Scores Holdings (SCRH)

[badman]

Making a long story short

Results of Operations



Three Months Ended March 31, 2014 (“the 2014 three-month period”) Compared to Three Months Ended March 31, 2013 (“the 2013 three-month period”).



Revenues:



Revenues increased to $204,353 for the 2014 three-month period from $166,565 for the 2013 three-month period.



Revenues from the New York Club decreased ten percent (10%) to $33,476 as compared to $37,115 for the 2014 and 2013 three-month periods, respectively. Revenues from our Chicago nightclub decreased nine percent (9%) to $29,825 for the 2014 three-month period from $32,884 from the 2013 three-month period, while revenues from our Baltimore club increased nine percent (9%) to $35,696 for the 2014 three-month period from $32,706 for the 2013 three-month period and revenues from our New Orleans club remained the same at $30,000 for the 2014 and 2013 three-month period. Revenue from our Tampa club remained the same at $30,000 for the 2014 and 2013 three-month period. Revenue from our Scoreslive.com licensee increased two hundred ninety-seven percent (297%) to $15,355 for the 2014 three-month period from $3,860 for the 2013 three-month period. The Company earned revenue from three new clubs (Jacksonville, West Palm Beach and Savannah) that commenced operations in March 2014. Our revenues from each of these clubs were $10,000 for the 2014 three-month period.



Revenues under our license agreements vary from a flat monthly fee to a percentage of club revenues on a monthly basis.



General and Administrative Expenses:



General and administrative expenses decreased during the 2014 three-month period to $116,789 from $121,981 during the 2013 three-month period. General and administrative expenses decreased approximately by $5,192 from 2014 to 2013, which decrease can be attributed to a decrease in legal fees. Legal expenses attributable to ongoing litigation amounted to $43,418 for the three-month period ended March 31, 2014 and $50,928 for the three-month period ended March 31, 2013.



Provision for Income Taxes



The provision for state income taxes relates primarily to average assets and capital which were not impacted by our net operating losses.



Net Income:



Our net income was $150,950 or $0.001 per share for the 2014 three-month period compared to net income of $43,741 or $0.000 per share for the 2013 three-month period. The increase in net income for the 2014 three-month period is largely attributable to the settlement of a lawsuit in our favor.




4






Net income per share data for both the 2014 three-month period and the 2013 three-month period is based on net income available to common shareholders divided by the weighted average of the number of common shares outstanding.



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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, 2014



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: 000-16665



SCORES HOLDING COMPANY, INC.

(Exact name of registrant as specified in its charter)



Utah 87-0426358

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)




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



212-246-9090

(Registrant’s telephone number, including area code)



N/A

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)



Indicate by check mark whether the 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 the registrant was required to file such reports), 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 x



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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:



Large accelerated filer ¨ Accelerated filer ¨

Non-accelerated filer ¨ Smaller reporting company x
(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 of the Exchange Act). Yes ¨ No x



Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:



As of May 16, 2014, there were 165,186,124 shares of common stock, $0.001 par value per share, outstanding.











TABLE OF CONTENTS



PART I-Financial Information

Item 1. Financial Statements (unaudited). F-1

Condensed Consolidated Balance Sheets F-1

Condensed Consolidated Statements of Operations F-2

Condensed Consolidated Statements of Cash Flows F-3

Notes to Condensed Consolidated Financial Statements F-4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 4

Item 3. Quantitative and Qualitative Disclosures About Market Risk. 5

Item 4. Controls and Procedures. 5

PART II-Other Information

Item 1. Legal Proceedings. 6

Item 1A. Risk Factors. 7

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 7

Item 3 Defaults Upon Senior Securities. 7

Item 4 Mine Safety Disclosures. 7

Item 5. Other Information. 7

Item 6. Exhibits. 8




2






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.




3






PART I - FINANCIAL INFORMATION



Item 1. Financial Statements.



SCORES HOLDING COMPANY, INC. AND SUBSIDIARY



CONDENSED CONSOLIDATED BALANCE SHEETS



March 31, December 31,
2014 2013
(Unaudited)
ASSETS

CURRENT ASSETS:
Cash $ 71,861 $ 4,522
Trade receivables - including affiliates, net 263,786 188,988
Prepaid expenses 7,706 11,217
Settlement receivable 128,383 138,608

Total Current Assets 471,736 343,335

Settlement receivable - 23,781
Loan receivable 33,564 33,148

TOTAL ASSETS $ 505,300 $ 400,264

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 121,088 $ 130,460
Security deposit payable 20,000 10,000
Related party payable 152,500 143,775
Settlement payable due to related party 162,042 189,071

Total Current Liabilities 455,630 473,306

Settlement payable due to related party - 28,654
Note payable to related party 33,564 33,148

TOTAL LIABILITIES 489,194 535,108

STOCKHOLDERS' EQUITY (DEFICIT)
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 issued and 165,186,124 outstanding, respectively 165,186 165,186
Additional paid-in capital 6,058,117 6,058,117
Accumulated deficit (6,207,197 ) (6,358,147 )

Total stockholders' Equity (Deficit) 16,106 (134,844 )

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 505,300 $ 400,264




F- 1






SCORES HOLDING COMPANY, INC. AND SUBSIDIARY



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended
March 31,
2014 2013

REVENUES

Royalty Revenue $ 204,353 $ 166,565

Total Revenue 204,353 166,565

EXPENSES

General and Administrative Expenses 116,789 121,981

INCOME FROM OPERATIONS 87,564 44,584

OTHER INCOME/(EXPENSE)

Interest Income/(Expense), net (501 ) (843 )
Settlement 63,887 -

TOTAL OTHER INCOME/(EXPENSE) 63,386 (843 )

NET INCOME BEFORE INCOME TAXES 150,950 43,741

PROVISION FOR INCOME TAXES - -

NET INCOME $ 150,950 $ 43,741

NET INCOME PER SHARE-Basic and Diluted 0.001 0.000

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




F- 2






SCORES HOLDING COMPANY INC. AND SUBSIDIARY



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Three Months Ended
March 31,
2014 2013

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 150,950 $ 43,741

Adjustments to reconcile net income to net cash provided by (used) in operating activities:

Changes in assets and liabilities:
Licensee receivable (74,798 ) (5,536 )
Prepaid expenses 3,511 2,334
Security deposit payable 10,000 -
Accounts payable and accrued expenses (9,372 ) (42,441 )

NET CASH PROVIDED BY/(USED BY) OPERATING ACTIVITIES 80,291 (1,902 )

CASH FLOW FROM FINANCING ACTIVITIES:
Related party payables 8,725 (22,115 )
Settlement receivable 34,006 32,351
Loan receivable (416 ) (396 )
Settlement payable (55,683 ) (31,627 )
Loan payable 416 396

NET CASH USED IN FINANCING ACTIVITIES (12,952 ) (21,391 )

NET INCREASE/(DECREASE) IN CASH 67,339 (23,293 )
Cash and cash equivalents - beginning of year 4,522 59,139
Cash and cash equivalents - end of year $ 71,861 $ 35,846

Supplemental disclosures of cash flow information:
Cash paid during the year for interest $ 9,849 $ -
Cash paid for income taxes $ 1,139 $ -




F- 3






Scores Holding Co., Inc. and Subsidiary

Notes To Condensed Consolidated Financial Statements

(Unaudited)



Note 1. Organization



Basis for presentation



Scores Holding Company, Inc. and subsidiary (the “Company”) is a Utah corporation, formed in September 1981 and is located in New York, NY. Originally incorporated as Adonis Energy, Inc., the Company adopted its current name in July 2002. The Company is a licensing company that exploits the “SCORES” name and trademark for franchising and other licensing options.



The condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States. The condensed consolidated financial statements of the Company include the accounts of Scores Licensing Corp. (“SLC”).



Our condensed consolidated financial statements include our accounts, as well as those of our wholly-owned subsidiary. Certain prior period amounts have been reclassified to conform to the current period presentation. Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by U.S. GAAP for complete financial statements. The condensed consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the condensed consolidated results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature. These unaudited condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2013.



The preparation of financial statements in conformity with U.S. GAAP requires us 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. The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the results to be expected for any other interim period or for the year ending December 31, 2014.



Note 2. Summary of Significant Accounting Principles



Going Concern



As of March 31, 2014 the Company has incurred cumulative losses (since the inception of its business) totaling $(6,207,197) and a working capital surplus of $16,106. The Company had net income of $150,950 for the three months ended March 31, 2014. Because of these conditions, the Company will require additional working capital to develop business operations. The Company intends to raise additional working capital through the continued licensing of its brand with its current and new operators. There are no assurances that the Company will be able to achieve the level of revenues adequate to generate sufficient cash flow from operations to support the Company’s working capital requirements. To the extent that funds generated from any future use of licensing are insufficient, the Company 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 the Company. If adequate working capital is not available, the Company may not continue its operations.



These conditions raise substantial doubt about the Company’s 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 the Company be unable to continue as a going concern.



Concentration of Credit Risk



The Company earns predominately royalty revenues and to a lesser extent merchandise sales from 12 licensees.



With regard to the three months ended March 31, 2014, concentrations of sales from 5 licensees range from 14% to 17%, which include receivables from 3 licensees ranging from 11% to 42% from these licensees for the three months ended March 31, 2014. Included in these amounts for 2014 is 1 licensee considered a related party. Sales from this licensee are 16%. There are receivables from 2 licensees considered related parties of 10% and 42%.




