-------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM 8-K
PURSUANT TO SECTION 13 OR 15 (D)
of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report: September 24, 2003
TRUE HEALTH, INC.
(Exact name of registrant as specified in its charter)
UTAH
(State or other jurisdiction of incorporation or organization)
000-30351 75-2263732
(Commission File Number) (IRS Employer Identification Number)
Kelsey House, 77 High Street
Beckenham, Kent, UK. BR3 1AN
(Address of principal executive offices)
David Francis, Chairman & CEO
True Health, Inc.
Kelsey House, 77 High Street
Beckenham, Kent, UK. BR3 1AN
(Name and address of agent for service)
(44) (0) 208 658 9575
(Telephone number, including area code of agent for service)
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Item 7. Financial Statements and Exhibits.
Financial Statements
Attached
Exhibits
None
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.
TRUE HEALTH, INC.
By: /s/David Francis
-----------------------------------
David Francis, President and CEO
Date: September 24, 2003
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Westmeria Health Care Limited
Beckenham, Kent, United Kingdom
We have audited the accompanying balance sheet of Westmeria Health Care Limited
as of January 31, 2003 and the related statements of operations, stockholders'
deficit and cash flows for each of the two years then ended. These financial
statements are the responsibility of Westmeria'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 Westmeria Health Care Limited
as of January 31, 2003 and the results of its operations and its cash flows for
each of the two years then ended in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that Westmeria
will continue as a going concern. As shown in the financial statements,
Westmeria incurred a net loss of $181,035 during the year ended January 31,
2003, and, as of that date, Westmeria's current liabilities
exceeded its current assets by $121,987. These factors raise substantial doubt
about Westmeria's ability to continue as a going concern. Management's plans in
regard to these matters are described in note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
MALONE & BAILEY, PLLC
www.malone-bailey.com
Houston, Texas
September 3, 2003
WESTMERIA HEALTH CARE LIMITED
BALANCE SHEET
January 31, 2003
ASSETS
Current Assets
Cash $ 255
Accounts receivable, net 210,030
Inventory 110,085
Income tax refund receivable 25,719
Other 2,113
---------
Total Current Assets 348,202
Equipment, net of accumulated depreciation of $230,125 230,444
---------
$ 578,646
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Note payable to factor $ 89,029
Current portion of notes payable 98,998
Accounts payable 111,008
Accrued expenses 68,864
Advances from stockholders 102,290
---------
Total Current Liabilities 470,189
Long-term portion of notes payable 173,783
---------
Total Liabilities 643,972
---------
Commitments
Stockholders' Deficit
Common stock, $.01 par value, 100,000,000
shares authorized, 37,500,000
shares issued and outstanding 375,000
Accumulated deficit (440,264)
Accumulated other comprehensive loss ( 62)
---------
Total Stockholders' Deficit ( 65,326)
---------
$ 578,646
=========
See accompanying summary of accounting policies
and notes to financial statements.
WESTMERIA HEALTH CARE LIMITED
STATEMENTS OF OPERATIONS
Years Ended January 31, 2003 and 2002
2003 2002
--------- ---------
Revenue
- Equipment rentals and sales $ 762,889 $ 483,196
- Gross fees from radiographer services 233,632 62,458
- Other 35,368 27,611
--------- --------
Total Revenues 1,031,889 573,265
--------- ---------
Cost of equipment sold and radiographer services 294,762 37,665
General and administrative 827,803 338,517
Depreciation 98,603 76,470
--------- ---------
Total operating expenses 1,221,168 452,652
--------- ---------
Operating income (loss) (189,279) 120,613
Interest income 49
Interest expense ( 14,423) ( 16,524)
--------- ---------
Income (loss) before income taxes (203,654) 104,089
Income tax expense (recovery) ( 23,619) 22,439
--------- ---------
NET INCOME (LOSS) $(181,035) $ 81,650
========= =========
Basic and diluted earnings (loss) per share $(.01) $.01
Weighted average shares outstanding 37,500,000 37,500,000
See accompanying summary of accounting policies
and notes to financial statements.
