##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-QSB
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934

|                                                |  |                            
|----------------------------------------------- |  | ---------------------------
|For the Quarterly Period Ended January 31, 2002 |  | Commission File No. 0-14234

KINGS ROAD ENTERTAINMENT, INC.
(Name of small business issuer in its charter)

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

5743 N. W. 66th Avenue
Parkland, FL 33067
(Address of principal executive office)

Issuers telephone number: (954) 344-6168

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 | 

As of March 15, 2002, the Registrant had 3,664,390 shares of its common stock
outstanding.

|                                               |     |  |  |    |   | 
|---------------------------------------------- | --- |  |  | -- | - | 
|Transitional Small Business Disclosure Format: | YES |  |  | NO | X



---

TABLE OF CONTENTS



|                                           |                                                                                                                    |                                       |  |  |  |  |  | 
|------------------------------------------ | ------------------------------------------------------------------------------------------------------------------ | ------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION            
|                                           | Item 1  Financial Statements                                                                                     
|                                           |                                                                                                                    | CONSOLIDATED BALANCE SHEET           
|                                           |                                                                                                                    | CONSOLIDATED STATEMENTS OF OPERATIONS
|                                           |                                                                                                                    | CONSOLIDATED STATEMENTS OF CASH FLOWS
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                           | Item 2  Managements Discussion and Analysis of Financial Position and                      Results of Operations
|PART II  OTHER INFORMATION               
|                                           | Item 6  Exhibits and Reports on Form 8-K                                                                         
|SIGNATURES                                



---



##### Table of Contents












PART I  FINANCIAL INFORMATION

Item 1  Financial Statements

KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)

|                                           |                                                                                                     |                            |         |               |         |  
|------------------------------------------ | --------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------------- | ------- | -
|                                           |                                                                                                     |                            |         | AS OF        
|                                           |                                                                                                     |                            |         | JAN. 31, 2002
|                                           |                                                                                                     |                            |         |              
|ASSETS                                     |                                                                                                     |                            |         |              
|                                           | Cash and Cash Equivalents                                                                           |                            | $       | 84,871        |        
|                                           | Film Costs                                                                                          |                            |         | 29,305        |        
|                                           | Fixed Assets                                                                                        |                            |         | 1,491         |        
|                                           | Other Assets                                                                                        |                            |         | 148           |        
|                                           |                                                                                                     |                            |         |              
|TOTAL ASSETS                               |                                                                                                     | $                          | 115,815 |              
|                                           |                                                                                                     |                            |         |              
|LIABILITIES AND STOCKHOLDERS EQUITY       |                                                                                                     |                            |         |              
|LIABILITIES                                |                                                                                                     |                            |         |              
|                                           | Accounts Payable                                                                                    |                            | $       | 90,430        |        
|                                           | Note Payable                                                                                        |                            |         | 19,000        |        
|                                           | Note Payable  Related Party                                                                        |                            |         | 7,843         |        
|                                           | Reserve for Discontinued Operations                                                                 |                            |         | 50,000        |        
|                                           | Accrued Expenses                                                                                    |                            |         | 12,747        |        
|                                           | Deferred Revenue                                                                                    |                            |         | 35,200        |        
|                                           |                                                                                                     |                            |         |              
|                                           |                                                                                                     | TOTAL LIABILITIES          |         |               | 215,220 |  
|COMMITMENTS AND CONTINGENCIES              |                                                                                                     |                            |         |              
|STOCKHOLDERS EQUITY                       |                                                                                                     |                            |         |              
|                                           | Common Stock, $.01 par value, 12,000,000 shares
authorized, 3,664,390 shares issued and outstanding |                            |         | 36,644        |        
|                                           | Additional Paid-In Capital                                                                          |                            |         | 24,906,656    |        
|                                           | Deficit                                                                                             |                            |         | (25,042,705   | )      
|                                           |                                                                                                     |                            |         |              
|                                           |                                                                                                     | TOTAL STOCKHOLDERS EQUITY |         |               | (99,405 | )
|                                           |                                                                                                     |                            |         |              
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                     | $                          | 115,815 |              
|                                           |                                                                                                     |                            |         |              

The accompanying notes are an integral part of these consolidated financial
statements.



