SCHEDULE 14A INFORMATION
SUPPLEMENT TO PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive proxy statement
[X] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
WESTMARK GROUP HOLDINGS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
WESTMARK GROUP HOLDINGS, INC.
355 N.E. FIFTH AVENUE, SUITE 4
DELRAY BEACH, FLORIDA 33483
TO OUR SHAREHOLDERS:
You recently received a Proxy Statement dated April 30, 1998 (the "Proxy
Statement") in connection with the solicitation of proxies to be used at the
Annual Meeting of Westmark Group Holdings, Inc. (the "Company") to be held on
June 29, 1998, and at any adjournments thereof.
The Proxy Statement contains a description of various contractual
relationships between Medical Industries of America, Inc. ("MIOA") and the
Company, including (1) a provision in the November 1996 Stock Purchase Agreement
providing that MIOA's ownership of the Company would not be diluted below 49%
(the "Anti-Dilution Provision"), (2) a January 1997 settlement agreement, as
amended in March and June 1997 (the "Settlement Agreement"), which terminated
the Anti-Dilution Provision, and (3) a promissory note in the remaining
principal amount of approximately $1,852,924 (the "MIOA Note") the Company
issued to MIOA in connection with the Settlement Agreement.
MIOA has asserted that (1) the Anti-Dilution Provision is still in effect,
(2) the Company is in default with respect to payment of the Note, and (3)
bonuses paid in common stock in 1998 to senior management constitute a breach of
fiduciary duty. The Company vigorously disputes all these assertions which it
believes are without merit. MIOA has threatened to file a lawsuit against the
Company based on these allegations. The Company filed a Declaratory Judgment
action in Palm Beach County Circuit Court, Case No. 98 005545 AG, on June 23,
1998, seeking a declaration by the court that MIOA is bound by the terms of the
Settlement Agreement which terminated the Anti-Dilution Provision.
Notwithstanding the Company's firm belief in the lack of foundation for
MIOA's assertions, in order to afford you sufficient time to consider these
assertions, the Company intends to convene and then adjourn the June 29, 1998
Annual Meeting without considering any of the matters scheduled for presentation
to the shareholders at such meeting. The Anticipated Adjourned Annual Meeting
will be held on August 10, 1998, at the Delray Beach Marriott, 10 North Ocean
Boulevard, Delray Beach, Florida 33483 at 10:00 a.m. local time, at which time
the matters described in the original Proxy Statement will be submitted to
shareholders. These matters were:
1. To elect six directors to serve for the ensuing year;
2. To amend the Company's Employee Stock Option Plan to increase the number
of shares of common stock reserved for issuance thereunder from 600,000 to
900,000;
3. To ratify the selection by the Board of Directors of Rachlin Cohen &
Holtz as the Company's independent accountants for the current fiscal year; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
This Proxy Supplement also contains a revision to the Proxy Statement
beneficial ownership table titled Principal Shareholders and Security Ownership
of Management. The revision consists of the deletion from the table of a
shareholder whose right to convert its Company Series B Preferred Stock into
Common Stock is contractually limited so as to prevent the shareholder from
attaining more than 5% of the outstanding shares of Common Stock.
A new white Proxy Card has been enclosed with this Proxy Supplement. IF YOU
HAVE ALREADY RETURNED YOUR INITIAL PROXY CARD, YOU DO NOT NEED TO RETURN THE
ENCLOSED PROXY CARD UNLESS YOU WISH TO CHANGE YOUR VOTE.
Shareholders of record at the close of business on April 30, 1998 will be
entitled to notice of and to vote at the adjournment of the Annual Meeting. The
stock transfer books of the Company will remain open following the record date.
All shareholders are cordially invited to attend the adjourned Annual
Meeting.
