10QSB 1 v124710_10qsb.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarter ended October 31, 2007

-OR-

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

Commission File Number 0-14234

KINGS ROAD ENTERTAINMENT, INC.

(Exact Name of Registrant as Specified in Its Charter)

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

468 N. Camden Drive Beverly Hills, California		90210
(Address of principal executive offices)		(Zip Code)

310-278-9975

(Registrant’s telephone number, including area code)

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

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

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

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

The number of shares outstanding of the Registrant’s common stock, as of October 31, 2007 was 6,206,493 shares. As of August 1, 2008 the number of shares outstanding of the Registrant’s common stock was 10,756,493.

KINGS ROAD ENTERTAINMENT, INC.

FORM 10-QSB

Quarter Ended October 31, 2007

TABLE OF CONTENTS

			PAGE
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Index to Consolidated Financial Statements			F-1

Consolidated Balance Sheets as of October 31, 2007 and April 30, 2007			F-2

Consolidated Statements of Operations for the Three Months Ended October 31, 2007 and 2006			F-3

Consolidated Statements of Operations for the Six Months Ended October 31, 2007 and 2006			F-4

Consolidated Statements of Cash Flows for the Six Months Ended October 31, 2007 and 2006			F-5

Notes to Consolidated Financial Statements as of October 31, 2007			F-6 – F-12

Item 2. Management’s Discussion and Analysis or Plan of Operation			13

Item 3. Controls and Procedures			15


PART II - OTHER INFORMATION

Item 1. Legal Proceedings			16

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			18

Item 3. Defaults Upon Senior Securities			18

Item 4. Submission of Matters to a Vote of Security Holders			18

Item 5. Other Information			18

Item 6. Exhibits			18

SIGNATURES			19

PART I - FINANCIAL INFORMATION

Item I – Financial Statements

KINGS ROAD ENTERTAINMENT, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Page

Consolidated Balance Sheets as of October 31, 2007 and April 30, 2007	F-2

Consolidated Statements of Operations for the three months ended October 31, 2007 and 2006	F-3

Consolidated Statements of Operation for the six months ended October 31, 2007 and 2006	F-4

Consolidated Statements of Cash Flows for the six months ended October 31, 2007 and 2006	F-5

Notes to Consolidated Financial Statements as of October 31, 2007	F-6 to F-12

F-1

KINGS ROAD ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

AS OF OCTOBER 31, 2007 AND APRIL 30, 2007

	October 31, 2007			April 30, 2007
ASSETS	(unaudited)			(audited)
Current assets:
Cash and cash equivalents	$	167,163		$	553,648
Prepayments and other current assets		5,190			5,190
Total current assets		172,353			558,838


OTHER ASSETS
Film development costs, net		70,037			70,037
Total Other Assets		70,037			70,037

TOTAL ASSETS	$	242,390		$	628,875

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	60,614		$	440,409
Accrued expenses		349,164			338,231
Deferred revenue		875,888			953,601
Total current liabilities		1,285,666			1,732,241

Stockholders’ equity:
Common stock; 12,000,000 shares authorized at $0.01 par value; 6,206,493 shares issued and outstanding at October 31, 2007 and 5,806,493 at April 30, 2007 respectively.		62,064			58,064
Additional paid-in capital		25,233,118			25,204,118
Accumulated deficit		(26,365,548	)		(25,915,293	)
Net Profit (Loss) for Period		27,090			(450,255	)
Total stockholders’ equity (deficit)		(1,043,276	)		(1,103,366	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	242,390		$	628,875

See accompanying notes to consolidated financial statements.

F-2

KINGS ROAD ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2007 and 2006

(Unaudited)

	Three months ended October 31,
	2007		2006
REVENUES
Feature films	$	199,305	$	50,371
TOTAL REVENUE		199,305		50,371


OPERATING EXPENSES:
General and administrative		141,502		218,900
Total operating expenses		141,502		218,900

INCOME (LOSS) FROM OPERATIONS		57,803		(168,529	)

OTHER INCOME (EXPENSE):
Interest income		1,209		7,052
Interest expense		0		0
Total Other Income (Expense)		1,209		7,052

INCOME (LOSS) BEFORE INCOME TAXES		59,012		(161,477	)

PROVISION FOR INCOME TAXES		0		0

NET INCOME (LOSS)	$	59,012	$	(161,477	)

Net income (loss) per share – Basic	$	0.01	$	(0.02	)
Basic weighted average number of shares outstanding during the period		5,949,971		7,041,436

See accompanying notes to consolidated financial statements.