F- 4






With regard to the three months ended March 31, 2013, concentrations of sales from 5 licensees range from 18% to 22%, which include receivables from 4 licensees ranging from 17% to 29% from these licensees for the three months ended March 31, 2013. Included in these amounts for 2013 was 1 licensee considered related party. Sales from this licensee were 22%. There are receivables from 1 related party licensee of 22%.



Revenue recognition



The Company records revenues earned as royalties under its license agreements as they are earned over the term of the license agreements. The terms of the royalties earned under these license agreements vary from a flat monthly fee to a percentage of the revenues of the licensee on a monthly basis. If a license agreement is terminated then the remaining unearned balance of the deferred revenues are recorded as earned if applicable.



Principles of consolidation



The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Inter-company items and transactions have been eliminated in consolidation.



Cash and cash equivalents



The Company considers all highly liquid temporary cash investments, with a maturity of three months or less when purchased, to be cash equivalents. There are times when cash may exceed $250,000, the FDIC insured limit.



Income Per Share



Net income per share data for both the three-month period ended March 31, 2014 and 2013 are based on net income available to common shareholders divided by the weighted average of the number of common shares outstanding. As of March 31, 2014, there are no outstanding stock options.



Fair Value of Financial Instruments



The carrying value of cash, trade receivables, prepaid expenses, other receivables, related party payables and accrued expenses, if applicable, approximate their fair values based on the short-term maturity of these instruments. The carrying amounts of debt were also estimated to approximate fair value.



The Company utilizes the methods of fair value measurement as described in ASC 820 to value its financial assets and liabilities. As defined in ASC 820, fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:



Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.



Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.



Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.



New Accounting Pronouncements



All new accounting pronouncements issued but not yet effective or adopted have been deemed not to be relevant to us, hence are not expected to have any impact once adopted.



Note 3. Related-Party Transactions



Transactions with Common ownership affiliates



On January 24, 2006, the Company entered into a licensing agreement with AYA International, Inc. (“AYA”) granting AYA the right to use our trademarks in connection with its online video chat website, “Scoreslive.com.” The agreement with AYA provides for royalty payments to be made directly to the Company at the rate of 4.99% of weekly gross revenues from all revenue sources within the AYA website. On December 21, 2009, AYA transferred all of its rights in Scoreslive.com and in its licensing agreement with us to Swan Media Group, Inc., a newly formed New York corporation whose majority owner is Robert M. Gans, who is also the majority shareholder and chief executive officer of the Company. The Company is owed $111,254 and $95,899 in unpaid royalties and expenses as of March 31, 2014 and December 31, 2013, respectively.




F- 5






On January 27, 2009, the Company entered into a licensing agreement with its affiliate through common ownership I.M. Operating LLC (“IMO”) for the use of the Scores brand name “Scores New York”. Robert M. Gans is the majority owner of IMO and is also the Company’s majority shareholder. IMO owes the Company a royalty receivable of $27,201 as of March 31, 2014. IMO paid for various years of administrative costs related to accounting, business development, insurance and legal services for the Company, which a portion thereof in the amount of $6,275 remains a payable to this related party as of December 31, 2013. The Company also leases office space directly from Westside Realty of New York, Inc. (WSR), the owner of the West 27 th Street Building. The majority owner of WSR is Robert M. Gans. Since April 1, 2009, the monthly rent has been $2,500 per month including overhead costs. The Company owed WSR $115,000 and $107,500 in unpaid rents as of March 31, 2014 and December 31, 2013, respectively.



Effective January 1, 2013, the Company entered into a management services agreement with Metropolitan Lumber Hardware and Building Supplies, Inc., pursuant to which Metropolitan Lumber Hardware and Building Supplies, Inc. provides management and other services to the Company, including the services of Robert M. Gans and Howard Rosenbluth to act as executive officers of the Company. In consideration of the services, the Company pays Metropolitan Lumber Hardware and Building Supplies, Inc. a fee in the amount of $30,000 per year. The agreement may be terminated by either party upon ten days’ written notice. Mr. Gans is the sole owner of Metropolitan Lumber Hardware and Building Supplies, Inc. The Company owed Metropolitan Lumber Hardware and Building Supplies, Inc. $37,500 and $30,000 in unpaid management services as of March 31, 2014 and December 31, 2013, respectively.



The total amounts due to the various related parties as of March 31, 2014 and December 31, 2013 were $152,500 and $143,775 respectively.



Pursuant to an oral arrangement, in September 2013 we granted an exclusive, non-transferable license for the use of the “Scores Atlantic City” name to Star Light Events LLC (“Star Light”) for its gentlemen’s club in Atlantic City, New Jersey. Royalties under this license are payable at the rate of $10,000 per month, commencing in April 2014, and the license is for a term of five years, with five successive five year renewal terms. This oral arrangement was memorialized in a written license agreement between SLC and Star Light effective December 9, 2013. Pursuant to the written agreement, we also granted Star Light a non-exclusive, non-transferable license to sell certain licensed products bearing our trademarks. Starlight will purchase the licensed products from us or our affiliates at our cost plus 25%. Robert M. Gans, our President, Chief Executive Officer and a director, is the majority owner of Star Light Events LLC.



On December 9, 2013, the Company entered into a license agreement with its subsidiary, SLC, granting SLC the exclusive right to use certain trademarks, including the “Scores” stylized trademark, in connection with certain goods and services. The grant of license also includes the right to issue sublicenses to third parties, subject to the approval of the Company. Pursuant to the agreement, SLC shall pay to the Company a royalty, as determined by the Company, such as a percentage of net revenue or a flat fee, received in connection with the provision of services and/or sale of goods using the trademarks. SLC may also pay a percentage, as determined by the Company, of all royalties received by SLC under any sublicense agreements. SLC and any sublicensees are to adhere to quality standards as set by the Company, and the Company has the right to inspect all facilities and approve all promotional and marketing materials as well as any related packaging. The agreement has a one-year term with automatic one-year renewals, subject to either party’s election to terminate the agreement at least thirty days prior to such renewal. The Company also has the right to terminate the agreement, with immediate effect, upon the occurrence of certain events. The license is subject to any pre-existing license agreements as of the date of the agreement.



Note 4. Intangible Assets



Trademark



In connection with the acquisition of SLC, the Company acquired the trademark to the name “SCORES”. This trademark had a net recorded value at March 31, 2014 of $ -0-. This trademark has been registered in the United States, Canada, Japan and the European Community. The trademark has been completely amortized by straight line methods over an estimated useful life of ten years. The Company’s trademark having an infinite useful life by its definition was amortized over ten years due to the difficult New York legal environment for which the related showcase adult club is operating. This intangible asset was fully amortized as of September 30, 2011.



Note 5. Licensees



The Company has ten license agreements (encompassing eleven clubs and the Scoreslive.com website) which were obtained between 2003 and 2014; Stone Park Entertainment Group, Inc. known as “Scores Chicago”, Club 2000 Eastern Avenue Inc. known as “Scores Baltimore”, Silver Bourbon, Inc., I.M Operating LLC known as “IMO”, Tampa Food and Entertainment Inc., Norm A Properties, LLC, Swan Media Group, Inc. (formerly AYA International, Inc.), Starlight Events LLC known as “Scores Atlantic City” and SLC and Houston KP LLC.




F- 6






“IMO’s” members are our majority shareholder, Robert M. Gans, and Secretary and Director, Howard Rosenbluth hence making “IMO” a related party. The building occupied by IMO is owned by Westside Realty of New York Inc., of which the majority owner is Robert M. Gans. The club accounted for 16% and 22% of our royalty revenues during the first three months of 2014 and 2013, respectively. Mr. Gans is also the majority owner of Swan Media Group, Inc., which accounted for 8% and 2% of our royalty revenues during the first three months of 2014 and 2013. Mr. Gans is also the majority owner of Scores Atlantic City; royalties do not accrue until April 2014.



Note 6. Settlement/Note Receivables



On September 26, 2011, the Company, Richard Goldring and Elliot Osher (Goldring and Osher were formerly two of the Company’s principal shareholders) (collectively the “Defendants”) and Sari Diaz et al. (the “Plaintiffs”) entered into a Court approved Joint Stipulation of Settlement and Release (the “Settlement Agreement”) relating to a purported class action and collective action on behalf of all tipped employees filed by Plaintiffs, pursuant to which Defendants agreed to make a settlement payment of $450,000 to resolve and settle awards to Plaintiffs and related Plaintiffs’ attorneys’ fees. Additionally, the Defendants agreed to pay the employer portion of payroll taxes on approximately $300,000 in distributions, approximately $15,600.



In a settlement payment agreement among the Company, Goldring and Osher, the Company agreed to advance all of the Defendants’ obligations under the Settlement Agreement and to pay $64,500 of Goldring’s and Osher’s legal fees to their designated attorney. In consideration for the Company’s payment of these obligations, Goldring and Osher agreed, jointly and severally, to pay the Company $440,000 plus interest at the rate of 5% per annum on the unpaid balance of such amount, in 40 equal monthly payments of $11,965 per month. To secure his obligations under this agreement, Goldring agreed to assign to the Company a portion of his interests in a promissory note dated September 14, 2009 in the principal amount of $2,400,000 made by a third party to Goldring (the “Note”) and to grant the Company a security interest in the Note, which will remain in effect until his obligations under this settlement payment agreement are paid in full. As of March 31, 2014, the settlement receivable is $128,383.



On December 29, 2011 the Company entered into a Promissory Note with Goldring for $30,000 plus interest at the rate of 5% per annum on the unpaid balance. To secure his obligations under this agreement, Goldring agreed to assign to the Company a portion of his interests in a promissory note dated September 14, 2009 in the principal amount of $2,400,000 made by a third party to Goldring (the “Note”) and to grant the Company a security interest in the Note, which will remain in effect until his obligations under this settlement payment agreement are paid in full. Three payments of $11,965 are due beginning March 2015. As of March 31, 2014, this promissory note balance is $33,564.