WESTMERIA HEALTH CARE LIMITED
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Years Ended January 31, 2003 and 2002
Accumulated
Other
Comprehensive
Common Stock Accumulated Income
Shares Amount (Deficit) (Loss) Totals
--------- -------- --------- ------- --------
Balances,
January 31, 2001 37,500,000 $375,000 $(346,994) $ 28,006
Net income 81,650 81,650
Foreign currency
translation $(2,225) (2,225)
--------
Comprehensive income 79,425
--------- -------- --------- ------- --------
Balances,
January 31, 2002 37,500,000 375,000 (265,344) (2,225) 107,431
Imputed interest
on stockholder
loans 5,115 5,115
Net loss (180,035) (180,035)
Foreign currency
translation 2,163 2,163
--------
Comprehensive loss (177,872)
--------- -------- --------- ------- --------
Balances,
January 31, 2003 37,500,000 $375,000 $(440,264) $( 62) $(65,326)
========= ======== ========= ======= ========
See accompanying summary of accounting policies
and notes to financial statements.
WESTMERIA HEALTH CARE LIMITED
STATEMENTS OF CASH FLOW
Years Ended January 31, 2003 and 2002
2003 2002
--------- ---------
Cash Flows From Operating Activities
Net income (loss) $(181,035) $ 81,650
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 98,603 76,470
Imputed interest on shareholder debt 5,115
Changes in:
Accounts receivable (50,180) ( 77,063)
Inventory (104,792) ( 4,528)
Income tax refund receivable (25,719)
Other current assets 2,118 ( 3,052)
Accounts payable 91,957 ( 6,658)
Accrued expenses (22,942) 36,568
Income taxes payable (25,822) 22,085
--------- ---------
Net Cash From (Used in) Operating Activities (211,697) 125,472
--------- ---------
Cash Flows Used in Investing Activities
Purchase of equipment (105,965) (110,004)
--------- ---------
Cash Flows From Financing Activities
Proceeds from stockholders 180,237 29,799
Net change in note payable to factor 89,029
Proceeds on notes payable 67,464 46,644
Payments on notes payable ( 11,572) ( 89,768)
--------- ---------
Net Cash From (Used in) Financing Activities 325,158 ( 13,326)
--------- ---------
Effect of exchange rate changes on cash ( 7,241) ( 2,496)
--------- ---------
Net change in cash 255 ( 354)
Cash at beginning of year 0 354
--------- ---------
Cash at end of year $ 255 $ 0
========= =========
Cash paid during the year for:
Interest $ 9,726 $ 16,524
Income taxes 25,822
See accompanying summary of accounting policies
and notes to financial statements.
WESTMERIA HEALTH CARE LIMITED
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
Westmeria Health Care Limited (Westmeria) was incorporated in England and Wales
in 1996. Westmeria rents and sells equipment to hospitals, clinics and nursing
homes. The equipment includes orthopedic mattresses, cushions, bed hoists, pumps
and other bed accessories. Beginning in fiscal 2003, Westmeria also began
placing and leasing radiographers (radiologists) with hospitals and clinics.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, as well as certain financial statement
disclosures. While management believes that the estimates and assumptions used
in the preparation of the financial statements are appropriate, actual results
could differ from these estimates.
Cash Equivalents. Highly liquid investments with original maturities of three
months or less are considered cash equivalents. There were no cash equivalents
as of January 31, 2003 and 2002.
Revenue Recognition. Rental revenue is recognized over the rental term,
generally by the month. Product sales are recognized when the product is
shipped. For placed and leased personnel, revenue is recognized when all
placement conditions have been met or as the leased employee performs services
and wages or contractor payments are incurred.
Allowance For Doubtful Accounts. Westmeria analyzes current accounts receivable
for an allowance for doubtful accounts based on historical bad debt, customer
credit-worthiness, the current business environment and historical experience
with the customer. The allowance includes specific reserves for accounts where
collection is deemed to be no longer probable.
Inventories. Inventories are valued at the lower of first-in, first-out (FIFO)
cost or market.
Long-lived Assets. Property and equipment are stated on the basis of historical
cost less accumulated depreciation. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets. Major
renewals and improvements are capitalized, while minor replacements, maintenance
and repairs are charged to current operations.
