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 ended October 31, 2009


-OR-


 ̈
            TRANSITION REPORT PURSUANT
      TOSECTION 13 OR
      15(d) OF THE SECURITIES AND EXCHANGE ACT OF
  1934


For
the transition period
from:                               to




Commission
File Number 0-14234





KINGS
ROAD ENTERTAINMENT, INC.


(Exact
Name of Registrant as Specified in Its Charter)




DELAWARE
              
              95-3587522(State
      or other jurisdiction of
              
              (I.R.S.
      Employer Identification No.)incorporation
      or organization)468
      N. Camden Drive
                Beverly
      Hills, California
              
              90210(Address
      of principal executive offices)
              
              (Zip
      Code)





310-278-9975


(Registrant’s
telephone number, including area code)





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





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 the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes   ̈   No 
 x




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  ̈
            Accelerated
      filer  ̈Non-accelerated
      filer  ̈(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)  ̈ Yes   x No





As of
December 14, 2009, the registrant had 31,321,493 shares of common stock
outstanding.








KINGS
ROAD ENTERTAINMENT, INC.


FORM
10-Q


Quarter
Ended October 31, 2009





TABLE
OF CONTENTS





PAGEPART
      I - FINANCIAL INFORMATIONItem
      1.
                      Financial
      Statements
                      3Consolidated
      Balance Sheets as of October 31, 2009 and April 30, 2009
                      3Consolidated
      Statements of Operations for the Three Months Ended October 31, 2009 and
      2008
                      4Consolidated
      Statements of Operations for the Six Months Ended October 31, 2009 and
      2008
                      5Consolidated
      Statements of Cash Flows for the Six Months Ended October 31, 2009 and
      2008
                      6Notes
      to Consolidated Financial Statements as of October 31,
2009
                      7Item
      2.
                      Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                      12Item
      3.
                      Quantitative
      and Qualitative Disclosures About Market Risk
                      13Item
      4T.
                      Controls
      and Procedures
                      13PART
      II - OTHER INFORMATIONItem
      1.
                      Legal
      Proceedings
                      15Item
      1A.
                      Risk
      Factors
                      15Item
      2.
                      Unregistered
      Sales of Equity Securities and Use of Proceeds
                      15Item
      3.
                      Defaults
      Upon Senior Securities
                      15Item
      4.
                      Submission
      of Matters to a Vote of Security Holders
                      15Item
      5.
                      Other
      Information
                      15Item
      6.
                      Exhibits
                      17SIGNATURES
                      18


2


PART
I - FINANCIAL INFORMATION





Item 1. Financial Statements


KINGS
ROAD ENTERTAINMENT, INC.


CONSOLIDATED
BALANCE SHEETS


AS
OF OCTOBER 31, 2009 AND APRIL 30, 2009





October 31,
                              2009
                            
                            
                            April 30, 2009(unaudited)
                            
                            
                            (audited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                            
                            $
                            18,013
                            
                            
                            $
                            11,416Accounts
      receivable, trade
                            
                            
                            10,097
                            
                            
                            
                            0Prepayments
      and other current assets
                            
                            
                            5,190
                            
                            
                            
                            5,190Total
      current assets
                            
                            
                            33,300
                            
                            
                            
                            16,606Other
      assets:Film
      development costs, net (Note 4)
                            
                            
                            443,253
                            
                            
                            
                            584,506Total
      other assets
                            
                            
                            443,253
                            
                            
                            
                            584,506TOTAL
      ASSETS
                            
                            $
                            476,553
                            
                            
                            $
                            601,112LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIT)Current
      liabilities:Accounts
      payable
                            
                            $
                            134,189
                            
                            
                            $
                            99,554Accrued
      expenses
                            
                            
                            362,326
                            
                            
                            
                            281,528Stockholder
      loans
                            
                            
                            112,822
                            
                            
                            
                            109,332Deferred
      revenue (Note 5)
                            
                            
                            109,091
                            
                            
                            
                            109,091Total
      current liabilities
                            
                            
                            718,428
                            
                            
                            
                            599,505Non-current
      liabilitiesDeferred
      revenue (Note 5)
                            
                            
                            518,182
                            
                            
                            
                            589,411Total
      non-current liabilities
                            
                            
                            518,182
                            
                            
                            
                            589,411Total
      liabilities
                            
                            
                            1,236,610
                            
                            
                            
                            1,188,916Stockholders’
      equity (deficit):Common
      stock; 50,000,000 shares authorized at $0.01 par value; 19,971,493 shares
      issued and outstanding at October 31, 2009 and 19,321,493 at April 30,
      2009.
                            
