<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, 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 December 5, 2000 there were 5,480,231 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
Balance Sheets as of October 31, 2000
(unaudited) and July 31, 2000 2 - 3
Statements of Operations and Comprehensive
Loss for the Three Months Ended October
31, 2000 and 1999 (unaudited) 4 - 5
Statements of Cash Flows for the Three
Months Ended October 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 - 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/A for the
year ended July 31, 2000.
The results of operations for the three-month period ended October 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 SHEET
<TABLE>
<CAPTION>
October 31, July 31,
2000 2000
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash $ 25,009 $ 551
Marketable securities 288,750 375,500
Prepaid expensees and other current assets 8,593 8,593
------------ ------------
TOTAL ASSETS $ 322,352 $ 384,644
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term debt $ 90,000 $ 90,000
Accounts payable 96,462 56,462
Accrued expenses 82,733 83,437
------------ ------------
Total Current Liabilities 269,195 229,899
------------ ------------
Commitments and Contingent Liabilities
Stockholders' Equity:
Preferred stock, par value $1; authorized
500,000 shares (involutnary 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
5,480,231 and 5,320,231 shares 365,472 354,800
Additional paid-in capital 16,851,917 16,822,589
Deficit (17,502,027) (17,447,189)
Cumulative other comprehensive income 142,750 229,500
------------ ------------
Total Stockholders' Equity 53,157 154,745
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 322,352 $ 384,644
============ ============
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
October 31,
------------ ------------
2000 1999
------------ ------------
Revenues:
Sales $ -- $ 115,875
------------ ------------
Costs and Expenses:
Cost of sales -- 13,725
Selling, general and
administrative expenses 103,488 1,028,662
Interest expense 1,350 2,047
------------ ------------
104,838 1,044,434
------------ ------------
Loss from operations (104,838) (928,559)
Other income 50,000 --
------------ ------------
Loss before provision for income taxes (54,838) (928,559)
Provision from income taxes -- --
------------ ------------
Net loss $ (54,838) $ (928,559)
============ ============
Net loss per share-basic and diluted $ (0.01) $ (0.07)
------------ ------------
Weighted average number of common
share outstanding-basic and diluted 5,344,796 13,619,673
============ ============
See notes to consolidated financial statements.
-3-
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Unaudited)
Three Months Ended
October 31,
-------------------------
2000 1999
--------- ---------
Net loss $ (54,838) $(928,559)
Other comprehensive income:
Unrealized gain (loss) on marketable securities (86,750) 42,900
--------- ---------
Comprehensive (loss) $(141,588) $(885,659)
========= =========
See notes to consolidated financial statements.
-4-
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
-----------------------
2000 1999
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (54,838) $(928,559)
Adjustments to reconcile net loss to net cash provided
from operating activities:
Depreciation and amortization -- 866,250
Non-employee non-cash compensation -- 41,812
Changes in operating assets and liabilities 39,296 12,147
--------- ---------
Net Cash (Used in) Operating Activities (15,542) (8,350)
--------- ---------
Cash flows from investing activities:
Acquisition of treasury stock -- (10)
Marketable securities received -- (111,000)
Advances -- --
Loans to unaffiliated entity -- --
Acquisition of treasury stock -- --
--------- ---------
Net Cash (Used in) Investing Activities -- (111,010)
--------- ---------
Cash flows from financing activities:
Proceeds from sale of common stock 40,000 --
--------- ---------
Net Increase (decrease) in Cash 24,458 (119,360)
Cash - beginning 551 194,034
--------- ---------
Cash - end $ 25,009 $ 74,674
========= =========
</TABLE>
See notes to consolidated financial statements.
-5-
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
--------------------
2000 1999
-------- --------
<S> <C> <C>
Changes in operating assets and liabilities:
Increase in prepaid expenses and sundry receivables $ -- $ (8,593)
Increase in accounts payable 40,000 27,605
Decrease in accrued expenses (704) (11,736)
Increase in payroll taxes payable -- 4,871
-------- --------
$ 39,296 $ 12,147
======== ========
Supplemental information:
Cash paid during the year for:
Interest $ 1,350 $ 2,047
======== ========
Supplementary information of non-cash investing and and financing activities:
Unrealized gain (loss) on marketable securities $(86,750) $ 42,900
======== ========
</TABLE>
See notes to consolidated financial statements.
