U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x	Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2007

¨	Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 0-17843

REGAL ONE CORPORATION

(Name of small business issuer in its charter)

Florida		95-4158065
(State or other jurisdiction		(I.R.S. Employer Identification No.)
of incorporation or organization)

11300 West Olympic Blvd, Suite 800, Los Angeles, CA		90064
(Address of principal executive offices)		(Zip Code)

Issuer's telephone number: (310) 312-6888

Check whether the issuer (1) has 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 ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x

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

Yes ¨ No x

As of November 14, 2007 there were: (i) 3,633,067 shares of common stock, $.001 par value, issued and outstanding; and 100,000 shares of Series B convertible preferred stock outstanding. The outstanding Series B convertible preferred stock is convertible into an aggregate of 10,000,000 shares of common stock.

TABLE OF CONTENTS

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements		F-1

Item 2. Management’s Discussion and Analysis of Financial Condition and Operating Results		1

Item 3. Control and Procedures		1

PART 1I - OTHER INFORMATION

Item 1. Legal Proceedings		5

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		10

Item 3. Defaults upon Senior Securities		10

Item 4. Submission of Matters to a Vote of Securities Holders		10

Item 5. Other Information		10

Item 6. Exhibits and Reports on Form 8-K		10

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

The following financial statements listed in the table below have been prepared in accordance with the requirements of Regulation S-X.

CONTENTS

		Page
Balance Sheets		F-2
Schedule of Investments		F-3
Statement of Changes in Net Assets		F-4
Statement of Operations		F-5
Statements of Cash Flows		F-6
Statements of Financial Highlights		F-7

Notes to Financial Statements		F-8 to F-15

F-1

REGAL ONE CORPORATION

BALANCE SHEETS

	September 30, 2007			December 31, 2006
	UNAUDITED			AUDITED
ASSETS
Current Assets
Cash	$	70,202		$	42
Marketable Securities - Salable		459,822			449,436
Marketable Securities - Reserved for Dividend		—			750,564
Prepaid Expense		3,000			3,000
Advances to Subsidiary		—			518,490
Less: Allowance for Collection of Advances to Subsidiary		—			(518,490	)
Total Current Assets		533,024			1,203,042
Deferred Tax Assets - net		—			—
Investments
Investment in Subsidiary		—			649,526
Less: Impairment of Value of Investment in Subsidiary		—			(649,526	)
Investments in Non-Affiliated Portfolio Companies		2,145,424			2,741,430
Less: Marketable Securities Portion		(459,822	)		(1,200,000	)
Total Investments, net		1,685,602			1,541,430
TOTAL ASSETS	$	2,218,626		$	2,744,472

LIABILITIES & NET ASSETS
Current Liabilities
Due to Stockholders and Officers	$	165,964		$	95,964
Accounts Payable and Accrued Liabilities		376,061			417,155
Note Payable - Officer/Principal Shareholder		650,794			227,294
Contingent Litigation Fees		—			250,000
Dividend Payable		—			750,564
Total Current Liabilities		1,192,819			1,740,977

Net Assets
Preferred Stock, no par value
Series A - Authorized 50,000 shares; 0 issued and		—			—
outstanding in 2006 and 2005
Series B - Authorized 500,000 shares; 100,000 issued and		500			500
outstanding in 2006 and 2005
Common Stock, no par value:
Authorized 50,000,000 shares; issued and outstanding 3,633,067		7,535,041			8,184,567
as of September 30, 2007 and 4,633,067 as of December 31, 2006
Paid In Capital		187,704			192,126

Dividend Declared		—			(750,564	)
Accumulated Deficit		(6,697,438	)		(6,623,134	)
Total Net Assets		1,025,807			1,003,495
TOTAL LIABILITIES & NET ASSETS	$	2,218,626		$	2,744,472
Net Asset Value Per Outstanding Common Share	$	0.282		$	0.217

See Accompanying Notes to the Financial Statements

F-2

REGAL ONE CORPORATION

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2007

UNAUDITED

Equity Investments:

	Description	Percent		Carrying Cost
Company	of Business	Ownership		Investment			Fair Value		Affiliation

Neuralstem	Biomedical company	4	%	$	83,707	(1)	$	2,145,424	No
American Stem Cell	Biomedical company	8	%	$	0		$	0	No
SuperOxide Health Sciences	Biomedical company	8	%	$	0		$	0	No
Total Investments				$	83,707		$	2,145,424

(1) As of September 30, 2007, there were 1,273,814 Neuralstem shares held after the sale in this quarter of 35,038 shares, the transfer of 20,000 shares to settle a disputed liability and the adjusted Regal dividend, paid in 465,430 Neuralstem shares in the first quarter. These remaining shares have been valued at a discounted price from the 9/30/07 market price due to the current thinly traded market for Neuralstem shares. Of the total shares held at 9/30/07, the adjusted 279,527 that were registered have been recorded as a current asset. Regal also has ten year warrants at an exercise price of $5 per share which is significantly above the present fair market value of Neuralstem shares, therefore only a $50,000 value has yet been assigned to these warrants. In 2006, all portfolio companies were also reported on a fair value basis.

See Accompanying Notes to the Financial Statements

F-3

REGAL ONE CORPORATION

STATEMENTS OF CHANGE IN NET ASSETS

	For the Nine Months Ended			For the Nine Months Ended
	September 30, 2007			September 30, 2006
	UNAUDITED			UNAUDITED
OPERATIONS:
Net investment income (loss)	$	(282,405	)	$	(503,269	)
Net realized gain (loss) on portfolio securities		2,083			—
Net change in unrealized appreciation (depreciation) of portfolio securities		206,018			678,548

Net increase (decrease) in net assets resulting from operations		(74,304	)		175,279

SHAREHOLDER ACTIVITY:

Stock Sales and vested Options		—			281,555

Declared Dividend		96,616			—
		96,616			281,555

NET INCREASE (DECREASE) IN NET ASSETS		22,312			456,834

NET ASSETS:
Beginning of Period		1,003,495			(281,697	)

End of Period	$	1,025,807		$	175,137

See Accompanying Notes to the Financial Statements

F-4

REGAL ONE CORPORATION

STATEMENTS OF OPERATIONS

	For the Three Months ended September 30,						For the Nine Months ended September 30,
	2007			2006			2007			2006
	UNAUDITED			UNAUDITED			UNAUDITED			UNAUDITED

Investment Income	$	—		$	—		$	—		$	—
Operating Expenses
Professional Services		37,968			59,377			140,697			220,914
Stock Option Expense		—			16,861			—			153,416
Reserve for Litigation Settlement		—			75,000			—			75,000
Litigation Settlement		—			—			45,000			—
Other Selling, General and Administrative Expenses		50,265			13,249			105,908			53,139
Total Operating Expenses		88,234			164,487			291,605			502,469
Net Operating (Loss)		(88,234	)		(164,487	)		(291,605	)		(502,469	)
Other Income - Gain on Services Fee Settlement		—			—			10,000			—
Net Income (Loss) Before Provision for Income Taxes		(88,234	)		(164,487	)		(281,605	)		(502,469	)
Income Tax Expenses		800			—			800			800
Net Investment Income (Loss)		(89,034	)		(164,487	)		(282,405	)		(503,269	)
Net Realized Gain (Loss) on portfolio companies		42,259			—			2,083			—
Net change in unrealized (depreciation) appreciation in portfolio companies		400,528			331,216			206,018			678,548
Net Increase in Net Assets Resulting from Operations	$	353,753		$	166,729		$	(74,304	)	$	175,279
Weighted Average Number of Common Shares		3,633,067			4,633,067			3,671,067			4,452,481
Basic	$	0.097		$	0.036		$	(0.020	)	$	0.039
Weighted Average Number of Fully Diluted Shares		13,633,067			14,633,067			13,633,067			14,452,481
Diluted	$	0.026		$	0.011		$	(0.005	)	$	0.012

