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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8 - K
REPORT
SENIOR CARE INDUSTRIES, INC.
Nevada 68-0221599
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
410 Broadway, 2nd Floor, Laguna Beach, CA 92651
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
(949) 376-3125 (949) 376-9117 FAX
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(ISSUER'S TELEPHONE NUMBER)
SECURITIES REGISTERED UNDER SECTION 12 (b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
REGISTERED
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SECURITIES REGISTERED UNDER SECTION 12 (g) OF THE ACT:
Common Stock - .001 Par Value
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(TITLE OF CLASS)
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FORWARD LOOKING STATEMENTS
Senior Care Industries, Inc., ("Senior Care Industries, Inc.," or the "Company")
cautions readers that certain important factors may affect the Company's actual
results and could cause such results to differ materially from any
forward-looking statements that may be deemed to have been made in this Form 8-K
or that are otherwise made by or on behalf of the Company. For this purpose, any
statements contained in the Form 8-K that are not statements of historical fact
may be deemed to be forward-looking statements. Without limiting the generality
of the foregoing, words such as "may," "expect," "believe," "anticipate,"
"intend," "could," "estimate," "plans," or "continue" or the negative or other
variations thereof or comparable terminology are intended to identify
forward-looking statements. Factors that may affect the Company's results
include, but are not limited to, the Company's limited operating history, its
ability to produce additional products and services, its dependence on a limited
number of customers and key personnel, its possible need for additional
financing, its dependence on certain industries, and competition from its
competitors. With respect to any forward-looking statements contained herein,
the Company believes that it is subject to a number of risk factors, including:
the Company's ability to implement its product strategies to develop its
business in emerging markets; competitive actions; and, general economic and
business conditions. Any forward-looking statements in this report should be
evaluated in light of these important risk factors. The Company is also subject
to other risks detailed herein or set forth from time to time in the Company's
filings with the Securities and Exchange Commission.
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TABLE OF CONTENTS
Item 1. Changes in Control of Registrant 4
Item 2. Acquisition or Disposition of Assets 4
Item 3. Bankruptcy or Receivership 15
Item 4. Changes in Registrant's Certifying Accountant 15
Item 5. Other Events 15
Item 6. Resignation of Registant's Directors 15
Item 7. Financial Statements and Exhibits 15
Item 8. Change in Fiscal Year 44
Item 9. Change in Security Ratings 44
Signatures 44
Exhibit 1 45
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Item 1. Changes in Control of Registrant
Not Applicable
Item 2. Acquisition or Disposition of Assets
On October 3, 2000, Senior Care Industries, Inc. purchased 5,000,000
shares of common stock in Rent USA, Inc. in exchange for 2,000,000 shares of
common stock in Senior Care Industries, Inc. The stock position of Senior Care
Industries, Inc. gives it actual control of Rent USA, Inc.
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.
As of the date of the acquisition by Senior Care Industries, Inc., Rent USA had
a total after the sale to Senior Care Industries, Inc.of 11,098,289 common
shares outstanding. Both the shares issued to Rent USA by Senior Care and the
Rent USA shares received by Senior Care Industries were issued pursuant to
Section 4(2) of the Securities & Exchange Act of 1933, as amended, which allows
the issuance of unregistered securities in exchange for assets. These securities
contain a legend condition which restricts their sale to the general public for
a period of one year from the date of issuance and then allows the stock to be
registered and sold pursuant to Regulation 230.144 by the filing of a Form 144
with the Commission.
Rent USA, Inc. provides services in four categories:
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%.
Rent USA maintains a rental yard in Chino, California where it stores
and maintains its equipment when it is not being used.
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The geographic marketing area for Rent USA initially will be limited to the
southwest United States and will only include Southern California, Nevada, Utah
and Arizona.
Industry Analysis
-----------------
According to the American Rental Association, the trade group for the
equipment rental business, construction and development in the United States has
continually increased over the last twenty years. Due to this gradual increase
of activity, demand for rental construction equipment and machinery has been
sustained at a relatively high level. The Association states that it has seen
gradual movement in the business from small, family owned, single facility
rental yards to large corporations with multiple facilities. As detailed in
"1999 Rental Year in Review" during the past year, there were changes that were
"unprecedented in the world of tool rentals. "These changes represented mergers,
hostile takeovers and consolidations." As a result, the Company believes that in
a time of large corporations without the local service which small business
owners formerly gave their customers, there is an opportunity for Rent USA to
take advantage of this consolidation to build a business limited to heavy
construction machinery and equipment by providing superior customer service
through a strategy of being in close proximity to the customer, by being able to
respond to customer needs in a timely and appropriate manner.
The equipment rental market as a whole has been growing at a rapid rate
in excess of 20% annually based on revenues reported to the American Rental
Association by its 7200 member organizations throughout the United States. The
market for these products amounted to $3 billion in 1996, increased to 3.5
billion in 1997 and continued to rise by a similar increase in 1998, according
to Rental Equipment Register, the trade publication of the American Rental
Association.
These trends which have been noticed by the American Rental Association
have not been broken down into regions and for that reason, the Company has no
definitive evidence that these trends exist in the Southwestern United States
where the Company intends to build its business. However, there is, likewise, no
evidence to the contrary and management believes that the national trends apply
to the Southwestern United States as well as to other areas.
It is management's opinion that one of the areas of greatest growth in
the equipment rental market is in the area of rentals to contractors fulfilling
state and federal contracts. This is the area where Rent USA has an advantage
because of its relationship with Northland Rental & Supply, a company with which
Rent USA has an exclusive marketing agreement to supply equipment for rental and
where Northland Rental & Supply being owned by a disabled veteran and has
received DVBD certification from both the State of California and the Federal
government, has an advantage. There are only 600 DVBE registered businesses in
the California and only one in the heavy construction field according to the
Disabled Veterans Alliance. The alliance between the Company and Northland
should have a positive impact on the ability of the Company to obtain business.
The reason for this is due to the fact that 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. It should be
noted that Rent USA, Inc. is not a DVBE registered company nor does it intend to
obtain such a registration. However, the Company's alliance with Northland,
will, in management's opinion, have a positive and beneficial affect.
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Currently, the entire equipment rental market is shared by
approximately 7,000 equipment rental yards across the United States, with United
Rental Corporation positioned as the market leader.
Through acquisitions, United Rental has amassed over $1.7 billion in
rental revenues for fiscal 1998. United Rental began its acquisition strategies
upon its inception in 1997.
The service area for Rent USA, Inc. is a twelve-month construction
Area. The Southwestern United States does not experience any disruption in
construction due to weather or other seasonal issues which should also be
advantageous to assuring regular cash flow.
Because the company has limited operating history, it is impossible at
this time to state the utilization rate for the Company's equipment, that is,
the percentage of time which the equipment will be rented to customers as
opposed to the time that it sits in the yard unrented and not generating income.
The Company believes that its utilization rate will be comparable to those in
the industry, averaging approximately 55%.
Rent USA's goal is to become a highly visible and regionally known
company providing affordable and well maintained equipment for the construction
industry.