-6-
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
Regent Group, Inc. (the "Company" or "Regent"), formerly NMC Corp., is
a holding company for its subsidiary. The Company, through its
subsidiary, owns several financially oriented websites which are no
longer actively maintained. The Company has no operations or material
sources of revenue, and its only business strategy is to consummate the
pending merger with Playa Minerals and Energy, Inc. (See Notes 4 and 5
below.)
2. Loss Per Common Share
Basic and diluted loss 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 diluted loss per share calculations for the three months ended
October 31, 2000 and 1999 because their effect would be antidilutive.
Potential common shares equivalents relate to stock options and
warrants.
3. Acquisition
On July 14, 1999, Regent acquired Stock Siren 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 the Company expected to
amortize over five (5) years. On June 30, 2000, the former shareholders
of Siren returned 7,620,346 shares to the Company. The purchase price
and the acquired goodwill was reduced by $11,434,000. As of July 31,
2000, the Company determined there was an impairment in the measurement
of goodwill, and approximately $5.6 million was written off through a
charge to operations. See Note 6 for further information regarding the
impairment. The operating results of the acquired business are included
in the consolidated statement of operations from the date of
acquisition.
4. Basis of Presentation
The accompanying consolidated financial statements have been prepared
on a going-concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business.
The Company has experienced recurring losses and negative cash flows
from operations through October 31, 2000. As of October 31, 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 $90,000, due December 31,
2000, which the Company likely will be unable to pay.
-7-
<PAGE>
During April 2000, the Company entered into a merger agreement, subject
to due diligence by both parties. The Company will receive $265,000, of
which $225,000 was received as of October 31, 2000, in the form of a
non-refundable deposit. In connection with the proposed merger, Playa
has paid the Company $25,000 in addition to the $265,000 cash portion
of the merger consideration, which additional payment is not refundable
under any circumstances. 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 consummation of
the merger with Playa. Certain of the restricted securities held by the
Company are subject to a claim which the Company believes has no merit.
The Company currently has no material operations or source of revenue.
The Company's web sites are not actively maintained and the Company's
only business strategy at present is to consummate the merger with
Playa. The Company received 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 web
sites, which it has no plan to pursue.
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 Company is investigating the possibility of selling the websites or
Siren. The operating results of Siren have been included in the
statement of operations from the date of acquisition. The websites are
not actively maintained, and the Company derived no revenue from the
websites or Siren during the fiscal quarter ended October 31, 2000.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the
amounts and classifications of liabilities that might be necessary
should the Company be unable to continue as a going concern.
5. Recent Developments
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 four fields it purchased and is in the process of purchasing
two other packages of proven oil and gas reserves.
-8-
<PAGE>
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 the Company will receive $265,000 in cash, of which
$225,000 has been received as of October 31, 2000, in the form of a
non-refundable deposit and recorded $200,000 of the deposit as income
in the Company's consolidated statement of operations for the year
ended July 31, 2000 and $25,000 as income in the Company's consolidated
statement of operations for the three months ended October 31, 2000. .
In connection with the proposed merger, Playa has paid the Company
$25,000 in addition to the $265,000 cash portion of the merger
consideration, which additional payment is not refundable under any
circumstances. The Company has recorded this additional $25,000 as
income in the Company's consolidated statement of operations for the
three months ended October 31, 2000. The merger is subject to due
diligence by both Regent and Playa.
6. Impairment Of Goodwill
On a periodic basis through July 31, 2000, the Company estimated the
future undiscounted cash flows of the business to which the goodwill
related in order to determine that the carrying value of the goodwill
had not been impaired.
