-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JYStT43vKHyN11BswGNkkdqCkiHqj79y/ijohCejjEU4ZM6Zgq0n2daBxJVtjTUv PR+WRS8HaNRl5ZJLxxsMmQ== 0000950148-00-000448.txt : 20000322 0000950148-00-000448.hdr.sgml : 20000322 ACCESSION NUMBER: 0000950148-00-000448 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000131 FILED AS OF DATE: 20000321 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KINGS ROAD ENTERTAINMENT INC CENTRAL INDEX KEY: 0000773588 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 953587522 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-14234 FILM NUMBER: 574517 BUSINESS ADDRESS: STREET 1: 3489 WEST CAHUENGA BLVD STREET 2: SUITE D CITY: HOLLYWOOD STATE: CA ZIP: 90068 BUSINESS PHONE: (323) 512-5045 MAIL ADDRESS: STREET 1: 1901 AVE OF THE STARS STREET 2: SUITE 1545 CITY: LOS ANGELES STATE: CA ZIP: 90067 10QSB 1 FORM 10-QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended January 31, 2000 Commission File No. 0-14234 KINGS ROAD ENTERTAINMENT, INC. (Name of small business issuer in its charter) Delaware 95-3587522 (State or other jurisdiction (I.R.S. Employer of incorporation) Identification No.) 3489 West Cahuenga Blvd., Suite D Hollywood, California 90068 (Address of principal executive office) Issuer's telephone number: (323) 512-5045 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 [ ] As of March 15, 1999 the registrant had 3,482,019 shares of its common stock outstanding. Transitional Small Business Disclosure Format: YES [ ] NO [X] 2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF JAN. 31, 2000 --------------- ASSETS Cash and Cash Equivalents $ 37,672 Accounts Receivable, net of allowance of $32,630 146,920 Film Costs, net of amortization of $168,424,493 132,532 Investment in Immediate Entertainment Group 539,364 Other Investments 1,000,000 Prepaid Expenses 18,876 Fixed Assets 9,748 Other Assets 26,606 ----------- TOTAL ASSETS $ 1,911,718 =========== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Accounts Payable $ 205,985 Accrued Expenses 33,459 Note Payable to Related Parties 210,803 Convertible Note Payable 1,000,000 Note Payable 250,000 Deferred Revenue 1,900 ----------- TOTAL LIABILITIES 1,702,147 STOCKHOLDERS' EQUITY Common Stock, $.01 par value, 12,000,000 shares authorized, 3,481,310 shares issued and outstanding 34,820 Additional Paid-In Capital 24,734,382 Deficit (24,559,631) ----------- TOTAL STOCKHOLDERS' EQUITY 209,571 ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,911,718 ===========
The accompanying notes are an integral part of these consolidated financial statements. 2 3 KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS NINE MONTHS ENDED JAN. 31, ENDED JAN. 31, 2000 1999 2000 1999 ---------- ---------- ---------- ---------- REVENUES Feature Films $ 234,898 $ 242,806 $ 525,338 $ 464,970 Interest Income 168 4,466 581 71,165 ---------- ---------- ---------- ---------- 235,066 247,272 525,919 536,135 COSTS AND EXPENSES Costs Related to Revenue 41,249 81,997 76,215 90,854 Selling Expenses 8,858 3,016 14,065 32,489 General & Administrative Expenses 157,307 235,604 634,149 548,191 Interest 26,571 2,426 79,001 2,426 Cancellation of Stock Options 0 113,754 0 113,754 ---------- ---------- ---------- ---------- 233,985 436,797 803,430 787,714 ---------- ---------- ---------- ---------- OPERATING INCCOME/(LOSS) 1,081 (189,525) (277,511) (251,579) OTHER EXPENSES Equity in Losses of Affiliates 299,155 31,236 1,495,772 31,236 Adjustment in Valuation of Other Investments 0 0 250,000 0 ---------- ---------- ---------- ---------- 299,155 31,236 1,745,772 31,236 LOSS BEFORE INCOME TAXES (298,074) (220,761) (2,023,283) (282,815) Provision for Income Taxes 2,620 0 2,866 (18,940) ---------- ---------- ---------- ---------- NET LOSS ($300,694) ($220,761) ($2,026,149) ($263,875) ========== ========== ========== ========== Net Loss Per Share - Basic ($0.09) ($0.07) ($0.58) ($0.11) ========== ========== ========== ========== Weighted Average Number of Common Shares - Basic 3,482,019 3,389,315 3,479,457 2,404,270 ========== ========== ========== ========== Net Loss Per Share - Diluted ($0.09) ($0.07) ($0.58) ($0.11) ========== ========== ========== ========== Weighted Average Number of Common Shares and Common Share Equivalents - Diluted 3,482,019 3,389,315 3,479,457 2,404,270 ========== ========== ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 