-----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, BCHjw0l1jdWGBFQinuXQxAWh/IuKdnByvCEFaZadxug2eENyp7VNAdT9tSRWgRkf mvfHtU5srf/w7JrTtVs1ZQ== 0000356446-00-000012.txt : 20000516 0000356446-00-000012.hdr.sgml : 20000516 ACCESSION NUMBER: 0000356446-00-000012 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 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: 633263 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 10-QSB of Pure World, Inc., for the period ended March 31, 2000 and is qualified in its entirety by reference to such financial statements. 0000356446 PURE WORLD, INC. 1000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 4,547 157 3,397 155 11,823 20,241 13,770 3,147 34,699 7,237 0 0 0 83 23,067 34,699 5,730 5,892 4,060 0 1,214 0 170 448 35 413 0 0 0 413 .05 .05
10QSB 2 FOR THE PERIOD ENDED MARCH 31, 2000 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2000 -------------- OR [ ] TRANSITION REPORT UNDER 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 equity: As of April 30, 2000, the issuer had 8,268,883 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 MARCH 31,2000 (UNAUDITED) (in $000's) ASSETS - ------ Current assets: Cash and cash equivalents $ 4,547 Marketable securities 157 Accounts receivable, net of allowance for uncollectible accounts and returns and allowances of $155 3,242 Inventories 11,823 Other 472 ------- Total current assets 20,241 Plant and equipment, net 10,623 Investment in unaffiliated natural products company 1,510 Notes receivable from affiliates 280 Goodwill, net of accumulated amortization of $596 1,395 Other assets 650 ------- Total assets $34,699 ======= LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 2,214 Short-term borrowings 3,975 Accrued expenses and other 1,048 ------- Total current liabilities 7,237 Long-term debt 4,312 ------- Total liabilities 11,549 ------- Stockholders' equity: Common stock, par value $.01; 30,000,000 shares authorized; 8,268,883 shares issued and outstanding 83 Additional paid-in capital 43,321 Accumulated deficit ( 20,254) ------- Total stockholders' equity 23,150 ------- Total liabilities and stockholders' equity $34,699 ======= See accompanying notes to consolidated financial statements. 2 PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) ($000 Omitted, except per share data) Three Months Ended March 31, -------------------- 2000 1999 ------ ------ Revenues: Sales $ 5,730 $ 3,747 Net gains on marketable securities 93 8 Interest income 69 66 ------- ------- Total revenues 5,892 3,821 ------- ------- Expenses: Cost of goods sold 4,060 2,430 Selling, general and administrative 1,384 1,239 ------- ------- Total expenses 5,444 3,669 ------- ------- Income before income taxes 448 152 Provision for income taxes 35 8 ------- ------- Net income 413 144 Other comprehensive income: Unrealized holding losses on securities available-for-sale - ( 261) ------- ------- Comprehensive income (loss) $ 413 ($ 117) ======= ======= Basic and diluted net income per share $ .05 $ .02 ======= ======= See accompanying notes to consolidated financial statements. 3 PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ($000 Omitted) Three Months Ended March 31, ----------------------- 2000 1999 -------- -------- Cash flows from operating activities: Net income $ 413 $ 144 Adjustments: Depreciation and amortization 468 336 Net marketable securities transactions ( 4) 11 Gain on sale of securities available-for-sale - ( 13) Change in inventories ( 1,043) ( 2,296) Change in receivables ( 790) 193 Change in accounts payable and other accruals 808 856 Other, net 96 ( 82) -------- -------- Net cash used in operating activities ( 52) ( 851) -------- -------- Cash flows from investing activities: Purchase of plant and equipment ( 712) ( 1,018) Proceeds from sale of securities available-for-sale - 59 Loans to affiliates and others ( 20) - Repayment of loans to affiliates and others 21 4 Other, net 2 - -------- -------- Net cash used in investing activities ( 709) ( 955) -------- -------- Cash flows from financing activities: Term loan borrowings 255 350 Term loan repayments ( 358) ( 184) Net revolving line of credit borrowings (repayments) ( 187) 1,393 -------- -------- Net cash provided by (used in) financing activities ( 290) 1,559 -------- -------- Net decrease in cash and cash equivalents ( 1,051) ( 247) Cash and cash equivalents at beginning of period 5,598 6,122 -------- -------- Cash and cash equivalents at end of period $ 4,547 $ 5,875 ======== ======== Supplemental disclosure of cash flow information: Cash paid for: Interest $ 170 $ 124 ======== ======== Taxes $ - $ 13 ======== ======== See accompanying notes to consolidated financial statements. 4 PURE WORLD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 (UNAUDITED) 1. General ------- The accompanying unaudited consolidated financial statements of Pure World, Inc. and subsidiaries ("Pure World" or the "Company") as of March 31, 2000 and for the quarters ended March 31, 2000 and 1999 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 consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1999 as filed with the Securities and Exchange Commission. Prior year's financial statements have been reclassified to conform to the current years' presentation. The results of operations for the quarters ended March 31, 2000 and 1999 are not necessarily indicative of the results to be expected for the entire year or any other period. 