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 1934For
      the quarter ended January 31,
2009
  -OR-
  o
                TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
      OF 1934For
      the transition period
      from:                               to
  Commission File Number 0-14234
 
 KINGS
ROAD ENTERTAINMENT, INC.
 (Exact
Name of Registrant as Specified in Its Charter)
  DELAWARE
                
                95-3587522(State
      or other jurisdiction of
                
                (I.R.S.
      Employer Identification No.)incorporation
      or organization)468
      N. Camden Drive
                  Beverly
      Hills, California
                
                90210(Address
      of principal executive offices)
                
                (Zip
      Code)
 310-278-9975
 (Registrant’s
telephone number, including area code)
 
 (Former
name, former address or former fiscal year, if changed since last
report)
 
 Check
whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past
90 days. Yes  x    No
 o
 
 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(Do
      not check if a smaller reporting company)
              Smaller
      reporting company  x
 
 Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) o Yes
  x No
 
 The
number of shares outstanding of the registrant’s common stock, as of March 13,
2009 was 19,191,493.
 
 1
 KINGS
ROAD ENTERTAINMENT, INC.
 FORM
10-Q
 Quarter
Ended January 31, 2009
 
 TABLE
OF CONTENTS
 
 PART I - FINANCIAL INFORMATION
                  PAGEItem
      1.
                  Financial
      StatementsConsolidated
      Balance Sheets as of January 31, 2009 and April 30, 2008
                  3Consolidated
      Statements of Operations for the Three Months Ended January 31, 2009 and
      2008
                  4Consolidated
      Statements of Operations for the Nine Months Ended January 31, 2009 and
      2008
                  5Consolidated
      Statements of Cash Flows for the Nine Months Ended January 31, 2009 and
      2008
                  6Notes
      to Consolidated Financial Statements as of January 31,
2009
                  7Item
      2.
                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                  13Item
      3.
                  Quantitative
      and Qualitative Disclosures About Market Risk
                  15Item
      4T.
                  Controls
      and Procedures
                  15PART
      II - OTHER INFORMATIONItem
      1.
                  Legal
      Proceedings
                  16Item
      2.
                  Unregistered
      Sales of Equity Securities and Use of Proceeds
                  16Item
      3.
                  Defaults
      Upon Senior Securities
                  16Item
      4.
                  Submission
      of Matters to a Vote of Security Holders
                  16Item
      5.
                  Other
      Information
                  16Item
      6.
                  Exhibits
                  16SIGNATURES
                  17
   2
 
 PART
I - FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 KINGS ROAD ENTERTAINMENT, INC.
 CONSOLIDATED
BALANCE SHEETS
 AS
OF JANUARY 31, 2009 AND APRIL 30, 2008
 
 January
      31, 2009
                                  
                                  
                                  April
      30, 2008ASSETS
                                  
                                  (unaudited)
                                  
                                  
                                  (audited)Current
      assets:Cash
      and cash equivalents
                                  
                                  $
                                  10,965
                                  
                                  
                                  $
                                  149,765Accounts
      receivable, trade
                                  
                                  
                                  52,594
                                  
                                  
                                  
                                  69,594Prepayments
      and other current assets
                                  
                                  
                                  5,386
                                  
                                  
                                  
                                  14,190Total
      current assets
                                  
                                  
                                  68,945
                                  
                                  
                                  
                                  233,549Other
      assets:Film
      development costs, net
                                  
                                  
                                  678,382
                                  
                                  
                                  
                                  524,582Total
      other assets
                                  
                                  
                                  678,382
                                  
                                  
                                  
                                  524,582TOTAL
      ASSETS
                                  
                                  $
                                  747,327
                                  
                                  
                                  $
                                  758,131LIABILITIES
      AND STOCKHOLDERS’ DEFICITCurrent
      liabilities:Accounts
      payable
                                  
                                  $
                                  255,182
                                  
                                  
                                  $
                                  26,554Accrued
      expenses
                                  
                                  
                                  294,104
                                  
                                  
                                  
                                  345,083Deferred
      revenue
                                  
                                  
                                  725,775
                                  
                                  
                                  
                                  807,593Total
      current liabilities
                                  
                                  
                                  1,275,061
                                  
                                  
                                  
                                  1,179,230Long
      term liabilities:Stockholder
      loans
                                  
                                  
                                  107,682
                                  
                                  
                                  
                                  0Total
      long term liabilities
                                  
                                  
                                  107,682
                                  
                                  
                                  
                                  0Total
      liabilities
                                  
                                  
                                  1,382,743
                                  
                                  
                                  
                                  0Stockholders’
      deficit:Common
      stock; 50,000,000 shares authorized at $0.01 par value; 9,956,493 shares
      issued and outstanding at January 31, 2009 and   10,756,493
      at April 30, 2008, respectively.
                                  
