ITEM 1. FINANCIAL STATEMENTS PAGE
Page
----
Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001 5
Consolidated Statements of Operations for the three and six months
ended June 30, 2002 and June 30, 2001 6
Consolidated Statement of Stockholders' Deficiency for the six months
ended June 30, 2002 7
Consolidated Statements of Cash Flows for the six months ended
June 30, 2002 and June 30, 2001 8
Notes to Consolidated Financial Statements 9
4
SCORES HOLDING COMPANY INC
(FORMERLY INTERNET ADVISORY CORPORATION)
CONSOLIDATED BALANCE SHEET
June 30, December 31,
2002 2001
----------- ------------
(unaudited) (audited)
ASSETS
CURRENT ASSETS:
Cash $ 11,249 $ 18,626
Notes Receivable 10,000 10,000
Interest Receivable 674 -
----------- --------
Total Current Assets 21,923 28,626
FURNITURE AND EQUIPMENT, NET 114,352 48,763
REORGANIZATION VALUE IN EXCESS OF AMOUNTS
ALLOCABLE TO IDENTIFIABLE ASSETS 9,814 9,814
OTHER ASSETS:
Security Deposits 1,002,667 2,667
----------- --------
$ 1,148,756 $ 89,870
=========== ========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Current portion of prepetition debt $ 14,991 $ 14,991
Current portion of prepetition long term debt - related party 6,875 6,875
Post petition accrued expenses 41,276 -
Related party payable 35,000 35,000
Accounts payable and accrued expenses 143,919 94,125
Deposit payable - -
Loan payable - -
Loan payable - related party 1,210,077 -
----------- --------
Total Current Liabilities 1,452,138 150,991
PREPITITION LONG TERM DEBT 16,714 22,178
STOCKHOLDERS' DEFICIENCY
Common stock, $.001 par value; 50,000,000 shares authorized,
15,999,676 and 4,601,794 issued and outstanding, respectively 15,999 4,602
Additional paid-in capital 740,144 -
Deficit accumulated during development stage (1,076,239) (87,901)
----------- --------
Total Stockholder's deficiency (320,096) (83,299)
----------- --------
$ 1,148,756 $ 89,870
=========== ========
|
See notes to consolidated financial statements.
5
SCORES HOLDING COMPANY INC
(FORMERLY INTERNET ADVISORY CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Ended June 30, Three Months Ended June 30,
----------------------------- ----------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
NET SALES $ 56,250 $ 175,979 $ 6,250 $ 56,749
COST OF GOODS SOLD - 88,761 0 33,369
----------- ----------- ----------- -----------
GROSS PROFIT 56,250 87,218 6,250 23,380
GENERAL AND ADMINISTRATIVE EXPENSES 925,613 187,710 711,001 265
----------- ----------- ----------- -----------
NET PROFIT (LOSS) FROM OPERATIONS (869,363) (100,492) (704,751) 23,115
INTEREST INCOME (EXPENSE) 674 (257) 337 (106)
----------- ----------- ----------- -----------
NET LOSS BEFORE INCOME TAXES (868,689) (100,749) (704,414) 23,009
PROVISION FOR INCOME TAXES - - - -
----------- ----------- ----------- -----------
NET PROFIT (LOSS) $ (868,689) $ (100,749) (704,414) 23,009
=========== =========== =========== ===========
NET LOSS PER SHARE $ (0.05) $ (0.01) (0.04) 0.00
=========== =========== =========== ===========
WEIGHTED AVERAGE OF COMMON SHARES
OUTSTANDING 15,826,343 14,445,018 15,826,343 14,445,018
=========== =========== =========== ===========
|
See notes to consolidated financial statements.
6
SCORES HOLDING COMPANY INC
(FORMERLY INTERNET ADVISORY CORPORATION)
CONSOLIDATED STATEMENT OF STOCKHOLDER'S DEFICIENCY
Common Stock Additional Total
---------------------- Paid in Accumulated Stockholders
Shares Amount Capital Deficit Deficit
---------- ------- ---------- ------------ ------------
Balance as of December 31, 2001 (audited) 4,601,794 $ 4,602 $ - $ (87,901) $ (83,299)
Issuance of shares resulting from the acquisition 10,000,000 10,000 (10,000) - -
Recapitalization resulting from the acquisition - - 10,000 (119,649) (109,649)
Forward stock split 650,382 650 (650) -
Converted debt 15,000 15 14,985 - 15,000
Issuance of shares for services 732,500 732 725,809 726,541
Net loss - - - (868,689) (868,689)
---------- ------- -------- ----------- ---------
Balance as of June 30, 2002 (unaudited) 15,999,676 $15,999 $740,144 $(1,076,239) $(320,096)
========== ======= ======== =========== =========
|
See notes to consolidated financial statements.
