SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: February 26, 2003
World Health Alternatives, Inc.
(Exact Name of Registrant as Specified in Charter)
Florida 333-84934 04-3613924
(State or Other Jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
300 Penn Center Boulevard
Pittsburgh, Pennsylvania 15235
(Address of principal executive offices) (Zip code)
412-829-7800
(Registrant's telephone number, including area code)
All correspondence to:
Brenda Lee Hamilton, Esquire
Hamilton, Lehrer and Dargan, P.A.
2 East Camino Real, Suite 202
Boca Raton, Florida 33432
561-416-8956 Telephone;
561-416-2855 Facsimile
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
World Health Alternatives, Inc. is referred to herein as "the Company", "us", or
"we".
Item 1. Changes In Control
On February 20, 2003, we completed our acquisition of 100% of the outstanding
common stock of Better Solutions, Inc. from its two shareholders, Marc D. Roup
and Richard E. McDonald, in exchange for newly issued shares of our common
stock. As a result of the transaction:
o Better Solutions, Inc. became our wholly owned subsidiary;
o Our previous officers and directors, Edward Siceloff and Joseph Prugh,
resigned all positions they held with us;
o Richard E. McDonald became our President, Principal Financial Officer,
Principal Accounting Officer, and Chairman of the Board of Directors;
o Marc D. Roup became our Chief Executive Officer and Director;
o We issued 16,500,000 shares of our common stock, which represents
approximately 41% of our common stock, to Richard E. McDonald;
o We issued 16,500,000 shares of our common stock, which represents
approximately 41% of our common stock, to Marc D. Roup;
o As a result of the issuance of an aggregate amount of 33,000,000
shares of stock to Marc D. Roup and Richard E. McDonald, a change in
the voting control of our common stock occurred;
o Edward Siceloff, our prior president and director, retired 39,500,000
of the 40,003,000 shares held by him after which he held 503,000
shares of our common stock;
o Joseph Prugh, our prior director, retired 8,000,000 of the 8,006,000
shares held by him after which he held 6,000 shares of our common
stock;
o Better Solutions, Inc.'s medical staffing business became integrated
into our business.
As an inducement for the shareholders of Better Solutions, Inc. to enter into
the agreement for us to acquire Better Solutions, Inc., on December 27, 2002,
Barry Gewin, the holder of 850,000 shares of our common stock, entered into an
agreement with Better Solutions, Inc., whereby Barry Gewin agreed to subject
his shares of our common stock to a lock up agreement. Barry Gewin agreed to
sell the 850,000 shares of our common stock held by him only, as follows:
a. For the first full calendar month after we complete the acquisition of Better
Solutions, Inc., Barry Gewin is allowed to sell 250,000 shares of our common
stock at his discretion. b. Beginning the period from the second month after we
complete the acquisition of Better Solutions, Inc., and until the expiration of
the sixth month, during each respective month of this period, Barry Gewin is
allowed to sell our common stock held by him at his discretion up to an amount
not to exceed twenty five (25) percent of the prior calendar month's trading
volume as reported by the OTCBB. c. After expiration of the sixth month after we
complete the acquisition of Better Solutions, Inc., Barry Gewin can sell the
shares of our common stock as he deems fit pursuant to the agreement.
As an inducement for the shareholders of Better Solutions, Inc. to enter into
the agreement for us to acquire Better Solutions, Inc., on December 27, 2002,
Tommi Ferguson, the holder of 750,000 shares of our common stock, entered into
an agreement with Better Solutions, Inc., whereby Tommi Ferguson agreed to
subject her shares of our common stock to a lock up agreement. Tommi Ferguson
agreed to sell the 750,000 shares of our common stock held by her only as
follows:
a. For the first full calendar month after we complete the acquisition of Better
Solutions, Inc., Tommi Ferguson is allowed to sell 250,000 shares of our common
stock at her discretion. b. Beginning the period from the second month after we
complete the acquisition of Better Solutions, Inc., and until the expiration of
the sixth month, during each respective month of this period, Tommi Ferguson
shall be allowed to sell our common stock held by her at his discretion up to an
amount not to exceed twenty five (25) percent of the prior calendar month's
trading volume as reported by the OTCBB. c. After expiration of the sixth month
after we complete the acquisition of Better Solutions, Inc., Tommi Ferguson can
sell the shares of our common stock as she deems fit pursuant to the agreement.
We are filing our updated financial statements reflecting the business of Better
Solutions, Inc. in this 8K under Item 7. below.