                                  
                                  99,564
                                  
                                  
                                  
                                  107,564Additional
      paid-in capital
                                  
                                  
                                  25,752,166
                                  
                                  
                                  
                                  25,828,166Accumulated
      deficit
                                  
                                  
                                  (26,487,278
                                  )
                                  
                                  
                                  (26,356,829
                                  )Accumulated
      other comprehensive income
                                  
                                  
                                  132
                                  
                                  
                                  
                                  0Total
      stockholders’ (deficit)
                                  
                                  
                                  (635,416
                                  )
                                  
                                  
                                  (421,099
                                  )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
                                  
                                  $
                                  747,327
                                  
                                  
                                  $
                                  758,131
 
 See
accompanying notes to consolidated financial statements.
  3
 
 KINGS
ROAD ENTERTAINMENT, INC.
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 FOR
THE THREE MONTHS ENDED JANUARY 31, 2009 AND 2008
 (Unaudited)
 
 Three
      months ended January 31,2009
                      
                      
                      2008REVENUESFeature
      film royalty revenue
                      
                      $
                      84,617
                      
                      
                      $
                      106,182Service
      productions
                      
                      
                      48,000
                      
                      
                      
                      0TOTAL
      REVENUE
                      
                      
                      132,617
                      
                      
                      
                      106,182OPERATING
      EXPENSES:General
      and administrative
                      
                      
                      150,616
                      
                      
                      
                      89,867Project
      expenses
                      
                      
                      18,800
                      
                      
                      
                      0Total
      operating expenses
                      
                      
                      169,416
                      
                      
                      
                      89,867INCOME
      (LOSS) FROM OPERATIONS
                      
                      
                      (36,799
                      )
                      
                      
                      16,315OTHER
      INCOME/EXPENSE:Interest
      income
                      
                      
                      0
                      
                      
                      
                      3,322Interest
      expense
                      
                      
                      (1,540
                      )
                      
                      
                      0Total
      other income (expense)
                      
                      
                      (1,540
                      )
                      
                      
                      3,322INCOME
      (LOSS) BEFORE INCOME TAXES
                      
                      
                      (38,339
                      )
                      
                      
                      19,637PROVISION
      FOR INCOME TAXES
                      
                      
                      0
                      
                      
                      
                      0NET
      INCOME (LOSS)
                      
                      $
                      (38,339
                      )
                      
                      $
                      19,637OTHER
      COMPREHENSIVE INCOMEForeign
      currency translation
                      
                      
                      961
                      
                      
                      
                      0COMPREHENSIVE
      INCOME (LOSS)
                      
                      $
                      (37,378
                      )
                      
                      $
                      19,637Net
      income (loss) per share – Basic and Diluted
                      
                      $
                      0.00
                      
                      
                      $
                      0.00Basic
      weighted average number of shares outstanding during the
      period
                      
                      
                      9,956,493
                      
                      
                      
                      10,756,493
 
 
 See
accompanying notes to consolidated financial statements.
 
 4
  KINGS
ROAD ENTERTAINMENT, INC.
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 FOR
THE NINE MONTHS ENDED JANUARY 31, 2009 AND 2008
 (Unaudited)
 
 Nine
      months ended January 31,2009
                          
                          
                          2008REVENUESFeature
      film royalty revenue
                          
                          $
                          247,115
                          
                          
                          $
                          349,541Service
      productions
                          
                          
                          85,000
                          
                          
                          
                          0TOTAL
      REVENUE
                          
                          
                          332,115
                          
                          
                          
                          349,541OPERATING
      EXPENSES:General
      and administrative
                          
                          
                          423,835
                          
                          
                          
                          309,292Project
      expenses
                          
                          
                          35,000
                          
                          
                          
                          0Total
      operating expenses
                          
                          
                          458,835
                          
                          
                          
                          309,292INCOME
      (LOSS) FROM OPERATIONS
                          
                          
                          (126,720
                          )
                          
                          
                          40,249OTHER
      INCOME/EXPENSE:Interest
      income
                          
                          
                          0
                          
                          
                          
                          6,478Interest
      expense
                          
                          
                          (3,729
                          )
                          
                          
                          0Total
      other income (expense)
                          
                          
                          (3,729
                          )
                          
                          
                          6,478INCOME
      (LOSS) BEFORE INCOME TAXES
                          
                          
                          (130,449
                          )
                          
                          
                          46,727PROVISION
      FOR INCOME TAXES
                          
                          
                          0
                          
                          
                          
                          0NET
      INCOME (LOSS)
                          
                          $
                          (130,449
                          )
                          
                          $
                          46,727OTHER
      COMPREHENSIVE INCOMEForeign
      currency translation
                          
                          
                          6,875
                          
                          
                          
                          0COMPREHENSIVE
      INCOME (LOSS)
                          
                          $
                          (123,574
                          )
                          
                          $
                          46,727Net
      income (loss) per share – Basic and Diluted
                          
                          $
                          (0.01
                          )
                          
                          $
                          0.01Basic
      weighted average number of shares outstanding during the
      period
                          
                          
                          10,176,783
                          
                          
                          
                          7,383,486
 
 
 See
accompanying notes to consolidated financial statements.
 