Growth through acquisition is planned to be in three primary areas -
heavy equipment sales and rental companies, mining and engineering companies and
materials and mineral companies. The latter two categories reflect the nitch
markets the company is targeting in addition to competing in the broader
equipment sales and rental industry. The strategy is to vertically integrate the
resources and customers in a way to create an in-house "floor" of business and
to maximize profits through participating in the services and products resulting
from the use of heavy equipment.
Two initial acquisitions in this strategy are currently in progress.
The first is a contract recently signed establishing a mining equipment and
sales company with Don Hodges who has been in this business for over 20 years.
The sales of crushers , conveyors, etc. from this enterprise will create
opportunities for Rent USA to also sell the necessary loaders and dozers in the
same transaction. This project is discussed below undre CONSTRUCTION EQUIPMENT
SALES. The second is the targeted acquisition of a specialty landscape and
architectural stone company known as the Calico Rock mines which will employ
equipment from both Rent USA and the mining equipment company on a full-time
basis and provide additional opportunities for profiting from the rock products
produced with the equipment.
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Rent USA has engaged Don Hodges to establish a mining equipment sales
and rental company whereby Mr. Hodges will share in the profit and will receive
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. It is anticipated
that this new entity will have sales of approximately $7,909,000.00 during the
first 10 months of operations with a projected commencement date of March, 2001.
There are no up-front costs for the development of this entity. However, there
will be a considerable requirement for operating capital. Net income before
taxes is projected to be 15.3% of gross income or $1,210,000.00 in net profit
before taxes of which 80% would go directly to the bottom line of Rent USA's
income statement for the year.
Rent USA has also entered into a letter of intent to purchase Calico
Rock, a major producer of natural crushed colored rock in the Southwest United
States with the rock crushing plant and quarry located in Barstow, California.
Calico primarily serves 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 Company, Rent USA is presently preparing a stock offering which
will give all holders of common stock in Senior Care Industries, Inc. an
opportunity to buy shares in Rent USA. These shares will be registered under an
SB-2 Registration Statement and will be sold pursuant to a prospectus which Rent
USA will send to all shareholders of record of Senior Care Industries, Inc. as
of November 30, 2000. By this offering, Rent USA intends to raise up to
approximately $2,300,000.00 for additional working capital.
Rent USA has developed projections which show its projected income and
expense during the first five years following the development of the mining
equipment sales division and the merger with Calico Rock. Those projections
demonstrate the following:
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<TABLE>
RENT USA PROJECTED INCOME & EXPENSE STATEMENT
<CAPTION>
YEAR 1 YEAR 2
------------------------------------------ ------------------------------------------
TOTAL CALICO EQUIPMENT TOTAL CALICO EQUIPMENT
COMPANY MINES SALES COMPANY MINES SALES
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $12,305,976 $ 5,282,476 $ 7,023,500 $13,429,955 $ 5,985,045 $ 7,444,910
COGS $ 8,053,468 $ 2,701,750 $ 5,351,718 $ 8,676,998 $ 3,111,212 $ 5,565,786
Gross Profit $ 4,252,508 $ 2,580,726 $ 1,671,782 $ 4,752,957 $ 2,873,833 $ 1,879,124
Gross Margin % 34.6% 48.9% 23.8% 35.4% 48.0% 25.2%
G&A $ 2,156,790 $ 1,101,844 $ 1,054,946 $ 2,460,017 $ 1,362,874 $ 1,097,144
NBIT $ 2,095,718 $ 1,478,881 $ 616,837 $ 2,292,940 $ 1,510,960 $ 781,980
NBIT % 17.0% 28.0% 8.8% 17.1% 25.2% 10.5%
Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Income Taxes $ 838,287 $ 591,553 $ 246,735 $ 917,176 $ 604,384 $ 312,792
Net Income $ 1,257,431 $ 887,329 $ 370,102 $ 1,375,764 $ 906,576 $ 469,188
Net Income % 10.2% 16.8% 5.3% 10.2% 15.1% 6.3%
(CONTINUED BELOW)
YEAR 3 YEAR 4
------------------------------------------ ------------------------------------------
TOTAL CALICO EQUIPMENT TOTAL CALICO EQUIPMENT
COMPANY MINES SALES COMPANY MINES SALES
------------ ------------ ------------ ------------ ------------ ------------
NET SALES $14,475,154 $ 6,583,550 $ 7,891,605 $15,607,006 $ 7,241,905 $ 8,365,101
COGS $ 9,143,472 $ 3,355,055 $ 5,788,418 $ 9,425,862 $ 3,290,139 $ 6,135,723
Gross Profit $ 5,331,682 $ 3,228,495 $ 2,103,187 $ 6,181,144 $ 3,951,766 $ 2,229,378
Gross Margin % 36.8% 49.0% 26.7% 39.6% 54.6% 26.7%
G&A $ 2,669,875 $ 1,528,846 $ 1,141,029 $ 2,819,844 $ 1,633,173 $ 1,186,670
NBIT $ 2,661,807 $ 1,699,649 $ 962,158 $ 3,361,300 $ 2,318,593 $ 1,042,708
NBIT % 18.4% 25.8% 12.2% 21.5% 32.0% 12.5%
Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Income Taxes $ 1,064,723 $ 679,860 $ 384,863 $ 1,344,520 $ 927,437 $ 417,083
Net Income $ 1,597,084 $ 1,019,790 $ 577,295 $ 2,016,780 $ 1,391,156 $ 625,625
Net Income % 11.0% 15.5% 7.3% 12.9% 19.2% 7.5%
</TABLE>
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<TABLE>
RENT USA PROJECTED INCOME & EXPENSE STATEMENT
(CONTINUED)
<CAPTION>
YEAR 5 FIVE YEAR TOTAL
------------------------------------------ ------------------------------------------
TOTAL CALICO EQUIPMENT TOTAL CALICO EQUIPMENT
COMPANY MINES SALES COMPANY MINES SALES
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $16,833,102 $ 7,966,095 $ 8,867,007 $72,651,194 $33,059,071 $39,592,122
COGS $ 9,562,252 $ 3,058,385 $ 6,503,866 $44,862,051 $15,516,541 $29,345,510
Gross Profit $ 7,270,851 $ 4,907,710 $ 2,363,141 $27,789,142 $17,542,530 $10,246,612
Gross Margin % 43.2% 61.6% 26.7% 38.3% 53.1% 25.9%
G&A $ 2,978,006 $ 1,743,869 $ 1,234,137 $13,084,532 $ 7,370,606 $ 5,713,926
NBIT $ 4,292,845 $ 3,163,841 $ 1,129,003 $14,704,610 $10,171,924 $ 4,532,686
NBIT % 25.5% 39.7% 12.7% 20.2% 30.8% 11.4%
Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Income Taxes $ 1,717,138 $ 1,265,536 $ 451,601 $ 5,881,844 $ 4,068,770 $ 1,813,074
Net Income $ 2,575,707 $ 1,898,305 $ 677,402 $ 8,822,766 $ 6,103,154 $ 2,719,611
Net Income % 15.3% 23.8% 7.6% 12.1% 18.5% 6.9%
</TABLE>
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Following the purchase of a controlling interest in Rent USA by Senior
Care Industries, Inc., John W. Cruickshank, Senior Vice President of Senior Care
Industries was asked by the Senior Care Board of Directors to become an officer
and director of Rent USA and he agreed.