                            
                            199,714
                            
                            
                            
                            193,214Preferred
      stock: 2,000,000 authorized at $0.01 par value; no shares issued and
      outstanding at October 31, 2009 and April 30, 2009.
                            
                            
                            -
                            
                            
                            
                            -Additional
      paid-in capital
                            
                            
                            25,970,141
                            
                            
                            
                            25,876,641Accumulated
      deficit
                            
                            
                            (26,928,458
                            )
                            
                            
                            (26,657,734
                            )Accumulated
      other comprehensive income
                            
                            
                            (1,454
                            )
                            
                            
                            75Total
      stockholders’ deficit
                            
                            
                            (760,057
                            )
                            
                            
                            (587,804
                            )TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
                            
                            $
                            476,553
                            
                            
                            $
                            601,112




See
accompanying notes to consolidated financial statements.


3





KINGS
ROAD ENTERTAINMENT, INC.


CONSOLIDATED
STATEMENTS OF OPERATIONS


FOR
THE THREE MONTHS ENDED OCTOBER 31, 2009 AND 2008


(unaudited)





Three months ended October 31,2009
                    
                    
                    2008REVENUESFeature
      films
                    
                    $
                    92,348
                    
                    
                    $
                    91,704Service
      productions
                    
                    
                    -
                    
                    
                    
                    37,000TOTAL
      REVENUE
                    
                    
                    92,348
                    
                    
                    
                    128,704OPERATING
      EXPENSES:General
      and administrative
                    
                    
                    170,131
                    
                    
                    
                    128,634Impairment
      of capitalized film costs
                    
                    
                    152,597
                    
                    
                    
                    -Project
      expenses
                    
                    
                    -
                    
                    
                    
                    16,200Total
      operating expenses
                    
                    
                    322,728
                    
                    
                    
                    144,834LOSS
      FROM OPERATIONS
                    
                    
                    (230,380
                    )
                    
                    
                    (16,130
                    )OTHER
      INCOME (EXPENSE):Interest
      income
                    
                    
                    21
                    
                    
                    
                    -Interest
      expense
                    
                    
                    (1,762
                    )
                    
                    
                    (1,834
                    )Total
      other income (expense)
                    
                    
                    (1,741
                    )
                    
                    
                    (1,834
                    )LOSS
      BEFORE INCOME TAXES
                    
                    
                    (232,121
                    )
                    
                    
                    (17,964
                    )PROVISION
      FOR INCOME TAXES
                    
                    
                    -
                    
                    
                    
                    -NET
      LOSS
                    
                    $
                    (232,121
                    )
                    
                    $
                    (17,964
                    )Net
      loss per share – Basic & Diluted
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.00
                    )Basic
      and diluted weighted average number of shares outstanding during the
      period
                    
                    
                    19,971,493
                    
                    
                    
                    9,956,493





See
accompanying notes to consolidated financial statements.


4





KINGS
ROAD ENTERTAINMENT, INC.


CONSOLIDATED
STATEMENTS OF OPERATIONS


FOR
THE SIX MONTHS ENDED OCTOBER 31, 2009 AND 2008


(unaudited)





Six months ended October 31,2009
                    
                    
                    2008REVENUESFeature
      films
                    
                    $
                    156,137
                    
                    
                    $
                    162,498Service
      productions
                    
                    
                    -
                    
                    
                    
                    37,000TOTAL
      REVENUE
                    
                    
                    156,137
                    
                    
                    
                    199,498OPERATING
      EXPENSES:General
      and administrative
                    
                    
                    270,792
                    
                    
                    
                    273,219Impairment
      of capitalized film costs
                    
                    
                    152,597
                    
                    
                    
                    -Project
      expenses
                    
                    
                    -
                    
                    
                    
                    16,200Total
      operating expenses
                    
                    
                    423,389
                    
                    
                    
                    289,419LOSS
      FROM OPERATIONS
                    
                    
                    (267,252
                    )
                    
                    
                    (89,921
                    )OTHER
      INCOME (EXPENSE):Interest
      income
                    
                    
                    21
                    
                    
                    
                    -Interest
      expense
                    
                    
                    (3,493
                    )
                    
                    
                    (2,189
                    )Total
      other income (expense)
                    
