UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-----------------------------
Commission file number:
MASON HILL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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Delaware 650109088
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
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110 Wall Street
New York, New York 10005
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 425-3000
Indicate by check whether 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 (or for such shorter period that registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
As of February 17, 2000, approximately 9,760,106 shares, $.002 par
value per share, of the Company were issued and outstanding.
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)
TABLE OF CONTENTS
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PAGE
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Consolidated Balance Sheets as of December 31, 1999 and March 31, 1999 3
Consolidated Statements of Income for the nine
months ended December 31, 1999 and 1998 4
Consolidated Statements of Cash Flows for the nine months
ended December 31, 1999 and 1998 5
Notes to Unaudited Financial Statements 6 - 7
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MASON HILL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(unaudited)
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- -------------------------------------------------------------------------------------------------------------------
Dec. 31, 1999 March 31, 1999
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Assets:
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Cash $ 62,919 $ 484,377
Receivable from broker dealers 75,733 776,199
Securities owned 2,847,209 169,415
Property and equipment, net 60,745 48,854
Other assets 515,086 4,265,886
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$ 3,561,692 $ 5,744,731
===========================================
Liabilities:
Commissions payable $ 833,506 $ 653,647
Accrued expenses and other liabilities 884,054 312,672
Securities sold, but not yet purchased 230,315
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1,947,875 966,319
Subordinated liabilities 230,000 230,000
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2,177,875 1,196,319
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Stockholders' equity:
Common stock; $0.002 par value, 20,000,000 shares
authorized, 8,940,988 shares issued and outstanding 17,882 17,882
Paid in Capital 13,449,129 13,449,129
Foreign currency translation (76,650) (76,650)
Retained earnings (deficit) (12,006,544) (8,841,949)
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1,383,817 4,548,412
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$ 3,561,692 $ 5,744,731
===========================================
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MASON HILL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
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Nine Months Ended Dec. 31 Three Months Ended Dec. 31,
----------------------- ---------------------------
1999 1999 1998 1998
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<S> <C> <C> <C> <C>
Revenue $ 9,397,988 $ 2,792,037 $ 3,388,012 $1,516,301
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Expenses:
Salaries and commissions 5,758,638 2,034,106 2,103,341 963,709
Clearing costs 531,014 226,143 142,231 110,828
Communications 338,836 223,984 83,183 97,483
Occupancy 346,784 327,375 86,986 132,885
Interest 11,194 17,971 3,095 5,332
Operating expenses 1,216,031 474,631 681,127 213,118
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8,202,497 3,304,210 3,099,963 1,523,355
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Income (loss) before taxes 1,195,491 (512,173) 288,049 (7,054)
Income taxes 432,109 0 396,598 0
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Income (loss) before discontinued
operations 763,382 (512,173) (108,549) (7,054)
Loss from discontinued operations (3,927,977)
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Net loss $ (3,164,595) $ (512,173) $ (108,549) $ (7,054)
=====================================================================================
Income (Loss) per Common Share
Income (Loss) before discontinued $ 0.08 $ (0.06) $ (0.01) $ -
Loss from discontinued operations (0.43) 0.00 0.00 0.00
-------------------------------------------------------------------------------------
$ (0.35) $ (0.06) $ (0.01) $ -
=====================================================================================
Weighted Average Number of
Common Shares Outstanding 9,223,014 8,940,988 9,487,067 8,940,988
=====================================================================================
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MASON HILL HOLDINGS, INC.
