U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
x
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
x       ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended:fiscal year ended: December 31, 20102012
OR
¨       TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT UNDER 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.
Commission file number:   000─16665(Exact name of registrant as specified in its charter)

SCORES HOLDING COMPANY, INC.
(Exact name of small business issuer as specified in its charter)

Utah
 
87-0426358
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization) 
(I.R.S. Employer
Identification No.)
   
533-535 West 27th27th Street
New York, NY
 
New York, NY
10001
(Address of principal executive offices) (Zip Code)
 
Registrant’s telephone number:  number, including area code: (212) 864-4900246-9090
 
Securities registered under Section 12(b) of the Exchange Act:
Securities registered under Section 12(b)Title of the Exchange Act:each classNone
Name of each Exchangeexchange on Which Registered:Nonewhich registered
Securities registered under Section 12(g) of the Exchange Act:N/ACommon Stock, $0.001 par valueN/A
Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ¨  No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.
Yes ¨   No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the pastpreceding 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See the definitions of the “large accelerated filer,” “accelerate“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.   (Check one):
 
Large Accelerated Fileraccelerated filer ¨
Accelerated Filerfiler ¨
Non-Accelerated FilerNon-accelerated filer o¨
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
 
As of March 31, 2011, there were 165,186,124 shares of the registrant's common stock, par value $0.001, issued and outstanding.
On June 30, 2010,28, 2013, the last business day of the registrant’s most recently completed second fiscal quarter, 76,285,894 shares of its common stock, $0.001 par value per share (its only class of voting or non-voting common equity), were held by non-affiliates of the registrant. The market value of those shares was $19,071,473,$2,517,435, based on the last sale price of $0.25$0.033 per share of the common stock on that date. Shares of common stock held by each officer and director and by each shareowner affiliated with a director have been excluded from this calculation because such persons may be deemed to be affiliates. This determination of officer or affiliate status is not necessarily a conclusive determination for other purposes.
 
As of October 25, 2013, there were 165,186,124 shares of the registrant's common stock, par value $0.001, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
 
Not ApplicableNone
 

TABLE OF CONTENTS
Item Number and CaptionItem Number and Caption PageItem Number and Caption Page
Forward-Looking StatementsForward-Looking Statements 3Forward-Looking Statements 3
      
PART IPART I 3PART I 3
1.Business 3Business. 3
1A.Risk Factors 9Risk Factors. 6
1BUnresolved Staff Comments 9Unresolved Staff Comments. 6
2.Properties 9Properties. 6
3.Legal Proceedings 9Legal Proceedings. 6
4.(Removed and Reserved) 13Mine Safety Disclosures. 7
      
PART IIPART II 13PART II 7
5.Market For Common Equity And Related Stockholder Matters 13Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 7
6.Selected Financial Data 14Selected Financial Data. 8
7.Management’s Discussion And Analysis Of Financial Condition And Results Of Operations 14Management’s Discussion and Analysis of Financial Condition and Results Of Operations. 8
7A.Quantitative and Qualitative Disclosures About Market Risk 18Quantitative and Qualitative Disclosures About Market Risk. 10
8.Financial Statements And Supplemental Data 18Financial Statements And Supplementary Data. 10
9.Changes In And Disagreements With Accountants On Accounting And Financial Disclosure 18Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 10
9A.Controls And Procedures 18Controls and Procedures. 10
9B.Other Information 20Other Information. 11
      
PART IIIPART III 20PART III 11
10.Directors, Executive Officers And Corporate Governance 20Directors, Executive Officers and Corporate Governance. 11
11.Executive Compensation 22Executive Compensation. 13
12.Security Ownership Of Certain Beneficial Owners And Management 23Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 13
13.Certain Relationships And Related Transactions, And Director Independence 25Certain Relationships and Related Transactions, and Director Independence. 14
14.Item 14.  Principal Accountant Fees And Services 26Principal Accounting Fees and Services. 15
      
PART IVPART IV 27PART IV 15
15.Exhibits and Financial Statement Schedules 27Exhibits, Financial Statement Schedules. 15

 
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FORWARD-LOOKING STATEMENTS
 
Except for historical information, this report contains forward-looking statements.“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 include, among others, those statements includingcan be identified by the words “expects,use of forward-looking terminology such as “may,” “will,” “anticipates,” “intends,” “believes” and similar language.“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 sections “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business”. 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.

PART I
Introduction: When we use the terms “Scores,” the “Company,” “we,” “us” and “our,” we mean Scores Holding Company, Inc. and all entities owned by us, except where it is clear that the term means only the parent company.
ITEM 1. BUSINESS

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. The Company adopted its current name in July 2002. Since 2003, we have been in the business of licensing the “Scores” trademarks and other intellectual property to gentlemen’s nightclubs with adult entertainment in the United States. These clubs feature topless female entertainers together with opportunities for watching sporting events and corporate and private parties. There are foursix such clubs currently operating under the Scores name, in New York City, Baltimore, Chicago, Tampa, Atlantic City and New Orleans. We also have licensing agreements in place for a club in Detroit (not currently operating).
 
Our trademarks and copyrights surrounding the Scores trade name are critical to the success and potential growth of our business.  Our trademarks are held by our wholly owned subsidiary, Scores Licensing Corp. (“SLC”).

History and Development of our Business

On March 31, 2003, pursuant to the Amended and Restated Master License Agreement (the “MLA”) by and between us and our former affiliate, Entertainment Management Services, Inc. ("EMS"), an entity owned by two of our former directors and employees, we granted EMS an exclusive, worldwide renewable 20 year license in our property to sublicense the Scores trade name to nightclubs (the “Licensing Rights”). Under the MLA, EMS was required to pay us 100% of the royalties EMS received from the formerly affiliated clubs (defined below) and 50% of the royalties received from non-affiliated clubs (the “Royalty Rights”). These clubs had license agreements with EMS pursuant to which they typically paid EMS approximately 4.99% of their gross revenues from operations, including the sale of merchandise. We depended on these royalties to operate our business and as our principal source of revenue.
 
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On January 27, 2009 (as further discussed below), we terminated the MLA with EMS and EMS transferred to us all of the Licensing Rights and Royalty Rights. Since termination of the MLA, our property is licensed directly by us to the three remaining clubs that previously had been sublicensing our property from EMS, and, thus, as of January 27, 2009, we are receiving 100% of the royalty payments made by these clubs rather than the 50% we were entitled to under the MLA.
 
Until January 27, 2009, we were under common control with two previously existing nightclubs in New York, New York (“Scores East” and “Scores West”) which were owned, respectively, by 333 East 60th60th Street, Inc. (“333”), and Go West Entertainment, Inc. (“Go West”). EMS is also owned by 333. Through EMS, we had sublicense agreements with each of Scores East and Scores West pursuant to which they were entitled to use the Scores intellectual property. (ThroughoutThroughout this report, we refer to Scores East and Scores West as our “formerly affiliated clubs.” All other clubs with the exception of our newly opened club in New York, Scores New York (see discussion below), are referred to as non-affiliated clubs or as licensees (or sublicensees, as applicable), a term that may include the formerly affiliated clubs when the context requires.)

On January 27, 2009, Mitchell’s East LLC, wholly owned by Robert M. Gans, acquired a majority interest in our outstanding capital stock1.  Mr. Gans is the majority owner of I.M. Operating LLC (“IMO”). IMO has a licensing agreement with us and has commenced operations in New York, New York under the club name Scores New York. (Throughout this report, we refer to Scores New York as our “affiliated club.”club”).

Termination of our Contract with EMS

OnAs further described below, on January 27, 2009, following the execution ofMitchell’s East LLC, a transfer agreement dated December 9, 2008, the Company and EMS completed the transfer (the “Transfer”) from EMS to us of all licensing and royalty rights originally granted to EMS under MLA1 and the MLA was cancelled.  Pursuant to the terms of the Assignment and Assumption AgreementNew York limited liability company wholly owned by and among EMS, 333 and us dated January 27, 2009 (the “Assignment Agreement”), EMS assigned to us the Licensing Rights and the Royalty Rights relating to the existing sublicensees, free and clear of any charges, liens or other encumbrances. In consideration of these assignments, we credited 333 withRobert M. Gans, acquired a $600,000 payment against a $1,220,475 unpaid royalty debt owed by 333 to us (the “Debt”) and provided 333 with an acknowledgement that the Debt was satisfied to the extent of the $600,000 payment.  Additionally, as part of the Transfer, we, EMS and 333 cancelled the MLA and terminated all of the rights and obligations of the parties thereunder.majority interest in our outstanding capital stock.
 
1.3As further discussed in our Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on February 2, 2009.

 
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Change in our Ownership

On January 27, 2009, pursuant to a stock purchase agreement (the “SPA”), Mitchell’s East LLC (“Buyer”), a New York limited liability company wholly owned by Robert M. Gans, purchased an aggregate of 88,900,230 shares (the “Owned Shares”) of our common stock beneficially owned by Richard Goldring and Elliot Osher (collectively the “Share Sellers”), as well as any rights Harvey Osher (the Share Sellers and Harvey Osher, together, the “Sellers”) may have in 13,886,059 shares of our common stock (the “Decedent Owned Shares”) currently held of record by the estate of William Osher, deceased, and any rights the Sellers may have in an additional 2,400,001 shares of our common stock (the “Expectancy Shares”).  Under the terms of the SPA, Harvey Osher is to deliver to the Buyer the Decedent Owned Shares that he may receive and the Sellers are to deliver to the Buyer any shares of the Company underlying the Expectancy Shares that any such Seller may receive.  Additionally, pursuant to the SPA, each of the Sellers granted to Buyer an irrevocable proxy enabling Buyer to act as his proxy with respect to any shares underlying the Decedent Owned Shares and the Expectancy Shares, as applicable.

The Owned Shares represent approximately fifty four percent (54%) of our outstanding capital stock and the Owned Shares together with the Decedent Owned Shares represent approximately sixty two percent (62%) of our outstanding capital stock.

Changes in our Management

On August 6, 2010, we appointed Robert M. Gans as our President and Chief Executive Officer and as a member of our Board.Board of Directors. 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. Mr. Rosenbluth is also a director.

Nightclubs Currently Licensing our Scores Brand

Pursuant to the Assignment Agreement between us and EMS dated January 27, 2009, payments to EMS under existing licenses with non-affiliated clubs were assigned to us. Since this Assignment Agreement, we have retained 100% of the royalty payments from each of these clubs.
In 2003, EMS licensed the use of the "Scores Chicago" name to Stone Park Entertainment, Inc. for its club in Chicago, Illinois. Royalties payable to EMSthe Company under this license are the greater of $2,500 per week or 4.99% of the the Chicago club’s gross revenues (less $25,000 per week) earned at that location. The Chicago club accounted for 21%18% and 23%18% of our total royalty revenues during 20102012 and 2009,2011, respectively.

In 2004, EMS licensed the use of "Scores Baltimore" to Club 2000 Eastern Avenue, Inc. for its nightclub in Baltimore, Maryland. Royalties payable to EMSthe Company under this license are the greater of $1,000 per week or 4.99% of gross revenues. The Baltimore club accounted for 26%20% and 27%23% of our total royalty revenues in 20102012 and 2009,2011, respectively.

In April 2007, EMS licensed the use of the Scores brand name to Silver Bourbon, Inc. for a night club in New Orleans, Louisiana “Score New Orleans”. Royalties payable under this license are capped at the greater of $4,000 per month or 4.99% of gross revenues. The New Orleans club accounted for 12%17% and 10%19% of our total royalty revenues during each of 20102012 and 2009,2011, respectively.

The Assignment Agreement between us and EMS dated January 27, 2009, terminated the MLA and, since that date, we have begun to retain 100% of the royalty payments received from each of these clubs.   This percentage includes the 50% which was previously retained by EMS under the MLA.
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On January 27, 2009, we entered into a licensing agreement with IMO for the use of the Scores brand name “Scores New York”.York.” IMO is owned in the majority by Robert M. Gans who is also our majority shareholder. The address where IMO’s new club is located is the same address as that of the former Scores West nightclub, 533-535 West 27th Street, New York, NY (the “West 27th Street Building”). Royalties payable to us under this license agreement have been set at 3% of gross revenues of Scores New York. Scores New York commenced operations in May 2009 and has accounted for 30%29% of our total royalty revenue during 20102012 and 40%29% of our total royalty revenue during 2009.2011. The West 27th27th Street Building is owned by Westside Realty of New York (“WSR”). Robert M. Gans is the majority owner of WSR.

On September 30, 2010, we entered into a licensing agreement with Tampa Food & Entertainment, Inc. Upon signing the contract, we received a non-refundable fee. For the first twelve months we received a flat fee of $6,000 per month with an advance payment made at the signing of the contractcontract. Following that initial 12-month period, royalties payable to us under this license are capped at the greater of $6,000 per month or 4.99% of net revenues, and beginning July 1, 2012, the greater of $10,000 or 4.99% of the net revenues. The Company subsequently entered into an Addendum to this agreement providing that until such time as 4.99% of net revenues for any month are equal to or greater than $8,000, the fee shall be $10,000 per month. The Tampa club accounted for 14% of our total royalty revenue during 2012 and 11% of our total revenue during 2011.
On December 26, 2012, we entered into a licensing agreement with Norm A Properties LLC for the use of certain Scores trademarks in Michigan. For the first five years of the agreement, we will receive a flat fee of $10,000 per month withbut will be required to designate a portion of that fee for advertising Scores Detroit. The Detroit club was not operating as of December 31, 2012.
Pursuant to an advance payment to be made atoral arrangement in November 2013 we granted a license for the signinguse of the contract.  After the first twelve months, royalties payable“Scores Atlantic City” name to usStar Light Events LLC for its gentlemen’s club in Atlantic City, New Jersey. Royalties under this license will be cappedare payable at the greaterrate of a certain dollar amount$10,000 per month, orcommencing in April 2014, and the license is for a percentageterm of net revenues.  Forfive years. We are currently in the year ended December 31, 2010, we recorded $43,000 in revenue from this club.

