UNITED STATES
 SECURITIES AND EXCHANGE
COMMISSION
 Washington,D.C.20549
 FORM 10-Q
  x
                QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF
      1934
  For the quarter endedJanuary31, 2010
  -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 Specifiedin 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)
 
 Indicate by check mark whether the
registrant(1)hasfiled all reports required to be filed
by Section 13 or 15(d) of theSecuritiesExchange Actof 1934during the 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  xNo o
 
 Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter)during thepreceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).
Yes oNo x
  Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a
non-acceleratedfiler 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(Do not check if a smaller reporting
      company)
                Smaller reporting
      companyx
 
 Indicate by check mark whether the
registrant is a shell company (as defined in Rule12b-2 of the Exchange Act)  oYesxNo
 
 As ofMarch17, 2010, the registrant had31,321,493 sharesof common stock outstanding.
 
 
  KINGS ROAD ENTERTAINMENT,
INC.
 FORM 10-Q
 QUARTER ENDED JANUARY 31,
2010
 
 TABLE OF CONTENTS
 
 PART I -
      FINANCIAL INFORMATION
                PAGEItem 1.
                Financial
      Statements
                1Consolidated Balance Sheetsas ofJanuary31, 2010and April 30, 2009
                1Consolidated Statements of
      Operations for the Three Months EndedJanuary31, 2010and 2009
                2Consolidated Statements of
      Operations for theNineMonths EndedJanuary 31, 2010 and
      2009
                3Consolidated Statements of Cash
      Flows for theNineMonths EndedJanuary 31, 2010 and
      2009
                4Notes to Consolidated Financial
      Statements as ofJanuary31, 2010
                5Item 2.
                Management’s Discussion and Analysis of
      Financial Conditionand Results of
      Operations
                10Item 3.
                Quantitative and Qualitative
      Disclosures About Market Risk
                12Item 4T.
                Controls and
      Procedures
                12PART II - OTHER
      INFORMATIONItem 1.
                Legal
      Proceedings
                13Item 1A.
                Risk Factors
                13Item 2.
                Unregistered Sales of Equity
      Securities and Use of Proceeds
                13Item 3.
                Defaults Upon Senior
      Securities
                13Item 4.
                Submission of Matters to a Vote of
      Security Holders
                13Item 5.
                Other
      Information
                13Item 6.
                Exhibits
                13SIGNATURES
                14
 
 
  PART I - FINANCIAL
INFORMATION
 
 Item 1. Financial
Statements
 KINGS ROAD ENTERTAINMENT, INC.
 CONSOLIDATED
BALANCE SHEETS
 AS
OF JANUARY 31, 2010 AND APRIL 30, 2009
 
 January
      31, 2010
                                                            
                                                            
                                                            April
      30, 2009(Unaudited)
                                                            
                                                            
                                                            (Audited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                                                            
                                                            $
                                                            5,512
                                                            
                                                            
                                                            $
                                                            11,416Accounts
      receivable, trade
                                                            
                                                            
                                                            14,370
                                                            
                                                            
                                                            
                                                            -Prepayments
      and other current assets
                                                            
                                                            
                                                            5,190
                                                            
                                                            
                                                            
                                                            5,190Total
      current assets
                                                            
                                                            
                                                            25,072
                                                            
                                                            
                                                            
                                                            16,606Other
      assets:Film
      development costs, net (Note 4)
                                                            
                                                            
                                                            442,823
                                                            
                                                            
                                                            
                                                            584,506Total
      other assets
                                                            
                                                            
                                                            442,823
                                                            
                                                            
                                                            
                                                            584,506TOTAL
      ASSETS
                                                            
                                                            $
                                                            467,895
                                                            
                                                            
                                                            $
                                                            601,112LIABILITIES
      AND STOCKHOLDERS’ DEFICITCurrent
      liabilities:Accounts
      payable
                                                            
                                                            $
                                                            146,931
                                                            
                                                            
                                                            $
                                                            99,554Accrued
      expenses
                                                            
                                                            
                                                            300,195
                                                            
                                                            
                                                            
                                                            281,528Stockholder
      loans
                                                            
                                                            
                                                            117,545
                                                            
                                                            
                                                            
                                                            109,332Deferred
      revenue (Note 5)
                                                            
                                                            
                                                            109,091
                                                            
                                                            
                                                            
                                                            109,091Total
      current liabilities
                                                            
                                                            
                                                            673,762
                                                            
                                                            
                                                            
                                                            599,505Non-current
      liabilitiesDeferred
      revenue (Note 5)
                                                            
                                                            
                                                            490,909
                                                            
                                                            
                                                            
                                                            589,411Total
      non-current liabilities
                                                            
                                                            
                                                            490,909
                                                            
                                                            
                                                            
                                                            589,411Total
      liabilities
                                                            
                                                            
                                                            1,164,671
                                                            
                                                            
                                                            
                                                            1,188,916Stockholders’
      deficit:Common
      stock; 50,000,000 shares authorized at $0.01 par value; 31,321,493 shares
      issued and outstanding at January 31, 2010 and 19,321,493 at April 30,
      2009.
                                                            