 5
 
 KINGS
ROAD ENTERTAINMENT, INC.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 FOR
THE NINE MONTHS ENDED JANUARY 31, 2009 AND 2008
 (Unaudited)
  Nine
      months ended January 31,2009
                        
                        
                        2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Income (loss)
                        
                        $
                        (130,449
                        )
                        
                        $
                        46,727Adjustments
      to reconcile net income (loss) to net cash (used in)
                          operating
      activities:Common
      stock issued for services
                        
                        
                        0
                        
                        
                        
                        47,000Change
      in operating assets and liabilities:Accounts
      receivable, trade
                        
                        
                        17,000
                        
                        
                        
                        0Prepayments
      and other current assets
                        
                        
                        8,804
                        
                        
                        
                        (9,000
                        )Film
      development costs
                        
                        
                        (49,400
                        )
                        
                        
                        (58,489
                        )Accounts
      payable
                        
                        
                        124,228
                        
                        
                        
                        (400,894
                        )Accrued
      expenses
                        
                        
                        (50,979
                        )
                        
                        
                        596Deferred
      revenue
                        
                        
                        (81,818
                        )
                        
                        
                        (113,235
                        )NET
      CASH USED IN OPERATING ACTIVITIES
                        
                        
                        (162,614
                        )
                        
                        
                        (487,295
                        )CASH
      FLOWS FROM INVESTING ACTIVITIES:Common
      stock exchanged for film projects
                        
                        
                        0
                        
                        
                        
                        0(Increase)
      in subsidiary investment
                        
                        
                        0
                        
                        
                        
                        (7,533
                        )NET
      CASH USED IN INVESTING ACTIVITIES
                        
                        
                        0
                        
                        
                        
                        (7,533
                        )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from stockholder loans
                        
                        
                        107,682
                        
                        
                        
                        0Common
      stock purchased (returned) for cash
                        
                        
                        (84,000
                        )
                        
                        
                        317,000NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                        
                        
                        23,682
                        
                        
                        
                        317,000FOREIGN
      CURRENCY TRANSLATION
                        
                        
                        132
                        
                        
                        
                        0NET CHANGE IN CASH AND CASH
      EQUIVALENTS
                        
                        
                        (138,800
                        )
                        
                        
                        (177,828
                        )CASH
      AND CASH EQUIVALENTS, BEGINNING OF PERIOD
                        
                        
                        149,765
                        
                        
                        
                        553,648CASH
      AND CASH EQUIVALENTS, END OF PERIOD
                        
                        $
                        10,965
                        
                        
                        $
                        375,820
  SUPPLEMENTAL
      DISCLOSURES:
                      Non-cash
      transactions included for the period ended January 31, 2009 film
      development costs ($104,400), with the corresponding entry in Accounts
      Payable. For the corresponding prior period ended January 31, 2008
      the Company issued shares in exchange for film development costs
      ($325,000).
 
 See
accompanying notes to consolidated financial statements
 
 6
  KINGS
ROAD ENTERTAINMENT, INC.
 
 Notes to Consolidated Financial
Statements
 As
of January 31, 2009
 
 
 NOTE
1 – NATURE OF OPERATIONS
 
 Kings
Road Entertainment, Inc., and its three wholly-owned subsidiaries (the "Company"
or "Registrant"), are  engaged primarily in the development, financing
and production of motion pictures for subsequent distribution in theaters, to
pay, network and syndicated television, on home video, and in other ancillary
media in the United States (the "domestic market") and all other countries and
territories of the world.  Kings Road Entertainment, Inc. was
incorporated in Delaware in 1980, began active operations in January 1983 and
released its first motion picture in 1984.  Since 1984, it has
released 17 additional pictures in the domestic market, and released seven
pictures directly to the domestic home video or pay television market. The
Company operates out of offices in the United States and in
Germany.
 
 
 NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES
 
 a. Basis
of Presentation
 The
accompanying unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial statements. Accordingly, they do not include all of the
information and disclosures required for annual financial statements. These
financial statements should be read in conjunction with the financial statements
and related footnotes for the year ended April 30, 2008, included in the Kings
Road Entertainment, Inc. annual report on Form 10-KSB for that
period.
 
