Scores Holding Co. Swings to Q3 Profit Amidst Revenue Decline

TL;DR

**SCORES HOLDING CO INC is barely treading water, with a Q3 profit masking a massive year-to-date revenue drop and a going concern warning that screams 'avoid'.**

AI Summary

SCORES HOLDING CO INC reported a net income of $19,751 for the three months ended September 30, 2023, a significant improvement from a net loss of $4,236 in the same period of 2022. For the nine months ended September 30, 2023, net income was $47,864, a substantial decrease from $302,922 in the prior year, primarily due to a significant drop in royalty revenue from $561,000 in 2022 to $276,500 in 2023. Total assets increased to $90,633 as of September 30, 2023, from $58,186 at December 31, 2022, driven by an increase in cash and cash equivalents to $57,633 from $7,600. The company's accumulated deficit improved slightly to $6,828,734 from $6,876,598, but it still faces a working capital deficit of $159,931. The company relies on royalty revenue from six licensees, with four licensees contributing 87% of revenue for the nine months ended September 30, 2023, highlighting a concentration risk. Despite the improved quarterly net income, the substantial decline in year-to-date revenue and the ongoing working capital deficit raise substantial doubt about the company's ability to continue as a going concern.

Why It Matters

SCORES HOLDING CO INC's ability to generate a quarterly profit of $19,751, despite a significant year-over-year revenue decline, indicates some operational efficiency improvements. However, the substantial drop in nine-month royalty revenue from $561,000 to $276,500, coupled with a persistent working capital deficit of $159,931 and an accumulated deficit of $6,828,734, presents a challenging outlook for investors. The high concentration of revenue from a few licensees (87% from four licensees) exposes the company to significant competitive and operational risks if any of these relationships falter. This financial instability could impact employees through job security concerns and customers through potential service disruptions, while the broader market might view this as a cautionary tale for small, niche licensing companies.

Risk Assessment

Risk Level: high — The company explicitly states a 'substantial doubt about the Company's ability to continue as a going concern' due to an accumulated deficit of $6,828,734 and a working capital deficit of $159,931 as of September 30, 2023. Furthermore, royalty revenue for the nine months ended September 30, 2023, plummeted by 50.7% to $276,500 from $561,000 in the prior year, indicating significant business contraction.

Analyst Insight

Investors should exercise extreme caution and likely avoid SCORES HOLDING CO INC given the explicit going concern warning and significant revenue decline. The company's reliance on a few licensees and its inability to generate sufficient cash flow from operations to support working capital requirements suggest a high-risk, speculative investment with limited upside potential.

Financial Highlights

debt To Equity

N/A

revenue

$276,500

operating Margin

17.5%

total Assets

$90,633

total Debt

$673,564

net Income

$47,864

eps

$0.000

gross Margin

N/A

cash Position

$57,633

revenue Growth

-50.7%

Revenue Breakdown

Key Numbers

• $19,751 — Net Income (Q3 2023) (Swung from a $4,236 loss in Q3 2022, indicating quarterly improvement.)
• $47,864 — Net Income (YTD 2023) (Significantly down from $302,922 in YTD 2022, reflecting a substantial annual decline.)
• $276,500 — Total Revenue (YTD 2023) (A 50.7% decrease from $561,000 in YTD 2022, highlighting core business contraction.)
• $6,828,734 — Accumulated Deficit (Indicates significant historical losses and contributes to going concern doubt.)
• $159,931 — Working Capital Deficit (Signals immediate liquidity challenges and contributes to going concern doubt.)
• $57,633 — Cash and Cash Equivalents (Increased from $7,600 at year-end 2022, providing some short-term liquidity.)
• 165,186,144 — Common Shares Outstanding (Consistent across periods, indicating no dilution from new share issuance.)
• 87% — Revenue Concentration (Four licensees accounted for 87% of YTD 2023 revenue, posing significant risk.)

