SCORES HOLDING CO INC - Quarter Report: 2009 March (Form 10-Q)

Unassociated Document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

o 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 000-16665

Scores Holding Company, Inc.
(Exact name of small business issuer as specified in its charter)

Utah		87-0426358
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

533-535 West 27th Street, New York, NY 10001
(Address of principal executive offices)

(212) 868-4900
(Registrant’s telephone number, including area code)

Indicate whether the issuer (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 such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):


Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company þ
		(Do not check if a smaller Reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2). Yes o No x

As of May 10, 2009 there were 165,186,124 shares of the issuer’s common stock, par value $0.001, issued and outstanding.

SCORES HOLDING COMPANY, INC.

MARCH 31, 2009 QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		PAGE

	Special Note Regarding Forward Looking Information		3

	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements		4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item4T.	Controls and Procedures		19

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings		20

Item 6.	Exhibits		23

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Except for historical information, this report contains forward-looking statements. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in “Management’s Discussion and Analysis”. You should carefully review the risks described in the documents we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

	PAGE

Consolidated Balance Sheets as of March 31, 2009 (Unaudited) and December 31, 2008		5

Consolidated Statements of Operations for the three months Ended March 31, 2009 and 2008 (Unaudited)		6

Consolidated Statements of Cash Flows for the three months Ended March 31, 2009 and 2008 (Unaudited)		7

Notes to Consolidated Financial Statements (Unaudited)		8

SCORES HOLDING COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2009			2008
	(Unaudited)			(Audited)

ASSETS

CURRENT ASSETS:
Cash	$	10,286		$	173
Licensee receivable - net		55,356			13,845
Total current Assets		65,642			14,018

Intangible assets, net		305,556			333,332

	$	371,198		$	347,350

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	156,439		$	128,826
Related party payable		—			6,000
Bank overdraft		—			20,982
Deferred revenue		50,000			—
Total Current Liabilities		206,439			155,808

STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par value, 10,000,000 shares authorized, -0- issued and outstanding		—			—
Common stock, $.001 par value; 500,000,000 shares authorized, 165,186,124 and 165,186,124 issued and outstanding, respectively		165,186			165,186
Additional paid-in capital		5,998,117			5,998,117
Accumulated deficit		(5,998,544	)		(5,971,761	)
Total stockholder's equity		164,759			191,542
	$	371,198		$	347,350

See notes to consolidated financial statements

SCORES HOLDING COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three months ended March 31
	2009			2008
	(Unaudited)			(Unaudited)

REVENUES
Royalty	$	59,783		$	88,377
Merchandise		—			2,946
Total		59,783			91,323

COST OF MERCHANDISE SOLD		—			718

GROSS PROFIT		59,783			90,605

GENERAL AND ADMINISTRATIVE EXPENSES		92,566			65,804
NET INCOME (LOSS) FROM OPERATIONS		(32,783	)		24,801

OTHER INCOME DEBT FORGIVENESS		6,000			—

NET INCOME (LOSS) BEFORE INCOME TAXES		(26,783	)		24,801

PROVISION FOR INCOME TAXES		—			—
NET INCOME (LOSS)	$	(26,783	)	$	24,801

NET INCOME (LOSS) PER SHARE - Basic and Diluted	$	(0.00	)	$	0.00

WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING - Basic and diluted		165,186,124			165,186,124

See notes to consolidated financial statements

SCORES HOLDING COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three months ended March 31,
	2009			2008
	(Unaudited)			(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(26,783	)	$	24,801

Adjustments to reconcile net loss to net cash provided by (used) in operating activities:
Amortization		27,776			14,930
Changes in asset and liabilities
Royalty receivable		(41,511	)		(20,541	)
Deferred revenue		50,000			—
Due to EMS		—			17,623
Accounts payable and accrued expenses		27,613			(28,813	)
NET CASH PROVIDED BY IN OPERATING ACTIVITIES		37,095			8,000

CASH FLOWS FROM INVESTING ACTIVITIES:
		—			—
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft		(20,982	)		—
Related party payable		(6,000	)		(8,000	)
NET CASH (USED) IN FINANCING ACTIVITIES		(26,982	)		(8,000	)