 In the
opinion of the Company's management, all adjustments necessary to present fairly
the Company's financial position at January 31, 2009, the results of operations
for the three month and nine month periods ended January 31, 2009 and cash flows
for the nine month period ended January 31, 2009 have been included. The results
of operations for the three and nine month periods ended January 31, 2009, are
not necessarily indicative of the results to be expected for the
full fiscal year.
  b.
Principles of Consolidation
 The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries. As of January 31, 2009, the Company had three
wholly-owned subsidiaries:  Ticker, Inc., (a California corporation),
The Big Easy II Film, LLC (a California limited liability corporation) and
Kings Road Entertainment Europe GmbH (a German limited liability
company).  Ticker, Inc. and The Big Easy II Film, LLC, were
inactive during the three and nine month periods ended January 31, 2009. Kings
Road Entertainment Europe GmbH which was active during the three and nine month
periods ending January 31, 2009, facilitates international co-productions. All
material intercompany balances and transactions have been eliminated in
consolidation.
  c. Use of
Estimates
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
 
 d. Newly
Issued Accounting Pronouncements
 In
December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS
No. 141-R, “Business Combinations” (revised 2007) (“SFAS 141-R”). This
Statement provides greater consistency in the accounting and financial reporting
of business combinations. It requires the acquiring entity in a business
combination to recognize all assets acquired and liabilities assumed in the
transaction, establishes the acquisition-date fair value as the measurement
objective for all assets acquired and liabilities assumed, and requires the
acquirer to disclose the nature and financial effect of the business
combination. SFAS 141-R is effective for fiscal years beginning after
December 15, 2008, or after April 30, 2009 for the Company. The Company
does not anticipate that adoption of this standard will have a material effect
on its financial statements.
 
 7
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements” (“SFAS 160”). This Statement amends
Accounting Research Bulletin No. 51, “Consolidated Financial Statements,”
to establish accounting and reporting standards for the noncontrolling interest
in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is
effective for fiscal years beginning after December 15, 2008, or after
April 30, 2009 for the Company. The Company does not anticipate that adoption of
this standard will have a material effect on its financial
statements.
 
 In
September 2006, the FASB issued FAS No. 157, “Fair Value Measurements”
(“FAS 157”). FAS 157 establishes a common definition of fair value to be used
whenever GAAP requires (or permits) assets or liabilities to be measured at fair
value, and does not expand the use of fair value in any new circumstances. It
also requires expanded disclosure about the extent to which companies measure
assets and liabilities at fair value, the information used to measure fair
value, and the effect of fair value measurements on earnings. On
February 12, 2008, the FASB issued FASB Staff Position No. FAS
No. 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”)
which defers the effective date for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis (that is, at least annually), to
fiscal years beginning after November 15, 2008. In addition, in February
2007, the FASB issued FAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities-including an amendment of FASB
Statement No. 115” (“FAS 159”). FAS 159 expands the use of fair
value accounting but does not affect existing standards that require assets or
liabilities to be carried at fair value. Under FAS 159, a company may elect to
use fair value to measure most financial assets and liabilities and any changes
in fair value are recognized in earnings. The fair value election is irrevocable
and generally made on an instrument-by-instrument basis, even if a company has
similar instruments that it elects not to measure based on fair value. The
Company does not anticipate that adoption of these standards will have a
material effect on its financial statements.
  e.
Earnings (Net Loss) Per Share
 In accordance with FASB Statement
No. 128, Earnings Per
Share, we calculate basic net loss per share using the weighted average number
of common shares outstanding during the periods presented.  We do not
have any potentially dilutive common stock equivalents, such as options or
warrants, and we have not issued any preferred
shares.
  f.
Foreign Currency Translation
 Monetary
assets and liabilities denominated in currencies other than the functional
currency of US 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 rate of exchange for the fiscal year. 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.
 
 g.
Accruals
 On
January 31, 2009 the board unanimously approved bonuses to management and staff
as well as an issuance of shares as non-cash compensation to the board of
directors for their services for the calendar year ending December 31, 2008. The
respective amounts for bonuses ($56,000) and directors’ common shares
($10,000) were accrued at January 31, 2009 and expensed in the Statement of
Operations for the period.
 
 
 NOTE
3 – CURRENT ASSETS
 
 a. Cash
and Cash Equivalents
 Cash
equivalents consist of cash on hand and cash on deposit at banks.  For
purposes of the statements of cash flows, the Company considers all
highly-liquid debt instruments with original maturities of three months or less
to be cash equivalents. The Company maintains its cash balances at financial
institutions that are federally insured. However, at times, these balances could
exceed federally insured limits.
 