See Accompanying Notes to the Financial Statements

F-5

REGAL ONE CORPORATION

STATEMENTS OF CASH FLOWS

	For the Nine Months Ended September 30,
	2007			2006
	UNAUDITED			UNAUDITED
Cash Flows from operating activities:
Net Increase (Decrease) in Net Assets resulting from operations	$	(74,304	)	$	175,279
Adjustments to reconcile net increase (decrease) in net assets resulting from operating activities:
Amortization of Loan Origination Fee		—			3,872
Stock options		—			153,416
(Increase) Decrease in Investments in Portfolio Companies		(45,859	)		(699,357	)
Gains on Services Fees Settlement		(10,000	)		—
Reserve for Litigation Settlement		—			75,000
Changes in operating assets and liabilities:
Increase in Due to Stockholders and Officers		70,000			13,000
Realized gain from Investment Portfolio		(2,083	)		—
Increase in Miscellaneous Receivable		—			(800	)
Increase (Decrease) in Accounts Payable/Accrued Expenses		(41,094	)		69,155
(Decrease) in Contingent Litigation Fees		(250,000	)		—

Total Adjustments		(279,036	)		(385,714	)
Net cash used in operating activities		(353,340	)		(210,435	)
Cash Flows used in Investing Activities:
Investment in Portfolio Companies		—			—
Cash Flows from Financing Activities:
Loan Payable		—			100,000
Sale of common stock		—			145,000
Stockholder Loans		423,500			—
Net cash provided by financing activities		423,500			245,000
Net increase in cash		70,160			34,565
Cash at beginning of period		42			1,283
Cash at end of period	$	70,202		$	35,848
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	—		$	—
Cash paid for income taxes	$	800		$	800
Non-Monetary Transactions:
Dividend Payable in 465,430 portfolio company shares	$	653,948		$	250,188
Warrant for Prepaid Expense					26,171
Stock Options Granted					153,416
Total Non-Monetary Transactions	$	653,948		$	429,775

See Accompanying Notes to the Financial Statements

F-6

REGAL ONE CORPORATION

STATEMENTS OF FINANCIAL HIGHLIGHTS

Per Unit Operating Performance:

	Nine Months Ended September 30, 2007			Nine Months Ended September 30, 2006
	UNAUDITED			UNAUDITED
NET ASSET VALUE, BEGINNING OF PERIOD	$	0.276		$	(0.063	)
INCOME FROM INVESTMENT OPERATIONS:
Net investment gain (loss)		(0.077	)		(0.113	)
Net change in unrealized (depreciation) appreciation of portfolio companies		0.057			0.152

Total from investment operations		(0.020	)		0.039

Net increase in net assets resulting from stock transactions		0.027			0.017

NET ASSET VALUE, END OF PERIOD	$	0.282		$	(0.007	)
TOTAL NET ASSET VALUE RETURN		2.2	%		62.2	%

RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period	$	1,025,807		$	175,137
Ratios to average net assets:
Net expenses		27.8	%		945	%
Net investment gain (loss)		(7.3	%)		329	%
Portfolio Turnover Rate		—			—

See Accompanying Notes to the Financial Statements

F-7

REGAL ONE CORPORATION

NOTES TO FINANCIAL STATEMENT

NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Business

Regal One Corporation (the "Company" or “Regal”) located in Los Angeles, California, is a financial services company which coaches and assists biomedical companies, through our network of professionals, in listing their securities on the over the counter market or national exchanges.

We were initially incorporated in 1959 as Electro-Mechanical Services Inc., in the state of Florida. Since inception we have been involved in a number of industries. In 1998 we changed our name to Regal One Corporation. On March 7, 2005, our Board of Directors determined that it was in our shareholders best interest to change the focus of the company’s operation to that of providing financial services through our network of advisors and professionals. Typically these services are provided to early stage biomedical companies who can benefit from our managerial skills, network of professions and other partners.

As a result of our clients’ early stage of development, they typically have limited resources and compensate us for our services in capital stock. Accordingly, although our primary business is to provide consulting services and not to be engaged, directly or through wholly-owned subsidiaries, in the business of investing, reinvesting, owning, holding or trading in securities, we may nonetheless be considered an investment company as that term is defined in the Investment Company Act of 1940 (1940 Act). In order to lessen the regulatory restrictions associated with the requirements of the 1940 Act, on June 16, 2005 we elected to be treated as a Business Development Company (BDC) in accordance with sections 55 through 65 of the 1940 Act.

Pursuant to the requirements of the Investment Company Act of 1940, as amended, the Board of Directors is responsible for determining in good faith the fair value of the securities and assets held by the Company. The Investment Committee of the Board of Directors bases its determination on, among other things, applicable quantitative and qualitative factors. These factors may include, but are not limited to, the type of securities, the nature of the business of the portfolio company, the marketability of the valuation of securities of publicly traded companies in the same or similar industries, current financial conditions and operating results of the portfolio company, sales and earnings growth of the portfolio company, operating revenues of the portfolio company, competitive conditions, and current and prospective conditions in the overall stock market. Without a readily recognized market value, the estimated value of some portfolio securities may differ significantly from the values that would be placed on the portfolio should there be a ready market for such equity securities currently in existence.

Basis of Presentation

On February 9, 2004, the Company issued 1,000,000 of its shares in exchange for 100% of the issued and outstanding stock of O2 Technology (“O2”). The shares were valued at $0.6495 per share and the Company recorded an investment of $649,526 in O2 Technology. Subsequent to the issuance, the Company and O2 were named as co-cross defendants in the litigation entitled “Eco Air Technologies vs. Regal One Corporation, et. al.” (“Eco Litigation”). As set forth in various previous financial reports and SEC filings, the Company was seeking a rescission of the O2 acquisition as part of the Eco Litigation. Consequently, the previous year’s financial statements were not consolidated. In May 2007 the Eco Litigation was settled by the parties (see Note 9: “Contingencies”).

In 2006, the Company began reporting as a BDC and the attached financial statements for the year ended December 31, 2006 have been formatted in conformity with the December 31, 2006 financial statements, including the BDC supplemental schedules, for comparative purposes. Although the nature of the Company's operations and its reported financial position, results of operations, and its cash flows are dissimilar for the periods prior to and subsequent to its becoming an investment company, its financial position for the years ended December 31, 2006 and 2005 and its operating results, cash flows and changes in net assets for each of the years ended December 31, 2006, 2005 and 2004 are presented in the accompanying financial statements pursuant to Article 6 of Regulation S−X. In addition, the accompanying footnotes, although different in nature as to the required disclosures and information reported are also presented as they relate to each of the above referenced periods.

F-8

Accounting Policies

Management Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America 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.

Net Increase (Decrease) in Net Assets from Operations per Share

Basic net increase (decrease) in net assets from operations per share is computed by dividing the net earnings (loss) amount adjusted for cumulative dividends on preferred stock (numerator) by the weighted average number of common shares outstanding during the period (denominator). Diluted net increase (decrease) in net assets from operations per share amounts reflect the maximum dilution that would have resulted from the assumed exercise of stock options and from the assumed conversion of the Series B Convertible Preferred Stock. Diluted net increase (decrease) in net assets from operations per share is computed by dividing the net earnings (loss) amount adjusted for cumulative dividends on preferred stock by the weighted average number of common and potentially dilutive securities outstanding during the period. For all periods presented the above potentially dilutive securities are excluded from the computation as their effect is anti-dilutive.

Income Taxes

The Company has not elected to be a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. Accordingly, the Company will be subject to U.S. federal income taxes on sales of investments for which the fair values are in excess of their tax basis. Income taxes are accounted for using an asset and liability approach for financial reporting. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the financial statement carrying amount and the tax basis of assets and liabilities and net operating loss and tax credit carry forwards. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all marketable securities to be cash equivalents (see Note 2). None of the Company's cash is restricted.

Valuation of Investments (as an Investment Company)

As an investment company under the Investment Company Act of 1940, all of the Company's investments must be carried at market value or fair value. The value is determined by management for investments which do not have readily determinable market values. In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements”. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure about fair values. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Management has adopted SFAS No. 157 and expects it will have a material effect on the consolidated financial results of the Company for this reporting period.

