10QSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarter ended January 31, 2006

-OR-

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from:                             to

Commission File Number 0-14234

KINGS ROAD ENTERTAINMENT, INC.

(Exact Name of Registrant as Specified in Its Charter)

DELAWARE	95-3587522
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
468 N. Camden Drive Beverly Hills, California	90210
(Address of principal executive offices)	(Zip Code)

310-278-9975

(Registrant’s telephone number, including area code)

(Former name, former address or former fiscal year, if changed since last report)

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 þ     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange)oYes   þNo

The number of shares outstanding of each of the Registrant’s classes of common stock, as of January 31, 2006 was 6,957,740 shares, all of one class of $0.01 par value Common Stock. As of April 2nd, 2008 the number of shares outstanding of each of the Registrant’s classes of common stock was 10,756,493

KINGS ROAD ENTERTAINMENT, INC.

FORM 10-QSB

Quarter Ended January 31, 2006

TABLE OF CONTENTS

		PAGE
FINANCIAL INFORMATION
Item 1.	Index to Consolidated Financial Statements
	Consolidated Balance Sheets as of January 31, 2006 and April 30, 2005	F-2
	Consolidated Statements of Operations for the Three Months Ended
	January 31, 2006 and 2005	F-3
	Consolidated Statements of Operations for the Nine Months Ended
	January 31, 2006 and 2005	F-4
	Consolidated Statements of Cash Flows for the Nine Months Ended
	January 31, 2006 and 2005	F-5
	Notes to Consolidated Financial Statements as of January 31, 2006	F-6 – F-10
Item 2.	Managements Discussion and Analysis or Plan of Operation	13
Item 3.	Controls and Procedures	14
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Submission of Matters to a Vote of Security Holders	17
Item 5.	Other Information	17
Item 6.	Exhibits and Reports on Form 8-K	17
SIGNATURES		17

Page 2 of 20

PART 1: FINANCIAL INFORMATION

KINGS ROAD ENTERTAINMENT, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Page
Consolidated Balance Sheets as of January 31, 2006 and April 30, 2005		F-2
Consolidated Statements of Operations for the three months ended January 31, 2006 and 2005		F-3
Consolidated Statements of Operations for the nine months ended January 31, 2006 and 2005		F-4
Consolidated Statements of Cash Flows for the nine months ended January 31, 2006 and 2005		F-5
Notes to Consolidated Financial Statements		F-6 to F-10

F-1

KINGS ROAD ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

AS OF JANUARY 31, 2006 AND APRIL 30, 2005

	January 31, 2006			April 30, 2005
	(unaudited)			(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	797,630		$	112,114
Restricted cash		61,952			60,386
Accounts receivable, trade		127,942			69,764
Amounts due from related parties		0			4,500
Total current assets		987,524			246,764
OTHER ASSETS
Film development costs, net		70,037			70,037
Total Other Assets		70,037			70,037
TOTAL ASSETS	$	1,057,561		$	316,801
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	138,794		$	187,786
Accrued expenses		364,024			256,077
Deferred revenue		1,068,031			215,508
Line of credit		60,000			60,000
Liabilities from discontinued operations		4,000			4,000
Total current liabilities		1,634,849			723,371
Stockholders’ equity:
Common stock; 12,000,000 shares authorized at $0.01 par value; 6,957,740 shares issued and outstanding at January 31, 2006 and April 30, 2005 respectively.		69,577			69,577
Additional paid-in capital		25,211,655			25,211,655
Accumulated deficit		(25,687,802	)		(25,687,802	)
Net Profit (Loss) for Period		(170,718	)		0
Total stockholders’ equity (deficit)		(577,288	)		(406,570	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,057,561		$	316,801

See accompanying notes to consolidated financial statements.

