UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM 8-K/A
AMENDMENT TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 15, 1997
WESTMARK GROUP HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-18945 84-1055077
(STATE OF INCORPORATION) (COMMISSION FILE NUMBER) (IRS EMPLOYER
IDENTIFICATION NUMBER)
355 N.E. 5TH AVENUE
DELRAY BEACH, FLORIDA 33483
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (561)243-8010
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Westmark Group Holdings, Inc. acquired the stock of Green World
Technologies, Inc. in July of 1996 as provided in the financial
statements incorporated herein.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable
ITEM 5. OTHER EVENTS.
Not applicable
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
a. Financial Statements of Business Acquired-Green World
Technologies, Inc.
Report of Independent Accountants
Balance Sheet - September 30, 1996
Statement of Income and Accumulated Deficit for January 12,
1996 to September 30, 1996 Statement of Cash Flows for
January 12, 1996 to September 30, 1996 Statement of
Stockholder's Deficit Notes to Financial Statements
c. Exhibits
Effective June 14, 1996, Mark Schaftlein was appointed Chief
Financial Officer of the Company. On September 10, 1996,
Norman Birmingham resigned as President of the Company. Mr.
Birmingham remains Chairman of the Board and retains his role
as Principal Accounting Officer. Subsequently, Mr. Schaftlein
was named Chief Operations Officer on September 11, 1996.
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ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
To the Board of Directors
Green World Technologies, Inc.
Valley Springs, California
We have audited the accompanying balance sheet of Green World Technologies, Inc.
(A Nevada corporation) as of September 30, 1996, and the related statements of
income, accumulated deficit and cash flows for the period January 12, 1996 to
September 30, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we 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 statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material reports, the financial position of Green World Technologies, Inc.
As of September 30, 1996, and the results of its operations and its cash flows
for the period January 12, 1996 to September 30, 1996 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2, to the
financial statements, the Company has incurred losses from operations and has
deficits in working capital and net worth. These conditions raise substantial
doubt about its ability to continue as a going concern. Management's plans
regarding those matters also are described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
KEMPER C.G. GROUP LIC
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
November 8, 1996
Stockton, California
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GREEN WORLD TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
SEPTEMBER 30, 1996
ASSETS
Current Assets
Cash and cash equivalents ................................... $ 1,140
Accounts receivable trade ................................... 18,711
Inventory ................................................... 41,008
Other Current Assets ........................................ 4,748
---------
Total Current Assets ................................... 65,607
---------
Property, Plant and Equipment
Mfg. Machinery & equipment .................................. 7,104
Leasehold improvements ...................................... 9,528
Office furniture & equipment ................................ 10,421
Vehicles .................................................... 1,000
Information processing equipment ............................ 3,840
Accumulated depreciation .................................... (6,438)
---------
Total Property, Plant & Equipment ...................... 25,455
---------
Total Assets .................................................... $ 91,062
=========
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities
Accounts payable ............................................ $ 46,949
Accrued expenses and withholding ............................ 9,614
Sales tax payable ........................................... 1,010
Income taxes payable ........................................ 800
Advances from Westmark ...................................... 79,000
---------
Total Current Liabilities .............................. 137,373
Stockholder's Deficit
Common stock, 10,000 shares authorized,
1 share issued and outstanding
Contributed capital ......................................... 242,759
Accumulated deficit ......................................... (289,070)
---------
Total Stockholder's Deficit ............................ (46,311)
---------
Total Liabilities & Stockholder's Equity ........................ $ 91,062
=========
SEE ACCOUNTANT'S REPORT AND NOTES TO FINANCIAL STATEMENTS
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GREEN WORLD TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF INCOME AND ACCUMULATED DEFICIT