Comprehensive Income

SFAS No. 130, Reporting Comprehensive Income, establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains, and losses) in a full set of general purpose financial statements. It requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. SFAS No. 130 requires that an enterprise (a) classify items of other comprehensive income by their nature in financial statements and (b) display the accumulated balance of other comprehensive income separately in the equity section of the balance sheet for all periods presented. The Company's comprehensive income (loss) does not differ from its reported net income (loss). As an investment company, the Company must report changes in the fair value of its investments outside of its operating income on its statement of operations and reflect the accumulated appreciation or depreciation in the fair value of its investments as a separate component of its stockholders' deficit. This treatment is similar to the treatment required by SFAS No. 130.

F-9

Accounting Changes and Error Corrections

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections, a replacement of APB No. 20 and FASB Statement No. 3” (“SFAS No. 154”). SFAS No. 154 requires retrospective application to prior periods’ financial statements of a voluntary change in accounting principles unless it is impracticable. APB Opinion No. 20 “Accounting Changes” previously required that most voluntary changes in accounting principles be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. This Statement was effective for the Company as of January 1, 2006.

Stock Based Incentive Program

SFAS No. 123R, Share Based Payment, a revision to SFAS No. 123, Accounting for Stock Based Compensation and superseding APB Opinion No. 25, Accounting for Stock Issued to Employees, establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, including obtaining employee services in share based payment transactions. SFAS No. 123R applies to all awards granted after the required effective date and to awards modified, purchased, or canceled after that date. The Company adopted SFAS No. 123R effective January 1, 2006.

Exchange of Non-monetary Assets

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Non-monetary Assets, an amendment of APB Opinion No. 29” (“SFAS No. 153”). SFAS No. 153 is based on the principle that exchanges of non-monetary assets should be measured based on the fair value of the assets exchanged. APB Opinion No. 29, “Accounting for Non-monetary Transactions”, provided an exception to its basic measurement principle (fair value) for exchanges of similar productive assets. Under APB Opinion No. 29, an exchange of a productive asset for a similar productive asset was based on the recorded amount of the asset relinquished. SFAS No. 153 eliminates this exception and replaces it with an exception of exchanges of non-monetary assets that do not have commercial substance. SFAS No. 153 became effective for the Company as of July 1, 2005. The Company will apply the requirements of SFAS No. 153 to any future non-monetary exchange transactions.

NOTE 2 - CASH AND MARKETABLE SECURITIES

Cash and Cash Equivalents

Cash and cash equivalents consist of cash balances and may include instruments with maturities of three months or less at the time of purchase.

Marketable Securities

In 2005 Regal acquired approximately 1,800,000 shares of Neuralstem’s common stock and a warrant to purchase an additional 1,000,000 shares of common stock in exchange for a variety of considerations supporting Neuralstem’s transition to a publicly traded operational entity, principally including fees and assistance in connection with the filing of a registration statement on Form SB-2 registration (see Note 6). During 2006, Neuralstem filed the registration statement and it was declared effective on August 30, 2006. In late December 2006, the shares began trading on the OTC:BB under the ticker symbol NRLS.OB. On February 5, 2007, the Company distributed 500,468 Neuralstem shares to its shareholder of which 35,038 of these shares were returned to the Company’s ownership in connection with the settlement of the Eco Litigation. On August 27, 2007 Neuralstem shares began trading on the American Stock Exchange under the symbol CUR. As of September 30, 2007, Regal held 1,273,814 Neuralstem shares. The shares have been valued at a discounted price from the 9/30/07 market price due to the current thinly traded market for Neuralstem shares. Of the total shares held at 9/30/07, the 279,527 that were registered and are freely tradable have been recorded as a current asset in the amount of $459,822, constituting working capital that is still available to Regal as of September 30, 2007. Regal also has ten year warrants at an exercise price of $5 per share which is significantly above the present fair market value of Neuralstem shares, therefore only a $50,000 value has yet been assigned to these warrants. On 12/31/06, Regal had recorded a dividend payable balance in the Current Liabilities section of its Balance Sheets. This distribution initially consisted of 500,468 Neuralstem shares. The distribution was made in the first quarter of 2007 and resulted in an adjustment to the Current Liabilities balance.

F-10

NOTE 3 - EQUITY TRANSACTIONS

During the quarter ended March 31, 2006, the Company raised $145,000 through the sale of 362,500 shares of newly issued, unregistered common stock. Since that date, there have been no other equity sales in the year ended December 31, 2006 or nine month period ended September 30, 2007. As a result, the Company’s outstanding common share balance as of September 30, 2007 is 3,633,067.

During the quarter ended March 31, 2006, the Company made four option grants with the total grants amounting to 885,000 common shares of which 535,000 were vested in the quarter. An expense of $136,555 was calculated under the Black-Scholes Option-Pricing Model and was recognized in that quarter for the vested options. All the options are exercisable at the price of $0.50 per share, equal to or higher than the public share price on the dates of the grants, and option lives ranged from 3 years to 10 years. During the nine month period ended September 30, 2007, no additional options were granted or vested and no options were exercised.

In connection with the secured loan received during the quarter ended September 30, 2006 and paid in the quarter ended December 31, 2006, warrants to purchase 75,000 shares of the Company’s stock were issued to the lender as a commitment fee. These warrants have been valued under the Black-Scholes Pricing Model and $26,171 was recognized in the year as prepaid expense that was fully amortized into expense on the payment date. The warrants are exercisable for a period of five years at the price of $0.60 per share, which was higher than the public share price on the date of the grant. None of these warrants were exercised in 2006 or the nine month period ended September 30, 2007.

The stock options and warrants issued during 2006 were valued under the Black-Scholes Option-Pricing Model using the following assumptions within the ranges defined: market price of Regal stock at grant date; exercise price; one and three year terms; volatility ranging from 188% to 350%; no dividends assumed; and a discount rate - bond equivalent yield of 4.27%. As of December 31, 2006, 885,000 options, with 635,000 vested, and 75,000 vested warrants were outstanding. The possibility that the options may be exercised in the future represents potential dilution to existing shareholders. If all the outstanding options and warrants had been exercised as of December 31, 2006, the impact on the fully diluted Earnings Per Share as reflected in the Statement Of Operations for 2006 would be a reduction from $0.117 earnings per share to $0.110 earnings per share.

In conjunction with the Neuralstem registration, the contingency delaying the Company’s previously declared dividend in Neuralstem shares has been removed. Regal paid that dividend, amounting to 500,468 Neuralstem shares including rounding, on February 5, 2007. Of this amount, 35,038 shares were returned to Regal as part of the Eco Litigation settlement. Since the record date for this dividend occurred earlier in 2006, Regal had recorded a payable for this dividend in the quarter ended December 31, 2006 using the per share valuation reflected in the portfolio balance at that date and also recorded that valuation as a reduction in the equity section. As of the payment date, that valuation was adjusted to the then existing fair market value of the Neuralstem shares and the Neuralstem valuation in the Company’s portfolio balance was then reduced by that final dividend amount.

The authorized number of shares of preferred stock (Series A and B) is 550,000. The Company's Certificate of Incorporation allow for segregating this preferred stock into separate series. As of December 31, 2006 and September 30, 2007, the Company has authorized 50,000 shares of series A preferred stock and 500,000 shares of series B convertible preferred stock; there were no outstanding shares of series A preferred stock and 100,000 shares of series B preferred stock were outstanding.

Holders of Series A preferred stock shall be entitled to voting rights equivalent to 1,000 shares of common stock for each share of preferred. The Series A preferred stock has certain dividend and liquidation preferences over common stockholders.

