<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
Amendment No. 1
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(Mark one)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
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[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 000-27371
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RENT USA, INC.
----------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 33-5695839
-------- ------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
PO Box 10
San Dimas, CA 91773-0010
(Address of principal executive offices)
(909) 287-1500
---------------
(Issuer's telephone number)
State the number of shares outstanding of each of the issuer's classes of common
equity as of March 31, 2000: Common stock 6,098,289 shares
Transitional Small Business Disclosure Format
(Check one): Yes [ ] No [x]
<PAGE>
TABLE OF CONTENTS
PART 1- FINANCIAL INFORMATION
PAGE
----
Item 1. Financial Statements..................................... F-1/10
Item 2. Plan of Operation........................................ 11
PART 11- OTHER INFORMATION
Item 1. Legal Proceedings........................................ 13
Item 2. Changes in Securities.................................... 13
Item 3. Defaults Upon Senior Securities.......................... 13
Item 4. Submission of Matters to a Vote of Security Holders...... 13
Item 5. Other Information........................................ 13
Item 6. Exhibits and Reports on Form 8-K......................... 13
SIGNATURES....................................................... 14
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements.
Unaudited Balance sheet at June 30, 2000
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.
<PAGE>
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
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Total Current Assets 87,473
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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
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7,632,482
Less; Accumulated Depreciation (441,042)
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Total Property and Equipment 7,191,440
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TOTAL ASSETS $7,278,913
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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
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Total Current Liabilities 1,871,010
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Long-Term Liabilities 327,521
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Total Liabilities 2,198,531
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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)
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Total Stockholders' Equity 5,080,382
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,278,913
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F - 3
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<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>
<TABLE>
RENT USA, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
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
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Net Cash used by investing Activities (37,343) 0
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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
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Net Cash provided from Financing Activities 70,374 5,000
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Net Increase (Decrease) in Cash 28,476 0
Cash Balance at Beginning of Period 0 0
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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
==========
</TABLE>
F - 5
<PAGE>
RENT USA, INC.
NOTES TO FINANCIAL 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 FINANCIAL 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
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$1,751,748
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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 $5950.83 including principal
and interest, maturing May 2004; collateralized
by equipment 227,453
----------
414,320
Less Current Portion 86,799
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$ 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
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$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
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$104,000
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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>
Item 2. Plan of Operation
The Company was originally organized under the laws of the State of Delaware in
1998, as RENT USA, INC, Delaware Company. On November 17, 1999 the Company
changed its domicile to the State of Nevada and is now doing business as a
Nevada Corporation.(See Part III, Articles of Incorporation and Agreement and
Plan of Merger, which is the document vehicle required by the state of Nevada to
change the company to Nevada).
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 June 30, 2000 the Company had a working capital deficiency of $1,783,537.
The acquisition by Senior Care is hoped to remedy that working capital
deficiency by a rights offering which will be made to Senior Care stockholders
and is discussed in greater detail later on in this Report.
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 under the umbrella of its
current domestic rental and sales business which is to be known as Equip USA.
Those rentals and sales are generally from the following sources:
1. Equipment Rentals - the principal service, consists of renting
equipment to small and large contractors, and construction companies.
2. Equipment Sales - The sale of new and used equipment to small and
large contractors and construction companies. The Company is presently
negotiating an agreement whereby it will become a dealer for New Holland, a
manufacturer of heavy construction equipment.
3. Re-Rentals - this means re-renting equipment which the Company must
rent from others and does not own, then re-renting that equipment to an end user
at an anticipated 20% markup over the amount which the Company must pay the
owner of the equipment.
4. Trade Rentals - this means renting equipment on a long term basis to
other rental yards, which they, in turn, will mark up and re-rent to the general
public at a markup, generally 20%.
About 50% of the gross volume of the Equip USA's business is from the
sale of used equipment which the Company holds in inventory for that purpose.
The other 50% of its business comes from the rental of equipment or re-rental of
equipment which belongs to others.
As of September 30, 2000, the Company had not yet commenced the sale of
new equipment.
Rent USA maintains a rental yard in Chino, California where it stores
and maintains its equipment when it is not being used.
4
<PAGE>
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.
5
<PAGE>
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.
This division will be known as Equip Mining Systems. It will market the sales of
crushers , conveyors, etc. and is anticipated will also create opportunities for
Rent USA to also sell the necessary loaders and dozers in the same transaction.
