<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-QSB
(Mark One)
X Quarterly report under section 13 or 15(d) of the Securities Exchange
----- Act of 1934 for the quarterly period ended June 30, 2000.
Transition report under section 13 or 15(d) of the Securities Exchange
----- Act of 1934 for the transition period from ____________ to ___________.
Commission File No: 0-23873
MOMENTUM HOLDINGS CORPORATION
[formerly Buffalo Capital VIII, Ltd.]
(Name of small business in its charter)
Delaware 13-4099008
(State or other jurisdiction of Incorporation) (IRS Employer Id. No.)
36 West 25th Street - Second Floor
New York, New York 10010
(Address of Principal Office) (Zip Code)
Issuer's telephone Number: (212) 414-2700
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Applicable only to issuers involved in bankruptcy proceedings during the past
five years:
Check whether the issuer has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes No
--- ---
Applicable only to corporate issuers:
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. At June 30, 2000 the
following shares of common stock were outstanding: Common Stock, $.001 par
value, 11,664,500 shares.
Transitional Small Business Disclosure Format (Check one): Yes No X
--- ---
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PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS
(a) The unaudited consolidated financial statements of registrant as of June 30,
2000 and for the periods February 23, 1999 (inception) through June 30, 1999,
and the six months ended June 30, 2000 follow. The consolidated financial
statements reflect all adjustments that are, in the opinion of management,
necessary to a fair statement of the results for the interim periods presented.
MOMENTUM HOLDINGS CORPORATION
[formerly Buffalo Capital VIII, Ltd.]
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS - Unaudited
<TABLE>
<S> <C>
Consolidated Balance Sheet at June 30, 2000 3
Consolidated Statement of Operations
February 23, 1999 (Inception) through June 30, 1999
and Six Months Ended June 30, 2000 4
Consolidated Statement of Shareholders' Equity
February 23, 1999 (Inception) through June 30, 1999
and Six Months Ended June 30, 2000 5
Consolidated Statement of Cash Flows
February 23, 1999 (Inception) through June 30, 1999
and Six Months Ended June 30, 2000 6
Notes to Consolidated Financial Statements 7 - 8
</TABLE>
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MOMENTUM HOLDINGS CORPORATION
[formerly Buffalo Capital VIII, Ltd.]
CONSOLIDATED BALANCE SHEET
Unaudited
<TABLE>
<CAPTION>
June 30, 2000
-------------
<S> <C>
ASSETS
Current assets:
Cash and equivalents $ 278,719
Accounts receivable 4,950
Loan receivable - related party 60,000
Prepaid expenses - related party 40,093
---------
Total current assets 383,762
Investments 84,999
---------
Total assets $ 468,761
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued expenses payable $ 20,127
Loans payable 144,000
---------
Total current liabilities 164,127
---------
Shareholders' equity:
Preferred stock --
Common stock 11,665
Additional paid in capital 647,534
Accumulated deficit (354,565)
---------
Total shareholders' equity 304,634
---------
Total liabilities and shareholders' equity $ 468,761
=========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
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MOMENTUM HOLDINGS CORPORATION
[formerly Buffalo Capital VIII, Ltd.]
CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
<TABLE>
<CAPTION>
February 23, 1999
(Inception) Six Months Three Months Three Months
Through Ended Ended Ended
June 30, 1999 June 30, 2000 June 30, 1999 June 30, 2000
<S> <C> <C> <C> <C>
REVENUE $ -- $ 133,033 $ -- $ 85,645
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Development expenses -- 166,479 -- 26,209
General and administrative -- 324,951 -- 194,389
Interest, net -- 4,042 -- 4,042
----------- ----------- ----------- -----------
Total costs and expenses -- 495,472 -- 224,640
----------- ----------- ----------- -----------
LOSS BEFORE TAXES -- 362,439 -- 138,995
PROVISION FOR TAXES -- -- -- --
----------- ----------- ----------- -----------
NET LOSS $ -- $ 362,439 $ -- $ 138,995
=========== =========== =========== ===========
NET LOSS PER SHARE Nil $ .03 Nil $ .01
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING (pro-forma in 1999) 11,000,000 11,213,357 11,000,000 11,373,375
=========== =========== =========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
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MOMENTUM HOLDINGS CORPORATION
[formerly Buffalo Capital VIII, Ltd.]
