================================================================================
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 September 30, 2000.
or
[ ] 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. 000-26687
THE REGENCY GROUP, LIMITED
(Exact Name of Registrant as Specified in Its Charter)
Nevada 88-0429812
(State or Other Jurisdiction of Incorporation (I.R.S. Employer
or Organization) Identification Number)
8930 E. Raintree Drive
Suite 100
Scottsdale, Arizona 85260
(Address of Principal Executive Offices) (Zip Code)
480-444-2014
(The Registrant's Telephone Number, Including Area Code)
Former Name, Former Address and Former Year, If Changed Since Last Report:
Former Year - December 31, 1999
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) if the Securities Exchange Act of
1934 during the preceding 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 [ ]
As of November 17, 2000, the registrant had 28,306,500 shares of common
stock outstanding.
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<PAGE>
THE REGENCY GROUP, LIMITED
QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30, 2000
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
PAGE
----
Item 1 Financial Statements - Unaudited:
* Balance Sheets as of September 30, 2000 and June 30, 2000......... 3
* Statements of Operations for the three months ended
September 30, 2000 and 1999....................................... 5
* Statements of Changes in Stockholders' Equity for the six
month transition period June 30, 2000 and for the three
month period ended September 30, 2000............................. 6
* Statements of Cash Flows for the three months ended
September 30, 2000 and 1999....................................... 7
* Notes to Financial Statements..................................... 8
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................ 12
PART II - OTHER INFORMATION
Item 1 Legal Proceedings.................................................... 14
Item 2 Changes in Securities and Use of Proceeds............................ 14
Item 3 Submission of Matters to a Vote of Security Holders.................. 14
Item 4 Other Information.................................................... 14
Item 5 Exhibits, Financial Statement Schedules and Reports on Form 8-K...... 14
Signatures.................................................................. 15
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<PAGE>
PART I
ITEM 1. FINANCIAL INFORMATION
REGENCY GROUP LIMITED, INC. AND SUBSIDIARY
BALANCE SHEETS
SEPTEMBER 30, JUNE 30,
2000 2000
---------- ----------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 48,706 $ 122,685
Accounts receivable 473,996 --
Inventory 112,519 --
Notes receivable-current portion 221,145 --
Other current assets 1,584 43,921
---------- ----------
TOTAL CURRENT ASSETS 857,950 166,606
---------- ----------
PROPERTY AND EQUIPMENT, NET 107,890 11,323
WEBSITE DEVELOPMENT, NET 31,714 --
OTHER ASSETS:
Notes receivable
-long-term portion 322,305 300,000
-related party-long-term portion 92,463 78,463
Investment-at cost 775,000 775,000
Investment-at equity 325,311 375,502
Goodwill 1,190,272 --
---------- ----------
2,705,351 1,528,965
---------- ----------
TOTAL ASSETS $3,702,905 $1,706,894
========== ==========
The Accompanying Notes are an Integral Part
of the Financial Statements
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<PAGE>
REGENCY GROUP LIMITED, INC. AND SUBSIDIARY
BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
2000 2000
----------- -----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 329,875 $ --
Notes payable
- current portion 253,900 --
- related parties 527,584 350,000
Accrued payroll 14,582 --
Interest payable 13,455 --
Accrued liabilities 5,767 4,800
Capital lease-current portion 3,327 --
----------- -----------
TOTAL CURRENT LIABILITIES 1,148,490 354,800
CAPITAL LEASE -- LONG-TERM 11,653 --
----------- -----------
TOTAL LIABILITIES 1,160,143 354,800
----------- -----------
STOCKHOLDERS' EQUITY:
Convertible preferred stock, $.001 par value, 5,000,000
shares authorized
- Series A, 15,500 shares issued and outstanding
at September 30, 2000 and June 30, 2000 15 15
- Series B, 2,500,000 and 0 shares issued
and outstanding at September 30, 2000
and June 30, 2000, respectively 2,500 --
Common stock, $.001 par value, 50,000,000 shares authorized,
28,306,500 and 23,306,500 shares issued and outstanding at
September 30, 2000 and June 30, 2000, respectively 28,307 23,307
Additional paid-in capital 3,215,928 1,723,428
Accumulated deficit (703,988) (394,656)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 2,542,762 1,352,094
