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, 2014
or
o
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)
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes x No
¨
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
Yes ¨
No x
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of
“large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2
of the Exchange Act:
Large accelerated filer ¨ |
Accelerated filer ¨ |
|
|
Non-accelerated filer ¨ |
Smaller reporting company x |
(Do not check if a smaller reporting company) |
|
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 August 14, 2014, there were 165,186,124 shares of common
stock, $0.001 par value per share, outstanding.
TABLE OF CONTENTS
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.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
SCORES HOLDING COMPANY, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
| |
June 30, | | |
December 31, | |
| |
2014 | | |
2013 | |
| |
(Unaudited) | | |
| |
ASSETS | |
| | |
| |
| |
| | | |
| | |
CURRENT ASSETS: | |
| | | |
| | |
Cash | |
$ | 2,501 | | |
$ | 4,522 | |
Trade receivables - including affiliates, net | |
| 237,126 | | |
| 188,988 | |
Prepaid expenses | |
| 27,569 | | |
| 11,217 | |
Loan receivable | |
| 33,986 | | |
| - | |
Settlement receivable | |
| 93,949 | | |
| 138,608 | |
| |
| | | |
| | |
Total Current Assets | |
| 395,131 | | |
| 343,335 | |
| |
| | | |
| | |
Settlement receivable | |
| - | | |
| 23,781 | |
Loan receivable | |
| - | | |
| 33,148 | |
| |
| | | |
| | |
TOTAL ASSETS | |
$ | 395,131 | | |
$ | 400,264 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |
| | | |
| | |
| |
| | | |
| | |
CURRENT LIABILITIES: | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 117,772 | | |
$ | 130,460 | |
Security deposit payable | |
| 25,000 | | |
| 10,000 | |
Note payable related party | |
| 33,986 | | |
| - | |
Related party payable | |
| - | | |
| 143,775 | |
Settlement payable due to related party | |
| 120,553 | | |
| 189,071 | |
| |
| | | |
| | |
Total Current Liabilities | |
| 297,311 | | |
| 473,306 | |
| |
| | | |
| | |
Settlement payable due to related party | |
| - | | |
| 28,654 | |
Note payable to related party | |
| - | | |
| 33,148 | |
| |
| | | |
| | |
TOTAL LIABILITIES | |
| 297,311 | | |
| 535,108 | |
| |
| | | |
| | |
STOCKHOLDERS' EQUITY (DEFICIT) | |
| | | |
| | |
Preferred stock, $.0001 par value, 10,000,000 shares
authorized, -0- issued and outstanding | |
| - | | |
| - | |
Common stock, $.001 par value; 500,000,000 shares
authorized, 165,186,124 issued and 165,186,124 outstanding, respectively | |
| 165,186 | | |
| 165,186 | |
Additional paid-in capital | |
| 6,058,117 | | |
| 6,058,117 | |
Accumulated deficit | |
| (6,125,483 | ) | |
| (6,358,147 | ) |
| |
| | | |
| | |
Total stockholders' Equity (Deficit) | |
| 97,820 | | |
| (134,844 | ) |
| |
| | | |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |
$ | 395,131 | | |
$ | 400,264 | |
See notes to condensed consolidated financial
statements.
SCORES HOLDING COMPANY, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
| |
Three Months
Ended | | |
Six Months
Ended | |
| |
June
30, | | |
June
30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
| | |
| | |
| | |
| |
REVENUES | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Royalty
Revenue | |
$ | 166,405 | | |
$ | 188,383 | | |
$ | 370,758 | | |
$ | 354,948 | |
| |
| | | |
| | | |
| | | |
| | |
Total
Revenue | |
| 166,405 | | |
| 188,383 | | |
| 370,758 | | |
| 354,948 | |
| |
| | | |
| | | |
| | | |
| | |
EXPENSES | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
General
and Administrative Expenses | |
| 117,545 | | |
| 126,218 | | |
| 234,334 | | |
| 248,198 | |
| |
| | | |
| | | |
| | | |
| | |
INCOME
FROM OPERATIONS | |
| 48,860 | | |
| 62,165 | | |
| 136,424 | | |
| 106,750 | |
| |
| | | |
| | | |
| | | |
| | |
OTHER INCOME/(EXPENSE) | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Interest Income/(Expense),
net | |
| (420 | ) | |
| (720 | ) | |
| (921 | ) | |
| (1,563 | ) |
Settlement | |
| 33,274 | | |
| - | | |
| 97,161 | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
TOTAL
OTHER INCOME/(EXPENSE) | |
| 32,854 | | |
| (720 | ) | |
| 96,240 | | |
| (1,563 | ) |
| |
| | | |
| | | |
| | | |
| | |
NET INCOME BEFORE INCOME
TAXES | |
| 81,714 | | |
| 61,445 | | |
| 232,664 | | |
| 105,187 | |
| |
| | | |
| | | |
| | | |
| | |
PROVISION
FOR INCOME TAXES | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
NET
INCOME | |
$ | 81,714 | | |
$ | 61,445 | | |
$ | 232,664 | | |
$ | 105,187 | |
| |
| | | |
| | | |
| | | |
| | |
NET
INCOME PER SHARE-Basic and Diluted | |
| 0.000 | | |
| 0.000 | | |
| 0.001 | | |
| 0.001 | |
| |
| | | |
| | | |
| | | |
| | |
WEIGHTED AVERAGE
OF COMMON SHARES OUTSTANDING-Basic and Diluted | |
| 165,186,124 | | |
| 165,186,124 | | |
| 165,186,124 | | |
| 165,186,124 | |
See notes to condensed consolidated financial
statements.