Nightclubs Formerly Licensingprocess of preparing a written license agreement with respect to our Scores Brand

Scores East wasarrangement with Star Light Events LLC. Robert M. Gans, our President, Chief Executive Officer and a director, is the first nightclub to sublicense our Scores brand through EMS. This nightclub surrendered its liquor license in December 2008 and closed its operations.  Scores East accounted for 0% of our royalty revenue in 2009.  Our second sublicensed nightclub, Scores West, had its liquor license revoked in 2008 and ceased operations. Scores West accounted for 0% of our royalty revenue in 2009.  On April 18, 2008, Go West, themajority owner of Scores West, filed for chapter 11 bankruptcy.

In July 2005, EMS licensed our Scores brand name to D.I. Food and Beverage (“DIF&B”) for DIF&B’s nightclub in Las Vegas, Nevada. Under this EMS sublicense agreement, DIF&B paid EMS $9,000 per week in royalties and $1,500 per month in related fees.  Following notice to EMS, DIF&B canceled its sublicense with EMS effective May 6, 2008.  This club accounted for 0% of our royalty revenue in 2009.  DIF&B failed to make its final royalty payments to EMS and we and EMS have begun legal action against EMS to collect our fees due and related damages, as more fully discussed below.

Scoreslive.comStar Light Events LLC.
 
Scoreslive.com
On January 24, 2006, we 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.” EMS was not a party to this license agreement. Our agreement with AYA provides for royalty payments to be made directly to us at the rate of 4.99% of weekly gross revenues from all revenue sources within the AYA website. The license continues for as long as the website is operational. Scoreslive.com piloted in January 2007. BecauseThe Company began accruing royalties under the Scoreslive.com website is stilllicense in the development stage, it has accountedsecond quarter of 2012. The Scoreslive.com license accounts for a minimal amount1% and 0% of our total royalty revenues in 20092012 and 2008.2011, respectively. 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. (“SWG”SMG”), a newly formed New York corporation whose majority owner is Robert M. Gans.
 
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Burhill LLC

On August 5, 2010, we entered into a license agreement (the “License Agreement”) with Burhill LLC (the “Licensee”) pursuant to which the Licensee will license the Scores trademarks and create, distribute, advertise and promote programming content in all forms of media using the Scores trademarks and conducting business under the name “Scores.”  The Licensee hashad agreed to pay us a non-refundable royalty equal to five percent (5%) of the revenues of the Licensee earned in connection with the Licensee’s use of the Scores trademarks, net of actual local sales taxes paid and including any and all licensing fees charged to third parties for the use of the programming content owned and/or distributed by the Licensee.  The Licensee is wholly owned by Robert M. Gans, our President and Chief Executive Officer and owner of Mitchell’s East LLC, our majority stockholder. This arrangement with Burhill LLC was terminated in July 2011. No royalties were ever paid pursuant to the License Agreement.

Competition

The adult nightclub entertainment business is highly competitive with respect to price, service, location and professionalism of its entertainment. Sublicensed clubs will compete with many locally-owned adult nightclubs. It is our belief, however, that only a few of these nightclubs have names that enjoy recognition and status equal to the Scores brand. For example, there are approximately twenty five (25) adult entertainment cabaret night clubs within the five boroughs of New York City; approximately six upscale located in the borough of Manhattan. We believe only three (Ricks Cabaret, Hustler and Penthouse) provide the most competitive adult entertainment experience to that of our brand and our New York affiliate. Other localities where our “Scores” brand is licensed have similar competitive environments. Penthouse is a related-party competitor due to the common control and ownership by our President and Chief Executive Officer.

We believe the combination of our name recognition and our distinctive entertainment environment allows our licensees to effectively compete within the industry, although we cannot assure anyone that this will prove to be the case. The success of our licensees depends upon their ability to retain quality entertainers, employees and to provide customer service to their customers. The inability to sustain quality entertainers, employees and customer service could have a material or adverse impact on the ability of our licensees to compete within the industry.

Competition among online adult entertainment providers is intense in respect to both content and subscribers’ capital. SWG’sSMG’s competition for its Scoreslive.com internet site varies in both the type and quality of offerings, but consists primarily of other premium pay services. The availability of, and price pressure from, more explicit content on the Internet, frequently offered for free, also presents a significant competitive challenge to SWG.SMG. The Internet is highly competitive, and Scoreslive.com will compete for visitors, subscribers, shoppers and advertisers. We believe that the primary competitive factors affecting SWG’sSMG’s Internet operations include brand recognition, the quality of content and products, pricing, ease of use and sales and marketing efforts. We believe that SWGSMG and Scoreslive.com have the advantage of leveraging the power of our Scores brand across multiple media platforms.
Employees
 
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Employees

At the present time, we have two (2) employees, who is not covered by any collective bargaining agreement. We believe that our relationship with our current employee is satisfactory.no employees.

Government Regulation

Our licensees are subject to a variety of governmental regulations depending upon the laws of the jurisdictions in which they operate. The most significant governmental regulations are described below.
 
Liquor Licenses

Our licensees are subject to state and local licensing regulation of the sale of alcoholic beverages. We expect licensees to obtain and maintain appropriate licenses allowing them to sell liquor, beer and wine. Obtaining a liquor license may be a time consuming procedure. In New York, for example, a licensee must make an application to the New York State Liquor Authority (the “NYSLA”) for a liquor license regarding its proposed nightclub. The NYSLA has the authority, in its discretion, to issue or deny such a license request. The NYSLA typically requires local community board approval in connection with such grants. Approval is usually granted or denied within 90-120 days from the initial application date, but can take longer in certain circumstances. Other jurisdictions have their own procedures.
 
We cannot offer any assurance that our licensees will obtain liquor licenses or that, once obtained, they will maintain their liquor licenses or be able to assign or transfer them if necessary. A license to sell alcoholic beverages in many cases requires annual renewal and may be revoked or suspended for cause, including any regulatory violation by the nightclub operating the license or its employees. Royalties for our business could decrease, if one or more of our licensees fails to maintain its liquor license.

"Cabaret" Licenses

Although not a requirement, our licensees typically request a cabaret license in connection with the operation of their nightclubs. Cabaret licenses are not a requirement in all states; however, some states mandate that such licenses be obtained prior to the operation of an adult nightclub. For example, one of our formerly affiliated licensees was granted a cabaret license for a nightclub by the City of New York’s Department of Consumer Affairs (the "DCA"). In response, the DCA determined that zoning requirements and that the building qualified for operations in accordance with the codes and standards for a nightclub.  We believe our licensees comply with all regulatory laws regarding cabaret or an adult entertainment license; however, there is no assurance that any of their licenses will remain effective or that they could be assigned or transferred if necessary. If one or more of our licensees failed to maintain a required license, this could have a material or adverse effect on our cash flow and profitability.
 
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Zoning Restrictions

Adult entertainment establishments must comply with local zoning restrictions which can be stringent. For example, zoning regulations in the City of New York mandate that an adult entertainment business may operate in an area zoned as residential, or in areas that are commercially zoned, and devotes more than either 40% or more of its space available to customers or 10,000 square feet for adult entertainment activities. Although we expect our licensees to operate within "zoned" areas, we cannot make any assurances that local zoning regulations will remain constant, or that if changed, our licensees will be able to continue operations under our Scores brand name trademark. If zoning regulations were to restrict the operations of one or more of our licensees, this could have a material or adverse effect on our cash flow and profitability.

We hold trademark and/or service mark registrations for the following trademarks in the United States: SCORES (Stylized) trademark, SCORES NEW YORK (Stylized), and SCORES SHOWROOM and Design. Such registrations were granted on various dates and are subject to renewal on various dates. Some of these trademarks are also registered in other jurisdictions outside of the United States. Applications have also been filed in the United States for other trademarks and/or service marks incorporating the SCORES word trademark, as well as others. It is too early to know whether registrations will issue for these pending applications.
Our trademarks and service marks provide significant value to us and are an important factor in our business. We believe that our trademarks and service marks do not infringe the intellectual property rights of any third parties.
ITEM 1A. RISK FACTORS
 
Not applicable.
 
ITEM 1B. UNRESOLVED STAFF COMMENTS
 
Not applicable.
 
ITEM 2. PROPERTIES

As of July 1, 2008, WSR, the owner of the West 27th27th Street Building, became the new lessor of our 700 square feet office occupancy at that location. On April 1, 2009, the monthly rent, which includes overhead cost, was reduced from $5,000 tohas been $2,500. Mr. Gans, the Company’s President, Chief Executive Officer, and majority shareholder, is the majority owner of WSR.
 
ITEM 3. LEGAL PROCEEDINGS

On March 22, 2010, Russell Whelchel, who performed work asJune 14, 2013, Elizabeth Shiflett, a hair and makeup stylist at the Scores West nightclub located at 536 West 28th Street, New York, NY,former cocktail waitress, filed a civil lawsuit against us in the S.D.N.Y. The plaintiff subsequentlyalleging violations of Title VII of the Civil Rights Act of 1964 (“Title VII”), as amended, the complaint on July 30, 2010.  The plaintiff is seeking to recover under federal and New York labor laws minimum wages,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 deductions, misappropriated gratuitiesretaliation 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 other wagesthe NYCHRL, an injunction enjoining us from engaging in future unlawful acts of discrimination, harassment and retaliation, unspecified compensatory damages for the periodplaintiff’s alleged loss of his “employment” with Scores West between May 2009past and February 13, 2010.  Additionally, the plaintiff is seeking pre-judgmentfuture earnings, emotional distress, humiliation and post-judgment interest, liquidatedloss of reputation, punitive damages as a result of our alleged disregard of plaintiff’s protected civil rights, and injunctive relief.attorneys’ fees and costs. We dispute that we were an employer of the plaintiff we contend that the plaintiff was not an “employee” but rather an independent contractor of Scores West and wecategorically deny all allegations seeking damages under federalof sexual discrimination, sexual and state wageracial harassment and hour laws.retaliation. We intend towill vigorously defend against all claimsourselves in this litigation and do not expect that the plaintiff’s complaint.  We are currently engaged with the plaintiff in the exchange of discovery.outcome will have a material impact on our operations.
 
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On March 16, 2010, Charles Braden, who claims he performed work as14, 2013, Miki Yamada, a hair and makeup stylistformer 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 settled these matters for a payment of $90,000 to Ms. Yamada pursuant to a settlement and release agreement dated April 30, 2013. These matters were settled out of court. Street,
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 New York State Supreme Court against us inand IMO alleging violations of Title VII of the S.D.N.Y.   The plaintiff is seeking to recover under federal andCivil Rights Act, New York labor laws minimum wages, unlawful deductions, misappropriated gratuities and other wages for the period of his “employment” with ScoresState Human Rights Law, New York between approximately January 2005Executive Law, New York City Human Rights Law and September 2010.  Additionally, the plaintiff is seeking pre-judgmentNew York City Administrative Code, based on allegations of sexual discrimination and post-judgment interest, liquidatedsexual harassment. The lawsuit further alleges that both we and IMO were her employers. The lawsuit seeks unspecified damages reasonable attorneys’ feesfor alleged loss of past and costs of the actionfuture earnings and other relief as the S.D.N.Y. deems justemotional distress and reasonable.humiliation. We dispute that that we were an employer of the plaintiff we contend that the plaintiff was not an “employee” but rather an independent contractor of Scores West and wecategorically deny all allegations seeking damages under federalof sexual discrimination and state wagesexual harassment. We responded to the complaint and hour laws.later filed an amended complaint and asserted a cross claim against IMO. We intend toare vigorously defend against all claimsdefending ourselves in this litigation and do not expect that the plaintiff’s complaint.outcome will be material.
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In mid Marchmid-March 2010, we were named by Nichole Hughes in a complaint filed with the SCNY. MsMs. Hughes is suingsued 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. The case is nowPlaintiff’s counsel was granted leave by the court to withdraw from representation in discovery.  We will vigorously defend ourselvesJanuary 2013. Plaintiff failed to appoint new counsel or further participate in this litigation and do not expect that the outcome will be material.

On January 14, 2010, we were named in a complaint filed with the SCNY in connection with an alleged assault on the plaintiff by an agent of our New York affiliated club. We filed a motion to dismiss this complaint and, on December 15, 2010, the plaintiff stipulated to discontinue the case against us.

On June 23, 2009, we filed a complaint with the SCNY against Silver Bourbon, Inc., our licensee in New Orleans and operator of Scores New Orleans, for breach of contract.  At the time of the filing, Silber Bourbon, Inc. owed us $70,000 in unpaid royalties.  We have settled this matter with Silver Bourbon, Inc. and the court action has been discontinued.

On September 5, 2008, Ruth Fowler, a former cocktail waitress at Scores West, filed a civil lawsuit against us in the S.D.N.Y.  The plaintiff is seeking to recover damages for alleged illegal deductions take from her salary and monies due her and for sexual harassment under the New York City and New York State Human Rights Laws.  Oncase was dismissed on May 7, 2009, we filed a motion to dismiss the action against us but that motion was denied by the S.D.N.Y. with possible leave to renew the motion at a future date after the completion of discovery proceedings.  In the meanwhile, counsel for plaintiff filed an amended complaint on February 26, 2010 to add as additional parties to the action Go West and EMS.  On March 1, 2010, we filed affirmative defenses and an amended response asserting cross-claims for judgment against both Go West and EMS. On September 13, 2010, the SDNY denied plaintiff’s application for further discovery and on October 18, 2010, we filed a motion to dismiss, which has yet to be decided on.  Although the outcome of this action is uncertain, we believe that any outcome will not have a material effect on us, since the plaintiff was only employed by Scores West for less than four months.20, 2013.
 
10

In early March 2008, we received notice that DIF&B, owner of the Las Vegas club, would be canceling its sublicense with EMS effective on or before May 6, 2008. We were notified that DIF&B would be making final royalty payments to EMS totaling $60,000 at the rate of $10,000 per week starting the first week of March 2008. The Las Vegas club ceased operating and, as of December 31, 2008, EMS had received only one such $10,000 payment from DIF&B. EMS commenced an action against DIF&B and filed a complaint and affidavit of service with the SCNY, on July 23, 2008. DIF&B was required to file an answer by August 23, 2008, but did not do so. As a result, EMS filed an application for a default judgment and the SCNY appointed a referee to determine damages. The referee determined that damages in the amount of $216,000, with interest, should be paid to EMS and a default judgment totaling $230,557 was entered by the Clerk of the SCNY.  We will attempt to collect on this judgment.  We will be entitled to all monies so collected, pursuant to the Assignment Agreement with EMS and 333.

