UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
------------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to _______________________
Commission file number 0-18945
WESTMARK GROUP HOLDINGS, INC.
(name of small business issuer in its charter)
DELAWARE 84-1055077
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
355 N.E. FIFTH AVENUE, SUITE 4
DELRAY BEACH, FLORIDA 33483
(Address of principal executive offices)(Zip Code)
(561) 243-8010
(Issuer's telephone number, including area code)
---------------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days. Yes [XX] No [ ]
The number of shares outstanding of each of the registrant's classes of common
stock, as of June 30, 1998: 2,861,862 (one class).
Transitional Small Business Disclosure Format: Yes [ ] No [XX]
1
<PAGE>
WESTMARK GROUP HOLDINGS, INC.
FORM 10-QSB REPORT INDEX
<TABLE>
<CAPTION>
10-QSB Part and Item No.
- -----------------------
<S> <C> <C>
Part I-Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets as of
June 30, 1998 and December 31, 1997 ................3
Consolidated statements of operations
for the three months and six months
ended June 30, 1998 and 1997 ................4
Consolidated statements of cash flows for the six
months ended June 30, 1998 and 1997 ................5
Condensed notes to consolidated financial statements ..6 and 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................8 - 10
Part II-Other Information
Item 1. Legal Proceedings......................................11
Item 2. Changes in Securities....... ..........................12
Item 3. Defaults Upon Senior Securities. ......................12
Item 4. Submission of Matters to a Vote of Security Holders....12
Item 5. Other Information......................................12
Item 6. Exhibits and Reports on Form 8-K.......................12
Signatures...............................................................13
</TABLE>
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
--------------------
Westmark Group Holdings, Inc. and Subsidiary
Consolidated Balance Sheets
June 30, 1998 with comparative figures for December 31, 1997
---------
UNAUDITED
<TABLE>
<CAPTION>
ASSETS 1998 1997
-------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 309,233 $ 100,010
Mortgage loans held for sale 20,103,905 7,788,374
-------------------------------------
Total current assets 20,413,138 7,888,384
-------------------------------------
Property and equipment:
Office buildings 535,991 535,991
Furniture, fixtures and equipment 602,057 463,226
-------------------------------------
1,138,048 999,217
Accumulated depreciation 390,833 354,654
-------------------------------------
Net property and equipment 747,215 644,563
-------------------------------------
Other assets:
Investment in preferred stock 2,876,528 2,876,528
Investment in real estate 500,000 500,000
Cost in excess of assets purchased, net 581,674 631,132
Dividends receivable 350,000 280,000
Deposits and other assets 165,735 -
-------------------------------------
Total other assets 4,473,937 4,287,660
-------------------------------------
TOTAL ASSETS $25,634,290 $12,820,607
=====================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 499,303 $ 485,621
Accrued expenses 135,196 359,287
Warehouse line payable 19,674,427 7,733,492
Current portion of long term debt 1,396,128 1,539,379
Settlements payable 393,968 733,979
Dividends payable 167,500 132,500
-------------------------------------
Total current liabilities 22,266,522 10,984,258
-------------------------------------
Long term debt 1,189,295 1,774,044
Stockholders' equity:
Preferred stock, $0.001 par value, 10,000,000 shares authorized,
350,005 (250,005 at 1997) shares issued and outstanding 1,300,010 800,010
Common stock, $0.005 par value, 15,000,000 shares authorized,
2,861,862 (2,389,655 at 1997) shares issued and outstanding 14,324 11,948
Capital in excess of par value 28,412,150 27,496,031
Accumulated deficit (27,298,011) (28,245,684)
-------------------------------------
Total stockholders' equity 2,428,473 62,305
-------------------------------------
Stock subscription receivable (250,000) -
-------------------------------------
Net stockholders' equity 2,178,473 62,305
-------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $25,634,290 $12,820,607
=====================================
</TABLE>
See accompanying condensed notes to consolidated financial statements.