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.
6
<PAGE>
Rent USA has engaged Don Hodges to establish a mining equipment sales
and rental company to be known as Equip Mining Systems. 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
$7,023,500.00 during the first year 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.
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 Calico acquisition once
completed will be known as Calico Mines.
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. By
this offering, Rent USA intends to raise up to approximately $2,300,000.00 for
additional working capital. The sale of stock which will be registered by the
filing of a Form SB-2 at the end of November of 2000
Rent USA has developed projections which show its projected income and
expense during the first five years following the development of the
acquisitions which have been discussed above. The projections show projected
income and expense for the first five years of operation and include normal
anticipated income flows from Rent USA's normal operating rental and sales
business which will be known as Equip USA, from its mining equipment sales
business to be known as Equip Mining Systems and from Calico Mines. Net sales
from the first year of operations after all acquisitions are complete anticipate
gross income of $16,405,976 and a gross profit margin of 35%. Net income during
that same year is anticipated to be $1,996,614 with a net profit of 12.2%.
7
<PAGE>
<TABLE>
Rent USA, Inc.
Income Statement
<CAPTION>
YEAR 1 YEAR 2
-------------------------------------------------- -------------------------------------------------
Rent USA Equip Mining Calico Rent USA Equip Mining Calico
Equip USA Systems Mines Equip USA Systems Mines
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET SALES $16,405,976 $4,100,000 $7,023,500 $5,282,476 $17,837,455 $4,407,500 $7,444,910 $5,985,045
COGS $10,663,703 $2,610,235 $5,351,718 $2,701,750 $11,483,001 $2,806,003 $5,565,786 $3,111,212
Gross Profit $5,742,273 $1,489,765 $1,671,782 $2,580,726 $6,354,454 $1,601,497 $1,879,124 $2,873,833
Gross Margin % 35.0% 36.3% 23.8% 48.9% 35.6% 36.3% 25.2% 48.0%
SG&A $2,563,185 $775,575 $844,241 $943,370 $2,892,397 $831,064 $878,010 $1,183,322
NBIT $3,179,088 $714,190 $827,542 $1,637,356 $3,462,057 $770,433 $1,001,113 $1,690,511
NBIT % 19.4% 17.4% 11.8% 31.0% 19.4% 17.5% 13.4% 28.2%
Interest Expense $107,374 $107,374 $0 $0 $115,427 $115,427 $0 $0
Income Taxes $1,075,100 $212,386 $289,640 $573,075 $1,171,321 $229,252 $350,390 $591,679
Net Income $1,996,614 $394,431 $537,902 $1,064,281 $2,175,310 $425,754 $650,724 $1,098,832
Net Income % 12.2% 9.6% 7.7% 20.1% 12.2% 9.7% 8.7% 18.4%
YEAR 3 YEAR 4
-------------------------------------------------- -------------------------------------------------
Rent USA Equip Mining Calico Rent USA Equip Mining Calico
Equip USA Systems Mines Equip USA Systems Mines
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET SALES $19,213,217 $4,738,063 $7,891,605 $6,583,550 $20,700,423 $5,093,417 $8,365,101 $7,241,905
COGS $12,159,925 $3,016,453 $5,788,418 $3,355,055 $12,668,549 $3,242,687 $6,135,723 $3,290,139
Gross Profit $7,053,292 $1,721,609 $2,103,187 $3,228,495 $8,031,874 $1,850,730 $2,229,378 $3,951,766
Gross Margin % 36.7% 36.3% 26.7% 49.0% 38.8% 36.3% 26.7% 54.6%
SG&A $3,135,186 $890,715 $913,131 $1,331,340 $3,323,091 $957,519 $949,656 $1,415,916
NBIT $3,918,106 $830,894 $1,190,056 $1,897,156 $4,708,783 $893,211 $1,279,722 $2,535,850
NBIT % 20.4% 17.5% 15.1% 28.8% 22.7% 17.5% 15.3% 35.0%
Interest Expense $124,084 $124,084 $0 $0 $133,390 $133,390 $0 $0
Income Taxes $1,327,908 $247,384 $416,520 $664,004 $1,601,388 $265,937 $447,903 $887,547
Net Income $2,466,114 $459,427 $773,536 $1,233,151 $2,974,005 $493,884 $831,819 $1,648,302
