FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarterly period ended September 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission File No. 0-17843
REGAL ONE CORPORATION
(name of small business issuer in its charter)
FLORIDA 95-4158065
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
551 Driftstone Avenue, Las Vegas, NV 89123
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (702) 897-5331
Check whether the issuer (1) filed all reports required to
be filed by section 13 or 15(d) of the Exchange Act during the
past 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13, or 15(d) of the Exchange
Act after the distribution of Securities under a plan confirmed
by court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable
date: 1,191,217 shares as of January 18, 2000.
REGAL ONE CORPORATION
Form 1O-Q for the quarter ended September 30, 1999
TABLE OF CONTENTS AND INFORMATION REQUIRED IN REPORT
Part I. Financial Information
Item 1. Financial Statements (unaudited):
Balance Sheet as of September 30, 1999
Statements of Operations for the quarter and
nine months ended September 30, 1999
Statements of Cash Flows for the quarter and
nine months ended September 30, 1999
Notes to the Financial Statements
Item 2. Managements Discussion and Analysis of Plan of
Operation
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security
holders
Item 5. Other Information
Item 6. Exhibits and reports on form 8-K
SIGNATURES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
REGAL ONE CORPORATION
Balance Sheet
(Unaudited)
September 30, 1999
ASSETS
Cash $ 151
___________
Total Assets $ 151
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts Payable and accrued expenses $ 161,801
Due to Officer and Shareholders 84,160
___________
Total Liabilities $ 245,961
Stockholders' Equity (Deficit):
Preferred Stock; $.01 par value, authorized
50,000,000 shares; Series A Preferred
Stock; No shares Issued and Outstanding -0-
Series B Preferred Stock
Issued and Outstanding 208,965 shares 500
Common Stock; no par value, authorized
50,000,000 shares; Issued and
Outstanding 1,191,217 shares 5,941,113
Accumulated Deficit ( 6,187,423)
-----------
Total Stockholders' Equity (Deficit) ( 245,810)
Total Liabilities and Stockholders' ___________
Equity (Deficit) $ 151
See accompanying Notes to Financial Statements
REGAL ONE CORPORATION
Statement of Operations
(Unaudited)
For the Quarter ended For the Nine Months ended
September 30 September 30
1999 1998 1999 1998
---- ---- ---- ----
Revenues $ 0 $ 0 $ 0 $ 0
Operating Expenses:
General and Administrative 23,644 48,484 59,184 97,699
expenses ---------- --------- ---------- ---------
Loss From Operations (23,644) (48,484) (59,184) (97,699)
Other Income (expense): 0 0 0 25,000
---------- --------- ---------- ---------
Income (Loss) Before income taxes (23,644) (48,484) (59,184) (72,699)
Provision for Income Taxes 0 0 0 0
---------- --------- ---------- ---------
Net Income (Loss) $ (23,644) $ (48,484) $ (59,184) $ (72,699)
========== ========= ========== =========
Net Income (Loss) per share $ (0.02) $ (0.04) $ (0.05) $ (0.06)
========== ========= ========== =========
Weighted average common and
common equivalent shares outstanding 1,191,217 1,196,875 1,191,217 1,196,875
See accompanying Notes to Financial Statements
REGAL ONE CORPORATION
Statement of Cash Flows
(Unaudited)
For the Nine Months ended
September 30
1999 1998
Cash flows from operating activities:
Net Loss $ (59,184) $ (72,699)
Adjustments to reconcile net loss to net cash
used by operating activities:
Increase (Decrease) in accounts payable 23,017 27,204
and accrued expenses
Increase in due to Officer 31,500 45,475
---------- ----------
Total Adjustments 54,517 72,679
---------- ----------
Net cash used by operating activities (4,667) (20)
Cash flows from investing activities:
Net cash provided by investing activities 0 0
Cash flows from financing activities:
Net cash used by financing activities 0 0
---------- ----------
Net Increase (Decrease) in cash (4,667) (20)
Cash at beginning of period 4,818 55
---------- ----------
Cash at end of period 151 35
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for
Income taxes $ 0 $ 0
Interest $ 0 $ 0
See accompanying Notes to Financial Statements
REGAL ONE CORPORATION
Notes to the financial Statements
(Unaudited)
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
General and Background
Regal One Corporation (the "Company") is a Florida
corporation originally incorporated as Electro-Mechanical
Services, Inc. ("EMS") in 1959. In 1974, Mr. Israel Rubinstein,
currently the President, a director and a shareholder of the
Company, acquired the Company, then named EMS, which at the time
had no operations. Pursuant to the merger agreement, Mr.