3
<PAGE>
Westmark Group Holdings, Inc. and Subsidiary
Consolidated Statements of Operations
For the three months and six months ended June 30, 1998 with
comparative figures for 1997
---------
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
REVENUES: 1998 1997 1998 1997
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Loan origination and gain on sale of loans $3,748,223 $1,509,970 $6,550,828 $2,540,752
Interest income 348,511 220,651 586,298 451,390
Other income 17,748 64,651 33,498 83,765
---------------------------------------------------------------
Total Revenue 4,114,482 1,795,272 7,170,624 3,075,907
---------------------------------------------------------------
COST AND EXPENSES:
Loan origination costs 721,139 128,154 1,024,176 278,549
General and administrative 2,168,401 855,828 4,084,731 1,771,680
Professional fees 234,955 180,490 291,493 308,236
Interest 445,522 264,237 750,093 465,411
Marketing and advertising 23,835 8,093 56,823 13,959
Depreciation and amortization 43,576 69,527 85,635 139,054
---------------------------------------------------------------
Total Cost and Expenses 3,637,428 1,506,329 6,292,951 2,976,889
---------------------------------------------------------------
OTHER INCOME (EXPENSES):
Dividend income 35,000 35,000 70,000 70,000
---------------------------------------------------------------
Total Other Income (Expenses) 35,000 35,000 70,000 70,000
---------------------------------------------------------------
NET INCOME (LOSS) FROM CONTINUING
---------------------------------------------------------------
OPERATIONS BEFORE INCOME TAXES 512,054 323,943 947,673 169,018
---------------------------------------------------------------
Income tax 163,469 - 315,936 -
---------------------------------------------------------------
NET INCOME (LOSS) FROM CONTINUING 348,585 323,943 631,737 169,018
---------------------------------------------------------------
OPERATIONS AFTER TAX
Tax benefit of net operating loss carryforward 163,469 - 315,936 -
---------------------------------------------------------------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS 512,054 323,943 947,673 169,018
---------------------------------------------------------------
Loss of discontinued operation - 290,905 - 402,962
===============================================================
NET INCOME (LOSS) $ 512,054 $ 33,038 $ 947,673 $ (233,944)
===============================================================
EARNINGS PER SHARE:
Basic:
Income (loss) from continuing operations 0.18 0.29 0.35 0.15
Income (loss) from discontinued operations - (0.26) - (0.36)
===============================================================
Basic Net Income (Loss) per share $ 0.18 $ 0.03 $ 0.35 $ (0.21)
===============================================================
Fully diluted:.
Income (loss) from continuing operations 0.10 - 0.20 -
Income (loss) from discontinued operations - - - -
===============================================================
Fully Diluted Net Income (Loss) per share $ 0.10 $ - $ 0.20 $ -
===============================================================
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 2,859,189 1,116,298 2,717,267 1,116,298
Fully diluted 5,168,418 - 4,838,844 -
</TABLE>
See accompanying condensed notes to consolidated financial statements.
4
<PAGE>
Westmark Group Holdings, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the six months ended June 30, 1998 with comparative figures for 1997
---------
UNAUDITED
<TABLE>
<CAPTION>
1998 1997
-------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss) $ 947,673 $ (233,944)
Adjustments to reconcile consolidated net income (loss)
to net cash provided (used) by operating activities:
Depreciation 36,179 35,692
Stock issued for bonus and services 237,500 483,052
Amortization of excess purchase cost 49,458 103,362
Changes in operating assets and liabilities:
(Increase) decrease in:
Mortgage loans held for sale (12,315,531) 1,381,420
Other assets (235,735) (11,553)
Accounts receivable - (3,937)
Increase (decrease) in:
Accounts payable 13,682 (1,083,820)
Accrued expenses (244,091) 203,145
Warehouse lines of credit 11,940,935 (1,580,666)
Settlements payable (340,011) -
------------------------------------
Cash provided for (used) in operating activities 110,059 (707,249)
------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
------------------------------------
(Purchase) sale of fixed assets and improvements (138,831) (25,040)
------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of preferred stock 330,995 -
Sale of common stock 600,000 -
Issuance of common stock for debt - 833,812
Dividends 35,000 -
Proceeds from issuance of note payable - 1,760,778
Payments on notes payable (728,000) (1,822,506)
------------------------------------
Cash provided for (used) in financing activities 237,995 772,084
------------------------------------
------------------------------------
Net increase/(decrease) in cash $ 209,223 $ 39,795
====================================
</TABLE>
See accompanying condensed notes to consolidated financial statements.
