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FORM 10-Q
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1999
OR
[ ] 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.
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(Exact name of registrant as specified in its charter)
Delaware 22-1558317
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
477 Madison Avenue, Suite 701
New York, New York 10022
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(Address of principal executive offices)
(Zip Code)
212-207-4560
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes _x_ No ___
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
At March 1, 1999 there were 2,296,368 shares of Common Stock, $.06 2/3 par
value, outstanding.
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<PAGE>
REGENT GROUP, INC.
INDEX
Page No.
Part I - Financial Information 1
Item 1. Financial Statements
Balance Sheets as of January 31, 1999
(unaudited) and July 31, 1998 2 - 3
Statements of Operations for the Six
Months Ended January 31, 1999 and 1998
(unaudited) 4
Statements of Cash Flows for the Six
Months Ended January 31, 1999 and 1998
(unaudited) 5 - 6
Notes to Financial Statements
(unaudited) 7 - 11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12 - 16
Part II - Other Information
Item 1. Legal Proceedings 17
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
<PAGE>
PART I. Financial Information
Item 1. Financial Statements
Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted from the following
financial statements pursuant to the rules and regulations of the Securities and
Exchange Commission. It is suggested that the following financial statements be
read in conjunction with the year-end consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended July 31, 1998.
The results of operations for the six-month period ended January 31, 1999,
are not necessarily indicative of the results to be expected for the entire
fiscal year or for any other period.
-1-
<PAGE>
REGENT GROUP, INC.
BALANCE SHEETS
ASSETS
January 31, July 31,
1999 1998
---------- ----------
(Unaudited)
Current Assets:
Cash $ 81 $ 4,111
Notes receivable 1,807,548 97,898
Prepaid expenses and other current
assets 67,863 210,557
--------- ---------
Total Current Assets 1,875,492 312,566
Property, plant and equipment - net 2,862 3,558
Advances -- 1,131,100
---------- ----------
TOTAL ASSETS $1,878,354 $1,447,224
========== ==========
See notes to financial statements.
-2-
<PAGE>
REGENT GROUP, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
January 31, July 31,
1999 1998
----------- ----------
(Unaudited)
Current Liabilities:
Short-term debt $1,197,500 $1,157,500
Accrued expenses 201,628 211,329
Due to officer 467,500 342,500
---------- ----------
Total Current Liabilities 1,866,628 1,711,329
Long-term Liabilities:
Long-term debt 750,000 --
---------- ----------
Total Liabilities 2,616,628 1,711,329
---------- ----------
Commitments and Contingent Liabilities
Stockholders' 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 2,296,368 and
2,351,993 shares 153,168 156,878
Additional paid-in capital 9,440,116 9,500,101
Deficit (10,526,903) (10,116,129)
----------- -----------
Total Stockholders' Deficiency (738,274) (264,105)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIENCY $ 1,878,354 $ 1,447,224
=========== ===========
See notes to financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
REGENT GROUP, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended Three Months Ended
January 31, January 31,
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Sales $ -- $ 8,011 $ -- $ 4,285
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of sales -- 4,102 -- 2,402
Selling, general and
administrative
expenses 324,879 1,216,543 167,110 746,972
Interest expense 85,895 52,553 (48,408) 29,709
----------- ----------- ----------- -----------
410,774 1,273,198 118,702 779,083
----------- ----------- ----------- -----------
Loss before income tax
provision (410,774) (1,265,187) (118,702) (774,798)
Income tax provision -- -- -- --
----------- ----------- ----------- -----------
Net loss $ (410,774) $(1,265,187) $ (118,702) $ (774,798)
=========== =========== =========== ===========
Loss per common
share - basic $(.18) $(.73) $(.05) $(.42)
====== ===== ===== =====
Weighted average number
of common shares
outstanding - basic 2,296,307 1,734,819 2,296,368 1,824,493
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
-4-
<PAGE>
REGENT GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
January 31,
---------------------------
1999 1998
----------- -----------
Cash flows from operating activities:
Net loss $ (410,774) $(1,265,187)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 696 57,483
Unpaid executive compensation 125,000 125,000
Disposal of fixed assets -- 3,737
Common stock issued in lieu of
payment of expenses 1,293 70,750
Cancellation of common stock previously
issued in lieu of payment of expenses (64,688) --
Changes in operating assets and
liabilities net of acquisition 132,993 1,176,340
----------- -----------
Net Cash Used in (Provided by)
Operating Activities (215,480) 168,123
----------- -----------
Cash flows from investing activities:
Purchase of property, plant and
equipment -- (11,498)
