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 October 31, 2001 Commission File No. 0-14234

KINGS ROAD ENTERTAINMENT, INC.
(Name of small business issuer in its charter)

Delaware
(State or other jurisdiction
of incorporation) 95-3587522
(I.R.S. Employer
Identification No.)

5743 N. W. 66th Avenue
Parkland, FL 33067
(Address of principal executive office)

Issuer’s telephone number: (954) 344-6168

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 December 14, 2001, the Registrant had 3,664,390 shares of its common stock outstanding.

Transitional Small Business Disclosure Format: YES [    ] NO [X]

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
	Item 1 — Financial Statements
		CONSOLIDATED BALANCE SHEET
		CONSOLIDATED STATEMENTS OF OPERATIONS
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	Item 2 — Management’s Discussion and Analysis of Financial Position and Results of Operations
PART II — OTHER INFORMATION
	Item 6 — Exhibits and Reports on Form 8-K
SIGNATURES

PART I — FINANCIAL INFORMATION

Item 1 — Financial Statements

KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)

			AS OF
			OCT. 31, 2001
ASSETS
	Cash and Cash Equivalents		$	66,998
	Film Costs			146,923
	Fixed Assets			1,848
TOTAL ASSETS			$	215,769
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
	Accounts Payable		$	262,804
	Note Payable			19,000
	Reserve for Discontinued Operations			50,000
	Accrued Expenses			19,433
	Deferred Revenue			2,300
		TOTAL LIABILITIES		353,537
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
	Common Stock, $.01 par value, 12,000,000 shares authorized, 3,664,390 shares issued and outstanding			36,644
	Additional Paid-In Capital			24,906,656
	Deficit			(25,081,068	)
		TOTAL STOCKHOLDERS’ EQUITY		(137,768	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	215,769

The accompanying notes are an integral part of these consolidated financial statements.

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KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

		THREE MONTHS						SIX MONTHS
		ENDED OCT. 31,						ENDED OCT. 31,
		2001			2000			2001			2000
REVENUES
	Feature Films	$	140,241		$	278,701		$	290,442		$	971,266
			140,241			278,701			290,442			971,266
COSTS AND EXPENSES
	Costs Related to Revenue		0			40,498			0			266,191
	Selling Expenses		5,500			0			11,034			35,585
	General & Administrative Expenses		137,839			149,844			346,150			306,493
	Impairment of Goodwill		(52,090	)		0			(67,965	)		0
			195,429			190,342			425,149			608,269
	OPERATING (LOSS)/PROFIT		(55,188	)		88,359			(134,707	)		362,997
OTHER INCOME/(EXPENSE)
	Adjustment in Valuation of Investments		(30,000	)		0			(30,000	)		0
	Interest Expense		(339	)		(566	)		(678	)		(566	)
	Interest Income		0			1,890			38			7,668
	Gain From Cancellation of Indebtedness		0			126,313			0			126,313
			(30,339	)		127,637			(30,640	)		133,415
	(LOSS)/INCOME BEFORE DISCONTINUED OPERATIONS AND INCOME TAXES		(85,527	)		215,996			(165,347	)		496,412
Loss from Discontinued Operations			2,095			113,109			79,294			113,109
Provision for Income Taxes			0			0			0			1,600
	NET (LOSS)/INCOME		($87,622	)	$	102,887			($244,641	)	$	381,703
	Net Loss Per Share — Discontinued Operations		($0.01	)		($0.03	)		($0.02	)		($0.03	)
	Net (Loss)/Income Per Share — Basic and Diluted		($0.02	)	$	0.03			($0.07	)	$	0.11
	Weighted Average Number of Common Shares — Basic and Diluted		3,664,390			3,487,390			3,664,390			3,487,390

The accompanying notes are an integral part of these consolidated financial statements.

