<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
Amendment No. 1
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(Mark one)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
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[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 000-27371
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SENIOR CARE INDUSTRIES, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 68-0221599
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
410 Broadway, 2nd Floor
Laguna Beach, California 92651
(Address of principal executive offices)
(949) 376-3125
---------------
(Issuer's telephone number)
State the number of shares outstanding of each of the issuer's classes of common
equity as of June 30, 2000: Common stock 9,591,654 shares
Transitional Small Business Disclosure Format
(Check one): Yes [ ] No [x]
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TABLE OF CONTENTS
PART 1- FINANCIAL INFORMATION
PAGE
----
Item 1. Financial Statements..................................... 4/7
Item 2. Plan of Operation........................................ 10/12
PART 11- OTHER INFORMATION
Item 1. Legal Proceedings........................................ 13
Item 2. Changes in Securities.................................... 14
Item 3. Defaults Upon Senior Securities.......................... 14
Item 4. Submission of Matters to a Vote of Security Holders...... 14
Item 5. Other Information........................................ 14
Item 6. Exhibits and Reports on Form 8-K......................... 14
SIGNATURES....................................................... 15
2
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements.
Unaudited Balance sheet at June 30, 2000 and June 30, 1999
Unaudited Statements of Operations for the three month and six month
periods ended June 30, 2000.
Unaudited Statements of Cash Flows for the six and nine month period
ended June 30, 2000.
Notes to the financial statements.
3
<PAGE>
FINANCIAL STATEMENTS
SENIOR CARE INDUSTRIES, INC.
(Unaudited)
June 30, 2000
TABLE OF CONTENTS
PAGE
BALANCE SHEET - ASSETS 4
BALANCE SHEET - LIABILITIES AND SHAREHOLDER'S EQUITY 5
STATEMENT OF OPERATIONS 6
STATEMENT OF STOCKHOLDERS' EQUITY 7
STATEMENT OF CASH FLOWS 8
NOTES TO FINANCIAL STATEMENTS 9
3
<PAGE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
ASSETS
Current Assets
Accounts receivable $ 723,540
Inventory 852,554
Prepaid expenses 26,496
Other current assets 135,364
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Total Current Assets 1,737,954
Property Held for Resale
Construction in progress 9,675,471
Property and Equipment
Machine & equipment 1,005,592
Capital leases 50,673
Leasehold improvement 28,933
Rental property 4,418,971
Land 2,966,160
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8,470,329
Less: accumulated depreciation (165,477)
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Total Property and Equipment 8,304,852
Other Assets
Investment in LLC 3,234,000
Goodwill, net of accumulated amortization of $57,741 1,674,499
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Total Other Assets 4,908,499
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TOTAL ASSETS $ 24,626,776
=============
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 408,487
Accrued expenses 34,671
Real estate loans 11,020,867
Lines of credit, current portion 56,125
Capital lease obligation, current portion 10,227
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Total Current Liabilities 11,530,377
Long-Term Liabilities
Lines of credit, net of current portion 817,201
Notes payable 1,102,880
Accrued interest 114,333
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Total Long-Term Liabilities 2,034,414
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Total Liabilities 13,564,791
Stockholders' Equity
Series A Convertible Preferred Stock, $.001 par value,
34,500 shares authorized, none issued
Series B Convertible Preferred Stock, $.001 par value,
400,000 shares authorized, none issued
Common stock, $.001 par value, 50,000,000 shares
authorized, 9,591,654 shares issued and outstanding 9,592
Paid-in capital 13,186,316
Accumulated deficit (2,133,923)
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Total Stockholders' Equity 11,061,985
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 24,626,776
=============
See accompanying notes to financial statements and accountant's report
<PAGE>
<TABLE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 2000 and 1999
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
(Consolidated) (Unconsolidated) (Consolidated) (Unconsolidated)
<S> <C> <C> <C> <C>
Revenue
Rental income $ 157,562 $ - $ 281,263 $ -
