Court entered an order dismissing the plaintiff’s claims against the Defendants with prejudice. Metropolitan, loaned the Company an aggregate of $770,000 to enable the Company to make the payments called for by the Agreement.

As previously reported, in February 2017, the Company entered into settlement agreements (each, a “Royalty Settlement Agreement”) with Star Light, Swan, IMO and Robert M. Gans. Robert M. Gans is the owner of a majority of the equity of each of aforementioned Licensees. Pursuant to the Royalty Settlement Agreements, the Company forgave the repayment of a certain portion of unpaid, past-due royalties in return for the respective Licensees’ agreements to pay the remainder (the “Royalty Settlement Amount”) of the unpaid royalties, plus interest, to the Company. The Royalty Settlement Amount for each Licensee was represented by a promissory note, and Robert M. Gans guaranteed the payment of each Licensee’s obligations under the Settlement Agreement.

The Licensees did not remain current with respect to their obligations under the Royalty Settlement Agreements, and the Company did not call upon Robert M. Gans to honor his guarantees. The past due amounts under the Royalty Settlement Agreements aggregated $382,259 (the “Aggregate Royalty Amount”) as of December 1, 2018. As of such date, the Company, the Licensees, Metropolitan and Robert M. Gans entered into a Settlement and Offset Agreement (the “Offset Agreement”) pursuant to which the Aggregate Royalty Amount was offset against the Voronina Amount, thereby reducing the amount owed by the Company to Metropolitan to $408,546 (the “Net Voronina Amount”). The Net Voronina Amount is payable pursuant to a promissory note (the “Voronina Note”), which bears simple interest at the rate of 4% per annum, in 86 consecutive monthly installments of $5,000, and a final installment of $1,370, with the initial installment due and payable on January 1, 2022 (or the first business day thereafter). The Company may prepay the Voronina Note at any time, in whole or in part without premium or penalty. The Offset Agreement also provides for the immediate termination of the Royalty Settlement Agreements and the related promissory notes and guarantees.

F-16

SCORES HOLDING CO., Inc and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On January 29, 2020, an individual referred to as Jane Doe, the Plaintiff, filed a civil suit in in the Circuit Court of the 13^th Judicial Circuit, in the State of Florida, Hillsborough County, against the Company, its subsidiary, Scores Licensing Corp. (“SLC”), and several other defendants.  Plaintiff’s Complaint details the somber circumstances surround the illegal actions of a non-party, who pled guilty to certain crimes against Plaintiff that were committed at a club known as Scores Tampa.  Plaintiff now seeks to hold the Company and its subsidiary, among other defendants, liable in connection with the non-party’s illegal activity by asserting causes of action for negligence, vicarious liability and unjust enrichment.  Initially, prior counsel moved to dismiss Plaintiff’s Complaint in lieu of filing Answers.  A motion to dismiss was submitted because the Court lacks personal jurisdiction under Florida’s Long-Arm Statute and Due Process Requirements because neither the Company or its subsidiary had minimum contacts with Florida; nor was their a benefited conferred upon them.  The Court wrongfully denied the motion to dismiss.  The case is in the deposition stage of discovery.  A motion for summary judgment will be submitted because neither the Company or its subsidiary were involved in the day-to-day operations of Scores Tampa, or in fact involved in the operations of Scores Tampa at all.  Other than the Company licensing the Scores trademark and other intellectual property to Scores Tampa, pursuant to a 2010 license agreement, neither the Company or its affiliate operated, conducted, engaged in, or managed Scores Tampa, making it vicariously liable for the non-party’s criminal actions.

On July 15, 2019, plaintiff Jeremy Green, a former consultant to Swan Media Group, Inc (“SMG”), commenced an action in U.S. District Court, Southern District of New York against Scores Holding Co., Inc., Scores Media Group LLC, Scores Digital Gaming LLC (“SDG”) and individual defendants Robert Gans and Charilaos Yioves seeking to recover from all defendants under various theories of breach of contract, unjust enrichment, promissory estoppels, fraudulent inducement and breach of implied duty of good faith and fair dealing.

By Order dated March 18, 2020, the Court dismissed all the causes of action except for the breach of contract claim pertaining to Greene’s consultancy agreement with SMG (First Cause of Action) and the unjust enrichment claim relating to ScoresCasino.com (Second Cause of Action). The parties have exchange documents and information relating to the remaining causes of action and depositions were held in April, July, August and November, 2021.  The parties do not expect expert disclosures will be necessary as neither side sees the need for it.

On March 4, 2022, the parties appeared before Judge Stanton for a status conference where the parties discussed a briefing schedule for summary judgment motions and the potential for trial on certain issues.

On April 17, 2021, in an action entitled Jessica Hall v. Scores Holding Company, Inc., et al, filed in Federal Court, Southern District, the Plaintiff claims that, while she worked at a gentlemen’s club located in New York, New York and commonly known as Scores NY, she was discriminated and retaliated against because of her race in violation of both Federal and State law. A motion for default judgment was denied, and Plaintiff was recently granted permission to file and serve an Amended Complaint. Accordingly on February 4, 2022 a First Amendment Complaint was filed. On March 4, 2022  an Answer to the First Amendment Complaint was filed. On March 18, 2022 the Defendants filed A First Demand for Interrogatories Upon the Defendant. We have made demands for discovery from the Plaintiff and motioned for summary judgement seeking dismissal of all claims, which is pending. The likelihood of success on the merits is negligible because the Company, as simply the owner of the “Scores” brand and trademarks, did not own, operate or otherwise control Scores NY or employ, manage, or otherwise control Plaintiff’s employment during the period October 23, 2009 until June 18, 2019.

There are no other material legal proceedings pending to which the Company or any of its property is subject, nor to the Company's knowledge are any such proceedings threatened.

F-17

SCORES HOLDING CO., Inc and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 8. SUBSEQUENT EVENTS

Please see Note 7 for events concerning legal matters.

Management evaluated subsequent events through the date of this filing and determined that no additional events have occurred that would require adjustment to or disclosure in the unaudited condensed consolidated financial statements.

F-18

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

Overview

Scores Holding Company, Inc. (“Scores,” the “Company,” “we,” “us” or “our”) was incorporated in Utah on September 21, 1981 under the name Adonis Energy, Inc. We adopted our current name in July 2002. Since 2003, we have been in the business of licensing the “Scores” trademarks and other intellectual property to fine gentlemen’s nightclubs with adult entertainment in the United States. As of June 30, 2020, there are nine such clubs operating under the Scores name, in New York, New York; Chicago, Illinois; Tampa, Florida; New Orleans, Louisiana; Mooresville, North Carolina; Palm Springs, Florida, Las Vegas, Nevada, and Huntsville Alabama.

On January 27, 2009, Mitchell’s East LLC, wholly owned by Robert M. Gans, acquired a majority interest in our outstanding capital stock. I.M. Operating LLC (“IMO”), which is partially owned by Robert M. Gans who is also our majority shareholder, has signed a licensing agreement with us and commenced operations in New York of a new club (the “New York Club”) under the Scores name in May 2009. Effective September 1, 2017, IMO no longer owned or operated the New York Club and terminated its licensing agreement with the Company. IMO sold the New York Club to Club Azure LLC (“CA”) which was owned by Mark Yackow who is the sole owner (100%) of CA and former Chief Operating Officer of IMO. Mr. Yackow passed away on October 12, 2020. Effective September 1, 2017, the Company granted an exclusive, non-transferable license for the use of the “Scores New York” to CA for the New York Club.

Impact of COVID-19

As a result of the COVID-19 virus, during the first and second quarter of 2020, state and local governments have required all but certain essential businesses to close, including all eight clubs operating under the Scores name. The duration and ultimate extent of the closures of these clubs cannot be predicted at this time, however the impact on such clubs' revenue could be material and result in a significant decline in our royalty revenues.

Summary of Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2020 from our critical accounting policies and estimates disclosed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2019 Form 10-K.

Results of Operations

Three Months Ended June 30, 2020 (“the 2020 three-month period”) Compared to Three Months Ended June 30, 2019 (“the 2019 three-month period”).

Revenues:

Revenues decreased to $9,000 for the 2020 three-month period from $183,549 for the 2019 three-month period. Revenues decreased due to COVID causing shutdowns.

Our licenses are structured such that we receive royalty payments representing a percentage of revenues of the licensee, or structured with a flat monthly rate.

Other Income (Expense)

Total other income (expense) decreased to $(3,816) for the 2020 three-month period from $35,701 from the 2019 three-month period. Total other income (expense) for the 2020 three month-period included interest expense of $3,816. Total other income for the 2019 three month-period included a $40,000 recovery of the $1,300,000 Litigation Settlement payment paid to us by various licensees, net of interest expense of $4,299.

General and Administrative Expenses:

General and administrative expenses decreased during the 2020 three-month period to $64,849 from $125,731 during the 2019 three-month period, which can be attributed to the decrease in salary and other expenses along with a decrease in legal expenses. Legal expenses, which are reflected in general and administrative expenses, attributable to ongoing litigation amounted to $5,773 for the 2020 three-month period and $27,335 for the 2019 three-month period.

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Provision for Income Taxes

The provision for income taxes relates primarily to the greater of average assets and capital taxable income. The average assets and capital are not impacted by net operating losses.

Net Income (Loss):

Our net loss ($59,665) or ($0.00) per share for the 2020 three-month period as compared to our net income was $93,519 or $0.00 per share for the 2019 three-month period. This increase in our net loss was primarily due COVID.

Net income(loss) per share data for both the 2020 three-month period and the 2019 three-month period is based on net income available to common shareholders divided by the weighted average of the number of common shares outstanding.

Six Months Ended June 30, 2020 (“the 2020 six-month period”) Compared to Six Months Ended June 30, 2019 (“the 2019 six-month period”).

Revenues:

Revenues decreased to $152,642 for the 2020 six-month period from $265,847 for the 2019 six-month period. Revenues decreased due to COVID.

Our licenses are structured such that we receive royalty payments representing a percentage of revenues of the licensee, or structured with a flat monthly rate.

Other Income (Expense)

Total other income (expense) decreased to $(7,560) for the 2020 six-month period from $76,177 from the 2019 six-month period. Total other income (expense) for the 2020 six month-period included interest expense of $7,560. Total other income for the 2019 six month-period included a $85,000 recovery of the $1,300,000 Litigation Settlement payment paid to us by various licensees, net of interest expense of $8,823.

General and Administrative Expenses:

General and administrative expenses decreased during the 2020 six-month period to $176,311 from $291,461 during the 2019 six-month period, which can be attributed to COVID along with the decrease in salary and other expenses along with a decrease in legal expenses. Legal expenses, which are reflected in general and administrative expenses, attributable to ongoing litigation amounted to $18,917 for the 2020 six-month period and $27,355 for the 2019 six-month period.

Provision for Income Taxes

The provision for income taxes relates primarily to the greater of average assets and capital taxable income. The average assets and capital are not impacted by net operating losses.

Net Income (Loss):

Our net loss ($31,229) or ($0.00) per share for the 2020 six-month period as compared to our net income was $50,563 or $0.00 per share for the 2019 six-month period. This increase in our net loss was primarily due COVID.

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Net income per share data for both the 2020 six-month period and the 2019 six-month period is based on net income available to common shareholders divided by the weighted average of the number of common shares outstanding.

Liquidity and Capital Resources

Going Concern:

Various conditions such as the accumulated losses, working capital deficit, significant debt, and the results of litigation raise substantial doubt about the Company’s ability to continue as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Cash:

At June 30, 2020, we had $1,891 in cash and cash equivalents compared to $9,331 in cash and cash equivalents at December 31, 2019.

Operating Activities:

Net cash provided by operating activities for the 2020 six month period was $15,060 and net cash used by operating activities for the 2019 six-month period was $28,439. The decrease in cash provided by operating activities is related to COVID.

Financing Activities:

Net cash used by financing activities for the 2020 six-month period was $22,500 and net cash provided by financing activities for the 2019 six-month period was $15,000.

As of June 30, 2020 and December 31, 2019, we owed $15,000 and $7,500, respectively in rent to our Westside Realty affiliate. As of June 30, 2020 and December 31, 2019, we owed to our Metropolitan Lumber Hardware and Building Supplies, Inc. affiliate $22,500 and $22,500 respectively for management fees and $352,581 and $345,611, respectively for a loan advanced to the Company to assist in paying litigation costs.

Future Capital Requirements:

We have incurred significant losses since the inception of our business. Since our inception, we have been dependent on funding from private lenders and investors to conduct operations. As of June 30, 2020, we had an accumulated deficit of $(6,931,224). As of June 30, 2020, we had total current assets of $160,897 and total current liabilities of $308,037 or negative working capital of $147,140. As of December 31, 2019, we had total current assets of $70,763 and total current liabilities of $221,644 or negative working capital of $150,881. The decrease in the amount of negative working capital has been primarily attributable to the increase in cash from previous non-paying clubs, along with a decrease in liabilities.