 8
 b.
Concentration of Credit Risk
 The
Company licenses various rights in its films to distributors throughout the
world. Generally, payment is received in full or in part prior to the Company's
delivery of the film to the applicable distributor. Once calculated royalties
from actual sales have exceeded such an advance, the Company receives royalty
income at the end of a specific reporting period (usually three, nine or twelve
months) based on actual sales from the preceding reporting period. As of January
31, 2009, the Company had $52,594 in accounts receivable, of which $27,218 was
with a foreign distributor.
   NOTE
4 – FIXED & OTHER ASSETS
 
 a. Fixed
Assets
 Fixed
assets of the Company at January 31, 2009, consisted of various items of office
equipment with a historical cost of $5,993 and a $0 book value. All of these
items were fully depreciated at January 31, 2009.
 
 b.
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed
of
 The
Company has adopted the provisions of SFAS No. 144, “Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of” and
SFAS No. 142 "Goodwill and Other Intangible Assets." These statements require
that long-lived assets and certain identifiable intangible assets be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amounts of the assets exceed their
respective fair values. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less the costs to sell.
 
 c. Film
Development Costs
 Film
development costs are costs incurred for movie projects not yet in production.
Film development costs, including any related interest and overhead, are
capitalized as incurred. Profit participations and residuals, if any, are
accrued in the proportion that revenue for a period bears to the estimated
future revenues.  Costs are amortized using the individual film
forecast method set forth in Statement of Position 00-2 Accounting by Producers
or Distributors of Films (“SOP 00-2”) which bases the costs on the ratio of
revenue earned in the current period to the Company's estimate of total revenues
to be realized. Management periodically reviews its estimates on a film-by-film
basis and, when unamortized costs exceed net realizable value for a film, that
film's unamortized costs are written down to net realizable value.
 
 At
January 31, 2009, film development costs totaled $678,382 which was
net after an allowance of $30,000. During the three month period ended January
31, 2009, no film development costs were determined to be impaired.
 
 Subject
to the closing of financing, 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 at January 31, 2009
relate entirely to movies in development for theatrical release.
 
 Regarding
the Company’s released films, there are no unamortized film costs in the balance
sheet.
 
 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 cash flows for film costs, participation costs,
exploitation costs and manufacturing costs are classified as operating
activities in the Statement of Cash Flows.
 
 
 9
 
 NOTE
5 – DEFERRED REVENUE
 
 Deferred
revenue is recognized in accordance with Statement of Position 00-2 “Accounting
by Producers or Distributors of Films” (“SOP 00-2”). As of January 31, 2009, the
Company has deferred revenue totaling $725,775. The amortization of this
amount occurs linearly across the duration of the distribution contracts to
which it was advanced.
   NOTE
6 - COMMITMENTS AND CONTINGENCIES
 
 a.
Rent
 The
Company rents its registered office space at 468 N. Camden Drive, Beverly Hills
and an additional office space in Santa Monica, California. The Company also
rents flexible storage space for its archives. In Europe, the Company’s
subsidiary rents office space in a shared facility.  Office rent
expense for the Company's offices and archive storage space was $13,983 and
$10,793 during the three months ended January 31, 2009 and 2008, respectively
and $37,236 and $32,379 during the nine months ended January 31, 2009 and 2008,
respectively. All rental agreements may be terminated upon one month’s notice.
The increase over prior periods primarily represents the addition of the
European subsidiary’s office.
  b.
Writing Agreement
 As a
result of a writing agreement signed on February 19, 2008, in connection 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 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 or accrued.
 
 c.
Stockholder Loans
 As of
January 31, 2009, the Company had borrowed $103,977 from its two largest
stockholders under the terms of an arrangement dated July 15, 2008, which
authorized the borrowing of up to $500,000 from stockholders of the Company to
fund working capital and other needs (the “Stockholder Loans”). This represents
an increase of $13,977 compared to the quarter ending October 31, 2008. The
interest charge is accrued with the principal amount of the loans on the Balance
Sheet and expensed on the Statement of Operations.  As of January 31,
2009 the accumulated interest for the loans totaled $3,705.  The Company
disclosed the board resolution authorizing these loans as well as significant
loan terms in a Form 8-K filed on July 21, 2008.
  d. Other
Commitments and Contingencies
 The
Company settled litigation with a former Officer and Director during the three
months ended July 31, 2008.  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 of January 31, 2009, the
Company was not involved in any active or passive litigation.
 