2



---



##### Table of Contents






KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

|                                  |                                                               |  |                |           |                |  |         |           |      |  |         |           |   |  |           |           |  
|--------------------------------- | ------------------------------------------------------------- |  | -------------- | --------- | -------------- |  | ------- | --------- | ---- |  | ------- | --------- | - |  | --------- | --------- | -
|                                  |                                                               |  | THREE MONTHS   |           | NINE MONTHS   
|                                  |                                                               |  | ENDED JAN. 31, |           | ENDED JAN. 31,
|                                  |                                                               |  |                |           |               
|                                  |                                                               |  | 2002           |           | 2001           |  | 2002    |           | 2001
|                                  |                                                               |  |                |           |                |  |         |           |     
|REVENUES                          |                                                               |  |                |           |                |  |         |           |      |  |         |           |   |  |           |          
|                                  | Feature Films                                                 |  | $              | 317,947   |                |  | $       | 296,248   |      |  | $       | 608,389   |   |  | $         | 1,267,514 |  
|                                  |                                                               |  |                |           |                |  |         |           |      |  |         |           |   |  |           |          
|                                  |                                                               |  | 317,947        |           |                |  | 296,248 |           |      |  | 608,389 |           |   |  | 1,267,514 |          
|COSTS AND EXPENSES                |                                                               |  |                |           |                |  |         |           |      |  |         |           |   |  |           |          
|                                  | Costs Related to Revenue                                      |  |                | 0         |                |  |         | 0         |      |  |         | 0         |   |  |           | 266,191   |  
|                                  | Film Cost Write-down                                          |  |                | 118,617   |                |  |         | 0         |      |  |         | 118,617   |   |  |           | 0         |  
|                                  | Selling Expenses                                              |  |                | 50,593    |                |  |         | 0         |      |  |         | 61,627    |   |  |           | 35,585    |  
|                                  | General & Administrative Expenses                             |  |                | 139,538   |                |  |         | 125,171   |      |  |         | 515,688   |   |  |           | 431,664   |  
|                                  | Impairment of Goodwill                                        |  |                | 0         |                |  |         | 0         |      |  |         | 67,965    |   |  |           | 0         |  
|                                  |                                                               |  |                |           |                |  |         |           |      |  |         |           |   |  |           |          
|                                  |                                                               |  | 308,748        |           |                |  | 125,171 |           |      |  | 763,897 |           |   |  | 733,440   |          
|                                  |                                                               |  |                |           |                |  |         |           |      |  |         |           |   |  |           |          
|                                  | OPERATING PROFIT/(LOSS)                                       |  |                | 9,199     |                |  |         | 171,077   |      |  |         | (155,508  | ) |  |           | 534,074   |  
|OTHER INCOME/(EXPENSE)            |                                                               |  |                |           |                |  |         |           |      |  |         |           |   |  |           |          
|                                  | Interest Expense                                              |  |                | (339      | )              |  |         | (438      | )    |  |         | (1,017    | ) |  |           | (1,004    | )
|                                  | Sale of Marketable Securities                                 |  |                | 29,503    |                |  |         | 0         |      |  |         | 29,503    |   |  |           | 0         |  
|                                  | Interest Income                                               |  |                | 0         |                |  |         | 135       |      |  |         | 38        |   |  |           | 7,802     |  
|                                  | Gain From Cancellation of Indebtedness                        |  |                | 0         |                |  |         | 0         |      |  |         | 0         |   |  |           | 126,313   |  
|                                  |                                                               |  |                |           |                |  |         |           |      |  |         |           |   |  |           |          
|                                  |                                                               |  | 29,164         |           |                |  | (303    | )         |      |  | 28,524  |           |   |  | 133,111   |          
|                                  | INCOME/(LOSS) BEFORE DISCONTINUED
OPERATIONS AND INCOME TAXES |  |                | 38,363    |                |  |         | 170,774   |      |  |         | (126,984  | ) |  |           | 667,185   |  
|Loss from Discontinued Operations |                                                               |  | 0              |           |                |  | 160,659 |           |      |  | 79,294  |           |   |  | 274,801   |          
|Provision for Income Taxes        |                                                               |  | 0              |           |                |  | 0       |           |      |  | 0       |           |   |  | 1,600     |          
|                                  |                                                               |  |                |           |                |  |         |           |      |  |         |           |   |  |           |          
|                                  | NET INCOME/(LOSS)                                             |  | $              | 38,363    |                |  | $       | 10,115    |      |  | $       | (206,278  | ) |  | $         | 390,784   |  
|                                  |                                                               |  |                |           |                |  |         |           |      |  |         |           |   |  |           |          
|                                  | Net (Loss) Per Share  Discontinued
Operations                |  |                |          |                |  | $       | (0.05     | )    |  | $       | (0.02     | ) |  | $         | (0.08     | )
|                                  |                                                               |  |                |           |                |  |         |           |      |  |         |           |   |  |           |          
|                                  | Net Income/(Loss) Per Share  Basic
and Diluted               |  | $              | 0.01      |                |  | $       | 0.00      |      |  | $       | (0.06     | ) |  | $         | 0.11      |  
|                                  |                                                               |  |                |           |                |  |         |           |      |  |         |           |   |  |           |          
|                                  | Weighted Average Number of Common
Shares  Basic and Diluted  |  |                | 3,664,390 |                |  |         | 3,487,390 |      |  |         | 3,664,390 |   |  |           | 3,487,390 |  
|                                  |                                                               |  |                |           |                |  |         |           |      |  |         |           |   |  |           |          

