UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1999
Commission file Number 0-9519
Regent Technologies, Inc.
(Exact name of registrant as specified in its charter.)
Texas 84-0807913
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2929 ELM STREET, DALLAS, TEXAS 75226
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
972 818-3738
Indicate by check mark whether the registrant(1) has filed
all reports required to be filed by Section 13 or 15(d) of 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 [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical
date:
Common Stock, $.10 Par Value - 47,747,026 shares as of
October 31, 1999.
<PAGE>
REGENT TECHNOLOGIES, INC.
TABLE OF CONTENTS
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements................................... 2
INCOME STATEMENTS
For the three months and nine months ended September 30,
1999 and 1998 (unaudited)............................ 2
BALANCE SHEETS
As of September 30, 1999 (unaudited)
and December 31, 1998 (audited)...................... 3
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1999 and 1998
(unaudited).......................................... 4
Item 2. Management's Discussion and Ananlysis of Financial
Condition and Results of Operations.................... 7
PART II OTHER INFORMATION
Item 5. Other Information...................................... 8
Item 6. Exhibits and Reports on Form 8-K....................... 8
SIGNATURES.......................................................9
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
REGENT TECHNOLOGIES, INC.
INCOME STATEMENTS
FOR THE THREE MONTHS and NINE MONTHS
ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
(Amounts in thousands, except per share data)
<CAPTION>
Three months ended Nine months ended
September 30 September 30
__________________ ________________
1999 1998 1999 1998
<S> <C> <C> <C> <C>
REVENUES
Internet product sales $ 0 $ 246 $ 0 $ 459
Digital prepress and printing 0 124 0 255
Interest income and other 12 10 16 23
______ ______ ______ _____
12 380 16 737
COSTS AND EXPENSES
Cost of sales and services 157 0 350
Selling, general and
administrative expenses 188 319 206 856
Depreciation and amortization 0 47 0 142
Interest expense 0 16 0 41
______ ______ _____ ____
NET LOSS (176) (159) (190) (652)
------ ------ ------ -----
NET LOSS APPLICABLE
TO COMMON STOCK (176) (173) (190) (666)
------ ------ ------ -----
Loss per share $ (.007) $ (.048) (.008) (0.192)
Weighted average Common
Shares outstanding 25,624 3,604 24,695 3,460
<FN>
See Accompanying Notes to Financial Statements.
</TABLE>
2
<PAGE>
<TABLE>
REGENT TECHNOLOGIES, INC.
BALANCE SHEETS
<CAPTION>
September 30, 1999 December 31, 1998
______________ ______________
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current Assets
Cash $ 0 $ 0
Accounts receivable from
related party 18 48
Interest receivable 12 0
______ ______
Total Current Assets 30 48
Furniture and fixtures 6 8
Computer and electronic equipment 5 3
______ ______
11 11
Less accumulated depreciation 7 7
______ ______
Total Fixed Assets 4 4
Other Assets 1,267 67
______ ______
TOTAL ASSETS $1,301 $ 119
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Current Liabilities
Accounts Payable $ 224 $ 48
Accrued Compensation 0 170
______ ______
Total Current Liabilities 224 218
Long Term Liabilities 64 64
Shareholders' Equity (Deficiency)
Common Stock, par value $.01 per share
Authorized 100,000,000 shares
Issued and outstanding -
45,747,026 and 3,643,693 shares 457 36
Capital in excess of par value 4,113 3,149
Accumulated deficit (3,558) (3,348)
_______ _______
Total Shareholders' Equity
(Deficiency)
$ 1,012 $ (163)
____ ____
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIENCY) $ 1,301 $ 119
<FN>
See Accompanying Notes to Financial Statements.