                                                            
                                                            313,214
                                                            
                                                            
                                                            
                                                            193,214Preferred
      stock: 2,000,000 authorized at $0.01 par value; no shares issued and
      outstanding at January 31, 2010 and April 30, 2009.
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            -Additional
      paid-in capital
                                                            
                                                            
                                                            25,970,141
                                                            
                                                            
                                                            
                                                            25,876,641Accumulated
      deficit
                                                            
                                                            
                                                            (26,979,777
                                                            )
                                                            
                                                            
                                                            (26,657,734
                                                            )Accumulated
      other comprehensive income (loss)
                                                            
                                                            
                                                            (354
                                                            )
                                                            
                                                            
                                                            75Total
      stockholders’ deficit
                                                            
                                                            
                                                            (696,776
                                                            )
                                                            
                                                            
                                                            (587,804
                                                            )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
                                                            
                                                            $
                                                            467,895
                                                            
                                                            
                                                            $
                                                            601,112
  See
accompanying notes to consolidated financial statements.
 
 1
 
 KINGS
ROAD ENTERTAINMENT, INC.
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 FOR
THE THREE MONTHS ENDED JANUARY 31, 2010 AND 2009
 (Unaudited)
 
 Three
      Months Ended January 31,2010
                                
                                
                                2009REVENUE:Feature
      films
                                
                                $
                                60,458
                                
                                
                                $
                                84,617Service
      productions
                                
                                
                                -
                                
                                
                                
                                48,000TOTAL
      REVENUE
                                
                                
                                60,458
                                
                                
                                
                                132,617OPERATING
      EXPENSES:General
      and administrative
                                
                                
                                102,565
                                
                                
                                
                                150,616Project
      expenses
                                
                                
                                -
                                
                                
                                
                                18,800Total
      operating expenses
                                
                                
                                102,565
                                
                                
                                
                                169,416LOSS
      FROM OPERATIONS
                                
                                
                                (42,107
                                )
                                
                                
                                (36,799
                                )OTHER
      INCOME (EXPENSE):Interest
      income
                                
                                
                                102
                                
                                
                                
                                -Interest
      expense
                                
                                
                                (9,314
                                )
                                
                                
                                (1,540
                                )Total
      other income (expense)
                                
                                
                                (9,212
                                )
                                
                                
                                (1,540
                                )LOSS
      BEFORE INCOME TAXES
                                
                                
                                (51,319
                                )
                                
                                
                                (38,339
                                )PROVISION
      FOR INCOME TAXES
                                
                                
                                -
                                
                                
                                
                                -NET
      LOSS
                                
                                $
                                (51,319
                                )
                                
                                $
                                (38,339
                                )Net
      loss per share – Basic & Diluted
                                
                                $
                                (0.00
                                )
                                
                                $
                                (0.00
                                )Basic
      and diluted weighted average number of shares outstanding during the
      period
                                
                                
                                26,139,971
                                
                                
                                
                                9,956,493
 
 See
accompanying notes to consolidated financial statements.
 
 2
  KINGS
ROAD ENTERTAINMENT, INC.
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 FOR
THE NINE MONTHS ENDED JANUARY 31, 2010 AND 2009
 (Unaudited)
 
 Nine
      Months Ended January 31,2010
                                      
                                      
                                      2009REVENUE:Feature
      films
                                      
                                      $
                                      216,595
                                      
                                      
                                      $
                                      247,115Service
      productions
                                      
                                      
                                      -
                                      
                                      
                                      
                                      85,000TOTAL
      REVENUE
                                      
                                      
                                      216,595
                                      
                                      
                                      
                                      332,115OPERATING
      EXPENSES:General
      and administrative
                                      
                                      
                                      373,357
                                      
                                      
                                      
                                      423,835Impairment
      of capitalized film costs
                                      
                                      
                                      152,597
                                      
                                      
                                      
                                      -Project
      expenses
                                      
                                      
                                      -
                                      
                                      
                                      
                                      35,000Total
      operating expenses
                                      
                                      
                                      525,954
                                      
                                      
                                      
                                      458,835LOSS
      FROM OPERATIONS
                                      
                                      
                                      (309,359
                                      )
                                      
                                      
                                      (126,720
                                      )OTHER
      INCOME (EXPENSE):Interest
      income
                                      
                                      
                                      123
                                      
                                      
                                      
                                      -Interest
      expense
                                      
                                      
                                      (12,807
                                      )
                                      
                                      
                                      (3,729
                                      )Total
      other income (expense)
                                      
                                      
                                      (12,684
                                      )
                                      
                                      
                                      (3,729
                                      )LOSS
      BEFORE INCOME TAXES
                                      
                                      
                                      (322,043
                                      )
                                      
                                      
                                      (130,449
                                      )PROVISION
      FOR INCOME TAXES
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -NET
      LOSS
                                      
                                      $
                                      (322,043
                                      )
                                      
                                      $
                                      (130,449
                                      )Net
      loss per share – Basic & Diluted
                                      
                                      $
                                      (0.01
                                      )
                                      
                                      $
                                      (0.01
                                      )Basic
      and diluted weighted average number of shares outstanding during the
      period
                                      
                                      
                                      21,815,696
                                      
                                      
                                      
                                      10,176,783
 
 See
accompanying notes to consolidated financial statements.
 