FOR THE PERIOD JANUARY 12, 1996 TO SEPTEMBER 30, 1996
Income
Talon Sales ........................................... $ 37,717
Audio, Video & Print Sales ............................ 5,404
Installation Income ................................... 400
Other Operating Income ................................ 99
---------
Total Income ..................................... 43,620
Cost of Goods Sold ........................................ 19,116
---------
Gross Profit (Loss) ....................................... 24,504
---------
Operating Expenses
Research and Development .............................. 53,217
Selling Expenses ...................................... 74,371
General and Administrative ............................ 184,452
---------
Total Operating Expenses ......................... 312,000
---------
Net Operating Income (Loss) ............................... (287,536)
Other Income (Expense)
Miscellaneous ......................................... 66
---------
Net Income Before Income Taxes ............................ (287,536)
Income Taxes .............................................. 1,600
---------
Net Income ................................................ (289,070)
Accumulated deficit, end of period ........................ $(289,070)
=========
Net Income (Loss) per share ............................... $(289,070)
=========
SEE ACCOUNTANT'S REPORT AND NOTES TO FINANCIAL STATEMENTS
GREEN WORLD TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
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STATEMENT OF CASH FLOWS
FOR THE PERIOD JANUARY 12, 1996 TO SEPTEMBER 30, 1996
1996
---------
Cash flows from operating activities:
Net Income ................................................. $(289,070)
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .............................. 6,438
(Increase) decrease in accounts receivable ................. (18,711)
(Increase) decrease in inventories ......................... (41,008)
(Increase) decrease in other assets ........................ (4,748)
Increase (decrease) in accounts payable .................... 46,949
Increase (decrease) in accrued liabilities ................. 9,614
Increase (decrease) in sales tax payable ................... 1,010
Increase (decrease) in income taxes payable ................ 800
---------
Total adjustments ..................................... 344
---------
Net cash provided (used) by operating activities ............... (288,726)
---------
Cash flows from investing activities:
Cash payments for the purchase of property ................. (31,893)
---------
Net cash provided (used) by investing activities ........... (31,893)
---------
Cash flows from financing activities:
Net advances from Westmark ................................. 79,000
Contributed capital from parent company .................... 242,759
Net cash provided (used) by financing activities ........... 321,759
---------
Net increase (decrease) in cash and equivalents ................ 1,140
Cash and equivalents, beginning of year
---------
Cash and equivalents, end of year .............................. $ 1,140
=========
SEE ACCOUNTANT'S REPORT AND NOTES TO FINANCIAL STATEMENTS.
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Green World Technologies, Inc.
(A DEVELOPMENT STAGE COMPANY)
Statement of Stockholder's Deficit
For the Period January 12, 1996 to September 30, 1996
Deficit
Accumulated
During the Total
Contributed Development Stockholder's
Share Amount Capital Stage Deficit
----- ------ -------- --------- ---------
Issuance of Common Stock ....... 1 $-- $ 3,859 $ -- $ 3,859
Contribution of Capital ........ - -- 238,900 -- 238,900
Loss for the period ended
September 30, 1996 ...... - -- -- (291,454) (291,454)
Balance at September 30, 1996 .. 1 $- $242,759 $(291,454) $ (48,695)
- --- -------- --------- ---------
SEE ACCOUNTANT'S REPORT AND NOTES TO FINANCIAL STATEMENTS.
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GREEN WORLD TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Green World Technologies, Inc., ("Company") was incorporated on January 12,
1996, under the laws of the State of Nevada. The Company has acquired the rights
to develop, manufacture and market an efficiency management improvement device
(Talon) for cooling and heating equipment through a patent licensing agreement
with ECS, Inc. The Company's current markets are located within California,
Mexico and the Western United States. The Company is in the development stage as
its operations principally involve research and development, market analysis and
other business planning activities and they have had minimal revenue from
product sales. Because the Company is in the developmental state, the
accompanying financial statements should not be regarded as typical for normal
operating periods. In accordance with FAS 7, the financial statements present
Green World Technologies, Inc. as a company in the development stage.
On April 19, 1996, the Company was acquired by Heart Labs of America, Inc.