F-3

KINGS ROAD ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED OCTOBER 31, 2007 and 2006

(Unaudited)

	Six months ended October 31,
	2007		2006
REVENUES
Feature films	$	243,359	$	117,373
TOTAL REVENUE		243,359		117,373

OPERATING EXPENSES:
General and administrative		219,425		381,118
Total operating expenses		219,425		381,118

INCOME (LOSS) FROM OPERATIONS		23,934		(263,745	)

OTHER INCOME:
Interest income		3,156		13,952
Interest expense		0		0
Total Other Income		3,156		13,952

INCOME (LOSS) BEFORE INCOME TAXES		27,090		(249,793	)

PROVISION FOR INCOME TAXES		0		0

NET INCOME (LOSS)	$	27,090	$	(249,793	)

Net income (loss) per share – Basic	$	0.00	$	(0.04	)

Basic weighted average number of shares outstanding during the period		5,878,624		7,041,436

See accompanying notes to consolidated financial statements.

F-4

KINGS ROAD ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED OCTOBER 31, 2007 and 2006

(Unaudited)

	Six months ended October 31,
	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations	$	27,090		$	(249,793	)
Adjustments to reconcile income (loss) from continuing operations to net cash (used in) provided by operating activities:
Common stock issued for services		41,000			32,000
Change in operating assets and liabilities:
Accounts receivable, trade		0			97,814
Prepayments and other current assets		0			0
Accounts payable		(379,795	)		36,285
Accrued expenses		10,933			35,638
Deferred revenue		(77,713	)		(17,796	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(378,485	)		(65,852	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Common Stock re-purchased for cash		(8,000	)		0
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(8,000	)		0

NET CHANGE IN CASH AND CASH EQUIVALENTS		(386,485	)		(65,852	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		553,648			735,825

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	167,163		$	669,973

See accompanying notes to consolidated financial statements.

F-5

KINGS ROAD ENTERTAINMENT, INC.

Notes to Consolidated Financial Statements

As of October 31, 2007

NOTE 1 – NATURE OF OPERATIONS

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

The Company’s wholly-owned subsidiary, Ticker, Inc., (a California corporation), was inactive during the three month period ending October 31, 2007. In order to facilitate a future production of a remake or sequel to the Company’s original production “The Big Easy”, the Company incorporated a wholly-owned subsidiary, Big Easy II Film, LLC (a California limited liability corporation) on September 26, 2007. This subsidiary was also inactive during the three month period ending October 31, 2007. The consolidated financial statements include those of Kings Road Entertainment, Inc. and its subsidiaries.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

a. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements. Accordingly, they do not include all of the information and disclosures required for annual financial statements. These financial statements should be read in conjunction with the financial statements and related footnotes for the year ended April 30, 2007, included in the Kings Road Entertainment, Inc. annual report on Form 10-KSB for that period.

In the opinion of the Company's management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company's financial position at October 31, 2007, the results of operations for the three and six month periods ended October 31, 2007 and cash flows the six month period ended October 31, 2007 have been included. The results of operations for the three and six month periods ended October 31, 2007, are not necessarily indicative of the results to be expected for the full fiscal year. All inter-company items and transactions have been eliminated in consolidation.

b. Accounting Method

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

c. 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.

F-6

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.

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.

In November of 2007 the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and 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.

F-7

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. 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 October 31, 2007, the Company had no accounts receivable.

NOTE 4 – FIXED & OTHER ASSETS

a. Fixed Assets

Fixed assets of the Company at October 31, 2007, consisted of various items of office equipment with a historical cost of $5,993 and a $0 book value. All of these items were fully depreciated at October 31, 2007.

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.

c. Film Development Costs

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

At October 31, 2007, film development costs totaled $70,037, which was net after an allowance of $30,000. During the three month period ended October 31, 2007, no film development costs were determined to be impaired.