We will continue to evaluate possible acquisitions of or investments in businesses, products and technologies that are complementary 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 trademark licensing business.

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Statement of Forward-Looking Information

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. The Company and its representatives may from time to time make written or oral statements that are “forward-looking”, including statements contained in this report and other filings with the Securities and Exchange Commission, reports to the Company’s shareholders. All statements that express expectations, estimates, forecasts or projections are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, other written or oral statements, which constitute forward-looking statements, may be made by or on behalf of the Company. Words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “projects”, “forecasts”, “may”, “should”, variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and contingencies that are difficult to predict. All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company are qualified by the cautionary statements in this section. Many of the factors that will determine the Company’s future results are beyond the ability of management to control or predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements.

The forward-looking statements contained in this report include, but are not limited to, statements regarding (1) the Company’s ability to finance its future working capital,

The Company undertakes no obligation to update or publicly release any revisions to any forward-looking statement to reflect events, circumstances or changes in expectations after the date of such forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

Recently Issued Accounting Pronouncements

See Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of June 30, 2020.

Impact of inflation and seasonality

We do not anticipate any changes due to inflation and/or seasonality.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4.    CONTROLS AND PROCEDURES.

(a)             Evaluation of Disclosure Controls and Procedures

Based on management’s evaluation (with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer), as of June 30, 2020, the end of the period covered by this report, our CEO and Chief Financial Officer have concluded that our disclosure of controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), are not effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

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Management concluded that our disclosure controls and procedures were not effective as of June 30, 2020 because of the deficiencies in our internal control over financial reporting relating to the effectiveness and timeliness of our financial statement review process, including policies and procedures governing our financial statement close process, and control in the preparation, documentation, and review of journal entries and account reconciliations

A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. The control deficiencies as of June 30, 2020, and subsequent reports should be considered material weaknesses in our internal control over financial reporting.

As set forth below, management has taken or will take steps to remediate the control deficiencies identified above. Notwithstanding the control deficiencies described above, we have performed additional analyses and other procedures to enable management to conclude that our condensed consolidated financial statements included in this Form 10-Q fairly present, in all material respects, our financial condition and results of operations as of and for the six-month period ended June 30, 2020.

Management's Remediation Plan

In response to the deficiencies discussed above, we plan to continue efforts already underway to improve internal control over financial reporting, which include creating formal policies and procedures governing our financial statement close process, and control in the preparation, documentation, and review of journal entries and account reconciliations.

Management and our Board of Directors will continue to monitor these remedial measures and the effectiveness of our internal controls and procedures. Other than as described above, there were no changes in our internal control over financial reporting during the quarter ended June 30, 2020 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.

On April 3, 2016, 50 individuals purporting to be professional models and/or actresses collectively, the “Plaintiffs”) filed a civil suit in the United States District Court for the Southern District of New York against the Company, I.M. Operating, LLC, The Executive Club, LLC, and Robert M. Gans, collectively the (“Defendants”) alleging that images of Plaintiffs were used without their consent for commercial purposes on websites and social media outlets to promote gentlemen’s clubs operated by the Defendants or licensees of the Defendants (the “Lawsuit”). The Lawsuit further alleged that the unauthorized use of these images created, among other things, the false impression that these individuals either worked at, or endorsed, one or more of such clubs. The Lawsuit asserted causes of action under Section 43 of the Lanham Act, 28 U.S.C. § 1125(a)(1), premised on a theory of false endorsement and/or association; New York Civil Rights Law §§ 50-51; New York’s Deceptive Trade Practices Act, New York General Business Law § 349; as well as various common law torts, namely defamation, negligence, conversion, unjust enrichment and quantum meruit. The Lawsuit sought unspecified compensatory damages, punitive damages, as well as attorneys’ fees and costs. The Lawsuit also sought an injunction permanently enjoining the use of the individuals’ images to promote, via any medium, any of the clubs. On April 20, 2017, as a result of the claims asserted in the Lawsuit, the Company filed a third-party complaint (the “Third-Party Complaint”) against certain licensees, namely CG Consulting, LLC; Anthony Quaranta; High Five Management Group, Inc.; Club 2000 Eastern Avenue, Inc.; SCMD, LLC; David Baucom; Manhattan Fashion L.L.C.; Stone Park Entertainment, Inc.; Silver Bourbon, Inc.; Tampa Food & Entertainment, Inc.; Fuun House Productions, L.L.C.; Norm A Properties, LLC; Southeast Show Clubs, LLC; Michael Tomkovich; Palm Spring Grill LLC; Houston KP LLC; and Star Light Events LLC (collectively, “Third-Party Defendants”) asserting causes of action for breach of contract, breach of warranty, contractual indemnification, common law indemnification, contribution and breach of contract for failure to procure insurance. The Company maintained in the Third-Party Complaint, among other things, that pursuant to the Third-Party Defendants’ respective license agreements, each of the Third-Party Defendants are expressly obligated to indemnify, defend and hold the Company harmless in connection with the conduct giving rise to the claims asserted by Plaintiffs in the Lawsuit. Third-Party Defendants Club 2000 Eastern Avenue, Inc., Fuun House Productions, L.L.C., and Norm A Properties, LLC (collectively the “Defaulting Third-Party Defendants”) failed to respond to the Third-Party Complaint.

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On January 5, 2017, the Court issued an Order granting in part, and denying in part, Defendants’ motion to dismiss the Complaint. The Court dismissed Plaintiffs’ claims sounding in negligence, conversion, unjust enrichment and quantum meruit. The remaining claims were not dismissed at that time. On August 4, 2018, the Court dismissed Plaintiffs’ claims against Defendants, including the Company, with prejudice, at Plaintiffs’ request following settlement with Defendants. During 2018, the Company paid $1,310,000 to Plaintiffs in connection with the settlement. Between August 4, 2018 and October 9, 2018, the Court dismissed with prejudice the Company’s claims against the Third-Party Defendants, other than the Defaulting Third-Party Defendants, at the Company’s request following settlement with those Third-Party Defendants. The total amount of money paid to the Company by the settling Third-Party Defendants, and the Company’s insurance carrier, is $505,660, paid thru September 30, 2019 and $90,000 received during the nine months ended September 30, 2019. Scores has obtained Default Orders against Fuun House Productions, L.L.C. and Norm A Properties, LLC. The value of the Company’s claims against Fuun House Productions, L.L.C. and Norm A Properties, LLC are all that remain to be determined in the action. The Company became aware during the week of December 17, 2018 that Fuun House Productions, L.L.C. has filed for bankruptcy protection.

On January 3, 2017, the Company, together with its subsidiary SLC, filed an action against CJ NYC Inc. in the United States District Court for the Southern District of New York. Defendant utilizes the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club in Woodside, New York. In this action the Company sought damages for breach of contract in the amount of $85,000 and the issuance of a preliminary and permanent injunction prohibiting the defendant from using the “Scores” name and trademark with respect to the Woodside, New York club and all websites and social media sites controlled by Defendant. The defendant failed to appear and on February 27, 2017, the Company filed a motion for judgment by default. The court heard the Company motion on April 5, 2017, and on May 25, 2017, the court granted the Company's motion for a Judgment by default, granting a permanent injunction and awarding damages in the amount of $85,000 to SLC and $14,333 in damages and $530 in costs to the Company. All signage has been removed and the Company is attempting to collect on the default judgment, but it believes that Defendant no longer has any assets, leaving the Company unable to collect on the default judgment.

On January 31, 2017, the Company, together with its subsidiary SLC, filed an action against Funn House Productions LLC in the United States District Court for the Southern District of New York. Defendant utilizes the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club in New Haven, Connecticut. In this action the Company sought damages for breach of contract in the amount of $45,000 and the issuance of a preliminary and permanent injunction prohibiting the defendant from using the “Scores” name and trademark with respect to the New Haven, Connecticut club and all websites and social media sites controlled by Defendant. The Defendant failed to appear and on February 28, 2017, the Court granted Plaintiffs’ motion for a Judgment by default, granting a permanent injunction and awarding damages in the amount of $60,000. The parties negotiated a settlement agreement, which included a payment schedule, but then Defendant did not sign the proposed settlement agreement. The Company is attempting to collect on the default judgment, but it believes that Defendant no longer has any assets, leaving the Company unable to collect on the default judgment.

On July 25, 2017, plaintiff Dislenia Munoz, who formerly performed as an adult entertainer at Scores New York, owned in its entirety by I.M. Operating LLC, commenced a putative class action lawsuit against the Company, IMO, Robert Gans and Mark Yackow in the Supreme Court of the State of New York, County of New York. Plaintiff alleged that she and other similarly situated entertainers at Scores New York were misclassified as independent contractors, that they should have been classified as employees, and as a result, the Defendants violated, among other things, applicable state wage and hour laws. The Lawsuit sought unspecified compensatory damages, liquidated damages, as well as attorneys’ fees and costs. On June 22, 2018, Plaintiff (1) amended her complaint in the Lawsuit to excise her class allegations, and (2) discontinued the Lawsuit, without prejudice. Plaintiff has brought her claims in the Lawsuit in another forum against the Defendants, other than the Company, which is no longer a subject of Plaintiff’s claims.

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On October 8, 2018, the Company was served with a Summons and Complaint in the action entitled Luisa Santos de Oliveira v. Scores Holding Company, Inc.; Club Azure, LLC; Robert Gans; Mark S. Yackow; Howard Rosenbluth, Docket No. 1:18-cv-06769-GBD, in the United States District Court of the Southern District. Plaintiff claims that the Defendants violated the minimum wage and overtime provisions of the Fair Labor Standards Act (“FLSA”); violated the New York Minimum Wage Act and the overtime provisions of the New York State Labor Law (“NYLL”); violated the Spread of Hours Wage Order of the New York Commissioner of Labor; violated the Notice and Recordkeeping requirements of the NYLL; violated the wage statement provisions of the NYLL; recovery of equipment costs in violation of the FLSA and NYLL; and unlawful deductions from tips in violation of the NYLL. Plaintiff brought this action as a class action and seeks certification of this action as a collective action on behalf of herself and all other similarly situated employees and former employees of Defendants. The Company has submitted an Answer to Plaintiff’s claims and the case is currently in the discovery phase. The Company, along with the Co-defendants, intends to vigorously defend itself against the claims asserted against it in this lawsuit. The likelihood of an unfavorable outcome is remote because the Company’s records show, inter alia, that the Plaintiff never worked more than 25 hours per week. The case was assigned to a Magistrate Judge.  There was a conference on March 2, 2021 and a Scheduling Order was entered.  On March 26, 2021, a Stipulation of Discontinuance was so-ordered by the Federal Court, discontinuing all claims against the Company.

On October 10, 2018, the Company, filed an action against SCMD, LLC, in the Supreme Court of the State of New York, County of New York. Defendant utilized the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club located in Baltimore, Maryland and paid royalty fees to the Company up through and including July of 2017 but did not abandon its use of the Scores name and trademarks until September of 2018. In this action, the Company sought damages for breach of contract in the amount of $160,000. On December 5, 2018, the case was removed to the United States District Court for the Southern District of New York. On February 19, 2019, an Amended Complaint was filed. On March 8, 2019, Defendant’s counsel requested permission from the Court to submit a motion to dismiss the Company’s amended complaint. The Court finally granted Defendant’s request on November 6, 2019 and gave a briefing schedule. Defendant’s motion to dismiss was denied on August 14, 2020. In September of 2020, the parties settled this matter for $50,000, of which $5,000 remains due and outstanding. SCMD, LLC has since been dissolved. We are still trying to collect the remaining $5,000 that is due to the Company, but we are not confident that we will be successful given that SCMD, LLC has been dissolved.

On September 14, 2018, the Company and its subsidiary Scores Licensing Corp. (“SLC”), filed an action against New 4125, LLC and Mike Taraska in the Supreme Court of the State of New York, County of New York. Defendants utilized the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club located in Phoenix, Arizona. In this action, the Company sought damages for breach of contract in the amount of $47,500. Defendants filed an Answer to the Complaint but it was not submitted by an attorney notwithstanding the fact that corporations must be represented by counsel. A motion to vacate the Answer based on the fact that the corporate defendant is not represented by counsel is pending.

On April 22, 2018, the Company together with its subsidiary SLC filed a civil action in Supreme Court of New York, New York County against 1715 Northside Drive, Inc., the former licensee of SCORES Atlanta. The action was settled and paid in full during the 3rd quarter 2018.