5
<PAGE>
Westmark Group Holdings, Inc. and subsidiaries
Condensed Consolidated Notes to Financial Statements
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310b of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month and six month periods
ended June 30, 1998 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1998. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's audited annual report on Form 10-KSB for the year ended December 31,
1997.
NOTE 2: FINANCING ACTIVITY
During the first quarter of 1998, Westmark Group Holdings, Inc. ("WGHI"
or the "Company"), in exchange for $154,004 and 48,624 shares of common stock,
provided for the issuance of 69,572 shares of Series G preferred stock to MCA
Financial Corporation ("MCA") and in the second quarter of 1998, WGHI, in
exchange for $152,140, provided for the issuance of 30,428 additional shares of
Series G preferred stock all pursuant to a Stock Purchase Agreement entered into
in September 1997 in connection with the sale of mortgage loan packages to MCA.
All monies received were used for funding operating activities.
In February 1998, certain executives of the Company agreed to purchase
400,000 shares of common stock at $2.125 per share (the closing bid price of the
Company's common stock on the date prior to the date of such agreement)(the
"1998 Executive Stock Purchase"). In connection with the 1998 Executive Stock
Purchase, the executives paid $600,000 to the Company and delivered to the
Company promissory notes in an aggregate amount of $250,000 payable over three
years with interest at 10% per annum.
NOTE 3: REVERSE STOCK SPLIT
On August 28, 1997, the stockholders of the Company approved a reverse
stock split in the range of 1 for 3 to 1 for 5 to be determined by the Board of
Directors. The Board of Directors approved a 1 for 5 reverse stock split on
August 29, 1997 with an effective date of September 3, 1997. The stockholders
also approved a change in the authorized common stock from 50,000,000 shares to
15,000,000 shares.
NOTE 4: EARNINGS PER SHARE
Basic earning (loss) per common share has been computed using the net
income (loss) adjusted for preferred dividends over the weighted average shares
outstanding. Diluted loss per common share for the six months ended June 30,
1997 has not been presented since the effect of common stock equivalents would
be anti-dilutive. Diluted earnings per common share for the three and six months
ended June 30, 1998 has been computed using the net income adjusted for
preferred dividends over the weighted average shares outstanding including all
common shares underlying all outstanding warrants, options, convertible debt and
convertible preferred stock.
6
<PAGE>
Westmark Group Holdings, Inc. and subsidiaries
Condensed Consolidated Notes to Financial Statements
NOTE 5: SUBSEQUENT EVENTS
On July 28, 1998, a NASDAQ Listing Qualifications Panel granted the
Company's request for continued inclusion on the NASDAQ Small Cap Market
pursuant to an exception to the net tangible assets/market capitalization/net
income requirement as set forth in NASD Marketplace Rule 431(e)(2). The panel
granted the exception on the condition that by August 15, 1998, the Company make
a public filing with the SEC and NASDAQ, evidencing a minimum of $2,000,000 net
tangible assets and continued profitability. This report on form 10-QSB
satisfies the requirement of continued profitability. The following July 31,
1998 condensed balance sheet is presented in satisfaction of that requirement.
The pro forma balance sheet gives effect to two transactions: 1) Net income of
$253,892 for the month ended July 31, 1998; 2) Debt of $179,749 converted to
79,888 shares of common stock on August 7, 1998.
