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 MARCH 31, 1999
Commission File Number - 0-1607
MID-STATE RACEWAY, INC.
(Exact Name of Registrant as Specified in Charter)
New York 15-0555258
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(State of Incorporation) (I.R.S. Employer Identification No.)
Vernon, New York 13476
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(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 March 31, 1999
------------- ------------------------------
Common Stock, $0.10 par value 250,386
<PAGE>
A. SUMMARY OF FINANCIAL INFORMATION
MID-STATE RACEWAY, INC.
PROFIT AND LOSS INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED YEAR ENDED
MARCH 31, 1999 MARCH 31, 1998 DECEMBER 31, 1998
2 RACING DAYS 0 RACING DAYS 122 RACING DAYS
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<S> <C> <C> <C>
Operating Revenues $ 944,064 $ 928,268 $6,502,987
Operating Expenses 878,276 1,020,016 7,301,521
--------- --------- ----------
Income (loss) from operations 65,788 (91,748) (798,534)
--------- --------- ----------
Other income:
Commissions for Capital Improvements 0 0 86,330
Investment Income (loss) (32,991) 0 (20,603)
Aid from state and local governments 0 0 372,750
Gain on sale of land 0 399,999 399,999
Gain on sale of other assets 0 0 73,500
--------- --------- ----------
Total Other Income (32,991) 399,999 911,976
--------- --------- ----------
Income before provision for
taxes 32,797 308,251 113,442
Provision (Credit) for
Taxes 0 0 404
--------- --------- ----------
NET INCOME $ 32,797 $ 308,251 $ 113,038
========= ========= ==========
Income per weighted average shares outstanding $ 0.13 $ 1.23 $ 0.45
========= ========= ==========
Cash dividend per share $ 0.00 $ 0.00 $ 0.00
========= ========= ==========
</TABLE>
2
<PAGE>
A. (CONTINUED)
MID-STATE RACEWAY, INC.
STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
FOR THE THREE FOR THE
MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
INCREASE (DECREASE) IN CASH 1999 1998
--------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 32,797 $ 113,038
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation 41,716 197,667
Allowance for (recoveries) of doubtful accounts 0 15,000
Gain on sale of other assets 0 (73,500)
Gain on sale of land 0 (399,999)
Loss on sale/disposal of equipment 0 14,596
Changes in:
Restricted cash 50,337 (25,268)
Accounts and grants receivable 282,161 (324,588)
Prepaid expenses 111,711 (231,137)
Other assets (71,591) (20,703)
Real estate taxes payable (18,000) 174,000
Accounts payable 138 (545,529)
Uncashed winning tickets (51,610) (2,952)
Retention for capital improvements 2,336 20,788
--------- ---------
Net cash provided by (used in) operating activities 379,995 (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 (64,344) (193,170)
--------- ---------
Net cash provided by investing activities (64,344) 329,831
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage loan 0 1,000,000
--------- ---------
Net cash provided by financing activities 0 1,000,000
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Net change in cash 315,651 241,244
Cash, beginning of period 437,241 195,997
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Cash, end of period $ 752,892 $ 437,241
========= =========
</TABLE>
3
<PAGE>
A. (CONTINUED)
MANAGEMENT ANALYSES OF PROFIT AND LOSS INFORMATION
- --------------------------------------------------------------------------------
The Company generated net income from operations of $65,788 for the quarter
ended March 31, 1999 resulting in a positive change of $157,536 from the net
loss from operations of $91,748 for the same period in 1998. A significant
factor in this improvement was a decrease in operating expenses of 13.9%. Track
management continues to focus on reducing operating expenses through a variety
of measures.
The decrease in net income of $275,454 for the quarter ended March 31, 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 1998 for a net gain of $399,999. Edward Leffler, a Director
of the Company, is the sole shareholder of E.L. Management of Syracuse Corp.
Total wagering on thoroughbred and harness simulcasts during the quarter ended
March 31, 1999 decreased by $1,139,498 (27.8%) over the same period as last
year. The resulting decrease in operating revenue was offset by increased
revenues in corporate sponsorships, trailer park rent, stall rentals and
advertising in the track racing program. the 2 days of live racing during the
quarter ended March 31, 1999 versus no live racing days for the same period last
year did not have a significant impact on the net income generated from
operations.
Management continues to take action and explore its options to raise operating
capital and to improve the Company's financial condition, including but not
limited to the following:
a. Applications to local governmental agencies for grants (some of which
are approved);
b. Application to a private lender for short-term line of credit
financing;
c. Increasing the number of events using the facility:
d. Elimination of various expenditures; and
e. Raising capital through a private offering of Company stock.
