<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 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.
(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.)
720 Milton Road, Suite J-3
Rye, New York 10580
(Address of principal executive offices)
(Zip Code)
(914) 921-6389
(Registrant's telephone number, including area code)
(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 December 1, 1999 there were 12,850,577 shares of Common Stock,
$.06-2/3 par value, outstanding.
<PAGE>
REGENT GROUP, INC.
INDEX
Page No.
--------
Part I - Financial Information 1
Item 1. Financial Statements
Balance Sheets as of October 31, 1999
(unaudited) and July 31, 1999 2 - 3
Statements of Operations and Comprehensive
Loss for the Three Months Ended October
31, 1999 and 1998 (unaudited) 4 - 5
Statements of Cash Flows for the Three
Months Ended October 31, 1999 and 1998
(unaudited) 6 - 7
Notes to Financial Statements
(unaudited) 8 - 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10 - 11
Part II - Other Information
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
<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-KSB for the
year ended July 31, 1999.
The results of operations for the three-month period ended October 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. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
October 31, July 31,
1999 1999
----------- -----------
(Unaudited)
Current Assets:
Cash $ 74,674 $ 194,034
Marketable securities 153,900 --
Prepaid expenses and sundry
receivables 8,593 --
----------- -----------
Total Current Assets 237,167 194,034
----------- -----------
Goodwill - net 16,220,787 17,087,037
----------- -----------
TOTAL ASSETS $16,457,954 $17,281,071
=========== ===========
See notes to consolidated financial statements
-2-
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
October 31, July 31,
1999 1999
------------- ------------
(Unaudited)
<S> <C> <C>
Current Liabilities:
Short-term debt $ 200,000 $ 200,000
Accounts payable 40,299 12,694
Accrued expenses 52,797 64,533
Payroll taxes payable 4,871 --
Unearned revenue 3,750 3,750
------------ ------------
Total Current Liabilities 301,717 280,977
------------ ------------
Commitments and Contingent Liabilities
Stockholders' Equity:
Preferred stock, par value $1; authorized 500,000
shares (involuntary liquidation value $777,912):
Convertible Series B, at redemption
value; outstanding 65,141 shares 130,282 130,282
Cumulative Series C, par value $1;
outstanding 64,763 shares 64,763 64,763
Common stock, par value $.06-2/3;
authorized 20,000,000 shares;
outstanding 12,850,577 and 13,891,118 shares 857,133 926,538
Additional paid-in capital 27,303,358 27,192,151
Deficit (12,242,199) (11,313,640)
Cumulative other comprehensive income 42,900 --
------------ ------------
Total Stockholders' Equity 16,156,237 17,000,094
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 16,457,954 $ 17,281,071
============ ============
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
------------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues:
Sales $ 115,875 $ --
------------ ------------
Costs and Expenses:
Cost of sales 13,725 --
Selling, general and administrative
expenses 1,028,662 157,769
Interest expense 2,047 134,303
------------ ------------
1,044,434 292,072
------------ ------------
Loss before income tax provision (928,559) (292,072)
Provision for income taxes -- --
------------ ------------
Net loss $ (928,559) $ (292,072)
============ ============
Loss per common share - basic $ (.07) $ (.12)
============ ============
Weighted average number of common
shares outstanding - basic 13,619,673 2,353,746
============ ============
</TABLE>
(Continued)
See notes to consolidated financial statements.
-4-
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
------------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Net loss $(928,559) $(292,072)
Other comprehensive income:
Unrealized gain on marketable securities 42,900 --
--------- ---------
Comprehensive loss $(885,659) $(292,072)
========= =========
</TABLE>
See notes to consolidated financial statements.
-5-
<PAGE>
REGENT GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
------------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(928,559) $(292,072)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 866,250 348
Unpaid executive compensation -- 62,500
Non-employee non - cash compensation 41,812 --
Common stock issued in lieu of payment of expenses -- 1,293
Changes in operating assets and
liabilities net of acquisition 12,147 206,269
--------- ---------
Net Cash Used in Operating Activities (8,350) (21,662)
--------- ---------
Cash flows from investing activities:
Acquisition of treasury stock (10) --
Marketable securities received (111,000) --
Loans to unaffiliated entity -- (103,291)
--------- ---------
Net Cash Used in Investing
Activities (111,010) (103,291)
--------- ---------
Cash flows from financing activities:
Proceeds from borrowings -- 122,500
--------- ---------
Net Cash Provided by Financing Activities -- 122,500
--------- ---------
Net decrease in cash and cash equivalents (119,360) (2,453)
Cash and Cash Equivalents - beginning of period 194,034 4,111
--------- ---------
Cash and Cash Equivalents - end of period $ 74,674 $ 1,658
========= =========
</TABLE>
(Continued)
See notes to consolidated financial statements
-6-
<PAGE>
REGENT GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
------------------------------
1999 1998
--------- ---------
<S> <C> <C>
Changes in operating assets and liabilities:
Decrease (increase) in prepaid expenses and
sundry receivables $ (8,593) $ 120,098
Increase in accounts payable 27,605 --
Increase (decrease) in accrued expenses (11,736) 86,171
Increase in payroll taxes payable 4,871 --
--------- ---------
$ 12,147 $ 206,269
========= =========
Supplementary information:
Cash paid during the year for:
Interest $ 2,047 $ 983
========= =========
Income taxes $ -- $ --
========= =========
Supplemental disclosure of non-cash investing activities:
Unrealized gain on marketable securities $ 42,900 $ --
========= =========
</TABLE>
See notes to consolidated financial statements.