7
SCORES HOLDING COMPANY INC
(FORMERLY INTERNET ADVISORY CORPORATION)
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended June 30,
---------------------------
2002 2001
----------- -----------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (868,689) $(100,749)
Adjustments to reconcile net loss to net cash provided
by (used) in operating activities:
Depreciation 6,500 71,676
Converted debt 15,000 -
Accounts receivable - (73)
Interest receivable (674) -
Prepitition debt - -
Post petition accrued expenses 41,276 -
Accounts payable and accrued expenses 49,794 (791,475)
Deposit payable - -
Debt restructuring - 867,242
Deferred revenue - (14,912)
----------- ---------
NET CASH PROVIDED BY (USED) IN OPERATIONS (756,793) 31,709
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of capital expenditures (72,089) -
Security deposits (1,000,000) -
----------- ---------
NET CASH USED IN INVESTING ACTIVITIES (1,072,089) -
----------- ---------
CASH PROVIDED BY FINANCING ACTIVITIES:
Issuance of shares resulting from the acquisition 10,000 -
Issuance of shares 732
Additional paid in capital 725,809
Recapitalization resulting from the acquisition (119,649) -
Prepetition long term debt (5,464) -
Loan payable -
Loan payable - related party 1,210,077 -
Proceeds from officer loan - (30,500)
----------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,821,505 (30,500)
----------- ---------
NET DECREASE IN CASH (7,377) 1,209
CASH, beginning of the period 18,626 21,031
----------- ---------
CASH, end of the period $ 11,249 $ 22,240
=========== =========
Supplemental disclosures of cash flow information:
Interest paid $ - $ -
Taxes paid - -
Non cash financing activities:
Common stock issued for services $ 726,541 -
|
See notes to consolidated financial statements.
8
SCORES HOLDING COMPANY INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Note 1: Basis of Presentation
The accompanying unaudited consolidated financial statements of Scores Holding
Company Inc., formerly Internet Advisory Corporation, (the "Company") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Regulation
S-B. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered necessary
for a fair presentation (consisting of normal recurring accruals) have been
included. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Operating
results expected for the six months ended June 30, 2002 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2002. For further information, refer to the financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 2001. Per share data for the periods are based upon the
weighted average number of shares of common stock outstanding during such
periods, plus net additional shares issued upon exercise of options and
warrants.
Note 2: Equity Transactions
During the first quarter the Company declared a forward 3 for 1 stock split for
shares not owned by a principal shareholder. The forward stock split resulted in
650,382 shares of common stock being issued.
In March 2002, the Company issued 15,000 shares of common stock at $1.00 per
share for an outstanding legal debt.
In April 2002, the Company issued 12,500 shares of common stock for an
outstanding consulting fee.
9
In April 2002, the Company issued 60,000 shares of common stock for an
outstanding legal debt.
In April 2002, the Company issued 400,000 shares of common stock for an
outstanding consulting fee.
In June 2002, the Company issued 60,000 shares of common stock for an
outstanding consulting fee.
In June 2002, the Company issued 200,000 shares of common stock for an
outstanding legal debt.
Note 3: Acquisition
On March 11, 2002 the Company exchanged 10,000,000 shares of capital stock for
all of the outstanding stock of Go West Entertainment, Inc. (Go West) whose
primary asset is a lease on New York City retail space with a deposit of
$750,000. Go West has had no operations. Due to related management and ownership
of both Internet Advisory and Go West, for accounting purposes the transaction
has been treated as a transaction between entities under common control as
described in paragraphs D11 to D18 of Financial Accounting Standard 141 -
Business Combinations. The acquisition has been recorded as of January 1, 2002
using the carrying values of the assets of each company as of that date. The
statements of operations and cash flows represent the operations of both
companies' from January 1, 2002.
Note 4. Real Estate Lease
Go West entered into on October 3, 2001 for the rental of a building in New York
City to be converted to an entertainment club. The term of the lease is for
twenty years commencing on June 1, 2002. Go West is entitled to 50% base rental
deferral in the first year or the period commencing on June 1, 2002 and ending
the day operations begin if no default occurs. The amount deferred shall be
payable as additional rent during the second year of operations.
The rental commitments for the next five years are as follows:
Year ended December 31,
2002 408,333
2003 728,000
2004 757,120
2005 787,405
2006 818,904
The Company has the option to acquire the building with a related party. The
Company paid $750,000 as security deposit through March 31, 2002 and remaining
$250,000 on May 15, 2002.
10
On July 10, 2002, the Company transferred its data center assets located at 2455
East Sunrise Blvd., Fort Lauderdale, Florida to Worldwide Connect, Inc.,
pursuant to an installment sale arrangement between the Company and Worldwide
Connect Inc., and Lonnie Divine, the principal of Worldwide Connect. The assets
consist of bay routers and computer hardware equipment previously utilized by
the Company in its Internet operations. In connection with the sale, Worldwide
Connect will make 24 monthly payments to the Company in the aggregate amount of
$200,000 followed by a nominal payment of $100 to complete the purchase. The
Company will pay the rental obligation to the landlord through the termination
of the lease, February 28, 2003. The rental obligation, including security
deposit of $666.67 per month is $6,184.43 per month. The security deposit will
be returned to the Company upon termination of the lease. The sale of the data
center assets concludes the Internet related business for the Company and allows
the Company to devote all of its resources to its proposed adult entertainment
business.
Note 5: Loan payable - related party
The Company borrowed $1,210,077 from six related party entities.
11
|