F-2

KINGS ROAD ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED JANUARY 31, 2006 AND 2005

(Unaudited)

	Three months ended January 31,
	2006			2005
REVENUES
Feature films	$	120,639		$	65,532
TOTAL REVENUE		120,639			65,532
OPERATING EXPENSES:
General and administrative		124,278			209,764
Total operating expenses		124,278			209,764
INCOME (LOSS) FROM OPERATIONS		(3,639	)		(144,232	)
OTHER INCOME (EXPENSE):
Interest income		6,855			248
Interest expense		0			(244	)
Total Other Income (Expense)		6,855			4
INCOME (LOSS) BEFORE INCOME TAXES		3,216			(144,228	)
PROVISION FOR INCOME TAXES		0			0
NET INCOME (LOSS)	$	3,216		$	(144,228	)
Net income (loss) per share – Basic	$	(0.00	)	$	(0.03	)
Basic weighted average number of shares outstanding during the period		6,957,740			3,951,347

See accompanying notes to consolidated financial statements.

F-3

KINGS ROAD ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED JANUARY 31, 2006 AND 2005

(Unaudited)

	Nine months ended January 31,
	2006			2005
REVENUES
Feature films	$	393,517		$	201,423
TOTAL REVENUE		393,517			201,423
OPERATING EXPENSES:
Depreciation		0			0
General and administrative		585,915			542,907
Total operating expenses		585,915			542,907
INCOME (LOSS) FROM OPERATIONS		(192,398	)		(341,484	)
OTHER INCOME (EXPENSE):
Other income		13,910			0
Interest income		9,295			393
Interest expense		(1,525	)		(382	)
Total Other Income (Expense)		21,680			11
INCOME (LOSS) BEFORE INCOME TAXES		(170,718	)		(341,473	)
PROVISION FOR INCOME TAXES		0			0
NET INCOME (LOSS)	$	(170,718	)	$	(341,473	)
Net income (loss) per share – Basic	$	(0.02	)	$	(0.08	)
Basic weighted average number of shares outstanding during the period		6,957,740			3,951,347

See accompanying notes to consolidated financial statements.

F-4

KINGS ROAD ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED JANUARY 31, 2006 AND 2005

(Unaudited)

	Nine months ended January 31,
	2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations	$	(170,718	)	$	(341,473	)
Adjustments to reconcile income (loss) from continuing operations to net cash (used in) provided by operating activities:
Stock Based Compensation		0			80,000
Common Stock Issued for Services		0			80,000
Change in operating assets and liabilities:
Accounts receivable, trade		(58,178	)		49,676
Prepayments and other current assets		4,500			0
Accounts payables		(48,992	)		27,552
Accrued expenses		107,947			(19,665	)
Deferred revenue		852,523			180,454
Net cash (used in) provided by operating activities		687,082			56,544
CASH FLOWS FROM FINANCING ACTVITIES:
(Increase) decrease in restricted cash		(1,566	)		0
Net cash used in financing activities		(1,566	)		0
NET CHANGE IN CASH AND CASH EQUIVALENTS		685,516			56,544
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		112,114			21,915
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	797,630		$	78,459

See accompanying notes to condensed consolidated financial statements.

F-5

KINGS ROAD ENTERTAINMENT, INC.

Notes to Consolidated Financial Statements

As of January 31, 2006

NOTE 1 – NATURE OF OPERATIONS

Kings Road Entertainment, Inc, and its wholly-owned subsidiary (the "Company" or "Registrant"), have been engaged primarily in the development, financing and production of motion pictures for subsequent distribution in theaters, to pay, network and syndicated television, on home video, and in other ancillary media in the United States (the "domestic market") and all other countries and territories of the world (the "international market"). Kings Road Entertainment, Inc., incorporated in Delaware in 1980, began active operations in January 1983 and released its first motion picture in 1984. There have been 17 additional pictures theatrically released in the domestic market, and seven pictures have been released directly to the domestic home video or pay television market.