 3
 
 KINGS
ROAD ENTERTAINMENT, INC.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 FOR
THE NINE MONTHS ENDED JANUARY 31, 2010 AND 2009
 (Unaudited)
 
 Nine
      Months Ended January 31,CASH
      FLOWS FROM OPERATING ACTIVITIES:
                                            
                                            2010
                                            
                                            
                                            2009Net
      loss
                                            
                                            $
                                            (322,043
                                            )
                                            
                                            $
                                            (130,449
                                            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Common
      stock issued for services
                                            
                                            
                                            113,500
                                            
                                            
                                            
                                            -Impaired
      film development costs
                                            
                                            
                                            152,597
                                            
                                            
                                            
                                            -Accrued
      shareholder interest payable
                                            
                                            
                                            5,313Change
      in operating assets and liabilities:Accounts
      receivable, trade
                                            
                                            
                                            (14,370
                                            )
                                            
                                            
                                            17,000Film
      development costs
                                            
                                            
                                            (10,914
                                            )
                                            
                                            
                                            (49,400
                                            )Prepayments
      and other current assets
                                            
                                            
                                            -
                                            
                                            
                                            
                                            8,804Accounts
      payable
                                            
                                            
                                            47,377
                                            
                                            
                                            
                                            124,228Accrued
      expenses
                                            
                                            
                                            18,667
                                            
                                            
                                            
                                            (50,979
                                            )Deferred
      revenue
                                            
                                            
                                            (98,502
                                            
                                            
                                            
                                            (81,818
                                            )NET
      CASH USED IN OPERATING ACTIVITIES
                                            
                                            
                                            (108,375
                                            )
                                            
                                            
                                            (162,614
                                            )CASH
      FLOWS FROM FINANCING ACTIVITIES:Common
      stock issued for cash
                                            
                                            
                                            100,000
                                            
                                            
                                            
                                            -Common
      stock repurchased for cash
                                            
                                            
                                            
                                            
                                            
                                            
                                            (84,000
                                            )Proceeds
      from stockholder loans
                                            
                                            
                                            2,900
                                            
                                            
                                            
                                            107,682NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                                            
                                            
                                            102,900
                                            
                                            
                                            
                                            23,682Foreign
      currency translation
                                            
                                            
                                            (429
                                            )
                                            
                                            
                                            132NET
      CHANGE IN CASH AND CASH EQUIVALENTS
                                            
                                            
                                            (5,904
                                            )
                                            
                                            
                                            (138,800
                                            )CASH
      AND CASH EQUIVALENTS, BEGINNING OF PERIOD
                                            
                                            
                                            11,416
                                            
                                            
                                            
                                            149,765CASH
      AND CASH EQUIVALENTS, END OF PERIOD
                                            
                                            $
                                            5,512
                                            
                                            
                                            
                                            10,965
  See
accompanying notes to consolidated financial statements.
 
 4
  KINGS ROADENTERTAINMENT,INC.
 
 Notes to Consolidated Financial
Statements
 As ofJanuary31, 2010
 
 
 NOTE
1 – NATURE OF OPERATIONS
 
 Kings
Road Entertainment, Inc. and its wholly-owned subsidiaries (collectively, the
"Company") have been engaged primarily in the development, financing and
production of motion pictures for subsequent distribution in movie theaters, to
pay-TV, network and syndicated television, on home video and in other ancillary
media in the United States and all other foreign countries and territories.
Incorporated in Delaware in 1980, the Company began active operations in January
1983 and released its first motion picture in 1984. The Company has theatrically
released 17 additional pictures in the domestic market and released seven
pictures directly to the domestic home video or pay television
market.
 
 NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES
 
 a. Basis
of Presentation
 
 The
accompanying audited consolidated financial statements were prepared in
accordance with generally accepted accounting principles in the United States of
America and reflect all adjustments, consisting of normal recurring accruals and
adjustments which are necessary for a fair statement of the financial position,
results of operations and cash flows for the periods presented. Such financial
statements do not include all the information or notes necessary for a complete
presentation and therefore should be read in conjunction with the consolidated
financial statements, including the notes thereto, contained in our Annual
Report on Form 10-K for the year-ended April 30, 2009. Results for the interim
period are not necessarily indicative of results that may be achieved for the
entire year or for any other period.
 
 b.
Accounting Method
 
 The
Company's consolidated financial statements are prepared using the accrual
method of accounting. The Company has elected an April 30 fiscal
year-end.
 
 c.
Amortization
 
 Film
development costs are expensed or capitalized in accordance with generally
accepted accounting principles.Theamortization of film and participation costs is calculated according
to the individual-film-forecast-computation method, which amortizes or accrues
(expenses) such costs in the same ratio that current period actual revenue
(numerator) bears to estimated remaining unrecognized ultimate revenue as of the
beginning of the current fiscal year (denominator).
 