</TABLE>
3
<PAGE>
<TABLE>
REGENT TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(Unaudited)
(Amounts in thousands)
<CAPTION>
1999 1998
____ ____
<S> <C> <C>
Cash Flow From Operating Activities:
Loss From Operations $ (190) $ (666)
_______ _______
Adjustments To Reconcile Net
Income to Net Cash (Used)Provided by
Operating Activities
Depreciation 142
(Increase) Decrease in
Receivables 18 (167)
Deposits (40)
Increase (Decrease) in
Accounts payable 176 324
Accrued compensation (170) 185
_______ _______
Net Cash Used In Operating Activities $ (166) $ (222)
_______ _______
Cash Flow From Investing Activities:
Net collections on notes $ 0 $ 46
Decrease to equipment 51
Costs of investment
in subsidiary (40)
Increase in other assets (90)
Net Cash Used In _______ _______
Investing Activities $ 0 $ (33)
Cash Flow From Financing Activities:
Notes receivable for issuance of
Common Stock $ (1,200) $ 0
Net issuance of Common Stock 1,366 56
Decrease to equipment (74)
Net proceeds from
note to shareholder 273
_______ _______
Net Cash Provided From
Financing Activities $ 166 $ 255
_______ _______
Increase in Cash 0 0
Cash at Beginning of Period $ 0 $ 2
_______ _______
Cash at End of Period $ 0 $ 2
<FN>
See Accompanying Notes to Financial Statements.
</TABLE>
4
<PAGE>
REGENT TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 (unaudited) and December 31, 1998
(1) BASIS OF PRESENTATION
The accompanying financial statements, which should be read in conjunction
with the financial statements of Regent Technologies, Inc. ("the Company")
included in the 1998 Annual Report filed on Form 10-KSB, are unaudited but
have been prepared in the ordinary course of business for the purpose of
providing information with respect to the interim period. The Company
believes that all adjustments (none of which were other than normal
recurring accruals)necessary for a fair presentation for such periods have
been included.
(2) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Regent Technologies, Inc., formerly Regent Petroleum
Corporation, was incorporated on January 18, 1980, for the
purpose of exploration and development of oil and gas
properties in the United States. Activities of the Company
up to 1992 were primarily organization, issuance of equity
capital and acquisition of developed and undeveloped oil and
gas properties which included the formation of Earth
Minerals, Inc. in 1991, which was later renamed Regent
Industries, Inc. In 1992, the Company redirected its core
activities and acquired SSB Environmental, Inc. ("SSBE"),
which was organized for the purpose of obtaining waste and
landfill reclamation contracts and accounted for under the
purchase method of accounting. Effective January 1, 1996,
the Company sold 100% of Regent Industries and 81% of its
interest in SSBE, and the remaining 19% was accounted for on
the cost method of accounting. In September, 1996, the
Company entered into a license agreement for the
technologies necessary to offer dialup access to the
Internet (the "Technology License" or "License"). During the
fourth quarter of 1996, the Company organized Regent TEL1
Communications, Inc. ("TEL1") as a Nevada corporation and a
wholly owned subsidiary to market its Internet products and
services primarily to consumer markets. In the third
quarter of 1997, the Company acquired ConnecTen, L.L.C. as a
wholly owned subsidiary to market its dedicated Internet
access services to professionals and corporations.
Effective January 1, 1998, the Company acquired Channel
Services, LC, to expand its telecommunications products to
include wireless telephone services. The acquisitions of
ConnecTen and Channel Services were accounted for under the
purchase method of accounting. During the first quarter of
1998, the Company organized Regent Digital Imaging, Inc. to
offer digital printing and prepress services with access
available via the Internet. Effective January 1, 1998, the
Company divested 100% of its ownership in all subsidiary
companies. The investment in SSBE was written off without
value as of December 31, 1998.
Depreciation
Depreciation is provided in amounts sufficient to relate the
cost of depreciable assets to operations over their estimated
service lives (5 years). The straight-line method of
depreciation is used for financial reporting purposes, while
accelerated methods are used for federal income tax purposes.
Income Taxes
The Company utilizes the method of accounting for federal
income tax set forth in Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes" (SFAS 109).
SFAS 109 requires the recognition of deferred tax
liabilities and assets for the expected future tax
consequences of events that have been recognized in the
Company's financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined
based on the difference between the financial statement
carrying amounts and tax bases of assets and liabilities,
using enacted tax rates in effect in the years which
the differences are expected to reverse. These temporary
differences primarily relate to depreciation, depletion and
amortization. The Company has not recognized the benefit of
any net operating loss carryforwards as the result of
adopting SFAS 109, and no deferred tax assets have been
recorded on the books of the Company due to uncertainty as
to the Company's ability to utilize the loss carryforwards.
