SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) AUGUST 13, 2002
SCORES HOLDING COMPANY INC.
(Exact name of registrant as specified in its charter)
UTAH 0-16665 87-0426358
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State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation or organization)
150 E. 58TH STREET, NEW YORK, NY 10022
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(Address of principal executive offices)(Zip Code)
(212) 421-8480
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address If Changed since Last Report.)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 13, 2002 a triangular merger among Registrant, HEIR Holding
Company Inc. a Delaware corporation ("HEIR"), and Scores Acquisition Corp.
("SAC"), a Delaware corporation and wholly owned subsidiary of Registrant, was
completed. The merger was based upon an August 7, 2002 Agreement and Plan of
Merger among the parties. Pursuant to the merger (i) SAC was merged with and
into HEIR; (ii) the HEIR shareholders exchanged all of their HEIR shares,
constituting all of the issued and outstanding capital stock of HEIR, for an
aggregate of 3,000,000 shares of Registrant's restricted common stock making
HEIR a wholly owned subsidiary of Registrant; and (iii) HEIR, the surviving
corporation in the merger, changed its name to Scores Licensing Corp. The HEIR
shareholders were Richard Goldring, Elliot Osher and William Osher, each of whom
is an affiliate of the Registrant. Mr. Goldring is an officer, director and
principal shareholder of Registrant. Elliot Osher and William Osher are
principal shareholders of Registrant. Scores Licensing Corp. is the owner of all
of the intellectual property rights to the "SCORES" trademark, name and brand.
The determination of the number of shares of Registrant's stock to be exchanged
for the HEIR shares was based upon the valuation given to HEIR's assets in an
arms length transaction in which HEIR had previously acquired such assets.
Immediately, prior to the merger, HEIR completed a $1,000,000 financing
transaction pursuant to Rule 504 of Regulation D of the General Rules and
Regulations under the Securities Act of 1933 as amended pursuant to an August 7,
2002 Convertible Debenture Purchase Agreement (the "Purchase Agreement") between
HEIR and an accredited Colorado investor (the "Investor"). In connection
therewith, HEIR sold a 1% $1,000,000 convertible debenture due August 6, 2007
(the "HEIR Debenture") to the Investor. The unpaid principal amount of the HEIR
Debenture was convertible into unrestricted shares of HEIR common stock to be
held in escrow pending the repayment or conversion of the HEIR Debenture.
Pursuant to the merger, Registrant assumed all obligations of HEIR under the
HEIR Debenture and issued the holder thereof its 1% $1,000,000 convertible
debenture due August 6, 2007 (the "Convertible Debenture") in exchange for the
HEIR Convertible Debenture. The material terms of the Convertible Debenture are
identical to the terms of the HEIR Convertible Debenture except that the unpaid
principal amount of the Convertible Debenture is convertible into unrestricted
shares of Registrant's common Stock (the "Common Shares"). The per share
conversion price for the Convertible Debenture in effect on any conversion date
is the lesser of (a) $1.15 or sixty-five percent (65%) of the average of the
closing bid prices per share of Registrant's common stock during the five (5)
trading days immediately preceding August 13, 2002 or (b) fifty percent (50%) of
the average of the three (3) lowest closing bid prices per share of Registrant's
common stock during the forty (40) trading days immediately preceding the date
on which the holder of the Convertible Debenture provides the escrow agent with
a notice of conversion. The number of shares of Registrant's common stock
issuable upon conversion is also subject to anti-dilution provisions.
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ITEM 5. OTHER EVENTS.
On August 13, 2002, Registrant received a $1,000,000 loan (the "Loan")
from a private equity fund which it intends to use in furtherance of its adult
entertainment business. The Loan is evidenced by an August 7, 2002 Loan
Agreement (the "Loan Agreement") and August 7, 2002 Promissory Note (the "Note")
between Registrant and the fund. The Note bears interest at the rate of 6% per
annum and is due August 6, 2007. Interest thereon is payable annually. The Loan
Agreement contains a special repayment provision which provides that in the
event during the five year term of the Loan, a minimum of 8,000,000 shares of
Registrant's common stock have been traded on the OTCBB or such other US public
markets or stock exchanges on which such common stock may have been traded
during such period, Registrant may at its option, repay all remaining interest
and principal due on the Loan by issuing to Lender 100,000 of Registrant's
common stock purchase warrants, each to purchase one share of Registrant's
common stock at a per share exercise price equal to 75% of the average of the
three (3) lowest closing bid prices per share of Registrant's common stock
during the forty (40) trading days immediately proceeding the maturity date of
the Loan. The number of shares issuable upon exercise of the warrants is subject
to anti-dilution provisions.
Effective August 15, 2002 John Neilson resigned from his positions as
secretary and a director of Registrant in order to devote more time to his
outside interests. Such resignation was not the result of any disagreements
between Registrant and Mr. Neilson relating to Registrant's operations,
policies, practices or any other matters.