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,702,905 $ 1,706,894
=========== ===========
</TABLE>
The Accompanying Notes are an Integral Part
of the Financial Statements
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<PAGE>
REGENCY GROUP LIMITED, INC. AND SUBSIDIARY
STATEMENTS OF OPERATIONS
THREE MONTH ENDED
SEPTEMBER 30,
------------------------------
2000 1999
------------ ------------
(UNAUDITED) (UNAUDITED)
REVENUES $ 773,987 $ --
COST OF REVENUES 718,503 --
------------ ------------
GROSS PROFIT 55,484 --
GENERAL AND ADMINISTRATIVE EXPENSES 306,652 40,419
------------ ------------
NET LOSS FROM OPERATIONS (251,168) (40,419)
------------ ------------
OTHER INCOME (EXPENSE):
Other income 7,177 2,666
Interest expense (15,150) --
Equity in loss of minority interest investment (50,191) --
------------ ------------
TOTAL OTHER INCOME (EXPENSE) (58,164) 2,666
------------ ------------
NET LOSS $ (309,332) $ (37,753)
============ ============
BASIC LOSS PER COMMON SHARE $ (0.01) $ (0.01)
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 27,811,995 4,618,750
============ ============
The Accompanying Notes are an Integral Part
of the Financial Statement
-5-
<PAGE>
REGENCY GROUP LIMITED, INC. AND SUBSIDIARY
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTH TRANSITION PERIOD ENDED JUNE 30, 2000 AND
FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED STOCK
------------------------------------
SERIES A SERIES B COMMON STOCK ADDITIONAL
--------------- ------------------ ---------------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ ------ --------- ------ ----------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 -- $ -- -- $ -- 4,618,750 $ 4,619 $ 123,131 4,619 $ (8,418)
Stock Split -- -- -- -- 41,568,750 41,569 (41,569) -- --
Private placement of
common stock -- -- -- -- 1,619,000 1,619 1,617,381 -- 1,619,000
Conversion of common stock
to preferred stock 15,500 15 -- -- (24,500,000) (24,500) 24,485 -- --
Net loss, transition period
ended June 30, 2000 -- -- -- -- -- -- -- (258,488) (258,488)
------ ------ --------- ------ ----------- -------- ---------- --------- ----------
Balance at June 30, 2000 15,500 15 -- -- 23,306,500 23,307 1,723,428 (394,656) 1,352,094
Stock issued in connection
with acquisition 2,500 3 -- -- 5,000,000 5,000 1,494,997 -- 1,500,000
Recapitalization of
preferred stock in
relation to the
acquisition (2,500) (3) 2,500,000 2,500 -- -- (2,497) -- --
Net loss, for the three
month period ended
September 30, 2000 -- -- -- -- -- -- -- (309,332) (309,332)
------ ------ --------- ------ ----------- -------- ---------- --------- ----------
Balance at September 30, 2000 15,500 $ 15 2,500,000 $2,500 28,306,500 $ 28,307 $3,215,928 $(703,988) $2,542,762
====== ====== ========= ====== =========== ======== ========== ========= ==========
</TABLE>
The Accompanying Notes are an Integral Part
of the Financial Statements
-6-
<PAGE>
REGENCY GROUP LIMITED, INC. AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------
2000 1999
----------- -----------
(UNAUDITED) (UNAUDITED)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (309,332) $ (37,753)
Net adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 44,207 257
Loss on minority interest investment 50,191 --
Net changes in assets and liabilities 349,039 --
----------- -----------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 134,105 (37,496)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Disbursements for note payable (243,450) --
Purchase of website development (18,617) --
Purchase of property and equipment (92,095) --
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (354,162) --
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt-related parties 91,484 --
Proceeds from capital lease 14,980 --
Proceeds from issuance of stock 39,614 --
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 146,078 --
----------- -----------
Net change in cash and cash equivalents (73,979) (37,496)
----------- -----------
Cash and cash equivalents at beginning of period 122,685 45,686
----------- -----------
Cash and cash equivalents at end of period $ 48,706 $ 8,190
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 6,495 $ --
=========== ===========
Noncash investing and financing activities:
Goodwill created in acquisition $ 1,229,460 $ --
=========== ===========
Debt acquired in acquisition $ 340,000 $ --
=========== ===========
Property and equipment acquired in acquisition $ 22,588 $ --
=========== ===========
Net operating assets acquired in acquisition $ 208,338 $ --
=========== ===========