2. Marketable Securities --------------------- At March 31, 2000, marketable securities consisted of the following (in $000's): Gross Holding Fair Cost Losses Value ------ -------- -------- Trading securities $ 569 $ 412 $ 157 ===== ===== ===== All marketable securities were investments in common stock. 3. Inventories ----------- Inventories are comprised of the following (in $000's): Raw materials $ 2,875 Work-in-progress 324 Finished goods 8,624 ------- Total inventories $11,823 ======= 5 4. Investment in Unaffiliated Natural Products Company --------------------------------------------------- In May 1996, the Company purchased 500 shares of common stock representing a 25% interest in Gaia Herbs, Inc. ("Gaia") for approximately $1 million. In June 1997, the Company purchased an additional 200 shares of common stock for $500,000, increasing its equity ownership to 35% of Gaia's outstanding shares of common stock ("Pure World's Gaia Stock"). Pure World's Gaia Stock is 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 "Pure World Loan"). The Pure World 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. The parties also agreed that if any other party acquired voting shares, Pure World's Gaia Stock would become voting stock. Additionally, the parties agreed that Gaia and the principal stockholder of Gaia (the "Principal Stockholder") would have a right of first refusal to acquire any Gaia stock sold by Pure World and that Pure World would have a right of first refusal to acquire any Gaia stock sold by Gaia or the Principal Stockholder. In June 1998, Gaia requested that Pure World guarantee an unsecured bank line of $500,000 (the "Gaia Bank Loan"). Because of expansion plans for Pure World's wholly-owned subsidiary, Pure World Botanicals Inc., Pure World declined to issue the guarantee. An individual unaffiliated with Gaia or Pure World agreed to guarantee the Gaia Bank Loan in consideration of a cash fee and the issuance to the individual of 100 shares of Gaia's common stock, representing 5 percent of Gaia's common stock outstanding (the "Guarantee"). The Guarantee is also secured by Gaia stock held by Gaia's Principal Stockholder. Pure World notified Gaia that it wished to exercise its right of first refusal in connection with the Guarantee. Pure World and Gaia reached an understanding that Pure World would decline the right of first refusal if by November 30, 1998 thirty percent of Pure World's interest was purchased for $1,500,000 (leaving five percent of the current Gaia common stock outstanding) and the Pure World Loan was repaid, including any accrued interest (the "Repurchase"). If the Repurchase was not closed by November 30, 1998 ("the Closing Date"), Pure World then would have the right to assume the Guarantee pursuant to the same terms granted the original guarantor, except for the cash fee. If the Repurchase did not close prior to the Closing date, and either before or after the Closing Date, the Guarantee is called by the bank, Pure World would then own, or have the right to own a majority of Gaia's voting stock. The repurchase did not close as of November 30, 1998. The Company continues to monitor its investment. 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. 6 5. Borrowings ---------- Borrowings consisted of the following at March 31, 2000 (in $000's): Loans payable to a bank, collateralized by certain property and equipment, bearing annual interest at 6.878% in March 2000 maturing in December 2003 $ 2,464 Loans payable to a bank, pursuant to a $3 million unsecured line of credit bearing annual interest at the prime rate, currently 9%, maturing in June 2000 2,726 Loan payable to a bank, collateralized by certain equipment bearing annual interest at 7.94%, maturing in October 2004 1,833 Loan payable to a bank, collateralized by certain equipment bearing annual interest at 8.75% maturing in April 2003 200 Loan payable to a bank, collateralized by certain equipment bearing annual interest at 8.75% maturing in August 2003 47 Loan payable to a bank, collateralized by certain equipment, bearing annual interest at 8.25% maturing in June 2004 187 Loan payable to a bank, pursuant to a credit agreement, collateralized by certain equipment, bearing annual interest at LIBOR plus 2.5% payable interest only until June 2000 maturing in June 2004 352 Lease payable to IBM Credit Corporation for gross assets of $150,000 with inputed interest of 6.5% maturing in January 2002. 127 7 Leases payable for equipment 314 All other 37 ------- Total borrowings 8,287 Less: Current portion of long-term debt 3,975 ------- Long-term debt $ 4,312 ======= Interest expense was $170,000 and $124,000 for the three months ended March 31, 2000 and 1999, respectively. 