| The equipment rental industry is highly fragmented and competitive with
limited barriers to entry. All of the 10 largest equipment rental companies are
primarily in the heavy equipment segment of the market. Management believes that
RentX is the only equipment rental company currently pursuing a national
consolidation focused on the homeowner, light commercial and special events
segments of the market. The Company's competitors in various segments of its
business include independent businesses with one to four rental stores in a
single geographic area or regional competitors that operate in more than one
state; larger national equipment rental companies; home improvement and hardware
retailers; and equipment vendors and dealers who both sell and rent equipment
directly to customers.
RentX believes that it competes in the markets it serves primarily on the
basis of customer service, convenience and equipment availability. The success
of a rental operator in the Company's targeted segments is predicated on its
customer service and problem solving abilities; quality, condition and servicing
of its equipment; availability of equipment (both depth and breadth); delivery
capabilities; management information systems; location of its stores in relation
to its customer base; overall operation of its business; and price. The Company
believes that it competes favorably on the basis of these factors.
Some of the Company's competitors have greater financial resources and a
longer operating history than the Company, with a substantial local customer
base, and consequently have greater name recognition than the Company. Because
the capital investment required to establish a rental store in the homeowner,
light commercial and special events segments is relatively low, the barriers to
entry are also relatively low. There can be no assurance that the Company will
not encounter increased competition from existing competitors or new market
entrants that may be significantly larger and have greater financial and
marketing resources then the Company. Increased competition is likely to result
in, among other things, reduced operating margins, loss of market share and
diminished brand value, any of which could have a material adverse effect on the
Company. One equipment rental company which operates primarily in the heavy
equipment segment has significantly reduced prices on longer term rentals of
certain pieces of heavy equipment. In addition, existing or future competitors
may compete with the Company for acquisition candidates and sites for new
stores, which could have the effect of increasing the price for acquisitions or
reducing the number of suitable acquisition candidates or new store locations.
Currently, the largest companies in the equipment rental industry, including a
number which are actively pursuing consolidation and growth strategies, are
primarily in the heavy equipment segment of the market, but also compete in the
Company's targeted segments. Some or all of these companies may increase their
focus on one or more of the market segments in which the Company is active,
which would significantly increase competition for customers, acquisitions and
locations for new stores. In addition, there can be no assurance that foreign
companies that
focus on the Company's market segments will not aggressively enter the U.S.
market. |