 NOTE
7 – RECOGNITION OF REVENUES
 
 Revenue
from the sale or licensing of films is recognized in accordance with SOP 00-2.
Revenue from the theatrical release of feature films is recognized at the time
of exhibition based on the Company’s participation in box office receipts.
Revenue from the sale of DVDs rights under licensing agreements is recognized on
the later of receipt by the customer or “street date” (when it is available for
sale by the customer). Under revenue sharing arrangements, rental revenue is
recognized when the Company is entitled to receipts and such receipts are
determinable. Revenues from television licensing are recognized when the feature
film or television program is available to the licensee for telecast. For
television licenses that include separate availability “windows” during the
license period, revenue is allocated over the “windows.” Revenue from sales to
international territories are recognized when access to the feature film or
television program has been granted or delivery has occurred, as required under
the sales contract, and the right to exploit the feature film has commenced.
Cash payments received are recorded as deferred revenue until all the conditions
of revenue recognition have been met.
 10
  The
Company’s revenues are derived primarily from distribution agreements in the US
domestic market place and are amortized during the reporting period for which
the revenue is applicable. Revenues derived from purchase option agreements are
amortized over the period of the option granted. Revenues from theatrical
exhibition are recognized on the dates of exhibition. Revenues from
international, home video, video-on-demand, television and pay-television
license agreements are recognized when the license period begins and the film is
available for exhibition or exploitation pursuant to the terms of the applicable
license agreement. Once complete, a typical film will generally be made
available for licensing as follows:
  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, they will 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 and accrued. The timing difference between the cash flows
and the recognition of revenue is recorded as deferred revenue where the cash
received exceeds the actual work performed or as accounts receivable where work
performed exceeds the payments received.
 
 NOTE
8 – COMMON AND PREFERRED STOCK
 
 At
January 31, 2009, the Company had 50,000,000 authorized shares of common stock,
of which 9,956,493 shares were issued and outstanding and 2,000,000 authorized
shares of “blank check” preferred stock, $.01 par value, of
which  no preferred shares were issued or
outstanding.
 
 N0TE
9 – GOING CONCERN
 
 The
Company's consolidated financial statements are prepared using accounting
principles generally accepted in the United States of America applicable to a
going concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However at January 31, 2009, the
Company has sustained recent losses from operations, has a deficit in
working capital of $1,206,116 and has an accumulated deficit of
approximately $26,487,278. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.  The Company has
discontinued certain operations that historically produced negative cash flow
and plans to raise capital through equity-based investment instruments, which
will provide funding for the development of future projects and operating
expenses.
 
 N0TE
10 – SUBSEQUENT EVENTS
 
 Subsequent
to the period covered by this report, on March 3, 2009, the Company issued
5,220,000 common shares for services related to the acquisition of nine film
projects that are in various stages of development.  Each
of International Solutions Business Consulting GmbH, a company solely
managed by Philip Holmes and therefore an affiliate of the Company, and
West Coast Pictures, LLC whose principal Sven Ebeling is also Head of Production
at the Company and therefore an affiliate of the Company, received 2,320,000
common shares in exchange for services related to the acquisition of four
projects.  An independent producer also received 580,000 shares in
exchange for services related to one project.  This issuance is exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933.
 The aforementioned issuance was unanimously approved by the board of
directors on January 31, 2009. The related costs have been allocated to the
respective project development asset position in the balance sheet. The
liability of $104,400 in total was converted to 5,220,000 common shares
based on the closing price for the common stock of $0.02 on the day of approval
by the board, January 31, 2009.
 
 11
 Subsequent
to the period covered by this report, on March 3, 2009, the Company issued
2,800,000 common shares as performance bonuses for the calendar year 2008.
Recipients of these performance bonuses included Chief Executive Officer and
Director Philip M. Holmes (1,100,000 shares), Chief Financial Officer and
Director Robert Kainz (100,000 shares), Directors Branko Lustig and Monika Nosic
(100,000 shares each) and Head of Production, Sven Ebeling received 1,300,000
common shares.  A further 100,000 shares were issued to an independent
producer. The shares were fully vested on the date of the award and this
issuance is exempt from registration pursuant to Section 4(2) of the Securities
Act of 1933. The afore­mentioned issuance was unanimously approved by the
board of directors on January 31, 2009. The liability of $56,000 in total was
converted to 2,800,000 common shares and the performance bonuses were
expensed in general and administrative expenses and the liability accrued in the
balance sheet. The accrued liability was calculated in total to be $56,000
representing the 2,800,000 shares awarded, valued at $0.02 per share, the
closing price for the common stock on the day of approval by the board, January
31, 2009.
 
