<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 1999
[ ] Transition report under Section 13 or 15 (d) of the Exchange Act
For the transition period from __________ to __________
Commission file number 0-26197
STUDIO CITY HOLDINGS CORPORATION
(Exact Name of Small Business Issuer as Specified in Its Charter)
New York 13-322-7032
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) IdentificationNo.)
153 Stevens Avenue, Mount Vernon, New York 10550
(Address of Principal Executive Offices)
(352) 347-3947
(Issuer's Telephone Number, Including Area Code)
Studio City Holdings Corporation - 121 Stevens Avenue.
Mount Vernon, New York 10550
(Former Name, Former Address and Former Fiscal year,
if Changed Since Last Report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) Of the 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 CORPORATE ISSUERS
The number of outstanding shares of common stock as of November 1,
1999: 31,028,500.
Transitional Small Business Disclosure Format (check one):
Yes No [X]
<PAGE> 2
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The interim financial information furnished herein was prepared from
the books and records of the Company and its subsidiaries as of September 30,
1999 and for the period then ended, without audit. Such financial information
reflects all normal and recurring accruals and adjustments which are, in the
opinion of management, necessary for a fair presentation of financial position
and statements of operations and cash flows for the interim period presented.
The interim financial information furnished herein should be read in
conjunction with the consolidated financial statements included in this report
and the consolidated financial statements and notes for the fiscal year ended
December 31, 1999 contained in the Company's Prospectus dated May 26, 1999
included as part of a Registration Statement on Form SB-2 under the Securities
Act of 1933. The interim financial information presented is not necessarily
indicative of the results from operations expected for the full fiscal year.
The Company is a development stage media holding company specializing
in the creation of "entertainment franchises" and the development of its media
subsidiaries. Except for certain limited operations, primarily involving the
publication of a limited first edition of the second book in "The Nicholas
Stories" series of three children's books and the publication of a special
limited edition of the first book, the Company's activities to date primarily
have consisted of raising capital, obtaining financing, acquiring intellectual
properties, and administrative activities relating to the foregoing. Each of
its subsidiaries is in the development stage with a limited or no operating
history; each of the subsidiaries has generated little or no revenue.
During the three month and nine month periods ended September 30, 1999,
the Company had no income and had net losses of $142,357 and $456,322,
respectively, compared with income of -0- and $14,005 and net losses of
$105,894 and $$342,205 for the comparable periods ended September 30, 1998. The
increased net losses during the three-month and none month periods ended
September 30, 1999 compared to the comparable periods in the preceding year
reflect the increased cost of development and other start-up activities without
any offsetting revenues. Increased accounting, consulting and legal fees and
office expenses during the 1999 periods reflect the costs related to the
Company's Registration Statement, effective in the second quarter, and the
Company's becoming subject to the reporting obligations of a publicly held
company; increased interest expense reflects increased loans from stockholders
for working capital and other corporate purposes.
The Company's business is capital intensive and it expects to incur
losses for the foreseeable future as it seeks to develop and grow its business.
The Company's plan of operation for the fourth quarter of fiscal 1999 and for
fiscal 2000 is dependent upon the availability of necessary financing until
operations generate sufficient funds to meet anticipated costs and expenses, of
which there can be no assurance. The Company anticipates that it will continue
to meet its cash requirements as it has in the past, through
<PAGE> 3
the private sale of securities and from loans and advances from stockholders
and management. The Company has no agreement, arrangement or understanding with
any person for any financing, so that there can be no assurance that the
necessary financing will be available at all or on favorable terms. If
necessary financing were not available, the Company's activities would have to
be curtailed and its financial position and condition would be adversely
affected.