Current assets $21,537,836
Net property and equipment $ 818,680
Cost in excess of assets purchased, net $ 573,431
Other assets $ 3,973,615
-----------
Total assets $26,903,562
===========
Current liabilities $23,263,284
Long term debt $ 1,028,163
Net stockholders equity $ 2,612,115
-----------
Total liabilities and stockholders equity $26,903,562
===========
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Forward Looking Statement
- -------------------------
This Quarterly Report on Form 10-QSB contains forward-looking
statements. For this purpose, any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects," and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could cause the
Company's actual results to differ materially from those indicated by such
forward-looking statements. These factors include, without limitation, the
Company's ability to generate mortgage loans and/or acquire them on favorable
terms, interest rate fluctuations and those set forth in the Company's 1997
Annual Report on Form 10-KSB under the caption "Certain Factors That May Affect
Future Results."
The following discussion of the Company's results of operations and
financial condition should be read in conjunction with the Company's condensed
consolidated unaudited Financial Statements listed in Part I, Item 1 and the
Notes thereto appearing elsewhere in this Form 10-QSB, and the Company's audited
Financial Statements listed in Item 7 and the Notes thereto appearing in the
Company's 1997 Annual Report on Form 10-KSB.
FINANCIAL RESULTS OF OPERATIONS
- -------------------------------
On a consolidated basis, total revenues increased to $7,170,624 and
$4,114,482 in the six months and three months ended June 30, 1998 compared with
$3,075,907 and $1,795,272 in the six months and three months ended June 30,
1997, an increase of 133% and 129%. This continues to reflect the implementation
of Westmark's strategic plan to concentrate its efforts on its non-conforming
(subprime) mortgage lending business. Expenses for the six months and three
months ended June 30, 1998 increased to $6,292,951 and $3,637,428 from
$2,976,889 and $1,506,328 for the six months and three months ended June 30,
1997, a 111% and 141% increase. The primary reason for the increase was expected
expenses associated with the planned growth of the non-conforming (subprime)
mortgage business which also is reflected in the increase in general and
administrative expenses from $1,771,680 and $855,827 in the six months and three
months ended June 30, 1997 to $4,084,731 and $2,168,401 in the six months and
three months ended June 30, 1998 (a 131% and 153% increase). The increase in
loan origination costs from $278,549 and $128,154 in the six months and three
months ended June 30, 1997 to $1,024,176 and $721,139 in the period ended June
30, 1998 (a 267% and 463% increase), resulted primarily from increased broker
cost. The increase in marketing and advertising and interest expense is
primarily the result of the addition of new staff to support the growing loan
volume and new account executives to further increase loan production and an
increase in expenditures on advanced technology. The increase in professional
fees from $180,490 in the quarter ended June 30, 1997 to $234,955 in the quarter
ended June 30, 1998 is primarily due to increased legal fees.
Net income was $947,673 ($0.35 per share) and $512,054 ($0.18 per
share) for the six months and three months ended June 30, 1998 as compared to a
net loss of $233,944 ($0.21 per share) for the six months ended June 30, 1997
and net income of $33,038 ($0.03 per share) for the three months ended June
30,1997, all of these increases were based on increased loan production and
more consistent margins on the sale of loans.
8
<PAGE>
BUSINESS OPERATIONS
- -------------------
During the six months of 1998, the Company continued to focus its
business on funding non-conforming (subprime) mortgages, with approximately 99%
of all closed loan volume being non-conforming (subprime) loan fundings. Total
non-conforming (subprime) loan fundings by the Company increased from $49.3
million in the six months ending June 30, 1997 to $119.8 million for the six
months ended June 30, 1998, an increase of 143%.
In the first two quarters of 1998, the Company continued to expand its
non-conforming (subprime) lending program through bulk sales, and as a result,
experienced increased revenue in the first six months of 1998 from this
expansion. The Company is continuing to focus its marketing efforts in the
non-conforming (subprime) loan market. The increase in the non-conforming
(subprime) loans has come primarily from an increased market share in Florida,
Illinois, California and Georgia. Management intends to continue its marketing
strategy in additional states throughout the Southeast, Midwest and West Coast,
where licensing and/or sales activities began or expanded this period.