Net Income % 12.8% 9.7% 9.8% 18.7% 14.4% 9.7% 9.9% 22.8%
YEAR 5 FIVE YEAR TOTAL
-------------------------------------------------- -------------------------------------------------
Rent USA Equip Mining Calico Rent USA Equip Mining Calico
Equip USA Systems Mines Equip USA Systems Mines
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET SALES $22,308,526 $5,475,423 $8,867,007 $7,966,095 $96,465,597 $23,814,403$39,592,122 $33,059,071
COGS $13,048,140 $3,485,889 $6,503,866 $3,058,385 $58,902,848 $14,040,796$29,345,510 $15,516,541
Gross Profit $9,260,386 $1,989,535 $2,363,141 $4,907,710 $37,562,749 $9,773,607 $10,246,612 $17,542,530
Gross Margin % 41.5% 36.3% 26.7% 61.6% 38.9% 41.0% 25.9% 53.1%
SG&A $3,521,861 $1,029,333 $987,642 $1,504,886 $15,435,720 $4,484,206 $4,572,680 $6,378,834
NBIT $5,738,525 $960,202 $1,375,499 $3,402,824 $22,127,029 $5,289,401 $5,673,932 $11,163,696
NBIT % 25.7% 17.5% 15.5% 42.7% 22.9% 22.2% 14.3% 33.8%
Interest Expense $143,394 $143,394 $0 $0 $623,669 $623,669 $0 $0
Income Taxes $1,958,296 $285,883 $481,424 $1,190,988 $5,930,188 $1,117,542 $1,569,357 $3,243,289
Net Income $3,636,835 $530,925 $894,074 $2,211,836 $15,573,172 $3,548,190 $4,104,575 $7,920,407
Net Income % 16.3% 9.7% 10.1% 27.8% 16.1% 14.9% 10.4% 24.0%
These forecasts should be read in conjunction with the
Attached Summary of Significant Assumptions
</TABLE>
8
<PAGE>
CASH COLLECTIONS
Rent USA EQUIP MINING
EQUIP USA SYSTEMS CALICO MINES
Yr 1 $14,995,080 $3,710,500 $6,440,550 $4,844,030
Yr 2 $17,718,643 $4,381,978 $7,409,933 $5,926,732
Yr 3 $19,099,029 $4,710,626 $7,854,529 $6,533,874
Yr 4 $20,576,985 $5,063,923 $8,325,801 $7,187,261
Yr 5 $22,175,053 $5,443,717 $8,825,349 $7,905,987
Total $94,564,789 $23,310,743 $38,856,161 $32,397,885
Assume 11/12 of current year + 1/12 of prior year (net 30 days)
PURCHASES
Rent USA EQUIP MINING
EQUIP USA SYSTEMS CALICO MINES
Yr 1 COGS $10,663,703 $2,610,235 $5,351,718 $2,701,750
SG&A $2,563,185 $775,575 $844,241 $943,370
Yr Total $13,226,888 $3,385,810 $6,195,958 $3,645,120
Yr 2 COGS $11,483,001 $2,806,003 $5,565,786 $3,111,212
SG&A $2,892,397 $831,064 $878,010 $1,183,322
Yr Total $14,375,398 $3,637,067 $6,443,797 $4,294,534
Yr 3 COGS $12,159,925 $3,016,453 $5,788,418 $3,355,055
SG&A $3,135,186 $890,715 $913,131 $1,331,340
Yr Total $15,295,111 $3,907,168 $6,701,548 $4,686,394
Yr 4 COGS $12,668,549 $3,242,687 $6,135,723 $3,290,139
SG&A $3,323,091 $957,519 $949,656 $1,415,916
Yr Total $15,991,640 $4,200,206 $7,085,379 $4,706,055
Yr 5 COGS $13,048,140 $3,485,889 $6,503,866 $3,058,385
SG&A $3,521,861 $1,029,333 $987,642 $1,504,886
Yr Total $16,570,001 $4,515,221 $7,491,508 $4,563,271
Total $75,459,038 $19,645,472 $33,918,191 $21,895,375
CASH DISBURSEMENTS
Rent USA EQUIP MINING
EQUIP USA SYSTEMS CALICO MINES
Yr 1 COGS $9,747,646 $2,362,616 $4,907,525 $2,477,505
SG&A $2,563,185 $775,575 $844,241 $943,370
Yr Total $12,310,832 $3,138,191 $5,751,766 $3,420,875
Yr 2 COGS $11,414,934 $2,789,689 $5,548,019 $3,077,227
SG&A $2,892,397 $831,064 $878,010 $1,183,322
Yr Total $14,307,331 $3,620,753 $6,426,029 $4,260,549
Yr 3 COGS $12,103,670 $2,998,916 $5,769,939 $3,334,816
SG&A $3,135,186 $890,715 $913,131 $1,331,340
Yr Total $15,238,856 $3,889,631 $6,683,070 $4,666,155
Yr 4 COGS $12,626,333 $3,223,910 $6,106,896 $3,295,527
SG&A $3,323,091 $957,519 $949,656 $1,415,916
Yr Total $15,949,424 $4,181,429 $7,056,552 $4,711,443
Yr 5 COGS $13,016,634 $3,465,703 $6,473,310 $3,077,621
SG&A $3,521,861 $1,029,333 $987,642 $1,504,886
Yr Total $16,538,495 $4,495,036 $7,460,952 $4,582,507
Total $74,344,938 $19,325,039 $33,378,370 $21,641,529
These forecasts should be read in conjunction with the
Attached Summary of Significant Assumptions
9
<PAGE>
<TABLE>
Rent USA, Inc.