Holders of Series B preferred stock shall be entitled to voting rights equivalent to 100 shares of common stock for each share of preferred. The Series B preferred stock had been entitled to a non-cumulative dividend of 8.75% of revenues which exceed $5,000,000. In 2004, the Series B class voted by a large majority to void the dividend preference, at the option of the holder of series B preferred stock, each share is convertible into common stock at a rate of 100 shares of common for each share of preferred. In connection with the acquisition of O2 Technology on February 9, 2004, the Share Exchange agreement required that the Series B Preferred as a class be restricted to a cumulative conversion into no more than 10,000,000 common shares. This reduction was sought by the Company and was agreed to by 98.5% of the Series B class, effecting a compression of the outstanding Series B preferred from 208,965 shares to 100,000 shares. As of December 31, 2006 and September 30, 2007, no dividends have been declared on the series A or series B convertible preferred stock.

NOTE 4 - IMPAIRMENT OF ASSETS

As set forth in various previous financial reports and SEC filings, the Company was seeking a rescission of the O2 Technology acquisition. The immediate effect of these matters was to impair the assets acquired in the O2 acquisition. Accordingly, the Company had written-off in 2004 all of the assets acquired with O2 and the advances made to O2 - see Note 1 - “Presentation”. In May 2007 this litigation was settled by the parties (see Note 9: “Contingencies”).

F-11

NOTE 5 - STOCK OPTION PLAN

The Company's Stock Option Plan (Plan) provides a means to incentives its employees, directors, officers, consultants and advisors. On May 3, 1995, the Company filed a registration statement on Form S-8 adopting a 3,000,000 common share Plan. Under the plan, the Board of Directors was authorized to grant options to individuals who have contributed, or will contribute to the well being of the Company. In 2004 and earlier years, the Plan was extended by the Company’s shareholders. On March 4, 2005 the Company's shareholders approved another extension of time in which to exercise outstanding options to purchase shares of the Company’s common stock at the $0.8125 exercise price. That extension ran from March 31, 2005 to September 30, 2005. (See the Company's 14C filing dated March 23, 2005.) By the extended September 30, 2005 option expiration date, the then remaining outstanding options were not further extended and as a result 1,147,140 unexercised options became null and void. During the year ended December 31, 2005 and 2004, 252,308 and 814,057 options respectively were exercised and the Company realized $205,000 and $661,421 respectively in working capital. As of September 30, 2005, holders had exercised options to purchase 1,852,860 shares of common stock. As of December 31, 2006 and September 30, 2007, all outstanding options granted under our stock option plan had either been exercised or expired. As of December 31, 2006 and September 30, 2007, there were 980,986 shares available for future grants.

The following table summarizes the Company's stock options activity under the Plan; there were no changes in the first nine months of 2007:

	Year Ended 12/31/06				Year Ended 12/31/05					Year Ended 12/31/04
	Number of Shares		Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding at January 1		—		—		1,399,448		$	.8125		2,213,055		$	.8125

Granted		—		—		—			—		—			—
Exercised		—		—		(252,308	)	$	.8125		(814,057	)		.8125
Expired		—		—		(1,147,140	)	$	.8125		—			—
Outstanding at December 31, 2006, 2005 and 2004		—		—		0			0		1,399,448		$	.8125

NOTE 6 - INVESTMENTS

On March 7, 2005, our board of directors determined that it was in our shareholders best interest to change the focus of the company’s business to that of providing financial services through our network of advisors and professionals, and to be treated as a business development company (“BDC”) under the Investment Company Act of 1940. On September 16, 2005 we filed a Form N54A (Notification of Election by Business Development Companies), with the Securities and Exchange Commission, which transforms the Company into a Business Development Company (BDC) in accordance with sections 55 through 65 of the Investment Company Act of 1940. The Company began reporting as an operating BDC in the March 31, 2006 10Q-SB.

In 2005, Regal signed an option agreement to acquire a significant equity stake in SuperOxide Health Sciences, Inc. (SOHS), a privately owned development stage company. As of December 31, 2005, Regal had made a total investment of $145,000 in SOHS as part of the agreement and in the quarter ended March 31, 2006 made a valuation adjustment to reduce the carrying cost of this investment to $72,500. In the quarter ended September 30, 2006, the Company wrote off the remainder of the investment since SOHS advised that it had no resources to continue operating and was being dissolved.

As of June 30, 2005, the Company entered into an agreement with American Stem Cell (ASC), a private development stage company, to assist ASC in the preparation and filing of an SB 2 registration statement. Regal acquired 3,000,000 shares of ASC’s common stock in exchange for the Company’s investment via a variety of considerations that support ASC’s transition from a private development-stage company to a publicly traded operational entity. These considerations include the Company’s assumption of the liability for certain legal fees, principally including fees for an SB-2 registration, and access to the Company’s network of advisors and other related resources. Regal valued these shares in its balance sheet at the $34,087 of accrued legal fees that it had assumed to date. However, in 2006 the SB 2 registration was withdrawn and ASC undertook a restructuring of its various securities holders. In the quarter ended December 31, 2006, the Company wrote off its $34,087 investment in ASC.

F-12

As of June 30, 2005, the Company had entered into a Letter of Intent with Neuralstem, Inc., a private early stage company, to assist it in filing an SB-2 registration statement. Effective September 15, 2005, those understandings were memorialized and further defined in an “Equity Investment and Share Purchase Agreement” between the parties. Regal acquired approximately 1,800,000 shares of Neuralstem’s common stock and a warrant to purchase an additional 1,000,000 shares of common stock in exchange for a variety of considerations supporting Neuralstem’s transition from a private, early stage, research and development company to a publicly traded operational entity. These considerations included the Company’s assumption of the liability for certain legal fees, principally including fees for an SB-2 registration, and access to the Company’s network of advisors and other related resources. Regal initially reflected these shares in its balance sheet as of December 31, 2005 based on its estimated $50,000 direct cost of the considerations it had provided or planned to provide to Neuralstem. During 2006, Neuralstem filed an SB-2 registration statement and in August 2006 it was declared effective. As of December 31, 2006, Neuralstem shares were trading on the OTC:BB exchange. Prior to effectiveness of the registration, 1,000,000 of Neuralstem shares held by Regal were subject to forfeiture based on contingency concerning the initial submission date and effective date of Neuralstem’s SB-2 registration; 51,000 of these shares were forfeited in the third quarter of 2006 and the balance are no longer subject to forfeit. As of December 31, 2006, the 1,794,287 Neuralstem shares held after the forfeit were valued as indicated in the Schedule of Investments. Of those shares, 800,000 shares were registered by Neuralstem, were readily salable and were reclassified as Marketable Securities in the Current Assets section of the Balance Sheet. Initially, 500,468 of those Neuralstem shares were reserved for distribution to the Company’s shareholders which distribution was made on February 5, 2007. Of that amount, 35,038 were withheld from distribution pending the outcome of the Eco Litigation. On May 7, 2007, the Company reached a settlement in the Eco Litigation resulting in the return of the 35,038 Neuralstem shares to the Company. The balance of the registered Neuralstem shares remains reclassified as Marketable Securities in the Current Assets section of the Balance Sheet. Regal also has ten year warrants at an exercise price of $5 per share which is significantly above the present fair market value of Neuralstem shares, therefore only a nominal $50,000 value has been assigned to these warrants.

The Board of Directors is responsible for determining in good faith the fair value of the securities and assets held by the Company. In 2005, all portfolio companies were reported on a cost basis. For 2006 and the first nine months of 2007, the Investment Committee of the Board of Directors early adopted the provisions of FAS 157 for valuation of the portfolio and bases its determination on, among other things, applicable quantitative and qualitative factors. These factors may include, but are not limited to, the type of securities, the nature of the business of the portfolio company, the marketability of the valuation of securities of publicly traded companies in the same or similar industries, current financial conditions and operating results of the portfolio company, sales and earnings growth of the portfolio company, operating revenues of the portfolio company, competitive conditions, and current and prospective conditions in the overall stock market. Without a readily recognized market value, the estimated value of some portfolio securities may differ significantly from the values that would be placed on the portfolio if there was a ready market for such equity securities.

NOTE 7 - INCOME TAXES

As of September 30, 2007, the Company’s federal net operating loss carryforwards were approximately $3,690,000. The Company had a provision for (benefit from) income taxes of $800 and $0 for the three months ended September 30, 2007 and 2006; and $800 and $800 for the nine months ended September 30, 2007 and 2006 respectively.