The following persons are officers and directors of Rent USA:
Name Age Position
--------------------------------------------------------------------------------
Jeffrey P. Harvey Chairman, Chief Executive Officer, Director
Charles "Cort" Hooper 52 President, Chief Financial Officer, Director
Jim Flippen 54 Chief Operating Officer
Art Wigand 57 Chief Financial Officer
John W. Cruickshank 60 Vice President, Director
Management Responsibilities
---------------------------
Jeff Harvey, Chairman, Chief Executive Officer, Director
Mr. Harvey will act to develop and maintain the company vision. He will
oversee all areas and company departments. He will Approve all financial
obligations, will seek business opportunities and strategic alliances with other
organizations, will plan, develop and establish policies and objectives of
business organization in accordance with board directives and company charter,
direct and coordinate financial programs to provide funding for new or
continuing operations in order to maximize return on investments and increase
productivity.
Goals include: To form Rent USA into one of the premier equipment
rental companies in the Unites States by maintaining quality of equipment,
service and reliability to facilitate increased revenues, profitability, and
exposure.
Charles C. Hooper, President, Chief Financial Officer, Director
Mr. Hooper will work closely with Al Harvey to develop revenue and
profitability goals. His essential obligation is to work with investors and
creditors to raise required capital to meet Companies funding requirements, to
work with CEO to target and review feasibility of potential acquisitions and to
oversee the Company's overall accounting and tax liabilities. Finally, he will
work with Sales Managers to establish optimal sales levels and pricing.
Jim Flippen, Chief Operating Officer
Mr. Flippen has the experience and dedication to assemble a cost
effective organization with emphasis on business development from concept
through negotiation and development of cash flow models from start up to
maintenance of an organization. His experience includes financing, leasing,
plant design and setup, cost accounting and control, quality control, production
and a safe working environment. Mr. Flippen believes that the worker environment
should be exciting, challenging and goal oriented with a fun everyday experience
for all persons involved.
Arthur Wigand, Chief Financial Officer
Mr. Wigand brings a broad based manufacturing and engineering
background to the Company with a stong emphasis on strategic planning and
execution, organizational skills and bottom line management capabilities. His
experience demonstrates his expertise in increasing profit and expanding the
capabilities of the company. He will be the hands on financial person
experienced in both governmental and commercial sales with experience in both
domestic and international sales.
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John W. Cruickshank, Vice President, Director
Mr. Cruickshank will act to coordinate all legal and accounting aspects
of the Company's business and will work closely with the other executive
officers to assist in negotiation and implementation of funding requirments. Mr.
Cruickshank is also Senior Vice President of Senior Care Industries, Inc. and
acts as the liaison between management of Rent USA and the executive team and
Board of Senior Care Industries, Inc.
Management Team Backgrounds
Jeff Harvey, Chairman, Chief Executive Officer, Director
Prior to coming with Rent USA, Mr. Harvey had been a marketing
consultant to Glyphics Communications, Mediaworks and Northland Rental & Supply
since 1998. Mr. Harvey was director or marketing for Dynacom Teleconferencing in
Salt Lake City, UT from 1996 to 1998. Dynacom Teleconferencing was acquired by
Glyphics Communications in 1998. Mr. Harvey is a licenced real estate appraiser
in the State of Utah. His experience in the rental and heavy equipment business
spans the last two decades where he learned the business under his father, Al
Harvey, former Chairman of Rent USA and founder of the Company. From 1994 to
1997, Mr. Harvey was on the PGA Golf Professional circuit, prior to that time
having attended the University of Utah and is preparing to enter a series of
courses to obtain a graduate degree in Business Management. From 1991 to 1994,
Mr. Harvey was employed at Northland Rental & Supply and assisted Denzel Harvey,
his uncle, in developing the DVBE program and Northland's current business model
in the State of California. From 1983 to 1990, he was employed in the equipment
rental business by Rent-a- Tool in the Utah market. Mr. Harvey is also a member
of the National Honor Society.
Charles C. Hooper, President, Chief Financial Officer, Director
Mr. Hooper was from 1986 until coming with the Company, the Chief
Executive Officer of Mojave Natural Resources in Temecula, California, a company
which produces decorative rock and construction aggregate and industrial
minerals. From 1978 until 1990, he was also the owner of Old Town Financial in
La Jolla, California, a developer of shopping centers, office buildings,
condominiums, apartments, health clubs, single family homes and ranch estates.
He began his careet in 1968 with Litton Industries as a reliability systems
engineer which designed and built missle guidance systems for the U.S. Army
ground to air combat installations. He was an officer in the U.S. Navy during
the Viet Nam war and became an instructor at the Naval War College. He served
Jim Flippen, Chief Operating Officer
Mr. Flippen has over thirty years of experience in the Civil
Engineering Contracting field, is a graduate civil engineer and started his own
engineering contracting firm in Los Angeles, J.C. Flippen & Son in 1969 with
clients including among others, Atlantic Richfield, Mobil Oil, Union Oil and the
Parsons Group building annual sales to in excess of 8 million dollars when the
company was sold in 1981. He then founded Recycled Asphalt Materials Systems,
perfecting a way to recycle 100% of used asphalt paving back to its original
state. By 1985 he had three of these plants working in Arizona along with a
crushing facility with annual sales of 10 million dollars. This business was
sold in 1986 to Tanner Industries. He then moved to San Diego and founded
Flippen Engineering, Inc. specializing in sand and gravel mining and recovery
and handling the engineering aspects of a number of large development projects
including high end resindential, commercial and a Robert Trent Jones golf
course. In 1997, he retired and became a consultant specializing in new business
development, feasibility studies of acquisitions for quarry development, asphalt
plants and batch plants, working on such specific developmental projects as the
new San Francisco ball park, the San Francisco BART Airport extension and U.S.
Steel hazardous waste clean up.
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two tours in Viet Nam as Navy Seal and trained submarine diving officers. From
1974 until 1986 he was the owner of Organizational Diagnostics Associates in San
Diego, California, a private financial and business consulting firm to Fortune
500 and local companies pioneering the development of financial and legal
software systems. Mr. Hooper is a graduate of the University of California at
Los Angeles with High Honors, has a Master of Science Degree from the U.S. Naval
Post Graduate School and has done doctorate work in finance and human behavior.
He has also taken a number of continuing education courses in finance, real
estate and insurance. He is a 22 year member of the San Diego Yacht Club, a
member of Toastmasters International, The Veterans of Foreign Wars, the
California Mining Association and the Pacific S.W. Quarter Horse Association.
John W. Cruickshank, Vice President, Director
Mr. Cruickshank is a graduate of the University of Vermont and Boston
College Law School and comes to the company with over 30 years of legal
experience. He is Senior Vice President of Senior Care Industries, Inc. and acts
as spokesperson for that company. He also acts as coordinator of all legal and
accounting aspects of the Senior Care's business and works closely with the
other executive officers to assist in negotiation and implementation of funding
requirments for that company as well as Rent USA. He is also a member of the
Board of Directors of Freedom Surf, Inc. [OTCBB: FRSH & FRANKFURT FRX].
The purchase of Rent USA by Senior Care Industries is a part of the plan of
Senior Care to vertically integrate its services to seniors by being able to
supply heavy construction equipment for use on the Company's senior oriented
construction projects in the Western United States.
Senior Care Industries is a diversified firm consisting of a real estate
division a manufacturing division, and a pharmaceutical.nutriceutical division.
The Company's real estate division invests in, manages, and develops senior
housing, and is a leader quality for-sale and rental, independent living
age-restricted communities.
The Company's manufacturing division targets for acquisition, ancillary
companies whose products and services are in high demand by Seniors such as
medical device manufacturers, specialty food manufacturing companies and
furniture manufacturing companies, enabling the firm to service seniors both in
and out of its age restricted communities with its own products.
The Company's Nutriceutical and pharmaceutical division targets for acquisition
nutriceutical and/or pharmaceutical manufacturing companies and web based health
products distributors as a feeder to manufacture and sell the products through
an "E-commerce" pharmacy. The Company's pharmaceutical division utilizes a
program to include a full service web-based senior support system that sells
direct to the consumer, related health products in the financial services
sector, including life insurance, health insurance, dietary advice, holistic
medical alternatives, water and air purification. The Company is finalizing a
web-site and a support staff offering 24 hour access to these products and
services once an acquisition closes.
Presently, the Company has no operations in the nutriceutical or pharmaceutical
division but is actively seeking acquisitions in this area.
The Company's projects and/ or the services the Company may offer fall under the
auspices of various state and federal regulatory agencies and various licensing
and or zoning requirements and programs, such as the "Medicaid waiver programs"
The company currently owns a project in Monterey Park, California whose zoning
approval required a non-profit organization be formed to own a 10% interest at
the request of the city of Monterey Park.
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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 will complete construction on a 44 unit senior condominium project
in Monterey Park, California in October of 2000 known as Evergreen Manor II.
In addition, the Company owns and, or is under construction on projects located
in the following communities and states:
1. a 57 unit Senior Apartment Project in Albuquerque, New Mexico which is in the
beginning phase of construction.
2. a 25,000 square foot strip center known as Friendly Bear Plaza located in Las
Vegas, Nevada which is a strip mall that is 95% leased to a variety of small
businesses.
3. A 32,000 square foot office in Las Vegas, Nevada known as the Pecos Russell
Commercial Center, a four building complex of which two buildings are presently
complete and are leased with the third building presently under construction.
Also, the Company owns its office headquarters building at 410 Broadway in
Laguna Beach, California known as Broadway Acacia and has tenants in the
building in addition to corporate headquarters.
Additionally, the Company has entered into escrow on the purchase of a 15,000
acre site in the State of Tennessee which contains timber and substantial coal
reserves. The Company intends to lease the timber for harvesting and replanting.
It also intends to develop 1,000 acres of the land into a senior oriented
fishing and outdoor sports resort along the banks of a river and stream that
runs through the property.
The Company also has entered escrow on a 223 residential lot senior restricted
housing development in San Jacinto approximately 40 minutes from Palm Springs
and 10 minutes from Hemet, California.
Another project known as Flamingo 55 located in the City of Las Vegas, Nevada at
the intersection of Flamingo Blvd. and Freeway 95 will build 55 senior
restricted town homes. The Company intends to break ground on this project in
November, 2000. Plans were submitted to the Clark County Planning Department on
this project in early August, 2000.
By far the largest project presently being undertaken by the Company is the 715
acre project at the Lakes in Pahrump Valley, Nevada. This project which will
take nearly 10 years to build eventually will comprise 2 golf courses, 2,000
residential housing units in a mixed use age restricted fully planned community.
Escrow on this project was opened in July, 2000 and the plan development process
is underway.
On August 7, 2000, the Company agreed to purchase the Bellflower Christian
Retirement Center, a 99 unit retirement home in Bellflower, California.
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Item 3. Bankruptcy or Receivership
Not Applicable
Item 4. Changes in Registrant's Certifying Accountant
Not Applicable
Item 5. Other Events
Not Applicable
Item 6. Financial Statements and Exhibits
FINANCIAL STATEMENTS
RENT USA, INC.
December 31, 1999
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT F-1
BALANCE SHEET - ASSETS F-2
BALANCE SHEET - LIABILITIES AND SHAREHOLDER'S EQUITY F-3
STATEMENT OF OPERATIONS F-4
STATEMENT OF STOCKHOLDERS' EQUITY F-5
STATEMENT OF CASH FLOWS F-6
NOTES TO FINANCIAL STATEMENTS F-7
<PAGE>
James E. Slayton, CPA
2858 WEST MARKET STREET
SUITE C
FAIRLAWN, OHIO 44333
1-330-865-3553
INDEPENDENT AUDITORS' REPORT
Board of Directors December 31, 1999
Rent USA, Inc. (The Company) Revised August 25, 2000
Las Vegas, Nevada 89109
I have audited the Balance Sheet of Rent USA, Inc. (A Development Stage
Company) for the period from July 27, 1998 [Date of Inception] to December 31,
1998, the fiscal year ended December 31, 1999 and the cumulative period from
inception to December 31, 1999 and the related Statements of Operations,
Stockholders' Equity and Cash Flows for the period July 27, 1998 (Date of
Inception) to December 31, 1999. 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 statement presentation. 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 Rent USA, Inc., (A
Development Stage Company), as of December 31, 1999, and the results of its
operations and cash flows for the period July 27, 1998 (Date of Inception) to
December 31, 1998, the fiscal year ended December 31, 1999, and the cumulative
period from inception to December 31, 1999, in conformity with generally
accepted accounting principles.
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
generated significant revenues from planned principal operations. This raises
substantial doubt about its ability to continue as a going concern. Management's
plan in regard to these matters is also described in Note 3. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ James E. Slayton
-------------------------
James E. Slayton, CPA
Ohio License ID# 04-1-15582
F-1
<PAGE>
Rent USA, Inc.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF
December 31, 1999
ASSETS
ASSETS
CURRENT ASSETS
Cash 0.00
--------------
Total Current Assets 0.00
PROPERTY AND EQUIPMENT
Property and Equipment(net of depreciation 7,110,588.00
--------------
Total Property and Equipment 7,110,588.00
OTHER ASSETS
Organization Costs(net of amortization) 0.00
--------------
Total Other Assets 0.00
--------------
TOTAL ASSETS $7,110,588.00
==============
See accompanying notes to financial statements
F-2
<PAGE>
Rent USA, Inc.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF
December 31, 1999
LIABILITIES & EQUITY
CURRENT LIABILITES
Accounts Payable 910.00
--------------
Total Current Liabilities 910.00
OTHER LIABILITIES
Noncurrent Liabilities 1,661,721.00
--------------
Total Other Liabilities 1,661,721.00
--------------
Total Liabilities 1,662,631.00
EQUITY
Common Stock, $0.001 par value, authorized 20,000,000
shares; issued and outstanding at 12/31/1999,
6,098,289 common shares 6,098.00
Additional Paid in Capital 5,490,347.00
Preferred Stock, $0.001 par value, authorized 5,000,000,
none issued 0.00
Retained Earnings (Deficit accumulated during development
stage) (48,488.00)
--------------
Total Stockholders' Equity 5,447,957.00
--------------
TOTAL LIABILITIES & OWNER'S EQUITY $7,110,588.00
==============
See accompanying notes to financial statements
F-3
<PAGE>
<TABLE>
Rent USA, Inc.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR PERIOD
July 27, 1998 (Date of Inception) to December 31, 1999
<CAPTION>
Date of Inception Twelve Months Date of Inception
to to to
Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1998
------------- ------------- -------------
REVENUE
<S> <C> <C> <C>
Sales 0.00 0.00 0.00
COSTS AND EXPENSES
General and Administrative 5,910.00 5,910.00 0.00
Depreciation Expense 42,578.00 42,578.00 0.00
----------- ----------- -----------
Total Costs and Expenses 48,488.00 48,468.00 0.00
----------- ----------- ----------
Net Income or (Loss) (48,488.00) (48,488.00) 0.00
----------- ----------- ----------
Weighted average number of common
shares outstanding 5,109,829 5,109,629 0.00
Basic Net Loss Per Share (0.01) (0.01)
See accompanying notes to financial statements
F-4
</TABLE>
<PAGE>
<TABLE>
Rent USA, Inc.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR PERIOD
July 27, 1998(Date of Inception) to December 31, 1999
<CAPTION>
Deficit
Accumulated
Common Additional During Total
Stock Paid-in Development Stockholder's
Shares Amount Capital Stage Equity
------------ ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Balances as of
December 31, 1998 0 0 0 0 0
March 26, 1999 5,000,000 5,000.00 0.00 5,000.00
Issued for cash
December 10, 1999 1,098,289 1,098.00 5,490,347.00 5,491,445.00
Issued as part of
December 10, 1999
purchase agreement
Net loss (48,488.00) (48,488.00)
------------ ------------ ------------- ------------ --------------
Balances as of
December 31, 1999 6,098,289 $ 6,098.00 $5,490,347.00 ($48,488.00) $5,447,957.00
============ ============ ============= ============ ==============
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE>
<TABLE>
Rent USA, Inc.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR PERIOD
July 27, 1998 (Date of Inception) to December 31, 1999
<CAPTION>
Date of Inception Twelve Months Date of Inception
to to to
Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1998
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net (loss) from operations ($48,488.00) ($48,488.00) 0.00
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation Expense 42,578.00 42,578.00 0.00
Increase in accounts payable 910.00 910.00 0.00
----------- ----------- -----------
Net cash provided by
operating activities (5,000.00) (5,000.00) 0.00
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash in investing activities 0.00 0.00 0.00
----------- ----------- -----------
Net cash used by investing activities 0.00 0.00 0.00
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Capital Stock 5,000.00 5,000.00 0.00
----------- ----------- -----------
Net cash provided by
financing activities 5,000.00 5,000.00 0.00
Net increase (decrease) in cash 0.00 0.00 0.00
Balances as at end of period 0.00 0.00 0.00
</TABLE>
See accompanying notes to financial statements
F-6
<PAGE>
Rent USA, Inc.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized July 27, 1998 (Date of Inception) under the laws
of the State of Delaware, as Rent USA, Inc. (The Company) has no operations and
in accordance with SFAS #7, the Company is considered a development stage
company.
On March 26, 1999, the Company issued 5,000,000 shares of its $.001 par
value common stock for $5,000.00 in cash to expand its shareholder base.
On or about November 17, 1999, the Company incorporated in Nevada solely
for the purpose of moving the corporate domicile to Nevada.
On December 10, 1999, the Company issued 1,098,289 shares of its $.001
par value common stock as part of an asset purchase agreement which became
effective on November 17, 1999. The Company assumed related liabilities in the
amount of $1,661,721.00.
The Company has 20,000,000 of $.001 par value common stock authorized and
5,000,000 of $.001 par value preferred stock authorized.
There have been no other issuances of equity or Common Stock.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except as
follows:
1. The Company uses the accrual method of accounting.
2. Recognition of revenue from sales:
Revenues from equipment rentals are recognized as earned as time passes
from rights to use assets (rentals) which extend continuously over time based on
contractual rights established in advance.
Revenues from facilitating sales of used equipment are recognized only when
the asset sale is consummated and until that time no revenue is recognized.
The Company had no revenue from sales of any kind through the end of the
period which was on December 31, 1999.
3. The cost of organization was expensed when incurred.
4. Basic earnings per share is computed using the weighted average
number of shares of common stock outstanding.
5. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
6. The cost of equipment is depreciated over the estimated useful life of
the equipment utilizing the straight line method of depreciation utilizing the
following depreciation schedule:
Heavy Equipment 10 years, straight line method Shop & Tools 7 years, straight
line method Furniture & Other Equipment 5 years, straight line method
The amount of depreciation recorded during the calendar year 1999 was
$42,578.00.
F-7
<PAGE>
Rent USA, Inc.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES - CONTINUED
7. The Company experienced losses since its inception on July 28, 1998
(Date of inception) to 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. There has not been any deferred
tax benefits recorded as management has deemed it less than likely that the net
operating losses will be utilized.
8. The Company has adopted December 31 as its fiscal year end.
9. The Company records its inventory at cost.
10. 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 at
the date of the financial statements and revenues and expenses for the period
reported. Actual results may differ from these estimates.
11. The Company's Statement of Cash Flows is reported utilizing
cash(currency on hand and demand deposits) and cash equivalents( short-term,
highly liquid investments). The Company's Statement of Cash Flows is reported
utilizing the indirect method of reporting cash flows.
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.
F-8
<PAGE>
Rent USA, Inc.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 4 - RELATED PARTY TRANSACTION
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
Minor out of pocket expenses for office supplies for such things as fax
costs and paper costs during the calendar year ended 1999 are not reflected in
these financial statements and were provided without charge by Al Harvey, Chief
Executive Officer and Director. Such costs are immaterial to the financial
statements and, accordingly, have not been reflected therein.
NOTE 5 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
shares of common stock.
NOTE 6 - YEAR 2000 ISSUE
The Year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in systems
which use certain dates in 1999 to represent something other than a date. The
effects of the Year 2000 issue may be experienced before on, or after January 1,
2000 and if not addressed, the impact on operations and financial reporting may
range from minor errors to significant systems failure which could affect an
entity's ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 issue affecting the entity, including
those related to the efforts of customers, suppliers, or other third parties
will be fully resolved.
NOTE 7 - LONG TERM COMMITMENTS
The Company has agreed to lease a 2 acre yard and office space in Chino,
California. The lease term expires on February 28, 2003. The base rent is $3,250
per month. The Company only purchased its equipment in December, 1999 and rent
on the space in Chino had already been paid by Al Harvey for the month of
December, 1999. The Company did not actually commence business operations until
the year 2000 when the Company will commence paying rent.
From November 17, 1999 when the Company obtained title to the equipment,
through the end of the year on December 31, 1999, there were no repairs,
maintenance costs, costs for corporate offices or payroll.
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
The Company gave a note as part of the asset purchase agreement in the
amount of $1,661,721. The note is due 180 days after the closing of the asset
purchase agreement and has an interest rate of 8.5% annually.
F-9
<PAGE>
James Slayton, C.P.A. resigned as Rent USA's auditor effective January
1, 2000. The reason for the resignation was at the request of the Registrant due
to the fact that Mr. Slayton is not a member of the SEC Practice Section of the
AICPA which the Company deemed to be of extreme importance for purposes of its
relationships with the stock market community and with the Securities & Exchange
Commission. No dispute existed or exists between the Company and the Auditors.
John Spurgeon, CPA, JD whose address is 80 South Lake Ave., Suite 723, Pasadena,
California 91740 telephone number (626) 914-9449 replaced James Slayton as
auditor. Mr. Spurgeon is a member of the SEC Practice Section of the AICPA.
The unaudited financial statements for the 1st and 2nd quarter which appear
below have not been audited by Mr. Spurgeon as the new auditor.
The accompanying unaudited financial statements were prepared in accordance with
generally accepted accounting principal for interim financial information and
with the instructions to Form 10-QSB and Item 310 (b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and six month periods ended March 31, 1999 are
not necessarily indicative of the results that may be expected for the year
ended March 31, 2000. For further information, refer to the audited financial
statements and footnotes included above which were audited for the period ended
December 31, 1999.
F-10
<PAGE>
FINANCIAL STATEMENTS
RENT USA, INC.
(Unaudited)
March 31, 2000
CONTENTS
Consolidated Balance Sheets F - 2
Consolidated Statements of Income and Expense F - 4
Consolidated Statements of Cash Flows F - 5
Notes to the Financial Statements F - 6
F - 1
<PAGE>
RENT USA, INC.
BALANCE SHEET
MARCH 31, 2000
ASSETS
Current Assets
Cash $ 78,221
Accounts Receivable 9,199
Employee Advance 400
-----------
Total Current Assets 87,820
Property and Equipment
Furniture and Office Equipment 73,313
Heavy Construction Equipment 5,036,376
Attachments and Parts 1,476,068
Shop Equipment and Tools 803,744
-----------
7,389,531
Less; Accumulated Depreciation (237,761)
-----------
Total Property and Equipment 7,150,770
TOTAL ASSETS $7,239,590
===========
F - 2
<PAGE>
RENT USA, INC.
BALANCE SHEET
MARCH 31, 2000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-Term Notes Payable $1,720,689
Current Portion of Long-Term Debt 73,699
-----------
Total Current Liabilities 1,794,388
Long-Term Liabilities 124,080
-----------
Total Liabilities $1,918,468
Stockholders' Equity
Common Stock, $.001 par value, 20,000,000
Shares authorized; 6,098,289 issued and
Outstanding as of March 31, 2000 6,098
Preferred Stock, $.001 par value, 5,000,000
Shares authorized; none issued -0-
Paid-in Capital 5,497,847
Retained Earnings (182,823)
-----------
Total Stockholders' Equity 5,321,122
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,239,590
===========
F - 3
<PAGE>
RENT USA, INC.
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
March 31, 2000 March 31, 1999
-------------- --------------
Income $ 100,812 $ 0
Cost of Goods Sold 174,545 0
-------------- --------------
Gross Profit (Deficit) (73,733) 0
Operating Expenses 60,602 5,000
-------------- --------------
Income (Loss) from Operations (134,335) (5,000)
Provision for Income Taxes 0 0
-------------- --------------
Net Income (Loss) (134,335) (5,000)
Earnings Per Share - Basic (0.02) (0.003)
============== ==============
Weighted Average Number of Shares 6,089,289 1,666,667
============== ==============
F - 4
<PAGE>
RENT USA, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
March 31, 2000 March 31, 1999
-------------- --------------
Cash Flow from Operating Activities:
Net Income $ (134,335) $ (5,000)
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation 195,183 0
(Increase) Decrease in:
Accounts Receivable (9,199) 0
Employee Advance (400) 0
Increase (Decrease) in:
Accounts Payable (910) 0
-------------- --------------
Net Cash provided (used) from Operating
Activities 50,399 5,000
Cash Flow from Investing Activities:
Purchase of Property and Equipment (25,723) 0
Net Cash (used) from Investing Activities (25,723) 0
-------------- --------------
Cash Flow from Financing Activities:
Proceeds from Issuance of Stock 0 5,000
Net Proceeds from Notes Payable 53,605 0
-------------- --------------
Net Cash provided from Financing Activities 53,605 5,000
Net Increase (Decrease) in Cash 78,221 0
Cash Balance at Beginning of Period 0 0
-------------- --------------
Cash Balance at End of Period 78,211 0
============== ==============
SUPPLEMENTAL DISCLOSURES:
Cash Paid During the Period for:
Interest 0 0
Income Tax 0 0
Schedule of Noncash Investing and Financing Activities:
In 2000
Notes Payable incurred for purchase of property
and equipment $ 203,142
Paid-in Capital incurred for acquiring of property and
equipment $ 7,500
F - 5
<PAGE>
RENT USA, INC.
NOTES TO FIANNCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Presentation of Interim Information
In the Opinion of the management of Rent USA, Inc.(the Company), the
accompanying unaudited financial statements include all normal adjustments
considered necessary to present fairly the financial position as of March 31,
2000, and the results of operations and cash flows for the three months ended
March 31, 2000 and 1999. Interim results are not necessarily indicative of
results for a full year.
The financial statements and notes are presented as permitted by Form 10-QSB,
and do not contain certain information included in the Company's audited
financial statements and notes for the fiscal year ended December 31, 1999.
Former Development Stage Company
Effective this year, the Company begins its planned operations and generates
significant revenues and is no longer in the development stage as defined under
Financial Accounting Standards Board Statement No. 7.
Use of estimates
The preparation of the accompanying financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that directly affect the results of reported assets,
liabilities, revenue, and expenses. Actual results may differ from these
estimates.
Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments with an original maturity of three months or less to be
cash equivalents.
Revenue Recognition
Revenues are recognized as earned as time passes from rights to use assets
(rentals) which extend continuously over time based on contractual prices
established in advance.
F - 6
<PAGE>
RENT USA, INC.
NOTES TO FIANNCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable
Management of the Company considers accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts is required. If amounts become
uncollectible, they will be charged to operations when that determination is
made. There was no bad debt expense either for 2000 or 1999.
Property and Equipment
Property and Equipment are valued at cost. Maintenance and repair costs are
charged to expenses as incurred. Depreciation is computed on the straight-line
method based on the estimated useful lives of the assets. Depreciation expense
was $195,183 and $0 for 2000 and 1999, respectively.
Income Taxes
The Company accounts income taxes in accordance with Financial Accounting
standards Board Statement No. 109 "Accounting For Income Taxes" (SFAS No. 109).
SFAS No. 109 requires a company to recognize deferred tax liabilities and assets
for the expected future income tax consequences of events that have been
recognized in the Company's financial statements. Under this method, deferred
tax assets and liabilities are determined based on temporary differences between
the financial carrying amounts and the tax bases of assets and liabilities using
the enacted tax rates in effect in the years in which the temporary differences
are expected to reverse.
NOTE 2 - SHORT-TERM NOTES PAYABLE
a.)Note Payable to an Officer; no interest
accrued; due on demand $ 20,000
b.)Note Payable to an Officer; no interest
accrued: due on demand 33,605
c.)Note Payable to related party; interest
at 8.5%; due June 3, 2000 1,661,721
d.)Note Payable to Airgas, due on demand;
secured by equipment 5,363
-----------
$1,720,689
===========
F - 7
<PAGE>
RENT USA, INC.
NOTES TO FIANNCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
NOTE 3 - LONG-TERM LIABILITIES
a.)10.75% Note Payable to Anchor due in monthly installment of $743.43 including
principal and interest, maturing March 24, 2004; collateralized by equipment
$ 28,900
b.)9.65% Note Payable to bank due in monthly installment of $2,645.49 including
principal and interest, maturing April 28, 2003; collateralized by equipment
82,405
c.)12% Note Payable to Johnson due in monthly
installment of $6,174.52 including principal
and interest, maturing April 2001 86,474
----------
197,779
Less Current Portion 73,699
----------
$ 120,080
==========
Long-term liabilities maturities during the years ending December 31:
2000 $ 73,699
2001 69,080
2002 36,799
2003 16,099
2004 2,102
---------
$197,779
=========
NOTE 4 - PROVISION FOR INCOME TAX
There was no provision for income tax for three months ended March 31, 2000 and
1999. Due to net operating losses and the uncertainty of realization, no tax
benefit has been recognized for operating losses.
At December 31, 1999, net federal operating losses of approximately $48,488 are
available for carryforward against future years' taxable income and expire in
2020. The Company's ability to utilize its federal net operating loss
carryforwards is uncertain and thus a valuation reserve has been provided
against the Company's net deferred tax assets.
NOTE 5 - NET LOSS PER SHARE
Net loss per share is computed based on the weighted average number of shares of
common stock outstanding during the period. Basic net loss per share for three
months ended March 31, 2000 and 1999 is $0.02 and $0.003, respectively.
F - 8
<PAGE>
RENT USA, INC.
NOTES TO FIANNCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
NOTE 6 - CAPITAL CONTRIBUTION
A shareholder contributed an equipment with a fair value of $7,500 to the
Company.
NOTE 7 - LEASE COMMITMENTS
The Company leases its office facilities for $3,250 per month. The lease expires
February 28, 2003. Rent expense totaled $6,300 and $0 for 2000 and 1999,
respectively.
As of March 31, 2000, the minimum commitments under the lease are as follows:
December 31, Amount
------------ ---------
2000 $ 29,250
2001 39,000
2002 39,000
2003 6,500
---------
$113,750
=========
NOTE 8 - GOING CONCERN
The accompanying financial statements are presented on the basis that the
Company is a going concern. Going concern contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business over a
reasonable length of time. As shown in the accompanying financial statements,
the Company incurred a net loss of $134,335 and $5,000 for three months ended
March 31, 2000 and 1999, respectively, and as of March 31, 2000, the Company has
a working capital deficiency of $1,706,568.
Management is currently involved in active negotiations to obtain additional
financing and actively increasing marketing efforts to increase revenues. The
Company's continued existence depends on its ability to meet its financing
requirements and the success of its future operations. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
F - 9
<PAGE>
The accompanying unaudited financial statements were prepared in accordance with
generally accepted accounting principal for interim financial information and
with the instructions to Form 10-QSB and Item 310 (b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and six month periods ended June 30, 1999 are
not necessarily indicative of the results that may be expected for the year
ended June 30, 2000. For further information, refer to the audited financial
statements and footnotes included above which were audited for the period ended
December 31, 1999.
FINANCIAL STATEMENTS
RENT USA, INC.
(Unaudited)
JUNE 30, 2000
CONTENTS
Consolidated Balance Sheets F - 2
Consolidated Statements of Income and Expense F - 4
Consolidated Statements of Cash Flows F - 5
Notes to the Financial Statements F - 6
F - 1
<PAGE>
RENT USA, INC.
BALANCE SHEET
JUNE 30, 2000
ASSETS
Current Assets
Cash $ 28,476
Accounts Receivable 55,235
Employee Advance 3,762
-----------
Total Current Assets 87,473
-----------
Property and Equipment
Furniture and Office Equipment 73,313
Heavy Construction Equipment 5,279,327
Attachments and Parts 1,476,068
Shop Equipment and Tools 803,774
-----------
7,632,482
Less; Accumulated Depreciation (441,042)
-----------
Total Property and Equipment 7,191,440
-----------
TOTAL ASSETS $7,278,913
===========
F - 2
<PAGE>
RENT USA, INC.
BALANCE SHEET
JUNE 30, 2000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accrued Expenses $ 32,463
Short-Term Notes Payable 1,751,748
Notes Payable, Current Portion 86,799
-----------
Total Current Liabilities 1,871,010
-----------
Long-Term Liabilities 327,521
-----------
Total Liabilities 2,198,531
-----------
Stockholders' Equity
Common Stock, $.001 par value, 20,000,000
Shares authorized; 6,098,289 issued and
Outstanding 6,098
Preferred Stock, $.001 par value, 5,000,000
Shares authorized; none issued 0
Paid-in Capital 5,498,347
Retained Earnings (424,063)
-----------
Total Stockholders' Equity 5,080,382
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,278,913
===========
F - 3
<PAGE>
<TABLE>
RENT USA, INC.
STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
<CAPTION>
Three Months ended Six Months ended
June 30, June 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income $ 125,122 $ 0 $ 225,934 $ 0
Cost of Goods Sold 247,910 0 422,425 0
------------ ------------ ------------ ------------
Gross Profit (Deficit) (122,788) 0 (196,491) 0
Operating Expenses 118,482 0 179,084 (5,000)
------------ ------------ ------------ ------------
Income (Loss) from Operations (241,270) 0 (375,575) (5,000)
Provision for Income Taxes 0 0 0 0
------------ ------------ ------------ ------------
Net Income (Loss) $ (241,270) $ 0 $ (375,575) $ (5,000)
============ ============ ============ ============
Earnings Per Share - Basic $ (0.04) $ 0 $ (0.06) $ (0.001)
============ ============ ============ ============
Weighted Average Number of Shares 6,098,289 5,000,000 6,098,289 3,333,333
============ ============ ============ ============
</TABLE>
F - 4
<PAGE>
RENT USA, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
2000 1999
---------- ----------
Cash Flow from Operating Activities:
Net Income $(375,575) $ (5,000)
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation 398,464 0
(Increase) Decrease in:
Accounts Receivable (55,235) 0
Employee Advance (3,762) 0
Increase (Decrease) in:
Accounts Payable (910) 0
Accrued Expenses 32,463 0
---------- ----------
Net Cash (used) by Operating Activities (4,555) (5,000)
---------- ----------
Cash Flow from Investing Activities:
Purchase of Property and Equipment (37,343) 0
---------- ----------
Net Cash used by investing Activities (37,343) 0
---------- ----------
Cash Flow from Financing Activities:
Proceeds from Issuance of Stock 0 5,000
Capital Contribution 500 0
Net Proceeds from Notes Payable 69,874 0
---------- ----------
Net Cash provided from Financing Activities 70,374 5,000
---------- ----------
Net Increase (Decrease) in Cash 28,476 0
Cash Balance at Beginning of Period 0 0
---------- ----------
Cash Balance at End of Period $ 28,476 $ 0
========== ==========
SUPPLEMENTAL DISCLOSURES:
Cash Paid During the Period for:
Interest $ 4,113 $ 0
========== ==========
Income Tax $ 0 $ 0
========== ==========
Schedule of Noncash Investing and Financing Activities:
In 2000
Notes Payable incurred for purchase of property
and equipment $ 434,473
==========
Paid-in Capital incurred for acquiring of property and
equipment $ 7,500
==========
F - 5
<PAGE>
RENT USA, INC.
NOTES TO FIANNCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Presentation of Interim Information
In the Opinion of the management of Rent USA, Inc.(the Company), the
accompanying unaudited financial statements include all normal adjustments
considered necessary to present fairly the financial position as of June 30,
2000, and the results of operations for the three and six months ended June 30,
2000 and 1999, and cash flows for the six months ended June 30, 2000 and 1999.
Interim results are not necessarily indicative of results for a full year.
The financial statements and notes are presented as permitted by Form 10-QSB,
and do not contain certain information included in the Company's audited
financial statements and notes for the fiscal year ended December 31, 1999.
Former Development Stage Company
Effective this year, the Company begins its planned operations and generates
significant revenues and is no longer in the development stage as defined under
Financial Accounting Standards Board Statement No. 7.
Use of estimates
The preparation of the accompanying financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that directly affect the results of reported assets,
liabilities, revenue, and expenses. Actual results may differ from these
estimates.
Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments with an original maturity of three months or less to be
cash equivalents.
Revenue Recognition
Revenues are recognized as earned as time passes from rights to use assets
(rentals) which extend continuously over time based on contractual prices
established in advance.
F - 6
<PAGE>
RENT USA, INC.
NOTES TO FIANNCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable
Management of the Company considers accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts is required. If amounts become
uncollectible, they will be charged to operations when that determination is
made. There was no bad debt expense either for 2000 or 1999.
Property and Equipment
Property and Equipment are valued at cost. Maintenance and repair costs are
charged to expenses as incurred. Depreciation is computed on the straight- line
method based on the estimated useful lives of the assets. Depreciation expense
was $398,464 and $0 for 2000 and 1999, respectively.
Income Taxes
The Company accounts income taxes in accordance with Financial Accounting
standards Board Statement No. 109 "Accounting For Income Taxes" (SFAS No. 109).
SFAS No. 109 requires a company to recognize deferred tax liabilities and assets
for the expected future income tax consequences of events that have been
recognized in the Company's financial statements. Under this method, deferred
tax assets and liabilities are determined based on temporary differences between
the financial carrying amounts and the tax bases of assets and liabilities using
the enacted tax rates in effect in the years in which the temporary differences
are expected to reverse.
NOTE 2 - SHORT-TERM NOTES PAYABLE
a.) Note Payable to an Officer; no interest
accrued; due on demand $ 20,000
b.) Note Payable to an Officer; no interest
accrued: due on demand 39,664
c.) Note Payable to related party; interest
at 8.5%; due June 3, 2000 1,661,721
d.) Note Payable to Airgas, due on demand;
secured by equipment 5,363
F - 7
<PAGE>
RENT USA, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
NOTE 2 - SHORT-TERM NOTES PAYABLE (Continued)
e.) Note Payable to related party; interest
at 10%; due 60 days 25,000
-----------
$1,751,748
===========
NOTE 3 - LONG-TERM LIABILITIES
a.) 10.75% Note Payable to Anchor due in monthly
installment of $743.43 including principal
and interest, maturing March 24, 2004;
collateralized by equipment $ 27,926
b.) 9.65% Note Payable to bank due in monthly
installment of $2,645.49 including principal
and interest, maturing April 28, 2003;
collateralized by equipment 77,777
c.) 12% Note Payable to Johnson due in monthly
installment of $6,174.52 including principal
and interest, maturing April 2001 81,164
d.) 10.75% Note Payable to CIT due in monthly
installment of $5950.83 including principal
and interest, maturing May 2004; collateralized
by equipment 227,453
----------
414,320
Less Current Portion 86,799
----------
$ 327,521
==========
Long-term liabilities maturities during the years ending December 31:
2000 $ 86,799
2001 121,135
2002 94,734
2003 74,848
2004 36,804
---------
$414,320
=========
NOTE 4 - PROVISION FOR INCOME TAX
There was no provision for income tax for three and six months ended June 30,
2000 and 1999. Due to net operating losses and the uncertainty of realization,
no tax benefit has been recognized for operating losses.
F - 8
<PAGE>
RENT USA, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
NOTE 4 - PROVISION FOR INCOME TAX (Continued)
At December 31, 1999, net federal operating losses of approximately $48,488 are
available for carryforward against future years' taxable income and expire in
2020. The Company's ability to utilize its federal net operating loss
carryforwards is uncertain and thus a valuation reserve has been provided
against the Company's net deferred tax assets.
NOTE 5 - NET LOSS PER SHARE
Net loss per share is computed based on the weighted average number of shares of
common stock outstanding during the period. Basic net loss per share for six
months ended June 30, 2000 and 1999 is $0.06 and $0.001, respectively.
NOTE 6 - CAPITAL CONTRIBUTION
A shareholder contributed an equipment with a fair value of $7,500 to the
Company.
NOTE 7 - LEASE COMMITMENTS
The Company leases its office facilities for $3,250 per month. The lease expires
February 28, 2003. Rent expense totaled $6,300 and $0 for 2000 and 1999,
respectively.
As of June 30, 2000, the minimum commitments under the lease are as follows:
December 31, Amount
------------ ------
2000 $ 19,500
2001 39,000
2002 39,000
2003 6,500
---------
$104,000
=========
NOTE 8 - GOING CONCERN
The accompanying financial statements are presented on the basis that the
Company is a going concern. Going concern contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business over a
reasonable length of time. As shown in the accompanying financial statements,
the Company incurred a net loss of $375,575 and $5,000 for six months ended June
30, 2000 and 1999, respectively, and as of June 30, 2000, the Company has a
working capital deficiency of $1,783,537.
F - 9
<PAGE>
RENT USA, INC.
NOTES TO FIANNCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
NOTE 8 - GOING CONCERN (Continued)
Management is currently involved in active negotiations to obtain additional
financing and actively increasing marketing efforts to increase revenues. The
Company's continued existence depends on its ability to meet its financing
requirements and the success of its future operations. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
F - 10
<PAGE>
Exhibits attached:
Exhibit 10 - Copy of the Stock Exchange Agreement between Senior Care
Industries, Inc. and Rent USA, Inc.
Exhibit 23 - Consent of James L. Slayton, CPA
Item 8. Changes in Fiscal Year
Not Applicable
Item 9. Change is Security Rating
Not Applicable
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Senior Care Industries, Inc.
(Registrant)
Dated: October 23, 2000
/S/ Stephen Reeder
-----------------------------------
Stephen Reeder
Chief Executive Officer & Director
