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 September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 033-24178-A
MASON HILL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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Delaware 65-0109088
(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 December 20, 2000, approximately 16,833,216 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)
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TABLE OF CONTENTS PAGE
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Consolidated Balance Sheets as at September 30, 2000 and March 31, 2000 3
Consolidated Statements of Operations for the three months ended September 30, 2000 and September 30,1999 4
Consolidated Statements of Operations for the six months ended September 30, 2000 and September 30,1999 5
Consolidated Statements of Cash Flows for the six months ended September 30, 2000 and September 30,1999 6
Notes to Consolidated Financial Statements 7-8
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MASON HILL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
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September 30, 2000 March 31, 2000
(unaudited)
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Assets:
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Cash $ 509,439 $ 713,244
Receivables from broker dealers - 1,379,400
Securities owned 1,080,146 839,335
Property and equipment, net 88,096 84,952
Other assets 183,444 212,455
--------------------------------------------------
$ 1,861,125 $ 3,229,386
==================================================
Liabilities:
Commission payable $ 115,495 $ 1,081,269
Payable to broker dealers 560,891
Accrued expenses and other liabilities 155,283 274,147
Securities sold, but not yet purchased 9,888 10,875
Loans payable 64,000 281,500
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905,557 1,647,791
Subordinated liabilities - 230,000
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905,557 1,877,791
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Stockholder's Equity:
Common stock; $0.002 par value,
20,000,000 shares authorized,
15,138,769 shares issued and
outstanding in 2000 and12,726,269 in 2000 30,277 25,452
Paid-in-capital 15,315,223 14,402,243
Foreign currency translation (76,645) (76,645)
Retained deficit (14,313,287) (12,999,455)
--------------------------------------------------
955,568 1,351,595
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$ 1,861,125 $ 3,229,386
==================================================
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MASON HILL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
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Three months ended Three months ended
September 30, 2000 September 30, 1999
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<S> <C> <C>
Revenue $ 685,203 $ 3,467,271
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Expenses:
Salaries and commissions 937,986 1,508,381
Stock based compensation Svc. 232,050
Clearing costs 358,126 186,664
Communications 157,457 136,839
Occupancy 88,279 90,862
Interest 2,867 3,690
Operating expenses 324,712 185,330
--------------------------------------------------
Salaries and related costs 685,012 2,146,917
Commissions and clearing charges 146,844 202,119
Communications and data processing 164,718 147,559
Occupancy 115,968 169,570
Interest (income) expense (9,546) 4,409
Operating expenses 275,673 355,702
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1,378,669 3,026,276
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Income (loss) before Taxes (693,466) 440,995
Provision for Income taxes
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Net income (loss) $ (693,466) $ 440,995
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MASON HILL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
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Six months ended Six months ended
September 30, 2000 September 30, 1999
==================================================
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Revenue $ 2,140,317 $ 6,009,974
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Expenses:
Salaries and commissions 937,986 1,508,381
Stock based compensation Svc. 232,050
Clearing costs 358,126 186,664
Communications 157,457 136,839
Occupancy 88,279 90,862
Interest 2,867 3,690
Operating expenses 324,712 185,330
--------------------------------------------------
Salaries and related costs 1,855,048 3,655,298
Commissions and clearing charges 504,970 388,783
Communications and data processing 322,175 284,398
Occupancy 204,247 260,432
Interest (income) expense (6,679) 8,099
Operating expenses 574,388 541,032
--------------------------------------------------
3,454,149 5,138,042
--------------------------------------------------
Income (loss) before Taxes (1,313,832) 871,932
Provision for Income taxes
--------------------------------------------------
Net income (loss) $ (1,313,832) $ 871,932
==================================================
Income (Loss) per Common Share
Basic and diluted loss per common share $ (0.09) $ 0.10
==================================================
Weighted average common shares outstanding 14,438,769 8,940,988
==================================================
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MASON HILL HOLDINGS, INC.
STATEMENTS OF CASH FLOW
(unaudited)
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Six months ended Six months ended
September 30, 2000 September 30, 1999
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Cash flow from operating activities:
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Cash received from customers $ 4,130,608 $ 5,500,147
Cash paid to suppliers and employees (4,283,525) (5,430,079)
Interest received (paid) 6,679 (8,099)
Income tax paid (880) -
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Net Cash Provided by (Used in) Operating Activities (147,118) 61,969
--------------------------------------------------
Cash flows from investing activities:
Purchase of investments (247,846) (533,581)
Purchase of equipment (3,144) (9,913)
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Net Cash Used in Investing Activities (250,990) (543,494)
--------------------------------------------------
Cash flows from financing activities:
Short-term borrowing from (payments to) related parties (987) 8,475
Proceeds from (payments of) loans (317,500) 5,000
Proceeds from issuance of stock 512,790
--------------------------------------------------
Net Cash Provided by (Used in) Financing Activities 194,303 13,475
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Net decrease in cash (203,805) (468,050)
Cash at beginning 713,244 484,377
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Cash at End $ 509,439 $ 16,327
==================================================
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<PAGE>
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.