Rubinstein transferred the assets of Regal Muffler Centers, a
franchise network of over 100 muffler shops that he founded in
1972 and solely owned, into EMS. In March of 1975, EMS amended
its certificate of incorporation and changed its name to Regal
International Holding Co., Inc. In 1976, the Company sold
substantially all of its assets, but Mr. Rubinstein retained
control of the Company. In June 1988, after merging with its
wholly owned Nevada Subsidiary, Regal One Corporation, the
Company changed its name to Regal One Corporation, but remained a
Florida entity.
From 1987 to 1992, the Company was engaged in the
acquisition and holding of real estate, primarily in the Western
United States. Until the end of 1992, the Company assets
consisted primary of irrevocable options to acquire the real
estate in exchange for shares of the Company's common stock.
Generally, the Company would issue to the Seller of the property
shares of its common stock with a fair value equal to the value
of the real estate on the date of the agreement.
During 1992, due to the protracted depressed national real
estate market, the Company decided to abandon its real estate
operations and pursue opportunities in the pharmaceutical and
health fields.
Xechem, Inc.
In January, 1993, the Company executed an agreement to
acquire Xechem, Inc. The total costs incurred by the Company
relating to the proposed investment in Xechem were approximately
$1,012,000. On January 14, 1994, the agreement with Xechem was
canceled and a settlement agreement was entered into whereby the
Company received 60,000 shares of common stock of Xechem,
$250,000 in cash and the satisfaction of $131,000 of liabilities
at no cost to the Company. Accordingly, based on this settlement
agreement, the net realizable cost of the Xechem investment was
adjusted down to the estimated fair value of $150,000, resulting
in a loss of $142,645 in 1994. The Company then sold 20,000
shares of Xechem (one third of its investment) for $50,000. In
1995, the Company distributed the remaining 40,000 shares of
Xechem common stock to consultants or advisors of the Company for
services provided to the Company.
Carbonex Systems Corporation
In August, 1995, the Company acquired in a reverse
acquisition all of the issued and outstanding shares of common
stock of Carbonex Systems Corporation ("Carbonex"), a development
stage Delaware Corporation, owning certain exclusive rights to a
proprietary emission reduction system for internal combustion
engines. To effect the acquisition, the Company issued a total
of 464,000 shares of 8.75% convertible, participating voting
Series B Preferred Stock (the "Preferred Stock"). Each share of
Preferred Stock is convertible into 100 shares of common stock
and has 100 votes for each vote allowed to a share of common
stock.
In June, 1996, the Company entered into a Stock Exchange
Settlement Agreement and General Release whereby the Company
exchanged all of the issued and outstanding shares of common
stock of Carbonex for 255,035 shares of Series B Preferred Stock
owned by Gene Bemel and certain members of his family. As part
of the agreement, the Company assumed certain specified accounts
payable totaling approximately $61,000. The net impact of this
transaction was a gain on sale of $295,803, primarily due to the
forgiveness of debt and accrued interest payable. As a result of
this transaction, the Company has issued and outstanding 208,965
shares of Series B Preferred Stock.
Quality Franchise Systems, Inc.
In November, 1996, the Company executed a Letter of Intent
to acquire all of the issued and outstanding stock of Quality
Franchise Systems, Inc. However, a final agreement was never
completed, and the Company is no longer pursuing this
acquisition.
Safesight, Inc.
In July, 1997, the Company announced the acquisition of
Safesight, Inc., a development-stage company engaged in the
design of vehicle anti-collision warning products for the
automobile, commercial vehicle, recreational vehicle and
motorcycle markets. In August, 1997, the parties elected not to
proceed with this transaction because of the parties' inability
to obtain adequate funding for operations.
Current Operations
In April, 1998, the Company entered into an agreement to
merge a newly formed subsidiary of the Company with Infectech,
Inc. ("Infectech"). Infectech, founded In 1989, is a
development-stage biotechnology company which owns 15 patents for
the rapid identification and antibiotic sensitivity testing of 34
disease-causing bacteria.
On August 5, 1998, the Company announced that Infectech,
Inc. had unilaterally acted to terminate the merger agreement
between the two parties. Infectech stated as its reason that it
had not been successful in raising the requisite $300,000 prior
to June 30, 1998. Infectech further notified the Company that it
proposed to arbitrate the return of $56,000 paid by Infectech for
legal fees and certain other merger-related expenses of the
Company, as per the merger agreement. On November 18, 1998, the
Company and Infectech, Inc. resolved the matter subject to
arbitration, with the Company issuing 10,000 shares of restricted
common stock to Infectech, Inc. on November 24, 1998.