Item 2. Acquisition Or Disposition Of Assets
Not Applicable.
Item 3. Bankruptcy or Receivership
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant
Not Applicable.
Item 5. Other Events and Regulation FD Disclosure
Not Applicable.
Item 6. Resignations of Registrant's Directors
Not Applicable.
Item 7. Financial Statements, Pro Forma Financial Information And Exhibits
BETTER SOLUTIONS INCORPORATED
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
TABLE OF CONTENTS
Independent Auditor's Report................................................. 1
Financial Statements:
Balance Sheets at December 31, 2002 and 2001............................ 2
Statements of Income for the years ended December 31, 2002 and 2001..... 3
Statements of Changes in Shareholders' Equity for the years ended
December 31, 2002 and 2001.............................................. 4
Statements of Cash Flows for the years ended December 31, 2002 and 2001. 5
Notes to Financial Statements.............................................. 6-8
DaszkalBolton LLP
Certified Public Accountants
Michael I. Daszkal, CPA, P.A. 2401 N.W. Boca Raton Boulevard
Jeffery A. Bolton, CPA, P.A. Boca Raton, FL 33431
Timothy R. Devlin, CPA, P.A. t: 561.367.1040
Michael S. Kridel, CPA, P.A. f: 561.750.3236
Marjorie A. Horwin, CPA, P.A. www.daszkalbolton.com
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Better Solutions Incorporated
We have audited the accompanying balance sheets of Better Solutions Incorporated
as of December 31, 2002 and 2001, and the related statements of income, changes
in shareholders' equity and cash flows for the years then ended. 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Better Solutions Incorporated
at December 31, 2002 and 2001, and the results of their operations and their
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
/s/DASZKAL BOLTON LLP
Boca Raton, Florida
February 12, 2003
BETTER SOLUTIONS INCORPORATED
BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
2002 2001
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 64,864 $ 5,802
Accounts receivable 157,957 166,736
Other current assets 515 2,876
---------- ----------
Total current assets 223,336 175,414
---------- ----------
Property, plant and equipment, net 43,360 16,379
---------- ----------
Total assets $ 266,696 $ 191,793
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 38,720 $ 4,049
Accrued liabilities 40,222 87,012
Income taxes payable 27,000 33,737
---------- ----------
Total current liabilities 105,942 124,798
---------- ----------
Shareholders' equity:
Common stock, no par value per share;
1,000,000 shares authorized, 20,000
shares issued and outstanding 15,858 200
Retained earnings 144,896 66,795
---------- ----------
Total shareholders' equity 160,754 66,995
---------- ----------
Total liabilities
and shareholders' equity $ 266,696 $ 191,793
========== ==========
See accompanying notes to financial statements.
-2-
BETTER SOLUTIONS INCORPORATED
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
----------- -----------
Sales $ 2,796,911 $ 2,707,891
Cost of sales 1,781,865 1,638,882
----------- -----------
Gross profit 1,015,046 1,069,009
Selling, marketing, warehouse
and administrative expenses 865,904 879,696
----------- -----------
Operating income 149,142 189,313
Other income (expense):
Interest expense (74,146) (61,765)
Interest income 588 242
Other income (expense) 2,517 1,111
----------- -----------
(71,041) (60,412)
----------- -----------
Net income before income tax 78,101 128,901
Income tax - 36,650
----------- -----------
Net income $ 78,101 $ 92,251
=========== ===========
See accompanying notes to financial statements.
-3-
BETTER SOLUTIONS INCORPORATED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
Common Stock Retained
Shares Amount Earnings Total
------- -------- --------- ---------
Balance, December 31, 2000 20,000 $ 200 $ 168,285 $ 168,485
Dividends - - (193,741) (193,741)
Net income - December 31, 2001 - - 92,251 92,251
------- -------- --------- ---------
Balance, December 31, 2001 20,000 200 66,795 66,995
Capital contributions, net - 15,658 - 15,658
Net income - December 31, 2002 - - 78,101 78,101
------- -------- --------- ---------
Balance, December 31, 2002 20,000 $ 15,858 $ 144,896 $ 160,754
======= ======== ========= =========
See accompanying notes to financial statements.