Key Players & Entities

• SCORES HOLDING COMPANY, INC. (company) — Registrant and primary entity in the filing
• Scores Licensing Corp. (company) — Wholly-owned subsidiary of SCORES HOLDING COMPANY, INC.
• $19,751 (dollar_amount) — Net income for the three months ended September 30, 2023
• $4,236 (dollar_amount) — Net loss for the three months ended September 30, 2022
• $47,864 (dollar_amount) — Net income for the nine months ended September 30, 2023
• $302,922 (dollar_amount) — Net income for the nine months ended September 30, 2022
• $276,500 (dollar_amount) — Total revenue for the nine months ended September 30, 2023
• $561,000 (dollar_amount) — Total revenue for the nine months ended September 30, 2022
• $6,828,734 (dollar_amount) — Accumulated deficit as of September 30, 2023
• $159,931 (dollar_amount) — Working capital deficit as of September 30, 2023

FAQ

Risk Factors

• Working Capital Deficit [high — financial]: The company has a working capital deficit of $159,931 as of September 30, 2023. This indicates that current liabilities exceed current assets, posing immediate liquidity challenges and raising concerns about the company's ability to meet its short-term obligations.
• Accumulated Deficit [high — financial]: The company has an accumulated deficit of $6,828,734 as of September 30, 2023. This substantial historical loss indicates a long-term struggle to achieve profitability, contributing to doubts about the company's viability as a going concern.
• Revenue Concentration [high — operational]: Revenue is highly concentrated among a few licensees, with four licensees accounting for 87% of the total royalty revenue for the nine months ended September 30, 2023. The loss of any of these key licensees could severely impact the company's financial performance.
• Declining Year-to-Date Revenue [high — financial]: Total revenue for the nine months ended September 30, 2023, was $276,500, a 50.7% decrease from $561,000 in the same period of 2022. This significant contraction in core revenue raises concerns about the sustainability of the business model.

Industry Context

The royalty revenue model is dependent on intellectual property and licensing agreements. Companies in this space often face challenges related to market saturation, intellectual property disputes, and the ability to secure and maintain lucrative licensing deals. Competition can arise from similar IP holders or alternative solutions that reduce the need for licensed products.

Regulatory Implications

While no specific regulatory issues are detailed in this excerpt, companies relying on licensing agreements must ensure compliance with contract law and intellectual property regulations. Changes in copyright or patent laws could impact the value and enforceability of their licensed assets.

What Investors Should Do

1. Monitor licensee performance and diversification efforts.
2. Assess the company's ability to manage its working capital deficit.
3. Evaluate the sustainability of the current revenue model.

Key Dates

• 2023-09-30: End of Q3 2023 — Reported net income of $19,751, a significant improvement from a net loss in the prior year's quarter. However, YTD revenue declined substantially, and a working capital deficit persists.
• 2023-12-31: End of Fiscal Year 2022 — Reported cash and cash equivalents of $7,600 and total assets of $58,186. Accumulated deficit was $6,876,598.

Glossary

Accumulated deficit

The total cumulative net losses of a company since its inception, minus any cumulative net income. It represents a negative balance in retained earnings. (Indicates the company's historical inability to generate sustained profits and contributes to going concern doubts.)

Working capital deficit

A situation where a company's current liabilities exceed its current assets. It signifies a potential inability to meet short-term obligations. (Highlights immediate liquidity challenges for SCORES HOLDING CO INC.)

Royalty Revenue

Income generated from licensing intellectual property, such as patents, trademarks, or copyrights, to other parties. (This is the primary revenue source for SCORES HOLDING CO INC., and its significant decline is a major concern.)

Going concern

An assumption that a company will continue to operate for the foreseeable future, typically at least 12 months. If substantial doubt exists, it must be disclosed. (The company's financial condition raises substantial doubt about its ability to continue as a going concern.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, SCORES HOLDING CO INC. has experienced a significant revenue decline of 50.7%, with royalty revenue dropping from $561,000 to $276,500. While the company swung to a net income of $19,751 in Q3 2023 from a loss in Q3 2022, the year-to-date net income also saw a substantial decrease from $302,922 to $47,864. Total assets have increased due to higher cash reserves, but the company continues to face a working capital deficit of $159,931 and a substantial accumulated deficit of $6,828,734, raising going concern doubts.