 The
Company periodically reviews its capitalized film costs and where it determines
that a property will not be used (i.e. will be disposed of) or where a date for
production has not been set within 3 years from the time of the first
capitalized transaction, a loss by a charge to the income statement is made
where the carrying amount of the project exceeds its fair value.
 
 d.
Principals of Consolidation
 
 The
consolidated financial statements include the accounts of the Company and of its
wholly-owned subsidiaries. As of January 31, 2010, the Company had three
wholly-owned subsidiaries: Ticker, Inc., (a California corporation), which was
inactive during the nine month period ended January 31, 2010, The Big Easy II
Film, LLC (a California limited liability corporation), which was also inactive
during the nine month period ended January 31, 2010 and Kings Road Entertainment
Europe GmbH (a limited liability company incorporated under the laws of
Germany), which facilitates international co-productions.
 
 e. Use of
Estimates
 
 The
preparation of financial statements in conformity with U.S. GAAP 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.
 
 5
  f. Newly
Issued Accounting Pronouncements
 
 In May
2009, the Financial Accounting Standards Board (“FASB”) issued new standards for
subsequent events, which establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. The new standards
are effective for interim and annual reporting periods ending after June 15,
2009. The Company adopted the new standards for financial reporting purposes in
its Form 10-Q filing for the quarter ended July 31, 2009. As the pronouncement
only requires additional disclosures, the adoption did not have an impact on the
Company’s consolidated financial statements.
  In June
2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles (a replacement of
FASB Statement No. 162)” (SFAS No. 168). This statement modifies the GAAP
hierarchy by establishing only two levels of GAAP, authoritative and
non-authoritative accounting literature. Effective July 2009, the FASB
Accounting Standards Codification (“ASC”), also known collectively as the
“Codification,” is considered the single source of authoritative U.S. accounting
and reporting standards, except for additional authoritative rules and
interpretive releases issued by the SEC. The Codification was developed to
organize GAAP pronouncements by topic so that users can more easily access
authoritative accounting guidance. It is organized by topic, subtopic, section,
and paragraph, each of which is identified by a numerical designation. The
Company has adopted SFAS No. 168 prospectively beginning in the second
quarter of fiscal 2010, resulting in no impact on the Company’s consolidated
financial statements.
  g. Net
Loss Per Share
 
 In
accordance with generally accepted accounting principles, the Company calculates
basic net loss per share using the weighted average number of common shares
outstanding during the periods presented. The Company does not have any
potentially dilutive common stock equivalents, such as options or warrants.
Additionally, no shares of preferred stock have been issued.
 
 h.
Foreign Currency Translation
 
 Monetary
assets and liabilities denominated in currencies other than the functional
currency of U.S. Dollars are translated at exchange rates in effect at the
balance sheet date. Foreign company assets and liabilities in foreign currencies
are translated into U.S. Dollars at the exchange rate in effect at the
balance sheet date. Foreign company revenue and expense items are translated at
the average exchange rate for the period. Unrealized gains or losses arising on
the translation of the accounts of foreign companies are included in accumulated
other comprehensive income (loss), a separate component of stockholders’
equity.
 
 NOTE
3 – CURRENT ASSETS
 
 a. Cash
and Cash Equivalents
  Cash
equivalents consist of cash on hand and cash on deposit at financial
institutions. 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. The Company had no cash
equivalents as of January 31, 2010 or April 30, 2009.
 
 b.
Accounts Receivable
 
 The
Company licenses various rights in its films to distributors throughout the
world. Generally, payment is received in full or in part prior to the Company’s
delivery of the film to the applicable distributor. Once calculated royalties
from actual sales have exceeded such an advance, the Company receives royalty
income at the end of a specific reporting period (usually three, six or twelve
months) based on actual sales from the preceding reporting period. As of January
31, 2010, the Company had a total of $14,370 in accounts receivable, of which
$14,110 had been collected by the date of this report.
 
 6
  NOTE
4 - 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 incurredin accordance withU.S. GAAP. Profit participations and residuals,
if any, are accrued in the proportion that revenue for a period bears to the
estimated future revenues.  Costs areamortized using the individual film
forecast method which bases the costs amortized 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. Management’s periodical review of unamortized film
costs resulted inanimpairmentof $152,597during theninemonth period endedJanuary 31, 2010resulting in film developmentcosts of $442,823.The impaired amountcomprisedprimarilyof one project in development where the
Company decided not to renew the screenplay option.
 
 Subject to the closing of
financing for the
production budgets of three films, the Company expects to amortize approximately
$240,000 of its film development costs during the next twelve months. This
represents production of two complete movies and partial production of one
further movie. The components of the
Company’s film costs atJanuary 31, 2010relate entirely to movies in
development for theatrical release.
 
 Regarding the Company’s released films, there are no
unamortized film costs capitalized on the balance sheets.
 The Company does not have any accrued
participation liabilities for its projects in development. The Company accrues
costs for participation liabilities primarily for existing movies in
distribution in the period and amount in which they occur.  The
Company’s cashflows for film costs, participation
costs, exploitation costs and manufacturing costs are classified as operating
activities in the Statement of Cash Flows.
 
