-----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, P11FF+4O1f44R/ZRcBBqKdInWLc5q6JoeO+3aAdrpZ8HY7vePbEAikbS0GjCoGnL aofaQLG7F48h8FqxssNRzQ== /in/edgar/work/0000356446-00-000020/0000356446-00-000020.txt : 20001115 0000356446-00-000020.hdr.sgml : 20001115 ACCESSION NUMBER: 0000356446-00-000020 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PURE WORLD INC CENTRAL INDEX KEY: 0000356446 STANDARD INDUSTRIAL CLASSIFICATION: [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: 765387 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 0001.txt FDS --
5 This Schedule contains summary financial information extracted from the Form 10-QSB of Pure World, Inc., for the period ended September 30, 2000 and is qualified in its entirety by reference to such financial statemens. 0000356446 PURE WORLD, INC. 1000 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 3,402 91 5,001 167 13,220 22,313 14,260 3,870 36,513 9,006 0 0 0 83 22,957 36,513 19,135 19,351 14,803 0 3,695 0 536 317 42 275 0 0 0 275 .03 .03
10QSB 2 0002.txt FOR THE PERIOD ENDED SEPTEMBER 30, 2000 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, 2000 ------------------ 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, 2000, the issuer had 8,282,079 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) (in $000's) September 30, 2000 ------------- ASSETS Current assets: Cash and cash equivalents $ 3,402 Marketable securities 91 Accounts receivable, net of allowance for uncollectible accounts and returns and allowances of $167 4,834 Inventories 13,220 Other 766 ------- Total current assets 22,313 Plant and equipment, net 10,390 Investment in unaffiliated natural products company 1,510 Notes receivable from affiliates 326 Goodwill, net of accumulated amortization of $668 1,323 Other assets 651 ------- Total assets $36,513 ======= LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 4,031 Short-term borrowings 3,805 Accrued expenses and other 1,170 ------- Total current liabilities 9,006 Long-term debt 4,467 ------- Total liabilities 13,473 ------- Stockholders' equity: Common stock, par value $.01; 30,000,000 shares authorized; 8,282,079 shares outstanding 83 Additional paid-in capital 43,349 Accumulated deficit ( 20,392) ------- Total stockholders' equity 23,040 ------- Total liabilities and stockholders' equity $36,513 ======= 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 September 30, ------------------- 2000 1999 ------ ------ Revenues: Sales $ 8,696 $ 3,471 Net losses on marketable securities ( 36) ( 1,190) Interest income 57 69 ------- ------- Total revenues 8,717 2,350 ------- ------- Expenses: Cost of goods sold 7,250 2,928 Selling, general and administrative 1,378 1,243 ------- ------- Total expenses 8,628 4,171 ------- ------- Income (loss) before income taxes 89 ( 1,821) Benefit for income taxes ( 12) ( 43) ------- ------- Net income (loss) 101 ( 1,778) Other comprehensive income: Unrealized holding gains on securities available-for-sale - 693 ------- ------- Comprehensive income (loss) $ 101 ($ 1,085) ======= ======= Basic net income (loss) per share $ .01 ($ .22) ======= ======= Diluted net income (loss) per share $ .01 ($ .22) ======= ======= See accompanying notes to consolidated financial statements. 3 PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) ($000 Omitted, except per share data) Nine Months Ended September 30, ------------------ 2000 1999 ------ ------ Revenues: Sales $ 19,135 $12,019 Net gains (losses) on marketable securities 31 ( 1,191) Interest income 185 197 -------- ------- Total revenues 19,351 11,025 -------- ------- Expenses: Cost of goods sold 14,803 8,488 Selling, general and administrative 4,231 3,869 -------- ------- Total expenses 19,034 12,357 -------- ------- Income (loss) before income taxes 317 ( 1,332) Provision for income taxes 42 - -------- ------- Net income (loss) 275 ( 1,332) Other comprehensive income: Unrealized holding gains on securities available-for-sale - 244 -------- ------- Comprehensive income (loss) $ 275 ($ 1,088) ======== ======= Basic net income (loss) per share $ .03 ($ .16) ======== ======= Diluted net income (loss) per share $ .03 ($ .16) ======== ======= See accompanying notes to consolidated financial statements. 4 PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ($000 Omitted) Nine Months Ended September 30, ------------------ 2000 1999 ------ ------ Cash flows from operating activities: Net income (loss) $ 275 ($ 1,332) Adjustments: Depreciation and amortization 1,263 1,040 Unrealized (gains) losses on marketable securities ( 424) 1,066 Net marketable securities transactions 486 188 Change in inventories ( 2,440) ( 3,052) Change in receivables ( 2,381) 1,152 Change in accounts payable and other accruals 2,747 12 Other, net ( 248) ( 195) -------- -------- Net cash used in operating activities ( 722) ( 1,121) -------- -------- Cash flows from investing activities: Purchases of plant and equipment ( 1,202) ( 2,007) Proceeds from sale of securities available-for-sale - 59 Loans to affiliates and others ( 20) ( 70) Repayment of loans to affiliates 26 10 -------- -------- Net cash used in investing activities ( 1,196) ( 2,008) -------- -------- Cash flows from financing activities: Issuance of common stock 28 - Term loan borrowings 1,154 2,462 Term loan repayments ( 976) ( 598) Net revolving line of credit borrowings (repayments) ( 484) 752 -------- -------- Net cash provided by (used in) financing activities ( 278) 2,616 -------- -------- Net decrease in cash and cash equivalents ( 2,196) ( 513) Cash and cash equivalents at beginning of period 5,598 6,122 -------- -------- Cash and cash equivalents at end of period $ 3,402 $ 5,609 ======== ======== Supplemental disclosure of cash flow information: Cash paid for: Interest $ 536 $ 381 ======== ======== Taxes $ 14 $ 51 ======== ======== See accompanying notes to consolidated financial statements. 