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Unaudited
<TABLE>
<CAPTION>
Preferred Stock, Common Stock,
$.01 par value $.001 par value Additional Accum- Share-
----------------- -------------------- paid in lated holders'
Shs Amt Shs Amt Capital Deficit Equity
--- --- --- --- ----------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 -
Balance, February 23 -- -- 100 $ 4 $ -- $ -- $ 4
(inception)
Net loss, period ended
June 30 -- -- -- -- -- -- --
-------- -------- ----------- ----------- ----------- ----------- -----------
Balance, June 30 -- -- 100 $ 4 $ -- $ -- $ 4
======== ======== =========== =========== =========== =========== ===========
2000 -
Balance, January 1 -- -- 100 $ 4 $ -- $ 7,874 $ 7,878
Acquisition of
Buffalo Capital VIII,
Ltd., merger and -- -- (100) (4) 4 -- --
recapitalization -- -- 11,000,000 11,000 (11,000) -- --
Sale of shares, net -- -- 664,500 665 658,530 -- 659,195
Net loss, six months
ended June 30 -- -- -- -- -- (362,439) (362,439)
-------- -------- ----------- ----------- ----------- ----------- -----------
Balance, June 30 -- -- 11,664,500 $ 11,665 $ 647,534 $ (354,565) $ 304,634
======== ======== =========== =========== =========== =========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
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MOMENTUM HOLDINGS CORPORATION
[formerly Buffalo Capital VIII, Ltd.]
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
<TABLE>
<CAPTION>
February 23, 1999
(Inception) Six Months
Through Ended
June 30,1999 June 30, 2000
------------------ -------------
<S> <C> <C>
Cash provided (consumed) by:
Operations -
Revenues received $ -- $ 133,153
Expenses paid -- (533,455)
--------- ---------
Net cash consumed by operations -- (400,302)
Investment - Additions (51,950) (50,186)
Financing - Borrowings 52,000 70,000
Proceeds from sale of common stock -- 659,195
--------- ---------
Net increase (decrease) in cash 50 278,707
Cash, beginning of period -- 12
--------- ---------
Cash (overdraft), end of period $ 50 $ 278,719
========= =========
Reconciliation of Net loss to Net cash consumed by
operations:
Net loss $(362,439)
Decrease in accounts receivable $ -- 120
--
Decrease in accounts payable and accrued liabilities -- (7,890)
--------- ---------
Net cash consumed by operations $ -- $(400,302)
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
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MOMENTUM HOLDINGS CORPORATION
[formerly Buffalo Capital VIII, Ltd.]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
1. ACCOUNTING POLICIES. The Company's consolidated financial statements for the
six months ended June 30, 2000 and the period February 23, 1999 (inception)
through June 30, 1999, have been prepared in accordance with the accounting
policies described in its Annual Report on Form 10-KSB, supplemented by Notes 1
through 6 herein. Fees received for management and other services are recognized
in the period to which they relate, and costs and expenses are recognized as
incurred. The Company finances its entertainment projects through limited
partnerships in which it is general partner and investor. The Company has four
such projects at June 30, 2000. In addition, the Company purchased a limited
interest in the regional tour of a fifth project in April 2000 with a view
toward participating in its New York exploitation. These interests are recorded
at the lower of cost or estimated realizable value.
Management believes the consolidated statements include all adjustments
necessary to present fairly the Company's operating results for the interim
periods presented and its financial condition at June 30, 2000. Interim
financial statements may not be indicative of results for the full fiscal period
and should be read in conjunction with the Company's audited report for December
31, 1999.
2. BASIS OF CONSOLIDATION. The accompanying consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries, Momentum
Productions, Inc.(an operating company acquired March 2000), and Momentum
Holding Corp.(an inactive Delaware corporation formed January 2000). In June
2000, the Company was merged into Momentum Holding Corp. and among other things,
changed its name to Momentum Holdings Corporation (see Recapitalization below).
All intercompany transactions have been eliminated.
3. MOMENTUM PRODUCTIONS, INC. ("MPI"). During March 2000, the Company acquired
100% of the outstanding stock of MPI, a privately held New York corporation
engaged in the development and production of live theatrical products. In
connection with this transaction, the Company's shareholders returned 9,470,000
common shares to authorized but issued and cancelled all of the Class A and
Class B warrants outstanding, and the Company issued 9,120,000 new shares to the
shareholders of MPI. Upon completion of the foregoing, the Company had a total
of 11,000,000 common shares outstanding, of which the former owners of MPI held
82.9%. The Company has recorded the acquisition of MPI as a reverse acquisition.
Had this reverse acquisition occurred on January 1, 2000, consolidated net loss
for the six months ended March 31, 2000 would have been $367,134.
