U.S. SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-Q


[mark one]





x  QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934





For the quarterly period ended: SEPTEMBER 30, 2013





o  TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934





For the transition period from ___________ to ____________




Commission File Number: 000-52846





REGALWORKS MEDIA, INC.


(Name of small business issuer in its Charter)





NEVADA
76-0766174(State or other jurisdiction of
(I.R.S. EmployerIncorporation or organization)
Identification No.)





225 SANTA MONICA BOULEVARD, SUITE 300


SANTA MONICA, CA 90401


(Address of Principal Executive Offices)





703-220-9977





(Registrant’s Telephone Number including Area Code)










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





Copy of all communications to:


John Holt Smith, Esq.


225 Santa Monica Blvd., Suite 300


Santa Monica, CA 90401


310-384-1886





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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.


x Yes o No





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large Accelerated filer
o

Accelerated Filer
oNon-accelerated filer
o

Smaller Reporting Company
x(Do not check if smaller reporting company)





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


Yes oNo x





As of November 21, 2013 the registrant had 14,390,540 shares of its common stock, $0.001 par value, issued and outstanding.






1




REGALWORKS MEDIA, INC. (F/K/A AMERELITE SOLUTIONS, INC.)


(A DEVELOPMENT STAGE COMPANY)





Table of Contents


PagePart I - Financial InformationItem 1.
Financial Statements
3Balance Sheet as of September 30, 2013 (unaudited)
3Statements of Operations (unaudited) for the Three Months and for the period March 21, 2013 (inception) through September 30, 2013 (unaudited)
4Statement of Cash Flows (unaudited) for the period March 21, 2013 (inception) through September 30, 2013 (unaudited)
5Notes to Financial Statements (unaudited)
6Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
13Item 3.
Quantitative and Qualitative Disclosures About Market Risk
17Item 4.
Controls and Procedures
17Part II - Other InformationItem 1.
Legal Proceedings
18Item 1A.
Risk Factors
18Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
18Item 3.
Defaults Upon Senior Securities
18Item 4.
Submission of Matters to a Vote of Security Holders
18Item 5.
Other Information
18Item 6.
Exhibits
18Signatures

19























2





PART I – FINANCIAL STATEMENTS





ITEM 1. FINANCIAL INFORMATION





REGALWORKS MEDIA, INC. (F/K/A AMERELITE SOLUTIONS, INC.)


(A DEVELOPMENT STAGE COMPANY)


CONDENSED CONSOLIDATED BALANCE SHEET




September 30,2013(unaudited)ASSETSCurrent Assets:Cash and Cash Equivalents

$
1,831Total Current Assets


1,831Other Assets:Deposits


-Total Assets

$
1,831LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)Current Liabilities:Accounts Payable

$
116,152Accrued Salaries and Other Compensation


189,812Accrued Interest Payable


117,787Notes Payable


302,740Total Current Liabilities


726,491Total Liabilities


726,491Stockholders' Equity (Deficit):Preferred Stock, par value $0.001 per share; authorized10,000,000, issued and outstanding - none


-Common Stock, par value $0.001 per share;authorized 100,000,000, issued andoutstanding - 14,390,540


14,391Additional Paid-in Capital


216,670Accumulated Deficit during Development Stage


(955,721
)Total Stockholders' Equity (Deficit)


(724,660
)Total Liabilities and Stockholders' Equity (Deficit)

$
1,831





The accompanying notes are an integral part of these statements




3


REGALWORKS MEDIA, INC. (F/K/A AMERELITE SOLUTIONS, INC.)


(A DEVELOPMENT STAGE COMPANY)


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)





Three Months Ended September 30,


March 21,2013 (inception) throughSeptember 30,2013


2013Revenue

$
-


$
-Total Revenue


-



-Cost of Goods Sold


-



-Gross Profit


-



-Operating ExpensesCompensation Expense


362,700



505,800General and Administrative


182,321



191,802Consulting and Professional


42,285



42.285Merger Costs and Expenses


171,745



193,745759,051



933,632(Loss) from Operations


(759,051
)


(933,632
)Other Income/(Expense)Other Income


-



-Interest Expense


(14,160
)


(20,439
)Total Other Income/(Expense)


(773,211
)


(20,439
)Net Income/(Loss) Before Income Taxes


(773,211
)


(954,071
)Income Tax Expense


(1,650
)


(1,650
)Net Income(Loss)

$
(774,861
)

$
(955,721
)Basic (Loss) per Share

$
(0.06
)

$
(0.11
)Weighted Average Number of Common Shares


13,082,414



11,965,196





The accompanying notes are an integral part of these statements













4


REGALWORKS MEDIA, INC. (F/K/A AMERELITE SOLUTIONS, INC.)


(A DEVELOPMENT STAGE COMPANY)


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)





March 21, 2013(inception) throughSeptember 30,2013Operating Activities:Net Loss

$
(955,721
)Adjustments to reconcile Net Loss:Stock Issued for Services


280,550Stock Issued for Interest Accrual


20,269Merger Related Costs Paid in Cash


65,000Changes in Operating Assets and Liabilities(Increase)/Decrease in Deposits


-Increase/(Decrease) in Accounts Payable


96,152Increase/(Decrease) in Accrued Salaries and Other Compensation


189,812Increase/(Decrease) in Accrued Interest Payable


118,029Increase/(Decrease) in Other


-Net Cash (Used) by Operating Activities


(185,909
)Net Cash (Used) by Investment Activities


-Financing Activities:Proceeds from Loans


187,740Proceeds from the Sale of Stock


-Net Cash Provided by Financing Activities


187,740Net Increase/(Decrease) in Cash


1,831Cash, Beginning of Period


-Cash, End of Period

$
1,831Supplemental Information:Interest Paid

$
-Income Taxes Paid

$
-Significant Non-Cash Transactions:Stock Issued in Debt Conversion

$
230,000Stock Issued for Services

$
-Notes Issued for Accounts Payable

$
115,000





The accompanying notes are an integral part of these statements







5
 
 REGALWORKS MEDIA, INC. (F/K/A AMERELITE SOLUTIONS, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER 30, 2013


NOTE 1 - GENERAL ORGANIZATION AND BUSINESS





RegalWorks Media, Inc. (f/k/a AmerElite Solutions, Inc.) (the “Company”) was incorporated in the state of Nevada July 26, 1994 as ABC Home Care Specialists, Inc., and on May 18, 2005 changed its name to AmerElite Solutions, Inc. As of September 30, 2013 the Company is primarily engaged in one business segment, with its former business segment available for sale. On June 27, 2013 the Company entered into an agreement to acquire all of the outstanding shares of RegalWorks, Inc. a Nevada corporation (“RWI”). On July 15, 2013 the Company completed its reorganization with RWI, which changed its name from RegalWorks Media to RegalWorks. RWI became a wholly owned subsidiary and we changed our name to RegalWorks Media, Inc. to reflect our business operations.