Note 7. Settlement/Note Payable



As discussed in the Note regarding the settlement receivable it should be noted that Mr. Gans (the Company’s Chief Executive Officer and majority stockholder) advanced $560,151 to settle the Sari Diaz et. al. litigation and fund the $30,000 loan to Mr. Goldring. As of March 31, 2014, $162,042 is outstanding.



In March 2014, the Company filed a complaint against various parties for trademark infringement. A settlement was reached in which the Company would receive $150,000 and the defendants would cease and desist from further use of the trademarks. The first installment of $63,887 ($100,000 less legal fees) was received in March 2014.The second installment of $50,000 is due in June 2014. This installment will be recorded when received due to its unsecured nature.



Note 8. Commitments and Contingencies



The Company records $2,500 a month as rent, overhead, and services dues to Metropolitan Lumber Hardware Building Supplies, Inc. for services rendered by the management of the Company. Mr. Gans is the sole owner of Metropolitan Lumber Hardware Building Supplies, Inc.



The Company currently leases office space from the Westside Realty of New York which is owned and operated by Robert Gans our majority shareholder, for $2,500 a month.



On June 14, 2011, Christina Maldonado, a former front door receptionist/coat checker at Scores New York, located in New York NY filed a civil lawsuit against the Company and IMO alleging violations of Title VII of the Civil Rights Act, New York State Human Rights Law, New York Executive Law, New York City Human Rights Law and the New York City Administrative Code, based on allegations of sexual discrimination and sexual harassment. The lawsuit further alleges that both the Company and IMO were her employers. The lawsuit seeks unspecified damages for alleged loss of past and future earnings and emotional distress and humiliation. The Company disputes that that it was an employer of the plaintiff and categorically denies all allegations of sexual discrimination and sexual harassment. The Company responded to the complaint and later filed an amended complaint and asserted a cross claim against IMO. The Company is vigorously defending itself in this litigation and does not expect that the outcome will be material.




F- 7






In mid-March 2010, the Company was named by Nichole Hughes in a complaint filed with the SCNY. Ms. Hughes sued the Company for an unspecified amount of damages in connection with an alleged unauthorized use of her image in the Company’s advertising materials. On June 20, 2010, the Company filed a pre-answer motion to dismiss the complaint, which was denied on December 17, 2010. The Company then filed an answer and affirmative defenses and a third party complaint against IMO, owner and operator of the club where Ms. Hughes was employed. Plaintiff’s counsel was granted leave by the court to withdraw from representation in January 2013. Plaintiff failed to appoint new counsel or further participate in the case and the case was dismissed on May 20, 2013.



On March 14, 2013, Miki Yamada, a former bartender at the Scores New York nightclub located at 536 West 28 th Street, New York, NY filed charges against the Company and IMO with the EEOC claiming violations of Title VII based upon alleged sexual harassment, discrimination based on gender and unlawful retaliation. Ms. Yamada also delivered a draft civil complaint to the Company containing similar allegations. Although the Company disputed the issues of liability and damages asserted by Ms. Yamada, the Company and the other respondents settled these matters for a payment of $90,000 (of which the Company paid $0) to Ms. Yamada pursuant to a settlement and release agreement dated April 30, 2013. These matters were settled out of court.



On June 14, 2013, Elizabeth Shiflett, a former cocktail waitress, filed a civil lawsuit against the Company in the S.D.N.Y. alleging violations of Title VII of the Civil Rights Act of 1964 (“Title VII”), as amended, the New York State Human Rights Law (“NYSHRL”) and the New York City Human Rights Law (“NYCHRL”) based upon allegations of sexual discrimination, creating a hostile work environment based upon plaintiff’s sex and race and unlawful retaliation against plaintiff. The lawsuit further alleges that at all material times the Company was the employer of the plaintiff. The lawsuit had been preceded by a Determination of the U.S. Equal Employment Opportunity Commission (the “EEOC”) on January 25, 2013 that there was reasonable cause to believe that the Company had violated Title VII as a result of the complained-of conduct. The lawsuit seeks a declaratory judgment that the practices complained of violated Title VII, the NYSHRL and the NYCHRL, an injunction enjoining the Company from engaging in future unlawful acts of discrimination, harassment and retaliation, unspecified compensatory damages for plaintiff’s alleged loss of past and future earnings, emotional distress, humiliation and loss of reputation, punitive damages as a result of the Company’s alleged disregard of plaintiff’s protected civil rights, and attorneys’ fees and costs. The Company disputes that it was an employer of the plaintiff and categorically denies all allegations of sexual discrimination, sexual and racial harassment and retaliation. In an order dated April 10, 2014, the Court dismissed all claims. In May 2014, Ms. Shiflett filed an appeal. The Company will vigorously defend itself in this litigation and does not expect that the outcome will be material.



On or about February 28, 2014, Kiana Love, a former entertainer and masseuse at The Penthouse Executive Club and Scores New York, both located in New York, NY, filed a civil lawsuit in the SDNY against us, The Executive Club, LLC, Go West Entertainment, Inc., Scores Entertainment, Inc., Entertainment Management Services, Inc., 333 East 60 th Street., Inc., I.M. Operating, LLC, Richard Goldring, Elliot Osher, Robert Gans and Mark Yackow (collectively “Defendants”), alleging, for the time during which she performed as a masseuse, violations of the state and federal wage and hour laws, including the New York Labor Law and Fair Labor Standards Act, based upon allegations of failure to pay minimum wage, uniform related expenses, and allegations of improper wage deductions and tip misappropriation as well as record keeping violations. The lawsuit further alleges that at all material times Defendants were employers of Ms. Love, the plaintiff, while she performed massage services at Scores New York as well as The Penthouse Executive Club. The lawsuit seeks unspecified compensatory damages for plaintiff’s alleged loss of past wages and reimbursement of allegedly unlawful deductions. We dispute that we were an employer of the plaintiff, who was at all material times an independent contractor, and categorically deny all allegations of violations of law, including the wage and hour laws, improper tip taking, and violations related to uniforms. The Complaint in the action has not yet been served and our answer therefore has not yet become due. We have been presented with an initial demand for settlement in the amount of approximately $75,000 and, along with other defendants, are actively trying to resolve the dispute with counsel for the plaintiff without a need to appear in the lawsuit.



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



Note 9. Subsequent Events



Management evaluated subsequent events through the date of this filing and determined that no such events have occurred that would require adjustment to or disclosure in the financial statements.




F- 8






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. We adopted our current name in July 2002. 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 nine such clubs currently operating under the Scores name, in New York City, Atlantic City, Baltimore, Chicago, Tampa, New Orleans, and Savannah, Jacksonville, and West Palm Beach. The Atlantic City club commenced operations in September 2013. Clubs in Savannah, Jacksonville and West Palm Beach commenced operations in March 2014. The Detroit and Houston clubs are not yet operating.



On January 27, 2009, Mitchell’s East LLC, wholly owned by Robert M. Gans, acquired a majority interest in our outstanding capital stock. I.M. Operating LLC (“IMO”), which is partially owned by Robert M. Gans who is also our majority shareholder, has signed a licensing agreement with us and commenced operations in New York of a new club (the “New York Club”) under the Scores name in May 2009. Throughout this report, we refer to the New York Club as our affiliate, because of the common ownership by Mr. Gans. All other clubs are referred to as non-affiliated clubs or as licensees, a term that may include the New York Club when the context requires.



On August 6, 2010, we appointed Robert M. Gans as our President and Chief Executive Officer and as a member of our Board. Robert Gans and Martin Gans, one of our existing Board members, are brothers. Also on August 6, 2010, we appointed Howard Rosenbluth as our Treasurer and Chief Financial Officer.



Results of Operations



Three Months Ended March 31, 2014 (“the 2014 three-month period”) Compared to Three Months Ended March 31, 2013 (“the 2013 three-month period”).



Revenues:



Revenues increased to $204,353 for the 2014 three-month period from $166,565 for the 2013 three-month period.



Revenues from the New York Club decreased ten percent (10%) to $33,476 as compared to $37,115 for the 2014 and 2013 three-month periods, respectively. Revenues from our Chicago nightclub decreased nine percent (9%) to $29,825 for the 2014 three-month period from $32,884 from the 2013 three-month period, while revenues from our Baltimore club increased nine percent (9%) to $35,696 for the 2014 three-month period from $32,706 for the 2013 three-month period and revenues from our New Orleans club remained the same at $30,000 for the 2014 and 2013 three-month period. Revenue from our Tampa club remained the same at $30,000 for the 2014 and 2013 three-month period. Revenue from our Scoreslive.com licensee increased two hundred ninety-seven percent (297%) to $15,355 for the 2014 three-month period from $3,860 for the 2013 three-month period. The Company earned revenue from three new clubs (Jacksonville, West Palm Beach and Savannah) that commenced operations in March 2014. Our revenues from each of these clubs were $10,000 for the 2014 three-month period.



Revenues under our license agreements vary from a flat monthly fee to a percentage of club revenues on a monthly basis.



General and Administrative Expenses:



General and administrative expenses decreased during the 2014 three-month period to $116,789 from $121,981 during the 2013 three-month period. General and administrative expenses decreased approximately by $5,192 from 2014 to 2013, which decrease can be attributed to a decrease in legal fees. Legal expenses attributable to ongoing litigation amounted to $43,418 for the three-month period ended March 31, 2014 and $50,928 for the three-month period ended March 31, 2013.



