Same store sales continue to improve, poor performing stores are being closed, and the management team has been strengthened with the addition of Mr. Bill Johnson as President and Chief Operating Officer of Insta-rent.
Gordon Reykdal, Chairman and CEO, RentCash

Rentcash Inc (TSXV: RCS) today announced first quarter results for the period ended September 30, 2006.

Mr. Gordon Reykdal, Chairman and CEO commented, "I'm pleased to report that we have delivered three consecutive quarters of solid financial performance in our brokerage division since the implementation of significant changes one year ago. We've produced consistent revenue and expenses over the past three quarters. We've continued to make improvements in the company's processes and controls and were successful in reducing first quarter retention payments to 19.8% of broker fees from 23.1% in the same quarter last year." Mr. Reykdal added, "Now that we have a full twelve month cycle behind us, it's time for us to increase our emphasis on growing customers and revenue. While we will continue to maintain our strong and well established controls, we are now gearing our operating, training and marketing plans towards profitable growth. We will continue to develop new products and enhance existing services for an underserved portion of the population, which is evidenced by the 300,000 plus customers that have developed relationships with."

He also noted, "We continue to focus on improving financial performance in the rental division and significant progress has been made. Same store sales continue to improve with 15% growth over the first quarter last year; poor performing stores are being closed; and the management team has been strengthened with the addition of Mr. Bill Johnson as President and Chief Operating Officer of Insta-rent." Mr. Johnson was previously the Executive Vice President and Chief Financial Officer of the largest merchandise rental company in Canada.

The separation of the brokerage and rental divisions continues to be a key priority as management believes that this will provide better clarity on both business models and have a positive impact on shareholder value.

Financial Performance

Net income for the first quarter of fiscal 2007 was $2.5 million, compared to $4.5 million in the same quarter last year. The lower earnings reflect the impact of a voluntary decision made by the company to implement a "no rollover policy", which ultimately resulted in increased third party lender loan losses. When the impact of the no rollover policy was realized in the first quarter of fiscal 2006, significant changes were made to the brokerage division's operational processes and controls. While the changes have resulted in lower revenue, the company believes it is the best choice in the long term for customers, Rentcash, and the industry overall. The company has successfully adjusted to the changes and produced consistent revenue and expenses (excluding retention payments) over the last three quarters. Quarterly revenues ranged from $37.6 million to $38.0 million over the past three quarters, while expenses ranged from $23.3 million to $23.8 million. Third party lender retention payments totalled $6.2 million in both the current quarter and the third quarter last year, but $3.6 million in the fourth quarter. While payments were up over the fourth quarter, at 19.8% of broker fees they were consistent with approximately 19% overall in fiscal 2006.

The fluctuation in third party lender retention payments resulted in net income decreasing to $2.5 million in the first quarter from $3.6 million in the fourth quarter last year. In comparison, the first quarter net income was relatively consistent with earnings of $2.8 million in the third quarter last year.

The company's solid financial performance over the last three quarters also resulted in an improved cash position. At the end of the quarter, cash and cash equivalents totalled $15.7 million, compared to $12.9 million at June 30, 2006 and $7.2 million at December 31, 2005. Over the past three quarters, the company's working capital position also improved to a positive $1.9 million, compared to deficits of $1.6 million at June 30, 2006 and $9.7 million at December 31, 2005.

Financial Results - Q1 2007 vs. Q1 2006

Net income for the first quarter was $2.5 million, compared to $4.5 million in the same quarter last year reflecting the impact of the change in the brokerage division's business model. Revenue for the first quarter totalled $37.7 million, compared to $39.3 million in the same quarter last year. The decrease in revenue was due to lower brokerage revenue offsetting increased rental revenue. Expenses for the first quarter increased to $23.7 million from $21.3 million in the same quarter last year due to increased stores in operation and additional costs associated with corporate and operational infrastructure enhancements. On a per store basis, expenses averaged approximately $55,000 in the quarter, compared to approximately $57,000 in the first quarter last year.

Third party lender retention payments for the first quarter totalled $6.2 million (4.8% of loans brokered), compared to $7.8 million (5.3% of loans brokered) in the same quarter last year. The lower payments reflect total loans brokered decreasing to $128 million this quarter from $148 million in the same quarter last year, while the improved percentage was due to continued improvements in the company's processes and controls. Amortization of rental assets increased to $2.6 million in the quarter from $2.0 million in the first quarter last year due to increased business volume in the rental division. Amortization of capital and intangible assets increased to $1.3 million in the quarter from $915,000 in the first quarter last year due to the company's continued store expansion program in the brokerage division.