On December 11, 2007, Francis Vargas, a former cocktail waitress at Scores West located in New York, NY, filed a civil lawsuit against us and Go West in the SCNY, alleging violations of the New York State Human Rights Law, New York Executive Law, New York City Human Rights Law, and the New York City Administrative Code, based upon allegations of sexual discrimination and sexual harassment. The lawsuit further alleges that at all material times both we and Go West were employers of Ms. Vargas, the plaintiff. The law suitlawsuit seeks unspecified compensatory damages for plaintiff’s alleged loss of past and future earnings and benefits, emotional distress, humiliation and loss of reputation. We dispute that we were an employer of the plaintiff and categorically deny all allegations of sexual discrimination and sexual harassment. We filed our verified answer in the Supreme Court of the State of New York on February 12, 2008 to contest and defend against these accusations and we are currently engaged in discovery.accusations. On April 18, 2008, co-defendant Go West filed for bankruptcy and the case was stayed. On July 23, 2009, the bankruptcy petition was dismissed and, as a result, the automatic stay was lifted. We subsequently filed an amended response asserting cross-claims for judgment against both Go West and EMSour former affiliate, Entertainment Management Services, Inc. ("EMS"), an entity owned by two of our former directors and a motion to compelemployees. After engaging in discovery which was approved.  We are currently preparing for the plaintiff’s deposition and a compliance conference which are scheduled for the end of April.

11

On October 9, 2007, former Go West bartender Siri Diaz filed a purported class action and collective action on behalf of all tipped employees against us and other defendants alleging violations of federal and state wage/hour laws (Siri Diaz et al. v. Scores Holding Company, Inc.; Go West Entertainment, Inc. a/k/pre-trial activities the two sides agreed to a Scores West Side; and Scores Entertainment, Inc., a/k/a Scores East Side, Case No. 07 Civ. 8718 (Southern District of New York (the “Court”), Judge Richard M. Berman)). On November 6, 2007, plaintiffs served an amended purported class action and collective action complaint, naming dancers and servers as additional plaintiffs and alleging the same violations of federal and state wage/hour laws. On or aboutconfidential settlement on February 21, 2008, plaintiffs served a second amended complaint adding two additional party defendants, but limiting the action to persons employed in the New York Scores’ clubs. The amended complaint alleged that we22, 2013 and the other defendants are “an integrated enterprise” and that we jointly employ the plaintiffs, subjecting all of the defendants to liability for the alleged wage/hour violations.  On behalf of ourselves and the other defendants we filed a motion to dismiss that portion of the Complaint that asserted State law class action allegations; we also moved to dismiss the claims of two of the named plaintiffs for failure to appear for depositions. At the same time plaintiffs moved for conditional certification under the federal law for a class of the servers, bartenders and dancers; we opposed that motion. On May 9, 2008, the Court issued its decision, denying the motion to dismiss and granting conditional certification for a class of servers, cocktail waitresses, bartenders and dancers who have worked at Scores East since October 2004.  On May 29, 2008, we filed an answer to plaintiff's’ second amended complaint.  On or about September 5, 2009, plaintiffs served their third amended complaint adding in two individual defendants who are alleged to be employers under the state and federal wage claims.  We dispute that we are a proper defendant in this action and we dispute that we violated the federal and state labor laws, and further dispute that the dancers are “employees” subject to the federal and state wage and hour laws.  Two of the defendants havecase has been dismissed without prejudice and we have agreed upon a settlement amount of $450,000 that will be contributed among and between all of the remaining defendants.dismissed. The settlement documents are currently in the process of being prepared.

On March 30, 2007, we, along with several of our affiliates, were named indoes not have a suit in connection with an alleged assault by an employee of an affiliate and one of our stockholders and former officer and director. We have answered a third amended complaint and completed discovery.  We have filed a note of issue with the court and are waiting for a court datematerial outcome on which the trial will begin.  We will vigorously defend ourselves in this litigation and do not expect that the outcome will be material.

On March 31, 2006, Richard K. Goldring, our former president, chief executive officer and principal shareholder pled guilty to one count of offering a False Instrument for Filing in the First Degree pursuant to a plea agreement with the District Attorney of the County of New York (the "DA"). In the event that within one year of the date of the entry of the guilty plea, Mr. Goldring resigns from all "control management positions" that he holds in publicly traded companies, including ours, and divests himself of all "control ownership positions" in publicly traded companies, including ours, and satisfies certain other conditions, the DA will recommend a sentence of probation. In this context, a “control management position” is a role, official or unofficial, by which he substantially directs the decisions of a company, and a “control ownership position” is a position in which he controls, directly or indirectly more than 9% of the voting stock or other securities of a company, or stock or securities that have the capability of being converted into voting stock or other securities of a company. The plea agreement resolved the DA's investigation against Mr. Goldring and us. No charges were brought against us.
 
To comply with the plea agreement between Richard Goldring and the District Attorney of the County of New York, on September 4, 2008, Mr. Goldring transferred his 76,080,958 shares of our common stock (the “Goldring Shares”) to Ira Altchek as trustee (the “Trustee”). According to the terms of the Voting Trust Agreement by and between Mr. Goldring and the Trustee dated September 4, 2008, the Trustee had the right to exercise all rights and powers of a shareholder of the Company with respect to the Goldring Shares, including, without limitation, the sole and exclusive right to vote the Goldring Shares, while Mr. Goldring maintained the right to sell the Goldring Shares at any time. The Goldring Shares represented approximately forty six percent (46%) of the outstanding capital stock of the Company as of the December 31, 2008.  On January 27, 2009, Mr. Goldring sold all of the Goldring Shares in a private transaction with Buyer, as further discussed above.
12

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 4.     (Removed and Reserved)4.MINE SAFETY DISCLOSURES
 
Not applicable.

PART II
 
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
 
Market Information.

Our common stock has been quoted on OTC Pink, a marketplace under the OTC Bulletin BoardMarkets Group (formerly known as Pink OTC Markets and Pink Sheets) under the symbol “SCRH” since 2004. The following table sets forth, for the fiscal quarters indicated, the high and low closing bid prices per share of our common stock, as derived from quotations providedreported by OTC Markets Inc.Nasdaq on its website, www.nasdaq.com. Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.
 
Quarter Ended High Bid Low Bid
March 31, 2009 .0035 .0005
June 30, 2009 .025 .0011
September 30, 2009 .035 .019
December 31, 2009 .057 .0125
March 31, 2010 .17 .044
June 30, 2010 .081 .05
September 30, 2010 .10 .056
December 31, 2010 .07 .06
Quarter Ended High
Bid		 Low
Bid		 
March 31, 2011  .075  .06 
June 30, 2011  .07  .04 
September 30, 2011  .055  .0275 
December 31, 2011  .05  .025 
March 31, 2012  .0475  .0222 
June 30, 2012  .0575  .024 
September 30, 2012  .05  .04 
December 31, 2012  .047  .0355 
Holders

Holders
As of March 31, 2011,October 25, 2013, there were approximately 580 record holders of our common stock.
 
Dividends

We have never declared any cash dividends with respect to our common stock. Future payment of dividends is within the discretion of our Board of Directors and will depend on our earnings, capital requirements, financial condition and other relevant factors. Although there are no material restrictions limiting, or that are likely to limit, our ability to pay dividends on our common stock, we presently intend to retain future earnings, if any, for use in our business and have no present intention to pay cash dividends on our common stock.
 
Recent Sales of Unregistered Securities

None.
 
7

 
13

Securities Authorized For Issuance under Equity Compensation Plans

On August 6, 2010, our Board of Directors and stockholders adopted the 2010 Equity Incentive Plan (the “2010 Plan”) subject to the approval of our shareholders within twelve months of adoption. Shareholders had not adopted the 2010 Plan by August 6, 2011 and, accordingly, the 2010 Plan terminated).  The 2010 Plan providesprovided for the issuance of both non-statutory and incentive stock options and other awards to officers, directors, employees and consultants to acquire up to 20,000,000 shares of our common stock. If an incentive awardNo stock options or other awards were ever granted under the 2010 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrenderedpursuant to us in connection with an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2010 Plan. AsThe following table sets forth information our equity compensation plans as of December 31, 2010,2012.
Plan category Number of
securities to
be issued
upon
exercise of
outstanding
options,
warrants
and rights
(a)		 Weighted-average
exercise price of
outstanding
options, warrants
and rights
(b)		 Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a))
(c)		 
           
Equity compensation plans approved by security holders  0 $—  0 
Equity compensation plans not approved by security holders  85,000
1
$2.80  — 
Total  85,000 $2.80  — 
1On October 22, 2002, we have not issued anygranted options to purchase shares of the Company’s common stock to the Company’s former executive officers in consideration for their employment with the Company. The options vested upon issuance on October 22, 2002 and there are no outstanding grants under the 2008 Plan.expires on March 21, 2013. The table above reflects those shares that were authorized for issuance as of December 31, 2012.

ITEM 6. SELECTED FINANCIAL DATA.

Not applicable
 
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Results of Operations:

For the year ended December 31, 20102012 (the “2010“2012 period”) compared to the year ended December 21, 200931, 2011 (the “2009“2011 period”).

Revenues:

Revenues increased to $514,155$693,889 for the 20102012 period from $387,425$629,251 for the 20092011 period. This increase was primarily due to the following factors:  In September 2010,increased sales in our newly established Tampa club, which commenced operations in late 2010 and revenues from this club amounted to $43,000$96,000 during the 20102012 period and $-0-$72,000 during the 20092011 period. Our operations are dependent upon royalties from our New York affiliated club which, in 2010,2012, represented 30%29% of our total revenue. We license our brand to innovative and experienced operators who help sustain our brand by providing quality service to customers. We believe the combination of the club services provided by our existing operators and the opening of our newly established Tampa club contributedRevenues increased 9% to the increase$121,816 in the 2010 and 20092012 period revenues from our Chicago, Baltimore and New Orleans licensees. Revenues increased 23% to $106,987$112,168 in the 2010 period from $87,320 in the 20092011 period for the Chicago club, 27%revenues decreased 2% to $133,751$138,781 in the 20102012 period from $105,358$142,214 in the 20092011 period for the Baltimore club and 62% to $60,000 inremained the 2010same at $120,000 for the 2012 period from $37,000 inand the 20092011 period for the New Orleans club.
14

In January 2007, Revenues increased 8% to 197,892 in the website, Scoreslive.com, began a developmental test launch of its operations and,2012 period from $182,870 in the 2011 period for the 2010New York club. The Scoreslive.com license accounts for 1% and 2009 periods, generated gross0% of our total revenues in 2012 and 2011, respectively. Since our licenses are mostly structured such that we receive a percentage of approximately $5,000 per month resulting in minimal royalties to us. We believe thatrevenues from our licensees, the Scoreslive.com website will remain in development mode during 2011, continuing to generate minimalforegoing increase or decreases are a direct result of revenues for us.at the licensee level.

We recognize revenues as they are earned, not as they are collected.

Bad Debt Expense

As of December 31, 2010,2012, our New Orleans licenseeslicensee owed us $14,000$54,000 in accrued and unpaid royalties. During the 20102012 period, management agreed to continuewrite off $35,000 to reservebad debt and utilize the $14,000 allowance for bad debt in connection with the amount owed by our New Orleans licensee.


Operating Expenses:

Operating expenses for the 20102012 period and the 20092011 period were $1,165,503$670,719 and $547,223,$884,195 respectively. These expenses were directly related to the maintenance of the corporate entity and regulatory filing of periodic reports under the Securities Exchange Act of 1934 (the “Exchange Act”). To comply with the requirements of Sarbanes Oxley, we expect these regulatory costs to increase in future years. Virtually all or 87%Most of the increase24% of decrease in operating expenses can be attributed to legal fees which increased $526,109,and amortization expense that decreased in 2012. Legal expense decreased $132,261, largely attributed to the settlement of the class action lawsuit initiated under the prior management of the Company (S.Diaz, et al. v. Scores Holding Company Inc.) and. The recovery of $440,000 from prior shareholders as part of the accrual of $450,000 for the estimated settlement of this case.case helped offset other expenses. Our business development and other executive administrative costs changed modestly during the 20102012 period from the 20092011 period, but isare expected to increase in future periods due to the proposed expansion of our brand into emerging markets. Our current year amortization of the intangible assets is $0, which decreased from $88,725 in the 2011 period. The intangible asset was fully amortized as of $116,703 will decrease next year to $88,000 as next year is the final year of such asset being amortized.December 31, 2011.

8

Provision for Income Taxes:

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


Net Income (Loss) (per share):per share:
Our net lossincome for the 20102012 year end was $(651,348)$39,090 or $(0.00)$.000 per share versus a net lossincome of $(158,362)$183,627 or $(0.00)$.001 per share for the 20092011 year end. During the 20102012 period, we increased our $126,730 increaseroyalty revenue by $64,638. Our net income decreased in revenues was offset2012 by $144,537 due to the 2011 gain on settlement and costs primarily incurred by the potential settlement of the S.Diaz, et al. v. Scores Holding Company Inc. and ongoing legal costs aggregating to $5 and secondarily related to business development, regulatory report preparation and filing, salaries, legal, amortization and taxes, which approximated to $521,000.  This material change from the 20092011 period to the 20102012 period is based on net income available to common shareholders divided by the weighted average of the common shares outstanding.

Liquidity and Capital Resources

At December 31, 2010,2012, we had $23,748$59,139 in cash and cash equivalents compared to $31,694$8,930 in cash and cash equivalents at December 31, 2009.2011.
 
15

On February 28, 2007, our then President, Chief Executive Officer, Director and majority stockholder, Richard Goldring resigned from each of his positions, and terminated his employment with us. Under the terms of his employment agreement dated March 31, 2003, we were obligated to pay Mr. Goldring a $1 million termination fee (the “Termination Fee”). Because of our lack of cash and other business relatedbusiness-related reasons, we did not pay Mr. Goldring the Termination Fee. On May 10, 2009 Mr. Goldring assigned his right, title and interest in and to the Termination Fee to Robert M. Gans. As further discussed below, we do not expect Mr. Gans to require from us payment of the Termination Fee.