Loss on minority interest investment $ 50,191 $ --
=========== ===========
The Accompanying Notes are an Integral Part
of the Financial Statements
-7-
<PAGE>
REGENCY GROUP LIMITED, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
--------------------------------------------------------------------------------
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
--------------------------------------------------------------------------------
BASIS OF PRESENTATION AND INTERIM FINANCIAL STATEMENTS:
The accompanying financial statements of Regency Group Limited, Inc. and
Subsidiary (the "Company") have been prepared in accordance with generally
accepted accounting principles ("GAAP"), pursuant to the rules and regulations
of the Securities and Exchange Commission, and are unaudited. Accordingly, they
do not include all the information and footnotes required by GAAP for complete
financial statements. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary for a fair presentation of
the results for the interim periods presented have been made. The results for
the three-month period ended September 30, 2000 may not be indicative of the
results for the entire year. These financial statements should be read in
conjunction with the Company's Annual Report on Form 10-KSB for the fiscal year
ended June 30, 2000.
FISCAL YEAR END CHANGE:
On July 10, 2000, the Company elected to change its fiscal year ended December
31, to a fiscal year ended June 30, effective June 30, 2000. The six-month
transition period ended June 30, 2000, bridges the gap between the Company's old
and new fiscal year ends.
INVESTMENTS:
Investments in unconsolidated subsidiaries, jointly owned companies, and other
investees in which the company has approximately 20% to 50% interest or
otherwise exercises significant influence are carried at cost, adjusted for the
company's proportionate share of their undistributed earnings or losses. This is
known as the equity method. Investment in companies in which the Company has
less than a 20% interest are carried at the lower of cost or market. Market is
determined by management's best estimate. Dividends, if any, received from those
companies will be included in other income. Dividends are currently not expected
to be realized under the cost or equity method. During the three-month period
ended September 30, 2000, the Company's percentage of ownership in
ClickIncomes.com was diluted from 25% to approximately a 19.8% interest. The
investment is still accounted for under the equity method.
SOFTWARE DEVELOPMENT COSTS:
The Company capitalizes software development costs in accordance with Statement
of Position No. 98-1, "Accounting for Costs of Computer Software Developed or
Obtained for Internal Use." Capitalization of software development costs begins
when the preliminary project stage is completed and management authorizes and
commits to funding the computer software project and it is probable that the
project will be completed and the software will be used to perform the function
intended. Upgrades and enhancements that result in additional functionality are
capitalized as incurred. The Company periodically reviews the carrying value of
software development costs. Impairments, if any, will be recognized when the
asset is not expected to provide any future service potential to the Company.
Amortization of capitalized software development costs begins when all
substantial testing is complete, and the computer software is ready for its
intended use or sale. Software development costs are amortized using the
straight-line method with a useful life of five years, which represents the
remaining estimated economic life of the computer software.
-8-
<PAGE>
REGENCY GROUP LIMITED, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
--------------------------------------------------------------------------------
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(CONTINUED)
--------------------------------------------------------------------------------
GOODWILL:
Goodwill represents the excess of the purchase price over the fair value of the
net assets acquired in the e-River Marketing Services, Inc. acquisition, which
occured on July 10, 2000. Goodwill is amortized on a straight-line basis over a
seven-year period. The Company periodically reviews the carrying value of
intangible assets and impairments, if any, will be recognized when the expected
future operating cash flows derived from the intangibles are less than the
carrying value. Amortization expense for the three-month period ended September
30, 2000, totaled $39,188.