Acquisition of business assets - net of
cash acquired -- (911,197)
Loans to unaffiliated entity (578,550) --
----------- -----------
Net Cash Used in Investing
Activities (578,550) (922,695)
----------- -----------
Cash flows from financing activities:
Proceeds from borrowings 977,500 785,112
Repayments of borrowings (187,500) (17,500)
----------- -----------
Net Cash Provided by Financing
Activities 790,000 767,612
----------- -----------
Net increase (decrease) in cash and cash
equivalents (4,030) 13,040
Cash and Cash Equivalents - beginning
of year 4,111 76,441
----------- -----------
Cash and Cash Equivalents - end of
year $ 81 $ 89,481
=========== ===========
(Continued)
See notes to financial statements
-5-
<PAGE>
REGENT GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
Six Months Ended
January 31,
----------------------------
1999 1998
----------- -----------
Changes in operating assets and liabilities--
net of acquisition:
Increase in accounts receivable $ -- $ (13,987)
Decrease in prepaid expenses and
sundry receivables 142,694 274,321
Decrease in other assets -- 56,697
Increase in accounts payable -- 38,759
(Decrease) increase in accrued expenses (9,701) 845,550
Decrease in deferred revenue -- (25,000)
----------- -----------
$ 132,993 $ 1,176,340
=========== ===========
Supplementary information:
Cash paid during the year for:
Interest $ 29,991 $ 22,844
=========== ===========
Income taxes $ -- $ --
=========== ===========
Details of Acquisition:
Fair value of assets $ 594,561
Liabilities 1,672,042
-----------
Net Liabilities Assumed $ 1,077,481
===========
Cash paid $ 963.000
Less: cash acquired 51,803
-----------
Net Cash Paid for Acquisition $ 911,197
===========
See notes to financial statements.
-6-
<PAGE>
REGENT GROUP, INC
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Organization
The balance sheet as of January 31, 1999, the statement of operations for
the six months ended January 31, 1999 and 1998, and the statement of cash flows
for the periods then ended have been prepared by Regent Group, Inc. (the
"Company" or "Regent") and are unaudited. In the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows for
all periods presented have been made. Certain items in the January 31, 1998
consolidated financial statements have been reclassified to conform to January
31, 1999 classifications. The information for July 31, 1998 was derived from
audited financial statements.
2. Recent Developments
a) In October 1998, the Company announced it was acquiring one hundred (100%)
percent of the issued and outstanding common stock of New Century Ventures, Inc.
("New Century") for two million (2,000,000) shares of Regent common stock. New
Century is a corporation in 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 40-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.
On March 3, 1999 New Century acquired the remainder of the residential PUD
for development, exclusive of the golf course. New Century purchased the
property for one million ($1,000,000) dollars payable over three years. It is
anticipated that New Century will develop approximately three hundred fifty
(350) residential units on the site.
In December 1998 the Company borrowed $750,000 from Ballydine Investments
Limited. During January 1999 the Company advanced New Century $440,000 to
complete the acquisition. As of this date the Company has not completed the
acquisition of New Century.
b) 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 January 31, 1999, the Company
advanced U.S. Lead $1,131,000 toward the purchase price.
-7-
<PAGE>
REGENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
2. Recent Developments (continued)
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 31, 1998,
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 were 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. No interest was earned on the
advances until the signing of the debenture agreement, and no measurement on the
warrant to convert was ascribed by the Company. Upon rescission, the Company
recognized a gain of approximately $1,100,000. Subsequent to the rescission, the
Company loaned U.S. Lead an additional $100,000 due on demand with interest at
15% per annum.
3. Basis of Presentation
The accompanying 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 experienced recurring losses and negative cash flows from
operations through January 31, 1999. In addition, losses and negative cash flows
from operations have continued throughout the period subsequent to January 31,
1999. Also, as of January 31, 1999, the Company has a working capital deficit of
approximately $.6 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, assuming the Company completes the acquisition of New Century.
Management is actively seeking additional capital to ensure the continuation of
its operations and for various acquisitions. In December 1998 the Company
borrowed $750,000 from Ballydine Investments, Limited and advanced funds to New
Century to complete the Gator Trace transaction. The Company is in further
negotiations with a bank to obtain financing for the construction of the
residential units. There is no assurance that the financing will be completed.
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.
-8-
<PAGE>
REGENT GROUP, INC.
