UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended April 30, 2007

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-14234

KINGS ROAD ENTERTAINMENT, INC.

(Name of Small Business Issuer in Its Charter)

Delaware		95-3587522
(State or other jurisdiction of Incorporation or organization)		(IRS Employer Identification No.)

468 N. Camden Drive

Beverly Hills, California 90210

(Address of principal executive offices)

310-278-9975

(Issuer's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act: Common Stock ($0.01 par value)

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. o

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Check if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

State issuer's revenues for its most recent fiscal year $267,876.

The aggregate market value of the voting and non-voting common stock held by non-affiliates as of May 1^st 2007 (2,947,193 shares) was approximately $206,304 using the closing price per share of $0.07, as reported on the Pink Sheets as of such date.

The number of shares of registrant's common stock outstanding as of April 30, 2007 was 5,806,493. As of June 30, 2008, the number of shares of registrant’s common stock outstanding was 10,756,493.

Kings Road Entertainment, Inc.

Annual Report on Form 10-KSB

For the Year Ended April 30, 2007

INDEX

PART I
ITEM 1.	Description of Business	3
ITEM 1A.	Risk Factors	6
ITEM 2.	Description of Properties	12
ITEM 3.	Legal Proceedings	12
ITEM 4.	Submission of Matters to a Vote of Security Holders	15

PART II
ITEM 5.	Market for Common Equity and Related Stockholder Matters	15
ITEM 6.	Management's Discussion and Analysis or Plan of Operation	16
ITEM 7.	Financial Statements	F-1 - F-14
ITEM 8.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	19
ITEM 8A.	Controls and Procedures	19
ITEM 8A(T)	Controls and Procedures	19
ITEM 8B.	Other Information	20

PART III
ITEM 9.	Directors, Executive Officers, Promoters, Control Persons and Corporate Governance, Compliance with Section 16(A) of the Exchange Act	20
ITEM 10.	Executive Compensation	21
ITEM 11.	Security Ownership of Certain Beneficial Owners and Management Related to Stockholder Matters	22
ITEM 12.	Certain Relationships and Related Transactions, and Director Independence	23
ITEM 13.	Exhibits	23
ITEM 14.	Principal Accountant Fees and Services	23

SIGNATURES		24

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-KSB contains forward-looking statements. These statements relate to future events or our future financial performance. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no duty to update any of the forward-looking statements after the date of this report to conform such statements to actual results or to changes in our expectations.

PART I.

ITEM 1. Description of Business

Overview

Kings Road Entertainment, Inc., and its wholly owned subsidiary (collectively "Company" or "Registrant"), has been engaged primarily in the development, financing and production of feature films 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"). The Company released its first motion picture in 1984, All of Me, starring Steve Martin. 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 year ending April 30, 2007. The consolidated financial statements include those of Kings Road Entertainment, Inc. and its subsidiary.

History

Kings Road Entertainment, Inc. was founded by Stephen J. Friedman, an entertainment industry lawyer, who became one of Hollywood’s most successful independent film producers in the 1970’s. Prior to forming King’s Road Entertainment, Mr. Friedman was the producer of The Last Picture Show, which received a Best Picture, Academy Award nomination in 1971. The Company was incorporated in 1980, began active operations in January 1983 and released its first feature film in 1984. Mr. Friedman served as Chairman of the Company until his passing in 1996.

The Company’s movie production strategy has been to produce quality films at the lowest possible cost by avoiding the overhead of major studios and engaging staff only when needed. As of April 30, 2007, the Company had produced (or co-produced) 25 feature films, 18 of which were theatrically released in the domestic market, and seven of which were released directly to video or pay television in the domestic market, as follows:

Title	Principal Cast	Release Date
All of Me	Steve Martin, Lily Tomlin	September 1984
Creator	Peter O’Toole, Mariel Hemingway	September 1985
Enemy Mine	Dennis Quaid, Louis Gossett, Jr.	December 1985
The Best of Times	Robin Williams, Kurt Russell	January 1986
Touch & Go	Michael Keaton, Maria Conchita Alonso	August 1986
Morgan Stewart’s Coming Home	Jon Cryer, Lynn Redgrave	February 1987
The Big Easy	Dennis Quaid, Ellen Barkin	August 1987
In the Mood	Patrick Dempsey, Beverly D’Angelo	September 1987
Rent-A-Cop	Burt Reynolds, Liza Minelli	January 1988
The Night Before	Keanu Reeves, Lori Louglin	March 1988
My Best Friend is a Vampire	Robert Sean Leonard, Cheryl Pollack	May 1988
Jacknife	Robert DeNiro, Ed Harris	March 1989
Time Flies When You’re Alive	Paul Linke	July 1989
Kickboxer	Jean Claude Van Damme	August 1989
Homer & Eddie	Woopi Goldberg, James Belushi	December 1989
Blood of Heroes	Rutger Hauer, Joan Chen	February 1990
Kickboxer II	Sasha Mitchell, Peter Boyle	June 1991
Kickboxer III	Sasha Mitchell	June 1992
Paydirt	Jeff Daniels, Catherine O’Hara	August 1992
Knights	Kris Kristofferson, Kathy Long	November 1993
Brainsmasher	Andrew Dice Clay, Teri Hatcher	November 1993
Kickboxer IV	Sasha Mitchell	July 1994
The Stranger	Kathy Long	March 1995
The Redemption	Mark DaCascos	August 1995
The Haunted Heart	Dianne Ladd, Olympia Dukakis	January 1996

The Company also has profit participation in the following theatrical film releases:

SLAP SHOT (1977). Starring Paul Newman and Michael Ontkean. Directed by George Roy Hill (director for "Butch Cassidy and the Sundance Kid").

FAST BREAK (1979). Starring Gabe Kaplan

LITTLE DARLINGS (1980). Starring Tatum O'Neal, Kristy McNichol and Matt Dillon

TICKER (2001) Starring Steven Seagal, Tom Sizemore, Dennis Hopper.

The Company’s existing film library is the Company's most valuable asset. The majority of the Company’s current revenues are derived from licensing movie rights to the Home video/DVD market, and the free and pay television markets. The Company has not produced any of its own films since 1996.

The Motion Picture Industry

Overview. Revenues at domestic theaters grew approximately 5.4%, to approximately $9.6 billion in 2007, from approximately $9.2 billion in 2006, according to the Motion Picture Association’s U.S. Theatrical Market: 2007Statistics, the domestic motion picture industry has grown in both revenues and attendance over the past ten years. In 2007, U.S. theater admissions were approximately 1.4 billion.

Competition. The motion picture industry is highly competitive. The Company faces intense competition from major motion picture studios and numerous independent production companies, many of which have significantly greater financial resources than the Company. All of these companies compete for feature film projects and talent and are producing motion pictures that compete for exhibition time at theaters, on television and on home video with feature films produced by the Company. Major studios, such as NBC Universal, Paramount Pictures, Sony Pictures Entertainment Inc., Twentieth Century Fox Film Corporation, Walt Disney Studios Motion Pictures and Warner Bros. Entertainment Inc., have historically dominated the motion picture industry. The “major studios” have recently encountered significant competition from smaller studios such as DreamWorks Animation SKG, Lions Gate Films and Metro-Goldwyn-Mayer Studios, Inc. additionally, smaller and “independent” production companies have gained market share and industry acceptance. Presently, the Company is a relatively small entity that will compete with many companies that are larger and significantly better capitalized.

Product Life Cycle. A motion pictures, generally, begins with a theatrical release, before being available on home video, cable, pay television or syndicated or free television channels. Many motion pictures never achieve a theatrical release and some never become available to the home video/dvd market. After an initial release to theaters, movie producers often seek to release their films in exclusive windows in the home video, cable/pay television or syndicated/free television markets (collectively “secondary markets”). The longevity and success of a film property is usually a function of its initial success in theaters, but such licensing revenues generally decline over time. The value of older films can be enhanced through the production of prequels, sequels, and remakes.

Development

Development activities are a fundamental building block to the Company’s future financial success. The existing properties, which the Company owns and exploits through prequels, sequels, and remakes are among the Company’s most valuable assets.

Marketing Strategy

The Company licenses rights to movies in its film library to the Home video/DVD market, and both the free and pay television markets. Additionally, the Company seeks to enhance and protect the value of our film library through the sale of option and rights for the production and distribution of prequels, sequels, and remakes.

Financing Strategy

The Company's previous financing strategy has consisted of fully financing its films by obtaining advances and guarantees from the licensing of distribution rights in those pictures and other investments from third parties. Once fully financed, the Company can then earn fees for its development and production services, in addition to generating contingent compensation based on the success of a film. The Company may also finance a portion of the cost of a film using internally generated funds or debt financing.

Production Strategy

Once a project is fully financed, the Company attempts to produce a picture at the lowest possible cost consistent with the quality that it seeks to achieve. The Company avoids the substantial overhead of major studios by maintaining a small staff, renting production facilities, and engaging production crews only as required. The Company has historically produced pictures with production costs ranging from $1,000,000 to $10,000,000. The Company’s record of remaining within budgeted cost is excellent. Although the Company’s past production experience allows it certain control over production costs, production costs of motion pictures as an industry trend have substantially escalated in recent years.

Distribution

Theatrical - The Company, when practical, has licensed its pictures to distributors for theatrical distribution in the domestic market. These distributors undertake all activities related to the distribution of the Company's motion pictures, including booking the picture into theaters, shipping prints and collecting film rentals. In certain cases distributors have advanced the costs of advertising and publicizing the motion pictures and the manufacture of prints, however, in most cases the Company has been required to fund or arrange funding for these costs itself. The Company's most recent pictures, however, were not theatrically released and were initially released on either home video or pay television.

Home Video - Distribution into the home video market has occurred by licensing the home video rights for the Company's pictures to video distributors who, in turn sell DVDs to video retailers that rent or sell DVDs to consumers. Similarly, Video on Demand will become a factor in the home video market as this technology becomes more readily available. Pay and Free Television - Distribution on pay television has occurred by licensing the pay television rights of its movies to cable television companies such as HBO/Cinemax, Showtime/The Movie Channel and various pay-per-view distributors. After licensing to pay television, the Company's films are then made available to television stations and basic cable outlets. The Company has licensed the free television rights to its films to companies who in turn sell packages of films to television stations and basic cable services.

Other Rights - Network television, non-theatrical, music publishing, soundtrack album, novelization, and other miscellaneous rights in the Company's pictures have been, whenever possible, licensed by the Company to third parties. The revenue to be derived from the exercise of these other rights is generally not as significant as revenue from other sources.

International Markets - The Company previously generated substantial revenues from the licensing of its pictures outside of the United States. However, in 1996 the Company sold the international distribution rights to most of its films to another company. For those pictures where international distribution rights are still owned by the Company, it licenses these pictures to local distributors on a territory-by-territory basis. Each license may cover one or more pictures, and may include all rights or only certain rights. Sales, collections and delivery of product are handled by outside foreign sales organizations. Such organizations generally receive a commission based on a percentage of cash receipts. The Company believes that, based on its current and anticipated future level of film production, it is more efficient and cost effective to use outside foreign sales organizations rather than to maintain its own staff.

Personnel

As of April 30, 2007, the Company has been operated by its two Officer/Directors, as well as an administrative assistant. The Company is subject to the terms of certain industry-wide collective bargaining agreements with the Writers Guild of America, the Directors Guild of America and the Screen Actors Guild, among others, relating to its completed films and projects in development. The Company considers its employee relations to be satisfactory at present, although the renewal of these union contracts does not depend on the Company's activities or decisions alone. Any strike, work stoppage or other labor disturbance may have a materially adverse effect on the production of motion pictures.