                    
                    (3,472
                    )
                    
                    
                    (2,189
                    )LOSS
      BEFORE INCOME TAXES
                    
                    
                    (270,724
                    )
                    
                    
                    (92,110
                    )PROVISION
      FOR INCOME TAXES
                    
                    
                    -
                    
                    
                    
                    -NET
      LOSS
                    
                    $
                    (270,724
                    )
                    
                    $
                    (92,110
                    )Net
      loss per share – Basic & Diluted
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.01
                    )Basic
      and diluted weighted average number of shares outstanding during the
      period
                    
                    
                    19,653,558
                    
                    
                    
                    10,286,928





See
accompanying notes to consolidated financial statements.


5





KINGS
ROAD ENTERTAINMENT, INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR
THE SIX MONTHS ENDED OCTOBER 31, 2009 AND 2008


(unaudited)





Six months ended October 31,2009
                    
                    
                    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                    
                    $
                    (270,724
                    )
                    
                    $
                    (92,110
                    )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Impaired
      film development costs
                    
                    
                    152,597
                    
                    
                    
                    -Accrued
      shareholder interest payable
                    
                    
                    3,490
                    
                    
                    
                    -Change
      in operating assets and liabilities:Accounts
      receivable, trade
                    
                    
                    (10,097
                    )
                    
                    
                    27,235Film
      development costs
                    
                    
                    (11,344
                    )
                    
                    
                    (45,020
                    )Prepayments
      and other current assets
                    
                    
                    -
                    
                    
                    
                    6,638Accounts
      payable
                    
                    
                    34,635
                    
                    
                    
                    72,553Accrued
      expenses
                    
                    
                    80,798
                    
                    
                    
                    (72,634
                    )Deferred
      revenue
                    
                    
                    (71,229
                    )
                    
                    
                    (41,545
                    )NET
      CASH USED IN OPERATING ACTIVITIES
                    
                    
                    (91,874
                    )
                    
                    
                    (144,883
                    )CASH
      FLOWS FROM FINANCING ACTIVITIES:Common
      stock issued for cash
                    
                    
                    100,000
                    
                    
                    
                    -Common
      stock repurchased for cash
                    
                    
                    -
                    
                    
                    
                    (84,000
                    )Proceeds
      from stockholder loans
                    
                    
                    -
                    
                    
                    
                    92,189NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                    
                    
                    100,000
                    
                    
                    
                    8,189Foreign
      currency translation
                    
                    
                    (1,529
                    )
                    
                    
                    5,914NET
      CHANGE IN CASH AND CASH EQUIVALENTS
                    
                    
                    6,597
                    
                    
                    
                    (130,780
                    )CASH
      AND CASH EQUIVALENTS, BEGINNING OF PERIOD
                    
                    
                    11,416
                    
                    
                    
                    149,765CASH
      AND CASH EQUIVALENTS, END OF PERIOD
                    
                    $
                    18,013
                    
                    
                    $
                    18,985





See
accompanying notes to consolidated financial statements.


6




KINGS
ROAD ENTERTAINMENT, INC.





Notes
to Consolidated Financial Statements


As
of October 31, 2009





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 countries and territories of the world.
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 as of and for the fiscal
year ended April 30, 2009 have been prepared in accordance with generally
accepted accounting principles in the United States of America. All material
inter-company activity and transactions have been eliminated in the preparation
of the condensed consolidated financial statements. The unaudited condensed
consolidated financial statements have been prepared in accordance with the
requirements of Form 10-Q and Rule 10-01 of Regulation S-X. Some information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to those rules and regulations. In the opinion of management,
the accompanying unaudited consolidated financial statements include all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the consolidated financial position, results of operations and
cash flows of the Company. The consolidated balance sheet at April 30, 2009 was
derived from the Company’s audited financial statements included in the
Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2009.
The unaudited condensed consolidated financial statements included herein should
be read in conjunction with the audited consolidated financial statements and
the notes thereto included in that Annual Report on Form 10-K and the Company’s
other SEC filings. Results for the interim period are not necessarily indicative
of the results 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.
Depreciation and Amortization





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





Film
development costs are expensed or capitalized in accordance with generally
accepted accounting principles. The amortization 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.


