<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 April 30, 2000
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 June 1, 2000 there were 12,850,577 shares of Common Stock, $.06 2/3
par value, outstanding.
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REGENT GROUP, INC.
INDEX
Page No.
Part I - Financial Information 1
Item 1. Financial Statements
Consolidated Balance Sheets as of
April 30, 2000 (unaudited) and
July 31, 1999 2 - 3
Consolidated Statements of Operations
and Comprehensive Loss for the Nine
and Three Months Ended April
30, 2000 and 1999 (unaudited) 4
Consolidated Statements of Cash Flows
for the Nine and Three Months Ended
April 30, 2000 and 1999 (unaudited) 5
Notes to Consolidated Financial Statements
(unaudited) 6 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8 - 10
Part II - Other Information
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
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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
consolidated financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission. It is suggested that the following
consolidated 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 nine-month period ended April 30,
2000, are not necessarily indicative of the results to be expected for the
entire fiscal year or for any other period.
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REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
April 30, July 31,
2000 1999
---------- --------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash $ 17,593 $ 194,034
Marketable securities 405,900 -
Sundry receivable 50,000 -
Prepaid expenses 8,593 -
---------- ----------
Total Current Assets 482,086 194,034
Goodwill - net 14,488,287 17,087,037
---------- ----------
TOTAL ASSETS $14,970,373 $17,281,071
=========== ===========
</TABLE>
See notes to consolidated financial statements
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<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
April 30, July 31,
2000 1999
---------- --------
(Unaudited)
<S> <C> <C>
Current Liabilities:
Short-term debt $ 150,000 $ 200,000
Accounts payable 51,058 12,694
Accrued expenses 56,491 64,533
Unearned revenue - 3,750
----------- -----------
Total Current Liabilities 257,549 280,977
----------- -----------
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 27,386,981 27,192,151
Deficit (14,021,235) (11,313,640)
Cumulative other comprehensive income 294,900 -
----------- -----------
Total Stockholders' Equity 14,712,824 17,000,094
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 14,970,373 $17,281,071
============ ===========
</TABLE>
See notes to consolidated financial statements.
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REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
April 30, April 30,
----------------------- -----------------------
2000 1999 2000 1999
------ ------ ------- ------
<S> <C> <C> <C> <C>
Revenues:
Sales $ 119,625 $ - $ 3,750 $ -
---------- --------- --------- --------
Costs and Expenses:
Cost of sales 15,725 - - -
Selling, general and
administrative
expenses 2,933,663 465,144 976,025 140,265
Interest expense 7,831 146,215 2,750 60,320
---------- --------- --------- --------
2,957,219 611,359 978,775 200,585
---------- --------- --------- --------
Loss from operations (2,837,594) (611,359) (975,025) (200,585)
Other income 130,000 - 130,000 -
---------- --------- --------- --------
Loss before income tax
provision (2,707,594) (611,359) (845,025) (200,585)
Income tax provision - - - -
---------- --------- --------- --------
Net loss $(2,707,594) $ (611,359) $ (845,025) $(200,585)
========== ========= ========= ========
Loss per common
share - basic $(.21) $(.27) $(.07) $(.09)
====== ====== ====== ======
Weighted average number
of common shares
outstanding - basic 13,106,942 2,296,327 12,850,577 2,296,368
========== ========= ========== =========
Net loss $(2,707,594) $(611,359) $(845,025) $(200,585)
Other comprehensive
income:
Unrealized gain
on marketable
securities 294,900 - 252,000 -
---------- -------- -------- --------
Comprehensive loss $(2,412,694) $(611,359) $(593,025) $(200,585)
=========== ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
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REGENT GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
April 30,
---------------------------------
2000 1999
---------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,707,594) $ (611,359)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 2,598,750 1,044
Unpaid executive compensation - 187,500
Non-employee stock based compensation 125,435 -
Common stock issued in lieu of
payment of expenses - 1,293
Cancellation of common stock previously
issued in lieu of payment of expenses - (64,688)
Changes in operating assets and
liabilities net of acquisition (32,022) 247,061
---------- ---------
Net Cash Used in Operating
Activities (15,431) (239,149)
---------- ---------
Cash flows from investing activities:
Acquisition of treasury stock (10) -
Marketable securities received (111,000) -
Loans to unaffiliated entity - (629,914)
---------- ---------
Net Cash Used in Investing
Activities (111,010) (629,914)
---------- ---------
Cash flows from financing activities:
Repayments of borrowings (50,000) (207,500)
Proceeds from borrowings - 1,112,500
---------- ---------
Net Cash (Used in) Provided by Financing
Activities (50,000) 905,000
---------- ---------
Net decrease in cash 176,441 35,937
Cash - beginning of period 194,034 4,111
---------- --------
Cash - end of period $ 17,593 $ 40,048
========== ========
Changes in operating assets and liabilities:
Decrease (increase) in prepaid expenses $ (8,593) $ 187,546
(Increase) in sundry receivable (50,000) -
Increase in accounts payable 38,364 -
Increase (decrease) in accrued expenses (8,043) 59,515
(Decrease) in unearned revenue (3,750) -
---------- ---------
$ (32,022) $ 247,061
========== =========
Supplementary information:
Cash paid during the year for:
Interest $ 5,081 $ 30,764
========== =========
Income taxes $ - $ -
========== =========
Supplemental disclosure of non-cash investing activities:
Unrealized gain on marketable securities $ 294,900 $ -
========== =========
</TABLE>
See notes to consolidated financial statements.