The accompanying notes are an integral part of these consolidated financial
statements.



3



---



##### Table of Contents






KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                                     |                                                                                          |                                                 |        |                     |          |      |         |         |          |  
|---------------------------------------------------- | ---------------------------------------------------------------------------------------- | ----------------------------------------------- | ------ | ------------------- | -------- | ---- | ------- | ------- | -------- | -
|                                                     |                                                                                          |                                                 |        | FOR THE NINE MONTHS
|                                                     |                                                                                          |                                                 |        | ENDED JANUARY 31,  
|                                                     |                                                                                          |                                                 |        |                    
|                                                     |                                                                                          |                                                 |        | 2002                |          | 2001
|                                                     |                                                                                          |                                                 |        |                     |          |     
|CASH FLOWS FROM OPERATING ACTIVITIES:                |                                                                                          |                                                 |        |                     |          |      |         |        
|                                                     | Net (Loss)/Income                                                                        |                                                 | $      | (206,278            | )        |      | $       | 390,784 |         
|                                                     | Adjustments to reconcile Net (Loss)/Income to Net Cash
Provided by Operating Activities: |                                                 |        |                     |          |      |         |         |         
|                                                     |                                                                                          | Depreciation and Amortization                   |        |                     | 1,072    |      |         |         | 281,528  |  
|                                                     |                                                                                          | Development Cost Write-down                     |        |                     | 118,617  |      |         |         | 0        |  
|                                                     |                                                                                          | Impairment of Goodwill                          |        |                     | 67,965   |      |         |         | 0        |  
|                                                     |                                                                                          | Gain from Cancellation of Indebtedness          |        |                     | 0        |      |         |         | (126,313 | )
|                                                     | Changes in Assets and Liabilities:                                                       |                                                 |        |                     |          |      |         |         |         
|                                                     |                                                                                          | Decrease/(Increase) in Accounts Receivable      |        |                     | 52,891   |      |         |         | (206,537 | )
|                                                     |                                                                                          | Decrease/(Increase) in Inventory                |        |                     | 34,071   |      |         |         | (215,890 | )
|                                                     |                                                                                          | Decrease/(Increase) in Prepaid Expenses         |        |                     | 49,631   |      |         |         | (184,871 | )
|                                                     |                                                                                          | Increase in Other Assets                        |        |                     | (148     | )    |         |         | (41,440  | )
|                                                     |                                                                                          | (Decrease)/Increase in Accounts Payable         |        |                     | (112,939 | )    |         |         | 71,810   |  
|                                                     |                                                                                          | Increase in Reserve for Discontinued Operations |        |                     | 50,000   |      |         |         | 0        |  
|                                                     |                                                                                          | (Decrease)/Increase in Accrued Expenses         |        |                     | (43,626  | )    |         |         | 6,827    |  
|                                                     |                                                                                          | Increase in Deferred Revenue                    |        |                     | 32,900   |      |         |         | 8,030    |  
|                                                     |                                                                                          |                                                 |        |                     |          |      |         |        
|                                                     | NET CASH AND CASH EQUIVALENTS PROVIDED BY/
(USED IN) OPERATING ACTIVITIES                |                                                 |        | 44,156              |          |      |         | (16,072 | )       
|CASH FLOWS FROM INVESTING ACTIVITIES:                |                                                                                          |                                                 |        |                     |          |      |         |        
|                                                     | Purchases of Other Investments                                                           |                                                 |        | 0                   |          |      |         | (10,000 | )       
|                                                     | Additions to Film Development Costs                                                      |                                                 |        | (21,604             | )        |      |         | 0       |         
|                                                     | Theater Production Costs                                                                 |                                                 |        | 0                   |          |      |         | (37,385 | )       
|                                                     | Disposal of Fixed Assets                                                                 |                                                 |        | 0                   |          |      |         | 6,514   |         
|                                                     |                                                                                          |                                                 |        |                     |          |      |         |        
|                                                     | NET CASH AND CASH EQUIVALENTS USED
IN INVESTING ACTIVITIES                               |                                                 |        | (21,604             | )        |      |         | (40,871 | )       
|CASH FLOWS FROM FINANCING ACTIVITIES:                |                                                                                          |                                                 |        |                     |          |      |         |        
|                                                     | Issuance of Note                                                                         |                                                 |        | 0                   |          |      |         | 39,000  |         
|                                                     | Issuance of Note  Related Party                                                         |                                                 |        | 28,268              |          |      |         | 0       |         
|                                                     | Repayment of Note                                                                        |                                                 |        | (20,425             | )        |      |         | (20,000 | )       
|                                                     |                                                                                          |                                                 |        |                     |          |      |         |        
|                                                     | NET CASH AND CASH EQUIVALENTS PROVIDED
BY FINANCING ACTIVITIES                           |                                                 |        | 7,843               |          |      |         | 19,000  |         
|                                                     |                                                                                          |                                                 |        |                     |          |      |         |        
|NET INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS |                                                                                          |                                                 | 30,394 |                     |          |      | (37,943 | )      
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     |                                                                                          |                                                 | 54,477 |                     |          |      | 85,159  |        
|                                                     |                                                                                          |                                                 |        |                     |          |      |         |        
|CASH AND CASH EQUIVALENTS AT END OF PERIOD           |                                                                                          | $                                               | 84,871 |                     |          | $    | 47,216  |        
|                                                     |                                                                                          |                                                 |        |                     |          |      |         |        