NET INCREASE IN CASH		10,113			—

CASH, beginning of the period		173			173

CASH, end of the period	$	10,286		$	173

Supplemental disclosures of cash flow information:
Cash paid during the year for interest	$	—		$	—
Cash paid during the year for taxes	$	—		$	8,953

See notes to consolidated financial statements

Scores Holding Company Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(Unaudited)

Note 1: Basis of Presentation

The accompanying unaudited consolidated financial statements of Scores Holding Company Inc., formerly Internet Advisory Corporation and (the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-K. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation (consisting of normal recurring accruals) have been included. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating results expected for the three months ended March 31, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2008.

Going Concern

Scores Holding Company, Inc. and Subsidiaries (“SCRH”) has incurred losses totaling $(5,998,544) through March 31, 2009 and has a working capital deficit of $(140,797) at March 31, 2009. Because of these conditions, SCRH will require additional working capital to develop business operations. SCRH intends to raise additional working capital through the continued licensing of the brand with its current and new operators and to take on operations in larger cities with greater demand for our product through acquisitions. There are no assurances that SCRH will be able to achieve the level of revenues adequate to generate sufficient cash flow from operations to support SCRH’s working capital requirements. To the extent that funds generated from any future use of licensing are insufficient, SCRH will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to SCRH. If adequate working capital is not available SCRH may not increase its operations.

These conditions raise substantial doubt about SCRHs’ ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should SCRH be unable to continue as a going concern.

Scores Holding Company Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(Unaudited)

Note 2: Summary of Significant Accounting Principles

Fair Value of Financial Instruments

The carrying amounts reported on the balance sheets for cash, accounts payable, accrued expenses and licensee receivable approximate fair value based on the short-term maturity of these instruments

Concentration of Credit Risk

The Company earned royalties revenues from four licensees who are unrelated from management of the Company. During the March 31, 2009 period, revenues earned from royalties from these unrelated licensees amounted to $59,783 and there is $55,356 due and outstanding as of March 31, 2009. Our Baltimore and Chicago licensees account for the majority or our revenues; in 2009 Baltimore and Chicago accounted for 45% and 30% and in 2008 they accounted for 15% and 15%, respectively. Our Las Vegas sublicensee was sold and ceased operations in May 2008, accounted for 61% of our revenues in 2008. Our AYA, Scoreslive.com licensee website is still in the development stage since 2007, it has accounted for a minimal amount of our total royalty revenues to date for the 2009 and 2008 periods.

New Accounting Pronouncements

In April 2009, the FASB issued FASB Staff Position No. FAS 107-1 and APB 28-1, "Interim Disclosures about Fair Value of Financial Instruments," which requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This Staff Position is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009.

In April 2009, the FASB issued FASB Staff Position No. FAS 115-2 and FAS 124-2, "Recognition and Presentation of Other-Than-Temporary Impairments," which amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This Staff Position is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The adoption of this Staff Position did not have a material effect on our operations.

FASB 161 - Disclosures about Derivative Instruments and Hedging Activities

In March 2008, the FASB issued FASB Statement No. 161, which amends and expands the disclosure requirements of FASB Statement No. 133 with the intent to provide users of financial statements with an enhanced understanding of; how and why an entity uses derivative instruments, how the derivative instruments and the related hedged items are accounted for and how the related hedged items affect an entity’s financial position, performance and cash flows. This Statement is effective for financial statements for fiscal years and interim periods beginning after November 15, 2008. Management believes this Statement will have no impact on the financial statements of the Company once adopted.

Scores Holding Company Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(Unaudited)

All new accounting pronouncements issued but not yet effective have been deemed to be not applicable to the Company, hence the adoption of these new accounting pronouncements once effective is not expected to have any impact on the Company.

Note 3 - Related party transactions

On January 27, 2009, the Company and Entertainment Management Services, Inc. (“EMS”) completed the closing (the “Closing”) of the transfer from EMS to the Company of all licensing and royalty rights granted to EMS by the Company under that certain Amended and Restated Master License Agreement by and between EMS and the Company (the “MLA”). Under the MLA, the Company had granted EMS the exclusive worldwide license for twenty years plus six five-year renewals at the option of EMS to sublicense the Company’s trademarks and related properties (the “Licensing Rights”). Additionally, under the MLA, EMS was entitled to receive 50% of the licensing fees paid by various non-affiliated nightclubs (the Existing Sublicensees”) to EMS (the “EMS Royalty Rights”).