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REGENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Organization
The consolidated balance sheet as of April 30, 2000, the consolidated
statement of operations and comprehensive loss and cash flows for the nine
months ended April 30, 2000 and 1999, 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. 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 Statements of Operations and Comprehensive Loss from the date
of acquisition.
Proforma unaudited operating information for the nine months ended April
30, 1999 of Regent and Siren assuming the business combination had occurred at
the beginning of the respective year is as follows:
Nine Months Ended
April 30, 1999
------------------
Net sales $ -
Net (loss) $(3,318,797)
Net (loss) per share $ (.25)
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 April 30, 2000.
In April 2000, the Company executed a merger agreement, subject to due
diligence by both parties. The Company has received a non-refundable deposit of
$130,000. If the Company continues to receive the expected funds in connection
with the proposed merger, or if the Company can reasonably liquidate restricted
securities previously received by the Company in lieu of cash compensation for
services rendered, the Company believes it will have sufficient cash to fund its
operations through the
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end of the current fiscal year ending July 31, 2000. Certain of the restricted
securities held by the Company are subject to a claim which the Company believes
has no merit.
If the merger is not completed, the Company's ability to continue as a
going concern will depend upon its ability to obtain needed working capital
through additional equity and/or debt financing or to complete a merger with
another entity. There are no assurances that the restricted securities held by
the Company can be liquidated or that such alternative financing or an
alternative merger can be completed on terms that are acceptable to the Company
or at all. 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 nine months ended April 30, 2000 and 1999 because their
effect would be antidilutive. Potential common shares relate to stock options
and warrants.
6. Recent Developments
(a) 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.
(b) On April 3, 2000 the Company executed a merger agreement with Playa
Minerals and Energy, Inc. ("Playa"), a company engaged in the acquisition and
development of proven oil and gas reserves located primarily in the San Juan
Basin and the Gulf Coast. Currently Playa is developing two fields it purchased
and is in the process of purchasing two other packages of proven oil and gas
reserves.
Under the terms of the agreement, Playa shareholders will received 92%
of the equity of Regent. Current shareholders of Regent will retain 8% of the
Company and will receive $265,000 in cash. As of June 10, 2000 the Company
received $130,000 as a non-refundable deposit and has recorded the deposit as
income in the Company's consolidated statement of operations. The merger is
subject to due diligence by both Regent and Playa.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company had insignificant operations and no revenues for the nine
months ended April 30, 2000. The Company did receive a portion of the
non-refundable deposit in connection with the proposed merger. The Company
expects that it will continue to generate insignificant revenues unless it
obtains additional equity or debt financing for the development of its
StockSheet.com and StockSiren.com web sites. The Company has no employees.
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
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 RH, the holders of all of Regent's existing
liabilities discharged Regent from those liabilities.
On April 3, 2000 the Company executed a merger agreement with Playa
Minerals and Energy, Inc. ("Playa"), a company engaged in the acquisition and
development of proven oil and gas reserves located primarily in the San Juan
Basin and the Gulf Coast. Currently Playa is developing two fields it purchased
and is in the process of purchasing two other packages of proven oil and gas
reserves.