SCORES HOLDING COMPANY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
| |
Six Months Ended | |
| |
June 30, | |
| |
2014 | | |
2013 | |
| |
| | |
| |
CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
Net Income | |
$ | 232,664 | | |
$ | 105,187 | |
| |
| | | |
| | |
Adjustments to reconcile net income to net cash provided by (used) in operating
activities: | |
| | | |
| | |
| |
| | | |
| | |
Changes in assets and liabilities: | |
| | | |
| | |
Licensee receivable | |
| (48,138 | ) | |
| (47,399 | ) |
Prepaid expenses | |
| (16,352 | ) | |
| (19,966 | ) |
Security deposit payable | |
| 15,000 | | |
| - | |
Accounts payable and accrued expenses | |
| (12,688 | ) | |
| (21,205 | ) |
| |
| | | |
| | |
NET CASH PROVIDED BY OPERATING ACTIVITIES | |
| 170,486 | | |
| 16,617 | |
| |
| | | |
| | |
CASH FLOW FROM FINANCING ACTIVITIES: | |
| | | |
| | |
Related party payables | |
| (143,775 | ) | |
| (47,401 | ) |
Settlement receivable | |
| 68,440 | | |
| 65,109 | |
Loan receivable | |
| (838 | ) | |
| (797 | ) |
Settlement payable | |
| (97,172 | ) | |
| (90,707 | ) |
Loan payable | |
| 838 | | |
| 797 | |
| |
| | | |
| | |
NET CASH USED IN FINANCING ACTIVITIES | |
| (172,507 | ) | |
| (72,999 | ) |
| |
| | | |
| | |
NET INCREASE/(DECREASE) IN CASH | |
| (2,021 | ) | |
| (56,382 | ) |
Cash and cash equivalents - beginning of year | |
| 4,522 | | |
| 59,139 | |
Cash and cash equivalents - end of year | |
$ | 2,501 | | |
$ | 2,757 | |
| |
| | | |
| | |
Supplemental disclosures of cash flow information: | |
| | | |
| | |
Cash paid during the year for interest | |
$ | 12,125 | | |
$ | - | |
Cash paid for income taxes | |
$ | 1,139 | | |
$ | - | |
See notes to condensed consolidated financial
statements.
Scores Holding Co., Inc. and Subsidiary
Notes To Condensed Consolidated Financial
Statements
(Unaudited)
Note 1. Organization
Basis for presentation
Scores Holding Company, Inc. and subsidiary
(the “Company”) is a Utah corporation, formed in September 1981 and is 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 exploits the
“SCORES” name and trademark for franchising and other licensing options.
The condensed consolidated financial statements
of the Company have been prepared in accordance with generally accepted accounting principles in the United States. The condensed
consolidated financial statements of the Company include the accounts of Scores Licensing Corp. (“SLC”).
Our condensed consolidated financial statements
include our accounts, as well as those of our wholly-owned subsidiary. Certain prior period amounts have been reclassified
to conform to the current period presentation. Our accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the United States (“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
our Annual Report on Form 10-K for the year ended December 31, 2013.
The preparation of financial statements
in conformity with U.S. GAAP requires us 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, 2014 are not necessarily indicative of the results to be expected for any other
interim period or for the year ending December 31, 2014.
Note 2. Summary of Significant Accounting
Principles
Going Concern
As of June 30, 2014 the Company has incurred
cumulative losses (since the inception of its business) totaling $(6,125,483) and a working capital surplus of $97,820. The Company
had net income of $232,664 for the six months ended June 30, 2014. 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. The 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.
Concentration of Credit Risk
The Company earns predominately royalty revenues and to a lesser
extent merchandise sales from 12 licensees.
With regards to 2014, concentrations of sales from 5 licensees
range from 16% to 20%, which include receivables from 4 licensees ranging from 13% to 41% on these licensees for 2014. Included
in these amounts for 2014 is 1 licensee considered a related party. Sales from this licensee are 16%. There are receivables
from 2 licensees considered related parties of 22% and 41%.
With regards to 2013, concentrations of sales from 5 licensees
range from 16% to 22%, which include receivables from 4 licensees ranging from 21% to 25% on these licensees for 2013. Included
in these amounts for 2013 was 1 licensee considered related party. Sales from this licensee were 22%. There is a receivable from
1 related party licensee of 24%.
Revenue recognition
The Company records revenues earned as
royalties under its license agreements as they are earned over the term of the license agreements. 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. If a license agreement is terminated then the remaining unearned balance of the deferred revenues are recorded as earned
if applicable.