Sales 1,371,533 - 2,693,881 -
Sales returns & allowances (28,159) - (65,068) -
------------ ------------ ------------ ------------
Total Revenue 1,500,936 - 2,910,076 -
Cost of Sales 1,109,990 - 1,967,336 -
------------ ------------ ------------ ------------
Gross Profit 390,946 - 942,740 -
Operating Expenses
Selling, general, and administrative 258,831 - 697,746 1,342
Depreciation and amortization 47,933 - 132,600 -
------------ ------------ ------------ ------------
Total Operating Expenses 306,764 - 830,346 1,342
------------ ------------ ------------ ------------
Income from Operations 84,182 - 112,394 (1,342)
Other Income and (Expenses)
Interest income 1,750 1,750
Interest expense (95,275) (174,794)
------------ ------------ ------------ ------------
Total Other Income and (Expenses) (93,525) - (173,044) -
------------ ------------ ------------ ------------
Income Before Income Taxes (9,343) - (60,650) (1,342)
Provision for Income Taxes - -
------------ ------------ ------------ ------------
Net Income (Loss) $ (9,343) $ - $ (60,650) $ (1,342)
============ ============ ============ ============
Earnings Per Share - Basic $ (0.00) $ - $ (0.01) $ (0.00)
============ ============ ============ ============
Weighted Average Number of Shares 9,591,654 6,662,154 9,591,654 6,662,154
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements and accountant's report
<PAGE>
<TABLE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
<CAPTION>
2000 1999
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(Consolidated) (Unconsolidated)
<S> <C> <C>
Cash Flow from Operating Activities:
Net income (loss) $ (60,650) $ (1,342)
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Stock issued for services 29,029
Depreciation and amortization 132,600 -
(Increase) decrease in accounts receivable (164,114) -
(Increase) decrease in inventory (106,397) -
(Increase) decrease in prepaid expenses (16,253) -
(Increase) decrease in other current assets (119,505)
Increase (decrease) in accounts payable 58,220 -
Increase (decrease) in accrued interest 49,000
Increase (decrease) in accrued expenses 6,271 -
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Net Cash Provided (Used) by Operating Activities: (191,799) (1,342)
Cash Flow from Investing Activities:
Cash provided from asset purchase agreement - 610
Cash used by construction in progress (1,508,565) -
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Net Cash Provided (Used) by Investing Activities: (1,508,565) 610
Cash Flow from Financing Activities:
Proceeds from issuance of stock - -
Capital contribution - -
Net proceeds (payments) from notes payable 1,605,030 -
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Net Cash Provided (Used) by Financing Activities: 1,605,030 -
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Net Increase (Decrease) in Cash (95,334) (732)
Cash Balance at Beginning of Period 95,334 832
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Cash Balance at End of Period $ - $ 100
============ ============
Supplemental Disclosures:
Cash paid during the period for interest, including
amounts capitalized $ 858,080 $ -
============ ============
Cash paid during the period for income tax $ - $ -
============ ============
Supplemental Schedules of Noncash Operating, Investing,
and Financing Activities:
Issuance of common stock for service $ 29,029 $ -
============ ============
Capital lease incurred for acquisition of machinery and
equipment $ 50,673 $ -
============ ============
Issuance of common stock in acquisition of Noble
Fidelity, Inc. $ 2,897,250 $ -
============ ============
Issuance of common stock in conversion of preferred
stock $ 2,173 $ -
============ ============
</TABLE>
See accompanying notes to financial statements and accountant's report
<PAGE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
June 30, 2000
(Unaudited)
NOTE 1 - ACCOUNTING POLICIES AND PROCEDURES
1. Senior Care Industries, Inc. ("the Company") uses the accrual method of
accounting, recording revenues when a transaction occurs where the
Company has a reasonable expectation of receiving the revenue.
2. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
3. The costs of operational equipment and real property improvements are
depreciated over the estimated useful life of the asset utilizing the
straight-line method of depreciation.
4. The preparation of financial statements in conformity with generally
accepted accounting principles requires that management make estimates
and assumptions which affect the reported amounts of assets and
liabilities as of the date of the financial statements and revenues and
expenses for the period reported. Actual results may differ from these
estimates.
