REGENT GROUP INC /DE, 10-K, 1998-11-13

REGENT GROUP INC /DE
10-K, 1998-11-13
EQUIPMENT RENTAL & LEASING, NEC

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act
For the Fiscal Year Ended July 31, 1998

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
---------- ----------

Commission File Number 0-3338

REGENT GROUP INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Delaware 22-1558317
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

477 Madison Avenue, Suite 701, New York, New York 10022
(212) 207-4560
(Address and telephone number, including area code, of registrant's principal
executive office)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.06
2/3 par value

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 month (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
----- -----

[X] Indicated by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K.

<PAGE>

At November 2, 1998, 2,353,868 shares of registrant's Common Stock were
outstanding.

The aggregate market value of the voting stock held by non-affiliates of
the registrant based on the average bid and asked prices of such stock as
reported in the National Quotation Bureau, Incorporated as of November 2, 1998
was $1,350,388.

Documents incorporated by reference: See Part IV, Index to Exhibits

<PAGE>

REGENT GROUP INC.

INDEX

Part I Page

Item 1. Business.............................. 1

Item 2. Properties............................ 4

Item 3. Legal Proceedings..................... 4

Item 4. Submission of Matters to a Vote of
Security Holders...................... 4

Part II

Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters....... 5

Item 6. Selected Financial Data............... 7

Item 7. Management's Discussion and Analysis
of Financial Condition and Results of
Operations............................ 8 - 11

Item 8. Financial Statements and Supplementary
Data.................................. 13

Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure............................ 14

Part III

Item 10. Directors of the Registrant........... 14

Item 11. Executive Compensation................ 15 - 16

Item 12. Security Ownership of Certain Beneficial
Owners and Management................. 17 - 18

Item 13. Certain Relationships and Related
Transactions.......................... 19

Part IV

Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K............... 20

Signatures........................................... 22

*Page F-1 follows Page 12.

<PAGE>

PART I

All statements contained herein that are not historical facts, including,
but not limited to, statements regarding anticipated growth in revenue, gross
margins and earnings, statements regarding the Company's current business
strategy, the Company's projected sources and uses of cash, and the Company's
plans for future development and operations, are based upon current
expectations. These statements are forward-looking in nature and involve a
number of risks and uncertainties. Actual results may differ materially. Among
the factors that could cause results to differ materially are the following: the
availability of sufficient capital to finance the Company's business plans on
terms satisfactory to the Company; competitive factors; the ability of the
Company to adequately defend or reach a settlement of outstanding litigations
and investigations involving the Company or its management; changes in labor,
equipment and capital costs; changes in regulations affecting the Company's
business; future acquisitions or strategic partnerships; general business and
economic conditions; and other factors described from time to time in the
Company's report filed with the Securities and Exchange Commission. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which statements are made pursuant to the Private
Litigation Reform Act of 1995 and, as such, speak only as of the date made.

Item 1. Business
General

Regent Group Inc. ("Regent" or the "Company"), formerly known as NMC Corp.,
recently rescinded an agreement for one business acquisition and entered into a
letter of intent for another business.

In September 1997, Regent acquired eighty (80%) percent of the capital
stock of United States Lead Testing and Removal Service Inc. ("U.S. Lead") for a
purchase price of $2,000,000, of which $1,131,100 has been advanced toward the
purchase price. U.S. Lead markets and sells franchises to provide lead testings,
hazard assessment, in-place management, abatement planning and monitoring to
owners of commercial and residential real estate. During the year ended July 31,
1998, U.S. Lead was the Company's only operating entity.

On April 30, 1998, the Company rescinded the agreement with U.S. Lead and
all assets and liabilities were reacquired by U.S. Lead. As of this date, the
Company has no operating businesses. On October 30, 1998, the cash advanced to
purchase U.S. Lead was converted into a convertible debenture due October 30,
1999, bearing interest at eight (8%) percent. The debenture is convertible into
17,544,453 shares of U.S. Lead common stock.

The Company continues to investigate further acquisitions. In October 1998,
the Company announced it was acquiring one hundred (100%) percent of the issued
and outstanding stock of New Century Ventures, Inc. ("New Century") for two
million (2,000,000) shares of Regent common stock. New Century is a corporation
which the Company's President and Chief Executive Officer owns a thirty-five
(35%) percent interest. New Century has entered into a contract with Erskine
Properties, Inc. to acquire a 240-acre golf real estate development in Fort
Pierce, Florida, known as Gator Trace Golf Course and Residential Community
("Gator Trace"). Gator Trace is an existing Planned United Development ("PUD")
containing a private community with a semi-private golf course. Approximately,
two hundred fourteen (214) residential dwelling units have been developed and
sold.

<PAGE>

New Century is acquiring the remainder of the residential PUD for
development, but is not acquiring the golf course. New Century is purchasing the
property for one million ($1,000,000) dollars payable over three years. It is
anticipated that New Century will develop approximately two hundred fifty (250)
residential units on the site.

The Company needs to finance the downpayment of $433,333 so New Century can
complete the acquisition. As of this date, no financing has been consummated and
there is no assurance there ever will.

On June 1, 1998, the Company executed a stock purchase agreement between
Regent and Edenfield Enterprises, Inc. ("Edenfield") to acquire a 450-acre
property in Thomaston, Georgia, known as Hickory Ridge Golf Course and
Residential Community ("Hickory"). All prior agreements relating to Hickory were
terminated by mutual consent of the parties. After due diligence by the Company,
Regent terminated the stock purchase agreement and the acquisition was never
consummated.

NMC Corp. was incorporated in the State of Delaware on November 28, 1967.
In September 1997, NMC Corp. changed its name to International Madison Holdings
Corp. In October 1997, International Madison Holdings Corp. changed its name to
Regent Group, Inc. The executive offices of the Company are located at 477
Madison Avenue, Suite 701, New York, New York 10022 and its telephone number is
(212) 207-4560.

Industry Background

Gator Trace Golf Course and Residential Community

History

Gator Trace Golf Club and Community located east of U.S. 1 and immediately
adjacent to the Savannah's State Preserve and the Intercoastal Waterway in Fort
Pierce, Florida, is an established semi-private golf club and residential
community.

Gator Trace was originally planned to be a Planned Unit Development (PUD)
containing a private community with a semi-private golf course. It was approved
by the Fort Pierce Planning Commission as such and is currently approved for six
hundred seventy-eight residential dwelling units. The original developer
developed and sold two hundred fourteen residential dwelling units. Other
amenities include a clubhouse, two tennis courts, and an Olympic size heated
swimming pool. Gator Trace sits on roughly 240 acres, with an Arthur Hills
designed golf course rolling throughout the community.

The golf course opened in May of 1986, and the Clubhouse opened in January
of 1987 as a Semi-Private facility. Gator Trace Country Club continues to be a
profitable semi-private club and is very well known and respected in the
community. Players travel from Vero Beach, Fort Pierce, Port St. Lucie, Jensen
Beach, and Stuart to play a round at Gator Trace. The course averages over
40,000 rounds of golf a year. The course is the host to many charity and
fund-raising tournaments each year. The clubhouse caters many large functions
each year such as Wedding Receptions, Anniversary Parties, Class Reunions,
Birthday Parties, and many corporate outings.

<PAGE>

The back nine of Gator Trace was developed with all Single Family Homes
around it. There are 90 homes on sites ranging from 1/4 to 1/3rd acre and have
all been sold. All homes have golf course views. The front side at Gator Trace
was planned to have all Condominiums, totaling 588 units. These were to be all
two bedroom, two bath units containing approximately 1,100 square feet with no
garages but with some covered parking. To the north side of #8 hole there was
planned to be two eight-story mid-rises, totaling 96 units. The mid-rises were
to be all two bedroom and two bath units.

After construction of 32 Condominiums, all of which have been sold, it was
decided to change the style of the units on the front side. Weyerhaeuser
(Babcock) purchased the property between the holes of #2 and #5 in 1987. They
built 36 units which are duplex containing two condominiums in each unit. These
units are two bedrooms and two baths, with a den, and a one car garage,
approximately 1,400 square feet under air. The garage is big enough to house a
golf cart and a car. All units have golf course views. They are constructed with
concrete and stucco with tile roofs and were all sold.

In 1989, a new phase at Gator Trace was commenced, called the Garden Villas
which was comprised of eighty four (84) duplex residential units. These units
are between holes #6 and #7. The Garden Villas are two bedroom and two bath
units with high vaulted ceilings and a one car garage with room for a golf cart.
Sixty two of the Garden Villas have been developed and sold. All of these units
are built directly on the golf course and have golf course views with the
exception of 14 units in the center of the site.

In 1994, it was decided to build another Condominium Building. This
building has all the new hurricane requirements and has been upgraded from the
earlier condominium units. This building has eight units, all of which have been
sold, and is completely concrete and stucco.

Gator Trace was originally approved for 678 units; however, due to several
zoning changes that have taken place over the past several years, it is
presently estimated that between 240 and 280 additional residential dwelling
units can be built in the remaining parcels, all of which would have golf course
vistas.

Presently, Gator Trace has a governing body of the condominium and single
family units in the community called the Gator Trace Master Association. Each
homeowner, property owner, condo or villa owner, pays $40.00 per month to the
master association. This fee is to take care of such items as street maintenance
and repair, street lights, common ground maintenance, all landscape
improvements, patrolled security, and cable TV. There are three sub-associations
in Gator Trace. The Homeowners Condominium Association, Gator Trace Villa
Association, and the Garden Villa Association. Each association takes care of
their own building exterior maintenance, building insurance, mowing, edging,
fertilizing, mulching, and landscaping.

Development Plans

Regent Group, through its wholly-owned subsidiary New Century Ventures,
Inc., intends to develop the remainder of the residential development (PUD).
This development will contain a minimum of two hundred fifty or as many as three
hundred residential dwelling units.

<PAGE>

These residential dwelling units will be comprised of twenty-two (22)
Garden Villas containing two bedrooms, two baths, high vaulted ceilings and a
one car garage with golf cart storage which are required to conform with the
existing PUD. The balance of the project will be comprised of two story
townhouse condominiums containing a mix of two and three bedroom units with
garages and will range in size from approximately 1,100 to 1,350 square feet
under air. All of the residential dwelling units will have golf course views.
The units are intended to be sold at prices varying from approximately $74,990
to $99,990. Mortgage financing has been arranged with a large local bank that
will provide the purchasers with conventional home loans. The project is
anticipated to commence ground breaking in November 1998 and is projected to
take thirty-six months to sell out. Revenues are anticipated to be in excess of
$20,000,000 of residential dwelling unit sales.

Employees

In addition to Marvin E. Greenfield, who is President, Treasurer, Chief
Executive Officer, and a Director of the Company, Regent currently employs one
administrative assistant and a file clerk.

The Company believes its future prospects will depend upon the ability to
identify and retain capable management. The Company considers its relations with
employees, who are not represented by any labor organization, to be
satisfactory.

Item 2. Properties

The Company's corporate headquarters are located at 477 Madison Avenue,
Suite 701, New York, New York 10022, where the Company occupies approximately
1,500 square feet pursuant to a lease ending December 31, 1998 at an annual
rental of $38,400. The lease is believed to be at a market rate.

Item 3. Legal Proceedings

The Company is not presently subject to any legal proceedings which are
material to the consolidated results of operations or financial condition of the
Company.

Item 4. Submission of Matters to a Vote of Security Holders

None

<PAGE>

PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

Regent's Common Stock is traded in the over-the-counter market on the NASD
Non-NASDAQ Electronic Bulletin Board. The following table sets forth, for the
periods indicated, the high and low closing bid and asked prices for one share
of Common Stock. These prices were obtained from the National Quotation Bureau,
Incorporated. The quotations represent prices between dealers and do not include
retail markups, markdowns or commissions and do not necessarily represent actual
transactions.

The market for the Common Stock has been sporadic and there have been long
periods during which there were few, if any, transactions in the Stock and no
reported quotations. Accordingly, reliance should not be placed on the quotes
listed below, as the trades and depth of the market may be limited and,
therefore such quotes may not be a true indication of the current market value
of the Company's Common Stock.

Fiscal Year Ended Bid Prices Asked Prices
July 31, 1998 High Low High Low
- ----------------- --------------- ----------------
August 1, 1997 through
October 31, 1997 2 29/32 1 7/8 3 1/8 2 1/8

November 1, 1997 through
January 31, 1998 3 1/4 1 7/8 3 5/8 2 1/8

February 1, 1998 through
April 30, 1998 2 1/2 1 3/16 2 5/8 2

May 1, 1998 through
July 31, 1998 3 1 7/8 3 7/8 2 1/8

Fiscal Year Ended Bid Prices Asked Prices
July 31, 1997 High Low High Low
- ----------------- --------------- ----------------

August 1, 1996 through
October 31, 1996 3 3/16 3/4 3 5/8 1 1/4

November 1, 1996 through
January 31, 1997 3 5/8 1 13/32 3 7/8 1 1/2

February 1, 1997 through
April 30, 1997 3 3/4 2 4 2 3/8

May 1, 1997 through
July 31, 1997 4 1/4 2 9/16 4 3/4 2 7/8

=================

<PAGE>

(b) Approximate Number of Equity Security Holders.

