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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1999
Commission File Number -- 0-1607
MID-STATE RACEWAY, INC.
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(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
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(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 JUNE 30, 1998
- ----------------------------- ----------------------------
Common Stock, $0.10 par value 250,386
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<PAGE>
<TABLE>
A. SUMMARY OF FINANCIAL INFORMATION
MID-STATE RACEWAY, INC.
PROFIT AND LOSS INFORMATION
<CAPTION>
Three Months Six Months
Ended Ended
------------------------------ ------------------------------ Year Ended
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998 December 31, 1998
47 Racing Days 50 Racing Days 49 Racing Days 50 Racing Days 122 Racing Days
-------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Operating Revenue ................................ $ 1,932,894 $ 2,061,785 $ 2,876,958 $ 2,981,124 $ 6,502,987
-----------
Operating Expense ................................ 2,196,434 2,432,172 3,074,710 3,443,259 7,301,521
----------- ----------- ----------- ----------- -----------
Loss from Operations ............................. (263,540) (370,387) (197,752) (462,135) (798,534)
----------- ----------- ----------- ----------- -----------
Other Income:
Commissions for Capital Improvements .......... 0 0 0 0 86,330
Investment income (loss) ...................... (92,913) (11,320) (59,922) (11,320) (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 ......................... (92,913) (11,320) (59,922) 388,679 911,976
----------- ----------- ----------- ----------- -----------
Loss before provision for
Taxes on income ............................... (356,453) (381,707) (257,674) (73,456) 113,442
Provision (Credit) for Taxes
on Income ..................................... 0 0 0 0 404
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) ................................ ($ 356,453) ($ 381,707) ($ 257,674) ($ 73,456) $ 113,038
=========== =========== =========== =========== ===========
Earnings per weighted average shares outstanding . ($ 1.42) ($ 1.52) ($ 1.03) ($ 0.29) $ 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 Six For the
Months Ended Year Ended
June 30, December 31,
INCREASE (DECREASE) IN CASH 1999 1998
--------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) .............................. ($ 257,674) $ 113,038
Adjustments to reconcile net income (loss)
to cash used in operating activities:
Depreciation ................................ 83,433 197,667
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 ........................... 11,589 (25,268)
Accounts and grants receivable ............ 329,956 (324,588)
Other current assets ...................... 69,800 (231,137)
Other assets .............................. 36,149 (20,703)
Real estate taxes payable ................. (36,000) 174,000
Accounts payable .......................... 208,483 (545,529)
Uncashed winning tickets .................. (50,727) (2,952)
Retention for capital improvements ........ 17,174 20,788
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Net cash provided by (used in) operating
activities...................................... 412,183 (1,088,587)
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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 ........... (178,106) (193,170)
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Net cash provided by (used in) investing
activities...................................... (178,106) 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 ................................ 234,077 241,244
Cash, beginning of period ......................... 437,241 195,997
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Cash, end of period ............................... $ 671,318 $ 437,241
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3
<PAGE>
A. (Continued)
MANAGEMENT ANALYSES OF PROFIT AND LOSS INFORMATION
The Company's net loss from operations of $ 197,752 for the six (6) months ended
June 30, 1999, represents a decrease of 57.2% from the loss of $264,383 over the
same period last year. A significant factor in the decrease of the loss from
operations was a decrease in operating expense of $368,549-(10.7%). Management
continues to focus on reducing operating expenses through a variety of measures.
The decrease in other income of $448,602 for the six (6) months ended June 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 six (6) months ended June 30, 1999 decreased an
average of $6,844 per day. While the average daily attendance is down by 9.3%,
the per capita average on-track wagering is 3.6% above last year's level. Total
wagering on harness and thoroughbred simulcasting during the six (6) months
ended June 30, 1999 decreased by $1,464,596 (16.8%) 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; and
c. Eliminating various expenditures.
In addition, during the second quarter of 1999, the Company commenced a private
placement of its common stock. Pursuant to the private placement, the Company
plans to raise a minimum of $100,000 and a maximum of $1,500,000 of equity
capital by issuing 150,000 of its shares of common stock at $10.00 per share.
The proceeds will be used to provide needed working capital, fund capital
improvements including roof repair, debt retirement and necessary funds for
promotion and advertising of the facility.
As of the end of the second quarter, subscriptions totaling $60,000 had been
received and placed in escrow pending the receipt of additional subscriptions to
achieve $100,000.
Subsequent to the end of the second quarter, the Company entered into a Stock
Purchase Agreement with John J. Signorelli, Dominic A. Giambona, and Wesley E.
