FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarterly period ended June 30, 1999.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission File No. 0-17843
REGAL ONE CORPORATION
(name of small business issuer in its charter)
FLORIDA 95-4158065
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
551 Driftstone Avenue, Las Vegas, NV 89123
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (702) 897-5331
Check whether the issuer (1) filed all reports required to
be filed by section 13 or 15(d) of the Exchange Act during the
past 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13, or 15(d) of the Exchange
Act after the distribution of Securities under a plan confirmed
by court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuers
classes of common stock, as of the latest practicable date:
1,191,217 shares as of August 19, 1999.
REGAL ONE CORPORATION
Form 1O-Q for the quarter ended June 30, 1999
TABLE OF CONTENTS AND INFORMATION REQUIRED IN REPORT
Part I. Financial Information
Item 1. Financial Statements (unaudited):
Balance Sheet as of June 30, 1999
Statements of Operations for the quarter and
six months ended June 30, 1999
Statements of Cash Flows for the quarter and
six months ended June 30, 1999
Notes to the Financial Statements
Item 2. Managements Discussion and Analysis of Plan of
Operation
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security
holders
Item 5. Other Information
Item 6. Exhibits and reports on form 8-K
SIGNATURES
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
REGAL ONE CORPORATION
Balance Sheet
(Unaudited)
<TABLE>
<S> <C>
June 30, 1999
ASSETS
Cash $ 4,334
___________
Total Assets $ 4,334
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts Payable and accrued expenses $ 150,364
Due to Officer and Shareholders 73,660
___________
Total Liabilities $ 224,024
Stockholders' Equity (Deficit):
Preferred Stock; $.01 par value, authorized
50,000,000 shares; Series A Preferred
Stock; No shares Issued and Outstanding -0-
Series B Preferred Stock
Issued and Outstanding 208,965 shares 500
Common Stock; no par value, authorized
50,000,000 shares; Issued and
Outstanding 1,191,217 shares 5,941,113
Accumulated Deficit ( 6,164,303)
-----------
Total Stockholders' Equity (Deficit) ( 222,690)
Total Liabilities and Stockholders' ___________
Equity (Deficit) $ 4,334
</TABLE>
See accompanying Notes to Financial Statements
<PAGE>
REGAL ONE CORPORATION
Statement of Operations
(Unaudited)
<TABLE>
For the Quarter ended For the Six Months ended
June 30 June 30
<S> <C> <C> <C> <C>
1999 1998 1999 1998
---- ---- ---- ----
Revenues $ 0 $ 0 $ 0 $ 0
Operating Expenses:
General and Administrative 17,585 32,945 35,539 49,215
expenses ---------- --------- ---------- ---------
Loss From Operations (17,585) (32,945) (35,539) (49,215)
Other Income (expense): 0 0 0 25,000
---------- --------- ---------- ---------
Income (Loss) Before income taxes (17,585) (32,945) (35,539) (24,215)
Provision for Income Taxes 0 0 0 0
---------- --------- ---------- ---------
Net Income (Loss) $ (17,585) $ (32,945) $ (35,539) $ (24,215)
========== ========= ========== =========
Net Income (Loss) per share $ (0.01) $ 0.01 $ (0.03) $ 0.02
========== ========= ========== =========
Weighted average common and
common equivalent shares outstanding 1,191,217 1,196,875 1,191,217 1,196,875
See accompanying Notes to Financial Statements
</TABLE>
<PAGE>
REGAL ONE CORPORATION
Statement of Cash Flows
(Unaudited)
<TABLE>
<S> <C> <C>
For the Six Months ended
June 30
1999 1998
Cash flows from operating activities:
Net Loss $ (35,539) $ (24,215)
Adjustments to reconcile net loss to net cash
used by operating activities:
Increase (Decrease) in accounts payable 11,055 3,275
and accrued expenses
Increase in due to Officer 21,000 21,000
---------- ----------
Total Adjustments 32,055 24,275
---------- ----------
Net cash used by operating activities (3,484) 60
Cash flows from investing activities:
Net cash provided by investing activities 0 0
Cash flows from financing activities:
Net cash used by financing activities 0 0
---------- ----------
Net Increase (Decrease) in cash (3,484) 60
Cash at beginning of period 4,818 55
---------- ----------
Cash at end of period 1,334 115
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for
Income taxes $ 0 $ 0
Interest $ 0 $ 0
</TABLE>
See accompanying Notes to Financial Statements
<PAGE>
REGAL ONE CORPORATION
Notes to the financial Statements
(Unaudited)
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
General and Background
Regal One Corporation (the "Company") is a Florida corporation
originally incorporated as Electro-Mechanical Services, Inc. ("EMS") in
1959. In 1974, Mr. Israel Rubinstein, currently the President, a director
and a shareholder of the Company, acquired the Company, then named EMS,
which at the time had no operations. Pursuant to the merger agreement, Mr.