4. RECAPITALIZATION. In June 2000, the Company was merged into its Delaware
subsidiary and changed the name of the surviving entity to Momentum Holdings
Corporation. The principal effects of the merger were to more closely align the
Company's identity with its operating business, change its domicile from
Colorado to Delaware, and to restate the par values for its Preferred and Common
Shares to $.01 and $.001, respectively. In addition, the number of Common shares
authorized was reduced from 100,000,000 to 50,000,000, without changing the
number of Preferred shares authorized of 10,000,000. The Company's capital
accounts have been restated to give effect to this recapitalization.
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5. RELATED PARTY TRANSACTIONS. The Company rents its office facilities from an
entity owned by one of its executives. In January 2000, the Company agreed to
pay $5,500 per month, on a month to month basis, for such facilities. At June
30, 2000 the Company is owed $60,000 from an entity owned by one of its
executives. This loan is non-interest bearing and has no stated maturity. In
addition, the Company has made $40,093 in non-interest bearing advances to one
of its executives which is being repaid through reduction of that executive's
bi-monthy compensation. The Company's principal source of revenue is from
entertainment project partnerships of which the Company is general partner; see
Investments below.
6. INVESTMENTS. The Company's owns the following entertainment interests:
<TABLE>
<S> <C>
Dinner With Friends, L.P. $ 9,566
Hole in the Head, L.P. 2,500
Ringing Development, L.P. 38,932
Thunder Development, L.P. 1
Salena Forever, LP 34,000
-------
$84,999
</TABLE>
The Company is general partner and investor of the first four above listed
limited partnerships and a limited partner in the fifth. In addition, the
Company has been assigned the rights to receive general partner distributions,
if any, relating to Spin, L.P.
6. LOANS PAYABLE. At June 30, 2000 the Company was indebted to three individuals
for loans amounting to $144,000. One loan for $14,000 is non-interest bearing
with no stated maturity, and the other two totaling $100,000, and $30,000 bear
interest at 10% and are payable in June 2000. In July 2000, the $30,000 loan was
repaid and the Company commenced negotiations to extend the other.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion contains forward-looking statements regarding us, our
business, prospects and results of operations that are subject to certain risks
and uncertainties posed by many factors and events that could cause our actual
business, prospects and results of operations to differ materially from those
that may be anticipated by such forward-looking statements. Factors that may
affect such forward-looking statements include, without limitation: our ability
to successfully develop new products for new markets; the impact of competition
on our revenues, changes in law or regulatory requirements that adversely affect
or preclude customers from using our products for certain applications; delays
in our introduction of new products or services; and failure by us to keep pace
with emerging technologies.
When used in this discussion, words such as "believes," "anticipates,"
"expects," "intends," and similar expressions are intended to identify
forward-looking statements, but are not the exclusive
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means of identifying forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date of this report. We undertake no obligation to revise any
forward-looking statements in order to reflect events or circumstances that may
subsequently arise. Readers are urged to carefully review and consider the
various disclosures made by us in this report and other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect our business.
REVENUES - Our revenues for the six months ended June 30, 2000 ("SM00") of
$133,033 are comprised of royalties and fee income, substantially all of which
relates to distributions received from our production of Dinner With Friends at
the Variety Arts Theatre, Off-Broadway, in New York, NY. Our operating
subsidiary MPI, which was formed in February 1999, did not begin to receive
revenues until late 1999. Accordingly, the period February 23, 1999 (inception)
through June 30, 1999 ("SM99") had no comparable receipts. The revenues
applicable to the three months ended June 30, 2000 amounted to $85,645 and were
similar in composition.
EXPENSES - Development expense for SM00 was $166,479 substantially all of which
relates to the write-down of the Company's investment in Thunder Knocking on the
Door. The write-down of this project, which had been experiencing moderate
audience acceptance for almost a year on tour, was deemed appropriate by
management following its April 2000 performance in Stamford, CT that confirmed
it still fell below the artistic potential expected of a Broadway production. Of
the foregoing development expenses, $26,209 were incurred in the three months
ended June 30, 2000, substantially all of which related to wind-up expenses
associated with Thunder's closure.
General and administrative expenses were $324,951 for SM00 and relate in order
of magnitude to the cost of managing our Off-Broadway production of Dinner With
Friends and the demand for the play from regional theatres, the orderly wind-up
of Thunder Knocking on the Door, planning associated with an international tour
of Play On!, and development efforts associated with our planned revival of
Bells Are Ringing. In addition, we expend management time and other resources
reviewing new prospects for inclusion in our ongoing efforts to develop live
theatrical entertainment products for the New York and related markets. General
and administration expenses applicable to the three months ended June 30, 2000
amounted to $194,389.