Regulation and Governmental Approval

Distribution rights to motion pictures are granted legal protection under the copyright laws of the United States and most foreign countries, which provide substantial civil and criminal sanctions for unauthorized duplication and exhibition of motion pictures. Motion pictures, musical works, sound recording, artwork, still photography and motion picture properties are each separate works subject to copyright under most copyright laws, including the United States Copyright Act of 1976, as amended. The Company has taken all appropriate and reasonable measures to obtain agreements from licensees to secure, protect and maintain copyright protection for all motion pictures under the laws of all applicable jurisdictions.

The Classification and Rating Administration of the Motion Picture Association of America, an industry trade association, assigns ratings for age-group suitability for motion pictures. The Company submits its pictures for such ratings. Management's current policy is to produce or participate in the production of motion pictures that qualify for a rating no more restrictive than "R."

Patents Trademarks and Other Intellectual Property

The Company owns distribution rights in all North American territories (US & Canada) to all media in regards to 14 completed motion pictures, and retains ownership to all world rights in all media to one motion picture (Knights). In most cases, the Company owns all remake, prequel, sequel and TV film and series rights to all motion picture properties. Additionally, the Company has legal ownership of certain intellectual properties in the form of 10 screenplays and the corresponding underlying rights in all but one case.

Website Access to our SEC Reports

Our Internet website address is www.kingsroadentertainment.net. Through our Internet website, we will make available, free of charge, the following reports as soon as reasonably practicable after electronically filing them with, or furnishing them to, the SEC: our Annual Reports on Form 10-KSB; our Quarterly Reports on Form 10-QSB; our Current Reports on Form 8-K; and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Our Proxy Statements for our Annual Stockholder Meetings will also be made available through our Internet website at the earliest practical opportunity. Our Internet website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-KSB.

You may also obtain copies of our reports without charge by writing to:

Kings Road Entertainment, Inc.

Attn: Investor Relations

468 N. Camden Drive

Beverly Hills, California 90210

The public may also read and copy any materials filed with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, or through the SEC website at www.sec.gov. The Public Reference Room may be contacted at (800) SEC-0330. You may also access our other reports via that link to the SEC website.

ITEM 1A. RISK FACTORS

The following risks and other information in this Form 10-K should be studied carefully prior to making an investment decision in our common stock. The following risks and uncertainties could materially negatively affect our business, results of operations and financial condition. The risks described below are not the only ones facing the Company. Additional risks that we may not presently be aware of or that we currently believe are immaterial may also have a negative impact on our business operations.

We have had losses, and we cannot assure future profitability.

We have reported losses for the fiscal years ending April 30, 2007 and 2006. Our accumulated deficit exceeded $26.3 million at April 30, 2007. We cannot assure you that we will operate profitably and, if we do not, we may not be able to meet our debt service requirements, working capital requirements, capital expenditure plans, anticipated production slate, acquisition and releasing plans or other cash needs. Our inability to meet those needs could have a material adverse effect on our business, results of operations and financial condition.

We face substantial capital requirements and financial risks.

Our business requires a substantial investment of capital. The development, production, acquisition and distribution of motion pictures require a significant amount of capital. A significant amount of time may elapse between our expenditure of funds and the receipt of commercial revenues from or government contributions or other subsidies to our motion pictures. This time lapse requires us to fund a significant portion of our capital requirements from working capital, distribution advances or from other financing sources. Although we intend to continue to reduce the risks of our working capital exposure through financial contributions from broadcasters and distributors, tax shelters, government and industry programs, other studios and other sources, we cannot assure you that we will continue to implement successfully these arrangements or that we will not be subject to substantial financial risks relating to the development, production, acquisition, completion and release of future motion pictures. Failure to generate revenues from new titles or other sources will increase the Company’s dependence on its existing library income. We cannot assure you that this income will be sufficient to provide working capital to cover the overhead expenses of the Company. If we increase (through internal growth or acquisition) our production slate or our production budgets, we may be required to increase overhead and/or make larger up-front payments to talent and, consequently, bear greater financial risks. Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

The costs of producing and marketing feature films have steadily increased and may further increase in the future, which may make it more difficult for a film to generate a profit or compete against other films. The costs of producing and marketing feature films have generally increased in recent years. These costs may continue to increase in the future, which may make it more difficult for our films to generate a profit or compete against other films. Historically, production costs and marketing costs have risen at a higher rate than increases in either the number of domestic admissions to movie theaters or admission ticket prices. A continuation of this trend would leave us more dependent on other media, such as home video, television, international markets and new media for revenue, and the revenues from such sources may not be sufficient to offset an increase in the cost of motion picture production. If we cannot successfully exploit these other media, it could have a material adverse effect on our business, results of operations and financial condition.

Budget overruns may adversely affect our business. Our business model requires that we be efficient in the production of our motion pictures. Actual motion picture production costs often exceed their budgets, sometimes significantly. The production, completion and distribution of motion pictures is subject to a number of uncertainties, including delays and increased expenditures due to creative differences among key cast members and other key creative personnel or other disruptions or events beyond our control. Risks such as death or disability of star performers, technical complications with special effects or other aspects of production, shortages of necessary equipment, damage to film negatives, master tapes and recordings or adverse weather conditions may cause cost overruns and delay or frustrate completion of a production. If a motion picture incurs substantial budget overruns, we may have to seek additional financing from outside sources to complete production. We cannot make assurances regarding the availability of such financing on terms acceptable to us, and the lack of such financing could have a material adverse effect on our business, results of operations and financial condition.

Additionally, if a motion picture incurs substantial budget overruns, we cannot assure you that we will recoup these costs, which could have a material adverse effect on our business, results of operations and financial condition. Increased costs incurred with respect to a particular film may result in any such film not being ready for release at the intended time and the postponement to a potentially less favorable time, all of which could cause a decline in box office performance, and, thus, the overall financial success of such film. Budget overruns could also prevent a picture from being completed or released. Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

Our revenues and results of operations may fluctuate significantly.

Revenues and results of operations are difficult to predict and depend on a variety of factors. Our revenues and results of operations depend significantly upon the commercial success of the motion pictures that are in distribution by third parties. Income from distribution agreements cannot be predicted with certainty. Accordingly, our revenues and results of operations may fluctuate significantly from period to period, and the results of any one period or periods may not be indicative of the results for any future period or periods. As a result, we may not be able to achieve our internal production targets or any publicly projected earnings targets.

In addition, our activities may be negatively impacted by the success of other film or TV productions, their release timing, creative content or attached creative personnel or other factors beyond our immediate control. These factors may affect the projected commercial success of our own productions and have a material adverse effect on our business, results of operations and financial condition.

We rely on a few major distributors for a material portion of our business and the loss of any of those distributors could reduce our revenues and operating results. A material part of our revenue is derived from distribution contracts with a few distribution companies. These revenues are reliant on the distributor remaining in business and continuing to promote the Company’s titles that are represented in the respective agreements. If any of these distributors’ revenues significantly reduce or otherwise face financial difficulties, it could have a material adverse effect on our business, results of operations and financial condition.

Our revenues and results of operations are vulnerable to currency fluctuations. We report our revenues and results of operations in U.S. dollars, but a portion of our revenues is earned outside of the U.S. Our principal currency exposure is currently limited, since the international rights to the majority of titles in our library were sold in 1996 and income from outside the USA is limited to certain individual titles and territories. However, we cannot accurately predict the impact of future exchange rate fluctuations on revenues and operating margins and fluctuations could have a material adverse effect on our business, results of operations and financial condition. From time to time, we may experience currency exposure on distribution and production revenues and expenses from foreign countries, which could have a material adverse effect on our business, results of operations and financial condition.

Accounting practices used in our industry may accentuate fluctuations in operating results. In addition to the cyclical nature of the entertainment industry, our accounting practices (which are standard for the industry) may accentuate fluctuations in our operating results. We amortize film costs in accordance with U.S. generally accepted accounting principles and industry practice. These accounting methods may be changed from time to time due to legislative change or change in applicable circumstances. This may result in a change in the rate of amortization and/or a write-down of the film or related asset to its estimated fair value. Results of operations in future years depend upon our amortization of our film and related costs. Periodic adjustments in amortization rates may significantly affect these results. In addition, we are required to expense film advertising costs as incurred, but are also required to recognize the revenue from any motion picture over the entire revenue stream expected to be generated by the individual picture.

Failure to manage future growth may adversely affect our business.

We are subject to risks associated with possible acquisitions, business combinations, or joint ventures. From time to time, we engage in discussions and activities with respect to possible acquisitions, business combinations, or joint ventures intended to complement or expand our business. We may not realize the anticipated benefit from any of the transactions we pursue. Irrespective of whether we consummate any such considered transaction, the negotiation of a potential transaction (including associated litigation and proxy contests), as well as the integration of the acquired business, could require us to incur significant costs and cause diversion of management’s time and resources. Any such transaction could also result in impairment of goodwill and other intangibles, development write-offs and other related expenses. Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

We may be unable to integrate any business that we acquire or have acquired or with which we combine or have combined. Integrating any business that we acquire or have acquired or with which we combine or have combined is distracting to our management and disruptive to our business and may result in significant costs to us. We could face challenges in consolidating functions and integrating procedures, information technology and accounting systems, personnel and operations in a timely and efficient manner. If any such integration is unsuccessful, or if the integration takes longer than anticipated, there could be a material adverse effect on our business, results of operations and financial condition. We may have difficulty managing the combined entity in the short term if we experience a significant loss of management personnel during the transition period after the significant acquisition.

Claims against us relating to any acquisition or business combination may necessitate our seeking claims against the seller for which the seller may not indemnify us or that may exceed the seller’s indemnification obligations. There may be liabilities assumed in any acquisition or business combination that we did not discover or that we underestimated in the course of performing our due diligence investigation. Although a seller generally will have indemnification obligations to us under an acquisition or merger agreement, these obligations usually will be subject to financial limitations, such as general deductibles and maximum recovery amounts, as well as time limitations. We cannot assure you that our right to indemnification from any seller will be enforceable, collectible or sufficient in amount, scope or duration to fully offset the amount of any undiscovered or underestimated liabilities that we may incur. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, results of operations and financial condition.

We may not be able to obtain additional funding to meet our requirements. Our ability to grow through acquisitions, business combinations and joint ventures, to maintain and expand our development, production and distribution of motion pictures and to fund our operating expenses depends upon our ability to obtain funds through equity financing, debt financing (including credit facilities) or the sale or syndication of some or all of our interests in certain projects or other assets. If we do not have access to such financing arrangements, and if other funding does not become available on terms acceptable to us, there could be a material adverse effect on our business, results of operations and financial condition.

A significant portion of our filmed content library revenues comes from a small number of titles.

We depend on a limited number of titles for the majority of the revenues generated by our filmed content library. In addition, some of the titles in our library are not presently distributed or actively promoted and generate no revenue. If we cannot acquire new product and the rights to popular titles through production, distribution agreements, acquisitions, mergers, joint ventures or other strategic alliances, it could have a material adverse effect on our business, results of operations and financial condition.

We are limited in our ability to exploit a portion of our filmed content library.

