SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SENIOR CARE INDUSTRIES, INC.
(exact name of registrant specified in its charter)
Nevada 6500 68-0221599
------------------------ ------------------------ ----------------------
(State of incorporation) (Primary Standard (IRS Employer
Industrial Classification) Identification Number)
410 Broadway, 2nd Floor Laguna Beach, CA 92651
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(Address of principal executive offices)
Resident Agents of Nevada, Inc.
711 S. Carson Street, Suite 4
Carson City, NV 89701
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(Name and address of agent for service)
(775) 882-4641
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(Telephone number, including area code, of agent for service)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to RULE 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to RULE 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to RULE 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
-------------------------------------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
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The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title of each Maximum Proposed Proposed
class of securities Amount to maximum maximum Amount of
to be registered be registered offering price aggregate registration
per unit(1) offering price fee
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<S> <C> <C> <C> <C>
Common Stock, $.001 Par Value 16,000,000(1) $.50 $8,000,000 $2,224.00
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<S> <C> <C> <C> <C>
Common Stock, $.001 Par Value(2) 3,200,000 $.50 $1,600,000 $ 444.80
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Total $2,668.80
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as
amended (the "Act").
(2) Issuable upon the exercise of Common Stock Commitment and Purchase
Warrants issued or issuable to Bayview, LLC.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective.
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SENIOR CARE INDUSTRIES, INC.
Cross Reference Sheet Furnished Pursuant to Rule 501(b) of Regulation S-K
Item No. and Caption Caption in Prospectus
1. Forepart of the Registration Facing page of the Registration
Statement and Outside Front Statement and Outside Front
Cover Page of Prospectus Cover Page of Prospectus
2. Inside Front and Outside Back Inside Front and Outside Back
Cover Pages of Prospectus Cover Pages of Prospectus
3. Summary Information and Risk Prospectus Summary; Risk
Factors Factors; Sales by Selling
Shareholder; The Company
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Front Cover Page of Prospectus;
Risk Factors;
Prospectus Summary
6. Dilution Prospectus Summary; Risk Factors
7. Selling Security holders Sales by Selling Shareholder
8. Plan of Distribution Front Cover Page of Prospectus;
Plan of Distribution
9. Legal Proceedings Litigation
10. Directors, Executive Officers Management; Principal Ownership
Promoters and Control Persons Of Certain Beneficial Owners
& Management
11. Security Ownership of Certain Principal Ownership of Certain
Beneficial Owners and Beneficial Owners & Management
Management
12. Description of the Securities Prospectus Summary;
to be Registered Sales by Selling Shareholder
13. Interest of Named Experts Legal Matters; Experts
and Counsel
14. Statement as to Indemnification
Indemnification
15. Organization Within Five Prospectus Summary;
Years The Company; Management;
Management's Discussion and
Analysis of Financial Condition
& Results of Operations
16. Description of Business The Company
17. Management's Discussion and Management's Discussion and
Analysis or Plan of Operation Analysis of Financial Condition
& Results of Operations; Plan
Of Operation
18. Description of Property The Company
19. Certain Relationships and The Company; Plan of Operation;
Related Transactions Management
20. Market for Common Equity Risk Factors; Trading Market
and Related Stockholder Matters & Related Matters; Description of
Securities
21. Executive Compensation Executive Compensation
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22. Financial Statements Financial Statements
23. Changes In and Disagreements Changes In & Disagreements
With Accountants on Accounting With Accountants
and Financial Disclosure
24. Indemnification of Part II
Directors and Officers
25. Other Expenses of Part II
Issuance and
Distribution
26. Recent Sales of Part II
Unregistered Securities
27. Exhibits Part II
28. Undertakings Part II
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Subject to Completion, Dated
P R O S P E C T U S
SENIOR CARE INDUSTRIES, INC.
410 Broadway, 2nd Floor
Laguna Beach, CA 92651
(949) 376-1325
THE OFFERING
The resale of up to 19,200,000 shares of common stock in the
over-the-counter market at the prevailing market price or in negotiated
transactions.
o up to 16,000,000 shares are issuable to Bayview, LLC
["Bayview"]
o up to 3,200,000 shares are issuable upon the exercise of
warrants issuable to Bayview,
We may receive proceeds from the sale of shares to Bayview and, if
exercised, will receive proceeds from the sale of shares issuable upon the
exercise of warrants by Bayview.
TRADING SYMBOL
SENR (Over-the-counter Electronic Bulletin Board)
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.
PLEASE REFER TO RISK FACTORS BEGINNING ON PAGE 8
The Securities and Exchange Commission (SEC) and state securities regulators
have not approved these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal offense. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Please read this prospectus carefully. It describes our Company, finances and
services. Federal and state securities laws require that we include in this
prospectus all the important information that you will need to make an
investment decision.
You should rely only on the information contained in this prospectus to make
your investment decision. We have not authorized anyone to provide you with
information that is different from what is contained in this prospectus. The
following table of contents has been designed to help you find important
information contained in this prospectus. We have included subheadings to aid
you in searching for particular information you might want to return to. We
encourage you to read the entire prospectus.
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TABLE OF CONTENTS
Page
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PROSPECTUS SUMMARY
About our Company 7
About our Investment Agreement 7
Key facts 7
RISK FACTORS 8
PLAN OF DISTRIBUTION 12
REGISTRATION RIGHTS OF BAYVIEW 14
SALES BY SELLING SHAREHOLDER 15
Bayview Investment agreement 15
Overview 15
Put rights 15
Warrants 16
Shareholder approval 16
Substitution of New Agreement 16
Request Procedures & Stock Purchases 16
Prices of Shares 16
Necessary Conditions 16
Restrictions on Future Financings 17
Costs & Fees 17
Termination of Stock Purchase Agreement 17
Bayview's right of indemnification 18
Shares Eligible for Future Sale 18
Sale of Restricted Securities 18
Selling Shareholder 19
THE COMPANY 19
General Background of the Company 19
Significant Acquisitions of Senior Care Industries 20
The Nature of Senior Care's Business 21
Facilities 23
Employees 23
Government Regulation 23
USE OF PROCEEDS 24
LITIGATION 25
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 26
PLAN OF OPERATION 29
MANAGEMENT 30
EXECUTIVE COMPENSATION 33
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT 35
TRADING MARKET & RELATED MATTERS 36
DESCRIPTION OF SECURITIES 36
LEGAL MATTERS 37
EXPERTS 37
AVAILABLE INFORMATION 37
INDEMNIFICATION 38
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 38
FINANCIAL STATEMENTS F-1
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References in this document to "us," "we," or "the Company" refer to
Senior Care Industries, Inc., its predecessor and its subsidiaries.
PROSPECTUS SUMMARY
ABOUT OUR COMPANY
Senior Care Industries is a diversified firm consisting of a real estate
division, a manufacturing division, and eventually a third division to be known
as the pharmaceutical.nutriceutical division is contemplated.
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. It has entered into two binding agreements to purchase companies in
this field, MicroDentiX which performs dental diagnostic tests for periodontal
disease by the use of DNA analysis and Physicians Nutritional Laboratories,
Inc., who distributes a line of nutriceuticals designed by doctors.
ABOUT OUR INVESTMENT AGREEMENT
We have been seeking additional financing for our working capital requirements,
expansion of our existing operations and acquisition of additional companies
whose businesses fit into our basic plan for growth. We have entered into an
investment agreement with Bayview to raise up to $20 million through a series of
sales of our common stock. The dollar amount of each sale is limited by our
common stock's trading volume, and a minimum period of time must elapse between
each sale. Each sale will be to Bayview. In turn, Bayview will either hold our
stock in their own portfolio, sell our stock in the open market, or place our
stock through negotiated transactions with other investors. This prospectus
covers the resale of our stock by Bayview either in the open market or to other
investors.
<TABLE>
<CAPTION>
KEY FACTS
<S> <C>
Common Shares of the Company's Stock:
Shares being offered for resale to the public 19,200,000
Total shares outstanding prior to the offering 11,440,681 as of
November 30, 2000
Total shares outstanding after the offering and 30,640,681
exercise of Bayview warrants
Price per share to the public Market price at time of resale
Total proceeds raised by
offering None, however up
to $20 million may be
received from Bayview
under the investment
agreement and additional
amounts may be received
from the exercise of
warrants
Our investment agreement with
Bayview is included as an exhibit
to this Registration Statement
Dividend policy No dividends expected
</TABLE>
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RISK FACTORS
The common shares being offered for resale by Bayview are highly speculative in
nature, involve a high degree of risk and should be purchased only by persons
who can afford to lose their entire investment in the common shares. Before
purchasing any of the common shares, you should carefully consider the following
factors relating to our business and prospects.
History of Operating Losses; Accumulated Deficit; Uncertainty of Future
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Profitability; Going Concern Issue
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We have historically operated at a loss and incurred a loss for the fiscal year
ended December 31, 1999. The accumulated deficit for the period ended December
31, 1999 was $2,073,273.00. The net loss on operations for the fiscal year ended
December 31, 1999 was $234,468.00 resulting in a net loss attributable to common
shareholders of $.05 per share, basic and diluted. For the nine month period
ended September 30, 2000, the Company suffered a net loss of $262,181.00
resulting in a net loss attributable to common shareholders of $.02 per share,
basic and diluted.
The Company was a development stage company until the third quarter of 1999 when
it actually commenced operations after the purchase of a group of assets from
East West Community Developer, some of which were in the construction stage of
development. At that time, the Company had little income other than from rents
which it realized from its office building in Laguna Beach, California, from a
strip mall in Nevada and from a partially completed complex in Nevada. At that
time, income from the sale of condominium which were under construction at the
beginning of the year 2000 was at least ten months away. The Noble Furniture
acquisition which became effective in January, 2000, assured that the Company
would have an income stream regardless of whether it had real estate sales from
condomuniums or other development projects. Likewise, the Company has been
seeking to acquire other operating businesses which, when combined with Senior
Care's real estate development operations, will hopefully result in a steady
income stream and profitablity.
However, there can be no assurances that we will be able to identify any
operations that we may deem suitable for acquisition, or that if we do identify
such operations, that any of them will be successfully acquired, developed and
commercialized.
Need for Additional Capital; Possible Issuance of
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Securities and Corresponding Possible Future, Substantial Dilution
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Our cash requirements continue to be significant. In order for us to satisfy our
capital needs for the next 12 months, we must increase revenues from our real
estate development projects and raise additional capital. There can be no
assurance that additional capital can be obtained on terms acceptable to us, or
at all. Failure by us to realize significant revenues and achieve profitability
from our real estate development and sales operations or obtain additional
capital, would have a material adverse effect on us.
There are presently a total of 11,440,681 common shares outstanding. If the
entire equity line of $20,000,000.00 which is contemplated by the offering is
raised, this would mean that additional shares totaling up to 19,200,000 shares
would be issued over a period of two years resulting in a total number of shares
outstanding of 30,640,681 not considering any other acquisitions which the
Company may make during this two year period. This would result in a substantial
dilution of the Company's stock and would have a substantial dilutive effect on
the holders of our securities.
It should also be noted that on April 5, 1999, in connection with the
acquisition of East-West, the Company's Board of Directors authorized the
Company to grant a consultant warrants to subscribe for and purchase up to
5,000,000 shares of the Company's common stock, $0.001 par value at an exercise
price of $0.00083333 per share expiring on April 5, 2001. The consultant
returned these warrants to the Company and requested that the warrants be
canceled in April of 2000. The Company accepted the cancellation of these
warrants. The cancellation of these warrants had an anti-dilution effect by
reducing a potential dilution of an additional 5,000,000 shares which could have
come onto the market if the provisions of Rule 144 were employed.
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Uncertainty of Corporate Development; Corporate Inexperience
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Development of our new operations will be subject to all of the risks associated
with new operational development, including unanticipated delays, expenses,
technical problems, or other difficulties that could result in continuing
losses. For example, a construction project could be delayed because building
plans are not promptly approved or have to be redrawn or because a zoning
variance could not be obtained on a timely basis. Given the uncertainties
inherent in the development of new operations particularly in the housing
construction market, there can be no assurances that we will be successful in
developing the income that we presently believe we will develop. Investors
should be aware of the potential problems, delays and difficulties often
encountered by any company that has been out of the development stage for a
little over one year. As a consequence, problems may arise that may be beyond
the experience or control of management and accordingly, our prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by such companies in the establishment of a new business in a highly
competitive industry. Accordingly, there can be no assurance that our
development and commercialization activities will be successful, or that we will
ever achieve significant levels of revenue or profits, if any.
No Assurance of Identification or Acquisition of Additional Operations
----------------------------------------------------------------------
From time to time, if our resources allow, we intend to explore the acquisition
of additional operating companies that fit into the general scheme of Senior
Care's goal to become a fully integrated real estate, manufacturing and
pharmaceutical/nutricutical company benefiting seniors. There can be no
assurance, however, that we will be able to identify any such companies and,
even if suitable companies are identified, there can be no assurance that we
will have sufficient funds to acquire any such operations or that any such
operations will ultimately be viable.
Government Regulations
----------------------
The Company is subject to governmental regulation with respect to its
development projects from the standpoint of being required to secure certain
zoning clearances, building permits and must satisfy other normal building
regulations including occupancy permits for condominium and apartment units
which the Company may, from time to time, have under construction. Also, the
Company must satisfy local building inspectors who inspect the work on the
Company's projects from time to time.
The Company develops age restricted housing for seniors, generally aged 55 and
over. Presently, the Company is unaware of any governmental regulation of the
senior housing market, per se. However, should such regulation become or be made
effective, the Company intends to comply with those regulations.
Competition
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The "elder care" industry is expanding as a simple matter of demographics takes
over the market - U.S. Census Bureau information demonstrates that the age of
the average American is increasing annually. Senior Care believes that as a
result senior citizens are acquiring more clout in the market, and are changing
key real estate concepts. Senior Care believes that the older citizen is looking
for properties that can provide them with the lifestyle that they would like to
have without having to "break the bank" by using all of their savings to
purchase housing and use all of their income just to live. Private residences
for senior citizens are very active sectors of the market according to the Bank
or America who has studied this housing sector. The biggest problem, according
to the Bank is that the sector is flooded with demand while there is an absence
of supply. Because of this, many development firms are acquiring properties and
are reconfiguring them to suit the needs of the elderly. While barriers to entry
into this industry are starting to appear, firms with a highly aggressive
acquisition schedule, can position themselves to be key players in different
geographic locations.
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Nationwide Demographics: Senior Housing
Due to the aging of the population, the number of people included in this
segment is increasing, and is projected to have strong continued growth. Because
of increases in life expectancy, the U.S. Census Bureau statistics cite that the
proportion of Americans over the age of 65 has steadily gained during this
century. In 1994, 1 in 8 Americans was over 65, by the year 2050, it is
projected that 1 in 5 will be over this age. In 1993, 600,000 assisted living
units generated a combined total of $12 billion in revenue. Due to the "graying
of America," the number of assisted living units is expected to reach 1.3
million by the year 2000, generating in excess of $33 billion in revenue.