NOTE 5 – DEFERRED REVENUE

As of October 31, 2007, the Company has deferred revenue totaling $875,888. The Company is following the guidelines of SOP 00-02 for film production and distribution.

F-8

NOTE 6 - COMMITMENTS AND CONTINGENCIES

a. Rent

The Company rents its registered office space at 468 N. Camden Drive, Beverly Hills and an additional office space in Santa Monica, California. The Company also rents flexible storage space for its archives. Rent expense for the Company's offices and archive storage space was $10,793 and $7,661 during the three months ended October 31, 2007 and 2006, respectively. All rental agreements may be terminated upon one month’s notice.

b. Contingent Losses & Litigation

We have previously disclosed our material litigation and regulatory issues in our Annual Report on Form 10-KSB, for the period ended April 30, 2007, and in our other filings with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. At October 31, 2007, we were involved with various legal matters, including litigation with former officers, Directors, and related parties. Although the ultimate resolution of certain matters cannot be determined at this time, we do not believe that such matters, individually or in the aggregate, will have a material adverse effect on our future consolidated results of operations, cash flows or financial condition.

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

c. Other Commitments and Contingencies

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

NOTE 7 – 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.

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:

F-9

	Months After	Approximate
Marketplace	Initial Release	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.

NOTE 8 - COMMON STOCK

At October 31, 2007, the Company had 12,000,000 authorized shares of common stock, of which 6,206,493 shares were issued and outstanding. On September 28, 2007, Directors Brad Hoffman and Emanuel Neuman were each issued 100,000 restricted shares in exchange for services rendered as Directors and ISBC GmbH was issued 300,000 shares in exchange for services valued at $25,000. On October 2, 2007, at the request of former Director, Michel Shane, the Company repurchased 100,000 of its own shares belonging to Mr. Shane at a negotiated price of $8,000 in total which represented the approximate 90 day rolling average for the shares.

N0TE 9 – DEPRECIATION AND AMORTIZATION

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

NOTE 10 - GOING CONCERN

The Company's consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However at October 31, 2007, the Company has sustained recent losses from operations, has a deficit in working capital of $1,113,313, and has an accumulated deficit of approximately $26,338,458. 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 11 - SUBSEQUENT EVENTS

a. Option/Purchase Agreement

On October 6, 2006, New Line Cinema paid the Company $90,000 to extend an option pertaining to the remake rights to the movie production, All of Me, for an additional 18-month period, up to and including April 11, 2008. As a result of the Writers’ Guild strike of 2007 and 2008, the option period was further extended to July 21, 2008. Subsequent to the period covered by this report, on July 21, 2008, the option expired without New Line exercising the option. In accordance with the option agreement, all rights in this title have reverted to the Company.

F-10

b. Litigation with Director and Former Officer

On June 13, 2007, the Company filed a complaint in the Superior Court of the State of California, County of Los Angeles, against Director, H. Martin DeFrank, and Sloane Squared LTC, (“Sloane”), alleging breach of fiduciary duty, constructive fraud, usurping corporate opportunity, conversion/civil theft, restitution, interference with business, breach of contract and unfair competition/false representation of association. The foregoing event was reported in an 8-K filed on July 10, 2007.

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

c. West Coast Pictures, LLC Stock Purchase Agreement

On October 31, 2007 the Company entered into a Securities Purchase Agreement (“Agreement”) with West Coast Pictures, LLC (“WCP”), a California limited liability company, for the purchase of Four Million Four Hundred Fifty Thousand (4,450,000) shares of the Company’s Common Stock (“Purchase Shares”) for the purchase price of Three Hundred Twenty-Five Thousand Dollars ($325,000) and a commitment by WCP to contribute five (5) film assets (listed in a Schedule to the Agreement) similarly valued at an additional $325,000. The agreement includes a provision that WCP is entitled to occupy seats on the Board of Directors in proportion to the percentage of the Company’s common stock that it owns.