EMS is owned by 333 East 60th Street Inc. (“333”) and 333 is owned by the Share Sellers Richard Goldring and Elliot Osher.

At the Closing and pursuant to the terms of the transfer agreement by and between the Company and EMS dated December 9, 2008, EMS assigned to the Company the Licensing Rights and the EMS Royalty Rights relating to the Existing Sublicensees, free and clear of any charges, liens or other encumbrances. In consideration of these assignments, the Company credited 333 with a $600,000 payment against a $1,220,475 debt owed by 333 to the Company (the “Debt”) and provided 333 with an acknowledgement that the Debt was satisfied to the extent of the $600,000 payment. Additionally, at the Closing, EMS and the Company executed a cancellation and mutual release agreement canceling the MLA and terminating all of the rights and obligations of the parties thereunder.

WestSide Realty of New York, Inc.

In 2008, we occupied approximately 700 square feet of office space from Go West, on a temporary, month-to-month basis located at 533-535 West 27th Street, New York, NY. On July 1, 2008 we cancelled our occupancy with Go West and currently pay $5,000 per month, including overhead costs, for this office space with Westside Realty of New York which is owned and operated by our majority shareholder.

Scores Holding Company Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(Unaudited)

Note 4 - Sub-licensees

The agreement between us and EMS dated January 27, 2009, terminated the MLA and hence, we have begun to retain 100% of the royalty payments received from each of these clubs rather than the 50% which was previously retained by EMS under the MLA.

In 2003, EMS licensed the use of the "Scores Chicago" name to Stone Park Entertainment, Inc. for its club in Chicago, Illinois. Royalties payable to the Company were the greater of $2,500 per week or 4.99% of the gross revenues (less $25,000 per week) earned at that location. This nightclub accounted for 30% and 15% of our total royalty revenues during the first three month of 2009 and 2008, respectively.

In 2004, EMS licensed the use of "Scores Baltimore" to Club 2000 Eastern Avenue, Inc. for its nightclub in Baltimore, Maryland. Royalties payable to EMS were the greater of $1,000 per week or 4.99% of gross revenues. This club accounted for 45% and 15% of our total royalty revenues during the first three months in 2009 and 2008, respectively.

In April 2007, EMS licensed the use of the Scores brand name to Silver Bourbon, Inc. for a night club in New Orleans, Louisiana. Royalties payable under this license are capped at the greater of $4,000 per month or 4.99% of gross revenues. This club commenced operations in April 2007 and accounted for 20% and 7% of our total royalty revenues during first three months of 2009 and 2008, respectively.

On January 27, 2009, we entered into a licensing agreement with I.M. Operating LLC (“IMO”) for the use of the Scores brand name with I.M. Operating LLC (“IMO”) The address for IMOs’ operations will be at the location of the former Scores West nightclub, 533-535 West 27th Street, New York, NY (the “West 27th Street Building”), which is also owned by our majority shareholder. Royalties payable to us under this license have been set at 3% of gross revenues. The West 27th Street Building is owned by Westside Realty of New York, whose majority shareholder is also our majority shareholder. IMO has applied for and received a liquor license and is currently renovating the club. We believe the club will commence operations during the second quarter 2009. The Company received a $50,000 cash payment from IMO during the 2009 period which will be applied towards future royalties.

Note 5 - Tax matters

As a result of the change in ownership described in Note 3 - Related party transactions, we believe there has been a limitation as to the utilization of the net operating loss carry forwards under I.R.C. Section 382. The utilization of our net operating loss carryforward will be limited to approximately $40,000 per annum. Such net operating loss carryforwards expire in 2028.