NET LOSS PER SHARE:
Basic net loss per common share is computed based on weighted average shares
outstanding and excludes any potential dilution from stock options, warrants or
other common stock equivalents. Basic net loss per share is computed by dividing
loss available to common shareholders by the weighted average number of common
shares outstanding for the period. Diluted net loss per common share reflects
potential dilution from the exercise or conversion of securities into common
stock or from other contracts to issue common stock. Assumed exercise of the
convertible preferred stock at September 30, 2000, of 18,000,000 common shares,
have been excluded from the calculation of diluted net loss per common share as
their effect is antidilutive.
--------------------------------------------------------------------------------
NOTE 2
INVESTMENT:
--------------------------------------------------------------------------------
Following is a summary of the financial position and results of operations of
ClickIncomes.Com for the three month period ending September 30, 2000.
CLICKINCOMES.COM
BALANCE SHEET
September 30, 2000
ASSETS
(UNAUDITED)
Current assets $ 130,242
Property and equipment 19,123
Other assets 1,011,187
----------
Total Assets $1,160,552
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 279,981
Long term liabilities 198,463
Stockholders' equity 682,108
----------
Total Liabilities and Stockholders' Equity $1,160,552
==========
STATEMENT OF OPERATIONS
Net Sales $ 94,138
==========
Gross profit $ 54,908
==========
Net loss $ (253,417)
==========
-9-
<PAGE>
REGENCY GROUP LIMITED, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
NOTE 2
INVESTMENT:
(CONTINUED)
--------------------------------------------------------------------------------
The Company held approximately a 19.8% interest in ClickIncomes.com as of
September 30, 2000. The Company uses the equity method of accounting to account
for the investment. For the three month period ended September 30, 2000, the
Company's share of ClickIncomes.com loss charged to operations was $50,191.
--------------------------------------------------------------------------------
NOTE 3
NOTES RECEIVABLE:
--------------------------------------------------------------------------------
For the three-month period ended September 30, 2000, the Company has an
additional note receivable in the amount of $243,450. The note is non-interest
bearing unless an event of default occurs. At that time, the remaining balance
owed on the note will be subject to an 8% simple interest from July 20, 2000, to
the date of the repayment of the note. No such event has occurred as of
September 30, 2000. Principal is due through October 2001.
--------------------------------------------------------------------------------
NOTE 4
NOTES PAYABLE:
--------------------------------------------------------------------------------
During the quarter ended September 30, 2000, the Company entered into an
additional non-interest bearing, unsecured, note payable in the amount of
$253,900. Principal is due through October 2001.
--------------------------------------------------------------------------------
NOTE 5
STOCKHOLDER EQUITY:
--------------------------------------------------------------------------------
STOCK OPTIONS:
During the three-month period ended September 30, 2000, the Company entered into
an employment agreement to issue 1,000,000 non-qualified stock options
exercisable at market value on the date of grant, September 1, 2000. The options
are exercisable for ten years, with a weighted average remaining contractual
life of 9.91 years. All options are currently exercisable.
