<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1998
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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 October 28, 1998 is 87,283,661.
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REGENCY EQUITIES CORP.
INDEX
<TABLE>
<CAPTION>
Page
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Part I Financial information
Item 1. Financial statements
<S> <C>
Balance sheets as of September 30, 1998
(unaudited) and December 31, 1997. . . . . . . . . . . . . . . . . . .1
Statements of operations for the three
months and nine months ended September 30, 1998
and 1997 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 2
Statement of changes in shareholders' equity
for the nine months ended September 30, 1998
(unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Statements of cash flows for the nine months
ended September 30, 1998 and 1997 (unaudited). . . . . . . . . . . . .4
Notes to financial statements (unaudited) . . . . . . . . . . . . . . .5
Item 2. Management's discussion and analysis
of financial condition and results
of operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Item 3. Quantitative and Qualitative
Disclosures About Market Risk. . . . . . . . . . . . . . . . . . . . .6
Part II Other information
Item 6. Exhibits and reports on Form 8-K . . . . . . . . . . . . . . . . .7
Signature page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Index to exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
REGENCY EQUITIES CORP.
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1 9 9 8 1 9 9 7
( unaudited )
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 3,111,353 $ 3,137,924
Rent receivable 2,021 3,752
Rental property owned, net of write
down for possible loss of $215,000 and
accumulated depreciation of $380,277
in 1998 and $343,476 in 1997 876,164 912,965
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$ 3,989,538 $ 4,054,641
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses $ 15,954 $ 22,366
Income taxes payable 1,510 1,420
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17,464 23,786
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SHAREHOLDERS' EQUITY
Preferred stock, par value $.01 per
share, authorized 5,000,000 shares;
none issued
Common stock, par value $.01 per
share, authorized 125,000,000 shares;
issued and outstanding 87,283,661
shares 872,836 872,836
Additional paid-in capital 47,660,331 47,660,331
Accumulated (deficit) (44,561,093) (44,502,312)
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3,972,074 4,030,855
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$ 3,989,538 $ 4,054,641
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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,
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1 9 9 8 1 9 9 7 1 9 9 8 1 9 9 7
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<S> <C> <C> <C> <C>
REVENUES
Interest income $ 37,903 $ 37,635 $ 113,422 $ 109,168
Rental income 12,557 40,785 36,176 174,670
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Total revenues 50,460 78,420 149,598 283,838
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EXPENSES
Administrative expense 22,851 27,108 76,513 82,885
Professional fees 6,398 31,990 37,220 70,793
Rental expense 36,464 33,292 93,136 87,153
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Total expenses 65,713 92,390 206,869 240,831
------------ ------------ ------------ ------------
Income (loss) before income
taxes (15,253) (13,970) (57,271) 43,007
PROVISION FOR INCOME TAXES 1,510 1,210
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Net income (loss) ($ 15,253) ($ 13,970) ($ 58,781) $ 41,797
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 87,283,661 87,283,661 87,283,661 87,283,661
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
INCOME (LOSS) PER SHARE $ .000 $ .000 $ .001 $ .000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements
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REGENCY EQUITIES CORP.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------- ADDITIONAL
NUMBER OF PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT
----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
BALANCE AT
December 31, 1997 87,283,661 $ 872,836 $ 47,660,331 ($44,502,312)
Net loss for the
nine months ended
September 30, 1998 (58,781)
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BALANCE AT
September 30, 1998 87,283,661 $ 872,836 $ 47,660,331 ($44,561,093)
----------- ------------ ------------- -------------
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</TABLE>
See accompanying notes to financial statements
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<PAGE>
REGENCY EQUITIES CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
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1 9 9 8 1 9 9 7
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<S> <C> <C>
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Net income (loss) ($ 58,781) $ 41,797
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 1,731 95,868
Accounts payable and accrued
expenses (6,412) (5,567)
Income taxes payable 90 (210)
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NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES: (26,571) 168,689
CASH - BEGINNING OF PERIOD 3,137,924 2,974,146
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CASH - END OF PERIOD $ 3,111,353 $ 3,142,835
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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, 1998
(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, 1997, together with certain procedural disclosures.
2. Basis of reporting
The balance sheet as of September 30, 1998, the statements of operations
for the three month periods ended September 30, 1998 and 1997 and the nine
month periods ended September 30, 1998 and 1997, the statement of changes
in shareholders' equity for the nine months ended September 30, 1998 and
the statements of cash flows for the nine month periods ended September 30,
1998 and 1997 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, 1998
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, 1997.
3. Rental property
Real estate owned consists of a shopping center (the "Center") located in
Grand Rapids, Michigan. Approximately 12.5% of the Center is leased to a
tenant on a month-to-month basis. Minimum rent in connection with this
tenant is $3,500 per month. The remaining 87.5% of the Center is vacant.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
During the third quarter of 1998, the Company recorded a net loss of $15,253
before income taxes compared to a net loss of $13,970 for the same period of
1997. The increase resulted principally from the decrease in rental income of
$28,228 attributable to the termination of the Witmark, Inc. lease in September
1997. The decrease in income was offset in part by a decrease in professional
fees of $25,592 primarily attributable to litigation in connection with the
termination of the Witmark, Inc. lease in September 1997.
During the nine months ended September 30, 1998, the Company recorded a loss of
$57,271 before income taxes compared to income of $43,007 for the same period of
1997. The decrease resulted principally from the decrease in rental income of
$138,494 attributable to the termination of the Witmark, Inc. lease in September
1997. The decrease in income was offset in part by a decrease in professional
fees of $33,573 primarily attributable to litigation in connection with the
termination of the Witmark Inc. lease in September 1997.
Impact of Year 2000
The Year 2000 issue affects computer applications that may not properly
recognize and process data for the year 2000 and beyond because of the use of
two digits rather than four to define an applicable year. The Company presently
is not aware of any material operational year 2000-related concerns and believes
that, with minor modifications to existing accounting software or conversion to
new software, any Year 2000 concerns can be mitigated. Based on management's
best estimate, the costs associated with the year 2000 mitigation are not
expected to be material to the Company.
However, the Company maintains significant cash and cash equivalent balances at
Wells Fargo Bank (the Bank), a major banking institution. The Company cannot,
at this time, make any assurances that the computer systems of the Bank will be
Year 2000 compliant. In such event, the Company's results of operations and
financial position could be adversely affected in a material manner. In fiscal
1999, management of the Company will request information from the Bank regarding
its year 2000 readiness and evaluate the possible impact on the Company.
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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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 10, 1998 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 10, 1998 By /s/ MORRIS ENGEL
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Morris Engel
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
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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>
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF REGENCY EQUITIES CORP. FOR THE PERIOD ENDED SEPTEMBER
30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 3,111,353
<SECURITIES> 0
<RECEIVABLES> 2,021
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,113,374
<PP&E> 1,256,441
<DEPRECIATION> 380,277
<TOTAL-ASSETS> 3,989,538
<CURRENT-LIABILITIES> 17,464
<BONDS> 0
0
0
<COMMON> 872,836
<OTHER-SE> 3,099,238
<TOTAL-LIABILITY-AND-EQUITY> 3,989,538
<SALES> 0
<TOTAL-REVENUES> 149,598
<CGS> 0
<TOTAL-COSTS> 93,136
<OTHER-EXPENSES> 113,733
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (57,271)
<INCOME-TAX> 1,510
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (58,781)
<EPS-PRIMARY> .000
<EPS-DILUTED> .000
</TABLE>