Scores Holding Company Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(Unaudited)

Note 6 – Commitments and Contingencies

In early March 2008, we received notice that DIF&B, owner of the Las Vegas club, would be canceling its sublicense with EMS effective on or before May 6, 2008. We were notified that DIF&B would be making final royalty payments to EMS totaling $60,000 at the rate of $10,000 per week starting the first week of March 2008. The Las Vegas club ceased operating and, as of December 31, 2008, EMS had received only one such $10,000 payment from DIF&B. EMS commenced an action against DIF&B and filed a complaint and affidavit of service with the Supreme Court of the State of New York, County of New York (the “SCNY”), on July 23, 2008. DIF&B was required to file an answer by August 23, 2008, but did not do so. As a result, EMS filed an application for a default judgment and the SCNY appointed a referee to determine damages. The referee determined that damages in the amount of $216,000, with interest, should be paid to EMS. This amount must be confirmed by the SCNY in a final judgment. If such a judgment is rendered by the SCNY, we will attempt to collect on the judgment. We will be entitled to all monies so collected, pursuant to the Assignment Agreement with EMS and 333.

On December 11, 2007, a former cocktail waitress at Scores West located in New York, NY, filed a civil lawsuit against us and Go West in the Supreme Court of the State of New York, County of New York, alleging violations of the New York State Human Rights Law, New York Executive Law, New York City Human Rights Law, and the New York City Administrative Code, based upon allegations of sexual discrimination and sexual harassment. The lawsuit further alleges that at all material times both we and Go West were employers of the plaintiff. The law suit seeks unspecified compensatory damages for plaintiff’s alleged loss of past and future earnings and benefits, emotional distress, humiliation and loss of reputation. We dispute that we were an employer of the plaintiff and categorically deny all allegations of sexual discrimination and sexual harassment. We filed our verified answer in the Supreme Court of the State of New York on February 12, 2008 to contest and defend against these accusations and we are currently engaged in discovery. On April 18, 2008, co-defendant Go West filed for bankruptcy and the case is currently stayed.

On October 9, 2007, a former Go West bartender filed a purported class action and collective action on behalf of all tipped employees against us and other defendants alleging violations of federal and state wage/hour laws (Siri Diaz et al. v. Scores Holding Company, Inc.; Go West Entertainment, Inc. a/k/a Scores West Side; and Scores Entertainment, Inc., a/k/a Scores East Side, Case No. 07 Civ. 8718 (Southern District of New York (the “Court”), Judge Richard M. Berman)). On November 6, 2007, plaintiffs served an amended purported class action and collective action complaint, naming dancers and servers as additional plaintiffs and alleging the same violations of federal and state wage/hour laws. On or about February 21, 2008, plaintiffs served a second amended complaint adding two additional party defendants, but limiting the action to persons employed in the New York Scores’ clubs. The amended complaint alleges that we and the other defendants are “an integrated enterprise” and that we jointly employ the plaintiffs, subjecting all of the defendants to liability for the alleged wage/hour violations. We dispute that we violated the federal and state labor laws, and further dispute that the dancers are “employees” subject to the federal and state wage and hour laws. We intend to vigorously contest the claimed liability as well as the violations alleged.

On April 18, 2008, co-defendant Go West filed for bankruptcy.

Scores Holding Company Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(Unaudited)

On behalf of ourselves and the other defendants we filed a motion to dismiss that portion of the Complaint as asserted State law class action allegations; we also moved to dismiss the claims of two of the named plaintiffs for failure to appear for depositions. At the same time plaintiffs moved for conditional certification under the federal law for a class of the servers, bartenders and dancers; we opposed that motion. On May 9, 2008, the Court issued its decision, denying the motion to dismiss and granting conditional certification for a class of servers, cocktail waitresses, bartenders and dancers who have worked at Scores East since October 2004. The case is stayed as against Go West pursuant to the bankruptcy law. The Court directed that notice be sent to all potential class members. On May 29, 2008, we filed an answer to plaintiffs’ second amended complaint. Discovery into both the procedural and substantive issues is ongoing, as are settlement negotiations.