Balance Sheet
<CAPTION>
YEAR 1 YEAR 2
------------------------------------------------------ ----------------------------------------------------
Equip Mining Equip Mining
Rent USA Equip USA Systems Calico Mines Rent USA Equip USA Systems Calico Mines
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash $3,573,806 $2,324,581 $399,144 $850,081 $5,503,760 $2,546,516 $1,032,659 $1,924,585
Accounts Receivable $1,410,896 $389,500 $582,951 $438,446 $1,529,709 $415,023 $617,928 $496,759
Inventories $6,225,324 $6,225,324 $0 $0 $6,692,224 $6,692,224 $0 $0
Prepaid Expenses $0
TOTAL CURRENT ASSETS $11,210,026 $8,939,405 $982,095 $1,288,526 $13,725,693 $9,653,763 $1,650,586 $2,421,344
FIXED ASSETS:
Plant and Equipment $250,000 $250,000 $0 $0 $250,000 $250,000 $0 $0
Less accumulative
depreciation $35,714 $35,714 $0 $0 $71,429 $71,429 $0 $0
NET PLANT AND EQUIPMENT $214,286 $214,286 $0 $0 $178,571 $178,571 $0 $0
TOTAL ASSETS $11,424,312 $9,153,691 $982,095 $1,288,526 $13,904,264 $9,832,334 $1,650,586 $2,421,344
CURRENT LIABILITIES:
Accounts Payable $6,206,698 $5,538,260 $444,193 $224,245 $6,511,340 $5,791,149 $461,960 $258,231
Accrued liabilities $0 $0
TOTAL CURRENT
LIABILITIES $6,206,698 $5,538,260 $444,193 $224,245 $6,511,340 $5,791,149 $461,960 $258,231
LONG-TERM LIABILITIES:
Long-term notes payable $921,000 $921,000 $0 $0 $921,000 $921,000 $0 $0
TOTAL LIABILITIES $7,127,698 $6,459,260 $444,193 $224,245 $7,432,340 $6,712,149 $461,960 $258,231
EQUITY
Shareholder's Equity $2,300,000 $2,300,000 $0 $0 $2,300,000 $2,300,000 $0 $0
Investment in Divisions $0 $0 $0 $0 $0 $0 $0 $0
Retained Earnings $1,996,614 $394,431 $537,902 $1,064,281 $4,171,924 $820,185 $1,188,626 $2,163,113
TOTAL EQUITY $4,296,614 $2,694,431 $537,902 $1,064,281 $6,471,924 $3,120,185 $1,188,626 $2,163,113
TOTAL LIABILITIES &
EQUITY $11,424,312 $9,153,691 $982,095 $1,288,526 $13,904,264 $9,832,334 $1,650,586 $2,421,344
YEAR 3 YEAR 4
------------------------------------------------------ ----------------------------------------------------
Equip Mining Equip Mining
Rent USA Equip USA Systems Calico Mines Rent USA Equip USA Systems Calico Mines
CURRENT ASSETS:
Cash $7,911,941 $2,996,043 $1,787,598 $3,128,299 $10,804,724 $3,479,210 $2,608,943 $4,716,570
Accounts Receivable $1,643,897 $442,459 $655,003 $546,435 $1,767,335 $471,954 $694,303 $601,078
Inventories $7,194,141 $7,194,141 $0 $0 $7,733,702 $7,733,702 $0 $0
Prepaid Expenses $0 $0 $0
TOTAL CURRENT ASSETS $16,749,979 $10,632,644 $2,442,601 $3,674,734 $20,305,760 $11,684,865 $3,303,247 $5,317,648
FIXED ASSETS:
Plant and Equipment $250,000 $250,000 $0 $0 $250,000 $250,000 $0 $0