7





d.
Principals of Consolidation





The
consolidated financial statements include the accounts of the Company and of its
wholly-owned subsidiaries. As of October 31, 2009, the Company had three
wholly-owned subsidiaries: Ticker, Inc., (a California corporation), which was
inactive during the six month period ended October 31, 2009, The Big Easy II
Film, LLC (a California limited liability corporation), which was also inactive
during the six month period ended October 31, 2009 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 generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.





f. Newly
Issued Accounting Pronouncements





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.
Earnings (Net Loss) Per Share





In
accordance with generally accepted accounting principles, 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.





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.





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 October
31, 2009, the Company had a total of $10,097 in accounts receivable. This amount
had been collected by the date of this report.


8





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 incurred in accordance with generally accepted accounting
principles. 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
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 in an impairment of $152,597during the three
month period ending October 31, 2009. This amount comprised primarily of the
impairment of 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 at October 31, 2009 relate 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 cash flows 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.  Current liabilities disclose the
amount expected to be amortized during the subsequent 12 month period and the
balance is disclosed as a non-current liability. As of October 31, 2009 and
April 30, 2009, the Company had deferred revenue totaling $627,273 and $698,502,
respectively. The decrease is primarily due to the regular amortization of
royalty advances but also includes amortization of $16,684 due to early
termination of a distribution contract.





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 $13,689 and $13,873 during the
three months ended October 31, 2009 and 2008, respectively and $26,484 and
$25,616 during the six months ended October 31, 2009 and 2008, 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, 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.





9




c.
Stockholder Loans


As of
October 31, 2009, the Company had borrowed the principal sum of
$103,977 ($112,822 including accrued interest) from its two largest
stockholders, the Company’s Head of Production, Mr. Sven Ebeling and the
Company’s President and CEO, Mr. Philip Holmes under the terms of an arrangement
dated October 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”). The loans bear interest at an adjustable rate equal to 3%
above the WSJ Prime Rate. The interest rate will be reset for each calendar
quarter by the same measure. The term of each loan will be for a maximum of one
year from the end of the month in which the loan is made. At the end of this
term, the Company will either repay the loan with interest or renegotiate the
loan with the lending party. The lenders may require that the Company issue
shares at the value of the 90-day rolling average share price of the Company’s
common stock as quoted on the Pink Sheets at the lower price at the day of
lending or date of renewal upon default or failure to negotiate a mutual
extension. 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 of operations.  As of October 31, 2009 the accumulated interest
for the loans totaled $8,845.  The Company disclosed this transaction in a
Form 8-K filed on July 21, 2008.  On July 22, 2009, the board
unanimously resolved to extend and clarify the terms to 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 the loan at the 90 day rolling average
stock price for transactions.  As the loans and accrued interest are
convertible at the option of the lender, the Company has classified the
stockholder loans as a current liability. Of the principal sum of $103,977
outstanding as of October 31, 2009, an amount of $90,000 plus accrued
interest was re-negotiated according to the original terms on July 31, 2009
between the stockholders and the Company resulting in a 12 month extension of
the loan term through to July 31, 2010.





d.
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
of October 31, 2009, the Company was not involved in any
litigation.





NOTE
7 – RELATED PARTY TRANSACTIONS





On August
4, 2009, the Company paid ISBC GmbH, a German limited liability company managed
by Philip Holmes, President and CEO of the Company and therefore an affiliate, a
flat fee amount of $5,000 as compensation for its work and expenses incurred in
the successful introduction of an equity transaction which closed on July 29,
2009 (see Note 8). On October 6, 2009, the Company reimbursed to ISBC GmbH an
amount of approximately $5,000 within the conditions of a Service Agreement
dated December 17, 2007.





On August
14, 2009 the Company compensated Mr. Sven Ebeling an amount of approximately
$5,000 for production services relating to movies in development. Mr. Ebeling is
Head of Production and beneficial shareholder of approximately 40% of the
Company’s common stock and therefore an affiliate.  The production services
arrangement between the Company and Mr. Ebeling, respectively his production
company West Coast Pictures was published in an 8-K/A on August 4, 2008. On
October 2, 2009 the Company reimbursed West Coast Pictures an amount of $5,000
for production overhead.





NOTE
8 - COMMON STOCK





At
October 31, 2009, the Company had 50,000,000 authorized shares of common stock,
$0.01 par value, of which 19,971,493 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 had 50,000,000 authorized shares of which 19,321,493 were issued and
outstanding. The following common stock transaction transpired in the six months
ended October 31, 2009:





On July
26, 2009, the Company entered into a Securities Purchase Agreement (“Agreement”)
with a European entity (“Investor”), 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
common share of approximately $0.154. This transaction was exempt from
registration pursuant to Section 4(2) of the Securities Act of
1933.