6. Net Income Per Share -------------------- Basic earnings per common share are computed by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings per share are computed by dividing net income by the sum of the weighted-average number of common shares outstanding plus the dilutive effect of shares issuable through the exercise of stock options. The shares used for basic earnings per common share and diluted earnings per common share are reconciled below. All share and per share information reflects a 10% stock dividend declared on November 17, 1998, to stockholders of record on January 7, 1999, distributed on January 15, 1999. (Shares in Thousands) 2000 1999 ---- ---- Basic earnings per common share: Average shares outstanding for basic earnings per share 8,269 8,269 ===== ===== Diluted earnings per common share: Average shares outstanding for basic earnings per share 8,269 8,269 Dilutive effect of stock options 452 742 ----- ----- Average shares outstanding for diluted earnings per share 8,721 9,011 ===== ===== 8 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations --------------------------------------------- This Form 10-QSB contains forward-looking statements which may involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future periods or performance suggested by these statements. Liquidity and Capital Resources - ------------------------------- At March 31, 2000, the Company had cash and cash equivalents of approximately $4.5 million. Cash equivalents of $3.9 million consisted of U.S. Treasury bills with an original maturity of less than three months and yields ranging between 5.30% and 5.91%. The Company had working capital of $13 million at March 31, 2000. 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 $52,000 was used in operations for the three months ended March 31, 2000, compared to net cash used in operations of $851,000 for the same period in 1999. In 2000 and 1999, the net use of cash was primarily attributable to an increase in inventories, partially offset by an increase in accounts payable and other accruals and depreciation and amortization. Net cash of $709,000 and $955,000 was used in investing activities in the three months ended March 31, 2000 and 1999, respectively. In 2000, $712,000 was used in connection with the construction of an additional production facility. In 1999, $1,018,000 was used in connection with plant and equipment purchases as follows: $376,000 was used for the replacement of underground storage tanks with greater capacity tanks, $350,000 was used in connection with production expansion and $292,000 for purchases of machinery and equipment. Cash flows used in financing activities in the first quarter of 2000 were $290,000 compared to net cash of $1,559,000 provided in the same period in 1999. Changes in notes payable were the primary reason for these cash flows. For more information on borrowings, see Note 5 of Notes to Consolidated Financial Statements. Results of Operations - --------------------- The Company's operations resulted in net income of $413,000, or $.05 basic earnings per share, for the three months ended March 31, 2000 compared to net income of $144,000, or $.02 basic earnings per share, for the comparable period in 1999. Diluted earnings per share was $.05 and $.02 for the three months ended March 31, 2000 and 1999, respectively. The Company, through its wholly-owned subsidiary, Pure World Botanicals, Inc. had sales of $5.7 million for the quarter ended March 31, 2000, compared to sales of $3.7 million for the comparable quarter of 1999, an increase of $2.0 million, or 53%. The Company believes that the increase in sales was due to the gradual but continued improvement in the herbal products industry. 9 For the three month periods ended March 31, 2000 and 1999, the gross margin (sales less cost of goods sold) was $1.7 million, or 29.1% of sales and $1.3 million, or 35.2% of sales, respectively. The decrease in gross margin was due to the change in the product sales mix and pricing pressures. For the three month period ended March 31, 2000, the Company recorded net gains on marketable securities of $93,000 compared to $8,000 for the same period in 1999. In 2000, $478,000 were unrealized gains and $385,000 were realized losses. In 1999, substantially all of the gains recorded were realized. Interest income was $69,000 for the three month period ended March 31, 2000, compared to $66,000 for the three month period ended March 31, 1999. Selling, general and administrative expenses were $1,384,000 for the three months ended March 31, 2000 compared to $1,239,000 for the comparable period in 1999, an increase of $145,000 or 11.7%. Higher selling and interest expenses were the primary reasons for the increase. 10 PART II - OTHER INFORMATION - ------- ----------------- Item 6. - Exhibits and Reports on Form 8-K - ------- -------------------------------- (a) Exhibits -------- 27. Financial Data Schedule for the three months ended March 31, 2000. (b) Reports on Form 8-K ------------------- None 11 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: May 15, 2000 By: /s/ Sue Ann Itzel ---------------------------- Sue Ann Itzel Assistant Secretary (Principal Accounting Officer) 12 -----END PRIVACY-ENHANCED MESSAGE-----