The following table sets forth the approximate number of holders of record
of the equity securities of Regent listed:

Number of Holders at
Title of Class September 15, 1998
- -------------- --------------------

Common Stock, $.06 2/3 par value 1,247

Series B Convertible Preferred
Stock, $1.00 par value 10

Series C Preferred Stock,
$1.00 par value 68

No cash or stock dividends have been declared or paid during the last two
fiscal years. No cash dividends may be declared or paid on the Company's Common
Stock if, and as long as, the Series B Preferred Stock is outstanding or there
are unpaid dividends on outstanding shares of Series C Preferred Stock. No
dividends may be declared on the Series C Preferred Stock if, and as long as,
the Series B Preferred Stock is outstanding. Accordingly, it is unlikely the
Company will declare any cash dividends in the foreseeable future.

<PAGE>

Item 6. Selected Financial Data

<TABLE>
<CAPTION>
Years Ended July 31,
----------------------------------------------------------
1998(5) 1997(3)(4) 1996(4) 1995(4) 1994(4)
------- ---------- ------- ------- -------

(In thousands of dollars, except per share data)
<S> <C> <C> <C> <C> <C>
Selected Statements of Operations Data:

Sales................................... $ 33 $ 1,080 $ 1,496 $ 577 $ 339
Cost of sales........................... 4 414 555 246 177
Gain on rescission
and sale of subsidiary.................. 1,062 621 -- -- --
Interest expense........................ 435 228 181 25 6
(Loss) before income tax provision ..... (1,909) (326) (758) (430) (490)
Income tax provision. .................. -- -- 5 1 5
Net (loss).............................. (1,909) (326) (763) (431) (495)
(Loss) per common share - basic......... (.97) (.35) (.79) (.74) (1.34)

Years Ended July 31,
-----------------------------------------------------------
1998 1997 1996(2) 1995 1994
---- ---- ------- ---- ----

Selected Balance Sheet Data:
(In thousands of dollars)
<S> <C> <C> <C> <C> <C>

Total Assets............................ $ 1,447 $ 484 $ 3,186 $ 1,544 $ 1,200
Long-term debt.......................... -- -- 96 12 39

<FN>
(1) The Company acquired Krystal as of October 31, 1993, pursuant to a transaction accounted for as a
purchase. Accordingly, the results of Krystal's operations are reflected above solely for the
periods after the acquisition and the balance sheet data set forth above does not include Krystal
for periods prior to 1994.

(2) Krystal acquired Water Express as of November 1, 1995, pursuant to a transaction accounted for as
a purchase. Accordingly, the results of Water Express's operations are reflected above solely for
the periods after the acquisition and the balance sheet data set forth above does not include
Water Express for the periods prior to 1996.

(3) The Company sold Krystal on February 21, 1997. Accordingly, the results of Krystal's operations
are reflected through the date of sale.

(4) All share and per share date have been restated to reflect the 1-10 reverse stock split.

(5) As of April 30, 1998, the Company rescinded its investment in U.S. Lead.
</FN>
</TABLE>

<PAGE>

Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations

Liquidity and Capital Resources

On February 21, 1997, the Company consummated the sale of its only
operating subsidiary, Krystal Fountain Water Company Limited. The selling price
was approximately $1,600,000 resulting in a gain of approximately $621,000.
Subsequent to the sale, the Company liquidated substantially all of its
liabilities. The Company continues to pursue other investment opportunities. The
Company recently acquired an eighty (80%) percent interest in one business and
entered into letters of intent for two other businesses. However, the
acquisition was subsequently rescinded and one of the letters of intent was
terminated.

In September 1997, Regent acquired eighty (80%) percent of the capital
stock of U.S. Lead for a purchase price of $2,000,000, of which $1,131,100 has
been advanced toward the purchase price. During the year ended July 31, 1998,
U.S. Lead was the Company's only operating entity. The company rescinded the
transaction with U.S. Lead, effective April 30, 1998. All assets and liabilities
were reacquired by U.S. Lead. During the time U.S. Lead was owned by the
Company, losses by U.S. Lead exceeded $1 million. The Company financed the
payments toward the purchase price and cash flow for operations by loans from
various stockholders. As part of the rescission agreement, the cash advanced to
U.S. as partial payment toward the purchase price was converted into a
convertible debenturedue October 30, 1999, bearing interest at eight (8%)
percent. The debenture is convertible into 17,544,453 shares of U.S. Lead common
stock.

On June 1, 1998, the Company executed a stock purchase agreement between
Regent and Edenfield Enterprises, Inc. to acquire a 450-acre property in
Thomaston, Georgia, known as Hickory Ridge Golf Course and Residential Community
("Hickory"). All prior agreements relating to Hickory were terminated by mutual
consent of the parties. After further due diligence by the Company, Regent
terminated the stock purchase agreement and the acquisition was never
consummated.

In October 1998, the Company announced it was acquiring one hundred (100%)
percent of the issued and outstanding stock of New Century Ventures, Inc. ("New
Century") for two million (2,000,000) shares of Regent common stock. New Century
has entered into an agreement to acquire a 240-acre golf real estate development
in Fort Pierce, Florida, known as Gator Trace for one million ($1,000,000)
dollars. It is anticipated New Century will develop approximately two hundred
fifty (250) residential units on the site. The Company believes the cash flow
from the sale of these units will be sufficient to fund the Company's operations
over the next twelve (12) months. The Company needs to finance the downpayment
of $433,333 so New Century can complete the acquisition. As of this date, no
financing has been consummated and there is no assurance there ever will.

<PAGE>

The Company's viability as a going concern is dependent upon its ability to
obtain needed working capital through additional equity and/or debt financing.
The Company has borrowed funds from stockholders of the Company to meet
obligations on the U.S. Lead acquisition and third parties for the Gator Trace
acquisition. Management is actively seeking additional capital to ensure the
continuation of its operations and for the various acquisitions. The Company has
partially funded the Gator Trace acquisition, however, there is no assurance
that additional capital will be obtained to compete the Gator Trace transaction.
This raises substantial doubt about the ability of the Company to continue as a
going concern.

Results of Operations

1998 Compared to 1997

Prior to February 21, 1997, the Company operated its business through
Krystal. On September 22, 1997, the Company acquired eighty (80%) percent of the
outstanding common stock of U.S. Lead. The operating results of U.S. Lead have
been included in the statement of operations from the date of acquisition. On
April 30, 1998, the Company rescinded the transaction with U.S. Lead. The
consolidated financial statements include the accounts of the Company and its
subsidiary through the rescission date.

The Company previously operated its business through Krystal. The Company
acquired Krystal in October 1993. In November 1995, Krystal acquired
substantially all the net assets of Water Express. Regent's investment in
Krystal was reduced to fifty (50%) percent as a result of the acquisition. On
February 21, 1997, Regent sold its investment in Krystal. The consolidated
financial statements for 1997 include the accounts of the Company and its
subsidiary through the sale date.

Sales

Sales decreased from $1,079,808 for the year ended July 31, 1997 to $33,188
for the year ended July 31, 1998. The Company attributes the decrease primarily
to the sale of its only operating subsidiary in February 1997. U.S. Lead, the
Company's recent acquisition, commenced operations in January 1998 and very few
sales have been generated through the date of the rescission.

Cost of Sales

Cost of sales decreased from $413,722 for the year ended July 31, 1998 to
$4,102 for the year ended July 31, 1998. The Company attributes the decrease
primarily to the reasons described above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased from $1,404,380 for
the year ended July 31, 1997 to $2,564,347 for the year ended July 31, 1998. The
Company attributes the increase primarily to increases in professional fees and
consulting fees in pursuing new acquisitions and increases in marketing expenses
to launch the new program for U.S. Lead in January 1998.

<PAGE>

Interest Expense

Interest expense increased from $228,032 for the year ended July 31, 1997
to $435,129 for the year ended July 31, 1998. The Company has recently incurred
debt to finance the investment in U.S. Lead and help contribute to Regent's
overhead expenses.

Gain on Rescission

On April 30, 1998, the Company rescinded its acquisition of U.S. Lead. The
Company distributed all assets and liabilities to U.S. Lead as of that date. The
Company recognized a gain on rescission of approximately $1.1 million.

1997 Compared to 1996

Sales

Revenues from sales decreased 27.8% to $1,079,808 for the year ended July
31, 1997 from $1,495,846 for the year ended July 31, 1996. The decrease is
primarily due to revenues for Krystal are reflected only through the date of
sales as compared to revenues for the entire prior year. Prior to the sale of
Krystal revenues increased from the prior year due to an increase in the number
of customers and more demand for the Company's product.

Cost of Sales

Cost of sales decreased 25.5% to $413,722 for the year ended July 31, 1997
from $555,282 for the year ended July 31, 1996 due to the reasons described
above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased 12.8% to $1,404,380
for the year ended July 31, 1997 from $1,611,260 for the year ended July 31,
1996. The decrease is primarily due to the reasons described above offset, in
part by, increases in officer's compensation and professional fees.

Interest Expenses

Interest expense increased to $228,032 for the year ended July 31, 1997
from $181,434 for the year ended July 31, 1996. The increase is primarily
attributable to interest expense on the below market warrant given to Ballydine.
The outstanding debt incurred by the Company was primarily paid off with the
proceeds from the sale of Krystal.

Gain on Sale of Subsidiary

On February 21, 1997, the Company sold its investment in Krystal for
$1,600,000, resulting in a gain of approximately $621,000.

Accounting Standards

For information regarding certain promulgated accounting standards, see
Note 1 of Notes to Consolidated Financial Statements.

<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)

Other Matters

Year 2000

Background

The Year 2000 problem is the result of computer programs being written
using two digits (rather than four) to define the applicable years. Any of the
Company's programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000, which could result in
miscalculations or system failures.

The Company does not rely heavily on computer technologies to operate its
business. However, in 1998, the Company conducted an initial assessment of its
information technology to determine which Year 2000 related problems might cause
processing errors or computer system failures.

The following discussion of the implications of the Year 2000 problem for
the Company contains numerous forward-looking statements based on inherently
uncertain information. The cost of the project and the date on which the Company
plans to complete its internal Year 2000 modifications are based on the
Company's best estimate, which were derived utilizing a number of assumptions of
future events including the continued availability of internal and external
resources, third party modifications and other factors. However, there can be no
guarantee that these estimates will be achieved, and actual results could
differ. Moreover, although the Company believes it will be able to make the
necessary modifications in advance, there can be no guarantee that failure to
modify the systems would not have a material adverse effect on the Company.

In addition, the Company places a high degree of reliance on computer
systems of third parties, such as customers, trade suppliers and computer
hardware and commercial software suppliers. Although the Company is assessing
the readiness of these third parties and preparing contingency plans, there can
be no guarantee that the failure of these third parties to modify their systems
in advance of December 31, 1999, would not have a material adverse effect on the
Company.

Readiness

The Year 2000 project is intended to ensure that all critical systems,
devices and applications, as well as data exchanged with customers, trade
suppliers and other third parties have been evaluated and will be suitable for
continued use into and beyond the Year 2000.

Since early 1998, the Company has required Year 2000 compliance statements
from all suppliers of the Company's computer hardware and commercial software.
Regardless of the compliance statements, all third party hardware and software
will also be subjected to testing to reconfirm the Year 2000 readiness.

<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)

Cost

The Company estimates that the total cost of achieving Year 2000 readiness
for its internal systems, devices and applications is approximately $25,000.
Year 2000 project costs are difficult to estimate accurately and the projected
cost could change due to unanticipated technological difficulties and Year 2000
readiness of third parties.

Contingency Plans

In the event that the efforts of the Company's Year 2000 project do not
address all potential systems problems, the Company is currently developing
business interruption contingency plans. The Company believes, however, that due
to the widespread nature of potential Year 2000 issues, the contingency
planning process is an ongoing one which will require further modifications as
the Company obtains additional information regarding (1) the Company's project
and (2) the status of third party Year 2000 readiness. Contingency planning for
possible Year 2000 disruptions will continue to be defined, improved and
implemented.

Risks

The Company believes that completed and planned modifications and
conversions of its critical systems, devices and applications will allow it to
be Year 2000 compliant in a timely manner. There can be no assurances however,
that the Company's internal systems, devices and applications or those of a
third parties on which the Company relies will be Year 2000 compliant by Year
2000 or that the Company's or third parties' contingency plans will mitigate the
effects of any non-compliance. An interruption of the Company's ability to
conduct its business due to a Year 2000 readiness problem could have a material
adverse effect on the Company.

This Form 10-K, other than the historical financial information, may
consist of forward looking statements that involve risks and uncertainties,
including, but not limited to, statements contained in "Business" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations". Such statements are based on many assumptions and are subject to
risks and uncertainties. Actual results could differ materially from the results
discussed in the forward looking statements due to a number of factors,
including, but not limited to, those identified in the preceding paragraph as
well as those set forth under "Business--Risks and Uncertainties" in this Form
10-K.

<PAGE>

Item 8. Financial Statements and Supplementary Data

Index to Financial Statements and Supplementary Financial Data

Page

Independent Auditors' Report F-1 - F-2

Financial Statements:
Consolidated Balance Sheets as of July 31,
1998 and 1997 F-3 - F-4

Consolidated Statements of Operations, Years
Ended July 31, 1998, 1997 and 1996 F-5

Consolidated Statements of Stockholders'
(Deficiency) Equity, Years Ended July 31,
1998, 1997 and 1996 F-6 - F-7

Consolidated Statements of Cash Flows, Years
Ended July 31, 1998, 1997 and 1996 F-8 - F-9

Notes to Consolidated Financial Statements F-10 - F-24

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
and Stockholders of
Regent Group Inc.
New York, New York

We have audited the consolidated balance sheets of Regent Group Inc. and
subsidiary (formerly NMC Corp.), as of July 31, 1998 and 1997, and the related
consolidated statements of operations, stockholders' equity (deficiency), and
cash flows for each of the three years in the period ended July 31, 1998. Our
audits also included the financial statement schedule listed in the Index at
Item 14. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Regent Group
Inc. and subsidiary at July 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
July 31, 1998 in conformity with generally accepted accounting principles. Also,
in our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly
in all material respects the information set forth therein.