 Subsequent
to the period covered by this report, on March 3, 2009, the Company issued
500,000 common shares in exchange for services as a Director of the
Company.  Directors receiving shares includes included Chief Executive
Officer and Director Philip M. Holmes (300,000 shares), Chief Financial Officer
and former Director Robert Kainz (50,000 shares), Director Monika Nosic (100,000
shares) and Director Branko Lustig (50,000 shares).  The shares were
fully vested on the date of the award and this issuance was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933. The
afore­mentioned issuance was unanimously approved by the board of directors
on January 31, 2009. The related costs of the award for services as a
non-executive director were expensed in general and administrative expenses and
the liability accrued in the balance sheet as of January 31, 2009. The amount
was calculated in total to be $10,000 representing the 500,000 shares awarded,
valued at $0.02 per share, the closing price for the common stock on the day of
approval by the board, January 31, 2009.
 
 Subsequent
to the period covered by this report, on March 3, 2009, the Company issued
250,000 common shares to six different vendors in exchange for services rendered
to the Company.  The shares were fully vested on the date of the
exchange and this issuance is exempt from registration pursuant to Section 4(2)
of the Securities Act of 1933. The aforementioned issuance was unanimously
approved by the board of directors on January 31, 2009. The liabilities toward
those vendors of $7,725 were expensed in general and administrative
expenses and the liabilities recorded in accounts payable in the balance
sheet.
 
 Subsequent
to the period covered by this report, on March 3, 2009, the Company issued
465,000 common shares to West Coast Pictures, LLC, in exchange for services
rendered to the Company valued at $20,000.  The shares were fully
vested on the date of the exchange and this issuance is exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933. The aforementioned
issuance was unanimously approved by the board of directors on January 31, 2009.
The amount owed to West Coast Pictures was expensed in general and
administrative expenses and the liabilities recorded in accounts payable in the
balance sheet. The liability was $20,000 in total, and paid with the common
shares.
 
 12
 
 ITEM
2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 
 The
following discussion concerns the periods ended January 31, 2009 and January 31,
2008, which should be read in conjunction with the financial statements and
notes thereto appearing elsewhere in this document as well as the Form 10-KSB
for the fiscal year ended April 30, 2008.
 
 Results of
Operations
 
 The
Three Months Ended January 31, 2009 vs. the Three Months Ended January 31,
2008
 For the
quarter ended January 31, 2009, operating revenues were $132,617 as compared to
$106,182 for the quarter ended January 31, 2008. The increase of $26,435 results
primarily from an increase in service production revenue which was partially
offset by a decrease in royalties from distribution of the Company's feature
film library.  The Company has licensed its films to various, third
party distributors and revenue is reported by these distributors on a regular
basis and is based on actual sales for a preceding period. Revenue fluctuations
from distribution are therefore mainly influenced by consumer demand and the
activities of the distributor and the Company has generally no further influence
on the sales success of those movies and the resulting fluctuations in
revenue.
 
 Costs and
expenses amounted to $169,416 for the quarter ended January 31, 2009 as compared
to $89,867 during the quarter ended January 31, 2008. This increase of $79,549
is primarily due to an increase in direct project expenses of
$18,800 associated with the increase in service production revenues, an
increase in accounting and audit fees of $12,000, compensation to management and
production team in the form of bonuses and salaries of approximately $67,000 and
an award to directors for their services of $10,000.  These increases were
partially offset by a decrease in travel expenses of approximately $12,000 and a
reduction in legal fees of approximately $17,000.
 
 The
Company had an operating loss of $38,339 for the quarter ended January 31,
2009 as compared to operating  income of $19,637 for the quarter ended
January 31, 2008. The increase in operating loss of $57,976 results primarily
from the increase in operating costs which were only partially offset by the
increase in revenues described in the previous paragraphs.
 
 
 The
Nine Months Ended January 31, 2009 vs. the Nine Months Ended January 31,
2008
 
 For the
nine months ended January 31, 2009, operating revenues were $332,115 as compared
to $349,541 for the nine months ended January 31, 2008. The decrease of $17,426
results primarily from decreased revenue from distribution of the Company's
feature film library which was only partly offset by an increase in service
production revenues.
 
 Costs and
expenses amounted to $458,835 for the nine months ended January 31, 2009 as
compared to $309,292 during the nine months ended January 31, 2008. This
increase of $149,543 is primarily due to increases in direct project expenses of
$35,000 associated with the increase in service production revenues, an increase
in selling expenses of approximately $20,000, an increase in compensation to
management and production team in the form of bonuses and salaries of
approximately $91,000 which includes a non-cash award of shares valued at
$56,000, a non-cash award of shares to directors for their services valued at
$10,000, an increase in accounting and audit fees of approximately
$24,000. These increases were partially offset by a reduction in legal fees
of approximately $31,000.
 
 The
Company had an operating loss of $130,449 for the nine months ended January 31,
2009 as compared to operating income of $46,727 for the nine months ended
January 31, 2008. This increase in operating loss of $177,176 is as a
result of the changes in revenues and costs as described above.
 