5 PURE WORLD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) 1. General ------- The accompanying unaudited consolidated financial statements of Pure World, Inc. and subsidiaries (the "Company" or "Pure World") as of September 30, 2000 and for the three and nine month periods ended September 30, 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 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, 1999 as filed with the Securities and Exchange Commission. The results of operations for the three and nine month periods ended September 30, 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 September 30, 2000, marketable securities consisted of the following (in $000's): Gross Holding Fair Cost Losses Value ---- ------- ----- Trading securities $ 557 $ 466 $ 91 ===== ===== ===== All marketable securities were investments in common stock. 3. Inventories ----------- Inventories are comprised of the following (in $000's): Raw materials $ 2,789 Work-in-progress 115 Finished goods 10,316 ------- Total inventories $13,220 ======= 6 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 $1.0 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"). In July 2000, Gaia notified the Company that they were deferring the repayment of the principal for one year as allowed in the promissory note. The Pure World Loan bears interest at 6.48% 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 is 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 does 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 on 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. 7 5. Borrowings ---------- Borrowings consisted of the following at September 30, 2000 (in $000's): Loans payable to a bank, pursuant to a $3 million unsecured line of credit bearing annual interest at the prime rate, currently 9.5%, maturing in June 2001 $ 2,430 Loans payable to a bank, collateralized by certain property and equipment, bearing annual interest of 6.878% maturing in December 2003 2,250 Loan payable to a bank, collateralized by certain equipment bearing annual interest at 9.09% maturing in October 2004 1,633 Loan payable to a bank, pursuant to a credit agreement, collateralized by certain equipment, bearing annual interest at LIBOR plus 2.5% currently 9.11% maturing in June 2004 771 Loan payable to a bank, bearing annual interest at LIBOR plus 2.5% currently 9.11% maturing in May 2005 373 Loan payable to a bank, collateralized by certain equipment bearing annual interest at 8.75% maturing in April 2003 171 Loan payable to a bank, collateralized by certain equipment, bearing annual interest at 8.25% maturing in June 2004 168 Loan payable to a bank, collateralized by certain equipment bearing annual interest at 8.75% maturing in August 2003 41 Lease payable to IBM Credit Corporation for gross assets of $150,000 with imputed interest of 6.5% maturing in January 2002 90 Leases payable for equipment 328 All other 17 ------- Total borrowings 8,272 Less: Current portion of long-term debt 3,805 ------- Long-term debt $ 4,467 =======
Interest expense was $183,000 and $536,000 for the three and nine months ended September 30, 2000, respectively and $110,000 and $381,000 for the same periods in 1999. 8 6. Net Income Per Share -------------------- Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted net income per share is 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 share and diluted earnings per share are reconciled below. All share and per share information has been restated to reflect a 10% stock dividend declared on November 17, 1998, to stockholders of record on January 7, 1999, distributed on January 15, 1999. Three Months Ended Nine Months Ended September 30, September 30, (Shares in Thousands) (Shares in Thousands) 2000 1999 2000 1999 ------ ------ ------ ------ Average shares outstanding for basic earnings per shares 8,282 8,269 8,277 8,269 Dilutive effect of stock options 203 - 318 - ----- ----- ----- ----- Average shares outstanding for diluted earnings per share 8,485 8,269 8,595 8,269 ===== ===== ===== ===== 7. Litigation ---------- The Turnkey litigaion was settled in September 2000. In connection with the settlement, Pure World received net proceeds of $345,000 and was relieved of any potential liability to Turnkey. 9 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 September 30, 2000, the Company had cash and cash equivalents of approximately $3.4 million. Cash equivalents of $3.3 million consisted of U.S. Treasury bills with an original maturity of less than three months and yields ranging between 5.99% and 6.25%. The Company had working capital of $13.3 million at September 30, 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 $722,000 and $1.1 million was used in operations for the nine months ended September 30, 2000 and 1999, respectively. In 2000, the net use of cash was primarily attributable to an increase in inventories and receivables, partially offset by an increase in accounts payable and other accruals, and depreciation and amortization. In 1999, the net use of cash was primarily attributable to the net loss of $1.3 million and an increase in inventories, partially offset by a decrease in receivables, unrealized losses on marketable securities, net marketable securities transactions and depreciation and amortization Net cash of $1.2 million and $2 million was used in investing activities for the nine months