By Order of the Board of Directors,
Mark Schaftlein
President and Chief Executive Officer
<PAGE>
Delray Beach, Florida
June 23, 1998
THIS SUPPLEMENT TO PROXY STATEMENT SHOULD BE READ CAREFULLY AND SHOULD BE READ
IN CONJUNCTION WITH THE PROXY STATEMENT DATED APRIL 30, 1998, WHICH WAS MAILED
TO COMPANY STOCKHOLDERS ON OR ABOUT MAY 8, 1998. IF YOU NEED AN ADDITIONAL COPY
OF THE PROXY STATEMENT, ONE WILL BE PROVIDED UPON WRITTEN REQUEST TO THE COMPANY
AT WESTMARK GROUP HOLDINGS, INC., 355 N.E. FIFTH AVENUE, SUITE 4, DELRAY BEACH,
FLORIDA 33483, ATTENTION: BARBARA NOLA, SECRETARY.
IT IS IMPORTANT THAT THE PROXY CARDS BE RETURNED PROMPTLY. THEREFORE, WHETHER OR
NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ADJOURNED ANNUAL MEETING, IN THE
EVENT YOU HAVE NOT YET SIGNED AND RETURNED THE PROXY CARD ENCLOSED WITH THE
PROXY STATEMENT DATED APRIL 30, 1998, OR IN THE EVENT YOU WISH TO REVOKE SUCH
PROXY AND CHANGE YOUR VOTE, PLEASE VOTE, DATE AND SIGN THE ENCLOSED WHITE PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH DOES NOT REQUIRE POSTAGE IF
MAILED IN THE UNITED STATES. THIS WILL NOT PREVENT YOU FROM VOTING IN PERSON IF
YOU ARE PRESENT AT THE ADJOURNED ANNUAL MEETING.
YOU NEED NOT EXECUTE THE ENCLOSED WHITE PROXY CARD IF YOU PREVIOUSLY EXECUTED,
DATED AND RETURNED THE PROXY CARD ENCLOSED WITH THE PROXY STATEMENT DATED APRIL
30, 1998 AND YOU DO NOT WISH TO REVOKE IT AND CHANGE YOUR VOTE.
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WESTMARK GROUP HOLDINGS, INC.
355 N.E. FIFTH AVENUE, SUITE 4
DELRAY BEACH, FLORIDA 33483
SUPPLEMENTAL PROXY MATERIAL
ANNUAL MEETING OF SHAREHOLDERS
Dated: June 22, 1998
This Supplement to Proxy Statement has been prepared and is furnished by
the Board of Directors of Westmark Group Holdings, Inc. (the "Company") in
connection with the solicitation of proxies for the Annual Meeting of
Shareholders of the Company to be held on June 29, 1998. Because of the
assertions by Medical Industries of America, Inc. ("MIOA") of the matters
described below (the "MIOA Assertions"), the Company intends to convene and then
adjourn the June 29, 1998 Annual Meeting without considering any of the matters
scheduled for presentation to the shareholders at such meeting. The Anticipated
Adjourned Annual Meeting will be held on August 10, 1998, at which time the
matters described in the original Proxy Statement will be submitted to
shareholders.
It is anticipated that this Supplement to Proxy Statement and the
accompanying form of proxy will be mailed to shareholders on or about June 25,
1998.
Only shareholders of record of the Company's common stock, $.005 par value
(the "Common Stock"), at the close of business on April 30, 1998, are entitled
to vote at the Annual Meeting and the Anticipated Adjourned Annual Meeting. On
that date, there were 2,866,186 issued and outstanding shares of Common Stock
entitled to vote on each matter to be presented at the meeting.
THE MIOA ASSERTIONS
In the section titled "Certain Relationships and Related Transactions," the
original Proxy Statement contains a description of various contractual
relationships between Medical Industries of America, Inc. ("MIOA") and the
Company, including (1) a provision in the November 1996 Stock Purchase Agreement
providing that MIOA's ownership of the Company would not be diluted below 49%
(the "Anti-Dilution Provision"), (2) a January 1997 settlement agreement, as
amended in March and June 1997 (the "Settlement Agreement"), which terminated
the Anti-Dilution Provision, and (3) a promissory note in the remaining
principal amount of approximately $1,852,924 (the "MIOA Note") the Company
issued to MIOA in connection with the Settlement Agreement.