On May 4, 2018, we together with our subsidiary SLC filed a civil action in Supreme Court of New York, New York County against Bonkers Space Coast Inc. and Ken Fees, the former licensee of the SCORES Green Bay, for unpaid royalties in the amount of $80,000. The Defendants have not appeared and Plaintiffs have filed a motion for judgment by default. A motion for default judgement was granted and judgement was entered on November 26, 2019. The Company has found real property owned by the Defendant and we are in the process of attaching same. We filed an exemplified copy of the default judgment with the State Court in Wisconsin, to collect licensing fees. A judgment was docketed on June 12, 2020 in Manitowoc County, WI for $82,330.34. The real property is valued at approximately $97,000 but the Wisconsin Homestead Act allows the debtor to exempt as much as $75,000 of equity. There is also a prior mortgage and tax lien totaling approximately $45,000. We have therefore ceased attempts to collect on the judgment because there is no remaining equity left in the real property.

On April 20, 2018, the Company together with its subsidiary SLC filed a civil action in Supreme Court of New York, New York County against The Cadillac Lounge LLC and Dick Shappy, the former licensee of SCORES Rhode Island for unpaid royalty fees. The action was settled for $50,000 and has been paid in full during the 2nd quarter 2018.

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On April 25, 2018, the Company together with its subsidiary SLC filed a civil action in Supreme Court of New York, New York County against South East Show Clubs LLC and Michael Tomkovich, the license of SCORES Jacksonville and SCORES Savannah, for unpaid royalties in the amount of $60,000. The action was settled and has been paid in full during the 4th quarter of 2018.

On August 3, 2018, the Company and its subsidiary SLC, filed an action against Silver Bourbon, Inc. in the Supreme Court of the State of New York, County of New York. Defendant utilized the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club located in New Orleans, Louisiana. In this action, the Company seeks damages for breach of contract in the amount of $145,500. The parties were in the process of negotiating a settlement but then the club permanently closed after it lost its lease and was forced to close in March of 2020 due to the global pandemic. We have therefore ceased all attempts to collect this debt.

On July 13, 2018, Company and its subsidiary SLC, filed an action against Manhattan Fashions, LLC in the Supreme Court of the State of New York, County of New York. Defendant utilized the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club located in Harvey, Louisiana. In this action, the Company sought damages for breach of contract in the amount of $84,000. Defendant did not appear, and On February 6, 2019, the Court granted the Company’s motion for default judgment. The parties were in the process of negotiating a settlement agreement but then ceased all attempts to settle this matter after the club was forced to permanently close in March of 2020 due to the global pandemic. We have therefore ceased

On September 5, 2019, the Company together with its subsidiary SLC filed a civil action in Supreme Court of New York, New York County against Scores Alabama. A cease and desist letter was sent. The Company finally entered into a license agreement as of March 5, 2020 with Cheetah Club, LLC for a club located in Huntsville, Alabama.

The Company had been in the process of negotiating a license agreement with an adult entertainment club that started using the “Scores” name and trademark in connection with an adult entertainment club located in Huntsville, Alabama without a proper licensing agreement in place. The Company’s subsidiary, SLC, ended up entering into a license agreement in March of 2020.

In July 2018, the Company entered into a confidential settlement agreement (the “Settlement Agreement”) in the Voronina litigation, and in August 2018, the Court entered an order dismissing the plaintiff’s claims against the Defendants with prejudice. Metropolitan, loaned the Company an aggregate of $770,000 to enable the Company to make the payments called for by the Agreement.

As previously reported, in February 2017, the Company entered into settlement agreements (each, a “Royalty Settlement Agreement”) with Star Light, Swan, IMO and Robert M. Gans. Robert M. Gans is the owner of a majority of the equity of each of aforementioned Licensees. Pursuant to the Royalty Settlement Agreements, the Company forgave the repayment of a certain portion of unpaid, past-due royalties in return for the respective Licensees’ agreements to pay the remainder (the “Royalty Settlement Amount”) of the unpaid royalties, plus interest, to the Company. The Royalty Settlement Amount for each Licensee was represented by a promissory note, and Robert M. Gans guaranteed the payment of each Licensee’s obligations under the Settlement Agreement.

The Licensees did not remain current with respect to their obligations under the Royalty Settlement Agreements, and the Company did not call upon Robert M. Gans to honor his guarantees. The past due amounts under the Royalty Settlement Agreements aggregated $382,259 (the “Aggregate Royalty Amount”) as of December 1, 2018. As of such date, the Company, the Licensees, Metropolitan and Robert M. Gans entered into a Settlement and Offset Agreement (the “Offset Agreement”) pursuant to which the Aggregate Royalty Amount was offset against the Voronina Amount, thereby reducing the amount owed by the Company to Metropolitan to $408,546 (the “Net Voronina Amount”). The Net Voronina Amount is payable pursuant to a promissory note (the “Voronina Note”), which bears simple interest at the rate of 4% per annum, in 86 consecutive monthly installments of $5,000, and a final installment of $1,370, with the initial installment due and payable on January 1, 2022 (or the first business day thereafter). The Company may prepay the Voronina Note at any time, in whole or in part without premium or penalty. The Offset Agreement also provides for the immediate termination of the Royalty Settlement Agreements and the related promissory notes and guarantees.

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On January 29, 2020, an individual referred to as Jane Doe, the Plaintiff, filed a civil suit in in the Circuit Court of the 13^th Judicial Circuit, in the State of Florida, Hillsborough County, against the Company, its subsidiary, Scores Licensing Corp. (“SLC”), and several other defendants.  Plaintiff’s Complaint details the somber circumstances surround the illegal actions of a non-party, who pled guilty to certain crimes against Plaintiff that were committed at a club known as Scores Tampa.  Plaintiff now seeks to hold the Company and its subsidiary, among other defendants, liable in connection with the non-party’s illegal activity by asserting causes of action for negligence, vicarious liability and unjust enrichment.  Initially, prior counsel moved to dismiss Plaintiff’s Complaint in lieu of filing Answers.  A motion to dismiss was submitted because the Court lacks personal jurisdiction under Florida’s Long-Arm Statute and Due Process Requirements because neither the Company or its subsidiary had minimum contacts with Florida; nor was their a benefited conferred upon them.  The Court wrongfully denied the motion to dismiss.  The case is in the deposition stage of discovery.  A motion for summary judgment will be submitted because neither the Company or its subsidiary were involved in the day-to-day operations of Scores Tampa, or in fact involved in the operations of Scores Tampa at all.  Other than the Company licensing the Scores trademark and other intellectual property to Scores Tampa, pursuant to a 2010 license agreement, neither the Company or its affiliate operated, conducted, engaged in, or managed Scores Tampa, making it vicariously liable for the non-party’s criminal actions.

On July 15, 2019, plaintiff Jeremy Green, a former consultant to Swan Media Group, Inc (“SMG”), commenced an action in U.S. District Court, Southern District of New York against Scores Holding Co., Inc., Scores Media Group LLC, Scores Digital Gaming LLC (“SDG”) and individual defendants Robert Gans and Charilaos Yioves seeking to recover from all defendants under various theories of breach of contract, unjust enrichment, promissory estoppels, fraudulent inducement and breach of implied duty of good faith and fair dealing.

By Order dated March 18, 2020, the Court dismissed all the causes of action except for the breach of contract claim pertaining to Greene’s consultancy agreement with SMG (First Cause of Action) and the unjust enrichment claim relating to ScoresCasino.com (Second Cause of Action). The parties have exchange documents and information relating to the remaining causes of action and depositions were held in April, July, August and November, 2021.  The parties do not expect expert disclosures will be necessary as neither side sees the need for it.

On March 4, 2022, the parties appeared before Judge Stanton for a status conference where the parties discussed a briefing schedule for summary judgment motions and the potential for trial on certain issues.

On April 17, 2021, in an action entitled Jessica Hall v. Scores Holding Company, Inc., et al, filed in Federal Court, Southern District, the Plaintiff claims that, while she worked at a gentlemen’s club located in New York, New York and commonly known as Scores NY, she was discriminated and retaliated against because of her race in violation of both Federal and State law. A motion for default judgment was denied, and Plaintiff was recently granted permission to file and serve an Amended Complaint. Accordingly on February 4, 2022 a First Amendment Complaint was filed. On March 4, 2022  an Answer to the First Amendment Complaint was filed On March 18, 2022 the Defendants filed A First Demand for Interrogatories Upon the Defendant. We have made demands for discovery from the Plaintiff and motioned for summary judgement seeking dismissal of all claims, which is pending. The likelihood of success on the merits is negligible because the Company, as simply the owner of the “Scores” brand and trademarks, did not own, operate or otherwise control Scores NY or employ, manage, or otherwise control Plaintiff’s employment during the period October 23, 2009 until June 18, 2019.

There are no other material legal proceedings pending to which the Company or any of its property is subject, nor to the Company's knowledge are any such proceedings threatened.

ITEM 1A.  RISK FACTORS.

Not applicable.

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

None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES.

None.

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ITEM 4.    MINE SAFETY DISCLOSURE.

Not applicable.

ITEM 5.    OTHER INFORMATION.

None.

ITEM 6.    EXHIBITS.

Exhibit No.	Description
31.1	*Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.
31.2	*Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.
32.1	±Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.
32.2	±Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.
101.INS	*XBRL Instance Document
101.SCH	*XBRL Taxonomy Schema Document
101.CAL	*XBRL Taxonomy Calculation Linkbase Document
101.DEF	*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	*XBRL Taxonomy Extension Label Linkbase Document
101.PRE	*XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.
±	Furnished herewith.

12

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.

	SCORES HOLDING COMPANY, INC.
Date: June 16, 2022	By:	/s/ Robert M. Gans
		Robert M. Gans
		Chief Executive Officer and Director
		(Principal Executive Officer)
Date: June 16, 2022	By:	/s/ Howard Rosenbluth
		Howard Rosenbluth
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

13

EX-31.1

Exhibit 31.1

I, Robert M. Gans, certify that:

1. I have reviewed this Form 10-Q of Scores Holding Company, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 16, 2022

/s/ Robert M. Gans

Robert M. Gans

Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

I, Howard Rosenbluth, certify that:

1. I have reviewed this Form 10-Q of Scores Holding Company, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 16, 2022

/s/ Howard Rosenbluth

Howard Rosenbluth

Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report of Scores Company Holding, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert M. Gans, Chief Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.         The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.         The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company

Date: June 16, 2022

/s/ Robert M. Gans

Robert M. Gans

Chief Executive Officer (Principal Executive Officer)

A signed original of this written statement, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement, has been provided to Scores Holding Company, Inc., and will be retained by Scores Holding Company, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION OF

CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report of Scores Holding Company, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Howard Rosenbluth, Chief Financial Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.         The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.         The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: June 16, 2022

/s/ Howard Rosenbluth

Howard Rosenbluth

Chief Financial Officer (Principal Financial and Accounting Officer)

A signed original of this written statement, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement, has been provided to Scores Holding Company, Inc., and will be retained by Scores Holding Company, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Jun. 09, 2022
Document and Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Entity Registrant Name	SCORES HOLDING CO INC
Entity Central Index Key	0000831489
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	No
Entity Interactive Data Current	No
Entity Filer Category	Non-accelerated Filer
Title of 12(b) Security	None
Trading Symbol	SCRH
Entity Common Stock, Shares Outstanding		165,186,144
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2020	Dec. 31, 2019
CURRENT ASSETS:
Cash and cash equivalents	$ 1,891	$ 9,331
Trade receivables, net of allowance of $0 and $0, respectively	70,305	44,913
Prepaid expenses	88,701	16,519
Total Current Assets	160,897	70,763
TOTAL ASSETS	160,897	70,763
CURRENT LIABILITIES:
Accounts payable and accrued expenses	263,037	184,144
Accrued expenses, related party	7,500	7,500
Related party payable	37,500	30,000
Total Current Liabilities	308,037	221,644
Related party loan payable - long term	352,581	345,611
Contract Liabilities	208,200	180,200
TOTAL LIABILITIES	868,818	747,455
Commitments and Contingencies (Note 7)
STOCKHOLDERS' DEFICIT
Preferred stock, $.0001 par value, 10,000,000 shares authorized, -0- share issued and outstanding
Common stock, $.001 par value; 500,000,000 shares authorized,165,186,144 shares issued and 165,186,144 shares outstanding, respectively	165,186	165,186
Additional paid-in capital	6,058,117	6,058,117
Accumulated deficit	(6,931,224)	(6,899,995)
Total Stockholders' Deficit	(707,921)	(676,692)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 160,897	$ 70,763

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	165,186,144	165,186,144
Common stock, shares outstanding	165,186,144	165,186,144
Trade receivables, net of allowance	$ 0	$ 0