F-1

<PAGE>

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As more fully
explained in Note 1 of Notes to Consolidated Financial Statements, the Company
needs to obtain additional financing and achieve a level of sales to support its
cost structure. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

WIENER, PENTA & GOODMAN, P.C.
Certified Public Accountants
Eatontown, New Jersey

October 29, 1998

F-2

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

ASSETS

July 31,
--------------------------------
1998 1997
--------- ---------

Current Assets:
Cash $ 4,111 $ 76,441
Notes receivable 97,898 --
Prepaid expenses and other current assets 210,557 407,784
--------- --------

Total Current Assets 312,566 484,225
--------- --------

Property, plant and equipment - net 3,558 8,687

Advances 1,131,100 --
Investment -- 50,000
Deferred acquisition costs -- 119,277
--------- --------

TOTAL ASSETS $1,447,224 $ 662,189
========= ========

See notes to consolidated financial statements

F-3
<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

July 31,
------------------------
1998 1997
---------- --------
<S> <C> <C>
Current Liabilities:
Short-term debt $ 1,157,500 $ 131,800
Accrued expenses 211,329 118,158
Due to officer 342,500 100,000
---------- ---------
Total Current Liabilities 1,711,329 349,958
---------- ---------

Commitments and Contingent Liabilities

Stockholders' Equity (Deficiency):
Preferred stock, par value $1; authorized
500,000 shares (involuntary liquidation value $777,912):
Convertible Series B, at redemption value; issued and
outstanding 65,141 shares 130,282 130,282
Cumulative Series C, par value $1;
issued and outstanding 64,763 shares 64,763 64,763

Common stock, par value $.06-2/3;
authorized 20,000,000 shares; issued
and outstanding 2,351,993 and 1,494,493 shares 156,878 99,682
Additional paid-in capital 9,500,101 8,224,858
Deficit (10,116,129) (8,207,354)
---------- ---------

Total Stockholders' Equity
(Deficiency) (264,105) 312,231
---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY) $ 1,447,224 $ 662,189
========== =========
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

<TABLE>
<CAPTION>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended
-------------------------------------------------------
July 31,
-------------------------------------------------------

1998 1997 1996
---------- ---------- ---------
<S> <C> <C> <C>
Revenues:
Sales $ 33,188 $1,079,808 $1,495,846
Other income -- 19,668 70
Gain on sale of subsidiary -- 620,529 --
---------- --------- ---------
33,188 1,720,005 1,495,916
---------- --------- ---------

Costs and Expenses:
Cost of sales 4,102 413,722 555,282
Selling, general and administrative expenses 2,564,347 1,404,380 1,611,260
Interest expense 435,129 228,032 181,434
---------- --------- ---------

3,003,578 2,046,134 2,347,976
---------- --------- ---------

Loss before income tax provision (2,970,390) (326,129) (852,060)

Gain on rescission 1,061,615 -- --
Minority interest in net income (loss)
of consolidated subsidiary -- 88,331 (94,368)
---------- --------- ---------
Loss before income tax provision (1,908,775) (414,460) (757,692)
Income tax provision -- -- 5,643
---------- ---------- ---------

Net loss $(1,908,775) $ (414,460) $ (763,335)
========== ========= =========

Loss per common share - basic $ (.97) $ (.35) $ (.79)
========== ========= =========

Weighted average number of common
shares outstanding - basic 1,975,639 1,177,644 970,010
========== ========= =========

See notes to consolidated financial statements.

F-5
</TABLE>

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED JULY 31, 1998, 1997 AND 1996

Preferred Stock
---------------------------------
Convertible Cumulative
--------------------------------- Foreign
Series B Series C Common Stock Additional Currency
--------------- -------------- ---------------- Paid-In Translation
Shares Amount Shares Amount Shares Amount Capital Deficit Adjustment Total
------ ------ ------ ------ ------ ------ ------- ------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, August 1,
1995 65,141 $130,282 64,763 $64,763 936,677 $ 62,476 $7,351,643 $(7,029,559) $ 23,607 $ 603,212

Issuance of common
stock in lieu of
compensation (at
$.25 per share) 50,000 3,335 2,915 6,250

Issuance of warrants
in lieu of interest
(at $.001 per share) 13,552 13,552

Foreign currency
translation ad-
justment (13,554) (13,554)

Net (loss) (763,335) (763,335)
------ ------- ------ ------ --------- ------- --------- ---------- --------- ----------

Balance, July 31,
1996 65,141 130,282 64,763 64,763 986,677 65,811 7,368,110 (7,792,894) 10,053 (153,875)

Issuance of options and
warrants in lieu of
compensation (at $.001
to $2.50 per share) 390,821 390,821

Issuance of common stock
in lieu of compensation
and consulting (at $1.00
to $2.9375 per share) 150,000 10,005 266,870 276,875

Exercise of stock options
and warrants (at $.001
to $1.00 per share) 357,816 23,866 76,343 100,209

Issuance of warrants in
lieu of interest (at
$.001 per share) 122,714 122,714

See notes to consolidated financial statements. (Continued)

F-6
</TABLE>

<PAGE>

<TABLE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED JULY 31, 1998, 1997 AND 1996

Foreign currency trans-
lation adjustment (10,053) (10,053)

Net (loss) (414,460) (414,460)
------ ------- ------ ------ --------- ------- --------- ---------- --------- ----------

Balance, July 31, 1997 65,141 130,282 64,763 64,763 1,494,393 99,682 8,224,858 (8,207,354) -- 312,231

Issuance of common
stock in lieu of
compensation (at
$2.31 per share) 1,250 84 2,803 2,887

Issuance of common stock
in lieu of consulting
services (at $2.25
to $3.00 per share) 325,000 32,678 700,073 -- -- 721,751

Exercise of warrants
(at $1.00 per share) 220,000 14,674 205,326 220,000

Issuance of common stock
in lieu of interest (at
$2.16 to $2.44 per
share) 311,250 20,762 367,039 387,801

Net (loss) (1,908,775) (1,908,775)
------ ------- ------ ------ --------- ------- --------- ---------- --------- ----------

Balance, July 31, 1998 65,141 $130,282 64,763 $64,763 2,351,993 $156,878 $9,500,101 $(10,116,129) $ -- $ (264,105)
====== ======= ====== ====== ========= ======= ========= =========== ========= ==========

See notes to consolidated financial statements.

F-7
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended
-----------------------------------------------------------
July 31,
-----------------------------------------------------------
1998 1997 1996
---------- ---------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $(1,908,775) $ (414,460) $ (763,335)
Adjustments to reconcile net (loss) to net cash
provided from operating activities:
Depreciation and amortization 1,392 208,792 285,511
Non-employee non-cash compensation 1,099,634 456,038 19,802
Non-cash executive compensation 252,888 211,658 150,000
Loss on abandonment of leasehold improvements 2,558 -- --
Reserve for bad debts -- (9,000) 9,000
Gain on sale of subsidiary -- (620,529) --
Minority interest in income (loss) of consolidated
subsidiary -- 88,331 (94,368)
Gain on sale of equipment -- (21,282) (9,645)
Loss from former subsidiary 1,115,210 -- --
Gain on rescission (1,061,615) -- --
Changes in operating assets and liabilities net of
effects from acquisition of Water Express and sale
of Krystal Fountain Water Company Limited 409,675 (262,465) (53,861)
---------- ---------- ---------
Net Cash (Used in) Operating Activities (89,033) (362,917) (456,896)
---------- ---------- ---------
Cash flows from investing activities:
Advances (1,131,100) -- --
Loans to unaffiliated entity (97,898) -- --
Proceeds from sale of subsidiary -- 1,624,295 --
Proceeds from sale of equipment -- 54,629 16,173
Purchase of property, plant and equipment -- (412,904) (131,515)
Prepayments on acquisitions -- (50,000) --
---------- ---------- ---------
Net Cash Provided by (Used in) Investing
Activities (1,228,998) 1,216,020 (115,342)
---------- ---------- ---------
Cash flows from financing activities:
Proceeds from borrowings 1,183,200 636,243 804,711
Proceeds from minority shareholder -- -- 77,150
Repayments on borrowings (157,500) (1,518,652) (294,520)
Proceeds from sale of common stock -- 100,209 --
Proceeds from exercise of warrants 220,000 -- --
---------- ---------- ---------
Net Cash Provided by (Used in) Financing Activities 1,245,700 (782,200) 587,341
---------- ---------- ---------
Foreign currency translation adjustment -- (10,053) (13,554)
---------- ---------- ---------
Net Increase (decrease) in Cash (72,331) 60,850 1,549

Cash - beginning of year 76,442 15,592 14,043
---------- ---------- ---------
Cash - end of year $ 4,111 $ 76,442 $ 15,5922
========== ========== =========

(Continued)
See notes to consolidated financial statements.

F-8
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)

Years Ended
-----------------------------------------------------------
July 31,
-----------------------------------------------------------
1998 1997 1996
---------- ---------- ---------
<S> <C> <C> <C>
Changes in operating assets and liabilities net of
effects from purchase of Water Express and the sale
of Krystal Fountain Water Company Limited consist of:
(Increase) in accounts receivable $ -- $ (1,032) $ (206,855)
(Increase) decrease in inventories -- 8,214 (4,433)
(Increase) decrease in prepaid expenses and sundry receivables 197,227 (274,961) (90,683)
(Increase) decrease in deferred acquisition costs 119,277 (100,409) (106,570)
Increase in accounts payable -- 1,002,820 149,178
Increase (decrease) in accrued expenses 93,171 (256,653) 113,889
Increase (decrease) in income taxes payable -- (7,970) 4,940
Increase (decrease) in deferred revenue -- (145,704) 73,642
Increase (decrease) in customer deposits -- (105,873) 13,031
(Decrease) in lease obligations -- (380,897) --
---------- ---------- ---------
$ 409,675 $ (262,465) $ (53,861)
========== ========== =========
Supplementary information:
Cash paid during the year for:
Interest $ 38,826 $ 126,566 $ 128,998
========== ========== =========
Income taxes $ -- $ 7,950 $ 2,568
========== ========== =========

Supplementary information of non-cash
investing and financing activities:
During 1995, Krystal Fountain Water Company
Limited purchased the net assets of Water Express
In conjunction with this acquisition:
Fair value of assets acquired $1,260,110
=========
Liabilities assumed $ 360,399
=========
Common stock issued for compensation $ 2,887 $ 80,000 $ 6,250
========== ========== =========
Common stock issued for consulting services $ 721,751 $ 196,875 $ --
========== ========== =========
Common stock issued in lieu of payment of interest $ 387,801 $ -- $ --
========== ========== =========
Warrants issued in lieu of payment of interest $ -- $ 122,714 $ 13,552
========== ========== =========

Issuance of options and warrants for employee
and non-employee compensation $ -- $ 390,821 $ --
========== ========== =========

See notes to consolidated financial statements.

F-9
</TABLE>

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Regent Group Inc. (the "Company" or "Regent"), formerly NMC Corp., is
incorporated under the laws of the State of Delaware on November 28, 1962
and is a holding Company for its subsidiary.

Recent Developments

a) In October 1998, the Company announced it was acquiring one hundred
(100%) percent of the issued and outstanding stock of New Century Ventures,
Inc. ("New Century") for two million (2,000,000) shares of Regent common
stock. New Century is a corporation which the Company's President and Chief
Executive Officer owns a thirty-five (35%) percent interest. New Century
has entered into a contract with Erskine Properties, Inc. to acquire a
240-acre golf real estate development in Fort Pierce, Florida, known as
Gator Trace Golf Course and Residential Community ("Gator Trace"). Gator
Trace is an existing Planned United Development ("PUD") containing a
private community with a semi-private golf course. Approximately, two
hundred fourteen (214) residential dwelling units have been developed and
sold by Erskine Properties Inc.

New Century is acquiring the remainder of the residential PUD for
development, exclusive of the golf course. New Century is purchasing the
property for one million ($1,000,000) dollars payable over three years. It
is anticipated that New Century will develop approximately two hundred
fifty (250) residential units on the site.

The Company needs to finance the downpayment of $433,333 so New
Century can complete the acquisition. As of this date, no financing has
been consummated and there is no assurance there ever will.

b) On June 1, 1998, the Company executed a stock purchase agreement
between Regent and Edenfield Enterprises, Inc. ("Edenfield") to acquire a
450-acre property in Thomaston, Georgia, known as Hickory Ridge Golf Course
and Residential Community ("Hickory"). All prior agreements relating to
Hickory were terminated by mutual consent of the parties. After further due
diligence by the Company, Regent terminated the stock purchase agreement
and the acquisition was never consummated.

c) On September 22, 1997, the Company acquired eighty (80%) percent of
the common stock of United States Lead Testing and Removal Service, Inc.
("U.S. Lead") for $2 million. U.S. Lead markets and sells franchises to
provide lead testings, hazard assessment, in-place management, abatement
planning and monitoring to owners of commercial and residential real
estate. U.S. Lead has executed an agreement with HFS Inc. ("HFS") to become
their exclusive preferred vendor for lead testing services for Century 21,
ERA and Coldwell Banker. HFS is a global consumer services company. Through
October 30, 1998, the Company advanced U.S. Lead $1,131,100 toward the
purchase price.