3 4 KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED JANUARY 31, 2000 1999 ----------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss ($2,026,149) ($263,875) Adjustments to reconcile Net Loss to Net Cash Provided by/(Used in) Operating Activities: Depreciation and Amortization 79,547 97,024 Equity in Losses of Affiliates 1,495,772 31,236 Adj. in Valuation of Other Investments 250,000 0 Change in Assets and Liabilities: Decrease in Restricted Cash 1,000,000 0 Decrease/(Increase) in Accounts Receivable 185,422 (14,645) Increase in Amount Due from Related Party (93,210) 0 Increase in Prepaid Expenses (2,642) (24,260) Decrease in Other Assets 114,573 0 Decrease in Accounts Payable (64,991) (28,150) Decrease in Accrued Expenses (58,193) (4,414) Decrease in Deferred Revenue (5,375) (1,200) ----------- ---------- NET CASH AND CASH EQUIVALENTS PROVIDED BY/ (USED IN) OPERATING ACTIVITIES 874,754 (208,284) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Investments (1,250,000) (5,983,087) Gross Additions to Film Cost (51,261) (98,441) Purchase of Fixed Assets (3,312) (4,560) ----------- ---------- NET CASH AND CASH EQUIVALENTS USED IN INVESTING ACTIVITIES (1,304,573) (6,086,088) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of Stock 161,908 0 Issuance of Note Payable 250,000 0 Issuance of Stock for Investments 0 3,472,285 Borrowing from Related Parties 0 210,803 ----------- ---------- NET CASH AND CASH EQUIVALENTS PROVIDED BY FINANCING ACTIVITIES 411,908 3,683,088 ----------- ---------- NET DECREASE IN CASH AND CASH EQUIVALENTS (17,911) (2,611,284) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 55,583 2,658,500 ----------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 37,672 $ 47,216 =========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 4 5 KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements. Accordingly, they do not include all of the information and disclosures required for annual financial statements. These financial statements should be read in conjunction with the financial statements and related footnotes for the year ended April 30, 1999 included in the Kings Road Entertainment, Inc. ("Company" or "Registrant") annual report on Form 10-KSB for that period. In the opinion of the Company's management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company's financial position as of January 31, 2000 and the results of operations and cash flows for the three and nine month periods ended January 31, 2000 and 1999 have been included. The results of operations for the three and nine month periods ended January 31, 2000 are not necessarily indicative of the results to be expected for the full fiscal year. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-KSB for the year ended April 30, 1999. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Certain amounts for the three and nine month periods ended January 31, 1999 have been reclassified to conform to the presentation of the January 31, 2000 amounts. The reclassifications have no effect on the net loss for the three and nine month periods ended January 31, 1999. NOTE B - FILM COSTS Film costs consist of:
As Of Jan. 31, 2000 ------------- Released Films, less amortization $0 Films in Development 132,532 -------- $132,532 ========
5 6 KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE C - INVESTMENT IN IMMEDIATE ENTERTAINMENT GROUP On November 9, 1998, the Company acquired 2,393,235 shares of Immediate Entertainment Group, Inc. ("Immediate"), approximately 19% of Immediate's outstanding common stock, for an aggregate of $2,300,000 in cash, 1,477,567 newly issued shares of the Company's common stock and a note payable to the sellers of the stock for $210,803. The Company's investment in Immediate has been accounted for using the equity method. The Company's investment in Immediate also includes $240,210 of amounts advanced to Immediate or payments made to third parties on Immediate's behalf. Immediate is a diversified entertainment holding company that provides services relating to music production, audio recording, CD manufacturing, film soundtrack and script development and operates a mail order music club. The Company has evaluated the recoverability of its investment in Immediate and has recorded a valuation allowance of approximately $1,258,000 during the nine months ended January 31, 