Less accumulative
depreciation $107,143 $107,143 $0 $0 $142,857 $142,857 $0 $0
NET PLANT AND EQUIPMENT $142,857 $142,857 $0 $0 $107,143 $107,143 $0 $0
TOTAL ASSETS $16,892,836 $10,775,501 $2,442,601 $3,674,734 $20,412,903 $11,792,008 $3,303,247 $5,317,648
CURRENT LIABILITIES:
Accounts Payable $7,033,798 $6,274,889 $480,439 $278,470 $7,579,860 $6,797,514 $509,265 $273,082
Accrued liabilities $0 $0
TOTAL CURRENT
LIABILITIES $7,033,798 $6,274,889 $480,439 $278,470 $7,579,860 $6,797,514 $509,265 $273,082
LONG-TERM LIABILITIES:
Long-term notes payable $921,000 $921,000 $0 $0 $921,000 $921,000 $0 $0
TOTAL LIABILITIES $7,954,798 $7,195,889 $480,439 $278,470 $8,500,860 $7,718,514 $509,265 $273,082
EQUITY
Shareholder's Equity $2,300,000 $2,300,000 $0 $0 $2,300,000 $2,300,000 $0 $0
Investment in Divisions $0 $0 $0 $0 $0 $0 $0 $0
Retained Earnings $6,638,038 $1,279,611 $1,962,162 $3,396,265 $9,612,044 $1,773,495 $2,793,982 $5,044,567
TOTAL EQUITY $8,938,038 $3,579,611 $1,962,162 $3,396,265 $11,912,044 $4,073,495 $2,793,982 $5,044,567
TOTAL LIABILITIES &
EQUITY $16,892,836 $10,775,501 $2,442,601 $3,674,734 $20,412,904 $11,792,009 $3,303,247 $5,317,648
These forecasts should be read in conjunction with the
Attached Summary of Significant Assumptions
10
<PAGE>
YEAR 5
------------------------------------------------------
Equip Mining
Rent USA Equip USA Systems Calico Mines
Current Assets:
Cash $14,339,592 $3,998,614 $3,491,915 $6,849,063
Accounts Receivable $1,900,808 $503,660 $735,962 $661,186
Inventories $8,313,729 $8,313,729 $0 $0
Prepaid Expenses $0
TOTAL CURRENT ASSETS $24,554,129 $12,816,004 $4,227,877 $7,510,249
FIXED ASSETS:
Plant and Equipment $250,000 $250,000 $0 $0
Less accumulative
depreciation $178,571 $178,571 $0 $0
NET PLANT AND EQUIPMENT $71,429 $71,429 $0 $0
TOTAL ASSETS $24,625,558 $12,887,433 $4,227,877 $7,510,249
CURRENT LIABILITIES:
Accounts Payable $8,155,679 $7,362,013 $539,821 $253,846
Accrued liabilities $0
TOTAL CURRENT
LIABILITIES $8,155,679 $7,362,013 $539,821 $253,846
LONG-TERM LIABILITIES:
Long-term notes payable $921,000 $921,000 $0 $0
TOTAL LIABILITIES $9,076,679 $8,283,013 $539,821 $253,846
EQUITY
Shareholder's Equity $2,300,000 $2,300,000 $0 $0
Investment in Divisions $0 $0 $0 $0
Retained Earnings $13,248,878 $2,304,420 $3,688,056 $7,256,403
TOTAL EQUITY $15,548,878 $4,604,420 $3,688,056 $7,256,403
TOTAL LIABILITIES &
EQUITY $24,625,558 $12,887,432 $4,227,877 $7,510,249
These forecasts should be read in conjunction with the
Attached Summary of Significant Assumptions
</TABLE>
11
<PAGE>
<TABLE>
Rent USA, Inc.