Principles of consolidation
The condensed 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.
Income Per Share
Net income per share data for both the
six-month period ending June 30, 2014 and 2013 are based on net income available to common shareholders divided by
the weighted average of the number of common shares outstanding. As of June 30, 2014, there are no outstanding stock options.
Fair Value of Financial Instruments
The carrying value of cash, trade receivables,
prepaid expenses, other receivables, related party payables 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 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.
Level 3: Unobservable inputs are used
when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
New Accounting Pronouncements
In June 2014, FASB issued Accounting Standards
Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”. The update gives entities
a single comprehensive model to use in reporting information about the amount and timing of revenue resulting from contracts to
provide goods or services to customers. The proposed ASU, which would apply to any entity that enters into contracts to provide
goods or services, would supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific
guidance throughout the Industry Topics of the Codification. Additionally, the update would supersede some cost guidance included
in Subtopic 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts. The update removes inconsistencies
and weaknesses in revenue requirements and provides a more robust framework for addressing revenue issues and more useful information
to users of financial statements through improved disclosure requirements. In addition, the update improves comparability of revenue
recognition practices across entities, industries, jurisdictions, and capital markets and simplifies the preparation of financial
statements by reducing the number of requirements to which an entity must refer. The update is effective for annual reporting
periods beginning after December 15, 2016, including interim periods within that reporting period. This updated guidance is not
expected to have a material impact on our results of operations, cash flows or financial condition.
Note 3. 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 our 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 us to Swan Media Group, Inc.,
a newly formed New York corporation whose majority owner is Robert M. Gans, who is also the majority shareholder and chief
executive officer of the Company. The Company is owed $98,279 and $95,899 in unpaid royalties and expenses as of June 30, 2014
and December 31, 2013, 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 of IMO and is also the Company’s
majority shareholder. IMO owes the Company a royalty receivable of $52,188 as of June 30, 2014. IMO paid for various
years of administrative costs related to accounting, business development, insurance and legal services for the Company,
which a portion thereof in the amount of $6,275 remains a payable to this related party as of December 31, 2013. 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 is Robert M. Gans. Since April 1, 2009, the monthly rent has
been $2,500 per month including overhead costs. The Company owed WSR $0 and $107,500 in unpaid rents as of June 30, 2014
and December 31, 2013, respectively.
Effective January 1, 2013, the Company
entered into a management services agreement with Metropolitan Lumber Hardware and Building Supplies, Inc., pursuant to which
Metropolitan Lumber Hardware and Building Supplies, Inc. 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 pays Metropolitan Lumber Hardware and Building Supplies, Inc. a fee in the amount of $30,000 per year. The agreement
may be terminated by either party upon ten days’ written notice. Mr. Gans is the sole owner of Metropolitan Lumber Hardware
and Building Supplies, Inc. The Company owed Metropolitan Lumber Hardware and Building Supplies, Inc. $0 and $30,000 in unpaid
management services as of June 30, 2014 and December 31, 2013, respectively.
The total amounts due to the various related
parties as of June 30, 2014 and December 31, 2013 was $0 and $143,775 respectively and the total amounts due to the Company from
the various related parties as of June 30, 2014 was $150,467.
Effective December 9, 2013, we 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 $10,000 per month, commencing in April 2014, and the license is for a term of five years, with five successive five year renewal
terms. Pursuant to the written agreement, we also granted Star Light a non-exclusive, non-transferable license to sell certain
licensed products bearing our trademarks. Starlight will purchase the licensed products from us or our affiliates at our cost
plus 25%. Robert M. Gans, our President, Chief Executive Officer and a director, is the majority owner of Star Light Events
LLC.
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.
Note 4. Intangible
Assets
Trademark
In connection with the acquisition of
SLC, the Company acquired the trademark to the name “SCORES”. This trademark had a net recorded value at June 30,
2014 of $ -0-. This trademark has been registered in the United States, Canada, Japan and the European Community. The trademark
has been completely amortized by straight line methods over an estimated useful life of ten years. The Company’s trademark
having an infinite useful life by its definition was amortized over ten years due to the difficult New York legal environment
for which the related showcase adult club is operating. This intangible asset was fully amortized as of September 30, 2011.
Note 5. Licensees
The Company has ten license agreements
which were obtained between 2003 and 2014; Stone Park Entertainment Group, Inc. known as “Scores Chicago”, Club 2000
Eastern Avenue Inc. known as “Scores Baltimore”, Silver Bourbon, Inc., I.M Operating LLC known as “IMO”,
Tampa Food and Entertainment Inc., Norm A Properties, LLC, Swan Media Group, Inc. (formerly AYA International, Inc.), Starlight
Events LLC known as “Scores Atlantic City” and SLC and Houston KP LLC.
“IMO’s” members are
our majority shareholder, Robert M. Gans, and Secretary and Director, Howard Rosenbluth 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.