Our wholly-owned subsidiary, RegalWorks, Inc. acquired the assets of RWI through a reverse merger. The Company, through its wholly-owned subsidiary is an early stage independent film studio led by a highly regarded team of media and business executives.  The Company, through its wholly-owned subsidiary offers production quality worthy of wide theatrical release, making a substantive contribution to the landscape of family films with compelling, inspirational stories geared towards broad family audiences, leading producers and directors to produce buzz-worthy family films with memorable story lines and characters.





NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Principles of and Basis of Presentation-The Company’s business is comprised ofcertain business assets contributed by majority shareholder and chief executive officer, Dane B. West, along with RegalWorks Media, LLC (the LLC), managing partner of the LLC in exchange for certain shares of the Company. These assets have a cost basis of $0, the transferors cost basis in accordance with SEC Regulation S-X, Staff Accounting Bulletins, Topic 5-G, “Transfers of Nonmonetary Assets by Promoters or Shareholders” (Topic 5-G). Topic 5-G requires that assets purchased in exchange for stock in whole or part from a shareholder should be recorded at the shareholder's historical cost basis. RegalWorks Media, LLC, Mr. West historical cost basis is $0, even though fair market value of these assets may be in excess of $30,000 negotiated in an arm’s length manner.





These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP).





Use of estimates-The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Ultimate realization of assets and settlement of liabilities in the future could materially differ from those estimates.  Significant estimates include the realization of receivables, the method of depreciation and useful lives assigned to fixed assets, and the revenue to be recognized from services performed.





Cash and cash equivalents–Cash equivalents are considered to be all highly liquid investments with a maturity of three (3) months or less at the time of purchase.  Cash at the end of each period reflects amounts on deposit with banking facilities.





Property and Equipment- Fixed assets, stated at cost, are depreciated on the straight-line method for financial statement reporting purposes, over the estimated useful lives of the assets, which range from seven to ten years. Leasehold improvement costs are depreciated over the shorter of the lease term or their useful life. Repairs and maintenance costs are expensed as incurred. Betterments or renewals are capitalized when they occur.





Long-Lived Assets– The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. When indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets is less than the assets’ carrying amount. The Company measures the amount of such impairment by comparing the assets' carrying value to the assets' present value of the expected future discounted cash flows. Impairment charges, if any, are recorded in the period realized.








6
 
 REGALWORKS MEDIA, INC. (F/K/A AMERELITE SOLUTIONS, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER 30, 2013





NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
 
 Fair Value of Financial Instruments-The carrying amounts of financial instruments including cash, accounts receivable, accrued liabilities and debt approximate fair value based on their short maturities or, for debt, based on borrowing rates currently available to the Company for loans with similar terms and maturities.
  Fair Value of Financial Assets and Liabilities-Fair value is defined under U.S. GAAP as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. U.S. GAAP establishes a fair value hierarchy requiring an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:





Level 1 - Quoted prices in active markets for identical assets or liabilities.





Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.





Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.





Revenues- The Company recognizes revenue when all of the following criteria have been met:





·
Persuasive evidence of an arrangement exists;





·
Delivery has occurred or services have been rendered;





·
The fee for the arrangement is fixed or determinable; and





·
Collectability is reasonably assured.





The Company’s revenue will be comprised of contractual agreements that are subject multiple deliverable in the media/film entertainment industry.





The Company’s revenues may be subject to some seasonal fluctuation. The Company operates in an industry where many of its clients or customers will be subject to seasonal as well global market fluctuations. As such, monthly revenues during the periods of non-holiday months may be lower than the remainder of the year.





Earnings (Loss) per Share - Basic earnings (loss) per share is calculated by dividing the Company’s net income available to common shareholders by the weighted average number of common shares during the year or period presented. The diluted earnings (loss) per share is calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year or period presented. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company.





Income Taxes-Income taxes are provided in accordance with ASC 740, Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards.  Deferred tax expense (benefit) results  from  the net  change  during  the  year of  deferred  tax  assets  and liabilities.





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.





No provision was made for Federal or state income taxes.





At September 30, 2013 the Company had net operating loss carry-forwards of approximately $0.9 million that begins to expire in 2033. A deferred tax asset of approximately $0.4 million created by the net operating loss has been offset by a valuation allowance equal to the net operating loss.








7
 
 REGALWORKS MEDIA, INC. (F/K/A AMERELITE SOLUTIONS, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER 30, 2013





NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
 
 Stock Based Compensation- The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.





Advertising-The Company follows the policy of charging the costs of advertising to expense as incurred. The Company incurred no advertising costs during the period ending September 30, 2013.





NOTE 3 - GOING CONCERN





The Company has suffered recurring losses from operations and has a working capital deficit and stockholders’ deficit. In all likelihood the Company will be required to make significant future expenses in connection with its media and entertainment business development efforts along with increasing general and administrative expenses. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.





Management is actively seeking to raise additional capital through the sale of equity securities, through an offering of debt securities, or through borrowings from financial institutions or other resources.