FIN No. 48

The Financial Accounting Standards Board has published FASB Interpretation No. 48 (FIN No. 48), “Accounting for Uncertainty in Income Taxes”, to address the non-comparability in reporting tax assets and liabilities resulting from a lack of specific guidance in FASB Statement of Financial Accounting Standards No. 109 (SFAS 109), “Accounting for Income Taxes”, on the uncertainty in income taxes recognized in an enterprise’s financial statements. Specifically, FIN No. 48 prescribes (a) a consistent recognition threshold and (b) a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and provides related guidance on derecognition, classification, interest and penalties, accounting interim periods, disclosures and transition. To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income taxes, such amounts would be accrued and classified as a component of income tax expenses on the statement of operations. FIN No. 48 will apply to fiscal years beginning after December 15, 2006, with earlier adoption permitted. The Company has completed its evaluation of the effects of FIN No. 48 and has concluded that the adoption of FIN No. 48 did not impact the financial statements for the quarter and nine months ended September 30, 2007. The Company’s federal tax returns are potentially open to examinations for fiscal years 2003 through 2006.

F-13

NOTE 8 - RELATED PARTY TRANSACTIONS

Indebtedness to a stockholder/officer was converted into a secured Note Payable in the fourth quarter of 2006. In 2007, that stockholder/officer continued to make cash advances to and on behalf of the Company and Regal entered into modifications of the Note Payable to that party. The modifications were entered into for purposes of increasing the Note Payable amount as a result of additional advances made by the stockholder/officer to Regal through September 30, 2007. In the second quarter 2007, the stockholder made additional advances to the Company and it is anticipated that the stockholder/officer may continue to make additional periodic advances to the Company. These will also increase the secured Note Payable. No additional advances were made in the quarter ended September 30, 2007 but a correction was recorded. Advances under the Note have been made to pay the Company’s litigation expenses and settlement, and for working capital. As a result of the increases in the outstanding loan balance, the number of Neuralstem shares subject to the security agreement was increased to 600,000 shares on June 25, 2007.

The amounts due to stockholders and officers, as of September 30, 2007, is $816,758 and includes the above secured Note Payable in the amount of $650,794 as of September 30, 2007, which was increased by $9,991 in the quarter ended September 30, 2007. The remaining open account balance of $165,964 increased by $70,000 in the third quarter due to the reclassification of an accrued amount that was previously carried in accounts payable and the total amount represents advances and compensation which are non-interest bearing, unsecured and payable on demand. Through December 31, 2006 and September 30, 2007, there have been no demands made on Regal One to make any such related payments. Under the terms of the Note Payable, the Note is due and payable on or before December 8, 2008 and bears interest at a rate of 10% per annum. An amount due of $94,357 to a former, deceased officer was reduced to the current value of $40,000 as of December 31, 2002 and is payable to the widowed spouse after all other payables are covered and at the discretion of the Board of Directors.

Through December 31, 2004 the Company loaned $518,490 to its wholly-owned subsidiary that was acquired in the 1^st quarter of 2004. The loans were subject to interest of 6% per year, were due and payable on December 31, 2004 and were secured by a pledge of all the shares of the wholly-owned subsidiary. During litigation between the parties, the repayment did not occur and the Company established an allowance for the potential uncollectability of this amount. The pending litigation was settled by the parties in the second quarter ended June 30, 2007 and in accordance with the settlement these loans will not be recovered and have been removed from Regal’s books and records. See Note 9 “Contingencies - Litigation” below.

During 2005, Regal signed an option agreement to acquire a significant equity stake in SuperOxide Health Sciences, Inc. (SOHS), a privately owned development stage company. As of December 31, 2005, Regal One had made a total investment of $145,000 in SOHS and in 2006 wrote-off that investment. Principals of SOHS are also principal shareholders of Regal One.

NOTE 9 - CONTINGENCIES

Eco Litigation

The Company and certain of its officers and consultants were named as defendants in a case filed on November 4, 2003, under the name "Eco Air Technologies vs. Regal One Corporation, et. al" (California Superior Court, County of Orange, Case No. 03CC13317). On April 7, 2005, the Company and certain of its officers, stockholders and consultants were named as cross-defendants in a cross-complaint filed by two of the former directors of O2. The Company had been advised that such a filing added significantly to the fee exposure of the Company.

During October 2005, the Company negotiated and executed a settlement agreement with Eco Air Technologies and Alf Mauriston whereby the Company relinquished any claims it may have to the technology in question, and obtained certain marketing rights to the technology in several foreign countries and in certain domestic market niches.

On May 10, 2007, the Company filed an 8-K to report that it and its officers and associated representatives and consultants had entered into a confidential, final and complete settlement on May 7 with O2 Technology, Inc., Ronald Hofer, Richard Allen Smith and Amber Le Bleu-Hofer, resolving their differences which were detailed in the Orange County Superior court case, Eco Air vs. Regal One et. al. and the various cross-complaints in that litigation. The parties determined that their business transaction failed to close through a mutual mistake of fact without fault by any party and, consequently, they never had any rights in each other. All parties are returned to their status as if the contemplated transaction never occurred and no party admits or accepts any liability for events transpiring in the interim as between and among the various persons and corporations involved. The parties acknowledge that they have no interest or claim to each other’s securities and that there are no debts or obligations between them. The Company is reviewing to what extent the results of the settlement will require it to amend past financial statements.

F-14

Operations

On March 7, 2005, our board of directors determined that it was in our shareholders best interest to change the focus of the company’s operation to that of providing financial services through our network of advisors and professionals, and to be treated as a business development company (“BDC”) under the Investment Company Act of 1940. On September 16, 2005 we filed a Form N54A (Notification of Election by Business Development Companies), with the Securities and Exchange Commission, which transforms the Company into a Business Development Company (BDC) in accordance with sections 55 through 65 of the Investment Company Act of 1940. The Company began reporting as an operating BDC in the March 31, 2006 10Q-SB.

In 2005, the Company initiated equity investments or agreements for investments with three biomedical companies. Under two of those agreements, the Company agreed to assume certain legal fees that are reflected in the financial statements for 2005 and discussed in Notes thereto. The obligations to assume any other such expenses were terminated in 2006. Additionally, the third agreement allows Regal to make additional cash investments in the related entity, which Regal presently does not expect to do.

On April 1, 2007, the Company and Equity Communications entered into a settlement agreement regarding the value of services provided by Equity to the Company. The result of this settlement was that the Company provided 20,000 Neuralstem shares to Equity in full settlement of the $72,000 that Equity had billed to the Company. The Company recognized a $10,000 gain on this settlement.

F-15

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

Forward Looking Statements

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, among other things, statements concerning our expectations regarding:

·	the type and character of our future investments

·	future sources of revenue and/or income

·	increases in operating expenses

·	future trends with regard to net investment losses

·	how long cash on hand can sustain our operations

·	other statements regarding our future operations, financial condition, prospects and business strategies

These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements. The following discussion should be read in conjunction with our Annual Report on Form 10-K, and the consolidated financial statements and notes thereto. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

The following discussion is qualified by reference to, and should be read in conjunction with the Company's financial statements and the notes contained in this document, and the Management's Discussion and Analysis section for the fiscal year ended December 31, 2006 included in the Company's Annual Report on Form 10−K as well as our prior quarterly reports for the current year filed on Form 10-Q.

Overview

We are a financial services company which coaches and assists biomedical companies, through our network of professionals, in listing their securities on the over the counter market or national exchanges.

Strategy

We intend to focus our efforts on assisting private biomedical companies with distinctive IP and well-defined, near-term applications that address significant and quantifiable markets and that can benefit from our network of business professional. Our Investment Committee has adopted a charter wherein these criteria will be weighed against other criteria including:

·	Strategic fit,

·	Management ability, and

·	Incremental value that we can bring to the potential client

The potential client must also be willing to comply with the Company’s requirement as a BDC to offer significant managerial oversight and guidance, including the right of the Company to a seat on the then client’s board of directors.

