UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - SB
AMENDMENT NO. 2
AS FILED MARCH 6, 2000
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12 (b)
OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
RENT USA, INC.
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(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
NEVADA 33-5695839
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
PO BOX 10, SAN DIMAS, CA 91773-0010
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
(909) 590-3063
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(ISSUER'S TELEPHONE NUMBER)
Any correspondence on this registration statement should be directed to
Brian Dvorak at Globalwide Investment Co. by fax: (702) 214-4228 and by mail
at: 3450 E Russell Rd
Las Vegas, Nevada 89120
SECURITIES TO BE REGISTERED UNDER SECTION 12 (b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
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SECURITIES TO BE REGISTERED UNDER SECTION 12 (g) OF THE ACT:
Common Stock - .001 Par Value
Preferred Stock - -.001 Par Value
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(TITLE OF CLASS)
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FORWARD LOOKING STATEMENTS
Rent USA, Inc., a developmental stage company ("Rent USA, 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 10-SB or that are otherwise made by or on behalf of the Company. For this
purpose, any statements contained in the Form 10-SB 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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INFORMATION REQUIRED IN REGISTRATION STATEMENT
TABLE OF CONTENTS
Part I 4
Item 1. Description of Business 4
Item 2. Management's Discussion and Analysis
or Plan of Operation 11
Item 3. Description of Property 13
Item 4. Security Ownership of Management and
Others and Certain Security Holders 14
Item 5. Directors, Executives, Officers and
Significant Employees 14
Item 6. Remuneration of Directors and
Executive Officers 16
Item 7. Interest of Management and Others in
Certain Transactions 16
Item 8. Legal Proceedings 16
Part II 16
Item 1. Market Price of and Dividends of the
Registrant's Common Equity and Other
Stockholder Matters 16
Item 2. Recent Sales of Unregistered Securities 16
Item 3. Description of Securities 16
Item 4. Indemnification of Directors and Officers 17
Part F/S 17
Item 1. Financial Statements 17
Item 2. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure 17
Part III 18
Item 1. Index to Exhibits 18
Item 2. Description of Exhibits 18
Signatures 18
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Part I
Item 1. Description of Business
Rent USA, Inc., a developmental stage company, hereinafter referred to as "the
Company", is filing this Form 10-SB on a voluntary basis in order to make its
financial information equally available to any interested parties or investors.
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
RENT
USA, INC., 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).
Rent USA is in the business of acquiring and managing companies that rent
construction, forestry and multipurpose equipment to construction firms,
contractors, and other users of commercial machinery.
Over the last twenty years, construction and development in the United States
has continually increased. Due to this gradual increase of activity, demand for
rental construction equipment and machinery has been sustained at a relatively
high level. Large-scale corporations have moved to fulfill this demand. (It
is management's belief substantiated by review of industry literature including
published reports by the American Rental Association, that the change in the
industry from primarily a "family-owned" industry to an industry dominated by
large corporations, franchises and independent owner/operators forms the basis
for this statement. 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.)
The opportunity has surfaced for Rent USA to increase its machinery & equipment
available for rent to take advantage of the advancing demand for rental
equipment. (Management formed this opinion based on review of industry
reports including "1999 Rental Year in Review" obtained from the internet. The
opportunity that management referenced is based on the established principal of
providing superior customer service through a strategy of being in close
proximity to the customer. By responding to customer needs in a timely and
appropriate manner, management believes that the company can increase its market
share in the rental industry market.)
In December 1999, the Company purchased assets selected from Pacific
Standard Financial Group, Inc.(PSFG). PSFG is a diversified company that
invests in manufacturing machinery and equipment for repackaging to targeted
enterprises. The Company also entered into a Marketing Agreement with Northland
Supply Company. Through this agreement Rent USA, Inc. provides Northland with
rental equipment and supplies. Northland is certified by the State of
California as a Disabled Veterans Business Enterprise (DVBE) provider under the
state of DVBE California program It is management's opinion that the ability to
tap into the large contract available under DVBE is a contributing factor to the
potential success of the Company. The program is currently exclusively
available to California domiciled companies, the competition for these funds is
limited. It is anticipated by management that a new federally mandated program
will be initiated in 2000. Due to the company's current partnership with a
Certified DVBE, it will have an advantage with the proposed federal program due
to its current certification and its experience. Northland is the only
Certified DVBE in the rental equipment category in California. California is
the only state currently utilizing the DVBE set-a-side for construction
projects.
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Current Service
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The geographic market area for the company is the southwest United States.
By the end of the current year 2000, the Company anticipates it will provide
rental services in California, Nevada, Utah and Arizona. The Company
provides service in four major categories:
1. Equipment Rentals - the principal service, consists of renting equipment to
small and large contractors, and construction companies.