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
REVENUES
Royalty Revenue	$ 9,000	$ 183,549	$ 152,642	$ 265,847
Total Revenue	9,000	183,549	152,642	265,847
OPERATING EXPENSES
General and Administrative Expenses	64,849	125,731	176,311	291,461
INCOME(LOSS) FROM OPERATIONS	(55,849)	57,818	(23,669)	(25,614)
OTHER INCOME/(EXPENSE)
Litigation Settlement, net	0	40,000		85,000
Interest Expense, net	(3,816)	(4,299)	(7,560)	(8,823)
TOTAL OTHER INCOME/(EXPENSE)	(3,816)	35,701	(7,560)	76,177
NET INCOME(LOSS) BEFORE INCOME TAXES	(59,665)	93,519	(31,229)	50,563
INCOME TAXES	0	0
NET INCOME/(LOSS)	$ (59,665)	$ 93,519	$ (31,229)	$ 50,563
NET INCOME/(LOSS) PER SHARE-Basic	$ 0.00	$ 0.00	$ 0.00	$ 0.00
NET INCOME/(LOSS) PER SHARE-Diluted	$ 0.00	$ 0.00	$ 0.00	$ 0.00
WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING-Basic	165,186,144	165,186,144	165,186,144	165,186,144
WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING-Diluted	165,186,144	165,186,144	165,186,144	165,186,144

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income/(Loss)	$ (31,229)	$ 50,563
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Recovery of bad debts	(13,750)	(29,000)
Changes in operating assets and liabilities:
Trade receivable	(11,642)	(11,177)
Prepaid expenses	(72,182)	(26,489)
Accounts payable and accrued expenses	78,893	26,466
Accrued expenses, related party	30,000	7,500
Accrued interest, related party	6,970	8,076
Contract liabilities	28,000	2,500
NET CASH PROVIDED BY OPERATING ACTIVITIES	15,060	28,439
CASH FLOW FROM INVESTING ACTIVITES:
NET CASH USED IN INVESTING ACTIVITIES:	0	0
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from related party	0	15,000
Payments to related party	(22,500)	0
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES	(22,500)	15,000
NET INCREASE/(DECREASE) IN CASH	(7,440)	43,439
Cash and cash equivalents - beginning of period	9,331	7,662
Cash and cash equivalents - end of period	1,891	51,101
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	589	746
Cash paid for income taxes	$ 0	$ 0

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S DEFICIT - USD ($)	Common Stock [Member]	Additional Paid in Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2018	$ 165,186	$ 6,058,117	$ (6,894,193)	$ (670,890)
Balance (in shares) at Dec. 31, 2018	165,186,144
Net Income/(Loss)	$ 0	0	(42,956)	(42,956)
Balance at Mar. 31, 2019	$ 165,186	6,058,117	(6,937,149)	(713,846)
Balance (in shares) at Mar. 31, 2019	165,186,144
Balance at Dec. 31, 2018	$ 165,186	6,058,117	(6,894,193)	(670,890)
Balance (in shares) at Dec. 31, 2018	165,186,144
Net Income/(Loss)				50,563
Balance at Jun. 30, 2019	$ 165,186	6,058,117	(6,843,630)	(620,327)
Balance (in shares) at Jun. 30, 2019	165,186,144
Balance at Mar. 31, 2019	$ 165,186	6,058,117	(6,937,149)	(713,846)
Balance (in shares) at Mar. 31, 2019	165,186,144
Net Income/(Loss)	$ 0	0	93,519	93,519
Balance at Jun. 30, 2019	$ 165,186	6,058,117	(6,843,630)	(620,327)
Balance (in shares) at Jun. 30, 2019	165,186,144
Balance at Dec. 31, 2019	$ 165,186	6,058,117	(6,899,995)	(676,692)
Balance (in shares) at Dec. 31, 2019	165,186,144
Net Income/(Loss)	$ 0	0	28,436	28,436
Balance at Mar. 31, 2020	$ 165,186	6,058,117	(6,871,559)	(648,256)
Balance (in shares) at Mar. 31, 2020	165,186,144
Balance at Dec. 31, 2019	$ 165,186	6,058,117	(6,899,995)	(676,692)
Balance (in shares) at Dec. 31, 2019	165,186,144
Net Income/(Loss)				(31,229)
Balance at Jun. 30, 2020	$ 165,186	6,058,117	(6,931,224)	(707,921)
Balance (in shares) at Jun. 30, 2020	165,186,144
Balance at Mar. 31, 2020	$ 165,186	6,058,117	(6,871,559)	(648,256)
Balance (in shares) at Mar. 31, 2020	165,186,144
Net Income/(Loss)	$ 0	0	(59,665)	(59,665)
Balance at Jun. 30, 2020	$ 165,186	$ 6,058,117	$ (6,931,224)	$ (707,921)
Balance (in shares) at Jun. 30, 2020	165,186,144

XML

Organization

6 Months Ended

Jun. 30, 2020

Organization

Organization

Note 1. Organization

BASIS OF PRESENTATION

Scores Holding Company, Inc. (the “Company”) is a Utah corporation, formed in September 1981 and located in New York, NY. Originally incorporated as Adonis Energy, Inc., the Company adopted its current name in July 2002. The Company is a licensing company that utilizes the “SCORES” name and trademark for licensing options.

These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The consolidated financial statements of the Company include the accounts of Scores Licensing Corp. (“SLC”), its wholly-owned subsidiary.

The Company’s condensed consolidated financial statements include the Company’s accounts, as well as those of its wholly-owned subsidiary. Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications have no impact on the reported results. The Company’s accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP 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 information and footnote disclosures required by U.S. GAAP for complete financial statements. The condensed consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the condensed consolidated results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature. These unaudited condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The preparation of financial statements in conformity with U.S. GAAP requires the Company 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. The results of operations for the six months ended June 30, 2020 are not necessarily indicative of the results to be expected for any other interim period or for the year ending December 31, 2020.

XML

Summary of Significant Accounting Principles

6 Months Ended

Jun. 30, 2020

Summary of Significant Accounting Principles

Summary of Significant Accounting Principles

Note 2. Summary of Significant Accounting Principles

COVID-19

As a result of the COVID-19 virus, during the first quarter of 2020 and ongoing, state and local governments have required all but certain essential businesses to close, including all nine clubs operating under the Scores name. The duration and ultimate extent of the closures of these clubs cannot be predicted at this time, however the impact on such clubs’ revenue could be material and result in a significant decline in our royalty revenues.

Going Concern

As of June 30, 2020, the Company has cumulative losses totaling $(6,931,224) and negative working capital of $147,140. Because of these conditions, the Company will require additional working capital to develop business operations. The Company intends to raise additional working capital through the continued licensing of its brand with its current and new operators. There are no assurances that the Company will be able to achieve the level of revenues adequate to generate sufficient cash flow from operations to support the Company’s working capital requirements. To the extent that funds generated from any future use of licensing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not continue its operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financials are issued. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Revenue Recognition

Under ASC 606, revenue from the initiation fees are recognizable when at a point in time (first month of the contract) and royalty revenues are recognized over time for those contracts with probable collections.

The Company’s license fee revenue is generated from royalties earned through intellectual property licensing agreements which permit the licensee to use the recognition and status of the Scores brand in order to promote their businesses. Under ASC 606, revenue is recognized throughout the life of the executed licensing agreement. The Company measures revenue based on consideration specified in a contract with a customer. Furthermore, the Company recognizes revenue when it satisfies a performance obligation by transferring control over the service to its customer.

A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The Company’s customers typically receive the benefit of its services as they are performed. Substantially all customer contracts provide that the Company is compensated for services performed to date. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

Nature of goods and services

The following is a description of the Company’s products and services from which it generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each:

i. Licensing Revenue

Licensing fees represent the fees the Company receives from the licensing of the Company’s Scores trademark. The terms of the royalties earned under these license agreements vary from a flat monthly fee to a percentage of the revenues of the licensee on a monthly basis. The licensing rights are transferred to the Company’s customers over time, and the Company recognizes licensing revenue over time because the customer will simultaneously receive and consume the benefit from the license as the performance occurs.

ii. Stand-Ready for Consulting and Club Set-up Services

The Company offers an initial set-up and consultation to new clubs in order to aid in the opening and operation. The services are provided within the first month of any licensing agreements, and sometimes are not requested by the licensee and therefore never provided.

Concentration of Credit Risk

The Company earns royalty revenues from ten licensees.

With regards to June 30, 2020, concentrations of sales from four licensees range from 11% to 41%, totaling 99%. There are receivables from two licensee totaling 100%. There are no sales from licensees that are considered related parties. There are no receivables from these licensees that are considered related parties.

With regards to June 30, 2019, concentrations of sales from five licensees range from 11% to 23%, totaling 78%. There are receivables from three licensees ranging from 14% to 64%, totaling 96%. There are no sales from licensees that are considered related parties. There are no receivables from these licensees that are considered related parties.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Inter-company items and transactions have been eliminated in consolidation.

Cash and cash equivalents

The Company considers all highly liquid temporary cash investments, with a maturity of three months or less when purchased, to be cash equivalents. There are times when cash may exceed $250,000, the FDIC insured limit. At June 30, 2020 and December 31, 2019, the uninsured balance amounted to $-0- and $-0-, respectively.

Income per Share

Under ASC 260-10-45, “Earnings Per Share”, basic income (loss) per common share is computed by dividing the income (loss) applicable to common stockholders by the weighted average number of common shares assumed to be outstanding during the period of computation. Diluted income (loss) per common share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. As of June 30, 2020, there are no outstanding stock equivalents. Accordingly, the weighted average number of common shares outstanding for the periods ended June 30, 2020 and 2019, respectively, is the same for purposes of computing both basic and diluted net income per share for such years.

Fair Value of Financial Instruments

The carrying value of cash and accrued expenses, if applicable, approximate their fair values based on the short-term maturity of these instruments. The carrying amounts of debt were also estimated to approximate fair value.

The Company utilizes the methods of fair value measurement as described in ASC 820 to value its financial assets and liabilities. As defined in ASC 820, fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2:  Observable prices that are based on inputs not quoted on active markets, but corroborated by market data or quoted prices in active markets for similar assets or liabilities.

Level 3:  Unobservable inputs are used when little or no market data is available including the Company’s own assumptions in determining the fair value. The fair value hierarchy gives the lowest priority to Level 3 inputs.

Recently Issued Accounting Standards Update

Leases

In March 2019, the FASB issued ASU No. 2019-01, Leases (Topic 842): Codification Improvements. ASU 2019-01 aligns the guidance for fair value of the underlying asset by lessors with existing guidance in Topic 842. The ASU requires that the fair value of the underlying asset at lease commencement is its cost reflecting in volume or trade discounts that may apply. However, if there has been a significant lapse of time between the date the asset was acquired and the lease commencement date, the definition of fair value as outlined in Topic 820 should be applied. In addition, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We have evaluated the impact of this ASU on the Company’s consolidated financial statements and there is no effect.

Credit loss

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendment to the initial guidance: ASU 2018-19 (collectively, Topic 326). ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact on the Company’s consolidated financial statements.

All new accounting pronouncements issued but not yet effective or adopted have been deemed not to be relevant to us, hence are not expected to have any impact once adopted.

XML

Disaggregation of Revenue

6 Months Ended

Jun. 30, 2020

Disaggregation of Revenue

Disaggregation of Revenue

Note 3. Disaggregation of Revenue

Disaggregation of revenue

In the following table, revenue is disaggregated by major products/service lines, and timing of revenue recognition:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Major products/service lines
Licensing fees - royalty revenue	$	9,000	$	183,549	$	152,642	$	265,847
Total Revenue	$	9,000	$	183,549	$	152,642	$	265,847
Timing of revenue recognition
Products transferred at a point in time	$		$	—	$		$	—
Products and services transferred over time		9,000		183,549		152,642		265,847
	$	9,000	$	183,549	$	152,642	$	265,847

Contract balances

The following table provides information about receivables and liabilities from contracts with customers:

	June 30,		December 31,
	2020		2019
Assets
Trade receivables, net	$	70,305	$	44,913
Liabilities
Contract liabilities	$	208,200	$	180,200

	June 30,		December 31,
Contract liabilities	2020		2019
Opening	$	180,200	$	112,500
Addditions		28,000		120,200
Transfer to revenue		—		52,500
Ending	$	208,200	$	180,200

Contract receivables are recorded at the invoiced amount and do not bear interest. Credit is extended based on the evaluation of a customer’s financial condition and collateral is not required.

The contract liabilities primarily relate to deferred revenue. Amounts billed in advance of performance obligations being satisfied are booked as deferred revenue.

Practical Expedients and Exemptions

The Company did not apply any practical expedients during the adoption of ASC 606.