<PAGE> 4
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
December September 30, September 30,
1998 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 80,178 $ 107,220 $ 139,048
Intangible assets (Note 3) 77,315 77,315 83,150
Investment in joint ventures and stock 56,823 56,823 56,823
Prepaid services 3,469 3,469 3,469
Office equipment (cost $52,506, $52,506 and $53,316;
accumulated depreciation $33,320, $28,275 and $39,141) 19,186 24,231 14,175
Organization costs (net of accumulated amortization) 446 782 445
Accounts receivable 7,445 1,636
----------- ----------- -----------
TOTAL ASSETS $ 244,862 $ 269,840 $ 298,746
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Note payable-stockholder $ 1,554,027 1,554,027 $ 1,554,027
Accrued interest 375,069 358,803 422,151
Accrued expenses 65,284 7,750 34,415
Loans from stockholders 328,000 245,500 821,993
CONTINGENT LIABILITIES--Collective Bargaining Agreement (Note 3) -- -- --
LEASE COMMITMENTS--(Note 15) -- -- --
----------- ----------- -----------
TOTAL LIABILITIES 2,322,380 2,166,080 2,832,586
EQUITY SECURITIES SUBJECT TO RESCISSION (Note 20) 1,003,100 1,003,100 1,003,100
STOCKHOLDERS' EQUITY
Common stock - par value $.002;
150,000,000 shares authorized; 31,057,001 shares issued 61,077 61,077 61,077
and outstanding
Common stock warrants 5,000,000 5,000,000 5,000,000
Preferred stock--A - par value $.0001;
10,000,000 shares authorized, issued and outstanding 1,000 1,000 1,000
Preferred stock--B - $.0001 par value
10,000,000 shares authorized; 3,825,834 issued and outstanding 383 383 383
Additional paid-in capital 1,392,737 1,392,737 1,392,737
Deficit accumulated during development stage (2,309,815) (2,128,537) (2,766,137)
Less special distribution to stockholder (Note 3) (7,226,000) (7,226,000) (7,226,000)
----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY (3,080,618) (2,899,340) (3,536,940)
=========== =========== ===========
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 244,862 $ 269,840 $ 298,746
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Cumulative --------------------------- ---------------------------
From Inception Nine Months Ended Three Months Ended
October 21, 1991 to September 30, September 30,
September 30, 1999 1999 1998 1999 1998
------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INCOME $ 286,168 $ -- $ 14,005 $ -- $ --
EXPENSES
Accounting fees 131,705 19,475 12,694 2,725 5,325
Advertising 15,792
Amortization--organization costs 1,537
Auto expenses 169,400 6,755 10,515 2,371 2,693
Bad debts 167,695
Bank charges 1,543 401 157 76 35
Commissions 36,906
Consulting fees 140,226 16,682 6,872 1,486 348
Contributions 1,602 651 550
Depreciation 39,141 5,820 4,782 2,489 1,594
Dues and publications 19,136 2,766 3,199 2,157 1,148
Equipment rental 299,798 74,588 68,415 31,586 23,413
Insurance 23,414 892
Interest 765,232 146,575 108,638 53,308 38,707
Legal fees 265,558 67,538 26,582 13,293 4,623
Licenses 23,918 2,383 2,417 26
Meals 29,535 2,618 1,606 1,033 143
Medical reimbursement--officer 14,161
Miscellaneous expenses 44,641 3,244 19,240 846 5,480
Offering costs 32,051
Office expenses 141,624 19,262 9,164 6,941 2,041
Officer compensation 5,000
Postage 59,167 8,610 7,910 4,890 3,005
Professional fees 86,632 521 5,110 200
Project costs 215,385 51,172 40,930 11,138 7,313
Rent 139,065 7,591 13,419 3,045 5,848
Repairs and maintenance 1,275 249
Seminars 604
Telephone expense 78,674 3,866 6,459 1,854 1,919
Travel 66,644 13,843 4,169 1,590 1,027
Utilities 21,327 1,712 3,040 779 1,206
Wages 13,917
----------- --------- --------- --------- ---------
TOTAL EXPENSES 3,052,305 456,322 356,210 142,357 105,894
----------- --------- --------- --------- ---------
NET LOSS $(2,766,137) $(456,322) $(342,205) $(142,357) $(105,894)
=========== ========= ========= ========= =========
EARNINGS (LOSS) PER
COMMON SHARE
----------- --------- --------- --------- ---------
(Basic and Diluted Loss Per Share
are the same--See Note 2) $ (0.0174) $ (0.0147) $ (0.0110) $ (0.0046) $ (0.0034)
=========== ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
-------------------------------------------------------
Additional Common
Common Paid-In Stock Preferred
Shares Amount Capital Warrants Stock A
------------ -------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
Issuance of common stock 748,000 $ 11,920 $ 1,138,500 $ -- $ --