On August 13, 2002 Registrant entered into a financing transaction in
which it has received a firm commitment from a private equity fund for the
purchase of a $2,000,000 convertible debenture from Registrant (the
"Debenture"). The closing of the transaction will occur upon the effectiveness
of a registration statement (the "Registration Statement") to be filed with the
Securities and Exchange Commission in which, among other things, shares of
Registrant's common stock issuable upon conversion of the Debenture will be
registered for resale by the equity fund. Part of the financing proceeds are
intended to be used in connection with Registrant's adult entertainment
nightclub intended to be operated at 533-535 West 28th Street in Manhattan under
the Scores(TM) name. The terms of the transaction are set forth in an August 7,
2002 Convertible Debenture Purchase Agreement (the "Debenture Purchase
Agreement") and an August 7, 2002, $2,000,000 1% Convertible Debenture (the
"Debenture") due August 6, 2007 between Registrant and the equity fund. The
equity fund will receive the Debenture at the time if fulfills its $2,000,000
commitment to Registrant. The Debenture is convertible into registered shares of
Registrant's common stock.
The per share conversion price for the Debentures in effect on any
conversion date is the lesser of (a) $2.25 or one hundred twenty-five percent
(125%) of the average of the closing bid prices per share of Registrant's common
stock during the five (5) trading days immediately preceding the closing date
for the transaction which shall be no later than five (5) business days after
the effective date of the Registration Statement
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or (b) one hundred (100%) of the average of the three (3) lowest closing bid
prices per share of Registrant's common stock during the forty (40) trading days
immediately preceding the date on which the holder of the Debenture provides a
notice of conversion, provided, however, that the maximum number of shares of
Registrant's common stock that the Debentures may be converted into shall be
6,000,000 (the "Maximum Conversion"); and further provided, however, that upon
the Maximum Conversion, the Registrant may, at its option (a) increase the
Maximum Conversion or (b) redeem the unconverted amount of the Debentures in
whole or in part at one hundred forty percent (140%) of the unconverted amount
of the Debentures being redeemed plus accrued interest thereon. The number of
Shares issuable upon conversion of the Debenture is also subject to
anti-dilution provisions.
Pursuant to the Debenture Purchase Agreement, the equity fund will also
receive a common stock purchase warrant (the "Warrant") exercisable for the
purchase of 250,000 shares of Registrant's common stock, at any time from the
date of issuance through August 6, 2007, at a price of $.01 per share, subject
to adjustment based upon anti-dilution provisions contained therein. Pursuant to
the Debenture Purchase Agreement, the equity fund may be provided with a
termination warrant (the "Termination Warrant") entitling it to receive 500,000
restricted shares of Registrant's common stock at a price of $.01 per share,
subject to adjustment based upon anti-dilution provision contained therein, if
the Debenture Purchase Agreement is terminated pursuant to Section 5.1 thereof,
which sets forth certain events of default under the Debenture Purchase
Agreement. Piggyback registration rights apply to the shares underlying the
Termination Warrant.
Registrant's obligation to file the Registration Statement is set forth in
an August 7, 2002 Registration Rights Agreement between Registrant and the
equity fund which requires Registrant to file a Registration Statement with the
SEC on or before September 21, 2002 and to have such Registration Statement
declared effective on or prior to December 20, 2002. The Registration Statement
will register for resale, on behalf of the equity fund, the shares of
Registrant's Common Stock issuable upon conversion of the Debenture and exercise
of the Warrant. Such shares shall be placed in escrow pending any conversions of
the Debenture or exercises of the Warrant.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
7(c) Exhibits.
2.1 Agreement and Plan of Merger dated as of August 7, 2002 among Registrant,
HEIR Holding Company Inc. and Scores Acquisition Corp.
2.2 Certificate of Merger between HEIR Holding Co. Inc. and Scores Acquisition
Corp. dated August 7, 2002 as filed with the Delaware Secretary of State
on August 13, 2002.
10.1 Convertible Debenture Purchase Agreement dated as of August 7, 2002
between HEIR Holding Co. Inc. and HEM Mutual Assurance LLC.
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10.2 Convertible Debenture Purchase Agreement dated as of August 7, 2002
between Registrant and HEM Mutual Assurance Fund Limited.
10.3 Loan Agreement and Promissory Note dated as of August 7, 2002 between
Registrant and HEM Mutual Assurance Fund Limited.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly cause this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
SCORES HOLDING COMPANY INC.
Dated: August 27, 2002 By: /s/ Richard Goldring
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Richard Goldring
President & Chief Executive Officer
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EXHIBIT INDEX
Exhibit No. Name of Document PAGE
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2.1 Agreement and Plan of Merger dated as of August 7, 2002
among Registrant, HEIR Holding Company Inc.
and Scores Acquisition Corp..................................... 8
2.2 Certificate of Merger between HEIR Holding Co. Inc.
and Scores Acquisition Corp. dated August 7, 2002 as filed
with the Delaware Secretary of State on August 13, 2002......... 82
10.1 Convertible Debenture Purchase Agreement dated as of
August 7, 2002 between HEIR Holding Co. Inc. and HEM
Mutual Assurance LLC. .......................................... 84
10.2 Convertible Debenture Purchase Agreement dated as of
August 7, 2002 between Registrant and HEM Mutual
Assurance Fund Limited......................................... 155
10.3 Loan Agreement and Promissory Note dated as of
August 7, 2002 between Registrant and HEM Mutual
Assurance Fund Limited......................................... 297
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