NOTE 4 – NOTES PAYABLE





Notes payable consist of the following:


September 30, 2013Note payable to an individual, a shareholder of the Company – related party, interest at 10.0% per annum, no monthly payments, matures on April 1, 2014, convertible into common stock of the Company at a price of $0.50 per share

$
60,000Notes payable to five (5) individuals and two corporate entities, original issue discount of 50%, interest accrued as of September 30, 2013 was $110,075, no monthly payments, matures on December 31, 2013, convertible into common stock of the Company at a price of $0.25 per share, collateralized (pari passu basis with other OID note holders) by Mr. West’s equity ownership in the case of default along with a default conversion price per share reduction to $0.01


242,740Total notes payable

$
302,740




The Company entered into Original Issue Discount (OID) notes payable with various individuals and business entities. The Company entered into OID’s totaling $172,740 from July 1, 2013 through August 13, 2013. Of this amount $115,000 was recognized through the assumption of various payables due and owing by AmerElite. As part of the Stock Purchase and Reorganization Agreement (the SPA) RWI was required to fund escrow in order to pay for various liabilities of the Company in order to complete the reverse acquisition. Assumption and conversion of accounts payable, notes payable of the Company, along with various payments through escrow and extension payments of the letter of intent and amendments, the Company paid $150,000. The remainder of the OID entered into was $67,740, was received in cash. A total of $242,740 in OID note payables have been issued to 7 investors. The OID notes are discounted 50% requiring payment of $2.00 for each $1.00 borrowed. The OID notes are collateralized (pari passu) by Mr. West’s shares. Upon default the collateralized shares shall be transferred pro-rata. Upon default OID holders may exercise the default conversion rate of $0.01 per share for all principal and interest due, a change in control would occur upon default. OID note holders prior to maturity, December 31, 2013, may exercise their entire principal and interest or a portion thereof into common stock at $0.25 per share. OID note holders prior to maturity may convert into 1,941,920 shares of common stock of the Company, and upon default into 48,548,000 shares of common stock of the Company, along with a distribution of Mr. West’s shares.













8
 
 REGALWORKS MEDIA, INC. (F/K/A AMERELITE SOLUTIONS, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER 30, 2013




NOTE 4 – NOTES PAYABLE - continued
  During 2012 the Company converted $230,000 in accounts payable into a demand note payable accruing interest at 2% per annum. The Company recognized no beneficial conversion feature expense associated with the note. The note payable contained the right to convert into common stock of the Company at $0.125 per share (which expired on September 12, 2103), or 46,000,000 shares of common stock (pre-reverse stock split adjusted). The conversion feature was considered to be fair market value of the Company’s common stock at the time. On August 15, 2013 the holders of the $230,000 demand note payable instructed the Company that they wanted to convert the entire principal and interest at the time into common stock of the Company. The holders received 2,032,672 shares of common stock for the principal and interest. The Company recognized $20,269 in interest expense in the conversion for shares as well as the extinguishment of $230,000 in debt.





NOTE 5 - STOCKHOLDERS’ EQUITY





The Company is authorized to issue 100,000,000 shares of common stock and 10,000,000 shares of preferred stock both having a $0.001 par value. On July 15, 2013, the Company completed a reorganization with RWI, which resulted in the issuance of 11,200,000 shares of common stock, the authorization and issuance of 5,600,000 shares of preferred stock. The preferred stock is to be held in escrow pending the successful completion of milestones. The Company acquired 100% of the issued and outstanding shares of RegalWorks, Inc. a Nevada corporation, which became a wholly-owned subsidiary of the Company. Along with the reorganization the Company completed a 25-1 reverse stock split of its equity which resulted in for every 25 shares was exchanged for 1 share of the post-reorganized Company’s equity.





The Company through its wholly owned subsidiary issued 4,580,000 shares of its common stock to RWI incorporator, chief executive officer and president for various intangible assets, liabilities and contractual obligations received. Mr. West is the control person for RegalWorks Media, LLC the entity that sold its assets to RWI. Fair market value of the intangible assets offset by liabilities and contractual obligations was $18,000. Pursuant to Topic 5-G the Company recorded these assets at the transferor’s basis, which was $0. Following the formation of RWI, the Company through its wholly owned subsidiary issued 6,620,000 shares of common stock to 19 individuals and business entities for services. The Company recognized $33,100 in consulting or compensation expense for these shares.





The Company during the period ending September 30, 2013 filed a Form S-8 plan with the Securities and Exchange Commission. The Company issued 245,000 shares of S-8 stock to five (5) individuals for which we recognized $247,450 in compensation expense. The Company during the period ending September 30, 2013 converted $230,000 in notes payable along with all accrued interest into 2,032,672 shares of common stock. These shares were issued with a restrictive legend.





At September 30, 2013, there are 14,390,540 shares of common stock issued and outstanding.





NOTE 6 – REVERSE MERGER TRANSACTION AND REORGANIZATION





On July 15, 2013 (the Closing Date), the Company completed its acquisition of all of the issued and outstanding shares of equity of Regal Works, Inc., a Nevada corporation (the Seller). Pursuant to the terms of  that certain Stock Purchase and Reorganization Agreement between the Company and  Seller dated May 7, 2013, (the “Stock Purchase Agreement”) and filed on Form 8-K, May 14, 2013 the Company was to have approximately 70,000,000 common shares issued and outstanding prior to the reverse stock split and conversion of certain debt instruments into equity, which resulted in approximately 2,800,000 common shares being issued and outstanding after the reverse split but prior to the shares being issued for the acquisition of the Seller. The Agreement outlines the plan to issue 11,200,000 post-reverse split common shares to acquire the Seller in a tax free transaction, for a total of 14,000,000 common shares issued and outstanding post reverse split and post-merger.





Pursuant to the Stock Purchase Agreement, the Company acquired all of the issued and outstanding shares of the Seller in exchange for an initial 80% dilution of the issued and outstanding shares of the Company as of the Closing Date, with the release of certain escrowed shares of the Company upon achieving certain performance objectives as set out in the Stock Purchase Agreement.  The Stock Purchase Agreement contained representations and warranties from both parties customary for this type of transaction.