The Company rescinded the acquisition effective April 30, 1998. All
assets and liabilities of U.S. Lead as of that date were reacquired by U.S.
Lead. The Company incurred losses from U.S. Lead from the date of
acquisition through the date of rescission of approximately $1,115,000,
which is included in the statement of operations for the year ending July
31, 1998. On October 30, 1998

F-10

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Developments (Continued)

the advances made to U.S. Lead by the Company in the amount of $1,131,100
as partial payment of the original purchase price has been converted into a
convertible debenture due October 30, 1999. The Company can convert the
debenture into 17,544,453 shares of U.S. Lead common stock. Upon
recscission, the Company recognized a gain of approximately $1,100,000.

d) On February 21, 1997, the Company sold its only operating business,
Krystal Fountain Water Company Limited ("Krystal"). The selling price was
approximately $1,600,000 resulting in a gain on the sale of approximately
$621,000.

Basis of Presentation

The accompanying consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business.

The Company has experienced recurring losses and negative cash flows
from operations through July 31, 1998. In addition, losses and negative
cash flows from operations have continued throughout the period subsequent
to July 31, 1998. Also, as of July 31, 1998, the Company has a working
capital deficit of approximately $1.4 million.

The Company's ability to continue as a going concern is dependent upon
its ability to obtain needed working capital through additional equity
and/or debt financing or generate enough sales from Gator Trace to support
the Company's overhead. Management is actively seeking additional capital
to ensure the continuation of its operations and for various acquisitions.
There is no assurance that additional capital will be obtained to complete
the Gator Trace transaction. This raises substantial doubt about the
ability of the Company to continue as a going concern.

The financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or the
amounts and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern.

Principles of Consolidation

The consolidated financial statements include the accounts of the
Company and its subsidiaries through their sale or rescission dates. All
significant intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.

Foreign Currency Translation

The financial statements of the foreign subsidiary is generally
measured using the local currency as the functional currency. Assets

F-11

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Foreign Currency Translation (Continued)

and liabilities of the subsidiary are translated at the rates of exchange
at the balance sheet date. The resultant translation adjustments are
included in equity adjustment from translation, a separate component of
stockholders' equity (deficiency). Income and expense items are translated
at average monthly rates of exchange. Gains or losses from foreign currency
transactions of the subsidiary is included in net earnings.

Deferred Acquisition Costs

Costs incurred in connection with proposed acquisitions are deferred
until the acquisitions have either been completed and will then be included
as part of the purchase price or expensed if the acquisitions are not
completed.

Property and Equipment

Property and equipment are stated at cost less accumulated
depreciation. Depreciation, which includes amortization of assets under
capital leases, is calculated using the straight-line and declining-balance
methods over the estimated useful lives of the assets.

Minority Interest

Minority interest represents the minority stockholders' proportionate
share of the investment of Krystal. In February 1997, the Company sold its
entire fifty (50%) percent investment interest in Krystal.

Impairment of Long-Lived Assets

In March 1995 the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of". This statement was adopted by the Company in 1996. Since
adoption, no impairment losses have been recognized.

Stock-Based Compensation

Effective August 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation".
The standard encourages, but does not require, companies to recognize
compensation expense for grants of stock, stock options and other equity
instruments to employees based on fair value accounting rules. The Company
has adopted the disclosure only provisions of SFAS No. 123 for pro forma
information.

Earnings (Loss) Per Common Share

In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings Per
Share", which requires companies to present basic earnings per share (EPS)
and diluted earnings per share, instead of the primary and fully diluted
EPS that was required. The new standard requires additional informational
disclosures, and also makes certain modifications to the currently
applicable EPS calculations defined in Accounting Principles Board No. 15.
The Company's interim and prior year results have been restated to conform
with the provisions of this statement.

F-12

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings (Loss) Per Common Share (Continued)

Basic loss per common share is computed by dividing net loss by the
weighted average number of common shares outstanding during the year.
Diluted earnings per common share are computed by dividing net earnings by
the weighted average number of common and common stock equivalent shares
outstanding during the year. Common stock equivalents are excluded from the
loss per share calculation for the three years ending July 31, 1998,
because the effect would be antidilutive. Common stock equivalents relate
to stock options and warrants.

Fair Value of Financial Instruments

For financial instruments including cash, notes receivable, prepaid
expenses and other current assets, short-term debt, accounts payable,
accrued expenses, and amounts due to officer it was assumed that the
carrying values approximated fair value because of their short-term
maturities. It is not practicable to estimate the fair value of the
non-publicly traded long-term debt.

Segment Information

During June 1997, the Financial Standards Board issued statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information". This Statement requires the disclosure
of financial and descriptive information about reportable operating
segments. Operating segments are defined as components of an enterprise
about which separate financial information is available that is evaluated
regularly in deciding how to allocate resources and in assessing
performance. The Company has not yet completed its evaluation of this
Statement. This Statement is effective for the Company's July, 1999 year
end financial statements.

Reclassification

Certain reclassifications have been made to prior year balances to
conform with the current year's presentation.

2. ACQUISITION/SALE OF SUBSIDIARY

On November 1, 1995, Krystal acquired substantially all the net assets
of Water Express, a water distribution company in the United Kingdom, in
exchange for the issuance of 363,155 shares of the common stock of Krystal,
approximately $379,000 in cash, and a promissory note for approximately
$125,000. The total purchase price approximated $1,085,000. Accordingly,
the Company's investment in Krystal was reduced to fifty (50%) percent.

The acquisition has been accounted for using the purchase method of
accounting, and, accordingly the purchase price was allocated to the assets
purchased and the liabilities assumed based upon the fair values at the
date of acquisition. The fair value of the assets acquired of Water Express
was $1,260,000 and the liabilities assumed totalled $360,000 resulting in
goodwill of approximately $185,000, which will be amortized principally
over twenty (20) years. The operating results of the acquired business is
included in the consolidated statement of operations from the date of
acquisition.

F-13

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. ACQUISITION (Continued)

Pro forma unaudited operating information for the year ended July 31,
1996 of Regent, Krystal and Water Express assuming the business
combinations had occurred at the beginning of the respective year in which
Water Express was acquired is as follows:

July 31, 1996
-------------

Net sales $1,661,505

Net (loss) (726,874)

Net (loss) per share $ (.75)

During February, 1997, the Company sold its fifty (50%) percent
investment in Krystal to Regent's fifty (50%) percent equity partner in
Krystal for approximately $1,600,000.

3. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

July 31,
----------------------
1998 1997
-------- --------
Machinery and equipment $ 22,710 $ 22,710
Leasehold improvements -- 6,197
Master tapes 20,001 20,001
-------- --------
42,711 48,908

Less accumulated depreciation
and amortization 39,153 40,221
-------- --------

Net property, plant and equipment $ 3,558 $ 8,687
======== ========

4. LOANS AND ADVANCES

Loans and advances consist of the following:

July 31, 1998
-------------
Loan to Edenfield Enterprises, Inc.
interest at 8%, due on demand $ 97,898

Advances to U.S. Lead Testing
and Removal Service, Inc.,
converted into a debenture
on October 30, 1998, interest
at 8%, due October 30, 1999;
convertible into 17,544,453
shares of U.S. Lead 1,131,100
---------
1,228,998
Current portion 97,898
---------

$1,131,100
=========

F-14

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. DEBT
Short-term debt is as follows:

July 31,
-----------------------
1998 1997
--------- --------

Unsecured note, due on demand,
interest at 12% per annum (1) $ 432,500 $131,800

Secured note, due March 20, 1999,
interest at 7.5% per year (2) 100,000 --

Unsecured note, due on demand,
interest at 12% per annum (3) 200,000 --

Unsecured notes, due on demand,
interest from 8% to 12% per
annum (4) 250,000 --

Unsecured notes, due on demand,
interest at 12% per annum (5) 55,000 --

Unsecured notes, due on demand,
interest at 12% per annum (6) 120,000 --
--------- -------
$1,157,500 $131,800
========= =======

(1) The unsecured notes are payable to Mrs. Barbara Greenfield ("Mrs.
Greenfield"), wife of Mr. Marvin E. Greenfield ("Mr. Greenfield"), the
Company's President and Chief Executive Officer. Per the loan agreement,
Mrs. Greenfield received shares of Regent common stock as additional
consideration. In addition, for every ninety days after the inception of
each note, if the note is still outstanding Mrs. Greenfield will receive
additional shares. During the year ended July 31, 1998, Mrs. Greenfield
received a total of 254,375 shares of Regent common stock. The Company has
recorded interest expense in the amount of $275,702 for the year ended July
31, 1998 and prepaid interest of $57,500 is included in the Company's
balance sheet at July 31, 1998 in connection with the issuance of these
shares.

(2) The note payable to Republic Bank is collateralized by a certificate of
deposit owned by an affiliate of Mrs. Greenfield.

(3) The unsecured note is payable to a shareholder of the Company. On September
18, 1997, in connection with this note, the unsecured shareholder received
25,000 shares of Regent common stock as additional consideration. The
Company has recorded interest expense in the amount of $72,860 for the year
ending July 31, 1998 and prepaid interest of $9,917 which is included in
the Company's balance sheet at July 31, 1998 in connection with the
issuance of these shares.

(4) The unsecured notes are payable to BSM, Inc., a shareholder of Regent.
The Company has recorded interest expense of $15,608 for the year ending
July 31, 1998.

(5) The unsecured notes are payable to Mrs.Felicia Rubin ("Mrs. Rubin"),
daughter of Mr. Greenfield. The loan agreement is similar to the note due
Mrs. Greenfield. (See (1) above). For the year ended July 31, 1998 Mrs.
Rubin was to receive 19,375 shares, of which 18,750 have been received and
the balance of 625 due to her. The Company has recorded interest expense in
the amount of $25,190 for the year ended July 31, 1998 in connection with
the issuance of these shares.

F-15

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(6) The unsecured note is payable to Mrs. Valerie Greenfield ("Mrs. V.
Greenfield"), mother of Mr. Greenfield. The loan agreement is similar to
the note due Mrs. Greenfield. (See (1) above). For the year ended July 31,
1998 Mrs. Valerie Greenfield was to receive 27,500 shares, of which 13,125
shares have been received and the balance of 14,375 is due to her. The
Company has recorded interest expense in the amount of $36,430 for the year
ended July 31, 1998 in connection with the issuance of these shares.

6. INCOME TAX

As of July 31, 1998, the Company has a net operating loss carryforward
("NOL") of approximately $4,648,000 expiring in the years 1998 through
2011. The Company has not reflected any benefit of such NOL carryforward in
accordance with the Financial Accounting Board Statement No. 109 (SFAS 109)
as the realization of this deferred tax benefit is not more than likely.

The provision for income taxes consists of the following:

Year Ended July 31,
-------------------------------
1998 1997 1996
-------- ------- -------
Current:
Federal $ -- $ -- $ --
Foreign -- -- --
State -- -- 5,643
-------- ------- -------
$ -- $ -- $ 5,643
======== ======= =======

A reconciliation of taxes on income at the federal statutory
rate to amounts provided is as follows:

Year Ended July 31,
-------------------------------
1998 1997 1996
-------- ------- -------
Tax (benefit) computed
at the Federal statutory rate $(648,984) $(140,916) $(257,615)
Increase in taxes resulting from:
State income taxes -- -- 1,919
Effect of unused tax losses 648,984 140,916 261,339
-------- ------- -------
$ -- $ -- $ 5,643
======== ======= =======

The temporary differences between the tax bases of assets and the financial
reporting amount that give rise to the deferred tax assets and their
approximate tax effect are as follows:

July 31,
-------------------------------------------------------
1998 1997
------------------------- -------------------------
Temporary Temporary
Difference Tax Effect Difference Tax Effect

Net operating
loss carry-
forward $ 4,648,000 $ 1,859,200 $ 3,031,000 $ 1,212,000
Officer salary 342,500 137,000 100,000 40,000
Interest expense 85,500 34,200 -- --
Valuation
allowances (5,076,000) (2,030,400) (3,131,000) (1,252,000)
---------- ---------- ---------- ----------
$ -- $ -- $ -- $ --
========== ========== ========== ==========

F-16

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. EMPLOYMENT AGREEMENTS

On July 28, 1997, the Board of Directors of the Company awarded Mr.
Greenfield a bonus in the amount of $100,000. As of July 31, 1998, $7,500
of the bonus has been paid and the balance of $92,500 is included in due to
officer.

The Board of Directors also approved a new employment agreement with
Mr. Greenfield commencing August 1, 1997. Mr. Greenfield's compensation
will be $250,000 per year. The employment agreement expires July 31, 2001.
Mr. Greenfield's salary for the year ending July 31, 1998 has been accrued
and is included in due to officer as of July 31, 1998.

8. CAPITAL STOCK

a) Preferred Stock

Convertible Series B preferred shares ("Series B") are non-dividend
bearing, and are convertible into shares of the Company's common stock
at any time at the option of the holder and are subject to adjustment
in accordance with certain antidilution clauses. Cumulative Series C
preferred shares ("Series C") are not convertible but are entitled to
cumulative cash dividends at the rate of $.65 per share per annum,
payable in each year commencing the year after all the shares of
Series B are retired.

b) Voting Rights

The holders of Series B and Series C preferred stock have no voting
rights.

c) Dividend Restrictions

No cash dividends may be declared or paid on the Company's common
stock if, and as long as, Series B is still outstanding or there are
dividends in arrears on outstanding shares of Series C. No dividends
may be declared on Series C shares if, and as long as, any Series B
shares are outstanding.

d) Other information is summarized as follows:

Convertible Cumulative
Series B Series C
----------- ----------
Number of common shares to
be issued upon conversion
of each preferred share 10 None

Redemption price and in-
voluntary liquidation value
per preferred shares (if
redeemed, must be in series
order, Convertible Series
B then Cumulative Series C) $2.00 $10.00(1)

(1) Plus any dividend in arrears.

