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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 September 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 10010-2706
(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
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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. Common Stock, $.001 par
value, 11,704,500 shares at September 30, 2000.
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
September 30, 2000 and for the periods February 23, 1999 (inception) through
September 30, 1999, and the nine months ended September 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 September 30, 2000 3
Consolidated Statement of Operations
February 23, 1999 (Inception) through September 30, 1999
and Nine Months Ended September 30, 2000 4
Consolidated Statement of Shareholders' Equity
February 23, 1999 (Inception) through September 30, 1999
and Nine Months Ended September 30, 2000 5
Consolidated Statement of Cash Flows
February 23, 1999 (Inception) through September 30, 1999
and Nine Months Ended September 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>
September 30, 2000
------------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 55,095
Accounts receivable 14,362
Loan receivable - related party 40,000
Prepaid expenses - related party 35,290
---------
Total current assets 144,747
Investments 258,972
---------
Total assets $ 403,719
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued expenses payable $ 23,750
Advance royalty 30,000
Loans payable 114,000
---------
Total current liabilities 167,750
---------
Shareholders' equity:
Preferred stock --
Common stock 11,704
Additional paid in capital 687,495
Accumulated deficit (463,230)
---------
Total shareholders' equity 235,969
---------
Total liabilities and shareholders' equity $ 403,719
=========
</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 Nine Three Three
(Inception) Months Months Months
Through Ended Ended Ended
September September September September
30, 1999 30, 2000 30, 1999 30, 2000
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUE $ -- $ 239,457 $ -- $ 106,424
-------------- -------------- -------------- --------------
COSTS AND EXPENSES:
Development expenses -- 204,026 -- 37,547
General and administrative -- 502,380 -- 177,429
Interest, net -- 4,155 -- 113
-------------- -------------- -------------- --------------
Total costs and expenses -- 710,561 -- 215,089
-------------- -------------- -------------- --------------
LOSS BEFORE TAXES -- 471,104 -- 108,665
PROVISION FOR TAXES -- -- -- --
-------------- -------------- -------------- --------------
NET LOSS $ -- $ 471,104 $ -- $ 108,665
============== ============== ============== ==============
NET LOSS PER SHARE Nil $ .04 Nil $ .01
============== ============== ============== ==============
WEIGHTED AVERAGE SHARES
OUTSTANDING (pro-forma in 1999) 11,000,000 11,360,700 11,000,000 11,694,500
============== ============== ============== ==============
</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
(inception) -- -- 100 $ 4 $ -- $ -- $ 4
Net loss, period ended
September 30 -- -- -- -- -- -- --
---- ---- -------------- -------------- -------------- -------------- --------------
Balance,
September 30 -- -- 100 $ 4 $ -- $ -- $ 4
==== ==== ============== ============== ============== ============== ==============
2000 -
Balance, January 1 -- -- 100 $ 4 $ -- $ 7,874 $ 7,878
Acquisition of Buffalo
Capital VIII, Ltd., merger
and recapitalization -- -- (100) (4) 4 -- --
-- -- 11,000,000 11,000 (11,000) -- --
Sale of shares, net -- -- 704,500 704 698,491 -- 699,195
Net loss, nine months ended
September 30 -- -- -- -- -- (471,104) (471,104)
---- ---- -------------- -------------- -------------- -------------- --------------
Balance,
September 30 -- -- 11,704,500 $ 11,704 $ 687,495 $ (463,230) $ 235,969
==== ==== ============== ============== ============== ============== ==============
</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) Nine Months
Through Ended
September 30, September 30,
1999 2000
-------------- --------------
<S> <C> <C>
Cash provided (consumed) by:
Operations -
Revenues received $ -- $ 230,165
Expenses paid -- (731,268)
-------------- --------------
Net cash consumed by operations -- (501,103)
Collection - Loan receivable -- 20,000
Investment - Additions (59,904) (194,159)
Financing - Borrowings 60,000 31,150
Proceeds from sale of common stock -- 699,195
-------------- --------------
Net increase in cash 96 55,083
Cash and cash equivalents, beginning of period -- 12
-------------- --------------
Cash and cash equivalents, end of period $ 96 $ 55,095
============== ==============
</TABLE>
Reconciliation of Net loss to Net cash consumed by operations:
<TABLE>
<S> <C> <C>
Net loss $ -- $ (471,104)
Increase in accounts receivable -- (9,292)
Increase in prepaid expenses -- (25,290)
Increase in accounts payable and accrued liabilities -- 4,583
-------------- --------------
Net cash consumed by operations $ -- $ (501,103)
============== ==============
</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
nine months ended September 30, 2000 and the period February 23, 1999
(inception) through September 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. Royalties received in advance are recorded
as a current liability until earned. The Company seeks to develop live theatre
properties, which when produced, are financed through limited partnerships in
which it is general partner and investor. 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 September 30, 2000. Interim
financial statements may not be indicative of full fiscal period results 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 unissued 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 nine months ended September 30, 2000 would have been $475,799.