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Related-Party Transactions

6 Months Ended

Jun. 30, 2020

Related-Party Transactions

Related-Party Transactions

Note 4. Related-Party Transactions

Transactions with Common ownership affiliates:

On January 24, 2006, the Company entered into a licensing agreement with AYA International, Inc. (“AYA”) granting AYA the right to use the Company’s trademarks in connection with its online video chat website, “Scoreslive.com.” The agreement with AYA provides for royalty payments to be made directly to the Company at the rate of 4.99% of weekly gross revenues from all revenue sources within the AYA website. On December 21, 2009, AYA transferred all of its rights in Scoreslive.com and in its licensing agreement with the Company to Swan Media Group, Inc. (“Swan”), a newly formed New York corporation whose majority owner (80%) is Robert M. Gans, who is also the majority shareholder and chief executive officer of the Company. The Company is owed $0 and $0 in unpaid royalties and expenses as of June  30, 2020 and December 31, 2019, respectively.

On January 27, 2009, the Company entered into a licensing agreement with its affiliate through common ownership I.M. Operating LLC (“IMO”) for the use of the Scores brand name “Scores New York”. Robert M. Gans is the majority owner (72%) of IMO and is also the Company’s majority shareholder and chief executive officer and Howard Rosenbluth, the Company’s Treasurer and a Director, owns 2%. IMO owes the Company a royalty receivable of $0 and $0 as of June  30, 2020 and December 31, 2019, respectively.

On August 31, 2017, IMO entered into an agreement to sell all of its assets to Club Azure LLC (“CA”). Effective September 1, 2017, IMO no longer operated Scores New York and terminated its licensing agreement with the Company. Mark Yackow, an unrelated party, is the sole owner (100%) of CA and former Chief Operating Officer of IMO. Effective September 1, 2017, the Company granted an exclusive, non-transferable license for the use of the “Scores New York” to CA for its gentlemen’s club in New York City. Royalties under this license are payable at a rate of $5,000 per month, commencing in September 2017, and the license is for a term of five years, with five successive five-year renewal terms.

The Company also leases office space directly from Westside Realty of New York, Inc. (WSR), the owner of the West 27th Street Building. The majority owner of WSR (80%) is Robert M. Gans. Since April 1, 2009, the monthly rent has been $2,500 per month including overhead costs. The Company incurred rent expense of $15,00 for the periods ending June  30, 2020 and 2019. The Company owed WSR $15,000 and $7,500 in unpaid rents as of June  30, 2020 and December 31, 2019, respectively.

Effective January 1, 2013, the Company entered into a management services agreement with Metropolitan Lumber Hardware and Building Supplies, Inc . (“Metropolitan”) pursuant to which Metropolitan provides management and other services to the Company, including the services of Robert M. Gans and Howard Rosenbluth to act as executive officers of the Company. In consideration of the services, the Company paid Metropolitan a fee in the amount of $30,000 per year. Effective May 5, 2015, the agreement was amended increasing the annual fee to $90,000. Effective January 1, 2017, the agreement was further amended to remove the requirement that the services of Robert M. Gans to be provided under the agreement. In addition, Metropolitan shall be eligible for a discretionary cash bonus. The agreement may be terminated by either party upon ten days written notice. Mr. Gans is the sole owner of Metropolitan. The Company incurred management fees of $45,000 for the periods ending June  30, 2020 and 2019. The Company owed $22,500 and $22,500 in unpaid management services as of June  30, 2020 and December 31, 2019, respectively.

As of June  30, 2020, the Company has accrued expenses of $7,500 due to Metropolitan. The balance was repaid at the end of 2021. The Company owed $7,500 and $7,500 as of June  30, 2020 and December 31, 2019, respectively.

Effective July 1, 2018, after the gentlemen’s club in New Jersey had been closed from August 15, 2016 to June 28, 2018, the Company terminated the previous licensing agreement and granted an exclusive, non-transferable license for the use of the “Scores Atlantic City” name to Star Light Events LLC (“Star Light”) for its gentlemen’s club in Atlantic City, New Jersey. Royalties under this license are payable at the rate of $5,000 per month, commencing in July 2018, and the license is for a term of five years, with five successive five-year renewal terms. Pursuant to the written agreement, the Company also granted Star Light a non-exclusive, non-transferable license to sell certain licensed products bearing the Company’s trademarks. Star Light will purchase the licensed products from the Company or its affiliates at cost plus 25%. Robert M. Gans, the Company’s President, Chief Executive Officer and a Director, is the majority owner (92.165%) of Star Light  and Howard Rosenbluth, the Company’s Secretary, Treasurer and a Director, owns 1%. Star Light owes the Company a royalty receivable of $0 and $0 as of June  30, 2020 and December 31, 2019, respectively.

On December 9, 2013, the Company entered into a license agreement with its subsidiary, SLC, granting SLC the exclusive right to use certain trademarks, including the “Scores” stylized trademark, in connection with certain goods and services. The grant of license also includes the right to issue sublicenses to third parties, subject to the approval of the Company. Pursuant to the agreement, SLC shall pay to the Company a royalty, as determined by the Company, such as a percentage of net revenue or a flat fee, received in connection with the provision of services and/or sale of goods using the trademarks. SLC may also pay a percentage, as determined by the Company, of all royalties received by SLC under any sublicense agreements. SLC and any sublicensees are to adhere to quality standards as set by the Company, and the Company has the right to inspect all facilities and approve all promotional and marketing materials as well as any related packaging. The agreement has a one-year term with automatic one-year renewals, subject to either party’s election to terminate the agreement at least thirty days prior to such renewal. The Company also has the right to terminate the agreement, with immediate effect, upon the occurrence of certain events. The license is subject to any pre-existing license agreements as of the date of the agreement.

Effective February 28, 2017 (the “Effective Date”), the Company entered into separate Settlement Agreements (each, a “Settlement Agreement”) with three licensees, IMO, Star Light and Swan (are sometimes referred to individually as a “Licensee” and collectively as the “Licensees”) controlled by Robert M. Gans, the Company’s President, Chief Executive Officer and a member of its Board of Directors.

As of the Effective Date, IMO owed the Company an aggregate of $255,406 in unpaid royalties and other fees. Under its Settlement Agreement, IMO has agreed to pay the entire amount owed to the Company, in full settlement of all claims the Company may have against it. The settlement amount is payable pursuant to a promissory note in 22 consecutive monthly installments commencing March 1, 2017 and bears simple interest at the rate of 4% per year. Included as an event of default under the note is a requirement that IMO remain current in its obligations to the Company under its license agreement from and after the Effective Date. This obligation was satisfied under the terms of the Offset Agreement as discussed further below.

As of the Effective Date, Star Light owed the Company an aggregate of $250,000 in unpaid royalties and other fees. Star Light is currently inactive and has no revenue. Under its Settlement Agreement, Star Light has agreed to pay the Company $75,000, in full settlement of all claims the Company may have against it. The settlement amount is payable pursuant to a promissory note in 10 consecutive monthly installments commencing March 1, 2017 and bears simple interest at the rate of 4% per year. This obligation was satisfied under the terms of the Offset Agreement as discussed further below.

As of the Effective Date, Swan owed the Company an aggregate of $166,000 in unpaid royalties and other fees. Swan is currently unprofitable. Under its Settlement Agreement, Swan has agreed to pay the Company $50,000, in full settlement of all claims the Company may have against it. The settlement amount is payable pursuant to a promissory note in 10 consecutive monthly installments commencing March 1, 2017 and bears simple interest at the rate of 4% per year. Included as an event of default under the note is a requirement that Swan remain current in its obligations to the Company under its license agreement from and after the Effective Date. This obligation was satisfied under the terms of the Offset Agreement as discussed further below.

On August 4, 2018, the Company settled the Plaintiffs (as defined below) claims in the Voronina matter for $1,310,000. See Note 7 for additional information. The Company had insufficient liquid resources to enable it to make a portion of the settlement payments called for by the Voronina Settlement Agreement. Metropolitan, made loans to the Company in the aggregate amount of $770,000 to enable the Company to make the payments under the Voronina Settlement Agreement. In addition to the aforementioned loan and as discussed further in Note 7, the Company filed a third-party complaint against certain licensees. During the period of August 16, 2018, thru July 19, 2019, the amount of money paid to the Company by settling with Third-Party Defendants and the Company’s insurance carrier was $505,660.

The Company previously entered into the three Royalty Settlement Agreements noted above where Robert M. Gans is a majority owner of the equity of each of the Licensees. Robert M. Gans guaranteed the payment of each Licensee’s obligations under each of the 3 Settlement Documents. The Licensees were not current with respect to their obligations under the Settlement Documents and the Company did not call upon Mr. Gans to honor his Guaranties.

The past due amounts under the Royalty Settlement Agreements were $382,259 as of December 1, 2018. On this date the Company entered into an agreement to offset the Royalty Amount against the Voronina Amount, thereby reducing the amount owed by the Company to Metropolitan to $399,139 pursuant to the terms of a certain Settlement and Offset Agreement made by and among the Company, Star Light, Swan, Metropolitan and Robert M. Gans.

The Licensees did not remain current with respect to their obligations under the Royalty Settlement Agreements, and the Company did not call upon Robert M. Gans to honor his guarantees. The past due amounts under the Royalty Settlement Agreements aggregated $382,259 (the “Aggregate Royalty Amount”) as of December 1, 2018. As of such date, the Company, the Licensees, Metropolitan and Robert M. Gans entered into a Settlement and Offset Agreement (the “Offset Agreement”) pursuant to which the Aggregate Royalty Amount was offset against the Voronina Amount, thereby reducing the amount owed by the Company to Metropolitan to $404,488 (the “Net Voronina Amount”). The Net Voronina Amount is payable pursuant to a promissory note (the “Voronina Note”), which bears simple interest at the rate of 4% per annum, in 86 consecutive monthly installments of $5,000, and a final installment of $1,370, with the initial installment due and payable on January 1, 2019 (or the first business day thereafter). The Company may prepay the Voronina Note at any time, in whole or in part without premium or penalty. The Offset Agreement also provides for the immediate termination of the Royalty Settlement Agreements and the related promissory notes and guarantees.

The total amounts due to the various related parties as of June  30, 2020, and December 31, 2019, was $352,581 and $383,111 respectively and the total amounts due to the Company from the various related parties as of June  30, 2020, and December 31, 2019, was $0 and $0, respectively.

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Licensees

6 Months Ended

Jun. 30, 2020

Licensees

Licensees

Note 5. Licensees

As of June 30, 2020, the Company has  ten license agreements which were obtained between 2003 and 2020.

On March 18, 2016, the Company (through its subsidiary SLC.) entered into a Trademark License (the “Trademark License”) with Michael Blutrich, an unrelated party. The Trademark License grants Mr. Blutrich the non-exclusive use of the Company’s registered trademarks, related logos and other intellectual property in connection with the development, production, and distribution of a potential scripted television series, mini-series, or movie of the week (the “Series”). Under the Trademark License, the Company will receive three percent of all fees, contingent compensation and other consideration that Mr. Blutrich receives in connection with the Series. Mr. Blutrich is permitted to assign the Trademark License without consideration to third-parties. The term of the Trademark License is for one year, which term may and has been extended through December 31, 2020. Effective March 18, 2016, the Company and Mr. Blutrich entered into an addendum to the Trademark License, extending the license to a book about Scores.

See Note 7 for litigation relating to a few of the Company’s license agreements.

IMO’s members are the Company’s majority shareholder, Robert M. Gans (72%), and Secretary and Director, Howard Rosenbluth (2%) hence making IMO a related party. The building occupied by IMO is owned by Westside Realty of New York Inc., of which the majority owner is Robert M. Gans (80%). IMO accounted for 0% and 0% of the Company’s royalty revenues for the six months ended June 30, 2020 and 2019, respectively. Mr. Gans is also the majority owner (80%) of Swan, which accounted for 0% and 0% of the Company royalty revenues for the six months ended June 30, 2020 and 2019, respectively. Mr. Gans is also the majority owner (92.165%) of Star Light, which accounted for 0% and 0% of the Company’s royalty revenues for the six months ended June 30, 2020 and 2019, respectively.

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Contract liabilities

6 Months Ended

Jun. 30, 2020

Contract liabilities

Contract liabilities

Note 6. Contract liabilities

License agreements sometimes include Initiation/Inception Fees. Please see Note 3 for a detailed discussion of this matter.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies

Commitments and Contingencies

Note 7. Commitments and Contingencies

The Company records $7,500 a month as rent, overhead, and services due to Metropolitan for services rendered by the management of the Company. The Company incurred management fees of $45,000 for the periods ending June  30, 2020 and 2019. Mr. Gans is the sole owner of Metropolitan.

The Company currently leases office space from the Westside Realty of New York which is owned and operated by Robert Gans, the Company’s majority shareholder, for $2,500 a month. The Company incurred rent expense of $15,000 for the periods ending June  30, 2020 and 2019.