In February 2007, the City of New York (the “City”) sought to close Scores West claiming that it presented a public nuisance. The City alleged that this nightclub was used for purposes of prostitution; the case was dismissed by the City of New York and no charges were sought against Scores West or us. In February, 2007, the New York State Liquor Authority (the “NYSLA”) began a review of the license held by Scores West and issued an Emergency Summary Order of Suspension of the Scores West liquor license on February 21, 2007. Go West, the owner of Scores West, filed a pleading with the NYSLA on behalf of Scores West. After a temporary adjournment and a series of hearings in front of an administrative law judge, on February 4, 2008, this judge sustained all charges against Scores West. A NYSLA hearing was held on March 6, 2008 and the NYSLA revoked the Scores West Liquor license. On March 18, 2008, the New York State Appellate Division, First Department (the “Appellate Court”) granted an interim stay of the liquor license revocation pending a review by the full bench of the Appellate Court. On April 15, 2008 the Appellate Court decided to deny a further stay of the March 2008 revocation by the NYSLA of the Scores West liquor license. Go West filed with the Appellate Court for a reconsideration of its decision, which was denied. As a result of this outcome, Scores West has closed. The Appellate Court decided to hear this case on the merits and, on October 3, 2008, found in favor of the NYSLA, upholding the NYSLA’s revocation of the Scores West Liquor License. Go West subsequently filed a motion for re-argument before the Appellate Court and/or leave to appeal to the New York Court of Appeals. This further motion was withdrawn by Go West.

On April 18, 2008, Go West filed a voluntary petition for bankruptcy with the U.S. Bankruptcy Court, Southern District of New York (the “Bankruptcy Court”), under Chapter 11 of the U.S. Bankruptcy Code. This filing followed the April 15, 2008 Appellate Court decision to deny a further stay of the March 2008 revocation by the NYSLA of the Scores West liquor license. As of the date hereof, an Official Committee of Unsecured Creditors has not been formed nor has a Trustee or Examiner been appointed in this case. Go West’s bankruptcy case is pending in the Bankruptcy Court, Case No. 08-11420. The United States Trustee in this case filed a motion seeking the dismissal or conversion of Go West’s Chapter 11 case as Go West is no longer operating. That motion was granted by the Bankruptcy Court and an order will be entered once Go West completes its stipulations with the Internal Revenue Service (regarding the payment of unpaid federal taxes) and the New York State Department of Taxation (regarding a payment plan for state taxes due).

Scores Holding Company Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(Unaudited)

Scores West has permanently lost its liquor license and has closed its business. As a result, we are no longer able to receive royalty revenues from Go West, owner of that club. In 2006, royalty revenues from Scores West amounted to 31% of our royalties. We did not receive any revenue from Scores West since 2006. Because Scores West has closed, the ability of Go West to make payments under the Note has been severely impaired. As of January 1, 2009, the Note has been fully written off.

On May 2, 2008, the NYSLA gave notice of its pleading to 333, the owner of Scores East, in connection with its proceeding to cancel or revoke the liquor license of Scores East, based on its revocation of the Scores West liquor license (Scores West and Scores East were related by common ownership). On July 2, 2008, the NYSLA gave 333 a notice of hearing set for August 19, 2008. Based on the filing with the NYSLA of a conditional no-contest plea, this hearing was adjourned. 333 has since surrendered its liquor license for Scores East and that club has permanently closed. Because of these developments, we are no longer able to receive royalty revenues from Scores East, which in 2006, amounted to 28% of our royalties. We did not receive any revenue from Scores East since 2006.

On March 30, 2007, we, along with several of our affiliates, were named in a suit in connection with an alleged assault by an employee of an affiliate and one of our stockholders and former officer and director. We have recently answered a third amended complaint and participated in a Preliminary Conference to establish the discovery schedule. Examinations before trial of the parties have been completed and non-party depositions are now being taken. The plaintiff has not yet undergone the required physical examination. We will vigorously defend ourselves in this litigation and do not expect that the outcome will be material.

On December 11, 2006, SMG, our former affiliate and owner of the club in North Miami, Florida, filed for bankruptcy with the United States Bankruptcy Court for the Southern District of New York. In connection therewith, it terminated its license agreement with EMS whereby it was authorized to use our intellectual property. At the time of its filing, SMG owed us $16,661 for unpaid merchandise, which we subsequently reserved as bad debt. SMG emerged from bankruptcy in September 2008 under a plan or reorganization pursuant to which all general, unsecured debt was discharged, including the $16,661 owed to us.