Rubinstein transferred the assets of Regal Muffler Centers, a franchise
network of over 100 muffler shops that he founded in 1972 and solely owned,
into EMS. In March of 1975, EMS amended its certificate of incorporation
and changed its name to Regal International Holding Co., Inc. In 1976, the
Company sold substantially all of its assets, but Mr. Rubinstein retained
control of the Company. In June 1988, after merging with its wholly owned
Nevada Subsidiary, Regal One Corporation, the Company changed its name to
Regal One Corporation, but remained a Florida entity.
From 1987 to 1992, the Company was engaged in the acquisition and
holding of real estate, primarily in the Western United States. Until the
end of 1992, the Company assets consisted primary of irrevocable options to
acquire the real estate in exchange for shares of the Company's common
stock. Generally, the Company would issue to the Seller of the property
shares of its common stock with a fair value equal to the value of the real
estate on the date of the agreement.
During 1992, due to the protracted depressed national real estate
market, the Company decided to abandon its real estate operations and
pursue opportunities in the pharmaceutical and health fields.
Xechem, Inc.
In January, 1993, the Company executed an agreement to acquire Xechem,
Inc. The total costs incurred by the Company relating to the proposed
investment in Xechem were approximately $1,012,000. On January 14, 1994,
the agreement with Xechem was canceled and a settlement agreement was
entered into whereby the Company received 60,000 shares of common stock of
Xechem, $250,000 in cash and the satisfaction of $131,000 of liabilities at
no cost to the Company. Accordingly, based on this settlement agreement,
the net realizable cost of the Xechem investment was adjusted down to the
estimated fair value of $150,000, resulting in a loss of $142,645 in 1994.
The Company then sold 20,000 shares of Xechem (one third of its investment)
for $50,000. In 1995, the Company distributed the remaining 40,000 shares
of Xechem common stock to consultants or advisors of the Company for
services provided to the Company.
Carbonex Systems Corporation
In August, 1995, the Company acquired in a reverse acquisition all of
the issued and outstanding shares of common stock of Carbonex Systems
Corporation ("Carbonex"), a development stage Delaware Corporation, owning
certain exclusive rights to a proprietary emission reduction system for
internal combustion engines. To effect the acquisition, the Company issued
a total of 464,000 shares of 8.75% convertible, participating voting Series
B Preferred Stock (the "Preferred Stock"). Each share of Preferred Stock
is convertible into 100 shares of common stock and has 100 votes for each
vote allowed to a share of common stock.
In June, 1996, the Company entered into a Stock Exchange Settlement
Agreement and General Release whereby the Company exchanged all of the
issued and outstanding shares of common stock of Carbonex for 255,035
shares of Series B Preferred Stock owned by Gene Bemel and certain members
of his family. As part of the agreement, the Company assumed certain
specified accounts payable totaling approximately $61,000. The net impact
of this transaction was a gain on sale of $295,803, primarily due to the
forgiveness of debt and accrued interest payable. As a result of this
transaction, the Company has issued and outstanding 208,965 shares of
Series B Preferred Stock.
Quality Franchise Systems, Inc.
In November, 1996, the Company executed a Letter of Intent to acquire
all of the issued and outstanding stock of Quality Franchise Systems, Inc.
However, a final agreement was never completed, and the Company is no
longer pursuing this acquisition.
Safesight, Inc.
In July, 1997, the Company announced the acquisition of Safesight,
Inc., a development-stage company engaged in the design of vehicle
anti-collision warning products for the automobile, commercial vehicle,
recreational vehicle and motorcycle markets. In August, 1997, the parties
elected not to proceed with this transaction because of the parties'
inability to obtain adequate funding for operations.
Current Operations
In April, 1998, the Company entered into an agreement to merge a newly
formed subsidiary of the Company with Infectech, Inc. ("Infectech").
Infectech, founded In 1989, is a development-stage biotechnology company
which owns 15 patents for the rapid identification and antibiotic
sensitivity testing of 34 disease-
causing bacteria.
On August 5, 1998, the Company announced that Infectech, Inc. had
unilaterally acted to terminate the merger agreement between the two
parties. Infectech stated as its reason that it had not been successful in
raising the requisite $300,000 prior to June 30, 1998. Infectech further
notified the Company that it proposed to arbitrate the return of $56,000
paid by Infectech for legal fees and certain other merger-related expenses
of the Company, as per the merger agreement. On November 18, 1998, the
Company and Infectech, Inc. resolved the matter subject to arbitration,
with the Company issuing 10,000 shares of restricted common stock to
Infectech, Inc. on November 24, 1998.