We have incurred cumulative 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 December 31, 20102012 we had an accumulated deficit of $(6,781,471)$(6,558,754). As of December 31, 2010,2012, we had total current assets of $117,821$270,341 and total current liabilities of $824,714$572,520 or negative working capital of $(706,893)$(302,179). As of December 31, 2009,2011, we had total current assets of $58,426$254,259 and total current liabilities of $230,674$628,511 or negative working capital of $(172,248)$(374,252). The increasedecrease in the amount of negative working capital has been primarily attributable to the increasedecrease in our related party activitypayable and additional litigation related to ourthe settlement case.of the class action lawsuit in 2011. During the 20102012 period, the Company decreasedincreased its cash position due to additionalthe decrease in litigation which was offset due to ourexpense and the increase in royalty revenue.

We presently do not have any available credit, bank financing or other external sources of liquidity to fund our operations. We will need to obtain additional capital in order to meet our working needs and to continue to execute our business plan, build our operations and become profitable. In order to obtain capital, we may need to sell additional shares of our common stock or debt securities, or borrow funds from private or institutional lenders. Because of recent problems in the credit markets, steep stock market declines, financial institution failures and government bail-outs, there can be no assurance that we will be successful in obtaining additional funding in amounts or on terms acceptable to us, if at all. If we are unable to raise additional funding as necessary, we may have to suspend our operations temporarily or cease operations entirely.

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 also 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. Our future liquidity and capital requirements will depend upon numerous factors, including the success of our adult entertainment licensing business.
 
Compliance with Sarbanes-Oxley

The amount of royalties owed to us from our formerly affiliated nightclubs, Scores East and Scores West, and including our formerly affiliated nightclub in North Miami, Florida, during 2008 totaled $816,905. Cash received as partial payment on these receivables during the 2008 period amounted to $50,715. We received no payments of principal or interest on the Note during these periods.
16

As we and our formerly affiliated clubs and the North Miami club were under common control until January 27, 2009, we are mindful that those royalties’ receivables could have taken on the appearance of prohibited loans under Section 402 of the Sarbanes-Oxley Act of 2002. We do not believe, however, that these receivables were prohibited loans as we exercised our best commercial efforts to reduce the amount due under these receivables.
Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosure on contingent assets and liabilities at the date of our financial at the date of our financial statements. Actual results may differ from these estimates under different assumptions and conditions.

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions. We believe that our critical accounting policies are limited to those described below. For a detailed discussion on the application of these and other accounting policies see note 2 to our consolidated financial statements.

9

Revenue Recognition

Revenues for the 20102012 period and the 20092011 period were derived predominately from royalties. We apply judgment to ensure that the criteria for recognizing revenues are consistently applied and achieved for all recognized sales transactions.

Long-Lived Assets (including Tangible and Intangible Assets)

We acquired the “Scores” trademark to market and conduct a global business strategy. The determination of the value of such intangible assets requires management to make estimates and assumptions that affect our consolidated financial statements. We assess potential impairment to the intangible and tangible assets on a quarterly basis or when evidence, events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. Related costs affect the amount of future period amortization expense and impairment expense that we incur and record as cost of sales. Our judgments regarding the existence of impairment indicators and future cash flows related to these assets are based on operational performance of our business, market conditions and other factors. Future events could cause us conclude that impairment indicators exist and that other tangible or intangible assets is impaired.
17
Accounting for Income Taxes

As part of the process of preparing our consolidated financial statements we are required to estimate our income taxes. Professional judgment is required by management in estimating a provision for our deferred tax asset. Because the Company consistently incurred net losses in prior years, a valuation for the full deferred tax asset was recorded based on carry forwards of such net operating losses. This was due to the Company not demonstrating any consistent profitable operations. In the event that the actual results differ from these estimates or we adjust these estimates in future periods, we may need to adjust such valuation recorded.
 
ITEM 7A.    QUANTITATIVE7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
Not Aapplicable.Applicable.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTALSUPPLEMENTARY DATA.

Our audited consolidated financial statements as of, and for the years ended, December 31, 20102012 and 20092011 are included beginning immediately following the signature page to this report. See Item 15 for a list of the financial statements included herein.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
 
Not applicable.

ITEM 9A.  CONTROLS AND PROCEDURES.

(a) Management’s Annual Report on Internal Control over Financial Reporting. Management of Scores Holding Company, Inc. is responsible for establishingDisclosure Controls and maintaining an adequate system of internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)).  Procedures
Under the supervision and with the participation of our senior management, consisting of Robert M. Gans, our chief executive officer, and Howard Rosenbluth, our chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded, as of the Evaluation Date, that our disclosure controls and procedures were not sufficiently effective to ensure that the information relating to us required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our acting chief executive officer and chief financial officer and secretary, as appropriate to allow timely decisions regarding required disclosure. In particular, we concluded that internal controlbecause of material weaknesses in our accounting policiesinternal control over financial reporting described below, and lack of sufficient resources, as of December 31, 2012, our disclosure controls and procedures relatingwere not effective.
The deficiencies in the Company’s disclosure controls and procedures resulted in failures to our segregation of duties were material weaknesses.timely file periodic reports within the time periods specified in the SEC's rules and forms.
In May 2013, the Company engaged a consultant, qualified as a certified public accountant to assist the Company’s controller in preparing periodic reports and the accompanying financial statements. The consultant has also been charged with communicating with management to verify information contained in such reports and statements. The Company intends to take additional corrective action to ensure that information required to be disclosed by the Company pursuant to the reports that the Company files or submits to the SEC is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b) Management’s Annual Report on Internal Control over Financial Reporting.
 
18

Management of Scores Holding Company, Inc. is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. In evaluating the effectiveness of our internal control over financial reporting, management used the criteria set forth in the framework in Internal Control—Integrated Framework and the Internal Control over Financial Reporting – Guidance for Smaller Public Companies both issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
 
10

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. OurIn connection with the preparation of our financial statements for the year ended December 31, 2012, our management has identified the following material weaknesses.

 1.As
Lack of December 31, 2010, we did not maintain effective internal controls over financial reporting.  For one, wesufficient independent directors to form an audit committee. We did not have a functioning audit committee due to a lack of a majority of independent directors on our board of directors. We currently have no independent directors on our board, which is comprised of three directors. Although there is no requirement that we have an audit committee, we intend to have a majority of independent directors as soon as we are reasonably able to do so. This lack of a functioning audit committee resulted in our having ineffective oversight in the establishment and monitoring of required internal controls and procedures, and management concluded that it constituted a material weakness in our system of financial reporting.procedures.

 2.As
Insufficient segregation of duties in our finance and accounting functions due to limited personnel. During the year ended December 31, 2010,2012, we did not adequately segregate, or mitigatehad one person on staff who performed nearly all aspects of our financial reporting process, including access to the risks associated with, incompatible functions among personnelunderlying accounting records and systems, the ability to reducepost and record journal entries, and responsibility for the risk that a potential material misstatementpreparation of the financial statements. This creates certain incompatible duties and a lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the Securities and Exchange Commission. These control deficiencies could result in a material misstatement to our interim or annual consolidated financial statements that would occur without beingnot be prevented or detected. Accordingly, management concluded that this control deficiency constituted a material weakness.

Based on this evaluation and the material weaknesses identified, management concluded that, as of December 31, 20102012 our internal controls over financial reporting were not effective, based on the criteria established in "Internal Control-Integrated Framework" issued by the COSO.COSO .
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this annual report.
 
(b) Management’s Report on Disclosure Controls and Procedures
The Company’s management has identified what it believes are deficiencies in the Company’s disclosure controls and procedures. The deficiencies in the Company’s disclosure controls and procedures resulted in failures to timely file periodic reports within the time periods specified in the SEC's rules and forms.
The deficiencies in our disclosure controls and procedures included (i) lack of segregation of duties and (ii) lack of sufficient resources to ensure that information required to be disclosed by the Company in the reports that the Company files or submits to the SEC are recorded, processed, summarized, and reported, within the time periods specified in the SEC's rules and forms.
As stated above, on May 28, 2013, we hired a consultant to assist our controller with disclosure controls and procedures. The Company intends to take corrective action to ensure that information required to be disclosed by the Company pursuant to the reports that the Company files or submits to the SEC is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
(c) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
 
19

ITEM 9B.   OTHER INFORMATION.

None.


PART III
 
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
 
Executive Officers and Directors

The following table sets forth certain information, as of March 31, 2011,October 25, 2013, with respect to our directors and executive officers.
 
Directors serve until the next annual meeting of the stockholders;stockholders, until their successors are elected or appointed and qualified, or until their prior resignation or removal. Officers serve for such terms as determined by ouruntil the next annual meeting of the Board of Directors.  Each officer holds officeDirectors, until such officer’s successor istheir successors are elected or appointed and qualified, or until such officer’s earliertheir prior resignation or removal.  No family relationships exist between any of our present directors and officers.
 
Name11Positions Held

Age
Name
 
Positions Held
Age
Date of Election

or Appointment as Director
Robert M. Gans President, Chief Executive Officer and Director 6769 August 6, 2010
Martin Gans Director 7577 June 23, 2009
Howard Rosenbluth Treasurer, Chief Financial Officer, Secretary and Director 6466 April 21, 2009
 
The following is a brief account of the business experience during the past five years or more of our directors and executive officer.
 
Robert M. Gans:. Mr. Gans became President, Chief Executive Officer and director on August 6, 2010. For the past forty two years Robert M. Gans has owned and operated companies in the building materials business, as well as gentlemens'gentlemen’s clubs, restaurants, and several commercial and residential real estate properties.  Mr. Gans has either been the President, Managing Member, or sole owner of all of the companies in which he has been involved.involved including The Executive Club LLC, a Company operating in the Gentlemen’s club industry. None of the companies was or is a public company. The Board concluded that Mr. Gans should serve as a director of the Company because of his extensive experience in the management and operation of gentlemen’s clubs.

Martin Gans.Martin Gans,: Martin Gans who became a director on June 23, 2009, has been retired since 2002.  Prior to his retirement, Mr. Gans held managerial positions with The Nassau County Board of Elections, from 1994 to 2002, and with the Metropolitan New York hospitals, from 1990 to 1994.  Mr. Gans has ana MBA in Health Care Administration from George Washington University and a Bachelor’s degree in Economics from Hunter College. Mr. Gans served in the United States Army where he reached the rank of SP4. The Board concluded that Mr. Gans should serve as a director of the Company because of his managerial experience and the knowledge and experience he has attained through his service as a director of the Company.
 
20

Robert Gans and Martin Gans are brothers.

Howard Rosenbluth.Mr. Rosenbluth: became our Treasurer, Chief Financial Officer and Secretary on August 6, 2010, and became a director on April 21, 2009. Over the past five years, Mr. Rosenbluth has been an executive officer overseeing the financial operations for Metropolitan Lumber Hardware and Building Supplies, Inc., and The Executive Club LLC, a company operating in the Gentlemen’s'Gentlemen’s club industry.  Mr. Rosenbluth received an MBA in Finance in 1975 from the University of Connecticut and has owned a consulting firm, a manufacturing company and a restaurant and has worked in public accounting and consulting for more than 35 years. The Board concluded that Mr. Rosenbluth should serve as a director of the Company because of his financial literacy and expertise, as well as his extensive experience in the management and operation of gentlemen’s clubs.

Board of Directors

None of our directors receives any remuneration for acting as such. Directors may, however, be reimbursed for their out-of-pocket expenses, if any, for attendance at meetings of the Board of Directors. Our Board of Directors may designate from among its members an executive committee and one or more other committees. No such committees have been established to date. Accordingly, we do not have an audit committee or an audit committee financial expert. Given the small size of the Company’s board of directors and the limited number of independent directors over the Company’s history, the board has determined that it is appropriate for the entire board of directors to act as its audit committee, which has resulted in the directors who are also executive officers serving on its audit committee. Similarly, we do not have a nominating committee or a committee performing similar functions. We have not implemented procedures by which our security holders may recommend board nominees to us, but expect to do so in the future.
 
Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities, to file with the SEC initial statements of beneficial ownership on Form 3, reports of changes in ownership on Form 4 and annual reports concerning their ownership on Form 5. Executive officers, directors and greater than 10% stockholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file.

ToBased solely on the bestCompany’s review of our knowledge,copies of Forms 3 and 4 and amendments thereto received by it during 2012 and Forms 5 and amendments thereto received by the fiscal year ended December 31, 2010,Company with respect to 2012 and any written representations from certain reporting persons that no Form 5 is required, none of our directors failed to file a required report on Form 3, Form 4 or Form 5.5 during the fiscal year ended December 31, 2012.
 
21

Director Independence

We are not subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the Board of Directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “Independent Directors.”
 
Code of Ethics
 
Due to the scope of our current operations, as of December 31, 2010,2012, we have not adopted a code of ethics for financial executives, which include our principal executive officer,Chief Executive Officer, Chief Financial Officer or persons performing similar functions. Our decision not to not adopt such a code of ethics results from our having only a limited number of officers and directors operating as management. We believe that as a result of the limited interaction which occurs having such a small management structure eliminates the current need for such a code.
 
12

ITEM 11. EXECUTIVE COMPENSATION.
 
The following table sets forth information concerning the total compensation paid or accrued by us during the two fiscal years ended December 31, 20102012 and 2011 to (i) all individuals that served as our chief executive officer and our chief financial officer or acted in a similar capacitycapacities for us at any time during the fiscal yearyears ended December 31, 20102012 and 2011 and (ii) all individuals that served as executive officers of ours at any time during the fiscal year ended December 31, 20102012 and 2011 that received annual compensation during thesuch fiscal year ended December 31, 2010years in excess of $100,000.$100,000 (collectively, the “named executive officers”).
 