General
Mason Hill Holdings 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 on contract hire to local authorities and selected
corporate customers throughout the United Kingdom.
On October 1, 1999, Mason Hill Holdings consummated an acquisition of all
of the issued and outstanding stock of Mason Hill & Co., in exchange for the
issuance of 15,886,618 shares of Common Stock of Mason Hill Holdings. As part of
the completed transaction, Mason Hill Holdings changed its name from Pride, Inc.
to Mason Hill Holdings, Inc., reduced its authorized capital from 500,000,000
shares of common stock to 20,000,000 shares, and accepted the resignation of its
officers and replaced them with the officers of Mason Hill & Co. In addition to
the foregoing, Mason Hill Holdings (i) reorganized its AC Investments and Pride
Management Services Investments, Inc. subsidiaries as wholly-owned subsidiaries
of AC Holdings, Inc., (ii) delivered 350,000 shares of Digital Mafia
Entertainment common stock to AC Holdings as a capital contribution, and (iii)
it spun-off 743,000 shares of Digital Mafia Entertainment common stock that it
owned to its shareholders. AC Holdings is a newly formed minority-owned
subsidiary of Mason Hill Holdings that Mason Hill Holdings intends to spin-off
to its shareholders. Finally, simultaneous with the closing of the agreement,
Mason Hill Holdings' stock underwent a 1 for 2 reverse split.
3
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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, through its wholly-owned subsidiary, Mason Hill & Co,
offers a full line of securities brokerage services to its clients. Mason Hill &
Co. 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 & Co. is currently licensed to conduct activities as a
broker-dealer in forty-five (45) states. Mason Hill & Co. 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 & Co. 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 & Co. also provides financial consulting
services to publicly and privately held companies.
Results of Operations
Six months ended September 30, 2000 compared to six months ended September 30,
1999.
Total revenues for the six months ended September 30, 2000 decreased
$3,869,657 or 64.4% to $2,140,317 from $6,009,974 for the six months ended
September 30, 1999. The decrease in revenues experienced by the Company resulted
primarily from a decrease in commissions generated, as well as from trading
losses incurred, by the Company's wholly-owned subsidiary, Mason Hill & Co.,
Inc. The decrease in commissions generated resulted from the general decrease in
the stock market and the decreased level of trading activity by customers.
Salaries and related costs for the six months ended September 30, 2000 were
$1,855,048, a $1,800,250 or 49.3% decrease over the salaries and related costs
of $3,655,298 for the same period last year. The decrease in salaries and
related costs primarily resulted from a decrease in the commissions payable to
existing personnel due to a decreased level of trading activity as well as from
a decrease in total salaries paid due to reductions in personnel.
Commissions and clearing costs for the six months ended September 30, 2000
were $504,970, a $116,187 or 29.9% increase over the commissions and clearing
expenses of $388,783 for the same period last year. The increase related to
charges stemming from customer reneges on unsecured margin calls or non-payment
of deficits resulting from the general decrease in the stock market.
The Company had a net loss for the six months ended September 30, 2000 of
($1,313,832) as compared to net income of $871,932 for the same period ended
September 30, 1999. The net loss primarily resulted from the reduction of
customer trades, as well as proprietary trading losses incurred by Mason Hill &
Co.
4
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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.
In March 2000, Mason Hill Holdings completed a private placement of
1,499,500 shares of its common stock from which it received net proceeds of
$578,300.
In March 2000, Mason Hill also sold 555,555 shares of common stock to
Christopher Kinsley for an aggregate purchase price of $150,000. In addition, in
March 2000, Mason Hill sold 961,111 shares of common stock to an entity
controlled by Christopher Kinsley for an aggregate purchase price of $259,500.
In July and August 2000, Mason Hill sold an aggregate of 1,362,500 Units,
each Unit composed of one share of common stock and two warrants to purchase
common stock of the Company, at a purchase price of $0.40 per Unit, from which
it received aggregate net proceeds of approximately $512,700.
In September 2000, Christopher Kinsley agreed to exchange a $130,000
subordinated loan that he had made to the Company's wholly-owned subsidiary for
an aggregate of 1,444,444 shares of Common Stock.
Mason Hill Holdings has no 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 its expanding operations and to pursue
its business growth strategy. There can be no assurances that additional
financing will be available on acceptable terms, if at all.
5
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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:
27.1 - Financial Data Schedule
(B) Reports of Form 8-K filed during quarter:
None.
<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
Christopher J. Kinsley,
President
Dated: December 20, 2000
