================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------
QUARTERLY REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
Commision File Number -- 0-1607
MID-STATE RACEWAY, INC.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
NEW YORK 15-0555258
------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
VERNON, NEW YORK 13476
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(315) 829-2201
-------------------------------
(Registrant's Telephone Number)
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 and (2) has been subject to the filing
requirements for at least the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuers' classes of
common stock, as of the close of the period covered by this report.
Class Outstanding at September 30, 1999
- ----------------------------- ---------------------------------
Common Stock, $0.10 par value 250,386
================================================================================
<PAGE>
<TABLE>
A. SUMMARY OF FINANCIAL INFORMATION
MID-STATE RACEWAY, INC.
PROFIT AND LOSS INFORMATION
<CAPTION>
Three Months Nine Months
Ended Ended
------------------------------ ------------------------------- Year Ended
Sept. 30, 1999 Sept. 30, 1998 Sept. 30, 1999 Sept. 30, 1998 December 31, 1998
55 Racing Days 52 Racing Days 104 Racing Days 102 Racing Days 122 Racing Days
-------------- -------------- -------------------------------- -----------------
<S> <C> <C> <C> <C> <C>
Operating Revenue ........................ $1,953,047 $1,940,421 $4,830,005 $4,921,545 $6,502,987
Operating Expense ........................ 2,609,162 2,348,755 5,683,872 5,792,014 7,301,521
---------- ---------- ---------- ---------- ----------
Income (Loss) from Operations ............ (656,115) (408,334) (853,867) (870,469) (798,534)
---------- ---------- ---------- ---------- ----------
Other Income:
Commissions for Capital Improvements .. $0 0 0 0 86,330
Investment income (loss) .............. (35,291) (33,958) (95,213) (45,278) (20,603)
Aid from state and local governments .. 0 0 0 0 372,750
Gain on sale of land .................. 0 0 0 399,999 399,999
Gain on sale of other assets .......... 0 0 0 0 73,500
---------- ---------- ---------- ---------- ----------
Total other income ................. (35,291 (33,958 (95,213 354,721 911,976
---------- ---------- ---------- ---------- ----------
Loss before provision for
Taxes on income ....................... (691,406 (442,292 (949,080 (515,748 113,442
---------- ---------- ---------- ---------- ----------
Provision (Credit) for Taxes
on income ............................. 0 0 0 0 404
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) ........................ ($691,406) ($442,292) ($949,080) ($515,748) $113,038
========== ========== ========== ========== ==========
Loss per weighted average shares
outstanding ............................ ($2.76) ($1.77) ($3.79) ($2.06) $0.45
========== ========== ========== ========== ==========
Cash dividend per share .................. $0.00 $0.00 $0.00 $0.00 $0.00
========== ========== ========== ========== ==========
</TABLE>
2
<PAGE>
A. (Continued)
MID-STATE RACEWAY, INC.
STATEMENT OF CASH FLOW
For the Nine For the
Months Ended Year Ended
September 30, December 31,
Increase (Decrease) in Cash 1999 1998
------------ ------------
Cash Flows from Operating Activities:
Net income (loss) ............................... ($ 949,080) $ 113,038
Adjustments to reconcile net income (loss)
to cash used in operating activities:
Depreciation ................................. 125,150 197,667
Allowance for doubtful accounts .............. 0 15,000
Gain on sale of other assets ................. 0 (73,500)
Loss on sale/disposal of equipment ........... 0 14,596
Gain on sale of land ......................... 0 (399,999)
Changes in:
Restricted cash .............................. (61,894) (25,268)
Accounts and grants receivable ............... 305,004 (324,588)
Other current assets ......................... 39,592 (231,137)
Other assets ................................. 36,149 (20,703)
Real estate taxes payable .................... (54,000) 174,000
Accounts payable ............................. 618,961 (545,529)
Uncashed winning tickets ..................... (50,767) (2,952)
Retention for capital improvements ........... 56,105 20,788
--------- -----------
Net cash provided by (used in) operating activities. 65,220 (1,088,587)
--------- -----------
Cash Flows from Investing Activities:
Proceeds from sale of other assets .............. 0 122,500
Proceeds from sale of equipment ................. 0 501
Proceeds from sale of land ...................... 0 400,000
Purchase of properties and equipment ............ (280,688) (193,170)
--------- -----------
Net cash provided by (used in) investing activities. (280,688) 329,831
--------- -----------
Cash Flows from Financing Activities:
Proceeds from mortgage loan ..................... 250,000 1,000,000
--------- -----------
Net cash provided by financing activities .......... 250,000 1,000,000
--------- -----------
Net change in cash ................................. 34,532 241,244
Cash, beginning of period .......................... 437,241 195,997
--------- -----------
Cash, end of period ................................ $ 471,773 $ 437,241
========= ===========
3
<PAGE>
A. (Continued)
MANAGEMENT ANALYSES OF PROFIT AND LOSS INFORMATION
The Company's net loss from operations of $853,867 for the nine (9) months ended
September 30, 1999 represents a decrease of $16,602 over the same period last
year. A significant factor in the decrease of operating revenue of $91,540 was
the decrease in revenue from concerts in 1999. Only two (2) major concerts were
held during the nine (9) months ended September 30, 1999 versus four (4) major
concerts during the same period last year. Operating expenses decreased by
$108,142 compared to the same period last year as management continues to focus
on reducing operating expenses through a variety of measures.
