-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ToxLRb2vdVjAkm4K99tbBYUKnSevFWkSwUHxsBXxusWZ8u1BvBpWQ5TCbK5SlI0r ze5HYrIPlRJwG/Joa3ndmQ== 0000356446-97-000024.txt : 19971111 0000356446-97-000024.hdr.sgml : 19971111 ACCESSION NUMBER: 0000356446-97-000024 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971110 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PURE WORLD INC CENTRAL INDEX KEY: 0000356446 STANDARD INDUSTRIAL CLASSIFICATION: INVESTORS, NEC [6799] IRS NUMBER: 953419191 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-10566 FILM NUMBER: 97711717 BUSINESS ADDRESS: STREET 1: P O BOX 74 STREET 2: 376 MAIN ST CITY: BEDMINSTER STATE: NJ ZIP: 07921 BUSINESS PHONE: 9082349220 MAIL ADDRESS: STREET 1: P O BOX 74 STREET 2: 376 MAIN STREET CITY: BEDMINSTER STATE: NJ ZIP: 07921 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN HOLDINGS INC /DE/ DATE OF NAME CHANGE: 19940411 FORMER COMPANY: FORMER CONFORMED NAME: COMPUTER MEMORIES INC /DE/ DATE OF NAME CHANGE: 19940411 EX-27 1 FDS --
5 This Schedule contains summary financial information extracted from the Form 10QSB of Pure World, Inc. for the period ended September 30, 1997 and is qualified in its entirety by reference to such financial statements. 0000356446 PURE WORLD, INC. 1000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 10,270 0 1,426 133 2,833 14,868 2,461 647 21,581 2,177 0 0 0 75 19,329 21,581 8,051 9,679 4,365 7,395 0 0 12 2,272 193 2,079 0 0 0 2,079 .26 .26
10QSB 2 FOR QUARTER ENDED 09/30/97 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: September 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No.: 0-10566 Pure World, Inc. (Exact name of small business issuer as specified in its charter) Delaware 95-3419191 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 376 Main Street, Bedminster, New Jersey 07921 (Address of principal executive offices) (908) 234-9220 (Issuer's telephone number) N/A (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- State the number of shares outstanding of each of the issuer's classes of common stock: As of October 31, 1997, the issuer had 7,505,287 shares of its common stock, par value $.01 per share, outstanding. Transitional Small Business Disclosure Format (check one): Yes ---- No X PART I - FINANCIAL INFORMATION Item 1. - Financial Statements PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED) ($000 Omitted)
September 30, 1997 ------------- ASSETS Current assets: Cash and cash equivalents $10,270 Accounts receivable, net of allowance for uncollectible accounts and returns and allowances of $133 1,293 Inventories, net 2,833 Other 472 ------- Total current assets 14,868 ------- Securities available-for-sale 1,488 Investment in unaffiliated natural products company 1,510 Furniture and equipment, net 1,814 Notes receivable from affiliates 529 Goodwill, net of accumulated amortization of $249 1,166 Other assets 206 ------- Total assets $21,581 ======= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable $ 320 Accrued expenses and other 1,857 ------- Total current liabilities 2,177 ------- Stockholders' equity: Common stock, par value $.01; 30,000,000 shares authorized; 7,505,287 shares outstanding 75 Additional paid-in capital 43,287 Accumulated deficit ( 24,472) Unrealized gains on securities available-for-sale 514 ------- Total stockholders' equity 19,404 ------- Total liabilities and stockholders' equity $21,581 ======= See accompanying notes to consolidated financial statements.
PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ($000 Omitted, except per share data)
Three Months Ended September 30, ------------------------- 1997 1996 ------- -------- Revenues: Sales $ 2,972 $ 1,469 Net gains on marketable securities 265 6 Interest and dividends 134 125 Other income 242 - ------- ------- Total revenues 3,613 1,600 ------- ------- Expenses: Cost of goods sold 1,617 904 Personnel 467 475 Professional fees 90 199 Other 416 332 ------- ------- Total expenses 2,590 1,910 ------- ------- Income (loss) before income taxes 1,023 ( 310) Provision for income taxes 111 - ------- ------- Net income (loss) $ 912 ($ 310) ======= ======= Net income (loss) per share $ .12 ($ .04) ======= ======= Weighted average shares outstanding (in 000's) 7,505 7,680 ======= ======= See accompanying notes to consolidated financial statements.
PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ($000 Omitted, except per share data)
Nine Months Ended September 30, ------------------------ 1997 1996 -------- -------- Revenues: Sales $ 8,051 $ 4,784 Net gains on marketable securities 514 315 Interest and dividends 411 391 Other income 703 3 ------- ------- Total revenues 9,679 5,493 ------- ------- Expenses: Cost of goods sold 4,365 2,965 Personnel 1,452 1,380 Professional fees 311 860 Other 1,279 1,119 ------- ------- Total expenses 7,407 6,324 ------- ------- Income (loss) before income taxes 2,272 ( 831) Provision for income taxes 193 1 ------- ------- Net income (loss) $ 2,079 ($ 832) ======= ======= Net income (loss) per share $ .26 ($ .11) ======= ======= Weighted average shares outstanding (in 000's) 7,543 7,697 ======= ======= See accompanying notes to consolidated financial statements.
PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ($000 Omitted)
Nine Months Ended September 30, ------------------------ 1997 1996 -------- -------- Cash flows from operating activities: Net income (loss) $ 2,079 ($ 832) Adjustments: Depreciation and amortization 318 218 Net marketable securities transactions ( 443) 1,900 Change in inventories ( 842) ( 616) Change in receivables ( 219) 33 Change in accounts payable and other accruals 62 ( 187) Other, net ( 147) 33 ------- ------- Net cash provided by operating activities 808 549 ------- ------- Cash flows from investing activities: Purchase of furniture and equipment, net ( 550) ( 277) Proceeds from sale of securities available-for-sale 706 - Purchase of securities available-for-sale ( 610) ( 37) Loans to affiliates ( 30) - Repayment of loans to affiliates 104 92 Loan to unaffiliated natural products company ( 200) - Investment in unaffiliated natural products company ( 500) ( 1,010) Other, net 15 ( 30) ------- ------- Net cash used in investing activities ( 1,065) ( 1,262) ------- ------- Cash flows from financing activities: Repurchase of common stock ( 357) ( 107) Other, net 19 - ------- ------- Net cash used in financing activities ( 338) ( 107) ------- ------- Net decrease in cash and cash equivalents ( 595) ( 820) Cash and cash equivalents at beginning of period 10,865 9,357 ------- ------- Cash and cash equivalents at end of period $10,270 $ 8,537 ======= ======= Supplemental disclosure for cash flow information: Cash paid for: Interest expense $ 12 $ 8 Taxes 150 15 See accompanying notes to consolidated financial statements.
PURE WORLD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1997 AND 1996 (UNAUDITED) 1. General ------- The accompanying unaudited consolidated financial statements of Pure World, Inc. and subsidiaries (the "Company") as of September 30, 1997 and for the three and nine month periods ended September 30, 1997 and 1996 reflect all material adjustments consisting of only normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. Certain information and footnote disclosures required under generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1996 as filed with the Securities and Exchange Commission. Prior years financial statements have been reclassified to conform to the current year's presentation. The results of operations for the three and nine month periods ended September 30, 1997 and 1996 are not necessarily indicative of the results to be expected for the entire year or any other period. 2. Inventories ----------- Inventories are comprised of the following (in $000's): Raw materials $ 765 Work-in-progress 231 Finished goods 1,837 ------ Total inventories, net $2,833 ======
3. Securities Available-For-Sale ----------------------------- At September 30, 1997, securities available-for-sale were as follows (in 000's): Cost $ 974 Gross holding gains 514 ------ Fair value of securities available-for-sale $1,488 ======
4. Investment in Unaffiliated Natural Products Company --------------------------------------------------- In May 1996, the Company made an investment in non-voting common stock representing 25% ownership of Gaia Herbs, Inc. ("Gaia") for approximately $1.0 million. In June 1997, the Company made an additional investment of $500,000, increasing its equity ownership to 35% of Gaia's outstanding shares of common stock. The Company loaned Gaia $200,000 in July 1997 payable interest only on a quarterly basis for the first three years and 36 monthly payments of principal and interest thereafter. The loan bears interest at 6.49% which was the imputed rate required under the Internal Revenue Code and is classified as an other asset in the consolidated balance sheet. Gaia manufactures and distributes fluid botanical extracts for the high-end consumer market. Gaia is a privately held company and does not publish financial results. The Company is accounting for this investment by the cost method. 5. Net Income (Loss) Per Common Share ---------------------------------- Net income (loss) per common share is based on the weighted average number of outstanding shares adjusted for the assumed conversion of shares issuable upon exercise of stock options where appropriate. 