California Demographics: Senior Housing, Conventional Housing,
and Commercial Development.
Although the Company will continue it's west coast development in Las Vegas, New
Mexico, Arizona and California, it is placing particular emphasis on locating
opportunities within southern California's "sixty mile circle". The Evergreen
Manor II project which was recently completed by the Company and is owned by the
Company, as well as the Company office building in Laguna Beach that is owned by
the Company, fall within the "sixty mile circle", which is the area within sixty
miles of downtown Los Angeles. This area represents the heart of the southern
California market as defined by Bank of America, and is one of the most dynamic
economies in the United States. The market contained within the "sixty mile
circle" accounts for nearly one half of the state of California's personal
income, one half of the state's total economy, 45% of the state's population,
48% of the state's non-farm employment, and two thirds of the state's valuation
in international trade. According to Bank of America, the "sixty mile circle" is
the nation's second largest concentrated area of population, employment,
business and industry, and exceeds the population of all but three states in the
country excluding California. Among the 13 western states, the "sixty mile
circle" accounts for 25% of the population and 27% of the personal income. This
vast pool of wealth generates gross output that exceeds the GNP of all but 13
nations in the world today and creates a massive market of potential residents
for both projects.
THE SIXTY MILE CIRCLE: STATISTICAL DATA
ON THE AREA WITHIN 60 MILES OF DOWNTOWN LOS ANGELES
AS COMPARED TO THE STATE OF CALIFORNIA
Total Personal Income: 49.9%
Total Population: 45%
Non-Farm Employment: 48%
Manufacturing Employment: 56%
Valuation of International Trade: 66%
AS COMPARED TO THE NATION AS A WHOLE
Concentration of Population 2nd Largest
Concentration of Employment: 2nd Largest
Concentration of Business And Industry: 2nd Largest
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AS COMPARED TO THE 13 WESTERN STATES
Total Population: Exceeds all but 3 states
Total Population: 25%
Total Personal Income: 27%
The "sixty mile circle" offers ongoing stable development
opportunities for all 3 categories of the Senior Care
Industries Inc., portfolio.
The principal competitors of Senior Care are such operations as the Del Webb
Company and others who also build senior restricted housing. Senior Care's
emphasis will be to fill the nitch of the senior who wishes to spend from
$125,000.00 to $250,000.00 for a home and who wishes to save on monthly
maintenance fees. Senior Care does not intend to build for the high end customer
and for that reason, competition, at least at the present time, is limited in
Senior Care's nitch market.
Dependence On Key Personnel
---------------------------
Our success will depend to a large extent upon our ability to retain Mr. Stephen
Reeder, our Chief Executive Officer and Chairman of the Board. The loss or
unavailability of the services of Mr. Reeder would have a material adverse
effect on our business and operations.
Likewise, Bob Eschwege, the manager of Noble Furniture, is essential to the
continued profitablity of that subdivision of the Company. He understands the
furniture manufacturing business and the distribution of furniture business
thoroughly, and though he could be replaced, it would be difficult and the loss
or unavailability of the services of Mr. Eschwege would have a material adverse
effect on Noble Furniture as an integral part of Senior Care's business and
business plan.
No Dividends With Respect to Common Stock
-----------------------------------------
We have not paid any cash dividends with respect to our Common Stock, and it is
unlikely that we will pay any dividends on our Common Stock in the foreseeable
future. Earnings, if any, that we may realize will be retained in the business
for further development and expansion.
Shares Eligible for Future Sale
-------------------------------
There are presently 5,783,681 shares of Common Stock that were issued and
outstanding that are "restricted securities" as that term is defined by Rule 144
of the Securities Act, all of which are currently eligible for resale in
compliance with Rule 144 of the Securities Act. Of these shares, 2.59% are owned
by Bob Eschwege, the manager of Noble Furniture. 10.52% of these shares are
owned by other officers or directors but no one person owns more than 1% of the
shares outstanding.
Rule 144 provides that, in general, a person holding restricted securities for a
minimum period of one (1) year may, every three (3) months thereafter, sell in
brokerage transactions an amount of shares which does not exceed the greater of
one percent (1%) of our then outstanding Common Stock or the average weekly
trading volume of the Common Stock during the four (4) calendar weeks
immediately prior to such sale. Rule 144 also permits, under certain
circumstances, the sale of shares without any quantity limitations by a person
who is not an affiliate of us and was not an affiliate at any time during the
ninety (90) day period immediately prior to such sale, and who has satisfied a
two (2) year holding period. Sales of our Common Stock by shareholders under
Rule 144 may have a depressive effect on the market price of our Common Stock.
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Forward-Looking Statements and Associated Risk.
-----------------------------------------------
This prospectus includes "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1934, and the Private Securities Litigation Reform
Act of 1995, and we desire to take advantage of the "safe harbor" provisions in
those laws. Therefore, we are including this statement for the express purpose
of availing ourselves of the protections of these safe harbor provisions with
respect to all of the forward-looking statements we make. The forward-looking
statements in this prospectus reflect our current views with respect to possible
future events and financial performance. These forward-looking statements are
subject to certain risks and uncertainties, including specifically the absence
of significant revenues, financial resources, a history of losses, significant
competition, trading risks of low-priced stocks and those other risks and
uncertainties discussed herein that could cause our actual results to differ
materially from our historical results or those we anticipate. In this
prospectus, the words "anticipates," "believes,""expects," "intends," "future"
and similar expressions identify certain forward-looking statements. You are
cautioned to consider the specific risk factors described in "Risk Factors" and
elsewhere in this prospectus and not to place undue reliance on the
forward-looking statements contained in this prospectus, which speak only as of
the date of this prospectus. We undertake no obligation to publicly revise these
forward-looking statements to reflect the effect of events or circumstances that
may arise after the date of this prospectus. All written and oral
forward-looking statements made subsequent to the date of this prospectus and
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by this section.
PLAN OF DISTRIBUTION
General
-------
Bayview is offering the shares of our common stock for its account as a
statutory underwriter, and not for our account. We will not receive any proceeds
from the sale of our common stock by Bayview. Bayview will be offering for sale
up to 19,200,000 shares of our common stock acquired by it pursuant to the terms
of the investment agreement more fully described above and the warrants issued
to it in connection with the transaction. Bayview has agreed to be named as a
statutory underwriter within the meaning of the Securities Act of 1933 in
connection with such sales of our common stock and will be acting as an
underwriter in its resales of our common stock under this prospectus. Bayview
has, prior to any sales, agreed not to effect any offers or sales of our common
stock in any manner other than as specified in this prospectus and not to
purchase or induce others to purchase shares of our common stock in violation of
any applicable state and federal securities laws, rules, and regulations and the
rules and regulations governing the OTC electronic bulletin board.
To permit Bayview to resell the shares of our common stock issued to it
under the investment agreement, we agreed to register those shares and to
maintain that registration. To that end, we have agreed with Bayview that we
will prepare and file such amendments and supplements to the registration
statement and the prospectus as may be necessary in accordance with the
Securities Act of 1933 and the rules and regulations promulgated thereunder, to
keep it effective until the earlier of (i) the date as of which Bayview may sell
all of the securities it holds without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act or (ii) the date on which (A) Bayview has sold
all the common stock required to be registered under the investment agreement;
(B) Bayview has no right to acquire any additional shares of common stock under
the investment agreement; and (C) Bayview has no right to receive common stock
underlying the warrants we are required to issue to it pursuant to the
investment agreement.
Bayview is subject to the applicable provisions of the Exchange Act of
1934, including without limitations, Rule 10b-5 thereunder. Under applicable
rules and regulations under the Exchange Act, any person engaged in a
distribution of shares of our common stock may not simultaneously engage in
market making activities with respect to such securities for a period beginning
when such person becomes a distribution participant and ending upon such
person's completion of participation in a distribution, including stabilization
activities in the common shares to effect covering transactions, to impose
penalty bids, or to effect passive market making bids. In addition, in
connection with the transactions in our common stock, Bayview and we will be
subject to applicable provisions of the Exchange Act and the rules and
regulations promulgated thereunder, including, without limitations, the rule set
forth above. These restrictions may affect the marketability of the shares of
our common stock owned by Bayview.
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All the selling security holders have advised us that, prior to the
date of this prospectus, they have not made any agreement or arrangement with
any underwriters, brokers, or dealers regarding the distribution and resale of
the shares or warrants. If we are notified by a selling security holder that any
material arrangement has been entered into with an underwriter for the sale of
their shares or warrants, then, to the extent required under the Securities Act
of 1933 or the rules of the Securities and Exchange Commission, a supplemental
prospectus will be filed to disclose such of the following information as we
believe appropriate: (i) the name of the participating underwriter; (ii) the
number of the shares or warrants involved; (iii) the price at which such shares
or warrants are to be sold, the commissions to be paid, or discounts or
concessions to be allowed to such underwriter; and (iv) other facts material to
the transaction.
Neither the shares nor warrants have been registered for sale by the
selling security holders under the securities laws of any state as of the date
of this prospectus. Brokers or dealers effecting transactions in these
securities should confirm the registration thereof under the securities laws of
the states in which transactions occur or the existence of any exemption from
registration.
We expect that the selling security holders will sell their securities
covered by this prospectus through customary brokerage channels, either through
broker-dealers acting as agents or brokers for the seller, or through
broker-dealers acting as principals, who may then resell the securities in the
over-the-counter market, or at private sale or otherwise at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, or at negotiated prices. The selling security holders may effect such
transactions by selling the securities to or through broker-dealers, and such
broker-dealers may receive compensation in the form of concessions or
commissions from the selling security holders and/or the purchasers of the
securities for whom they may act as agent (and thus compensation may be in
excess of customary commissions). The selling security holders and any
broker-dealers that participate with the selling security holders in the
distribution of shares may be deemed to be underwriters and commissions received
by them and any profit on the resale of securities positioned by them might be
deemed to be underwriting discounts and commissions under the Securities Act.
There can be no assurance that any of the selling security holders will sell any
or all of the common stock or warrants offered by them hereunder.
Sales of the securities on the OTC Bulletin Board or other trading
system may be by means of one or more of the following:
(i) a block trade in which a broker or dealer will attempt to sell the
securities as agent, but may position and resell a portion of the block as
principal to facilitate the transaction;
(ii) purchases by a dealer as principal and resale by such dealer for
its account pursuant to this prospectus; and
(iii) ordinary brokerage transactions and transactions in which the
broker solicits purchasers.
In effecting sales, brokers or dealers engaged by the selling security
holders may arrange for other brokers or dealers to participate. From time to
time the selling shareholders may engage in short sales, short sales against the
box, puts and calls, and other hedging transactions in our securities, and may
sell and deliver their shares of our common stock in connection with such
transactions or in settlement of securities loans. In addition, from time to
time a selling shareholder may pledge its shares pursuant to the margin
provisions of its customer agreements with its broker-dealer. Upon delivery of
such shares or a default by a selling shareholder, the broker-dealer or
financial institution may offer and sell such pledged shares from time to time.
The selling security holders are not restricted as to the price or
prices at which they may sell their share of common stock or warrants. Sales of
such securities at less than market prices may depress the market price of our
common stock. Moreover, the selling security holders are not restricted as to
the number of shares or warrants that may be sold at any one time.
The selling security holders will pay all commissions and their own
expenses, if any, associated with the sale of our common stock, other than the
expenses associated with preparing this prospectus and the registration
statement of which it is a part.
13
<PAGE>
On December 4, 2000, the closing bid price for our common stock was
$0.52, the average daily trading volume for the last 30 trading days ended
December 4, 2000 was 97,444 and our average dollar trading volume, as defined in
the investment agreement for that same period was $98,533. If this closing bid
price and average trading volume remained constant over the 24 month period of
the investment agreement and we requested $100,000 each of the approximately 32
purchase periods during the 24 month term, which amount Bayview agrees to fund
if certain conditions in the investment agreement are met, under this example,
we would issue 7,032,967 shares to Bayview at $.455 per share, a twelve and one
half percent discount to the average of the lowest three closing bid prices
during the ten trading day purchase period; provided that we do not exceed the
limit contained in the investment agreeement or Bayview's total beneficial
ownership of common stock described below, and we have enough authorized shares.
Presuming we issue the 7,032,967 shares and that we do not exceed the limit
contained in the investment agreement or Bayview's total beneficial ownership of
common stock described below and we have enough authorized shares, we will pay
underwriting compensation to and expenses for Bayview, and other offering
expenses as follows:
UNDERWRITING COMPENSATION AND EXPENSES
--------------------------------------
Per Share Total
--------- -----
Discount to Bayview (12.5%) $0.065 457,143
Expenses payable on behalf of Bayview
Escrow fees (1) 0.0091 64,000
Legal Fees of Bayview 0.0028 20,000
Estimated offering expenses
SEC filing fee 0.000278 2,668
Accountant's fees and expenses 0.0005 5,000
Legal fees and expenses 0.0005 5,000
Total $0.072578 543,811
-----------
(1) This fee will be $2,000 per request.
REGISTRATION RIGHTS OF BAYVIEW
------------------------------
We granted registration rights to Bayview to enable it to sell the
shares of our common stock that it purchases under the investment agreement. In
connection with such registration, we will have no obligation to:
o assist or cooperate with Bayview in the offering or disposition of such
shares;
o indemnify or hold harmless the holders of any such shares (other than
Bayview) or any underwriter designated by such holders; or
o obtain a commitment from an underwriter relative to the sale of any
such shares.
We will assume no obligation or responsibility whatsoever to determine
a method of disposition for such shares or to otherwise include such shares
within the confines of any registered offering other than the registration
statement of which this prospectus forms a part.
Bayview may resell all or a portion of the common shares in open market
transactions in reliance upon Rule 144 under the Securities and Exchange Act,
provided it meets the criteria and conform to the requirements of such Rule.
14
<PAGE>
SALES BY SELLING SHAREHOLDER
BAYVIEW INVESTMENT AGREEMENT
OVERVIEW. On November 16, 2000 we entered into an investment agreement
with Bayview. The investment agreement entitles us to issue and sell our common
stock for up to an aggregate of $20 million from time to time during a two-year
period, beginning on the effective date of this Registration Statement. This is
also referred to as a put right.
PUT RIGHTS. After the Registration Statement is declared effective, the
Company can draw down on the equity credit line provided by the investment
agreement with Bayview upon certain terms and conditions. This explanation is
not meant to be all-inclusive but simply a brief and incomplete synopsis of the
procedure and terms for drawing down on the equity credit line.
Some of the Conditions Precedent to Issuing a Put Notice:
---------------------------------------------------------
- The Registration Statement must be effective and current;
- Average dollar trading volume for each of the ten (10) trading days
prior to the Put Notice Date must be at least $75,000.00;
- Average closing bid price for the ten (10) trading days prior to the
Put Notice Date must be at least $.50;
- Subject to other conditions set forth in the Investment Agreement
mainly in Sections 1, 7 and 8, inclusive.