2000. Immediate has experienced recurring operating losses and has a working capital deficit. Immediate's management is presently pursuing plans to increase sales, reduce administrative costs, improve cash flow and obtain additional financing. Immediate's ability to achieve its operating goals and to obtain additional financing is uncertain. NOTE D - OTHER INVESTMENTS On May 12, 1999, the Company acquired 140 shares of Star TV AG ("Star"), approximately 19% of Star's outstanding common stock for $1,000,000 in cash. The Company's investment in Star has been accounted for using the cost method. Star is a developing cable television network based in Switzerland. (SEE NOTE G - SUBSEQUENT EVENTS). NOTE E - NOTES PAYABLE On November 9, 1998, the Company acquired 2,393,235 shares of Immediate, approximately 19% of Immediate's outstanding common stock, from FAB Capital Corporation ("FAB"), MBO Music Verlag GmbH ("MBO") and West Union Leasing Ltd. ("West") for an aggregate of $2,300,000 in cash, 1,477,567 newly issued shares of the Company's common stock and a note payable to the sellers of the stock for $210,803 bearing interest at 5% per annum due upon demand but in no event earlier that April 30, 2000 ("Note"). Pursuant to such transaction, FAB, MBO and West are due $93,175, $82,424, and $35,204, respectively, under the Note. The accrued and unpaid interest balance at January 31, 2000 was $12,967. 6 7 KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E - NOTES PAYABLE (CONTINUED) On April 26, 1999, the Company issued a convertible note ("Convertible Note") to Tresor Worldwide Limited ("Tresor") in the principal amount of $1,000,000. The Convertible Note bore interest at the rate of 8% per annum, payable quarterly on July 1, 1999, October 1, 1999 and January 1, 2000. Tresor had the right to convert, in whole or in part, any outstanding and unpaid principal and interest into fully paid and non-assessable shares of the Company's common stock at the lower of (i) $2.06 per share or (ii) 70% of the average closing bid price for the five (5) trading days immediately preceding the date of conversion but in no event less than $1.00 ("Conversion Price"). The Conversion Price was subject to reduction of 3% per month beginning on the six month anniversary of the Convertible Note if any portion of the securities issuable upon conversion had not been registered under the Securities Act of 1933, as amended. The Company entered into a Registration Rights Agreement with Tresor wherein the Company, as soon as practicable, agreed to register the securities issuable upon conversion. The accrued and unpaid interest balance at January 31, 2000 was $6,793. (SEE NOTE G - SUBSEQUENT EVENTS). On May 17, 1999, the Company entered into a Loan Agreement ("Star Loan Agreement") with Star whereby the Company borrowed $250,000 from Star ("Star Loan") bearing interest at 6% per annum. The Star Loan was originally due July 19, 1999. By agreement dated July 22, 1999, the due date was extended until August 19, 1999. By further agreement, the due date was extended until December 22, 1999. The accrued and unpaid interest balance at January 31, 2000 was $10,538. (SEE NOTE G - SUBSEQUENT EVENTS). NOTE F - LITIGATION AND CONTINGENCIES In the ordinary course of business, the Company has or may become involved in disputes or litigation. On the basis of information available to it, the Company believes such contingencies will not have a materially adverse impact on the Company's financial position or results of operations. NOTE G - SUBSEQUENT EVENTS On February 15, 2000, the Company sold its investment in Star back to Star in exchange for (i) extinguishment of the Star Loan and related interest payable and (ii) cash proceeds of $1,000,000. Using the cash proceeds, the Company then repaid the Convertible Note in full. 7 8 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS RECENT DEVELOPMENTS Subsequent to the fiscal year ended April 30, 1995, the Company has not produced any new films and has derived revenues almost exclusively from the exploitation of films produced prior to April 30, 1995. Following the death on October 4, 1996 of Mr. Stephen Friedman, the Company's founder and then Chairman of the Board of Directors and Chief Executive Officer, the Company explored various business options, including, among other things, the liquidation of