SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended March 31, 2002
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________to____________
Commission File Number: 0-17843
REGAL ONE CORPORATION
(name of small business issuer as specified in its charter)
Florida 95-4158065
(State or other jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
C/O Christopher H. Dietrich, Attorney at Law
11300 W. Olympic Blvd., Suite 800
Los Angeles, California 90064
(Address of Principal Executive Offices)
(310) 312-6888
(Issuer's telephone number)
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 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 [ ]
As of March 31, 2002, the Company had 1,269,716 shares of common
stock issued and outstanding and 208,965 shares of convertible
preferred stock issued and outstanding, each of which is
convertible into 100 shares of the Company's common stock.
Part 1
ITEM 1: Financial Statements
REGAL ONE CORPORATION
FINANCIAL STATEMENTS
MARCH 31, 2002
Independent Accountant's Report
We have reviewed the accompanying balance sheet and the
related statements of operations and cash flows of Regal One
Corporation as of March 31, 2002, and for the three month periods
then ended. These financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data
and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with auditing standards generally
accepted in the United States, the objective of which is the
expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying financial
statements for them to be in conformity with accounting
principles generally accepted in the United States.
As discussed in Note 2, certain conditions indicate that the
Company may be unable to continue as a going concern. The
accompanying financial statements do not include any adjustments
to the financial statements that might be necessary should the
Company be unable to continue as a going concern.
May 14, 2002
Reno, Nevada
REGAL ONE CORPORATION
BALANCE SHEETS
March 31, 2002 and December 31, 2001
(See Accountants' Report)
March 31, December 31,
2002 2001
(Unaudited) (Audited)
ASSETS
Current Assets
Cash $ 3,029 $ 4,744
Prepaid expenses 110 176
------------ ------------
3,139 4,920
------------ ------------
Other Assets
Deferred tax asset, net - -
------------ ------------
Total Assets $ 3,139 $ 4,920
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Due to stockholders
and officers $ 170,216 $ 157,184
Accounts payable and
accrued liabilities 133,736 142,374
---------- ----------
Total Current Liabilities 303,952 299,558
---------- ----------
Stockholders' Equity (Deficit)
Preferred stock, no par value.
Authorized 50,000,000 shares;
issued and outstanding
208,965 shares in 2002 and 2001 500 500
Common stock, no par value.
Authorized 50,000,000 shares;
issued and outstanding
1,269,716 shares in
2002 and 2001 6,036,604 6,036,604
Accumulated deficit (6,337,917) (6,331,742)
----------- -----------
Net Stockholders' Equity
(Deficit) (300,813) (294,638)
----------- -----------
Total Liabilities and Stockholders'
Equity (Deficit) $ 3,139 $ 4,920
======== ========
See the accompanying notes to the Financial Statements.
REGAL ONE CORPORATION
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Quarters Ended March 31, 2002 and 2001
(See Accountants' Report)
(Unaudited)
2002 2001
-------- --------
Expenses:
Consulting and outside services $ - $ -
Professional services 5,915 2,188
Other, selling, general
and administrative expenses 260 204
-------- --------
6,175 2,392
-------- --------
Loss from Operations (6,175) (2,392)
-------- --------
Other Income (Expense) - (75)
-------- --------
Loss Before Provision for Income Taxes (6,175) (2,467)
Income Tax Expenses - -
-------- --------
Net Income (Loss) (6,175) (2,467)
Other Comprehensive Income - -
-------- --------
Comprehensive (Loss) $ (6,175) $ (2,467)
======== ========
Basic and Diluted Net Loss
per Common Share $ (.004) $ (.002)
======== ========
Shares Used in Computing Basic
and Diluted per Share Data $1,269,716 1,269,716
========= =========
See the accompanying notes to the Financial Statements.
REGAL ONE CORPORATION
STATEMENTS OF CASH FLOWS
For the Quarters Ended March 31, 2002 and 2001
(See Accountants' Report)
(Unaudited)
2002 2001
------ ------
Cash flows from operating activities:
Net income (loss) $ (6,175) $ (2,467)
--------- ---------
Adjustments to reconcile net loss
to net cash used by operating
activities:
Noncash consulting fees - -
Decrease in prepaid expenses 66 -
Expenses paid by stockholders
and officers 13,032 4,659
Increase (Decrease)in accounts payable
and accrued liabilities (8,638) (2,237)
-------- --------
Total Adjustments 4,460 2,422
-------- --------
Net cash used by operating
activities (1,715) (45)
Cash Flows from Investing Activities:
Net cash provided by
investing activities - -
Cash flows from financing activities:
Net cash used by
financing activities - -
-------- --------
Net increase (decrease) in cash (1,715) (45)
Cash at beginning of period 4,744 2,336
-------- --------
Cash at end of period $ 3,029 $ 2,291
======== ========
See the accompanying notes to the Financial Statements.
REGAL ONE CORPORATION
STATEMENTS OF CASH FLOWS (continued)
For the Quarters Ended March 31, 2002 and 2001
(See Accountants' Report)
(Unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
2002 2001
------ ------
Cash paid during the quarter
for interest $ - $ -
========== =========
Cash paid during the quarter
for income taxes $ - $ -
========== =========
See the accompanying notes to the Financial Statements.