As part of the closing, certain debts of the Company were satisfied by the issuance of approximately 2,000,000 shares of the Company’s common stock. All such shares were “restricted securities” as such term is defined by the Securities Act of 1933, as amended. Other debts and liabilities were assumed by the Seller as part of the transaction and new debt instruments were entered into by and between the Sellers and the holders of the debt and/or accounts payable.








9
 
 REGALWORKS MEDIA, INC. (F/K/A AMERELITE SOLUTIONS, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER 30, 2013





NOTE 6 – REVERSE MERGER TRANSACTION AND REORGANIZATION - continued
 
 As part of the closing, the Company filed with the Nevada Secretary of State and FINRA (i) a 25-1 reverse stock split and (ii) a name change to “RegalWorks Media, Inc.”





As consideration for the shares of common stock of the Seller, the Company paid to the Seller’s shareholders an aggregate purchase price consisting of 11,200,000 shares of common stock, $.001 par value and 5,600,000 shares of Series B preferred stock. Reflecting the 25-1 reverse stock split the Company had a total of 14,000,000 shares of common stock issued and outstanding, a contingent issuance of 5,600,000 shares of preferred stock convertible into 11.200,000 shares of common stock, and a change in control of both management and the Board of Directors of the Company.





On July 15, 2013, the Company completed the acquisition of all of the issued and outstanding shares of stock of RWI. Pursuant to the terms of the stock purchase agreement (SPA) between AmerElite and our Company’s shareholders dated May 7, 2013, the Company became a wholly-owned subsidiary of AmerElite Solutions, Inc., which changed its name on July 3, 2013 to RegalWorks Media, Inc. The wholly-owned subsidiary (the operating entity) simultaneously changed its name to RegalWorks, Inc. Our shareholders received 1,000 shares of common stock and 500 shares of preferred stock for each share of the Company common stock held by them. AmerElite on July 3, 2013 effected a 25 for 1 reverse stock split of both its common and preferred equity, along with an increase to its authorized capital of 100,000,000 shares of common stock and 10,000,000 preferred stock. The Company’s shareholders initially own an 80% equity interest and pursuant to certain milestones shall have released from escrow preferred stock increasing that ownership to 90% of the publicly traded company.





Pursuant to the SPA, the Company acquired all of the issued and outstanding shares of RWI in exchange for an initial 80% of the issued and outstanding shares of the Company at closing, with our shareholders having the ability to receive additional shares issued and placed in escrow (rights to acquire additional common shares upon conversion of the escrowed preferred shares) of the Company upon achieving certain performance objectives as set out in the SPA.





As part of the closing, the publicly traded company filed with the Nevada Secretary of State and FINRA (i) a 25-1 reverse stock split and (ii) a name change to “Regal Works Media, Inc.”





As consideration for the shares of common stock of the Company and its shareholders, the publicly traded company paid to our shareholders an aggregate purchase price consisting of 11,200,000 “restricted” shares of common stock, $.001 par value and 5,600,000 shares of preferred stock, convertible into 11,200,000 shares of common stock.





As part of the consideration paid by AmerElite to the shareholders of the Company a Series B class of preferred stock was established and 5,600,000 shares were authorized to be issued. Each share of Series B preferred stock is entitled to two votes per share (the “Escrowed Preferred Shares”) and may be converted into two shares of common stock. The Escrowed Preferred Shares are to be held until the following conditions have been met for as full payment of the shares.





(i) Based on the following provisions, the RWI shareholders shall have released certain Escrowed Preferred Shares as performance and valuation milestones are met. Set forth is structure and release of the Escrowed Preferred Shares under the agreement that qualifies as a tax-free exchange under the Code.





(ii) The publicly traded company achieves one or more of the following milestones within the first twelve (12) months from “closing,” the Company’s shareholders shall have released from Escrow one share of preferred stock (Escrowed Preferred Shares) for every four shares of common stock issued at Closing, or 2,800,000 shares, increasing the Company’s shareholder ownership in the publicly traded company from 11,200,000 shares of common stock to 16,800,000 shares of common stock.



















10
 
 REGALWORKS MEDIA, INC. (F/K/A AMERELITE SOLUTIONS, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER 30, 2013




NOTE 6 – REVERSE MERGER TRANSACTION AND REORGANIZATION - continued


·
The aggregate market value of the publicly traded company’s common stock is greater than or equal to $20.0 million, computed using the voting and non-voting common and preferred equity held by both affiliates and non-affiliates (‘fully diluted”) for a period of 60 consecutive trading days, determined using the fully diluted shares of the post-reorganization publicly traded company’s shares multiplied by the closing stock price for each day or the use of the volume weighted average price (“VWAP”) if the aggregate market value falls below $20.0 million for a period of 5 days or less; or




·
The publicly traded company’s share price is greater than or equal to 200% of the lower of $0.50 per share (based on a 25 for 1 reverse stock split) or the publicly traded company’s volume weighted average price for the initial 20 trading days post the ‘closing’ for a period of not less than 60 consecutive trading days; or




·
The completion of a capital raise or financing of at least $5 million.




(iii) If publicly traded company achieves one or more of the following milestones within twelve (12) months from the “closing”, the Company’s shareholders shall have released from Escrow one share of preferred stock (Escrowed publicly traded company Preferred Shares) for every four shares of common stock (or the publicly traded company Escrowed Shares) issued at Closing, or 2,800,000 shares, thereby increasing Company’s shareholder fully diluted  ownership from 16,800,000 shares of common stock to 22,400,000 shares of common stock (assuming the milestones referred to above in (ii) have been achieved).





·
Aggregate market value of publicly traded company is greater than or equal to $30.0 million, computed using the voting and non-voting common and preferred equity held by both affiliates and non-affiliates (‘fully diluted”) for a period of 60 consecutive trading days, determined using the fully diluted shares of the publicly traded company multiplied by the closing stock price for each day or the use of the volume weighted average price if the aggregate market value falls below for a period of 5 days or less; or




·
The publicly traded company’s share price is greater than or equal to 300% of the lower of $0.50 per share (based on a 25 for 1 reverse stock split) or publicly traded company’s volume weighted average price for the initial 20 trading days post ‘Closing’ or completion of the Transaction for a period of not less than 60 consecutive trading days; or




·
The completion of a capital raise or financing of at least $10 million.