Some of the Procedures or Mechanics for Drawing Down by Issuing a Put
---------------------------------------------------------------------
Notice:
-------
- The Put Notice Date is the trading day after the Put Notice is
received if it is received by 12:00 P.M. Eastern Time and the
second trading day after the Put Notice is received if it is
received after 12:00 P.M. Eastern Time;
- The maximum dollar amount of the Put Notice shall be 1.5 times the
average trading volume for the 30 consecutive days preceding the Put
Notice (which may be increased or decreased upon mutual agreement of
the parties);
- The maximum number of shares is limited to 4.99% of the Company's
current issued and outstanding common shares;
- The purchase price for the shares will be 87.5% of the average lowest
three closing bids during the ten (10) days prior to the Closing Date;
- The Closing Date is the eleventh day after the Put Notice Date.
WARRANTS. At the end of each trading day, we are required to issue and
deliver to Bayview a warrant to purchase a number of shares of common stock
equal to 20% of the common shares issued to Bayview in the applicable put. Each
warrant will be exercisable at a price which will initially equal 120% of the
market price for the applicable pricing period. Each warrant will be immediately
exercisable and have a term beginning on the date of issuance and ending five
years thereafter.
15
<PAGE>
SHAREHOLDER APPROVAL. We may issue more than 20% of our outstanding
shares. If we become listed on the Nasdaq Small Cap Market or Nasdaq National
Market or the American Stock Exchange, then we must get shareholder approval to
issue more than 20% of our outstanding shares. Since we are currently a bulletin
board company, we do not need shareholder approval.
TERMINATION OF INVESTMENT AGREEMENT. We may also terminate our right to
initiate further puts or terminate the investment agreement by providing Bayview
with notice of such intention to terminate; however, any such termination will
not affect any other rights or obligations we have concerning the investment
agreement or any related agreement.
SUBSTITUTION OF NEW INVESTMENT AGREEMENT TO REPLACE BAYVIEW. We may
also terminate our right to initiate further puts or terminate the investment
agreement by providing Bayview with notice of such intention to terminate and
replace Bayview with another investment agreement with another investor under
the same or similar terms and conditions. If the Company replaced Bayview with
another investor under similar terms and conditions, it may not be required to
file a new Prospectus if this Prospectus is considered current and the new
investment agreements become a part of a reoffer prospectus.
THE REQUEST PROCEDURE AND THE STOCK PURCHASES The investment agreement
does not permit us to request funds if the issuance of shares of common stock to
Bayview pursuant to the request would result in Bayview owning more than 4.99%
of our outstanding common stock on the request date.
We may make a request for cash by faxing a notice to Bayview that
states the amount we wish to request.
PRICES OF SHARES The price at which Bayview will purchase our common
stock will be 87.5% of the lowest three closing bid prices during the ten
trading days following the day after the put right is exercised.
NECESSARY CONDITIONS BEFORE BAYVIEW IS OBLIGATED TO PURCHASE OUR SHARES
The following are some of the conditions that must be satisfied before Bayview
is obligated to purchase the shares of common stock that we wish to sell from
time to time:
o A registration statement for the shares must be declared effective by
the Securities and Exchange Commission and must remain effective and
available for making resales of the common shares purchased by Bayview;
o Our common stock must remain listed on the OTC electronic bulletin
board or must be listed on another stock exchange or on NASDAQ;
o We must not have merged or consolidated with or into another company or
transferred all or substantially all of our assets to another company,
nor must a purchase, tender, or exchange offer have been made to and
accepted by, the holders of more than 51% of our voting stock, unless
in the ordinary course of our business;
o We must be in compliance with our obligations under the investment
agreement and related agreements and we must not be in breach of, or in
default under, any material provision of the investment agreement or
related agreements;
o There can be no material adverse change in our business operations,
properties, prospects, or financial condition;
o No injunction may be issued, or action commenced by a governmental
authority, prohibiting the purchase or the purchase or the issuance of
our common stock;
o No statute, rule, regulation, executive order, decree, ruling, or
injunction may be in effect which prohibits consummation of the
transactions comtemplated by the investment agreement;
o No litigation or proceeding or any investigation by any governmental
authority can be pending or threatened against us or Bayview seeking to
restrain, prevent, or change the transactions contemplated by the
investment agreement or seeking damages in connection with such
transactions; and
o We may not have filed for protection from creditors.
16
<PAGE>
RESTRICTIONS ON FUTURE FINANCINGS The investment agreement limits our
ability to raise money by selling our securities for cash at a discount to the
market price. Pursuant to the investment agreement, during the two year period
following the effective date of the registration statement, we may not, without
prior notice to Bayview, offer, sell, grant any option to purchase, or otherwise
dispose of any of our common stock or securities. If we need additional
financing, Bayview has a right of first refusal to provide the financing to us.
If Bayview does not wish to provide the financing to us, we may obtain the
financing through the disposition of our common stock or securities convertible
into common stock to a third party. If we violate the right and sell common
stock or securities convertible into common stock at pricing more favorable than
that in the investment agreement with Bayview, then the purchase price to
Bayview shall be adjusted accordingly. There are exceptions to this limitation
in the following situations:
o Shares, options, or warrants issued pursuant to our stock option plan;
o Shares issued upon the exercise of any currently outstanding warrants
or option and upon conversion of any currently outstanding convertible
debenture;
o Shares issued in connection with the capitalization or creation of a
joint venture with a strategic partner;
o Shares issued in connection with an acquisition by us of another
company; and
o Shares issued in a bona fide public offering by us of our securities.
COSTS AND FEES ASSOCIATED WITH THE TRANSACTION At the closing of the
transaction on November 13, 2000, we delivered the requisite opinion of counsel
to Bayview and will pay the escrow agent Joseph LaRocco, P.C. $20,000 for his
legal, administrative, and escrow costs. In addition, each time we issue common
stock to Bayview in return for cash, we will pay Mr. LaRocco an escrow agent fee
of $2,000.
TERMINATION OF THE STOCK PURCHASE AGREEMENT Unless Bayview agrees to a
waiver, the investment agreement will automatically terminate upon the earlier
of the date that:
o Bayview has purchased an aggregate of $20,000,000 of our common stock;
o Is 24 months after the effective date of this registration statement;
o We file for protection from creditors;
o We fail to file a registration statement for this offering within 60
calendar days of the signing of the investment agreement or fail to
have the registration statement declared effective within 180 calendar
days of the signing of the investment agreement;
o We suffer a material adverse change in our business operations,
properties, or financial condition;
o Trading in our common stock is suspended by the Securities and Exchange
Commission or the OTC electronic bulletin board for a period of five
consecutive trading days;
o The resale of our common stock by Bayview ceases to be registered under
the Securities Act of 1933;
o We require shareholder approval under Nasdaq rules to issue additional
shares and such approval is not obtained within 60 calendar days from
the date we issue 19.9% of the maximum allowable shares of common
stock; or
o If the registration statement is suspended for more than 30 trading
days.
Additionally, the investment agreement may be terminated by mutual agreement of
Bayview and us.
17
<PAGE>
INDEMNIFICATION OF BAYVIEW Bayview is entitled to customary
indemnification from us for any losses or liabilities suffered by it based upon
material misstatements or omissions in the registration statement, prospectus,
investment agreement and related documents except as they relate to information
supplied by Bayview to us for inclusion in the registration statement and
prospectus. We are entitled to indemnification from Bayview for any losses or
liabilities suffered by us as a result of any information supplied to us by
Bayview for use in connection with the registration statement.
SHARES ELIGIBLE FOR FUTURE SALE Through the date of this prospectus,
there has been only limited over-the-counter trading of our common stock by
certain market makers who have registered to enter quotes on the common stock on
the OTC electronic bulletin board. We have no plans to list the common stock on
The NASDAQ National Market System or on any national securities exchange. Sales
of substantial amounts of shares of our common stock in the public market
following the offering, or the perception that such sales could occur, could
adversely affect the market price of the common stock prevailing from time to
time and could impair our ability to raise capital in the future through sales
of our equity securities.
After this registration statement is declared effective by the SEC the shares
being sold to Bayview, subject to prospectus delivery requirements, will be
freely tradable without restriction or further registration under the Securities
Act, except that any shares purchased by our "affiliates" as that term is
defined in Rule 144 under the Securities Act of 1933, may generally only be sold
in compliance with Rule 144 described below. Any shares of our common stock that
are not registered are "Restricted Securities" as defined in Rule 144.
Restricted Securities may be sold in the public market only if registered or if
they qualify for an exemption from registration under the Securities Act, such
as pursuant to Rule 144, which rule is summarized below. We are aware that some
shares have been sold in reliance on Rule 144.
SALES OF RESTRICTED SECURITIES
In general, under Rule 144 as currently in effect, a person who has beneficially
ownede restricted securities, as defined in Rule 144, for at least one year,
including a person who may be deemed our affiliate is entitled to sell within a
three-month period, a number of shares of our common stock that does not exceed
the greater of one percent of the then outstanding shares of common stock and
the average weekly reported trading volume of our common stock during the four
calendar weeks preceding such sale.
Sales under Rule 144 are subject to certain restrictions relating to manner of
sale, notice, and availability of current public information about us. In
addition, under Rule 144(k), a person who is not an affiliate and has not been
an affiliate at any time during the ninety days preceding a sale, and who has
beneficially owned shares for at least two years, would be entitled to sell such
shares immediately following the offering, without regard to the volume
limitations, manner of sale provisions, or notice or other requirements of Rule
144. In meeting the one and two-year holding periods described above, the holder
of restricted securities can include the holding periods of a prior owner who is
not an affiliate. The one- and two-year holding periods described above do not
begin to run until the full purchase price or other consideration is paid by the
person acquiring the restricted securities from the issuer or an affiliate.
18
<PAGE>
SELLING SHAREHOLDER
The following table sets forth certain information with respect to the
selling shareholder as of December 15, 2000. Except as shown below, the selling
shareholder currently is not an affiliate of ours, or has had a material
relationship with us during the past three years. The selling shareholder is not
and was not affiliated with registered broker-dealers.
<TABLE>
<CAPTION>
Amount and
Percentage of
Beneficial Maximum Number Common Stock
Ownership of of Shares of After the Sale
Common Stock as Common Stock --------------
Name of Dec. 15, 2000 Offered for Sale Number %(1)
---- ---------------- ---------------- --------------
<S> <C> <C> <C>
Bayview, LLC (2) 19,200,000 19,200,000 None
</TABLE>
(1) Assumes that the selling shareholders will sell all of the shares of
common stock offered hereby. We cannot assure you that the selling
shareholders will sell all or any of the shares offered hereunder.
(2) This number includes shares of common stock issuable upon exercise of
outstanding warrants which are currently exercisable, which represents
60.67% of our issued and outstanding common stock as of November 15,
2000. This number also includes (solely for purposes of this
prospectus) up to an aggregate of 19,200,000 shares of our common stock
that we may sell to Bayview pursuant to the investment agreement and
warrants issuable in connection with the investment agreement, which
shares would not be deemed beneficially owned within the meaning of
Sections 13(d) and 13(g) of the Exchange Act before their acquisition
by Bayview. It is expected that Bayview will not beneficially own more
than 4.99% of our outstanding common stock at any time.
THE COMPANY
GENERAL BACKGROUND OF THE COMPANY
History of the Company
----------------------
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.
19
<PAGE>
In 1999, the company transferred its assets and liabilities to Paymaster
Resources Incorporated.
Significant Acquisitions of Senior Care Industries
--------------------------------------------------
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.
As a result of the East-West Developer acquisition, Senior Care obtained title
to the following properties and assets:
1. a 45% membership interest in a limited liability company which
owns a development project in Delran, New Jersey *;
2. a 44 unit senior condominium project in Monterey Park, California known as
Evergreen Manor II;
3. a 57 unit Senior Apartment Project in Albuquerque, New Mexico;
4. a 25,000 square foot strip center known as Friendly Bear Plaza located in Las
Vegas, Nevada;
5. a 32,000 square foot office in Las Vegas, Nevada known as the Pecos Russell
Commercial Center;
6. the Company office headquarters building at 410 Broadway in
Laguna Beach, California known as Broadway Acacia.
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.
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 Class D Preferred Stock ** in
Senior Care Industries, Inc. The stock position of Senior Care Industries, Inc.
gives it actual control of Rent USA, Inc.
---------------------------------------------------
* The Company is involved in litigation regarding its membership interest in
Delran and readers are advised to review the Litigation section of this
Prospectus to get full details regarding that litigation and the Company's
potential exposure.
** Originally the Company reported on a Form 8-K filed on October 26, 2000 that
the Company had paid 2,000,000 shares of common stock for its interest in Rent
USA. In December, 2000, the purchase agreement was amended and the common stock
was returned to the treasury of the Company and a new Class D Preferred Stock
was issued in lieu of the original issuance of common stock. An amended 8-K
Report will be filed to report this change.
---------------------------------------------------
Rent USA, Inc. is a publicly held company that became a fully reporting company
with the Securities & Exchange Commission earlier this year. Rent USA, Inc. is
not yet trading on any public market but a Form 211 was filed by Olsen Paine, a
brokerage firm who will act as Rent USA's initial market maker, on or about
October 16, 2000 to commence trading on the over the counter bulletin board.
Rent USA anticipates three operating divisions, Equip USA, Equip Mining Systems
and its mining division. Equip USA and Equip Mining Systems are presently in
operation. Mining operations have not yet commenced.
Each of the three divisions is discussed below:
20
<PAGE>
Equip USA
---------
Rent USA, Inc. provides services in four categories under the umbrella
of its current domestic rental and sales business which is to be known as Equip
USA. Those rentals and sales are generally from the following sources:
1. Equipment Rentals - the principal service, consists of renting
equipment to small and large contractors, and construction companies.
2. Equipment Sales - The sale of new and used equipment to small and
large contractors and construction companies. The Company is presently
negotiating an agreement whereby it will become a dealer for New Holland, a
manufacturer of heavy construction equipment.
3. Re-Rentals - this means re-renting equipment which the Company must
rent from others and does not own, then re-renting that equipment to an end user
at an anticipated 20% markup over the amount which the Company must pay the
owner of the equipment.
4. Trade Rentals - this means renting equipment on a long term basis to
other rental yards, which they, in turn, will mark up and re-rent to the general
public at a markup, generally 20%.
About 50% of the gross volume of the Equip USA's business is from the
sale of used equipment which the Company holds in inventory for that purpose.
The other 50% of its business comes from the rental of equipment or re-rental of
equipment which belongs to others.
Equip Mining Systems
--------------------
Don Hodges of Rent USA has established a mining equipment sales and
rental company known as Equip Mining Systems. Mr. Hodges shares in the profit
and had received 20% of the equity in the construction equipment sales entity.
Mr. Hodges has considerable experience in this business and brings with him a
customer list and executive staff which will be available to run the company.