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
September 30, 2000 the Company is owed $40,000 from an entity owned by one of
its executives. This loan is non-interest bearing and is being repaid from
royalties this entity has assigned to the Company, as they are received. In
addition, the Company is owed $35,290 of non-interest bearing advances made to
one of its executives which are being repaid through reduction of that
executive's bi-monthly 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 at
September 30, 2000:
<TABLE>
<S> <C>
Dinner With Friends, L.P. $ 110,501
Ringing Development, L.P. 88,968
Thunder Development, L.P. 1
Selena Forever, LP 34,000
Great White Hope 20,000
Hole in the Head 2,500
Speed the Plow 3,000
Play On! 1
Spin the Bottle 1
------------
$ 258,972
</TABLE>
The Company is general partner of and investor in the first three limited
partnerships and an investor in the fourth. The Company has invested in
acquiring rights to Great White Hope, Hole in the Head, and Speed the Plow in
contemplation of engaging in their production. In addition, the Company's
principals have assigned their rights to receive future distributions, if any,
relating to Play On! and Spin the Bottle.
7. LOANS PAYABLE. At September 30, 2000 the Company was indebted to two
individuals for loans amounting to $114,000. One loan for $14,000 is
non-interest bearing with no stated maturity, and the other for $100,000 bears
interest at 10% and was payable in June 2000. In July 2000, the Company
commenced negotiations to extend the second note.
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
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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 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. Except as otherwise required under applicable federal
securities laws, 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 - Revenues for the nine months ended September 30, 2000 ("NM00") of
$239,457 are comprised of royalties and fee income from our production of Dinner
With Friends at the Variety Arts Theatre, Off-Broadway, New York, and our
pre-production efforts relating to a revival of Bells are Ringing at the
Broadway Theatre in April 2001. 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 September 30, 1999
("NM99") had no comparable receipts. The revenues applicable to the three months
ended September 30, 2000 amounted to $106,424 and were similar in composition.
EXPENSES - Development expense for NM00 was $204,026 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, $37,547 were incurred in the three months
ended September 30, 2000, substantially all of which related to wind-up expenses
associated with Thunder's closure.
General and administrative expenses were $502,380 for NM00 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 pre-production efforts associated with our 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 September 30, 2000
amounted to $177,429.
As significant development and general and administrative efforts did not begin
until late 1999, the Company had no comparable expenses for NM99.
RESULTS OF OPERATIONS - Our loss from operations for NM00 was $471,104. 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 $471,104. The loss for NM00 was in line with management's
expectation, as the enhanced revenue opportunities associated with developing
live entertainment products generally do not occur until each project's
investors recoup their initial capital. At September 30, 2000 the investors in
the first of the company's projects, Dinner With
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Friends, which opened November 1999, had recouped 100 percent of their capital.
Accordingly, distributions of profits from this project, in which the Company is
a significant participant, began to reduce the net loss for the three months
ended September 30, 2000.
LOSS PER SHARE - The average number of shares outstanding during NM00 and NM99
was 11,360,700 and 11,000,000, respectively. Accordingly, loss per share for the
respective periods equaled $.04 and Nil. The average number of shares
outstanding and net loss per share for the three months ended September 30, 2000
were 11,694,500 and $.01, respectively.
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 our projects.
At September 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 took place during April through June 2000. Additionally,
distributions of profit from the Company's operation of Dinner with Friends have
begun to contribute to our overall expenses as the project's backers recouped
all of their original investment during the quarter ended just ended. The
national tour of Dinner with Friends will begin in November 2000, and after a
short holiday recess, reopen in February 2001 for approximately 30 weeks. In
management's judgement, the incremental revenues associated with this tour
coupled with those to be derived from the Company's second project, Bells are
Ringing in April 2001, will provide sufficient cash flow to cover operating and
development expenses. The Company finances the actual production of its projects
through capital raised in limited partnership offerings. Management believes the
projects the Company is currently developing will have no difficulty accessing
sufficient capital for production. .
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 - None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None.
ITEM 5. OTHER INFORMATION - None.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits - None.
(b) Reports - None.
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: November 13, 2000
/s/ Mark Balsam
-----------------------------
Mark Balsam, President
and Chief Executive Officer
/s/ Anthony R. Russo
-----------------------------
Anthony R. Russo, Vice President
and Chief Financial Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
27 Financial Data Schedule
</TABLE>