2. Equipment Sales - a supplementary service, incorporating the sale of used
machinery to small and large contractors, and construction companies.
3. Re-Rentals - consists of rentals of equipment that Rent USA does not
currently have in its inventory. In order to fulfill these orders, Rent USA
must rent this equipment from another rental yard at a smaller 20% margin.
4. Trade Rentals - is the process in which Rent USA will rent its equipment to
other rental yards in order for them to fulfill their orders.
By following management's acquisitions plan, the Company will position itself
as a premier provider in the above-mentioned service categories. No
acquisition negotiations are currently under discussion.
Industry Analysis
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The equipment rental market is growing at a rapid rate in excess of 20%
annually based on revenues reported to the American Rental Association, an
association of over 7200 of the more than 12,000 rental companies in the US.
The market for these products amounted to $3 billion in 1996 according to the
ARA.
According to the American Rental Association and "Rental Equipment Register", a
trade publication, the overall equipment rental market (the "Market") for the
construction industry exceeded $3.5 billion in 1997 and rose from that number
in 1998. It is management's opinion that the area of greatest growth in
the equipment rental market is in the area of rentals to entities in the process
of fulfilling state and federal contracts. This is based on the fact that
Federal and state highway construction exceeds 18 billion dollars annually as
defined in the US Government budget.
Currently, the market is shared by 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 southwest United States does not experience any disruption in
construction due to weather or other season issues.
The company has no operating history to address utilization rate at this time.
It is anticipated that the company's utilization rates will be comparable to
those in the industry. The rates average to approximately 55% utilization. The
Company believes the U.S. equipment rental industry (including used and new
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equipment sales by rental companies) generates annual revenues in excess of $20
billion. The Company management believes one of the highest growth potential
for the Company will be in servicing contractors fulfilling large state and
federal funded projects because state and federal government expenditure will
require 3% of the expenditures be awarded to DVBE entity such as Northland.
Customer Profile-General
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Rent USA's target market includes small and large contractors, and construction
companies. The most typical customers for Rent USA's product are individuals
or companies in the construction field, which currently use Rent USA's products
for small and large additions, renovations, and construction of schools,
buildings, and state and federally funded projects.
Competition
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The equipment rental industry is highly fragmented and competitive. The
Company's competitors include: public companies or divisions of public companies
(such as Hertz Equipment Rental Corporation, Prime Service, Inc. United Rentals,
Inc. and Rental Service Corporation); regional competitors which operate in one
or more states; small, independent businesses with one or two rental locations;
and equipment vendors and dealers who both sell and rent equipment directly to
customers. The Company believes that, in general, large companies enjoy
significant competitive advantages compared to smaller operators, including
greater purchasing power, a lower cost of capital, the ability to provide
customers with a broader range of equipment and services and with newer and
better maintained equipment, and greater flexibility to transfer equipment among
locations in response to customer demand. Certain of the Company's competitors
are larger and have greater financial resources than the Company.
Patents
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The Company does not hold trademarks, copyrights or patents.
Regulations
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The passing of the Disabled Veterans Business Enterprise (DVBE) program in
California and by Congress on a Federal level gives an entitlement to disabled
veterans on a par with minorities. The gives a certified Disabled Veterans
Business Enterprise the right to 3% of all expenditures for State of California
and Federal public works projects. The company has an agreement that allows it
to utilize this favorable regulation. This agreement between Northland Rental
& Supply and Rent USA provides for an exclusive marketing arrangement. Rent USA
will provide the material, equipment and supplies for all of Northland's
projects, as Northland is the only Certified DVBE in the rental equipment
business. The agreement is for seven years and is renewable. The agreement is
written and signed by both parties. Other than this law, no material
regulations govern this business enterprise beyond standard business practices
and licenses.
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Employees
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The Company has no organized labor and/or union agreements. The heavy
equipment rental industry has minimal seasonal impact to the employees. The
Company will maintain industry standard health and other necessary benefits for
its key employees which will be expanded upon on further filings and when the
Company has additional cash flow necessary to offer these benefits.
The Company currently holds a 7 year term Employment Contract with the
Chairman , CEO, Mr. Al Harvey dated July 27, 1998. The contract agrees
upon the duties and compensation between the two parties. (See attached
Employment Contract in Part III Item 1 in this registration).
Risk Factors
Principal components of the Company's growth strategy includes expansion
through an ongoing acquisition program, the opening of start-up locations, and
internal growth. However, there can be no assurance that the Company will
successfully implement its growth strategy or that, if implemented, such
strategy will result in ongoing profitability. In addition, the Company may not
make acquisitions unless certain financial conditions are satisfied or the
consent of new lenders is obtained.