Summary Compensation Table
 
Name and
Principal Position
 Year Salary ($)  
Bonus
($)
  
Stock
Awards
($)
  
Option
Awards
($)
  
Non-
Equity
Incentive
Plan
Compen-
sation ($)
  
Change
in
Pension
Value
and Non-
qualified
Deferred
Compen-
sation
Earnings
($)
  
All Other
Compensation
($)
  Total ($) 
(a) (b) (c)  (d)  (e)  (f)  (g)  (h)  (i)  (j) 
Robert M. Gans,
Chief Executive
Officer
 2010  0   0   0   0   0   0   0   0 
                                   
Curtis Smith, Acting 2010  93,880   0   0   0   0   0   0   93,880 
Chief Executive 2009  105,731   0   0   0   0   0   0   105,731 
Officer, Chief 2008  79,015   0   0   0   0   0   0   79,015 
Financial Officer (2)                                  

(1)Robert M. Gans became our Chief Executive Officer on August 6, 2010.
(2)Curtis Smith became our Chief Financial Officer on September 26, 2006 and Acting Chief Executive Officer on June 25, 2007.  Mr. Smith resigned from both of these positions on June 15, 2010.
                Non-Equity       
                Incentive       
          Stock Option Plan All Other    
Name and      Bonus Awards Awards Compen- Compensation    
Principal Position Year Salary ($) ($) ($) ($) sation ($) ($) Total ($) 
(a) (b) (c) (d) (e) (f) (g) (i) (j) 
Robert M. Gans, 2012  0  0  0  0  0  0  0 
Chief Executive Officer 2011  0  0  0  0  0  0  0 
                         
Howard Rosenbluth, 2012  0  0  0  0  0  0  0 
Chief Financial Officer 2011  0  0  0  0  0  0  0 
 
22
We have not issued any stock options or maintained any stock option or other incentive plans other than our 2010 Plan.Plan, which was adopted by our board but never approved by our shareholders. (See “Item 5. Market for Registrant’s Common Equity, and Related Stockholder Matters and Issuer Purchases of Equity Securities – Securities Authorized for Issuance Under Equity Compensation Plans” above.) We have no other plans in place and have never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans.

Similarly, we have no contracts, agreements, plans or arrangements, whether written or unwritten, that provide for payments to the named executive officers or any other persons following, or in connection with, the resignation, retirement or other termination of a named executive officer, or a change in control of usthe Company or a change in a named executive officer’s responsibilities following a change in control.

Effective January 1, 2013, we entered into a management services agreement with Metropolitan Lumber, Hardware and Building Supplies, Inc., pursuant to which Metropolitan Lumber provides management and other services to us, including the services of Robert M. Gans and Howard Rosenbluth to act as executive officers of the Company. In consideration of the services, we pay Metropolitan Lumber 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 majority owner of Metropolitan Lumber.
Outstanding Equity Awards at 2012 Fiscal Year-End  
As of the year ended December 31, 2012, there were no unexercised options, stock that has not vested or equity incentive plan awards held by any of the Company’s named executive officers.
Compensation of Directors
 
None of our directors receives any compensation for serving as such, for serving on committees of the Board of Directors or for special assignments. During the fiscal years ended December 31, 20102012 and 20092011 there were no other arrangements between us and our directors that resulted in our making payments to any of our directors for any services provided to us by them as directors. The following table shows compensation earned by each of our non-officer directors for the year ended December 31, 2012.

  Fees
Earned
or
Paid in
Cash
($)		 Stock
Awards
($)		 Option
Awards
($)		 Non-Equity
Incentive
Plan
Compensation
($)		 Nonqualified
Deferred
Compensation
Earnings
($)		 All
Other
Compen-
sation
($)		 Total
($)		 
Martin Gans 0 0 0 0 0 0 0 
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
 
The following table sets forth information with respect to the beneficial ownership of our common stock known by us as of March 31, 2011October 25, 2013 by
· (i) each person or entity known by us to be the beneficial owner of more than 5% of our common stock,
· (ii) each of our directors,
· (iii) each of ournamed executive officers,officer and
· (iv) all of our directors and executive officers as a group.
 
13

The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on such date and all shares of our common stock issuable to such holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by such person at said date which are exercisable within 60 days of such date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent such power may be shared with a spouse. The addresses for our executive officers and directors are c/o Scores Holding Company, Inc., 533-535 West 27th Street, New York, NY 10001.
 
Name and Address
of Beneficial Owner		 Title of Class Amount and Nature
of
Beneficial Ownership		  
Percent of
Class  (1)
 
         
Robert M. Gans (2) Common Stock 88,900,230(2) 53.8%
         
Howard Rosenbluth Common Stock - 0 -  0.0%
         
Martin Gans Common Stock - 0 -  0.0%
         
All directors and executive officers as a group (3 persons) Common Stock 88,900,230(2) 53.8%
         
Mitchell’s East LLC (2)
617 Eleventh Avenue
New York, NY 10036		 Common Stock 88,900,230(2) 53.8%
         
Estate of William Osher (3)
2955 Shell Road
Brooklyn, NY		 Common Stock 13,886,059  8.4%
23
____________________
 
Name and Address
of Beneficial Owner
 Title of Class 
Amount and Nature
of
Beneficial Ownership
  
Percent of 
Class (1)
 
         
Robert M. Gans (2) Common Stock  88,900,230   53.8%
           
Howard Rosenbluth Common Stock  - 0 -   0.0%
           
Martin Gans Common Stock  - 0 -   0.0%
           
All directors and executive officers as a group (3 persons) Common Stock  88,900,230   53.8%
           
Mitchell’s East LLC (2)
617 Eleventh Avenue
New York, NY 10036
 Common Stock  88,900,230   53.8%
           
Estate of William Osher (3)
2955 Shell Road
Broklyn, NY
 Common Stock  13,886,059   8.4%

 (1)Based upon 165,186,124 shares of Common Stock issued and outstanding as at March 31, 2011.October 25, 2013.
 (2)Robert M. Gans is the sole owner of MitchellsMitchell’s East LLC. The principal business address of Mr. Gans is 617 Eleventh Avenue, New York, NY 10036. Does not include 13,886,059 shares of Common Stock currently held of record by William Osher, deceased, of which Harvey Osher (“H. Osher”) claims title and which.which H. Osher has agreed to transfer to Mitchell’s East LLC pursuant to the SPA.Stock Purchase Agreement whereby Mr. Gans purchased any rights of H. Osher to such shares.
 (3)William Osher passed away in August, 2007. H. Osher claims all right and title to and interest in these shares of Common Stock and has agreed to transfer them to Mitchell’s East LLC pursuant to the Stock Purchase Agreement.

Changes in Control
Not Applicable.
 
Securities Authorized for Issuance under Equity Compensation Plans
 
On August 6, 2010, our Board of Directors and stockholders adopted the 2010 Plan.  The 2010 Plan providesprovided for the issuance of both non-statutory and incentive stock options and other awards to acquire up to 20,000,000 shares of our common stock. As of December 31,Having never been approved by our shareholders, the 2010 we havePlan termination on August 6, 2011. We had not issued any shares and there are no outstanding grants under the 20082010 Plan.
 
24
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Until January 27, 2009, Richard Goldring owned approximately 46% of our outstanding common stock. 
On January 27, 2009, he sold all of his shares24, 2006, the Company entered into a licensing agreement with AYA International, Inc. (“AYA”) granting AYA the right to Buyer, owned by Robert M. Gans.  Elliot Osher owned approximately 8.8% ofuse our common stock until January 27, 2009 when he sold all of his sharestrademarks in connection with its online video chat website, “Scoreslive.com.” The agreement with AYA provides for royalty payments to Buyer.  The estate of William Osher currently owns approximately 8.8% of our common stock.  Harvey Osher claims ownership of those shares and, as discussed above, has agreed to transfer them to Buyer.

Obligations to Richard Goldring and Robert M. Gans

On February 28, 2007, our then President, Chief Executive Officer, Director and majority stockholder, Richard Goldring, resigned from each of his positions, and terminated his employment with us.  Under the terms of his employment agreement dated March 31, 2003, we were obligated to pay Mr. Goldring a $1 million Termination Fee. Because of our lack of cash and other business related reasons, we did not pay Mr. Goldring the Termination Fee.  On May 10, 2009 Mr. Goldring assigned his right, title and interest in andbe made directly to the Termination Fee to Robert M. Gans.  On August 3, 2009, we filed with the SCNY an Affidavit of Confession of Judgment acknowledging that we owe Mr. Gans the Termination Fee along with prejudgment interestCompany at the rate of nine percent (9%) per annum running4.99% of weekly gross revenues from February 28,all revenue sources within the AYA website. On December 21, 2009, through August 3, 2009 (this interest together with the Termination Fee, the “Settlement Amount”).  Also on August 3, 2009, we, SLC and Mr. Gans entered into a trademark security agreement pursuant to which we and SLC granted Mr. Gans a first priority security interest inAYA transferred all of our trademarkits rights as security forin Scoreslive.com and in its licensing agreement with us to Swan Media Group, Inc. (“SMG”), a newly formed New York corporation whose majority owner is Robert M. Gans, who is also the timelymajority shareholder and complete payment to Mr. GansChief executive officer of the Settlement Amount.  We do not expect, however, Mr. Gans to require from us payment of the Settlement Amount.Company.

Executive Offices

As of July 1, 2008, WSR,West Side Realty of New York (WSR), the owner of the West 27th27th Street Building, became the new lessor of our 700 square feet office occupancy at that location. On April 1, 2009, the monthly rent, which includes overhead cost, was reduced from $5,000$2,500. As discussed in Note 2 to $2,500.the Company’s financial statements, a capital contribution has been recorded for personnel services rendered by Mr. Gans in the amount of $30,000 for the year 2012 and 2011. Director Robert M. Gans is the majority owner of WSR. The Company owed WSR $77,500 and $47,500 in unpaid rents as of December 31, 2012 and 2011, respectively. Mr. Gans owns 66 2/3% of WSR.

On January 27, 2009, the Company entered into a licensing agreement with I.M. Operating LLC (“IMO”)  for the use of the Scores brand name “Scores New York.” Robert M. Gans is the majority shareholder of IMO. Pursuant to the licensing agreement, the Company receives 3% of the gross revenues of the Scores New York club.
As of January 1, 2013, the Company entered into a management services agreement with Metropolitan Lumber, Hardware and Building Suppliers, Inc., which is majority owned by Mr. Gans. (See “item 11. Executive Compensation” above.)
In November 2013, the Company granted a license for the use of the “Scores Atlantic City” name to Star Light Events LLC for its gentlemen’s club in Atlantic City, New Jersey. Robert M. Gans is the majority owner of Star Light Events LLC. (See Item 1. Business – Nightclubs Currently Licensing our Scores Brand”)
14

Director Independence
 
Our Board of Directors has considered the independence of its directors in reference to the definition of “independent director” established by the Nasdaq Marketplace Rule 5605(a)(2). In doing so, the Board has reviewed all commercial and other relationships of each director in making its determination as to the independence of its directors. After such review, the Board has determined that none of our directors qualifies as independent under the requirements of the Nasdaq listing standards.
 
25

ITEM 14. PRINCIPAL ACCOUNTANTACCOUNTING FEES AND SERVICES.
 
Audit Fees.
 
The aggregate fees billed to us by our principal accountant for services rendered during the fiscal years ended December 31, 20102012 and 20092011 are set forth in the table below:

Fee Category 
Fiscal year ended December 31,
2010
  
Fiscal year ended December 31,
2009
 
Audit fees (1) $18,000  $20,000 
Audit-related fees (2)  12,000   12,000 
Tax fees (3)  3,000   3,000 
All other fees (4)  -   - 
Total fees $33,000  $35,000 
Fee Category Fiscal year ended December 31,
2012		 Fiscal year ended December 31,
2011		 
Audit Fees (1) $30,000 $30,000 
Audit-Related Fees (2)  —  — 
Tax Fees (3)  3,000  3,000 
All Other Fees (4)  —  — 
Total Fees $33,000 $33,000 

(1)Audit fees consists of fees incurred for professional services rendered for the audit of annual consolidated financial statements, for reviews of our interim consolidated financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements.

(2)Audit-related fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our consolidated financial statements, but are not reported under “Audit fees.”

(3)Tax fees consist of fees billed for professional services relating to tax compliance, tax planning, and tax advice.

(4)All other fees consist of fees billed for all other services.

Audit Committee’s Pre-Approval Practice.

Inasmuch as we do not have an audit committee, our Board of Directors performs the functions of an audit committee. Section 10A(i) of the Exchange Act prohibits our auditors from performing audit services for us as well as any services not considered to be “audit services” unless such services are pre-approved by the Board of Directors (in lieu of the audit committee) or unless the services meet certain de-minimsde-minimis standards.

All audit services were approved by our Board of Directors.

26
PART IV
 
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULESSCHEDULES.

Financial Statement Schedules

The consolidated financial statements of Scores Holding Company, Inc. are listed on the Index to Financial Statements on this annual report on Form 10-K beginning on page F-1.

All financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

Exhibits
 
The following Exhibits are being filed with this Annual Report on Form 10-K:
 
Exhibit
No
 
SEC Report
Reference
Number
 Description
     
10.1 10.20 Stock Option Agreement dated October 22, 2002 between the Registrant and Richard Goldring (1)
     
10.2 10.21 Stock Option Agreement dated October 22, 2002 between the Registrant and Elda Auerback (1)
     
10.3 10.28 Sublicense Agreement, dated June 13, 2003, between Entertainment Management Services, Inc. and Stone Park Entertainment (2)
     
 10.4 10.29 Sublicense Agreement, dated February 27, 2004, between Entertainment Management Services, Inc. and Club 2000 Eastern Avenue, Inc. (2)
     
10.5  10.38 Sublicense Agreement, dated January 24, 2006, between the Registrant and AYA Entertainment, Inc. (3)
     
10.6 10.42 Sublicense Agreement, dated April 2, 2007, between Entertainment Management Services, Inc. and Silver Bourbon, Inc. (3)
     
10.7 10.1 
Transfer Agreement by and among the Registrant, 333 East 60th Street Inc. (“333”) and Entertainment Management Services, Inc. (“EMS”) dated as of December 9, 2008 (4)
     
10.8 10.2 Cancellation Agreement by and among the Registrant and EMS dated as of January 27, 2009 (4)
     
10.9 10.3 Assignment and Assumption Agreement by and among the Registrant, 333 and EMS dated as of January 27, 2009 (4)
     
10.10 10.47 License Agreement, dated January 27, 2009, between the Registrant and I.M. Operating LLC (5)

15

27

Exhibit
No		 SEC Report
Reference
Number		 Description
    
3.1*  Certificate of Incorporation of Scores Holding Company, Inc.
    