The accompanying notes are an integral part of these consolidated financial
statements.



4



---



##### Table of Contents






KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles 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, 2001 included in the Kings Road
Entertainment, Inc. (Company or Registrant) annual report on Form 10-KSB
for that period.

In the opinion of the Companys management, all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Companys financial
position at January 31, 2002 and the results of its operations and cash flows
for the nine month periods ended January 31, 2002 and 2001 have been included.

The results of operations for the three and nine month periods ended
January 31, 2002 are not necessarily indicative of the results to be expected for the
full fiscal year. For further information, refer to the financial statements
and footnotes thereto included in the Companys annual report on Form 10-KSB
for the year ended April 30, 2001.

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 periods.
Actual results could differ from those estimates.

Certain amounts for the three and nine month periods ended January 31, 2001
have been reclassified to conform to the presentation of the January 31, 2002
amounts. The reclassifications have no effect on reported net income.

The Companys financial statements have been prepared assuming the Company will
continue as a going concern. As described in Item 2  Liquidity and Capital
Resources, the Company does not currently have sufficient capital resources to
fund its operations for more than approximately 6 months. If the Company does
not raise additional capital, increase its revenues or sell certain of its
assets, the Company will, in all likelihood, be forced to significantly reduce
its operations or liquidate.

NOTE B  FILM COSTS

Film costs consist of film projects actively in development at January 31,
2002.

NOTE C  NOTES PAYABLE

In connection with the acquisition of Animal Town, Inc. (Animal Town) on
August 31, 2000, the Company issued a note to the seller of the common stock of
Animal Town in the principal amount of $39,000, bearing interest at 7% per annum with an
initial maturity date of November 30, 2000. The outstanding balance of the
note at January 31, 2002 was $20,908 consisting of principal of $19,000 plus
accrued and unpaid interest of $1,908. As of January 31, 2002, the Company was
in default of the note. See Note E  Litigation and Contingencies.