-4-
BETTER SOLUTIONS INCORPORATED
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
---------- ----------
Cash flows from operating activities:
Net income $ 78,101 $ 92,251
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation of property, plant
and equipment 11,924 3,619
(Increase) decrease in:
Accounts receivable 8,779 3,466
Other current assets 2,361 1,784
Increase (decrease) in:
Accounts payable 34,671 (3,219)
Accrued liabilities (46,790) 79,099
Income taxes payable (6,737) 33,737
---------- ----------
Net cash provided by operating activities 82,309 210,737
---------- ----------
Cash flows from investing activities:
Purchases of property, plant and equipment (38,905) (19,998)
---------- ----------
Cash flows from financing activities:
Shareholders contributions 15,658 -
Dividends - (193,741)
Loan proceeds, related party 56,104 -
Loan repayment, related party (56,104) -
---------- ----------
Net cash provided by (used in)
financing activities 15,658 (193,741)
---------- ----------
Net increase (decrease) in cash and
cash equivalents 59,062 (3,002)
Cash and cash equivalents, beginning of year 5,802 8,804
---------- ----------
Cash and cash equivalents, end of year $ 64,864 $ 5,802
========== ==========
Supplementary disclosure of cash activities:
- --------------------------------------------
Cash paid for interest $ 74,146 $ 61,765
========== ==========
Cash paid for income taxes $ 6,737 $ 2,913
========== ==========
See accompanying notes to financial statements.
-5-
BETTER SOLUTIONS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
Better Solutions Incorporated (the "Company") was incorporated in the state of
Pennsylvania on August 30, 2000 and is primarily involved in staffing medical
personnel to hospitals and other healthcare related facilities. The Company
places medical professionals, such as nurses, doctors, pharmacists and medical
technicians, on either an hourly or permanent consulting basis and charges their
clients a fee for this service.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
The Company considers all investments purchased with an original maturity of
less than three months to be cash equivalents.
Revenue Recognition and Accounts Receivable
The Company recognizes revenue on service contracts as services are performed.
Property, Plant and Equipment
Property, plant and equipment is carried at cost. Depreciation is computed using
the straight-line method over the following estimated lives:
Software 3 years
Computer equipment 5 years
Furniture and fixtures 7 years
Advertising
The Company expenses advertising costs as incurred. The Company incurred
advertising expenses of approximately $26,184 and $41,482 during the years ended
December 31, 2002 and 2001, respectively. These amounts are included in selling,
marketing, warehouse and administrative expenses.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following at December 31:
2002 2001
--------------- ---------------
Computers and equipment $ 48,318 $ 13,342
Software 3,929 -
Furniture and fixtures 6,656 6,656
--------------- ---------------
58,903 19,998
Less: accumulated depreciation (15,543) (3,619)
--------------- ---------------
$ 43,360 $ 16,379
=============== ===============
-6-
BETTER SOLUTIONS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, continued
Depreciation expense for the years ended December 31, 2002 and 2001 was
approximately $11,924 and $3,619, respectively.
NOTE 4 - LEASE OBLIGATIONS
The Company leases premises, automobiles and operating equipment under operating
lease agreements with unrelated parties. Future minimum rental commitments under
these noncancellable operating leases are as follows:
For the Year Ending December 31,
-------------------------------------
2003 $ 161,672
2004 61,547
2005 7,584
2006 -
2007 -
-
Total minimum rental commitment $ 230,803
=========
Rental expense of approximately $91,060 and $61,877 was incurred in connection
with these leases in 2002 and 2001, respectively.
NOTE 5 - ACCOUNTS RECEIVABLE
Accounts receivable comprise the following at December 31, 2002, and December
31, 2001:
2002 2001
--------- ---------
Receivables assigned to factor $ 289,304 $ 200,286
Advances to (from) factor (276,816) (179,368)
-------- ---------
Amounts due from factor 12,488 20,918
Unfactored accounts receivable 145,469 145,818
--------- ---------
$ 157,957 $ 166,736
========= =========
Pursuant to a factoring agreement, AmeriSource Funding, Inc. acts as the
Company's factor for the majority of its receivables, which are sold with
recourse on a pre-approved basis. Fees for accounts receivables purchased by
AmeriSource Funding, Inc. includes a flat rate of 3.5% for the first 35 days an
account is outstanding. An additional fee of 0.12% per day begins on the 36th
day the account is outstanding. At December 31, 2002 and 2001, the factoring
charge amounted to $69,814 and $58,959, respectively. The Company's obligations
to AmeriSource Funding, Inc. are collateralized by substantially all of the
Company's assets and are guaranteed by the shareholders.
-7-
BETTER SOLUTIONS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - INCOME TAXES
On January 1, 2002 the Company, with the consent of its shareholders, elected
under the Internal Revenue Code to be an S Corporation. In lieu of corporation
income taxes, the stockholders of an S Corporation are taxed on their
proportionate share of the Company's taxable income. Therefore, no provision or
liability for federal or state income taxes has been included in the
accompanying financial statements.