F-17

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. CAPITAL STOCK (Continued)

Because the Series B preferred stock had mandatory redemption
requirements at the time of its issuance (which are no longer
applicable), these shares are stated at redemption value. Series B
shares are stated at par value.

e) Common Stock

On December 1, 1995, Paul Woolford ("Woolford"), the Managing Director
of Krystal and a Director of the Company, received 50,000 shares of
the Company's common stock as part of his employment agreement.
Compensation expense of $6,250 was charged to operations during the
year ended July 31, 1996.

On February 25, 1997, Mr. Greenfield and Mr. Woolford each received
25,000 shares of the Company's common stock in connection with the
sale of Krystal. This resulted in a total expense of $80,000 which
reduced the gain from the sale of Krystal.

During the fiscal year ended July 31, 1998, Mrs. Greenfield, Mrs.
Rubin and Mrs. V. Greenfield received 254,375, 18,750 and 13,125
shares of common stock, respectively. The common stock was issued in
exchange for monies borrowed from each of the individuals. Interest
expense of $285,301 was charged to operations during the year ended
July 31, 1998.

During the fiscal year ended July 31, 1998, 325,000 shares of common
stock were issued in lieu of consulting fees. Consulting expense of
$721,751 was charged to operations during the year ended July 31,
1998.

On April 9, 1998, a shareholder of the Company was issued 25,000
shares of common stock. The common stock was issued per the loan
agreement for monies loaned to the Company. Interest expense of
$49,583 was charged to operations during the year ended July 31, 1998.
The remaining expense of $9,917 will be charged to interest during the
fiscal year ended July 31, 1999.

On July 24, 1998, two employees of the Company were issued a total of
1,250 shares of common stock in lieu of compensation. This resulted in
a charge to operations of $2,887 for the fiscal year ended July 31,
1998.

During April and May, 1998, 220,000 shares of common stock were issued
in exchange for warrants exercised. The Company received $220,000.

F-18

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. OPTIONS AND WARRANTS

The Company has adopted the disclosure only provisions of Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation". Accordingly, no compensation cost for employees has been
recognized for the stock options and warrants awarded except for $131,660
for fiscal year ended 1997, which represents the value of stock options and
warrants that were granted below fair market value at the time of the
grant. Had compensation cost for the Company's stock option plans and
warrants been determined based on the fair value at the grant date for
awards in fiscal year 1997 and 1996, the Company's net loss and net loss
per share would have increased to the pro forma amounts indicated below:

Years Ended
July 31,
---------------------------
1998 1997
---------- ---------

Net loss - as reported $(1,908,775) $(414,460)
Net loss - pro forma $(1,908,775) $(445,181)
Loss per share - as reported $ (.97) $ (.35)
Loss per share - pro forma $ (.97) $ (.38)

The fair value of options and warrants are estimated on the date of
grant using the Black-Scholes option pricing model with the following
weighted average assumptions used for grants in 1997 and 1996: dividend
yield of -0-%, expected volatility of 148% to 386%, risk-free interest rate
of 5.1% and expected lives of .5 to 1 years.

The Company grants stock options and warrants as follows:

The granting of Company stock options is not under a formal stock option
plan.

(1) During the year ended July 31, 1997, the Board of Directors approved
the issuance of stock options to Mr. Greenfield to purchase 475,000
shares of the Company's common stock at prices from $.0667 per share
to $1.00 per share (which was above market value) expiring in periods
through November 2007. A portion of these options were issued for his
forgiving accrued compensation for the period April 1, 1995 to July
31, 1997. These below market value options resulted in additional
compensation expense for the year ended July 31, 1997 of approximately
$132,000.

(2) On December 13, 1996, the Company issued options to purchase 53,826
shares of the Company's common stock at a price of $.0667 (which was
below fair market value) expiring December 2006 in connection with
legal services performed for the Company. This resulted in additional
legal expense of approximately $74,000 for the year ended July 31,
1997. The options were subsequently exercised in December 1996.

(3) During July 1992, certain investors including the daughter of Mr.
Greenfield, purchased 27,000 shares of the Company's common stock and
warrants to acquire 100,000 shares of the Company's common stock at
$3.00 per share. The warrants expired on August 1, 1996.

F-19

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. OPTIONS AND WARRANTS (Continued)

(4) On March 15, 1995, the Company entered into a secured loan agreement
with a third party. (See Notes 1 and 4 of Notes to Consolidated
Financial Statements). In consideration for the loan, the Company
issued warrants to purchase 100,000 shares of the Company's common
stock at $1.00 per share (which was above fair value), exercisable
through March 13, 1997. In November, 1996, the warrant was exercised
and 100,000 shares of common stock was issued by the Company.

(5) On August 19, 1996, the Company issued to BSM 50,000 shares of common
stock and warrants to purchase 220,000 shares of common stock at an
exercise price of $1.00 per share (which was below fair value),
expiring during November, 2000, in connection with consulting services
provided to the Company. This resulted in a consulting expense in the
amount of $103,774 for the year ended July 31, 1997. BSM subsequently
assigned these warrants to various parties including 50,000 warrants
to a related party. All of these warrants were exercised during the
year ending July 31, 1998.

(6) On December 26, 1996, the Company issued a warrant to Arnold Poliskin
a former director, to purchase 200,000 shares of the Company's common
stock at a price of $2.50 per share, expiring January 2000 in
connection with consulting services performed for the Company. This
resulted in additional expense of $80,980 during the year ended July
31, 1997.

(7) On December 8, 1995, Regent and Krystal entered into loan agreements
with Ballydine Investments Limited ("Ballydine") for a combined
line-of-credit ("line-of-credit") of up to $750,000 with interest at
18% per year, payable monthly. Additionally, the Company granted to
Ballydine a warrant to purchase 9.9% of the outstanding, fully diluted
shares of the Company, or 203,990 shares at $.001 per share (which was
below fair market value) expiring December, 2006. This resulted in
additional interest expense of $13,552 and $122,714 during the years
ended July 31, 1996 and 1997, respectively. Interest expense on the
loans for the years ended July 31, 1997 and 1996, was $62,092 and
$59,689, respectively. During May 1997, Ballydine exercised their
warrant.

F-20

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. OPTIONS AND WARRANTS (Continued)

Information regarding the Company's stock option plans and warrants for
fiscal years ended July 31, 1998, 1997 and 1996 is as follows:

July 31, 1998 July 31, 1997
--------------------- -----------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
------- --------- ------- --------
<S> <C> <C> <C> <C>
Options outstanding -
beginning of year 475,000 $ .4597 -- $ --
Options exercised -- -- (53,826) .0667
Options granted -- -- 528,826 .4189
Options cancelled -- --
------- -------
Options outstanding -
end of year 475,000 $ .4597 475,000 $ .4597
======= =======
Option price range
at end of year $.0667 to $1.00 $.0667 to $1.00
Option price range
for exercised shares -- $.0667
Options available
for grant at end of year N/A N/A

July 31, 1998 July 31, 1997 July 31, 1996
--------------------- ----------------------- -------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price Shares
------- --------- ------- -------- -------
Warrants outstanding -
<S> <C> <C> <C> <C> <C>
beginning of year 420,000 $ 1.7143 403,990 $ .99 200,000
Warrants exercised (220,000) 1.00 (303,990) .33 --
Warrants granted - 420,000 1.7143 203,990
Warrants cancelled - (100,000) 3.00 --
-------- -------- -------

Warrants outstanding -
end of year 200,000 $ 2.50 420,000 $ 1.7143 403,990
======== ======== =======

Warrant price range
at end of year $1.00 - $2.50 $1.00 - $2.50 $.001 - $1.00
Warrant price range
for exercised shares $1.00 $.001 - $1.00 N/A

Warrants available
for grant at end of year N/A N/A N/A

</TABLE>
F-21

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. OPTIONS AND WARRANTS (Continued)

The weighted exercise price and weighted fair value of options and warrants
granted by the Company for fiscal years ended 1997 and 1998 are as follows:

July 31, 1998 July 31, 1997
------------------ ------------------
Weighted Weighted Weighted Weighted
Average Average Average Average
Exercise Fair Exercise Fair
Price Value Price Value
-------- -------- -------- --------

Weighted average of options
and warrants granted during
the year whose exercise price
exceeded fair market value at
the date of grant -- -- $ 1.48 $ .35

Weighted average of options
and warrants during the year
whose exercise price was less
than fair market value at the
date of grant -- -- $ .0667 $ .63

The following table summarizes information about fixed-price stock options
and warrants outstanding at July 31, 1998.

<TABLE>
<CAPTION>
Weighted
Number Average Weighted Number Weighted
Range of Outstanding Remaining Average Exercisable Average
Exercise At July 31, Contractual Exercise At July 31, Exercise
Prices 1998 Life Price 1998 Price
-------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$ .0667 275,000 8.52 years $ .0667 275,000 .0667
$1.00 - $2.50 400,000 4.83 years 1.750 400,000 1.750
------- -------

675,000 675,000
======= =======

</TABLE>

F-22

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. OPERATIONS IN GEOGRAPHIC AREAS, FOREIGN OPERATIONS AND EXPORT SALES

<TABLE>
<CAPTION>
Adjustments
United United and
States Kingdom Eliminations Consolidated
------ ------- ------------ ------------
July 31, 1997
<S> <C> <C> <C> <C>
Sales to unaffiliated
customers $ -- $1,079,808 $ -- $1,079,808
Transfers between
geographic areas -- -- -- --
--------- --------- --------- ---------
Total Revenue $ -- $1,079,808 $ -- $1,079,808
========= ========= ========= =========

Operating (loss) $ (663,712) $ (74,582) -- $ (738,294)
========= ========= ========= =========
Identifiable assets
at July 31, 1997 $ 662,189 $ -- $ -- $ 662,189
========= ========= ========= =========

July 31, 1996
Sales to unaffiliated
customers $ -- $1,495,846 $ -- $1,495,846
Transfers between
geographic areas -- -- -- --
--------- --------- --------- ---------
Total Revenue $ -- $1,495,846 $ -- $1,495,846
========= ========= ========= =========

Operating (loss) $ (437,838) $ (104,555) $ -- $ (542,393)
========= ========= ========= =========
Identifiable assets
at July 31, 1996 $1,203,009 $2,177,573 $ (69,540) $3,311,042
========= ========= ========= =========
</TABLE>

Operating (loss) represents total revenue less operating expenses. In
computing operating (loss), none of the following items have been included:
interest income or expense, other income and income taxes.

Identifiable assets are those assets of the Company that are
identified with the operations of each geographic area.

The Company realized exchange losses of approximately $29,125 and
$5,078 for the years ended July 31, 1997, and 1996, respectively.

The Company's foreign operations were principally in the United
Kingdom through February 21, 1997, the date of sale of the subsidiary.

F-23

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. COMMITMENTS

The Company leases office facilities under an operating lease which
extends through December 31, 1998. The minimum annual lease payment due
under the operating lease is as follows:

Year Ending Operating
July 31, Leases
----------- ---------
1998 $ 16,000
--------
Total Minimum Lease
Payments $ 16,000
========

Rent expense under operating leases for the year ended July 31, 1998,
1997 and 1996 was $36,150, $34,446, and $71,780, respectively. The Company
subleases office space on a month-to-month basis. The amount of sublease
income was $6,000 for the years ended July 31, 1998, and 1997, and $12,000
for the year ended July 31, 1996. Included in the sublease income were
amounts received from the Mast Group Inc. ("Mast") and National BMF Corp.
("NBMF"). The Company received $600 in sublease income from Mast for the
years ended July 31, 1998 and 1997 and $6,000 from both Mast and NBMF for
the year ending July 31, 1996. Mr. Greenfield is the President of Mast and
NBMF. The Company believes the terms of the sublease to Mast and NBMF were
at least as favorable to the Company as rent which have been received from
unaffiliated third parties.

F-24

<PAGE>

Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None to be reported.
PART III

Item 10. Directors and Executive Officers of the Registrant

The directors and executive officers and key employees of the Company,
together with their ages and a brief description of their employment history,
are as follows:

Name Age Position
- ---- --- ---------

Marvin E. Greenfield 67 President, Chief Executive Officer
Treasurer, Chief Financial Officer
and Director

Paul Rosen 68 Director

Paul R.C. Woolford 49 Director

Judith Kardos 36 Secretary and Director

Paul Rosen was elected to the Board of Directors as a Director to replace
Arnold Poliskin in July 1997.

All directors hold office until the next annual meeting of stockholders
and the election and qualification of their successors. Vacancies on the Board
of Directors may be filled by the remaining directors until the next annual
stockholders' meeting. Officers serve at the discretion of the Board. The Board
has no committees. The Company has not to date paid directors fees for service
on the Board of Directors or any committee thereof.

The following is a brief summary of the background of each executive
officer and director of the Company.

MARVIN E. GREENFIELD. Mr. Greenfield has served as the President, Director
and Chief Executive Officer of the Company since July 1, 1992. He is, and has
been since 1978, president of the Mast Group, Inc. ("Mast"), a company providing
management services to real estate entities with offices located in New York
City, N.Y. and Miami, Florida.

Mr. Greenfield filed a voluntary petition for personal bankruptcy pursuant
to Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for
the Southern District of Florida on September 16, 1992, which was converted to a
proceeding under Chapter 7 of the Bankruptcy Code. Mr. Greenfield was discharged
pursuant to such proceeding in November 1997.