On April 3, 2016, 50 individuals purporting to be professional models and/or actresses collectively, the “Plaintiffs”) filed a civil suit in the United States District Court for the Southern District of New York against the Company, I.M. Operating, LLC, The Executive Club, LLC, and Robert M. Gans, collectively the (“Defendants”) alleging that images of Plaintiffs were used without their consent for commercial purposes on websites and social media outlets to promote gentlemen’s clubs operated by the Defendants or licensees of the Defendants (the “Lawsuit”). The Lawsuit further alleged that the unauthorized use of these images created, among other things, the false impression that these individuals either worked at, or endorsed, one or more of such clubs. The Lawsuit asserted causes of action under Section 43 of the Lanham Act, 28 U.S.C. § 1125(a)(1), premised on a theory of false endorsement and/or association; New York Civil Rights Law §§ 50-51; New York’s Deceptive Trade Practices Act, New York General Business Law § 349; as well as various common law torts, namely defamation, negligence, conversion, unjust enrichment and quantum meruit. The Lawsuit sought unspecified compensatory damages, punitive damages, as well as attorneys’ fees and costs. The Lawsuit also sought an injunction permanently enjoining the use of the individuals’ images to promote, via any medium, any of the clubs. On April 20, 2017, as a result of the claims asserted in the Lawsuit, the Company filed a third-party complaint (the “Third-Party Complaint”) against certain licensees, namely CG Consulting, LLC; Anthony Quaranta; High Five Management Group, Inc.; Club 2000 Eastern Avenue, Inc.; SCMD, LLC; David Baucom; Manhattan Fashion L.L.C.; Stone Park Entertainment, Inc.; Silver Bourbon, Inc.; Tampa Food & Entertainment, Inc.; Fuun House Productions, L.L.C.; Norm A Properties, LLC; Southeast Show Clubs, LLC; Michael Tomkovich; Palm Spring Grill LLC; Houston KP LLC; and Star Light Events LLC (collectively, “Third-Party Defendants”) asserting causes of action for breach of contract, breach of warranty, contractual indemnification, common law indemnification, contribution and breach of contract for failure to procure insurance. The Company maintained in the Third-Party Complaint, among other things, that pursuant to the Third-Party Defendants’ respective license agreements, each of the Third-Party Defendants are expressly obligated to indemnify, defend and hold the Company harmless in connection with the conduct giving rise to the claims asserted by Plaintiffs in the Lawsuit. Third-Party Defendants Club 2000 Eastern Avenue, Inc., Fuun House Productions, L.L.C., and Norm A Properties, LLC (collectively the “Defaulting Third-Party Defendants”) failed to respond to the Third-Party Complaint.

On January 5, 2017, the Court issued an Order granting in part, and denying in part, Defendants’ motion to dismiss the Complaint. The Court dismissed Plaintiffs’ claims sounding in negligence, conversion, unjust enrichment and quantum meruit. The remaining claims were not dismissed at that time. On August 4, 2018, the Court dismissed Plaintiffs’ claims against Defendants, including the Company, with prejudice, at Plaintiffs’ request following settlement with Defendants. During 2018, the Company paid $1,310,000 to Plaintiffs in connection with the settlement. Between August 4, 2018 and October 9, 2018, the Court dismissed with prejudice the Company’s claims against the Third-Party Defendants, other than the Defaulting Third-Party Defendants, at the Company’s request following settlement with those Third-Party Defendants. The total amount of money paid to the Company by the settling Third-Party Defendants, and the Company’s insurance carrier, is $505,660, paid thru September 30, 2019 and $90,000 received during the nine months ended September 30, 2019. Scores has obtained Default Orders against Fuun House Productions, L.L.C. and Norm A Properties, LLC. The value of the Company’s claims against Fuun House Productions, L.L.C. and Norm A Properties, LLC are all that remain to be determined in the action. The Company became aware during the week of December 17, 2018 that Fuun House Productions, L.L.C. has filed for bankruptcy protection.

On January 3, 2017, the Company, together with its subsidiary SLC, filed an action against CJ NYC Inc. in the United States District Court for the Southern District of New York. Defendant utilizes the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club in Woodside, New York. In this action the Company sought damages for breach of contract in the amount of $85,000 and the issuance of a preliminary and permanent injunction prohibiting the defendant from using the “Scores” name and trademark with respect to the Woodside, New York club and all websites and social media sites controlled by Defendant. The defendant failed to appear and on February 27, 2017, the Company filed a motion for judgment by default. The court heard the Company motion on April 5, 2017, and on May 25, 2017, the court granted the Company’s motion for a Judgment by default, granting a permanent injunction and awarding damages in the amount of $85,000 to SLC and $14,333 in damages and $530 in costs to the Company. All signage has been removed and the Company is attempting to collect on the default judgment, but it believes that Defendant no longer has any assets, leaving the Company unable to collect on the default judgment.

On January 31, 2017, the Company, together with its subsidiary SLC, filed an action against Funn House Productions LLC in the United States District Court for the Southern District of New York. Defendant utilizes the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club in New Haven, Connecticut. In this action the Company sought damages for breach of contract in the amount of $45,000 and the issuance of a preliminary and permanent injunction prohibiting the defendant from using the “Scores” name and trademark with respect to the New Haven, Connecticut club and all websites and social media sites controlled by Defendant. The Defendant failed to appear and on February 28, 2017, the Court granted Plaintiffs’ motion for a Judgment by default, granting a permanent injunction and awarding damages in the amount of $60,000. The parties negotiated a settlement agreement, which included a payment schedule, but then Defendant did not sign the proposed settlement agreement. The Company is attempting to collect on the default judgment, but it believes that Defendant no longer has any assets, leaving the Company unable to collect on the default judgment.

On July 25, 2017, plaintiff Dislenia Munoz, who formerly performed as an adult entertainer at Scores New York, owned in its entirety by I.M. Operating LLC, commenced a putative class action lawsuit against the Company, IMO, Robert Gans and Mark Yackow in the Supreme Court of the State of New York, County of New York. Plaintiff alleged that she and other similarly situated entertainers at Scores New York were misclassified as independent contractors, that they should have been classified as employees, and as a result, the Defendants violated, among other things, applicable state wage and hour laws. The Lawsuit sought unspecified compensatory damages, liquidated damages, as well as attorneys’ fees and costs. On June 22, 2018, Plaintiff (1) amended her complaint in the Lawsuit to excise her class allegations, and (2) discontinued the Lawsuit, without prejudice. Plaintiff has brought her claims in the Lawsuit in another forum against the Defendants, other than the Company, which is no longer a subject of Plaintiff’s claims.

On October 8, 2018, the Company was served with a Summons and Complaint in the action entitled Luisa Santos de Oliveira v. Scores Holding Company, Inc.; Club Azure, LLC; Robert Gans; Mark S. Yackow; Howard Rosenbluth, Docket No. 1:18-cv-06769-GBD, in the United States District Court of the Southern District. Plaintiff claims that the Defendants violated the minimum wage and overtime provisions of the Fair Labor Standards Act (“FLSA”); violated the New York Minimum Wage Act and the overtime provisions of the New York State Labor Law (“NYLL”); violated the Spread of Hours Wage Order of the New York Commissioner of Labor; violated the Notice and Recordkeeping requirements of the NYLL; violated the wage statement provisions of the NYLL; recovery of equipment costs in violation of the FLSA and NYLL; and unlawful deductions from tips in violation of the NYLL. Plaintiff brought this action as a class action and seeks certification of this action as a collective action on behalf of herself and all other similarly situated employees and former employees of Defendants. The Company has submitted an Answer to Plaintiff’s claims and the case is currently in the discovery phase. The Company, along with the Co-defendants, intends to vigorously defend itself against the claims asserted against it in this lawsuit. The likelihood of an unfavorable outcome is remote because the Company’s records show, inter alia, that the Plaintiff never worked more than 25 hours per week. The case was assigned to a Magistrate Judge. There was a conference on March 2, 2021 and a Scheduling Order was entered. On March 26, 2021, a Stipulation of Discontinuance was so-ordered by the Federal Court, discontinuing all claims against the Company.

On October 10, 2018,the Company, filed an action against SCMD, LLC, in the Supreme Court of the State of New York, County of New York. Defendant utilized the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club located in Baltimore, Maryland and paid royalty fees to the Company up through and including July of 2017 but did not abandon its use of the Scores name and trademarks until September of 2018. In this action, the Company sought damages for breach of contract in the amount of $160,000. On December 5, 2018, the case was removed to the United States District Court for the Southern District of New York . On February 19, 2019, an Amended Complaint was filed. On March 8, 2019, Defendant's counsel requested permission from the Court to submit a motion to dismiss the Company’s amended complaint. The Court finally granted Defendant’s request on November 6, 2019 and gave a briefing schedule. Defendant’s motion to dismiss was denied on August 14, 2020.  In September of 2020, the parties settled this matter for $50,000, of which $5,000 remains due and outstanding. SCMD, LLC has since been dissolved. We are still trying to collect the remaining $5,000 that is due to the Company, but we are not confident that we will be successful given that SCMD, LLC has been dissolved.

On September 14, 2018, the Company and its subsidiary Scores Licensing Corp. (“SLC”), filed an action against New 4125, LLC and Mike Taraska in the Supreme Court of the State of New York, County of New York. Defendants utilized the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club located in Phoenix, Arizona. In this action, the Company sought damages for breach of contract in the amount of $47,500. Defendants filed an Answer to the Complaint but it was not submitted by an attorney notwithstanding the fact that corporations must be represented by counsel. A motion to vacate the Answer based on the fact that the corporate defendant is not represented by counsel is pending.

On April 22, 2018, the Company together with its subsidiary SLC filed a civil action in Supreme Court of New York, New York County against 1715 Northside Drive, Inc., the former licensee of SCORES Atlanta. The action was settled and paid in full during the 3rd quarter 2018.

On May 4, 2018, we together with our subsidiary SLC filed a civil action in Supreme Court of New York, New York County against Bonkers Space Coast Inc. and Ken Fees, the former licensee of the SCORES Green Bay, for unpaid royalties in the amount of $80,000. The Defendants have not appeared and Plaintiffs have filed a motion for judgment by default. A motion for default judgement was granted and judgement was entered on November 26, 2019. The Company has found real property owned by the Defendant and we are in the process of attaching same. We filed an exemplified copy of the default judgment with the State Court in Wisconsin, to collect licensing fees. A judgment was docketed on June 12, 2020 in Manitowoc County, WI for $82,330.34.  The real property is valued at approximately $97,000 but the Wisconsin Homestead Act allows the debtor to exempt as much as $75,000 of equity. There is also a prior mortgage and tax lien totaling approximately $45,000. We have therefore ceased attempts to collect on the judgment because there is no remaining equity left in the real property.

On April 20, 2018, the Company together with its subsidiary SLC filed a civil action in Supreme Court of New York, New York County against The Cadillac Lounge LLC and Dick Shappy, the former licensee of SCORES Rhode Island for unpaid royalty fees. The action was settled for $50,000 and has been paid in full during the 2nd quarter 2018.

On April 25, 2018, the Company together with its subsidiary SLC filed a civil action in Supreme Court of New York, New York County against South East Show Clubs LLC and Michael Tomkovich, the license of SCORES Jacksonville and SCORES Savannah, for unpaid royalties in the amount of $60,000. The action was settled and has been paid in full during the 4th quarter of 2018.

On August 3, 2018, the Company and its subsidiary SLC, filed an action against Silver Bourbon, Inc. in the Supreme Court of the State of New York, County of New York. Defendant utilized the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club located in New Orleans, Louisiana. In this action, the Company seeks damages for breach of contract in the amount of $145,500. The parties were in the process of negotiating a settlement but then the club permanently closed after it lost its lease and was forced to close in March of 2020 due to the global pandemic. We have therefore ceased all attempts to collect this debt.

On July 13, 2018, the Company and its subsidiary SLC, filed an action against Manhattan Fashions, LLC in the Supreme Court of the State of New York, County of New York. Defendant utilized the “Scores” name and trademark in connection with its ownership and operation of an adult entertainment club located in Harvey, Louisiana. In this action, the Company sought damages for breach of contract in the amount of $84,000. Defendant did not appear, and On February 6, 2019, the Court granted the Company’s motion for default judgment. The parties were in the process of negotiating a settlement agreement but then ceased all attempts to settle this matter after the club was forced to permanently close in March of 2020 due to the global pandemic. We have therefore ceased all attempts to collect this debt.

On September 5, 2019, the Company together with its subsidiary SLC filed a civil action in Supreme Court of New York, New York County against Scores Alabama. A cease and desist letter was sent. The Company finally entered into a license agreement as of March 5, 2020 with Cheetah Club, LLC for a club located in Huntsville, Alabama. 