Our rights to the titles in our film library vary; in some cases we have only the right to distribute titles in certain media and territories for a limited term. We cannot assure you that we will be able to renew expiring rights on acceptable terms and that any failure to renew titles generating a significant portion of our revenue would not have a material adverse effect on our business, results of operations or financial condition.

Our success depends on external factors in the motion picture and entertainment industry.

Our success depends on the commercial success of motion pictures which is unpredictable. Operating in the motion picture or entertainment industry involves a substantial degree of risk. Each motion picture is an individual artistic work, and inherently unpredictable audience reactions primarily determine commercial success. Generally, the popularity of our motion pictures or programs depends on many factors, including the critical acclaim they receive, the format of their initial release, for example, theatrical or direct-to-video, the actors and other key talent, their genre and their specific subject matter. The commercial success of our motion pictures also depends upon the quality and acceptance of motion pictures or programs that our competitors release into the marketplace at or near the same time, critical reviews, the availability of alternative forms of entertainment and leisure activities, general economic conditions and other tangible and intangible factors, many of which we do not control and all of which may change. We cannot predict the future effects of these factors with certainty, any of which factors could have a material adverse effect on our business, results of operations and financial condition.

In addition, because a motion picture’s performance in ancillary markets, such as home video and pay and free television, is often directly related to its box office performance or television ratings, poor box office results or poor television ratings may negatively affect future revenue streams. Our success will depend on the experience and judgment of our management to select and develop new investment and production opportunities. We cannot make assurances that our motion pictures will obtain favorable reviews or ratings or that our motion pictures will perform well at the box office or in ancillary markets or renew licenses to broadcast programs in our library. The failure to achieve any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

Changes in the United States, global or regional economic conditions could adversely affect the profitability of our business. A decrease in economic activity in the U.S. or in other regions of the world in which we do business could adversely affect demand for our films, thus reducing our revenue and earnings. A decline in economic conditions could reduce performance of our theatrical, television and home entertainment releases. In addition, an increase in price levels generally, or in price levels in a particular sector such as the energy sector, could result in a shift in consumer demand away from the entertainment we offer, which could also adversely affect our revenues and, at the same time, increase our costs.

Licensed distributors’ failure to promote our programs may adversely affect our business. Licensed distributors’ decisions regarding the timing of release and promotional support of our motion pictures, and any related products are important in determining the success of these titles and products. We do not control the timing and manner in which our licensed distributors distribute our titles. Any decision by those distributors not to distribute or promote one of our titles or to promote our competitors’ motion pictures or related products to a greater extent than they promote ours could have a material adverse effect on our business, results of operations and financial condition.

We could be adversely affected by strikes or other union job actions. We are directly or indirectly dependent upon highly specialized union members who are essential to the production of motion pictures. A strike by, or a lockout of, one or more of the unions that provide personnel essential to the development or production of motion pictures could delay or halt our ongoing development or production activities. Work stoppages by members of a Guild or union in the future may, depending on the length of time, cause a delay or interruption in our development or production of new motion pictures which could have a material adverse effect on our business, results of operations and financial condition.

We face substantial competition in all aspects of our business.

We are smaller and less diversified than many of our competitors. As an independent producer, we constantly compete with major U.S. and international studios. Most of the major U.S. studios are part of large diversified corporate groups with a variety of other operations, including television networks and cable channels that can provide both the means of distributing their products and stable sources of earnings that may allow them better to offset fluctuations in the financial performance of their motion picture operations. In addition, the major studios have more resources with which to compete for ideas, storylines and scripts created by third parties as well as for actors, directors and other personnel required for production. The resources of the major studios may also give them an advantage in acquiring other businesses or assets, including film libraries, that we might also be interested in acquiring. Our inability to compete successfully could have a material adverse effect on our business, results of operations and financial condition.

The motion picture industry is highly competitive and at times may create an oversupply of motion pictures in the market. The number of motion pictures released by our competitors, particularly the major U.S. studios, may create an oversupply of product in the market, reduce our share of box office receipts and make it more difficult for our films to succeed commercially. Moreover, we cannot guarantee that we can release all of our films when they are scheduled. In addition to production or other delays that might cause us to alter our release schedule, a change in the schedule of a major studio may force us to alter the release date of a film because we cannot always compete with a major studio’s larger promotion campaign. Any such change could adversely impact a film’s financial performance. In addition, if we cannot change our schedule after such a change by a major studio because we are too close to the release date, the major studio’s release and its typically larger promotion budget may adversely impact the financial performance of our film. The foregoing could have a material adverse effect on our business, results of operations and financial condition.

The limited supply of motion picture screens compounds this product oversupply problem. Currently, a substantial majority of the motion picture screens in the U.S. typically are committed at any one time to only 30 to 35 films distributed nationally by major studio distributors. In addition, as a result of changes in the theatrical exhibition industry, including reorganizations and consolidations and the fact that major studio releases occupy more screens, the number of screens available to us when we want to release a picture may decrease. If the number of motion picture screens decreases, box office receipts, and the correlating future revenue streams, such as from home video and pay and free television, of our motion pictures may also decrease, which could have a material adverse effect on our business, results of operations and financial condition.

We must successfully respond to rapid technological changes and alternative forms of delivery or storage to remain competitive.

The entertainment industry in general and the motion picture and television industries in particular continue to undergo significant technological developments. Advances in technologies or alternative methods of product delivery or storage or certain changes in consumer behavior driven by these or other technologies and methods of delivery and storage could have a negative effect on our business. Examples of such advances in technologies include video-on-demand, new video formats and downloading and streaming from the internet. If we cannot successfully exploit these and other emerging technologies, it could have a material adverse effect on our business, results of operations and financial condition.

We face risks from doing business internationally.

We develop motion picture material with a view to take advantage of international subsidies and other international financing opportunities. As a result, our business is subject to certain risks inherent in international business, many of which are beyond our control. These risks include; laws and policies affecting trade, investment and taxes, including laws and policies relating to the repatriation of funds and withholding taxes, and changes in these laws; changes in local regulatory requirements, including restrictions on content; differing cultural tastes and attitudes; copyright law and intellectual property protection; financial instability and increased market concentration of buyers in foreign television markets, including in European pay television markets; the instability of foreign economies and governments; fluctuating foreign exchange rates; health and environmental risks; and war and acts of terrorism. Events or developments related to these and other risks associated with international trade could adversely affect our revenues from non-U.S. sources, which could have a material adverse effect on our business, financial condition and results of operations.

Protecting and defending against intellectual property claims may have a material adverse effect on our business.

Our ability to compete depends, in part, upon successful protection of our intellectual property. We do not have the financial resources to protect our rights to the same extent as major studios. We attempt to protect proprietary and intellectual property rights to our productions through available copyright and trademark laws and licensing and distribution arrangements with reputable international companies in specific territories and media for limited durations. Despite these precautions, existing copyright and trademark laws afford only limited practical protection in certain countries. We also distribute our products in other countries in which there is no copyright or trademark protection. As a result, it may be possible for unauthorized third parties to copy and distribute our productions or certain portions or applications of our intended productions, which could have a material adverse effect on our business, results of operations and financial condition.

Litigation may also be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Any such litigation could result in substantial costs and the diversion of resources and could have a material adverse effect on our business, results of operations and financial condition. We cannot assure you that infringement or invalidity claims will not materially adversely affect our business, results of operations and financial condition. Regardless of the validity or the success of the assertion of these claims, we could incur significant costs and diversion of resources in enforcing our intellectual property rights or in defending against such claims, which could have a material adverse effect on our business, results of operations and financial condition.

Others may assert intellectual property infringement claims against us.

One of the risks of the film production business is the possibility that others may claim that our productions and production techniques misappropriate or infringe the intellectual property rights of third parties with respect to their previously developed films, stories, characters, other entertainment or intellectual property. We are likely to receive in the future claims of infringement or misappropriation of other parties’ proprietary rights. Any such assertions or claims may materially adversely affect our business, financial condition or results of operations. Irrespective of the validity or the successful assertion of such claims, we could incur significant costs and diversion of resources in defending against them, which could have a material adverse effect on our business, financial condition or results of operations. If any claims or actions are asserted against us, we may seek to settle such claim by obtaining a license from the plaintiff covering the disputed intellectual property rights. We cannot provide any assurances, however, that under such circumstances a license, or any other form of settlement, would be available on reasonable terms or at all.

Our business involves risks of liability claims for media content, which could adversely affect our business, results of operations and financial condition.

As a distributor of media content, we may face potential liability for:

defamation;

invasion of privacy;

negligence;

other claims based on the nature and content of the materials distributed.

These types of claims have been brought, sometimes successfully, against producers and distributors of media content. Any imposition of liability that is not covered by insurance or is in excess of insurance coverage could have a material adverse effect on our business, results of operations and financial condition.

Piracy of motion pictures, including digital and internet piracy may reduce the gross receipts from the exploitation of our films.

Motion picture piracy is extensive in many parts of the world and is made easier by technological advances and the conversion of motion pictures into digital formats. This trend facilitates the creation, transmission and sharing of high quality unauthorized copies of motion pictures in theatrical release, on videotapes and DVDs, from pay-per-view through set top boxes and other devices and through unlicensed broadcasts on free television and the internet. The proliferation of unauthorized copies of these products has had and will likely continue to have an adverse effect on our business, because these products reduce the revenue we received from the distribution of our own products.

In particular, unauthorized copying and piracy are prevalent in countries outside of the U.S., Canada and Western Europe, where the prevailing legal systems may make it difficult for us to enforce our intellectual property rights. As a result, we may lose revenue as a result of motion picture piracy.

Our success depends on certain key employees.

Our success depends to a significant extent on the performance of a number of senior management personnel and other key employees, including production and creative personnel. We do not currently have significant “key person” life insurance policies for any of our employees. Our inability to provide competitive employment terms and conditions may materially affect our ability to retain the services of key employees. In addition, competition for the limited number of business, production and creative personnel necessary to create and distribute quality entertainment content is intense and may grow in the future. Our inability to retain or successfully replace where necessary members of our senior management and other key employees could have a material adverse effect on our business, results of operations and financial condition.

To be successful, we need to attract and retain qualified personnel.

Our success continues to depend to a significant extent on our ability to identify, attract, hire, train and retain qualified professional, creative, technical and managerial personnel. Competition for the caliber of talent required to produce our motion pictures continues to increase. We cannot assure you that we will be successful in identifying, attracting, hiring, training and retaining such personnel in the future. If we were unable to hire, assimilate and retain qualified personnel in the future, such inability would have a material adverse effect on our business, results of operations and financial condition.

If we are delisted from the Pink Sheets or fail to achieve and maintain full trading status in the future, it may affect our fund-raising capabilities.

Fund raising activities are heavily dependent on our common stock being tradable and the Company wishes to achieve an over the counter listing on the Bulletin Board (OTCBB) to facilitate fund raising activities. However, the administrative and ongoing expenditure requirements to achieve and maintain such a listing require continuous funding at a level much higher than a private company. We cannot assure you that we will be able to attract or maintain funding or generate revenues at a level sufficient to maintain a publicly trading status. This would also have a serious negative impact on the Company’s ability to achieve its operating targets and severely limit the possibilities regarding sale or disposal of share ownership in the Company.

If our stock price fluctuates, you could lose a significant part of your investment.

The market price of our common shares may be influenced by many factors, some of which are beyond our control, including, but not limited to, changes in financial estimates by analysts, announcements by us or our competitors of significant contracts, productions, acquisitions or capital commitments, variations in quarterly operating results, general economic conditions, terrorist acts, future sales of our common shares and investor perception of us and the filmmaking industry. These broad market and industry factors may materially reduce the market price of our common stock, regardless of our operating performance.