(iv) In the event the publicly traded company does not achieve any one of the following actions set to expire 180 days from the closing an adjustment shall be made by the publicly traded company to the number of shares held by the pre-reverse acquisition shareholder base as identified in paragraph (c) above - (x) the aforementioned 2,800,000 shares of common stock held by the pre-reverse acquisition shareholders collectively hold shares that have a market value that is greater than or equal to $1.4 million based upon a 20-day VWAP during that 180 days; or (xx) the post-closing publicly traded company completes a capital raise or financing of $1 million or more within 60 days from the closing date; or (xxx) the post-closing publicly traded company completes a capital raise or financing or completes an acquisition with a value more than $2 million. If neither (x), (xx) or (xxx) are achieved then the publicly traded company shall compensate the pre-RWMI publicly traded company shareholders the delta between $1.4 million and the market value as determined by the 20-day VWAP of publicly traded company’s common stock 180 days from the Closing Date.



Based upon the above the Company was in compliance nor had breached the minimum pricing guarantee for the pre-RWMI publicly traded company shareholders. However if the Company’s common stock price continues to hold around $0.25 per share the Company will be required to issue an additional 1,400,000 shares of common stock to the pre-RWMI publicly traded company shareholders.NOTE 7 – RELATED PARTY TRANSACTIONS





On March 21, 2013, the Company through the acquisition of RWI assumed various liabilities and contractual obligations from the LLC as part of its capital contribution in the formation of the Company. Obligations assumed by the Company, include employment services by Mr. West pursuant to an employment agreement. As of September 30, 2013 the Company owed approximately $79,662 in accrued wages to Mr. West. The Company recognized $108,500 in compensation for the period March 21, 2013 (date of inception) through September 30, 2013. As part of the capital contribution, the Company assumed $40,500 in unpaid compensation. Mr. West is the managing member of RegalWorks Media, LLC which provides services to the media entertainment industry which may be in direct competition to the Company. Mr. West is the beneficial owner of 3,835,000 shares of common stock acquired in the transaction (see Footnote 5 - Stockholder’s Equity).






11
 
 REGALWORKS MEDIA, INC. (F/K/A AMERELITE SOLUTIONS, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER 30, 2013




NOTE 7 – RELATED PARTY TRANSACTIONS - continued





On June 10, 2013 the Company entered into an Interim Services Agreement (ISA) with Kenneth Herfurth. Mr. Herfurth is a shareholder from the formation of RWI as well as a note holder (see Footnote 4- Notes Payable and Original Issue Discount). Mr. Herfurth’s ownership along with the beneficial conversion feature of his note payable denotes Mr. Herfurth as a related party. Mr. Herfurth received 1,000,000 shares of common stock of the Company as a founder in exchange for services valued at $5,000. The ISA provides for services from Mr. Herfurth of 90 days in length.  Under the ISA the Company shall pay $30,000 in cash and/or S-8 stock of the Company to Mr. Herfurth. As of September 30, 2013 the Company issued 70,000 shares of S-8 stock, recognized compensation expense for ISA services through September 30, 2013 in the amount of $36,700 and $70,700 in additional ISA compensation extending the original ISA agreement for total compensation of $107,400. The Company is obligated to further compensate Mr. Herfurth for his services through December 10, 2013, the extended ISA agreement. In addition the Company recognized interest expense of $3,155 on Mr. Herfurth’s $60,000 note payable.





On June 10, 2013 the Company entered into an ISA with Bruce Johnson.  Mr. Johnson is a shareholder in the initial formation of the Company.  Mr. Johnson’s ownership denotes Mr. Johnson as a related party requiring disclosure.  Mr. Johnson received 1,000,000 shares of common stock of the Company as a founder in exchange for services valued at $5,000.  Mr. Johnson’s ISA provides for 90 days of service as Consultant, Development and Production.  Under the ISA the Company shall pay a total of $30,000 in cash and/or S-8 stock of the Company to Mr. Johnson. As of September 30, 2013 the Company issued 70,000 shares of S-8 stock, recognized compensation expense for ISA services through September 30, 2013 in the amount of $36,700 and $70,700 in additional ISA compensation extending the original ISA agreement for total compensation of $107,400. The Company is obligated to further compensate Mr. Johnson for his services through December 10, 2013, the extended ISA agreement.





NOTE 8 – EMBEDDED DERIVATIVES – FINANCIAL INSTRUMENTS





Since inception (March 21, 2013) the Company entered into several financial instruments, which consist of notes payable, containing various conversion features. Generally the financial instruments are convertible into shares of the Company’s common stock; at prices that are either marked to the volume weighted average price of the Company’s intended publicly traded stock or a static price determinative from the financial instrument agreements. These prices may be at a significant discount to market determined by the volume weighted average price once the Company completes its reverse acquisition with the intended publicly traded company. The Company for all intent and purposes considers this discount to be fair market value as would be determined in an arm’s length transaction with a willing buyer.





The Company accounts for the fair value of the conversion feature in accordance with ASC 815-15, Derivatives and Hedging; Embedded Derivatives, which requires the Company to bifurcate and separately account for the conversion features as an embedded derivative contained in the Company’s convertible debt and original issue discount notes payable. The Company is required to carry the embedded derivative on its balance sheet at fair value and account for any unrealized change in fair value as a component of results of operations. The Company valued the embedded derivatives using the Black-Scholes pricing model. The fair value of the conversion feature is zero or near $0. The Company has not recorded any expense associated with the embedded derivative at September 30, 2013.





































12





Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations





The following discussion is a discussion and analysis of our financial condition and results of operations for the three month period ended and for the period March 21, 2013 (date of inception) through September 30, 2013 and significant factors that could affect our prospective financial condition and results of operations. Historical results may not be indicative of future performance.