STATEMENT OF CASH FLOWS
(unaudited)
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Nine Months Ended Dec. 31,
1999 1998
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Cash flows from operating activities:
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Net loss $ (3,164,595) $ (512,173)
------------------------------------
Adjustments to reconcile net loss to net
cash used by operating activities:
(Increase) decrease in assets
Due from broker dealers 700,466 (174,920)
Securities owned (2,677,794) 114,596
Other assets 3,750,800 (122,662)
Increase in liabilities
Commissions payable 179,859 162,625
Accrued expenses and other liabilities 571,382 34,877
Securities sold, but not yet purchased 230,315 29,827
------------------------------------
Total adjustments 2,755,028 44,343
------------------------------------
Net cash used by operating activities (409,567) (467,830)
------------------------------------
Cash flows from investing activities:
Cash paid for equipment (11,891) (851)
------------------------------------
Net cash used by investing activities (11,891) (851)
------------------------------------
Cash flows from financing activities:
Decrease in subordinated liabilities
Proceeds from paid in capital 462,500
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Net cash provided by financing activities 0 462,500
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Net decrease in cash (421,458) (6,181)
Cash - beginning 484,377 20,194
------------------------------------
Cash - end $ 62,919 $ 14,013
====================================
Supplemental disclosure of cash flow information:
Cash paid during the periods for:
Interest expense $ 2,530 $ 4,033
====================================
Income taxes $ 611 $ -
====================================
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29
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MASON HILL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements are presented
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB and item 310 under
subpart A of Regulation S-B. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended December 31, 1999 are not
necessarily indicative of the results that may be expected for the year ended
March 31, 2000.
The balance sheet at March 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's current report on Form 8-K filed on
December 15, 1999.
NOTE 2 -DESCRIPTION OF COMPANY
On October 1, 1999, the Company completed the acquisition of all the issued
and outstanding capital of Mason Hill & Co., Inc. in exchange for the issuance
of 15,886,618 shares of Common Stock. In addition to the foregoing, the
Company's then existing subsidiaries were reorganized and spun-off to its
shareholders.
Simultaneously with the acquisition of Mason Hill & Co., Inc., the Company
changed its name from Pride, Inc. to Mason Hill Holdings, Inc. For financial
reporting purposes the transaction was accounted for as a reverse acquisition.
Mason Hill & Co., Inc. was treated as the acquirer and is the ongoing reporting
entity. As a result of the foregoing, the Company has effectively discontinued
its prior operations, and has now been reconstituted as a parent holding company
for Mason Hill & Co., Inc.
Mason Hill Holdings is engaged, through its wholly-owned subsidiary, Mason
Hill & Co., Inc., in commercial brokerage operations, particularly retail and
institutional sales of securities, trading and market making activities, and
investment and merchant banking. In addition, Mason Hill & Co. intends to engage
in other aspects of the securities business, such as the purchase and sale of
United States Government obligations, money market instruments, mortgage related
securities, municipal and tax exempt securities, options and foreign exchange
commodities.
In the opinion of management, the accompanying unaudited interim
consolidated condensed financial statements of Mason Hill & Co., Inc. and its
subsidiary, contain all adjustments necessary to present the Company's financial
position as of December 31, 1999 and the results of its operations for the three
and nine month periods ended December 31, 1999 and 1998 and the cash flows for
the nine month periods ended December 31, 1999 and 1998.
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NOTES 3-FIXED ASSETS
Fixed assets consists of the following:
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December 31, March 31,
1999 1999
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(unaudited)
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Leasehold improvements $106,839 $106,839
Furniture, fixtures and equipment 117,318 85,829
------------------------
224,157 192,668
Less: Accumulated depreciation 163,412 143,814
------------------------
$ 60,745 $ 48,854
------------------------
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NOTE 4-NEW ACCOUNTING PRONOUNCEMENTS
Earnings (Loss) per share
The Company has adopted SFAS 128 'Earnings Per Share' ("SFAS 128'), which is
effective for periods ending after December 15, 1997 and has changed the method
of calculating eamings (loss) per share. SFAS 128 requires the presentation of
basic and diluted earnings (loss) per share on the face of the income statement.
Prior period earnings (loss) per share data has been restated in accordance with
SFAS 128.Loss per common share is computed by dividing the net loss by the
weighted average number of common shares outstanding during the period.