Provision for Income Taxes



The provision for state income taxes relates primarily to average assets and capital which were not impacted by our net operating losses.



Net Income:



Our net income was $150,950 or $0.001 per share for the 2014 three-month period compared to net income of $43,741 or $0.000 per share for the 2013 three-month period. The increase in net income for the 2014 three-month period is largely attributable to the settlement of a lawsuit in our favor.




4






Net income per share data for both the 2014 three-month period and the 2013 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



Cash:



At March 31, 2014, we had $71,861 in cash and cash equivalents compared to $4,522 in cash and cash equivalents at December 31, 2013. The increase in cash is related to the settlement we received in March 2014.



Operating Activities :



Net cash provided by operating activities for the three months ended March 31, 2014 was $80,291 and net cash used by operating activities for the three months ended March 31, 2013 was $1,902. The increase in cash is related to the settlement we received in March 2014.



Financing Activities:



As of March 31, 2014, we owed $115,000 in rent to our Westside Realty affiliate and $37,500 to our Metropolitan Lumber Hardware and Building Supplies, Inc. affiliate.



Future Capital Requirements:



We have incurred 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 March 31, 2014 we had an accumulated deficit of $(6,207,197). As of March 31, 2014, we had total current assets of $471,736 and total current liabilities of $455,630 or working capital of $16,106. As of December 31, 2013, we had total current assets of $343,335 and total current liabilities of $473,306 or negative working capital of $(129,971). The decrease in the amount of negative working capital has been primarily attributable to the decrease in our related party payable.



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.



Off Balance Sheet Arrangements .



The Company has no off balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.



Item 3. Quantitative and Qualitative Disclosures about Market Risk.



Not applicable.



Item 4. Controls and Procedures.



(a) Evaluation of Disclosure Controls and Procedures



Based on management’s evaluation (with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer), as of the end of the period covered by this report, our CEO and Chief Financial Officer have concluded that our disclosure of controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.




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(b) Changes in Internal Control over Financial Reporting



There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



PART II - Other Information



Item 1. Legal Proceedings.



On June 14, 2013, Elizabeth Shiflett, a former cocktail waitress, filed a civil lawsuit against us in the S.D.N.Y. alleging violations of Title VII of the Civil Rights Act of 1964 (“Title VII”), as amended, the New York State Human Rights Law (“NYSHRL”) and the New York City Human Rights Law (“NYCHRL”) based upon allegations of sexual discrimination, creating a hostile work environment based upon plaintiff’s sex and race and unlawful retaliation against plaintiff. The lawsuit further alleges that at all material times we were the employer of the plaintiff. The lawsuit had been preceded by a Determination of the U.S. Equal Employment Opportunity Commission (the “EEOC”) on January 25, 2013 that there was reasonable cause to believe that we had violated Title VII as a result of the complained-of conduct. The lawsuit seeks a declaratory judgment that the practices complained of violated Title VII, the NYSHRL and the NYCHRL, an injunction enjoining us from engaging in future unlawful acts of discrimination, harassment and retaliation, unspecified compensatory damages for plaintiff’s alleged loss of past and future earnings, emotional distress, humiliation and loss of reputation, punitive damages as a result of our alleged disregard of plaintiff’s protected civil rights, and attorneys’ fees and costs. We dispute that we were an employer of the plaintiff and categorically deny all allegations of sexual discrimination, sexual and racial harassment and retaliation. In November 2013, we filed a motion for summary judgment seeking dismissal of the case. On April 10, 2014, the Court granted our motion for summary judgment dismissing all claims. In May 2014, Ms. Shiflett filed a notice of appeal to with the United States Court of Appeals for the Second Circuit. We will continue to vigorously defend ourselves in this litigation and do not expect that the outcome will be material.



On March 14, 2013, Miki Yamada, a former bartender at the Scores New York nightclub located at 536 West 28th Street, New York, NY filed charges against us and IM Operating LLC (“IMO”) with the EEOC claiming violations of Title VII based upon alleged sexual harassment, discrimination based on gender and unlawful retaliation. Ms. Yamada also delivered a draft civil complaint to us containing similar allegations. Although we disputed the issues of liability and damages asserted by Ms. Yamada, we and the other respondents settled these matters for a payment of $90,000 (of which we paid $0) to Ms. Yamada pursuant to a settlement and release agreement dated April 30, 2013. These matters were settled out of court.



On June 14, 2011, Christina Maldonado, a former front door receptionist/coat checker at Scores New York, located in New York NY filed a civil lawsuit in New York State Supreme Court against us and IMO alleging violations of Title VII of the Civil Rights Act, New York State Human Rights Law, New York Executive Law, New York City Human Rights Law and the New York City Administrative Code, based on allegations of sexual discrimination and sexual harassment. The lawsuit further alleges that both we and IMO were her employers. The lawsuit seeks unspecified damages for alleged loss of past and future earnings and emotional distress and humiliation. We dispute that that we were an employer of the plaintiff and categorically deny all allegations of sexual discrimination and sexual harassment. We responded to the complaint and later filed an amended complaint and asserted a cross claim against IMO. We are vigorously defending ourselves in this litigation and do not expect that the outcome will be material.



In mid-March 2010, we were named by Nichole Hughes in a complaint filed with the SCNY. Ms. Hughes sued us for an unspecified amount of damages in connection with an alleged unauthorized use of her image in our advertising materials. On June 20, 2010, we filed a pre-answer motion to dismiss the complaint, which was denied on December 17, 2010. We then filed an answer and affirmative defenses and a third party complaint against IMO, owner and operator of the club where Ms. Hughes was employed. Plaintiff’s counsel was granted leave by the court to withdraw from representation in January 2013. Plaintiff failed to appoint new counsel or further participate in the case and the case was dismissed on May 20, 2013.



On or about February 28, 2014, Kiana Love, a former entertainer and masseuse at The Penthouse Executive Club and Scores New York, both located in New York, NY, filed a civil lawsuit in the SDNY against us, The Executive Club, LLC, Go West Entertainment, Inc., Scores Entertainment, Inc., Entertainment Management Services, Inc., 333 East 60 th Street., Inc., I.M. Operating, LLC, Richard Goldring, Elliot Osher, Robert Gans and Mark Yackow (collectively “Defendants”), alleging, for the time during which she performed as a masseuse, violations of the state and federal wage and hour laws, including the New York Labor Law and Fair Labor Standards Act, based upon allegations of failure to pay minimum wage, uniform related expenses, and allegations of improper wage deductions and tip misappropriation as well as record keeping violations. The lawsuit further alleges that at all material times Defendants were employers of Ms. Love, the plaintiff, while she performed massage services at Scores New York as well as The Penthouse Executive Club. The lawsuit seeks unspecified compensatory damages for plaintiff’s alleged loss of past wages and reimbursement of allegedly unlawful deductions. We dispute that we were an employer of the plaintiff, who was at all material times an independent contractor, and categorically deny all allegations of violations of law, including the wage and hour laws, improper tip taking, and violations related to uniforms. The Complaint in the action has not yet been served and our answer therefore has not yet become due. We have been presented with an initial demand for settlement in the amount of approximately $75,000 and, along with other defendants, are actively trying to resolve the dispute with counsel for the plaintiff without a need to appear in the lawsuit.




6






On April 26, 2013, the Company filed a complaint in United States District Court, District of Massachusetts against Helesant, Inc., et al. for trademark infringement. The compliant sought injunctive relief and money damages. A settlement was reached in which the Company would receive $150,000 and the defendants would cease and desist from further use of the trademarks. The first installment of $100,000 was received in March 2014. The second installment of $50,000 is due in June 2014. Pursuant to settlement order of dismissal filed February 6, 2014, the action was dismissed, with prejudice, as of March 23, 2014.



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.



Item 1A. Risk Factors.



Not applicable.



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



None.



Item 3. Defaults upon Senior Securities.



None.



Item 4. Mine Safety Disclosure.



Not applicable.



Item 5. Other Information.



On February 14, 2014, we (through our subsidiary Scores Licensing Corp.) entered into a trademark license agreement with Houston KP LLC, granting it an exclusive, non-transferable license for the use of certain Scores trademarks in its night club/restaurant in Houston, Texas. The license is for a term of five years, with five successive five year renewal terms. Commencing on July 31, 2014, we will receive $10,000 per month for the first two years of the agreement but will be required to designate $2,500 of that fee for advertising Scores Houston. After such two-year period, we shall be due to receive, on a monthly basis, the greater of 4.99% of monthly net revenues or $10,000. Pursuant to the written agreement, SLC also granted Scores Houston a non-exclusive, non-transferable license to sell certain licensed products bearing our trademarks. Scores Houston will purchase for the licensed products from us or our affiliates at our cost plus 25%. The Houston club was not operating as of March 31, 2014.



Pursuant to an oral arrangement, in July 2013 we granted an exclusive license for the use of certain Scores trademarks to Southeast Show Clubs LLC for its gentlemen’s clubs in West Palm Beach, Florida, Savannah, Georgia and Jacksonville, Florida. The license is for a term of five years, with five successive five-year renewal terms. Royalties under this license are payable at the rate of $10,000 per month, per club, beginning in March 2014. We also granted Southeast Show Clubs a non-exclusive license to sell certain licensed products bearing our trademarks. Southeast Show Clubs will purchase the licensed products from us or our affiliates at our cost plus 25%. The above terms are subject to modification upon entry into definitive documentation memorializing the arrangement.




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Item 6. Exhibits.



Exhibit No. Description

3.1 Certificate of Incorporation of Scores Holding Company, Inc. (1)

3.2 By-Laws of Scores Holding Company, Inc. (2)

10.1 *Trademark License Agreement between Scores Licensing Corp. and Houston KP LLC, effective February 14, 2014.