PAUL ROSEN. Mr. Rosen became a Director of the Company in July, 1997. Mr.
Rosen is the Chief Executive Officer of Prose Management, Inc., a real estate
management company, has been in the residential construction business since
1957, and has built more than 3,000 apartment or condominium units as well as
various free-standing, retail food stores. Since 1973, he has been engaged in
the management of apartment buildings, office buildings and shopping centers
throughout the southeastern U.S. and Puerto Rico.

<PAGE>

Item 10. Directors and Executive Officers of the Registrant (Continued)

PAUL R. C. WOOLFORD. Mr. Woolford became a Director of the Company in
March, 1995. He was employed by Krystal Group, Inc., a former subsidiary of
Regent Group, Inc., from July 1992 through May 1998. From March 1993 through May
1998, he was a managing director of Krystal Group, Inc. From May 1998 to the
present, he has been a managing director of Cool Water Ltd. in London, England.

JUDITH KARDOS. Ms. Kardos has been the Secretary of the Company since July
1, 1992. She became a director in July 1992. She was employed by Mast from 1984
through November 1993 as an executive assistant.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

To the Company's knowledge, based solely on a review of such materials as
are required by the Securities and Exchange Commission, no officer, director or
beneficial holder of more than ten percent of the Company's issued and
outstanding shares of Common Stock failed to timely file with the Securities and
Exchange Commission any form or report required to be so filed pursuant to
Section 16(a) of the Securities Exchange Act of 1934 during the fiscal year
ended July 31, 1998.

Item 11. Executive Compensation

The following table sets forth, for the fiscal years ended July 31, 1998,
1997 and 1996, the annual and long-term compensation of the Company's Chief
Executive Officer and the two other most highly compensated executive officers
of Regent ("Named Officers").

<PAGE>

Item 11. Executive Compensation (Continued)
<TABLE>
<CAPTION>

Summary Compensation Table

Annual Compensation Long-Term Compensation
------------------- ---------------------------------
Awards Payouts
---------------------- ---------
Securities
Restricted Underlying
Name and Other Annual Stock Options LTIP All Other
Principal Position Year Salary($) Bonus($) Compensation($) Award(s)($) SARs(#) Payouts($) Compensation
- ------------------ ---- --------- -------- --------------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Marvin Greenfield 1998 250,000 -- -- -- -- -- --
President and 1997 150,000 100,000 -- 40,000 475,000 -- --
Chief Executive 1996 150,000 -- -- -- -- -- --
Officer

</TABLE>

- --------------

(A) Mr. Greenfield and the Company entered into an employment agreement through
July 31, 2001. The agreement provides for a base salary of $250,000 per
year. Upon termination of Mr. Greenfield's employment by the Company except
for cause or death or disability, he is to receive the sum of $750,000.

(B) During the year ended July 31, 1997, the Board of Directors approved the
issuance of stock options to Mr. Greenfield to 475,000 shares of the
Company's common stock. A portion of these options (options to purchase
275,000 shares) were issued for his forgiving accrued compensation in the
amount of $350,000 for the period April 1, 1995 to July 31, 1997. In March
1995, Mr. Greenfield waived cash compensation payable to him from August 1,
1993 through March 31, 1995, aggregating $250,000, in exchange for the
issuance of 300,000 shares of the Company's common stock.

(C) In July 1997, the Board of Directors approved a $100,000 bonus payable to
Mr. Greenfield, which has not yet been paid.

(D) On February 25, 1997, Mr. Greenfield received 25,000 shares of the
Company's common stock in connection with the sale of Krystal.

(E) During 1996 no named Officer received perquisites (i.e., personal benefits)
in excess of the lesser of $60,000 or 10% of such individual's reported
salary and bonus.

(F) "All Other Compensation" only includes amounts earned or with respect to
1996, 1997 and 1998.

<PAGE>

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth as of November 1, 1998 the beneficial
ownership of voting securities of Regent by each person known to Regent to be
the beneficial owner of more than 5% of any class of its voting securities as
well as the beneficial ownership of equity securities of Regent by each of its
directors and its directors and officers as a group. To Regent's knowledge, each
person named has the sole voting and investment power with respect to the
securities listed as owned by him or it.

Only the common stock, which is also known as "Class A Common Stock", has
voting rights. An owner of Series B Convertible Stock has the right to convert
each share of such stock into one share of Class A Common Stock. Until such
conversion, the shares of Series B Preferred Stock may not be voted. None of the
classes of stock vote jointly.

Number of Shares
of Common Stock Approximate
Name and Address Beneficially Percentage of
of Beneficial Owner Owned (1) Class (1) (2)
- --------------------- ----------------- --------------
Marvin E. Greenfield
(3)(4)(5)(6)(7) 1,070,020 37.9%

Paul Rosen (3) 6,563 .3

Judith Kardos (3) 1,600 *

Paul Woolford (3)(7) 62,500 2.7

Ira Russack (8) 175,000 7.4
504 Broadway
New York, NY 10012

Ballydine Investments Ltd. (9) 203,990 8.7
55 Mulgrave Street
Dun Laoghaire
County Dublin, Eire

Plymouth Partners, Ltd. 200,000 8.5

Arnold Poliskin (10) 200,000 7.8
333 Recter Place
New York, NY 10280

Officer and directors as a group 1,140,683 40.3
(four persons)

- --------------------------------------------------------------------------------

<PAGE>

Item 12. Security Ownership of Certain Beneficial Owners and Management
(Continued)

(1) There were 2,353,868 shares of Common Stock outstanding as of November 2,
1998.

(2) For purposes hereof, a person is deemed to be the beneficial owner of
securities that can be acquired by such person with 60 days from the date
hereof, upon the exercise of warrants or options or conversion of
convertible securities. Each beneficial owner's percentage ownership is
determined by assuming that any warrants, options or convertible securities
that are held by such person (but not those held by any other person) and
which are exercisable or convertible within 60 days from the date hereof,
have been exercised or converted.

(3) The addresses of each of these persons is c/o Company, 477 Madison Avenue,
Suite 701, New York, NY 10014.

(4) Director, President, Chief Executive Officer and Treasurer of Regent.

(5) Includes 254,375 shares held by Mr. Greenfield's wife, issued in connection
with a financing arrangement, 3,345 shares held of record by National BMF
Corp. ("NBMF") and 25,000 shares held of record by Profitmargin Limited
("Profitmargin"), a company located in London, England. The outstanding
common stock of NBMF is owned by Mr. Greenfield's daughter and a trust for
which she is sole beneficiary. Mr. Greenfield's wife is the sole trustee of
the trust. Mr. Greenfield is also the President of NBMF. The outstanding
equity interest in Profitmargin is owned equally by Mr. Greenfield's wife
and NBMF.

(6) Includes (i) 200,000 shares issuable at a price $.0001 per share upon the
exercise of options, which are exercisable until October 30, 2006, (ii)
200,000 shares issuable at a price of $1.00 per share upon the exercise of
options, which are exercisable until October 30, 2006, (iii) 75,000 shares
issuable at a price of $.001 per share upon the exercise of options, which
are exercisable until October 30, 2007.

(7) Includes 25,000 shares issued in connection with the sale of Krystal.

(8) Includes (i) 150,000 shares issued upon the exercise of warrants and
(ii) 25,000 shares issued in connection with a financing arrangement.

(9) Includes 203,990 shares issued upon the exercise of warrants.

(10) Includes 200,000 shares issuable at a price of $2.50 per share until
November 1, 2000.

(11) Includes 200,000 shares issued in lieu of consulting fee.

- --------------

* Represents less than one percent of the Common Stock outstanding.

<PAGE>

Item 13. Certain Relationships and Related Transactions

Barbara Greenfield, the wife of Marvin E. Greenfield, the President, Chief
Executive Officer and a Director of the Company, collateralized the Company's
note to Republic National Bank of New York dated March 20, 1998, in the
principal amount of $100,000 with a certificate of deposit. In addition,
unsecured notes, dated July 31, 1997 through July 6, 1998, in the amount of
$432,500, are payable by the Company to Mrs. Greenfield representing advances
made by Mrs. Greenfield to Regent. In connection with these notes, Mrs.
Greenfield received 254,375 shares of Regent common stock as additional
consideration. The Company has recorded interest expense in the amount
of $275,202 for the year ended July 31, 1998, of which $19,297 is included
in accrued expenses at July 31, 1998.

Unsecured notes, dated January and July 1998, in the amount of $55,000 are
payable to Mrs. Felicia Rubin, the daughter of Mr. Greenfield, representing
advances made by Mrs. Rubin to Regent. In connection with these notes, Mrs.
Rubin was to receive 19,375 shares of Regent common stock, of which 18,750 was
received and the balance of 625 due her as additional consideration. The Company
has recorded interest expense in the amount of $25,190 for the year ended July
31, 1998, of which $3,502 is included in accrued expenses at July 31, 1998.

Unsecured notes, dated February, April and May 1998, in the amount of
$120,000, are payable to Mrs. Valerie Greenfield, the mother of Mr. Greenfield,
representing advances made by Mrs. Valerie Greenfield to Regent. In connection
with these notes, Mrs. Valerie Greenfield was to receive 27,500 shares of Regent
common stock, of which 13,125 was received and the balance of 14,375 due her as
additional consideration. The Company has recorded interest expense in the
amount of $36,430 for the year ended July 31, 1998, of which $17,477 is included
in accrued expenses at July 31, 1998.

The Company borrowed $175,000 from Plymouth Partners, Inc. on January 12,
1998. BSM, Inc., a shareholder of the Company, purchased the note. In addition,
BSM, Inc. advanced the Company an additional $125,000, of which $50,000 has been
repaid. The notes are unsecured with interest varying between eight and ten
percent. Interest expense for the year ending July 31, 1998, in the amount of
$15,608 has been accrued to BSM, Inc.

In November 1996, the Company issued to BSM, Inc. warrants to purchase up
to 220,000 shares of common stock at a purchase price of $1.00 per share, which
are exercisable until November 1, 2000. BSM, Inc. assigned such warrants to
various individuals. All of these warrants were exercised during the year ended
July 31, 1998.

In September 1997, the Company borrowed $200,000 from Ira Russack, a
principal shareholder of the Company. The Company issued Mr. Russack 25,000
shares of Regent common stock as additional consideration. The Company
has recorded interest expense in the amount of $72,860 for the year ended July
31, 1998, of which $23,277 is included in accrued expenses at July 31, 1998.

The Company subleases office space. The Company received $6,000 in
sublease income from Mast for the year ended July 31, 1998. Mr. Greenfield is
also the President of Mast. The Company believes the terms of the sublease of
Mast are at least as favorable to the Company as rent which could have been
obtained from unaffiliated third parties. See Note 10 of Notes to Consolidated
Financial Statements.

In October 1998, the Company announced it was acquiring one hundred (100%)
percent of the issued and outstanding stock of New Century Ventures, Inc. for
two million (2,000,000) shares of Regent common stock. New Century Ventures,
Inc. is a corporation which Mr. Greenfield owns a thirty-five (35%) percent
interest.

<PAGE>

PART IV

Item 14. Exhibits, Financial statement Schedules and Reports on Form 8-K

Page
----

(a)

1. Financial statements filed as part of this report:

Independent Auditors' Report F-1 - F-2

Consolidated Balance Sheets as of July 31, 1997 and 1996 F-3 - F-4

Consolidated Statements of Operations for the Years Ended
July 31, 1998, 1997 and 1996 F-5

Consolidated Statements of Stockholders' Equity for the
Years Ended July 31, 1998, 1997 and 1996 F-6 - F-7

Consolidated Statements of Cash Flows for the Years Ended
July 31, 1998, 1997 and 1996 F-8 - F-9

Notes to Consolidated Financial Statements F-10 - F-24

2. Financial statement schedules filed as part of this report:

Schedule II: Valuation and Qualifying Accounts S-1

All other schedules are omitted because they are inapplicable,
not required or the information is included in the financial
statements or notes thereto.

(b)

3. Exhibits filed as part of this report

Exhibit No.:

3.1 Certificate of Incorporation and Bylaws of the Registrant --
Incorporated by reference to Exhibit 3 of the Company's Annual Report
on Form 10-K for the year ended July 31, 1981.

10.1 Employment agreement between Registrant and Maxwell Friedberg --
Incorporated by reference to Exhibit C of the Company's Annual Report
on Form 10-K for the year ended July 31, 1988.

10.2 Lease covering Registrant's office -- Incorporated by reference to
Exhibit No. 1 of the Company's Annual Report on Form 10-K for the year
ended July 31, 1990.

<PAGE>

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(Continued)

Exhibit No.:

10.3 Agreement dated August 5, 1991 between Regent Group Inc. Maxwell
Friedberg and Estate of Jesse Selter ("Estate") for the Sale of
Registrant's Stock by the Estate to Maxwell Friedberg -- Incorporated
by reference to Exhibit No. 1 of the Company's Annual Report on Form
10-K for the year ended July 31, 1991.

10.4 Stock purchase agreement between Maxwell Friedberg and the Krystal
Group dated June 11, 1992 -- Incorporated by reference to Exhibit
No. 1 of the Company's Annual Report on Form 10-K for the year ended
July 31, 1993.

10.5 Stock purchase agreement dated October 15, 1993 between Regent Group
Inc. and Krystal Fountain Water Company Limited -- Incorporated by
reference to Exhibit 10.5 of the Company's Annual Report on Form 10-K
for the year ended July 31, 1994.