This report on Form 10-Q contains forward-looking statements within the meaning of, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. Forward-looking statements generally are accompanied by words such as “anticipates”, “believes”, “estimates”, “expects”, “intends”, “plans” and similar statements and should be considered uncertain and forward-looking. Any forward-looking statements speak only as of the date on which such statement is made, are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements, whether as a result of new information, future events or otherwise.





Factors that could cause such results to differ materially from the results discussed in such forward looking statements include, without limitation; uncertain continued ability to meet our operational needs in view of continued severe ongoing working capital constraints; need for substantial additional capital to fully implement our plan of operations; no assurances of and uncertainty of profitability; no assurances of the Company’s ability to effect sufficient sales, the results of which, could materially adversely affect the Company’s results of operations; need for additional management, sales and marketing personnel, which is contingent upon our receipt of additional capital; competition from companies having substantially greater financial, marketing and other resources than the Company, including name, brand recognition; the impact of competitive services and pricing; changing consumer tastes and trends in the media and entertainment field; and the legal, auditing and administrative cost of compliance associated with Sarbanes Oxley.





Many of such factors are beyond our control. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each factor on our business or the extent to which any factor, or combination of factors may cause actual results to differ materially from those contained in any forward looking statements. In light of these risks and uncertainties, there can be no assurance that the results anticipated in these forward-looking statements in this report will in fact occur. All forward-looking statements wherever they may appear are expressly qualified in their entirety by the cautionary statements in this section. The Company undertakes no obligation to update any such forward-looking statements.





OVERVIEW





RegalWorks, Inc. (the subsidiary)





RegalWorks, Inc. (the subsidiary) as of July 15, 2013 became a wholly-owned subsidiary of a publicly traded, independent multimedia studio led by a highly regarded team of media and business executives.





The primary focus of the Company is to acquire, produce, and distribute movies that resonate with audiences worldwide.  RegalWorks’ slate of films in the pipeline have been developed with a number of leading producers and directors with the expectation of producing “buzz-worthy” movies with memorable story lines and characters and featuring internationally renowned casts.





A proprietary framework has been established that matches audiences and resonating content together to better ensure that there is a large, identifiable audience for each film prior to its financing and production.  To build its technology, production and advertising capabilities, RegalWorks is actively pursuing two potential acquisitions of profitable media-related companies.







STUDIO BUSINESS PLAN





The primary focus of the Company is the financing, production, and distribution of feature films.  This is being accomplished by building the comprehensive business, financial, and production services infrastructure of a studio but does not include managing soundstages, back lots or other studio facilities.  This infrastructure is being built gradually as there is revenue to support it.  It is important to note that while the Company arranges financing for films it does not invest in films.




RegalWorks has recently announced the formal financing commitments for its first film, “Jake’s Run” (formerly entitled, “Fragile”).  The film, which is based on a true story that won an ESPN ‘ESPY’ award, is expected to begin pre-production in December.  Twentieth Century Fox will be distributing the film.




The work to manage each of these films as they move toward pre-production will be provided in a combination of a lean product management team at RegalWorks supplemented with 3rd party service providers.  More of the work will move in-house as revenue is generated from an increasing number of films.




A significant benefit of the studio business model is that the Company generates sustaining revenue and profits from within the production budget of each film through the provision of various production services while maintaining an equity interest in each film to benefit from the upside of each profitable film.  Furthermore, because the Company does not invest in films, it does not take on the risk of losing money from any films that may not be profitable.




13
 
 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued
  THE FILM INDUSTRY





Filmed entertainment remains a large and attractive industry.  According to BMO Capital Markets, it is a $113 billion industry and growing. The industry has outpaced the US economy over the past 112 years, even during times of economic downturn. In fact, even with the most recent global recession, the industry has experienced a 5.3% Compounded Annual Growth Rate since 2000 and filmed entertainment is the second leading U.S. export (behind Aerospace/Defense). RegalWorks offers investors a unique and compelling investment opportunity to participate in this growth industry. Largely because of industry consolidation, most of the industry is now centered among just a few major and ‘mini-major’ studios. RegalWorks is positioned to fill this gap and establish a leadership position as a major independent studio.




While filmed entertainment offers the potential for great financial reward, it is often seen as a high-risk industry for investors.  RegalWorks employs a comprehensive set of strategies to manage this risk.  Following are several of the key risk management strategies.




·
As a full-service studio, the Company participates in all aspects of the film business, including marketing and distribution that are low-risk and generate predictable revenue.




·
Projects are selected based on criteria of profitable films in a competitive and disciplined greenlight process that is overseen by an Advisory Board of recognized industry leaders who, collectively, have proven expertise in all key functional areas of filmed entertainment (production, financing, marketing, distribution, talent agents, etc.).




·
Resonating stories are aligned with audiences.  This audience-driven approach of selecting projects only after identifying a large, reachable audience greatly enhances the chances for success.




·
Films are financed outside the Company in film funds formed and managed by RegalWorks.  Therefore, the risk of each film investment is limited to investors in the fund who give final approval for each film in which the fund invests.  RegalWorks generates predictable, high margin revenue from fund management fees and production services fees for each film while also maintaining a 20% equity interest (plus 5-10% per film as a producer) in each fund after fund investors receive their principal plus a preferred return.




·
To build its studio capacity and capability, and to expand into other media sectors besides film (such as TV, video games, music, etc.), the Company will undertake an M&A plan. Acquired companies will have historical revenue, strong growth trends, and, typically, will be profitable.  Therefore, in addition to their strategic value, the acquired companies provide stable and sustainable revenue.




RegalWorks is executing its business plan via a public company structure.  This structure is expected to provide increased access to capital through the public markets, enabling the Company’s equity to be used as currency for acquisitions, and increased mindshare through public company ‘earned media’ opportunities.








MERGERS AND ACQUISITIONS PLAN





RegalWorks will leverage success in film to expand into related media businesses to establish sustaining revenue, deliver a broad range of media demanded by consumers as media consumption habits continue to evolve, and build a business and financial infrastructure to support our continued expansion. Each new media business will become a subsidiary of RegalWorks and will be launched with a platform acquisition that has historical revenue and, ideally profits. RegalWorks will expand and accelerate the acquired company’s business plan by providing capital and business infrastructure to support their organic growth while generating new, synergistic growth opportunities. This will enable RegalWorks to own a critical mass of clients, the strongest sales and marketing channels to reach them, a valuable customer database, and a comprehensive strategic set of media related products and services that serve both producers and consumers.