Impairment losses are recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. There
were no impairment losses in fiscal 2003 or 2002.
Income Taxes. Income tax expense is based on reported earnings before income
taxes. Deferred income taxes reflect the impact of temporary differences between
assets and liabilities recognized for financial reporting purposes and such
amounts recognized for tax purposes, and are measured by applying enacted tax
rates in effect in years in which the differences are expected to reverse.
Earnings per Share. Basic earnings per share equals net earnings divided by
weighted average shares outstanding during the year. Diluted earnings per share
include the impact of common stock equivalents using the treasury stock method
when the effect is dilutive. There were no common stock equivalents during
fiscal 2003 or 2002.
Segment reporting. Segment reporting is required where certain criteria are met,
for U.S. public reporting companies, which Westmeria became on June 27, 2003
(see Note 9). Westmeria operates two lines of business, but its internal
reporting does not formalize the separation of these two lines into separate
reporting divisions for management purposes. Thus, discrete financial
information by segment is not readily available and segment reporting is not
required.
Foreign currency. Westmeria designates the United Kingdom pound as their
functional currency because most transactions, including most inventory
purchases and all sales are conducted in U.K. pounds. Transactions are
translated to U.S. dollars for reporting purposes using current rates of
exchange for assets and liabilities. Income and expense elements are translated
at average rates that approximate the rates in effect on the transaction dates.
Equity transactions are translated at historical rates.
Transactions in foreign currencies are recorded using the rate of exchange at
the date of the transaction. There were no monetary assets or liabilities
denominated in foreign currencies as of January 31, 2003 or 2002.
Recently issued accounting pronouncements. Westmeria does not expect the
adoption of recently issued accounting pronouncements to have a significant
impact on its financial position, results of operations or cash flow.
Economic risk. All revenues are earned from the health care industry within the
United Kingdom.
NOTE 2 - GOING CONCERN
From February 2003 through July 2003, Westmeria raised additional funding from
stockholders of $111,171 to fund additional cash requirements of losses in the
first 6 months of fiscal 2004. Sales have increased almost 400% from the same
period in fiscal 2003. Management expects profits in the second half of the
year.
NOTE 3 - PROPERTY AND EQUIPMENT
Depreciation
Lives
------------
Rental equipment 4 years $ 330,212
Office equipment 3 - 5 years 87,511
Vehicles 4 years 42,846
---------
460,569
Less: accumulated depreciation (230,125)
---------
$ 230,444
=========
NOTE 4 - NOTE PAYABLE TO FACTOR
Westmeria maintains a credit line with Venture Finance PLC (Venture) which
involves the sale of Westmeria's eligible trade accounts receivable to Venture
at a 0.4% discount rate, with 85% of each account available in cash. Interest is
charged at prime + 1.75%. There are minimum per-quarter factoring fees. Accounts
not promptly collected must be repurchased by Westmeria. Because of this
mandatory recourse provision, this agreement is treated as a financing
arrangement with the sold receivables carried as assets by Westmeria, and the
net uncollected amount advanced by Venture to Westmeria as a loan. All discounts
are treated as interest expense. The majority stockholder has personally
guaranteed approximately $16,500 of this outstanding balance.
NOTE 5 - NOTES PAYABLE
Credit line payable to HSBC Bank PLC in London, England, with interest at
bank's prime rate + 2%, collateralized by substantially all assets and a
personal guarantee by the majority shareholder, repayable in monthly
installments of approximately $4,160 per month including interest. The maximum
credit under this agreement is $215,059, and the
agreement expires December 2007. $215,059
HSBC Bank PLC checking account overdraft credit line, limited to approximately
$16,543 beyond the above credit line maximum amount, with interest payable at
bank's prime rate + 2%, secured by substantially all assets, with no
specific repayment terms. 31,634
3 capitalized vehicle leases, with monthly payments due of approximately $722
including interest at 7 - 14% APR, collateralized by 3 vehicles with a cost of
approximately
$34,400. 15,716
Mastercard credit card balance owed to Bank of Scotland, and carried in the
name of a key employee, no collateral, with
interest at 14.9% APR, and approximately $5,400 credit limit. 10,372
--------
Total $272,781
Less: amounts due within one year (98,998)
--------
Long-term portion of notes payable $173,783
========
Future principal repayments are due in the years ended:
January 31, 2005 $ 8,564
2006 49,920
2007 49,920
2008 15,379
--------
$173,783
========
NOTE 6 - AMOUNTS PAYABLE TO STOCKHOLDERS
The majority stockholder and several key employees have periodically advanced
amounts to Westmeria for operating capital. These advances bear no interest, and
an 8% imputed interest charge has been added as an increase to stockholders'
equity. In June 2003, the key employees purchased 4,420,500 shares from the
previously sole shareholder by exchanging $257,193 in amounts previously
advanced to Westmeria. These advances were thus transferred to the majority
stockholder who now holds all of this debt.