As of July 31, 2000, the Company's operations through Siren had vastly
diminished. The former owners of Siren returned 7,620,346 shares,
previously issued to them, to the Company. The Company is investigating
the possibility of selling the web sites or Siren but no buyers have
been identified. As of July 31, 2000, the Company determined that the
measurement value of goodwill had been impaired and a more realistic
valuation would be the write-down of goodwill to $-0-.
In connection with the impairment with respect to the measurement of
goodwill, approximately $5.6 million of goodwill was written off
through a charge to operations during the fourth quarter of fiscal
2000. The goodwill write-off represented a per share net loss of $.46
both on a basic and diluted basis for fiscal 2000. The change
represents a change in estimate, which is indistinguishable from a
change in accounting principle.
7. Debt
Short-term debt is as follows:
October 31, July 31,
----------- --------
2000 2000
-------- --------
Unsecured convertible note,
due December 31, 2000 interest
at 6% per annum, payable
quarterly (1) $ 90,000 $ 90,000
======== ========
(1) The unsecured convertible note was payable to Robert Platek, a
shareholder of the Company. In December 1999, the note was assigned to
an unaffiliated third party. In June 2000, the note was extended to
December 31, 2000. Under the terms of the extension agreement, the
outstanding balance of the note is convertible into shares of Regent
common stock at an exercise price of $.25 per share.
-9-
<PAGE>
8. Common Stock
From August through October 2000, the Company sold an aggregate of
160,000 shares of common stock at a price of $.25 per share to three
individual accredited investors. These securities were offered and
issued without an underwriter in reliance upon the exemption from the
registration requirements of the Securities Act of 1933, as amended
(the "Securities Act"), provided by Rule 506 of Regulation D
promulgated under the Securities Act.
9. New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133 "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133). This
standard was amended by Statement of Financial Accounting Standards No.
137 "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No. 133"
and changed the effective date for SFAS 133 to all fiscal quarters of
fiscal years beginning after June 15, 2000. In June 2000, the FASB
issued SFAS 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities, ("SFAS 138"). SFAS 133 and 138 requires
that all derivative instruments be recorded on the balance sheet at
their respective fair values. Changes in the fair value of derivatives
are recorded each period in current earnings or other comprehensive
income, depending on the designation of the hedge transaction. For fair
value hedge transactions in which the Company is hedging changes in the
fair value of assets or liabilities, changes in the fair value of the
derivative instrument will generally be offset by changes in the hedged
item's fair value. For cash flow hedge transactions in which the
Company is hedging the variability of cash flows related to a variable
rate asset, liability or forecasted transaction, changes in the fair
value of the derivative instrument will be reported in other
comprehensive income. The gains and losses on the derivative instrument
that are reported in other comprehensive income will be recognized in
earnings in the periods in which earnings are impacted by the
variability of the cash flows of the hedged item. The Company will
adopt SFAS 133 and 138 in the first quarter of 2001 and does not expect
such adoption to have a material effect on the Company's consolidated
results of operations, financial position or cash flows.
In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial
Statements" ("SAB 101"). SAB 101 summarizes certain of the SEC's views
in applying generally accepted accounting principles to revenue
recognition in financial statements. The Company adopted the provisions
of SAB 101 during the first quarter ending October 31, 2000 and it is
not expected to have a material impact on the Company's consolidated
results of operations, financial position or cash flows.
-10-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company currently has no material operations or source of revenue. The
Company's web sites are not actively maintained, and the Company's only business
strategy at present is to consummate the merger with Playa. The Company expects
that it will continue to generate insignificant revenues unless it consummates
the merger with Playa.
Liquidity and Capital Resources
On April 3, 2000, the Company executed a definitive merger agreement with
Playa Minerals and Energy, Inc., 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 agreements, Playa shareholders will receive 92% of
the equity of Regent. Current shareholders of Regent will retain 8% of the
Company, and the Company will receive $265,000 in cash, of which $225,000 was
received as of October 31, 2000 in the form of a non-refundable deposit. In
connection with the proposed merger, Playa has paid the Company $25,000 in
addition to the $265,000 cash portion of the merger consideration, which
additional payment is not refundable under any circumstances. The merger is
subject to due diligence by both Regent and Playa.