To date we have secured our clients through word of mouth or industry referrals from lawyers, accountants and other professionals. In looking at prospective clients, we do not focus on any particular geographic region and would consider clients globally.

Portfolio Investments

During the three months ended September 30, 2007, we did not add any companies to our portfolio. Our portfolio is as follows:

Name of Company	Investment		Value of Investment as of Sep. 30, 2007
Neuralstem, Inc. (CUR)		Common Stock and Warrants	$	2,145,424
American Stem Cell (“ASC”)		Common Stock	$	0
SuperOxide Health Sciences, Inc. (“SOHS”)		Common Stock	$	0

Neuralstem, Inc.

On June 16, 2005, we entered into an agreement whereby we provided services to Neuralstem, Inc. In consideration for such services, we were granted approximately 1,800,000 shares of Neuralstem’s common stock and a warrant to purchase an additional 1,000,000 common shares at $5.00. Of the approximately 1,800,000 shares granted to us, we distributed 500,468 shares to our stockholders on February 5, 2007.

Neuralstem is a life sciences company focused on the development and commercialization of treatments based on transplanting human neural stem cells. At present Neuralstem is pre-revenue and has not yet undertaken any clinical trials with regard to their technology.

Neuralstem has developed and maintains a portfolio of patents and patent applications that form the proprietary base for their research and development efforts in the area of neural stem cell research. Neuralstem, Inc. has ownership or exclusive licensing of four issued patents and 12 patent pending applications in the field of regenerative medicine and related technologies.

The field in which Neuralstem focuses is young and emerging. There can be no assurances that their intellectual property portfolio will ultimately produce viable commercialized products and processes. Even if they are able to produce a commercially viable product, there are strong competitors in this field and their product may not be able to successfully compete against them.

As of September 30, 2007 we hold 1,273,814 shares of Neuralstem, Inc. common stock and warrants to purchase an additional 1,000,000 of common stock at a price of $5.00 per share.

American Stem Cell

On June 30, 2005, we entered into an agreement with American Stem Cell (“ASC”) whereby we were to provide consulting services. In consideration for such services we were granted 3,000,000 common shares of ASC’s.

ASC is a private development stage company with plans to acquire stem cell companies and technologies. In January of 2006 we were notified that ASC’s expected acquisition of its initial stem cell company had failed. We understand that ASC is still searching for a business to acquire, but has limited resources and no firm plans.

As of September 30, 2007 we hold 3,000,000 shares of ASC common stock. For purpose of portfolio valuation, our investment committee has valued the investment at $0.00.

SuperOxide Health Sciences, Inc.

In March 2005, we entered into an agreement whereby we were granted an option to purchase up to a 40% equity interest in SuperOxide Health Sciences, Inc. (“SOHS”). Pursuant to that option, we invested a total of $145,000 in exchange for approximately 8% of the issued and outstanding shares of SOHS.

SOHS is a privately owned development stage company looking to commercialize medical applications of airborne superoxide ions. In September 2006 we received notice from SOHS that due to lack of working capital, the board of directors had decided to dissolve the company. To date we have yet to receive formal documentation or confirmation of such dissolution. As a result of the forgoing, we believe the value of our investment in SOHS is $0.00. Accordingly, upon receipt of confirmation as to the dissolution, we will remove SOHS from our portfolio.

Financial Condition Overview

The Company's total assets were $2,218,626 and its net assets were $1,025,807 at September 30, 2007, compared to $998,479 and $(32,019), respectively, for the comparable period in 2006 and $2,744,472 and $1,003,495 for the year ending December 31, 2006.

The changes in total assets during the three months ended September 30, 2007 were primarily attributable to increases in marketable securities of $79,767 and in the remainder of total portfolio investment value of $333,086 along with an increase in cash of $58,225. The Company's unrealized appreciation (depreciation) varies significantly from period to period as a result of the wide fluctuations in value of the Company's portfolio securities and the number of shares owned. For example, the Company incurred an unrealized gain in the portfolio of $206,018 for the three month period ending September 30, 2007 as a result of an increase in the share price of Neuralstem, Inc., despite a reduction in the number of shares owned.

The changes in net assets during the three months ended September 30, 2007 were primarily attributable to the higher valuation for the lesser number of Neuralstem shares owned and lower operating expenses for that period. The increase in current liabilities was primarily due to an increase of a note payable to an officer along with increases in accounts payable and Due to Stockholder and Officers.

The Company's financial condition is dependent on a number of factors including the ability of each portfolio company to effectuate its respective strategies with the Company's help. These businesses are frequently thinly capitalized, unproven, small companies that may lack management depth, and may be dependent on new or commercially unproven technologies, and which may have little or no operating history.

Result of Operations for the three month period ending September 30, 2007 and 2006.

Investment Income

For the three months ended September 30, 2007 Investment Income consisted of a Realized Gain of $42,259 of compared to $0 for the comparable period in 2006.

Operating Expenses

For the three months ended September 30, 2007, operating expenses were $88,234 compared to $164,487 for the comparable period of 2006. The decrease for the three month period ending September 30, 2007 compared to the comparable period of 2006 is primarily attributed to lower Professional Fees and the actual litigation settlement being less than the prior reserve.

Net Investment Income/Loss

For the three months ending September 30, 2007, net investment loss was $89,034 compared to a loss of $164,487 for the comparable period ended September 30, 2006. The decreased loss of $75,453 in the three month period ending September 30, 2007 as compared to the comparable period ended September 30, 2006 is primarily attributable to the factors discussed above.

Result of Operations for the nine month period ending September 30, 2007 and 2006

Investment Income

We anticipate generating revenue in the form of capital gains or losses on equity securities that we acquire in portfolio companies and subsequently sell. Potentially, we also anticipate receiving dividend income on any common or preferred stock that we own should a dividend be declared.

Investment Income for the nine month period ended September 30, 2007 consisted of a Realized Gain of $2,083 of compared to $0 for the comparable period in 2006.

Operating Expenses

Our operating expenses consist mostly of fees paid to outside attorneys, consultants, and accountants in connection with the advisory services we provide our clients and to a lesser extent for general overhead.

For the nine months ended September 30, 2007, operating expenses were $291,605 as compared to operating expenses of $502,469 for the comparable period in 2006. The increase in operating expenses were primarily attributed to general and administrative expenses, including insurance and litigation fees, stemming from increased activity in managing our portfolio companies.

We anticipate operational expenses will continue to increase as we add more companies to our portfolio.

Net Investment Income/Loss

For the nine months ending September 30, 2007, net investment loss was $282,405. This amount consisted primarily of a gain on settlement less professional services and consulting fees and general overhead.

We anticipate our net investment income will decrease as we add more companies to our portfolio and hold the securities of our portfolio companies for long term capital growth.

Liquidity and Capital Resources

As of September 30, 2007, we had approximately $530,000 in liquid and semi liquid assets consisting of approximately: (i) $70,000 in cash; and (ii) $460,000 in registered shares of Neuralstem, Inc.

For the three month period ended September 30, 2007 we satisfied our working capital needs from: (i) cash on hand at the beginning of the period; (ii) an increase in marketable securities of $21,542 despite the sale of 35,038 such shares for proceeds of $88,159, (iii) an increase in a note payable to one of our officers in the amount of $9,991, and an increase in other liabilities in the amount of $49,109. As of September 30, 2007 the Company had a Net Asset Value of $1,025,807.

As of September 30, 2007, the aggregate outstanding balance under the officer loan is $650,794. Such loan is a demand loan and secured by a pledge of 600,000 shares of Neuralstem (“Collateral Shares”) currently owned by the Company. In the event the note holder made a demand for repayment, the Company’s working capital would be insufficient for such repayment. In such event, the Company would be required to either: (i) sell shares of Neuralstem which it currently owns; or (ii) default on the obligation whereby the note holder would have the right to receive the Collateral Shares in order to satisfy the outstanding balance.