 
 13
 
 
 Liquidity
and Capital Resources
 
 The
Company's principal source of working capital during the three and nine month
periods ended January 31, 2009 was feature film royalty revenues, production
services and stockholder loans. The Company does not currently have sufficient
working capital to fund its operations. The Company is presently investing in
new film projects and is seeking external financing and other alternatives
necessary to raise capital.  If the Company fails to raise
additional capital, increase revenues, or sell certain assets, the Company will,
in all likelihood, be forced to significantly reduce its operations or
liquidate.
 For the
nine months ended January 31, 2009, the Company's net cash flow used in
operating activities was $162,614 compared to net cash used by operating
activities of $487,295 during the nine month period ended January 31, 2008. Net
cash flow provided by financing activities was $23,682 for the nine months ended
January 31, 2009 compared to net cash provided by financing activities of
$317,000 during the nine month period ended January 31, 2008. At January 31,
2009, the Company had cash of $10,965 as compared to $375,820 at January 31,
2008.  The Company’s decline in cash is primarily attributable to
operating losses and investments in film projects.
 
 In
general, cash flows resulting from the distribution of the Company’s existing
film library are expected to decline over the long term. The Company is taking
measures to renew expiring licenses and ensure its library is continuously
distributed in all major world markets to slow down this trend. Additionally,
the Company is developing new movies and seeking equity funding for these movies
in order to fully implement its business planning as a movie production and
distribution company.
 
 Future
Commitments
 
 As a
result of a writing agreement signed on February 19, 2008, in connection 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 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 either paid or accrued.
 
 The
Company does not have, nor is it aware of, any other material future
commitments.
 
 Disclosure Regarding Forward Looking
Statements
 
 This
quarterly report 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 comparable
terminology. 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
success of marketing efforts by third parties,
 - the
changing demands of customers and
 - the
arrangements with present and future customers and third parties.
  14
 
 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 reflected in these
statements.
 
 
 ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 Not
applicable.
 
 
 ITEM 4T. CONTROLS AND PROCEDURES.
 
 Disclosure
Controls And Procedures
 
 As
required by SEC Rule 13a-15 or Rule 15d-15, our Chief Executive and Chief
Financial Officers carried out an evaluation under the supervision and with the
participation of our management, of the effectiveness of the design and
operation of our disclosure controls and procedures as of the end of the period
covered by this report. Based on the foregoing evaluation, they have concluded
that our disclosure controls and procedures were not effective as of January 31,
2009 since they do not allow for information required to be disclosed by us in
the reports that we file or submit under the Exchange Act to be recorded,
processed, summarized and reported, within the time periods specified in the
SEC's rules and forms. Specifically, we identified  material
weaknesses in our internal control over financial reporting as described in Item
8A and 8A(T) in our Annual Report on Form 10-KSB for our fiscal year ended April
30, 2008 and those deficiencies have not yet been remediated by us. Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is accumulated and
communicated to our management, including our Chief Executive and Chief
Financial Officers as appropriate to allow timely decisions regarding required
disclosure.
 
 Internal
Control Over Financial Reporting
  Pursuant
to Rule 13a-15(d) or Rule 15d-15(d) of the Exchange Act, our management, with
the participation of the Company’s Chief Executive and Chief Financial Officers,
is responsible for evaluating any change in the Company's internal control over
financial reporting (as defined in Rule 13a-15(f) or Rule 15d-15(f) under the
Exchange Act), that occurred during the Company’s fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
 
 Based on
the foregoing evaluation, we have concluded that there was no change in our
internal control over financial reporting that occurred during the fiscal
quarter ended January 31, 2009, that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.  We continue to have  material weaknesses in our
internal control over financial reporting as described in Item 8A and 8A(T) in
our Annual Report on Form 10-KSB filed for our fiscal year ended April 30, 2008
and those deficiencies have not yet been remediated by us.
 
 
 15
 
 PART
II - OTHER INFORMATION
 
 ITEM 1.
                LEGAL
      PROCEEDINGS
 
 As of
March 17, 2009, 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 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
 
 31.1
              Rule
      13a-14(a)/15d-14(a) Certification of Chief Executive
    Officer.
 
 31.2
              Rule
      13a-14(a)/15d-14(a) Certification of Chief Financial
    Officer.
 
 32
              Certifications
      of Chief Executive Officer and Chief Financial Officer pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002.
 
 
 16
 SIGNATURES
 
 In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
  KINGS
      ROAD ENTERTAINMENT, INC.Date:  March 17,
      2009
                    By:
                    /s/
      Philip HolmesPhilip
      Holmes, Chief Executive Officer
 
 
 17