For the year ended December 31, 2001 the Company incurred income taxes of
$36,650. This amount included approximately $27,000 of built in gains tax which
will be paid with the Company's 2002 income tax return.
NOTE 7 - SALES CONCENTRATION
In 2002, one customer accounted for 10.8% of sales. In 2001, two customers
accounted for 22.7% of sales.
NOTE 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments are accounts receivable and accounts
payable. The approximate fair value of the accounts payable is based on its
short-term nature.
NOTE 9 - SUBSEQUENT EVENTS
On December 27, 2002 the Company entered into an agreement with World Health
Alternatives, Inc. ("WHAI") and its shareholders to acquire all of the issued
and outstanding shares of capital stock of the Company in exchange for
approximately 90% of WHAI's capital stock. For accounting purposes, the public
shell merger will be treated as a recapitalization of the Company.
On January 8, 2003, the Company entered into a promissory note agreement with
PNC Bank providing for a $250,000 revolving line of credit. Under the terms of
the agreement, the Company is required to pay a 6.25% per annum interest rate on
any unpaid principal balance. The note is secured by the personal property of
the shareholders.
-8-
Pro Forma financial information.
On December 27, 2002, World Health Alternatives, Inc. ("WHAI" or the
"Registrant"), executed an agreement with Better Solutions, Inc. ("BSI") and its
shareholders, to acquire all of the issued and outstanding shares of common
stock of BSI in exchange for 33,000,000 shares of WHAI's common stock. As a
result of the common stock exchange, the two shareholders of BSI will acquire
approximately 87% of the outstanding voting control stock of WHAI upon closing.
The following Pro Forma Combined Balance Sheet of the Registrant have been
prepared by management of the Registrant based upon the balance sheets of BSI
for the year ended December 31, 2002. The pro forma combined balance sheet as of
December 31, 2002 gives effect to the proposed share exchange as if it had
occurred as of December 31, 2002.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable. The pro forma combined
financial statements do not purport to represent what the combined companies'
financial position or results of operations would actually have been had the
proposed share exchange occurred on such date or as of the beginning of the
period indicated, or to project the combined companies' financial position or
results of operations for any future period.
WHAI
Historical Acquisition
BSI Adjustments Pro Forma
$ $ $
(3) (4)
ASSETS
Current assets:
Cash and cash equivalents 64,864 97 (1) 64,961
Accounts receivable 157,957 157,957
Other current assets 515 1,030 (1) 1,545
Property, plant and equipment, net 43,360 43,360
--------- ----------- -----------
Total assets 266,696 1,127 (2) 267,823
========= =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 38,720 6,696 (1) 45,416
Accrued liabilities 40,222 40,222
Income taxes payable 27,000 27,000
Shareholders' equity:
Common stock, no par value
per share; 1,000,000 shares
authorized, 20,000 shares
issued and outstanding 15,858 (12,159)(1),(2) 3,699
Additional paid in capital 6,590 (1) 6,590
Retained earnings 144,896 - 144,896
--------- ----------- -----------
Total liabilities and
shareholder's equity 266,696 1,127 (2) 267,823
========= =========== ===========
Note (1) The adjustment to record the assets and liabilities acquired by BSI,
the accounting acquirer
Note (2) The Company issued 33,000,000 shares to the shareholders of BSI in
exchange for 100% of their common stock
Note (3) These numbers were obtained from the December 31, 2002 audited
financial statements of Better Solutions, Inc. ("BSI")
Note (4) These numbers were obtained from the November 30, 2002 10-QSB filed
by World Health Alternatives, Inc. ("WHAI")
- --------------------------------------------------------------------------------
Exhibits
Agreement and Plan of Share Exchange
Item 8. Change In Fiscal Year
Not Applicable.
Item 9. Regulation FD Disclosure
Not Applicable.
SIGNATURE
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.
WORLD HEALTH ALTERNATIVES, INC.
February 26, 2003
/s/ Richard E. McDonald
President, Principal Financial Officer, Principal Accounting Officer, Chairman
of the Board of Directors
/s/ Marc D. Roup
Chief Executive Officer and Director
EXHIBITS
Exhibit No. Description of Exhibits
3.3 Agreement and Plan of Share Exchange between us and Better
Solutions, Inc.,*
* previously filed in our Form 8K dated January 6, 2003.