NOTE 7 - INCOME TAXES
Westmeria uses the liability method, where deferred tax assets and liabilities
are determined based on the expected future tax consequences of temporary
differences between the carrying amounts of assets and liabilities for financial
and income tax reporting purposes.
Income tax is composed of:
2003 2002
---------- ----------
Current income tax (recovery) $ (23,619) $ 22,439
Deferred income tax 0 0
---------- ----------
$ (23,619) $ 22,439
========== ==========
The following is a reconciliation of the effective income tax rate:
2003 2002
---------- ----------
United Kingdom statutory income tax rate 19.0% 20.0%
Increase (decrease) in tax rate resulting from:
Non-deductible expenses 1.6
Limited by refundable taxes paid in prior years (7.4)
---------- ----------
11.6% 21.6%
========== ==========
The net operating loss carryforward at January 31, 2003 is $95,000.
NOTE 8 - COMMITMENTS
Westmeria leases its facility under an operating lease agreement which expires
in 2009. Total minimum rental commitments as of January 31, 2003 are $59,776 in
2004, $59,776 in 2005, $59,776 in 2006, and $179,328 thereafter. Total rent
expense was $24,217 and $16,543 in 2003 and 2002, respectively.
NOTE 9 - MAJOR CUSTOMERS AND VENDORS
Westmeria sold 24% and 28% of fiscal 2003 and 2002 sales, respectively, to one
customer. In 2003, Westmeria sold 14%, 11% and 10% of its sales to 3 other
customers.
Westmeria purchased 11% and 10% from two major vendors during fiscal 2003.
NOTE 10 - SUBSEQUENT EVENT
Westmeria agreed to a reorganization with an inactive publicly-traded United
States corporation, True Health, Inc. (True Health) on June 27, 2003. In this
transaction, True Health announced that it had issued 40,485,000 shares to
Westmeria shareholders. Immediately prior to this transaction, there were 7 key
Westmeria employees who received 37,500,000 shares. The other 2,985,000 shares
were issued to consultants. This common stock was issued in exchange for 100% of
Westmeria's outstanding shares, with another 7,123,750 shares issued to
consultants, or a total of 10,108,750 shares issued to consultants. Immediately
prior to this transaction, there were 259,126 shares outstanding in True Health.
After this transaction, and as of both June 27 and September 3, 2003, True
Health now has 47,867,876 total shares outstanding. Westmeria became a
wholly-owned subsidiary of True Health.
All share amounts for the 2 years ended January 31, 2003 have been restated to
this 37,500,000 outstanding share figure.
Immediately prior to this transaction, the sole shareholder of Westmeria sold
4,420,500 of his personal Westmeria shares to key employees for $257,193 of
prior amounts loaned to Westmeria, and issued another 728,250 shares to a key
employee for past services performed. These shares issued for services have been
recorded at the same approximately $.058 per share as the shares issued for
cash, or $42,186. Because these transactions involve Westmeria shares and
employees, these 5,148,750 shares will be shown as a deemed contribution by the
sole shareholder to Westmeria and the debt transfer from these key employees to
the now-majority shareholder as a deemed distribution.
Also in connection with this True Health transaction, 3,000,000 warrants were
issued to consultants for services to be performed. 1,000,000 of these warrants
are exercisable at $.001 per share, or $1,000. These warrants are recorded as
compensation expense in June 2003 of $56,261. The other 2,000,000 warrants are
at exercise prices ranging from $.40 to $1 per share, and no compensation
expense will be recorded for them.