Wendt, Sr. (the "Purchasers") to subscribe for the balance of shares available
in the private placement. In addition, the Purchasers will be granted Warrants
to purchase an additional 150,000 to 175,000 shares of common stock at $10.00
per share. The Warrants must be exercised by November 15, 2000.
Closing on the Stock Purchase Agreement is subject to several contingencies.
There can be no assurance that the contingencies will be satisfied and the
balance of the shares will be purchased pursuant to the Stock Purchase
Agreement.
If the closing on the Stock Purchase Agreement occurs, the Company will receive
$1,500,000 in new capital which will substantially improve the financial
condition 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, anticipated private placement of its
common stock and expected grants from local governmental agencies. The Company's
current ratio at June 30, 1999 was approximately 1.3 to 1.
4
<PAGE>
B. CAPITALIZATION AND SHAREHOLDERS' EQUITY
MID-STATE RACEWAY, INC.
BALANCE SHEET
JUNE 30, 1999 AND DECEMBER 31, 1998
June 30, December 31,
1999 1998
----------- ------------
ASSETS
CURRENT ASSETS
Cash ............................................ $ 671,318 $ 437,241
Cash restricted for purses, capital improvements
and uncashed winning tickets ................. 75,889 87,478
Grant receivable ................................ 0 122,750
Accounts receivable, net of allowance for
doubtful accounts of $22,000 in 1999 and 1998. 166,648 373,854
Other current assets ............................ 183,077 252,877
----------- -----------
Total current assets .......... 1,096,932 1,274,200
PROPERTY, PLANT AND EQUIPMENT
Land, racing plant and equipment ................ 12,896,711 12,718,605
Other Properties ................................ 121,671 121,671
----------- -----------
13,018,382 12,840,276
Less accumulated depreciation ................... 11,085,747 11,002,314
----------- -----------
1,932,635 1,837,962
OTHER ASSETS ....................................... 41,457 77,606
$ 3,071,024 $ 3,189,768
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses ........... $ 691,251 $ 482,768
Current portion of real estate taxes payable .... 36,000 72,000
Uncashed winning tickets ........................ 8,531 59,258
Retention for capital improvements .............. 37,962 20,788
----------- -----------
Total current liabilities ..... 773,744 634,814
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 (deficit) ..................... (68,967) 188,707
----------- -----------
Total shareholders' equity .... 181,419 439,093
----------- -----------
$ 3,071,024 $ 3,189,768
=========== ===========
5
<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 June 30, 1999.
ITEM 7 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
The Company held its Annual Meeting of the Shareholders on June 25, 1999
for the purposes of electing four (4) persons to the Company's Board of
Directors until the Company's 2002 Annual Meeting of the Shareholders and
to transact such other business as may properly come before the Meeting.
Proxies were not solicited from the Shareholders.
Following is a listing of the Directors of the Company after the election
noted above and the expiration of their term as a Director:
Year 2000 Annual Meeting
------------------------
Abe Acee, Jr.
Justice M. Cheney
Thomas M. Hunter
Year 2001 Annual Meeting
------------------------
Patrick Bombardo
Gwen K. Bennett
Paul V. Noyes
James J. Moran
Year 2002 Annual Meeting
------------------------
Edward A. Kiley
Jeremiah Law
Dr. Robert Legler, DVM
Wesley E. Wendt, Sr.
No other business was transacted at the Meeting.
6
<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: 07/28/99 /s/ JUSTICE M. CHENEY
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Justice M. Cheney, President &
Chief Executive Officer
Date: 07/28/99 /s/ JAMES R. WISE
---------------------------------------
James R. Wise, Treasurer and
Principal Financial and
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 747,207
<SECURITIES> 0
<RECEIVABLES> 188,648
<ALLOWANCES> 22,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,096,932
<PP&E> 13,018,382
<DEPRECIATION> 11,085,747
<TOTAL-ASSETS> 3,071,024
<CURRENT-LIABILITIES> 773,744
<BONDS> 0
0
0
<COMMON> 25,039
<OTHER-SE> 156,380
<TOTAL-LIABILITY-AND-EQUITY> 3,071,024
<SALES> 0
<TOTAL-REVENUES> 1,939,921
<CGS> 0
<TOTAL-COSTS> 2,196,434
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,958
<INCOME-PRETAX> (356,453)
<INCOME-TAX> 0
<INCOME-CONTINUING> (356,453)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (356,453)
<EPS-BASIC> (1.42)
<EPS-DILUTED> 0.00
</TABLE>