As significant development and general and administrative efforts did not begin
until late 1999, the Company had no comparable expenses for SM99.
RESULTS OF OPERATIONS - Our loss from operations for SM00 was $362,439. In view
of our recent formation and lack of profitable operating history, no tax benefit
(or savings) could reasonably be anticipated resulting in a net loss for the
full amount of $362,439. The loss for SM00 was in line with management's
expectation, as the enhanced revenue opportunities associated with developing
live entertainment products generally do not occur until each product's
investors recoup their initial capital. At June 30, 2000 the investors in the
first of the company's projects, Dinner With Friends, which opened November
1999, had recouped 90 percent of their capital.
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LOSS PER SHARE - The average number of shares outstanding during EM00 and SM99
was 11,213,357 and 11,000,000, respectively. Accordingly, loss per share for the
respective periods equaled $.03 and Nil.
LIQUIDITY AND CAPITAL RESOURCES - We develop and commercialize each of our live
theatrical projects through sale to accredited buyers of interests in a limited
partnership of which the company acts as General Partner and Manager. While
limited partnerships provide an ideal medium for financing theatrical products,
until investors recoup their investment, distributions of management fees and
royalties to the general partner and manager are generally marginal and no
distributions of profit are permitted. Accordingly, we must maintain sufficient
working capital to sustain the expenses of identification, early development,
and continuing management of its projects.
At June 30, 2000 substantially all of our working capital was provided from
short-term borrowings and proceeds from the private sale of the Company's common
shares which began in April 2000. Additionally, distributions from the Company's
operation of Dinner with Friends will soon contribute to our overall expenses as
the project's backers had recouped all but 10 percent of their original
investment. After repayment of its short-term borrowings of approximately
$144,000, the Company will have sufficient capital resources to exploit the
commercial potential of its existing live theatre production rights.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No legal proceedings of a material nature to which we are a party were pending
during the reporting period, and we know of no legal proceedings of a material
nature pending or threatened or judgements entered against any of our directors
or officers in his capacity as such.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the period ended June 30, 2000 the Company sold 664,500 common shares at
$1.00 per share, pursuant to an exemption under Section 4 (2) and 4 (6) of The
Securities Act of 1933 as amended, to 20 persons in a private sale. No
underwriting or brokerage fees were paid. In addition, following shareholders'
approval in June 2000, the Company reduced the number of common share it was
authorized to issue and adopted a stated par value for its Preferred and Common
shares of $.01 and $.001, respectively. Reference is hereby made to the
Company's report on Form 8-K/A, dated July 27, 2000.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its First Annual Meeting of Shareholders on June 21, 2000; 1)
to reelect Mitchell Maxwell, Mark Balsam and Anthony R. Russo as directors, 2)
approve the change of its name to Momentum Holdings Corporation and its domicile
from Colorado to Delaware, 3) approve recapitalization of our authorized shares,
4) ratify a change of independent accountants to Marden, Harrison & Kreuter,
CPAs, and 5) consider other matters that may come before the Meeting. A total of
9,540,001 shares were represented in person or by proxy at the Meeting as
follows:
<TABLE>
<CAPTION>
For Against Abstain Total
--- ------- ------- -----
<S> <C> <C> <C> <C>
1) Election of directors (no votes were
withheld as to any nominee) 9,477,501 55,000 7,500 9,540,001
2) Change of name and domicile 9,477,501 55,000 7,500 9,540,001
3) Approve recapitalization 9,477,501 55,000 7,500 9,540,001
4) Ratify change of accountants 9,477,501 55,000 7,500 9,540,001
5) Other matters - There were none 9,477,501 55,000 7,500 9,540,001
</TABLE>
Reference is hereby made to the Company's Report on Form 8-K/A dated July 27,
2000.
ITEM 5. OTHER INFORMATION - None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits - None.
(b) We filed a report on Form 8-K/A on July 27, 2000 in connection with
holding the Company's First Annual Meeting of Shareholders on June 21, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MOMENTUM HOLDINGS CORPORATION
[formerly Buffalo Capital VIII, Ltd.]
(Registrant)
Date: August 21, 2000
/s/
-----------------------------
Mark Balsam, President
and Chief Executive Officer
/s/
-----------------------------
Anthony R. Russo, Vice President
and Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