NUMBER OF WEIGHTED AVERAGE
OPTIONS EXERCISE PRICE
------- --------------
Outstanding at June 30, 2000 -- $ --
Granted 1,000,000 1.50
--------- -----
Outstanding at September 30, 2000 1,000,000 $1.50
========= =====
-10-
<PAGE>
REGENCY GROUP LIMITED, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
--------------------------------------------------------------------------------
NOTE 5
STOCKHOLDER EQUITY:
(CONTINUED)
--------------------------------------------------------------------------------
The stock options issued to employees have an exercise price not less than the
fair market value of the Company's common stock on the date of grant. In
accordance with accounting for such options utilizing the intrinsic value
method, there is no related compensation expense recorded in the Company's
financial statements for the three-month period ended September 30, 2000. Had
compensation cost for stock-based compensation been determined based on the fair
value of the options at the grant dates consistent with the method of SFAS 123,
the Company's net loss and loss per share for the three-month period ended
September 30, 2000 would have been increased to the pro forma amounts presented
below:
FOR THE THREE MONTH PERIOD ENDED
SEPTEMBER 30, 2000
------------------
(UNAUDITED)
NET LOSS:
As reported $ (309,332)
=============
Proforma $ (1,269,332)
=============
LOSS PER SHARE:
As reported $ (0.01)
=============
Pro forma $ (0.05)
=============
PREFERRED STOCK:
The Company issued 2,500 shares of voting convertible perferred stock in
relation to the acquisition of e-River Marketing Services, Inc. The voting
preferred stock was convertible into 2,500,000 shares of common stock as of July
10, 2002. The Company elected to issue 2,500,000 shares of Series B preferred
stock, that has a 1 for 1 common stock conversion, to replace the previously
issued 2,500 shares of Series A preferred stock. All other rights and privileges
were consistent between the issuance's.
--------------------------------------------------------------------------------
NOTE 6
GOING CONCERN:
--------------------------------------------------------------------------------
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. The Company has experienced significant losses and negative cash
flows from operating and investment in activities for the three-month period
ending September 30, 2000, which have resulted in a deficiency of working
capital of approximately $290,500 and an accumulated deficit of approximately
$704,000 as of September 30, 2000.
There can be no assurance that the Company will be able to continue as a going
concern in view of its financial condition. The Company's continued existence
will depend upon its ability to obtain sufficient additional capital in a timely
manner to fund its operations and to further develop its long-term business
plan. Any inability to obtain additional financing will have a material adverse
effect on the Company, including possibly requiring the Company to significantly
reduce or cease operations.
These factors raise substantial doubt about the ability of the Company to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
-11-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND
RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND RELATED NOTES CONTAINED IN ITEM 8 OF THIS ANNUAL REPORT. THIS
DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A
OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. WE MAY IDENTIFY THESE
STATEMENTS BY THE USE OF WORDS SUCH AS "BELIEVE", "EXPECT", "ANTICIPATE",
"INTEND", "PLAN" AND SIMILAR EXPRESSIONS. THESE FORWARD-LOOKING STATEMENTS
INVOLVE SEVERAL RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A
RESULT OF VARIOUS FACTORS, INCLUDING THOSE PREVIOUSLY DESCRIBED UNDER THE
CAPTION "RISK FACTORS" IN " ITEM 1. BUSINESS" ABOVE. THESE FORWARD-LOOKING
STATEMENTS SPEAK ONLY AS OF THE DATE OF THIS ANNUAL REPORT, AND WE CAUTION YOU
NOT TO RELY ON THESE STATEMENTS WITHOUT ALSO CONSIDERING THE RISKS AND
UNCERTAINTIES ASSOCIATED WITH THESE STATEMENTS AND OUR BUSINESS ADDRESSED IN
THIS ANNUAL REPORT.
OVERVIEW
The Regency Group, Limited Inc. and Subsidiary (Regency) is a
technology-based investment company focusing on the Internet-economy. The
Company was incorporated in February of 1999. Based in Scottsdale, Arizona, the
firm has interests in three companies that are developing key emerging
technologies. Regency's main focus is developing Internet, broadband, and
telephony technology companies with a view towards enhancing their value as
potential take-over targets or through taking them public. Regency provides
financial, management, and technical support as needed. Regency Group companies
may be majority-owned, or the beneficiaries of strategic investment capital by
the company. We believe we are positioned to act promptly on potential
opportunities.
With the acquisition of its wholly owned subsidiary e-River Marketing
Services, Inc., Regency's day-to-day operations will be based on a set of core
competencies that focus on the buying, selling and manufacturing of computer and
consumer electronics. E-Rivers business divisions supply consumer electronics
goods and information, sales services featuring exclusive and regional
agreements with various technology-oriented manufacturers and in-house studio
design services for custom business-to-business web applications. Through it's
affiliates, Regency provides single source solutions for web sites, ad agencies
and advertisers seeking the best in Internet advertising expenditure activity
data as well as marketing products, services and business opportunities to home
based business consumers.