From inception, the Company has relied on the infusion of capital through capital share transactions and loans. The Company plans to either: (i) dispose of its current portfolio securities to meet operational needs; or (ii) borrow against such securities via a traditional margin account or other such credit facility. Any such dispositions may have to be made at inopportune times and there is no assurance that, in light of the lack of liquidity in such shares, they could be sold at all, or if sold, could bring values approximating the estimates of fair value set forth in the Company financial statements. Additionally, in the event the Company enters into a margin agreement with regard to any portfolio securities, a decrease in their market value may result in a liquidation of such securities which could greatly depress the value of such securities in the market. The Company's current monthly cash burn rate is approximately $30,000. Because our revenues, if generated, tend to be in the form of portfolio securities, such revenues are not of a type capable of being used to satisfy the Company's ongoing monthly expenses. Consequently, for us to be able to avoid having to defer expenses or sell portfolio companies' securities to raise cash to pay operating expenses we are constantly seeking to secure adequate funding under acceptable terms. There is no assurance that the Company will be able to do so. Further, if the Company is unable to secure adequate funding under acceptable terms, there is substantial doubt that the company can continue as a going concern.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our business activities contain high elements of risk. The Company considers a principal type of market risk to be a valuation risk. All assets are valued at fair value as determined in good faith by or under the direction of the Board of Directors (which is based, in part, on quoted market prices of similar investments).

Market prices of common equity securities in general, are subject to fluctuations which could cause the amount to be realized upon sale to differ significantly from the current reported value. The fluctuations may result from perceived changes in the underlying economic characteristics of the Company's portfolio companies, the relative prices of alternative investments, general market conditions and supply and demand imbalances for a particular security

Neither the Company’s investments nor an investment in the Company is intended to constitute a balanced investment program. The Company will be subject to exposure in the public-market pricing and the risks inherent therein.

Item 4. Controls and Procedures

Evaluation of Controls and Procedures.

The Company’s management, under the supervision and with the participation of various members of management, including our CEO and our CFO, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this quarterly report. Based upon that evaluation, our CEO and CFO have concluded that our current disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.

Changes in Internal Controls.

There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934) that occurred during the three months ended June 30, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

The purchase of shares of capital stock of the Company involves many risks. A prospective investor should carefully consider the following factors before making a decision to purchase any such shares:

We Have Historically Lost Money and Losses May Continue in the Future:

We have historically lost money. Our net operating loss for the 2006 fiscal year was $779,206 and future losses are likely to occur. For the nine month period ended September 30, 2007 we have incurred net operating losses of $291,605. Accordingly, we may experience significant liquidity and cash flow problems if we are not able to raise additional capital as needed and on acceptable terms. No assurances can be given we will be successful in reaching or maintaining profitable operations.

We recently undertook our current business model and as a result, historical results may not be relied upon with regard to our operating history:

In March 2005 we formally began implementing our current business model of providing services to biotech companies. As a result of how we receive payment for these services, we are technically considered an investment company under the 1940 Investment Company Act. As such, we have presented our financial results and accompanying notes in such fashion. Conversely, until 2005, our operating results were presented in the format and style of an industrial company. As a result, our financial performance and statements may not be comparable between the years prior and up to 2004 and the results for 2005 and after.

The Company’s cash expenses are very large relative to its cash flow which requires the Company continually to sell new shares. This could result in substantial dilution to our shareholders or our ability to continue in operations should additional capital not be raised:

For year ended December 31, 2006 the Company had no revenues and operating expenses of $779,206. Consequently, the Company was required either to sell new shares of Company common stock or issue promissory notes to raise the cash necessary to pay ongoing expenses. This practice is likely to continue for the foreseeable future and could lead to continuing dilution in the interest of existing Company stockholders. Moreover, there is no assurance that the Company will be able to find investors willing to purchase Company shares at a price and on terms acceptable to the Company, in which case, the Company could deplete its cash resources.

Regulations governing operations of a business development company will affect the Company’s ability to raise, and the way in which the Company raises additional capital. This could result in the Company not being able to raise additional capital and accordingly cease operations:

Under the provisions of the 1940 Act, the Company is permitted, as a business development company, to issue senior securities only in amounts such that asset coverage, as defined in the 1940 Act, equals at least 200% after each issuance of senior securities. If the value of portfolio assets declines, the Company may be unable to satisfy this test. If that happens, the Company may be required to sell a portion of its investments and, depending on the nature of the Company’s leverage, repay a portion of its indebtedness at a time when such sales may be disadvantageous and result in unfavorable prices.

Applicable law requires that business development companies may invest 70% of its assets only in privately held U.S. companies, small, publicly traded U.S. companies, certain high-quality debt, and cash.

The Company is not generally able to issue and sell common stock at a price below net asset value per share. The Company may, however, sell common stock, or warrants, options or rights to acquire common stock, at prices below the current net asset value of the common stock if the Board of Directors determines that such sale is in the best interests of the Company and its stockholders approve such sale. In any such case, the price at which the Company’s securities are to be issued and sold may not be less than a price which, in the determination of the Board of Directors, closely approximates the market value of such securities (less any distributing commission or discount).

The success of the Company will depend in part on its size, and in part on management’s ability to make successful investments:

If the Company is unable to select profitable investments, the Company will not achieve its objectives. Moreover, if the size of the Company remains small, operating expenses will be higher as a percentage of invested capital than would otherwise be the case, which increases the risk of loss (and reduces the chance for gain) for investors.

The Company’s investment activities are inherently risky:

The Company’s investment activities involve a significant degree of risk. The performance of any investment is subject to numerous factors which are neither within the control of nor predictable by the Company. Such factors include a wide range of economic, political, competitive and other conditions which may affect investments in general or specific industries or companies.

The Company’s equity investments may lose all or part of their value, causing the Company to lose all or part of its investment in those companies:

The equity interests in which the Company invests may not appreciate in value and may decline in value. Accordingly, the Company may not be able to realize gains from its investments and any gains that are realized on the disposition of any equity interests may not be sufficient to offset any losses experienced. Moreover, the Company’s primary objective is to invest in early stage companies, the products or services of which will frequently not have demonstrated market acceptance. Many portfolio companies lack depth of management and have limited financial resources. All of these factors make investments in the Company’s portfolio companies particularly risky.

The Company common stock has historically traded at a substantial premium to net asset value:

Historically, the Company’s common stock has traded at a substantial premium to its net asset value. The following summarizes the Company’s approximate net asset value and corresponding stock price:

As of December 31,	2006		2005			2004
Net Asset Value	$	0.22	$	(0.12	)	$	(0.12	)

Stock Price*	$	0.15	$	0.30		$	0.95

* Stock Price is as December 29 of each corresponding year.

Although at present it appears that the Company is trading at a discount to Net Asset Value, there can be no assurance that this trend will continue. Moreover, as the Company utilizes and monetizes its assets for its continuing operating needs, the Net Asset Value will decrease possibly resulting in further decreases in the price of the Company’s common stock.

Our common stock is traded on the "Over-the-Counter Bulletin Board," which may make it more difficult for investors to resell their shares due to suitability requirements:

Our common stock is currently traded on the Over the Counter Bulletin Board (OTCBB) where we expect it to remain in the foreseeable future. Broker-dealers often decline to trade in OTCBB stocks given the markets for such securities are often limited, the stocks are more volatile, and the risk to investors is greater. These factors may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of their shares. This could cause our stock price to decline.

We could fail to retain or attract key personnel who are required in order for us to fully carry out our business plan:

The Company’s operations and ability to implement its business plan are dependent upon the efforts of its key personnel, the loss of the services of which could have a material adverse effect on the Company. The Company will likely be required to hire additional personnel to implement its business plan. Qualified employees and consultants are in great demand and are likely to remain a limited resource for the foreseeable future. Competition for skilled creative and technical talent is intense. There can be no assurance that the Company will be successful in attracting and retaining such personnel. Any failure by the Company to retain the services of existing employees and consultants or to hire new employees when necessary could have a material adverse effect upon the Company’s business, financial condition and results of operations. Our future success depends in significant part on the continued services of Dr. Malcolm Currie, our Chairman and Chief Executive Officer. We have no employment agreement with or life insurance on, Dr. Currie.