While we believe we currently have adequate internal control over financial reporting, we are required to assess our internal control over financial reporting on an annual basis and any future adverse results from such assessment could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price.

Section 404 of the Sarbanes-Oxley Act of 2002 and the accompanying rules and regulations promulgated by the SEC to implement it require us to include in our Form 10-K an annual report by our management regarding the effectiveness of our internal control over financial reporting. The report includes, among other things, an assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management. During this process, if our management identifies one or more material weaknesses in our internal control over financial reporting that cannot be remediated in a timely manner; we will be unable to assert that such internal control is effective. While we currently believe our internal control over financial reporting is effective, the effectiveness of our internal controls in future periods is subject to the risk that our controls may become inadequate because of changes in conditions, and, as a result, the degree of compliance of our internal control over financial reporting with the applicable policies or procedures may deteriorate. If we are unable to conclude that our internal control over financial reporting is effective (or if our independent auditors disagree with our conclusion), we could lose investor confidence in the accuracy and completeness of our financial reports, which would have an adverse effect on our stock price.

ITEM 2. Description of Properties

ITEM 3. 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.

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. Subsequent to this report, the Court issued a Writ of Execution on July 13, 2006, and the Defendant filed an appellate brief to appeal the judgment on October 25, 2006. On March 19, 2007, this matter was resolved with the execution of a Settlement Agreement and Mutual General Release (see below: “Settlement of 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. 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.).

On February 9, 2006, the Company filed a complaint against MBO Media GmbH with the District Court of Darmstadt, Germany, representing a formal demand for information in the form of a royalty statement to be provided by MBO, relating to music royalty income derived by MBO from the German collection society (GEMA) for royalties to certain Kings Road music titles and the subsequent payment to the Company of any such monies received. On April 5, 2006, MBO responded to the German court that there was no information to be provided, as it had received no royalties for the contested Kings Road music titles, nor any statement of account from the GEMA organization. At the same time, MBO Media filed a counterclaim against the Company demanding payment of a total sum of 15,751 Euro, with an additional 5% interest as from February 2004, relating to certain costs invoiced to the Company by MBO Media in December 2003 and January 2004.

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

Shareholder Demand for Inspection of Company Records

On March 30, 2005 the Company received a letter from 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.

Settlement of Certain Lawsuits and Entry into a Material Definitive Agreement

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”).

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

Claim against the Company by Beate C. Mueller

On March 8, 2006, the Company was served with a complaint dated December 12, 2005 filed with the Frankfurt District Court against the Company and company officer Geraldine Blecker individually by Ms. Beate C. Mueller, demanding payment of the total sum of Euro 20,000, plus 10.5% interest as from May 11, 2004. This claim is based on an invoice relating to legal costs incurred in representing Michael Berresheim, a former officer and director of the Company, individually in litigation pertaining to the Company. On March 9, 2006, the Company’s German counsel repudiated this claim.

On March 21, 2007, this matter was resolved with the execution of a Settlement Agreement and Mutual General Release between the parties. The foregoing event was reported in an 8-K filed on April 23, 2007

Shareholder Complaint against the Company and Derivative Suit

On December 16, 2006, shareholder John M. Burnley, filed a complaint in the State of Delaware to Compel an Annual Meeting of Shareholders. The complaint alleged that certain members of the Board of Directors were acting in a manner that may be for their own interests and detrimental to that of the shareholders at large. Legal counsel for the Company has reviewed the case and deemed that the necessary steps have not been completed to effectuate this petition and likewise deemed the matter to be inactive at that time. The foregoing event was reported in an 8-K filed on April 23, 2007

On April 18, 2007, shareholder Burnley filed a complaint in the U.S. District Court of California for and on behalf of the Shareholders of Kings Road Entertainment, Inc. The complaint brought a derivative suit against four Directors of the Company, alleging that they had breached their fiduciary duties to the Company and claiming compensatory damages in the amount of $7,500,000. Subsequent to this report, the case was dismissed without prejudice pursuant to local rule 7-9 on June 12, 2007. The foregoing events were reported in an 8-K filed on June 27, 2007

Subsequent to this report, on July 24, 2007, the same shareholder, in the right and for the benefit of Kings Road Entertainment Inc., re-filed the above derivative suit in the Los Angeles Superior Court (against four Directors of the Company as well as the Company as a nominal defendant. The complaint alleges that the named directors breached their fiduciary duties to the Company in conspiring to sell a majority interest in the Company without the benefit of an evaluation of the assets of the Company being performed and at a price considered by Plaintiff to be unreasonable and detrimental to the company and its shareholders, in that the price received for the majority interest was far below certain rival offers existing at the time of the transaction and claiming compensatory damages in the amount of $7,500,000.

Subsequent to this report, on September 28, 2007, the Company filed a demurrer on the grounds that the Plaintiff failed to set forth facts sufficient to state a cause of action against Defendants or disprove that the Directors acted in valid exercise of their business judgment according to Delaware Law. On January 4,2008, the Plaintiff dismissed the case without prejudice.

Subsequent to this report, on July 15, 2008, the Company settled the lawsuits with shareholder Mr. John M. Burnley. (See “Settlement of DeFrank and Shareholder Burnley Lawsuits”). The foregoing event was filed in an 8-K on July 18, 2008.

Litigation with Director and Former Officer

Subsequent to this report, on June 13, 2007, the Company filed a lawsuit against Director, H. Martin DeFrank, and Sloan Squared, LTC, (“Sloan”), for breach of fiduciary duty, constructive fraud, usurping corporate opportunity, and conversion. The foregoing event was reported in an 8-K filed on July 10, 2007.

Subsequent to this report, on August 15, 2007, Mr. DeFrank filed a complaint against the Company and three Directors alleging wrongful termination, negligence and violation of the Fair Employment and Housing Act. This complaint was amended on October 12, 2007.

Subsequent to this report, on November 13, 2007, the Company and the three named directors filed a demurrer against this amended complaint. On January 7, 2008, the court issued a tentative ruling upholding the individual Directors’ demurrer on all counts without leave to amend. On February 14, 2008, the court dismissed Mr. DeFrank’s complaint in its entirety.

Subsequent to this report, on July 15, 2008, the Company settled the lawsuits with former President and Director DeFrank. (See “Settlement of DeFrank and Shareholder Burnley Lawsuits”).The foregoing event was filed in an 8-K on July 18, 2008.

Settlement of DeFrank and Shareholder Burnley Lawsuits

On July 15, 2008, the Company settled the lawsuits with its former president and officer Mr. H. Martin DeFrank and shareholder Mr. John M. Burnley by repurchasing 500,000 shares of its common stock from Mr. DeFrank and 300,000 shares of its common stock from Mr. Burnley. The purchase price of Mr. DeFrank’s Shares was $60,000 and the purchase price of the Mr. Burnley’s shares was $24,000.

The Company repurchased these as part of a settlement between the Company, its President Mr. Holmes, Mr. DeFrank, Sloane Squared Ltd., an entity purportedly owned or controlled by Mr. DeFrank and Mr. John Burnley. In addition to the Company’s repurchase of Mr. DeFrank’s shares and Mr. Burnley’s shares, the settlement contemplates (i) the dismissal with prejudice by the Company of the complaint filed by the Company in the matter of King’s Road Entertainment, Inc. vs. H. Martin DeFrank, Sloane Squared Ltd., et. al. ; (ii) the dismissal with prejudice by the Company and Mr. Holmes of the complaint filed by the Company, Mr. Holmes and Mr. George Moseman, a former officer and director of the Company in the matter of King’s Road Entertainment, Inc. v. H. Martin DeFrank, John Burnley, et al. ; (iii) the dismissal with prejudice by Mr. DeFrank of the cross-complaint filed against the Company, Holmes and Brad Hoffman in the matter of DeFrank vs. King’s Road Entertainment, Inc. and Certain Directors and the dismissal by Mr. DeFrank without prejudice of the cross-complaint filed against Mr. Moseman in such matter; (iv) the dismissal with prejudice by Mr. Burnley of his complaint against the Company, Mr. Holmes and all other parties other than Mr. Moseman in the matter of John Burnley vs. King’s Road Entertainment, Inc., George Moseman and Phil Holmes, et. al . and the dismissal by Mr. Burnley of his complaint in such matter against Mr. Moseman without prejudice; (v) the release by the Company and Mr. Holmes of any claims (other than any claims created by the settlement) against Mr. DeFrank, Sloane Squared Ltd, Mr. Burnley and their respective affiliates; (vi) the release by Mr. DeFrank, Sloane Squared Ltd., Mr. Burnley and their respective affiliates of any claims (other than any claims created by the settlement) against the Company, Mr. Holmes and the Company’s current and former officers, directors and shareholders other than Mr. Moseman; and (vii) Mr. DeFrank and Sloane agreeing to pay the Company fifty percent (50%) of all compensation and proceeds (if any) received by Mr. DeFrank or Sloane under the “All of Me”/Producer Agreement, dated April 23, 2004, by and among Sloane Squared Ltd., Mr. DeFrank, Katja Motion Picture Corp., Eclectic Filmworks, Inc. and Mr. Ira Posnansky.

In addition, as part of the settlement, Mr. DeFrank acknowledged that the common law trademark of the name Kings Road Entertainment is owned exclusively by the Company. Mr. DeFrank further agreed to refrain from any use of the name “Kings Road,” “Kings Road Entertainment,” “KREN,” “Kingsroadscreen,” “Kingsroadmedia,” or any derivations, acronym or words or abbreviations of similar import, in any way or context, including but not limited to email addresses. Mr. DeFrank also agreed to refrain from associating himself with the production of any of Kings Road movie assets except for the possible New Line/Katja remake project of “All of Me.”

The foregoing event was filed in an 8-K on July 18, 2008.

Ashford Capital, LLC Stock Purshase Agreement and Rescission thereof

On March 1, 2007, the Company entered into a Stock Purchase Agreement (“SPA”) with Ashford Capital, LLC, (“Ashford”) with a Closing Date of March 8, 2007 and an effective completion date of April 17, 2007. The Company sold Four Million Seven Hundred Thousand (4,700,000) shares of the Company’s 144 Restricted Common Stock in exchange for Three Hundred Thousand Dollars ($300,000), which was paid at the closing. Furthermore, the Company shall create and issue to Ashford Five Hundred Ten (510) shares of the Series A Preferred Stock, which can be converted to Fifty-One Percent (51%) of the Company’s total outstanding shares on the given date of conversion. The Company was in the process of creating the Series A Preferred Shares and has not issued such shares as of the date of this filing. The consideration to be paid by Ashford for the 510 Series A Preferred Shares is the surrender to the Company by Ashford of Four Million Seven Hundred Thousand (4,700,000) shares of Common Stock of the Company. Included in the consideration of this Agreement is a secured line of credit from Ashford to the Company in the amount of Three Hundred Thousand Dollars ($300,000) [these funds are separate and apart from the $300,000 cash paid by Ashford upon the Close of this Agreement], pursuant to terms, covenants and conditions to be mutually agreed upon by the Company and Ashford through the form of a secured promissory note, security agreement and applicable Form UCC-1. This unregistered sale of equity securities is exempt from registration based on Section 4(2) of the Securities Act of 1933. The foregoing event was reported in an 8-K filed on April 23, 2007.

