<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 January 31, 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 March 1, 2000 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 January 31, 2000
(unaudited) and July 31, 1999 2 - 3
Statements of Operations and Comprehensive
Loss for the Six Months Ended January
31, 2000 and 1999 (unaudited) 4 - 5
Statements of Cash Flows for the Six
Months Ended January 31, 2000 and 1999
(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 - 12
Part II - Other Information
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
<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 six-month period ended January 31,
2000, 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
July 31,
January 31, -----------
2000 1999
------------ -----------
(Unaudited)
Current Assets:
Cash $ 9,226 $ 194,034
Marketable securities 153,900 -
Prepaid expenses and sundry
receivables 8,593 -
----------- -----------
Total Current Assets 171,719 194,034
Goodwill - net 15,354,537 17,087,037
----------- -----------
TOTAL ASSETS $15,526,256 $17,281,071
=========== ===========
See notes to consolidated financial statements
-2-
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
January 31, July 31,
2000 1999
------------ -----------
(Unaudited)
Current Liabilities:
Short-term debt $ 200,000 $ 200,000
Accounts payable 47,024 12,694
Accrued expenses 11,443 64,533
Unearned revenue 3,750 3,750
------------ -----------
Total Current Liabilities 262,217 280,977
------------ -----------
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 27,345,170 27,192,151
Deficit (13,176,209) (11,313,640)
Cumulative other comprehensive income 42,900 -
------------ -----------
Total Stockholders' Equity 15,264,039 17,000,094
------------ -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 15,526,256 $17,281,071
============ ===========
See notes to consolidated financial statements.
-3-
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
Six Months Ended Three Months Ended
January 31, January 31,
------------------------ -------------------------
2000 1999 2000 1999
----------- ---------- ----------- ----------
Revenues:
Sales $ 115,875 $ - $ - $ -
----------- ---------- ----------- ---------
Costs and Expenses:
Cost of sales 15,725 - 2,000 -
Selling, general and
administrative
expenses 1,957,638 324,879 928,976 167,110
Interest expense 5,081 85,895 3,034 (48,408)
----------- ---------- ----------- ----------
1,978,444 410,774 934,010 118,702
----------- ---------- ----------- ----------
Loss before income tax
provision (1,862,569) (410,774) (934,010) (118,702)
Income tax provision - - - -
----------- ---------- ----------- ----------
Net loss $(1,862,569) $ (410,774) $ (934,010) $ (118,702)
=========== ========== =========== ==========
Loss per common
share - basic $(.14) $(.18) $(.07) $(.05)
===== ===== ===== =====
Weighted average number
of common shares
outstanding - basic 13,235,125 2,296,307 12,850,577 2,296,368
=========== ========== =========== ==========
(Continued)
See notes to consolidated financial statements.
-4-
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
Six Months Ended Three Months Ended
January 31, January 31,
------------------------ -------------------------
2000 1999 2000 1999
----------- ---------- ----------- ----------
Net loss $(1,862,569) $(410,774) $(934,010) $(118,702)
Other comprehensive
income:
Unrealized gain
on marketable
securities 42,900 - 42,900 -
----------- --------- --------- ---------
Comprehensive loss $(1,819,669) $(440,774) $(891,110) $(118,702)
=========== ========= ========= =========
See notes to consolidated financial statements.
-5-
<PAGE>
REGENT GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
January 31,
------------------------------
2000 1999
------------ -----------
Cash flows from operating activities:
Net loss $(1,862,569) $ (410,774)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 1,732,500 696
Unpaid executive compensation 83,624 125,000
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 (27,353) 132,993
----------- ----------
Net Cash Used in Operating
Activities (73,798) (215,480)
----------- ----------
Cash flows from investing activities:
Acquisition of treasury stock (10) -
Marketable securities received (111,000) -
Loans to unaffiliated entity - (578,550)
----------- ----------
Net Cash Used in Investing
Activities (111,010) (578,550)
----------- ----------
Cash flows from financing activities:
Repayments of borrowings - (187,500)
Proceeds from borrowings - 977,500
----------- ----------
Net Cash Provided by Financing
Activities - 790,000
----------- ----------
Net decrease in cash and cash equivalents (184,808) (4,030)
Cash and Cash Equivalents - beginning
of period 194,034 4,111
----------- ----------
Cash and Cash Equivalents - end of
period $ 9,226 $ 81
=========== ==========
(Continued)
See notes to consolidated financial statements
-6-
<PAGE>
REGENT GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
Six Months Ended
January 31,
------------------------------
2000 1999
------------ -----------
Changes in operating assets and liabilities:
Decrease (increase) in prepaid expenses
and sundry receivables $ (8,593) $ 142,694
Increase in accounts payable 34,330 -
Increase (decrease) in accrued expenses (53,090) (9,701)
----------- ----------
$ (27,353) $ 132,993
=========== ==========
Supplementary information:
Cash paid during the year for:
Interest $ 5,081 $ 29,991
=========== ==========
Income taxes $ - $ -
=========== ==========
Supplemental disclosure of non-cash
investing activities:
Unrealized gain on marketable securities $ 42,900 $ -
=========== ==========
See notes to consolidated financial statements.
