<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 March 31, 1999
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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 O-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 W. Olympic Boulevard, Suite 900 Los Angeles, CA 90064-5023
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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 May 6, 1999 is 87,283,661.
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REGENCY EQUITIES CORP.
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
Part I Financial information
Item 1. Financial statements
Balance sheets as of March 31, 1999
(Unaudited) and December 31, 1998 . . . . . . . . . . . . . 1
Statements of operations for the three
months ended March 31, 1999 and 1998
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 2
Statement of changes in shareholders' equity
for the three months ended March 31, 1999
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 3
Statements of cash flows for the three months
ended March 31, 1999 and 1998 (Unaudited) . . . . . . . . . 4
Notes to financial statements (Unaudited). . . . . . . . . . . . 5
Item 2. Management's discussion and analysis
of financial condition and results . . . . . . . . . . . . 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
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
REGENCY EQUITIES CORP.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
1999 December 31,
(Unaudited) 1998
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<S> <C> <C>
ASSETS
Cash $ 3,072,130 $ 3,113,031
Rent receivable 2,235 3,412
Rental property owned, net of write
down for possible loss of $215,000
and accumulated depreciation of
$404,811 in 1999 and $392,544 in 1998 851,630 863,897
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$ 3,925,995 $ 3,980,340
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LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses $ 25,601 $ 30,549
Income taxes payable 610 3,020
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26,211 33,569
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SHAREHOLDERS' EQUITY
Preferred stock, par value $.01
per share, authorized 5,000,000
shares; none issued
Common stock, par value $.01
per share, authorized
125,000,000 shares; issued and
outstanding 87,283,661 shares 872,836 872,836
Additional paid-in capital 47,660,331 47,660,331
Accumulated deficit (44,633,383) (44,586,396)
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3,899,784 3,946,771
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$ 3,925,995 $ 3,980,340
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</TABLE>
See accompanying notes to financial statements
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REGENCY EQUITIES CORP.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
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1999 1998
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<S> <C> <C>
REVENUES:
Interest income $ 34,196 $ 37,601
Rental income 12,045 11,739
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TOTAL REVENUES 46,241 49,340
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EXPENSES:
Administrative expense 32,318 27,670
Professional fees 28,389 27,131
Rental expense 31,311 28,414
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TOTAL EXPENSES 92,018 83,215
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INCOME (LOSS) BEFORE INCOME TAXES (45,777) (33,875)
PROVISION FOR INCOME TAXES 1,210 1,510
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NET INCOME (LOSS) ($46,987) ($35,385)
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WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 87,283,661 87,283,661
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INCOME (LOSS) PER SHARE ($.001) $ .000
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</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
------------------------- Additional
Number of Paid-In Accumulated
Shares Amount Capital deficit
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<S> <C> <C> <C> <C>
Balance at December 31, 1998 87,283,661 $ 872,836 $47,660,331 ($44,586,396)
Net loss for the three months ended
March 31, 1999 (46,987)
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Balance at March 31, 1999 87,283,661 $ 872,836 $47,660,331 ($44,633,383)
---------- ---------- ----------- -----------
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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>
THREE MONTHS ENDED
MARCH 31,
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1999 1998
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($46,987) ($35,385)
Adjustments to reconcile net
income (loss) to net cash provided
by (used in) operating activities:
Depreciation 12,267 12,267
Changes in operating assets and liabilities:
Rent receivable 1,177 2,512
Accounts payable and accrued expenses (4,948) 17,783
Income taxes payable (2,410) 90
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NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (40,901) 2,733
CASH BEGINNING OF PERIOD 3,113,031 3,137,924
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CASH END OF PERIOD $ 3,072,130 $ 3,135,191
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</TABLE>
See accompanying notes to financial statements
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<PAGE>
Regency Equities Corp.
Notes to Financial Statements
March 31, 1999
(Unaudited)
1. Significant accounting policies
Significant accounting policies of Regency Equities Corp. are set forth in
its Annual Report on Form 10-K as filed by the Company for the year ended
December 31, 1998 together with certain procedural disclosures.
2. Basis of reporting
The balance sheet as of March 31, 1999, the statements of operations for
the three month periods ended March 31, 1999 and 1998, the statement of
changes in shareholders' equity for the three months ended March 31, 1999,
and the statements of cash flows for the three month periods ended March
31, 1999 and 1998, 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 pursuant to 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 statements. 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 March 31, 1999 and
the results of its operations and cash flow for the three month period 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,
1998.
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 first quarter of 1999, the Company recorded a loss of $45,777,
before income taxes, compared to loss of $33,875 before income taxes for the
same period in 1998. The increase resulted principally from the decrease in
interest income of $3,405 attributable to a decrease in the cash balance and
an increase in the directors committee fee expense of $6,000.
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 two United States banks. The Company cannot, at this time, make any
assurances that the computer systems of the banks will be year 2000
compliant. If such systems are not year 2000 compliant, the Company's results
of operations and financial position could be adversely affected in a
material manner. Management intends to request information from the banks
regarding their year 2000 readiness and to evaluate the possible impact on
the Company.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable. The Company has exposure to interest rate changes as a
result of interest rate changes relating to the cash and cash equivalent
balances that it maintains with two banks. However, the Company believes
that any such reasonably anticipated changes in interest rates are unlikely
to have a material effect on the Company's financial position and results of
operations.
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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: May 13, 1999 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: May 13, 1999 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
<TABLE>
<CAPTION>
Exhibit
Number
<S> <C>
27.1 Financial Data Schedule (included only in the electronic filing)
</TABLE>
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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 MARCH 31,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 3,072,130
<SECURITIES> 0
<RECEIVABLES> 2,235
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,074,365
<PP&E> 1,256,441
<DEPRECIATION> 404,811
<TOTAL-ASSETS> 3,925,995
<CURRENT-LIABILITIES> 26,211
<BONDS> 0
0
0
<COMMON> 872,836
<OTHER-SE> 3,026,948
<TOTAL-LIABILITY-AND-EQUITY> 3,925,995
<SALES> 0
<TOTAL-REVENUES> 46,241
<CGS> 0
<TOTAL-COSTS> 31,311
<OTHER-EXPENSES> 60,707
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (45,777)
<INCOME-TAX> 1,210
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (46,987)
<EPS-PRIMARY> (.001)
<EPS-DILUTED> (.001)
</TABLE>