Notes to Financial Statements
(Unaudited)
4. Notes Receivable
Notes receivable consist of the following:
January 31, July 31,
1999 1998
----------- -----------
Loan to Edenfield Enterprises, Inc.,
interest at 8%, due on demand $ 97,898 $ 97,898
Loan to U.S. Lead Testing and Removal
Service, Inc., converted into a
debenture on October 31, 1998, interest
at 8%, due October 30, 1999;
convertible into 17,544,453 shares
of U.S. Lead 1,131,100 1,131,100
Loan to U.S. Lead Testing and Removal
Service, Inc., interest at 15%, due
on demand 100,000 --
Loan to New Century Ventures, Inc.,
interest at 8%, due on demand 478,550 --
---------- ----------
1,807,548 1,228,998
Current portion 1,807,548 97,898
---------- ----------
$ -- $1,131,100
========== ==========
5. Debt
Short-term debt is as follows:
January 31, July 31,
1999 1998
----------- -----------
Unsecured note, due on demand
interest at 12% per annum (1) $ 352,500 $ 432,500
Secured note, due March 20, 1999,
interest at 7.5% per annum (2) 100,000 100,000
Unsecured note, due on demand,
interest at 12% per annum (3) 100,000 200,000
Unsecured notes, due on demand,
interest from 8% to 12% per
annum (4) 250,000 250,000
Unsecured notes, due on demand,
interest at 12% per annum (5) 55,000 55,000
Unsecured notes, due on demand,
interest at 12% per annum (6) 240,000 120,000
Secured note, due October 30, 1999,
interest at 15% per annum (7) 100,000 --
---------- ----------
$1,197,500 $1,157,500
========== ==========
-9-
<PAGE>
REGENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
5. Debt (continued)
Long-term debt is as follows:
January 31, July 31,
1999 1998
---------- ----------
Secured note, due April 2000,
interest at 16% per annum (8) $750,000 $ --
======== ========
(1) The unsecured note is 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 for all amounts loaned prior to July 31, 1998. The original
loan agreement was amended as of July 31, 1998. Mrs. Greenfield was to
receive additional shares of common stock subsequent to July 31, 1998 in
connection with her loan. The amended loan agreement, as agreed by both
parties, discontinues the receiving of any shares of Regent common stock as
of July 31, 1998. Mrs. Greenfield returned 57,500 shares to the Company as
of July 31, 1998 that were previously issued to her for additional
consideration subsequent to July 31, 1998.
(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 $10,619 and $11,375
for the six months ended January 31, 1999 and 1998, respectively, in
connection with this note. On December 16, 1998, $100,000 of this note was
repaid. In addition, interest in the amount of $23,277 was also paid.
(4) The unsecured notes are payable to BSM, Inc., a shareholder of Regent. The
Company has recorded interest expense of $10,082 for the six months ended
January 31, 1999.
(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.) Mrs. Rubin is still due 625 shares as of
July 31, 1998.
(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.) Mrs. V. Greenfield is still
due 13,125 shares as of July 31, 1998.
-10-
<PAGE>
REGENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
5. Debt (continued)
(7) The note is payable to Paul Rosen, a Director of the Company, and is
secured by common stock of Compost American Holding Company Inc. pledged by
a shareholder of Regent. In connection with this note, the holder was
issued warrants to purchase 100,000 shares of common stock of the Company
at an exercise price of $1.00 per share. These warrants expire one year
from the date the note is paid off or the maturity date, whichever is
earlier. The Company has recorded interest expense of $3,781 in connection
with this note, of which $3,750 has been paid.
(8) The note payable to Ballydine Investments, Limited is secured by a second
mortgage on real property owned by New Century Ventures, Inc. The Company
has recorded interest in the amount of $14,795 for the six months ended
January 31, 1999.
6. New Accounting Standards
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 1999 year end financial statements.
7. Loss Per Common Share
Basic earnings per common share is computed by dividing net earnings by the
weighted average number of common shares outstanding during the period. 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 period. Common stock equivalents are excluded from the loss per share
calculated the six months ended January 31, 1999 and 1998 because their effect
would be antidilutive. Common stock equivalents relate to stock options and
warrants.
-11-
<PAGE>
Item 7. Management's' Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
The Company continues to pursue investment opportunities. The Company
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. Lead as partial payment toward the purchase price 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.
In October 1998 the Company announced it was acquiring one hundred (100%)
percent of the issued and outstanding common stock of New Century Ventures, Inc.
("New Century") for two million (2,000,000) shares of Regent common stock. In
March 1999 New Century acquired a 40-acre golf real estate development in Fort
Pierce, Florida, known as Gator Trace, for one million ($1,000,000) dollars. It
is anticipated that New Century will develop approximately three hundred fifty
(350) 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, assuming the acquisition of New Century is consummated.