Basis of Presentation
The unaudited financial statements presented herein have
been prepared by the Company, without audit, pursuant to the
rules and regulations for interim financial information and the
instruction to Form 10-QSB and Regulation S-B. Accordingly,
certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally
accepted accounting principals have been omitted. These
unaudited financial statements should be read in conjunction with
the financial statement and notes thereto included in the
Company's Annual Report Form 10-KSB for the fiscal year ended
December 31, 1998. In the opinion of management, the unaudited
financial statements reflect all adjustments (consisting of
normal recurring accruals only) which are necessary to present
fairly the financial position, results of operation, and changes
in cash flows of the Company. Operating results for the interim
periods are not necessarily indicative of the results which may
be expected for the entire year.
Income Taxes
The Company did not provide for income taxes in the
accompanying interim financial statements since the Company does
not anticipate generating taxable income for the full year.
Net Income (Loss) Per Share Computation
Net Income (Loss) per share is based on the weighted average
number of common stock for all periods presented. The
outstanding preferred stock and common stock warrants are not
considered in the calculations because they are anti-dilusive.
NOTE 2 - GOING CONCERN AND MANAGEMENT'S PLAN
For the fiscal year ended December 31, 1998, the independent
auditors report included an explanatory paragraph calling
attention to a going concern issue. The Company has suffered
recurring losses from operations and at September 30, 1999,
continues to have an accumulated deficit. The accompanying
financial statements have also been prepared contemplating
continuation of the Company as a going concern, which is
dependent upon the Company obtaining additional financing to
satisfy the operating needs of the Company and/or completing a
successful merger.
NOTE 3 - STOCK OPTION PLAN
The Company has a stock option plan for its employees,
directors, officers, and consultants or advisors of the Company.
In May 1995, 3,000,000 shares were registered on Form S-8 for
this plan.
Managements Discussion and Analysis of Plan of Operation
The following discussion should be read in conjunction with
the Company's financial statements and notes thereto included
elsewhere in this Form 10-QSB report. In addition, the
discussion of the Company's expected plan of operation included
in the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998, is incorporated herein in its entirety
as the discussion of the Plan of Operation as required by Item
303(a) Regulation SB.
Plan of Operation
The Company was incorporated in 1959 in Florida. Since that
time, the Company has owned and operated, and subsequently sold
off, a number of businesses. During 1987, the Company pursued a
policy of using its common stock to purchase, either in fee
simple or as an irrevocable option to purchase, a number of
parcels of real estate, in the form of commercial, industrial,
residential and development stage land parcels. In 1992, market
conditions for real estate were no longer deemed to be favorable
and the Company decided to abandon its real estate operations and
pursue other courses of operation.
In January, 1993, the Company agreed to acquire Xechem,
Inc., a development-stage company engaged in the research and
development of pharmaceuticals from plants and other naturally-
occurring sources. However, the transaction was terminated in
January, 1994 pursuant to a settlement agreement.
In August, 1995, the Company acquired all of the issued and
outstanding common stock of Carbonex Systems Corporation
("Carbonex"). In June, 1996, the Company entered into a Stock
Exchange, Settlement Agreement and General Release whereby the
Company exchanged with its then-principal shareholders, Gene
Bemel and members of his family, all of the issued and
outstanding common stock of Carbonex for 255,035 shares of Series
B Preferred Stock of the Company.
In November, 1996, the Company executed a Letter of Intent
to acquire all of the issued and outstanding stock of Quality
Franchise Systems, Inc. However a final agreement was never
completed and the Company is no longer pursing this acquisition.
In July, 1997, the Company announced the acquisition of
Safesight, Inc., a development-stage company engaged in the
design of vehicle anti-collision warning products. However, in
August, 1997, the parties elected not to proceed with the
transaction because of the inability to obtain adequate funding
for operations.
In April, 1998, the Company entered into an agreement to
merge a newly-formed subsidiary of the Company with Infectech,
Inc. Infectech, Inc., founded in 1989, is a development-stage
biotechnology company which owns 15 patents for the rapid
identification and antibiotic sensitivity testing of 34
disease-causing bacteria. However, in August, 1998, the merger
agreement was terminated. (See Note 1, "Organization and
Significant Accounting Policies").