Under the terms of the agreement, Playa shareholders will receive 92%
of the equity of Regent. Current shareholders of Regent will retain 8% of the
Company and will receive $265,000 in cash. As of June 10, 2000 the Company
received $130,000 as a non-refundable deposit. The merger is subject to due
diligence by both Regent and Playa.
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There is substantial doubt about the Company's ability to continue as a
going concern. As of April 30, 2000, the Company's current liabilities exceeded
its current assets, exclusive of the restricted marketable securities held by
the Company. The Company is liable on a note in the face amount of $150,000, due
on June 30, 2000, which the Company likely will be unable to repay by the due
date.
If the Company continues to receive the expected funds to connection
with the proposed merger, or if the Company can reasonably liquidate restricted
securities previously received by the Company in lieu of cash compensation for
services rendered, the Company believes it will have sufficient cash to fund its
operations through the end of the current fiscal year ending July 31, 2000.
Certain of the restricted securities held by the Company are subject to a claim
which the Company believes has no merit.
If the merger is not completed, the Company's ability to continue as a
going concern will depend upon its ability to obtain needed working capital
through additional equity and/or debt financing or to complete a merger with
another entity. There are no assurances that the restricted securities held by
the Company can be liquidated or that such alternative financing or an
alternative merger can be completed on terms that are acceptable to the Company
or at all.
The Company is investigating the possibility of selling the web sites
or Siren. 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.
Results of Operations
Nine Months Ended April 30, 2000 compared to
Nine Months Ended April 30, 1999
Sales
-----
Sales increased from $0 for the nine months ended April 30, 1999 to
$119,625 for the nine months ended April 30, 2000. 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 nine months ended April 30,
1999 to $15,725 for the nine months ended April 30, 2000. The Company attributes
the increase to the reasons described above.
Selling, General and Administrative Expenses
--------------------------------------------
Selling, general and administrative expenses increased from $465,144
for the nine months ended April 30, 1999 to $2,933,663 for the nine months ended
April 30, 2000. The Company attributes the increase primarily to the
amortization of goodwill in the amount of $2,598,750 for the nine months ended
April 30, 2000.
Interest Expense
----------------
Interest expense decreased from $146,215 for the nine months ended
April 30, 1999 to $7,831 for the nine months ended April 30, 2000. 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.
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<PAGE>
Other Income
------------
In connection with a proposed merger, the Company received a
non-refundable deposit of $130,000, which the Company recorded as income during
the nine months ended April 30, 2000.
Three Months Ended April 30, 2000 compared to
Three Months Ended April 30, 1999
Cost of Sales
-------------
The Company did not incur any cost of sales for the three months ended
April 30, 2000.
Selling, General and Administrative Expenses
--------------------------------------------
Selling, general and administrative expenses increased from $140,265
for the three months ended April 30, 1999 to $976,025 for the three months ended
April 30, 2000. The Company attributes the increase primarily to the
amortization of goodwill in the amount of $866,250 for the three months ended
April 30,2000.
Interest Expense
----------------
Interest expense decreased from $60,320 for the three months ended
April 30, 1999 to $2,750 for the three months ended April 30, 2000. 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 Income
------------
Other income increased $130,000 for the three months ended April 30,
2000 compared to the three months ended April 30, 1999. The Company attributes
this increase as described in the nine month analysis.
Other Matters
-------------
Impact of Year 2000
During 1999, the Company addressed the year 2000 readiness of its
mission critical systems and mission critical service providers. Prior to
December 31, 1999, the Company believed that its mission critical systems were
year 2000 compliant and, based on written communications received from mission
critical service providers, that all such service providers had addressed the
year 2000 readiness of their mission critical systems and devices. Prior to
December 31, 1999, the Company had also identified and upgraded non-mission
critical systems and devices to a state of year 2000 readiness. As of the filing
date of this Form 10-QSB, the Company has not experienced any significant year
2000 related issues in its own operations, nor has there been any year 2000
related disruption in service from the Company's mission critical service
providers.
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PART II - OTHER INFORMATION
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 April 30, 2000.
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SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
REGENT GROUP, INC.
Date: June 13, 2000 By: /s/ Robert M. Long
------------------
Robert M. Long
Chairman
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