Consolidated Cash Flow
<CAPTION>
YEAR 1 YEAR 2
------------------------------------------------------ ----------------------------------------------------
Equip Mining Equip Mining
Rent USA Equip USA Systems Calico Mines Rent USA Equip USA Systems Calico Mines
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CASH BALANCE,
BEGINNING $185,000 $185,000 $0 $0 $3,573,806 $2,324,581 $399,144 $850,081
ADD RECEIPTS:
Collections from
customers $14,995,080 $3,710,500 $6,440,550 $4,844,030 $17,718,643 $4,381,978 $7,409,933 $5,926,732
TOTAL CASH AVAILABLE $15,180,080 $3,895,500 $6,440,550 $4,844,030 $21,292,448 $6,706,558 $7,809,077 $6,776,813
LESS DISBURSEMENTS:
COGS $9,747,646 $2,362,616 $4,907,525 $2,477,505 $11,414,934 $2,789,689 $5,548,019 $3,077,227
SG&A $2,563,185 $775,575 $844,241 $943,370 $2,892,397 $831,064 $878,010 $1,183,322
Income Tax $1,075,100 $212,386 $289,640 $573,075 $1,171,321 $229,252 $350,390 $591,679
Equipment Purchases $0 $0 $0 $0 $0 $0 $0 $0
TOTAL DISBURSEMENTS $13,385,931 $3,350,577 $6,041,405 $3,993,950 $15,478,652 $3,850,005 $6,776,419 $4,852,228
EXCESS (DEFICIENCY)
OF CASH $1,794,149 $544,923 $399,144 $850,081 $5,813,797 $2,856,553 $1,032,659 $1,924,585
FINANCING:
Investment $2,300,000 $2,300,000 $0 $0 $0 $0 $0 $0
Loans (repayment) ($412,969) ($412,969) $0 $0 ($194,610) ($194,610) $0 $0
(Interest) ($107,374) ($107,374) $0 $0 ($115,427) ($115,427) $0 $0
TOTAL FINANCING $1,779,657 $1,779,657 $0 $0 ($310,037) ($310,037) $0 $0
CASH BALANCE, ENDING $3,573,806 $2,324,581 $399,144 $850,081 $5,503,760 $2,546,516 $1,032,659 $1,924,585
YEAR 3 YEAR 4
------------------------------------------------------ ----------------------------------------------------
Equip Mining Equip Mining
Rent USA Equip USA Systems Calico Mines Rent USA Equip USA Systems Calico Mines
CASH BALANCE,
BEGINNING $5,503,760 $2,546,516 $1,032,659 $1,924,585 $7,911,941 $2,996,043 $1,787,598 $3,128,299
ADD RECEIPTS:
Collections from
customers $19,099,029 $4,710,626 $7,854,529 $6,533,874 $20,576,985 $5,063,923 $8,325,801 $7,187,261
TOTAL CASH AVAILABLE $24,602,788 $7,257,142 $8,887,187 $8,458,459 $28,488,925 $8,059,966 $10,113,398 $10,315,561
LESS DISBURSEMENTS:
COGS $12,103,670 $2,998,916 $5,769,939 $3,334,816 $12,626,333 $3,223,910 $6,106,896 $3,295,527
SG&A $3,135,186 $890,715 $913,131 $1,331,340 $3,323,091 $957,519 $949,656 $1,415,916
Income Tax $1,327,908 $247,384 $416,520 $664,004 $1,601,388 $265,937 $447,903 $887,547
Equipment Purchases $0 $0 $0 $0 $0 $0 $0 $0
TOTAL DISBURSEMENTS $16,566,764 $4,137,014 $7,099,590 $5,330,160 $17,550,812 $4,447,366 $7,504,455 $5,598,990
EXCESS (DEFICIENCY)
OF CASH $8,036,025 $3,120,127 $1,787,598 $3,128,299 $10,938,114 $3,612,600 $2,608,943 $4,716,570
FINANCING:
Investment $0 $0 $0 $0 $0 $0 $0 $0
Loans (repayment) $0 $0 $0 $0 $0 $0 $0 $0
(Interest) ($124,084) ($124,084) $0 $0 ($133,390) ($133,390) $0 $0
TOTAL FINANCING ($124,084) ($124,084) $0 $0 ($133,390) ($133,390) $0 $0
CASH BALANCE, ENDING $7,911,941 $2,996,043 $1,787,598 $3,128,299 $10,804,724 $3,479,210 $2,608,943 $4,716,570
These forecasts should be read in conjunction with the
Attached Summary of Significant Assumptions
12
<PAGE>
YEAR 5
------------------------------------------------------
Equip Mining
Rent USA Equip USA Systems Calico Mines
CASH BALANCE,
BEGINNING $10,804,724 $3,479,210 $2,608,943 $4,716,570
ADD RECEIPTS:
Collections from
customers $22,175,053 $5,443,717 $8,825,349 $7,905,987
TOTAL CASH AVAILABLE $32,979,777 $8,922,927 $11,434,292 $12,622,558
LESS DISBURSEMENTS:
COGS $13,016,634 $3,465,703 $6,473,310 $3,077,621
SG&A $3,521,861 $1,029,333 $987,642 $1,504,886
Income Tax $1,958,296 $285,883 $481,424 $1,190,988
Equipment Purchases $0 $0 $0 $0
TOTAL DISBURSEMENTS $18,496,791 $4,780,918 $7,942,377 $5,773,495
EXCESS (DEFICIENCY) $14,482,986 $4,142,009 $3,491,915 $6,849,063