14
 
 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued
  MANAGEMENT





The Company appointed Marcia Allen as Chief Financial Officer and Director.  Ms. Allen is Founder and Chief Executive Officer of Allen & Associates LLC, finance and strategic advisory firm focusing on media / entertainment and financial service and related companies. Ms. Allen has over twenty-five years of experience in entertainment, film finance, strategic planning, and investment banking. Ms. Allen was a founder and served as Chief Financial Officer and Director of The Movie Group, (American Stock Exchange (AMEX) traded company) the originating company, which is today Lionsgate Entertainment (New York Stock Exchange (NYSE) traded company). Ms. Allen has held positions as Chief Financial Officer for Taco Bell Corp. (a subsidiary of Yum! Brands, Inc., (NYSE)), Senior Vice President of Finance and Business Development at WR Grace & Co (NYSE), and a founder of Ruby Tuesday, Inc. (NYSE). Ms. Allen was educated in Finance and Accounting at the University of Tennessee.





The Company appointed John Eger as Secretary. Mr. Eger has served as a senior executive in over a dozen companies and as an expert consultant to over fifty companies and organizations. Through multiple engagements as a Strategic Consultant to a wide variety of both investors and companies, Mr. Eger has advised in relationship to transition management, strategic alliances, co-developments (Raytheon, Equitable Resources and Eaton Cutler Hammer), reorganizations, and funding rounds. As Chief Operating Officer of Capital General Corporation, a private investment banking firm, Mr. Eger was responsible for the oversight of management and exit strategies of the closely-held assets of a small group of high-net worth investors. The team Mr. Eger led was responsible for mergers and acquisitions, capital formation, work-outs and plans of re-organization totaling more than $125 million in four years. Mr. Eger has successfully held senior management positions in diverse vertical markets, including, E-Premis (information management), InteliHome (home automation), USIG (industrial minerals), Ashford Capital (real estate) National Response Corporation and Direct Partners (direct response marketing), and EAD (trade publishing).





The Company appointed Maureen Smith as a Director. Ms. Smith brings passion, energy and enthusiasm to all she does, along with an ardent commitment to quality, innovative marketing, efficiency, generating revenue and a passion for the environment and its inhabitants. Her integrity, communications, marketing and management skills established Ms. Smith as a highly effective executive from her earliest days at FOX Broadcasting through her simultaneous presidencies at FOX Family Channel (now known as ABC Family) and FOX Kids Network (now known as Disney XD), to her most recent corporate media position as the head of Animal Planet and Animal Planet Media Enterprises.  Ms. Smith served as President of the Jane Goodall Institute, a global non-profit wildlife conservation and research organization, and most recently served as Chief Marketing and Operations Officer at Maroon Public Relations in Columbia, Maryland. Ms. Smith is currently head of Marketing and Communications at the National Wildlife Federation – America’s largest conservation and education organization.





Ms. Smith has twice been named one of the 100 most powerful women in entertainment by The Hollywood Reporter magazine, Ms. Smith has been profiled in Smart Money magazine, the Washington Post, Smart CEO magazine, and the business book, The Opt-Out Revolt: Why People are Leaving Companies to Create Kaleidoscope Careers. Ms. Smith majored in Communications at the University of Southern California where she received an Outstanding Senior recognition award.





RegalWorks has developed a team of complimentary and proven media and business executives that are well suited to execute the business plan.  This includes the experience and expertise to execute the Company’s merger and acquisition strategy in developing a world-class independent multimedia studio.





Results of Operations





RegalWorks independent multi-media business is presented for the two periods ended September 30, 2013. The Company began on March 21, 2013 (date of inception) and formed as a new business entity.














15
 
 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued
  For the period March 21, 2013 (date of inception) through September 30, 2013





During the period March 21, 2013 (date of inception) through September 30, 2013 the Company generated no revenue. Net loss for the period March 21, 2013 (date of inception) through September 30, 2013 was $955,721. The loss for the period March 21, 2013 (date of inception) through September 30, 2013 was primarily attributable to increased administrative expenses, legal and accounting, as well as professional and consulting fees related to our business operations. The Company issued 70,000 shares of common stock, each, to three (3) individuals to extend their services contract with the Company. The S-8 shares at the time of issuance had a market value of $1.01 per share, effectively requiring the Company to recognize $212,100 to extend these agreements. The Company issued additional S-8 shares to two (2) other individuals and recognized consulting expense of $35,350. The Company believes these to be one-time expenses and will not incur these fees on a go-forward basis. These payments were made in the form of S-8 shares as the Company has limited financial resources to pay its consultants or contracted employees.





The Company recognized for the period March 21, 2013 (date of inception) through September 30, 2013, $193,745 in merger related costs, which are payments to accounts payable of the pre-merger company, legal fees, accounting fees and other,. These expenses are considered to be one-time expenses and will not be incurred on a recurring basis. The Company recognized $42,285 in consulting and professional fees for the period March 21, 2013 (date of inception) through September 30, 2013.





The Company recognized for the period March 21, 2013 (date of inception) through September 30, 2013, $20,439 in interest expense. The Company under certain debt arrangements has considerable interest expense associated with original issue discount on the principal. The Company has limited its exposure to these financing instruments and were entered into to fund the initial operations of the Company. The Company will seek less costly and less potentially dilutive financing options in the future.





Three Months Ended September 30, 2013





During the three months ended September 30, 2013 the Company generated no revenues. Net loss for the three months ended September 30, 2013 was $774,861. The loss for the three months ended September 30, 2013 was primarily attributable to increased administrative expenses, legal and accounting, as well as professional and consulting fees related to our business operations. The Company issued 70,000 shares of common stock, each, to three (3) individuals to extend their services contract with the Company. The S-8 shares at the time of issuance had a market value of $1.01 per share, effectively requiring the Company to recognize $212,100 to extend these agreements. The Company issued additional S-8 shares to two (2) other individuals and recognized consulting expense of $35,350. The Company believes these to be one-time expenses and will not incur these fees on a go-forward basis. These payments were made in the form of S-8 shares as the Company has limited financial resources to pay its consultants or contracted employees.