NOTE
9 – RECOGNITION OF REVENUES





Revenue
from the sale or licensing of films is recognized in accordance generally
accepted accounting principles. 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:


10





Months After
                      
                      ApproximateMarketplace
                      
                      InitialRelease
                      
                      ReleasePeriodDomestic
      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. In a given accounting 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, where work performed exceeds the payments received then the
difference is recorded as accounts receivable.





NOTE
10 - GOING CONCERN





The
Company's consolidated financial statements are prepared using generally
accepted accounting principles in the United States of America applicable to a
going concern which contemplates the realization of assets and payment of
liabilities in the normal course of business. However at October 31, 2009, the
Company has limited revenues and a deficit in working capital of $685,128 and
has an accumulated deficit of approximately $26,928,458. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
The Company has discontinued certain operations that historically produced
negative cash flow and is in the process of raising capital through equity-based
investment instruments, which is expected to provide funding for the development
of future projects and operating expenses.


11





ITEM
2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS





The
following discussion concerns the periods ended October 31, 2009 and October 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-K for
the fiscal year ended April 30, 2009.





Results
of Operations





The
Three Months Ended October 31, 2009 vs. the Three Months Ended October 31,
2008


For the
quarter ended October 31, 2009, operating revenues were $92,348 as compared to
$128,704 for the quarter ended October 31, 2008. The decrease of $36,356 results
primarily from no service production contracts in progress during the three
month period ending on October 31, 2009.  Of the $92,348 revenue for the
period, $38,310 was from non-recurring revenue representing a revenue adjustment
by a distributor relating to prior periods.





Operating
expenses amounted to $322,728 for the quarter ended October 31, 2009 as
compared to $144,834 during the quarter ended October 31, 2008. This increase of
approximately $178,000 is primarily due to an increase in the impairment of
film development costs of approximately $153,000 due to the expiration of
an option agreement and large project and consulting fees of approximately
$60,000 which was partially offset by a decrease of project expenses of $16,200
and a decrease in travel and other expenses of approximately
$18,800.





Interest
expenses decreased to $1,762 for the quarter ended October 31, 2009 as compared
to $1,834 during the quarter ended October 31, 2008. The decrease of $72 is
primarily attributable to a reduction in the US Prime interest rate
compared to the corresponding period. The prime rate is used to calculate the
interest on shareholder loans.





The
Company had a net loss of $232,121 for the quarter ended October 31, 2009
as compared to $17,964 for the quarter ended October 31, 2008. The increase in
operating loss of $214,157 results primarily from the increase in the costs
associated with the impairment of film assets which amounted to $152,597 and an
increase in consulting fees of approximately $60,000 for the period.





The
Six Months Ended October 31, 2009 vs. the Six Months Ended October 31,
2008


For the
six months ended October 31, 2009, operating revenues were $156,137 as compared
to $199,498 for the six months ended October 31, 2008. The decrease of $43,361
results primarily from decreased revenue from service productions amounting to
$37,000 during the period. Of the $156,137 revenue for the period, $38,310
was from non-recurring revenue representing a revenue adjustment by a
distributor relating to prior periods.





Costs and
expenses amounted to $423,389 for the six months ended October 31, 2009 as
compared to $289,419 during the six months ended October 31, 2008. This increase
of approximately $134,000 is primarily due to an increase in the impairment
of film development costs of approximately $153,000 and an increase in
consulting fees of approximately $60,000 which was partially offset by a
decrease in project expenses of $16,200, a decrease in salaries of
approximately $38,000 and a decrease in travel and other expenses of
approximately $25,000.





The
Company had a net loss of $270,724 for the six months ended October 31,
2009 as compared to a net loss of $92,110 for the six months ended October 31,
2008. This increase in net loss of $178,614 resulted primarily from the decrease
in revenues, the impairment of certain capitalized film development expenses, an
increase in consulting fees partially offset by decreases in travel,
professional and project expenses.





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 months ended
October 31, 2009, 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 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. 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 new
movies and seeking equity funding for these movies 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. External financing will likely significantly
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.


12





At
October 31, 2009, the Company had cash of $18,013 as compared to $11,416 at
April 30, 2009.  The increase in the Company’s cash is primarily
attributable to an equity investment of $100,000 on July 29, 2009 (refer to Note
7 of the accompanying financial statements) partially offset by operating
losses.