There were no up-front costs for the development of this entity. However, there
is a considerable ongoing requirement for operating capital.
Mining Operations
-----------------
Rent USA entered into a binding agreement to purchase a quarry and rock
crushing equipment for the production of natural crushed colored rock which is
to be sold in the Southwest United States with the rock crushing plant and
quarry located in Kern County, California. The mining operation will primarily
serve the wholesale landscape, roofing and architectural pre-cast markets with
14 natural crushed rock colors. The acquisition will be for stock in Rent USA,
Inc. but the on going operation of the business will require a considerable
infusion of working capital.
The Nature of Senior Care's Business
------------------------------------
Senior Care Industries is a diversified firm consisting of a real estate
division, a manufacturing division, and eventually a third division to be known
as the pharmaceutical.nutriceutical division is contemplated.
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.
21
<PAGE>
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. It has entered into two binding agreements to purchase companies in
this field, MicroDentiX which performs dental diagnostic tests for periodontal
disease by the use of DNA analysis and Physicians Nutritional Laboratories,
Inc., who distributes a line of nutriceuticals designed by doctors.
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 has completed construction on its 44 unit senior condominium project
in Monterey Park, California known as Evergreen Manor II and unit sales are
underway.
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.
Additionally, 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
December, 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.
22
<PAGE>
On August 7, 2000, the Company agreed to purchase the Bellflower Christian
Retirement Center, a 99 unit retirement home in Bellflower, California. That
escrow is still open as of December 15, 2000 and the Company expects to complete
the transaction in early 2001.
FACILITIES.
The Company owns the office building which it occupies at 410 Broadway in Laguna
Beach, California. It also maintains a furniture factory in San Diego,
California which is leased.
The Company's corporate headquarters at 410 Broadway in Laguna Beach, California
is an 5,600 square foot office building. The Company occupies a total of 800
square feet and the rest of the building is leased to tenants. Additionally, the
Company occupies a total of 1,200 square feet of an office building which it
owns in Las Vegas, Nevada. That building has a total of 8,000 square feet with
the balance being leased to tenants.
The furniture factory, Noble Furniture, leases two properties, a 21,000 square
foot facility and another 20,000 square foot facility, both in El Cajon,
California. Both leases are gross leases with a monthly rental of .33 cents per
square foot and both leases will terminate on May 1, 2002.
In addition, the Company owns and, or is under construction on projects located
in the following communities and states:
1. 47 unit Senior Condominium Project, Monterey Park, California known as
Evergreen Manor II, which was recently completed and is in the process of being
sold. After the sale of the condominium units, Senior Care will have no
continued association with the property.
2. 57 unit Senior Apartment Project in Albuquerque, New Mexico, which is yet to
commence construction. Senior Care presently owns the raw land and the
development plans.
3. 25,000 square foot strip center located in Las Vegas, Nevada, known as
Friendly Bear Plaza. This property is completely leased to tenants.
4. A 32,000 square foot office building in Las Vegas, Nevada, known as Pecos
Russell Business Center. This project includes a total of four buildings, two of
which are completed and are completely leased, the third is under construction
and the fourth is yet to commence construction.
EMPLOYEES.
As of November 30, 2000, the Company had 85 employees, of whom,
approximately 80 were employed at the Noble Furniture factory. The balance of
the employees are managerial or secretarial. Of our present officers staff, only
Stephen Reeder and Bob Eschwege are full time and John Cruickshank devotes a
large portion of his time to the Company. The other officers continue to hold
positions with other companies or work for their own entities in addition to
serving Senior Care's needs.
Our future success depends in significant part upon the continued
service of our key technical and senior management personnel. The competition
for highly qualified personnel is intense, and there can be no assurance that we
will be able to retain our key managerial and technical employees or that we
will be able to attract and retain additional highly qualified technical and
managerial personnel in the future. None of our employees is represented by a
labor union, and we consider our relations with our employees to be good. None
of our employees is covered by key man life insurance policies.
23
<PAGE>
GOVERNMENT REGULATION.
We are not subject, as a company, to any material governmental
regulation or approvals. However, the Company is subject to governmental
regulation with respect to its development projects from the standpoint of being
required to secure certain zoning clearances, building permits and must satisfy
other normal building regulations including occupancy permits for condominium
and apartment units which the Company may, from time to time, have under
construction. Also, the Company must satisfy local building inspectors who
inspect the work on the Company's projects from time to time.
USE OF PROCEEDS
We expect to raise a total of $20,000,000.00 under the investment
agreement, subject to the terms and limitations previously described. Net
proceeds are determined after deducting all expenses of the offering. The net
proceeds are determined by the selling price of the shares less a discount of
12.5%. Thus the net proceeds represent a total of 87.5% of the total selling
price.
The proceeds will be determined after deducting the following:
Proceeds $20,000,000.00
Less 12.5% discount = ( 2,500,000.00)
--------------
Net Proceeds 17,500,000.00
Less Expenses:
2% of dollar amount raised to
The Geneva Group, Inc. 400,000.00
Fees to Joseph B. LaRocco, Esq. 15,000.00
Fees to Joseph B. LaRocco, Esq. of
$2,000.00 on each drawdown 20,000.00 (Estimate)
--------------
Total Expenses: ( 435,000.00)
--------------
Net Proceeds after above noted Costs: $17,565,000.00
We intend, in the following order of priority, to use the net proceeds
after costs from this offering as follows:
Acquisition $13,000,000
Public Relations 300,000
Working capital and general corporate purposes 4,265,000
------------
Total $17,565,000
============
The amount and timing of working capital expenditures may vary
significantly depending upon numerous factors such as:
- Revenues generated from existing and anticipated acquisitions
- The development of marketing and sales resources,
- Administrative and legal expenses, and
- Other requirements not now known or estimable.
We believe that our available cash and existing sources of funding,
together with the proceeds of this offering and interest earned thereon, will be
adequate to maintain our current and planned operations for at least the next 2
years.
24
<PAGE>
LITIGATION
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.
25
<PAGE>
Except as described above, we are not aware of any legal matter or claim pending
or threatened that would have a material adverse effect on our consolidated
financial position or results of operations. There are no other legal
proceedings, to which we are a party, which could have a material adverse effect
on us.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the notes thereto appearing in this Prospectus Forward-Looking
Statements
--------------------------
THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS REGARDING
US, OUR BUSINESS, PROSPECTS AND RESULTS OF OPERATIONS THAT ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES POSED BY MANY FACTORS AND EVENTS THAT COULD
CAUSE OUR ACTUAL BUSINESS, PROSPECTS AND RESULTS OF OPERATIONS TO DIFFER
MATERIALLY FROM THOSE THAT MAY BE ANTICIPATED BY SUCH FORWARD-LOOKING
STATEMENTS. FACTORS THAT MAY AFFECT SUCH FORWARD-LOOKING STATEMENTS INCLUDE,
WITHOUT LIMITATION: THE IMPACT OF COMPETITION ON OUR REVENUES, CHANGES IN LAW OR
REGULATORY REQUIREMENTS THAT ADVERSELY AFFECT OR PRECLUDE CUSTOMERS FROM USING
OUR SERVICES FOR CERTAIN APPLICATIONS; ABILITY TO ACQUIRE ADDITIONAL MEDICAL
DIAGNOSTIC IMAGING CENTERS; AND FAILURE BY US TO KEEP PACE WITH EMERGING
TECHNOLOGIES.
WHEN USED IN THIS DISCUSSION AS WELL AS IN OTHER ITEMS IN THIS
PROSPECTUS, WORDS SUCH AS "BELIEVES", "ANTICIPATES", "EXPECTS", "INTENDS" AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, BUT ARE
NOT THE EXCLUSIVE MEANS OF IDENTIFYING FORWARD-LOOKING STATEMENTS. READERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH
SPEAK ONLY AS OF THE DATE OF THIS REPORT. WE UNDERTAKE NO OBLIGATION TO REVISE
ANY FORWARD-LOOKING STATEMENTS IN ORDER TO REFLECT EVENTS OR CIRCUMSTANCES THAT
MAY SUBSEQUENTLY ARISE. READERS ARE URGED TO CAREFULLY REVIEW AND CONSIDER THE
VARIOUS DISCLOSURES MADE BY US IN THIS REPORT AND OTHER REPORTS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION THAT ATTEMPT TO ADVISE INTERESTED PARTIES OF
THE RISKS AND FACTORS THAT MAY AFFECT THE COMPANY'S BUSINESS.
General
-------
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.
26
<PAGE>
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.
As a result of the East-West Developer acquisition, Senior Care obtained title
to the following properties and assets:
1. a 45% membership interest in a limited liability company which
owns a development project in Delran, New Jersey;
2. a 44 unit senior condominium project in Monterey Park, California known as
Evergreen Manor II;
3. a 57 unit Senior Apartment Project in Albuquerque, New Mexico;
4. a 25,000 square foot strip center known as Friendly Bear Plaza located in Las
Vegas, Nevada;
5. a 32,000 square foot office in Las Vegas, Nevada known as the Pecos Russell
Commercial Center;
6. the Company office headquarters building at 410 Broadway in
Laguna Beach, California known as Broadway Acacia.
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.
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 Class D Preferred Stock in
Senior Care Industries, Inc. The stock position of Senior Care Industries, Inc.
gives it actual control of Rent USA, Inc.
Rent USA, Inc. is a publicly held company that became a fully reporting company
with the Securities & Exchange Commission earlier this year. Rent USA, Inc. is
not yet trading on any public market but a Form 211 was filed by Olsen Paine, a
brokerage firm who will act as Rent USA's initial market maker, on or about
October 16, 2000.
Rent USA anticipates three operating divisions, Equip USA, Equip Mining Systems
and a mining division. Equip USA and Equip Mining Systems are presently in
operation. The mining division is yet to commence operations.
The following management discussion and analysis and plan of operation should be
read in conjunction with the Senior Care consolidated financial statements and
notes thereto.
Results of Operations
---------------------
The results of operations of the Company for the nine month period ended
September 30, 2000 compared to nine month period ended September 30, 1999 and
the year ended December 31, 1999 compared to year ended December 31, 1998 are
discussed below and the financial statements concerning operations for these
periods are attached in the Financial Statements "F/S" section of this
Prospectus.
27
<PAGE>
Revenues
--------
Presently, Senior Care receives income from rentals, sales of condominiums and
sales of furniture from the manufacturing operation at Noble Furniture. For the
nine months ended September 30, 2000 gross rental income totaled $438,587.00,
and furniture sales totaled $4,067,992.00 compared to no income from the period
ended September 30, 1999 since at that time, the Company was in development
stage. As of September 30, 2000, there had been no condominium sales. Total
gross income for the nine month period was $4,396,907.00 resulting in a net
operating loss of $262,181.00 which resulted in a net loss attributable to
common shareholders of $.02 per share, basic and diluted whereas for the nine
month period ended September 30, 1999, again, the Company had no income and no
expenses thus resulting in no loss attributable to common shareholders.
Gross revenues for the year ended December 31, 1999 were $100,428.00 compared to
no revenue for the year ended December 31, 1998 since the Company was in its
development stage until the third quarter of 1999. The Company suffered a net
loss for the year ended December 31, 1999 of $234,468.00 whereas, it had no loss
for the year ended December 31, 1998. The only income reported during the year
ended December 31, 1999 was from property rentals.
Operating Expenses
------------------
Sales, General and Administrative
Selling, general and administrative costs were $1,070,690.00 in the for
the nine month period ended September 30, 2000 as compared to $1,342.00 for the
same nine month period ended September 30, 1999. This increase was primarily
attributed to the fact that the Company had not yet started operations as of
September 30, 1999 and was still in its development stage.
Selling, general and administrative expense for the year ended December
31, 1999 totaled $140,892.00, compared to no expense during the year ended
December 31, 1998.
Net Loss
--------
Our net loss for the nine month period ended September 30, 2000 was
($262,181.00) as compared to a loss of ($1,342.00) for the nine month period
ended September 30, 1999. The increase in net loss was primarily attributable to
the fact that the Company was in its development stage during 1999 and had no
income and little expense. Loss per common share for the nine month period ended
September 30, 2000 was ($0.02) as compared to a ($0.00) loss per common share
for the nine months ended September 30, 1999. This increase in loss per common
share was attributable to the fact that the Company had not yet commenced
operations during the nine month period ended September 30, 1999.
28
<PAGE>
Our net loss for the year ended December 31, 1999 was ($234,468.00) as
compared to ($-0-) for the year ended December 31, 1998. This increase was in
net loss was primarily attributable to the fact that the Company was in its
development stage during 1999 and had no income and little expense. Loss per
common share for the year ended December 31, 1999 was ($0.05) whereas for the
year ended December 31, 1998 we had no operations at all. This increase in loss
per common share was attributable to the fact that the Company had not yet
commenced operations during the year ended December 31, 1998.
Liquidity and Capital Resources
-------------------------------
To date, we have funded our capital requirements for our current
operations from cash flows from our operations, from real estate construction
loans and from equity lines of credit which the Company has available. Our cash
position as of September 30, 2000 was $505,727.00 as compared to $100.00 as of
September 30, 1999. During the first nine months of the year 2000, the Company
had a net decline of cash of ($114,931.00) from operating activities. The
Company received net cash of $2,787,079.00 from financing activities and
expended $2,263,755.00 on construction in progress. During this same period, the
Company issued stock for services valued at $29,029.00, incurred a capital lease
for the acquisition of machinery and equipment valued at $50,673.00 and paid
cash for interest and other items which were capitalized totaling $996,678.00.
On May 1, 2000 the Company purchased Noble Furniture for 900,000 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
method of accounting and recorded a total of $1,732,240 in goodwill, which is
being amortized over 15 years. The Company recorded $86,612 in amortization
expense for the nine months ended September 30, 2000. The effective date of the
combination was agreed to as January 1, 2000.
Our cash position as of December 31, 1999 was $38,117 as compared to
$832 as of December 31, 1998. During 1999, a total of ($128,647) in cash was
used for operating activities while the Company received net cash of $4,045,789
from financing activities and expended $3,884,857 on construction in progress.
In the immediate future, in order to fund our current working capital
requirements, expand of our existing operations as well as acquire additional
companies for growth, we intend to seek to complete this offering of equity
securities. Our ability to obtain additional sources of financing cannot be
assured. Our growth is dependent on our ability to obtain such additional
funding.
PLAN OF OPERATION
Emergence from a Development Stage Company
------------------------------------------
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 1,480,122 shares or Senior Care Industries, Inc.'s
common stock and 400,000 shares of preferred stock. After that date, the Company
commenced operations and was no longer a development stage company.
29
<PAGE>
Our Capital Requirements
------------------------
Our greatest cash requirements during the next two years will be the
need for cash for real estate projects which generally will come from
construction loans which the Company will obtain directly from bank lenders, for
funding growth through future acquisitions of other companies who fit into the
Senior Care business model and for capital requirements of companies already
owned by Senior Care such as Rent USA. Noble Furniture already has a credit line
from Celtic Capital which the Company believes will meet Noble's requirements
for the immediate future.