-7-
<PAGE>
REGENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Organization
The consolidated balance sheet as of January 31, 2000, the consolidated
statement of operations and comprehensive loss and cash flows for the six months
ended January 31, 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. Certain items in
the January 31, 1999 consolidated financial statements have been reclassified to
conform to January 31, 2000 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 six months ended January
31, 1999 of Regent and Siren assuming the business combination had occurred at
the beginning of the respective year is as follows:
Six Months Ended
January 31, 1999
----------------
Net sales $ -
Net (loss) $(2,143,274)
Net (loss) per share $ (.16)
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 January 31, 2000.
-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 six months ended January 31, 2000 and 1999 because their
effect would be antidilutive. Potential common shares equivalents 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 had insignificant operations and no revenues for the three
months ended January 31, 2000. The Company expects that it will continue to
generate insignificant revenues unless it can obtain adequate working capital,
through 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 Mr. Greenfield, the holders of all of Regent's
existing liabilities discharged Regent from those liabilities.
There is substantial doubt about the Company's ability to continue as a
going concern. As of January 31, 2000, the Company's current liabilities
exceeded its current assets. The Company is liable on a note in the face amount
of $200,000, due on June 30, 2000, which the Company likely will be unable to
repay by the due date. The Company's ability to continue as a going concern is
dependent upon its ability to obtain needed working capital through additional
equity or debt financing, for the development of its StockSheet.com and
StockSiren.com web sites. There is no assurance that such financing will be
obtained or that Siren will be commercially accepted.
-10-
<PAGE>
Item 2. Management's' Discussion and Analysis of Financial Condition and
Results of Operations
If management can reasonably liquidate restricted securities previously received
in lieu of cash compensation for services rendered, the Company believes that it
will have sufficient cash flow to fund the operations of the Company 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. The Company also is investigating the possibility of selling the
web sites or Siren, as well as the possibility of merging the Company with
another entity.
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
Six Months Ended January 31, 2000 compared to
Six Months Ended January 31, 1999
Sales
Sales increased from $0 for the six months ended January 31, 1999 to
$115,875 for the six months ended January 31, 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 six months ended January 31,
1999 to $15,725 for the six months ended January 31, 2000. The Company
attributes the increase to the reasons described above.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased from $324,878
for the six months ended January 31, 1999 to $1,957,638 for the six months ended
January 31, 2000. The Company attributes the increase primarily to the
amortization of goodwill in the amount of $1,732,500 for the six months ended
January 31, 2000.
Interest Expense
Interest expense decreased from $85,895 for the six months ended
January 31, 1999 to $5,081 for the six months ended January 31, 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.
-11-
<PAGE>
Three Months Ended January 31, 2000 compared to
Three Months Ended January 31, 1999
Cost of Sales
Cost of sales increased from $-0- for the three months ended January
31, 1999 to $2,000 for the three months ended January 31, 2000. The Company
attributes the increase to the reasons described above.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased from $167,110
for the three months ended January 31, 1999 to $928,976 for the three months
ended January 31, 2000. The Company attributes the increase primarily to the
amortization of goodwill in the amount of $866,250 for the three months ended
January 31,2000.
Interest Expense
Interest expense increased from $(48,408) for the three months ended
January 31, 1999 to $3,034 for the three months ended January 31, 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 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.
-12-
<PAGE>
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 January 31, 2000.
-13-
<PAGE>
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: March 17, 2000 By: /s/ Robert M. Long
------------------
Robert M. Long
Chairman
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGENT GROUP
INC. AND SUBSIDIARY FINANCIAL STATEMENTS AT JANUARY 31, 2000 AND THE SIX 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> JAN-31-2000
<CASH> 9,226
<SECURITIES> 153,900
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 171,719
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,526,256
<CURRENT-LIABILITIES> 262,217
<BONDS> 0
0
195,045
<COMMON> 857,133
<OTHER-SE> 14,211,861
<TOTAL-LIABILITY-AND-EQUITY> 15,526,256
<SALES> 115,875
<TOTAL-REVENUES> 115,875
<CGS> 15,725
<TOTAL-COSTS> 1,973,363
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,081
<INCOME-PRETAX> (1,862,569)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,862,569)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,862,569)
<EPS-BASIC> (.14)
<EPS-DILUTED> (.14)
</TABLE>