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ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
Statements in this Quarterly Report on Form 10-QSB concerning the Company's
outlook or future economic performance, anticipated profitability, gross
billings, expenses or other financial items, and statements concerning
assumption made or exceptions to any future events, conditions, performance or
other matter are "forward looking statements," as that term is defined under the
Federal Securities Laws. Forward-looking statements are subject to risks,
uncertainties, and other factors which would cause actual results to differ
materially from those stated in such statements. Such risks, uncertainties, and
other factors which would cause actual results to differ materially from those
stated in such statements. Such risks, and uncertainties and factors include,
but are not limited to: (i) changes in external competitive market factors or
trends in the Company's results of operation; (ii) unanticipated working capital
or other cash requirements; and (iii) changes in the Company's business strategy
or an inability to execute its competitive factors that may prevent the Company
from competing successfully in the marketplace.
Background
Mason Hill Holdings, Inc. (the "Company") is a Delaware corporation
originally incorporated under the name International Sportfest, Inc. in the
state of Delaware, on September 11, 1988. The Company was a development stage
company with no operations through January 1994. In January 1994, the Company
acquired 100% of the issued and outstanding common stock of Pride Management
Services Plc ("PMS"). PMS was a holding company of six subsidiaries, in the
United Kingdom, engaged in the leasing of motor vehicles primarily on contract
hire to local authorities and selected corporate customers throughout the United
Kingdom. Simultaneously with the acquisition, the Company changed its name from
International Sportfest, Inc. to Pride, Inc. From January 1994 through October
1999, the Company engaged in the leasing of motor vehicles primarily on contract
hire to local authorities and selected corporate customers throughout the United
Kingdom.
On October 1, 1999, the Company completed the acquisition of all the issued
and outstanding capital of Mason Hill & Co., Inc. in exchange for the issuance
of 15,886,618 shares of Common Stock. In addition to the foregoing, the
Company's then existing subsidiaries were reorganized and spun-off to its
shareholders.
Simultaneously with the acquisition of Mason Hill & Co., Inc., the Company
changed its name from Pride, Inc. to Mason Hill Holdings, Inc. For financial
reporting purposes the transaction was accounted for as a reverse acquisition.
Mason Hill & Co., Inc. was treated as the acquirer and is the ongoing reporting
entity. As a result of the foregoing, the Company has effectively discontinued
its prior operations, and has now been reconstituted as a parent holding company
for Mason Hill & Co., Inc.
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Mason Hill Holdings, Inc. (the "Company"), through its wholly-owned
subsidiary, Mason Hill & Co., Inc. ("Mason Hill"), offers a full line of
securities brokerage services to its clients. Mason Hill is a broker-dealer
registered with the Securities and Exchange Commission ("SEC") and a member of
the National Association of Securities Dealers, Inc. ("NASD"). Mason Hill is
currently licensed to conduct activities as a broker-dealer in forty-five (45)
states. Mason Hill offers a full line of securities brokerage services to its
clients, including the purchase and sale of listed and over-the-counter
securities, fixed income instruments, annuities and mutual funds. In addition,
Mason Hill engages in investment banking activities for small to mid-size
companies by structuring their financing and raising capital through private
placements, initial public offerings and secondary offerings. Mason Hill also
provides financial consulting services to publicly and privately held companies.
Results of Operations
Three months ended December 31, 1999 compared to three months ended December 31,
1998.
Revenues for the three months ended December 31, 1999 were $3,388,012, a
123% increase over prior year's revenues of $1,516,301. The increase in revenues
experienced by the Company resulted primarily from an increase in commissions
and trading profits generated by the Company's wholly-owned subsidiary, Mason
Hill & Co., Inc. The increase in commissions generated resulted from an increase
in the number of brokers employed by Mason Hill & Co., as well as from revenues
generated by the Mason Hill & Co.'s new office located in Linwood, New Jersey.
Furthermore, Mason Hill & Co. benefited from the general increase in the stock
market and the increased level of trading activity by customers.
Salaries and related costs for the three months ended December 31, 1999
were $2,103,341, a 118% increase over prior year's salaries and related costs of
$963,709. The increase in salaries and commissions primarily resulted from an
increase in the number of brokers employed by Mason Hill & Co., which resulted
in increased commission generating activity, as well as from an increase in the
salaries payable to existing personnel.
Operating expenses for the three months ended December 31, 1999 were
$996,622, a 78% increase over prior year's operating expenses of $559,646.