The Company borrowed $750,000 in December 1998 and advanced $440,000 to New
Century to complete the acquisition of the real estate project. The Company is
further negotiating a loan to finance the construction phase of the units. As of
this date, no construction financing has been consummated, and there is no
assurance there ever will.
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. In December
1998 the Company borrowed $750,000 from Ballydine Investments Limited and
advanced funds to New Century to complete the Gater Trace transaction. The
Company is in further negotiations with a bank to obtain financing for the
construction of the residential units. There is no assurance that the financing
will be completed. This raises substantial doubt about the ability of the
Company to continue as a going concern.
-12-
<PAGE>
Item 7. Management's' Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations (continued)
Six Months Ended January 31, 1999 vs. Six Months Ended January 31, 1998
On September 22, 1997, Regent 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
financial statements for the period ended January 31, 1998 include the accounts
of the company and its subsidiary through the rescission date.
Sales
Sales decreased from $8,011 for the six months ended January 31, 1998 to $0
for the six months ended January 31, 1999. The Company attributes the decrease
to the rescission of the acquisition of U.S. Lead, its only operating
subsidiary, in April 1998.
Cost of Sales
Cost of sales decreased from $4,102 for the six months ended January 31,
1998 to $0 for the six months ended January 31, 1999. The Company attributes the
decrease primarily to the reasons described above.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased from $1,216,543 for
the six months ended January 31, 1998 to $324,878 for the six months ended
January 31, 1999. The Company attributes the decrease primarily to the reasons
described above.
Interest Expense
Interest expense increased from $52,553 for the six months ended January
31, 1998 to $85,895 for the six months ended January 31, 1999. The Company has
incurred debt to finance the loans to U.S. Lead and New Century Ventures and
help contribute to Regent's overhead expenses.
Three Months Ended January 31, 1999 vs. Three Months Ended January 31, 1998
Sales
Sales decreased from $4,285 for the three months ended January 31, 1998 to
$0 for the three months ended January 31, 1999. The Company attributes the
decrease to the rescission of the acquisition of U.S. Lead, its only operating
subsidiary, in April 1998.
-13-
<PAGE>
Item 7. Management's' Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations (continued)
Cost of Sales
Cost of sales decreased from $2,402 for the three months ended January 31,
1998 to $0 for the three months ended January 31, 1999. The Company attributes
the decrease primarily to the reasons described above.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased from $746,972 for
the three months ended January 31, 1998 to $167,110 for the three months ended
January 31, 1999. The Company attributes the decrease primarily to the reasons
described above.
Interest Expense
Interest expense decreased from $29,709 for the three months ended January
31, 1998 to a credit of $(48,408) for the three months ended January 31, 1999.
The decrease is primarily due to an over-accrual during the first quarter of the
Company's fiscal year. Loan agreements were amended as of July 31, 1998,
reducing the amount of common stock to be used in connection with various
financing the Company received, resulting in a decrease in the interest expense.
Accounting Standards
For information regarding certain promulgated accounting standards, see
Note 1 of Notes to Financial Statements.
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.
-14-
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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 estimates, 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 effete 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.
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.
-15-
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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 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-Q, 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 the
Company's Form 10-K for the year ending July 31, 1998.
-16-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: Exhibit 27.1 Financial Data Schedule.
(b) There were no Current Reports on Form 8-K filed by the registrant
during the three months ended January 31, 1999.
-17-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
REGENT GROUP, INC.
------------------------------
(Registrant)
Date: March 15, 1999 By: /s/ MARVIN E. GREENFIELD
------------------------------
Marvin E. Greenfield,
President and Treasurer
Duly Authorized Officer
of the Registrant
(Principal Financial Officer)
-18-
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
REGENT GROUP INC. FINANCIAL STATEMENTS AT JANUARY 31, 1999
AND THE SIX MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> JAN-31-1999
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<SECURITIES> 0
<RECEIVABLES> 1,807,548
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,875,492
<PP&E> 42,711
<DEPRECIATION> 39,849
<TOTAL-ASSETS> 1,878,354
<CURRENT-LIABILITIES> 1,866,628
<BONDS> 0
0
195,045
<COMMON> 153,168
<OTHER-SE> (1,086,782)
<TOTAL-LIABILITY-AND-EQUITY> 1,878,354
<SALES> 324,879
<TOTAL-REVENUES> 8
<CGS> 0
<TOTAL-COSTS> 324,879
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85,895
<INCOME-PRETAX> (410,774)
<INCOME-TAX> 0
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