The decrease in other income of $449,934 for the nine (9) months ended September
30, 1999 versus the same period last year was largely the result of the Company
selling 126 acres of surplus land on Collamer Road in Onondaga County to E.L.
Management of Syracuse Corp. in the first quarter of 1998 for a net gain of
$399,999. Edward Leffler, who at the time of the sale was a Director of the
Company, is the sole shareholder of E.L. Management of Syracuse Corp.
Wagering on live racing for the nine (9) months ended September 30, 1999
decreased an average of $8,444 per racing program. While the average daily
attendance is down by 15%, the per capita on-track wagering is 3.1% above last
year's level. Total wagering on harness and thoroughbred simulcasting during the
nine (9) months ended ended September 30, 1999 decreased by $2,095,576 (16.2%)
over the same period in 1998.
Management continues to take action and explore its options to raise operating
capital and to improve the Company's financial condition which include the
following:
a. Applying to local governmental agencies for grants (some of which have
been approved);
b. Increasing the number of events using the facility;
c. Taking over the food and beverage concessions; and
d. Eliminating various expenditures.
Subsequent to the end of the third quarter, the Company has completed a Private
Placement Offering of 150,000 shares of its common stock at $10 per share to an
investor group comprised of John J. Signorelli, Dominic A. Giambona, Wesley E.
Wendt, Sr. and others. The investment gives the investment group ownership of
approximately 1/3 of the Company's outstanding shares. In addition to the stock
purchase, Messrs. Signorelli, Giambona and Wendt have been given an option to
purchase an additional 150,000 to 175,000 shares at $10 per share which, if
exercised, would give them majority interest in the outstanding shares of the
Company. The proceeds from the Private Placement Offering will be used to
provide needed working capital; fund capital improvements including
reconfiguration of the racing oval, roof repair, debt retirement; and necessary
funds for promotion and advertising of the facility.
At a Board of Directors' Meeting on September 8, 1999, several changes were made
to the management of the Company. Messrs. Signorelli and Giambona were elected
Directors of the Company. Mr. Wendt is an existing Director of the Company. Also
on September 8, 1999, Mrs. Gwen K. Bennett resigned as a Director of the
Company. Also, Mr. Signorelli was elected President & CEO of the Company and Mr.
Giambona was elected Vice President. The former President & CEO, Justice M.
Cheney, who has run the Company's day-to-day operations since December, 1997,
remains a Director and will continue as Vice President and General Manager of
the Company. Mr. James R. Wise remains Treasurer of the Company. Paul V. Noyes,
who is a member of the investment group, was elected Secretary of the Company
and is also a Director of the Company. The former Secretary, James J. Moran,
remains a Director of the Company and is Publicity/Public Relations Director and
Track Announcer.
4
<PAGE>
A. (Continued)
MANAGEMENT ANALYSES OF PROFIT AND LOSS INFORMATION, Continued
The new management team plans, over time, to make Vernon Downs into one of the
premier settings for the presentation of harness racing, not only in New York
State, but throughout the country. Immediate plans call for the conversion of
Vernon Downs 3/4 mile racing oval into a 7/8ths mile track, and the return of
major stakes competitions to complement New York sire stakes events.
The Company has settled a claim against the Company made by the Trustee of the
Bennett Funding Group, Inc. and related companies' bankruptcy to recover
payments made to the Company during the years 1992-1996. The parties have agreed
to settle the bankruptcy estate's claim against the Company for the issuance of
38,000 shares of the common stock of the Company.