5



---



##### Table of Contents



KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE C  NOTES PAYABLE (CONTINUED)

In connection with the acquisition of Kings Road Productions (Europe) GmbH (See
Note G), the Company issued a note in the amount of $28,268 to a related party
bearing interest at 8% per annum. The note was due on December 31, 2001 and is
currently in default. As of January 31, 2002, the outstanding balance related
to this note was $7,843.

NOTE D  INCOME TAXES

A reconciliation of the provision for income taxes to the expected income tax
expense at the statutory federal tax rate of 34% is as follows:

|                                        |  |               |         |               |  |   |          |  
|--------------------------------------- |  | ------------- | ------- | ------------- |  | - | -------- | -
|                                        |  | Nine Months   |         | Nine Months  
|                                        |  | Ended         |         | Ended        
|                                        |  | Jan. 31, 2002 |         | Jan. 31, 2001
|                                        |  |               |         |              
|Computed Expected Tax at Statutory Rate |  | $             | (70,135 | )             |  | $ | 132,867  |  
|State and Local Taxes                   |  |               | 0       |               |  |   | 1,600    |  
|Valuation Allowance                     |  |               | 70,135  |               |  |   | (132,867 | )
|                                        |  |               |         |               |  |   |          |  
|                                        |  | $             | 0       |               |  | $ | 1,600    |  
|                                        |  |               |         |               |  |   |          |  

For federal income tax purposes, the Company has available net operating loss
carryforwards to offset current and future income tax liabilities.

NOTE E  LITIGATION AND CONTINGENCIES

On April 30, 2001, Kelrom Agency, Inc. filed suit against the Company and KRTR,
Inc. seeking payment of $5,968 related to theater advertising for the play End
of the World Party. The Company does not believe it has any liability in
connection with such advertising and intends to defend itself vigorously.

On August 15, 2001, Sensory Lighting and Sound, Inc. filed suit against the
Company and KRTR, Inc. seeking payment of $14,080 for lighting equipment rental
in connection with the play End of the World Party. The Company does not
believe it has any liability in connection with such equipment rental and
intends to defend itself vigorously.

On October 10, 2001, Kenneth Kolsbunn filed suit against the Company in
Superior Court of California, County of Sonoma for collection of the note
described in Note C  Notes Payable. A default judgment was entered against
the Company on February 26, 2002 in the amount of $24,281.36. On April 9,
2002, the Company entered into a settlement agreement with Mr. Kolsbunn
resolving all claims between the parties. Under the terms of the settlement,
the Company is required to pay Mr. Kolsbunn
$10,000, $5,000 of which was paid on April 18, 2002. The balance is payable
upon Mr. Kolsbunn satisfying various conditions of the settlement agreement.



6



---



##### Table of Contents



KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE E  LITIGATION AND CONTINGENCIES (CONTINUED)

The Company has been advised of a lawsuit filed against the Company by the
Theatrical and Television Motion Picture Special Payments Fund seeking the
payment of residuals under a collective bargaining agreement with the American
Federation of Musicians. The Company has not yet been served and, therefore,
does not have sufficient information regarding the specifics of such claim(s).
The Company believes it has previously satisfied all of its obligations with
respect to the American Federation Musicians collective bargaining agreement
and intends to vigorously defend itself. The Company cannot yet assess the
potential impact of such claim(s) on its results of operations.

In the ordinary course of business, the Company has or may become involved in
disputes or litigation. On the basis of information available to it,
management believes such contingencies will not have a materially adverse
effect on the Companys financial position or results of operations.

NOTE F  DISCONTINUED OPERATIONS

During the three months ended October 31, 2001, the Company elected to cease
all operations pertaining to its Animal Town subsidiary. Subsequent to its
purchase by the Company, Animal Towns operations proved to be unprofitable and
the Company was unable to determine a reasonable scenario under which Animal
Town could become a profitable entity. Therefore, as of January 31, 2002,
Animal Towns operations have been classified as discontinued and have been
segregated from the Companys viable operations. At the date of
discontinuance, Animal Town had assets totaling $34,584 and liabilities of
$57,329. The Company created a reserve of $45,000 to cover any unforeseen
claims against Animal Town.

During the three months ended October 31, 2001, the Company elected to cease
all operations pertaining to the stage play End of the World Party (the
Play). Therefore, as of January 31, 2002, all operations pertaining to the
Play have been classified as discontinued and have been segregated from the
Companys viable operations. At the date of discontinuance, the Play had no
assets and liabilities of $15,000. The Company created a reserve of $5,000 to
cover any unforeseen claims related to the Play.