The Company’s wholly-owned subsidiary, Ticker, Inc., (a California corporation) was inactive during the three month period ending January 31, 2006. The consolidated financial statements include those of Kings Road Entertainment, Inc. and its subsidiary.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

a. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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, 2005, included in the Kings Road Entertainment, Inc. 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 January 31, 2006, and the results of operations and cash flows for the three and nine month periods ended January 31, 2006 have been included. The results of operations for the three and nine month periods ended January 31, 2006, are not necessarily indicative of the results to be expected for the full fiscal year. All inter-company items and transactions have been eliminated in consolidation.

b. Accounting Method

The Company's consolidated financial statements are prepared using the accrual method of accounting. The Company has elected an April 30 year-end.

c. Newly Issued Accounting Pronouncements

In December 2002, the FASB issued Statement No. 148 "Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123" (SFAS 148). SFAS 148 provides alternate methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reporting results. SFAS 148 is effective for fiscal years beginning after December 15, 2003. We intend to adopt SFAS 148, however, we do not believe that the adoption of SFAS 148 will materially affect the financial statements.

F-6

d. Use of Estimates

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 period. Actual results could differ from those estimates.

NOTE 3 – CURRENT ASSETS

a. Cash and Cash Equivalents

Cash equivalents consist of cash on hand and cash due from banks. For purposes of the statements of cash flows, the Company considers all highly-liquid debt instruments with original maturities of three months or less to be cash equivalents. The Company maintains its cash balances at financial institutions that are federally insured. However, at times, these balances could exceed federally insured limits.

b. Restricted Cash

As of January 31, 2006, restricted cash totaled $61,952, which was associated with the Company’s line of credit. During 2004, the Company entered into a certificate of deposit to secure a revolving line of credit. This certificate of deposit had a beginning principal balance of $60,000 and interest accrued at a rate two percent below the rate on the line of credit it secured. Funds contained in this CD are classified as restricted as long as the related line of credit is outstanding.

c. Concentration of Credit Risk

The Company licenses various rights in its films to distributors throughout the world. Generally, payment is received in full or in part prior to the Company's delivery of the film to the applicable distributor. Once calculated royalties from actual sales have exceeded such an advance, the Company receives royalty income at the end of a specific reporting period (usually three, six or twelve months) based on actual sales from the preceding reporting period. As of January 31, 2006, none of the Company's accounts receivable was from foreign distributors.

NOTE 4 – FIXED & OTHER ASSETS

a. Fixed Assets

Fixed assets of the Company at January 31, 2006, consisted of various items of office equipment with a historical cost of $5,993 and a $0 book value. All of these items were fully depreciated at January 31, 2006.

b. Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of

The Company has adopted the provisions of SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of” and SFAS No. 142 "Goodwill and Other Intangible Assets." These statements require that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed their respective fair values. Assets to be disposed of are reported at the lower of the carrying amount of fair value less the costs to sell.

F-7

c. Film Development Costs

Film development costs are costs incurred for movie projects not yet in production. Film development costs, including any related interest and overhead, are capitalized as incurred. Profit participations and residuals, if any, are accrued in the proportion that revenue for a period bears to the estimated future revenues. Costs are amortized using the individual film forecast method set forth in FASB Statement No. 53 ("SFAS 53"), which bases the costs on the ratio of revenue earned in the current period to the Company's estimate of total revenues to be realized. Management periodically reviews its estimates on a film-by-film basis and, when unamortized costs exceed net realizable value for a film, that film's unamortized costs are written down to net realizable value.

At January 31, 2006, film development costs totaled $70,037, which was net after an allowance of $30,000. During the three month period ended January 31, 2006, no film development costs were determined to be impaired.

NOTE 5 – LIABILITIES

a. Deferred Revenue

As of January 31, 2006, the Company has deferred revenue totaling $1,068,031. The Company is following the guidelines of SOP 00-02 for film production and distribution.

b. Line of Credit

On March 4, 2004, the Company entered into a revolving line of credit loan with a beginning principal balance of $60,000, secured by a $60,000 certificate of deposit (see Note 3). The Company’s credit line will expire on March 1, 2006 unless renewed.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

a. Rent

The Company rents a three-room apartment located on Doheny Drive, Beverly Hills, California as its registered office. From June 1, 2005 the rent for this facility increased by 4.5%. Additionally, the Company rents flexible storage space for its archives.  Rent expense for the Company's office and archive storage space was $7,391 and $7,043 during the three months ending January 31, 2006 and 2005, respectively.

b. Contingent Losses & Litigation

We have previously disclosed our material litigation and regulatory issues in our Annual Report on Form 10-KSB, for the period ended April 30, 2005, and in our other filings with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. At January 31, 2006, we were involved with various legal matters, including litigation with former officers, directors, and related parties. Although the ultimate resolution of certain matters cannot be determined at this time, we do not believe that such matters, individually or in the aggregate, will have a material adverse effect on our future consolidated results of operations, cash flows or financial condition.