The Company's Board of Directors approved a Year 2000 compliance action plan in
December ,1998. The Company expects to complete the plan prior to the end of
1999. The cost of making the Company Year 2000 compliant is anticipated to be
less than $20,000 and is not considered material to the Company. The Company
does not have a contingency plan because it fully expects to be year 2000
compliant without material additional work required of it or its vendors.
LIQUIDITY AND CAPITAL RESOURCES
In 1999, the funding of business operations and capital requirements will be
substantially sourced from existing cash, the Private Placement Offering of its
common stock, mortgage loan modifications and expected grants from local
governmental agencies. The Company's current ratio at September 30, 1999 was
approximately .9 to 1.
5
<PAGE>
<TABLE>
B. CAPITALIZATION AND SHAREHOLDERS' EQUITY
MID-STATE RACEWAY, INC.
BALANCE SHEET
September 30, 1999 and December 31, 1998
<CAPTION>
September 30, December 31,
ASSETS 1999 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash ......................................................... $ 471,773 $ 437,241
Cash restricted for purses, capital improvements
and uncashed winning tickets ............................... 149,372 87,478
Grant receivable ............................................. 0 122,750
Accounts receivable, net of allowance for doubtful
accounts of $22,000 in 1999 and 1998 ...................... 191,600 373,854
Other current assets ......................................... 213,285 252,877
----------- -----------
Total current assets ................................... 1,026,030 1,274,200
PROPERTY, PLANT AND EQUIPMENT
Land, racing plant and equipment ............................. 12,999,293 12,718,605
Other Properties ............................................. 121,671 121,671
----------- -----------
13,120,964 12,840,276
Less accumulated depreciation ................................ 11,127,464 11,002,314
----------- -----------
1,993,500 1,837,962
OTHER ASSETS .................................................... 41,457 77,606
----------- -----------
$ 3,060,987 $ 3,189,768
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses ........................ $ 1,101,729 $ 482,768
Current portion of real estate taxes payable ................. 18,000 72,000
Uncashed winning tickets ..................................... 8,491 59,258
Retention for capital improvements ........................... 76,893 20,788
----------- -----------
Total current liabilities .............................. 1,205,113 634,814
REAL ESTATE TAXES PAYABLE, LESS CURRENT PORTION ................. 102,000 102,000
MORTGAGE PAYABLE ................................................ 1,250,000 1,000,000
DEFERRED RETIREMENT BENEFITS .................................... 1,013,861 1,013,861
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock, par value $0.10 per share, authorized
10,000,000 shares; issued and outstanding 250,386 shares .... 25,039 25,039
Additional paid-in-capital ................................... 225,347 225,347
Retained earnings (deficit) .................................. (760,373) 188,707
----------- -----------
Total shareholders' equity (deficit) .......... (509,987) 439,093
----------- -----------
$ 3,060,987 $ 3,189,768
=========== ===========
</TABLE>
6
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1 THROUGH 5 -- NOT APPLICABLE
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K -- There were no reports on Form 8-K filed for the three
months ended September 30, 1999.
7
<PAGE>
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.
MID-STATE RACEWAY, INC.
Date: 11/15/99 /S/ JOHN J. SIGNORELLI
--------------------------------------
John J. Signorelli, President &
Chief Executive Officer
Date: 11/15/99 /S/ JAMES R. WISE
--------------------------------------
James R. Wise, Treasurer and Principal
Financial and Accounting Officer
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 621,145
<SECURITIES> 0
<RECEIVABLES> 213,404
<ALLOWANCES> 21,804
<INVENTORY> 0
<CURRENT-ASSETS> 1,026,030
<PP&E> 13,120,694
<DEPRECIATION> 11,127,464
<TOTAL-ASSETS> 3,060,987
<CURRENT-LIABILITIES> 1,205,113
<BONDS> 0
0
0
<COMMON> 25,039
<OTHER-SE> (535,026)
<TOTAL-LIABILITY-AND-EQUITY> 3,060,987
<SALES> 0
<TOTAL-REVENUES> 1,962,834
<CGS> 0
<TOTAL-COSTS> 2,609,162
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105,000
<INCOME-PRETAX> (691,406)
<INCOME-TAX> 0
<INCOME-CONTINUING> (691,406)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (691,406)
<EPS-BASIC> (2.76)
<EPS-DILUTED> 0.00
</TABLE>