the Company, the sale of the Company as a going concern to an outside party, the sale of substantially all of the assets of the Company to an outside party and the issuance of shares of common stock to an outside party that would provide a new source of financing for the Company. The Company had discussions with over twenty outside parties which expressed varying degrees of interest in acquiring all or part of the Company or in supplying additional capital in return for an equity interest in the Company. On November 6, 1998, pursuant to a Stock Acquisition Agreement, FAB, MBO, West and RAS Securities, Inc. purchased 962,360 shares of the Company's common stock (approximately 50.3% of the Company's then outstanding common stock) from the Estate of Stephen Friedman ("Estate") and Christopher Trunkey, the Chief Financial Officer of the Company, for a purchase price of $2.35 per share or $2,261,546 in the aggregate. In addition, Music Action Ltd. agreed that it would, as soon as practicable but in any event within 120 days after November 6, 1998, make or cause to be made an offer to each of the Company's shareholders other than the Acquirors, the Estate and Mr. Trunkey, for the purchase of up to ninety percent (90%) of such shareholder's shares at a price of $2.35 per share. MAC agreed that, in the event the Purchase Offer was not made within ninety days after November 6, 1998, it would deposit $1,800,000 into escrow to be applied toward the Purchase Offer. FAB agreed to make the $1,800,000 deposit into escrow in the event MAC did not do so. On February 3, 1999, the Stock Acquisition Agreement was amended to eliminate the Purchase Offer due to the fact that the Company's closing share price exceeded the $2.35 Purchase Offer price for the previous ten (10) trading days. On November 9, 1998, the Company acquired 2,393,235 shares of Immediate, approximately 19% of Immediate's outstanding common stock, for an aggregate of $2,300,000 in cash, 1,477,567 newly issued shares of the Company's common stock and a note payable to the sellers of the stock for $210,803. Immediate is a diversified entertainment holding company that provides services relating to music production, audio recording, CD manufacturing, film soundtrack and script development and operates a mail order music club. On May 12, 1999, the Company acquired 140 shares of Star TV AG ("Star"), approximately 19% of Star's outstanding common stock for $1,000,000 in cash. Star is a developing cable television network based in Switzerland. On February 15, 2000, the Company sold its investment in Star back to Star in exchange for (i) extinguishment of the $250,000 Star Loan and related interest payable and (ii) cash proceeds of $1,000,000. 8 9 RESULTS OF OPERATIONS THE THREE MONTHS ENDED JANUARY 31, 2000 VS. THE THREE MONTHS ENDED JANUARY 31, 1999 For the quarter ended January 31, 2000 feature film revenues were approximately $235,000 as compared to approximately $243,000 for the quarter ended January 31, 2000. Costs related to revenue for the quarter ended January 31, 2000 decreased to approximately $41,000 versus approximately $82,000 for the quarter ended January 31, 1999. This decrease results primarily from the fact that a significant portion of the costs associated with the Company's films has previously been amortized. Selling expenses increased to approximately $9,000 during the quarter ended January 31, 2000 versus approximately $3,000 during the same quarter last year primarily from increased sales commissions paid by the Company. General and administrative costs decreased by approximately 33% to approximately $157,000 during the quarter ended January 31, 2000 versus approximately $236,000 during the same period last year. This decrease results primarily from a decrease in legal fees of approximately $105,000 partially offset by increases in accounting and consulting fees. Interest expense during the quarter ended January 31, 2000 was approximately $27,000 versus approximately $2,000 during the same quarter last year. This increase results from the significant increase in notes payable outstanding during the respective periods. Equity in losses of affiliates was approximately $299,000 during the quarter ended January 31, 2000 resulting from a valuation allowance recorded by the Company to reflect the Company's evaluation of the recoverability of its