Overview
On
Impact of COVID-19
As a result of the COVID-19 virus, during the first quarter of 2020 and ongoing, state and local governments have required all but certain essential businesses to close, including all clubs operating under the Scores name.
Upon management's evaluation of relevant hospitality industry conditions and events known as of the date that these financial statements are issued it is their belief the financial effects of the Covid 19 pandemic will not have a substantial or long term effect on the financial viability of the adult entertainment industry. There will be operational changes to be certain but not a consequentially detrimental impact on the industry.
That said it should be noted all royalty paying licensees have reopened and are
current. In addition, cash collections increased from
Although there are fewer licensees and some of the licensing fees have been re-negotiated management believes the worst of the effects the Covid 19 pandemic are over. The lifting of many, if not all, gathering restrictions imposed by local government has vastly improved the appeal of adult entertainment-oriented establishments. Consequently, the Company has seen a recent increase in the number of such establishments interested in utilizing the SCORES brand trademarks.
3 Table of Contents
Summary of Critical Accounting Policies and Estimates
There have been no significant changes in our critical accounting policies and
estimates during the three months ended
Results of Operations
Three Months Ended
Revenues:
Revenues decreased to
Our licenses are structured such that we receive royalty payments representing a percentage of revenues of the licensee, or structured with a flat monthly rate.
Other Expense
Total other expense decreased to
General and Administrative Expenses:
General and administrative expenses decreased during the 2021 and 2020
three-month period to
Provision for Income Taxes
The provision for income taxes relates primarily to the greater of average assets and capital taxable income. The average assets and capital are not impacted by net operating losses.
Net Income (Loss):
Our net loss (
Net income(loss) per share data for both the 2021 three-month period and the 2020 three-month period is based on net income available to common shareholders divided by the weighted average of the number of common shares outstanding.
Liquidity and Capital Resources
Going Concern:
Various conditions such as the accumulated losses, working capital deficit, significant debt, and the results of litigation raise substantial doubt about the Company's ability to continue as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset
4
Table of Contents
carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Cash:
At
Operating Activities:
Net cash provided by operating activities for the 2021 three-month period was
As of
Financing Activities:
Net cash provided by financing activities for the 2021 three-month period was
Future Capital Requirements:
We have incurred significant losses since the inception of our business. Since
our inception, we have been dependent on funding from private lenders and
investors to conduct operations. As of
We will continue to evaluate possible acquisitions of or investments in businesses, products and technologies that are complementary to ours. These may require the use of cash, which would require us to seek financing. We may sell equity or debt securities or seek credit facilities to fund acquisition-related or other business costs. Sales of equity or convertible debt securities would result in additional dilution to our stockholders. We may also need to raise additional funds in order to support more rapid expansion, develop new or enhanced services or products, respond to competitive pressures, or take advantage of unanticipated opportunities. Our future liquidity and capital requirements will depend upon numerous factors, including the success of our adult entertainment trademark licensing business.
Statement of Forward-Looking Information
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements made by or on behalf of the Company. The Company and
its representatives may from time to time make written or oral statements that
are "forward-looking", including statements contained in this report and other
filings with the
5
Table of Contents
looking statements attributable to the Company or any person acting on behalf of the Company are qualified by the cautionary statements in this section. Many of the factors that will determine the Company's future results are beyond the ability of management to control or predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements.
The forward-looking statements contained in this report include, but are not limited to, statements regarding (1) the Company's ability to finance its future working capital.
The Company undertakes no obligation to update or publicly release any revisions to any forward-looking statement to reflect events, circumstances or changes in expectations after the date of such forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
Recently Issued Accounting Pronouncements
See Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of
Impact of inflation and seasonality
We do not anticipate any changes due to inflation and/or seasonality.
© Edgar Online, source