-7-
<PAGE>
REGENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Organization
The consolidated balance sheet as of October 31, 1999, the consolidated
statement of operations and comprehensive loss and cash flows for the three
months ended October 31, 1999 and 1998, 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 comprehensive
loss and cash flows for all periods presented have been made. Certain items in
the October 31, 1998 consolidated financial statements have been reclassified to
conform to October 31, 1999 classifications. The information for July 31, 1999
was derived from audited financial statements.
2. Acquisitions
On July 14, 1999 Regent acquired StockSiren.com, LLC ("Siren"). Regent
issued 11,550,000 shares of restricted common stock, in exchange for all the
issued outstanding membership interests of Siren. The acquisition has been
accounted for using the purchase method of accounting, and accordingly, the
purchase price was allocated to assets purchased and the liabilities assumed
based upon the fair values at the date of acquisition. The fair value of the
assets acquired from Siren was $643 and the liabilities assumed total $-0-
resulting in goodwill of approximately $17,324,000 which will be amortized over
five (5) years. The operating results of the acquired business is included in
the consolidated statement of operations from the date of acquisition.
Proforma unaudited operating information for the three months ended
October 31, 1998 of Regent and Siren assuming the business combination had
occurred at the beginning of the respective year is as follows:
Three Months Ended
October 31, 1998
------------------
Net sales $ -
Net (loss) $(1,158,322)
Net (loss) per share $ (.49)
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 has experienced recurring losses and negative cash flows
from operations through October 31, 1999.
-8-
<PAGE>
If management can reasonably liquidate restricted securities received
in lieu of cash compensation the Company believes the cash flow from Siren
should be sufficient to fund the operations of the Company over the next twelve
months. The Company's ability to continue as a going concern is dependant upon
its ability to obtain needed working capital through additional equity and/or
debt financing. There are no assurances that financing will be completed or that
Siren will be commercially accepted. These uncertainties raise 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.
4. Treasury Stock
Effective October 8,1999 one of the officers of the Company resigned. The
Company purchased the 1,040,541 shares originally issued to him for a purchase
price of ten ($10) dollars. These shares were held in treasury. On November 1,
1999 the shares were cancelled by the Company.
5. Loss Per Common Share
Basic and diluted earnings per common share are computed by dividing net
earnings (loss) by the weighted average number of common shares outstanding
during the period. Potential common shares are excluded from the loss per share
calculations for the three months ended October 31, 1999 and 1998 because their
effect would be antidilutive. Potential common shares relate to stock options
and warrants.
6. Recent Developments
On October 18, 1999 the Company announced it had signed a letter of
intent to acquire all of the outstanding shares of Microtek Research
Corporation, a Lake Ronkonkoma, NY based software research and development
group. Regent had agreed to acquire the privately owned company in exchange for
approximately 1.5 million shares of restricted common stock.
On December 1, 1999, after the Company completed its due diligence, the
Company terminated the letter of intent.
-9-
<PAGE>
Item 2. Management's' Discussion and Analysis of Financial Condition and
Results of Operations
The Company's quarterly and annual operating results are affected by a wide
variety of factors that could materially and adversely affect revenues and
profitability, including competition; changes in consumer preferences and
spending habits; the inability to successfully manage growth; seasonality; the
ability to introduce and the timing of the introduction of new products and the
inability to obtain adequate supplies or materials at acceptable prices. As a
result of these and other factors, the Company may experience material
fluctuations in future operating results on a quarterly or annual basis, which
could materially and adversely affect its business, financial condition,
operating results, and stock prices. Furthermore, this document and other
documents filed by the Company with the Securities and Exchange Commission (the
"SEC") contain certain forward-looking statements under the Private Securities
Litigation Reform Act of 1995 with respect to the business of the Company. These
forward-looking statements are subject to certain risks and uncertainties,
including those mentioned above, and those detailed in the Company's Annual
Report on Form 10-KSB for the year ended July 31, 1999, which may cause actual
results to differ significantly from these forward-looking statements. The
Company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements which may be necessary to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events. An investment in the Company involves various risks,
including those mentioned above and those which are detailed from time to time
in the Company's SEC filings.