The Company had been in the process of negotiating a license agreement with an adult entertainment club that started using the “Scores” name and trademark in connection with an adult entertainment club located in Huntsville, Alabama without a proper licensing agreement in place. The Company’s subsidiary, SLC, ended up entering into a license agreement in March of 2020.

In July 2018, the Company entered into a confidential settlement agreement (the “Settlement Agreement”) in the Voronina litigation, and in August 2018, the Court entered an order dismissing the plaintiff’s claims against the Defendants with prejudice. Metropolitan, loaned the Company an aggregate of $770,000 to enable the Company to make the payments called for by the Agreement.

As previously reported, in February 2017, the Company entered into settlement agreements (each, a “Royalty Settlement Agreement”) with Star Light, Swan, IMO and Robert M. Gans. Robert M. Gans is the owner of a majority of the equity of each of aforementioned Licensees. Pursuant to the Royalty Settlement Agreements, the Company forgave the repayment of a certain portion of unpaid, past-due royalties in return for the respective Licensees’ agreements to pay the remainder (the “Royalty Settlement Amount”) of the unpaid royalties, plus interest, to the Company. The Royalty Settlement Amount for each Licensee was represented by a promissory note, and Robert M. Gans guaranteed the payment of each Licensee’s obligations under the Settlement Agreement.

The Licensees did not remain current with respect to their obligations under the Royalty Settlement Agreements, and the Company did not call upon Robert M. Gans to honor his guarantees. The past due amounts under the Royalty Settlement Agreements aggregated $382,259 (the “Aggregate Royalty Amount”) as of December 1, 2018. As of such date, the Company, the Licensees, Metropolitan and Robert M. Gans entered into a Settlement and Offset Agreement (the “Offset Agreement”) pursuant to which the Aggregate Royalty Amount was offset against the Voronina Amount, thereby reducing the amount owed by the Company to Metropolitan to $408,546 (the “Net Voronina Amount”). The Net Voronina Amount is payable pursuant to a promissory note (the “Voronina Note”), which bears simple interest at the rate of 4% per annum, in 86 consecutive monthly installments of $5,000, and a final installment of $1,370, with the initial installment due and payable on January 1, 2022 (or the first business day thereafter). The Company may prepay the Voronina Note at any time, in whole or in part without premium or penalty. The Offset Agreement also provides for the immediate termination of the Royalty Settlement Agreements and the related promissory notes and guarantees.

On January 29, 2020, an individual referred to as Jane Doe, the Plaintiff, filed a civil suit in in the Circuit Court of the 13th Judicial Circuit, in the State of Florida, Hillsborough County, against the Company, its subsidiary, Scores Licensing Corp. (“SLC”), and several other defendants.  Plaintiff’s Complaint details the somber circumstances surround the illegal actions of a non-party, who pled guilty to certain crimes against Plaintiff that were committed at a club known as Scores Tampa.  Plaintiff now seeks to hold the Company and its subsidiary, among other defendants, liable in connection with the non-party’s illegal activity by asserting causes of action for negligence, vicarious liability and unjust enrichment.  Initially, prior counsel moved to dismiss Plaintiff’s Complaint in lieu of filing Answers.  A motion to dismiss was submitted because the Court lacks personal jurisdiction under Florida’s Long-Arm Statute and Due Process Requirements because neither the Company or its subsidiary had minimum contacts with Florida; nor was their a benefited conferred upon them.  The Court wrongfully denied the motion to dismiss.  The case is in the deposition stage of discovery.  A motion for summary judgment will be submitted because neither the Company or its subsidiary were involved in the day-to-day operations of Scores Tampa, or in fact involved in the operations of Scores Tampa at all.  Other than the Company licensing the Scores trademark and other intellectual property to Scores Tampa, pursuant to a 2010 license agreement, neither the Company or its affiliate operated, conducted, engaged in, or managed Scores Tampa, making it vicariously liable for the non-party’s criminal actions.

On July 15, 2019, plaintiff Jeremy Green, a former consultant to Swan Media Group, Inc (“SMG”), commenced an action in U.S. District Court, Southern District of New York against Scores Holding Co., Inc., Scores Media Group LLC, Scores Digital Gaming LLC (“SDG”) and individual defendants Robert Gans and Charilaos Yioves seeking to recover from all defendants under various theories of breach of contract, unjust enrichment, promissory estoppels, fraudulent inducement and breach of implied duty of good faith and fair dealing.

By Order dated March 18, 2020, the Court dismissed all the causes of action except for the breach of contract claim pertaining to Greene’s consultancy agreement with SMG (First Cause of Action) and the unjust enrichment claim relating to ScoresCasino.com (Second Cause of Action). The parties have exchange documents and information relating to the remaining causes of action and depositions were held in April, July, August and November, 2021.  The parties do not expect expert disclosures will be necessary as neither side sees the need for it.

On March 4, 2022, the parties appeared before Judge Stanton for a status conference where the parties discussed a briefing schedule for summary judgment motions and the potential for trial on certain issues.

On April 17, 2021, in an action entitled Jessica Hall v. Scores Holding Company, Inc., et al, filed in Federal Court, Southern District, the Plaintiff claims that, while she worked at a gentlemen’s club located in New York, New York and commonly known as Scores NY, she was discriminated and retaliated against because of her race in violation of both Federal and State law. A motion for default judgment was denied, and Plaintiff was recently granted permission to file and serve an Amended Complaint. Accordingly on February 4, 2022 a First Amendment Complaint was filed. On March 4, 2022  an Answer to the First Amendment Complaint was filed. On March 18, 2022 the Defendants filed A First Demand for Interrogatories Upon the Defendant. We have made demands for discovery from the Plaintiff and motioned for summary judgement seeking dismissal of all claims, which is pending. The likelihood of success on the merits is negligible because the Company, as simply the owner of the “Scores” brand and trademarks, did not own, operate or otherwise control Scores NY or employ, manage, or otherwise control Plaintiff’s employment during the period October 23, 2009 until June 18, 2019.

There are no other material legal proceedings pending to which the Company or any of its property is subject, nor to the Company’s knowledge are any such proceedings threatened.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2020

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

Note 8. SUBSEQUENT EVENTS

Please see Note 7 for events concerning legal matters.

Management evaluated subsequent events through the date of this filing and determined that no additional events have occurred that would require adjustment to or disclosure in the unaudited condensed consolidated financial statements.

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Summary of Significant Accounting Principles (Policies)

6 Months Ended

Jun. 30, 2020

Summary of Significant Accounting Principles

COVID-19

COVID-19

As a result of the COVID-19 virus, during the first quarter of 2020 and ongoing, state and local governments have required all but certain essential businesses to close, including all nine clubs operating under the Scores name. The duration and ultimate extent of the closures of these clubs cannot be predicted at this time, however the impact on such clubs’ revenue could be material and result in a significant decline in our royalty revenues.

Going Concern

Going Concern

As of June 30, 2020, the Company has cumulative losses totaling $(6,931,224) and negative working capital of $147,140. Because of these conditions, the Company will require additional working capital to develop business operations. The Company intends to raise additional working capital through the continued licensing of its brand with its current and new operators. There are no assurances that the Company will be able to achieve the level of revenues adequate to generate sufficient cash flow from operations to support the Company’s working capital requirements. To the extent that funds generated from any future use of licensing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not continue its operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financials are issued. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Revenue Recognition

Revenue Recognition

Under ASC 606, revenue from the initiation fees are recognizable when at a point in time (first month of the contract) and royalty revenues are recognized over time for those contracts with probable collections.

The Company’s license fee revenue is generated from royalties earned through intellectual property licensing agreements which permit the licensee to use the recognition and status of the Scores brand in order to promote their businesses. Under ASC 606, revenue is recognized throughout the life of the executed licensing agreement. The Company measures revenue based on consideration specified in a contract with a customer. Furthermore, the Company recognizes revenue when it satisfies a performance obligation by transferring control over the service to its customer.

A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The Company’s customers typically receive the benefit of its services as they are performed. Substantially all customer contracts provide that the Company is compensated for services performed to date. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

Nature of goods and services

The following is a description of the Company’s products and services from which it generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each:

i. Licensing Revenue

Licensing fees represent the fees the Company receives from the licensing of the Company’s Scores trademark. The terms of the royalties earned under these license agreements vary from a flat monthly fee to a percentage of the revenues of the licensee on a monthly basis. The licensing rights are transferred to the Company’s customers over time, and the Company recognizes licensing revenue over time because the customer will simultaneously receive and consume the benefit from the license as the performance occurs.

ii. Stand-Ready for Consulting and Club Set-up Services

The Company offers an initial set-up and consultation to new clubs in order to aid in the opening and operation. The services are provided within the first month of any licensing agreements, and sometimes are not requested by the licensee and therefore never provided.

Concentration of Credit Risk

Concentration of Credit Risk

The Company earns royalty revenues from ten licensees.

With regards to June 30, 2020, concentrations of sales from four licensees range from 11% to 41%, totaling 99%. There are receivables from two licensee totaling 100%. There are no sales from licensees that are considered related parties. There are no receivables from these licensees that are considered related parties.

With regards to June 30, 2019, concentrations of sales from five licensees range from 11% to 23%, totaling 78%. There are receivables from three licensees ranging from 14% to 64%, totaling 96%. There are no sales from licensees that are considered related parties. There are no receivables from these licensees that are considered related parties.

Principles of consolidation

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Inter-company items and transactions have been eliminated in consolidation.

Cash and cash equivalents

Cash and cash equivalents

The Company considers all highly liquid temporary cash investments, with a maturity of three months or less when purchased, to be cash equivalents. There are times when cash may exceed $250,000, the FDIC insured limit. At June 30, 2020 and December 31, 2019, the uninsured balance amounted to $-0- and $-0-, respectively.

Income per Share

Income per Share

Under ASC 260-10-45, “Earnings Per Share”, basic income (loss) per common share is computed by dividing the income (loss) applicable to common stockholders by the weighted average number of common shares assumed to be outstanding during the period of computation. Diluted income (loss) per common share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. As of June 30, 2020, there are no outstanding stock equivalents. Accordingly, the weighted average number of common shares outstanding for the periods ended June 30, 2020 and 2019, respectively, is the same for purposes of computing both basic and diluted net income per share for such years.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying value of cash and accrued expenses, if applicable, approximate their fair values based on the short-term maturity of these instruments. The carrying amounts of debt were also estimated to approximate fair value.

The Company utilizes the methods of fair value measurement as described in ASC 820 to value its financial assets and liabilities. As defined in ASC 820, fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2:  Observable prices that are based on inputs not quoted on active markets, but corroborated by market data or quoted prices in active markets for similar assets or liabilities.

Level 3:  Unobservable inputs are used when little or no market data is available including the Company’s own assumptions in determining the fair value. The fair value hierarchy gives the lowest priority to Level 3 inputs.

Recently Issued Accounting Standards Update

Recently Issued Accounting Standards Update

Leases

In March 2019, the FASB issued ASU No. 2019-01, Leases (Topic 842): Codification Improvements. ASU 2019-01 aligns the guidance for fair value of the underlying asset by lessors with existing guidance in Topic 842. The ASU requires that the fair value of the underlying asset at lease commencement is its cost reflecting in volume or trade discounts that may apply. However, if there has been a significant lapse of time between the date the asset was acquired and the lease commencement date, the definition of fair value as outlined in Topic 820 should be applied. In addition, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We have evaluated the impact of this ASU on the Company’s consolidated financial statements and there is no effect.

Credit loss

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendment to the initial guidance: ASU 2018-19 (collectively, Topic 326). ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact on the Company’s consolidated financial statements.

All new accounting pronouncements issued but not yet effective or adopted have been deemed not to be relevant to us, hence are not expected to have any impact once adopted.