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KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

			FOR THE SIX MONTHS
			ENDED OCTOBER 31,
			2001			2000
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net (Loss)/Income			($244,641	)	$	381,703
	Adjustments to reconcile Net (Loss)/Income to Net Cash Provided by Operating Activities:
		Depreciation and Amortization		714			59,785
		Impairment of Goodwill		67,965			0
		Adjustment in Valuation of Investments		30,000			0
		Gain from Cancellation of Indebtedness		0			(126,313	)
	Changes in Assets and Liabilities:
		Decrease/(Increase) in Accounts Receivable		52,890			(177,328	)
		Decrease/(Increase) in Inventory		34,071			(203,607	)
		Decrease/(Increase) in Prepaid Expenses		49,631			(348,554	)
		Increase in Security Deposits		0			(28,384	)
		Increase in Other Assets		0			(446	)
		Increase (Decrease) in Accounts Payable		109,435			464,994
		Decrease in Accrued Expenses		(36,940	)		0
		Decrease in Deferred Revenue		0			(1,062	)
	NET CASH AND CASH EQUIVALENTS PROVIDED BY OPERATING ACTIVITIES			63,125			20,788
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of Other Investments			(30,000	)		(51,000	)
	Additions to Film Development Costs			(20,604	)		0
	Theater Production Costs			0			(43,165	)
	Disposal of Fixed Assets			0			4,058
	NET CASH AND CASH EQUIVALENTS USED IN INVESTING ACTIVITIES			(50,604	)		(90,107	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Issuance of Note			0			39,000
	NET CASH AND CASH EQUIVALENTS PROVIDED BY FINANCING ACTIVITIES			0			39,000
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS				12,521			(30,319	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD				54,477			85,159
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	66,998		$	54,840

The accompanying notes are an integral part of these consolidated financial statements.

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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, 2001 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 at October 31, 2001 and the results of its operations and cash flows for the six month periods ended October 31, 2001 and 2000 have been included.

The results of operations for the three month period ended October 31, 2001 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, 2001.

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 six month periods ended October 31, 2000 have been reclassified to conform to the presentation of the October 31, 2001 amounts. The reclassifications have no effect on reported net income.

NOTE B — FILM COSTS

Film costs consist of film projects actively in development at October 31, 2001.

NOTE C — NOTES PAYABLE

In connection with the acquisition of Animal Town, Inc. (“Animal Town”) on August 31, 2000, the Company issued a note to the seller of the common stock of Animal Town in the principal amount of $39,000, bearing interest at 7% per annum with an initial maturity date of November 30, 2000. The outstanding balance of the note at October 31, 2001 was $20,470 consisting of principal of $19,000 plus accrued and unpaid interest of $1,470. The parties have agreed to extension of the maturity date of the note to November 30, 2001.

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KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE D — INCOME TAXES

A reconciliation of the provision for income taxes to the expected income tax expense at the statutory federal tax rate of 34% is as follows:

	Six Months Ended			Six Months Ended
	Oct. 31, 2001			Oct. 31, 2000
Computed Expected Tax at Statutory Rate		($83,178	)	$	129,7811
State and Local Taxes		0			1,600
Valuation Allowance		83,178			(129,781	)
	$	0		$	1,600

For federal income tax purposes, the Company has available net operating loss carryforwards to offset current and future income tax liabilities.

NOTE E — 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, management believes such contingencies will not have a materially adverse effect on the Company’s financial position or results of operations.

NOTE F — DISCONTINUED OPERATIONS

During the three months ended October 31, 2001, the Company elected to cease all operations pertaining to its Animal Town subsidiary. Subsequent to its purchase by the Company, Animal Town’s operations proved to be unprofitable and the Company was unable to determine a reasonable scenario under which Animal Town could become a profitable entity. Therefore, as of October 31, 2000, Animal Town’s operations have been classified as discontinued and have been segregated from the Company’s viable operations. At the date of discontinuance, Animal Town had assets totaling $34,584 and liabilities of $57,329. The Company created a reserve of $45,000 to cover any unforeseen claims against Animal Town.