The transaction was subject to certain closing conditions set forth in the Agreement. The Agreement further states that at the direction of WCP, the Company will issue Four Hundred Sixty Thousand (460,000) of the Purchase Shares directly to Hagen Behring. Therefore, WCP will receive Three Million Nine Hundred Ninety Thousand (3,990,000) of the Purchase Shares. In addition, the Company granted WCP “piggyback” registration rights with respect to its Purchase Shares on certain future registration statements of the Company, if any. The sale of the Purchase Shares closed on November 7, 2007. This transaction is exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

d. Stock Issued to Directors for Services Rendered

Subsequent to the period covered by this report, on November 26, 2007, the Company issued 100,000 shares to former Director Mr. Stephen Fryer for services rendered as a Director.

e. Creation of New Subsidiaries

Subsequent to the period covered by this report, on December 5, 2007, the Board of Directors resolved to set up a European subsidiary to identify, develop and produce international co-productions. The Board also resolved to finance the subsidiary with interest bearing subordinated loans. In accordance with the resolution, Kings Road Entertainment Europe GmbH was set up on December 5, 2007. The foregoing event was reported in an 8-K filed on December 27, 2007.

F-11

f. Writing Agreement

Subsequent to the period covered by this report, on February 19, 2008, the Company entered into a writing agreement with a Writers Guild of America writer in connection with a currently untitled feature length motion picture remake/sequel of one of the films in the Company’s library. This agreement foresees payments of approximately $100,000 in total over the course of the agreement. An initial payment of $33,333 was made by the Company on February 20, 2008.

F-12

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following review concerns the periods ended October 31, 2007 and October 31, 2006, which should be read in conjunction with the financial statements and notes thereto presented in the Form 10-QSB and the Form 10-KSB for the fiscal year ending April 30, 2007.

Forward Looking Statements

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

The following discussion should be read in conjunction with the Company's financial statements and related notes. Certain matters discussed herein may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties include, but are not limited to, the following:

- the volatile and competitive nature of the film industry,

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

- the uncertainties surrounding technological change of the industry,

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

- the success of marketing efforts by third parties,

- the changing demands of customers and

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

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

Recent Developments

Subsequent to the fiscal year ended April 30, 1996, the Company has produced no new films and has derived its film revenues almost exclusively from the exploitation of films produced in prior years. The Company continues to fund and develop motion picture projects, with the intention of either producing the motion picture, establishing a partnership or joint venture with another film production company to develop and/or produce the project or an outright sale of the project.

On September 26, 2007, the Company filed with the Secretary of State of California for the creation of a wholly-owned subsidiary Big Easy II Film, LLC, which will be used by the Company for the specific purpose of developing a remake or sequel of the Company’s film property “The Big Easy.”

On October 31, 2007 the Company entered into a Securities Purchase Agreement (“Agreement”) with West Coast Pictures, LLC (“WCP”), a California limited liability company, for the purchase of Four Million Four Hundred Fifty Thousand (4,450,000) shares of the Registrant’s Common Stock (“Purchase Shares”) for the purchase price of Three Hundred Twenty-Five Thousand Dollars ($325,000) and a commitment by WCP to contribute five (5) film assets (listed in a Schedule to the Agreement) similarly valued at an additional $325,000. The agreement included a provision that WCP is entitled to occupy seats on the Board of Directors in proportion to the percentage of the Company’s common stock that it owns.

Results of Operations

The Three Months Ended October 31, 2007 vs. the Three Months Ended October 31, 2006

For the quarter ended October 31, 2007, feature film revenues were $199,305 as compared to $50,371 for the quarter ended October 31, 2006. The increase of $148,934 results primarily from increased revenue from distribution of the Company's feature film library.

Costs and expenses amounted to $141,502 for the quarter ended October 31, 2007 as compared to $218,900 during the quarter ended October 31, 2006. This decrease of $77,398 is primarily due to a significant decrease in officers’ and administrative compensation.

The Company had a net profit of $59,012 for the quarter ended October 31, 2007 as compared to the net loss of $161,477 for the quarter ended October 31, 2006. This increase in net profit of $220,489 results primarily from an increase in film distribution revenues and a significant decrease in officers’ and administrative compensation.