On March 31, 2006, Richard K. Goldring, our former president, chief executive officer and principal shareholder pled guilty to one count of offering a False Instrument for Filing in the First Degree pursuant to a plea agreement with the District Attorney of the County of New York (the "DA"). In the event that within one year of the date of the entry of the guilty plea, Mr. Goldring resigns from all "control management positions" that he holds in publicly traded companies, including ours, and divests himself of all "control ownership positions" in publicly traded companies, including ours, and satisfies certain other conditions, the DA will recommend a sentence of probation. In this context, a “control management position” is a role, official or unofficial, by which he substantially directs the decisions of a company, and a “control ownership position” is a position in which he controls, directly or indirectly more than 9% of the voting stock or other securities of a company, or stock or securities that have the capability of being converted into voting stock or other securities of a company. The plea agreement resolves the DA's investigation against Mr. Goldring and us. No charges were brought against us.

Scores Holding Company Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(Unaudited)

To comply with the plea agreement between Richard Goldring and the District Attorney of the County of New York, on September 4, 2008, Mr. Goldring transferred his 76,080,958 shares of our common stock (the “Goldring Shares”) to Ira Altchek as trustee (the “Trustee”). According to the terms of the Voting Trust Agreement by and between Mr. Goldring and the Trustee dated September 4, 2008, the Trustee had the right to exercise all rights and powers of a shareholder of the Company with respect to the Goldring Shares, including, without limitation, the sole and exclusive right to vote the Goldring Shares, while Mr. Goldring maintained the right to sell the Goldring Shares at any time. The Goldring Shares represented approximately forty six percent (46%) of the outstanding capital stock of the Company as of the December 31, 2008. On January 27, 2009, Mr. Goldring sold all of the Goldring Shares in a private transaction with Buyer, as further discussed above.

In June 2005, we, together with several of our affiliates, commenced litigation regarding title to certain of our intellectual property. In February 2006, counterclaims were asserted and other persons brought third party complaints. In September 2006, we and our affiliates reached a settlement resolving all claims against us for a payment of $175,000 made in monthly installments. In return, the other parties in the litigation disclaimed any right to our intellectual property.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Scores Holding Company, Inc. (“Scores,” the “Company,” “we,” “us” or “our”) was incorporated in Utah on September 21, 1981 under the name Adonis Energy, Inc. Since 2003, we have been in the business of licensing the “Scores” trademarks and other intellectual property to fine gentlemen’s nightclubs with adult entertainment in the United States. There are three such clubs currently operating under the Scores name, in Baltimore, Chicago, and New Orleans.

On January 27, 2009, Entertainment Management Services, Inc. ("EMS"), an entity owned by two of our former directors and employees, transferred to us of all the Scores licensing and royalty rights originally granted to EMS in 20031. As a result of this transfer, our intellectual property is now licensed directly by us and we are now entitled to 100% of the royalty payments made by our licensed clubs rather than the 50% we were entitled to under the agreement with EMS.

Additionally on January 27, 2009, Mitchell’s East LLC, wholly owned by Robert M. Gans, acquired a majority interest in our outstanding capital stock1. Mr. Gans is the owner of I.M. Operating LLC (“IMO”). IMO has signed a licensing agreement with us and plans to open a new club in New York, New York under the Scores name, which it anticipates will commence operations during the second quarter 2009.

Results of Operations

Three Months Ended March 31, 2009 (“the 2009 period”) Compared to Three Months Ended March 31, 2008 (“the 2008 period”).

Revenues:

Royalty revenues decreased thirty two percent (32%) to $59,783 for the 2009 period from $88,377 for the 2008 period. Revenues from the Las Vegas club declined one hundred percent (100%) to $0 for the 2009 period from $54,000 for the 2008 period. This decline was due to the sale of the Las Vegas club and the resultant termination of its Scores license in August of 2008. On the other hand, revenues from our license with the Chicago nightclub increased thirty seven percent (37%) to $17,783 from $12,942 , from the Baltimore club, one hundred three percent (103%) to $27,000 from $13,302 and from the New Orleans club, one hundred percent (100%) to $12,000 from $6,000 for the 2009 and 2008 periods respectively. These increases were the direct result of our purchase of the MLA from EMS in January 2009 and our retention of one hundred percent (100%) of the royalties generated by the clubs formerly sublicensed through EMS. During the 2008 period, fifty percent (50%) or the royalties generated by these clubs was retained by EMS under our agreement with EMS. All of the, clubs Chicago, Baltimore and New Orleans experienced declines in revenues during the 2009 period due to the present unstable economic conditions.