The club accounted for 16% and 22% of our royalty revenues during the first six months of 2014 and 2013, respectively. Mr. Gans
is also the majority owner of Swan Media Group, Inc., which accounted for 7% and 4% of our royalty revenues during the first six
months of 2014 and 2013. Mr. Gans is also the majority owner of Scores Atlantic City, which accounted for 8 % of our royalty revenues
during the first six months of 2014. Royalties did not commence for Scores Atlantic City until April 2014.
Note 6. Settlement/Note Receivables
On September 26, 2011, the Company, Richard
Goldring and Elliot Osher (Goldring and Osher were formerly two of the Company’s principal shareholders) (collectively the
“Defendants”) and Sari Diaz et al. (the “Plaintiffs”) entered into a Court approved Joint Stipulation
of Settlement and Release (the “Settlement Agreement”) relating to a purported class action and collective action
on behalf of all tipped employees filed by Plaintiffs, pursuant to which Defendants agreed to make a settlement payment of $450,000
to resolve and settle awards to Plaintiffs and related Plaintiffs’ attorneys’ fees. Additionally, the Defendants agreed
to pay the employer portion of payroll taxes on approximately $300,000 in distributions, approximately $15,600.
In a settlement payment agreement among
the Company, Goldring and Osher, the Company agreed to advance all of the Defendants’ obligations under the Settlement Agreement
and to pay $64,500 of Goldring’s and Osher’s legal fees to their designated attorney. In consideration for the Company’s
payment of these obligations, Goldring and Osher agreed, jointly and severally, to pay the Company $440,000 plus interest at the
rate of 5% per annum on the unpaid balance of such amount, in 40 equal monthly payments of $11,965 per month. To secure his obligations
under this agreement, Goldring agreed to assign to the Company a portion of his interests in a promissory note dated September
14, 2009 in the principal amount of $2,400,000 made by a third party to Goldring (the “Note”) and to grant the Company
a security interest in the Note, which will remain in effect until his obligations under this settlement payment agreement are
paid in full. As of June 30, 2014, the settlement receivable is $93,949.
On December 29, 2011 the Company entered
into a Promissory Note with Goldring for $30,000 plus interest at the rate of 5% per annum on the unpaid balance. To secure his
obligations under this agreement, Goldring agreed to assign to the Company a portion of his interests in a promissory note dated
September 14, 2009 in the principal amount of $2,400,000 made by a third party to Goldring (the “Note”) and to grant
the Company a security interest in the Note, which will remain in effect until his obligations under this settlement payment agreement
are paid in full. Three payments of $11,965 are due beginning March 2015. As of June 30, 2014, this promissory note balance is
$33,564.
Note 7. Settlement/Note Payable
As discussed in the Note regarding the
settlement receivable it should be noted that Mr. Gans (the Company’s Chief Executive Officer and majority stockholder)
advanced $560,151 to settle the Sari Diaz et. al. litigation and fund the $30,000 loan to Mr. Goldring. As of June 30, 2014, $120,553
is outstanding.
In March 2014, the Company filed a complaint
against various parties for trademark infringement. A settlement was reached in which the Company would receive $150,000 and the
defendants would cease and desist from further use of the trademarks. The first installment of $63,887 ($100,000 less legal fees)
was received in March 2014.The second installment of $33,274 ($50,000 less legal fees) was collected in June 2014.
Note 8. Commitments and Contingencies
The Company records $2,500 a month as
rent, overhead, and services dues to Metropolitan Lumber Hardware Building Supplies, Inc. for services rendered by the management
of the Company. Mr. Gans is the sole owner of Metropolitan Lumber Hardware Building Supplies, Inc.
The Company currently leases office space
from the Westside Realty of New York which is owned and operated by Robert Gans our majority shareholder, for $2,500 a month.
On June 14, 2011, Christina Maldonado,
a former front door receptionist/coat checker at Scores New York, located in New York NY filed a civil lawsuit against the Company
and IMO alleging violations of Title VII of the Civil Rights Act, New York State Human Rights Law, New York Executive Law, New
York City Human Rights Law and the New York City Administrative Code, based on allegations of sexual discrimination and sexual
harassment. The lawsuit further alleges that both the Company and IMO were her employers. The lawsuit seeks unspecified damages
for alleged loss of past and future earnings and emotional distress and humiliation. The Company disputes that that it was an
employer of the plaintiff and categorically denies all allegations of sexual discrimination and sexual harassment. The Company
responded to the complaint and later filed an amended complaint and asserted a cross claim against IMO. The Company is vigorously
defending itself in this litigation and does not expect that the outcome will be material.
In mid-March 2010, the Company was named
by Nichole Hughes in a complaint filed with the SCNY. Ms. Hughes sued the Company for an unspecified amount of damages in connection
with an alleged unauthorized use of her image in the Company’s advertising materials. On June 20, 2010, the Company filed
a pre-answer motion to dismiss the complaint, which was denied on December 17, 2010. The Company then filed an answer and affirmative
defenses and a third party complaint against IMO, owner and operator of the club where Ms. Hughes was employed. Plaintiff’s
counsel was granted leave by the court to withdraw from representation in January 2013. Plaintiff failed to appoint new counsel
or further participate in the case and the case was dismissed on May 20, 2013.