Special distribution (Note 3)
Common shareholder loss for period
October 21, 1991 to December 31, 1991
------------ -------- ------------ ----------- -------
Balance at December 31, 1991 748,000 11,920 1,138,500 -- --
Issuance of common stock 610,201 1,662 72,770
Common shareholder loss for year
ended December 31, 1992
------------ -------- ------------ ----------- -------
Balance at December 31, 1992 1,358,201 13,582 1,211,270 -- --
Stock split 1 to 100 134,461,899
Shares for properties (1,151,004)
Special distribution (Note 3)
Issuance of common and preferred
stock and common warrants 16,749,900 1,675 56,976 5,000,000
Common shareholder loss for year
ended December 31, 1993
------------ -------- ------------ ----------- -------
Balance at December 31, 1993 152,570,000 15,257 117,242 5,000,000 --
Issuance of common stock (13,420,000) (1,342) 242,670
Common shareholder loss for year
ended December 31, 1994
------------ -------- ------------ ----------- -------
Balance at December 31, 1994 139,150,000 13,915 359,912 5,000,000 --
Issuance of common stock 4,150,000 415 406,095
Common shareholder loss for year
ended December 31, 1995
------------ -------- ------------ ----------- -------
Balance at December 31, 1995 143,300,000 14,330 766,007 5,000,000 --
Issuance of common stock 6,700,000 670 431,506
Equity securities subject to rescission (Note 20) (670) (431,506)
Common shareholder loss for year
ended December 31, 1996
------------ -------- ------------ ----------- -------
Balance at December 31, 1996 150,000,000 14,330 766,007 5,000,000 --
Issuance of common stock 155,000 310 481,113
Equity securities subject to rescission (Note 20) (310) (481,113)
Common shareholder loss for year
ended December 31, 1997
Shares issued, exchanged or converted (119,126,500) (11,000) 9,000 1,000
Merger adjustments 57,747 617,730
------------ -------- ------------ ----------- -------
Balance at December 31, 1997 31,028,500 61,077 1,392,737 5,000,000 1,000
Issuance of common stock 28,501 57 89,444
Equity securities subject to rescission (Note 20) (57) (89,444)
Common shareholder loss for year
ended December 31, 1998
------------ -------- ------------ ----------- -------
Balance at December 31, 1998 31,057,001 $61,077 $ 1,392,737 $ 5,000,000 $ 1,000
Common shareholder loss for nine months
ended September 30, 1999 (Unaudited)
------------ -------- --------------- ----------- -------
Balance at September 30, 1999 31,057,001 $ 61,077 $ 1,392,737 $ 5,000,000 $ 1,000
============ ======== =============== =========== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 7
<TABLE>
<CAPTION>
Deficit
Accumulated Special
During Distribution Total
Preferred Development To Stockholders'
Stock B Stage Stockholder Equity
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Issuance of common stock $ -- $ -- $ -- $ 1,150,420
Special distribution (Note 3) (1,150,000) (1,150,000)
Common shareholder loss for period
October 21, 1991 to December 31, 1991 (35,455) (35,455)
---------- ----------- ----------- -----------
Balance at December 31, 1991 -- (35,455) (1,150,000) (35,035)
Issuance of common stock 74,432
Common shareholder loss for year
ended December 31, 1992 (57,999) (57,999)
---------- ----------- ----------- -----------
Balance at December 31, 1992 -- (93,454) (1,150,000) (18,602)
Stock split 1 to 100
Shares for properties (1,151,004)
Special distribution (Note 3) (6,076,000) (6,076,000)
Issuance of common and preferred
stock and common warrants 671,974 5,730,625
Common shareholder loss for year
ended December 31, 1993 (73,409) (73,409)
---------- ----------- ----------- -----------
Balance at December 31, 1993 671,974 (166,863) (7,226,000) (1,588,390)
Issuance of common stock 241,328
Common shareholder loss for year
ended December 31, 1994 (172,174) (172,174)
---------- ----------- ----------- -----------
Balance at December 31, 1994 671,974 (339,037) (7,226,000) (1,519,236)
Issuance of common stock 406,510
Common shareholder loss for year
ended December 31, 1995 (316,578) (316,578)
---------- ----------- ----------- -----------
Balance at December 31, 1995 671,974 (655,615) (7,226,000) (1,429,304)
Issuance of common stock 432,176
Equity securities subject to rescission (Note 20) (432,176)
Common shareholder loss for year
ended December 31, 1996 (558,211) (558,211)