31.1 *Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.

31.2 *Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.

32.1 *Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.

32.2 *Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.

101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Schema Document
101.CAL XBRL Taxonomy Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document



*Filed herewith.



(1) Filed with the Securities and Exchange Commission on November 14, 2013 as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012, which exhibit is incorporated herein by reference.



(2) Filed with the Securities and Exchange Commission on April 4, 1997 as an exhibit to the Registrant’s Annual Report on Form 10-KSB for the year ended November 30, 1996, which exhibit is incorporated herein by reference.




8






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.



SCORES HOLDING COMPANY, INC.

Date: May 19, 2014 By: /s/ Robert M. Gans
Robert M. Gans
Chief Executive Officer and Director
(Principal Executive Officer)

Date: May 19, 2014 By: /s/ Howard Rosenbluth
Howard Rosenbluth
Chief Financial Officer
(Principal Financial Officer)




9








(Houston)



SCORES TRADEMARK LICENSE AGREEMENT



THIS AGREEMENT (the “ Agreement ”) is made and entered into this [14] day of [February] 2014 (the “ Effective Date ”) by and between SCORES LICENSING CORP., a Delaware corporation, with its principal office at 617 11 th Avenue, New York, NY 10036 (“ SLC ”) and [Houston KP LLC], a [Domestic Limited Liability Company], with its principal office at 6340 Westheimer Road Houston, Texas 77057] (“ Licensee ”).



WITNESSETH:



WHEREAS, SLC is the authorized licensee of the SCORES trademarks listed on Schedule A hereto, which may be amended from time to time by SLC in its sole discretion, by providing Licensee with written notice of such changes (collectively, the “ SCORES Trademarks ”);



WHEREAS, Licensee is the owner and operator of an adult entertainment night club/restaurant to be located at 6340 Westheimer Road, Houston, Texas 77057(the “ Location ”) which will open to the public and be fully operational no later than six (6) months from the Effective Date (the “ Business ”);



WHEREAS, Licensee wishes to operate the Business under the name “SCORES” and to otherwise brand the Business with the SCORES Trademarks, and to offer and sell various related licensed products at the Location under the SCORES Trademarks; and



WHEREAS, SLC wishes to license the SCORES Trademarks to Licensee for use in connection with the Business pursuant to the terms and conditions of this Agreement.



NOW, THEREFORE, for and in consideration of the promises, covenants, and agreements contained herein, and for other good and valuable consideration, receipt of which is hereby acknowledged, SLC and Licensee (the “Parties”) agree as follows:



1. LICENSE GRANT.



(a) Business . Subject to the terms and conditions of this Agreement, SLC hereby grants to Licensee, and Licensee hereby accepts, an exclusive, non-transferable, non-sublicenseable sublicense during the Term of the Agreement, as specified in Section 15 below, to use the SCORES Trademarks at the Location (the “ Territory ”) solely to promote, market and otherwise brand the Business (the “ Club License ”).













(b) Licensed Products . Subject to the terms and conditions of this Agreement, SLC hereby grants to Licensee a non-exclusive, non-transferable, non-sublicensable sublicense during the Term to use the SCORES Trademarks solely on or in association with the offering for sale and sale of licensed products as identified on Schedule A, which may be amended from time to time by SLC in its sole discretion, by providing Licensee with written notice of such changes (collectively, the “ Licensed Products ”) at the Location only (the “ Merchandise License ”). The Merchandise License does not grant to Licensee the right to produce, manufacture or have manufactured the Licensed Products. Nothing in the Merchandise License restricts SLC or its licensees from offering for sale or selling Licensed Products in or outside of the Territory. The Club License and the Merchandise License shall hereinafter be referred to collectively as the “ Licenses ”. The Licenses are granted subject to any previous licenses granted by SLC or SLC’s parent or affiliates prior to the Effective Date.



(c) License Restrictions. All rights in and to the SCORES Trademarks not expressly licensed to Licensee pursuant to the Licenses herein are expressly reserved by and for SLC and Scores Holding Company, Inc., which has licensed the SCORES Trademarks to SLC and which is the owner of the SCORES Trademarks (the “ Owner ”). At no time shall Licensee use or otherwise exploit any of the SCORES Trademarks except as expressly provided in this Agreement. Without limiting the generality of the foregoing, SLC expressly reserves the right to sell, or enter into license agreements with other parties to sell, merchandise directly to any retail consumer by means of the Internet or other means of e-commerce or by catalog, direct mail, or by other similar means. Retail sales include retail sales in any authorized store.



2. ROYALTIES AND OTHER PAYMENTS.



(a) Royalty Amount . Licensee shall pay SLC a fixed fee of Ten Thousand Dollars ($10,000.00) per month (“ Fixed Fee Royalty ”) to be received by May 31, 2014. Please note SCORES™ will give SCORES Houston a $2,500 advertising allowance paid upon clearing of monthly $10,000 fee. This arrangement will be for the first 24 timely payments being current. Commencing on July 31, 2014, Licensee shall pay the Fixed Fee Royalty for two (2) consecutive years, and after such two-year period, for the remainder of the Term, Licensee shall pay SLC, on a monthly basis, the greater of 4.99% of Licensee’s monthly Net Revenue (as hereinafter defined) (the “ Net Revenue Royalty ”) or the Fixed Fee Royalty (collectively, the “ Business Royalties ”). “ Net Revenue ” means 100% of Licensee’s receipts received in connection with the operation of the Business (“ Gross Revenues ”), less all actual local sales taxes paid, amounts specifically designated by customers on credit card receipts as “tips for service”, credit card discount fees, and complementary food and beverage sales (not to exceed 5% of Licensee’s Gross Revenues). Gross Revenues include all revenues from operation of the Business including, but not limited to, liquor revenue, beer revenue, champagne revenue, shot girl house fees, wine revenue, non-alcoholic beverage revenue, food revenue, party revenue, admission fees club, admission fees for private or VIP rooms, room rental, humidor revenue, cigar revenue, cigarette revenue, candy revenue, novelty revenue (other than revenue from Licensed Products), valet revenue, coat check revenue, concession—cigarette, concession—bathroom, concession—massage concession—tarot, dressing room rent, house fees from entertainers, house fees from DJs, house fees from floor manager, house fees from service personnel, feature calendar, feature-novelty, feature-video, feature-cigar and Internet revenue and will also include the fee charged to customers for the purchase of Diamond Dollars™ and the fee paid by entertainers for cashing in Diamond Dollars™.






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(b) Licensed Product Royalties . Licensee will purchase all re-sellable Licensed Products from SLC, or SLC’s authorized affiliate. Licensee shall pay for all such Licensed Products on a cost plus twenty-five percent (25%) markup basis, unless otherwise agreed (the “ Licensed Product Royalties ”). For the avoidance of doubt, this Agreement does not grant Licensee the right to produce, manufacture or have manufactured Licensed Products for resale and any such production of Licensed Products shall constitute an infringement of SLC’s and/or Owner’s intellectual property rights.



(c) Royalty Reports . Licensee shall furnish SLC with written reports describing in detail all Gross Revenues and Net Revenue, including all deductions taken from the Gross Revenue, relative to the Business (the “ Royalty Reports ”). The Royalty Reports shall be prepared and sent to SLC not later than ten (10) days following the end of each calendar month. Royalty Reports may be adjusted on a quarterly basis (if necessary, with SLC’s written approval), and shall be sent not later than ten (10) business days after each calendar quarter period ending in March, June, September and December of each year.



(d) Payment . Payment of Royalties due under this Section shall be made within ten (10) business days after the end of each calendar month (or calendar quarter, with SLC’s prior written approval) during the Term.






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3. OPERATIONS.



(a) Licensee, at its sole cost and expense, shall operate and maintain the Business at the Location under the authority of this Agreement as prescribed herein and as permitted by federal, state and local laws, rules, regulations or orders.



(b) Licensee, at its sole cost and expense, shall provide any lighting, music, music programming, sound equipment, or any other equipment and facilities necessary for the proper operation of the Business at the Location.



(c) Licensee warrants that all food, beverages and merchandise shall be pure and of good quality. Licensee shall maintain adequate inventory control to ensure a constant supply of food, beverages and merchandise. Licensee shall operate any restaurant, bar or the facility that dispenses food or beverage in such manner as to maintain the highest health inspection rating.



(d) Licensee shall personally conduct operations under this Agreement and utilize an employee operations manager satisfactory to SLC. The designated manager must be available by telephone during all hours of operation. Licensee shall notify SLC in writing of the name(s) of the designated manager(s) as soon as such person(s) begin their employment with Licensee. Licensee shall promptly notify SLC of any changes to who the designated managers are and any changes in their contact phone numbers.



(e) Licensee shall at its sole cost and expense, provide a twenty-four (24) hour per day security system at the Location.



(f) Licensee shall prepare and provide to SLC, reports of major accidents or incidents involving law enforcement authorities occurring at the Location. Licensee shall promptly notify SLC, in writing, of any claim for injury, death, property damage or theft which shall be asserted against Licensee with respect to the Location. Licensee shall also designate a person to handle all such claims, including all insured claims for loss or damage pertaining to the operations of the Location and Licensee shall notify SLC in writing, as to said person’s name, address, phone number and e-mail address.



(g) Licensee shall promptly notify SLC of any unusual conditions that may develop in the course of the operation of this License Agreement such as, but not limited to, fire, flood, vandalism, casualty or substantial damage of any character.






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4. APPROVALS.