Furthermore, there can be no assurance that the Company's growth rate will be
comparable to the past or future growth rate of the overall equipment rental
industry or any segment thereof. The Company's growth strategy involves a number
of risks and uncertainties, including:
Availability of Acquisition Targets and Sites for Start-up Locations. The
Company may encounter substantial competition in its efforts to identify and
acquire appropriate acquisition candidates and sites for start-up locations,
which could have the effect of increasing prices for acquisitions or such sites.
There can be no assurance that the Company will succeed in identifying
appropriate acquisition candidates or sites for start-up locations or that the
Company will be able to acquire any acquisition candidate or site that it does
identify on terms that are acceptable to the Company.
Need to Integrate New Operations. As the Company grows, the Company intends to
focus substantial efforts on the efficient integration of new operations, the
elimination of duplicative costs and the reduction of overhead. There can be no
assurance, however, that the Company will be successful in these efforts or that
these efforts may not in certain circumstances adversely affect existing
operations.
Need to Recruit Additional Personnel. The Company will require additional
personnel in order to implement its growth strategy and support expanded
operations. Accordingly, the Company is in the process of recruiting additional
operating, acquisition, finance and other personnel from the equipment rental
industry and from other industries. There can be no assurance, however, that the
Company will succeed in recruiting the requisite qualified personnel as and when
needed.
Certain Risks Related to Start-up Locations. The Company expects that start-up
locations may initially have a negative impact on results of operations and
margins due to several factors, including: (i) the Company will incur
significant start-up expenses in connection with establishing each start-up
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location and (ii) it will generally take some time following the commencement of
operations at a start-up location before profitability can be achieved. There
can be no assurance that any start-up location will become profitable within the
first several years of operations, if at all.
DEPENDENCE ON ADDITIONAL CAPITAL TO FINANCE GROWTH
The Company's growth strategy will require substantial capital investment.
Capital will be required by the Company for, among other purposes, completing
acquisitions, establishing new rental locations, integrating completed
acquisitions, acquiring rental equipment and maintaining the condition of its
rental equipment. The Company intends to pay for future acquisitions using cash,
capital stock, notes and/or assumption of indebtedness. To the extent that cash
generated internally and cash available under credit facilities is not
sufficient to provide the capital required for such purposes and future
operations, the Company will require additional debt and/or equity financing in
order to provide for such capital. There can be no assurance, however, that such
financing will be available or, if available, will be available on terms
satisfactory to the Company. Failure by the Company to obtain sufficient
additional capital in the future could limit the Company's ability to implement
its business strategy. Future debt financings, if available, may result in
increased interest and amortization expense, increased leverage and decreased
income available to fund further acquisitions and expansion, and may limit the
Company's ability to withstand competitive pressures and render the Company more
vulnerable to economic downturns. Future equity financings may dilute the equity
interest of existing stockholders.
POSSIBLE UNDISCOVERED LIABILITIES OF ACQUIRED COMPANIES
Although the Company will perform due diligence investigation of each business
that it might acquire, there may nevertheless be liabilities of the Acquired
Companies or future acquired companies that the Company fails or is unable to
discover during its due diligence investigation and for which the Company, as a
successor owner, may be responsible. The Company will seek to minimize the
impact of these liabilities by obtaining indemnities and warranties from the
seller, which may be supported by deferring payment of a portion of the purchase
price. However, these indemnities and warranties, if obtained, may not fully
cover the liabilities due to their limited scope, amount, or duration, the
financial limitations of the indemnitor or warrantor, or other reasons.
DEPENDENCE ON MANAGEMENT
The Company is highly dependent upon its senior management team. The loss of the
services of any member of senior management may have a material adverse effect
on the Company. The Company does not presently maintain "key man" life
insurance with respect to members of senior management. The Company's rental
locations shall be managed by local managers who have extensive experience in
the equipment rental industry and substantial knowledge of the local markets
served. These managers shall be generally former owners or employees of the
businesses acquired by the Company. The loss of one or more of these managers
may have a material adverse effect on the Company in the event that the Company
is unable to find a suitable replacement in a timely manner.