---------- ----------- ----------- -----------
Balance at December 31, 1996 671,974 (1,213,826) (7,226,000) (1,987,515)
Issuance of common stock 481,423
Equity securities subject to rescission (Note 20) (481,423)
Common shareholder loss for year
ended December 31, 1997 (572,506) (572,506)
Shares issued, exchanged or converted 1,182 182
Merger adjustments (672,773) 2,704
---------- ----------- ----------- -----------
Balance at December 31, 1997 383 (1,786,332) (7,226,000) (2,557,135)
Issuance of common stock 89,501
Equity securities subject to rescission (Note 20) (89,501)
Common shareholder loss for year
ended December 31, 1998 (523,483) (523,483)
---------- ----------- ----------- -----------
Balance at December 31, 1998 $ 383 $(2,309,815) $(7,226,000) $(3,080,618)
Common shareholder loss for nine months
ended September 30, 1999 (Unaudited) (456,322) $(456,322)
---------- ----------- ----------- -----------
Balance at September 30, 1999 $ 383 $(2,766,137) $(7,226,000) $(3,536,940)
========== =========== =========== ===========
</TABLE>
5
<PAGE> 8
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
Cumulative ---------------------------
From Inception Nine Months Ended
October 21, 1991 to September 30,
September 30, 1999 1999 1998
------------------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $(2,766,137) $(456,322) $(342,205)
Amortization and depreciation 40,678 5,820 4,782
Changes in operating assets and liabilities:
Increase in prepaid services (1,024)
Increase in organizational costs (1,860)
Decrease in offering costs
(Increase) decrease in accounts receivable (1,636) 5,809
(Increase) decrease in stock subscription 53,000
Increase (decrease) in accrued expenses 34,414 (30,870) (30,091)
Increase in accrued interest payable 422,151 47,082 68,285
Decrease in intangible assets 19,750
----------- --------- ---------
Net cash used in operating activities (2,253,664) (428,481) (246,229)
INVESTING ACTIVITIES
Investment in CVT Corporation of America (12,000)
Investment in joint ventures and stocks (56,823)
Acquisition of equipment (53,316) (810)
Acquisition of properties (102,900) (5,834)
----------- --------- ---------
Net cash used in investing activities (225,039) (6,644) --
FINANCING ACTIVITIES
Borrowings from stockholders 894,732 493,995 245,500
Proceeds for issuance of common stock 1,817,036 89,501
Repayment of stockholders loans (72,737)
Loan to affiliated company (21,280)
----------- --------- ---------
Net cash provided by financing activities 2,617,751 493,995 335,001
----------- --------- ---------
Cash and cash equivalents - increase 139,048 58,870 88,772
Cash and cash equivalents - Beginning -- 80,178 18,448
----------- --------- ---------
Cash and cash equivalents - Ending $ 139,048 $ 139,048 $ 107,220
=========== ========= =========
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest $ 343,081 $ 99,493 $ 55,312
Noncash financing transaction: =========== ========= =========
Value of Studio City shares
issued for services $ 3,647 $ -- $ --
=========== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 9
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.
Studio City Holdings Corporation
(Registrant)
Date: November 22, 1999 /s/ Larry D. Faw
---------------------------------
Larry D. Faw, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1999
CONSOLIDATED BALANCE SHEETS AND 1999 CONSOLIDATED STATEMENTS OF OPERATIONS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 139,048
<SECURITIES> 0
<RECEIVABLES> 1636
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 53,316
<DEPRECIATION> 39,141
<TOTAL-ASSETS> 298,746
<CURRENT-LIABILITIES> 0
<BONDS> 0
1,003,100
1,000
<COMMON> 61,077
<OTHER-SE> 1,392,737
<TOTAL-LIABILITY-AND-EQUITY> 298,746
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 51,172
<TOTAL-COSTS> 51,172
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 146,575
<INCOME-PRETAX> (456,322)
<INCOME-TAX> 0
<INCOME-CONTINUING> (456,322)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (456,322)
<EPS-BASIC> (0.015)
<EPS-DILUTED> (0.015)
<FN>
PREPAID-SERVICES 3,469
INVESTMENTS 56,823
INTANGIBLES 83,150
ORGANIZATION-COSTS 1,986
AMORTIZATION 1,541
NOTE-PAYABLE 1,554,027
ACCRUED-INTEREST 422,151
ACCRUED-EXPENSES 34,415
PREFERRED-STOCK-B 383
COMMON 5,000,000
OTHER-SE (2,766,137)
OTHER-SE (7,226,000)
OTHER-EXPENSES 258,575
COSTS-EXPENSES 456,322
</FN>
</TABLE>