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Disaggregation of Revenue (Tables)

6 Months Ended

Jun. 30, 2020

Disaggregation of Revenue

Schedule of disaggregation of revenue

In the following table, revenue is disaggregated by major products/service lines, and timing of revenue recognition:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Major products/service lines
Licensing fees - royalty revenue	$	9,000	$	183,549	$	152,642	$	265,847
Total Revenue	$	9,000	$	183,549	$	152,642	$	265,847
Timing of revenue recognition
Products transferred at a point in time	$		$	—	$		$	—
Products and services transferred over time		9,000		183,549		152,642		265,847
	$	9,000	$	183,549	$	152,642	$	265,847

Schedule of contract balances

The following table provides information about receivables and liabilities from contracts with customers:

	June 30,		December 31,
	2020		2019
Assets
Trade receivables, net	$	70,305	$	44,913
Liabilities
Contract liabilities	$	208,200	$	180,200

	June 30,		December 31,
Contract liabilities	2020		2019
Opening	$	180,200	$	112,500
Addditions		28,000		120,200
Transfer to revenue		—		52,500
Ending	$	208,200	$	180,200

XML

Summary of Significant Accounting Principles (Details)	6 Months Ended
	Jun. 30, 2020 USD ($) agreement	Jun. 30, 2019	Dec. 31, 2019 USD ($)
Accounting policies [Line Items]
Accumulated deficit	$ (6,931,224)		$ (6,899,995)
Negative working capital	147,140
Cash, FDIC Insured Amount	$ 250,000
Number of license agreements | agreement	10
Uninsured balance	$ 0		$ 0
Merchandise Sales 4 Licenses [Member] | Revenue Benchmark [Member]
Accounting policies [Line Items]
Concentration Risk Percentage	99.00%
Merchandise Sales 4 Licenses [Member] | Revenue Benchmark [Member] | Minimum [Member]
Accounting policies [Line Items]
Concentration Risk, Percentage	11.00%
Merchandise Sales 4 Licenses [Member] | Revenue Benchmark [Member] | Maximum [Member]
Accounting policies [Line Items]
Concentration Risk, Percentage	41.00%
Merchandise Receivables 2 Licenses [Member] | Revenue Benchmark [Member]
Accounting policies [Line Items]
Concentration Risk Percentage	100.00%
Merchandise Sales 5 Licenses [Member] | Revenue Benchmark [Member]
Accounting policies [Line Items]
Concentration Risk Percentage		78.00%
Merchandise Sales 5 Licenses [Member] | Revenue Benchmark [Member] | Minimum [Member]
Accounting policies [Line Items]
Concentration Risk, Percentage		11.00%
Merchandise Sales 5 Licenses [Member] | Revenue Benchmark [Member] | Maximum [Member]
Accounting policies [Line Items]
Concentration Risk, Percentage		23.00%
Merchandise Receivables 3 Licenses [Member] | Revenue Benchmark [Member]
Accounting policies [Line Items]
Concentration Risk Percentage		96.00%
Merchandise Receivables 3 Licenses [Member] | Revenue Benchmark [Member] | Minimum [Member]
Accounting policies [Line Items]
Concentration Risk, Percentage		14.00%
Merchandise Receivables 3 Licenses [Member] | Revenue Benchmark [Member] | Maximum [Member]
Accounting policies [Line Items]
Concentration Risk, Percentage		64.00%

XML

Disaggregation of Revenue - Disaggregation of Revenue (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Total Revenue	$ 9,000	$ 183,549	$ 152,642	$ 265,847
Products and services transferred over time [Member]
Total Revenue	9,000	183,549	152,642	265,847
Licensing fees - royalty revenue [Member]
Total Revenue	$ 9,000	$ 183,549	$ 152,642	$ 265,847

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Disaggregation of Revenue - Contract Balances (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Assets
Trade receivables, net	$ 70,305	$ 44,913
Liabilities
Contract liabilities	208,200	180,200
Contract liabilities
Opening	180,200	112,500
Additions	28,000	120,200
Transfer to revenue		52,500
Ending	$ 208,200	$ 180,200

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Related-Party Transactions (Details) - USD ($)							1 Months Ended		6 Months Ended		20 Months Ended	28 Months Ended
	Jun. 12, 2020	Sep. 30, 2019	Dec. 01, 2018	Aug. 04, 2018	Jul. 01, 2018	Jan. 24, 2006	Sep. 30, 2017	Feb. 28, 2017	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2016	May 04, 2015	Dec. 31, 2019	Jul. 31, 2018	Sep. 01, 2017	Dec. 21, 2009	Jan. 27, 2009
Related Party Transaction [Line Items]
Royalty Payment Rate On Gross Revenue						4.99%
Royalties And Expenses Payable, Related Party									$ 0				$ 0
Related Party Royalties Payable Per Month							$ 5,000
Due from Related Parties, Current			$ 399,139						0				0
License Agreement Selling Price Description					Star Light will purchase the licensed products from the Company or its affiliates at cost plus 25%
Insurance carrier settled amount				$ 505,660
Paid for the settlement of insurance carrier		$ 505,660
Due to Related Parties									352,581				383,111
License agreement term							5 years
Royalty settlement	$ 82,330.34		382,259
Loss Contingency, Damages Sought, Value				1,310,000
Westside Realty of New York Inc [Member]
Related Party Transaction [Line Items]
Related Party Rent Per Month									2,500
Rent expenses									1,500	$ 1,500
Rent Payable, Related Party									$ 15,000				7,500
Star Light Evens LLC [Member]
Related Party Transaction [Line Items]
Related Party Royalties Payable Per Month														$ 5,000
Due from Related Parties								$ 250,000
Debt Instrument, Interest Rate During Period								4.00%
Debt Instrument, Frequency of Periodic Payment								10 consecutive monthly installments
Related Party Transaction, Amounts of Transaction								$ 75,000
Star Light Evens LLC [Member] | Director [Member]
Related Party Transaction [Line Items]
Equity Method Investment, Ownership Percentage									1.00%
Star Light Evens LLC [Member] | Royalty Receivable [Member]
Related Party Transaction [Line Items]
Due to Affiliate									$ 0				0
Scores New York [Member] | Director [Member]
Related Party Transaction [Line Items]
Equity Method Investment, Ownership Percentage									2.00%
Swan Media Group, Inc [Member]
Related Party Transaction [Line Items]
Due from Related Parties								$ 166,000
Debt Instrument, Interest Rate During Period								4.00%
Debt Instrument, Frequency of Periodic Payment								10 consecutive monthly installments
Related Party Transaction, Amounts of Transaction								$ 50,000
I.M. Operating LLC [Member]
Related Party Transaction [Line Items]
Due from Related Parties								$ 255,406
Debt Instrument, Interest Rate During Period								4.00%
Debt Instrument, Frequency of Periodic Payment								22 consecutive monthly installments
I.M. Operating LLC [Member] | Royalty Receivable [Member]
Related Party Transaction [Line Items]
Due to Affiliate									$ 0				0
I.M. Operating LLC [Member] | Scores New York [Member]
Related Party Transaction [Line Items]
Equity Method Investment, Ownership Percentage															100.00%
Robert M. Gans [Member]
Related Party Transaction [Line Items]
Due to Related Parties				$ 770,000
Robert M. Gans [Member] | Westside Realty of New York Inc [Member]
Related Party Transaction [Line Items]
Equity Method Investment, Ownership Percentage									80.00%
Robert M. Gans [Member] | Star Light Evens LLC [Member]
Related Party Transaction [Line Items]
Equity Method Investment, Ownership Percentage									92.165%
Robert M. Gans [Member] | Scores New York [Member]
Related Party Transaction [Line Items]
Equity Method Investment, Ownership Percentage									72.00%								72.00%
Robert M. Gans [Member] | Swan Media Group, Inc [Member]
Related Party Transaction [Line Items]
Equity Method Investment, Ownership Percentage									80.00%							80.00%
Metropolitan Lumber [Member]
Related Party Transaction [Line Items]
Management Services, Fee Amount Per Year											$ 90,000	$ 30,000
Management fees									$ 45,000	$ 45,000
Management Services, Fee Payable									22,500				22,500
Due to Related Parties									$ 404,488
Debt Instrument, Interest Rate During Period									4.00%
Debt Instrument, Frequency of Periodic Payment									86 consecutive monthly installments
Debt Instrument, Periodic Payment									$ 5,000
Debt Instrument Final Installment Amount									1,370
Royalty settlement			$ 382,259
Metropolitan Lumber Hardware And Building Supplies Inc [Member]
Related Party Transaction [Line Items]
Due to Other Related Parties, Current									$ 7,500				$ 7,500

XML

Licensees (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2020 USD ($) agreement	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) agreement	Jun. 30, 2019 USD ($)	Sep. 01, 2017	Dec. 21, 2009	Jan. 27, 2009
Licenses [Line Items]
Number of license agreements | agreement	10		10
Revenue from Contract with Customer, Including Assessed Tax | $	$ 9,000	$ 183,549	$ 152,642	$ 265,847
I.M. Operating LLC [Member]
Licenses [Line Items]
Percentage Of Royalty Revenue			0.00%	0.00%
Westside Realty of New York Inc [Member] | Robert M. Gans [Member]
Licenses [Line Items]
Equity Method Investment, Ownership Percentage	80.00%		80.00%
Swan Media Group, Inc [Member]
Licenses [Line Items]
Percentage Of Royalty Revenue			0.00%	0.00%
Swan Media Group, Inc [Member] | Robert M. Gans [Member]
Licenses [Line Items]
Equity Method Investment, Ownership Percentage	80.00%		80.00%			80.00%
Scores Atlantic City [Member]
Licenses [Line Items]
Percentage Of Royalty Revenue			0.00%	0.00%
Scores Atlantic City [Member] | Robert M. Gans [Member]
Licenses [Line Items]
Equity Method Investment, Ownership Percentage	92.165%		92.165%
Scores New York [Member] | Director [Member]
Licenses [Line Items]
Equity Method Investment, Ownership Percentage	2.00%		2.00%
Scores New York [Member] | Robert M. Gans [Member]
Licenses [Line Items]
Equity Method Investment, Ownership Percentage	72.00%		72.00%				72.00%
Scores New York [Member] | I.M. Operating LLC [Member]
Licenses [Line Items]
Equity Method Investment, Ownership Percentage					100.00%

XML

Commitments and Contingencies (Details) - USD ($)										1 Months Ended		6 Months Ended		9 Months Ended	12 Months Ended
	Jun. 12, 2020	Sep. 30, 2019	Dec. 01, 2018	Sep. 14, 2018	Aug. 04, 2018	Apr. 20, 2018	May 25, 2017	Jan. 31, 2017	Jan. 03, 2017	Sep. 30, 2020	Feb. 28, 2017	Jun. 30, 2020	Jun. 30, 2019	Sep. 30, 2019	Dec. 31, 2018	Oct. 10, 2018	Aug. 31, 2018	Aug. 03, 2018	Jul. 13, 2018	May 04, 2018	Apr. 25, 2018
Other Commitments [Line Items]
Amount of loss contingency, damages sought					$ 1,310,000
Paid for the settlement of insurance carrier		$ 505,660
Received for the settlement of insurance carrier														$ 90,000
Loss contingency accrual																$ 160,000
Royalty settlement	$ 82,330.34		$ 382,259
Damages [Member]
Other Commitments [Line Items]
Amount of damages paid				$ 47,500
Subsequent Event [Member]
Other Commitments [Line Items]
Parties subsequently settled damaged amount										$ 50,000
Loss contingency, damages awarded, value										50,000
Loss contingency outstanding due amount										$ 5,000
Norm A Properties LLC [Member]
Other Commitments [Line Items]
Amount of damages paid															$ 1,310,000
CJ NYC [Member]
Other Commitments [Line Items]
Amount of loss contingency, damages sought							$ 85,000
Total loss contingency defendant awarding									$ 85,000
CJ NYC [Member] | Other Expense [Member]
Other Commitments [Line Items]
Amount of loss contingency, damages sought							14,333
CJ NYC [Member] | Damages [Member]
Other Commitments [Line Items]
Amount of loss contingency, damages sought							$ 530
Bonkers Space Coast Inc [Member]
Other Commitments [Line Items]
Loss contingency accrual																				$ 80,000
Value of real property																				97,000
Amount of exemption of equity allowed by debtor																				75,000
Amount of prior mortgage and tax lien																				$ 45,000
Cadillac Lounge LLC [Member]
Other Commitments [Line Items]
Amount of damages paid						$ 50,000
South East Show Clubs LLC [Member]
Other Commitments [Line Items]
Loss contingency accrual																					$ 60,000
Silver Bourbon Inc [Member]
Other Commitments [Line Items]
Loss contingency accrual																		$ 145,500
Manhattan Fashions LLC [Member]
Other Commitments [Line Items]
Loss contingency accrual																			$ 84,000
Robert Gan [Member]
Other Commitments [Line Items]
Lease amount per month												$ 2,500
Rent expenses												15,000	$ 15,000
Metropolitan Lumber [Member]
Other Commitments [Line Items]
Contributed services rent per month												7,500
Management fees												45,000	$ 45,000
Loss contingency accrual																	$ 770,000
Royalty settlement			$ 382,259
Reducing value of amount owed												$ 408,546
Simple interest rate (in percentage)												4.00%
Number of monthly installments periodic payments												86 consecutive monthly installments
Monthly installment amount												$ 5,000
Debt instrument final installment												$ 1,370
Funn House Productions LLC [Member]
Other Commitments [Line Items]
Amount of loss contingency, damages sought								$ 45,000
Total loss contingency defendant awarding											$ 60,000