5. The Company has a net operating loss carry forward as of December 31,
1999. The Company will review its need for a provision for federal
income tax after each operating quarter and each period for which a
statement of operations is issued. The Company's' marginal tax rate is
34%. The Company's effective tax rate is 0% due to the tax loss carry
forward.
6. The Company evaluates the recoverability of long-lived assets in
accordance with Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of. "SFAS" No. 121 requires
recognition of impairment of long-lived assets in the event the net
book value of such assets exceeds the future undiscounted cash flows
attributable to such assets. At June 30, 2000, management determined
that there has been no impairment of the Company's long-lived assets.
There can be no assurance, however, that market conditions will not
change or demands for the Company's services will continue which could
result in future long-lived asset impairments.
<PAGE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
June 30, 2000
(Unaudited)
NOTE 2 - CAPITAL STOCK
In April 2000 the holders of Series A and B Convertible Preferred Stock
converted its preferred stock on a 5 to 1 basis. This conversion required the
Company to issue 2,172,500 additional common shares.
NOTE 3 - ACQUISTIONS
On May 1, 2000 the Company purchased Noble Furniture, Inc. (Noble) for 750,000
shares of Company common stock valued at $3,187,500. The combination has been
accounted for by the purchase method. Accordingly, the Company recorded assets
acquired at their fair values. The Company accounted for the acquisition under
the purchase methond of accounting and recorded a total of $1,732,240 in
goodwill, which is being amortized over 15 years. The Company recorded $57,741
in amortization expense for the six months ended June 30, 2000. The effective
date of the combination was agreed to as January 1, 2000. Therefore the results
of operations of Noble have been included in the income statement of the Company
beginning January 1, 2000.
NOTE 4 - RESTATEMENT OF FINANCIAL STATEMENTS
An audit was completed for the three months ended March 31, 2000. Accordingly,
in the course of the audit certain adjustments were made. These adjustments have
created a material impact on the interim financial statements for the three and
six months ended June 30, 2000. In addition, the Company subsequently determined
that certain transactions had been incorrectly recorded on the March 31, 2000
and June 30, 2000 accounting records.
June 30, 2000 June 30, 2000
(As previously reported) (Restated)
Construction in progress $ 15,273,653 $ 9,675,471
Property and equipment (net) 2,742,259 8,304,852
Total assets 24,725,093 24,626,776
Current portion of real estate loans 6,984,328 11,020,867
Total current liabilities 7,642,514 11,530,377
Additional paid in capital 13,186,316 13,186,316
Accumulated deficit (2,416,545) (2,133,923)
Net loss (343,272) (60,650)
<PAGE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
June 30, 2000
(Unaudited)
NOTE 4 - SEGMENT INFORMATION
The Company has adopted Statement of Financial Accounting Standards No. 131
("SFAS 131"), "Disclosures about Segments of an Enterprise and Related
Information." SFAS 131 changes the way public companies report information about
segments of their business in their annual financial statements and requires
them to report selected segment information in their quarterly reports issued to
stockholders. It also requires entity-wide disclosures about the products and
services an entity provides, the material countries in which it holds assets and
reports revenues and its major customers. The Company acquired Noble furniture,
Inc. as discussed in note 2. Noble manufactures furniture for the national
market.
Selected information for the three months ending June 30, 2000
Furniture Senior Care
manufacturer Industries
------------ ----------
Gross sales $ 2,628,813 $ 281,263
Operating income 174,517 (62,123)
Assets 4,257,893 20,368,883
Liabilities 1,295,483 12,269,308
NOTE 5 - EARNINGS PER SHARE
Basic net income per common share is computed by dividing the net income
available to common stockholders for the period by the weighted average number
of common shares outstanding during the period. Incremental common shares
issuable upon the exercise of stock options and warrants, are included in the
computation of diluted net income per common share to the extent such shares are
dilutive.