We are seeking to fund activities and other operating needs in the next
two years from funds to be obtained through our investment agreement with
Bayview, LLC.
Subsequent to the next twenty-four months, we plan to finance our
long-term operations and capital requirements with the profits and funds
generated from the revenues from the sale of our condominiums, single family
residences, from rents from our buildings including both commercial and
residential properties and from profits in our manufacturing facilities, both
present and contemplated. We may obtain future funding through new private
financings and public offerings of debt and equity securities and most
certainly, will continue to borrow money from banks and savings institutions to
continue construction projects and real estate development projects.
<TABLE>
<CAPTION>
MANAGEMENT
Our Directors and Executive Officers, on November 30, 2000, and their
ages, positions held with the Company, length of time in such positions, and
term of office are set forth below:
Name and Age Current Position Director Since Officer Since
------------ ---------------- -------------- -------------
<S> <C> <C> <C>
Stephen Reeder 50 Chairman, CEO, August 31, 1999 August 31, 1999
Director
Richard Hart 52 Vice President, August 31, 1999 August 31, 1999
Director
Bob Coberly 33 Vice President, August 31, 1999 VP since August 31, 1999
Chief Financial Officer, CFO since November 10, 2000
Director
David Tsai 55 Vice President, August 31, 1999 August 31, 1999
Director
John Cruickshank 60 Vice President VP since April 18, 2000
Secretary Sec. since November 10, 2000
Scott Brake 48 Director August 31, 1999
David Edwards 52 Director April 1, 2000
John Tanner 36 Director April 1, 2000
Denzel Harvey 55 Director April 1, 2000
Bob Eschwege 58 Vice President May 20, 2000
</TABLE>
The principal occupations and positions for the past several years of
each of our executive officers and directors are as follows:
30
<PAGE>
Stephen Reeder: Chairman, Chief Executive Officer, Director
Mr. Reeder brings 30 years of real estate development, construction, and
investment experience to the company. Mr. Reeder has built and developed over
20,000 units throughout the western United States and will run the day to day
operations of the company and head its construction division. In addition, Mr.
Reeder has developed and constructed over 6,000 acres of master-planned
communities, and developed and built on average, over $100,000,000 annually
between 1985 and 1991. Mr. Reeder will run the day to day operations of the
Company with a particular focus on the development division, coordinating and
directing the Company's acquisitions of existing and to-be-built properties and
the real estate financing for the company.
Mr. Reeder employment for the prior 5-year period has been as an independent
consultant and real estate investor, investing for his own portfolio and
consulting with clients in their financing of real estate in the Western United
States.
Richard Hart: Vice President, Director
Richard Hart has over twenty years of experience in the construction industry,
and has been intimately involved with all manners of construction and
developmental processes. He is a licensed general contractor in the State of
California and is licensed to build all types of residential and wood frame
construction commercial property.
During the last five years, Mr. Hart has been the owner and manager of Pacific
Communities, a company specializing in the construction and rehabilitation of
senior facilities and multi family homes in the Riverside/San Bernardino areas
of Greater Los Angeles. Before his involvement with the Company, Mr. Hart served
as the construction supervisor and project manager with the following
construction and development firms: Van/Hart Performance Builders, La Ban
Development, Special Projects, Sunkist Developers, Cal Cor, Regional Real Estate
Developers, and Mike Pleman Developments. Mr. Hart will oversee the western
United State construction projects for the Company reporting directly to Steve
Reeder.
Scott Brake: Director
Mr. Brake brings 30 years of business experience to the Board of Directors.
Mr. Brake's employment for the prior 5-year period has been as an independent
business and financial consultant in Los Angeles, California.
David Tsai: Vice President
Mr. Tsai is a licensed architect. He graduated from Chung Yuan Christian College
of Taiwan in 1967 and moved to California in 1969. After receiving his Masters
Degree of Architecture at the University of California Berkeley in 1970, Mr.
Tsai moved to Los Angeles and began his architectural career in the Southland.
Mr. Tsai's extensive commercial development and architectural experience derived
from early years when he was employed by various renowned architectural firms in
the Greater Los Angeles area. Mr. Tsai has participated in design work of
landmark projects in Los Angeles, including the Downtown Hyatt Regency Hotel,
the Broadway Plaza, and one of the tallest buildings in Los Angeles, the famous
60-story First Interstate Bank building.
31
<PAGE>
In 1975, Tsai Development and Construction Corp. was founded. In 1977, due to
increasing demand, an independent Development and Construction Division was
formed, separated from the Architectural Division. He has since developed
millions of square feet of commercial/retail, and thousands of multi- family
residential units, senior units and single family homes. Mr. Tsai most recently
created an efficient design for senior condominium projects and is under
construction on numerous senior projects in the state of California, including
Evergreen Manor, which is owned by Senior Care Industries Inc.
Mr. Tsai's employment for the prior 5-year period has been as the principal of
Tsai Development and Construction, in Monterey Park, California. He is the
principal designer and builder of the Evergreen Manor II owned by Senior Care.
Robert Coberly: Chief Financial Officer, Director
Mr. Coberly graduated Magna Cum Laude from the University of San Diego in 1990
with a degree in Business Administration with an emphasis on finance. He brings
8 years of real estate experience to the Senior Care Industries Inc., management
team. Mr. Coberly will focus on retail and residential development with the
company, utilizing his national network of contacts gained through his years
with CB Commercial and Marcus & Millechap. Mr. Coberly has initiated and sold
over $100,000,000 in real estate throughout the United States and will focus on
the eastern U.S. for the Company. He is a licensed real estate broker.
Mr. Coberly's employment for the prior 5-year period has been as a real estate
agent with CB Commercial and Marcus & Millechap, in Los Angeles, California.
Recently, he relocated to Capital Realty in South Pasadena, California.
John Cruickshank, Vice President
Mr. Cruickshank is a graduate of the University of Vermont and Boston College
Law School. For the last 10 years he has been a business consultant working
mainly in connection with the law offices of Lawrence R. Young & Associates,
P.C. in Downey, California as a consultant to Mr. Young's clients on business
affairs. He left that position and joined Senior Care in April of 2000.
David Edwards, Director
David Edwards resides in London, England and is in the international antiques
importing business. He was born in London in 1948 and attended school at St.
Georges. He was for many years the owner and operator of six major licensed
premises in London. He is now retired from that business and spends most of his
time in charitable endeavors including acting as trustee and vice-chair of the
national charity for children suffering from cancer, the Lennox Appeal, is a
member of the Sudbury Rugby Football Club and trustee of the Mountview Drama
School.
John Tanner, Director
John Tanner was born in 1964 in Dublin, Ireland, was educated at the Delasalle
Brother's School, embarked on a career in hotel management after attending the
Royal Marine Hotel Management Course. He presently resides in East Anglia in the
United Kingdom and maintains a large stable of horses, trains horses and is a
member of the British Show Hack & Riding Association and the British Sports
Horse Society. He competes in various horse shows and rides the hunt with the
Thorlow in Suffock and, has been awarded a number of hunt buttons by four other
hunts in the British Isles.
He presently is also in the antique business, has developed a serious interest
in architecture and design. After rebuilding and remodeling Westgate House in
Long Melford, he found himself rebuilding and redesigning houses of significance
in England, Ireland, Spain and Germany.
32
<PAGE>
Denzel Harvey, Director
Denzel Harvey has been for the last twenty years the owner and operator of
Northland Rental & Supply, a heavy equipment rental company in San Dimas,
California. His company has an exclusive arrangement with Rent USA to supply
equipment to Northland for its customers. He is the brother of Al Harvey, the
founder of Rent USA, Inc. Northland is a part of the Disabled Veterans Business
Enterprise (DVBE) program in California and by Congress on a Federal level gives
an entitlement to disabled veterans on a par with minorities. Denzel Harvey is a
disabled veteran. Because of the agreement between Rent USA and Northland,
Northland is able to favorably compete on all expenditures for State of
California and Federal public works projects. The agreement between Northland
and the Rent USA provides for an exclusive marketing arrangement whereby the
Rent USA provides the material, equipment and supplies for all of Northland's
projects. The agreement is for seven years and is renewable. The agreement is
written and signed by both parties. There are only 600 DVBE registered
businesses in the California and only one in the heavy construction field
according to the Disabled Veterans Alliance. Northland has an advantage over
other non DVBE companies when bidding on federally mandated construction
projects. The most recent version of the law passed by Congress and by the
California State Legislature requires that at least 3% of all contracts let in
State and federally mandated projects be to DVBE owned companies.
Bob Eschwege, Vice President and Manager of Noble Furniture
Mr. Eschwege founded Noble Furniture in 1989 and has been with the Company since
its inception. He handles all aspects of oversight of manufacture, design, and
distribution. He is a master furniture and cabinet maker whose expertise goes
far beyond the manufacturing of furniture to the showing and sale of the product
to distributors nationwide.
EXECUTIVE COMPENSATION
The following table sets forth the Summary Compensation Table for our
Chief Executive Officer and the next most highly compensated executive officer
other than the Chief Executive Officer who were serving as executive officers at
the end of the last completed fiscal year. No other compensation not covered in
the following table was paid or distributed by the Company to such persons
during the period covered. Employee Directors receive stock options for service
on the Board of Directors.
<TABLE>
<CAPTION>
Name Annual Awards Payouts
& Position Comp.
--------------------------------------------------------------------------------------
Year Salary Bonus Other Restricted LTIP Other
Compensation Stock Options
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard Hart 1997 -0- -0- -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
V.P. 1999 -0- -0- -0- -0- -0- -0- -0-
Director 2000 -0- -0- -0- -0- 55,000 -0- -0-
Martin 1997 -0- -0- -0- -0- -0- -0- -0-
Richelli 1998 -0- -0- -0- -0- -0- -0- -0-
V.P. 1999 -0- -0- -0- -0- -0- -0- -0-
Director 2000 -0- -0- -0- -0- 55,000 -0- -0-
Denzel 1997 -0- -0- -0- -0- -0- -0- -0-
Harvey 1998 -0- -0- -0- -0- -0- -0- -0-
Director 1999 -0- -0- -0- -0- -0- -0- -0-
2000 -0- -0- -0- -0- 55,000 -0- -0-
David Tsai 1997 -0- -0- -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
V.P. 1999 -0- -0- -0- -0- -0- -0- -0-
2000 -0- -0- -0- -0- 55,000 -0- -0-
33
<PAGE>
Name Annual Awards Payouts
& Position Comp.
--------------------------------------------------------------------------------------
Year Salary Bonus Other Restricted LTIP Other
Compensation Stock Options
Stephen 1997 -0- -0- -0- -0- -0- -0- -0-
Reeder 1998 -0- -0- -0- -0- -0- -0- -0-
CEO 1999 -0- -0- -0- -0- -0- -0- -0-
Director 2000 65,000 -0- -0- -0- 115,000 -0- -0-
Bob Coberly 1997 -0- -0- -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
V.P. 1999 -0- -0- -0- -0- -0- -0- -0-
Director 2000 -0- -0- -0- -0- 55,000 -0- -0-
John 1997 -0- -0- -0- -0- -0- -0- -0-
Cruickshank 1998 -0- -0- -0- -0- -0- -0- -0-
V.P. 1999 (1) -0- -0- -0- -0- -0- -0- -0-
Secretary 2000 38,850 -0- -0- -0- 55,000 -0- -0-
Scott Brake 1997 -0- -0- -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
V.P. 1999 -0- -0- -0- -0- -0- -0- -0-
Director 2000 -0- -0- -0- -0- 55,000 -0- -0-
Al Harvey 1997 -0- -0- -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
Former 1999 -0- -0- -0- -0- -0- -0- -0-
Director 2000 -0- -0- -0- -0- 55,000 -0- -0-
Bob Eschwege 1997 -0- -0- -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
V.P. 1999 -0- -0- -0- -0- -0- -0- -0-
Plant Mgr. 2000 66,000 -0- -0- -0- 55,000 -0- -0-
David 1997 -0- -0- -0- -0- -0- -0- -0-
Edwards 1998 -0- -0- -0- -0- -0- -0- -0-
Director 1999 -0- -0- -0- -0- -0- -0- -0-
2000 -0- -0- -0- 55,000 -0- -0- -0-
John Tanner 1997 -0- -0- -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
Director 1999 -0- -0- -0- -0- -0- -0- -0-
2000 -0- -0- -0- 55,000 -0- -0- -0-
</TABLE>
(1) Prior to becoming an officer of Senior Care, John Cruickshank received
compensation of 50,000 shares of common stock in lieu of cash for consulting
services during 1999.
Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------
The Company presently has no compensation committee.
Audit Committee and Insider Participation
-----------------------------------------
We have an Audit Committee of the Board of Directors. The committee was
activated on May 12, 2000. The Audit Committee, to date, has held no meetings.
The members of the Audit Committee are:
John Tanner
David Edwards
Denzel Harvey
34
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth the number of shares of our Common Stock
beneficially owned by (i) each person who, as of November 30, 2000, was known by
us to own beneficially more than five percent (5%) of our Common Stock; (ii) our
individual directors and (iii) our officers and directors as a group. As of
September 30, 2000, there were a total of 11,440,681 shares of Common Stock
issued and outstanding and after October 3, 2000, there were 2,000,000 shares of
Series D Preferred Stock outstanding.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1)(2) CLASS
------------------- --------------------------- ----------
<S> <C> <C>
(i) Rent USA, Inc. 2,000,000 Restricted Preferred
P.O. Box 10 Series D*
San Dimas, CA 91733 100%
Aziz Holdings &
Madeline Farah ** 800,000 Restricted 6.99%
50 Laura Drive
Cedar Grove, NJ 07009
(ii) Bob Eschwege 150,000 Restricted 1.31%
495 Raleigh Ave. 55,000 Registered Total 1.79% ***
San Diego, CA 92020
(iii) officers and directors
as a group (not including
Bob Eschwege) 495,000 Registered
110,000 Restricted Total 5.29% ***
</TABLE>
* Series D Preferred may be converted into common stock over a period of four
years from the issue date which was on October 3, 2000, with 1/4 of the number
of preferred shares issued on October 3, 2000 becoming convertible annually over
the next four years with 1/12th of the annual number of shares allowed to be
converted, convertible monthly into four common shares.
** Madeline Farah is the sole shareholder of Aziz Holdings, Inc. and therefore,
the two are considered a control group and as such have been added together for
purposes of determining 5% ownership. These shares are subject to an injunction
which was issued by the Bankruptcy Court in the State of New Jersey which
enjoined their transfer or sale pending the outcome of certain litigation which
is fully discussed in the pending litigation discussion earlier in the
Prospectus.
*** When both restricted stock and registered stock are added together, this is
the total percentage for this [these] beneficial owner[s]. No one person in this
group owns more than 5% of the shares outstanding.