There can be no assurance that efforts to raise operating capital and to improve
the Company's financial condition will be successful.
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 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.
4
<PAGE>
A. (CONTINUED)
MANAGEMENT ANALYSES OF PROFIT AND LOSS INFORMATION
- --------------------------------------------------------------------------------
Liquidity and Capital Resources
In 1999, the funding of business operations and capital requirements for the
Company will be substantially sourced from existing cash, anticipated stock
offering or anticipated loans, and expected grants from local governmental
agencies. The Company's current ratio at March 31, 1999 was approximately
2 to 1.
5
<PAGE>
B. CAPITALIZATION AND SHAREHOLDERS' EQUITY
MID-STATE RACEWAY, INC.
BALANCE SHEET
MARCH 31, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1999 1998
----------- -----------
CURRENT ASSETS
<S> <C> <C>
Cash $ 752,892 $ 437,241
Cash restricted for purses, capital improvements and
uncashed winning tickets 37,141 87,478
Grant receivable 250 122,750
Accounts receivable, net of allowance for doubtful
accounts of $22,000 in 1999 and 1998 214,193 373,854
Other current assets 141,166 252,877
----------- -----------
Total current assets 1,145,642 1,274,200
PROPERTY, PLANT AND EQUIPMENT
Land, racing plant and equipment 12,782,949 12,718,605
Other Properties 121,671 121,671
----------- -----------
12,904,620 12,840,276
Less accumulated depreciation 11,044,030 11,002,314
----------- -----------
1,860,590 1,837,962
OTHER ASSETS 149,197 77,606
$ 3,155,429 $ 3,189,768
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 482,906 $ 482,768
Current portion of real estate taxes payable 54,000 72,000
Uncashed winning tickets 7,648 59,258
Retention for capital improvements 23,124 20,788
----------- -----------
Total current liabilities 567,678 634,814
REAL ESTATE TAXES PAYABLE, LESS CURRENT PORTION 102,000 102,000
MORTGAGE PAYABLE 1,000,000 1,000,000
DEFERRED RETIREMENT BENEFITS 1,013,861 1,013,861
SHAREHOLDERS' EQUITY
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 221,504 188,707
----------- -----------
Total shareholders' equity 471,890 439,093
----------- -----------
$ 3,155,429 $ 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 March 31, 1999.
Item 7 - Submission of Matters to a Vote of Securities Holders
The Company held a special shareholders meeting on January 18, 1999 to obtain
its shareholders' consent to eliminate shareholder pre-emptive rights. It was
necessary to eliminate pre-emptive rights in order to have the right to proceed
with a private offering of its stock in order to raise capital. A private
offering of stock would dilute the existing shareholders' percentage interest in
the Company and would reduce the 51% interest in the Company held by
Standardbred Enterprises, Inc. below 50%. N.W. Investors L.L.C. and the Trustee
in the Bennett Bankruptcy (both of whom claim ownership of the Company's stock
held by Standardbred Enterprises, Inc.) asked the Bankruptcy Court to block the
shareholders meeting. The Court declined to intercede to block the shareholders
meeting. However, the Court required the Company to notify N.W. Investors,
L.L.C. and the Trustee in the Bennett Bankruptcy in the event it decides to
proceed with a private stock offering. No damages were asked in the lawsuit and
the Court Order does not appear to have a material impact on the Company's
financial position.
The Company notified N.W. Investors, L.L.C. and the Trustee in the Bennett
Bankruptcy on March 24, 1999 that it intended to go forward with a private stock
offering. The 20-day notification period expired on April 13, 1999 with no
response from N.W. Investors, L.L.C. or the Trustee in the Bennett Bankruptcy.
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: 04/23/99 /s/ JUSTICE M. CHENEY
-------------------------------------------------------
Justice M. Cheney, President & Chief Executive Officer
Date: 04/23/99 /s/ JAMES R. WISE
-------------------------------------------------------
James R. Wise, Treasurer and Principal Financial
and Accounting Officer
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 790,033
<SECURITIES> 0
<RECEIVABLES> 236,193
<ALLOWANCES> 22,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,145,642
<PP&E> 12,904,620
<DEPRECIATION> 11,044,030
<TOTAL-ASSETS> 3,155,429
<CURRENT-LIABILITIES> 567,678
<BONDS> 0
0
0
<COMMON> 25,039
<OTHER-SE> 446,851
<TOTAL-LIABILITY-AND-EQUITY> 3,155,429
<SALES> 0
<TOTAL-REVENUES> 945,031
<CGS> 0
<TOTAL-COSTS> 878,276
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,958
<INCOME-PRETAX> 32,797
<INCOME-TAX> 0
<INCOME-CONTINUING> 32,797
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,797
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
</TABLE>
