Due to the improved performance of the rental division, management has determined that the offer for a majority of assets of the rental division received on February 6, 2007 is no longer acceptable. We have determined that a spin-off of the division to shareholders is the best method for maximizing shareholder value.
Gordon Reykdal, Chairman and CEO, Rentcash

Rentcash Inc (TSXV: RCS) reported net income for the quarter ended March 31, 2007 dropped over 80% to $450,000 from $2.8 million in the same quarter last year. Diluted earnings per share were $0.02, compared to $0.14 in the same quarter last year.

Rentcash said the drop in net income was the result of:

- a decrease in store level operating results due to a restructuring of processes and controls in the brokerage division

- increased expenses related to the strengthening of the management team and operational functions in key areas such as internal audit, risk management, training and government relations,

- a significant increase in training and development activities and higher professional fees,

- the addition of an internal collection department and check cashing call centre in the brokerage division,

- costs related to the consolidation of stores in the rental division, and

- a $300,000 write-down of future tax assets in the rental division.

Rentcash also announced that the company has declined the offer for InsaRent received in February of this year. Instead, Rentcash will "spin-off of the rental division to the Company's shareholders."

Rentcash will hold a conference call to discuss its first quarter results ended March 31, 2007 on Thursday, May 10, 2007 at 12:30 p.m. EDT.

A link to the live webcast will be available from My RTO Portfolio.

Gordon Reykdal, Chairman and CEO commented, "Due to the improved performance of the rental division, management has determined that the offer for a majority of assets of the rental division received on February 6, 2007 is no longer acceptable. We have determined that a spin-off of the division to shareholders is the best method for maximizing shareholder value."

Reykdal said the year-long restructuring of the Company's brokerage division is complete. "I've traveled across the country over the past couple of months spending a full day with every store manager in our retail network reinforcing our overall direction. Managers are well briefed on how to generate earnings growth and I am energized by their commitment to the success of our Company."

"Q3 07 marks the first quarter for which year-over-year comparisons can reasonably be made, and the outlook is good. Despite reduced earnings, store operating performance has improved in recent months and retention payments to third party lenders are contained and poised to decrease in subsequent quarters. New products are making an increased contribution to store volumes and our base of new customers is growing. Positive trending in key areas signals that improved financial performance is achievable in future periods. Management's decision to eliminate rollovers will serve us well, as several provincial governments are now moving forward with industry rules that will include a ban on rollovers."

Reykdal concluded, "Product diversification and building relationships with new and existing customers have been key elements of our forward strategy. Our recently launched '50 % off check cashing' promotion has resulted in volume growth and customer retention. A prepaid credit card is currently being tested and will soon be launched in regions across the country. These initiatives will be complemented in the coming months with a customer loyalty program and online lending product."

Revenue for the third quarter totaled $36.0 million, a decrease of $2.0 million (5%) compared to $38.0 million in the same quarter last year. Year-to-date, revenue was $110.5 million, a decrease of 5% compared to $116.5 million in the first nine months of fiscal 2006. The third quarter revenue decrease reflects the closure of 26 stores in the rental division over the past nine months and a 7% decrease in same store sales in the brokerage division. The year-over-year decrease in brokerage same store sales has diminished from a high of 17% in the first quarter of this year to 7% this quarter and 4% in the month of March. Management believes the improvement reflects the impact of recent training and development initiatives and the renewed emphasis on growth. Management also believes that the recent initiatives along with the seasonality of the brokerage business should positively impact average same store sales in the fourth quarter relative to the third quarter of this year.

Expenses for the third quarter totaled $25.3 million, a 9% increase compared to $23.3 million in the same quarter last year. The increase resulted from the increased number of brokerage stores and the strengthening of operational and management capacity in key areas including internal audit, risk management, training and government relations. The increase also was due to a significant increase in training activities, higher professional fees and the addition of a collection department and check cashing call centre. Year-to-date, expenses totaled $73.4 million, an increase of 7% compared to $68.4 million for the first nine months of fiscal 2006.

Third party lender retention payments for the third quarter totaled $5.7 million, compared to $6.2 million in the same quarter last year. The lower payments were consistent with total loans brokered decreasing to $121 million this quarter from $133 million in the same quarter last year. Year-to-date, retention payments totaled $17.9 million, compared to $20.9 million for the nine months ended March 31, 2006. As a percentage of brokerage revenue, retention payments have declined consistently over the past three quarters from 19.8% to 19.1%. For the nine months ending March 31, 2007, retention payments represented 19.5% of brokerage revenue compared to 21.2% for the nine months ending March 31, 2006. Management believes that the focus on improving processes and controls as well as the establishment of an internal collection department should have a positive impact on retention payments in future periods.

Amortization of rental assets for the quarter improved to $2.3 million (38% of rental revenue), compared to $2.9 million (42% of rental revenue) in the third quarter last year due to initiatives designed to increase higher margin rental revenue and improve the margin on product sales. Year-to-date, the amortization of rental assets totaled $7.5 million (41% of rental revenue), consistent with $7.5 million (42% of rental revenue) for the first nine months of fiscal 2006.

Amortization of capital and intangible assets for the quarter totaled $1.4 million, compared to $1.2 million in the third quarter last year. The increase reflects an increased number of brokerage stores and approximately $130,000 in costs associated with the closure of stores in the rental division. Year-to-date, amortization of capital and intangible assets was $4.1 million (including $230,000 of store closure costs), compared to $3.1 million for the nine months ended March 31, 2006.

The Company's income taxes for the third quarter include the impact of a $300,000 write-down of future tax assets in the rental division. Excluding the impact of the write-down, the Company's effective tax rate was 39.0% in the third quarter and 39.2% year-to-date. The adjusted effective rates were higher than the consolidated statutory tax rate of approximately 34.5% due to the impact of stock based compensation which is not deductible for tax purposes. At the end of the quarter, the Company had cash of $14.2 million and positive working capital of $6.4 million. Over the past year, the Company's working capital position has improved $13.5 million from a deficit of $7.1 million as at March 31, 2006.