(1) All ownership is beneficial and of record, unless indicated otherwise
and includes shares issuable upon exercise of outstanding options,
warrants or other common stock equivalents which are exercisable within
60 days.
(2) Beneficial owners listed above have sole voting and investment power
with respect to the shares shown, unless otherwise indicated.
(3) There were no transactions, or series of transactions, during fiscal
1999 or 2000, nor are there any currently proposed transactions, or
series of transactions, to which we are a party, in which the amount
exceeds $60,000, and in which to our knowledge any director, executive
officer, nominee, five percent or greater shareholder, or any member of
the immediate family of any of the foregoing persons, has or will have
any direct or indirect material interest.
35
<PAGE>
TRADING MARKET AND RELATED MATTERS
Our common stock is traded over-the-counter under the symbol SENR. The
following table sets forth, for the periods indicated, the high and low bid
prices for the common stock, as reported by the OTC Bulletin Board during 1999
and 2000. Common stock prices have been adjusted to reflect the eleven for ten
split effective October 17, 2000.
Bid Price
High Low
-----------------------
1999
----
First Quarter $ -0- $ -0-
Second Quarter $ -0- $ -0-
Third Quarter $ -0- $ -0-
Fourth Quarter $ 7 17/64 $ 3 19/64
2000
----
First Quarter $ 5 29/64 $ 3 19/32
Second Quarter $ 4 1/4 $ 1 19/32
Third Quarter $ 3 1/8 $ 1 1/8
Fourth Quarter $ 1.75 $ .29
On November 30, 2000, there were approximately 3,000 holders of record
of our Common Stock.
We have not paid any cash dividends with respect to our common stock,
and it is unlikely we will pay any dividends on our common stock in the
foreseeable future. We made a stock dividend of eleven shares for each ten
shares owned which was distributed to shareholders of record as of August 15,
2000 and was actually distributed on August 19, 2000.
DESCRIPTION OF SECURITIES
Our authorized stock consists of 50,000,000 authorized shares of Common
Stock, par value $.001 per share, 11,440,681 shares of which were outstanding as
of September 30, 2000; and 5,000,000 authorized shares of Preferred Stock par
value .001 per share, of which 2,000,000 Class D shares of Preferred Stock were
outstanding after October 3, 2000.
Common Stock
------------
Each share of Common Stock is entitled to one vote, either in person or
by proxy, on all matters that may be voted upon by the owners thereof at a
meeting of the shareholders, including the election of directors. The holders of
Common Stock (i) have equal, ratable rights to dividends from funds legally
available therefor, when, as and if declared by the Board of Directors of the
Company; (ii) are entitled to share ratably in all of our assets available for
distribution to holders of Common Stock upon liquidation, dissolution or winding
up of our affairs; (iii) do not have preemptive or redemption provisions
applicable thereto; and (iv) are entitled to one non-cumulative vote per share
on all matters on which shareholders may vote at all meetings of shareholders.
All shares of Common Stock issued and outstanding are, and those
offered hereby, when issued, will be fully paid and nonassessable, with no
personal liability attaching to the ownership thereof.
36
<PAGE>
Preferred Stock
---------------
The rights of preferred shareholders is determined at the time a class
of preferred stock is issued. Generally, each preferred share is entitled to one
vote, either in person or by proxy, on all matters that may be voted upon by the
owners thereof at a meeting of the shareholders, including the election of
directors. The holders of Preferred Stock (i) have equal, ratable rights to
dividends from funds legally available; (ii) are entitled to share preferably in
all of our assets available for distribution to holders of Preferred Stock upon
liquidation, dissolution or winding up of our affairs; (iii) do not have
preemptive or redemption provisions applicable thereto; and (iv) are entitled to
one non-cumulative vote per share on all matters on which shareholders may vote
at all meetings of shareholders.
Series D Preferred may be converted into common stock over a period of
four years from the issue date which was on October 3, 2000, with 1/4 of the
number of preferred shares issued on October 3, 2000 becoming convertible
annually over the next four years with 1/12th of the annual number of shares
allowed to be converted, convertible monthly into four common shares. There is
no market for Series D Preferred and therefore, if the stock were to be sold, it
would necessarily be converted at which time it would become common stock having
been issued pursuant to Section 4(2) of the Act and could only be sold pursuant
to Rule 144. How and when stock which is restricted can be sold under Rule 144
has been explained elsewhere in this Prospectus. Thus after a period of four
years, it is possible that there could be a total of 8,000,000 additional common
shares issued as a result of annual conversions of Series D Preferred.
Transfer Agent
--------------
The transfer agent is: First American Stock Transfer, Inc.
PO Box 47700
Phoenix, AZ 85068-7700
Telephone: (602) 485-1346
LEGAL MATTERS
Lawrence R. Young & Associates, P.C., Attorneys at Law, Downey,
California, has rendered its opinion that the securities offered pursuant to
this Prospectus will, when issued as described in this Prospectus, be duly
authorized, validly issued, fully paid and non-assessable shares. This firm owns
a total of 22,000 of our Common shares.
EXPERTS
The 1999 financial statements included in this Prospectus have been
examined by John Spurgeon, CPA JD, of Pasadena, California, independent
certified public accountant, as set forth in their report herein and are
included herein in reliance upon the authority of said firm as an expert in
accounting and auditing.
AVAILABLE INFORMATION.
We file reports, proxy statements and other information with the SEC,
and these reports may be inspected and copied at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549. You may obtain information on the operation of the public reference
room by calling the SEC at 1-800-SEC-0330. The same information may be obtained
at the following Regional Offices of the SEC: 75 Park Place, New York, New York
10007, and the Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60621. Copies of such material may be obtained from the Public
Reference Section of the SEC's Washington, D.C. office at prescribed rates.
We mail a copy of our audited Annual Report on Form 10-KSB along with a
proxy statement to our shareholders prior to our annual meeting.
We have filed a registration statement on Form SB-2, of which this
prospectus is a part, with the SEC. This registration statement or any part
thereof may also be inspected and copied at the public reference facilities of
the SEC.
37
<PAGE>
INDEMNIFICATION
The Nevada Revised Statutes and the Company's Articles of Incorporation
and Bylaws authorize indemnification of a director, officer, employee or agent
of the Company against expenses incurred by him or her in connection with any
action, suit, or proceeding to which such person is named a party by reason of
having acted or served in such capacity, except for liabilities arising from
such person's own misconduct or negligence in performance of duty. In addition,
even a director, officer, employee or agent of the Company who was found liable
for misconduct or negligence in the performance of duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reasonably entitled
to indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the Act, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company's original accountant was James Slayton, CPA who provided the
Company with the audit for the filing of its Registration Statement as a
Development Stage Company in 1999.
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."
Note 3 to the Financial Statements stated as follows:
"NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has not generated significant revenues from its
planned principal operations. Without realization of additional capital, it
would be unlikely for the Company to continue as a going concern."
The Company then engaged John Spurgeon, CPA, who audited the Company's financial
statements for the fiscal year ended December 31, 1999 and filed by the Company
on Form 10KSB/A on June 27, 2000. This audit contains no adverse opinion or
disclaimer of opinion nor was it qualified or modified as to uncertainty, audit
scope or accounting principles.
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 was 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, was as follows:
38
<PAGE>
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, Mr. Spurgeon engaged a reviewing auditor who was a member of
the practice section and had undergone peer review.
However, once the restated audit for 1999 was filed on an amended 10KSB/A on
June 27, 2000, the American Stock Exchange required that the Company have a stub
audit for the first quarter of the year 2000 performed by a member of the
practice section who had already undergone peer review.
As a result, 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 herein above.
John Spurgeon continued as the Company's primary auditor once the special audit
of the first quarter of 2000 was completed by Mendoza & Berger.
The Company is unaware of any disagreement between John Spurgeon and/or Mendoza
& Berger and/or Mr. Spurgeon's reviewing auditor in connection with any audit
which was performed by John Spurgeon for any of the fiscal year ended December
31, 1999 and/or any subsequent period preceding the date when Mendoza & Berger
were engaged and there are no disagreement with any former accountant on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure.
39
<PAGE>
Senior Care Industries, Inc.
FINANCIAL STATEMENTS
December 31, 1998
and
December 31, 1999
TABLE OF CONTENTS
PAGE
----
INDEPENDENT AUDITOR'S REPORT
BALANCE SHEET - ASSETS
BALANCE SHEET - LIABILITIES AND SHAREHOLDER'S EQUITY
STATEMENT OF OPERATIONS
STATEMENT OF STOCKHOLDERS' EQUITY
STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
F-1
<PAGE>
JOHN H. SPURGEON CPA
1787 E. Alosta Ave.
Glendora, CA 91740
INDEPENDENT AUDITOR'S REPORT
Board of Directors June 22, 2000
Senior Care Industries, Inc. (The Company)
Las Vegas, Nevada 89102
I have audited the Balance Sheet of Senior Care Industries, Inc., as of December
31, 1999, (as restated - see Note 2) and the related Statements of Operations,
Stockholders' Equity and Cash Flows for the year then ended (as restated - see
Note 2). These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion the financial statements referred to above present fairly, in all
material respects, the financial position of Senior Care Industries, Inc., as of
December 31, 1999, and the results of its operations and cash flows for the year
then ended, in conformity with generally accepted accounting principles.
/s/ John H. Spurgeon CPA
F-2
<PAGE>
SENIOR CARE INDUSTRIES, INC.
BALANCE SHEET
ASSETS
December 31, 1999
-----------------
(as restated - see Note 2)
CURRENT ASSETS:
Cash $ 38,117
Prepaid expenses 2,550
-------------
Total current assets 40,667
-------------
PROPERTY:
Real estate 15,544,857
Accumulated depreciation (22,222)
-------------
Total property 15,522,635
-------------
OTHER ASSETS:
Investment in LLC 3,234,000
-------------
TOTAL ASSETS $ 18,797,302
=============
F-3
See accompanying notes and auditor's report.
<PAGE>
<TABLE>
SENIOR CARE INDUSTRIES, INC.
BALANCE SHEET
LIABILITES AND STOCKHOLDERS' EQUITY
<CAPTION>
December 31, 1999
-----------------
(as restated - see Note 2)
<S> <C>
CURRENT LIABILITIES:
Current portion of real estate loans $ 200,110
-------------
Total current liabilities 200,110
NON-CURRENT LIABILITIES:
Real estate loans, net of current portion 9,635,613
Note payable and accrued interest 765,333
-------------
Total liabilities 10,600,946
-------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Series A convertible preferred stock, $0.001 par value
34,500 shares authorized 34,500 shares issued and outstanding 34
Series B convertible preferred stock, $0.001 par value,
5,000,000 shares authorized, 400,000 shares issued and outstanding 400
Common stock, $0.001 par value, 25,000,000 shares
authorized, 6,662,154 shares issued and outstanding 6,662
Additional paid in capital 10,262,533
Accumulated deficit (2,073,273)
-------------
Total stockholders' equity 8,196,356
-------------
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY $ 18,797,302
=============
</TABLE>
F-4
See accompanying notes and auditor's report.
<PAGE>
<TABLE>
SENIOR CARE INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
For Years Ended
<CAPTION>
December 31, 1999 December 31, 1998
----------------- -----------------
(as restated - see Note 2)
<S> <C> <C>
REVENUES:
Property rental $ 100,428 $ 0
------------ ------------
COSTS AND EXPENSES:
Selling, general and administrative 140,892 0
Depreciation expense 22,222 0
Interest expense 146,766 0
Property tax 4,200 0
------------ ------------
Total costs and expenses 314,080 0
------------ ------------
Ordinary loss (213,652) 0
Loss on discontinued operation, net of tax of $0 (20,816) 0
------------ ------------
Net loss $ (234,468) $ 0
============ ============
Weighted average number of common shares outstanding:
Basic and diluted 4,784,546 182,032
============ ============
Net loss attributable to common shareholders per share:
Basic and diluted $ (0.05) $ 0.00
============ ============
</TABLE>
F-5
See accompanying notes and auditor's report.
<PAGE>
<TABLE>
SENIOR CARE INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
For the Year Ended
<CAPTION>
December 31, 1999 December 31, 1998
----------------- -----------------
(as restated - see Note 2)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (234,468) $ 0
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation expense 22,222 0
Loss on discontinued operation 20,816
Changes in operating assets and liabilities:
Prepaid expenses (2,550)
Accrued interest expense 65,333
------------ ------------
Net cash used in operating activities (128,647) 0
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Costs of real estate construction (3,884,857) 0
------------ ------------
Net cash in investing activities (3,884,857) 0
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 5,000 0
Proceeds from construction/real estate loans 4,045,789 0
------------ ------------
Net cash provided by financing activities 4,050,789 0
------------ ------------
Net increase in cash 37,285 0
Cash at beginning of period 832 832
------------ ------------
Balance at end of period $ 38,117 $ 832
============ ============
</TABLE>
Supplemental disclosure of cash flow information Cash paid during the year for:
Interest expense,
Net of amounts capitalized $81,433
=======
Supplemental disclosure of non-cash investing and financing activities: The
Company acquired the following assets and assumed liabilities for common
and preferred shares during 1999:
Real estate $11,660,000
Investment in LCC 3,234,000
Real estate loans (5,789,824)
Note payable (700,000)
------------
$ 8,404,176
============
F-6
See accompanying notes and auditor's report.
<PAGE>
<TABLE>
SENIOR CARE INDUSTRIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1998 and 1999
<CAPTION>
Series A Series B Additional Total
Preferred Stock Preferred Stock Common Stock paid-in Accumulated Stockholder's
Shares Amount Shares Amount Shares Amount capital Deficit Equity
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances as of
December 31, 1998
and 1997 34,500 $ 34 - $ - 182,032 $ 182 $ 1,860,237 ($1,838,805) $ 21,648
Common stock
issued for cash - - - - 5,000,000 5,000 - - 5,000
Stock issued for net
assets purchased from
East-West Community
Developer, Inc. - - 400,000 400 1,480,122 1,480 8,402,296 - 8,404,176
(as restated - see Note 2)
Net loss - - - - - - - (234,468) (234,468)
(as restated - see Note 2)
Balances as of
December 31, 1999 34,500 $ 34 400,000 $ 400 6,662,154 $6,662 $10,262,533 ($2,073,273) $8,196,356
===========================================================================================
</TABLE>
F-7
See accompanying notes and auditor's report.
<PAGE>
SENIOR CARE INDUSTRIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
December 31, 1999
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized February 26, 1968 under the laws of the State of Idaho
as Golden Chest, Inc. ("the Company"). During all of 1998 and through April
1999, the Company was inactive.
On April 2, 1999, the Company transferred its existing assets and liabilities to
Paymaster Resources Incorporated. The net book value of these assets and
liabilities totaled $20,816, which is recorded as a loss from discontinued
operations in the accompanying statement of operations.