MIOA has asserted that the Settlement Agreement was conditioned upon the
Company securing additional financing, and that therefore the Anti-Dilution
Provision is still in effect. In addition, MIOA has asserted that the Company is
in default with respect to payment of the MIOA Note. MIOA is also asserting that
bonuses paid in common stock in 1998 to senior management constitute a breach of
fiduciary duty. The Company disputes all these assertions which it believes are
without merit. The Company does not intend to issue any additional shares of
Common Stock to MIOA based on the MIOA Assertions or to give effect to the
demand for their issuance in computing share ownership for purposes of the
Annual Meeting or any adjournments thereof. MIOA has threatened to file a
lawsuit against the Company alleging (1) breach of the Stock Purchase Agreement,
(2) failure to disclose the above-described assertions in the Proxy Statement,
and (3) breach of fiduciary duty. Should such a lawsuit be filed, the Company
does not anticipate any liability. The Company filed a Declaratory Judgment
action in Palm Beach County Circuit Court, Case No. 98 005545 AG, on June 23,
1998, seeking a declaration by the court that MIOA is bound by the terms of the
Settlement Agreement which terminated the Anti-Dilution Provision.
If the Company fails to prevail in the Declaratory Judgment action it may
be required to issue to MIOA up to 2,099,947 additional shares of common stock,
based on the number of shares outstanding as of the record date of April 30,
1998. MIOA would then own 2,433,405 shares of common stock out of 4,966,133
shares outstanding (49%), based on the number of shares outstanding as of the
record date of April 30, 1998. Such issuance would be
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<PAGE>
highly dilutive to existing shareholders and probably would give MIOA effective
control of the Company. Approval of proposal two, which provides for an increase
in the number of shares provided for in the Company's Employee Stock Option Plan
from 600,000 to 900,000 will constitute additional dilution. In addition, if
MIOA is successful in asserting that the MIOA Note is in default, the MIOA Note
may constitute a current liability of the Company. If that were to occur, the
Company would have to enter into an alternative payment arrangement with MIOA or
secure alternative financing to repay the MIOA Note. Although the Company has
not made any such alternative financing arrangements, it believes it could
secure such financing on acceptable terms.
Shares represented by a properly executed proxy received in time to permit
its use at the Annual Meeting or any adjournment thereof will be voted in
accordance with the instructions indicated therein. If no instructions are
indicated, the shares represented by the proxy will be voted: (i) for the
election of all nominees for director; (ii) for approval of amendment to the
Company's Employee Stock Option Plan; (iii) for the ratification of the
appointment of Rachlin Cohen & Holz as the independent certified public
accountants of the Company for the fiscal year ending December 31, 1998; and
(iv) in the discretion of the proxy holders as to any other matter which may
properly come before the Annual Meeting. A shareholder who has given a proxy may
revoke it at any time before it is voted at the Anticipated Adjourned Annual
Meeting by giving written notice of revocation to the Secretary of the Company,
by submitting a proxy bearing a later date, or by attending the Annual Meeting
and voting in person.
The expense of soliciting proxies will be borne by the Company. Proxies
will be solicited principally by mail, but directors, officers and regular
employees of the Company may solicit proxies personally, by telephone or by
facsimile transmission. The Company will reimburse custodians, nominees or other
persons for their out-of-pocket expenses in sending proxy material to beneficial
owners.