6. Subsequent Event - Acquisition of Minority Interest in Madis Botanicals, Inc.("Madis") --------------------------------------------------- In October, 1997 the Company acquired the remaining 17% minority interest ownership in Madis for approximately $940,000. Madis is now a wholly-owned subsidiary of the Company. As a result of this transaction, goodwill will be increased by approximately $575,000 and minority interest in Madis, included in other liabilities on the consolidated balance sheet will be decreased by approximately $365,000. The remaining goodwill will be amortized over 13 years. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations --------------------------------------------- Liquidity and Capital Resources - ------------------------------- At September 30, 1997, the Company had cash and cash equivalents of approximately $10.3 million. Cash equivalents of $9.6 million consisted of U.S. Treasury bills with an original maturity of less than three months and yields ranging between 5.01% and 5.312%. The Company had net working capital of $12.7 million at September 30, 1997. The management of the Company believes that the Company's financial resources and anticipated cash flows will be sufficient for future operations and possible acquisitions of other operating businesses. Net cash of $808,000 and $549,000 was provided by operations for the nine months ended September 30, 1997 and 1996, respectively. The increases in inventory and accounts receivable is a result of the increase in sales in 1997 as the inventory and accounts receivable turnover in the nine months ended September 30, 1997 remained relatively consistent with the inventory and accounts receivable turnover in the comparable period in 1996. Depreciation and amortization increased in 1997 compared to 1996 due to the continued additions to and enhancements of laboratory and production equipment. The net cash flows from operations in 1996 were generated primarily by the sale of marketable securities and the change in investment in U.S. Treasury Securities to treasury securities with maturities of less than three months which are considered cash equivalents. In the second quarter of 1997, the Company made an additional investment of $500,000 in Gaia Herbs, Inc. ("Gaia"), an unaffiliated manufacturer and distributor of fluid botanical extracts for the high-end consumer market. Gaia is a privately held company which does not publish financial results. The Company, which now owns 35% of Gaia's outstanding shares, accounts for its investment by the cost method since its shares are non-voting. The Company loaned Gaia $200,000 in July 1997 payable interest only on a quarterly basis for the first three years and 36 monthly payments of principal and interest thereafter. The loan bears interest at 6.49% which was the imputed rate required under the Internal Revenue Code and is classified as an other asset in the consolidated balance sheet. Results of Operations - --------------------- The Company's operations resulted in net income of $912,000, or $.12 per share, for the three months ended September 30, 1997 compared to a net loss of $310,000, or $.04 per share, for the comparable period in 1996. Net income was $2,079,000, or $.26 per share for the nine month period ended September 30, 1997, compared to a net loss of $832,000, or $.11 per share, for the comparable period in 1996. The Company, through its wholly-owned subsidiaries, Madis Botanicals, Inc. ("Madis") and Pure World Botanicals, Inc., had sales of $3.0 million for the quarter ended September 30, 1997, compared to sales of $1.5 million for the comparable quarter of 1996, an increase of $1.5 million, or 102%. For the nine month period ended September 30, 1997, sales were $8.1 million compared to $4.8 million for the comparable period in 1996, an increase of $3.3 million, or 68%. The growth in sales principally is related to marketing new standardized products such as St. John's Wort, citrus pectin, CimiPure(TM) black cohosh, olive leaf extract and KavaPure(R). For the three and nine month periods ended September 30, 1997, the gross margin (sales less cost of goods sold) was $1.4 million, or 46% of sales and $3.7 million, or 46% of sales, respectively. This compares to a gross margin of $565,000, or 39% of sales and $1.8 million, or 38% of sales for the three and nine month periods ended September 30, 1996, respectively. The increase in gross margin in 1997 compared to 1996 was primarily due to a change in the sales mix. For the three and nine month periods ended September 30, 1997, the Company recorded net gains on marketable securities of $265,000 and $514,000, respectively, compared to $6,000 and $315,000 for the same periods in 1996. Substantially all of the gains recorded in 1997 were realized. The increase in net gains on marketable securities from 1996 to 1997 were due to changes in portfolio