During the three months ended October 31, 2001, the Company has elected to cease all operations pertaining to the stage play “End of the World Party” (the “Play”). Therefore, as of October 31, 2000, all operations pertaining to the Play have been classified as discontinued and have been segregated from the Company’s viable operations. At the date of discontinuance, the Play had no assets and liabilities of $15,000. The Company created a reserve of $5,000 to cover any unforeseen claims related to the Play.

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KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE F — DISCONTINUED OPERATIONS (CONTINUED)

The following is a summary of the loss from discontinued operations resulting from the elimination of the operations of Animal Town and the Play. The financial statements have been retroactively stated to reflect this event. No tax benefit has been attributed to the discontinued operations.

			THREE MONTHS						SIX MONTHS
			ENDED OCT. 31,						ENDED OCT. 31,
			2001			2000			2001			2000
REVENUES
		Catalog Sales	$	0		$	92,750		$	36,943		$	92,750
		Theatrical Admissions		0			11,295			0			11,295
				0			104,045			36,943			104,045
COSTS AND EXPENSES
	Costs Related to Revenue			0			124,718			29,852			124,718
	General & Administrative Expenses			2,095			92,436			86,385			92,436
				2,095			217,154			116,237			217,154
NET LOSS FROM DISCONTINUED OPERATIONS				($2,095	)		($113,109	)		($79,294	)		($113,109	)

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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 its film revenues almost exclusively from the exploitation of films produced in prior years. The Company continues to fund and develop motion picture projects, with the intention of either producing the motion picture, establishing a partnership or joint venture with another film production company to develop and/or produce the project or an outright sale of the project.

     On August 31, 2000, the Company completed the acquisition of the common stock of Animal Town, Inc. (“Animal Town”), a privately-held direct mail order catalogue company that markets children’s toys, games, crafts and books specializing in cooperative play and development, animal protection and environmental awareness. The Company acquired all of the outstanding common stock of Animal Town in exchange for a combination of approximately $12,000 in cash, a note payable in the amount of $39,000 to the seller of the common stock and the issuance of 77,000 shares of the Company’s common stock, the exact number of shares determined based upon a debt-for-equity exchange offer made to then existing Animal Town creditors that commenced on September 29, 2000 and was concluded on January 29, 2001. Due to recurring operating losses since the Company’s acquisition of Animal Town and current market conditions, the Company has discontinued the operations of Animal Town.

Results of Operations

The Three Months Ended October 31, 2001 vs. the Three Months Ended October 31, 2000

     For the quarter ended October 31, 2001, feature film revenues were $140,241 as compared to $278,701 for the quarter ended October 31, 2000. The decrease of $138,460 results primarily from lower overall royalties on the Company’s feature film library.

     Costs and expenses decreased to $143,339 for the quarter ended October 31, 2001 as compared to $190,342 during the quarter ended October 31, 2000. This decrease of $47,003 results primarily from lower film cost amortization (the Company has fully amortized the costs related to its film library) partially offset by increased salaries and professional fees expenses.

     During the quarter ended October 31, 2001, the Company recorded an expense of $30,000 related to an investment in a foreign subsidiary and recorded an expense of $52,090 related to the impairment of goodwill in connection with the Company’s acquisition of Animal Town. During the quarter ended October 31, 2000, the Company recorded a gain of $126,313 from the cancellation of certain indebtedness relating to the Company’s investment in Immediate Entertainment Group (“Immediate”).

     The Company’s loss from discontinued operations, principally Animal Town, decreased to $2,095 during the quarter ended October 31, 2001 as compared to $113,109 during the quarter ended October 31, 2000. This decrease results primarily from the significantly reduced operations of Animal Town during the quarter ended October 31, 2001 as compared to the same period last year.

     The Company had a net loss of $87,622 for the quarter ended October 31, 2001 compared to net income of $102,887 for the quarter ended October 31, 2000. This decrease in net income resulted primarily from (i) the gain of $126,313 from the cancellation of certain

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indebtedness relating to the Company’s investment in Immediate during the quarter ended October 31, 2000, (ii) the expense recorded of $30,000 related to an investment in a foreign subsidiary and (iii) the expense of $52,090 related to the impairment of good will in connection with the Company’s acquisition of Animal Town. During the quarters ended October 31, 2001 and 2000, the Company had no provision for income taxes.