Each share of Common Stock entitles the holder thereof to cast one vote on
each matter to be voted upon at the 1998 Annual Meeting and the Anticipated
Adjourned Annual Meeting. A majority of the outstanding shares will constitute a
quorum at the meeting. Abstentions and broker non-votes are counted only for
purposes of electing directors in accordance with Proposal One. None of the
actions to be voted upon at the 1998 Annual Meeting and the Anticipated
Adjourned Annual Meeting shall create dissenters' rights under the Delaware
General Corporation Law.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" ALL NOMINEES
FOR DIRECTOR AND "FOR" EACH OF THE PROPOSALS DESCRIBED ABOVE
In the event you have not yet signed and returned the Proxy Card enclosed
with the Proxy Statement dated April 30, 1998, or in the event you wish to
revoke such proxy and change your vote, you are requested, regardless of the
number of shares you hold, to sign the enclosed white Proxy Card and return it
promptly in the enclosed envelope.
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<PAGE>
PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The revised table below is based on information obtained from the persons
named below with respect to the shares of Common Stock beneficially owned, as of
April 9, 1998, by (i) each person known by the Company to be the owner of more
than 5% of the outstanding shares of Common Stock, (ii) each director and
nominee for director, (iii) each executive officer included in the Summary
Compensation Table and (iv) all executive officers and directors of the Company
as a group. It does not give effect to the MIOA Anti-Dilution Claim which the
Company is contesting. The revision to this table consists of the deletion of a
shareholder whose right to convert its Company Series B Preferred Stock into
Common Stock is contractually limited so as to prevent the shareholder from
attaining more than 5% of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OF BENEFICIAL OUTSTANDING
OWNER OWNERSHIP(1) SHARES OWNED(2)
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<S> <C> <C>
Medical Industries of America(3) 571,553 18.6%
1903 S. Congress Avenue, #400
Boynton Beach, Florida 33426
Mark Schaftlein(4) 221,008 7.6%
355 N.E. Fifth Avenue, Suite 4
Delray Beach, Florida 33483
Harry C. Coolidge, Esq.(5) 191,821 6.7%
Twin Palms Financial Center
1260 41st Avenue, Suite N
Capitola, California 95010
Payton Story, III(6) 183,334 6.4%
355 N.E. Fifth Avenue, Suite 4
Delray Beach, Florida 33483
Eugene Snowden(7) 154,585 5.2%
13 S. Main Street
Winchester, Kentucky 40391
Irving Bowen(8) 113,334 4.0%
355 N.E. Fifth Avenue, Suite 4
Delray Beach, Florida 33483
Louis Resweber(9) 64,706 2.2%
355 N.E. Fifth Avenue, Suite 4
Delray Beach, Florida 33483
John O. Hopkins(10) 8,000 0.3%
355 N.E. Fifth Avenue, Suite 4
Delray Beach, Florida 33483
Allan C. Sorensen(11) 5,000 0.2%
355 N.E. Fifth Avenue, Suite 4
Delray Beach, Florida 33483
All executive officers and directors as a group 595,382 19.6%
(6 persons)(12)
</TABLE>
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(1) The number of shares of Common Stock beneficially owned by each person is
determined under the rules of the Securities and Exchange Commission, and
the information is not necessarily indicative of beneficial ownership for
any other purpose. Under such rules, beneficial ownership includes any
shares as to which the holder has sole or shared voting power or investment
power and also any shares of Common Stock which the holder has the right to
acquire within 60 days after June 22, 1998 through the exercise of any
stock option or other right. The inclusion herein of any shares of Common
Stock deemed beneficially owned does not constitute an admission of
beneficial ownership of those shares. Unless otherwise indicated, the
persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
(2) Percentage of outstanding shares owned is calculated on the basis of the
amount of outstanding shares plus, for each person or group, any shares
that person or group has the right to acquire within 60 days after April
30, 1998, pursuant to options, warrants, conversion privileges, or other
rights.
(3) Includes 238,095 shares of the Company's Common Stock issuable upon the
conversion of 200,000 shares of the Company's Series C Convertible
Preferred Stock, based on a conversion rate of 84% of the closing price on
the day before conversion ($2.94 per share based on a closing price of
$3.50 on April 8, 1998).