Pursuant to the SPA, the Company agreed to put a vote before its shareholders to approve a restatement of its Certificate of Incorporation to eliminate the requirement of a classified board of directors, increase the number of authorized shares of common stock to 100,000,000, and authorize 100,000 shares of Preferred Stock. As a result of the SPA, Ashford became a beneficial owner of 4,700,000 shares, or 44.7%, of the outstanding Common Stock of the Company.

On May 4, 2007, a Rescission and Mutual Release Agreement (“Rescission Agreement”) was entered into by and between Ashford and the Company, thereby terminating the obligations of both parties under the above mentioned SPA. Pursuant to the Rescission Agreement, Ashford agreed to return the Shares acquired pursuant to the SPA and deliver a Stock Power with gold medallion signature to the Company. The Company agreed to return to Ashford $300,000 (USD) representing reimbursement for the purchase price of the Shares.

The Rescission Agreement was intended by both parties to fully and finally settle any and all disputes between them including any and all claims arising from the transaction embodied in the SPA, and subject only to the terms and conditions set forth in the Rescission Agreement. Both parties agreed that the Rescission Agreement did not constitute an admission of liability or concession of the merit of any claims by any party but was entered for the purpose of settling disputed claims and to avoid the expense and uncertainty of potential litigation. The foregoing event was reported in an 8-K filed on June 12, 2007.

ITEM 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted for a vote by security holders.

PART II.

ITEM 5. Market for Common Equity and Related Stockholder Matters

The Company's common stock trades on the Pink Sheets under the symbol: "KREN.PK." In October 1999, the Company’s Common Stock was de-listed from the NASDAQ Small Cap Market because the Company failed to meet certain minimum listing maintenance requirements set by NASDAQ and on September 17, 2002, the Company was de-listed from the Over-the-Counter Bulletin Board for failing to meet its eligibility requirements.

The following table sets forth, for the fiscal quarters indicated, the high and low closing prices as reported by the Pink Sheets. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

Sales Price

	High		Low
Fiscal 2007
First Quarter	$	0.20	$	0.10
Second Quarter	$	0.16	$	0.11
Third Quarter	$	0.16	$	0.08
Fourth Quarter	$	0.10	$	0.03

Fiscal 2006
First Quarter	$	0.15	$	0.05
Second Quarter	$	0.10	$	0.05
Third Quarter	$	0.09	$	0.04
Fourth Quarter	$	0.30	$	0.06

Dividend Policy

We have never paid cash dividends and have no plans to do so in the foreseeable future. Our future dividend policy will be determined by our Board of Directors and shareholders and will depend upon a number of factors, including our financial condition and performance, our cash needs and expansion plans, income tax consequences, and the restrictions that applicable laws and our credit arrangements then impose.

Holders

As of June 30, 2008, the Company had approximately 425 stockholders of record

Recent Sales of Unregistered Securities

On August 9, 2006, in conjunction with the appointment of Messrs. Moseman and Shane to the board of directors (see Item above), the Company authorized the issuance of 100,000 restricted shares of the Company’s common stock to each of Messrs. Moseman and Shane, as non-cash compensation for their services as directors of the Company. Said shares were issued pursuant to an exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Section 25102(f) of the California Corporations Code. The foregoing event was filed in an 8-K of August 19, 2006.

On February 8, 2007, the Board of Directors elected Mr. Philip M. Holmes to serve as President of the Company. It was further determined that his title as Interim Chief Financial Officer should be changed to Interim Treasurer, pursuant to the appropriate titles used under Delaware Corporate law. In conjunction with the appointment of Mr. Holmes to President, the board of directors authorized the issuance of 100,000 restricted shares of the Company’s common stock to Mr. Holmes, as non-cash compensation for prior services as a Director. Said shares were issued on February 26, 2007 pursuant to an exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Section 25102(f) of the California Corporations Code. The foregoing events were reported in an 8-K filed on April 23, 2007.

On March 1, 2007, the Company entered into a Stock Purchase Agreement (“SPA”) with Ashford Capital, LLC, (“Ashford”) with a foreseen Closing Date of March 8, 2007, upon which the Company sold Four Million Seven Hundred Thousand (4,700,000) shares of the Company’s 144 Restricted Common Stock in exchange for Three Hundred Thousand Dollars ($300,000), which was paid at the closing. This unregistered sale of equity securities is exempt from registration based on Section 4(2) of the Securities Act of 1933. The actual closing date of this agreement was April 17, 2007 The foregoing event was reported in an 8-K filed on April 23, 2007.

Subsequent to this report, on May 4, 2007, a Rescission and Mutual Release Agreement (“Rescission Agreement”) was entered into by and between Ashford and the Company, thereby terminating the obligations of both parties under the above mentioned SPA. Pursuant to the Rescission Agreement, Ashford agreed to return the Shares acquired pursuant to the SPA and the Company agreed to return to Ashford $300,000 (USD) representing reimbursement for the purchase price of the Shares. The foregoing event was reported in an 8-K filed on June 12, 2007

For legal and accounting purposes, both the purchase and rescission were deemed to have taken place on April 17, 2007. As of April 30, 2007 the Company’s liabilities included the repayment obligation of $300,000 to Ashford which was made during May 2007.

ITEM 6. Management's Discussion and Analysis or Plan of Operation

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.

Overview

The Company has not produced any new feature films since April 30, 1996. Subsequent to 1996, the Company has derived its revenues almost exclusively from the exploitation of feature films that the Company produced prior to 1996. In recent periods, the Company has focused on enhancing and protecting the value of the film library; by marketing options and rights for the production and distribution of prequels, sequels, and remakes of movies within its film library. The Company expects to increase its expenditures on development activities, including the purchase of books and screenplays, in order to obtain the types of projects that will attract third party financing and subsequently achieve commercial success. (See "Item 1-Description of Business").

Revenues are generated through distribution contracts with domestic and international film distributors specializing in different media. The Company's revenues from the feature films it produces are typically spread over a number of years. Following completion of a feature film the Company attempts to generate revenues from theatrical distributors as soon as possible. However, the Company’s most recently produced films were lower budget films that often do not have a theatrical release and go straight to home video. Revenues from home video are initially recognized when a film becomes available for release on videocassette, typically six months after the initial theatrical release or, when no theatrical release occurs, upon delivery of the film to the distributor. Revenues generated from pay and free television are similarly recognized when a film becomes available for distribution in those media, typically six to twenty-four months after the initial release. Some distribution contracts license more than one medium, a "multiple rights license." In this case, the full license fee is recognized when the film is exploited in the first available medium. Revenues from international markets generally follow the same pattern as revenues from the domestic market and may include multiple rights licenses as well. However, the Company sold the international distribution rights to most of its films to another company in 1996, and international revenues have substantially decreased due to this sale. As a result of these factors, the Company's revenues vary significantly each year depending on the number of films distributed as well as the success of the release of films that become available in the various media during that fiscal year.

Although the Company has not produced any films since 1996, the Company believes its present development activities, which may include the sale of certain projects to non-affiliated companies, as was the case with respect to the sale of "Ticker" during the year ended April 30, 2001, will achieve commercial success, while limiting the Company's front end exposure.

The Company has amortized the costs incurred in producing each feature film in accordance with the applicable Financial Accounting Standards Board Statements. The Company previously amortized film costs under the income forecast method as described in Financial Accounting Standards Board Statement No. 53 ("FASB 53"), which provided that film costs are amortized for a motion picture in the ratio of revenue earned in the current period to the Company's estimate of total revenues to be realized. The Company's management periodically reviews film development 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. During the year ended April 30, 2001, the Company adopted Financial Accounting Standards Board Statement No. 139 (“FASB 139”), which, in effect, replaced FASB 53. Since the Company has not produced a motion picture film since 1995, and in light of the fact that all of the Company's previously produced motion picture films have been fully amortized, there was no effect to the Company in adopting this new accounting standard. Film development costs relating to projects that have been abandoned or sold before being produced have been charged to overhead in the year the event occurs.

Recent Developments

Subsequent to the fiscal year ended April 30, 1996, the Company has produced no new films and has derived its feature 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.

Litigation with former Officers and Directors has continued to drain the financial resources of the Company. While searching for solutions to the legal issues of the past that are consistent with the Company’s aims of protecting its intellectual properties and movie assets while remaining economically viable with the Company’s limited financial resources, the Company’s management has also been looking for development and production funding for its assets.

Results of Operations for the Twelve Months Ended April 30, 2007 and April 30, 2006

For the year ended April 30, 2007, feature film revenues decreased to $267,876 as compared to $489,320 for the year ended April 30, 2006. The decrease of $221,444 results primarily from decreased revenues from distribution of the Company's feature film library.

Costs and expenses remained relatively constant at $743,974 for the year ended April 30, 2007 as compared to $744,844 during the year ended April 30, 2006.

Depreciation, Amortization of Intangible Assets, and Impairment Loss of Property, Plant and Equipment

There was no expense or gain recorded in the twelve months ending April 30, 2007 and 2006, for depreciation or amortization of intangible assets, as all assets were fully depreciated prior to those periods.

Other Income (Expense)

Total other income for both periods consisted of the following:

	2007		2006
Other income	$	0	$	13,910
Interest income		25,843		15,649
Interest expense		0		(1,526	)

Total other income	$	25,843	$	28,033

Interest income on the cash amount held on deposit at City National Bank was significantly greater than the previous year due to the higher average balance on deposit. Interest expense was not incurred during the twelve months ending April 30, 2007 due to no usage of the overdraft facility. Other income in the twelve month period ending April 30, 2006, consisted of a tax refund relating to the dissolution of the subsidiary, KRTR Inc.

Net Loss

The Company’s Net Loss for the years ending April 30, 2007 and 2006 were as follows:

		2007			2006			Variance
Net Loss		$	450,255		$	227,491		$	222,764

The increase in the net loss during the year ending April 30, 2007, compared to the previous twelve months ending April 30, 2006, of $222,764, was primarily due to this factor:

There was a significant reduction in film revenues of $221,444 for the 12 months ended April 30, 2007, a decrease of approximately 45.3%, compared to the year ended April 30, 2006.

Liquidity and Capital Resources for the Twelve Month Period Ended April 30, 2007 and 2006

The production of motion pictures requires substantial working capital. The Company must expend substantial sums for both the production and distribution of a picture, before that film generates any revenues. In many instances, the Company obtains advances or guarantees from its distributors, but these advances and guarantees generally defray only a portion of a film's cost. The Company's principal source of working capital during the year ended April 30, 2007, was motion picture distribution and licensing income. Management believes that the Company's distribution and licensing income will unlikely be sufficient to fund its ongoing operations.

Cash flows from operating activities

The Company experienced negative cash flows provided by operations in the amount of $126,079 for the twelve month period ended April 30, 2007 as opposed to positive cash flows of $625,227 in the year ended April 30, 2006. This was primarily due to a payment of $950,000 from Lions Gate Films with respect to the domestic, 10 year DVD/Video distribution agreement that was received during the prior year ending April 30, 2006.

Due in large part to its operating losses, working capital deficit and ongoing level of operating expenses, the Company's auditors have expressed doubt about the Company's ability to continue as a going concern. Management intends to address this issue by continuing to actively market the Company's film library to various studios and producers for sequel and remake rights. In addition, the Company is working closely with independent industry consultants regarding capitalization strategies and access to film production funds, which would help the Company maintain greater ownership of film projects.