On March 14, 2013, Miki Yamada, a former
bartender at the Scores New York nightclub located at 536 West 28th Street, New York, NY filed charges against the
Company and IMO with the EEOC claiming violations of Title VII based upon alleged sexual harassment, discrimination based on gender
and unlawful retaliation. Ms. Yamada also delivered a draft civil complaint to the Company containing similar allegations. Although
the Company disputed the issues of liability and damages asserted by Ms. Yamada, the Company and the other respondents settled
these matters for a payment of $90,000 (of which the Company paid $0) to Ms. Yamada pursuant to a settlement and release agreement
dated April 30, 2013. These matters were settled out of court.
On June 14, 2013, Elizabeth Shiflett,
a former cocktail waitress, filed a civil lawsuit against the Company in the S.D.N.Y. alleging violations of Title VII of the
Civil Rights Act of 1964 (“Title VII”), as amended, the New York State Human Rights Law (“NYSHRL”) and
the New York City Human Rights Law (“NYCHRL”) based upon allegations of sexual discrimination, creating a hostile
work environment based upon plaintiff’s sex and race and unlawful retaliation against plaintiff. The lawsuit further alleges
that at all material times the Company was the employer of the plaintiff. The lawsuit had been preceded by a Determination of
the U.S. Equal Employment Opportunity Commission (the “EEOC”) on January 25, 2013 that there was reasonable cause
to believe that the Company had violated Title VII as a result of the complained-of conduct. The lawsuit seeks a declaratory judgment
that the practices complained of violated Title VII, the NYSHRL and the NYCHRL, an injunction enjoining the Company from engaging
in future unlawful acts of discrimination, harassment and retaliation, unspecified compensatory damages for plaintiff’s
alleged loss of past and future earnings, emotional distress, humiliation and loss of reputation, punitive damages as a result
of the Company’s alleged disregard of plaintiff’s protected civil rights, and attorneys’ fees and costs. The
Company disputes that it was an employer of the plaintiff and categorically denies all allegations of sexual discrimination, sexual
and racial harassment and retaliation. In an order dated April 10, 2014, the Court dismissed all federal claims. In May 2014,
Ms. Shiflett filed an appeal. The Company will vigorously defend itself in this litigation and does not expect that the outcome
will be material.
On or about March 7, 2014, Kiana Love, a former entertainer
and masseuse at The Penthouse Executive Club and Scores New York, both located in New York, NY, filed a civil lawsuit in the SDNY
against us, The Executive Club, LLC, Go West Entertainment, Inc., Scores Entertainment, Inc., Entertainment Management Services,
Inc., 333 East 60th Street., Inc., I.M. Operating, LLC, Richard Goldring, Elliot Osher, Robert Gans and Mark Yackow
(collectively “Defendants”), alleging, for the time during which she performed as a masseuse, violations of the state
and federal wage and hour laws, including the New York Labor Law and Fair Labor Standards Act, based upon allegations of failure
to pay minimum wage, uniform related expenses, and allegations of improper wage deductions and tip misappropriation as well as
record keeping violations. The lawsuit further alleges that at all material times Defendants were employers of Ms. Love, the plaintiff,
while she performed massage services at Scores New York as well as The Penthouse Executive Club. The lawsuit seeks unspecified
compensatory damages for plaintiff’s alleged loss of past wages and reimbursement of allegedly unlawful deductions. We dispute
that we were an employer of the plaintiff, who was at all material times an independent contractor, and categorically deny all
allegations of violations of law, including the wage and hour laws, improper tip taking, and violations related to uniforms. The
Complaint in the action was served in June 2014. Certain defendants, including Scores Holding Company, Inc. answered on July 21,
2014. The Executive Club LLC and I.M. Operating, LLC each interposed a counterclaim for offset / unjust enrichment which Plaintiff
answered on August 13, 2014. The parties are presently exploring settlement while they simultaneously engage in the discovery
process. Fact discovery is scheduled to close in November 2014.
There are no other material legal proceedings
pending to which the Company or any of its property is subject, nor to our knowledge are any such proceedings threatened.
Note 9. Subsequent Events
Management evaluated subsequent events
through the date of this filing and determined that no such events have occurred that would require adjustment to or disclosure
in the financial statements.
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. There are six such clubs currently operating under the Scores
name, in New York City, Atlantic City, Baltimore, Chicago, Tampa, and New Orleans. There are five clubs: Savannah, Jacksonville,
West Palm Beach, Detroit and Houston clubs that are operating but not subject to royalties until July 1, 2014.
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. On December 9, 2013, we 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. Robert M. Gans, our President, Chief Executive Officer and a director, is the majority owner of Star Light Events
LLC. Throughout this report, we refer to the New York Club and Starlight as our affiliates, because of the common
ownership by Mr. Gans. All other clubs are referred to as non-affiliated clubs or as licensees, a term that may include the New
York Club and Starlight Club when the context requires.