ended September 30, 2000 and 1999, respectively. In 2000, $1.1 was used in connection with the construction of a new powdering facility and $100,000, net of proceeds received as a result of the settlement of the Turnkey litigation, for various purchases of machinery and computer equipment. (See Note 7 of Notes to Consolidated Financial Statements.)In 1999, $2,007,000 was used in connection with plant and equipment purchases which include: $376,000 used for the replacement of underground storage tanks with greater capacity tanks; $350,000 for production expansion; and $1,281,000 for various purchases of machinery, furniture and fixtures, computer equipment and other capital items. Cash used in financing activities was $278,000 for the nine months ended September 30, 2000, compared to cash provided by financing activities in the nine months ended September 30, 1999 of $2.6 million. (See Note 5 of Notes to Consolidated Financial Statements.) Results of Operations - --------------------- The Company's operations resulted in net income of $101,000, or $.01 basic earnings per share, for the three months ended September 30, 2000 compared to a net loss of $1,778,000, or $.22 basic loss per share, for the comparable period in 1999. Diluted earnings (loss) per share were $.01 and ($.22) for the quarters ended September 30, 2000 and 1999, respectively. Net income was $275,000, or $.03 basic earnings per share for the nine months ended September 30, 2000, compared to a net loss of $1,332,000, or $.16 basic loss per share, for the comparable period in 1999. Diluted earnings (loss) per share were $.03 and ($.16) for the nine months ended September 30, 2000 and 1999, respectively. 10 The Company, through its wholly-owned subsidiary, Pure World Botanicals, Inc. had sales of $8.7 million for the quarter ended September 30, 2000, compared to sales of $3.5 million for the comparable quarter of 1999, an increase of $5.2 million, or 150%. For the nine months ended September 30, 2000, sales were $19.1 million compared to $12 million for the comparable period in 1999, an increase of $7.1 million, or 59%. For the quarters ended September 30, 2000 and 1999, the gross margin (sales less cost of goods sold) was $1.5 million, or 17% of sales and $543,000, or 16% of sales, respectively. For the nine months ended September 30, 2000 and 1999, the gross margin was $4.3 million or 23% of sales and $3.5 million or 29% of sales, respectively. Results for the three and nine months ended September 30, 2000 were significantly affected by the delivery of a large contract to one customer to process a natural but not botanical product. That contract ended in October 2000 and will not be a material factor in the fourth quarter. For the three months ended September 30, 2000, net losses on marketable securities were $36,000 compared to net losses of $1,190,000 for the same period in 1999. For the nine month period ended September 30, 2000, the net gains on marketable securities were $31,000 compared to net losses of $1,191,000 for the same period in 1999. In 1999, the net losses on marketable securities was primarily due to the reclassification of securities available-for-sale to trading securities, and marking them to current value. In the quarter ended September 30, 1999, securities previously classified as available-for-sale were reclassified as trading securities. In accordance with Statement of Financial Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities", $1.1 million of unrealized holding losses, previously recorded as a separate component of stockholders equity, were recognized in earnings. (For more information on Marketable Securities, see Note 2 of Notes to Consolidated Financial Statements.) Interest income was $57,000 and $69,000 for the three months ended September 30, 2000 and 1999, respectively. Interest income was $185,000 and $197,000 for the nine month periods ended September 30, 2000 and September 30, 1999, respectively. Selling, general and administrative expenses were $1,378,000 for the three months ended September 30, 2000, an increase of $135,000 or 11% from $1,243,000 for the comparable period in 1999. Selling, general and administrative expenses were $4,231,000 for the nine months ended September 30, 2000 compared to $3,869,000 for the comparable period in 1999, an increase of $362,000 or 9%. This increase was due principally to the following: increases in professional fees of $101,000 consisting of legal, accounting and consulting fees; an increase in interest expense of $155,000; selling expenses of $75,000 and all other expenses of $31,000. 11 PART II - OTHER INFORMATION - ------- ----------------- Item 4. - Submission of Matters to a Vote of Security Holders - ------- --------------------------------------------------- The Company held its Annual Meeting of Stockholders on October 31, 2000. All nominees to the Company's Board of Directors were elected. The following is a vote tabulation for all nominees: For Withheld --- -------- Paul O. Koether 7,473,871 227,356 Mark W. Jaindl 7,471,388 229,839 William Mahomes, Jr. 7,473,871 227,356 Alfredo Mena 7,473,886 227,341 Item 6. - Exhibits and Reports on Form 8-K - ------- -------------------------------- (a) Exhibits -------- 27. Financial Data Schedule for the nine months ended September 30, 2000. (b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed during the quarter for which this report is being filed. 12 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 14, 2000 By:/s/ Sue Ann Itzel ----------------------- Sue Ann Itzel Vice President (Principal Accounting Officer) 13 -----END PRIVACY-ENHANCED MESSAGE-----