The Company continues to sell loan originations on a
"servicing-released" basis to investors in the normal course of business. The
Company's bulk sales program for non-conforming (subprime) paper in which loans
are pooled and sold in packages generally ranging from $3-15 million remains an
integral key to future growth. During the first two quarters, total loan sales
to third party investors in the secondary market equaled $109.7 million, an
increase of 126% from $48.6 million in the first two quarters ended June 30,
1997.
Bulk sales
- ----------
During the six months ended June 30, 1998, bulk sales were completed
with several institutional investors, including Household Financial Services,
Inc., The Money Store, Associates First Capital, Conti Financial and MCA
Financial Corporation.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company uses its cash flow from whole loan sales, loan origination
fees, net interest income and borrowings under its warehouse lines of credit to
meet its working capital needs. The Company's cash requirements include the
funding of loan originations, purchases, payment of interest expenses,
operations expenses, taxes and capital expenditures, along with settlement
agreements negotiated though June 30, 1998.
On June 30, 1998, total stockholders equity was $2,178,473. Adequate
credit facilities and other sources of funding, including the ability of the
Company to sell loans, are essential to the continuation of the Company's
ability to originate and purchase loans. The Company borrows funds on a short
term basis to support the accumulation of loans prior to sale. These short-term
borrowings are made under warehouse lines of credit with various lenders
including Household Financial Services, Inc., The Money Store, Princap Mortgage
Warehouse, Inc., MCA Financial Corporation and most recently, First Union
National Bank. (collectively the "Warehouse Facilities"). Pursuant to the
Warehouse Facilities, the Company has available total secured revolving credit
lines of $46 million, ( an increase of $20 million since December 31, 1997), to
finance the Company's origination or purchase of loans, pending sale to
investors. The lines of credit pursuant to the Warehouse Facilities are
collateralized by the assignment and pledge of eligible mortgage loans. The
various lines making up the Warehouse Facilities bear interest at annual rates
ranging from Libor plus 1 1/8 to 1 1/2 - 2% above prime, payable at the time of
purchase by the permanent investor. The Warehouse Facilities provide for a
9
<PAGE>
transaction charge from $100 per loan to as low as $25 per loan and require the
Company to possess a minimum net worth of $3.6 million, a current ratio of 1.1
and a compensating cash balance on deposit in the amount of $5,000 under the
more restrictive covenants. The Company was not in compliance with these
covenants at June 30, 1998 or December 31, 1997 and received a waiver from the
warehouse lender. On June 30, 1998, the balance outstanding, pursuant to this
Warehouse Facilities, totaled $19,674,427. First Union National Bank has granted
the Company a $10 million line of credit, on the same terms discussed above, to
acquire small ($1 to $5 million) pools of loans. The Company does not currently
have any other external lines of credit for financing.
Historically, the Company has obtained financing through the issuance
of its common stock and borrowings on a negotiated basis. However, as the
Company has become cash-flow positive, the necessity to utilize this type of
financing has been reduced, allowing the Company to decrease both the size and
the frequency of its common stock issuances.
10
<PAGE>
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-------------------------
The Company is a defendant in IMPERIAL CREDIT INDUSTRIES, INC. VS.
WESTMARK MORTGAGE CORPORATION, American Arbitration Association Case
#804880004597X filed in Irvine, California on December 2, 1996. Plaintiff
alleges that Westmark Mortgage Corporation is obligated to repurchase various
loans and the matter has been set for contractual arbitration in December of
1998. Discovery is ongoing but inconclusive with respect to the liability of the
Company.
The Company is a defendant in CROWN BANK VS. WESTMARK MORTGATE
CORPORATION filed on March 25, 1998 in the Circuit Court of Seminole County,
Florida, Case #199898625CA15A. Plaintiff alleges that Westmark is obligated to
repurchase multiple loans. Westmark has filed an Answer to the Complaint but no
discovery has been undertaken. The Company's potential liability, if any, cannot
be ascertained until initial discovery has been completed.
