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 June 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
----------------------------- ---------------
Commission file number: 033-24178-A
MASON HILL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
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 August 17, 2000, approximately 15,076,272 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 June 30, 2000 and March 31, 2000 3
Consolidated Statements of Loss and Deficit for the three months ended June 30, 2000 and June 30,1999 4
Consolidated Statements of Cash Flows for the three months ended June 30, 2000 and June 30,1999 5
Notes to Consolidated Financial Statements 6-7
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MASON HILL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
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June 30, 2000 June 30, 1999
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Assets:
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Cash $ 130,626
Receivables from broker dealers 805,632 719,558
Securities owned 343,998 482,181
Property and equipment, net 84,952 55,971
Other assets 193,211 234,637
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$ 1,558,419 $ 1,492,347
========================================================
Liabilities:
Commission payable $ 236,422 $ 230,849
Accrued expenses and other liabilities 106,639 199,373
Securities sold, but not yet purchased 22,079 10,754
Loans payable 5,000
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365,140 445,976
Subordinated liabilities 230,000 230,000
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595,140 675,976
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Stockholder's Equity:
Common stock; $0.002 par value,
20,000,000 shares authorized,
13,776,269 shares issued and
outstanding in 2000 and 8,940,988 in 1999 27,552 17,882
Paid-in-capital 14,632,193 13,319,313
Foreign currency translation (76,645) (76,645)
Retained deficit (13,619,821) (12,444,179)
--------------------------------------------------------
963,279 816,371
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$ 1,558,419 $ 1,492,347
========================================================
3
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CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
-----------------------------------------------------------------------------------------------------------
Three months ended Three months ended
June 30, 1999 June 30, 1999
=================================================
Revenue
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$ 1,455,114 $ 2,542,703
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Expenses:
Salaries and commissions 1,372,036 1,508,381
Clearing costs 156,126 186,664
Communications 157,457 136,839
Occupancy 88,279 90,862
Interest 2,867 3,690
Other operating expenses 298,715 185,330
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2,075,480 2,111,766
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Income (loss) before Taxes (620,366) 430,937
Provision for Income taxes 172,375
-------------------------------------------------
Net income (loss) $ (620,366) $ 258,562
=================================================
Income (Loss) per Common Share
Basic and diluted loss per common share $ (0.05) $ 0.03
=================================================
Weighted average common shares outstanding 13,251,269 8,940,988
=================================================
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MASON HILL HOLDINGS, INC.
STATEMENTS OF CASH FLOW
(unaudited)
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Three months ended Three months ended
June 30, 1999 June 30, 1999
=====================================================
Cash flow from operating activities:
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Cash received from customers $ 2,028,879 $ 2,599,344
Cash paid to suppliers and employees (2,832,791) (2,788,448)
Interest paid (2,867) (3,690)
Income tax paid (880)
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Net Cash Used in Operating Activities (807,659) (192,794)
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Cash flows from investing activities:
Proceeds from sale of investments 495,337
Purchase of long-term investments (312,766)
Purchase of equipment (7,117)
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Net Cash Provided by (Used in) Investing Activities 495,337 (319,883)
-----------------------------------------------------
Cash flows from financing activities:
Short-term borrowing from related parties (270,296) 15,754
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Net Cash Provided by (Used in) Financing Activities (270,296) 15,754
-----------------------------------------------------
Net decrease in cash (582,618) (496,923)
Cash at beginning 713,244 484,377
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Cash at End $ 130,626 $ (12,546)
=====================================================
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5
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MASON HILL HOLDINGS, INC.
NOTES
(unaudited)
-------------------------------------------------------------------------------------------------------------------
BASIS OF FINANCIAL STATEMENT PRESENTATION
The information as of and for the three months ended June 30, 2000 and 1999, is
unaudited. In the opinion of management, all adjustments necessary for a fair
presentation of the results of such interim periods have been included.
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES:
2000 1999
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Net Income (Loss) ($620,366) $258,562
Adjustments to reconcile net loss to
net cash used in operating activities:
Stock based compensation for services232,050 (Increase) decrease:
Receivable from clearing organization573,768 56,641
Prepaid expenses 19,244 (130,328)
Security deposits (1,400)
Increase (decrease):
Accounts payable and accrued expenses (1,012,355) (376,269)
---------- ----------
Net Cash Used in Operating Activities ($807,659) ($192,794)
========== ==========
During the three months ended June 30, 2000 the Company recorded an
expense for the following non-cash transaction:
1,050,000 shares of common stock issued as
compensation to employees $ 232,050
==========
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SUBSEQUENT EVENT
On July 7 and August 9, 2000, the Company issued 1,250,000 and 112,500 units in
a private placement. A unit is comprised of one share of common stock and two
warrants to purchase common stock. Net proceeds from the July 7 and August 9,
2000 private placement were $473,290 and $39,500, respectively.
6
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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.
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.
7
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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
Three months ended June 30, 2000 compared to three months ended June 30, 1999.
Total revenues for the three months ended June 30, 2000 decreased
$1,087,589 or 42.8% to $1,455,114 from $2,542,703 for the three months ended
June 30, 1999. The decrease in revenues experienced by the Company resulted
primarily from a decrease in commissions and trading profits generated 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 three months ended June 30, 2000 were
$1,372,036, a $136,345 or 9% decrease over the salaries and related costs of
$1,508,381 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 customer trading activity.
Commissions and clearing costs for the three months ended June 30, 2000
were $156,126, a $30,538 or 16.4% increase over the commissions and clearing
expenses of $186,664 for the same period last year. The decrease related to the
decreased commission revenue generated and the decreased trading volume
experienced by Mason Hill & Co.
Communications and data processing expenses for the three months ended June
30, 2000 were $157,457, a $20,618 or 15.1% increase over the communications and
data processing expenses of $136,839 for the same period last year.
8
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Operating expenses for the three months ended June 30, 2000 were $298,715,
a $113,385 or 61.2% increase over the operating expenses of $185,330 for the
same period last year.
The Company had a net loss for the three months ended June 30, 2000 of
($620,366) as compared to net income of $258,562 for the same period ended June
30, 1999. The net loss primarily resulted from expenses incurred in connection
with the issuance of stock to employees, as well as proprietary trading losses
incurred by Mason Hill & Co.
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 December 1999, 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 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 August 2000, Mason Hill sold 112,500 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 net proceeds of
approximately $512,700.
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, 2002.
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 through 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.
9
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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:
None.
(B) Reports of Form 8-K filed during quarter:
None.
10
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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: August 21, 2000