On August 6, 2010,
we appointed Robert M. Gans as our President and Chief Executive Officer and as a member of our Board. Robert Gans
and Martin Gans, one of our existing Board members, are brothers. Also on August 6, 2010, we appointed Howard Rosenbluth
as our Treasurer and Chief Financial Officer.
Results of Operations
Three Months Ended June 30, 2014 (“the
2014 three-month period”) Compared to Three Months Ended June 30, 2013 (“the 2013 three-month period”).
Revenues:
Revenues decreased
to $166,405 for the 2014 three-month period from $188,383 for the 2013 three-month period.
Revenues from the
New York Club decreased thirty seven percent (37%) to $24,987 for the 2014 three-month period as compared to $40,286 for the 2013
three-month period. Revenues from our Chicago nightclub decreased eight percent (8%) to $35,489 for the 2014 three-month
period from $38,711 from the 2013 three-month period; revenues from our Baltimore club decreased three percent (3%) to $36,645
for the 2014 three-month period from $37,769 for the 2013 three-month period and revenues from our New Orleans club remained the
same at $30,000 for the 2014 and 2013 three-month period. Revenue from our Tampa club remained the same at $30,000 for the 2014
and 2013 three-month period. Revenue from our Scoreslive.com licensee decreased twenty percent (20%) to $9,285 for the 2014 three-month
period from $11,617 for the 2013 three-month period. Revenues from our Atlantic City nightclub licensee increased one hundred
percent (100%) to $30,000 as royalties commenced April 2014.
General and Administrative
Expenses:
General and administrative
expenses decreased during the 2014 three-month period to $117,545 from $126,218 during the 2013 three-month period. General
and administrative expenses decreased approximately by $8,673 from 2014 to 2013, which decrease can be attributed to the decrease
in legal fees and accounting fees. Legal expenses attributable to ongoing litigation amounted to $48,410 for the three-month
period ended June 30, 2014 and $52,986 for the three-month period ended June 30, 2013.
Provision for Income
Taxes
The provision for
state 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:
Our net income was
$81,714 or $0.000 per share for the 2014 three-month period compared to net income of $61,445 or $0.000 per share for the 2013
three-month period. The increase in net income for the 2014 three-month period was a result of the settlement of a
lawsuit in our favor and also the increase in royalty revenue due to the new club that commenced royalties in April 2014.
Net income per share
data for both the 2014 three-month period and the 2013 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, 2014 (“the
2014 six month period”) Compared to Six Months Ended June 30, 2013 (“the 2013 six-month period”).
Revenues:
Revenues increased
to $370,758 for the 2014 six-month period from $354,948 for the 2013 six-month period.
Revenues from the
New York Club decreased twenty-four percent (24%) to $58,463 for the 2014 three-month period as compared to $77,401 for the 2013
six-month period. Revenues from our Chicago nightclub decreased nine percent (9%) to $65,314 for the 2014 six-month
period from $71,595 from the 2013 six-month period, while revenues from our Baltimore club increased three percent (3%) to $72,342
for the 2014 six-month period from $70,475 for the 2013 six-month period and revenues from our New Orleans club remained the same
at $60,000 for the 2014 and 2013 six-month period. Revenue from our Tampa club remained the same at $60,000 for 2014 and 2013
six month period. Revenue from our Scoreslive.com licensee increased fifty-nine percent (59%) to $24,640 for the 2014 six-month
period from $15,477 for the 2013 six-month period. Revenues from our Atlantic City nightclub licensee increased one hundred percent
(100%) to $30,000 as royalties commenced in April 2014.
General and Administrative
Expenses:
General and administrative
expenses decreased during the 2014 six-month period to $234,334 from $248,198 during the 2013 six-month period. General
and administrative expenses decreased approximately by $13,864 from 2014 to 2013, which decrease can largely be attributed to
the decrease in the Company’s legal fees. Legal expenses attributable to ongoing litigation amounted to
$91,828 in the 2014 six-month period and to $103,914 in the 2013 six-month period.
Provision for Income
Taxes:
The provision for state 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:
Our net income was
$232,664 or $0.001 per share for the 2014 six-month period compared to a net income of $105,187 or $0.001 per share for the 2013
six-month period. The increase in net operating income for the 2014 six-month period was a result of an increase in
royalty revenue and the settlement award from a lawsuit.
Net income per share
data for both the 2014 six-month period and the 2013 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
Cash:
At June 30, 2014,
we had $2,501 in cash and cash equivalents compared to $4,522 in cash and cash equivalents at December 31, 2013.
Operating Activities:
Net cash provided
by operating activities for the six months ended June 30, 2014 was $170,486 and net cash provided by operating activities for
the six months ended June 30, 2013 was $16,617. The increase in cash is related to the settlement we received in March and June
2014.
Financing Activities:
As of June 30, 2014,
we have made repayments to our Westside Realty affiliate of $122,500
and $45,000 to our Metropolitan Lumber Hardware and Building Supplies, Inc. affiliate.