The following is a summary of the loss from discontinued operations resulting
from the elimination of the operations of Animal Town and the Play. The
financial statements have been retroactively stated to reflect this event. No
tax benefit has been attributed to the discontinued operations.



7



---



##### Table of Contents



KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE F  DISCONTINUED OPERATIONS (CONTINUED)

|                   |  |                                       |   |                |   |                |         |      |          |      |         |   |         |   |           |   |          |  
|------------------ |  | ------------------------------------- | - | -------------- | - | -------------- | ------- | ---- | -------- | ---- | ------- | - | ------- | - | --------- | - | -------- | -
|                   |  |                                       |   | THREE MONTHS   |   | NINE MONTHS   
|                   |  |                                       |   | ENDED JAN. 31, |   | ENDED JAN. 31,
|                   |  |                                       |   |                |   |               
|                   |  |                                       |   | 2002           |   | 2001           |         | 2002 |          | 2001
|                   |  |                                       |   |                |   |                |         |      |          |     
|REVENUES           |  |                                       |   |                |   |                |         |      |          |      |         |   |         |   |           |  
|                   |  | Catalog Sales                         |   | $              | 0 |                |         | $    | 394,010  |      |         | $ | 36,943  |   |           | $ | 486,760  |  
|                   |  | Theatrical Admissions                 |   |                | 0 |                |         |      | 274,292  |      |         |   | 0       |   |           |   | 285,586  |  
|                   |  |                                       |   |                |   |                |         |      |          |      |         |   |         |   |           |  
|                   |  |                                       | 0 |                |   |                | 668,302 |      |          |      | 36,943  |   |         |   | 772,346   |  
|COSTS AND EXPENSES |  |                                       |   |                |   |                |         |      |          |      |         |   |         |   |           |  
|                   |  | Costs Related to Revenue              |   |                | 0 |                |         |      | 368,219  |      |         |   | 29,852  |   |           |   | 525,608  |  
|                   |  | General & Administrative Expenses     |   |                | 0 |                |         |      | 460,742  |      |         |   | 86,385  |   |           |   | 521,539  |  
|                   |  |                                       |   |                |   |                |         |      |          |      |         |   |         |   |           |  
|                   |  |                                       | 0 |                |   |                | 828,961 |      |          |      | 116,237 |   |         |   | 1,047,147 |  
|                   |  |                                       |   |                |   |                |         |      |          |      |         |   |         |   |           |  
|                   |  | NET LOSS FROM DISCONTINUED
OPERATIONS |   | $              | 0 |                |         | $    | (160,659 | )    |         | $ | (79,294 | ) |           | $ | (274,801 | )
|                   |  |                                       |   |                |   |                |         |      |          |      |         |   |         |   |           |  

NOTE G  RELATED PARTY TRANSACTIONS

During the nine months ended January 31, 2002, the Company purchased 50% of the
outstanding shares of Kings Road Productions (Europe) GmbH from a company owned
by a former officer and director, bringing its ownership to 100%. As of
January 31, 2002, the Company owes $7,843 to that company in the form of a
note. The note bears interest at 8% per annum and was due December 31, 2001.
The Company is currently in default of the note.

NOTE H  SIGNIFICANT EVENTS

During the quarter ended January 31, 2002, the Company entered into a
settlement agreement with a distributor of certain of the Companys films. The
settlement agreement resolved various claims made by the Company related to the
distribution of the various films. In accordance with the settlement
agreement, the Company received a non-refundable payment of $200,000. Of that payment,
$100,000 is recoupable from the Companys share of future revenues from the
various films, if any. As of January 31, 2002, the $200,000 payment received
by the Company has been recognized as revenue.



8



---



##### Table of Contents






Item 2  Managements Discussion and Analysis of Financial Position and
Results of Operations

Recent Developments

Subsequent to the fiscal year ended April 30, 1995, the Company has
derived its film revenues almost exclusively from the exploitation of films
produced in prior years. The Company continues to fund and develop motion
picture projects, with the intention of either producing the motion picture,
establishing a partnership or joint venture with another film production
company to develop and/or produce the project or an outright sale of the
project.