 NOTE
5 – DEFERRED REVENUE
 
 Deferred
revenue represents the unamortized portion of royalty advances from
distributors. The Company amortizes a royalty advance across the applicable
period of each distribution agreement.  The amount expected to be
amortized during the subsequent 12 month period is disclosed under current
liabilities and the balance is disclosed as a non-current liability. As of
January 31, 2010 and April 30, 2009, the Company had deferred revenue totaling
$600,000 and $698,502, respectively. The decrease is primarily due to the
regular amortization of royalty advances.
  NOTE
6 - COMMITMENTS AND CONTINGENCIES
 
 a.
Rent
 
 The
Company rents its registered office space at 468 N. Camden Drive in Beverly
Hills, California and 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 $13,454 and $13,983 during the
three months ended January 31, 2010 and 2009, respectively and $39,938 and
$37,236 during the nine months ended January 31, 2010 and 2009, respectively.
All rental agreements may be terminated upon one month’s notice.
 
 b. Writing Agreement
 
 As a result of a writing agreement
signed on February 19,2008, inconnection with a currently untitled
feature length motion picture remake/sequel of one of the films inthe Company’s library, the Company is obligated to
pay the writer a further $66,667 in installments upon completion of certain
writing milestones which may occur during the course of the agreement. As these
milestones occur, the amounts due will be paid oraccrued.
  c. Other Matters
  The Company is currently investigating
allegations concerning one or more usurpations of corporate opportunities by a
board member. As of the date of this report, management cannot estimate the
potential impact of the outcome of this investigation and accordingly, no
related amounts have been provided for in the accompanying financial
statements.
 
 7
  d. Stockholder Loans
 
 As ofJanuary 31, 2010, the Company had borrowedthe principal sum of$106,877($117,545including accrued interest)from its two largest
stockholders, the
Company’s Head of Production, Mr. Sven Ebeling
and the Company’sPresident and CEO, Mr. Philip
Holmesunder the terms of
an arrangement datedOctober15, 2008, which authorized the borrowing
of up to $500,000 from stockholders of the Company to fund working capital and
other needs (the “Loan”or “Loans”). TheLoansbearinterest atan adjustable rate equal to3% above the WSJ Prime Ratewhichinterest rateisres

et quarterly. The term of eachLoan will be for a maximum of one year
from the end of the month in which theLoan is made. At the end of this term,
theCompany will either repay theLoan with interest or
renegotiatetheLoanwith the lending party.Upon default or failure to negotiate a
mutual extension,
thelenders may requirethe Company issue shares at the value of
the 90-day rolling average share price of theCompany’s common stock as quoted on the Pink
Sheets at the lowerof the
tradingprice at the
day of lending or date of
renewal. The value shall
include the principal and accumulated interest. The accrued interest charge is
recognized on the balance sheet together with the principal amount of the
loans and the annual interest charge is expensed on the Statement ofOperations.  As ofJanuary 31, 2010the accumulated interest for the loans
totaled $10,668.  The Company disclosed this
transaction in a Form 8-Kfiled on July 21, 2008.  On
July 22, 2009, the boardof
directorsunanimously
resolved to extend and clarify the termsunder which Loans may be made to the
Companyto include amounts
due to stockholders for services and to provide for the conversion of
those loans to equity at
any time during the term of theLoan at the 90 day rolling average stock
priceas quoted on the Pink
Sheets.  As theLoans and accrued interest are
convertible at the option of the lenders, the Company has classified theLoans as a current liability.Of the principalsum of $106,877outstanding as ofJanuary 31, 2010,an amount of $90,000 plus accrued
interest was re-negotiatedaccording to the original termson July 31, 2009 between
the stockholders and the Company resulting ina12 month extensionof the Loan termthroughto July 31, 2010.
 
 e.Contingent Losses &
Litigation
 
 Legal fees associated with litigation
are recorded or accrued in the period in which they occur.  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. As ofJanuary 31, 2010, the Company was not involved in any
litigationthe result of
which would have a material
impact on its operations or financial statements.
 
 NOTE
7 - COMMON STOCK
 
 AtJanuary 31, 2010, the Company had 50,000,000 authorized
shares of common stock, $0.01 par value,of which
31,321,493 were issued and
outstanding and 2,000,000 authorized shares of “blank check”preferred stock, $0.01 par value, of
which no preferred shares were issued or outstanding.  At April 30,
2009, the Company had50,000,000 authorized shares of which19,321,493 were issued and outstanding. The
following common stock
transactionstranspired in theninemonthsendedJanuary 31, 2010:
 
 On July
26, 2009, the Company entered into a Securities Purchase Agreement (“Agreement”)
with DEUMAK, a German company controlled by Mr. Bekim Zemoski, for the purchase
of a total of 650,000 shares of the Company’s common stock for the purchase
price of $100,000. The transaction closed on July 29, 2009. The investment was
based on a price per share of approximately $0.154. This transaction was exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933. Mr.
Bekim Zemoski was appointed to the board of directors of the Company on December
12, 2009 and is therefore an affiliate.
 