Future Capital
Requirements:
We have incurred 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 20, 2014 we had an accumulated deficit of $(6,125,483). As of June 30, 2014, we had total current
assets of $395,131 and total current liabilities of $297,311 or working capital of $97,820. As of December 31, 2013, we had total
current assets of $343,335 and total current liabilities of $473,306 or negative working capital of $(129,971). The decrease in
the amount of negative working capital has been primarily attributable to the decrease in our related party payable.
We will continue to
evaluate possible acquisitions of or investments in businesses, products and technologies that are complimentary to ours. These
may require the use of cash, which would require us to seek financing. We may sell equity or debt securities or seek credit facilities
to fund acquisition-related or other business costs. Sales of equity or convertible debt securities would result in additional
dilution to our stockholders. We may also need to raise additional funds in order to support more rapid expansion, develop new
or enhanced services or products, respond to competitive pressures, or take advantage of unanticipated opportunities. Our future
liquidity and capital requirements will depend upon numerous factors, including the success of our adult entertainment trademark
licensing business.
Off Balance Sheet
Arrangements
The Company has no
off balance sheet arrangements that have or are reasonably likely to have a current or future effect on its
financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that
is material to investors.
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 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 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.
(b) Changes in Internal Control
over Financial Reporting
There were no changes
in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange
Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter 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 June 14, 2011,
Christina Maldonado, a former front door receptionist/coat checker at Scores New York, located in New York NY filed a civil lawsuit
against the Company and IMO alleging violations of Title VII of the Civil Rights Act, New York State Human Rights Law, New York
Executive Law, New York City Human Rights Law and the New York City Administrative Code, based on allegations of sexual discrimination
and sexual harassment. The lawsuit further alleges that both the Company and IMO were her employers. The lawsuit seeks unspecified
damages for alleged loss of past and future earnings and emotional distress and humiliation. The Company disputes that that it
was an employer of the plaintiff and categorically denies all allegations of sexual discrimination and sexual harassment. The
Company responded to the complaint and later filed an amended complaint and asserted a cross claim against IMO. The Company is
vigorously defending itself in this litigation and does not expect that the outcome will be material.
In mid-March 2010,
the Company was named by Nichole Hughes in a complaint filed with the SCNY. Ms. Hughes sued the Company for an unspecified amount
of damages in connection with an alleged unauthorized use of her image in the Company’s advertising materials. On June 20,
2010, the Company filed a pre-answer motion to dismiss the complaint, which was denied on December 17, 2010. The Company then
filed an answer and affirmative defenses and a third party complaint against IMO, owner and operator of the club where Ms. Hughes
was employed. Plaintiff’s counsel was granted leave by the court to withdraw from representation in January 2013. Plaintiff
failed to appoint new counsel or further participate in the case and the case was dismissed on May 20, 2013.
On March 14, 2013, Miki Yamada, a former
bartender at the Scores New York nightclub located at 536 West 28th Street, New York, NY filed charges against the
Company and IMO with the EEOC claiming violations of Title VII based upon alleged sexual harassment, discrimination based on gender
and unlawful retaliation. Ms. Yamada also delivered a draft civil complaint to the Company containing similar allegations. Although
the Company disputed the issues of liability and damages asserted by Ms. Yamada, the Company and the other respondents settled
these matters for a payment of $90,000 (of which the Company paid $0) to Ms. Yamada pursuant to a settlement and release agreement
dated April 30, 2013. These matters were settled out of court.
On June 14, 2013,
Elizabeth Shiflett, a former cocktail waitress, filed a civil lawsuit against the Company in the S.D.N.Y. alleging violations
of Title VII of the Civil Rights Act of 1964 (“Title VII”), as amended, the New York State Human Rights Law (“NYSHRL”)
and the New York City Human Rights Law (“NYCHRL”) based upon allegations of sexual discrimination, creating a hostile
work environment based upon plaintiff’s sex and race and unlawful retaliation against plaintiff. The lawsuit further alleges
that at all material times the Company was the employer of the plaintiff. The lawsuit had been preceded by a Determination of
the U.S. Equal Employment Opportunity Commission (the “EEOC”) on January 25, 2013 that there was reasonable cause
to believe that the Company had violated Title VII as a result of the complained-of conduct. The lawsuit seeks a declaratory judgment
that the practices complained of violated Title VII, the NYSHRL and the NYCHRL, an injunction enjoining the Company from engaging
in future unlawful acts of discrimination, harassment and retaliation, unspecified compensatory damages for plaintiff’s
alleged loss of past and future earnings, emotional distress, humiliation and loss of reputation, punitive damages as a result
of the Company’s alleged disregard of plaintiff’s protected civil rights, and attorneys’ fees and costs. The
Company disputes that it was an employer of the plaintiff and categorically denies all allegations of sexual discrimination, sexual
and racial harassment and retaliation. In an order dated April 10, 2014, the Court dismissed all federal claims. In May 2014,
Ms. Shiflett filed an appeal. The Company will vigorously defend itself in this litigation and does not expect that the outcome
will be material.