On August 31, 2000, the Company completed the acquisition of the common
stock of Animal Town, Inc. (Animal Town), a privately-held direct mail order
catalogue company that markets childrens toys, games, crafts and books
specializing in cooperative play and development, animal protection and
environmental awareness. The Company acquired all of the outstanding common
stock of Animal Town in exchange for a combination of approximately $12,000 in
cash, a note payable in the amount of $39,000 to the seller of the common stock
and the issuance of 77,000 shares of the Companys common stock, the exact
number of shares determined based upon a debt-for-equity exchange offer made to
then existing Animal Town creditors that commenced on September 29, 2000 and
was concluded on January 29, 2001. Due to recurring operating losses since
the Companys acquisition of Animal Town and current market conditions, the
Company has discontinued the operations of Animal Town.

During the nine months ended January 31, 2002, the Company purchased 50%
of the outstanding shares of Kings Road Productions (Europe) GmbH from a
company owned by a former officer and director, bringing its ownership to 100%.
As of January 31, 2002, the Company owes $7,843 to that company in the form of
a note. The note bears interest at 8% per annum and was due December 31, 2001.
The Company is currently in default of the note.

Results of Operations

The Three Months Ended January 31, 2002 vs. the Three Months Ended January 31,
2001

For the quarter ended January 31, 2002, feature film revenues were
$317,947 as compared to $296,248 for the quarter ended January 31, 2001. The
increase of $21,699 results primarily from increased royalties on the Companys
feature film library.

Costs and expenses increased to $308,748 for the quarter ended January 31,
2002 as compared to $125,171 during the quarter ended January 31, 2001. This
increase of $183,577 results primarily from the write-down of development costs
of $118,617, which the Company does not expect to recover, and $50,593 of
selling expenses for which there were no comparable expenses during the quarter
ended January 31, 2001.

During the quarter ended January 31, 2002, the Company recorded an expense
of $20,000 related to an investment in a foreign subsidiary. The Company also
recorded a gain of $29,503 from the sale of a portion of the Companys investment in
Immediate Entertainment Group (Immediate). This gain resulted from the fact
that the Company had previously written-off its investment in Immediate.

The Companys had no loss from discontinued operations during the quarter
ended January 31, 2002 as compared to $160,659 during the quarter ended
January 31, 2001. This decrease results from the fact that the operations of Animal
Town were terminated during the quarter ended October 31, 2001.



9



---



##### Table of Contents



The Company had net income of $38,363 for the quarter ended January 31,
2002 as compared to net income of $10,115 for the quarter ended January 31,
2001. During the quarters ended January 31, 2002 and 2001, the Company had no
provision for income taxes.

The Nine Months Ended January 31, 2002 vs. the Nine Months Ended January 31,
2001

For the nine months ended January 31, 2002, feature film revenues were
$608,389 as compared to $1,267,514 for the nine months ended January 31, 2001.
The decrease of increase of $659,125 principally related to (i) the sale of the
Companys rights to Ticker, a feature film project that had been developed by
the Company during the nine months ended January 31, 2001 and (ii) decreased
domestic and foreign distribution revenues from feature films in the Companys
film library during the nine months ended January 31, 2002.

Costs related to revenue were $0 for the nine months ended January 31,
2002 as compared to $266,191 during the nine months ended January 31, 2001
reflecting the full amortization of costs associated with the Company film
library. The Company recorded a write-down in development costs of $118,617
that the Company does not expect to recover. Selling expenses increased to
$61,627 during the nine months ended January 31, 2002 as compared to $35,585
during the nine months ended January 31, 2001 reflecting the Companys efforts
to offset the significant decrease in the Companys revenues. General and
administrative costs increased to $515,688 for the nine months ended January
31, 2002 from $431,664 for the nine months ended January 31, 2001. The
increase resulted principally from general expenses incurred by the Companys
foreign subsidiary, Kings Road Productions Europe.

Interest income decreased significantly to $38 for the nine months ended
January 31, 2002 versus $7,802 for the nine months ended January 31, 2001
reflecting a decrease in cash and cash equivalents held during the respective
periods.