investment in Immediate. Immediate has experienced recurring operating losses and has a working capital deficit. Immediate's management is presently pursuing plans to increase sales, reduce administrative costs, improve cash flow and obtain additional financing. Immediate's ability to achieve its operating goals and to obtain additional financing is uncertain. During the quarter ended January 31, 2000, the Company incurred a net loss of approximately $301,000 versus a net loss of approximately $221,000 for the quarter ended January 31, 1999. This increased loss results primarily from the valuation allowance of approximately $299,000 recorded to reflect the Company's uncertainty in fully recovering its investment in Immediate partially offset by decreased general and administrative expenses. During the quarters ended January 31, 2000 and 1999, the Company had no significant provision for income taxes. THE NINE MONTHS ENDED JANUARY 31, 2000 VS. THE NINE MONTHS ENDED JANUARY 31, 1999 For the nine months ended January 31, 2000 feature film revenues were approximately $525,000 as compared to approximately $465,000 for the nine months ended January 31, 1999. This increase in feature film revenues of approximately $60,000 results primarily from revenue generated by the initial release of All of Me, The Best of Times and The Big Easy to the DVD market pursuant to an agreement between Trimark Pictures and the Company. During the nine months ended January 31, 2000, interest income was approximately $1,000 versus approximately $71,000 during the same quarter last year, reflecting the substantial decrease in cash and marketable securities held during the nine months ended January 31, 2000 versus the same period last year. Costs related to revenue for the nine months ended January 31, 2000 decreased to approximately $76,000 versus approximately $91,000 for the nine months ended January 31, 9 10 1999. This decrease results primarily from the fact that a significant portion of the costs associated with the Company's films has previously been amortized. Selling expenses decreased to approximately $14,000 during the nine months ended January 31, 2000 versus approximately $32,000 during the same period last year. This decrease results primarily from decreased distribution expenses related to the Company's agreement with Trimark Pictures to release seventeen (17) of the Company's films to the DVD and home videocassette markets. General and administrative costs increased by approximately 16% to approximately $634,000 during the nine months ended January 31, 2000 versus approximately $548,000 during the same period last year. This increase results primarily from increases in accounting and consulting fees and financing costs associated with the Convertible Note partially offset by a decrease in employee salary expenses. Interest expense during the nine months ended January 31, 2000 was approximately $79,000 versus approximately $2,000 during the same period last year. This increase results from the significant increase in notes payable outstanding during the respective periods. Equity in losses of affiliates was approximately $1,496,000 during the nine months ended January 31, 2000 resulting primarily from a valuation allowance of approximately $1,258,000 recorded by the Company to reflect the Company's evaluation of the recoverability of its investment in Immediate. Immediate has experienced recurring operating losses and has a working capital deficit. Immediate's management is presently pursuing plans to increase sales, reduce administrative costs, improve cash flow and obtain additional financing. Immediate's ability to achieve its operating goals and to obtain additional financing is uncertain. During the nine months ended January 31, 2000, the Company incurred a net loss of approximately $2,026,000 versus a net loss of approximately $264,000 for the nine months ended January 31, 1999. This increased loss results primarily from (i) a valuation allowance of approximately $250,000 recorded to reflect the Company's uncertainty in fully recovering a certain investment, (ii) a valuation allowance of approximately $1,258,000 recorded to reflect the Company's uncertainty in fully recovering its investment in Immediate (iii) the Company's share of losses incurred by Immediate, and (iv) increased general and administrative and