The Company showed a loss before discontinued operations for the three
months ended December 31, 1999 of $108,549 as compared to a loss before
discontinued operations of $7,054 for the same period ended December 31, 1998.
The increase in the net loss was primarily a result of start-up costs associated
with the opening of Mason Hill & Co.'s new office located in Linwood, New
Jersey.
The Company showed a loss from discontinued operations for the three months
ended December 31, 1999 that was the result of the discontinued leasing
operations of the Company's former subsidiaries.
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Loss per share for the three months ended December 31, 1999 were ($0.35)
compared to ($0.06) for the same period last year using the total shares
presently outstanding of 8,940,988 in each period.
Nine months ended December 31, 1999 compared to nine months ended December 31,
1998.
Revenues for the nine months ended December 31, 1999 were $9,397,988, a
237% increase over prior year's revenues of $2,792,037. The increase in revenues
experienced by the Company resulted primarily from an increase in commissions
and trading profits generated by the Company's wholly-owned subsidiary, Mason
Hill & Co., Inc. The increase in commissions generated resulted from an increase
in the number of brokers employed by Mason Hill & Co., as well as from revenues
generated by the Mason Hill & Co.'s new office located in Linwood, New Jersey.
Furthermore, Mason Hill & Co. benefited from the general increase in the stock
market and the increased level of trading activity by customers.
Salaries and related costs for the nine months ended December 31, 1999 were
$5,758,638, a 183% increase over prior year's salaries and related costs of
$2,034,106. The increase in salaries and commissions primarily resulted from an
increase in the number of brokers employed by Mason Hill & Co., which resulted
in increased commission generating activity, as well as from an increase in the
salaries payable to existing personnel.
Operating expenses for the nine months ended December 31, 1999 were
$2,443,859, a 92% increase over prior year's operating expenses of $1,270,104.
The Company showed net loss for the nine months ended December 31, 1999 of
$3,164,595 as compared to a net loss of $512,173 for the same period ended
December 31, 1998. The increase in the net loss was a result of the discontinued
leasing operations of the Company's former subsidiaries.
Loss per share for the nine months ended December 31, 1999 were $0.35
compared to $0.06 for the same period last year using the total shares presently
outstanding of 8,940,988.
Liquidity and Capital Resources
Prior to the completion of the acquisition of Mason Hill & Co., Inc.,
Pride, Inc. had limited working capital and its prospects were severely limited.
Upon completion of the acquisition of Mason Hill & Co., Inc., the Company
changed its name to Mason Hill Holdings, Inc. For financial reporting purposes
the transaction was accounted for as a reverse acquisition. Mason Hill & Co.,
Inc. was treated as the acquirer and is the ongoing reporting entity.
Accordingly, the Company's working capital and its capital resources consists of
the financial situation of Mason Hill & Co., Inc.
Mason Hill Holdings has subordinated loans outstanding pursuant to which it
has borrowed an aggregate of $230,000. Such loans bear interest at the rate of
10% per annum and are due and payable on August 31, 2000.
<PAGE>
Mason Hill Holdings' working capital at December 31, 1999 was $1,383,817.
Except for the existing subordinated loans totaling $230,000, Mason Hill
Holdings has no other current arrangements in place with respect to financing.
Mason Hill Holdings is currently seeking to raise additional capital to provide
the necessary capital to fund our expanding operations and to pursue our
business growth strategy. There can be no assurances that additional financing
will be available on acceptable terms, if at all.
Year 2000
Neither the Company nor any of its third party vendors experienced any year
2000 problems.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None.
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.
Item 6. Exhibits and Reports on Form 8-K.
(A) Exhibits:
None.
(B) Reports of Form 8-K filed during quarter:
On October 15, 1999 the Company filed a report on Form
8-K regarding the acquisition of Mason Hill & Co., Inc.
On December 15, 1999 the Company filed a report on Form
8-K/A regarding the acquisition of Mason Hill & Co., Inc.
<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.
MASON HILL HOLDINGS, INC.
By: /s/ Christopher Kinsley
President
Dated: February 17, 2000