composition and general market conditions. Interest and dividend income was $134,000 and $411,000 for the three and nine months ended September 30, 1997, respectively, compared to $125,000 and $391,000 for the three and nine month periods ended September 30, 1996. Interest income was $408,000 during the nine month period ended September 30, 1997, an increase of $20,000 from the $388,000 recorded in the comparable period of 1996. This increase was due primarily to higher invested balances. Dividend income in both nine month periods ended September 30, 1997 and 1996 was $3,000. Other income was $242,000 and $703,000 for the quarter and nine months ended September 30, 1997, respectively, compared to zero and $3,000 for the comparable periods in 1996. Other income in 1997 was cash received in connection with the sale of a prior business in 1994. The Company does not anticipate additional revenue from this source. In 1996, other income consisted of revenue from the sale of unneeded equipment at Madis. Personnel expenses were $467,000 and $1,452,000 during the three and nine months ended September 30, 1997 compared to $475,000 and $1,380,000 in the comparable periods in 1996. An increase in management and laboratory personnel as well as merit salary increases accounted for the overall nine month increase. Professional fees, consisting of legal, accounting and consulting fees were $90,000 and $311,000 during the three and nine month periods in 1997, compared to $199,000 and $860,000 in the same three and nine month periods in 1996. Legal fees decreased due to the settlement in 1996 of litigations in which the Company was involved. Consulting fees, incurred principally in product development, also decreased. Other expenses were $416,000 and $1,279,000 for the three and nine month periods ended September 30, 1997, compared to $332,000 and $1,119,000 for the same periods in 1996. Increased sales expenses, depreciation expense and minority interest in the earnings of Madis were the primary reasons for the increased expenses in 1997 compared to 1996. Subsequent Event - Acquisition of Minority Interest in Madis ------------------------------------------ In October, 1997 the Company acquired the remaining 17% minority interest ownership in Madis for approximately $940,000. Madis is now a wholly-owned subsidiary of the Company. As a result of this transaction, goodwill will be increased by approximately $575,000 and minority interest in Madis, included in other liabilities on the consolidated balance sheet will be decreased by approximately $365,000. The remaining goodwill will be amortized over 13 years. New Accounting Standards - ------------------------ The Financial Accounting Standard Board ("FASB") has issued Statement No. 128 "Earnings Per Share ("EPS")" which becomes effective for periods ending after December 15, 1997. This statement requires restatement of all prior period EPS data presented and simplifies the standards for computing earnings per share previously found in APB Opinion No. 15 and makes them comparable to international EPS standards. It replaces the presentation of primary EPS with the presentation of basic EPS and requires dual presentation of diluted EPS on the face of the income statement for all entities with complex capital structures. Basic EPS excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similarly to fully diluted EPS pursuant to APB Opinion No. 15. The EPS reported in this Form 10-QSB is equivalent to diluted EPS under FASB No. 128. In February 1997, the Financial Accounting Standards Board issued Financial Accounting Standards No. 129 "Disclosure of Information about Capital Structure" which establishes standards for disclosing information about an entity's capital structure. The Company does not expect the adoption of this standard to have a material impact on earnings per share as compared to primary earnings per share as reported herein. In June 1997, the Financial Accounting Standards Board issued Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" which will be effective for the Company beginning January 1, 1998. This standard redefines how operating segments are determined and requires expanded quantitative and qualitative disclosures relating to a company's operating segments. The Company has not yet completed its analysis of which operating segments it will report on. PART II - OTHER INFORMATION - --------------------------- Item 6. - Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits -------- 27. Financial Data Schedule for the nine months ended September 30, 1997. (b) Reports on Form 8-K On July 9, 1997, the Company filed a current report on Form 8-K announcing that it had increased its equity ownership of Gaia Herbs, Inc. to 35%. SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PURE WORLD, INC. Dated: November 10, 1997 By: /s/ Mark Koscinski ------------------- Mark Koscinski Senior Vice President and Principal Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----