The Company had cash of $553,648 and $735,825 at April 30, 2007 and 2006 respectively. However, included in the cash figure at April 30, 2007 was the short term repayment liability to Ashford Capital LLC of $300,000 related to the rescission of the Share Purchase Agreement.

During the years ended April 30, 2007 and 2006, the Company had no significant provision for income taxes, however, there is a significant tax loss carry forward of approximately $15,000,000, which may be offset against future taxable income.

ITEM 7. Financial Statements

KINGS ROAD ENTERTAINMENT, INC.

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent registered Public Accounting Firm		F-2

Consolidated Balance Sheets as of April 30, 2007 and 2006		F-3

Consolidated Statements of Operations for the Years Ended April 30, 2007 and 2006		F-4

Consolidated Statements of Cash Flows for the Years Ended April 30, 2007 and 2006		F-5

Consolidated Statement of Stockholder’s Equity (deficit) for the Years Ended April 30, 2007 and 2006		F-6

Notes to Consolidated Statements		F-7 - 14

F-1

JASPERS + HALL, PC

CERTIFIED PUBLIC ACCOUNTANTS

9175 E. Kenyon Avenue, Suite 100

Denver, CO 80237

303-796-0099

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Kings Road Entertainment, Inc.

We have audited the accompanying consolidated balance sheets of Kings Road Entertainment, Inc. and subsidiaries as of April 30, 2007 and 2006 and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Kings Road Entertainment, Inc. and subsidiaries as of April 30, 2007 and 2006, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 11, conditions exist which raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 11. The financial statements do not include any adjustments that might result from this uncertainty.

/s/ Jaspers + Hall, PC

Denver, Colorado

July 28, 2008

F-2

KINGS ROAD ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

AS OF APRIL 30, 2007 AND APRIL 30, 2006

(Audited)

	April 30, 2007			April 30, 2006
ASSETS
Current assets:
Cash and cash equivalents	$	553,648		$	735,825
Restricted cash (Note 3)		0			61,952
Accounts receivable, trade		0			113,699
Prepayments and other current assets		5,190			0
Total current assets		558,838			911,476

OTHER ASSETS
Film development costs, net (Note 5)		70,037			70,037
Total Other Assets		70,037			70,037

TOTAL ASSETS	$	628,875		$	981,513

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	440,409		$	138,624
Accrued expenses		338,231			360,508
Deferred revenue (Note 6)		953,601			1,052,442
Line of credit		0			60,000
Liabilities from discontinued operations		0			4,000
Total current liabilities		1,732,241			1,615,574

Stockholders’ equity:
Common stock; 12,000,000 shares authorized at $0.01 par value; 5,806,493 shares issued and outstanding at April 30, 2007 and 6,957,740 at April 30, 2006		58,064			69,577
Additional paid-in capital		25,204,118			25,211,655
Accumulated deficit		(25,915,293	)		(25,915,293	)
Net Profit (Loss) for Period		(450,255	)		0
Total stockholders’ equity (deficit)		(1,103,366	)		(634,061	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	628,875		$	981,513

See accompanying notes to consolidated financial statements.

F-3

KINGS ROAD ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED APRIL 30, 2007 AND 2006

(Audited)

	Twelve months ended April 30,
	2007			2006

REVENUES
Feature films	$	267,876		$	489,320

TOTAL REVENUE		267,876			489,320


OPERATING EXPENSES:
General and administrative		743,974			744,844
Total operating expenses		743,974			744,844

INCOME (LOSS) FROM OPERATIONS		(476,098	)		(255,524	)

OTHER INCOME (EXPENSE):
Other income		0			13,910
Interest income		25,843			15,649
Interest expense		0			(1,526	)
Total Other Income		25,843			28,033

INCOME (LOSS) BEFORE INCOME TAXES		(450,255	)		(227,491	)

PROVISION FOR INCOME TAXES		0			0

NET INCOME (LOSS)	$	(450,255	)	$	(227,491	)

Net income (loss) per share – Basic	$	(0.06	)	$	(0.03	)

Basic weighted average number of shares outstanding during the period		7,044,802			6,957,740

See accompanying notes to consolidated financial statements.

F-4

KINGS ROAD ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED APRIL 30, 2007 AND 2006

(Audited)

	Twelve months ended April 30,
	2007			2006

CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations	$	(450,255	)	$	(227,491	)
Common stock returned for prior service		39,000			0
Adjustments to reconcile income (loss) from continuing operations to net cash (used in) provided by operating activities:
Change in operating assets and liabilities:
Accounts receivable, trade		113,699			(43,935	)
Prepayments and other current assets		(5,190	)		4,500
Accounts payable		301,785			(49,162	)
Accrued expenses		(26,277	)		104,431
Deferred revenue		(98,841	)		836,934
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(126,079	)		625,277

CASH FLOWS FROM FINANCING ACTIVITIES:
Common Stock purchased for cash		(58,050	)
Cash received from line of credit		(60,000	)		0
(Increase) decrease in restricted cash		61,952			(1,566	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(56,098	)		(1,566	)

NET CHANGE IN CASH AND CASH EQUIVALENTS		(182,177	)		623,711
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		735,825			112,114

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	553,648		$	735,825

Cash paid for income taxes	$	0		$	0
Cash paid for interest expenses	$	0		$	1,526

See accompanying notes to consolidated financial statements.

F-5

KINGS ROAD ENTERTAINMENT, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE YEARS ENDED APRIL 30, 2007 and 2006

	Common Stock						Additional						Total
	No. of shares			Amount			Paid-In Capital			Accumulated Deficit			Stockholders’ Equity

Balance as of April 30, 2005		6,957,740		$	69,577		$	25,211,655		$	(25,687,802	)	$	(406,570	)

Net loss for the period		0			0			0			(227,491	)		(227,491	)

Balance as of April 30, 2006		6,957,740			69,577			25,211,655			(25,915,293	)		(634,061	)


Aug. 15, 2006 shares issued to directors		200,000			2,000			30,000			0			32,000

Feb 26, 2007 shares issued to director		100,000			1,000			6,000			0			7,000

April 16, 2007 legal settlement		(1,451,247	)		(14,513	)		(43,537	)		0			(58,050	)
Net loss for the period		0			0			0			(450,255	)		(450,255	)

Balance as of April 30, 2007		5,806,493		$	58,064		$	25,204,118		$	(26,365,548	)	$	(1,103,366	)

F-6

KINGS ROAD ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

April 30, 2007 and 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 in each of the years ending April 30, 2007 and 2006.

On February 8, 2007, the Board of Directors determined to be in the best interest of the Company to create a wholly-owned subsidiary to be used by the Company for the specific purpose of developing the remake of the Company’s film property “The Big Easy.” Subsequent to the period covered by this report, the wholly-owned subsidiary was registered with the Secretary of State in California on September 26, 2007.

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 audited (consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. 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 April 30, 2007 and 2006, and the results of operations and cash flows for the years ended April 30, 2007 and 2006 have been included. 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. 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.

d. Newly Issued Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141-R, “Business Combinations” (revised 2007) (SFAS 141-R). This Statement provides greater consistency in the accounting and financial reporting of business combinations. It requires the acquiring entity in a business combination to recognize all assets acquired and liabilities assumed in the transaction, establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed, and requires the acquirer to disclose the nature and financial effect of the business combination. SFAS 141-R is effective for fiscal years beginning after December 15, 2008, or January 1, 2009 for the Company. The Company does not anticipate that adoption of this standard will have a material effect on its financial statements.

F-7

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (SFAS 160). This Statement amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years beginning after December 15, 2008, or January 1, 2009 for the Company. The Company does not anticipate that adoption of this standard will have a material effect on its financial statements.

Financial Liabilities” (SFAS 159). Under this standard, the Company may elect to report financial instruments and certain other items at fair value on a contract-by-contract basis with changes in value reported in earnings. This election is irrevocable. SFAS 159 provides an opportunity to mitigate volatility in reported earnings that is caused by measuring hedged assets and liabilities that were previously required to use a different accounting method than On February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and the related hedging contracts when the complex provisions of SFAS 133 hedge accounting are not met. SFAS 159 is effective for years beginning after November 15, 2007. Early adoption within 120 days of the beginning of the Company’s 2007 fiscal year is permissible, provided the Company has not yet issued interim financial statements for 2007 and has adopted SFAS 157. The Company does not anticipate that adoption of this standard will have a material effect on its financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS 157). SFAS 157 provides enhanced guidance for using fair value to measure assets and liabilities. It does not require any new fair value measurements, but does require expanded disclosures to provide information about the extent to which fair value is used to measure assets and liabilities, the methods and assumptions used to measure fair value, and the effect of fair value measures on earnings. In February 2008, the FASB issued FASB Staff Position FAS 157-2, “Effective Date of FASB Statement No. 157” (the FSP). The FSP delayed, for one year, the effective date of SFAS 157 for all nonfinancial assets and liabilities, except those that are recognized or disclosed in the financial statements on at least an annual basis. This statement is effective for the Company beginning January 1, 2008. The deferred provisions of SFAS 157 will be effective for the Company’s fiscal year 2009. The Company is currently evaluating the impact, if any, of the entirety of SFAS 157 on its financial position and results of operation.

e. Earnings (Net Loss) Per Share

In accordance with FASB Statement No. 128, Earnings Per Share, we calculate basic net loss per share using the weighted average number of common shares outstanding during the periods presented. We do not have any potentially dilutive common stock equivalents, such as options or warrants and we do not have any preferred shares.

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 April 30, 2007 and 2006, restricted cash totaled $0 and $61,952, respectively, 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 were classified as restricted while the related line of credit was outstanding. On March 20, 2007, the Company agreed to discontinue the line of credit and release the collateralized funds. The principal balance of $60,000 plus interest was released on March 29, 2007.

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 April 30, 2007, none of the Company's accounts receivable was from foreign distributors.

NOTE 4 – FIXED ASSETS

a. Fixed Assets

Fixed assets of the Company at April 30, 2007 and 2006 consisted of various items of office equipment with a historical cost of $5,993 and a net book value of $0. All of these items were fully depreciated at April 30, 2007 and 2006.

F-8

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.

NOTE 5 - 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 April 30, 2007 and 2006, film development costs totaled $70,037, which was net after an allowance of $30,000. During the years ended April 30, 2007 and 2006, no film development costs were determined to be impaired.

NOTE 6 – LIABILITIES

a. Deferred Revenue

As of April 30, 2007 and 2006, the Company had deferred revenue totaling $953,601 and $1,052,442, respectively. The decrease is primarily due to the regular amortization of royalty advances from distributors across the applicable period of each distribution agreement. The Company is following the guidelines of SOP 00-02 for film production and distribution (See Note 9).

b. Line of Credit

On March 2, 2006, the Company renewed its revolving line of credit loan, which has a principal balance of $60,000. This credit line is, secured by a $60,000 certificate of deposit (see Note 3). During the years ending April 30, 2007 and 2006, the line of credit accrued interest at a rate of 5.70% and 4.55% per annum, respectively. On March 20, 2007, the Company’s agreed to discontinue the credit line. The $60,000 certificate of deposit balance plus interest was released on March 29, 2007.

c. Discontinued Operations

The Company has discontinued operations of its Ticker Inc. subsidiary. Ticker Inc has been inactive and had no operations in the years ending April 30, 2007 and 2006. As of April 30, 2007, the Company had $0 accrued for liabilities for its discontinued operations.

d. Accounts Payable

Related to the rescission of the Share Purchase Agreement (refer to Item 5) entered into between the Company and Ashford Capital LLC which closed on April 17, 2007, of the Company’s total Accounts Payable of $440,409 on April 30, 2007, $300,000 was recorded as the liability for the refund of the purchase price in accordance with the rescission agreement.