On or about March
7, 2014, Kiana Love, a former entertainer and masseuse at The Penthouse Executive Club and Scores New York, both located in New
York, NY, filed a civil lawsuit in the SDNY against us, The Executive Club, LLC, Go West Entertainment, Inc., Scores Entertainment,
Inc., Entertainment Management Services, Inc., 333 East 60th Street., Inc., I.M. Operating, LLC, Richard Goldring,
Elliot Osher, Robert Gans and Mark Yackow (collectively “Defendants”), alleging, for the time during which she performed
as a masseuse, violations of the state and federal wage and hour laws, including the New York Labor Law and Fair Labor Standards
Act, based upon allegations of failure to pay minimum wage, uniform related expenses, and allegations of improper wage deductions
and tip misappropriation as well as record keeping violations. The lawsuit further alleges that at all material times Defendants
were employers of Ms. Love, the plaintiff, while she performed massage services at Scores New York as well as The Penthouse Executive
Club. The lawsuit seeks unspecified compensatory damages for plaintiff’s alleged loss of past wages and reimbursement
of allegedly unlawful deductions. We dispute that we were an employer of the plaintiff, who was at all material times an independent
contractor, and categorically deny all allegations of violations of law, including the wage and hour laws, improper tip taking,
and violations related to uniforms. The Complaint in the action was served in June 2014. Certain defendants, including Scores
Holding Company, Inc. answered on July 21, 2014. The Executive Club LLC and I.M. Operating, LLC each interposed a counterclaim
for offset / unjust enrichment which Plaintiff answered on August 13, 2014. The parties are presently exploring settlement while
they simultaneously engage in the discovery process. Fact discovery is scheduled to close in November 2014.
On April 26, 2013,
the Company filed a complaint in United States District Court, District of Massachusetts against Helesant, Inc., et al. for trademark
infringement. The compliant sought injunctive relief and money damages. A settlement was reached in which the Company would receive
$150,000 and the defendants would cease and desist from further use of the trademarks. The first installment of $63,887 ($100,000
less legal fees) was received in March 2014.The second installment of $33,274 ($50,000 less legal fees) was collected in June
2014. Pursuant to settlement order of dismissal filed February 6, 2014, the action was dismissed, with prejudice, as of March
23, 2014.
There are no other
material legal proceedings pending to which we or any of our property are subject, nor to our 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.
Item 4. Mine Safety Disclosure.
Not applicable.
Item 5. Other Information.
On February 14, 2014,
we (through our subsidiary Scores Licensing Corp.) entered into a trademark license agreement with Houston KP LLC, granting it
an exclusive, non-transferable license for the use of certain Scores trademarks in its night club/restaurant in Houston, Texas.
The license is for a term of five years, with five successive five year renewal terms. Commencing on July 31, 2014, we will
receive $10,000 per month for the first two years of the agreement but will be required to designate $2,500 of that fee for advertising
Scores Houston. After such two-year period, we shall be due to receive, on a monthly basis, the greater of 4.99% of monthly net
revenues or $10,000. Pursuant to the written agreement, SLC also granted Scores Houston a non-exclusive, non-transferable license
to sell certain licensed products bearing our trademarks. Scores Houston will purchase for the licensed products from us or our
affiliates at our cost plus 25%.
Pursuant to an oral
arrangement, in July 2013 we granted an exclusive license for the use of certain Scores trademarks to Southeast Show Clubs LLC
for its gentlemen’s clubs in West Palm Beach, Florida, Savannah, Georgia and Jacksonville, Florida. The license is for a
term of five years, with five successive five-year renewal terms. Royalties under this license are payable beginning in July 2014.
We also granted Southeast Show Clubs a non-exclusive license to sell certain licensed products bearing our trademarks. Southeast
Show Clubs will purchase the licensed products from us or our affiliates at our cost plus 25%. The above terms are subject to
modification upon entry into definitive documentation memorializing the arrangement.
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 |
|
Taxonomy Extension Label Linkbase Document |
101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase Document |
*Filed herewith.
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: August 19, 2014 |
By: |
/s/ Robert M. Gans |
|
|
Robert M. Gans |
|
|
Chief Executive Officer and Director |
|
|
(Principal Executive Officer) |
|
|
|
Date: August 19, 2014 |
By: |
/s/ Howard Rosenbluth |
|
|
Howard Rosenbluth |
|
|
Chief Financial Officer |
|
|
(Principal Financial Officer) |
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: August 19, 2014 |
|
|
/s/ Robert M. Gans |
|
Robert M. Gans, Chief Executive Officer |
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: August 19, 2014 |
|
|
/s/ Howard Rosenbluth |
|
Howard Rosenbluth, Chief Financial Officer |
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, 2014, 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: August 19, 2014 |
|
|
/s/ Robert M. Gans |
|
Robert M. Gans |
|
Chief 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.
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, 2014, as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Howard Rosenbluth, Chief Financial
Officer and Principal Accounting 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: August 19, 2014 |
|
|
/s/ Howard Rosenbluth |
|
Howard Rosenbluth |
|
Chief Financial Officer and Principal Financial 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.
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