10.6 Report of Gerald Edelman, Registered Auditor and Chartered
Accountants, on the financial statements of Krystal Fountain Water
Company Limited for the year ended July 31, 1995, dated September 27,
1995 -- Incorporated by reference to Exhibit 10.6 of the Company's
Annual Report on Form 10-K for the year ended July 31, 1994.

10.7 Asset Sale Agreement dated March 29, 1995 between Krystal Fountain
Water Company Limited ("Purchaser") and Matthew Richard Mitchison and
Catherine Mitchison ("Seller") -- Incorporated by reference to Exhibit
A of the Company's Quarterly Form 10-Q for the quarterly period ended
April 30, 1995.

10.8 Asset Sale Agreement dated February 17, 1997 between Matthew Richard
Mitchison, Catherine Jane Mitchison and Krystal Fountain Water Company
Limited ("Purchasers") and NMC Corporation ("Seller") -- Incorporated
by reference to Exhibit A of the Company's Form 8-K filed on March 17,
1997.

10.9 Stock Purchase Agreement dated September 12, 1997 between
International Madison Holdings Corp. F/K/A NMC Corp. ("Purchaser") and
United States Lead Testing & Removal Service Inc. ("Seller") --
Incorporated by reference to Exhibit A of the Company's Form 8-K filed
on September 26, 1997.

10.10 Rescission Agreement dated April 30, 1998 between Regent Group, Inc.
("Purchaser") and United States Lead Testing and Removal Services Inc.
("Seller").

11.1 A statement regarding the computation of earnings per share is omitted
because such computation can be clearly determined from the material
contained in this Annual Report on Form 10-K.

22.1 Subsidiaries of the Registrant.

27.1 Financial Data Schedule.

(b) Reports on Form 8-K

No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

REGENT GROUP INC.

By: /s/ MARVIN E. GREENFIELD
------------------------------------
Marvin E. Greenfield, President

Date: November 12, 1998

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

/s/ MARVIN E. GREENFIELD November 12, 1998
- ----------------------------------
Marvin E. Greenfield, President,
Treasurer and Director

/s/ PAUL ROSEN November 12, 1998
- ----------------------------------
Paul Rosen, Director

/s/ PAUL WOOLFORD November 12, 1998
- ----------------------------------
Paul Woolford, Director

/s/ JUDITH KARDOS November 12, 1998
- ----------------------------------
Judith Kardos, Secretary and
Director

<PAGE>

REGENT GROUP INC. AND SUBSIDIARY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Additions
-------------------------
(1) (2)
Charged Charged
Balance at to profit to other Balance
Beginning and loss accounts Deductions at close
Description of period or income (describe) (describe) of period
----------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Year ended July 31, 1998
Allowance for doubtful
accounts $ -- $ -- $ -- $ -- $ --
-------- -------- -------- -------- ------
Year ended July 31, 1997
Allowance for doubtful
accounts $ 9,000 $ -- $ -- (a) $ (9,000) $ --
======== ======== ======== ======== ======
Year ended July 31, 1996
Allowance for doubtful
accounts $ -- $ 9,000 $ -- $ -- $9,000
-------- -------- -------- -------- ------

</TABLE>

- ------------------

a) Amount transferred as part of sale agreement with Krystal Fountain Water
Company Limited.

S-1

RECISSION AGREEMENT dated as of April 30, 1998, by and between REGENT
GROUP, INC., a Delaware corporation, with an office at 477 Madison Avenue, New
York, New York 10022 ("Regent") and UNITED STATES LEAD TESTING & REMOVAL
SERVICE, INC., a New York corporation, with an office at 26 Harvard Lane,
Hastings-on-Hudson, New York 10706 ("U.S. Lead").

WITNESSETH:

WHEREAS, on June 30, 1997, Regent and U.S. Lead entered into, and on
September 12, 1997 consummated the transactions contemplated by, a Stock
Purchase Agreement dated June 30, 1997 by and between Regent and U.S. Lead, as
amended on September 12, 1997 and February 12, 1998 (the "Stock Purchase
Agreement"); and

WHEREAS, as result of the parties failure to mutually agree on certain
items set forth in the Stock Purchase Agreement and the abandonment of the Dirks
Offering, as defined in the Stock Purchase Agreement, Regent and U.S. Lead
desire to enter into this Agreement in order to rescind the transactions
consummated pursuant to the Stock Purchase Agreement on the terms set forth
herein; and

NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Recission of Stock Purchase Agreement

1.1 Exchange. Subject to the terms and conditions of this Agreement,
and in reliance upon the representations, warranties and agreements set forth
herein, Regent shall transfer

1
<PAGE>

and assign to U.S. lead 21,024,004 shares of common stock of U.S. Lead (the
"U.S. Lead Shares") constituting all of the shares of common stock of U.S. Lead
which were issued to Regent in connection with the Stock Purchase Agreement.
U.S. Lead and Regent acknowledge that Regent has delivered $1,131,100 as payment
for U.S. Lead Shares pursuant to the Stock Purchase Agreement. In lieu of
receiving cash in the amount of $1,131,100, Regent and U.S. Lead hereby agree
that such amount shall be paid to Regent pursuant to the debenture in the form
of Exhibit A.

2. Representations and Warranties of Regent.

Regent warrants and represents to and covenants with U.S. lead that:

2.1 Binding Obligations. This Agreement and any agreement or contract
the execution and delivery of which is contemplated in this Agreement, when
executed and delivered, will be the valid, binding obligation of Regent
enforceable according to its terms or their terms, except as such enforcement
may be limited by the laws of bankruptcy or insolvency.

2.2 Authorizations. No authorization, approval, order, license,
permit, franchise or consent of, declaration to, or filing or registration
with, any court, governmental authority or any other person or entity which is
not a party to this Agreement is required in connection with the execution,
delivery and performance of this Agreement by Regent, except filings with the
Securities and Exchange Commission, as may be required, which shall be the
responsibility of Regent.

2.3 Good Title. The delivery to U.S. Lead of the instruments of
transfer and ownership contemplated by this Agreement will vest good and
marketable title to the U.S. Lead

2
<PAGE>

Shares, free and clear of any lien, encumbrance, liability or restriction,
except restrictions on transfer under the federal and state securities laws.

3. Representations and Warranties of U.S. Lead

U.S. Lead warrants and represents to and covenants with Regent that:

3.1 Binding Obligations. This Agreement and any agreement or contract
the execution and delivery of which is contemplated in this Agreement, when
executed and delivered, will be the valid, binding obligation of U.S. Lead,
enforceable according to its terms or their terms, except as such enforcement
may be limited by the laws of bankruptcy or insolvency.

3.2 Authorization. No authorization, approval, order license, permit,
franchise or consent of, declaration to, or filing or registration with, any
court, governmental authority or any other personal or entity which is not a
party to this Agreement is required in connection with the execution, delivery
and performance of this Agreement by U.S. Lead.

4. Closing

4.1 The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Regent at 477
Madison Avenue, New York, New York 10022 at 10 A.M. on the date hereof.

5. Survival of Representations, Warranties, Etc.

All of the representations, warranties, covenants and agreements made
by the parties to this Agreement shall survive the consummation of the
transactions contemplated hereby.

3
<PAGE>

6. Indemnification.

6.1 Right to Indemnification. Regent and U.S. Lead each indemnify
and hold the other harmless from and against all claims, damage, losses,
liabilities, costs and expenses (including, without limitation, settlement
costs and expenses (including, without limitation, settlement costs and any
legal, accounting or other expenses for investigating or defending any actions
or threatened actions) incurred by the other in connection with:

(a) Any material breach of any representation or warranty made
in this Agreement by the party against whom indemnification is sought; or

(b) Any material misrepresentation contained in any statement,
certificate or schedule to this Agreement furnished by the party against
whom indemnification is sought.

6.2 Claims for Indemnification. Whenever any claim shall arise
for indemnification hereunder, the party seeking indemnification (the
"Indemnified Party") shall promptly notify each party from whom indemnification
is sought (the Indemnifying Party") of the claim and, when known, the facts
constituting the basis for the claim. In the event of any such claim for
indemnification results from or is in connection with any claim or legal
proceedings by a third party, the notice to the Indemnifying Party shall
specify, if known, the amount or an estimate of the amount, of the liability
arising therefrom. The Indemnified party shall not settle or compromise any
claim by a third party for which it is entitled to indemnification hereunder
without the prior written consent of the Indemnifying Party, which shall not be
unreasonably withheld or delayed, unless suit shall have been instituted against
the Indemnified Party and the

4
<PAGE>

Indemnifying Party shall not have taken control of such suit after notification
thereof, as provided in Section 6.3 of this Agreement.

6.3 Defense of Claim. If a claim giving rise to indemnity
hereunder results from or arises out of any claim or legal proceeding by a
person who is not a party to this Agreement, the Indemnifying Party, as its sole
cost and expense, may, upon written notice to the Indemnified Party, assume the
defense of any such claim or legal proceeding, with counsel reasonably
satisfactory to the Indemnified Party. the Indemnified Party shall be entitled
to participate in (but not control) the defense of any such action, with its
counsel and as its own expense. If the Indemnifying party does not assume the
defense of any such claim or litigation resulting therefrom within ten (10) days
after notice of such claim is given to the Indemnified Party, (a) the
Indemnified Party may defend against such claim or litigation in such manner as
it may deem appropriate, including, but not limited to, settling such claim or
litigation, after giving notice of the same to the Indemnifying Party, on such
terms as the Indemnified Party may deem appropriate, and (b) the Indemnifying
Party shall be entitled to participate in (but not control) the defense of such
action, with its counsel and at its own expense. If the Indemnifying Party
thereafter seeks to question the manner in which the Indemnified Party defended
such third party claim or litigation, or the amount or nature of any such
settlement, the Indemnifying Party shall have the burden to prove by a
preponderance of the evidence that the Indemnified Party did not defend or
settle such third party claim or litigation, in a reasonably prudent manner.

5
<PAGE>

7. Brokers.

Regent and U.S. Lead have had no dealings with any broker or
finder in connection with this Agreement or the transactions contemplated hereby
and no broker, finder or other person is entitled to receive any broker's or
finder's fee or similar compensation in connection with any such transaction.
Each of the parties agrees to defend, indemnify and hold harmless, in the manner
herein provided, the other from, against, for and in respect of any and all
losses sustained by the other as a result of any liability or obligation to any
broker or finder on the basis of any arrangement, agreement or acts made by or
on behalf of such other party with any person or persons whatsoever.

8. Miscellaneous.

8.1 Expenses. Each of the parties hereto shall bear and pay,
without any right of reimbursement from any other party, all costs, expenses
and fees incurred by it on its behalf incident to the preparation, execution and
delivery of this Agreement and the performance of such party's obligations
hereunder, whether or not the transactions contemplated by this Agreement are
consummated, including, without limitation, any broker's or finder's fees, costs
incident to the transfer of any securities and the fees and disbursements of
counsel, accountants and consultants (including investment banking advisors)
employed by such party.

8.2 Further Assurances. From time to time after the date of
this Agreement, each of the parties hereto, at the request of the other, and
without further consideration, shall execute and deliver such further
documents or instruments and shall take such other actions as the

6
<PAGE>

requesting party many reasonable request in order to effect complete
consummation of the transactions contemplated by this Agreement.

8.3 Notices. any notice permitted, required, or given hereunder
shall be in writing and shall be personally delivered; or delivered by any
prepaid overnight courier delivery service then in general use; or mailed,
registered or certified mail, return receipt requested, to the addresses
designated herein or at such other address as may be designated by notice given
hereunder:

If to Regent Group, Inc.
477 Madison Avenue
New York, NY 10022
Attention: Marvin E. Greenfield, President

If to U.S. Lead United States Lead Testing &
Removal Service, Inc.
26 Harvard Lane
Hastings-on-Hudson, New York, 10706

Delivery shall be deemed made when actually delivered, or if mailed, three
days after delivery to a United States Post Office.

8.4 Entire Agreement. This Agreement, together with the Schedules
and Exhibits annexed hereto, sets for the entire understanding of the parties
hereto with respect to its subject matter, merges and supersedes all prior and
contemporaneous understandings with respect to its subject matter and may not be
waived or modified, in whole or in part, except by a writing signed by each of
the parties hereto. No waiver of any provision of this Agreement in any instance
shall be deemed to be a waiver of the same or any other provision on any other
instance. Failure of any

7
<PAGE>

party to enforce any provision of this Agreement shall not be construed as a
waiver of its rights under such provision.

8.5 Successors and Assigns. This Agreement shall be binding upon,
enforceable against and inure to the benefit of, the parties hereto and their
respective heirs, administrators, executors, personal representatives,
successors and assigns, and nothing herein is intended to confer any right,
remedy or benefit upon any other person. This Agreement may not be assigned by
any party hereto except with the prior written consent of all the other party.

8.6 Governing Law. This Agreement shall in all respects be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and fully to be performed in such state, without
giving effect to conflicts of law principles. In the event of any litigation
arising out of a breach of this Agreement the prevailing party shall be entitled
to reasonable attorneys' fees and court costs.

8.7 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

8.8 Construction. Headings contained in this Agreement are for
convenience only and shall not be used in the interpretation of this Agreement.
As used herein, the singular includes the plural, and the masculine, feminine
and neuter gender each includes the other where the context so indicates.

8.9 Severability. If any provision of this Agreement is held to
be invalid or unenforceable by a court of competent jurisdiction, this
Agreement shall be interpreted and

8
<PAGE>

enforceable as if such provision were severed or limited but only to the extent
necessary to render such provision and this Agreement enforceable.

8.10 Remedies. The Rememdies hereunder shall be cumulative and
not alternatives; the election of one remedy for a breach shall not preclude
pursuit of other remedies.