interest expenses. During the nine month periods ended January 31, 2000 and 1999, the Company had no significant provision for income taxes. LIQUIDITY AND CAPITAL RESOURCES The Company's principal sources of working capital during the three and nine month periods ended January 31, 2000 were motion picture licensing income, the proceeds from the Star Loan and the proceeds from a Regulation S offering to offshore investors. Except for the financing of film production costs, management believes that its existing cash resources will be sufficient to fund its ongoing operations for the next twelve months. For the nine months ended January 31, 2000, the Company's net cash flow provided by its operating activities was approximately $875,000, an increase of approximately $1,083,000 as compared to approximately $208,000 of net cash flow used in operating activities during the nine months ended January 31, 1999. During the nine months ended January 31, 2000, the Company used its cash flow from operations plus approximately $412,000 of cash flow provided by financing activities to make investments of approximately $1,305,000. As of January 31, 2000, the Company had cash and cash equivalents of approximately $37,000 as compared to approximately $47,000 at January 31, 1999. 10 11 FUTURE COMMITMENTS The Company does not have any material future commitments for capital expenditures. On February 15, 2000, the Company sold its investment in Star back to Star in exchange for (i) extinguishment of the $250,000 Star Loan and related interest payable and (ii) cash proceeds of $1,000,000. Using the cash proceeds, the Company then repaid the Convertible Note in full. (SEE NOTE E - NOTES PAYABLE AND NOTE G - SUBSEQUENT EVENTS). FORWARD-LOOKING STATEMENTS The foregoing discussion, as well as the other sections of this Quarterly Report on Form 10-QSB, contains forward-looking statements that reflect the Company's current views with respect to future events and financial results. Forward-looking statements usually include the verbs "anticipates," "believes," "estimates," "expects," "intends," "plans," "projects," "understands" and other verbs suggesting uncertainty. The Company reminds shareholders that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors which could cause the actual results to differ materially from the forward-looking statements. Potential factors that could affect forward-looking statements include, among other things, the Company's ability to identify, produce and complete film projects that are successful in the marketplace, to arrange financing, distribution and promotion for these projects on favorable terms in various markets and to attract and retain qualified personnel. In addition, the Company is currently seeking merger and acquisition proposals for the Company and its plans, strategies and future results are subject to the outcome of any such proposals. PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS In the ordinary course of business, the Company has or may become involved in disputes or litigation. On the basis of information available to it, management believes such contingencies will not have a materially adverse impact on the Company's financial position or results of operations. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS (NUMBERED IN ACCORDANCE WITH ITEM 601 OF REGULATION S-B) 3.1 Restated Certificate of Incorporation of Registrant.(1) 3.2 Bylaws of Registrant.(2) 27 Financial Data Schedule.(3) --------------- (1) Incorporated by reference to Form 10-KSB for the fiscal year ended April 30, 1998. (2) Incorporated by reference to Form 10-K for the fiscal year ended April 30, 1988. (3) Filed electronically with Securities and Exchange Commission, omitted in copies distributed to shareholders or other persons. (B) FORMS 8-K None 11 12 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 15, 2000 KINGS ROAD ENTERTAINMENT, INC. By: /s/ Christopher M. Trunkey --------------------------- Christopher M. Trunkey, Chief Financial Officer 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS APR-30-2000 JAN-31-2000 37,672 0 179,550 (32,630) 132,532 317,124 14,756 (5,008) 1,911,718 1,700,247 0 0 0 24,769,202 (24,559,631) 1,911,718 234,898 235,066 41,249 207,414 299,155 0 26,571 (298,074) 2,620 (300,694) 0 0 0 (300,694) (0.09) (0.09)
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