3.2 
3(ii)
 By-Laws of Scores Holding Company, Inc. (1)
    
10.1 10.20 Stock Option Agreement dated October 22, 2002 between the Registrant and Richard Goldring (2)
    
10.2 10.21 Stock Option Agreement dated October 22, 2002 between the Registrant and Elda Auerback (2)
    
10.3 10.28 Sublicense Agreement, dated June 13, 2003, between Entertainment Management Services, Inc. and Stone Park Entertainment (3)
    
10.4 10.29 Sublicense Agreement, dated February 27, 2004, between Entertainment Management Services, Inc. and Club 2000 Eastern Avenue, Inc. (3)
    
10.5  10.38 Sublicense Agreement, dated January 24, 2006, between the Registrant and AYA Entertainment, Inc. (4)
    
10.6 10.42 Sublicense Agreement, dated April 2, 2007, between Entertainment Management Services, Inc. and Silver Bourbon, Inc. (4)
    
10.7 10.1 Transfer Agreement by and among the Registrant, 333 East 60th Street Inc. (“333”) and Entertainment Management Services, Inc. (“EMS”) dated as of December 9, 2008 (5)
    
10.8 10.2 Cancellation Agreement by and among the Registrant and EMS dated as of January 27, 2009 (5)
    
10.9 10.3 Assignment and Assumption Agreement by and among the Registrant, 333 and EMS dated as of January 27, 2009 (5)
    
10.10 10.47 License Agreement, dated January 27, 2009, between the Registrant and I.M. Operating LLC (6)
    
10.11 10.1 License Agreement by and between the Registrant and Burhill LLC (6) 10.1 License Agreement by and between the Registrant and Burhill LLC (7)
        
10.12 10.2 Scores Holding Company, Inc. 2010 Stock Incentive Plan (6)** 10.2 Scores Holding Company, Inc. 2010 Equity Incentive Plan (7)
        
10.13 10.3 Form of Option Agreement for the 2010 Plan (6)**10.3 Form of Option Agreement for the 2010 Plan (7)
        
10.14 10.4 Form of Director and Officer Indemnification Agreement (6)**10.4 Form of Director and Officer Indemnification Agreement (7)
        
10.15*  Stock Purchase Agreement, dated January 27, 2009, among Elliot Osher, Harvey Osher, Richard Goldring and Mitchell’s East LLC
   
 
10.16*  License Agreement (and Addendum) by and between Scores Holding Company, Inc. and Tampa Food & Entertainment, Inc. dated September 30, 2010
   
 
10.17*  License Agreement by and between the Registrant and Norm A. Properties dated December 26, 2012
    
10.18
*   Management Services Agreement, effective January 1, 2013, between Scores Holding Company, Inc. and Metropolitan Lumber, Hardware and Building Supplies, Inc.
    
21 21 Subsidiaries - As of December 31, 2010, we had one subsidiary: Scores Licensing Corp.*  List of Subsidiaries
    
31.1 * Certification of Principal Executive Officer pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
31.2 * Certification of Principal Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
32.1 * Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, 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, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
 
16

31.1*Certification of Principal Executive Officer pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*Certification of Principal Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1****Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, 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, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS***XBRL INSTANCE DOCUMENT
101.SCH***XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
101.CAL***XBRL TAXONOMY EXTENSION 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
____________________
* filedFiled herewith.
 
**Indicates managements contract or compensatory plan or arrangement.
*** This certification or information is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

(1)
Filed with the Securities and Exchange Commission on April 4, 1997 as an exhibit, numbered as indicated above, to the Registrant’s Annual Report on Form 10-KSB for the year ended November 30, 1996, which exhibit is incorporated herein by reference.
(2)Filed with the Securities and Exchange Commission on April 23, 2003 as an exhibit, numbered as indicated above, to the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2002, which exhibit is incorporated herein by reference.

(2)
(3)Filed with the Securities and Exchange Commission on April 15, 2005 as an exhibit, numbered as indicated above, to the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2004, which exhibit is incorporated herein by reference.

28

(3)
(4)Filed with the Securities and Exchange Commission on May 17, 2007 as an exhibit, numbered as indicated above, to the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2006, which exhibit is incorporated herein by reference.

(4)
(5)Filed with the Securities and Exchange Commission on February 2, 2009 as an exhibit, numbered as indicated above, to the Registrant’s Current Report on Form 8-K dated February 2, 2009, which exhibit is incorporated herein by reference.

(5)
(6)Filed with the Securities and Exchange Commission on April 15, 2009 as an exhibit, numbered as indicated above, to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009, which exhibit is incorporated herein by reference.

(6)
(7)Filed with the Securities and Exchange Commission on August 13, 2010 as an exhibit, numbered as indicated above, to the Registrant’s Current Report on Form 8-K dated August 5, 2010, which exhibit is incorporated herein by reference.

In reviewing the agreements included or incorporated by reference as exhibits to this Annual Report on Form 10-K, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:

should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Annual Report on Form 10-K and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

29
 
 
17

SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) 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.
 
Date: April 12, 2011November 14, 2013
SCORES HOLDING COMPANY, INC.
   
 By:  /s//s/Robert M. Gans
  Robert M. Gans
  Chief Executive Officer
   
 By:  /s//s/Howard Rosenbluth
  Howard Rosenbluth
  Chief Financial Officer

In accordance withPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
     
/s/ Robert M. Gans Director April 12, 2011November 14, 2013
Robert M. Gans    
     
/s/ Howard Rosenbluth Director April 12, 2011
November 14, 2013
Howard Rosenbluth    
     
/s/ Martin Gans Director April 12, 2011
November 14, 2013
Martin Gans    
 
18

30
 
PART IV – FINANCIAL INFORMATION

Index to Consolidated Financial Statements

Page

Page
Report of Independent Registered Public Accounting Firm.FirmF-2
  
Consolidated Balance Sheets as of December 31, 20102012 and December 31, 20092011F-3
  
Consolidated Statements of Operations for the years ended December 31, 20102012 and December 31, 20092011F-4
  
Consolidated StatementStatements of Stockholders’ Equity (Deficit) for the years ended December 31, 20102012 and December 31, 20092011F-5
  
Consolidated Statements of Cash Flows for the years ended December 31, 20102012 and  December 31, 20092011F-6
  
Notes to Consolidated Financial StatementsF-7

 
F-1

F-1
Report of Independent Registered Public Accounting Firm
 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and ShareholdersStockholders
Scores Holding Company, Inc. and subsidiariessubsidiary

We have audited the accompanying consolidated balance sheets of Scores Holding Company, Inc. and subsidiariessubsidiary as of December 31, 20102012 and 20092011, and the related consolidated statements of operations, stockholders’ equity (deficit),deficiency, and cash flows for each of the years ended December 31, 20102012 and 2009.2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.audit.

We conducted our auditsaudit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provideaudit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Scores Holdingthe Company Inc. as of December 31, 20102012 and 20092011, and the results of its operations stockholders’ equity (deficit) and cash flows for each of the years ended December 31, 20102012 and 2009,2011 in conformity with generally accepted accounting principles in the United States.

The accompanying financial statements have been prepared assuming that Scores Holding Company, Inc. will continue as a going concern. As more fully described in Note 2, the Company has a working capital deficit as of December 31, 2010.2012. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

/s/ Liggett, Vogt & Webb, P.A.
Certified Public Accountants
/s/ Sherb & Co., LLP
Certified Public Accountants

New York, New York
April 12, 2011November 4, 2013
F-2

F-2

SCORES HOLDING COMPANY, INC. AND SUBSIDIARIESSUBSIDIARY
CONSOLIDATED BALANCE SHEETS

  December 31,  December 31, 
  2010  2009 
ASSETS      
       
CURRENT ASSETS:      
Cash $23,748  $31,694 
Licensee  receivable - including affiliates- net  87,731   26,732 
Prepaid expenses  6,342   - 
         
Total Curent Assets  117,821   58,426 
         
INTANGIBLE ASSETS,NET  88,725   205,428 
         
         
TOTAL ASSETS $206,546  $263,854 
         
LIABILITIES AND STOCKHOLDERS'EQUITY( DEFICIT)        
         
CURRENT LIABILITIES:        
Accounts payable and accrued expenses $502,353  $22,091 
Related party payable  304,361   208,583 
Deferred revenue  18,000   - 
         
Total Current Liabilities  824,714   230,674 
         
STOCKHOLDERS' EQUITY (DEFICIT)        
Preferred stock, $.0001 par value, 10,000,000 shares authorized, -0- issued and outsatanding  -   - 
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  5,998,117   5,998,117 
Accumulated deficit  (6,781,471)  (6,130,123)
Total stockholder's equity (Deficit)  (618,168)  33,180 
         
TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY (DEFICIT) $206,546  $263,854 

The accompanying notes are an integral part of these consolidated financial statements.
 
  December 31, December 31, 
  2012 2011 
        
ASSETS       
        
CURRENT ASSETS:       
Cash $59,139 $8,930 
Licensee receivable - including affiliates- net  71,911  112,561 
Prepaid expenses  7,429  7,324 
Settlement receivable  131,862  125,444 
        
Total Current Assets  270,341  254,259 
        
Settlement receivable  162,389  294,251 
Loan receivable  31,535  30,000 
        
TOTAL ASSETS $464,265 $578,510 
        
LIABILITIES AND STOCKHOLDERS' DEFICIT       
        
CURRENT LIABILITIES:       
Accounts payable and accrued expenses $157,704 $82,956 
Related party payable  221,615  284,366 
Deferred revenue  -  105,140 
Settlement payable due to related party  193,201  156,049 
        
Total Current Liabilities  572,520  628,511 
        
Settlement payable due to related party  195,661  354,540 
Note Payable due to related party  31,535  - 
        
TOTAL LIABILITIES  799,716  983,051 
        
STOCKHOLDERS' DEFICIT:       
Preferred stock, $.0001 par value, 10,000,000 shares authorized, -0- issued and
    outsatanding		  -  - 
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  6,028,117 
Accumulated deficit  (6,558,754)  (6,597,844) 
        
Total Stockholder's Deficit  (335,451)  (404,541) 
        
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $464,265 $578,510 
F-3
 
(See accompanying notes to the consolidated financial statements)
F-3

SCORES HOLDING COMPANY, INC. AND SUBSIDIARIESSUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS

  Year Ended December 31, 
  2010  2009 
       
REVENUES      
Royalty Revenue $514,155  $387,425 
         
EXPENSES        
         
General and Administrative Expenses  1,165,503   547,223 
Debt Forgiveness ( Related Party )  -   (6,000)
Debt Forgiveness ( Unrelated Party )  -   (25,436)
Bad Debt Expenses  -   30,000 
         
NET (LOSS) FROM OPERATIONS  (651,348)  (158,362)
         
NET (LOSS) BEFORE INCOME TAXES  (651,348)  (158,362)
         
PROVISION FOR INCOME TAXES  -   - 
         
NET (LOSS) $(651,348) $(158,362)
         
NET (LOSS) PER SHARE-Basic and Diluted $(0.00) $(0.00)
         
WEIGHTED AVERAGE OF COMMOM SHARES OUTSTANDING-Basic and Diluted  165,186,124   165,186,124 

The accompanying notes are an integral part of these consolidated financial statements.
 
  Year Ended December 31, 
  2012 2011 
        
REVENUES       
        
Royalty Revenue $693,889 $629,251 
        
Total Revenue  693,889  629,251 
        
EXPENSES       
        
General and Administrative Expenses  670,719  884,195 
        
INCOME (LOSS) FROM OPERATIONS  23,170  (254,944) 
        
OTHER INCOME/(EXPENSE)       
        
Interest Income/(Expense), net  (4,080)  (1,429) 
Gain on Settlement  -  440,000 
Licensee Forfieture Income  20,000  - 
        
TOTAL OTHER INCOME  15,920  438,571 
        
INCOME BEFORE INCOME TAXES  39,090  183,627 
        
PROVISION FOR INCOME TAXES  -  - 
        
NET INCOME $39,090 $183,627 
        
NET INCOME PER SHARE-Basic and Diluted  0.000  0.001 
        
WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING-Basic and Diluted  165,186,124  165,186,124 
F-4
 
(See accompanying notes to the consolidated financial statements)
F-4

SCORES HOLDING COMPANY INC. AND SUBSIDIARIESSUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS’STOCKHOLDER'S EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 20102012 and 20092011

              Total 
  Common Stock     
Additional
Paid in
  Accumulated  
Stockholders
(Deficit)
 
  Shares  Amount  Capital  Deficit  Equity 
Balance as of December 31, 2008  165,186,124  $165,186  $5,998,117  $(5,971,761) $191,542 
                     
Net Loss              (158,362)  (158,362)
                     
Balance as of December 31, 2009  165,186,124   165,186   5,998,117   (6,130,123)  33,180 
                     
Net loss              (651,348)  (651,348)
                     
Balance as of December 31, 2010  165,186,124  $165,186  $5,998,117  $(6,781,471) $(618,168)
        Additional    Total 
  Common Stock Paid in Accumulated Stockholders 
  Shares Amount Capital Deficit Equity (Deficit) 
Balance as of December 31, 2010  165,186,124  165,186  5,998,117  (6,781,471)  (618,168) 
                 
Capital Contribution        30,000     30,000 
                 
Net Income           183,627  183,627 
                 
Balance as of December 31, 2011  165,186,124 $165,186 $6,028,117 $(6,597,844) $(404,541) 
                 
Capital Contribution        30,000     30,000 
                 
Net Income           39,090  39,090 
                 
Balance as of December 31, 2012  165,186,124 $165,186 $6,058,117 $(6,558,754) $(335,451) 

The(See accompanying notes are an integral part of theseto the consolidated financial statements.