The Company recognized for the three months ended September 30, 2013, $171,745 in merger related costs, which are payments to accounts payable of the pre-merger company, legal fees, accounting fees and other,. These expenses are considered to be one-time expenses and will not be incurred on a recurring basis. The Company recognized $42,285 in consulting and professional fees for the three months ended September 30, 2013 compared.





The Company recognized for the three months ended September 30, 2013, $14,160 in interest expense. The Company under certain debt arrangements has considerable interest expense associated with original issue discount on the principal. The Company has limited its exposure to these financing instruments and were entered into to fund the initial operations of the Company. The Company will seek less costly and less potentially dilutive financing options in the future.





Liquidity and Capital Resources





At September 30, 2013, the Company’s current assets of $1,831, exceeded by its current liabilities of $726,491, provided us with negative working capital of $724,660. The Company at September 30, 2013 had cash on hand of $1,831.





On March 15, 2013 the Company executed a binding Letter of Intent to acquire RegalWorks, Inc. (RWI). The Letter of Intent was amended and extended several times during the period ending September 30, 2013. A Stock Purchase and Reorganization Agreement was entered into on June 27, 2013 and completed on July 15, 2013 the closing date of the transaction. The Company, upon completion of its acquisition of RWI (the transaction), changed its name to RegalWorks Media, Inc. RWI became a wholly owned subsidiary of the Company. The Company is building an integrated media holding company for today’s media entertainment environment. The transaction required the Company to pay or negotiate settlement of all of its outstanding obligations prior to closing, and effect a reverse stock split of the Company’s common stock at a ratio of 25-1. The Company was limited to 70,000,000 shares of common stock issued and outstanding prior to the reverse stock split and the transaction. The transaction took the form of a “reverse acquisition” with the owners of RWI initially controlling 80% of the outstanding stock of the Company in a tax free exchange and with RWI’s management replacing the Company’s officers and directors. The Company issued shares of its common stock and preferred stock in exchange for 100% of the equity interests in RWI. Shares issued to RWI shareholders totaled 11,200,000 shares of common stock and 5,600,000 shares of preferred stock, Series B. The 5,600,000 shares of Series B, convertible preferred stock are currently held in escrow until satisfaction of certain post-closing conditions by the RWI executive team are achieved. As additional consideration for the purchase, RWI paid $35,000 towards the payables of the Company, assumed accounts payable of the Company which then later agreed to convert into original issue discount notes payable totaling $115,000. The Company and its management team are discussing financing strategies for its subsidiary business and have secured additional financing of approximately $70,000.






16
 
 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued
  The Company has limited capital resources, as, among other things, the Company is a startup company with a limited operating history. The Company has not generated any revenues for the first nine months of 2013, and may not be able to generate sufficient revenues to become profitable in the future.
  Our cash reserves are insufficient to meet our obligations for the next 12-month period. As a result, the Company will need to seek additional funding in order to pursue our business plan. The Company currently does not have a specific plan of how the Company will obtain such funding; however, the Company anticipates that additional funding will be in the form of short-term loans or in the form of equity financing from the sale of our common stock or preferred stock on a best efforts basis. The Company does not have any arrangements in place for either of these financing options.





The Company does not anticipate the need to purchase any equipment in the near future.





The Company believes that based on our operations and the expansion plans of our wholly-owned subsidiary the Company will need to add staffing to our operations as well as to its senior management team.





Item 3. Quantitative and Qualitative Disclosure about Market Risk





The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.





Item 4. Controls and Procedures





Evaluation of Disclosure Controls and Procedures





Dane West, the Company's Principal Executive Officer and Marcia Allen, the Company’s Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15e and 15d-15e under the Securities Exchange Act of 1934 (the "Exchange Act") as of September 30, 2013. Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported on a timely basis and that such information is accumulated and communicated to management, including the Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, the Company's Principal Executive Officer


and Principal Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective.





Changes in Internal Controls





During the period ended September 30, 2013, the Company employed the services of an outside accountant proficient in financial reporting and technical accounting on an ad-hoc hourly basis. As this person is interim to the hiring of a full time accounting professional and familiarity with the Company's accounting and financial reporting processes, management does not believe that its material weakness has been fully remediated as of September 30, 2013. There were no changes in the Company's internal controls over financial reporting that occurred during the period ended September 30, 2013 that is believed to have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.























17





Part II – Other Information





ITEM 1. LEGAL PROCEEDINGS





None.





ITEM 1(A). RISK FACTORS





Not Required.





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





None.





ITEM 3. DEFAULTS UPON SENIOR SECURITIES





None.





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





None.





ITEM 5. OTHER INFORMATION





None





ITEM 6. EXHIBITS AND REPORTS





A. EXHIBITS





Exhibit No.
Description31.1
Certification of Principal Executive Officer31.2
Certification of Principal Financial Officer32.1
Certification of Principal Executive Officer Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
Certification of Principal Financial Officer Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





99.1
Temporary Hardship Exemption101.INS*
XBRL Instance Document101.SCH*
XBRL Taxonomy Extension Schema101.CAL*
XBRL Taxonomy Extension Calculation Linkbase101.DEF*
XBRL Taxonomy Extension Definition Linkbase101.LAB*
XBRL Taxonomy Extension Label Linkbase101.PRE*
XBRL Extension Presentation Linkbase
  * To be furnished by amendment per Temporary Hardship Exemption under Regulation S-T.





B. REPORTS





None








18




SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.








REGALWORKS MEDIA, INC. (F/K/A AMERELITE SOLUTIONS, INC.)Date: November 22, 2013
By:
/s/ Dane B. WestPrincipal Executive OfficerDate: November 22, 2013
By:
/s/ Marcia AllenPrincipal Financial Officer

























































19