 On
December 12, 2009 the board of directors agreed to issue 8,650,000 shares of
common stock in settlement of a liability for services amounting to $86,500 owed
to DE-INVEST, a Macedonian company. The exchange was based on the closing price
of the common stock on December 11, 2009 of $0.01 per share on the Pink Sheets.
DE-INVEST is controlled by Mr. Bekim Zemoski who was appointed to the board of
directors on December 12, 2009 and is therefore an affiliate.
 
 On
December 12, 2009 the board of directors agreed to award a bonus to Ms.
Rose-Marie Couture of 2,300,000 shares of common stock in recognition of her
work in the Company’s German subsidiary in film development and management
consulting services. Ms. Couture is the spouse of the President and CEO of the
Company and is therefore an affiliate. The value of the transaction of $23,000
was based on the closing price for the common stock of $0.01 as quoted on the
Pink Sheets on the day of the transaction and the total value of $23,000 is
included in operating expenses on the statement of operations for that period.
On the day of the transaction, the 90 day rolling average price for the stock as
quoted on the Pink Sheets was below the par value of the stock and therefore not
used to evaluate the transaction.
 
 On
December 12, 2009 the board of directors agreed to compensate the departing
members of the board of directors, Ms. Monika Nosic and Mr. Branko Lustig, for
their services each with an award of 200,000 shares of common stock in the Company.
Both parties are affiliated with West Coast Pictures, a company controlled and
managed by Mr. Sven Ebeling, the Company’s Head of Production. The total value
of the transaction of $4,000 was based on the closing price for the common
shares as quoted on the Pink Sheets on the day of the transaction and the total
value of $4,000 is included in operating expenses on the Statement of Operations
for that period. On the day of the transaction, the 90 day rolling average price
for the stock as quoted on the Pink Sheets was below the par value of the stock
and therefore not used to evaluate the transaction.
 8
 NOTE
8 – RECOGNITION OF REVENUES
 
 Revenue from the sale or licensing of
films is recognized in accordancewithU.S. GAAP. The Company’s revenues are derived primarily from
distribution agreements in theU.S.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 thetermof the option. 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 filmwill generally be made available for
licensing as follows:
 
 
 Months
After
                    ApproximateMarketplace
                    Initial
    Release
                    Release
    PeriodDomestic
      theatrical
                    
                    0-3
  monthsAll international
      markets
                    
                    1-12
  yearsDomestic home
      video/DVD/Video on Demand
                    3-6 months
                    3-12
  monthsDomestic cable/pay
      television
                    12-18
months
                    18
monthsDomestic syndicated/free
      television
                    24-48
months
                    1-n
  years
 
 These periods are dynamic and as new
media, distribution platforms and consumer demands dictate, theywill continue to
change.
 
 The Company also derives revenues from
service production contracts. Third parties engage the Company to develop or
produce film projects on a consulting basis. These revenues will generally
be recognized in the period in which the work is performed.In a given period, where a timing
difference results in the cash received exceeding the actual work performed,
the difference between the
cash flows and the recognition of revenue is recorded as deferred
revenue. Conversely,wherework performed exceeds the payments
received,then the difference is recorded asaccounts
receivable.
 
 NOTE
9 - GOING CONCERN
 
 The
Company’s consolidated financial statements are prepared using generally
accepted accounting principles applicable to a going concern which contemplates
the realization of assets and payment of liabilities in the normal course of
business. However at January 31, 2010, the Company has limited revenues and a
deficit in working capital of $648,690 and has an accumulated deficit of
approximately $26,979,777. 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 is
attempting to raise capital through equity-based investment instruments in order
to provide funding for the development of future projects and operating
expenses.
  9
  ITEM
2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
 The
following discussion concerns the periods ended January 31, 2010 and January 31,
2009, which should be read in conjunction with the financial statements and
notes thereto appearing elsewhere in this document as well as the Form 10-K for
the fiscal year ended April 30, 2009.
 
 Results of Operations
 
 Three Months EndedJanuary 31, 2010vs. the Three Months EndedJanuary31, 2009
 For the quarter endedJanuary 31, 2010, operating revenues were $60,458as compared to $132,617for the quarter endedJanuary31, 2009. Thedecreaseof $72,159results primarily fromthe lack ofservice productioncontracts in progress during the three month period
endedonJanuary 31, 2010.A major part of the Company’s revenue is derived from royalties
earned from the distribution of the Company’s existing library.Revenuesfrom distribution agreementsareunpredictable and depend largely on the
distributors’activities and consumer demand, both of
which are beyond the Company’s influence.
 
 Operatingexpenses amounted to $102,565for the quarter endedJanuary 31, 2010as compared to $169,416during the quarter endedJanuary31, 2009. Thisdecrease ofapproximately$66,851is primarily due toa reduction in project expenses of
$18,800anda reduction in salaries, bonuses and
other personnel relatedexpenses of approximately $70,000 which
was partially offset by an increase in professional fees of approximately
$23,000.
 