("HLOA"). Pursuant to the terms of that acquisition, certain funds advanced to
the Company were converted to contributions to capital. As a part of the
acquisition agreement, HLOA agreed to provide up to $300,000 of working capital
and provide for the establishment of worldwide patents for the Talon, estimated
to cost $200,000. On July 19, 1996, HLOA transferred its ownership interest to
Westmark Group Holdings, Inc. ("WGHI").
The Company's cash and available credit are not sufficient to support operations
for the next year. As shown in the accompanying financial statements, the
Company has incurred losses from operations and has deficits in working capital
and net worth. If WGHI were not to adhere to the acquisition agreement to
provide working capital, management of the Company would need to seek additional
bank, lease and/or equity financing.
Absent additional infusion of operating capital, there is substantial doubt
about the Company's ability to continue as a going concern. Management has been
working to reduce costs and improve results of operations as well as searching
for additional sources of capital. There can be no assurance that the Company
will be successful in its efforts. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
FISCAL YEAR
The Company has began operations on January 12, 1996. The Company is currently
in its first
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fiscal year and has not completed its first full year of operation. Absent any
other timely election, the Company's fiscal year will end December 31.
USES OF ESTIMATES
Management uses estimates and assumptions in preparing financial statements.
Those estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported revenues and expenses.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Unless otherwise indicated, the fair values of all reported assets and
liabilities which represent financial instruments (none of which are held for
trading purposes) approximate the carrying values of such amounts.
EFFECTS OF NEW FINANCIAL ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long- Lived Assets and for Long-Lived Assets to Be Disposed Of."
generally requires entities that have long-lived assets to recognize an
impairment loss when the carrying amount of the asset exceeds the undiscounted
future cash flows expected from the asset or its net realizable value. This
standard is not expected to have a material impact on the financial statements.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation," generally requires entities that have stock based compensation to
disclose to the employee stock options based on their fair value at the grant
date. The entity is required to use recognized option pricing models to estimate
the fair values. Since the Company does not currently have stock based
compensation, the standard is expected to have a material impact on the
financial statements.
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, the Company considers all treasury bills,
certificates of deposit and money market funds purchased with an original
maturity of three months or less to be cash equivalents.
ACCOUNTS RECEIVABLE-TRADE
The Company provides credit to its commercial customers in the normal course of
its business. With respect to analyzing the collectibility of these accounts,
management evaluates the accounts individually and uses the "direct write-ff"
method for recording bad debts, and accordingly, writes off to earnings those
accounts which are deemed uncollectible.
INVENTORIES
Inventories consisting of components, supplies and finished goods are stated for
both financial reporting and income tax purposes at the lower of cost or market
using the first in, first out (FIFO) method.
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PROPERTY AND EQUIPMENT
Property and equipment are carried at cost less accumulated depreciation using
the straight line method over their estimated useful lives. The estimated useful
lives used in the computation of depreciation for financial statements were as
follows:
Motor Vehicles 5 to 7 years
Office furniture and equipment 7 to 10 years
Machinery and equipment 7 to 10 years
Leasehold improvements Remaining lease term
Betterments and improvements that extend the useful life of an asset are
capitalized. Maintenance and repairs are charged to expense as incurred. When
depreciable assets are retired or otherwise disposed, the cost and related
accumulated depreciation are eliminated from the accounts and the resulting gain
or loss is reflected in income.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" which requires the
use of the "liability method" of accounting for income taxes. Accordingly,
deferred tax liabilities and assets are determined based on the difference
between the financial statement and tax bases of assets and liabilities, using
expected marginal tax rates in effect for the year in which the differences are
expected to reverse. Current income taxes are based on the year's income taxable
for Federal and state income tax purposes.
NOTE 2- INVENTORY
Inventory consisted of finished goods $31,143, and components and supplies
$9,865.
NOTE 3 - PROPERTY AND EQUIPMENT
Depreciation and amortization expense was $6,438, for the period January 12,
1996 to September 30, 1996.
NOTE 4- NOTE RECEIVABLE
Included in other current assets is a note receivable from an employee for funds
advanced in the amount of $3,800. The note is due before April 25, 1997, and
bears interest at the rate of 10% per annum.