Store Count

At the end of the first quarter, the company's store count totalled 432, with 344 stores in the brokerage division and 88 in the rental division. The brokerage division added six stores in the quarter and remains on target with its objective of 30 new stores in fiscal 2007. The rental division's store count decreased from 92 to 88 in the quarter as four stores were closed and their accounts transferred to nearby stores. Management continues to assess the potential for each existing rental location and additional store closures may occur.

Brokerage Divisional Financial Results

The brokerage division's net income for the first quarter was
$3.6 million, compared to $5.6 million in the same quarter last year quarter reflecting the change in the brokerage division's business model. Brokerage revenue was $31.4 million in the quarter, compared to $34.0 million in the first quarter last year. The decrease in revenue was due to lower same store sales offsetting the impact of an increased number of stores in operation. Same store sales for the 274 brokerage stores open since the beginning of the first quarter of fiscal 2006 averaged $98,700 in the first quarter, compared to $118,400 in the same quarter last year.

Expenses in the brokerage division increased to $18.4 million in the quarter from $16.6 million in the same quarter last year due to increased stores in operation and additional costs associated with infrastructure enhancements. On a per store basis, brokerage expenses averaged approximately $54,000 in the quarter, compared with approximately $58,000 in the first quarter last year.

Third party lender retention payments for the first quarter totalled $6.2 million (4.8% of loans brokered), compared to $7.8 million (5.3% of loans brokered) in the same quarter last year. The lower payments reflect the decrease in total loans brokered, while the improved percentage was due to continued improvements in the company's processes and controls. Amortization of capital and intangible assets totalled $944,000 in the first quarter, compared to $634,000 in the same quarter last year. The increase was due to the increased stores in operation.

Rental Divisional Financial Results

The rental division incurred a net loss of $606,000 in the first quarter, compared to a loss of $575,000 in the same quarter last year. Although losses were up slightly in the rental division, significant progress has been made. Same store sales continue to improve with 15% growth over the first quarter last year; poor performing stores are being closed; and the management team has been strengthened.

The rental division's first quarter revenue increased to $6.3 million from $5.3 million in the same quarter last year due to improved same store sales. Same store sales for the 78 rental stores open since the beginning of the first quarter last year averaged $76,000 in the quarter, an increase of 15% over $66,300 in the first quarter last year.

Expenses for the first quarter totaled $4.4 million, compared to $4.0 million in the same quarter last year. On a per store basis, rental expenses increased slightly over the same quarter last year. However, as a percentage of rental revenue, rental expenses improved to 70% in the quarter from 75% in the first quarter last year due to increased same store sales and the closure of unprofitable stores.

Rental asset amortization increased to $2.6 million in the quarter from $2.0 million in the first quarter last year due to increased business volume in the rental division. Amortization of capital and intangible assets in the rental division totaled $208,000 in the first quarter, compared to $186,000 in the same quarter last year.

Business Strategy

The company is continuing to pursue the separation of the brokerage and rental divisions as management believes that this will provide better clarity on both business models and have a positive long term impact on shareholder value.

With the recent announcement by the federal government that they will impose a tax on distributions from publicly traded income trusts and limited partnerships, the company will be re-evaluating its plan to undertake a review of the merits of converting to an income trust.

Regulatory Update

On October 6, 2006, the federal government introduced Bill C-26, an amendment to the Criminal Code of Canada that will allow provinces the authority to regulate the payday loan industry. Under the new federal legislation, Bill C-26, An Act to Amend the Criminal Code (criminal interest rate), Section 347 of the Federal Criminal Code will not apply in provinces that legislate consumer protection measures for the payday loan industry. Rentcash welcomes provincial legislation and will work with the provincial governments to establish legislation that balances consumer protection with the viability of the payday loan industry. In support of this goal, the company recently appointed Michael J.L. Thompson to the position of Vice President of Investor Relations and Government Affairs. Mr. Thompson is the former President of the Canadian Payday Loan Association (CPLA) and in that role was instrumental in securing Bill C-26 and developing a compliance monitoring framework for the payday industry. Mr. Thompson will have specific responsibilities for strengthening Rentcash's consumer protection initiatives and he will work with provincial governments in that regard. The company believes that with the implementation of the no rollover policy and other changes it is well positioned to prosper in a regulated environment.