NEED FOR INTEGRATED INFORMATION TECHNOLOGY SYSTEMS
The Company is in the process of analyzing an integrated information technology
system that will link all future locations, integrate operating and financial
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data on a Company-wide basis, and enable the real-time tracking of rental
transactions, equipment availability, inventory and other data. The Company
expects that this system will become operational at substantially all the
Company's locations by September 2000. The Company thereafter will be required
to expand the system on an ongoing basis as it adds locations. Although the
Company expects the system to become operational in September 2000, there can be
no assurance that the Company will not encounter unexpected delays or that such
system when operational will function in accordance with the Company's
expectations. Failure of the system to become operational or to function as
expected could negatively impact the Company's ability to implement its growth
strategy. Until the new system is operational, each acquired business will
continue to use the systems that it had in place at the time it was acquired.
COMPETITION
The equipment rental industry is highly competitive and rapidly consolidating.
The Company's competitors include public companies or divisions of public
companies; regional competitors which operate in one or more states; small,
independent businesses with one or two rental locations; and equipment vendors
and dealers who both sell and rent equipment directly to customers. Certain of
the Company's competitors are larger and have greater financial resources than
the Company. There can be no assurance that the Company will not encounter
increased competition from existing competitors or new market entrants or that
equipment manufacturers will not commence, or increase their efforts, to rent or
sell equipment directly to the Company's customers. In addition, to the extent
that competitors seek to gain or retain market share by reducing prices, the
Company may be required to lower its prices, thereby affecting operating
results.
SENSITIVITY TO GENERAL ECONOMIC AND WEATHER CONDITIONS
The Company believes that the equipment rental business is sensitive to changes
in economic conditions and that demand for rental equipment can be reduced
significantly by adverse weather conditions. There can be no assurance that the
Company's business and financial condition will not be adversely affected by (i)
changes in general economic conditions, including national, regional and local
changes in construction and industrial activity, (ii) increases in interest
rates that may result in a higher cost of capital to the Company, or (iii)
adverse weather conditions that may decrease construction and industrial
activity.
QUARTERLY FLUCTUATIONS OF OPERATING RESULTS
The Company expects that its revenues and operating results may fluctuate from
quarter to quarter due to a number of factors, including: seasonal rental
patterns of the Company's customers (with rental activity tending to be lower in
the winter); changes in general economic conditions in the Company's markets;
the timing of acquisitions and the opening of start-up locations (which
generally will require a period of time to become profitable) and related costs;
the effect of the integration of acquired businesses and start-up locations; the
timing of expenditures for new equipment and the disposition of used equipment;
and price changes in response to competitive factors. These factors, among
others, may result in the Company's results of operations in some future periods
not meeting expectations, which could have a material adverse impact on the
market price of the Common Stock.
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LIABILITY AND INSURANCE
The Company is subject to various possible claims, including claims for personal
injury or death caused by equipment rented or sold by the Company or motor
vehicle accidents involving Company delivery and service personnel and
compensation and other employment related claims. The Company carries a broad
range of insurance for the protection of its assets and operations. However,
such coverage is subject to $1 million per occurrence. In addition, the Company
does not maintain insurance coverage for environmental liability, since the
Company believes that the cost for such coverage is high relative to the benefit
that it provides. Furthermore, certain types of claims, such as claims for
punitive damages or for damages arising from intentional misconduct, which are
often alleged in third party lawsuits, might not be covered by the Company's
insurance. There can be no assurance that insurance will continue to be
available to the Company on economically reasonable terms, if at all, that
existing or future claims will not exceed the level of the Company's insurance
or relate to matters not covered by the Company's insurance (such as
environmental liability), or that the Company will have sufficient capital
available to pay any uninsured claims.
ENVIRONMENTAL REGULATION
The Company uses hazardous materials, such as solvents, to clean and maintain
its rental equipment and generates and disposes of wastes such as used motor
oil, radiator fluid, solvents and batteries. In addition, the Company currently
dispenses, or may in the future dispense, petroleum products from underground
and above-ground storage tanks located at certain rental locations. These and
other activities of the Company are subject to various federal, state and local
laws and regulations governing the generation, handling, storage,
transportation, treatment and disposal of hazardous substances and wastes. Under
such laws, an owner or lessee of real estate may be liable for, among other
things, (i) the costs of removal or remediation of certain hazardous or toxic
substances located on, in, or emanating from, such property, as well as related
costs of investigation and property damage and substantial penalties for
violations of such laws, and (ii) environmental contamination at facilities
where its waste is or has been disposed. Such laws often impose such liability
without regard to whether the owner or lessee knew of, or was responsible for,
the presence of such hazardous or toxic substances. Although the Company
investigates each business or property that it acquires or leases and believes
there are no existing material liabilities relating to non-compliance with
environmental laws and regulations, there can be no assurance that there are no
undiscovered potential liabilities relating to non-compliance with environmental
laws and regulations, that historic or current operations have not resulted in
undiscovered conditions that will require investigation and/or remediation under
environmental laws, or that future uses or conditions will not result in the
imposition of environmental liability upon the Company or expose the Company to
third-party actions such as tort suits. Furthermore, there can be no assurance
that changes in environmental regulations in the future will not require the
Company to make significant capital expenditures to change methods of disposal
of hazardous materials or otherwise alter aspects of its operations.