F-9

NOTE 7 - COMMITMENTS AND CONTINGENCIES

a. Rent

The Company rented a three-room apartment located on Doheny Drive, Beverly Hills, California as its registered office. Due to property development activities by the owner, the Company moved its registered office during September 2006 to 468 N. Camden Drive, Beverly Hills and rented additional office space in S. Canon Drive, Beverly Hills. During the period ending October 31, 2005, there was a one month overlap of rental expense during the relocation. As of February 1, 2007, the additional office space in S. Canon Drive, Beverly Hills was sub-let to a Director and former Officer at that time, Mr. DeFrank, and replacement space was rented in Santa Monica. The Company also rents flexible storage space for its archives. Rent expense for the Company's office and archive storage space was $34,982 and $29,159 during the twelve months ending April 30, 2007 and 2006, respectively.

b. Contingent Losses & Litigation

At April 30, 2007, the Company was 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. Below are updates on those legal matters as to which there were material developments in the year ending April 30, 2007.

b. Shareholder Complaint against the Company and Derivative Suit

On April 18, 2007, shareholder John M. Burnley filed a complaint in the U.S. District Court of California for and on behalf of the Shareholders of Kings Road Entertainment, Inc. The complaint brought a derivative suit against four Directors of the Company, alleging that they had breached their fiduciary duties to the Company and claiming compensatory damages in the amount of $7,500,000. The case was dismissed without prejudice pursuant to local rule 7-9 on June 12, 2007. The foregoing events were reported in an 8-K filed on June 27, 2007.

Subsequent to this report, on July 24, 2007, the same shareholder, in the right and for the benefit of Kings Road Entertainment Inc., re-filed the above derivative suit in the Los Angeles Superior Court against four Directors of the Company as well as the Company as a nominal defendant. The complaint alleges that the named directors breached their fiduciary duties to the Company in conspiring to sell a majority interest in the Company without the benefit of an evaluation of the assets of the Company being performed and at a price considered by Plaintiff to be unreasonable and detrimental to the company and its shareholders, in that the price received for the majority interest was far below certain rival offers existing at the time of the transaction and claiming compensatory damages in the amount of $7,500,000.

Subsequent to this report, on July 15, 2008, the Company settled the lawsuits with shareholder Mr. John M. Burnley. The foregoing event was filed in an 8-K on July 18, 2008.

c. Other Commitments and Contingencies

In the ordinary course of business, the Company has or 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 8 - COMMON STOCK

At April 30, 2007 and 2006 the Company had 12,000,000 authorized shares of common stock, of which 5,806,493 and 6,957,740 shares were issued and outstanding at April 30, 2007 and April 30, 2006 respectively. The following common stock transactions transpired in the year ended April 30, 2007:

F-10

On August 15, 2006, in accordance with resolution made by the Board of Directors and in conjunction with the appointment of Messrs. Moseman and Shane to the board of directors (see Item above), the Company issued 100,000 restricted shares of the Company’s common stock to each of Messrs. Moseman and Shane, as non-cash compensation for their services as directors of the Company. Said shares were issued pursuant to an exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Section 25102(f) of the California Corporations Code. (The foregoing event was filed in an 8-K of August 19, 2006).

On February 26, 2007 in accordance with resolution made by the Board of Directors, 100,000 shares of common stock were issued to Mr. Holmes as non-cash compensation for his services as a director of the Company. Said shares were issued pursuant to an exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Section 25102(f) of the California Corporations Code.

On March 1, 2007, the Company entered into a Stock Purchase Agreement (“Agreement”) with Ashford Capital, LLC, (“Ashford”) with a Closing Date of March 8, 2007. The Close of the Agreement did not take place until April 17, 2007. The Company sold Four Million Seven Hundred Thousand (4,700,000) shares of the Company’s 144 Restricted Common Stock in exchange for Three Hundred Thousand Dollars ($300,000), which was paid at the closing. Furthermore, the Company shall create and issue to Ashford Five Hundred Ten (510) shares of the Series A Preferred Stock, which can be converted to Fifty-One Percent (51%) of the Company’s total outstanding shares on the given date of conversion. The Company is in the process of creating the Series A Preferred Shares and has not issued such shares as of the date of this filing. The consideration to be paid by Ashford for the 510 Series A Preferred Shares is the surrender to the Company by Ashford of Four Million Seven Hundred Thousand (4,700,000) shares of Common Stock of the Company. Included in the consideration of this Agreement is a secured line of credit from Ashford to the Company in the amount of Three Hundred Thousand Dollars ($300,000) [these funds are separate and apart from the $300,000 cash paid by Ashford upon the Close of this Agreement], pursuant to terms, covenants and conditions to be mutually agreed upon by the Company and Ashford through the form of a secured promissory note, security agreement and applicable Form UCC-1. This unregistered sale of equity securities is exempt from registration based on Section 4(2) of the Securities Act of 1933. The actual closing date for this agreement was April 17, 2007. The foregoing event was reported in an 8-K filed on April 23, 2007.

Subsequently on May 4, 2007, the Company and Ashford Capital LLC entered into a rescission agreement effectively reversing the transaction. For legal and accounting purposes the transaction was determined to have been rescinded on the original date of its closing. As of April 30, 2007 there was no affect on the issued number of shares or additional paid in capital from this transaction.

On March 19, 2007, the Company entered into a Settlement Agreement and Mutual General Release (the “Settlement Agreement”) with the following parties: MBO Musikverlag, 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.

NOTE 9 – RECOGNITION OF REVENUES

Revenue from the sale or licensing of films is recognized in accordance with Statement of Position 00-2 “Accounting by Producers or Distributors of Films” (“SOP 00-2”). Revenue from the theatrical release of feature films is recognized at the time of exhibition based on the Company’s participation in box office receipts. Revenue from the sale of DVDs rights under licensing agreements is recognized on the later of receipt by the customer or “street date” (when it is available for sale by the customer). Under revenue sharing arrangements, rental revenue is recognized when the Company is entitled to receipts and such receipts are determinable. Revenues from television licensing are recognized when the feature film or television program is available to the licensee for telecast. For television licenses that include separate availability “windows” during the license period, revenue is allocated over the “windows.” Revenue from sales to international territories are recognized when access to the feature film or television program has been granted or delivery has occurred, as required under the sales contract, and the right to exploit the feature film has commenced. Cash payments received are recorded as deferred revenue until all the conditions of revenue recognition have been met.

F-11

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, video on demand, 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:

Marketplace	Months After Initial Release		Approximate Release Period

Domestic theatrical				0-3 months
All international markets				1-12 years
Domestic home video/DVD/ Video on Demand		3-6 months		3-12 months
Domestic cable/pay television		12-18 months		18 months
Domestic syndicated/free television		24-48 months		1-n years

These periods are dynamic and as new media, distribution platforms and consumer behavior dictate, they will continue to change.

N0TE 10 – 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 11 - 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 April 30, 2007, the Company has a deficit in working capital of $1,173,403, has an accumulated deficit of approximately $26,365,000, 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.

NOTE 12 - SUBSEQUENT EVENTS

a. Litigation with Director and Former Officer

Subsequent to this report, on July 15, 2008, the Company settled the lawsuits with former President and Director DeFrank. The foregoing event was filed in an 8-K on July 18, 2008.

b. Ashford Capital, LLC stock purchase and rescission thereof

On March 1, 2007, the Company entered into a Stock Purchase Agreement (“SPA”) with Ashford Capital, LLC, (“Ashford”) with a Closing Date of March 8, 2007, upon which the Company sold Four Million Seven Hundred Thousand (4,700,000) shares of the Company’s 144 Restricted Common Stock in exchange for Three Hundred Thousand Dollars ($300,000), which was paid at the closing. This unregistered sale of equity securities is exempt from registration based on Section 4(2) of the Securities Act of 1933. The actual closing date for this agreement was April 17, 2007. The foregoing event was reported in an 8-K filed on April 23, 2007.

F-12

The Company is not aware of any further pending claims or assessments, other than as described above, which may have a material adverse impact on the Company’s financial position or results of operations.

c. West Coast Pictures, LLC Stock Purchase Agreement

Subsequent to the period covered by this report, on October 31, 2007, the Board of Directors unanimously resolved to enter into a Stock Purchase Agreement (“Agreement”) with West Coast Pictures, LLC, (“WCP”). The Company sold a total of four million four hundred and fifty thousand (4,450,000) shares of the Company’s 144 Restricted Common Stock, representing approximately 41.4% of the Company’s fully diluted outstanding common stock in exchange for three hundred and twenty-five thousand Dollars ($325,000) in cash and the transfer of rights, title and interest in four movie projects in development and a service production contract. The agreement included a provision that WCP is entitled to occupy seats on the Board of Directors in proportion to its shareholding. The transaction closed on November 7, 2007 and the foregoing event was reported in an 8-K filed on November 7, 2007.

NOTE 13 – INCOME TAXES

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax assets consist of the following components as of April 30, 2007 and 2006:

	2007			2006
Deferred tax assets: NOL Carryover	$	6,307,300		$	6,174,000
Deferred Tax liabilities:		0			0
Valuation Allowance		(6,307,300	)		(6,174,000	)
Net Deferred tax asset	$	0		$	0

The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 39% to pretax income from continuing operations for the years ended April 30, 2007 and 2006 due to the following:

	2007			2006
Book income (loss)	$	(175,600	)	$	(88,721	)
Meals and entertainment		5,990			6,492
State tax		(312	)		(312	)
Accrued expenses		169,922			82,541
Valuation Allowance		0			0
	$	0		$	0

F-13

At April 30, 2007, the Company had net operating loss carry-forwards of approximately $15,000,000 that may be offset against future taxable income from the year 2008 through 2025. No tax benefit has been reported in the April 30, 2007 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.

F-14

ITEM 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

On April 23, 2007, the Company was informed by their former independent accountants, HJ & Associates, LLC, that an adjustment and restatement of Form 10-KSB, filed for the period ending April 30, 2005, was necessary. As a result, the financial information that was previously filed in the 2005 Form 10-KSB was materially incorrect and should not be relied upon. Upon notification of these adjustments and restatements, the Company’s Board of Directors and former auditors discussed a definitive plan and timetable to address these matters. The foregoing event was reported in an 8-K filed on June 13, 2007.

On August 15, 2007, the Company filed an 8-K/A to correct errors in the 8-K filed on June 13, 2007, which failed to state: (i) the specific identity of the financial statement that should no longer be relied upon; (ii) a description of all the information provided by the accountant and a disclosure of the nature of the restatements; (iii) a letter from the accountants indicating whether or not they agree with the disclosures in the Form 8-K; (iv) a statement of when the restated financial statements and delinquent filings will be filed; and (v) a statement from the Registrant acknowledging that the Registrant is responsible for the adequacy and accuracy of the disclosure in the filings. The following documentation was likewise attached as an Exhibit to the prior filing: Correspondence from HJ & Associates, Correspondence from HJ & Associates, LLC, regarding Non-Reliance Upon Previously issued interim review dated April 23, 2007; Correspondence from Jaspers and Hall PC, as to whether or not it agrees with the disclosures in the Form 8-K; Correspondence from Registrant acknowledging that it is responsible for the adequacy and accuracy of the disclosures in the filings.