Loss Per Share
Loss per share is based on the weighted average number of
common shares outstanding for each period presented.
Common Stock equivalents are included if dilutive. In
February 1997, the Financial Accounting Standards Board
issued Statement No. 128, "Earnings per Share," which is
required to be adopted for years ending after December 15,
1997. Under the new requirements for calculating primary
earnings per share, the dilutive effect of stock options and
warrants will be excluded. Statement No. 128 is not expected
to have a material impact on the net loss per share of the
Company.
Cash Equivalents
The Company does not consider any of its assets to meet the
definition of a cash equivalent.
5
<PAGE>
REGENT TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 (unaudited) and December 31, 1998
(3) TRANSACTIONS WITH RELATED PARTIES
During the first quarter of 1999, the Directors approved
settlement agreements with the Chairman, the President, the
General Counsel, the Director of Marketing and the Chief
Technical Officer to terminate each of their employment
contracts and the deferred compensation amounts due thereunder.
The Chairman accepted a $90,000 promissory note for the $90,000
deferred compensation owed. The promissory note was assigned
to a third party and redeemed by the Company with 900,000 shares
of restricted Common Stock. In addition, the Chairman agreed to
accept conveyance of 100% of the ownership and interests in
Regent Digital Imaging, Inc. and ConnecTen, L.L.C. in exchange
for all other monies owed to the Chairman including $200,000
owed under a secured line of credit and termination of his
employment contract. From the assets of the transferred
companies, the Chairman agreed to pay certain Company payables,
including $20,000 to the Company plus monies owed to the General
Counsel, the Chief Technical Officer and the Director of
Marketing and related taxes for the termination of their
employment contracts.
The President accepted a $90,000 promissory note and an account
payable of $10,000 for the $80,000 deferred compensation owed and
$20,000 of expense reimbursement for the termination of his
employment contract. The promissory note was assigned to a third
party and paid by the Company with 900,000 shares of restricted
Common Stock.
In addition, the Company released the Chief Technical Officer
from his employment contract in exchange for the stock grant
thereunder. Pursuant thereto, 42,876 shares of restricted Common
Stock was returned to the Company. Also, the Company issued
50,000 shares of restricted Common Stock each to the General
Counsel and the Director of Marketing to fulfill previous
commitments.
During the third quarter of 1999, the Company issued 40,246,209
shares of Restricted Common Stock to the Straza Family Limited
Partnership in exchange for $1,200,000 notes receivable and
issued stock options to that entity.
(4) COMMITMENTS
The Company has a lease on its office space located at 2929 Elm
Street, Dallas, Texas for $3,500 per month, which lease expires
on August 31, 2000.
(5) CHANGES IN MANAGEMENT AND EVENTS
Effective June 22, 1999, the Board of Directors appointed Lupe
Vasquez and Brian Layton as Directors.
Effective June 28, 1999, the Board of Directors accepted the
resignations of Roy W. Mers as Director, Chairman and as Chief
Executive Officer and David A. Nelson as Director and President.
Effective June 28, 1999, the Board of Directors appointed Robyn
Sterritt as Director, President and Chief Executive Officer. Ms.
Sterritt was also elected Chairman of the Board of Directors
effective June 28, 1999.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations
The statements contained in this Form 10-QSB that are
not historical facts are forward-looking statements
(as such term is defined in the Private Securities
Litigation Reform Act of 1995) that involve risks and
uncertainties. Such forward-looking statements may be
identified by, among other things, the use of forward-looking
terminology such as "believes," "expects," "may," "will,"
should" or "anticipates" or the negative thereof or other
variations thereon or comparable terminology, or by
discussions of strategy that involve risks and uncertainties.
From time to time, the Company or its representatives have
made or may make forward-looking statements, orally or in
writing. Such forward-looking statements may be included in
various filings made by the Company with the Securities and
Exchange Commission, or press releases or oral
statements made by or with the approval of an authorized
executive officer of the Company. These forward-looking
statements, such as statements regarding anticipated future
revenues, capital expenditures and other statements regarding
matters that are not historical facts, involve predictions.