Legal and Governmental
Expansive rights were given to DVBE companies through California law in 1989 and
Federal law in 1999. Although unlikely, it is proper to note that Federal DVBE
guidelines, which were signed into law (public law 106-50) in the Third Quarter
of 1999, and/or the State of California DVBE guidelines could conceivably be
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revised downward at some future date. This might cause a loss of business that
would otherwise come to the Company through its exclusive agreement with
Northland, a DVBE certified company. This in turn might cause a loss of income
and viability in the marketplace. The Company will remain abreast of this
possibility and other legal issues facing the rental industry through following
research reported in the "Rental Equipment Register" (RER) and other industry
publications, and by retaining on-going legal and accountant counsel to address
legal and tax issues.
Item 2. Management's Discussion and Analysis or Plan of Operation
Present Situation
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Company
The Company is in the business of acquiring and managing companies that sell
and rent construction, forestry and multi-purpose equipment to construction
firms, contractors, and other users of commercial machinery.
The Company will benefit in several ways from the exclusive rental agreement
with Northland Rental & Supply. Northland Rental & Supply enjoys the preferred
status of a DVBE, entitled by law in both California and Federal law, to 3% of
all expenditures for State of California and Federal public works projects.
Northland is the only certified rental company for this set-a-side. Secondly,
Rents USA through its exclusive contract is positioned to move quickly on
Federal projects once the Federal law is implemented.
Additional facilities planned for acquisition:
Riverside, California
Approximately 28,620 square feet office and maintenance facility on a 3.8 acre
parcel of land.
Lease term: Estimated 3-5 years at $7,000 per month
Redding California
Approximately 15,000 square feet of office and warehouse on a five acres
parcel of land.
Lease term: Estimated 3-5 years at $7,000 per month
Pricing and Profitability
Company believes pricing extended to customers will be competitive to the
industry and further believes gross profitability on equipment rental will
exceed 32%
Customers
Rent USA's target market includes, medium small and large contractors, and
construction companies. The most typical customers for Rent USA's product are
individuals or companies in the construction field, which currently use Rent
USA's products for small and large additions, renovations, and construction of
homes, buildings, and state and federally funded projects.
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Growth Strategy
The Company's growth strategy is to expand through a disciplined acquisition
program, the opening of new rental locations and internal growth and to further
diversify its equipment categories and customer markets. The Company believes
that as it expands it should gain competitive advantages relative to smaller
operators, including greater purchasing power, a lower cost of capital, the
ability to provide customers with a broader range of equipment and services and
with newer and better maintained equipment, and greater flexibility to transfer
equipment among locations in response to customer demand.
In evaluating potential acquisition targets, the Company will consider a number
of factors, including the quality of the target's rental equipment and
management, the opportunities to improve operating margins and increase internal
growth at the target, the economic prospects of the region in which the target
is located, the potential for additional acquisitions in the region, and the
competitive landscape in the target's markets. The Company will seek expansion
opportunities in the Western United States and will pursue acquisition
candidates with varying types of equipment and customer specializations. The
Company believes that geographic and customer diversification will allow the
Company to participate in the overall growth of the equipment rental industry
and reduce the Company's sensitivity to fluctuations in regional economic
conditions or changes that affect particular market segments.
The Company believes that there will be significant opportunities to improve
operating margins at acquired companies through the efficient integration of new
and existing operations, the elimination of duplicative costs, reduction in
overhead, the centralization of functions such as purchasing and information
technology, and the application of best practices. The Company also believes
that a lack of capital has constrained expansion and modernization at many small
and mid-sized equipment rental companies and that as a result there is
significant potential to increase internal growth at many acquired companies
through capital investment. The Company will seek to increase internal growth by
investing in additional and more modern equipment, using advanced information
technology systems to improve asset utilization and tracking, increasing sales
and marketing efforts, expanding the customer segments and geographic areas
served, and opening complementary locations.
Sales Strategy
Because of the special market characteristics (increased demand for timely
completion of construction projects), the Company's sales strategy includes the
implementation of field representatives that target contractors who are
submitting bids on projects. Rent USA's strategic alliance with Northland
Rental & Supply, a Disabled Veterans Business Enterprise (DVBE) enables the
Company to participate in State of California and Federal DVBE mandated
projects where companies who are not associated with a DVBE contractor may
participate only after a Disabled Veterans Business has been contracted with.