On April 2, 1999, the Company Board of Directors authorized a 1 for 100 reverse
stock split of the Company's $0.10 par value common stock. On April 3, 1999, the
Company's Board of Directors approved increasing the authorized common stock to
25,000,000 shares at $0.001 par value and increasing the authorized preferred
stock to 5,000,000 shares at $0.001. For purposes of comparison, all financial
statements reflect the retroactive effects of the reverse split and the changes
in par value and authorized common and preferred stock.
On April 30, 1999, the Company completed an asset purchase agreement where it
purchased the assets and assumed the liabilities of East-West Developer, Inc.
("East-West") for a note payable of $700,000, 1,480,122 shares of common stock,
and 400,000 shares of Series B preferred stock. The total value of the
acquisition of $8,404,176 was based on the book value of net assets of
East-West, which consist of real estate assets that were recently appraised and
related real estate loans. Management felt that the recent appraisals where
sufficient determinants of value as of the acquisition date.
On August 26, 1999, the Company changed its name to Senior Care Industries, Inc.
and the corporate situs to Nevada.
The Company previously reported its financial statements under SFAS 7 as a
developmental stage company. During fiscal 1999, the Company is no longer
considered in the development stage as it now generates income from its intended
sources.
The Company has a loss of $234,468 for the year ended December 31, 1999 and an
accumulated deficit of $2,073,273 at December 31, 1999. Management believes its
rental operations, acquisitions (see Note 12) and anticipated sales of
condominium units beginning in the second half of 2000 will be sufficient to
fund its operations and meet its working capital requirements through the end of
2000 and beyond. There is no assurance that the Company will be able to generate
sufficient revenues or obtain sufficient funds where needed, or that such funds,
if available, can be obtained on terms satisfactory to the Company.
F-8
<PAGE>
NOTE 2 - RESTATEMENT OF 1999 FINANCIAL STATEMENTS
Subsequent to the issuance of its 1999 audited financial statements, the Company
determined that several transactions were incorrectly recorded on these
financial statements.
The estimated fair value of the properties acquired from East-West was
incorrectly calculated. Based on updated information, the net assets
acquired have been recorded at $8,404,176 instead of the previously
reported $9,400,610. The difference is comprised of a $2,728,653
reduction in real estate assets and a $1,732,219 reduction in real
estate loans. The real estate sales were incorrectly recorded in 1999.
Based upon updated information real estate sales in the amount of
$1,850,000 were determined to be prematurely recorded and removed. The
related cost of real estate sales in the amount of $1,213,415 was also
removed as premature. In addition, related the accounts receivable in
the amount of $1,805,000 and related deposits and other receivables in
the amount of $57,550 were removed.
Depreciation was incorrectly calculated. Based upon updated information
the total depreciation has been restated to $22,222 instead of the
previously recorded $88,250.
Interest expense was inadvertently omitted. Based upon updated
information the total interest has been recorded at $146,766.
The transfer of assets to Paymaster was properly recorded as a loss on
discontinued operation in the amount of $20,816 instead of the
previously recorded equity distribution.
NOTE 3 - ACCOUNTING POLICIES AND PROCEDURES
Accounting polices and procedures are as follows:
a. 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. In reporting sales of real estate, the Company
follows the accounting principles prescribed by Statement of Financial
Accounting Standards No. 66, "Accounting for Sales of Real Estate." Profits
are recognized when title has passed, the buyer has made a substantial
commitment, the usual risks and rewards of ownership have been transferred
to the buyer and the terms of any notes received from the buyer give the
Company reasonable assurance of collection.
b. The Company has not yet adopted any policy regarding payment of dividends.
No dividends have been paid since inception.
c. The cost of buildings and improvements are depreciated over the estimated
useful life when they are placed in service. The Company utilizes the
straight-line method of depreciation calculated over thirty years.
d. 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. Any
adjustments applied to estimated amounts are recognized in the year in
which such adjustments are determined.
e. The Company is required to estimate the fair value of all financial
instruments included on its balance sheet at December 31, 1999. The Company
considers the carrying value of such amounts in the financial statements
(cash, real estate loans and note payable) to approximate their fair value
due to the relatively short period of time between origination of the
instruments and their expected realization and interest rates, which
approximate current market rates.
F-9
<PAGE>
f. The Company has net operating loss carry forwards as of December 31, 1999
that results in a deferred tax asset of approximately $94,000. The Company
has recorded a valuation allowance of $94,000 against the asset in
accordance with Statement of Financial Accounting Standards No. 109
"Accounting for income taxes." The Company will review its need for a
provision for income taxes after each operating quarter and each period for
which a statement of operations is presented. The Company's marginal tax
rate is 0% as a result of the valuation allowance.
g. 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 convertible preferred stock and
options, are included in the computation of diluted net income per common
share to the extent such shares are dilutive. As the Company has a loss for
the year ended December 31, 1999, no incremental shares are included in the
computation as their effect would be anti dilutive.
h. 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 December
31, 1999, 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.
NOTE 4 - REAL ESTATE
Real estate is made up of the following at December 31, 1999:
Rental property $ 1,800,000
Construction in progress 13,744,857
-----------
$15,544,857
===========
Included in construction in progress is construction - period interest totaling
$610,112 which is capitalized in accordance with Statement of Financial
Accounting Standards No. 34, "Capitalization of Interest Costs."
Construction in progress is comprised of the following projects at December 31,
1999:
Albuquerque, New Mexico
-----------------------
The Company is constructing a 56 unit age restricted apartment complex. This
project has a planned budget of $2,350,000 with an expected completion date of
January 2001. As of December 31, 1999 only sewer, curb and water improvements
had been completed.
Las Vegas, Nevada
-----------------
The Company is has committed to building four separate 8,000 square foot office
buildings in Las Vegas, Nevada. As of December 31, 1999 one office building has
been completed and fully leased. Management occupies a portion of the completed
building. The project has a planned budget of $3,600,000, of which approximately
$3,100,000 has been used as of December 31, 1999.
Monterey Park, California
-------------------------
The Company is constructing a 46 unit Senior Condominium Project (Evergreen
Manor II), in Monterey Park, California. Ten units have been reserved as of
December 31, 1999 for a total sales price of $1,850,000. The project has a
planned budget of $4,975,000. As of December 31, 1999 approximately $2,675,583
of the planned budget has been used.
F-10
<PAGE>
NOTE 5 - MORTGAGE DEBT
The Company has mortgage obligations as summarized below.
Friendly Bear Property
----------------------
A secured term loan with a bank, bearing interest at 8.5%, payable
in equal monthly installments of $17,312.
Balloon payment due 2009. $2,139,435
Signature Property
------------------
A construction loan with a mortgage company, bearing interest at 12.5%
payable in interest only monthly installments of $26,695. Balloon
payment due June 1, 2001. 2,297,025
Pecos Russell
-------------
A construction loan with a mortgage company, bearing interest
at 12.5% payable in interest only monthly installments of
$11,219. Balloon payment due January 2000. The loan was
refinanced with a bank bearing interest at 9.25% payable in
monthly installments of principal of $9,400 plus interest
through December 2009. Balloon payment due January 2010. 1,760,000
Broadway Property
-----------------
A 1st trust deed loan with a bank, bearing interest at 8.375%
payable in monthly installments of principal and interest of
$7,116 through March 2027. 692,079
A 2nd trust deed loan with a bank, bearing interest
at 11% payable in monthly installments of principal
and interest of $2,200 through January 2001. Balloon
payment due February 2001. 311,789
Evergreen Manor Property
------------------------
A construction loan with a bank, bearing interest at prime plus 1.25%
payable in interest only monthly installments of $17,538. Balloon
payment due February 2001. 2,635,285
-----------
9,835,613
Less current portion (200,110)
-----------
Total $9,635,503
===========
Minimum maturities of notes payable (after considering the refinanced loan
above) are as follows:
2000 $ 200,110
2001 5,376,559
2002 169,300
2003 170,900
2004 and thereafter 3,918,744
------------
$ 9,835,613
============
In addition, the Company as part of the asset purchase agreement, agreed to
issue to a non-related third party a $700,000 note with principal and accrued
interest due on March 29, 2002. The note has no pre-payment penalty and an
interest rate of 14%.
F-11
<PAGE>
NOTE 6 - COMMON STOCK
On April 7, 1999 the Company issued 5,000,000 shares of stock for $5,000 in
cash. The Company presently has 6,662,154 shares of Common Stock issued and
outstanding.
At December 31, 1999, there were 546,890 shares of common stock in the name of a
predecessor company (TAP Resources Ltd) common stock which , if legally
presented to the Company, would be converted into 6,836 shares of the Company's
$0.001 par value common stock.
NOTE 7 - PREFERRED STOCK
SERIES A
--------
As of April 2, 1999 the Company had 34,500 of its Series A preferred stock,
convertible at .12 shares of the Company's $0.001 par value common stock for 1
share of preferred. The Series A preferred shares have no preferences for the
payment of dividends or liquidation preferences.
SERIES B
--------
On April 30, 1999 as part of the East-West purchase the Company issued 400,000
shares of its Series B preferred stock, par value $0.001, convertible at 5
shares of common stock for each share of preferred stock converted. The Series B
preferred shares have no preferences for the payment of dividends or liquidation
preferences.
NOTE 8 - LINE OF CREDIT
The Company has an unsecured $500,000 line of credit from a vendor. As of
December 31, 1999 the Company has not borrowed any funds against it. The rate of
interest agreed to is 14% per annum. The line of credit expires September 21,
2001.
NOTE 9 - COMMITMENTS
The Company has an equipment lease payable in monthly installments in the amount
of $320 expiring in July 2002.
NOTE 10 - STOCK BENEFIT PLAN
In October 1999, the Company established a Stock Benefit plan for the benefit of
certain officers and directors. In connection with the plan, the Company agreed
to issue 550,000 shares of common stock after two years provided certain
criteria are met. For the year ending 12/31/99, the Company has not recorded any
expense related to this plan as the stock has not yet been issued or earned.
NOTE 11 - EARNINGS PER SHARE
The following table sets forth the computation of basic earnings per share for
the period January 1, 1999 to December 31, 1999.
Numerator:
Numerator for basic loss per share - net profit $(234,468)
==========
Denominator:
Denominator for basic loss per share - weighted
average shares outstanding 4,784,546
==========
F-12
<PAGE>
NOTE 12 - SUBSEQUENT EVENTS
Acquisition
-----------
On May 1, 2000 the Company purchased the assets of Nobel Furniture Inc. (Nobel)
for 750,000 shares of Company common stock valued at $3,000,000. The combination
will be accounted for by the purchase method and accordingly, the Company will
record assets acquired at their fair values. The effective date of this
combination was agreed to as January 1, 2000. Therefore the results of
operations of Nobel will be included in the income statement of the Company
beginning January 1, 2000. The Company has not yet assessed the pro forma effect
of this acquisition on its 1999 financial statements.
Litigation
----------
The Company has been named in litigation in the ordinary course of its business.
Management believes the resolution of the matter will have an immaterial effect
on the Company's financial position and results of operations.
NOTE 13 - STOCK OPTION
On April 5, 1999, in connection with the acquisition of East-West, the Company's
Board of Directors authorized the Company to grant a consultant the right to
subscribe for and purchase up to 5,000,000 shares of the Company's common stock,
$0.001 par value at an exercise price of $0.00083333 per share expiring on April
5, 2001.
NOTE 14 - 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. As the Company is currently in the
early phase of its business plan, it does not yet have any reportable segments.
F-13
<PAGE>
SENIOR CARE INDUSTRIES, INC.
Unaudited Financial Statements
Unaudited Balance sheet at September 30, 2000;
Unaudited Statements of Operations for the nine month periods ended
September 30, 2000 and September 30, 1999;
Unaudited Statements of Cash Flows for the nine month period ended
September 30, 2000 and September 30, 1999;
Notes to the financial statements.
CONTENTS
Consolidated Balance Sheets F - 2
Consolidated Statements of Income and Expense F - 3
Consolidated Statements of Cash Flows F - 4
Notes to the Financial Statements F - 5
F-1
<PAGE>
<TABLE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
<CAPTION>
Sept. 30, 2000
(Consolidated)
<S> <C>
Current Assets
Cash $ 503,727
Accounts receivable 735,701
Inventory 581,702
Prepaid expenses 26,496
Other current assets 167,864
-------------
Total Current Assets 2,015,490
Property Held for Resale
Construction in progress 10,430,659
Property and Equipment
Machinery & equipment 1,005,592
Capital lease 50,673
Leasehold improvement 28,933
Rental property 4,418,971
Land 2,966,160
-------------
8,470,329
Less: accumulated depreciation (176,151)
-------------
Total Property and Equipment 8,294,178
Other Assets
Investment in LLC 3,234,000
Goodwill, net of accumulated
amortization of $86,612 1,645,628
-------------
Total Other Assets 4,879,628
-------------
TOTAL ASSETS $ 25,619,955
=============
See accompanying notes to financial statements and accountant's report
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES & STOCKHOLDERS' EQUITY
(Unaudited)
Sept. 30, 2000
(Consolidated)
<S> <C>
Current Liabilities
Accounts payable $ 394,520
Accrued expenses 36,799
Real estate loans 11,431,947
Lines of credit, current portion 79,484
Capital lease obligation, current portion 10,227
-------------
Total Current Liabilities 11,952,977
Long-Term Liabilities
Line of credit, net of current portion 1,108,221
Note payable 1,559,470
Accrued interest 138,833
-------------
Total Long-Term Liabilities 2,806,524
-------------
Total Liabilities 14,759,501
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, 13,440,681 shares issued and outstanding 13,441
Paid-in capital 13,182,467
Accumulated deficit (2,335,454)
-------------
Total Stockholders' Equity 10,860,454
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,619,955
=============
See accompanying notes to financial statements and accountant's report
F-3
</TABLE>
<PAGE>
<TABLE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
<CAPTION>
September 30, September 30,
2000 1999
------------ ------------
(Consolidated) (Unconsolidated)
<S> <C> <C>
Revenue
Rental income $ 438,587 $ -
Sales 4,067,992 -
Sales returns & allowances (109,907) -
------------ ------------
Total Revenue 4,396,672 -
Cost of Sales 3,142,373 -
------------ ------------
Gross Profit 1,254,299 -
Operating Expenses
Selling, general, and administrative 1,070,690 1,342
Depreciation and amortization 172,145 -
------------ ------------
Total Operating Expenses 1,242,835 1,342
------------ ------------
Income from Operations 11,464 (1,342)
Other Income and (Expenses)
Interest income 1,750
Interest expense (275,395)
------------ ------------
Total Other Income and (Expenses) (273,645) -
------------ ------------
Income Before Income Taxes (262,181) (1,342)
Provision for Income Taxes - -
------------ ------------
Net Income (Loss) $ (262,181) $ (1,342)
============ ============
Earnings Per Share - Basic $ (0.02) $ (0.00)
============ ============
Weighted Average Number of Shares 13,440,681 6,662,154
============ ============
See accompanying notes to financial statements and accountant's report
F-4
</TABLE>
<PAGE>
<TABLE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
<CAPTION>
2000 1999
------------ ------------
(Consolidated) (Unconsolidated)
<S> <C> <C>
Cash Flow from Operating Activities:
Net income (loss) $ (262,181) $ (1,342)
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Stock issued for services 29,029
Depreciation and amortization 172,145 -
(Increase) decrease in accounts receivable (176,276) -
(Increase) decrease in inventory 164,456 -
(Increase) decrease in prepaid expenses (16,253) -
(Increase) decrease in other current assets (152,005)
Increase (decrease) in accounts payable 44,254 -
Increase (decrease) in accrued interest 73,500
Increase (decrease) in accrued expenses 8,400 -
------------ ------------
Net Cash Provided (Used) by Operating Activities: (114,931) (1,342)
Cash Flow from Investing Activities:
Cash provided from asset purchase agreement - 610
Cash used by construction in progress (2,263,755) -
------------ ------------
Net Cash Provided (Used) by Investing Activities: (2,263,755) 610
Cash Flow from Financing Activities:
Net proceeds (payments) from notes payable 2,787,079 -
------------ ------------
Net Cash Provided (Used) by Financing Activities: 2,787,079 -
------------ ------------
Net Increase (Decrease) in Cash 408,393 (732)
Cash Balance at Beginning of Period 95,334 832
------------ ------------
Cash Balance at End of Period $ 503,727 $ 100
============ ============
Supplemental Disclosures:
Cash paid during the period for interest, including amounts
capitalized $ 996,678 $ -
============ ============
Cash paid during the period for income tax $ - $ -
============ ============
Supplemental Schedules of Noncash Operating, Investing,
and Financing Activities:
Issuance of common stock for services $ 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 $ -
============ ============
See accompanying notes to financial statements and accountant's report
F-5
</TABLE>
<PAGE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
September 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 September 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.