Legal fees associated with litigation are recorded in the period in which they occur. The company has not created, and does not intend to create any reserves for contingent losses resulting from an unfavorable outcome from any of these legal matters.

F-8

c. Other Commitments and Contingencies

In the ordinary course of business, the Company may become involved in matters of dispute which in the aggregate are not believed by management to be material to its financial position or results of operations.

NOTE 7 - COMMON STOCK

At January 31, 2006, the Company had 12,000,000 authorized shares of common stock, of which 6,957,740 shares were issued and outstanding. During the three month period ended January 31, 2006, no new stock was either issued or authorized.

NOTE 8 – RECOGNITION OF REVENUES

The Company’s revenues are derived primarily from distribution agreements in the US domestic market place and are amortized during the reporting period for which the revenue is applicable. Revenues derived from purchase option agreements are amortized over the period of the option granted. Revenues from theatrical exhibition are recognized on the dates of exhibition. Revenues from international, home video, television and pay-television license agreements are recognized when the license period begins and the film is available for exhibition or exploitation pursuant to the terms of the applicable license agreement. Once complete, a typical film will generally be made available for licensing as follows:

	Months After		Approximate
Marketplace	Initial Release		Release Period
Domestic theatrical				1-4 months
All international markets				1-10 years
Domestic home video/DVD		4 months		3-12 months
Domestic cable/pay television		12-18 months		18 months
Domestic syndicated/free television		24-48 months		1-n years

N0TE 9 – DEPRECIATION AND AMORTIZATION

Depreciation of fixed assets is computed by the straight-line method over the estimated useful lives of the assets ranging from three to five years. Leasehold improvements are amortized over the useful life of the improvements or the term of the applicable lease, whichever is less.

NOTE 10 - GOING CONCERN

The Company's consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However at January 31, 2006, the Company has a deficit in working capital of $647,325, has an accumulated deficit of approximately $25,858,000, and has sustained recent losses from operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company has discontinued certain operations that historically produced negative cash flow and plans to raise capital through equity-based investment instruments, which will provide funding for the development of future projects and operating expenses.

F-9

NOTE 11 - SUBSEQUENT EVENTS

a. Option/Purchase Agreement

Subsequent to the period covered by this report,on October 6, 2006, New Line Cinema paid the Company $90,000 to extend an option granting New Line Cinema the film rights of the remake of All of Me, for an additional 18-month period, up to and including April 11, 2008. The net proceeds of the $90,000 option extension fee was split equally with Eclectic Filmworks LLC, pursuant to the Company’s letter of agreement with Eclectic Filmworks, LLC of July 1, 2005.

b. Settlement of Certain Lawsuits and Entry into a Material Definitive Agreement

Subsequent to the period covered by this report, on March 19, 2007, the Company entered into a Settlement Agreement and Mutual General Release with Michael Berresheim, Eric Ottens, et al.,and various entities, including, but not limited to MBO Media GmbH, and other individuals and/or entities that may or may not have had a connection to Michael Berresheim, Eric Ottens, et al. For further detail s refer to Part II, Item 1- Legal Proceedings. The settlement was published in an 8-K filing on April 23, 2007.

F-10

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following review concerns the periods ended January 31, 2006 and January 31, 2005, which should be read in conjunction with the financial statements and notes thereto presented in the Form 10-QSB and the Form 10-KSB for the fiscal year ending April 30, 2005.

Forward Looking Statements

The information in this discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business strategy and expectations. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", “estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. Actual events or results may differ materially. We disclaim any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The following discussion should be read in conjunction with the Company's financial statements and related notes.