Three (3%) percent of all California State and Federal contracts must be, by
entitlement, offered to DVBE certified companies. Rent has an exclusive
contract with a DVBE certified company as discussed above, Northland Rental and
Supplies.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its cash requirements to date from the issuance $$$ in
Common Stock for assets owned and controlled by Pacific Standard Financial Inc.
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The Company is currently in negotiations a Credit Facility of approximately $4
million. The Company expects such increase to become effective following
completion of the Offerings. There can be no assurance, however, that such
increase will become effective at such time, if The Company expects that
following completion of the Offerings its principal sources of cash will be
borrowings under the Credit Facility and cash generated from operations. The
Company estimates that such sources will be sufficient to fund the cash required
for the Company's existing operations (not including new acquisitions or start-
up locations that are not currently under development, which may require
additional financing as discussed below) for at least 12 months following
completion of the Offerings. The Company expects that following the Offerings
its principal needs for cash relating to its operations will be to fund (i)
operating activities and working capital, (ii) the purchase of equipment on an
ongoing basis to maintain the quality and competitiveness of its existing rental
equipment, (iii) the purchase of equipment required to expand and modernize the
rental equipment at certain locations, (iv) the purchase of equipment and other
items required to maintain sufficient inventory of the new equipment and related
merchandise and parts that the Company offers for sale, and (v) the installation
of an integrated information technology system.
Item 3. Description of Property
The Company plans to lease a 2 acre yard and office space in Chino,
California. The lease term has been extended to February 28, 2003 with a
base rent of $3,250 per month.
The Company also maintains a small corporate office located at 3450 E.
Russell Road, Las Vegas, Nevada 89120.
Equipment Owned / Leased
MODEL MACHINE
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AMERICAN Comp-wheel
BEE GEE 18'
BOBCAT BREAKER
BOBCAT AUGER
CASE BUCKETS
CAT D-6H
CAT D-7G
CAT D-8N
CAT 988
CAT 824B
CAT 416H
DAEWOO G25S
DAEWOO G25S
FORD F350
Ford Water Truck
GREENLEY Drop Hammer
GREENLEY Binder
GREENLEY Puller
GROVE 66' Boom
HARBOR 4X8 TRAILOR
ISCCO 1700 Hammer
JOHN DEER Gator
JOHN DEER Gator
JOHN DEER Gator
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KENWORTH 600
MARK 80' 80' Boom
MILLER Welder
MQ 20 kw
MISC. Shop Tools
STORAGE UNIT 20'
TRAILER 8X20
WAKER Gen 5000 W
WAKER Gen 5000 W
WAKER Gen 3000 W
WAKER Jumping Jack
WAKER Plate
UPRIGHT 24' SCISSOR
Item 4. Security Ownership of Management and Others and Certain Security
Holders
To the best knowledge of the Company as of November 1, 1999, other than Pacific
Standard Financial Group, Inc., ("PSFG") which received 1,098,289 for select
assets purchased, there are no persons known by the Company to own beneficially
more than 5% of the Company's outstanding common stock. It is to the best
knowledge of the Company that the Stock received by PSFG was divided up between
those owners and not one person ones 5% of the stock transferred to that
company.
All Executive Officers and Directors as a Group:
AL HARVEY 1,500 (Less than 5%)
Item 5. Directors, Executives, Officers and Significant Employees
The directors and officers of the Company are as follows:
Name Age Position
- ------------ ------- --------------------
Al Harvey 56 Chairman and CEO
Dan McCoy 37 President & CFO
Gary Hulbert 63 Vice President & Regional Manager
Management Responsibilities
- ----------------------------
Al Harvey, Chairman and CEO
Mr. Harvey develops and maintains the company vision. Oversees all areas and
company departments. Approves all financial obligations. Seeks business
opportunities and strategic alliances with other organizations. Plans,
develops and establishes policies and objectives of business organization in
accordance with board directives and company charter. Directs and coordinates
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.
14
<PAGE>
Dan McCoy, President and CFO
Works closely with CEO to develop revenue and profitability goals. Works with
investors and creditors to raise required capital to meet Companies funding
requirements. Works with CEO to target and review feasibility of potential
acquisitions. Overseas Company's overall accounting and tax liabilities.
Works with Sales Manager to establish optimal sales levels and pricing.
Gary Hulbert, Vice President and Regional Manager
Oversees the Southern California Divisions of the Company to ensure maximum
profitability and adherence to Board mandated policies and directives.