1. As more fully described in our annual report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2009.

General and Administrative Expenses:

General and administrative expenses increased during the 2009 period to $92,566 from $65,804 during the 2008 period. This increase of $27,000 represents a 2009 first quarter increase in non-operating expenses related to amortization of $13,000 and prior year sales taxes on capital improvements of $19,000 and reductions in legal expense of approximately $6,000.

Bad Debt Expense

As of December 31, 2008, Scores East and Scores West owed us (indirectly, through EMS) $615,476 and $184,768, respectively, in accrued and unpaid royalties. We have decided to write off these amounts based on the NYSLA’s revocation of the Scores West liquor license and the subsequent permanent closing of that club and the related Scores East surrender of its liquor license and the permanent closing of that club. Additionally, in connection with Go West’s construction of the Scores West club, we loaned Go West $1,636,264 in exchange for a promissory note from Go West (the “Note”). The Note has not been repaid and, as of December 31, 2008, $1,867,310 (including accrued interest) remained due under the Note. As of December 31, 2006, we reserved $1,636,264, the principal amount of the Note, as a bad debt expense. As of the 2007 period, we began forgoing interest on the Note.

Any cash received from the owners of our formerly affiliated clubs (Scores East and Scores West) has been applied as a reversal of the bad debt expense when received. In 2008, we reversed bad debt expense in the amount of $35,928 for cash collected from Scores West and $614,788 for cash collected from Scores East. This later amount included $14,788 in cash and $600,000 deemed paid to EMS (owner of Scores East) in consideration of our repurchase from EMS of all Licensing Rights and Royalty Rights under the MLA.

Provision for Income Taxes:

The provision for state 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) was $(26,783) or $(0.00) per share for the 2009 period compared to a net income of $24,801 or $0.00 per share for the 2008 period. This decrease for the 2009 period was a result of a decrease in our revenues due to the sale of the Las Vegas club in May 2008. We experienced significant increases in our non-operating costs of approximately $27,000 in the 2009 period from the 2008 period. Amortization expense increased $13,000 and sales and use taxes on prior years capitalized improvements increased $19,000.

Net income (loss) per share data for both the 2009 period and the 2008 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

Cash:

At March 31, 2009, we had $10,286 in cash and cash equivalents compared to $173 in cash and cash equivalents at December 31, 2008.

Contractual Commitments:

On February 28, 2007, our then President, Chief Executive Officer and Director, Richard Goldring resigned from each of those positions, and terminated his employment with us under an employment agreement, dated April 16, 2003. The terms of such agreement provided that if Mr. Goldring terminated his employment without cause (which he did), we would become obligated to pay him $1 million. Given our lack of available cash to make such payment, we are currently in negotiations with Mr. Goldring regarding the terms of our payment obligation to him.

Operating Activities:

Net cash provided by operating activities for the three months ended March 31, 2009 and March 31, 2008 was $37,095 and $8,000, respectively. The increase in cash reflects the $50,000 advance payment during the 2009 period for royalties from our New York sub licensee which helped extinguish a significant portion of our outstanding debt. Royalty receivable increased $20,000 during the 2009 from the 2008 period. Overall revenue declined in the 2009 period from the 2008 period This may have been due to the loss of our main sublicensee in Las Vegas who accounted for approximately fifty nine percent (61%) of our royalty revenue in 2008.

Financing Activities:

During the 2009 period our bank overdraft decreased by $21,000 due to the $50,000 advance payment received from our New York sublicensee. During the 2009 period, we were debt in the amount of $6,000 was forgiven from our former related parties. This forgiveness was the result of our purchase of the Master License Agreement from EMS as discussed in Note 3. Related Party.