NOTE 5 - ADVANCES FROM WESTMARK
Advances from WGHI represent funds that have been provided by WGHI for operating
capital of Green World Technologies, Inc. The advances carry no interest.
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NOTE 6 - NON-CASH FINANCING
Capital contributed at the inception of the Company on January 12, 1996 was
$3,859 and consisted of inventory $1,745, accounts receivable $2,153 and sales
taxes payable $39. Other contributed capital arose from advances made by HLOA in
the amount of $238,900, which were subsequently converted to contributed capital
pursuant to its acquisition of Green World.
NOTE 7 - PROVISION FOR INCOME TAXES
Provision is made for the tax effect of transactions reported in the financial
statements. The provision consists of taxes currently due plus deferred taxes
related to differences between items of income and expense for financial and
income tax reporting. The deferred taxes represent the future tax return
consequences of the differences, which will be either taxable or deductible when
the related assets or liabilities are recovered or settled.
Provision for federal and state income taxes consists of the following at
September 30, 1996:
Current:
Federal .................... $ 0
State ...................... 1,600
------
1,600
------
Deferred:
Federal .................... 0
State ...................... 0
------
0
------
Total income taxes ......... $1,600
======
Deferred income taxes arise from timing differences resulting from income and
expense items reported for financial accounting and tax purposes in different
periods. Deferred taxes are classified as current or noncurrent, depending on
the classification of the assets and liabilities to which they relate. Deferred
taxes arising from timing differences that are not related to an asset or
liability are classified as current or noncurrent depending on the periods in
which the timing differences are expected to reverse.
The financial statements do not include a provision for a deferred tax asset of
liability because the Company has yet to compete its first fiscal year. The
current period loss may give rise to future tax benefits, but because of
substantial doubt about the Company's ability to continue as a going concern, no
deferred tax asset has been recorded. If the Company's taxable year were to end
September 30, 1996, it would have a net operating loss carryover of $289,070,
expiring in 15 years. Using current tax rates the deferred tax benefit available
from the loss carryover is $98,284. Because of the question of going concern
addressed in note 1, the Company has recorded a valuation allowance equal to the
deferred tax benefit. Current income taxes are recorded at the statutory
minimum.
NOTE 8 - ROYALTIES
The Company is obligated under the patent licensing agreement with ECS, Inc. To
make royalty payments of $4 per Talon manufactured, used or sold. The amount of
royalty expense recorded for the period was $2,348 and is included as a current
period expense in the cost of goods sold.
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NOTE 9- LEASE COMMITMENTS
The Company currently leases its operating facilities. The lease term expires
February 27, 1997. Monthly rent payments are $850. Rent expense for the period
was $5,667.
The Company also has entered into an operating lease/rental agreement for
certain equipment. Terms of the agreement include monthly payments of $160 over
a 60 month period beginning in April 1996. Rent expense for the period was $798.
Future minimum lease payments for the next five years under the above agreements
are:
Year 1 ......... $ 6,170
Year 2 ......... 1,920
Year 3 ......... 1,920
Year 4 ......... 1,920
Year 5 ......... 1,120
-------
Total .......... $13,050
-------
NOTE 10 - ADVERTISING
The Company uses nondirect-response advertising, which costs are expensed as
incurred. Total advertising costs for the period ended September 30, 1996
included media and publishing $38,950, trade shows and seminars $4,162, and
other promotions $725. No amount of advertising have been capitalized.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WESTMARK GROUP HOLDINGS, INC.
BY: /s/ NORMAN J. BIRMINGHAM
NORMAN J. BIRMINGHAM, DIRECTOR, CHAIRMAN,
(PRINCIPAL ACCOUNTING OFFICER & DULY AUTHORIZED
DIRECTOR OF THE REGISTRANT)
BY: /s/MARK D. SCHAFTLEIN
MARK D. SCHAFTLEIN, DIRECTOR, CHIEF OPERATING
OFFICER (DULY AUTHORIZED DIRECTOR & OFFICER OF
THE REGISTRANT)
APRIL 15, 1997
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