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 June 30, 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 June 30, 2002, the Company had 1,362,256 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.
TABLE OF CONTENTS AND INFORMATION REQUIRED IN REPORT
Part I. Financial Information
- -------
Item 1. Financial Statements (unaudited)
Item 2. Managements Discussion and Analysis or 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
Part 1
ITEM 1: Financial Statements
REGAL ONE CORPORATION
BALANCE SHEETS
June 30, 2002 and December 31, 2001
(See Accountants' Report)
June 30, December 31,
2002 2001
(Unaudited) (Audited)
ASSETS
Current Assets
Cash $ 50,575 $ 4,744
Prepaid expenses 44 176
------------ ------------
50,619 4,920
------------ ------------
Other Assets
Deferred tax asset, net - -
------------ ------------
Total Assets $ 50,619 $ 4,920
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Due to stockholders
and officers $ 176,734 $ 157,184
Accounts payable and
accrued liabilities 133,631 142,374
---------- ----------
Total Current Liabilities 310,365 299,558
---------- ----------
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
1,362,256 and 1,269,716 shares
as of June 30, 2002 and December
31, 2001, respectively 6,111,793 6,036,604
Accumulated deficit (6,372,039) (6,331,742)
----------- -----------
Net Stockholders' Equity
(Deficit) (259,746) (294,638)
----------- -----------
Total Liabilities and Stockholders'
Equity (Deficit) $ 50,619 $ 4,920
======== ========
See the accompanying notes to the Financial Statements.
(format change)
REGAL ONE CORPORATION
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Three Months and Six Months Ended June 30, 2002 and 2001
(See Accountant's Report)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
-----------------------------------------------------
Expenses:
Consulting and outside services $25,958 $ - $25,957 $ -
Professional services 6,126 11,120 12,041 12,758
Other, selling, general and
administrative expenses 2,039 234 2,299 988
Interest expense - 672 - 747
------- ------- ------- ---------
34,123 12,026 40,297 14,493
------- ------- ------- ---------
Loss from Operations (34,123) (12,026) (40,297) (14,493)
-------- -------- -------- ---------
Other Income (Expense) - - - -
-------- -------- -------- ---------
Loss Before Provision for Income
Taxes (34,123) (12,026) (40,297) (14,493)
Income Tax Expenses - - - -
-------- -------- -------- ---------
Net Income (Loss) (34,123) (12,026) (40,297) (14,493)
Other Comprehensive Income - - - -
-------- -------- -------- ---------
Comprehensive (Loss) $(34,123) $(12,026) $(40,297) $(14,493)
========= ========= ========= =========
Basic and Diluted Net Loss per
Common Share $ (.03) $ (.01) $ (.03) $ (.01)
========= ========== ========= =========
Shares Used in Computing Basic
and Diluted per Share Data 1,272,811 1,269,716 1,271,272 1,269,716
========= ========== ========== =========
See the accompanying notes to the Financial Statements.
(format change)
REGAL ONE CORPORATION
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2002 and 2001
(See Accountants' Report)
(Unaudited)
2002 2001
------ ------
Cash flows from operating activities:
Net income (loss) $(40,298) $(14,493)
--------- ---------
Adjustments to reconcile net loss
to net cash used by operating
activities:
Noncash consulting fees - -
Decrease in prepaid expenses 132 -
Expenses paid by stockholders
and officers 19,550 6,181
Increase (Decrease)in accounts payable
and accrued liabilities (8,743) 8,230
-------- --------
Total Adjustments 10,939 14,411
-------- --------
Net cash used by operating
activities (29,358) (82)
-------- --------
Cash Flows from Investing Activities:
Net cash provided by
investing activities - -
-------- --------
Cash flows from financing activities:
Proceeds from sale of stock 75,189 -
-------- --------
Net cash used by
financing activities 75,189 -
-------- --------
Net increase (decrease) in cash 45,831 (82)
Cash at beginning of period 4,744 2,336
-------- --------
Cash at end of period $ 50,575 $ 2,254
======== ========
See the accompanying notes to the Financial Statements.
REGAL ONE CORPORATION
STATEMENTS OF CASH FLOWS (continued)
For the Six Months Ended June 30, 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 not 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
six months ended June 30, 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 June 30, 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.
REGAL ONE CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 3 - STOCKHOLDERS' EQUITY
The following schedule summarizes the changes in the number of shares and stockholders'
equity acounts:
PREFERRED STOCK COMMON STOCK Net
----------------- ------------------ Accumulated Stockholders'
SHARES AMOUNT SHARES AMOUNT Deficit (Deficit)
-----------------------------------------------------------------------
BALANCE December 31,
2001 208,965 $ 500 1,269,716 $ 6,036,604 $ (6,331,742) $(294,638)
Exercise of stock options -- - 92,540 75,189 - 75,189
Net (Loss) -- - -- -- (40,297) (40,297)
--------- -------- --------- ---------- ---------- ---------
BALANCE June 30,
2002 208,965 $ 500 1,362,256 $ 6,111,793 (6,372,039) (259,746)
========= ======== ========== ========== ========== =========
(format change)
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.
Results of Operations
The Company reported no revenues for the six months ending June 30, 2002
and 2001.
Operating expenditures increased from $14,493 in the six months ended
June 30, 2001, to $40,298 in the six months ended June 30, 2002. The
increase of $25,805 is primarily attributable to professional fees
incurred in the second quarter of 2002, of which $25,958 related to due
diligence on issues related to a potential merger.
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.
June 30, 2002 December 31, 2001
Working Capital (deficit) $(259,746) $(294,638)
The Company's financial condition at June 30, 2002, reflects an
immediate inability to meet its short-term obligations. At June 30,
2002, the Company had $50,575 in cash on hand. The liabilities of the
Company at June 30, 2002, aggregated $310,365. 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 689,549 shares of common stock. During
the quarter ended June 30, 2002, 92,540 options were exercised, leaving
2,310,451 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.
Merger Plans
On June 11, 2002, the Company announced in a press release that they had
signed a definitive agreement for the Company 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 subject to
satisfaction of various conditions, including a "one-for-five"
combination or reverse split of its shares, as well as other conditions
regarding the issuance of shares. Although the Company and Lightsport
are highly confident that this transaction will be completed, neither
company can give a guarantee that the aforementioned conditions will be
satisfied.
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. On August 13, 2002, the
Company filed another information statement on Form 14C to extend the
date to December 31, 2002.
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
Exhibit 99.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Regal One Corporation (the
"Company") on Form 10-QSB for the period ending June 30, 2002, as filed
with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Malcolm Currie, Chairman of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and result of operations
of the Company.
/s/ Malcolm Currie
Chairman
Date: August 15, 2002