The Six Months Ended October 31, 2001 vs. the Six Months Ended October 31, 2000

     For the six months ended October 31, 2001, feature film revenues were $290,442 as compared to $971,266 for the six months ended October 31, 2000. The decrease of increase of $680,824 principally related to (i) the sale of the Company’s rights to “Ticker”, a feature film project that had been developed by the Company during the six months ended October 31, 2000 and (ii) decreased domestic and foreign distribution revenues from feature films in the Company’s film library during the six months ended October 31, 2001.

     Costs related to revenue were $0 for the six months ended October 31, 2001 as compared to $266,191 during the six months ended October 31, 2000 reflecting the full amortization of costs associated with the Company film library. Selling expenses decreased to $11,034 during the six months ended October 31, 2001 as compared to $35,585 during the six months ended October 31, 2000 reflecting the significant decrease in the Company’s revenues. General and administrative costs increased to $346,150 for the six months ended October 31, 2001 from $306,493 for the six months ended October 31, 2000. The increase resulted principally from increased professional fees partially offset by decreased salaries and insurance expenses.

     Interest income decreased significantly to $38 for the six months ended October 31, 2001 versus $7,668 for the six months ended October 31, 2000 reflecting a decrease in cash and cash equivalents held during the respective periods.

     During the six months ended October 31, 2001, the Company recorded an expense of $30,000 related to an investment in a foreign subsidiary and recorded an expense of $67,965 related to the impairment of goodwill in connection with the Company’s acquisition of Animal Town. During the six months ended October 31, 2000, the Company recorded a gain of $126,313 from the cancellation of certain indebtedness relating to the Company’s investment in Immediate Entertainment Group (“Immediate”).

     The Company’s loss from discontinued operations, principally Animal Town, decreased to $79,294 during the six months ended October 31, 2001 as compared to $113,109 during the quarter ended October 31, 2000. This decrease results primarily from the significantly reduced operations of Animal Town during the six months ended October 31, 2001 as compared to the same period last year.

     The Company had a net loss of $244,641 for the six months ended October 31, 2001 as compared to net income of $381,703 for the six months ended October 31, 2000. The decrease in net income resulted primarily from (i) significantly decreased revenues during the six months ended October 31, 2001, as discussed above, (ii) the expense recorded of $30,000 related to an investment in a foreign subsidiary and (iii) the expense of $67,965 related to the impairment of good will in connection with the Company’s acquisition of Animal Town and (iv) a gain from the cancellation of certain indebtedness relating to the Immediate transaction during the six months ended October 31, 2000, for which there was no comparable gain during the six months ended October 31, 2001. During the six months ended October 31, 2001 and 2000, the Company had no significant provision for income taxes.

9

Liquidity and Capital Resources

     The Company’s principal source of working capital during the three and six month periods ended October 31, 2001 was motion picture royalty income. The Company continues to invest in the development of motion picture projects, the production of which would require significant capital. In the event that the Company decides to invest in the production of one or more of its projects, the Company will need to examine and evaluate the additional capital required to undertake such activities. The Company presently does not have sufficient capital to pursue such activities. Except for the financing of new film production costs, the Company believes it has sufficient working capital to maintain all of its business activities.

     For the six months ended October 31, 2001, the Company’s net cash flow provided by operating activities was $63,125 compared to net cash flow of $20,788 for the comparable six month prior year period. The resulting increase was principally attributable to lower cash flow used in investing activities of $39,503. At October 31, 2001, the Company had cash and cash equivalents of $66,998 as compared to $54,840 at October 31, 2000.

Future Commitments

     The Company does not have any material future commitments.

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.

PART II — OTHER INFORMATION

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)

(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.

(b)  Forms 8-K

     None

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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: December 14, 2001	KINGS ROAD ENTERTAINMENT, INC.
	By:	/s/Michael L. Berresheim
		Michael L. Berresheim, Chairman and Chief Executive Officer

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