Numerator:
Numerator for basic loss per share - net loss $ (60,650)
Denominator:
Denominator for basic loss per share- weighted
Average share outstanding 9,591,654
NOTE 6 - LITIGATION
An action was filed on April 12, 2000 naming the Company, as a successor to an
unrelated company, that it is liable to a third part for a note entered into by
that company in the amount of $923,208 plus accrued interest. The Company has
denied this claim and is vigorously defending its position. Management believes
that it will prevail in this matter, however discovery is in process and will
not be complete for several months.
NOTE 7 - SUBSEQUENT EVENTS
On October 3, 2000, the Company purchased 5,000,000 shares of common stock in
Rent USA, Inc. in exchange for 2,000,000 shares of common stock in Senior Care
Industries, Inc. the stock position of Senior Care Industries, Inc. gives it
actual control of Rent USA, Inc.
<PAGE>
Item 2. Plan of Operation
The Company was organized under the laws of the State of Idaho, February 26,
1968, as Golden Chest, Inc., for the purpose of acquiring and developing mineral
properties. On April 5, 1999, the board of directors changed the Company name to
Senior Care Industries, Inc., and changed corporate situs from Idaho to Nevada.
The Company was re-incorporated on August 26, 1999 under the laws of the State
of Nevada.
In 1985, the Company merged with TAP Resources, Ltd, (TAP) a British Columbia
corporation in a transaction where the Company issued 1.25 shares of Golden
Chest Inc common stock in exchange for each share of TAP common stock. At the
time of the merger, the Company and TAP were partners in a minerals exploration
joint venture. After the merger Golden Chest Inc. was the surviving corporation
while TAP Resources was dissolved.
In 1990, the Company merged with Petro Gold Inc, a Washington corporation, in a
transaction where the Company issued 3,000,000 shares of Senior Care Industries,
Inc. common stock in exchange for all shares of Petro Gold, Inc. common stock.
After the merger Senior Care Industries, Inc. was the surviving corporation
while Petro Gold, Inc. was dissolved.
In 1999, the company transferred its assets and liabilities to Paymaster
Resources Incorporated.
On August 31, 1999, the Company completed an asset purchase agreement where it
purchased the assets and liabilities of East-West Developer, Inc. for a note
payable of $700,000 and 1,880,122 shares or Senior Care Industries, Inc.'s
common stock which was issued directly to the property owners whose properties
were sold to the Company through this transaction.
On April 28, 2000, the Company purchased all of the outstanding stock in Noble
Concepts Fidelity, Inc., a furniture manufacturing company in San Diego,
California. The effective date of the purchase was January 1, 2000 and the
income and expense of that corporation is reflected on the first quarter income
statement for Senior Care Industries, Inc.
Senior Care Industries is a diversified firm consisting of a real estate
division a manufacturing division, and a pharmaceutical.nutriceutical division.
The Company's real estate division invests in, manages, and develops senior
housing, and is a leader quality for-sale and rental, independent living
age-restricted communities.
The Company's manufacturing division targets for acquisition, ancillary
companies whose products and services are in high demand by Seniors such as
medical device manufacturers, specialty food manufacturing companies and
furniture manufacturing companies, enabling the firm to service seniors both in
and out of its age restricted communities with its own products.
The Company's Nutriceutical and pharmaceutical division targets for acquisition
nutriceutical and/or pharmaceutical manufacturing companies and web based health
products distributors as a feeder to manufacture and sell the products through
an "E-commerce" pharmacy. The Company's pharmaceutical division utilizes a
program to include a full service web-based senior support system that sells
direct to the consumer, related health products in the financial services
sector, including life insurance, health insurance, dietary advice, holistic
medical alternatives, water and air purification. The Company is finalizing a
web-site and a support staff offering 24 hour access to these products and
services once an acquisition closes.
Presently, the Company has no operations in the nutriceutical or pharmaceutical
division but is actively seeking acquisitions in this area.
The Company's projects and/ or the services the Company may offer fall under the
auspices of various state and federal regulatory agencies and various licensing
and or zoning requirements and programs, such as the "Medicaid waiver programs"
The company currently owns a project in Monterey Park, California whose zoning
approval required a non-profit organization be formed to own a 10% interest at
the request of the city of Monterey Park.