OF CASH
FINANCING:
Investment $0 $0 $0 $0
Loans (repayment) $0 $0 $0 $0
(Interest) ($143,394) ($143,394) $0 $0
TOTAL FINANCING ($143,394) ($143,394) $0 $0
CASH BALANCE, ENDING $14,339,592 $3,998,614 $3,491,915 $6,849,063
These forecasts should be read in conjunction with the
Attached Summary of Significant Assumptions
</TABLE>
13
<PAGE>
Rent USA, Inc.
And Subsidiaries
Summary of Significant Assumptions
And
Notes to Prospective Financial Statements
The financial forecasts which appear herein above present to the best of
management's knowledge and belief the Company's financial position, results of
operations and cash flows for the forecast periods. Accordingly, the forecast
reflects its judgment as of the date of this filing of the expected conditions
and its expected course of action. The assumptions disclosed herein are those
that management believes are significant to the forecast. There usually will be
differences between forecasted and actual results because events and
circumstances frequently do not occur as expected and those differences may be
material.
The projected amounts of sales and net income are based upon the hypothetical
assumption that the Company operated Equip USA, Equip Mining Systems and Calico
Mines for an entire year. Such projections reflect to the best of management's
knowledge and belief the operating results that would be obtained, given that
hypothetical assumption.
None of the forecasts which are contained herein were examined by the Company's
auditor, John Spurgeon, CPA and as a result, he can assume no responsibility for
them. They are purely management's belief as to what will occur in the event the
Company is able to complete all of the acquisitions which it presently intends
to undertake.
1. Summary of Significant Assumptions
a. Intended Acquisitions - The financial forecasts assume the Company will
acquire Calico Mines and will be able to complete its launch of Equip Mining
Systems. The funds required to operate Calico Mines and Equip Mining Systems are
expected to be derived from the proceeds of a rights offering to shareholders of
Senior Care Industries, Inc. which will be registered by the filing of a Form
SB-2. The Company expects to raise a maximum of approximately $2,300,000.00 from
that rights offering.
The rights offering is expected to be completed during the first six months of
2001 and the capital obtained from that offering will immediately be infused
into the Company and used to complete operate Calico Mines and Equip Mining
Systems.
b. Sales - The Company assumes that sales will increase approximately 8% per
annum over the five year period of the projections. Based upon management's
study of the market for its equipment and on the study of the needs for crushed
rock in the Western area serviced by Calico Mines presently, it believes that a
forecast of an 8% increase in business per annum is justified. The sales
forecast depends upon the Company being able to complete its anticipated
acquisition of Calico Mines and the launch of Equip Mining Systems by mid 2001.
c. Cost of Sales - The principal components of the cost to produce the Company's
forecasted revenue is the purchase of equipment for resale, labor,
transportation, equipment maintenance and mine overhead at Calico Mines.
d. Selling, General and Administrative Overhead - The principal cost of selling
relate to sales person salaries and commissions, transportation costs, and
advertising. Generally, each of these costs varies according to the amount of
product sold and accordingly, have been estimated based upon estimated sales
volume. General and administrative overhead are fixed costs which have been
estimated based upon Management's experience plus known increases and
adjustments for anticipated inflation based upon recent inflationary trends.