The Company sold 160,000 shares of its common stock for $40,000 from August
2000 through October 2000. The funds were used for working capital.
There is substantial doubt about the Company's ability to continue as a
going concern. As of October 31, 2000, the Company's current liabilities
exceeded its current assets, exclusive of the restricted marketable securities
held by the Company. The Company's liabilities include a note with an unpaid
balance of $90,000, due on December 31, 2000, which the Company likely will be
unable to repay.
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
consummation of the merger with Playa. Certain of the restricted securities held
by the Company are subject to a claim which the Company believes has no merit.
However, there can be no assurance that the claim, if asserted, will be
unsuccessful or that the restricted securities can be liquidated for a
sufficient amount to meet the Company's working capital needs.
-11-
<PAGE>
If the merger is not completed by approximately January 31, 2001, the
Company's ability to continue as a going concern will depend upon its ability to
amend the merger agreement with Playa to provide for additional cash payments
from Playa to the Company, 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 an alternative financing or an alternative merger can be
completed on terms that are acceptable to the Company or at all. If the Company
is unable to continue as a going concern, shareholders of the Company could
suffer a loss of their entire investment.
Results of Operations
Three Months Ended October 31, 2000 compared to
Three Months Ended October 31, 1999
Sales
Sales decreased from $115,875 for the three months ended October 31,
1999 to $-0- for the three months ended October 31, 2000. The Company currently
has no material operations or source of income. The Company's web sites are not
actively maintained and the Company's only business strategy at present is to
consummate the merger with Plaza.
Cost of Sales
Cost of sales decreased from $13,725 for the three months ended October
31, 1999 to $-0- for the three months ended October 31, 2000. The Company
attributes the decrease to the reasons described above.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased from $1,028,662
for the three months ended October 31, 1999 to $103,488 for the three months
ended October 31, 2000. The Company attributes the decrease primarily to the
decrease in amortization expense as a result of the write down of goodwill to $0
at July 31, 2000 due to the impairment of the Company's investment in Siren.
Interest Expense
Interest expense remained relatively constant for the three months
ended October 31, 2000 compared to the three months ended October 31, 1999.
Other Income
Other income increased from $-0- for the three months ended October 31,
1999 to $50,000 for the three months ended October 31, 2000 due to the Company's
receipt of a portion of the non-refundable deposit from Playa which was
recognized as income.
-12-
<PAGE>
CAUTIONARY STATEMENT PURSUANT TO "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for historical information, the Company's reports to the
Securities and Exchange Commission on Form 10-KSB and Form 10-QSB and periodic
press releases, as well as other public documents and statements, contain
"forward-looking statements" within the meaning of the federal securities laws.
Forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed or implied by the
statements, regarding, among others the Company's ability to consummate the
merger with Playa Minerals and Energy, Inc., the Company's ability to continue
as a going concern, and other risks and uncertainties identified in the
Company's reports to the Securities and Exchange Commission, periodic press
releases, or other public documents or statements.
Readers are cautioned not to place undue reliance on forward-looking
statements. The Company undertakes no obligation to republish or revise
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrences of unanticipated events.
-13-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not presently subject to any legal proceedings
which are material to the consolidated results of operations
or financial condition of the Company.
Item 2. Changes in Securities and Use of Proceeds
From August through October 2000, the Company sold an
aggregate of 160,000 shares of common stock at a price of $.25
per share to three individual accredited investors. These
securities were offered and issued without an underwriter in
reliance upon the exemption from the registration requirements
of the Securities Act of 1933, as amended (the "Securities
Act"), provided by Rule 506 of Regulation D promulgated under
the Securities Act. The proceeds were used for working
capital.
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, 2000.
-14-
<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 14, 2000 By: /s/ Robert Long
-----------------------------
Robert Long
Registrant (Chairman of the
Board and principal financial
officer)
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