Key Financial Figures

• $0.001 — ere 165,186,144 shares of common stock, $0.001 par value per share, outstanding. Tabl
• $250,000 — s. There are times when cash may exceed $250,000, the FDIC insured limit. At September 3

Filing Documents

• tmb-20230930x10q.htm (10-Q) — 879KB
• tmb-20230930xex31d1.htm (EX-31.1) — 11KB
• tmb-20230930xex31d2.htm (EX-31.2) — 11KB
• tmb-20230930xex32d1.htm (EX-32.1) — 6KB
• tmb-20230930xex32d2.htm (EX-32.2) — 6KB
• 0001104659-25-090746.txt ( ) — 3343KB
• tmb-20230930.xsd (EX-101.SCH) — 25KB
• tmb-20230930_cal.xml (EX-101.CAL) — 19KB
• tmb-20230930_def.xml (EX-101.DEF) — 84KB
• tmb-20230930_lab.xml (EX-101.LAB) — 186KB
• tmb-20230930_pre.xml (EX-101.PRE) — 150KB
• tmb-20230930x10q_htm.xml (XML) — 437KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) F-1

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 3

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 7

Controls and Procedures

Item 4. Controls and Procedures 7

– OTHER INFORMATION

PART II – OTHER INFORMATION 9

Legal Proceedings

Item 1. Legal Proceedings 9

Risk Factors

Item 1A. Risk Factors 12

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 12

Defaults upon Senior Securities

Item 3. Defaults upon Senior Securities 12

Mine Safety Disclosure

Item 4. Mine Safety Disclosure 12

Other Information

Item 5. Other Information 12

Exhibits

Item 6. Exhibits 13 2 Table of Contents

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS Except for historical information, this report contains "forward-looking information" within the meaning of the Private Securities Litigation Reform Act of 1995, and Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended. 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 can be identified by the use of forward-looking terminology such as "may," "will," "anticipates," "intends," "expects," "projects," "estimates," "believes," "seeks," "could," "should," the negative thereof or comparable terminology. 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 the section "Management's Discussion and Analysis of Financial Condition and Results of Operations". 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 taking place after the date of this document, except as required by law.

–FINANCIAL INFORMATION

PART I –FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS Unaudited Condensed Consolidated Balance Sheets F-2 Unaudited Condensed Consolidated Statements of Operations F-3 Unaudited Condensed Consolidated Statements of Cash Flows F-4 Unaudited Condensed Consolidated Statement of Changes in Stockholders' Deficit F-5 Notes to Unaudited Condensed Consolidated Financial Statements F-6 F-1 Table of Contents SCORES HOLDING COMPANY, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2023 2022 (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 57,633 $ 7,600 Trade receivables, net of allowance of $ 0 and $ 0 , respectively 33,000 12,499 Prepaid expenses — 38,087 Total Current Assets 90,633 58,186 TOTAL ASSETS $ 90,633 $ 58,186 LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES: Accounts payable and accrued expenses $ 138,064 $ 196,481 Related party payable 112,500 67,500 Total Current Liabilities 250,564 263,981 Contract Liabilities 423,000 447,500 TOTAL LIABILITIES 673,564 711,481 Commitments and Contingencies (Note 7) — — STOCKHOLDERS' DEFICIT Preferred stock, $ .0001 par value, 10,000,000 shares authorized, - 0 - share issued and outstanding — — Common stock, $ .001 par value; 500,000,000 shares authorized, 165,186,144 shares issued and 165,186,144 shares outstanding, respectively 165,186 165,186 Additional paid-in capital 6,080,617 6,058,117 Accumulated deficit ( 6,828,734 ) ( 6,876,598 ) Total Stockholders' Deficit ( 582,931 ) ( 653,295 ) TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 90,633 $ 58,186 See notes to the unaudited condensed consolidated financial statements. F-2 Table of Contents SCORES HOLDING COMPANY, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 REVENUES Ro

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