The Company operates in a highly competitive market:

The Company faces competition from a number of sources, many of which have longer operating histories, and significantly greater financial, management, marketing and other resources than the Company. The Company’s ability to generate new portfolio clients depends to a significant degree on its reputation among potential clients and partners, and its ability to reach acceptable investment terms with potential clients relative to competitive alternatives. In the event that the reputation of the Company is adversely impacted, or that potential portfolio clients perceive competitive alternatives to be superior, the business, financial condition and operating results of the Company could be adversely affected.

Our officers and directors have the ability to exercise significant influence over matters submitted for stockholder approval and their interests may differ from other stockholders:

Our executive officers and directors have the ability to appoint a majority to the Board of Directors. Accordingly, our directors and executive officers, whether acting alone or together, may have significant influence in determining the outcome of any corporate transaction or other matter submitted to our Board for approval, including issuing common and preferred stock, appointing officers, which could have a material impact on mergers, acquisitions, consolidations and the sale of all or substantially all of our assets, and the power to prevent or cause a change in control. The interests of these board members may differ from the interests of the other stockholders.

Our share ownership is concentrated:

The Company’s officers, directors and principal stockholders, together with their affiliates, beneficially own approximately 70% of the Company’s voting shares. As a result, these stockholders, if they act together, will exert significant influence over all matters requiring stockholder approval, including the election and removal of directors, any merger, consolidation or sale of all or substantially all of assets, as well as any charter amendment and other matters requiring stockholder approval. In addition, these stockholders may dictate the day to day management of the business. This concentration of ownership may delay or prevent a change in control and may have a negative impact on the market price of the Company’s common stock by discouraging third party investors. In addition, the interests of these stockholders may not always coincide with the interests of the Company’s other stockholders.

We may change our investment policies without further shareholder approval:

Although we are limited by the Investment Company Act of 1940 with respect to the percentage of our assets that must be invested in qualified investment companies, we are not limited with respect to the minimum standard that any investment company must meet, neither are we limited to the industries in which those investment companies must operate. We may make investments without shareholder approval and such investments may deviate significantly from our historic operations. Any change in our investment policy or selection of investments could adversely affect our stock price, liquidity, and the ability of our shareholders to sell their stock.

The Company’s common stock may be subject to the penny stock rules which might make it harder for stockholders to sell:

As a result of our stock price, our shares are subject to the penny stock rules. Because a “penny stock” is, generally speaking, one selling for less than $5.00 per share, the Company’s common stock may be subject to the foregoing rules. The application of the penny stock rules may affect stockholders’ ability to sell their shares because some broker-dealers may not be willing to make a market in the Company’s common stock because of the burdens imposed upon them by the penny stock rules which include but are not limited to:

·	Section 15(g) of the Securities Exchange Act of 1934 and SEC Rules 15g-1 through 15g-6, which impose additional sales practice requirements on broker-dealers who sell Company securities to persons other than established customers and accredited investors.

·	Rule 15g-2 declares unlawful any broker-dealer transactions in penny stocks unless the broker-dealer has first provided to the customer a standardized disclosure document.

·	Rule 15g-3 provides that it is unlawful for a broker-dealer to engage in a penny stock transaction unless the broker-dealer first discloses and subsequently confirms to the customer the current quotation prices or similar market information concerning the penny stock in question.

·	Rule 15g-4 prohibits broker-dealers from completing penny stock transactions for a customer unless the broker-dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.

·	Rule 15g-5 requires that a broker-dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales persons’ compensation.

Potential shareholders of the Company should also be aware that,, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses.

Limited regulatory oversight may require potential investors to fend for themselves:

The Company has elected to be treated as a business development company under the 1940 Act which makes the Company exempt from some provisions of that statute. The Company is not registered as a broker-dealer or investment advisor because the nature of its proposed activities does not require it to do so; moreover it is not registered as a commodity pool operator under the Commodity Exchange Act, based on its intention not to trade commodities or financial futures. However, the Company is a reporting company under the Securities Exchange Act of 1934. As a result of this limited regulatory oversight, the Company is not subject to certain operating limitations, capital requirements, or reporting obligations that might otherwise apply and investors may be left to fend for themselves.

The Company’s concentration of portfolio company securities:

The Company will attempt to hold the securities of several different portfolio companies. However, a significant amount of the Company’s holdings could be concentrated in the securities of only a few companies. This risk is particularly acute during this time period of early Company’s operations, which could result in significant concentration with respect to a particular issuer or industry. The concentration of the Company’s portfolio in any one issuer or industry would subject the Company to a greater degree of risk with respect to the failure of one or a few issuers or with respect to economic downturns in such industry than would be the case with a more diversified portfolio. At December 31, 2006, 100% of the Company’s asset value resulted from a single portfolio holding.

The unlikelihood of cash distributions:

Although the Company has the corporate power to make cash distributions, such distributions are not among the Company’s objectives. Consequently, management does not expect to make any cash distributions in the immediate future. Moreover, even if cash distributions were made, they would depend on the size of the Company, its performance, and the expenses incurred by the Company.

Because many of the Company’s portfolio securities will be recorded at values as determined in good faith by the Board of Directors, the prices at which the Company is able to dispose of these holdings may differ from their respective recorded values:

The Company values its portfolio securities at fair value as determined in good faith by the Board of Directors. However, the Company may be required on a more frequent basis to value the securities at fair value as determined in good faith by the Board of Directors to the extent necessary to reflect significant events affecting the value of such securities. For privately held securities, and to a lesser extent, for publicly-traded securities, this valuation is an art and not a science. The Board of Directors may retain an independent valuation firm to aid it on a selective basis in making fair value determinations. The types of factors that may be considered in fair value pricing of an investment include the markets in which the portfolio company does business, comparison of the portfolio company to (other) publicly traded companies, discounted cash flow of the portfolio company, and other relevant factors. Because such valuations are inherently uncertain, may fluctuate during short periods of time, and may be based on estimates, determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. As a result, the Company may not be able to dispose of its holdings at a price equal to or greater than the determined fair value. Net asset value could be adversely affected if the determination regarding the fair value of Company investments is materially higher than the values ultimately realized upon the disposal of such securities.

The lack of liquidity in the Company’s portfolio securities would probably prevent the Company from disposing of them at opportune times and prices, which may cause a loss and/or reduce a gain:

The Company will frequently hold securities in privately held companies. Some of these securities will be subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. The illiquidity of such investments may make it difficult to sell such investments at advantageous times and prices or in a timely manner. In addition, if the Company is required to liquidate all or a portion of its portfolio quickly, it may realize significantly less than the values recorded for such investments. The Company may also face other restrictions on its ability to liquidate an investment in a portfolio company to the extent that the Company has material non-public information regarding such portfolio company. If the Company is unable to sell its assets at opportune times, it might suffer a loss and/or reduce a gain. Restrictions on resale and limited liquidity are both factors the Board will consider in determining fair value of portfolio securities. Moreover, even holdings in publicly-traded securities are likely to be relatively illiquid because the market for companies of the type in which the Company invests tend to be thin and usually cannot accommodate large volume trades.

Holding securities of privately held companies may be riskier than holding securities of publicly traded companies due to the lack of available public information:

The Company will frequently hold securities in privately-held companies which may be subject to higher risk than holdings in publicly traded companies. Generally, little public information exists about privately held companies, and the Company will be required to rely on the ability of management to obtain adequate information to evaluate the potential risks and returns involved in investing in these companies. If the Company is unable to uncover all material information about these companies, it may not make a fully informed investment decision, and it may lose some or all of the money it invests in these companies. These factors could subject the Company to greater risk than holding securities in publicly traded companies and negatively affect investment returns.

The market values of publicly traded portfolio companies are likely to be extremely volatile:

Even portfolio companies the shares of which are quoted for public trading will generally be thinly traded and subject to wide and sometimes precipitous swings in value.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

None

Index to Exhibits

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith