<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
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(Mark one)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
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[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 000-27371
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SENIOR CARE INDUSTRIES, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 68-0221599
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
410 Broadway, 2nd Floor
Laguna Beach, California 92651
(Address of principal executive offices)
(949) 376-8575
---------------
(Issuer's telephone number)
State the number of shares outstanding of each of the issuer's classes of common
equity as of June 30, 2000: Common stock 9,591,654 shares
Transitional Small Business Disclosure Format
(Check one): Yes [ ] No [x]
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TABLE OF CONTENTS
PART 1- FINANCIAL INFORMATION
PAGE
----
Item 1. Financial Statements..................................... F-1/8
Item 2. Plan of Operation........................................ 4/6
PART 11- OTHER INFORMATION
Item 1. Legal Proceedings........................................ 6
Item 2. Changes in Securities.................................... 7
Item 3. Defaults Upon Senior Securities.......................... 7
Item 4. Submission of Matters to a Vote of Security Holders...... 7
Item 5. Other Information........................................ 7
Item 6. Exhibits and Reports on Form 8-K......................... 8
SIGNATURES....................................................... 9
2
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PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements.
Unaudited Balance sheet at June 30, 2000 and June 30, 1999
Unaudited Statements of Operations for the three month and six month
periods ended June 30, 2000.
Unaudited Statements of Cash Flows for the six and nine month period
ended June 30, 2000.
Notes to the financial statements.
3
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FINANCIAL STATEMENTS
SENIOR CARE INDUSTRIES, INC.
(Unaudited)
June 30, 2000
CONTENTS
Consolidated Balance Sheets F - 2
Consolidated Statements of Income and Expense F - 4
Consolidated Statement of Stockholders' Equity F - 5
Consolidated Statements of Cash Flows F - 6
Notes to the Financial Statements F - 7
F - 1
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<TABLE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
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<CAPTION>
ASSETS
DECEMBER 31, 1999 JUNE 30, 2000
(UNCONSOLIDATED) CONSOLIDATED)
---------------- -------------
<S> <C> <C>
Current assets:
Cash $ 38,117 $ 30,329
Deposits - 135,364
Accounts receivable - 723,539
Inventory - 852,554
Prepaid expenses 2,550 29,867
------------- -------------
Total current assets 40,667 1,771,653
------------- -------------
Construction in progress 13,744,857 15,273,812
Property and equipment
Machinery and equipment - 1,083,767
Real estate 1,800,000 1,800,000
Less: accumulated depreciation (22,222) (141,508)
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Total property and equipment 1,777,778 2,742,259
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Other assets:
Investment in LLC 3,234,000 3,234,000
Goodwill, net of accumulated amortization of $28,871 - 1,703,369
------------- -------------
Total other assets 3,234,000 4,937,369
------------- -------------
Total assets $ 18,797,302 $ 24,725,093
============= =============
The accompanying notes are an integral part of the financial statements F - 2
</TABLE>
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<TABLE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
DECEMBER 31, 1999 JUNE 30, 2000
(UNCONSOLIDATED) CONSOLIDATED)
---------------- -------------
<S> <C> <C>
Current liabilities:
Accounts payable $ - $ 438,816
Accrued expenses - 34,670
Accrued interest - 119,699
Capital lease obligation-current portion - 8,876
Current portion of real estate loans 200,000 6,984,328
Notes payable - current portion - 56,125
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Total current liabilities 200,000 7,642,514
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Real estate loans, net of current portion 9,635,613 4,334,136
Notes payable, net of current portion 765,333 1,920,080
Long-term accrued interest - 49,000
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Total liabilities 10,600,946 13,945,730
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Stockholders' equity (Note 3):
Series A convertible preferred stock, $.001 par value, 34,500 shares
authorized, 34,500 and 0 shares issued and outstanding at December 31,
1999 and June 30, 2000, respectively 34 -
Series B convertible preferred stock, $.001 par value 5,000,000 shares
authorized, 400,000 and 0 shares issued and outstanding at December 31,
1999 and June 30, 2000, respectively 400 -
Common stock, $.001 par value, 25,000,000 shares authorized,
6,662,154 and 9,591,654 shares issued and outstanding at December 31,
1999 and June 30, 2000, respectively 6,662 9,592
Additional paid in capital 10,262,533 13,186,316
Accumulated deficit (2,073,273) (2,416,545)
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Total stockholders' equity 8,196,356 10,779,363
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Total liabilities and stockholders' equity $ 18,797,302 $ 24,725,093
============= =============
The accompanying notes are an integral part of the financial statements F - 3
</TABLE>
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<TABLE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSE
(UNAUDITED)
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<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1999 JUNE 30, 2000 JUNE 30, 1999 JUNE 30, 2000
(UNCONSOLIDATED) (CONSOLIDATED) (UNCONSOLIDATED) (CONSOLIDATED)
---------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
Revenue $ - $ 1,501,624 $ - $ 2,910,076
Cost of sales - 953,401 - 1,797,053
------------- ------------- ------------- -------------
Gross profit - 548,223 - 1,113,023
------------- ------------- ------------- -------------
Operating expense:
Selling, general and
administrative - 780,794 1,342 1,122,415
Depreciation and
amortization - 52,901 - 74,963
------------- ------------- ------------- -------------
Total operating expenses - 833,695 1,342 1,197,378
------------- ------------- ------------- -------------
Operating income - (285,472) (1,342) (84,355)
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Other income(expense):
Interest expense - (238,857) - (298,653)
------------- ------------- ------------- -------------
Income before cumulative
effect of change in
accounting estimate - (524,329) (1,342) (383,008)
------------- ------------- ------------- -------------
Cumulative effect of change
in accounting estimates
(Note 4) - 39,736 - 39,736
------------- ------------- ------------- -------------
Net loss $ - $ (484,593) $ (1,342) $ (343,272)
============= ============= ============= =============
Earnings per share:
Basic $ - $ (.055) $ (.001) $ (.031)
============= ============= ============= =============
Diluted $ - $ - $ - $ -
============= ============= ============= =============
Weighted average shares
outstanding 4,859,419 8,732,476 2,649,021 11,028,392
============= ============= ============= =============
The accompanying notes are an integral part of the financial statements F - 4
</TABLE>
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<TABLE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SERIES A SERIES B
CONVERTIBLE CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK COMMON STOCK
----------------- ----------------- -----------------------
ADDITIONAL RETAINED TOTAL
NUMBER PAR NUMBER PAR NUMBER PAR PAID-IN EARNINGS STOCKHOLDERS'
OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE CAPITAL (DEFICIT) EQUITY
--------- ------ --------- ------ ---------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 34,500 $ 34 400,000 $ 400 6,662,154 $ 6,662 $10,262,533 $(2,073,273) $ 8,196,356
Shares issued in
acquisition (Note 4) - - - - 750,000 750 2,896,500 - 2,897,250
Shares issued for services
(Note 3) - - - - 7,000 7 29,022 - 29,029
Conversion of Series A and
Series B Preferred Stock
for common stock (Note 3) (34,500) (34) (400,000) (400) 2,172,500 2,173 (1,739) - -
Net loss - - - - - - - (343,272) (343,272)
--------- ------ --------- ------ ---------- ----------- ------------ ------------ ------------
Balance, June 30, 2000 -
consolidated - $ - - $ - 9,591,654 $ 9,592 $13,186,316 $(2,416,545) $ 10,779,363
========= ====== ========= ====== ========== =========== ============ ============ ============
The accompanying notes are an integral part of the financial statements F - 5
</TABLE>
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<TABLE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1999 JUNE 30, 2000
(UNCONSOLIDATED) (CONSOLIDATED)
---------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,342) $ (343,272)
------------- -------------
Adjustments to reconcile net loss to cash used
by operating activities:
Stock issued for services - 29,029
Depreciation and amortization - 93,981
Change in accounting estimate - (39,736)
Decrease (increase) in assets:
Accounts receivable - (164,114)
Inventory - (106,397)
Deposits - (119,324)
Construction in progress - (1,529,455)
Increase (decrease) in liabilities:
Accounts payable trade - 88,550
Accrued liability - 6,074
Other liability - 196
Taxes payable - (19,625)
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Total adjustments (1,342) (1,760,821)
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Net cash used in operating activities (1,342) (2,104,093)
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Cash flows from financing activities:
Net proceeds from debt - 2,039,088
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Net cash provided by financing activities - 2,039,088
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Net decrease in cash (1,342) (65,005)
Cash, beginning of period 832 95,334
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Cash, end of period $ (510) $ 30,329
============= =============
Cash paid for interest and taxes are as follows:
Interest, net of amounts capitalized $ - $ 298,653
============= =============
Income taxes $ - $ 19,624
============= =============
SUPPLEMENTAL DISCLOSURE OF NON-CASH OPERATING,
INVESTING, AND FINANCING ACTIVITIES:
Issuance of Common Stock for services $ - $ 29,029
============= =============
Issuance of Common Stock in acquisition $ - $ 2,897,250
============= =============
Issuance of Common Stock in conversion of
preferred stock $ - $ 2,173
============= =============
The accompanying notes are an integral part of the financial statements F - 6
</TABLE>
<PAGE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED JUNE 30, 2000
--------------------------------------------------------------------------------
1. INTERIM FINANCIAL INFORMATION
-----------------------------
The financial statements of Senior Care Industries, Inc. and Subsidiary
(the Company) as of June 30, 2000 and for the six months ended June 30,
2000 and 1999, and related footnote information are unaudited. All
adjustments (consisting only of normal recurring adjustments) have been
made which, in the opinion of management, are necessary for a fair
presentation. Results of operations for the six months ended June 30,
2000 and 1999 are not necessarily indicative of the results that may be
expected for any future period. The balance sheet at December 31, 1999
was derived from audited financial statements.
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, have been omitted. These financial statements
should be read in conjunction with the financial statements and notes
for the year ended December 31, 1999.
2. BASIS OF PRESENTATION
---------------------
The consolidated financial statements at June 30, 2000, and for the six
months then ended include the accounts of the Company and its
Subsidiary. All material intercompany balances and intercompany
transactions have been eliminated. The financial statements at June 30,
1999, and for the six months then ended were not consolidated.
3. CAPITAL STOCK
-------------
CONVERSION OF PREFERRED STOCK
-----------------------------
In April 2000, the holders of Series A and B Convertible Preferred
Stock converted its preferred stock on a 5 to 1 basis. This conversion
required the Company to issue 2,172,500 additional common shares.
STOCK ISSUED FOR SERVICES
-------------------------
In April 2000, the Company issued 7,000 common shares to Company
consultants as compensation and recognized $29,029 in compensation
expense.
4. ACQUISITION AND CHANGE IN ESTIMATE
----------------------------------
On April 6, 2000, the Company completed an asset purchase of Nobel
Concepts - Fidelity, Inc. (a Delaware Corporation) (Nobel). Pursuant to
the agreement, the Company issued 750,000 shares of common stock in
exchange for 100% of the outstanding shares of Noble. The effective
date of the acquisition was January 1, 2000.
The Company accounted for the acquisition under the purchase method of
accounting. The Company recorded a total of $1,732,240 in goodwill
which is being amortized over 15 years. Subsequent to the acquisition,
the Company appraised the value of the assets acquired, which resulted
F - 7
<PAGE>
SENIOR CARE INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED JUNE 30, 2000
--------------------------------------------------------------------------------
4. ACQUISITION AND CHANGE IN ESTIMATE (CONTINUED)
----------------------------------------------
in a revision of the goodwill amount recorded and an adjustment of
$39,736 for the six months ended June 30, 2000, for a change in the
estimated value of the assets and the original amount of goodwill
recorded by management. The Company recorded $28,871 in amortization
expense for the six months ended June 30, 2000.
The following unaudited Pro Forma Condensed Consolidated Statement of
Income and Expense reflects adjustments to Senior Care Industries,
Inc.'s historical income statement for the year ended December 31,
1999, to give effect to this acquisition.
The accompanying unaudited Pro Forma information is presented for
illustrative purposes only and is not necessarily indicative of the
financial position or results of operations which would actually have
been reported had the acquisition been in effect during the periods
presented, or which may be reported in the future.
The accompanying unaudited Pro Forma Condensed Consolidated Statement
of Income and Expense should be read in conjunction with the historical
financial statements and related notes thereto for Senior Care
Industries, Inc.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
EXPENSE
FOR THE YEAR ENDED
DECEMBER 31, 1999
-----------------
Revenues $ 100,428
Costs and expenses 371,822
-----------------
Ordinary loss (271,394)
Loss on discontinued operations (20,816)
-----------------
Net loss $ (292,210)
=================
F - 8
<PAGE>
Item 2. Plan of Operation
The Company was organized under the laws of the State of Idaho, February 26,
1968, as Golden Chest, Inc., for the purpose of acquiring and developing mineral
properties. On April 5, 1999, the board of directors changed the Company name to
Senior Care Industries, Inc., and changed corporate situs from Idaho to Nevada.
The Company was re-incorporated on August 26, 1999 under the laws of the State
of Nevada.
In 1985, the Company merged with TAP Resources, Ltd, (TAP) a British Columbia
corporation in a transaction where the Company issued 1.25 shares of Golden
Chest Inc common stock in exchange for each share of TAP common stock. At the
time of the merger, the Company and TAP were partners in a minerals exploration
joint venture. After the merger Golden Chest Inc. was the surviving corporation
while TAP Resources was dissolved.
In 1990, the Company merged with Petro Gold Inc, a Washington corporation, in a
transaction where the Company issued 3,000,000 shares of Senior Care Industries,
Inc. common stock in exchange for all shares of Petro Gold, Inc. common stock.
After the merger Senior Care Industries, Inc. was the surviving corporation
while Petro Gold, Inc. was dissolved.
In 1999, the company transferred its assets and liabilities to Paymaster
Resources Incorporated.
On August 31, 1999, the Company completed an asset purchase agreement where it
purchased the assets and liabilities of East-West Developer, Inc. for a note
payable of $700,000 and 1,880,122 shares or Senior Care Industries, Inc.'s
common stock which was issued directly to the property owners whose properties
were sold to the Company through this transaction.
On April 28, 2000, the Company purchased all of the outstanding stock in Noble
Concepts Fidelity, Inc., a furniture manufacturing company in San Diego,
California. The effective date of the purchase was January 1, 2000 and the
income and expense of that corporation is reflected on the first quarter income
statement for Senior Care Industries, Inc.
Senior Care Industries is a diversified firm consisting of a real estate
division a manufacturing division, and a pharmaceutical.nutriceutical division.
The Company's real estate division invests in, manages, and develops senior
housing, and is a leader quality for-sale and rental, independent living
age-restricted communities.
The Company's manufacturing division targets for acquisition, ancillary
companies whose products and services are in high demand by Seniors such as
medical device manufacturers, specialty food manufacturing companies and
furniture manufacturing companies, enabling the firm to service seniors both in
and out of its age restricted communities with its own products.
The Company's Nutriceutical and pharmaceutical division targets for acquisition
nutriceutical and/or pharmaceutical manufacturing companies and web based health
products distributors as a feeder to manufacture and sell the products through
an "E-commerce" pharmacy. The Company's pharmaceutical division utilizes a
program to include a full service web-based senior support system that sells
direct to the consumer, related health products in the financial services
sector, including life insurance, health insurance, dietary advice, holistic
medical alternatives, water and air purification. The Company is finalizing a
web-site and a support staff offering 24 hour access to these products and
services once an acquisition closes.
Presently, the Company has no operations in the nutriceutical or pharmaceutical
division but is actively seeking acquisitions in this area.
The Company's projects and/ or the services the Company may offer fall under the
auspices of various state and federal regulatory agencies and various licensing
and or zoning requirements and programs, such as the "Medicaid waiver programs"
The company currently owns a project in Monterey Park, California whose zoning
approval required a non-profit organization be formed to own a 10% interest at
the request of the city of Monterey Park.
4
<PAGE>
The company owns a 45% membership interest in a limited liability company which
owns a development project in Delran, New Jersey. The first three phases of this
development have already been completed and only the fourth phase which involves
the development of a shopping mall is yet to be built.
The company 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.
5
<PAGE>
Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the meaning
of the "safe-harbor" provisions of the Private Securities Litigation Reform Act
of 1995. Such statements are based on management's current expectations and are
subject to a number of factors and uncertainties that could cause actual results
to differ materially from those described in the forward- looking statements.
All statements, other than statements of historical facts include in this Form,
including without limitation, statements under "Plan of Operations" regarding
the Company's financial position, business strategy, and plans and objectives of
management of the Company for future operations, are forward-looking statements.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from the Company's expectations include, but
are not limited to, market conditions, competition and the ability to
successfully complete financing.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On April 25, 2000, the Company was named as a defendant in a bankruptcy
court adversary proceeding in the matter of Willy Farah, Debtor, United States
Bankruptcy Court, District of New Jersey, Case No. 98-44940 (NLW), Robert B.
Wasserman, Chapter 7 Trustee v. Willy Farah, Madeline Farah, Aziz Holdings,
Inc., Senior Care Industries, Inc., First American Stock Transfer, Inc. and Asia
Bank, N.A. The complaint seeks to avoid the transfer of certain shares in Senior
Care Industries, Inc. presently held by Madeline Farah and Aziz Holdings, Inc.
and seeks injunctive relief and to sell the stock pursuant to Section 363(h) of
the Bankruptcy Code [11 U.S.C. Section 101, et seq.]. The Chapter 7 Trustee
seeks to enjoin the transfer of a total of 800,000 unregistered and restricted
shares which Madeline Farah and Aziz Holdings, Inc. own in Senior Care
Industries, Inc. The Trustee claims that those shares are properly the property
of the debtor's estate. Madeline Farah and Aziz Holdings, Inc. claim that they
are not property of the estate of Willy Farah. Senior Care Industries, Inc.
takes no position on the matter. Pending a determination of the claims of the
various parties, on April 28, 2000, the Bankruptcy Court has temporarily
enjoined and restrained the stock transfer agent for Senior Care Industries,
Inc., First American Stock Transfer, Inc. from transferring any of the shares in
question until a further hearing on the matter.
Another lawsuit which is related to the above matter was brought in the Superior
Court of New Jersey, Burlington County Law Division, Case No. BUR L-3667-99 by
International Thermal Packaging as Plaintiff against CRT Corporation, American
Auditors, LLC, Delran Associates, LLC, Senior Care Industries, Inc., Aspi K.
Irani and Joseph Lipari.
International Thermal Packaging [ITP] claims that American Auditors, LLC
borrowed $700,000.00 from ITP which is now due and owing. The money was to be
secured by a portion of the Delran Associates membership interest owned by CRT
Corporation at the time the loan was obtained. At a later time, the Delran
membership interest which was owned by CRT Corporation was sold to Senior Care
Industries, Inc. having been assigned to it in a package deal from East West
Community Developer, Inc. Senior Care purchased a number of assets and assumed
various liabilities from East West. However, Senior Care is not liable for the
money owed to ITP and has never become obligated to pay the $700,000.00 loan
which American Auditors, LLC obtained from ITP.
In the lawsuit, ITP requests that Senior Care impose a constructive trust on any
proceeds which it may receive from the liquidation of its Delran membership
interest or from dividends paid to it by Delran Associates. Senior Care has
taken the position that it has no objection to an imposition of a constructive
trust under those conditions and has offered to secure ITP's position with a
security interest in its Delran membership interest. To date, that offer has not
been accepted by ITP but is still on the table.
The $700,000.00 obligation is a portion of an obligation which Senior Care owes
to East West Community Developer. That obligation becomes due on April 30, 2001.
6
<PAGE>
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.
Item 2. Changes in Securities
The following issuance of securities in the Company was made in exchange
for the purchase of assets by the Company during the quarter ended June 30,
2000:
Cyrus Industries, Inc. 600,000 common shares
207 W. 138th Street
Los Angeles, CA 90061
Robert Eschwege 150,000 common shares
495 Raleigh Ave.
El Cajon, CA 92020
All of these shares were issued in exchange for 100% of the ownership of Noble
Concepts Fidelity, Inc. which is discussed in full in An 8-K Report filed on May
15, 2000 noting the acquisition by the Company of that furniture manufacturer.
All other issuances of the Company's securities were disclosed in its Annual
Report, 10-KSB, filed on March 27, 2000 and in its first quarter Form 10QSB
filed on May 15, 2000.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
The Company changed auditors effective on August 1, 2000 naming Mendoza and
Berger, CPA"s, 25200 La Paz Road, Suite 111, Laguna Hills, CA 92653, telephone
(949) 598-8105 as its auditor to replace John Spurgeon, CPA who had been the
Company's auditor until that date. The reason for the change in auditors is as
follows:
The Company made application with the American Stock Exchange and in connection
with that application, the analyst requested information regarding the status of
the Company's auditor with AICPA as a member of the SEC practice section. The
Company's auditor, John Spurgeon, CPA was admitted to the practice section on
April 3, 2000. However, he had not undergone peer review. Because the work done
to audit the Company's financial statements for the year 1999 was done prior to
the admission to the practice section, it was determined that the audit should
be redone after his admission and that the work should be reviewed by a member
of the practice section who had already undergone peer review since the
Company's auditor, John Spurgeon had not. For that reason, the Company engaged
the firm of Corbin & Wertz to review Mr. Spurgeon's work for the year 1999 which
would be reviewed by Corbin & Wertz, CPA's who were members of the practice
section and had undergone peer review.
However, once the reviewed restated audit for 1999 was filed on an amended
10KSB/A on June 27, 2000, it was determined that a stub audit for the first
quarter of the year 2000 would be required in lieu of a complete reaudit of the
year 1999 since the review by Corbin & Wertz was not deemed sufficient. The
Company then solicited bids from three auditing firms, all of whom were members
of the SEC Practice Section of the AICPA. The lowest bid and the firm which the
Company believed could complete the audit most readily was Mendoza & Berger whom
the Company then engaged as its auditor to undertake that work and to become its
regular auditor.
7
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
The following 8-K Reports were filed by the Company which relate to
the first and second quarter of 2000:
An 8-K Report filed on April 21, 2000 noting changes in the Company's
certifying accountants.
An 8-K Report filed on May 8, 2000 noting Resignation of Registrant's
Director and Officer, Tom Reichman, noting the appointment of Stephen Reeder as
President, John Cruickshank as Senior Vice President and the naming of two new
directors.
An 8-K Report filed on May 15, 2000 noting the acquisition by the
Company of Nobel Concepts Fidelity, Inc., a furniture manufacturing company.
An 8-K Report was filed on August 15, 2000 noting changes in the
Company's certifying accountants as discussed hereinabove in Item 5.
All of the above noted 8-K Reports are incorporated herein by reference
as though fully set forth.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Senior Care Industries, Inc.
----------------------------
Date: August 17, 2000 /s/ Stephen Reeder
----------------------------
Stephen Reeder
Chief Executive Officer
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