During the nine months ended January 31, 2002, the Company recorded an
expense of $50,000 related to an investment in a foreign subsidiary and
recorded an expense of $67,965 related to the impairment of goodwill in
connection with the Companys acquisition of Animal Town. The Company also
recorded a gain of $29,503 from the sale of a portion of the Companys
investment in Immediate Entertainment Group (Immediate). This gain resulted
from the fact that the Company had previously written-off its investment in
Immediate. During the nine months ended January 31, 2001, the Company recorded
a gain of $126,313 from the cancellation of certain indebtedness relating to the
Companys investment in Immediate
Entertainment Group (Immediate).

The Companys loss from discontinued operations, principally Animal Town,
decreased to $79,294 during the nine months ended January 31, 2002 as compared
to $274,801 during the nine months ended January 31, 2001. This decrease
results primarily from the significantly reduced operations of Animal Town
during the nine months ended January 31, 2002 as compared to the same period
last year.

The Company had a net loss of $206,278 for the nine months ended
January 31, 2002 as compared to net income of $390,784 for the nine months ended
January 31, 2001. The decrease in net income resulted primarily from
(i) significantly decreased revenues during the nine months ended January 31, 2002,
as discussed above, (ii) the expense recorded of $50,000 related to an
investment in a foreign subsidiary and (iii) the expense of $67,965 related to
the impairment of good will in connection with the Companys acquisition of
Animal Town and (iv) a gain from the cancellation of certain indebtedness
relating to the Immediate transaction during



10



---



##### Table of Contents



the nine months ended January 31,
2001, for which there was no comparable gain during the nine months ended
January 31, 2002. During the nine months ended January 31, 2002 and 2000, the
Company had no significant provision for income taxes.

Liquidity and Capital Resources

The Companys principal source of working capital during the three and
nine month periods ended January 31, 2002 was motion picture royalty income.
The Company does not currently have sufficient capital to fund its operations
for more than approximately 6 months. If the Company fails to raise additional
capital, increase revenues or sell certain of its assets, the Company will, in
all likelihood, be forced to significantly reduce its operations or liquidate.

For the nine months ended January 31, 2002, the Companys net cash flow
provided by operating activities was $44,156 compared to net cash out flow of
$16,072 for the comparable nine month prior year period. At January 31, 2002,
the Company had cash and cash equivalents of $84,871 as compared to $47,216 at
January 31, 2001.

Forward-Looking Statements

The foregoing discussion, as well as the other sections of this Quarterly
Report on Form 10-QSB, contains forward-looking statements that reflect the
Companys current views with respect to future events and financial results.
Forward-looking statements usually include the verbs anticipates, believes,
estimates, expects, intends, plans, projects, understands and other
verbs suggesting uncertainty. The Company reminds shareholders that
forward-looking statements are merely predictions and therefore inherently
subject to uncertainties and other factors which could cause the actual results
to differ materially from the forward-looking statements. Potential factors
that could affect forward-looking statements include, among other things, the
Companys ability to identify, produce and complete film projects that are
successful in the marketplace, to arrange financing, distribution and promotion
for these projects on favorable terms in various markets and to attract and
retain qualified personnel.







PART II  OTHER INFORMATION

Item 6  Exhibits and Reports on Form 8-K

(a)   Exhibits (numbered in accordance with Item 601 of Regulation S-B)

| |  |                                                                                         
| |  | ----------------------------------------------------------------------------------------
| |  | 3.1   Restated Certificate of Incorporation of Registrant. (1)                          
| |  | 3.2   Bylaws of Registrant. (2)                                                         
| |  |                                                                                         
| |  | (1)   Incorporated by reference to Form 10-KSB for the fiscal year
ended April 30, 1998.
| |  | (2)   Incorporated by reference to Form 10-K for the fiscal year
ended April 30, 1988.  

(b)   Forms 8-K

| |  |                                                                                                                                                                                                                                             
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | On March 29, 2002, the Company filed a Form 8-K reporting under Item 5
thereof that Michael Berresheim resigned as the Companys Chairman and
Chief Executive Officer. Geraldine Blecker replaced Mr. Berresheim as
Chief Executive Officer.



11



---



##### Table of Contents






SIGNATURES

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



|                    |                                |                                                                
|------------------- | ------------------------------ | ---------------------------------------------------------------
|Date:  May 24, 2002 | KINGS ROAD ENTERTAINMENT, INC.
|                    | By:                            | /s/ Geraldine BleckerGeraldine Blecker, Chief
Executive Officer





12