The Company is a defendant in COUNTRYWIDE HOME LOANS VS. WESTMARK MORTGAGE
CORPORATION filed on May 19, 1998 in the Superior Court of Los Angeles County,
California, Case # GC021232. The defendant alleges that Westmark Mortgage
Corporation is obligated to repurchase various loans pursuant to a Loan Purchase
Agreement executed by the parties. The Company has an extension of time to
respond to the Complaint, through August 10, 1998. The Company's potential
liability, if any, cannot be ascertained until initial discovery is completed,
at which time the Company intends to submit a proposal for settlement.
The Company is a plaintiff in WESTMARK GROUP HOLDINGS, INC. VS. MEDICAL
INDUSTRIES OF AMERICA, INC. filed on June 23, 1998 in the Circuit Court of Palm
Beach County, Florida, Case # 98 005545 AG. The Company filed this Declaratory
Judgment action as a result of the Defendant's demand for additional shares of
common stock of the Company pursuant to an Anti-Dilution Provision in a November
1996 Stock Purchase Agreement between the Company and the defendant which
provided the defendant's ownership of the Company would not be diluted below
49%. The Company is seeking a declaration by the Court that the Defendant is
bound by the terms of a 1997 Settlement Agreement between the parties which
terminated the Anti-Dilution Provision. The defendant is asserting that the
Settlement Agreement was conditioned upon the Company securing additional
financing, and that therefore the Anti-Dilution Provision is still in effect.
The Company believes that the defendant's position is without merit. The Company
and the defendant are engaged in settlement negotiations which the Company
believes will result in voluntary dismissal of its Complaint and a waiver by the
defendant of its claim for additional shares of Company common stock.
Management does not believe that any of these proceedings, individually
or in the aggregate, will materially impact the Company's financial condition or
results of operations. From time to time the Company is a defendant (actual or
threatened) in certain lawsuits encountered in the ordinary course of its
business, the resolution of which, in the opinion of management, should not have
a material adverse affect on the Company's financial position.
11
<PAGE>
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
-----------------------------------------
During the second quarter of 1998: The Company issued 22,065 shares of
unregistered Common Stock to certain employees and creditors of the Company for
debt conversions and performance bonuses in satisfaction of debts to the
holders; and also provided for the issuance of 30,428 shares of Series G
Preferred Stock to MCA Financial Corp., in exchange for cash, in each case in
transactions exempt from registration under the Securities Act of 1933 (the
"Act"), pursuant to Section 4(2) of the Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE SECURITY HOLDERS
------------------------------------------------
None.
ITEM 5. OTHER INFORMATION
-----------------
As further discussed in PART I ITEM 2, the Company closed a $10,000,000
bulk loan acquisition warehouse line with First Union National Bank.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) EXHIBITS
None
(b) REPORTS ON FORM 8-K
None
12
<PAGE>
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: /c/ Irving H. Bowen
---------------------------------------------------------------
Irving H. Bowen, Executive Vice President, Treasurer
& Chief Financial Officer, Director (Principal Accounting
Officer & Duly Authorized Director & Officer of the Registrant)
By: /c/ Mark D. Schaftlein
---------------------------------------------------------------
Mark D. Schaftlein, President & Chief Executive
Officer, Director (Duly Authorized Director & Officer
of the Registrant)
Dated: August 10, 1998
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 309,233
<SECURITIES> 2,876,528
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 20,103,905
<CURRENT-ASSETS> 20,413,138
<PP&E> 1,138,048
<DEPRECIATION> (390,833)
<TOTAL-ASSETS> 25,634,290
<CURRENT-LIABILITIES> 22,266,522
<BONDS> 1,189,295
0
1,300,010
<COMMON> 14,324
<OTHER-SE> 1,114,139
<TOTAL-LIABILITY-AND-EQUITY> 25,634,290
<SALES> 3,748,223
<TOTAL-REVENUES> 4,114,482
<CGS> 721,139
<TOTAL-COSTS> 3,637,428
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 445,522
<INCOME-PRETAX> 512,054
<INCOME-TAX> 163,469
<INCOME-CONTINUING> 348,585
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 512,054
<EPS-PRIMARY> .18
<EPS-DILUTED> .10
</TABLE>