Management Team Backgrounds
- ---------------------------
The strength of Rent USA's management team stems from combined expertise in
both management and technical areas. This has produced outstanding results over
the past years. In addition, the leadership and alignment characteristics of
Rent USA's management team have resulted in the establishment of broad and
flexible goals designed to meet the ever-changing demands of the quickly moving
marketplace requiring Rent USA's products. This is evident when the team
responds to situations requiring new and innovative capabilities.
Al Harvey, Chairman & CEO
Mr. Harvey's professional experience includes virtually every aspect of the
equipment rental industry. He has been involved in the construction and rental
industry for over 30 years. Mr. Harvey has acquired specific knowledge of the
needs of construction
Daniel L. McCoy, President & CFO
Mr. McCoy has extensive experience in the banking and finance area. Previous
position held include: January 1995 to December 1999, President and founder of
Ayrlett Company a manufacture and marketer of injection molded plastic valves
used in the plumbing industry. January 1994 to January 1995, Fist Vice President
International Industrial Bank of Moscow Russia. June 1991 to December 1993, Vice
President & Manger International Banking, Union Bank of California. 1986 to June
1991, Vice President & Manager, International Treasury Services for Standard
Chartered Bank of London.
Gary Hulbert, Vice President & Regional Manager
With more than 40 years heavy equipment sales and management experience, Mr.
Hulbert brings great depth to the Rent USA management team. Owner Southland
Equipment December 1999 to May 1989, Equipment Salesman Western Equipment Sales
November 1985 to May 1989, Operations Manager Scott Machinery Co.82-85, Partner
Sealpoint Diving & Salvage Company 79-82, 59 Sheppard Machinery mechanic, parts
& branch.
15
<PAGE>
Item 6. Remuneration of Directors and Executive Officers
Annual (a)Off Balance
Name: Comp. Sheet Sales
- ------------------------------------------------------------
Al Harvey, CEO $ 225,000
Dan McCoy, PRES &CFO $ 150,000
Gary Hulbert, VP&RM $ 84,000 1%
Open - Controller $ 42,000
(a) percent representative of off balance sheet sales handled personally by
officer. "Off balance sheet" sales refers to equipment sales, primary of
used equipment belonging to Company's customers, that are sold by Company on a
consignment basis and are not placed on the Company's balance sheet during the
sales period. For conducting or arranging such sales, Company will earn a
commission from seller. Typically this commission is equivalent to 6%-12% of the
sales price.
Item 7. Interest of Management and Others in Certain Transactions
No known conflicts of interest or self dealing are known at this time.
Item 8. Legal Proceedings
There is no litigation pending at this time.
Part II
Item 1. Market Price of and Dividends of the Registrant's Common Equity and
Other Stockholder Matters
Dividends have not been issued by the Company. The market value is to be
determined.
Item 2. Recent Sales of Unregistered Securities
None.
Item 3. Description of Securities
The Company is authorized to issue 20,000,000 shares of Common Stock, par value
$0.001 per share and 5,000,000 shares of Preferred Stock, par value $0.001 per
share. The Company's presently 4,895,250 shares of Common Stock issued and
outstanding are held by approximately 30 of record.
Common Stock.
All shares of Common Stock have equal voting rights and, when validly issued
and outstanding, are entitled to one vote per share in all matters to be voted
upon by shareholders. The shares of Common Stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as fully
paid and non-assessable shares. Cumulative voting in the election of directors
is not permitted, which means that the holders of a majority of the issued and
outstanding shares of Common Stock represented at any meeting at which a quorum
is present will be able to elect the entire Board of Directors if they so
choose and, in such event, the holders of the remaining shares of Common Stock
will not be able to elect any Directors. In the event of liquidation of the
16
<PAGE>
Company, each shareholder is entitled to receive a proportionate share of the
Company's assets available for distribution to shareholders after the payment
of liabilities and after distribution in full of preferential amounts, if any.
All shares of the Company's Common Stock issued and outstanding are fully-paid
and non-assessable. Holders of the Common Stock are entitled to a pro-rata
share in dividends and distributions with respect to the Common Stock, as may
be declared by the Board of Directors out of funds legally available therefore.
Preferred Shares.
Shares of Preferred Stock may be issued from time to time in one or more Series
as may be determined by the Board of Directors. The voting powers and
preferences, the relative rights of each such Series and the qualifications,
limitations and restrictions thereof shall be established by the Board of
Directors, except that no holder of Preferred Stock shall have preemptive
rights.