In order to preserve the value, goodwill and reputation of the SCORES Trademarks, Licensee and SLC shall consult with each other during the Term hereof with regard to any marketing, advertising or promotional activities pursuant to the Business and SLC will have the right to pre-approve in writing, (in its sole discretion), all advertisements, promotional, marketing and other similar materials, including but not limited to, the images and format of the Diamond Dollars TM and the images of the SCORES Trademarks for the Business (collectively, the “ Promotional Materials ”) in order to ensure consistent quality of same and adherence to any brand or marketing guidelines provided by SLC. Prior to using any Promotional Materials, Licensee shall send copies of all proposed Promotional Materials to SLC for SLC and/or Owner’s review. SLC agrees to use commercially reasonable efforts to inform the Licensee of the decision regarding any approvals within ten (10) days of receiving Promotional Materials for approval, provided, however, that SLC’s failure to provide such approvals during such 10-day period shall not be deemed to constitute approval. All Promotional Materials shall be deemed “works made for hire,” pursuant to the Copyright Act of 1976, as amended, and all rights in and to the copyrights to such Promotional Materials shall be owned by Owner.



5. COMPLIANCE WITH APPLICABLE LAWS AND STANDARDS.



Licensee shall comply with all applicable laws, codes, regulations, orders and safety standards regarding the operation of the Business and the use of the SCORES Trademarks herein. SLC’s approval of Promotion Materials pursuant to Section 4 above in no way affects, alters, diminishes or waives Licensee’s obligations hereunder or Licensee’s obligations to indemnify SLC as set forth below.



6. BOOKS AND RECORDS.



Licensee shall, for a minimum of three (3) years from their creation, keep full and accurate books of account, records, data and memoranda with respect to the Business and the Licenses granted hereunder. Licensee grants SLC, Owner and/or their duly authorized representatives the right during the Term of this Agreement and for a period of three (3) years past the expiration or termination of this Agreement, at their own cost and expense, to examine said books and records on reasonable notice, such examination to be conducted in such a manner as to not unreasonably interfere with the business of Licensee. Examinations shall not be conducted more than once in every three (3) month period. Licensee shall reasonably cooperate with SLC and/or Owner in the event SLC and/or Owner requests an audit hereunder. SLC, Owner and their representatives shall not disclose to any other person, firm, or corporation any information acquired as a result of any examination, provided, however, that nothing contained herein shall be construed to prevent SLC, Owner and/or their duly authorized representatives from using or disclosing said information in any court, arbitration, or other action instituted to enforce the rights of SLC and Owner hereunder, or in order to comply with applicable rules, regulations or court orders or to SLC and Owner’s shareholders, directors, officers, affiliates, employees, consultants and advisors on a need to know basis. In the event that an audit conducted pursuant to this Section 6 reveals an underpayment of monies due SLC or its affiliates of more than five percent (5%) for the audited period, such underpayment shall be paid by Licensee to SLC within five (5) business days of notice of the underpayment to Licensee, and Licensee shall be solely responsible to pay and/or reimburse SLC for the cost of such audit.






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7. INTELLECTUAL PROPERTY RIGHTS.



(a) Ownership Rights . All right, title and interest in and to the SCORES Trademarks and related intellectual property are owned exclusively by the Owner. All uses by Licensee of the SCORES Trademarks under the License shall inure to the benefit of the Owner. In no event shall the granting of the Licenses set forth herein be deemed to convey or transfer to Licensee any ownership rights in or to any of the SCORES Trademarks. Licensee acknowledges that the SCORES Trademarks have acquired secondary meaning.



(b) Notices . Licensee shall include all appropriate legal notices as required by SLC with respect to all promotional, packaging and advertising material.



(c) No Challenge . Licensee acknowledges the exclusive ownership of all intellectual property rights in and to the SCORES Trademarks by Owner and will not take any action to interfere with or challenge said ownership, including but not limited to registering or attempting to register the same or similar marks or properties anywhere in the world, or commencing or participating in any cancellation or opposition proceedings or other litigations.






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(d) Protection . Licensee shall execute all documents and take all reasonable actions as SLC shall reasonably request to procure, preserve, confirm, evidence, establish, register, enforce and protect the rights of Owner in the SCORES Trademarks. Owner has the right, but not the obligation, to obtain at its own cost, appropriate statutory protection for the SCORES Trademarks, for any related intellectual property and/or for any advertising, promotional or packaging materials for the Licensed Products.



(e) Infringements . Licensee agrees to give SLC prompt notification of any third-party actions that would constitute an infringement of the rights granted to it by this Agreement. SLC or the Owner of the SCORES Trademarks shall have the exclusive right to prosecute, at their own discretion, infringement actions against any third-party infringers, and any recoveries obtained therein shall belong exclusively to SLC or the Owner of the SCORES Trademarks. Licensee shall, at SLC’s expense, cooperate in all respects with the prosecution of said suits, including but not limited to being named as a party in any such suit, producing documents, appearing as witnesses, etc.



(f) Unauthorized Use of SCORES Trademarks . SLC and/or Owner shall have the right to bring any action or proceeding deemed necessary by SLC and/or Owner against Licensee for Licensee’s unauthorized use of the SCORES Trademarks or for any breach by Licensee of any of the provisions in this Agreement regarding Licensee’s use of the SCORES Trademarks. SLC and/or Owner shall have the right to obtain immediate injunctive relief against Licensee in addition to any other remedies available to SLC and/or Owner.



(g) Branding Guidelines . Licensee shall comply with all brand and/or marketing guidelines that SLC may provide to Licensee regarding use of the SCORES Trademarks. SLC shall have the right to terminate this Agreement for Licensee’s failure to cure any misuse of the SCORES Trademarks or other noncompliance of the brand and/or marketing guidelines.



(h) Reversion of Rights . Upon termination or expiration of this Agreement all rights granted to Licensee under the Licenses and with respect to the SCORES Trademarks shall immediately revert to SLC and/or Owner, and Licensee agrees to immediately return to SLC all original artwork, models, samples, prototypes, renderings and drawings incorporating the SCORES Trademarks and to cease all uses of the SCORES Trademarks. All use by Licensee of the intellectual property rights of the SCORES Trademarks shall inure to the sole benefit of Owner. Licensee shall execute any and all documents necessary to confirm said reversions of rights and hereby appoints SLC as its attorney-in-fact for the sole and limited purpose of executing any such documents in the event Licensee is unwilling or unable to do so unless Licensee is relying upon the specific warranties set forth below.



(i) Owner is a third-party beneficiary of the provisions in this Section 7 and can enforce them.






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8. REPRESENTATIONS AND WARRANTIES OF LICENSEE.



(a) Licensee represents and warrants that Licensee:



(i) shall commence operation of the Business at the Location within 90 days of the execution of this Agreement and within that time obtain all permits, approvals, and consents, including, but not limited to liquor license and zoning and use permits in order that the Licensee may lawfully operate the Business at the Location as an adult entertainment night club in the manner contemplated herein;



(ii) shall render all services of a quality equal to the quality of other Licensees of the SCORES Trademarks;



(iii) shall maintain facilities and trained personnel sufficient to perform its obligations under this Agreement;



(iv) shall maintain a commercially reasonable inventory of merchandise bearing the SCORES Trademarks;



(v) shall not promote or advertise during the Term of this Agreement, any services or items that are comparable and competitive with SLC and which bear the name or are associated with the name, of businesses that SLC deems to be directly competitive with SLC without SLC’s prior written consent or any other business which renders adult entertainment services, including but not limited to gentlemen’s clubs, whether live or online;



(vi) shall not produce, distribute or sell any other products which are substantially similar in design to the Merchandise, and shall not “knock off” the Merchandise (which shall be determined by using a standard that is broader than that for determining whether a copyright has been infringed); and



(vii) shall not take any action which creates any lien upon, mortgage or otherwise encumber the Licensee’s interest in this Agreement without the express prior written consent of SLC, which consent may be withheld in SLC’s sole and absolute discretion.






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(b) Licensee hereby represents and warrants that Licensee has the right, power and authority to enter into this Agreement and receive the rights and license granted hereby and that all Promotional Materials used by Licensee in connection with this Agreement will not infringe any copyright, trademark, trade dress or other intellectual property right of any third party.



9. COOPERATION AND LICENSING MEETINGS.



(a) Cooperation . Licensee agrees to fully cooperate with and provide SLC with advice and/or suggestions with respect to the rendering of services or sale of merchandise.



(b) Licensing Meetings . Licensee agrees to attend or cause its representative to attend, at Licensee's expense, Licensee meetings held by SLC at such locations as SLC may designate within the Territory or at SLC’s offices to organize and coordinate service, marketing and advertising strategies designed to promote the success of the SCORES Trademarks.



(c) Right to Inspect Location . SLC and/or its authorized representatives shall have the right at reasonable times without notice to inspect the Location and require that any violations of this Agreement be immediately cured.



10. WARRANTIES/DISCLAIMERS OF SLC.



(a) SLC represents and warrants to Licensee that:



(i) Subject to any pre-existing licenses granted by the Owner of the SCORES Trademarks, SLC is the exclusive Licensee of the SCORES Trademarks and has the sole and exclusive rights to sublicense the same on the terms set forth herein;



(ii) SLC has full power and authority to enter into this Agreement;



(iii) To the best of SLC’s actual knowledge as of the Effective Date, the granting of the Licenses hereunder or the subsequent commercial exploitation of the Licenses during the Term does not violate the registered U.S. trademark rights of any third party; and



(iv) To the best of SLC’s actual knowledge as of the Effective Date, there are no liens, encumbrances, security interests, claims, actions, proceedings, or judgments regarding the SCORES Trademarks which would in any way impede, hinder, impair or interfere with the Licensee’s rights hereunder.