F-5
statements)
 
F-5

SCORES HOLDING COMPANY INC. AND SUBSIDIARIESSUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

 Year Ended December 31, 
 2010  2009  Year Ended December 31, 
       2012 2011 
CASH FLOWS FROM OPERATING ACTIVITIES:             
Net loss $(651,348) $(158,362)
Net Income $39,090 $183,627 
               
Adjustments to reconcile net loss to net cash provided by (used) in operating activities:        
Adjustments to reconcile net income to net cash provided by (used) in operating activities:       
Amortization  116,703   127,904   -  88,725 
Bad debt expense  -   30,000 
Debt Forgiveness  -   (31,436)
Contributed services  30,000  30,000 
       
Changes in assets and liabilities:               
Licensee receivable  (60,999)  (42,887)  40,650  (24,830) 
Prepaid expenses  (6,342)  -   (105)  (982) 
Deferred revenue  18,000   -   (105,140)  87,140 
Accounts payable and accrued expenses  480,262   (51,299)  74,748  (419,397) 
NET CASH (USED) IN OPERATING ACTIVITIES  (103,724)  (126,080)
               
CASH PROVIDED BY FINANCING ACTIVITIES:        
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES  79,243  (55,717) 
       
CASH FLOW FROM FINANCING ACTIVITIES:       
Related party payables  95,778   178,583   (62,751)  (19,995) 
Bank overdraft  -   (20,982)
NET CASH PROVIDED BY FINANCING ACTIVITIES  95,778   157,601 
Settlement receivable  125,444  (419,695) 
Loan receivable  (1,535)  (30,000) 
Settlement payable  (121,727)  510,589 
Loan payable  31,535  - 
               
NET (DECREASE) INCREASE IN CASH  (7,946)  31,521 
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES  (29,034)  40,899 
       
NET INCREASE/(DECREASE) IN CASH  50,209  (14,818) 
Cash and cash equivalents - beginning of year  31,694   173   8,930  23,748 
Cash and cash equivalents - end of year $23,748  $31,694  $59,139 $8,930 
               
Supplemental disclosures of cash flow information:               
        
Cash paid during the year for interest $-  $-  $- $- 
        
Cash paid for income taxes $809  $-  $329 $2,296 

The(See accompanying notes are an integral part of theseto the consolidated financial statements.statements)
 
F-6

F-6
SCORES HOLDING COMPANY INC. and SUBSIDIARIESSubsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2012 and 2011
TWO YEARS ENDED DECEMBER 31, 2010Notes to Consolidated Financial Statements

Note 1. Organization

Scores Holding Company, Inc. and subsidiaries (the “Company”) is a Utah corporation, formed in September 1981 and is located in New York, NY. Formerly, Internet Advisory Corporation,Originally incorporated under the name Adonis Energy, Inc.,  the Company is a licensing company that exploits the “Scores” name and trademark for franchising and other licensing options.

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


Note 2. Summary of Significant Accounting Principles

BASIS OF PRESENTATION - Going Concern

The Company has incurred cumulative losses totaling $(6,781,471)$(6,558,754) a working capital deficit of $(618,168)$(302,179) and a net operating lossincome of ($651,348)$39,090 at December 31, 2010.2012. 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 the brand with its current and new operators and to take on operations in larger cities with greater demand for our product through acquisitions.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 increase 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.

Principles of consolidation

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

 
F-7
 
F-7

 
SCORES HOLDING COMPANY INC. and SUBSIDIARIESSubsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2012 and 2011
TWO YEARS ENDED DECEMBER 31, 2010Notes to Consolidated Financial Statements

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,$250,000, the FDIC insured limit.

Accounting for Long-Lived Assets

The Company reviews long-lived assets, certain identifiable assets and any goodwill related to those assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. The Company believes there is no impairment loss to record for the years ended December 31, 2010 and 2009, hence such long-lived assets are fairly stated as of December 31, 2010 and 2009.

Fair Value of Financial Instruments

The Company follows the provisions of ASC 820-10, Fair Value Measurements which defines fair values, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Company's financial instruments include licensee receivable, accounts payable, accrued expenses and related party payable.  The fair values of all financial instruments were not materially different from their carrying values.

Licensee receivable and reserves

Accounts deemed uncollectible are applied against the allowance for doubtful accounts. Allowance for doubtful accounts had a balance of $14,000$-0- and $14,000$14,000 for the December 31, 20102012 and 20092011 periods. In reviewing any delinquent royalty or note receivable, the Company considers many factors in estimating its reserve, including historical data, experience, customer types, credit worthiness, financial distress and economic trends. From time to time, the Company may adjust its assumptions for anticipated changes in any of above or other factors expected to affect collectability.collectability.

Advertising Costs

The costs of advertising are expensed as incurred. The advertising expenses for the years ended December 31, 2010 and 2009 are $31,846 and $346 respectively.

Stock Based Compensation

The Company accounts for the plans under the recognition and measurement provisions of Accounting Standards Codification (ASC) Topic 718Compensation – Stock Compensation. The standard requires entities to measure the cost of employee services received in exchange for stock options based on the grant-date fair value of the award, and to recognize the cost over the period the employee is required to provide services for the award.
 
F-8
SCORES HOLDING COMPANY INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TWO YEARS ENDED DECEMBER 31, 2010

There were no stock options or warrants issued during the years ended December 31, 20102012 and 2009,2011, hence we havethe Company has recorded no compensation expense. If the Company were to issue equity rights for compensation, then the Company would recognize compensation expense under Topic 718 over the requisite service period using the Black-Scholes model for equity rights granted.

Revenue recognition

The Company records revenues from its license agreements on a straight line basis over the term of the license agreements. If a license agreement is terminated then the remaining unearned balance of the deferred revenues are recorded as earned if applicable. Revenue is recognized when earned, as products are completed and delivered or services are provided to customers.
F-8

SCORES HOLDING COMPANY and Subsidiaries
Years ended December 31, 2012 and 2011
Notes to Consolidated Financial Statements
Revenues earned under its royalty agreements are recorded as they are earned.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740-10-25, “Accounting for Income Taxes”. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The Company has a net operating loss carryforward of approximately $6,107,000,$6,200,000, which expire in the years 2018 through 2030.2032. The related deferred tax asset of approximately $2,910,000$2,764,000 has been offset by a valuation allowance. The Company’s net operating loss carryforwards may have been limited, pursuant to the Internal Revenue Code Section 382, as to the utilization of such net operating loss carryforwards due to changes in ownership of the Company over the years.

 2010  2009  2012 2011 
             
Deferred tax assets:             
       
Net operating loss carryforward $2,710,000  $2,664,000  $2,750,000 $2,780,000 
       
Temporary – legal accrual  200,000   -   14,000  - 
               
Less valuation allowance  (2,910,000)  (2,664,000)  (2,764,000)  (2,780,000) 
       
Net deferred tax asset $-  $-  $- $- 

The reconciliation of the Company’s effective tax rate differs from the Federal income tax rate of 34%34% for the years ended December 31, 20102012 and 2009,2011, as a result of the following:

  2010  2009 
Tax (benefit) at statutory rate $(221,000) $(54,000)
         
State and local taxes  (67,000)  (16,000)
         
Permanent differences  42,000   37,000 
         
Change in valuation allowance  246,000   33,000 
Tax due $—  $— 
 
  2012 2011 
        
Tax (benefit) at statutory rate $13,000 $62,000 
        
State and local taxes  3,000  19,000 
        
Permanent differences  -  36,000 
        
Change in valuation allowance  (16,000)  117,000 
        
Tax due $- $- 
 
F-9
 
F-9

 
SCORES HOLDING COMPANY INC. and SUBSIDIARIESSubsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2012 and 2011
TWO YEARS ENDED DECEMBER 31, 2010Notes to Consolidated Financial Statements

Loss per Share

Under ASC 260-10-45, “Earnings Per Share”, basic lossincome (loss) per common share is computed by dividing the lossincome (loss) applicable to common stockholders by the weighted average number of common shares assumed to be outstanding during the period of computation. Diluted lossincome (loss) per common share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. There were 85,000 options outstanding or potentially dilutive securities outstanding during the years ended December 31, 2010 and 2009, respectively. Since there was net losses during such years all common stock equivalents have been excluded as they would be anti-dilutive. Accordingly, the weighted average number of common shares outstanding for the years ended December 31, 20102012 and 2009,2011, respectively, is the same for purposes of computing both basic and diluted net income per share for such years.

Accounting Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Included in Accrued Liabilities is a $450,000 estimate to settle some pending litigation discussed hereinafter.

Concentration of Credit Risk

The Company earned royalties and merchandise revenues from five licensees who are unrelated from management of the Company. During the December 31, 20102012 period, revenues earned from royalties and merchandise sales from these unrelated licensees amounted to $358,758$693,889 and there was $46,836$71,911 due and outstanding as of December 31, 2010.2012. The Company’s New York affiliate commenced operations in May 2009 and revenue amountedrevenues increased 8% to $155,416$197,892 during the 20102012 period from $182,870 during the 2011 period. The Company’s Baltimore club had revenues increaseddecrease 2% to 27% from $133,751$138,781 in the 20102012 period to $105,358from $142,214 in the 20092011 period and Chicago revenues increased by 9% to 23% to $106,987$121,816 in the 20102012 period from $87,320$112,168 in the 2009 period Chicago.2011 period. In addition, revenues from the Company’s New Orleans nightclub increased 62% to $60,000remained the same at $120,000 in the 20102012 and 2011 period. The Company’s Tampa Club had revenues increase 33% to $96,000 in the 2012 period from $37,000$72,000 in the 2009.2011 period. The Company’s AYA,affiliate Swan Media Group, Inc., Scoreslive.com licensee website is stillwent live during 2011 and began accruing royalties in the development stage since 2007, it has accountedsecond quarter of 2012. The Scoreslive.com licensee accounts for a minimal amount1% and 0% of our total royalty revenues to date. On September 30, 2010, we entered into a licensing agreement with Tampa Food & Entertainment, Inc.  Upon signingfor the contract, we received a non-refundable fee.  For the next twelve months we will receive a flat fee of per month with an advance payment to be made at the signing of the contract.  After the first twelve months, royalties payable to us under this license will be capped at the greater of a certain dollar amount per month or a percentage of net revenues. During the year ended 2010 $43,000 was recorded as revenue.2012 and 2011 periods, respectively. 
 
F-10

F-10
 
SCORES HOLDING COMPANY INC. and SUBSIDIARIESSubsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2012 and 2011
TWO YEARS ENDED DECEMBER 31, 2010Notes to Consolidated Financial Statements

New Accounting Pronouncements

In July 2013, the FASB issued Accounting Standards Update “ASU” 2013-11 on “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”.  The amendments in this ASU are to improve the current U.S. GAAP because they are expected to reduce diversity in practice by providing guidance on the presentation of unrecognized tax benefits and will better reflect the manner in which an entity would settle at the reporting date any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist.  Current U.S. GAAP does not include explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This Update applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013.  Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted.
All newlyother new accounting pronouncements issued but not yet effective accounting pronouncementsor adopted have been deemed not to either be irrelevant or immaterialrelevant to the operations and reporting disclosures of the Company.us, hence are not expected to have any impact once adopted.


Note 3. Related-Party Transactions

Transactions with Common ownership affiliates

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”. IMO is also owned by Robert M. Gans who is the Company’s majority shareholder. During the years 2010 and 2009,since IMO paid $236,866 and $146,082 respectively infor various administrative costs related to accounting, business development, insurance and legal services for the Company, which a portion thereof in the amount of $144,115 remains a payable to this related party. The Company also leases office space directly from Westside Realty of New York (WSR), the owner of the West 27th Street Building. The majority owner of WSR is Robert M. Gans. Between January 1, and March 31, 2009, the monthly rent including overhead was $5,000. Since April 1, 2009, the monthly rent was reduced to $2,500has been $2,500 per month including overhead costs. The Company owed WSR approximately $52,500$77,500 and $47,500 in unpaid rents as of December 31, 2010.2012 and 2011, respectively. 

F-11

SCORES HOLDING COMPANY and Subsidiaries
Years ended December 31, 2012 and 2011
Notes to Consolidated Financial Statements
The total amounts due to the various related parties as of December 31, 20102012 and 20092011 was $304,361$221,615 and $208,583,$284,366, respectively.
A capital contribution has been recorded for personnel services rendered the majority shareholder in the amount of $30,000for the year 2012 and 2011.

Note 4.  Intangible Assets

Trademark

In connection with the acquisition of HEIR (also known as, Scores Licensing Company) as discussed above,Company (“SLC”) the Company acquired the trademark to the name "SCORES". This trademark had a gross recorded value at December 31, 2008 of $878,318$878,318 which had been increased for the purchase from HEIRSLC for $250,000$250,000. This trademark has been registered in the United States, Canada, Japan, Mexico and the European Community. The trademark is beinghas been completely amortized by straight line method over an estimated useful life of ten years. The Company's trademark having an infinite useful life by its definition is being amortized over ten years due to the difficult New York legal environment for which the related showcase adult club is operating. The Company recorded $91,703$0 in 20102012 and $102,904$88,725 of amortization expense, in 2009.   The Company estimates that amortization expense will be approximately $88,000 for2011.  As of December 31, 2011 the next year before being completelycost of the trademark has been fully amortized.
 
F-11
SCORES HOLDING COMPANY INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TWO YEARS ENDED DECEMBER 31, 2010

The Company believes that the carrying amount of the “Scores” trademark exceeds its fair or net present value as of December 31, 20102012 and 2009.2011. 

Note 5. Licensees
The Company has seven license agreements which were obtained between 2003 and 2012; 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 and Swan Media Group, Inc. (formerly AYA International, Inc.).
“IMO’s” members are the Company’s majority shareholder, Robert M. Gans, and Secretary and Board of 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 29% and 29% of our royalty revenues during the year of 2012 and 2011, respectively.

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.
F-12

SCORES HOLDING COMPANY and Subsidiaries
Years ended December 31, 2012 and 2011
Notes to Consolidated Financial Statements
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 December 31, 2012, the settlement receivable is $294,251.
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 December 31, 2012, this promissory note balance is $31,535.

Note 7. Settlement/Note Payable
As discussed in Note 6 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 December 31, 2012, $420,397 is outstanding.

Note 5.8. Accounts Payable and Accrued Expenses

Accounts Payablepayables and accrued expenses as of December 31, 20102012 is comprised of $450,000 for estimated$111,055 in settlement costs attributed to one of the lawsuits discussed hereafter,and legal fees, professional fees $18,000of $33,000 and miscellaneous accruals and payables of $34,353.$13,649. Accounts Payablepayables and accrued expenses as of December 31, 20092011 is comprised of miscellaneous accruals and payables of $22,091.