 Interest expensesincreased to $9,314for the quarter endedJanuary 31, 2010as compared to $1,540during the quarter endedJanuary31, 2009. Theincrease of $7,774is primarilyattributable totheinclusion of interest
considerationsin settlement negotiations of long term
debtamounting to$7,481of which $6,878wasanon-recurring expenseduring the three month period ended
January31,
2010.
 
 The Company had anetloss of $51,319for the quarter endedJanuary 31, 2010as compared to$38,339for the quarter endedJanuary31, 2009. Theincrease inoperatingloss of $12,980results primarily froma decrease in revenues and increase ininterest charges, partially
offset by a decrease in operating expenses.
 
 NineMonths EndedJanuary 31, 2010vs. theNineMonths EndedJanuary31, 2009
 For theninemonths endedJanuary 31, 2010, operating revenues were $216,595as compared to $332,115fortheninemonths endedJanuary31, 2009. The decrease of $115,520results primarily from decreased
revenue fromservice
productions amounting to $85,000 during the period.Of the $216,595revenue for the period,$38,310 wasfromnon-recurring revenue representing a revenueadjustment by a distributorrelating toprior periods.A major part of the Company’s revenue is derived from royalties
earned from the distribution of the Company’s existing library. Revenuesfrom distribution agreementsareunpredictableand depend largely on the
distributors’activities and consumer demand, both of
which are beyond the Company’s influence.
 
 Operatingexpenses amounted to $525,954for theninemonths endedJanuary 31, 2010as compared to $458,835during theninemonthsendedJanuary31, 2009. This increase ofapproximately$67,119is primarily due to an increase in the
impairment of film development costs ofapproximately$153,000and an increase inprofessionalfees of approximately $60,000which was partiallyoffsetbya decreaseinproject expensesof$35,000,a decrease in sales expenses of
approximately $20,000,a
decrease in salaries, bonus
and other personnel related expenseof approximately $70,000and a decrease in traveland otherexpenses of approximately $24,000.
 
 The Company hadanet loss of $322,043for theninemonths endedJanuary 31, 2010as compared toanet loss of $130,449for theninemonths endedJanuary31, 2009. This increase in net loss of
$191,594resultedprimarily from the decrease in
revenues,the impairment of certain capitalizedfilmdevelopment expenses,an increase in consulting
feespartiallyoffsetby decreases in travel, professionalfees, personnel related
expense as well asprojectand salesexpenses.
 
 10
  Liquidity and Capital
Resources
 
 The
production of motion pictures requires substantial working capital. The Company
must expend substantial sums for development as well as for the production and
distribution of a picture, before that picture generates any revenues. The
Company's principal source of working capital during the three month and nine
month periods ended January 31, 2010, was motion picture distribution and
licensing income. Additionally, on July 29, 2009, the Company received $100,000
from an investor for the sale of 650,000 shares of common stock. In general, cash flows resulting from
the distribution of the Company’s existing film library have declined
and are expected to continue to decline over the long termas the library gets older. The Company is taking measures torenew expiring licenses and
ensure its library is continuously distributed in all major world markets to
slow down this trend.It is unlikely that the Company's
existing distribution and licensing income will be sufficient to fund its
ongoing operations. For this reason, the Company is
developing newscreenplaysand seeking equity funding for
theproduction of
newmovies in order to
fully implement its business planning as a movie production and distribution
company.The Company anticipates that its films will primarily be
financed by external sources including tax and location incentives, sales made
in advance to distributors and TV companies as well as the receipt of minimum
guarantee payments from sales companies. If external financing is obtained, it
will likely reduce the equity required to fund the balance of the production
budget as well as the inherent risk in movie financing. In order to fully
implement the Company’s business planning, the Company’s liquidity requirements
include amounts for screenplay acquisition and development as well as the hiring
of creative personnel. The Company currently estimates that it requires a total
of approximately $1 million to fully implement its business plan assuming that
the budgets for initial projects are financed principally from external
sources.
 
 AtJanuary 31, 2010, the Company had cash of $5,512as compared to $11,416atApril 30,2009.  Thedecrease inthe Company’scash isprimarily attributable tooperatingexpenses exceeding cash
revenuesover the period. Inanattempt to mitigate this, the Company
has issued common shares of the Company’s stock in exchange for debt(refer NOTE 7)and restructuredcertainliabilitiesresulting inan increase in interest charges as
described above in the Results of Operations.
 
 Contractual
Obligations
 
 As a result of a writing agreement
signed on February 19,2008, inconnection with a currently untitled
feature length motion picture remake/sequel of one of the films in the
Company’s library, the Company is obligated to
paythe writer a further
$66,667 in installments upon completion of certain writing milestones which may
occur during the course of the agreement. As these milestones occur, the amounts
due will be either paid or accrued.
 
 Cautionary Note onForward-Looking Statements
 
 ThisQuarterlyReport on Form 10-Q 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 comparableterminology. Actual events or results may
differ materially.
 