Certain matters discussed herein may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties include, but are not limited to, the following:

- the volatile and competitive nature of the film industry,

- the uncertainties surrounding the rapidly evolving markets in which the Company competes,

- the uncertainties surrounding technological change of the industry,

- the Company's dependence on its intellectual property rights,

- the success of marketing efforts by third parties,

- the changing demands of customers and

- the arrangements with present and future customers and third parties.

Should one or more of these risks or uncertainties materialize or should any of the underlying assumptions prove incorrect, actual results of current and future operations may vary materially from those anticipated.

Recent Developments

Subsequent to the fiscal year ended April 30, 1996, the Company has produced no 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.

Results of Operations

The Three Months Ended January 31, 2006 vs. the Three Months Ended January 31, 2005

For the quarter ended January 31, 2006, feature film revenues were $120,639 as compared to $65,532 for the quarter ended January 31, 2005. The increase of $55,107 results primarily from increased revenues on distribution of the Company's feature film library.

Costs and expenses decreased to $124,278 for the quarter ended January 31, 2006 as compared to $209,764 during the quarter ended January 31, 2005. This decrease of $85,486 is due primarily to a decrease in professional fees.

Page 13 of 20

The Company had net income of $3,216 for the quarter ended January 31, 2006 as compared to net loss of $144,228 for the quarter ended January 31, 2005. This increase of net income of $147,444 results primarily from an increase in film revenues, and a decrease in professional fees.

The Nine Months Ended January 31, 2006 vs. the Nine Months Ended January 31, 2005

For the nine month period ended January 31, 2006, feature film revenues were $393,517 as compared to $201,423 for the nine month period ended January 31, 2005. The increase of $192,094 results primarily from increased revenues on distribution of the Company's feature film library and increased royalties from DVD distribution.

Costs and expenses increased to $585,915 for the nine months ended January 31, 2006 as compared to $542,907 during the nine months ended January 31, 2005. This increase of $43,008 is due primarily to an increase in Guild residual accruals and commission payment to Eclectic Filmworks partially offset by a decrease in professional fees..

The Company had a net loss of $170,718 for the nine month period ended January 31, 2006 as compared to net loss of $341,473 for the comparable period ended January 31, 2005. This decreased net loss of $170,755 results primarily from an increase in revenues on distribution of the Company's feature film library and increased royalties from DVD distribution coupled with decreases in professional fees.

Liquidity and Capital Resources

The Company's principal source of working capital during the three and nine month periods ended January 31, 2006 was motion picture royalty income. The Company does not currently have sufficient working capital to fund its operations. If the Company fails to raise additional capital, increase revenues, or sell certain assets, the Company will, in all likelihood, be forced to significantly reduce its operations or liquidate.

For the nine months ended January 31, 2006, the Company's net cash provided by operating activities was $687,082 compared to net cash provided by operating activities of $56,544 during the comparable period in 2005. At January 31, 2006, the Company had cash of $797,630 as compared to $78,459 at January 31, 2005.

Future Commitments

The Company does not have, nor is it aware of, any other material future commitments.

ITEM 3. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer performed an evaluation of our disclosure controls and procedures, which have been designed to permit us to effectively identify and timely disclose important information. They concluded that the controls and procedures were effective as of January 31, 2006 to provide reasonable assurance that the information required to be disclosed by the Company in reports it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. While our disclosure controls and procedures provide reasonable assurance that the appropriate information will be available on a timely basis, this assurance is subject to limitations inherent in any control system, no matter how well it may be designed or administered.

Changes in Internal Controls. There was no change in our internal control over financial reporting during the quarter ended January 31, 2006, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Page 14 of 20

PART II - OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

Claim Against Michael Berresheim, Eric Ottens, et al.

On September 9, 2004, the Company filed suit in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, against Mr. Michael Berresheim, a former officer and director of the Company, Mr. Eric Ottens, and two company’s under the control of Messrs Berresheim and Ottens (Kings Road Entertainment, Inc., a Florida Corporation and Kings Road to Fame, Inc.). The suit filed by the Company, was seeking the return of money illegally obtained and converted from the Company, an accounting, and an injunction from further use of its trade name.