F-6
<PAGE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
September 30, 2000
(Unaudited)
NOTE 2 - CAPITAL STOCK
In April 2000 the holders of Series A and B Convertible Preferred Stock
converted its preferred stock. This conversion required the Company to issue
2,172,500 additional common shares.
NOTE 3 - ACQUISITIONS
On May 1, 2000 the Company purchased Nobel Furniture, Inc. (Nobel) 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 method of accounting and recorded a total of $1,732,240 in
goodwill, which is being amortized over 15 years. The Company recorded $86,612
in amortization expense for the nine months ended September 30, 2000. The
effective date of the combination was agreed to as January 1, 2000. Therefore
the results of operations of Nobel have been included in the income statement of
the Company beginning January 1, 2000.
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 Nobel furniture,
Inc. as discussed in note 2. Nobel manufactures furniture for the national
market.
Selected information for the three months ending June 30, 2000
Furniture Senior Care
manufacturer Industries
Gross sales $ 3,958,085 $ 438,587
Operating income 57,716 (46,253)
Assets 2,275,131 22,844,824
Liabilities 1,624,256 13,135,245
F-7
<PAGE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
September 30, 2000
(Unaudited)
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 13,440,681
F-8
<PAGE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
September 30, 2000
(Unaudited)
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 Class D Preferred Stock in
Senior Care Industries, Inc. the stock position of Senior Care Industries, Inc.
gives it actual control of Rent USA, Inc.
F-9
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers.
Our Articles of Incorporation provides for indemnification of personal
liability of our Directors to the fullest extent permitted by Nevada Law.
Article X of the Articles of Incorporation, which is set forth below in
its entirety, provides for indemnification of officers, directors, employees and
agents substantially to the extent permitted under the Nevada Revised Business
Corporation Act.
Article X of the By-Laws provides as follows:
" ARTICLE X
INDEMNIFICATION
Section 1. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation, as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgements, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
2. The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened pending or completed action or
suit by or in the right of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he aced in
good faith an in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the Corporation unless and only to the extent the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
with such court shall deem proper.
3. To the extent that any person referred to in paragraphs 1 and 2 of this
Article X has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to therein or in defense of any claim, issue
or matter therein, th shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
II-1
<PAGE>
4. Any indemnification under paragraphs 1 and 2 of this Article XI (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in paragraphs 1 and 2 of
this Article X. Such determination shall be made (a) by the Board of Directors
by a majority vote of a quorum consisting of directors who were not parties to
such action, suit or other proceeding, or (b) if such quorum is not obtainable,
or, even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (c) by the stockholders.
5. Expenses incurred in defending a civil or criminal action, suit or proceeding
may be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as provided
in this Article X.
6. The indemnification provided by this Article X shall not be deemed exclusive
or any other rights to which those seeking indemnification may be entitled under
any statue, bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, office, employee or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
7. The Corporation shall have power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust of other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article X
8. For the purposes of this section, references to "the corporation" include all
constituent corporations absorbed in a consolidation or merger as well as the
resulting or surviving Corporation so that any person who is or was a director,
officer, employee or agent or such a constituent corporation or is or was
serving at the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise shall stand in the same position under the provisions of this
section with respect to the resulting or surviving corporation in the same
capacity."
II-2
<PAGE>
Other Expenses of Issuance and Distribution.
-------------------------------------------
Other expenses in connection with the registration of the securities
hereunder which will be paid by us will be substantially as follows:
Per Share Total
--------- -----
Discount to Bayview (12.5%) $0.065 457,143
Expenses payable on behalf of Bayview
Escrow fees (1) 0.0091 64,000
Legal Fees of Bayview 0.0028 20,000
Estimated offering expenses
SEC filing fee 0.000278 2,668
Accountant's fees and expenses 0.0005 5,000
Legal fees and expenses 0.0005 5,000
Total $0.072578 543,811
-----------
(1) This fee will be $2,000 per request.
Recent Sales of Unregistered Securities.
---------------------------------------
In the last three years, we have made transactions with our common
stock for cash, services, and acquisitions which were not registered under the
Securities Act of 1933.
We have issued stock for services rendered for investor relations and
other consulting services which were performed by OTC Financial Network, The
Hawke Group and Top 10 Financial Services. This stock was issued in lieu of cash
payments or in addition to cash payments in certain circumstances.
Additionally, we have issued stock to acquire assets as follows:
(1) On April 30, 1999, the Company completed an asset purchase agreement where
it purchased the assets and assumed the liabilities of East-West Developer, Inc.
for a note payable of $700,000, 1,480,122 shares of common stock, and 400,000
shares of Series B preferred stock which was convertible from 1 preferred share
into 5 common shares. The preferred stock was converted in April, 2000. The
total value of the acquisition of $8,404,176 based on the book value of net
assets of East-West, which consisted of real estate assets that were appraised
less related real estate loans.
(2) On May 15, 2000, the Company completed the purchase of Noble Concept
Fidelity, Inc., a furniture manufacturing operation in San Diego, California in
which it issued 750,000 shares of stock to shareholders of Cyrus Industries,
Inc., the then owner of 80% of the shares of Noble Concept Fidelity, Inc., and
150,000 shares of common stock to Bob Eschwege, the manager, operator of the
furniture company that was its founder and formerly 20% owner of Noble Concept
Fidelity, Inc.
(3) On October 3, 2000, the Company completed the purchase of a substantial
interest in Rent USA, Inc. in a stock swap in which Senior Care received
5,000,000 shares of Rent USA and Rent USA received a total of 2,000,000 shares
of Series D Preferred Stock in Senior Care. At the time of the transaction, Rent
USA had 6,098,289 shares of common stock outstanding. The sale to Senior Care of
5,000,000 shares of Rent USA raised the number of outstanding shares in Rent USA
to 11,098,289 common shares outstanding. Based upon the financial statements of
Rent USA as of the date of the closing of the transaction, the shares which
Senior Care received had a book value of approximately $.45 per share or
$2,250,000.00. Thus, the value assigned to the Senior Care Series D Preferred
shares issued to Rent USA was $1.125 per share.
II-3
<PAGE>
In connection with these acquisitions, we have issued our common shares as shown
below:
<TABLE>
<CAPTION>
Name Date of Issuance Number of Shares Value of Shares at Issuance
------------ ---------------- ---------------- ---------------------------
<S> <C> <C> <C>
Madeline Farah Aug.31, 1999 400,000 $1,111,500.00
Aziz Holdings Aug.31, 1999 400,000 $1,111,500.00
Friendly Bear Aug.31, 1999 105,000 $ 233,415.00
Signature Prop. Aug.31, 1999 110,000 $ 244,530.00
Pecos Russell Aug.31, 1999 200,000 $ 444,600.00
Broadway Acacia Aug.31, 1999 70,000 $ 155,610.00
Evergreen Manor Aug.31, 1999 2,200,000 * $4,890,600.00
Bob Eschwege May 15, 2000 150,000 $ 226,893.00
Shareholders
of Cyrus
Industries May 15, 2000 750,000 $1,223,107.00
</TABLE>
* Originally, Evergreen Manor received 600,000 shares plus 400,000 preferred
shares which were convertible 5 for 1 to common stock. The preferred stock was
converted to common stock in April, 2000. Those shares have subsequently been
divided among the members of the Evergreen Manor II, LLC and as a result, no one
person or entity has more than 5% of the outstanding shares in the Company as of
November 30, 2000.
In all of the transactions shown above, the issuance, delivery and sale of our
common stock was made pursuant to the asset exchange exemption within the
meaning of Section 4(2) of the Act; and we have issued stop transfer orders
concerning the transfer of certificates representing all the common stock issued
and outstanding as reported by the foregoing table.
Additionally, we have issued Series D Preferred Stock as follows:
<TABLE>
<CAPTION>
Name Date of Issuance Number of Shares Value of Shares at Issuance
------------ ---------------- ---------------- ---------------------------
<S> <C> <C> <C>
Rent USA October 3, 2000 2,000,000 $2,250,000.00
</TABLE>
We have issued our common stock, warrants or options for services to
our employees and others as follows (unless otherwise indicated the issuance was
of stock):
<TABLE>
<CAPTION>
Name Date of Issuance Number of Shares Value of Shares at Issuance
-------------- ---------------- ---------------- ---------------------------
<S> <C> <C> <C>
American Auditing
& Accounting Apr. 6, 2000 50,000 $100,000
Brian Dvorak Apr. 6, 2000 7,000 $ 14,000
Defined Holding Apr. 6, 2000 50,000 $100,000
David Edwards Apr.15, 2000 55,000 $ 55,000
John Tanner Apr.15, 2000 55,000 $ 55,000
OTC Financial Grp.Apr.15, 2000 25,000 $ 75,000
Hawke Group Apr.15, 2000 10,000 $ 30,000
Top 10 Financial Aug.28, 2000 25,000 warrants
Richard Hart Oct. 6, 2000 55,000* $ 55,000
Martin Richelli Oct. 6, 2000 55,000* $ 55,000
Denzel Harvey Oct. 6, 2000 55,000* $ 55,000
David Tsai Oct. 6, 2000 55,000* $ 55,000
Stephen Reeder Oct. 6, 2000 115,000* $115,000
Bob Coberly Oct. 6, 2000 55,000* $ 55,000
John Cruickshank Oct. 6, 2000 55,000* $ 55,000
Scott Brake Oct. 6, 2000 55,000* $ 55,000
Al Harvey Oct. 6, 2000 55,000* $ 55,000
Bob Eschwege Oct. 6, 2000 55,000* $ 55,000
</TABLE>
*These were options issued pursuant to the 2000 Stock Option Plan and all of
those options were exercised and shares were issued on the date indicated.
II-4
<PAGE>
In addition, we sold the following unregistered securities of ours to
the person named, in the amounts, for the consideration and the dates indicated.
Name Date Number of Shares Consideration
---- ---- ---------------- -------------
European Equity July 8, 2000 141,464 $ 72,425.00
& Guarantee
In all of the transactions shown above, the issuance, delivery and sale
of our common stock was made pursuant to the private offering exemption within
the meaning of Section 4(2) of the Act; and we have issued stop transfer orders
concerning the transfer of certificates representing all the common stock issued
and outstanding as reported by the foregoing table. All of the shares issued to
European Equity & Guarantee and/or its clients contained a restrictive legend
pursuant to Regulation S regarding sales of shares to offshore persons and
entities.
Exhibits.
---------
The following is a complete list of Exhibits as part of the
Registration Statement. Exhibit numbers correspond to the numbers in the Exhibit
Table of Item 601(a) of Regulation S-K, which are incorporated herein:
Exhibit No.
-----------
3.1 Articles of Incorporation of Senior Care Industries, Inc.
3.2 By-Laws of Senior Care Industries, Inc.
4.1 Form of Stock Purchase Warrant dated November 17, 2000 between
the Company and Bayview, LLC exercisable to purchase an
aggregate of 20,000,000 common shares
4.2 Registration Rights Agreement dated November 17, 2000 between
the Company and Bayview, LLC related to the registration of
shares
4.3 Investment Agreement dated November 17, 2000 between the
Company and Bayview, LLC relating to the purchase of up to
$20,000,000 of securities.
5 Opinion of Counsel, Lawrence R. Young & Associates, P.C.
24.1 Consent of John Spurgeon, CPA JD, Independent
Certified Public Accountant.
24.2 Consent of Lawrence R. Young & Associates, P.C. (Included in
Exhibit 5).
----------------------------
II-5
<PAGE>
Undertakings.
-------------
A. To Deliver Certificates.
The undersigned registrant hereby undertakes to provide certificates in
such denominations and registered in such names to permit prompt delivery to
each purchaser.
B. Indemnification.
Insofar as indemnification for liabilities under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, there unto duly
authorized, in the City of Laguna Beach, State of California, on this 22nd day
of December, 2000.
SENIOR CARE INDUSTRIES, INC.
By: /s/ Stephen Reeder By: /s/ Bob Coberly
--------------------------- ---------------------------
Chief Executive Officer Chief Financial Officer
II-6
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SENIOR CARE INDUSTRIES, INC.
--------------------------------------------------
(Exact name of Issuer as specified in its charter)
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
3.1 Articles of Incorporation of Senior Care Industries, Inc.
together with various amendments thereto.
3.2 By-Laws of Senior Care Industries, Inc. together with various
amendments thereto.
4.1 Form of Stock Purchase Warrant dated November 17, 2000 between
the Company and Bayview, LLC exercisable to purchase an
aggregate of 20,000,000 common shares.
4.2 Registration Rights Agreement dated November 17, 2000 between
the Company and Bayview, LLC related to the registration of
shares.
4.3 Investment Agreement dated November 17, 2000 between the
Company and Bayview, LLC relating to the purchase of up to
$20,000,000 of securities.
5 Opinion of Counsel, Lawrence R. Young & Associates, P.C.
relating to the issuance of shares to Bayview, LLC and his
consent to including his letter in this Registration
Statement.
24.1 Consent of John Spurgeon, CPA JD, Independent Certified Public
Accountant
24.2 Consent of Lawrence R. Young & Associates, P.C. (Included in
Exhibit 5).
----------------------------
II-7