WESTMERIA HEALTH CARE LIMITED
BALANCE SHEET
April 30, 2003
(unaudited)
ASSETS
Current Assets
Cash $ 734
Accounts receivable, net 287,275
Inventory 86,622
Income tax refund receivable 24,796
Other 18,182
-----------
Total Current Assets 417,609
Equipment, net of accumulated depreciation 230,495
-----------
$ 648,104
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Note payable to factor $ 88,370
Current portion of notes payable 143,577
Accounts payable 142,904
Accrued expenses 71,318
Amounts payable to stockholder 213,841
-----------
Total Current Liabilities 660,010
Long-term portion of notes payable 161,140
-----------
Total Liabilities 821,150
-----------
Commitments
Stockholders' Deficit
Common stock, $.01 par value; 100,000,000 shares
authorized; 37,500,000 shares issued and outstanding 375,000
Accumulated deficit (546,332)
Accumulated other comprehensive loss (1,714)
-----------
Total Stockholders' Deficit (173,046)
-----------
$ 648,104
===========
WESTMERIA HEALTH CARE LIMITED
STATEMENTS OF OPERATIONS
Three Months Ended April 30, 2003 and 2002
(unaudited)
Three Months Ended
2003 2002
---------- ---------
Revenue
- Equipment rentals and sales $316,299 $ 179,509
- Radiographer services and placement fees 244,068
- Other 7,876 10,847
---------- ---------
568,243 190,356
---------- ---------
Cost of sales 282,665 25,675
General and administrative 357,582 158,706
Depreciation 27,911 19,881
---------- ---------
Total operating expenses 668,158 204,262
---------- ---------
Net Operating Loss ( 99,915) ( 13,906)
Interest income 19
Interest expense ( 17,461) ( 1,943)
---------- ---------
Net loss before taxes (117,357) ( 15,849)
Income tax recovery ( 3,170)
---------- ---------
Net Loss $ (117,357) $( 12,679)
========== =========
Basic and diluted loss
per share $(.00) $(.00)
Weighted average shares
outstanding 37,500,000 37,500,000
WESTMERIA HEALTH CARE LIMITED
STATEMENTS OF CASH FLOW
Three Months Ended April 30, 2003 and 2002
(unaudited)
2003 2002
--------- ---------
Cash Flows From Operating Activities
Net loss $(117,357) $( 12,679)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 27,911 19,881
Imputed interest on shareholder notes payable 7,687
Changes in:
Accounts receivable ( 84,786) 10,912
Income tax refund receivable ( 3,231)
Inventory 19,510
Other current assets ( 16,145) (568)
Accounts payable 20,589 2,575
Accrued expenses 20,220 ( 27,877)
--------- ---------
Net Cash Used In Operating Activities (122,371) ( 10,987)
--------- ---------
Cash Flows Used in Investing Activities
Purchase of equipment ( 36,330) ( 26,556)
--------- ---------
Cash Flows From Financing Activities
Proceeds from stockholders 115,224 103,696
Net change in note payable to factor 2,537
Proceeds on notes payable 56,148
Payments on notes payable ( 14,417) ( 37,281)
--------- ---------
Net Cash Provided By Financing Activities 159,492 66,415
--------- ---------
Currency translation adjustment ( 302) 138
--------- ---------
Net change in cash 489 29,010
Cash at beginning of period 255
--------- ---------
Cash at end of period $ 734 $ 29,010
========= =========
WESTMERIA HEALTH CARE LIMITED
NOTES TO FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Westmeria Health Care
Limited have been prepared in accordance with accounting principles generally
accepted in the United States of America and the rules of the Securities and
Exchange Commission ("SEC"), and should be read in conjunction with the audited
financial statements and notes thereto contained in True Health, Inc.'s
significant acquisition statement filed with the SEC on Form 8-K. In the opinion
of management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected herein. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for the full year. Notes to the financial statements
which would substantially duplicate the disclosure contained in the audited
financial statements for the most recent fiscal year end 2003 as reported in the
Form 8-K, have been omitted.