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first set forth above.

REGENT GROUP, INC.

By: /s/ MARVIN E. GREENFIELD
-----------------------------
Name: Marvin E. Greenfield
Title:

UNITED STATES LEAD TESTING &
REMOVAL SERVICE, INC.

By: /s/ MARK MITCHELL
-----------------------------
Name: Mark Mitchell
Title: Pres./CEO

9
<PAGE>

EXHIBIT A

<PAGE>

DEBENTURE

THESE SECURITIES AND THE SHARES ISSUABLE UPON CONVERSION HEREOF,
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN
OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

No.______ $1,131,100

UNITED STATES LEAD TESTING & REMOVAL SERVICE, INC.

8% CONVERTIBLE DEBENTURE DUE October 30, 1999.

FOR VALUE RECEIVED, United States Lead Testing & Removal Service, Inc.
(the "Company") promises to pay to Regent Group, Inc. (the "Holder"), the
principal sum of One Million One Hundred Thirty-One Thousand One Hundred
($1,131,100) Dollars on October 30, 1999 (the "Maturity Date") and to pay
interest on the principal sum outstanding from time to time in arrears upon the
earlier of the Conversion Date, as defined below or the Maturity Date at the
rate of 8% per annum accruing from the date hereof. Accrual of interest shall
commence on the first such business day to occur after the date hereof until
payment in full of the principal sum has been made or duly provided for.

This Debenture is subject to the following additional provisions:

1. Transfer. This Debenture has been issued subject to investment
representations of the original holder hereof and may be transferred or
exchanged only in compliance with the Securities Act of 1933, as amended (the
"Act"), and other applicable state and foreign securities laws. In the event of
any proposed transfer of this Debenture, the Company may require, prior to
issuance of a new Debenture in the name of such other person, that it receive
reasonable transfer documentation including opinions that the issuance of the
Debenture in such other name

1
<PAGE>

does not and will not cause a violation of the Act or any applicable state or
foreign securities laws.

2. Conversion Privilege. Commencing 150 days from the date hereof, the
Holder of this Debenture is entitled, at its option, to convert at any time, the
principal amount of this Debenture together with the accrued interest thereon at
a conversion price for each share of common stock of the Company, $.001 par
value (the "Common Stock") equal to $0.06447052 per share (the "Conversion
Price"). Conversion shall be effectuated by surrendering the Debenture to be
converted to the Company with the form of conversion notice attached hereto as
Exhibit A (the "Conversion Notice"), executed by the Holder of the Debenture
evidencing such Holder's intention to convert this Debenture or a specified
portion (as above provided) hereof, and accompanied, if required by the Company,
by proper assignment hereof in blank. Interest accrued or accruing from the date
of issuance to the date of conversion shall, at the option of the Holder, be
paid in cash or shares of Common Stock upon conversion at the Conversion Price.
No fractional shares or scrip representing fractions of shares will be issued on
conversion, but the number of shares issuable shall be rounded to the nearest
whole share. The date on which notice of conversion is given (the "Conversion
Date") shall be deemed to be the date on which the Holder has delivered this
Debenture, with the Conversion Notice duly executed, to the Company. Facsimile
delivery of the Conversion notice shall be accepted by the Company. Certificates
representing shares of Common Stock upon conversion will be delivered within
five (5) business days from the Conversion Date.

3. Absolute and Unconditional Obligation. No provision of this Debenture
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, and interest on, this Debenture at the
time, place, and rate, and in the coin or currency, herein proscribed provided,
however, the Company may prepay this Debenture in whole or in part at any time
as provided in paragraph 4. This Debenture and all other Debentures now or
hereafter issued of similar terms are direct obligations of the Company.

4. Usury. Nothing contained in this Debenture shall be deemed to establish
or require the payment of interest to the Holder at a rate in excess of the
maximum rate permitted by governing law. In the event that the rate of interest
required to be paid under the Debenture exceeds the maximum rate permitted by
governing law, the rate of interest required to be paid thereunder shall be
automatically reduced to the maximum rate permitted under governing law and any
amounts collected in excess of the permissible amount shall be deemed a payment
of principal. To the extent that such excess amount exceeds the aggregate
principal amount of this Debenture, such excess shall be returned with
reasonable promptness by the holder to the Company.

5. Merger or Consolidation. If the Company merges or consolidates with
another corporation or sells or transfers all or substantially all of its assets
to another person and the holders of the Common Stock are entitled to receive
stock, securities or property in respect of or in exchange for Common Stock,
then as a condition of such merger, consolidation, sale or

2
<PAGE>

transfer, the Company and any such successor, purchaser or transferee agree that
the Debenture may thereafter be converted on the terms and subject to the
conditions set forth above into the kind and amount of stock, securities or
property receivable upon such merger, consolidation, sale or transfer by a
holder of the number of shares of Common Stock into which this Debenture might
have been converted immediately before such merger, consolidation, sale or
transfer, subject to adjustments which shall be as nearly equivalent as may be
practicable. In the event of any proposed merger, consolidated or sale or
transfer of all or substantially all of the assets of the Company (a "Sale"),
the Holder hereof shall have the right to convert by delivering a Conversion
Notice to the Company within fifteen (15) days of receipt of notice of such Sale
from the Company. In the event the Holder hereof shall elect not to convert, the
Company may prepay all outstanding principal and accrued interest on this
Debenture, less all amounts required by law to be deducted, upon which tender of
payment following such notice, the right of conversion shall terminate.

6. Acquisition for Investment. The Holder of the Debenture, by acceptance
hereof, agrees that this Debenture is being acquired for investment and that
such Holder will not offer, sell or otherwise dispose of this Debenture or the
shares of Common Stock issuable upon conversion thereof except under
circumstances which will not result in violation of the Act or any applicable
state Blue Sky or foreign laws or similar laws relating to the sale of
securities. The shares of Common Stock issuable upon the conversion of the
Debenture shall bear the following legend:

THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER
EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS
NOT REQUIRED. THESE SECURITIES MAY NOT BE PLEDGED, SOLD,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHIN 24 MONTHS OF THE
DATE HEREOF (EXCEPT TO THE HOLDER'S STOCKHOLDERS).

7. Operation. The Company shall not, without the prior written consent of
the Holder:

a. amend its Certificate of Incorporation or By-laws or merge (except to
change the provision for stockholders' meetings to extend the notice

3
<PAGE>

period to 120 days) with or into or consolidate with any other person,
or change or agree to rearrange in any manner the character of the
business of the Company;

b. issue, sell or purchase options or rights to subscribe to, or enter
into any contracts or commitments to issue, sell or purchase, any
shares of its capital stock or other equity interests, except in
connection with an offering of 200,000 shares of common stock and
warrants to purchase 200,000 shares of common stock;

c. enter into, amend or terminate any (i) employment agreement or
collective bargaining agreement, (ii) adopt, enter into or amend any
arrangement which is, or would be, an employee benefit plan or (iii)
make any change in any actuarial methods or assumptions used in
funding any Plan or in the assumptions or factors used in determining
benefit equivalences thereunder;

d. issue any note, bond or other debt security, created, incurred or
assumed any indebtedness for borrowed money other than in the ordinary
course of business in connection with trade payables, or guarantee any
indebtedness for borrowed money or any capitalized lease obligation;

e. declare, set aside or pay any dividends or declared or make any other
distributions of any kind to the shareholders, or make any direct or
indirect redemption, retirement, purchase or other acquisition of any
shares of its capital stock or other equity interests;

f. knowingly waive any right of material value to the business of the
Company;

g. make any change in its accounting methods or practices or make any
changes in depreciation or amortization policies or rates adopted by
it or make any material write-down of inventory or material write-off
as uncollectible of accounts receivable;

h. make any wage or salary increase or other compensation payable or to
become payable or bonus, or increase any other direct or indirect
compensation, for or to any of its officers, directors, employees,
consultants, agents or other representatives, or any accrual for or
commitment or agreement to make or pay the same, other than increases
make in the ordinary course consistent with past practice;

4
<PAGE>

i. enter into any transactions with any of its affiliates, shareholders,
officers, directors, employees, consultants, agents or other
representatives (other than employment arrangements in the ordinary
course of business consistent with past practice), or any affiliate of
any shareholder, officer, director, consultant, employee, agent, or
other representative;

j. make any payment or commitment to pay any severance or termination pay
to any person or any of its officers, directors, employees,
consultants, agents or other representatives, other than payments or
commitments to pay such persons or their officers, directors,
directors, employees in the ordinary course of business;

k. except in the ordinary course of business, (i) enter into any lease
(as lessor or lessee), (ii) sell, abandon or make any other
disposition of any of its assets or properties other than in the
ordinary course of business consistent with past practice; (iii) grant
or suffer any lien on any of its assets or properties other than sales
of inventory in the ordinary course of business; or (iv) enter into or
amend any material contract or other agreement to which it is a party,
or by or to which it assets or properties are bound or subject, or
pursuant to which it agrees to indemnify any person or to refrain from
competing with any person;

l. except in the ordinary course of business, incur or assume any debt,
obligation or liability (whether absolute or contingent and whether or
not currently due and payable);

m. except for inventory or equipment acquired in the ordinary course of
business, make any acquisition of all or any part of the assets,
properties, capital stock or business of any other person;

n. except in the ordinary course of business, pay, directly or
indirectly, any of its liabilities before the same become due in
accordance with their terms or otherwise than in ordinary course of
business, except to obtain the benefit of discounts available for
early payment;

o. except in the ordinary course of business, create, incur or assume any
indebtedness for borrowed money, or guarantee any indebtedness for
borrowed or any capitalized lease obligation, in each case in excess
of $5,000 individually or in the aggregate;

p. except in the ordinary course of business, make any capital
expenditures or commitments for capital expenditures in an aggregate
amount exceeding $5,000;

5
<PAGE>

q. increase the number of members of the board of directors in excess of
seven; or

r. except in the ordinary course of business, terminate, fail to renew,
amend or enter into any contract or other agreement.

8. Governing Law. This Debenture shall be governed by and constructed in
accordance with the laws of the State of New York.

9. evens of Default. The following shall constitute an "Event of Default":

a. The Company shall default in payment of principal or interest on this
Debenture; or

b. The Company fails to issue shares of Common Stock to the Holder and
any such failure shall continue uncured for ten (10) business days
after written notice;

c. The Company fails to comply with any other provision of this Debenture
or fails to cure such failure within ten (10) days of the written
notice.

d. The Company shall (1) admit in writing its inability to pay its debts
generally as they mature; (2) make an assignment for the benefit of
creditors or commence proceedings for its dissolution; or (3) apply
for or consent to the appointment of a trustee, liquidator or receiver
for its or for a substantial part of its property or business; or

e. A trustee, liquidator or receiver shall be appointed for the Company
or for a substantial part of its property or business without its
consent and shall not be discharged within sixty (60) days after such
appointment; or

f. Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of
all or any substantial portion of the properties or assets of the
Company and shall not be dismissed within sixty (60) days thereafter;
or

g. Any money judgement, writ or warrant of attachment, or similar process
in excess of Five Hundred Thousand ($500,00) Dollars in the aggregate
shall be entered or filed against the Company or any of its properties
or other assets and shall remain unpaid, unvacated, unbonded or
unstayed for a period of sixty (60) days or in any event later than
five (5) days prior to the date of any proposes sale thereunder; or

6
<PAGE>

h. Bankruptcy, reorganization, insolvency or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for
the relief of debtors shall be instituted by or against the Company
and, if instituted against the Company, shall not be dismissed within
sixty (60) days after such institution or the Company shall by any
action or answer approve of, consent to, or acquiesce in any such
proceedings or admit the material allegations of, or default in
answering a petition filed in any such proceedings.

Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be waiver of any subsequent default) at the option of the
Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, without presentment, demand, protest or
notice of any kinds, all of which are hereby expressly waived, anything herein
or in any note or other instruments contained to the contrary notwithstanding,
and the Holder may immediately enforce any and all of the Holder's rights and
remedies provided herein or any other rights or remedies afforded by law.

10. Interest Rate upon event of Default. Upon an Event of Default, the
interest rate hereunder shall increase from 8% to 13% per annum.

11. No Voting Rights. Nothing contained in this Debenture shall be
construed as conferring upon the Holder the right to vote or to receive
dividends or to consent or receive notice as a shareholder in respect of any
meeting of shareholders or any rights whatsoever as a shareholder of the
Company, unless and to the extent converted in accordance with the terms hereof.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.

Dated: Oct. 30, 1998

UNITED STATES LEAD TESTING &
REMOVAL SERVICE, INC.

By: MARK MITCHELL
-----------------------
Name:
Title: PRES/CEO

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
REGENT GROUP INC. AND SUBSIDIARY FINANCIAL STATEMENTS AT JULY 31, 1998
AND THE YEAR THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JUL-31-1998
<CASH> 4,111
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 312,566
<PP&E> 42,711
<DEPRECIATION> 39,153
<TOTAL-ASSETS> 1,447,224
<CURRENT-LIABILITIES> 1,711,329
<BONDS> 0
0
195,045
<COMMON> 156,878
<OTHER-SE> (616,028)
<TOTAL-LIABILITY-AND-EQUITY> 1,447,224
<SALES> 33,188
<TOTAL-REVENUES> 33,188
<CGS> 4,102
<TOTAL-COSTS> 2,568,449
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 435,129
<INCOME-PRETAX> (1,908,775)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,908,775)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,908,775)
<EPS-PRIMARY> (.97)
<EPS-DILUTED> (.97)

</TABLE>