Subsequent to this report, on April 18, 2006, the Court entered a final default judgment in favor of the Company, awarded damages in the amount of $332,534 and entered a permanent injunction requiring Berresheim to cease and desist from all use of the name Kings Road in any capacity. The Court also issued a Writ of Execution on July 13, 2006, and the Defendant filed an appellate brief to appeal the judgment on October 25, 2006.

Subsequent to this report, on March 19, 2007, this matter was resolved with the execution of a Settlement Agreement and Mutual General Release (see below: “Settlement of Certain Lawsuits and Entry into a Material Definitive Agreement“).

Claim on the Company from MBO Media GmbH

On March 29, 2005, the Company received a communication from an attorney- representing MBO Media GmbH and its managing director Mr. Michael Berresheim (former director and officer of the Company) demanding the Company's repayment of leasing costs of 179,884 Euro for the video and film editing suite Avid Symphony V 2.0 as allegedly paid by her client MBO Media GmbH (formerly MBO Musikverlags GmbH). The Company has no record of any such claim, invoice, or corresponding leasing/repayment agreement between the parties in its files and has passed this correspondence on to its counsel, who repudiated this claim on April 4, 2005. Subsequent to this report, this claim was included in the counterclaims filed by defendant Berresheim with his affirmative defenses filed on July 26, 2005 (see above Claim against Michael Berresheim, Eric Ottens, et al.).

Subsequent to this report, on March 19, 2007, this matter was resolved with the execution of a Settlement Agreement and Mutual General Release (see below: “Settlement of Certain Lawsuits and Entry into a Material Definitive Agreement“).

Shareholder Demand for Inspection of Company Records

On March 30, 2005 the Company received a letter dated March 22, 2005 an attorney representing Kings Road Enterprises Corp. (formerly Parkland AG, an entity controlled by a former Director and Officer of the Company), seeking to inspect the Corporation's stock ledger, list of its stockholders, and its other books and records and to make copies or extracts there from, all as provided in Section 220 of the Delaware General Corporation Law , which states that the purpose of the demand and the inspection is (i) to make a determination as to the value of the Stockholder's stock in the Corporation, (ii) to investigate the Corporation's compliance with applicable laws, including but not limited to applicable corporate and securities laws and its own organizational and operational requirements as may be set forth in the books and records, based upon a reasonable suspicion of mismanagement and/or self-dealing due, among other things, to the apparent sale of stock to certain stockholders for less than its actual value. The Company's counsel has complied with this demand.

Subsequent to this report, on March 19, 2007, this matter was resolved with the execution of a Settlement Agreement and Mutual General Release (see below: “Settlement of Certain Lawsuits and Entry into a Material Definitive Agreement“).

Page 15 of 20

Settlement of Certain Lawsuits and Entry into a Material Definitive Agreement

Subsequent to the period covered by this report, on March 19, 2007, the Company entered into a Settlement Agreement and Mutual General Release (the “Settlement Agreement”) with the following parties: MBO Musikverlags GmbH, a German limited liability company (“MBO Musikverlag”); MBO Media GmbH, a German limited liability company (“MBO Media”) and its new owner, as of March 2006, Tacitus Treuhand, Switzerland (“Tacitus”); Fabulous AG, a Nevada corporation (“Fabulous”), formerly Kings Road Entertainment Corp. (“KREC”), and prior to that Parkland AG (“Parkland”); Metropolitan Worldwide, Inc., a Nevada corporation (“Metropolitan”); Donal C. Tunnell (“Tunnell”); William E. Ottens (“Ottens”); and Lothar Michael Berresheim (“Berresheim”) individually and in his capacity as an officer, director, manager, member and/or shareholder of MBO Musikverlag, MBO Media, Tacitus, Fabulous/KREC/Parkland, KRFame, Florida and KREN Florida, including any affiliates, subsidiaries, parents and other entities controlled, directly or indirectly by Berresheim, (collectively the “Berresheim Entities”). A Settlement and Mutual Release was also concluded with Ms. Beate C. Mueller.