11
<PAGE>
The company owns a 45% membership interest in a limited liability company which
owns a development project in Delran, New Jersey. The first three phases of this
development have already been completed and only the fourth phase which involves
the development of a shopping mall is yet to be built.
The company completed construction on a 44 unit senior condominium project
in Monterey Park, California in October of 2000 known as Evergreen Manor II.
In addition, the Company owns and, or is under construction on projects located
in the following communities and states:
1. a 57 unit Senior Apartment Project in Albuquerque, New Mexico which is in the
beginning phase of construction.
2. a 25,000 square foot strip center known as Friendly Bear Plaza located in Las
Vegas, Nevada which is a strip mall that is 95% leased to a variety of small
businesses.
3. A 32,000 square foot office in Las Vegas, Nevada known as the Pecos Russell
Commercial Center, a four building complex of which two buildings are presently
complete and are leased with the third building presently under construction.
Also, the Company owns its office headquarters building at 410 Broadway in
Laguna Beach, California known as Broadway Acacia and has tenants in the
building in addition to corporate headquarters.
The Company also has entered escrow on a 223 residential lot senior restricted
housing development in San Jacinto approximately 40 minutes from Palm Springs
and 10 minutes from Hemet, California.
Another project known as Flamingo 55 located in the City of Las Vegas, Nevada at
the intersection of Flamingo Blvd. and Freeway 95 will build 55 senior
restricted town homes. The Company intends to break ground on this project in
November, 2000. Plans were submitted to the Clark County Planning Department on
this project in early August, 2000.
By far the largest project presently being undertaken by the Company is the 715
acre project at the Lakes in Pahrump Valley, Nevada. This project which will
take nearly 10 years to build eventually will comprise 2 golf courses, 2,000
residential housing units in a mixed use age restricted fully planned community.
Escrow on this project was opened in July, 2000 and the plan development process
is underway.
On August 7, 2000, the Company agreed to purchase the Bellflower Christian
Retirement Center, a 99 unit retirement home in Bellflower, California.
12
<PAGE>
Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the meaning
of the "safe-harbor" provisions of the Private Securities Litigation Reform Act
of 1995. Such statements are based on management's current expectations and are
subject to a number of factors and uncertainties that could cause actual results
to differ materially from those described in the forward- looking statements.
All statements, other than statements of historical facts include in this Form,
including without limitation, statements under "Plan of Operations" regarding
the Company's financial position, business strategy, and plans and objectives of
management of the Company for future operations, are forward-looking statements.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from the Company's expectations include, but
are not limited to, market conditions, competition and the ability to
successfully complete financing.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On April 25, 2000, the Company was named as a defendant in a bankruptcy
court adversary proceeding in the matter of Willy Farah, Debtor, United States
Bankruptcy Court, District of New Jersey, Case No. 98-44940 (NLW), Robert B.
Wasserman, Chapter 7 Trustee v. Willy Farah, Madeline Farah, Aziz Holdings,
Inc., Senior Care Industries, Inc., First American Stock Transfer, Inc. and Asia
Bank, N.A. The complaint seeks to avoid the transfer of certain shares in Senior
Care Industries, Inc. presently held by Madeline Farah and Aziz Holdings, Inc.
and seeks injunctive relief and to sell the stock pursuant to Section 363(h) of
the Bankruptcy Code [11 U.S.C. Section 101, et seq.]. The Chapter 7 Trustee
seeks to enjoin the transfer of a total of 800,000 unregistered and restricted
shares which Madeline Farah and Aziz Holdings, Inc. own in Senior Care
Industries, Inc. The Trustee claims that those shares are properly the property
of the debtor's estate. Madeline Farah and Aziz Holdings, Inc. claim that they
are not property of the estate of Willy Farah. Senior Care Industries, Inc.
takes no position on the matter. Pending a determination of the claims of the
various parties, on April 28, 2000, the Bankruptcy Court has temporarily
enjoined and restrained the stock transfer agent for Senior Care Industries,
Inc., First American Stock Transfer, Inc. from transferring any of the shares in
question until a further hearing on the matter.
