<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-10695
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REGENCY EQUITIES CORP.
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(Exact name of registrant as specified in its charter)
Delaware 23-2298894
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(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
11845 WEST OLYMPIC BOULEVARD, SUITE 900 LOS ANGELES, CA 90064
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 310-827-9604
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Former name, former address and former fiscal year,
if changed since last report.
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
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. Number of Shares of Common
Stock outstanding as of November 7, 1997 is 87,283,661.
<PAGE>
REGENCY EQUITIES CORP.
INDEX
Page
----
Part I Financial information
Item 1. Financial statements
Balance sheets as of September 30, 1997
(unaudited) and December 31, 1996 . . . . . . . . . . . . . . . 1
Statements of operations for the three
months and nine months ended September 30, 1997
and 1996 (unaudited). . . . . . . . . . . . . . . . . . . . . . 2
Statement of changes in shareholders' equity
for the nine months ended September 30, 1997
(unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Statements of cash flows for the nine months
ended September 30, 1997 and 1996 (unaudited). . . . . . . . . . 4
Notes to financial statements (unaudited) . . . . . . . . . . . . 5
Item 2. Management's discussion and analysis
of financial condition and results
of operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Part II Other information
Item 6. Exhibits and reports on Form 8-K. . . . . . . . . . . . . . . . . 7
Signature page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Index to exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
REGENCY EQUITIES CORP.
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1 9 9 7 1 9 9 6
(unaudited)
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 3,142,835 $ 2,974,146
Rent receivable 2,280 98,148
Rental property owned, net of write
down for possible loss of $215,000 and
accumulated depreciation of $331,209
in 1997 and $294,408 in 1996 925,232 962,033
Deferred income taxes 421,164 421,164
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$ 4,491,511 $ 4,455,491
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses $ 22,172 $ 27,739
Income taxes payable 1,510 1,720
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23,682 29,459
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SHAREHOLDERS' EQUITY
Preferred stock, par value $.01 per
share, authorized 5,000,000 shares;
none issued
Common stock, par value $.01 per
share, authorized 125,000,000 shares;
issued and outstanding 87,283,661
shares 872,836 872,836
Additional paid-in capital 47,660,331 47,660,331
Accumulated (deficit) ( 44,065,338) ( 44,107,135)
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4,467,829 4,426,032
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$ 4,491,511 $ 4,455,491
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</TABLE>
See accompanying notes to financial statements
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<PAGE>
REGENCY EQUITIES CORP.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
1 9 9 7 1 9 9 6 1 9 9 7 1 9 9 6
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES
Interest income $ 37,635 $ 28,585 $ 109,168 $ 91,254
Rental income 40,785 70,124 174,670 204,830
----------- ----------- ----------- -----------
Total revenues 78,420 98,709 283,838 296,084
----------- ----------- ----------- -----------
EXPENSES
Administrative expense 27,108 24,184 82,885 75,003
Professional fees 31,990 8,158 70,793 49,507
Rental expense 33,292 29,803 87,153 83,668
----------- ----------- ----------- -----------
Total expenses 92,390 62,145 240,831 208,178
----------- ----------- ----------- -----------
Income (loss) before income taxes (13,970) 36,564 43,007 87,906
PROVISION FOR INCOME TAXES 15,088 1,210 32,674
----------- ----------- ----------- -----------
Net income (loss) ($ 13,970) $ 21,476 $ 41,797 $ 55,232
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 87,283,661 87,283,661 87,283,661 87,283,661
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
INCOME (LOSS) PER SHARE $.000 $.000 $.000 $.001
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
See accompanying notes to financial statements
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<PAGE>
REGENCY EQUITIES CORP.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK
------------------------
NUMBER OF ADDITIONAL
ACCUMULATED PAID-IN
SHARES AMOUNT CAPITAL DEFICIT
----------- -------- ----------- ------------
<S> <C> <C> <C> <C>
BALANCE AT
December 31, 1996 87,283,661 $872,836 $47,660,331 ($44,107,135)
Net income for the
nine months ended
September 30, 1997 41,797
----------- -------- ----------- ------------
BALANCE AT
September 30, 1997 87,283,661 $872,836 $47,660,331 ($44,065,338)
----------- -------- ----------- ------------
----------- -------- ----------- ------------
</TABLE>
See accompanying notes to financial statements
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<PAGE>
REGENCY EQUITIES CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER
--------------------------
1 9 9 7 1 9 9 6
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<S> <C> <C>
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Net income (loss) $ 41,797 $ 55,232
Adjustments to reconcile net
income (loss) to net cash provided
by (used in) operating activities:
Depreciation 36,801 36,801
Change in operating assets and
liabilities:
Rent receivable 95,868 7,175
Deferred income taxes 29,754
Accounts payable and accrued
expenses ( 5,567) ( 193,549)
Income taxes payable ( 210) ( 400)
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NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES: 168,689 ( 64,187)
CASH - BEGINNING OF PERIOD 2,974,146 2,975,808
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CASH - END OF PERIOD $ 3,142,835 $ 2,911,621
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</TABLE>
See accompanying notes to financial statements
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<PAGE>
Regency Equities Corp.