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(b) EXCEPT FOR THE EXPRESS WARRANTIES OF SLC IN THIS SECTION 10, SLC AND ITS PARENT, AFFILIATES AND SUBSIDIARIES HEREBY DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE SCORES TRADEMARKS AND OTHERWISE, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT.



11. INDEMNIFICATION.



(a) Indemnification of Licensee . SLC agrees to indemnify and hold harmless Licensee from and against any and all third-party claims arising from the breach by SLC, as determined by a final, non-appealable court order or judgment, of any of SLC’s express warranties, set forth in Section 10, provided that Licensee provides SLC with prompt written notice of such claim, and such indemnification shall constitute Licensee’s sole and exclusive remedy with respect to any such alleged breach of warranty. Any claims made against Licensee which would result in SLC becoming obligated to indemnify Licensee hereunder shall not permit Licensee to withhold any amount due SLC hereunder. Licensee shall not settle or comprise any such indemnified claim without the prior written consent of SLC.



(b) Indemnification of SLC . Licensee agrees to indemnify, defend, and hold harmless SLC and Owner, and their subsidiaries, affiliates and licensor(s), and their shareholders, officers, directors, agents and employees from and against any and all claim, action, loss, expense, damages, or judgment arising out of or related to any claims of personal injury, product liability, wrongful death, negligence, strict liability or similar action, employee or contractor-related claims or suits, entertainer-related claims or suits, supplier-related claims or suits, and all claims or suits arising from the breach by Licensee of any of its third-party contracts or obligations or warranties under this Agreement or the violations of any applicable law or safety standard by or on behalf of Licensee and/or its subsidiary, affiliated or controlled company (if any). Licensee shall maintain, at its sole cost and expense, premises liability, liquor liability, workman’s compensation (in the amount required by the State of New York or applicable jurisdiction of the Territory), plate glass insurance (as per Licensee’s lease), commercial liability coverage and other customary insurance. The premises, commercial, and liquor insurance policies carried by Licensee must provide AAA insurance coverage of at least $3,000,000 per occurrence, naming SLC and Owner as additional insurers, and providing that such policy cannot be cancelled without thirty (30) days prior written notice to SLC. SLC may, at Licensee’s expense, retain counsel of its own choosing to defend said claims, and Licensee shall pay all fees and expenses of such counsel. All insurance shall be primary and not contributory. Licensee agrees to provide SLC with a copy of the insurance declarations and/or certificates within twenty (20) days following the Effective Date of this Agreement.






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12. TERMINATION.



(a) Termination For Default . In case either party fails to perform under or commits or allows to be committed a material breach of any of the terms and conditions of this Agreement, the other party may send written notice to the defaulting party, and such defaulting party shall then have the right to remedy such failure or default within thirty (30) days. If the default has not been cured within said thirty (30) days of notice to the defaulting party or is incapable of being cured, then the aggrieved party may terminate this Agreement immediately by a further notice in writing effective upon mailing. If SLC shall send notice of default to Licensee based on a failure to pay royalties, then Licensee shall cure such default within ten (10) days of such notice.



(b) Ongoing Covenants . Any termination under this Section 12 will be without prejudice to the rights and remedies of either party with respect to any provisions or covenants arising out of breaches committed prior to such termination.



(c) Insolvency; Bankruptcy . If a petition in bankruptcy is filed by or against Licensee, or Licensee becomes insolvent, or makes an assignment for the benefit of creditors, or any other arrangement pursuant to any bankruptcy law, or if Licensee discontinues its Business or if a receiver is appointed for it or its Business, to the fullest extent permitted by law at the time of the occurrence, the Licenses granted herein shall automatically terminate without any notice whatsoever being necessary. In the event this Agreement is so terminated, Licensee, its receivers, representatives, trustees, agents, administrators, successors, and/or assigns shall have no right to sell, use, exploit or in any way deal with or in the SCORES Trademarks or anything relating to it whatsoever except under the special consent and instructions of SLC in writing, in SLC’s sole discretion, which they shall be obliged to follow.






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(d) Cessation of Business . Upon cessation of the Business by the Licensee for a period of greater than thirty (30) days for any reason other than Force Majeure, this Agreement and the Licenses granted herein shall terminate automatically.



(e) Sale or Transfer of Business . If Licensee seeks to sell its Business or the assets of stock of the Business or otherwise transfer control of the Business, Licensee shall give SLC at least sixty (60) days advance written notice. Upon such sale or transfer, all rights and obligations of the Parties relative to this Agreement shall cease and be of no further force or effect, and this Agreement and the Licenses granted herein shall be deemed terminated.



(f) Termination for Convenience . SLC may terminate this Agreement upon thirty (30) days written notice to Licensee for any reason or no reason without further obligation, provided, however, that upon such termination, Licensee shall pay to SLC all of its accrued Business Royalties and provide SLC with final Royalty Reports.



(g) Cessation of Use . Upon termination or expiration of this Agreement for any reason, the Licenses granted herein shall automatically terminate and Licensee shall immediately cease and desist all uses of the SCORES Trademarks, and all rights under the Licenses shall automatically revert to SLC or Owner, as determined by SLC. In no event shall Licensee make any uses of the SCORES Trademarks beyond the Term of this Agreement.



(h) Final Royalty Report . Within thirty (30) days after the expiration or termination of this Agreement, Licensee shall deliver to SLC any remaining Business Royalties due and owing and a final Royalty Report.



13. REMEDIES.



(a) Relief In Equity Against Certain Defaults . In the event of a breach by Licensee of any of its obligations under this Agreement, Licensee acknowledges and agrees that, SLC will have no adequate remedies at law and that it will be irreparably damaged in the event that the provisions of this Agreement are not specifically enforced. Accordingly, Licensee agrees that (a) an action for specific performance of the obligations created by this Agreement shall be a proper remedy for such breach, or threatened breach, and (b) Licensee shall not assert as a defense or otherwise in such action an allegation or claim that would contravene the agreement set forth in this Section. Such equitable remedy shall, however, be cumulative not exhaustive and shall be in addition to any other remedies available to SLC for a breach or threatened breach of this Agreement, including the recovery of damages and legal fees.






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(b) Other Rights. In addition to the right to termination pursuant to Section 12, SLC may take, upon any default by Licensee, whatever action it deems reasonably necessary to protect its rights and interests under this Agreement. The termination of this Agreement by SLC shall not be deemed an election of remedies by SLC any such termination shall be without prejudice to the rights or remedies which SLC might otherwise have against Licensee under law, in contract or in equity for breach of this Agreement.



(c) Equitable Relief . Licensee acknowledges that its failure to cease use of the SCORES Trademarks at the termination or expiration of this Agreement, except as expressly provided herein, will result in immediate and irreparable damage to SLC and to the rights of any subsequent licensee. Licensee acknowledges and admits that there may be no adequate remedy at law for such failure and Licensee agrees that in the event of such failure SLC shall be entitled to seek equitable relief and any other and further relief as any court with jurisdiction may deem just and proper. In the event of equitable relief in favor of SLC pursuant to the terms of this Section, it is the intent of the Parties that no undertaking (whether in the form of cash or surety bond) shall be required of SLC except to the extent of a nominal amount, if any, is otherwise expressly required by statute.



(d) Attorneys’ Fees . In the event that either party to this Agreement shall commence or otherwise be made a party to any suit, action, arbitration or other proceeding to interpret this Agreement, or to determine or enforce any right or obligation created hereby, if SLC is the prevailing party, SLC shall recover its costs and expenses incurred in connection therewith, including reasonable attorneys’ fees and costs of appeal, if any.



(e) Liquidated Damages. Any termination of this Agreement resulting from a breach or default by Licensee shall not relieve Licensee for many obligations which it had prior to the date of termination or from the continuing obligation to pay any Royalties for the balance of the Term. Notwithstanding the foregoing, the Parties acknowledge that the breach by Licensee of this Agreement would cause substantial damages to SLC, including, but not limited to, loss of "presence" in the marketplace while a successor or replacement Licensee is located, and that the extent of such damages would be difficult and impractical to ascertain. Accordingly, and without prejudice to SLC’s rights and remedies or Licensee's indemnification obligations, it is agreed that if SLC terminates this Agreement as a result of Licensee's breach or default, then SLC shall be entitled to recover from Licensee, as liquidated damages (in lieu of any recovery for Business Royalties, but not in limitation of any other remedies which SLC may have as a result of such breach or default such as the right to injunctive relief, the right to recover past due Business Royalties up to the date of termination, and reasonable attorneys’ fees and costs of collection incurred by SLC and due as of the date of termination), a sum equal to six (6) times the monthly pro rata amount of such Business Royalties due on the date of termination, provided, however, that if there are fewer than six (6) months remaining on the Term, then the foregoing amount shall be computed based upon the number of months remaining.






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14. CONDITIONS; CONFIDENTIALITY.



This Agreement and Licensee’s rights hereunder are conditioned upon Licensee’s compliance with the terms hereof, including, without limitation, the following:



(a) Permits and Consents . Licensee, at its own cost, obtaining all permits, approvals and consents including, but not limited to, a liquor license and zoning and use permits in order that the Licensee may lawfully operate the Business in the Territory and at the Location as an adult entertainment night club and bar in the manner contemplated herein.



(b) Operation of Business . SLC acknowledges that, with the exception of the SCORES Trademarks, the Business is owned solely by Licensee and that, absent an uncured default by Licensee, SLC will not interfere with the Business or the operations thereof and that control of the Business remains solely with Licensee, subject to Licensee’s compliance with all the terms and conditions of this Agreement.