Liquidity and Capital Resources - September 30, 1999 Compared to
December 31, 1998
During the prior year and current quarter, the Company had
continuing losses from operations. There can be no assurances
that the Company will be able to secure long-term borrowings with
which to finance its future operations. The Company does not
currently have any established bank lines of credit. The
Company's lack of liquidity is reflected in the table below,
which shows comparative working capital (current assets less
current liabilities) which is an important measure of the
Company's ability to meet its short-term obligations.
September 30, 1999 December 31, 1998
Working Capital
(deficit) $ (245,961) $ (187,151)
The Company's financial condition at September 30, 1999
reflects an immediate inability to meet its short-term
obligations. At September 30, 1999, the Company had $151 cash on
hand. The liabilities of the Company at September 30, 1999
aggregated $245,961, consisting primarily of accounts payable to
accountants, lawyers and other service providers. Accounts
payable are due and in default, and it is possible that persons
to whom these obligations are due may seek to collect the amounts
due them.
Since April, 1998, the Company has relied primarily on
Infectech for the infusion of cash to fund basic operations,
principally fees due to accountants and lawyers. However, in
August, 1998, the merger agreement with Infectech was terminated.
(See Note 1, "Organization and Significant Accounting Policies").
The Company Stock Option Plan is for its employees,
directors, officers, and consultants or advisors of the Company.
In May, 1995, the Company filed a registration statement on Form
S-8 covering 3,000,000 shares of common stock for this Plan.
Since May, 1995, holders have exercised options to purchase
548,506 shares of common stock. No options were exercised during
the quarter ended September 30, 1999, leaving 2,451,494 yet
available, with an amended expiration date of December 31, 2000.
(See the Company's 14c, filed April 8, 1998).
Capital Expenditures and Commitments
During the quarter ended September 30, 1999, the Company had
no capital expenditures. In the near term, the Company believes
its capital expenditures will principally be expended for office
equipment. The amount of such additional capital required is
uncertain, and may be beyond that generated from future
operations. There can be no assurance that the Company will be
able to obtain any such capital or a merger acquisition candidate
on satisfactory terms.
Results of Operations - The quarter and nine months ended
September 30, 1999 compared to the quarter and nine months ended
September 30, 1998.
The Company reported no revenues for the quarters and nine
months ended September 30, 1999 and 1998. During the quarter and
nine months ended September 30, 1999, operating expenses were
$23,644 and $59,184, respectively, as compared to $48,484 and
$97,699, respectively, for the quarter and nine months ended
September 30, 1998 (consisting primarily of professional fees,
consulting fees and amounts due to an officer and shareholder).
During the nine months ended September 30, 1998, the Company had
other income of $25,000 from expenses paid by Infectech, Inc.
(see Note 1). As a result, the quarter and nine months ended
September 30, 1999, had net losses of $23,644 and $59,184,
respectively, as compared to net losses of $48,484 and $72,699,
respectively, for the quarter and nine months ended September 30,
1998.
Year 2000 Issues
Because many computer systems use only two digits to record
the year in date fields, such systems may not be able to
accurately process dates including the year 2000 and after. The
effects of this problem will vary from system to system and may
adversely affect a company's operations as well as the ability to
prepare financial statements. In order to determine the impact
that Year 2000 issues have on the Company, management has
undertaken a complete assessment of all systems potentially
affected by Year 2000 issues and has addressed the potential
consequences, if any, that its Year 2000 issues would have on its
business, results of operations, and financial condition. The
Company's assessment of its Year 2000 issues includes addressing
whether third parties with whom the Company has a material
relationship are Year 2000 compliant.
The Company has completed an evaluation of its Year 2000
issues and assessed third party issues. Since the Company
currently has no operations and is not reliant on internal
computer systems for any matters, management believes that the
impact of Year 2000 issues will have an immaterial effect, if any
at all, on its business, results of operations, and financial
condition.
Factors that may affect future results
A number of uncertainties exist that may affect the
Company's future operating results, including the possibility of
uncertain general economic conditions, market acceptance of the
Company's planned future operations, the Company's ability to
manage expense growth and the ability to acquire long-term
funding (including costs of the Infectech merger).
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not aware of any litigation either pending,
asserted, unasserted, or threatened.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
None.
A copy of any of the exhibits listed or referred to above
will be furnished at a reasonable cost to any person who was a
shareholder of the Company on September 30, 1999, upon receipt
from any such person of written request for any such exhibit.
Such request should be sent to the Company with the attention
directed to the Corporate Secretary.
Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
Dated: January 21, 2000
REGAL ONE CORPORATION
(Registrant)
By: /s/ Israel Rubinstein
Israel Rubinstein, President