Contractual
Obligations





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.





Cautionary
Note on 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.





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





We are a
“smaller reporting company” as defined by Regulation S-K and as such, are not
required to provide the information contained 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.


13




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 October 31, 2009.





b.
Changes in Internal Control over Financial Reporting




There
have been no material changes in our internal control over financial reporting
during the fiscal quarter ended October 31, 2009, that have materially affected,
or are 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 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.


14


PART
II - OTHER INFORMATION
 
 ITEM 1.
              LEGAL
      PROCEEDINGS
 
 As of
December 14, 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
      1A.
              RISK
      FACTORS
 
 There
have been no material changes from the risk factors disclosed in Part 1, Item 1A
- Risk Factors in our Annual Report on Form 10-K for the year ended April 30,
2009.
 
 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
 
 On
December 11, 2009 Ms. Monika Nosic and Mr. Branko Lustig resigned from the Board
of Directors. On December 12, 2009, the Board of Directors appointed Mr. Sven
Ebeling, the Company’s Head of Production, and Mr. Bekim Zemoski, a management
consultant to fill the vacancies with immediate effect.
 
 On
December 12, 2009 the Board of Directors agreed to issue common 8,650,000 shares
of common stock in exchange for $86,500 of debt owed to DE-INVEST. 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 a Company controlled by Mr. Bekim
Zemoski and therefore an affiliate.
 
 On
December 12, 2009 the Board of Directors agreed to award a bonus to Ms.
Rose-Mare Couture of 2,300,000 shares of common stock in recognition of her work
in the German subsidiary in film development and management consulting services.
Ms. Couture is the spouse of the President and CEO of the Company and therefore
an affiliate.
 
 On
December 12, 2009 the Board of Directors agreed to compensate the departing
Board Members, 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.
 
 On
December 12, 2009 the Board of Directors amended the bylaws of the Company
effective as of December 12, 2009.  Set forth below is a summary of
the amendments to the bylaws:
 
 ARTICLE II Section 6
(d):
 Clarified
that the approval of the holders of a majority of the outstanding shares is
required to approve resolutions.
 
 ARTICLE III Section 4
(a)
 Changed
to permit special meetings of the Board of Directors to be held at locations
permitting remote participation of Board members utilizing tele- and
videoconferencing capabilities, if necessary.
 
 15
  ARTICLE III Section 7 (c)
and, new (d)
 Changed
the Board of Directors authorization threshold for transactions with interested
parties from a 75% majority vote to a 75% majority vote AND a majority approval
of the disinterested directors.
 
 ARTICLE III Section
10
 Permits a
majority of shareholders to remove directors at a special meeting of
shareholders.
 .
 ARTICLE IV Section
3
 Requires
that officers elected by the Board of Directors be suitably
qualified.
 
 ARTICLE IX Section
2
 Requires
shareholder ratification of any amendment to the bylaws that alter the authority
or ability of the shareholders to take action.
 
 The
foregoing summary is qualified by reference to the Amended and Restated Bylaws
set forth in Exhibit 3.1.
 
 On
December 12, 2009, the Board of Directors also amended the resolutions from July
15, 2008, as amended on  July 22, 2009, to stipulate
that:
 (a) the
arrangements therein only applies to existing shareholder loans and existing
suppliers who have committed their services in awareness of such an arrangement
as of the date of the resolution, and
 (b)
conversions of shareholder loans into common shares may only be demanded to the
extent that common shares are available and authorized for issuance by the
Company, and that the minimum conversion value per share be the par value of the
common shares.
 
 On
December 12, 2009, the Board of Directors adopted a Code of Conduct and Ethics
for all employees, officers and directors, which is set forth in Exhibit
14.  The Code of Conduct and Ethics is available on the Company’s
website at www.kingsroadentertainment.net.
  16
 
 ITEM
      6.
                
                EXHIBITS3.1
                
                Amended
      and Restated Bylaws14
                
                Code
      of Conduct and Ethics31.1
                
                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.
  17
 
 SIGNATURES
 
 Pursuant
to the requirements of the Exchange Act, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
  KINGS
      ROAD ENTERTAINMENT, INC.Date:  December
      14, 2009
                      By:
                      /s/
      Philip HolmesPhilip
      Holmes, Chief Executive
Officer
  18