ITEM 8A. Controls and Procedures

We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow for timely decisions regarding required disclosure.

As required by SEC Rule 15d-15(b), our Chief Executive Officer/Chief Financial Officer carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report. Based on the foregoing evaluation, he has concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC filings and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Executive Officer/Chief Financial Officer, to allow timely decisions regarding required disclosure about our internal control over financial reporting discussed below.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management’s assessment of the effectiveness of the small business issuer’s internal control over financial reporting is as of the year ended April 30, 2007. We believe that internal control over financial reporting is effective. We have not identified any, current material weaknesses considering the nature and extent of our current operations and any risks or errors in financial reporting under current operations.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject

ITEM 8A(T). Controls and Procedures

Management’s Annual Report on Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed 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. Our internal control over financial reporting includes those policies and procedures that:

(i)

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii)

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(iii)

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material affect on our financial statements.

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended April 30, 2007, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 8B. Other Information

Credit / Overdraft Facility

On March 4, 2004, the Company signed a Corporate Resolution to borrow from and grant collateral to the City National Bank, 400 North Roxbury Drive, Beverly Hills, CA 90210 for an initial term of one year. The initial principal granted under a Certificate of Deposit and amount borrowed on a Revolving Line of Credit, on the same date, was $60,000. On March 8, 2005, the Company signed a Change in Terms Agreement renewing its Certificate of Deposit and continuing to borrow $60,000 at an annual interest rate of 4.550% through March 1, 2006. On March 2, 2006, the Company signed an additional Change in Terms Agreement renewing its Certificate of Deposit and continuing to borrow $60,000 at an annual interest rate of 5.70% through March 1, 2007. On March 20, 2007, the Company’s agreed to discontinue the credit line and the $60,000 certificate of deposit balance plus interest was released on March 29, 2007.

PART III.

ITEM 9. Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(A) of the Exchange Act.

DIRECTORS AND EXECUTIVE OFFICERS

Our directors and officers, as of April 30, 2008 are set forth below. Directors are elected at the Annual Meeting of Stockholders to serve for a staggered terms of three years each, or until their successors are elected and qualified. Vacancies in the existing Board are filled by a majority vote of the remaining directors. The officers serve at the will of the Board of Directors.

Name	Age	Position	Director Since

Philip Holmes	52	President and Director	October 2003

Robert Kainz	46	Chief Operating Officer and Director	February 2008

George Moseman	60	Chief Financial Officer, Secretary and Director	August 2006

Monika Nosic	34	Director	November 2007

The directors and officers for the fiscal year ended April 30, 2007 are set forth as follows:

Name	Age	Position	Director Since

H. Martin DeFrank	60	Director	March 2001

Geraldine Blecker	60	CEO Secretary and Director	March 2001

Philip Holmes	51	Interim Treasurer & Director	October 2003

Michel Shane	51	Independent Director	August 2006

George Moseman	59	Independent Director	August 2006

Brad Hoffman	37	Independent Director	December 2006

Emanuel Neuman	26	Independent Director	December 2006

****************************

(a) Significant Employees

Other than our officers, there are no employees who are expected to make a significant contribution to our corporation.

(b) Family Relationships

Our directors currently have terms which will end at our next annual meeting of the stockholders or until their successors are elected and qualify, subject to their prior death, resignation or removal. Officers serve at the discretion of the Board of Directors. There are no family relationships among any of our directors and executive officers. There are no family relationships among our officers, directors, or persons nominated for such positions.

LEGAL PROCEEDINGS

On February 4, 2007, a majority of the Board of Directors voted to appoint independent counsel to review certain transactions that occurred during the period covered by this report as well as prior and subsequent periods. This review resulted in the Company filing a complaint against one of the incumbent Officers and Directors during the period covered by this report, Mr. H. Martin DeFrank, for breach of fiduciary duty, usurpation of a corporate opportunity, civil theft, fraud and conversion. This complaint was filed on June 13, 2007.

Subsequent to the period covered by this report, the Company entered into a settlement agreement and mutual release with Mr. DeFrank. The agreement was consummated on July 15, 2008 and details were published in an 8-K filing on July 18, 2008

No other officer, director, or persons nominated for these positions, and no promoter or significant employee of our corporation has been involved in legal proceedings that would be material to an evaluation of our management.

COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers and beneficial holders of more than 10% of our common stock to file with the Commission initial reports of ownership and reports of changes in ownership of our equity securities.

Based solely on its review of the copies of such forms filed with the SEC electronically, received by the Company and representations from certain reporting persons, the Company believes that for the fiscal year ended April 30, 2007, all the officers, directors and more than 10% beneficial owners complied with the above described filing requirements, although the initial Forms 3 and 4 of each officer and director was filed late.

ITEM 10. Executive Compensation

The following table sets forth the cash and non-cash compensation for the years indicated earned by or awarded to Mr. H. Martin DeFrank our President and Chief Financial Officer, Ms. Geraldine Blecker our CEO and Company Secretary, and are our only executive officers and employees whose total cash compensation exceeded $100,000, or the Named Executive Officers and employees, in fiscal year 2007.

Summary Compensation Table

Name & Principal Position	Year Ended 4/30		Salary $			Bonus $		Accrued Salary $			Restricted Stock Awards			Securities Underlying Options/SAR’s	LTIP Payouts $	All other Comp. $
H. Martin DeFrank		2007		57,000			0		0	(3)
President/CFO		2006		83,000	(2)		0		12,000
(thru 12/21/06)		2005		54,000			4,500		(4,000	)		400,000	(1)

Geraldine Blecker		2007		42,000			0		48,000
CEO		2006		74,000	(2)		4,500		36,000
		2005		54,000			4,500		(4,000	)		400,000	(1)

Philip Holmes		2007		0			0		0			100,000	(4)
Interim Treasurer
(from 12/21/06)

(1)

On January 16^th 2005 award of 400,000 shares of common stock in exchange for accrued payroll liability of $40,000 for each executive officer.

(2)

On September 23, 2005 and on April 21, 2006, the executive officers received additional payments which were deducted from their accrued salary.

(3)

Upon Mr. DeFrank’s termination as an Officer on December 21, 2006, his accumulated, deferred salary of $21,000 was paid out.

(4)

The stock award of 100,000 shares on February 26, 2007 to Mr. Holmes was deemed to be for services performed as a Director in 2005.

Option Grants

No stock options were granted or exercised during the year ended April 30, 2007.

There are no outstanding stock options.

Employment Agreements

There are no formal employment agreements with the Officers of the Company.

Compensation of Directors

Members of our Board of Directors receive occasional awards of stock for services provided at the discretion of the Board of Directors. These are also reported in our 8-K filings.

ITEM 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership - Certain Beneficial Owners

Beneficial ownership is shown as of April 30, 2007, for shares held by (i) each person or entity known to us to be the beneficial owner of more than 5% of our issued and outstanding shares of common stock based solely upon a review of filings made with the Commission and our knowledge of the issuances by us, (ii) each of our directors, (iii) our Chief Executive Officer and our three other most highly compensated officers whose compensation exceeded $100,000 during the fiscal year ended April 30, 2007, or the Named Executive Officers, and (iv) all of our current directors and executive officers as a group. Unless otherwise indicated, the persons listed below have sole voting and investment power with respect to the shares.

				Shares
				Presently			Percentage
				Acquirable			of Class
				Within 60			Beneficially
Beneficial Owner	Shares			Days	Total		Owned
Geraldine Blecker		850,000				850,000		14.6	%
Frankfurt, Germany

H. Martin DeFrank		500,000				500,000		8.6	%
Beverly Hills, CA

Philip Holmes		1,109,300(1	)			1,109,300		19.1	%
Munich, Germany

The Peoples Helper Inc.		350,000				350,000		6.0	%
New York, NY

John M. Burnley		300,000				300,000		5.5	%
Riverhead, NY

(1)

This number includes 800,000 shares of the Company’s common stock held by International Solutions Business Consulting GmbH, which is solely managed by director Philip M. Holmes and therefore an affiliate of the Company.

(2)

The share purchase transaction with Ashford Capital which closed on April 17, 2007 was rescinded on May 4, 2007 and the original transaction reversed. For legal and accounting purposes, the purchase and rescission were deemed to have taken place on the same date; April 17, 2007.

Changes in Control

Except as otherwise disclosed herein, the Company does not know of any arrangements, including any pledge of the Company’s securities, the operation of which at a subsequent date may result in a change of control of the Company.

Securities Authorized for Issuance Under Equity Compensation Plans

No securities have been authorized for issuance as part of any Equity Compensation Plan.

ITEM 12. Certain Relationships and Related Transactions, and Director Independence

There were no equity transactions with Directors or related parties in the year ended April 30, 2006.

ITEM 13. Exhibits

(a) Exhibits

3.1	Restated Certificate of Incorporation (Filed as Exhibit 3.1 to Form 10-KSB for the fiscal year ended April 30, 1998 filed with the Commission on July 30, 1998)

3.2	Bylaws of Registrant (Incorporated by reference to Form 10-KSB for the fiscal year ended April 30, 1988.)

10.1	1998 Stock Option Plan (Filed as Exhibit 10.1 to Form 10-KSB for the fiscal year ended April 30, 1998 filed with the Commission on July 30, 1998)

31.1	Certification of President pursuant to 13a-14 and 15d-14 of the Exchange Act (filed herewith)

31.2	Certification of Chief Financial Officer pursuant to 13a-14 and 15d-14 of the Exchange Act (filed herewith)

32	Certificate pursuant to 18 U.S.C. ss. 1350 for Philip Holmes, President and Robert Kainz, Chief Financial Officer (filed herewith)

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Independent Public Accountants

The Company's independent accountants for the fiscal year ended April 30, 2007 and 2006 was Jaspers & Hall PC.

(a) Audit Fees.

For the fiscal years ended 2007 and 2006, the aggregate fees billed by Jaspers & Hall, LLP for services rendered for the audits of the annual financial statements and the review of the financial statements included in the quarterly reports on Form 10-QSB or services provided in connection with the statutory and regulatory filings or engagements for those fiscal years was $10,000 and $15,000, respectively.

(b) Audit-Related Fees.

For the fiscal years ended 2007 and 2006 Jaspers & Hall PC did not bill for any audit-related services other than as set forth in paragraph (a) above.

For the fiscal years ended 2007 and 2006, Jaspers & Hall PC, did not bill any fees for tax compliance services. The auditors did not provide tax-planning advice for the fiscal years ended 2007 and 2006.

(d) All Other Fees.

None.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

KINGS ROAD ENTERTAINMENT, INC.

/s/ Philip Holmes

PHILIP HOLMES, President

(Principal executive officer)

	/s/ Robert Kainz
	Robert Kainz, Chief Financial Officer (Principal financial officer)

Dated: July 25, 2008

In accordance with the requirements of the Exchange Act, this report has been signed below on behalf of the registrant and in the capacities indicated on July 25, 2008.

Each person whose signature appears below constitutes and appoints Philip Holmes as his true and lawful attorneys-in-fact and agents, each acting alone, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-KSB and to file the same, with all exhibits thereto, and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Signature		Title

/s/ Philip Holmes
Philip Holmes		President and Director

/s/ Robert Kainz
Robert Kainz		Chief Financial Officer and Secretary

Date: July 25, 2008	/s/ Philip Holmes
	Philip Holmes, President

Date: July 25, 2008	/s/ Robert Kainz
	Robert Kainz, Chief Financial Officer