RESULTS OF OPERATIONS:
REVENUES
Total revenues for the three months ending September 30, 1999 were $773,987
compared to zero for the quarter ending September 30, 1999. All of the Company's
revenues were generated from the e-River division's retail sales of consumer
electronics goods and computers.
COST-OF-SALES
Total cost-of-sales for the three months ending September 30, 2000 were
$718,503 compared to zero for the quarter ending September 30, 1999. These
amounts represent the cost of consumer merchandise that e-River sold at retail.
-12-
<PAGE>
GENERAL AND ADMINISTRATIVE EXPENSES
Total general and administrative expenses for the three months ending
September 30, 2000 were $306,652 compared to $40,419 for the quarter ending
September 30, 1999. This was an increase of approximately 659%. The majority of
the general and administrative expenses are broken out as follows:
* Approximately $44,200 or 14% was for depreciation and amortization
related expenses.
* Approximately $131,300 or 43% was incurred for salaries and benefits.
* Approximately $57,800 or 19% was incurred for legal and professional
related expenses.
* Approximately $21,800 or 7% was incurred for facilities rent.
* Approximately $13,200 or 4% was incurred for telephone and utilities
expense.
* Approximately $10,200 or 3% was incurred for travel related expenses.
OTHER INCOME AND EXPENSE
Other expense includes a $50,191 equity loss due to the Company's
investment in ClickIncomes.com and interest expense in the amount of $15,150
relating to the Company's capital leases and notes payable.
NET LOSS
Our net loss for the three months ending September 30, 2000 was $309,332
compared to a net loss of $37,753 for the three months ending September 30,
1999. The net loss for the three months ending September 30, 2000 was due
predominantly to the integration of e-Rivers operatating activities into those
of Regency.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have financed our operations primarily through private
sales of equity. At September 30, 2000, our principal source of liquidity was
approximately $522,700 in cash and trade receivables compared with approximately
$122,700 in cash at June 30, 2000. As of September 30, 2000, total current
liabilities were 1,148,490 and total liabilities were 1,160,143. Management
anticipated doing an additional debt or equity financing in the second half of
the current fiscal year, which will be used for operating capital and potential
additional business expansion. The amount of cash proceeds raised in conjunction
with the debt or equity financing, together with current available cash, is
anticipated to sustain Regency's operating and investment activities for the
current fiscal year.
-13-
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
Regency was not involved in any legal proceedings during the period covered
by this filing.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Company issued stock valued at $39,614 in conjunction with the
finalization of the purchase of e-River Marketing Services, Inc. in the current
quarter.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY VOTERS
No matters were submitted to a vote of security holders during the period
covered by this filing.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
INCORPORATED BY REFERENCE
---------------------------------------------
EXHIBIT
EXHIBIT DESCRIPTION FORM FILE NUMBER NUMBER FILING DATE
------------------- ---- ----------- ------ -----------
<S> <C> <C> <C> <C>
Agreement and plan of reorganization dated 8-K 000-26687 2 07/25/00
July 01, 2000 between the Registrant, Deal
Update.com and its wholly owned subsidiary
e-River Marketing Services, Inc.
Change in Registrant's certifying 8-K 000-26687 08/11/00
accountant to Semple & Cooper, LLP
Change in Registrant's fiscal year-end 8-K 000-26687 08/11/00
to June 30
Letter from Brad Beckstead to the Securities 8-KA 000-26687 16.1 08/21/00
and Exchange Commission regarding changes
in the Registrant's certifying accountant
</TABLE>
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this annual report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 17, 2000 REGENCY GROUP, LIMITED
By: /s/ Joseph A. Romano
-------------------------------------
Joseph A. Romano
CHIEF EXECUTIVE OFFICER
-15-