Future Capital Requirements:

We have incurred losses since the inception of our business. Since our inception, we have been dependent on acquisitions and funding from private lenders and investors to conduct operations. As of March 31, 2009 we had an accumulated deficit of $(5,998,544), with total current assets of $65,642 and total current liabilities of $206,439, or negative working capital of $(140,797). As of December 31, 2008, we had total current assets of $14,018 and total current liabilities of $155,808 or negative working capital of $(141,790). The increase in our working capital was primarily attributable to the increase in our cash and accounts receivable, which exceeded our borrowings and payables during the 2009 period.

We will continue to evaluate possible acquisitions of or investments in businesses, products and technologies that are complimentary 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.

ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Our management, including our Chief Executive Officer and our Treasurer who serves as our principal financial and accounting officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, and as discussed in greater detail below, our Chief Executive Officer and Treasurer has concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective:

·	to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and

·	to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our CEO and our Treasurer, to allow timely decisions regarding required disclosure.

During the analysis of our internal controls at March 31, 2009, we identified a number of controls, the adoption of which are material to our internal control environment and critical to providing reasonable assurance that any potential errors could be detected. Our analysis identified control deficiencies related to our recording of inventory, accounts payable, notes payable/debentures, prepaid expenses and unique or one time or first time transactions. While we have taken certain remedial steps during the three months ended March 31, 2009 to correct these control deficiencies, we do not have a sufficient number of personnel with the requisite expertise in generally accepted accounting principles to ensure the proper application of the appropriate controls. Due to the nature of these material weaknesses, there is more than a remote likelihood that misstatements which could be material to our financial statements could occur that would not be prevented or detected.

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting during the 2009 period that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting

PART II

ITEM 1.

LEGAL PROCEEDINGS

On December 11, 2007, Francis Vargas, a former cocktail waitress at Scores West located in New York, NY, filed a civil lawsuit against us and Go West in the Supreme Court of the State of New York, County of New York, alleging violations of the New York State Human Rights Law, New York Executive Law, New York City Human Rights Law, and the New York City Administrative Code, based upon allegations of sexual discrimination and sexual harassment. The lawsuit further alleges that at all material times both we and Go West were employers of Ms. Vargas, the plaintiff. The law suit seeks unspecified compensatory damages for plaintiff’s alleged loss of past and future earnings and benefits, emotional distress, humiliation and loss of reputation. We dispute that we were an employer of the plaintiff and categorically deny all allegations of sexual discrimination and sexual harassment. We filed our verified answer in the Supreme Court of the State of New York on February 12, 2008 to contest and defend against these accusations and we are currently engaged in discovery. On April 18, 2008, co-defendant Go West filed for bankruptcy and the case is currently stayed.

On April 18, 2008, co-defendant Go West filed for bankruptcy.

Scores West has permanently lost its liquor license and has closed its business. As a result, we are no longer able to receive royalty revenues from Go West, owner of that club. In 2006, royalty revenues from Scores West amounted to 31% of our royalties. We did not receive any revenue from Scores West since 2006. Because Scores West has closed, the ability of Go West to make payments under the Note (defined below) has been severely impaired. As of January 1, 2009, the note has been fully written off.

On May 2, 2008, the NYSLA gave notice of its pleading to 333, the owner of Scores East, in connection with its proceeding to cancel or revoke the liquor license of Scores East, based on its revocation of the Scores West liquor license. (Scores West and Scores East were related by common ownership.) On July 2, 2008, the NYSLA gave 333 a notice of hearing set for August 19, 2008. Based on the filing with the NYSLA of a conditional no-contest plea, this hearing was adjourned. 333 has since surrendered its liquor license for Scores East and that club has permanently closed. Because of these developments, we are no longer able to receive royalty revenues from Scores East, which in 2006, amounted to 28% of our royalties. We did not receive any revenue from Scores East since 2006.

There are no other material legal proceedings pending to which we or any of our property are subject, nor to our knowledge are any such proceedings threatened.

Exhibit No.		Description
31.1/31.2		Certification of Principal Executive Officer and Principal Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1/32.2		Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

* This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SCORES HOLDING COMPANY, INC.


Dated: May 14, 2009		By:	/s/ Curtis Smith
		Curtis Smith
		Acting Principal Executive Officer and Principal Financial Officer