The Company's actual results, performance or achievements
could differ materially from the results expressed in, or
implied by, these forward-looking statements.
Business and Acquisition Strategy
With the Company's decision to expand and initially focus on
waste, landfill and facilities management, the Company will
seek to develop these businesses with the acquisition of
companies in markets where consolidations are an appropriate
method for long-term growth.
Financial Condition
Liquidity and Capital Resources
At September 30, 1999, the Company had a negative net working
capital of $197,000. The Company has no amortization requirements
under any term loan agreements. The Company is not current on its
trade payables including.
The Company continues to raise monies as needed through proceeds
from the sale of the Company's Restricted Common Stock.
During the third quarter of 1999, the Company entered into an
agreement and issued 40,246,209 shares of Restricted Common Stock
to the Straza Family Limited Partnership in exchange for $1,200,000
in notes receivable and additionally issued the following options
to that entity:
1. For six months, the option to purchase, for cash or
assets, up to 1,400,000 of shares of Restricted
Common Stock at $.03 per share
2. For two years, the option to purchase up to 5,000,000
restricted shares at a purchase price of $.50 per share
3. For three years, the option to purchase up to 5,000,000
restricted shares at a purchase price of $1.00 per share.
4. For four years, the option to purchase up to 5,000,000
restricted shares at a purchase price of $2.00 per share.
Results of Operations
COMPARISION OF THE NINE MONTHS ENDED SEPTEMBER 30, 1999 TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1998
The Company's net loss for the nine months ending September 30,
1999 was $176,000 or $.008 cents per common share, compared
with a net loss of $666,000 for the same period in 1998.
The $4,000 recorded as Other Income was due to the receipt of
42,876 shares of restricted Common Stock for the settlement of an
employment contract. A total of $10,000 was recorded as expense
related to the 100,000 shares of restricted Common Stock issued
to fulfill previous commitments. The primary differences for the
current nine-month period as compared to the previous period was
the decrease in business activities and general and
administrative expenses during the current period.
7
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Information
Effective June 22, 1999 the Board of Directors elected Lupe Vasquez
and Brian Layton as Directors. Effective June 28, 1999 the Board of
Directors accepted the resignations of Roy W. Mers as Director,
Chairman and Chief Executive Officer and David A. Nelson as Director
and President. Effective June 28, 1999 the Board of Directors
appointed Robyn Sterritt as a Director, President and Chief
Executive Officer. Ms. Sterritt was also elected as Chairman of the
Board of Directors effective June 28, 1999.
Item 6. Exhibits and Reports on Form 8-k
(a) Exhibits
27. Financial data schedule for the quarter ended September 30, 1999
(included only in the copy of this report filed electronically).
(b) Reports of Form 8-k
On March 9, 1999, Regent announced that it had sold all of the assets
of its wholly owned subsidiary, Regent Digital, Inc. to The Color
Place, Inc., a Texas corporation. The corporate headquarters were
moved to 2929 Elm Street, Dallas, Texas 75226.
On April 2, 1999 Regent announced the sale of all of the assets of
ConnecTen, L.L.C. to Internet Allegiance, Inc.
On July 14, 1999, Regent announced the changes to its Board of
Directors and officers; sale of Restricted Common Stock and options
to purchase additional shares of Restricted Common Stock to the
Straza Family Limited Partnership; and, its plans to expand.
8
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of
1934, the registrant has duly cause this report to be signed on its
behalf by the undersigned thereunto duly authorized.
REGENT TECHNOLOGIES, INC.
Registrant
November 15, 1999 Robyn Sterritt
Date
Principal Financial Officer
Principal Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Sep-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 30
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 30
<PP&E> 11
<DEPRECIATION> 7
<TOTAL-ASSETS> 1,301
<CURRENT-LIABILITIES> 457
<BONDS> 0
0
0
<COMMON> 457
<OTHER-SE> 555
<TOTAL-LIABILITY-AND-EQUITY> 1,301
<SALES> 16
<TOTAL-REVENUES> 16
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 206
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (190)
<INCOME-TAX> 0
<INCOME-CONTINUING> (190)
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<NET-INCOME> (190)
<EPS-BASIC> (.008)
<EPS-DILUTED> (.008)
</TABLE>