The Settlement Agreement calls for Berresheim to deliver to the Company three (3) original certificate representing One Million Four Hundred Fifty-One Thousand Two Hundred Forty-Seven (1,451,247) shares of the Company’s Common Stock (“Settlement Shares”), these being all the shares held or beneficially owned by Berresheim. Further, the parties agreed to the following: discharges and releases of Berresheim, Tunnell, Ottens, the Berrsheim Entities, and their officers, directors, managers, members, shareholders, assigns, attorneys, agents, representatives, principals, predecessors and successors in interest (collectively, the “Berresheim Parties”), from any and all claims, demands, obligations, or causes of action of whatever nature or description; Dismissal of the Fourth DCA Litigation Appeal; Dismissal of the MBO Litigation; Dismissal of the Tunnell Litigation; Dissolution of KRFame Florida and KREN Florida; Withdrawal of Fictitious Name Filing of Regal Productions; Acknowledgement and Agreement to Refrain from Use of Kings Road Name by Berresheim; Transfer and Assignments of any Rights to the Kingsroadentertainment.com Website Ownership and Content; Agreement to Refrain from Acquiring Shares of Kings Road Stock by Berresheim Entities and Berresheim; Agreement to Refrain from Soliciting, Enticing, Encouraging or Assisting Claims of Litigation Against Kings Road by Berresheim and Berresheim Entities; and Non-Solicitation of Vendors, Customers or Employees of Kings Road by Berresheim. For consideration of the above, including the surrender of the Settlement Shares, the Company will pay Mr. Berresheim Sixty Thousand Dollars ($60,000) upon the receipt of the Settlement Shares by the Company’s Stock Transfer Agent, U.S. Stock Transfer Corporation; the transfer and quitclaim from the Company to Berresheim of the rights to the script entitled “Babylon Blues;” Agreement to refrain from opposing Berresheim’s motion to vacate the KREN Litigation; Dismissal of the MBO Litigation; Agreement to Refrain from Acquiring Shares of Metropolitan; Agreement to Refrain from Soliciting, Enticing, Encouraging or Assisting Claims of Litigation Against Berresheim.

The foregoing event was reported in an 8-K filed on April 23, 2007

Other litigation

As of July 31, 2005, the Company was not aware of any pending claims or assessments, other than as described above or related to the matters described above, which may have a material adverse impact on the Company's financial position or results of operations.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None in the three month period ending January 31, 2006.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None

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ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to security holders for a vote as of January 31, 2006.

ITEM 5.OTHER INFORMATION

None.

ITEM 6.EXHIBITS

INDEX TO EXHIBITS

OF

KINGS ROAD ENTERTAINMENT INC.

31.1	Rule 13a-14 (a)/15d-14 (a) Certification of President.
31.2	Rule 13a-14 (a)/15d-14 (a) Certification of Chief Financial Officer.
32	Section 1350 Certifications.

SIGNATURES

Pursuant to the requirements of Section 13 of 15(d) 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.

		KINGS ROAD ENTERTAINMENT, INC. (Registrant)
Date: July 17, 2008	By:	/s/ Philip Holmes
		Philip Holmes, President

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EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Philip Holmes, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Kings Road Entertainment, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 17, 2008

/s/ Philip Holmes

Philip Holmes

President

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Robert Kainz, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Kings Road Entertainment, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 17, 2008

/s/ Robert Kainz

Robert Kainz

Chief Financial Officer

EX-32

EXHIBIT 32

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Kings Road Entertainment, Inc., a Nevada corporation (the "Company"), does hereby certify, to such officer's knowledge, that:

The Quarterly Report on Form 10-QSB for the fiscal quarter ended January 31, 2006 (the "Form 10-QSB") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-QSB fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to Kings Road Entertainment, Inc. and will be retained by Kings Road Entertainment, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: July 17, 2008

/s/ Philip Holmes

Philip Holmes

President

/s/ Robert Kainz

Robert Kainz

Chief Financial Officer