REGAL ONE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Business
Regal One Corporation (the "Company") located in Las Vegas,
Nevada, is a Florida corporation originally incorporated as
Electro-Mechanical Services, Inc., in 1959 in Florida. The
Company has been involved in a variety of industries including
automobile mufflers, real estate, and the pharmaceutical and
health fields. The Company is currently no in formal business
operations, but is actively seeking a merger candidate.
Basis of Presentation
The accompanying unaudited financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States for interim financial information
and the instructions for Form 10- QSB and Regulation S-B.
Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in
the United States for complete financial statements. All
adjustments that, in the opinion of management, are necessary for
a fair presentation of the results of operations for the interim
periods have been made and are of a recurring nature unless
otherwise disclosed herein. The results of operations for the
quarter ended March 31, 2002, are not necessarily indicative of
the results that will be realized for a full year. For further
information, refer to the financial statements and notes thereto
contained in the Company's Annual Report on Form 10-KSB for the
year ending December 31, 2001.
NOTE 2 - GOING CONCERN
For the fiscal year ended December 31, 2001, 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 March 31, 2002, 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The Company is currently not in formal business operations, but
is actively seeking a merger candidate. The Company has not
generated significant revenue during the last several years, and
has funded its operation primarily through the issuance of
additional debt and equity financing. Accordingly, the Company's
ability to accomplish its business strategy and to ultimately
achieve profitable operations is dependent upon its ability to
obtain additional debt or equity financing, or to merge with a
going concern company. The Company is currently exploring a
merger option and has signed a letter of intent subsequent to
March 31, 2002.
Results of Operations
The Company reported no revenues for the quarters ending March
31, 2002 and 2001.
Operating expenditures increased from $2,392 in the quarter ended
March 31, 2001, to $6,175 in the quarter ended March 31, 2002.
The increase of $3,783 is primarily attributable to professional
fees incurred in the first quarter of 2001 of $5,850 for fees
applicable to the audit of the December 31, 2001 financial
statements.
Liquidity and Capital Resources
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.
March 31, 2002 December 31, 2001
Working Capital (deficit) $(300,813) $(294,638)
The Company's financial condition at March 31, 2002, reflects an
immediate inability to meet its short-term obligations. At March
31, 2002, the Company had $3,029 in cash on hand. The
liabilities of the Company at March 31, 2002, aggregated
$303,952. Certain accounts payable are past due, and it is
possible that the persons to whom these obligations are due may
seek to collect the amounts due them.
Stock Option Plan
The Company's Stock Option Plan (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
597,009 shares of common stock. No options were exercised during
the quarter ended March 31, 2002, leaving 2,402,991 yet
available, with an amended expiration date of July 1, 2002. (See
the Company's 14c, filed March 28, 2002)
Cautionary Statements Regarding Forward-Looking Statements
Certain statements contained in this Form 10-QSB regarding
matters that are not historical facts are forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements
involve risks and uncertainties, and actual results may differ
materially from those expressed or implied by such
forward-looking statements. All statements that address
operating performance, liquidity issues, or events or
developments that management expects or anticipates to occur in
the future are forward-looking statements. The forward-looking
statements are based on management's current views and
assumptions regarding future events and operating performance.
Many factors could cause actual results to differ materially from
estimates contained in management's forward-looking statements.
Some of these factors are adverse economic conditions, inadequate
capital, availability of alternative financing resources,
unexpected costs, and the Company's ability to manage its
recurring losses and shareholders' deficit.
Subsequent Events
On May 2, 2002, the Company signed a letter of intent to acquire
all of Lightsport Products, Inc., a privately held company
founded by David Galoob, formerly Chairman of NYSE listed Galoob
Toys. When it was acquired by Hasbro in 1998, Galoob Toys was
one of the largest toy companies in the world. The closing of
the transaction is contingent on the negotiation and execution of
definitive acquisition agreements, completion of due diligence,
restructuring of the Company's capital structure, and certain
shareholder, regulatory and other conditions. The parties to the
letter of intent can give no assurance that these conditions will
be satisfied or that the transaction will be completed.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security
Holders
On March 28, 2002, the Company filed an information
statement on Form 14C which amended the expiration date of the
Company's Stock Option Plan to July 1, 2002. This amendment was
approved by the vote of the majority of the stockholders of the
Company.
Item 5. Other Information
On May 2, 2002, the Company signed a letter of intent to
acquire all of Lightsport Products, Inc., a privately held
company founded by David Galoob, formerly Chairman of NYSE listed
Galoob Toys. When it was acquired by Hasbro in 1998, Galoob Toys
was one of the largest toy companies in the world. The closing
of the transaction is contingent on the negotiation and execution
of definitive acquisition agreements, completion of due
diligence, restructuring of the Company's capital structure, and
certain shareholder, regulatory and other conditions. The
parties to the letter of intent can give no assurance that these
conditions will be satisfied or that the transaction will be
completed.
Item 6. Exhibits and Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
REGAL ONE CORPORATION
(Registrant)
Date: May 14, 2002 /s/ Malcolm Currie
Malcolm Currie, Chairman