Another lawsuit which is related to the above matter was brought in the Superior
Court of New Jersey, Burlington County Law Division, Case No. BUR L-3667-99 by
International Thermal Packaging as Plaintiff against CRT Corporation, American
Auditors, LLC, Delran Associates, LLC, Senior Care Industries, Inc., Aspi K.
Irani and Joseph Lipari.
International Thermal Packaging [ITP] claims that American Auditors, LLC
borrowed $700,000.00 from ITP which is now due and owing. The money was to be
secured by a portion of the Delran Associates membership interest owned by CRT
Corporation at the time the loan was obtained. At a later time, the Delran
membership interest which was owned by CRT Corporation was sold to Senior Care
Industries, Inc. having been assigned to it in a package deal from East West
Community Developer, Inc. Senior Care purchased a number of assets and assumed
various liabilities from East West. However, Senior Care is not liable for the
money owed to ITP and has never become obligated to pay the $700,000.00 loan
which American Auditors, LLC obtained from ITP.
In the lawsuit, ITP requests that Senior Care impose a constructive trust on any
proceeds which it may receive from the liquidation of its Delran membership
interest or from dividends paid to it by Delran Associates. Senior Care has
taken the position that it has no objection to an imposition of a constructive
trust under those conditions and has offered to secure ITP's position with a
security interest in its Delran membership interest. To date, that offer has not
been accepted by ITP but is still on the table.
The $700,000.00 obligation is a portion of an obligation which Senior Care owes
to East West Community Developer. That obligation becomes due on April 30, 2001.
The managing member of the Delran limited liability company has challenged the
propriety of the transfer from Willy Farah's membership interest to Senior Care
and claims that certain procedures which were required by the Operating
Agreement were not followed when the transfer was made thus voiding the
transfer. This issue has only been raised, to date, in a counter claim filed in
the State Court action. Senior Care disputes this contention and has answered
the allegations denying all of the facts set forth in the counter claim.
The Company has retained the services of Connell Foley, LLP, Attorneys at Law,
85 Livingston Ave., Roseland, NJ 07068, telephone (973) 535-5000, Fax No. (973)
535-9217. The attorneys primarily assigned to this matter are Peter Pizzi, Esq.
and James Jacobus, Esq. of that firm. They have made appearances in both the
bankruptcy litigation and in the state litigation brought by ITP.
13
<PAGE>
Item 2. Changes in Securities
The following issuance of securities in the Company was made in exchange
for the purchase of assets by the Company during the quarter ended June 30,
2000:
Cyrus Industries, Inc. 600,000 common shares
207 W. 138th Street
Los Angeles, CA 90061
Robert Eschwege 150,000 common shares
495 Raleigh Ave.
El Cajon, CA 92020
All of these shares were issued in exchange for 100% of the ownership of Noble
Concepts Fidelity, Inc. which is discussed in full in An 8-K Report filed on May
15, 2000 noting the acquisition by the Company of that furniture manufacturer.
All other issuances of the Company's securities were disclosed in its Annual
Report, 10-KSB, filed on March 27, 2000 and in its first quarter Form 10QSB
filed on May 15, 2000.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
On August 1, 2000, the Company engaged the auditing firm of Mendoza and Berger,
CPA"s, 25200 La Paz Road, Suite 111, Laguna Hills, CA 92653, telephone (949)
598-8105 as its auditor for the special purpose of auditing the first quarter of
2000 which is a special requirement made upon the Company by the American Stock
Exchange as a part of the Company's application to become listed on that
exchange. The reason for the selection of Mendoza & Berger to perform this audit
rather than the audit being performed by the Company's regular auditor, John
Spurgeon, CPA, is as follows:
The Company made application with the American Stock Exchange and in connection
with that application, the analyst requested information regarding the status of
the Company's auditor with AICPA as a member of the SEC practice section. The
Company's auditor, John Spurgeon, CPA was admitted to the practice section on
April 3, 2000. However, he had not undergone peer review. Because the work done
to audit the Company's financial statements for the year 1999 was done prior to
the admission to the practice section, it was determined that the audit should
be redone after his admission and that the work should be reviewed by a member
of the practice section who had already undergone peer review since the
Company's auditor, John Spurgeon had not.