(4) Includes: (i) 45,000 shares that may be issued upon the exercise of
outstanding options; (ii) 18,000 shares that may be issued upon the
exercise of outstanding warrants; and (iii) 103,333 shares which were
purchased pursuant to rights granted the holder by the Company on February
20, 1998.
(5) Includes (i) 39,500 shares that may be issued upon the exercise of
outstanding options; and (ii) 50,000 shares which were purchased pursuant
to rights granted the holder by the Company on February 20, 1998.
(6) Includes (i) 40,000 shares that may be issued upon the exercise of
outstanding options; and (ii) 103,333 shares which were purchased pursuant
to rights granted the holder by the Company on February 20, 1998.
(7) Includes: (i) 39,543 shares that may be issued upon the conversion of
outstanding convertible debt; and (ii) 97,942 shares that may be issued
upon the exercise of outstanding warrants.
(8) Includes (i) 20,000 shares that may be issued upon the exercise of
outstanding options; and (ii) 93,334 shares which were purchased pursuant
to rights granted the holder by the Company on February 20, 1998.
(9) Includes: (i) 10,000 shares that may be issued upon the exercise of
outstanding options; and (ii) 50,000 shares that may be issued upon the
exercise of outstanding warrants.
(10) Includes 5,000 shares that may be issued upon the exercise of outstanding
options.
(11) Includes 5,000 shares that may be issued upon the exercise of outstanding
options.
(12) See footnotes (1) through (11) above.
In the event you have not yet signed and returned the Proxy Card enclosed
with the Proxy Statement dated April 30, 1998, or in the event you wish to
revoke such proxy and change your vote, kindly date, sign and return the
enclosed white Proxy Card.
By Order of the Board of Directors
/s/ Mark Schaftlein
-------------------------------
MARK SCHAFTLEIN
President and Chief Executive Officer
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<PAGE>
WESTMARK GROUP HOLDINGS, INC.
PROXY FOR THE ADJOURNED ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 24, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, revoking all prior proxies, hereby appoint(s) Mark
Schaftlein and Irving Bowen, and each of them, with full power of substitution,
as proxies to represent and vote, as designated herein, all shares of stock of
WESTMARK GROUP HOLDINGS, INC. (the "Company"), which the undersigned would be
entitled to vote if personally present at the Anticipated Adjourned Annual
Meeting of Shareholders of the Company to be held on August 10, 1998 at the
Delray Beach Marriott, 10 North Ocean Boulevard, Delray Beach, Florida 33483 at
10:00 a.m. local time, and at any adjournment thereof (the "Meeting").
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is given, this proxy will
be voted FOR all proposals. Attendance of the undersigned at the Meeting or at
any adjournment thereof, will not be deemed to revoke this proxy unless the
undersigned shall revoke this proxy in writing or shall deliver a subsequently
dated proxy to the Secretary of the Company or shall vote in person at the
Meeting.
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE.
1. To elect the following six (6) directors (except as marked below) for the
ensuing year.
NOMINEES: Mark Schaftlein; Irving Bowen; Payton Story, III;
Louis Resweber; Allan C. Sorensen; and John O. Hopkins.
[ ] FOR all nominees (except as marked below)
[ ] WITHHOLD authority to vote for all nominees
For all nominees except the following nominee(s):
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(CONTINUED AND TO BE SIGNED, ON REVERSE SIDE)
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<PAGE>
2. To approve the amendment to the Company's Employee Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the selection by the Board of Directors of Rachlin Cohen & Holz
as the Company's independent accountants for the fiscal year ending
December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated: , 1998
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Signature
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Print name
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Signature if held jointly
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Print name
Please sign exactly as name appears hereon. If the stock is registered in the
names of two or more persons, each should sign. Executors, administrators,
trustees, guardians, attorneys and corporate officers should add their titles.
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