14
<PAGE>
e. Interest - The Company presently has various equity lines of credit and
intends to develop additional lines of credit which will carry interest at a
rate ranging from 9.5% to 12% interest over the period of the forecasts. Due to
the Company's business of selling new and used equipment, there will always be a
borrowing component for flooring of equipment held for resale.
f. Income Taxes - The income tax provisions are based upon the current statutory
rates in effect for corporations. Because the Company may expand its operations
into other states than where it operates presently, such as Nevada, where there
is no state income tax to states where there may be a state income tax, the
total tax provision in relation to income before taxes may change during the
forecast period of five years.
2. Summary of Significant Accounting Principles
The following are the significant accounting policies the Company uses in the
preparation of its financial statements:
Former Development Stage Company
Effective this year, the Company began 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 forecasts were made in conformity with generally accepted
accounting principles requiring 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.
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.
Bad Debt Expense
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
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.
15
<PAGE>
Income Taxes
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.
16
<PAGE>
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
The Corporation advises that James Slayton, C.P.A. has resigned as the company
auditors, which resignation was accepted by the Company on January 1, 2000
effective from December 31, 1999. 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.
The decision to change accountants was recommended and approved by the Board of
Directors.
During the Registrant's two most recent fiscal years and any subsequent interim
period preceding the date of the dismissal, there were no disagreements with the
former accountant on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure.
The accountant's report on the financial statements for the past two years did
not contain an adverse opinion or a disclaimer of opinion and was not qualified
or modified as to uncertainty, audit scope or accounting principles other than
as stated in the Registration Statement, Amendment No. 4, wherein the
Accountant's Report states as follows:
"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."
The Accountant in Note 3 makes the following statement:
"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."
John Spurgeon, CPA, JD whose address is PO Box 1171, Glendora, CA 91740,
telephone number (626) 914-9449 has agreed to replace James Slayton as auditor.
Mr. Spurgeon is a member of the SEC Practice Section of the AICPA as is his
reviewing auditors, Corbin & Wertz of Irvine, California.
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Additionally, the Company has changed officers and directors. The directors and
officers of the Company were originally as follows:
Name Age Position
------------ ------- --------------------
Al Harvey 56 Chairman, Chief Executive Officer, Director
Dan McCoy 37 President, Chief Financial Officer, Director
Gary Hulbert 63 Vice President & Regional Manager
As of August 1, 2000, Dan McCoy resigned and Gary Hulbert took other employment.
Neither of them are any longer connected to the Company in any manner nor do
they have anything owed to them either by way of salary or other compensation.
Dan McCoy was replaced by Charles C. Hooper as President, Chief Financial
Officer and Director. Mr. Hooper is 52 years of age.
Gary Hulbert has not as yet been replaced.
Mr. Hulbert resigned effective August 1, 2000 because the Company was unable to
pay any salary to him and because he was unable to make commissions as had been
originally anticipated when he came on board at the time the Company was first
organized. No salary was ever paid to Mr. Hulbert and no commissions were made
by him during the time that he was associated with the Company.
Dan McCoy was terminated by the Board of Directors effective August 1, 2000 due
to unreconcilable differences between management's view of the Company and Mr.
McCoy's view of how the Company should develop. He was immediately replaced by
Mr. Hooper.
Management Responsibilities
----------------------------
Al 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.
Management Team Backgrounds
---------------------------
Al Harvey, Chairman, Chief Executive Officer, Director
Al Harvey was from 1995 to February of 1999, president of Big Iron Rental, a
California based construction equipment rental company with approximately 2
million dollars in annual sales during the last full year of operation. Prior to
1995, Mr. Harvey worked as sales manager from L. D. Harvey Equipment Rental
Company in Chino, California which, when Mr. Harvey left the company was
grossing approximately 3.8 million dollars in annual sales. From approximately
August of 1981 until 1992 when he joined L. D. Harvey, he owned and operated
Alvin Harvey Construction Company of Oren, Utah, specializing in single family
residential construction.
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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 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.
Remuneration of Directors and Executive Officers
Annual
Name: Comp.
-------------------------------------------
Al Harvey, CEO $ 225,000
Charles C. Hooper, PRES & CFO $ 150,000
Directors are not compensated at this time for serving in the capacity as a
director and it is not anticipated that directors will receive any compensation
for their service.
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 concurrently herewith regarding changes in auditor,
officers and directors.
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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.
Rent USA, Inc.
----------------------------
Date: November 21, 2000 /s/ Charles Hooper
----------------------------
Charles Hooper
President
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