For that reason, the Company engaged the firm of Corbin & Wertz to review Mr.
Spurgeon's work for the year 1999 which would be reviewed by Corbin & Wertz,
CPA's who were members of the practice section and had undergone peer review.
However, once the reviewed restated audit for 1999 was filed on an amended
10KSB/A on June 27, 2000, it was determined that a stub audit for the first
quarter of the year 2000 would be required in lieu of a complete reaudit of the
year 1999 since the review by Corbin & Wertz was not deemed sufficient. The
Company then solicited bids from three auditing firms, all of whom were members
of the SEC Practice Section of the AICPA. The lowest bid and the firm which the
Company believed could complete the audit most readily was Mendoza & Berger whom
the Company then engaged as its auditor to undertake that work and to become its
regular auditor.
The engagement of Mendoza & Berger for the purpose of performing the audit of
the first quarter of 2000, was recommended and approved by the Board of
Directors after considering all of the information set forth hereinabove.
During the period when Mendoza & Berger were performing their work in connection
with the first quarter stub audit, that firm reviewed the second quarter
unaudited financial statements which were filed in the original Form 10-QSB
which was filed by the Company on August 17, 2000.
After Mendoza & Berger completed their stub audit of the first quarter of
2000 and the Company filed a Form 10-QSB/A amending the first quarter financial
statements, the Company acted to compile restated financial statements for the
second quarter of 2000. Those restated financial statements for the second
quarter have been reviewed by John Spurgeon, CPA and are being submitted here on
a Form 10-QSB/A amending the second quarter financial statements.
The Company is unaware of any disagreement between John Spurgeon, Mendoza &
Berger and/or Corbin & Wertz in connection with any audit which was performed by
John Spurgeon for any of the prior two fiscal years and/or any subsequent period
preceding the date when Mendoza & Berger were engaged and there are no
disagreements with any former accountant on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure.
James E. Slayton, the Company's auditor through the early part of 1999 made the
following qualification in his Auditor's Report which was attached to the
original Registration Statement filed by the Company on Form 10SB as a
developmental stage company filed on December 23, 1999 and covering the audit
period from date of inception through April 30, 1999:
"The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. as discussed in Note 3 to the financial
statements, the Company has had limited operations and has not established a
long term source of revenue. The Company has had operating losses in its
previous operating periods. This raises substantial doubt about its ability to
continue as a going concern. Management's plan in regard to these matters are
also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty."
John Spurgeon, CPA, who audited the Company's business through December 31, 1999
and whose restated audit was reviewed by Corbin & Wertz, and filed by the
Company on Form 10KSB/A on June 27, 2000, contains no adverse opinion or
disclaimer of opinion nor was it qualified or modified as to uncertainty, audit
scope or accounting principles.
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Item 6. Exhibits and Reports on Form 8-K.
The following 8-K Reports were filed by the Company which relate to the
first and second quarter of 2000:
An 8-K Report filed on April 21, 2000 noting changes in the Company's
certifying accountants.
An 8-K Report filed on May 8, 2000 noting Resignation of Registrant's
Director and Officer, Tom Reichman, noting the appointment of Stephen Reeder as
President, John Cruickshank as Senior Vice President and the naming of two new
directors.
An 8-K Report filed on May 15, 2000 noting the acquisition by the
Company of Noble Concepts Fidelity, Inc., a furniture manufacturing company.
An 8-K Report was filed on August 15, 2000 noting changes in the
Company's certifying accountants as discussed hereinabove in Item 5.
An 8-K/A Report was filed on October 12, 2000 noting changes in the
Company's certifying accountants as discussed hereinabove in Item 5.
All of the above noted 8-K Reports are incorporated herein by reference
as though fully set forth.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Senior Care Industries, Inc.
----------------------------
Date: November 10, 2000 /s/ Stephen Reeder
----------------------------
Stephen Reeder
Chief Executive Officer
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