Item 4. Indemnification of Directors and Officers
The Nevada Revised Statutes and the Company's Articles of Incorporation and
Bylaws authorize indemnification of a director, officer, employee or agent of
the Company against expenses incurred by him or her in connection with any
action, suit, or proceeding to which such person is named a party by reason of
having acted or served in such capacity, except for liabilities arising from
such person's own misconduct or negligence in performance of duty. In addition,
even a director, officer, employee or agent of the Company who was found liable
for misconduct or negligence in the performance of duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reasonably entitled
to indemnification. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers, or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Commission, such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
Part F/S
Item 1. Financial Statements
The audited financial statements of the Company and related notes which are
included in this offering have been examined by James E. Slayton, CPA, and have
been so included in reliance upon the opinion of such accountant given upon
their authority as an expert in auditing and accounting.
The following documents are filed as part of this report:
a) Rent USA, Inc.
<PAGE>
Rent USA, Inc.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
December 31, 1999
<PAGE>
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)
Las Vegas, Nevada 89109
I have audited the Balance Sheet of Rent USA, Inc. (A Development
Stage Company) formerly known as Rent USA, Inc. as of 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, 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
<PAGE>
Rent USA, Inc.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS AT
December 31, 1999
ASSETS
ASSETS
<TABLE>
<S> <C>
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
-------------
-------------
</TABLE>
See accompanying notes to financial statements
F-2
<PAGE>
Rent USA, Inc.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS AT
December 31, 1999
LIABILITIES & EQUITY
<TABLE>
<S> <C>
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
-------------
-------------
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
Rent USA, Inc.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR PERIOD
July 27, 1998 (Date of Inception) to December 31, 1999
<TABLE>
<S> <C>
REVENUE
Services 0.00
COSTS AND EXPENSES
General and Administrative
5,910.00
Depreciation Expense
42,578.00
-------------
Total Costs and Expenses
48,488.00
-------------
Net Income or (Loss)
(48,488.00)
-------------
-------------
Weighted average number of common
shares outstanding 5,109,829
Basic Net Loss Per Share
(0.01)
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE>
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
<TABLE>
<CAPTION>
Deficit
accumulated
Common Additional during Total
Stock paid-in development Stockholder's
Shares Amount capital stage Equity
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
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
Issued as part of
December 10, 1999
purchase agreement
Net loss (48,488.00) (48,488.00)
July 27, 1998
(inception) to
December 31, 1999
------------ ------------ ------------ ------------ ------------
Balances as at
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>
Rent USA, Inc.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR PERIOD
July 27, 1998 (Date of Inception) to December 31, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) from operations
($48,488.00)
Adjustments to reconciled net income o net cash provided
Depreciation Expense
42,578.00
Increase in accounts payable 910.00
Services rendered in exchange for stock 0.00
-------------
Net cash provided by operating activities
(5,000.00)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of software 0.00
Purchase of domain name 0.00
Purchase of URL 0.00
-------------
Net cash used by investing activities 0.00
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Capital Stock 5,000.00
Advances from parent company 0.00
-------------
Net cash provided by financing activities 5,000.00
Net increase (decrease) in cash 0.00
Balances as at end of period 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.
On or about November 17, 1999, the Company incorporated in Nevada solely
for the purpose of moving the corporate domicile to Nevada.
On December 31, 1999, the Company issued 1,098,289 shares of its
$.001 par value common stock as part of an asset purchase agreement. 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. The cost of organization was expensed when incurred.
3. Basic earnings per share is computed using the weighted average
number of shares of common stock outstanding.
4. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
5. The cost of equipment is depreciated over the estimated useful life
of the equipment utilizing the straight line method of depreciation. The
amount of depreciation recorded during this period 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
6. The Company experienced losses since its inception (Date of
inception) to December , 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.
7. The Company has adopted December 31 as its fiscal year end.
8. The Company records its inventory at cost.
9. 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.
10. 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
Office services are provided without charge by a director. Such costs
are immaterial to the financial statements and, accordingly, have not been
reflected therein. 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.
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 neither owns or leases any real or personal property.
Office services are provided without charge by a director. Such costs are
immaterial to the financial statements and, accordingly, have not been
reflected therein. 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>
Item 2. Changes in and Disagreements With Accountant on Accounting and
Financial Disclosure
None.
17
<PAGE>
Part III
Item 1. Index to Exhibits
Exhibit
Number Title
- -------- ------
3.1 Nevada Article of Incorporation*
3.2 Nevada By Laws*
10.1 Employment Contract between Rent USA, Inc. and Mr. Al
Harvey*
10.2 Marketing Agreement between Big Iron Rental and Northland
Supply Company*
10.3 Agreement and Plan of Merger*
* Previously filed as an exhibit to the Company's Form 10-SB.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this amendment to the registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Rent USA, Inc.
(Registrant)
Date: March 6, 2000 By: /s/ Al Harvey
-----------------------
Al Harvey
Chairman