The Six Months Ended October 31, 2007 vs. the Six Months Ended October 31, 2006

For the six month period ended October 31, 2007, feature film revenues were $243,359 as compared to $117,373 for the six month period ended October 31, 2006. The increase of $125,986 results primarily from increased revenue from distribution of the Company's feature film library.

Costs and expenses decreased to $219,425 for the six months ended October 31, 2007 as compared to $381,118 during the six months ended October 31, 2006. This decrease of $161,693 is primarily due to a decrease in officers’ and administrative compensation.

The Company had a net profit of $27,090 for the six month period ended October 31, 2007 as compared to net loss of $249,793 for the comparable period ended October 31, 2006. This increase in net profit of $276,883 results primarily from increased film distribution revenues and a significant decrease in officers’ and administrative compensation.

Liquidity and Capital Resources

The Company's principal source of working capital during the three and six month periods ended October 31, 2007 was motion picture royalty income. The Company does not currently have sufficient working capital to fund its operations. If the Company fails to raise additional capital, increase revenues, or sell certain assets, the Company will, in all likelihood, be forced to significantly reduce its operations or liquidate.

For the six months ended October 31, 2007, the Company's net cash flow used in operating activities was $378,485 compared to net cash used in operating activities of $65,852 during the period ended October 31, 2006. At October 31, 2007, the Company had cash of $167,163 as compared to $669,973 at October 31, 2006.

Future Commitments

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

ITEM 3. 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 Principal Executive Officer and 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, they have concluded that as of October 31, 2007, our disclosure controls and procedures are not effective in view of our delinquent filings at such date. As of October 31, 2007, we were delinquent in filing our periodic reports since April 2004. The Company had been involved in litigation with former officers and directors and we did not have adequate financial resources to engage our auditor and ensure the timely filing of our periodic reports. Since then, we have resolved all of the legal matters, changed our management, and engaged an auditor to file all of our delinquent periodic reports.

This Quarterly 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 to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this quarterly report.

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 October 31, 2007, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

On July 24, 2007, shareholder Burnley, 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.

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. Subsequent to this report, 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

On June 13, 2007, the Company filed a lawsuit against Director, H. Martin DeFrank, and Sloan Squared, LTC, (“Sloan”), alleging, amongst others, 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 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

Subsequent to this report, 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.

Other litigation

As of October 31, 2007, the Company was not aware of any pending claims or assessments, other than as described above or related to the matters described above, which may have a material adverse impact on the Company's financial position or results of operations.

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

On September 28, 2007, Director Brad Hoffman and former Director Emanuel Neuman were each issued 100,000 restricted shares in exchange for services rendered as Directors and ISBC GmbH was issued 300,000 shares in exchange for services valued at $25,000. 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 October 2, 2007, the Company purchased shares belonging to former Director Michael Shane at a negotiated price of $8,000 representing approximately the 90 day rolling average for the shares.

Subsequent to the period covered by this report, on November 7, 2007, the Company sold Four Million Four Hundred Fifty Thousand (4,450,000) shares of the Registrant’s Common Stock (“Purchase Shares”) for the purchase price of Three Hundred Twenty-Five Thousand Dollars ($325,000) and a commitment by WCP to contribute five (5) film assets with a mutually agreed total value of $325,000. In addition, the Registrant granted WCP “piggyback” registration rights with respect to its Purchase Shares on certain future registration statements of the Registrant, if any. This transaction is exempt from registration pursuant to Section 4(2) of the Securities Act of 1933

Subsequent to the period covered by this report, on November 26, 2007, the Company issued 100,000 shares to former Director Mr. Stephen Fryer for services rendered as a Director.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

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

No matters were submitted to security holders for a vote as of October 31, 2007.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

31.1	Rule 13a-14 (a)/15d-14 (a) Certification of Principal Executive Officer.

31.2	Rule 13a-14 (a)/15d-14 (a) Certification of Chief Financial Officer.

32	Section 1350 Certifications.

SIGNATURES

Pursuant to the requirements of Section 13 of 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	KINGS ROAD ENTERTAINMENT, INC.
	(Registrant)

Date: August 22, 2008	By:	/s/ Philip Holmes
		Philip Holmes, President and Principal Executive Officer