Basis of Presentation
The unaudited financial statements presented herein have been prepared
by the Company, without audit, pursuant to the rules and regulations for
interim financial information and the instruction to Form 10-QSB and
Regulation S-B. Accordingly, certain information and footnote disclosure
normally included in financial statements prepared in accordance with
generally accepted accounting principals have been omitted. These
unaudited financial statements should be read in conjunction with the
financial statement and notes thereto included in the Company's Annual
Report Form 10-KSB for the fiscal year ended December 31, 1998. In the
opinion of management, the unaudited financial statements reflect all
adjustments (consisting of normal recurring accruals only) which are
necessary to present fairly the financial position, results of operation,
and changes in cash flows of the Company. Operating results for the
interim periods are not necessarily indicative of the results which may be
expected for the entire year.
Income Taxes
The Company did not provide for income taxes in the accompanying
interim financial statements since the Company does not anticipate
generating taxable income for the full year.
Net Income (Loss) Per Share Computation
Net Income (Loss) per share is based on the weighted average number of
common stock for all periods presented. The outstanding preferred stock
and common stock warrants are not considered in the calculations because
they are anti-dilusive.
NOTE 2 - GOING CONCERN AND MANAGEMENT'S PLAN
For the fiscal year ended December 31, 1998, the independent auditors
report included an explanatory paragraph calling attention to a going
concern issue. The Company has suffered recurring losses from operations
and at June 30, 1999, continues to have an accumulated deficit. The
accompanying financial statements have also been prepared contemplating
continuation of the Company as a going concern, which is dependent upon the
Company obtaining additional financing to satisfy the operating needs of
the Company and/or completing a successful merger.
NOTE 3 - STOCK OPTION PLAN
The Company has a stock option plan for its employees, directors,
officers, and consultants or advisors of the Company. In May 1995,
3,000,000 shares were registered on Form S-8 for this plan.
Managements Discussion and Analysis of Plan of Operation
The following discussion should be read in conjunction with the
Company's financial statements and notes thereto included elsewhere in this
Form 10-QSB report. In addition, the discussion of the Company's expected
plan of operation included in the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1998, is incorporated herein in its
entirety as the discussion of the Plan of Operation as required by Item
303(a) Regulation SB.
Plan of Operation
The Company was incorporated in 1959 in Florida. Since that time, the
Company has owned and operated, and subsequently sold off, a number of
businesses. During 1987, the Company pursued a policy of using its common
stock to purchase, either in fee simple or as an irrevocable option to
purchase, a number of parcels of real estate, in the form of commercial,
industrial, residential and development stage land parcels. In 1992,
market conditions for real estate were no longer deemed to be favorable and
the Company decided to abandon its real estate operations and pursue other
courses of operation.
In January, 1993, the Company agreed to acquire Xechem, Inc., a
development-stage company engaged in the research and development of
pharmaceuticals from plants and other naturally-occurring sources.
However, the transaction was terminated in January, 1994 pursuant to a
settlement agreement.
In August, 1995, the Company acquired all of the issued and
outstanding common stock of Carbonex Systems Corporation ("Carbonex"). In
June, 1996, the Company entered into a Stock Exchange, Settlement Agreement
and General Release whereby the Company exchanged with its then-principal
shareholders, Gene Bemel and members of his family, all of the issued and
outstanding common stock of Carbonex for 255,035 shares of Series B
Preferred Stock of the Company.
In November, 1996, the Company executed a Letter of Intent to acquire
all of the issued and outstanding stock of Quality Franchise Systems, Inc.
However a final agreement was never completed and the Company is no longer
pursing this acquisition.
In July, 1997, the Company announced the acquisition of Safesight,
Inc., a development-stage company engaged in the design of vehicle
anti-collision warning products. However, in August, 1997, the parties
elected not to proceed with the transaction because of the inability to
obtain adequate funding for operations.
In April, 1998, the Company entered into an agreement to merge a
newly-formed subsidiary of the Company with Infectech, Inc. Infectech,
Inc., founded in 1989, is a development-stage biotechnology company which
owns 15 patents for the rapid identification and antibiotic sensitivity
testing of 34 disease-causing bacteria. However, in August, 1998, the
merger agreement was terminated. (See Note 1, "Organization and
Significant Accounting Policies").