Note 6. Stock Option$82,956.
 
F-13

SCORES HOLDING COMPANY and Subsidiaries
Years ended December 31, 2012 and 2011
Notes to Consolidated Financial Statements
Note 9. Stock Option
Stock option plan:The below options are unsubscribed and were granted to ourthe Company’s former President, CEO, Director and Secretary in consideration with their employment with the Company. These options were granted by the Board for the optionee to purchase shares of ourthe Company’s common stock. These stock options are not “incentive stock options” under Section 422 of the Internal Revenue Code of 1986. The granted options fully vested upon issuance on October 22, 2002 and expireexpired on March 31, 2013.

Stock option activity for the two years ended December 31, 20102012 is summarized as follows:

    Weighted    Weighted 
    Average    Average 
 Shares  Exercise Price  Shares Exercise Price 
Outstanding at December 31, 2008  85,000  $2.80 
Outstanding at December 31, 2010 85,000 $2.80 
              
Granted  -   -  -  - 
Exercised  -   -  -  - 
Expired or cancelled  -   -  -  - 
Outstanding at December 31, 2009  85,000   2.80 
        
Outstanding at December 31, 2011 85,000  2.80 
              
Granted  -   -  -  - 
Exercised  -   -  -  - 
Expired or cancelled  -   -  -  - 
Outstanding at December 31, 2010  85,000  $2.80 
Outstanding at December 31, 2012 85,000 $
2.80
 

Weighted-average exercise price of outstanding options $2.80.
All such options are vested and exercisable

The weighted average fair value of these options outstanding is $0.037 per option. The intrinsic value of a stock option/SSAR is the amount by which the market value of the underlying stock exceeds the exercise price of the options/SSAR. The intrinsic value of the options/SSAR as of December 31, 20102012 and 20092011 was $0$0 and $0$0 respectively.

F-12
SCORES HOLDING COMPANY INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TWO YEARS ENDED DECEMBER 31, 2010

Note 7.10. Commitments and Contingencies

RentThe Company records $2,500 a month as rent, overhead, and services as a contribution to Capital and the related expense account for services rendered by the management of the Company. These expensesfor the year ended December 31, 20102012 and 2009 was $30,0002011 were $30,000 and $32,500$30,000 respectively.

F-14

SCORES HOLDING COMPANY and Subsidiaries
Years ended December 31, 2012 and 2011
Notes to Consolidated Financial Statements
The Company currently leases office space from the Westside Realty of New York which is owned and operated by Robert Gans ourthe Company’s majority shareholder, for $2,500$2,500 a month.

On March 22, 2010, Russell Whelchel, who performed work asJune 14, 2011, Christina Maldonado, a hair and makeup stylistformer front door receptionist/coat checker at the Scores West nightclubNew York, located at 536 West 28th Street,in New York NY filed a civil lawsuit against the Company inand IMO alleging violations of Title V11 of the S.D.N.Y.   The plaintiff subsequently amended the complaint on July 30, 2010.  The plaintiff is seeking to recover under federal andCivil Rights Act, New York labor laws minimum wages, unlawful deductions, misappropriated gratuitiesState Human Rights Law, New York Executive Law, New York City Human Rights Law and other wagesthe 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 the periodalleged loss of his “employment” with Scores West between May 2009past and February 13, 2010.  Additionally, the plaintiff is seeking pre-judgmentfuture earnings and post-judgment interest, liquidated damagesemotional distress and injunctive relief.humiliation. The Company disputes that it was an employer of the plaintiff; contends that the plaintiff was not an “employee” but rather an independent contractor of Scores West and denies all allegations seeking damages under federal and state wage and hour laws. The Company intends to vigorously defend against all claims in the plaintiff’s complaint.  The Company is currently engaged with the plaintiff in the exchange of discovery.

On March 16, 2010, Charles Braden, who claims he performed work as a hair and makeup stylist at the Scores New York nightclub located at 536 West 28th Street, New York, NY, filed a civil lawsuit against the Company in the S.D.N.Y.   The plaintiff is seeking to recover under federal and New York labor laws minimum wages, unlawful deductions, misappropriated gratuities and other wages for the period of his “employment” with “Scores New York” between approximately January 2005 and September 2010.  Additionally, the plaintiff is seeking pre-judgment and post-judgment interest, liquidated damages, reasonable attorneys’ fees and costs of the action and other relief as the S.D.N.Y. deems just and reasonable.  The Company disputes that it was an employer of the plaintiff contends that the plaintiff was not an “employee” but rather an independent contractor of Scores West and categorically denies all allegations seeking damages under federalof sexual discrimination and state wage and hour laws.sexual harassment. The Company intendsresponded to the complaint and later filed an amended complaint and asserted a cross claim against IMO. The Company is vigorously defend against all claimsdefending itself in this litigation and does not expect that the plaintiff’s complaint.outcome will be material.

In mid Marchmid-March 2010, the Company was named by Nichole Hughes in a complaint filed with the SCNY. Ms Hughes is suingsued 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. The case is nowPlaintiff’s counsel was granted leave by the court to withdraw from representation in discovery. The Company will vigorously defend itselfJanuary 2013. Plaintiff failed to appoint new counsel or further participate in this litigation and does not expect that the outcome will be material.

On January 14, 2010, the Company was named in a complaint filed with the SCNY in connection with an alleged assault on the plaintiff by an agent of the Company’s New York affiliated club. The Company filed a motion to dismiss this complaint and, on December 15, 2010, the plaintiff stipulated to discontinue the case against the Company.

F-13
SCORES HOLDING COMPANY INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TWO YEARS ENDED DECEMBER 31, 2010

On June 23, 2009, the Company filed a complaint with the SCNY against Silver Bourbon, Inc., its licensee in New Orleans and operator of Scores New Orleans, for breach of contract.  At the time of the filing, Silber Bourbon, Inc. owed the Company $70,000 in unpaid royaltiesWe have settled this matter with Silver Bourban, Inc. and the court action has been discontinued..

On September 5, 2008, Ruth Fowler, a former cocktail waitress at Scores West, filed a civil lawsuit against the Company in the Federal District Court for the Southern District of New York (the “Court”).  The plaintiff is seeking to recover damages for alleged illegal deductions take from her salary and monies due her and for sexual harassment under the New York City and New York State Human Rights Laws.  Oncase was dismissed on May 7, 2009, the Company filed a motion to dismiss the action against it but that motion was denied by the Court with possible leave to renew the motion at a future date after the completion of discovery proceedings.  In the meanwhile, counsel for plaintiff filed an amended complaint on February 26, 2010 to add as additional parties to the action Go West and EMS.  On March 1, 2010, the Company filed affirmative defenses and an amended response asserting cross-claims for judgment against both Go West and EMS. On September 13, 2010, the SDNY denied plaintiff’s application for further discovery and on October 18, 2010, the Company filed a motion to dismiss, which has yet to be decided on.  Although the outcome of this action is uncertain, the Company believes that any outcome will not have a material effect on it, since the plaintiff was only employed by Scores West for less than four months.

In early March 2008, the Company received notice that DIF&B, owner of the Las Vegas club, would be canceling its sublicense with EMS effective on or before May 6, 2008. The Company was notified that DIF&B would be making final royalty payments to EMS totaling $60,000 at the rate of $10,000 per week starting the first week of March 2008. The Las Vegas club ceased operating and, as of December 31, 2008, EMS had received only one such $10,000 payment from DIF&B. EMS commenced an action against DIF&B and filed a complaint and affidavit of service with the SCNY, on July 23, 2008. DIF&B was required to file an answer by August 23, 2008, but did not do so. As a result, EMS filed an application for a default judgment and the SCNY appointed a referee to determine damages. The referee determined that damages in the amount of $216,000, with interest, should be paid to EMS and a default judgment totaling $230,557 was entered by the Clerk of the SCNY.  The Company will attempt to collect on this judgment.  The Company will be entitled to all monies so collected, pursuant to the Assignment Agreement with EMS and 333.

F-14
20, 2013.
 
SCORES HOLDING COMPANY INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TWO YEARS ENDED DECEMBER 31, 2010

On December 11, 2007, Francis Vargas, a former cocktail waitress at Scores West located in New York, NY, filed a civil lawsuit against the Company and Go West in the SCNY, alleging violations of the New York State Human Rights Law, New York Executive Law, New York City Human Rights Law, and the New York City Administrative Code, based upon allegations of sexual discrimination and sexual harassment. The lawsuit further alleges that at all material times both the Company and Go West were employers of Ms. Vargas, the plaintiff. The law suit seeks unspecified compensatory damages for plaintiff’s alleged loss of past and future earnings and benefits, emotional distress, humiliation and loss of reputation. The Company disputes that it was an employer of the plaintiff and categorically denies all allegations of sexual discrimination and sexual harassment. The Company filed its verified answer in the Supreme Court of the State of New York on February 12, 2008 to contest and defend against these accusations and it is currently engaged in discovery.accusations. On April 18, 2008, co-defendant Go West filed for bankruptcy and the case was stayed. On July 23, 2009, the bankruptcy petition was dismissed and, as a result, the automatic stay was lifted. The Company subsequently filed an amended response asserting cross-claims for judgment against both Go West and EMS and a motion to compel discovery, which was approved. The Company is currently preparing for the plaintiff’s deposition and a compliance conference which are scheduled for the end of April.

On October 9, 2007,Company’s former Go West bartender Siri Diaz filed a purported class action and collective action on behalf of all tipped employees against the Company and other defendants alleging violations of federal and state wage/hour laws (Siri Diaz et al. v. Scores Holding Company,affiliate, Entertainment Management Services, Inc.; Go West Entertainment, Inc. a/k/a Scores West Side; and Scores Entertainment, Inc., a/k/a Scores East Side, Case No. 07 Civ. 8718 (Southern District of New York (the “Court” ("EMS"), Judge Richard M. Berman)). On November 6, 2007, plaintiffs served an amended purported class action and collective action complaint, naming dancers and servers as additional plaintiffs and alleging the same violations of federal and state wage/hour laws. On or about February 21, 2008, plaintiffs served a second amended complaint adding two additional party defendants, but limiting the action to persons employed in the New York Scores’ clubs. The amended complaint alleged that the Company and the other defendants were “an integrated enterprise” and that the Company jointly employed the plaintiffs, subjecting all of the defendants to liability for the alleged wage/hour violations. On behalf of the Company and the other defendants the Company filed a motion to dismiss that portion of the Complaint that asserted State law class action allegations; the Company also moved to dismiss the claims ofentity owned by two of the named plaintiffs for failureCompany’s former directors and employees. After engaging in discovery and other pre-trial activities the two sides agreed to appear for depositions. Ata confidential settlement on February 22, 2013 and the same time plaintiffs moved for conditional certification undercase has been dismissed. The settlement does not have a material outcome on the federal law for a classbusiness of the servers, bartenders and dancers; the Company opposed that motion. On May 9, 2008, the Court issued its decision, denying the motion to dismiss and granting conditional certification for a class of servers, cocktail waitresses, bartenders and dancers who have worked at Scores East since October 2004.  On May 29, 2008, the Company filed an answer to plaintiff's’ second amended complaint.  On or about September 5, 2009, plaintiffs served their third amended complaint adding in two individual defendants who are alleged to be employers under the state and federal wage claims.  The Company disputes that it is a proper defendant in this action and it disputes that it violated the federal and state labor laws, and further disputes that the dancers are “employees” subject to the federal and state wage and hour laws. The Company has recorded a $450,000 estimate to settle this lawsuit, as the legal fees defending the Company’s position during the year has amounted to approximately $80,000.Company.

On March 30, 2007, the Company, along with several of its affiliates, were named in a suit in connection with an alleged assault by an employee of an affiliate and one of the Company’s stockholders and former officer and director.  The Company has answered a third amended complaint and completed discovery.  The Company has filed a note of issue with the court and is waiting for a court date on which the trial will begin. The Company will vigorously defend itself in this litigation and does not expect that the outcome will be material.
 
F-15

F-15
 
SCORES HOLDING COMPANY INC. and SUBSIDIARIESSubsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2012 and 2011
TWO YEARS ENDED DECEMBERNotes to Consolidated Financial Statements
In early March 2008, the Company received notice that DIF&B, owner of the Las Vegas club, would be canceling its sublicense with EMS effective on or before May 6, 2008. The Company was notified that DIF&B would be making final royalty payments to EMS totaling $60,000 at the rate of $10,000 per week starting the first week of March 2008. The Las Vegas club ceased operating and, as of December 31, 20102008, EMS had received only one such $10,000 payment from DIF&B. EMS commenced an action against DIF&B and filed a complaint and affidavit of service with the SCNY, on July 23, 2008. DIF&B was required to file an answer by August 23, 2008, but did not do so. As a result, EMS filed an application for a default judgment and the SCNY appointed a referee to determine damages. The referee determined that damages in the amount of $216,000, with interest, should be paid to EMS and a default judgment totaling $230,557 was entered by the Clerk of the SCNY. The Company will attempt to collect on this judgment. The Company will be entitled to all monies so collected, pursuant to the Assignment Agreement with EMS and 333.

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 8.11. SUBSEQUENT EVENTS

We have evaluated for disclosure purposes, subsequent events.

 
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. The Company will vigorously defend itself in this litigation and does not expect that the outcome will be material.
F-16
F-16

SCORES HOLDING COMPANY and Subsidiaries
Years ended December 31, 2012 and 2011
Notes to Consolidated Financial Statements
 
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 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 $90,000to Ms. Yamada pursuant to a settlement and release agreement dated April 30, 2013. These matters were settled out of court.
Pursuant to an oral arrangement, in November 2013, the Company granted a license for the use of the “Scores Atlantic City” name to Star Light Events, LLC 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. The Company is currently in the process of preparing a written license agreement with respect to its arrangement with Star Light Events, LLC. Robert M. Gans, the Company’s President, Chief Executive officer and a director, is the majority owner of Star Light Events, LLC.
Management evaluated subsequent events through the date of this filing and determined that no additional events have occurred that would require adjustment to or disclosure in the financial statements.
F-17