PRO FORMA UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following pro forma balance sheet has been derived from the balance sheet of
True Health, Inc. ("THI") at December 31, 2002 and adjusts such information to
give effect to the acquisition of Westmeria Health Care Limited ("Westmeria"), a
United Kingdom limited liability company, as if the acquisition had occurred at
December 31, 2002. The pro forma financial statements are presented for
informational purposes only and do not purport to be indicative of the financial
condition that would have resulted if the acquisition had been consummated at
December 31, 2002. The pro forma financial statements should be read in
conjunction with the notes thereto and each Company's consolidated financial
statements and related notes thereto contained herein and in the True Health's
latest annual report filed with the SEC.
Pro forma Consolidated Condensed Balance Sheet:
THI Westmeria DR (CR) Pro forma
12/31/02 1/31/03 Adjustments 12/31/02
----------- ----------- ---------- ----------
Current Assets
Cash $ 868 $ 255 $ 1,123
Other 347,947 347,947
---------- ---------- ----------
Total Current Assets 868 348,202 349,070
---------- ---------- ----------
Equipment, net 230,444 230,444
---------- ---------- ----------
$ 868 $ 578,646 $579,514
========== ========== ==========
Liabilities
Accounts payable $ 20,449 $ 111,008 $ 131,457
Amounts payable to stockholder 102,290 102,290
Other 430,674 430,674
---------- ---------- ----------
Total Liabilities 20,449 643,972 664,421
Common stock, $.01 par
value; 100,000,000 shares
authorized
- 258,393 shares
outstanding 2,584 2,584
- 47,867,876 shares
outstanding (478,679) 478,679
Common stock, $1.46 par
value; 1,000 shares
authorized; 100 shares
outstanding 146 146 0
Paid in capital 1,010,375 70,456 (1,440,290) ( 359,459)
Retained Deficit (1,032,540) ( 135,866) ( 964,341) ( 204,065)
Accumulated other
comprehensive loss ( 62) ( 62)
---------- ---------- ----------
(19,581) ( 65,326) 1,540,632
---------- ---------- ----------
$ 868 $ 578,646 $ 579,514
========== ========== ===========
NOTES TO PRO FORMA UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEET
(1) The Closing Date of the Agreement and Plan of Reorganization between True
Health, Inc. (THI) and Westmeria Health Care Limited (Westmeria) occurred June
27, 2003. In this transaction, True Health announced that it had issued
40,485,000 shares to Westmeria shareholders. Immediately prior to this
transaction, there were 7 key Westmeria employees who received 37,500,000
shares. The other 2,985,000 shares were issued to consultants. This common stock
was issued in exchange for 100% of Westmeria's outstanding shares, with another
7,123,750 shares issued to consultants, or a total of 10,108,750 shares issued
to consultants. Immediately prior to this transaction, there were 259,126 shares
outstanding in True Health. After this transaction, and as of both June 27 and
September 3, 2003, True Health now has 47,867,876 total shares outstanding.
Westmeria became a wholly-owned subsidiary of True Health.
All share amounts in the accompanying Westmeria January 2003 financial
statements for the 2 years ended January 31, 2003 have been restated to this
37,500,000 outstanding share figure.
Immediately prior to this transaction, the sole shareholder of Westmeria sold
4,420,500 of his personal Westmeria shares to key employees for $257,193 of
prior amounts loaned to Westmeria, and issued another 728,250 shares to a key
employee for past services performed. These shares issued for services have been
recorded at the same approximately $.058 per share as the shares issued for
cash, or $42,186. Because these transactions involve Westmeria shares and
employees, these 5,148,750 shares will be shown as a deemed contribution by the
sole shareholder to Westmeria and the debt transfer from these key employees to
the now-majority shareholder as a deemed distribution.
Also in connection with this True Health transaction, 3,000,000 warrants were
issued to consultants for services to be performed. 1,000,000 of these warrants
are exercisable at $.001 per share, or $1,000. These warrants are recorded as
compensation expense in June 2003 of $56,261. The other 2,000,000 warrants are
at exercise prices ranging from $.40 to $1 per share, and no compensation
expense will be recorded for them.