Liquidity and Capital Resources - June 30, 1999 Compared to December 31,
1998
During the prior year and current quarter, the Company had continuing
losses from operations. There can be no assurances that the Company will
be able to secure long-term borrowings with which to finance its future
operations. The Company does not currently have any established bank lines
of credit. The Company's lack of liquidity is reflected in the table
below, which shows comparative working capital (current assets less current
liabilities) which is an important measure of the Company's ability to meet
its short-term obligations.
June 30, 1999 December 31, 1998
Working Capital
(deficit) $ (219,663) $ (187,151)
The Company's financial condition at June 30, 1999 reflects an
immediate inability to meet its short-term obligations. At June 30, 1999,
the Company had $4,334 cash on hand. The liabilities of the Company at
June 30, 1999 aggregated $224,024, consisting primarily of accounts payable
to accountants, lawyers and other service providers. Accounts payable are
due and in default, and it is possible that persons to whom these
obligations are due may seek to collect the amounts due them.
Since April, 1998, the Company has relied primarily on Infectech for
the infusion of cash to fund basic operations, principally fees due to
accountants and lawyers. However, in August, 1998, the merger agreement
with Infectech was terminated. (See Note 1, "Organization and Significant
Accounting Policies").
The Company Stock Option Plan is for its employees, directors,
officers, and consultants or advisors of the Company. In May, 1995, the
Company filed a registration statement on Form S-8 covering 3,000,000
shares of common stock for this Plan. Since May, 1995, holders have
exercised options to purchase 548,506 shares of common stock. No options
were exercised during the quarter ended June 30, 1999, leaving 2,451,494
yet available, with an amended expiration date of December 31, 2000. (See
the Company's 14c, filed April 8, 1998).
Capital Expenditures and Commitments
During the quarter ended June 30, 1999, the Company had no capital
expenditures. In the near term, the Company believes its capital
expenditures will principally be expended for office equipment. The amount
of such additional capital required is uncertain, and may be beyond that
generated from future operations. There can be no assurance that the
Company will be able to obtain any such capital or a merger acquisition
candidate on satisfactory terms.
Results of Operations - The quarter and six months ended June 30, 1999
compared to the quarter and six months ended June 30, 1998.
The Company reported no revenues for the quarters and six months ended
June 30, 1999 and 1998. During the quarter and six months ended June 30,
1999, operating expenses were $17,585 and $35,539, respectively, as
compared to $32,945 and $49,215, respectively, for the quarter and six
months ended June 30, 1998 (consisting primarily of professional and
consulting fees). During the six months ended June 30, 1998, the Company
had other income of $25,000 from expenses paid by Infectech, Inc. (see Note
1). As a result, the quarter and six months ended June 30, 1999, had net
losses of $17,585 and $ 35,539, respectively, as compared to net losses of
$32,945 and $24,215, respectively, for the quarter and six months ended
June 30, 1998.
Year 2000 Issues
Because many computer systems use only two digits to record the year
in date fields, such systems may not be able to accurately process dates
including the year 2000 and after. The effects of this problem will vary
from system to system and may adversely affect a company's operations as
well as the ability to prepare financial statements. In order to determine
the impact that Year 2000 issues have on the Company, (1) a complete
assessment of all systems potentially affected by Year 2000 issues needs to
be completed, and (2) management needs to determine the consequences that
its Year 2000 issues would have on its business, results of operations, and
financial condition. The Company's assessment of its Year 2000 issues
includes addressing whether third parties with whom the Company has a
material relationship are Year 2000 compliant.
Although the Company has not completed any evaluation of its Year 2000
issues or assessed third party issues, since the Company currently has no
operations and is not reliant on internal computer systems for any matters,
it believes that the impact of Year 2000 issues will have an immaterial
effect on its business, results of operations, and financial condition.
Factors that may affect future results
A number of uncertainties exist that may affect the Company's future
operating results, including the possibility of uncertain general economic
conditions, market acceptance of the Company's planned future operations,
the Company's ability to manage expense growth and the ability to acquire
long-term funding (including costs of the Infectech merger).
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not aware of any litigation either pending, asserted,
unasserted, or threatened.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
None.
A copy of any of the exhibits listed or referred to above will be
furnished at a reasonable cost to any person who was a shareholder of the
Company on June 30, 1999, upon receipt from any such person of written
request for any such exhibit. Such request should be sent to the Company
with the attention directed to the Corporate Secretary.
Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated: December 6, 1999
REGAL ONE CORPORATION
(Registrant)
By: /s/ Israel Rubinstein
Israel Rubinstein, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 4334
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4334
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4334
<CURRENT-LIABILITIES> 224024
<BONDS> 0
0
500
<COMMON> 5941113
<OTHER-SE> (6164303)
<TOTAL-LIABILITY-AND-EQUITY> 4334
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 17954
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (17954)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17954)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