(c) Confidentiality . Licensee shall maintain in strictest confidence all of the terms and conditions of this Agreement, as well as, any other information or materials of SLC which are of a confidential and/or proprietary nature (the “Confidential Information”). Licensee shall use the Confidential Information received from SLC solely to fulfill Licensee’s obligations under this Agreement.



15. TERM .



Unless earlier terminated in accordance with Section 12 by either party, the term of this Agreement shall commence on the Effective Date and continue for an initial term of five (5) years, with five (5) successive five (5)-year renewals, which renewals will occur automatically (collectively, the “ Term ”).






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16 . LIMITATION OF LIABILITY .



EXCEPT WITH RESPECT TO LICENSEE’S INDEMNIFICATION OBLIGATIONS HEREUNDER AND/ OR CLAIMS ARISING OUT OF LICENSEE’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OR LICENSEE’S VIOLATION OF THE INTELLECTUAL PROPERTY, LICENSE OR CONFIDENTIALITY RESTRICTIONS CONTAINED HEREIN, IN NO EVENT SHALL EITHER PARTY OR THEIR PARENTS (INCLUDING OWNER), AFFILIATES OR SUBSIDIARIES BE LIABLE FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL SLC’S OR OWNER’S LIABILITY TO LICENSEE ARISING OUT OF THIS AGREEMENT EXCEED, IN THE AGGREGATE, THE AMOUNTS PAID BY LICENSEE TO SLC UNDER THIS AGREEMENT DURING THE NINETY (90) DAY PERIOD IMMEDIATELY PRECEEDING THE ACCRUAL OF THE ALLEGED CAUSE OF ACTION. IN NO EVENT MAY ANY ACTION BY LICENSEE AGAINST SLC OR OWNER HEREUNDER BE ASSERTED MORE THAN ONE (1) CALENDAR YEAR AFTER THE CLAIM IN QUESTION HAS ACCRUED.



17. REPRESENTATION.



It is expressly agreed and understood that neither party hereto is the agent or legal representative of the other and neither party has the authority, express or implied to bind the other or pledge its credit. This Agreement does not create a partnership or joint venture between the Parties.



18. FORCE MAJEURE.



It is understood and agreed that in the event of an act of the government, war, terrorism, fire, flood or other natural disaster, or labor or manufacturing strikes which prevent the performance of this Agreement, such nonperformance will not be considered a breach of this Agreement, and such nonperformance shall be excused while, but not longer than, the conditions described herein prevail. The period of Force Majeure shall not exceed twelve (12) months. Either party may terminate this Agreement upon written notice to the other party if the Force Majeure event lasts for twelve (12) months or longer.



19. NOTICES.



All notices, whenever required in this Agreement, will be in writing and sent by certified mail, return receipt requested, or via standard overnight courier, facsimile transmission or electronic mail, to the addresses designated by the Parties for such purpose. Notices will be deemed to have been given two business days following mailing, one business day after delivery to an overnight courier, and upon electronic confirmation of a facsimile transmission.






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Notices To SLC: Scores Licensing Corp.

617 11 th Avenue, New York, NY 10036

Fax: [phone]

Attn: Howard Rosenbluth

E-mail: [e-mail]



With a copy to: Jeffrey Weingart, Esq., Meister Seelig & Fein LLP, 140 East 45 th Street, 19 th Floor, New York, NY, 10017, Fax No. [phone].



Notices to Licensee: [To Be Provided By Licensee]



20. CONTROLLING LAW; VENUE.



This Agreement shall be construed In accordance with the laws of the State of New York, United Stated of America, and jurisdiction over the Parties and subject matter of this Agreement with respect to any controversy arising hereunder, in whole or in part, shall be exclusively in the federal or state courts located in the State of New York, County of New York. The Parties hereby irrevocably consent to the exclusive jurisdiction and venue of such courts.



21. ASSIGNMENT .



This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective permitted successors and permitted assigns, provided, however, that neither this Agreement, nor any of the rights, interests or obligations hereunder may be assigned by Licensee without the prior written consent of SLC, and any attempts to do so without the consent of SLC shall be void and of no effect.



22. ENTIRE AGREEMENT .



This Agreement constitutes the entire agreement and understating between the Parties hereto. No other oral or written agreements or representations exist or are being relied upon by either party, all being merged herein. Any modifications or additions hereto must be made in writing and signed by the Parties.



23. MISCELLANEOUS.



(a) The section headings used herein are for reference purposes only and do not affect the meaning or interpretation of this Agreement. If any provisions of this Agreement are for any reason declared to be invalid or illegal, the remaining provisions shall not be affected thereby.






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(b) The failure of either party to enforce any or all of its rights hereunder as they accrue shall not be deemed a waiver of those rights, all of which are expressly reserved.



(c) This Agreement may be executed in more than one counterparts, all of which shall be deemed to be originals. Signatures delivered by electronic means shall be accepted and treated as original signatures.



(d) The following Sections of this Agreement shall survive the termination or expiration of this Agreement: 2, 6, 7, 11, 12, 13, 14 (c), 16, 19, 20, 21, 24 and 25.



24. SECURITY INTEREST.



(a) In order to induce SLC to enter into this Agreement and to secure the complete and timely performance of Licensee’s obligations hereunder, Licensee hereby grants to SLC a security interest in Licensee’s receipts and receivables from the Business as collateral. In the event Licensee defaults under this Agreement, SLC may enforce against Licensee all the rights and remedies of a secured creditor with respect to Licensee’s receipts and receivables from the Business upon default under all applicable laws. In the event Licensee files for bankruptcy under the U.S. Bankruptcy Laws, SLC may enforce all rights and remedies of a secured creditor under the U.S. Bankruptcy Code.



(b) Licensee agrees to execute any and all documents necessary to perfect SLC’s security interest hereunder including, but not limited to, Financing Statement Form UCC-1 and any other security agreements and financing statements evidencing said security interest in such form as may be recorded and perfected according to applicable laws.



25. SECURITY DEPOSIT.



A two month Security deposit shall be held by Licensor without liability for interest and as security for the performance by Licensee of Licensor’s covenants and obligations under this agreement, it being expressly understood that the Security Deposit shall not be considered an advance payment of royalties or other obligation but a measure of Licensor’s damages in case of default by Licensee. Unless otherwise provided by mandatory non-waive able law or regulation, Licensor may commingle the Security Deposit with Licensor’s other funds. Licensor may, from time to time, without prejudice to any other remedy, use the Security Deposit to the extent necessary to make good any arrearages of royalties or to satisfy any other covenant or obligation of Licensor hereunder. Following any such application of the Security Deposit, Licensee shall pay to Licensor on demand the amount so applied in order to restore the Security Deposit to its original amount. If Licensee is not in default at the termination of this agreement the balance of the Security Deposit remaining after any such application shall be returned by Licensor to Licensee. If Licensor transfers its interest in the premises during the term of this agreement, Licensor may assign the Security Deposit to the transferred and thereafter shall have no further liability for the return of such Security Deposit.






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THIS AGREEMENT AND THE LICENSE GRANT CONTAINED HEREIN SHALL NOT BE CONSIDERED VALID UNTIL EXECUTED BY AN EXECUTIVE OFFICER OF SCORES LICENSING CORP.



IN WITNESS WHEREOF, the Parties hereto have executed this Agreement by their respective duly authorized representatives as of the date first written above.



SCORES LICENSING CORP.





By : /s/ Howard Rosenbluth By: /s/ Anthony Quaranta

Print Name: Howard Rosenbluth Print Name: Anthony Quaranta

Title: CFO Title: Owner

Date: 5/12/14 Date: 5/2/14






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SCHEDULE A



1. SCORES Trademarks:





® trademark, U.S. Registration No. 1,830,135





International Classes: 6, 41, 42





® trademark, U.S. Registration No. 1,855,829





International Classes: 25, 41, 42







THE REAL MEN OF SCORES TM trademark, U.S. Serial No. 85/905,856



International Classes: 41, 43







SCORES COLLECTION TM trademark, U.S. Serial No. 85/965,064



International Class: 35







DIAMOND DOLLARS TM







2. Licensed Products:



Apparel, underwear, jewelry, novelties and other items, in each case subject to the prior written approval and consent of SLC.






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Exhibit 31.1



I, Robert M. Gans, certify that:



1. I have reviewed this Form 10-Q of Scores Holding Company, Inc.;



2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:



(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(d) Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and



5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):



(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and



(b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: May 19, 2014
/s/ Robert M. Gans
Robert M. Gans, Chief Executive Officer









Exhibit 31.2



I, Howard Rosenbluth, certify that:



1. I have reviewed this Form 10-Q of Scores Holding Company, Inc.;



2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:



(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(d) Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and



5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):



(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and



(b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: May 19, 2014
/s/ Howard Rosenbluth
Howard Rosenbluth, Chief Financial Officer









Exhibit 32.1



CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with this Quarterly Report of Scores Company Holding, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert M. Gans, Chief Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company



Date: May 19, 2014
/s/ Robert M. Gans
Robert M. Gans
Chief Executive Officer



A signed original of this written statement, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement, has been provided to Scores Holding Company, Inc., and will be retained by Scores Holding Company, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.









Exhibit 32.2



CERTIFICATION OF

CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with this Quarterly Report of Scores Holding Company, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Howard Rosenbluth, Chief Financial Officer and Principal Accounting Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date: May 19, 2014
/s/ Howard Rosenbluth
Howard Rosenbluth
Chief Financial Officer and Principal Financial Officer



A signed original of this written statement, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement, has been provided to Scores Holding Company, Inc., and will be retained by Scores Holding Company, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.