 Forward-looking statements 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 successof 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. We disclaim any obligation to publicly update these
statements, or disclose any difference between its actual results and those
reflectedin these statements.
 
 11
  ITEM 3.  QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 We are a “smaller reporting company”as defined by Regulation S-K and as
such, are not required to provide the informationcontained in this item pursuant to
Regulation S-K.
 
 ITEM 4T. CONTROLS AND
PROCEDURES.
 
 a. Evaluation of Disclosure Controls and
Procedures
 
 Our Chief Executive Officer and Chief
Financial Officer evaluated the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this report as required by
Rule 13a-15 and Rule 15d-15.
 
 The term “disclosure controls and
procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934 as amended (the “Exchange Act”). These rules refer to the
controls and other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within required time periods specified in the SEC’s rules and forms,
and that such information is accumulated and communicated to management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required
disclosure.
  Based on the foregoing evaluation, our
Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures are not effective as of January 31,
2010.We continue to have
material weaknesses in our internalcontrol over financial reporting as
described in Item 9A in our Annual Report on Form 10-K for our fiscal year ended
April 30, 2009 and those deficiencies have not yet been remediated by
us.  This is due to deficiencies in working capital that have
preventedthe hiring of additional staff which
would enable a segregation of duties and introduction of effective internal
controlsandother
improvements.
 
 b. Changes inInternal Controlover Financial
Reporting
  There have been no materialchangesin our internal control over financial reportingduring the fiscal quarter endedJanuary 31,
2010, that havematerially affected, orarereasonably likely to materially affect,
our internal control over financial reporting.
 
 12
  PART II - OTHER
INFORMATION
   ITEM
      1.
              LEGAL
      PROCEEDINGS
 
 As ofMarch 17, 2010, the Company was not aware of any
pending claims or assessments, which may have a material adverse impact on the
Company's financial position or results of operations.
 
 ITEM 1A.
              RISK
  FACTORS
 
 There have been no material changes from the risk factors
disclosed in Part 1, Item 1A - Risk Factors in ourAnnual Report on Form 10-K for the year ended
April 30, 2009.
 
 ITEM
      2.
              UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF
  PROCEEDS
 
 On
December 12, 2009 the board of directors agreed to issue 8,650,000 shares of
common stock in settlement of a liability for services amounting to $86,500 owed
to DE-INVEST, a Macedonian company. The exchange was based on the closing price
of the common stock on December 11, 2009 of $0.01 per share on the Pink Sheets.
DE-INVEST is controlled by Mr. Bekim Zemoski who was appointed to the board of
directors on December 12, 2009 and is therefore an affiliate.
 
 On
December 12, 2009 the board of directors agreed to award a bonus to Ms.
Rose-Marie Couture of 2,300,000 shares of common stock in recognition of her
work in the Company’s German subsidiary in film development and management
consulting services. Ms. Couture is the spouse of the President and CEO of the
Company and is therefore an affiliate. The value of the transaction of $23,000
was based on the closing price for the common stock of $0.01as quoted on the
Pink Sheets on the day of the transaction and the total value of $23,000 is
included in operating expenses on the statement of operations for that period.
On the day of the transaction, the 90 day rolling average price for the stock as
quoted on the Pink Sheets was below the par value of the stock and therefore not
used to evaluate the transaction.
 
 On
December 12, 2009 the board of directors agreed to compensate the departing
members of the board of directors, Ms. Monika Nosic and Mr. Branko Lustig, for
their services each with an award of 200,000 shares of common stock in the
Company. Both parties are affiliated with West Coast Pictures, a company
controlled and managed by Mr. Sven Ebeling, the Company’s Head of Production.
The total value of the transaction of $4,000 was based on the closing price for
the common shares as quoted on the Pink Sheets on the day of the transaction and
the total value of $4,000 is included in operating expenses on the Statement of
Operations for that period. On the day of the transaction, the 90 day rolling
average price for the stock as quoted on the Pink Sheets was below the par value
of the stock and therefore not used to evaluate the transaction.
 
 ITEM
      3.
              DEFAULTS UPON
      SENIOR SECURITIES
 
 None.
 
 ITEM
      4.
              SUBMISSION OF
      MATTERS TO A VOTE OF SECURITY
HOLDERS
 
 None.
  ITEM
      5.
              OTHER
      INFORMATION
 
 The
Company is currently investigating allegations concerning one or more
usurpations of corporate opportunities by a board
member.
 
 ITEM 6.
              EXHIBITS
  31.1
              Certification
      of
      Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act
      of 2002
 
 31.2
              Certification of
      Chief Financial Officerpursuant to
      Section 302 of the Sarbanes Oxley Act of
  2002
 
 32
              Certifications of
      Chief Executive Officer and Chief Financial Officer
      pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002


13
  SIGNATURES
 
 Pursuant tothe requirements of theSecuritiesExchange Actof 1934, the registranthas dulycaused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
 
  KINGS ROAD ENTERTAINMENT,
      INC.Date:March 22, 2010
                    By:
                    /s/ Philip
      HolmesPhilip Holmes, Chief Executive
      Officer
 14