Liquidity and Capital Resources
The Company continues to pursue investment opportunities. On July 14, 1999
the Company completed its acquisition of StockSiren.com, LLC ("Siren"), a New
York limited liability company. Siren is an internet-based advertising and
publishing entity that owns and operates several financially orientated
websites. Regent issued 11,500,000 shares of its restricted common stock in
exchange for all of the issued and outstanding membership interests in Siren.
In connection with the acquisition of Siren, Regent transferred its
pre-closing assets, subject to its pre-closing liabilities, to RH Holdings, LLC
("RH"), a New York limited liability company. The sole member of RH is Marvin E.
Greenfield. Mr. Greenfield is a former director and the former President and
Chief Executive Officer of Regent and remains a principal stockholder of Regent.
The consideration which RH delivered to Regent for the pre-closing assets was
the assumption of all of Regent's pre-closing liabilities. In connection with
this transfer of assets to Mr. Greenfield, the holders of all of Regent's
existing liabilities discharged Regent from those liabilities.
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. There is no assurance that such financing will be completed or
that Siren will be commercially accepted. If management can reasonably liquidate
restricted securities received in lieu of cash compensation, the Company
believes that cash flow from the Siren acquisition should be sufficient to fund
the operations of the Company over the next twelve months. These uncertainties
raise substantial doubt about the ability of the Company to continue as a going
concern.
-10-
<PAGE>
The operating results of Siren have been included in the statement of
operations from the date of acquisition. Siren is currently the Company's only
operating entity.
Item 7. Management's' Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Three Months Ended October 31, 1999 compared to
Three Months Ended October 31, 1998
Sales
Sales increased from $-0- for the three months ended October 31, 1998
to $115,875 for the three months ended October 31, 1999. The Company attributes
the increase to the acquisition of Siren, its only operating subsidiary, in July
1999.
Cost of Sales
Cost of sales increased from $-0- for the three months ended October
31, 1998 to $13,725 for the three months ended October 31, 1999. The Company
attributes the increase to the reasons described above.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased from $157,769
for the three months ended October 31, 1998 to $1,028,662 for the three months
ended October 31, 1999. The Company attributes the increase primarily to the
amortization of goodwill in the amount of $866,250 for the three months ended
October 31,1999.
Interest Expense
Interest expense decreased from $134,303 for the three months ended
October 31, 1998 to $2,047 for the three months ended October 31, 1999. In
connection with the acquisition of Siren, Regent transferred its pre-closing
liabilities to RH Holdings, reducing its debt to zero. In July 1999 the Company
incurred debt to finance Siren's working capital needs.
Other Matters
Year 2000
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 has conducted a review to identify, evaluate and
implement changes to computer systems and applications necessary to achieve a
year 2000 date conversion with no effect on customers or disruption to business
operations. The Company will also be communicating with suppliers, financial
institutions and others with which it conducts business to coordinate year 2000
conversions. The total cost of compliance and its effect on the Company's future
results of operations will be determined as a part of this project. Based on
initial review, the total cost is not expected to have a material effect on the
Company's results of operation or financial statements. However, there can be no
assurance that the systems of other companies on which the Company may rely will
be timely converted or that such failure to convert by another company would not
have an adverse effect on the Company's systems.
-11-
<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 quarter ended October 31, 1999.
-12-
<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.
Date: December 13, 1999 By: Anthony Escamilla
---------------------------------
Anthony Escamilla
Registrant (Chief
Financial Officer)
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGENT GROUP
INC. AND SUBSIDIARY FINANCIAL STATEMENTS AT OCTOBER 31, 1999 AND THE THREE
MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-2000
<PERIOD-END> OCT-31-1999
<CASH> 74,674
<SECURITIES> 153,900
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 237,167
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,457,954
<CURRENT-LIABILITIES> 301,717
<BONDS> 0
0
195,045
<COMMON> 857,133
<OTHER-SE> 15,104,059
<TOTAL-LIABILITY-AND-EQUITY> 16,457,954
<SALES> 115,875
<TOTAL-REVENUES> 115,875
<CGS> 13,725
<TOTAL-COSTS> 1,042,386
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,047
<INCOME-PRETAX> (928,558)
<INCOME-TAX> 0
<INCOME-CONTINUING> (928,558)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (928,558)
<EPS-BASIC> (.07)
<EPS-DILUTED> (.07)
</TABLE>