Notes to Financial Statements
September 30, 1997
(Unaudited)
1. Significant accounting policies
Significant accounting policies of Regency Equities Corp. (the Company)
are set forth in its Annual Report on Form 10-K as filed by the Company
for the year ended December 31, 1996, together with certain procedural
disclosures.
2. Basis of reporting
The balance sheet as of September 30, 1997, the statements of operations
for the three month periods ended September 30, 1997 and 1996 and the
nine month periods ended September 30, 1997 and 1996, the statement of
changes in shareholders' equity for the nine months ended September 30,
1997 and the statements of cash flows for the nine month periods ended
September 30, 1997 and 1996 have been prepared by the Company without
audit. The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statement presentation. In
the opinion of management, such statements include all adjustments
(consisting only of normal recurring items) which are considered
necessary for a fair presentation of the financial position of the
Company at September 30, 1997 and the results of its operations and cash
flow for the three month and nine month periods then ended. It is
suggested that these financial statements be read in conjunction with
the financial statements and the notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
3. Rental property
Real estate owned consists of a shopping center in Grand Rapids,
Michigan. The lease for the tenant occupying approximately 12.5% of the
building expired on July 10, 1997 and the tenant continues to occupy the
premises on a month-to-month basis. Witmark, Inc. ocuupied the
remaining lease space of approximately 87.5% of the building under a
lease which was to expire on August 31, 1999. In April 1997, the
Company was advised that Witmark, Inc. had initiated liquidating
procedings for all of its business. The Company was subsquently advised
that Witmark, Inc. would hold a "going out of business sale" in June
1997. On June 9, 1997 the Company filed an action against
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<PAGE>
Notes to Financial Statements
September 30, 1997
(Unaudited)
3. Rental property (continued)
Witmark, Inc. to enforce the lease for its full term. On September 8,
1997 the Company settled its lawsuit with Witmark, Inc. for a cash
payment of $120,000 in consideration of return of the premises to the
Company.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
During the third quarter of 1997, the Company recorded a net loss of $13,970
before income taxes compared to net income of $36,564 for the same period of
1996. The decrease in net income resulted principally from (i) a decrease in
rent income of $29,339 primarily attributable to the termination of the Witmark,
Inc. lease; and (ii) an increase in professional fees of $23,832 primarily
attributable to litigation costs with Witmark, Inc.
During the nine months ended September 30, 1997, the Company recorded net income
of $43,007 before income taxes compared to net income of $87,906 for the same
period of 1996. The decrease in net income resulted principally from (i) a
decrease in rent income of $30,160 primarily attributable to the termination of
the Witmark, Inc. lease; and (ii) an increase in professional fees of $21,286
primarily attributable to litigation costs with Witmark, Inc.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not Applicable.
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<PAGE>
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27.1 Financial Data Schedule (included only in the
electronic filing).
(b) Reports on Form 8-K
None.
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<PAGE>
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.
REGENCY EQUITIES CORP.
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(Registrant)
DATE: NOVEMBER 11, 1997 By /s/ ALLAN L. CHAPMAN
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Allan L. Chapman
Chairman of the Board, Chief
Executive Officer and President
(Principal Executive Officer)
DATE: November 11, 1997 By /s/ MORRIS ENGEL
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Morris Engel
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
REGENCY EQUITIES CORP.
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<PAGE>
REGENCY EQUITIES CORP.
QUARTERLY REPORT ON FORM 10-Q
INDEX TO EXHIBITS
Exhibit
Number
27.1 Financial Data Schedule (included only in the electronic filing)
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF REGENCY EQUITIES CORP. FOR THE PERIOD ENDED SEPTEMBER
30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,142,835
<SECURITIES> 0
<RECEIVABLES> 2,280
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,145,115
<PP&E> 1,256,441
<DEPRECIATION> 331,209
<TOTAL-ASSETS> 4,491,511
<CURRENT-LIABILITIES> 23,682
<BONDS> 0
0
0
<COMMON> 872,836
<OTHER-SE> 3,594,993
<TOTAL-LIABILITY-AND-EQUITY> 4,491,511
<SALES> 0
<TOTAL-REVENUES> 283,838
<CGS> 0
<TOTAL-COSTS> 87,153
<OTHER-EXPENSES> 153,678
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 43,007
<INCOME-TAX> 1,210
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,797
<EPS-PRIMARY> .000
<EPS-DILUTED> .000
</TABLE>
