-----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, L1ESq5FE0mEygz1T3tP8oKwLFE4uJZFdm6qBAyjLq4sor+8oPRnAwjpeCNQTjBYo ZI+abmWpErwXRX6U34ej6A== 0000356446-97-000016.txt : 19970812 0000356446-97-000016.hdr.sgml : 19970812 ACCESSION NUMBER: 0000356446-97-000016 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970811 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: 1934 Act SEC FILE NUMBER: 000-10566 FILM NUMBER: 97655837 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 quarter ended June 30, 1997 and is qualified in its entirety by reference to such financial statements. 0000356446 PURE WORLD, INC. 1000 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 9,890 0 1,485 129 2,794 14,430 2,220 564 20,961 2,249 0 0 0 75 18,637 20,961 5,079 6,066 2,748 4,810 0 0 7 1,249 82 1,167 0 0 0 1,167 0.15 0.15
10QSB 2 FOR QUARTER ENDED 06/30/97 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: June 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 July 31, 1997, the issuer had 7,505,297 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)
June 30, 1997 -------- ASSETS Current assets: Cash and cash equivalents $ 9,890 Accounts receivable, net of allowance for uncollectible accounts and returns and allowances of $129 1,356 Inventories, net 2,794 Other 390 ------- Total current assets 14,430 ------- Securities available-for-sale 1,637 Investment in unaffiliated natural products company 1,510 Furniture and equipment, net 1,656 Notes receivable from affiliates 532 Goodwill, net of accumulated amortization of $225 1,190 Other assets 6 ------- Total assets $20,961 ======= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable $ 510 Accrued expenses 1,739 ------- Total current liabilities 2,249 ------- Stockholders' equity: Common stock, par value $.01; 30,000,000 shares authorized; 7,505,297 shares outstanding 75 Additional paid-in capital 43,287 Accumulated deficit ( 25,383) Unrealized gains on securities available-for-sale 733 ------- Total stockholders' equity 18,712 ------- Total liabilities and stockholders' equity $20,961 =======
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 June 30, --------------------------- 1997 1996 ---------- ---------- Revenues: Sales $ 2,656 $ 1,702 Net gains on marketable securities 178 17 Interest and dividends 140 124 Other income 221 2 ------- ------- Total revenues 3,195 1,845 ------- ------- Expenses: Cost of goods sold 1,491 1,063 Personnel 488 467 Professional fees 104 280 Other 410 387 ------- ------- Total expenses 2,493 2,197 ------- ------- Income (loss) before income taxes 702 ( 352) Provision for income taxes 40 - ------- ------- Net income (loss) $ 662 ($ 352) ======= ======= Net income (loss) per share $ .09 ($ .05) ======= ======= Weighted average shares outstanding (in 000's) 7,514 7,705 ======= =======
See accompanying notes to consolidated financial statements. PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ($000 Omitted, except per share data)
Six Months Ended June 30, ------------------------- 1997 1996 --------- --------- Revenues: Sales $ 5,079 $ 3,315 Net gains on marketable securities 249 309 Interest and dividends 277 266 Other income 461 3 ------- ------- Total revenues 6,066 3,893 ------- ------- Expenses: Cost of goods sold 2,748 2,061 Personnel 985 905 Professional fees 221 661 Other 863 787 ------- ------- Total expenses 4,817 4,414 ------- ------- Income (loss) before income taxes 1,249 ( 521) Provision for income taxes 82 1 ------- ------- Net income (loss) $ 1,167 ($ 522) ======= ======= Net income (loss) per share $ .15 ($ .07) ======= ======= Weighted average shares outstanding (in 000's) 7,562 7,705 ======= =======
See accompanying notes to consolidated financial statements. PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ($000 Omitted)
Six Months Ended June 30, ------------------------ 1997 1996 ---------- --------- Cash flows from operating activities: Net income (loss) $ 1,167 ($ 522) Adjustments: Depreciation and amortization 210 148 Net trading securities transactions 1 1,776 Gain on sale of securities available-for-sale ( 244) - Change in inventories ( 804) ( 458) Change in receivables ( 277) ( 93) Change in accounts payable and other accruals 123 ( 196) Other, net ( 24) 7 ------- ------- Net cash provided by operating activities 152 662 ------- ------- Cash flows from investing activities: Purchase of furniture and equipment, net ( 309) ( 226) Proceeds from sale of securities available-for-sale 374 - Purchase of securities available-for-sale ( 469) - Repayment of loans to affiliates 71 79 Investment in unaffiliated natural products company ( 500) ( 1,010) Other, net 15 ( 8) ------- ------- Net cash used in investing activities ( 818) ( 1,165) ------- ------- Cash flows from financing activities: Repurchase of common stock ( 357) - Other, net 48 - ------- ------- Net cash used in financing activities ( 309) - ------- ------- Net decrease in cash and cash equivalents ( 975) ( 503) Cash and cash equivalents at beginning of period 10,865 9,357 ------- ------- Cash and cash equivalents at end of period $ 9,890 $ 8,854 ======= ======= Supplemental disclosure for cash flow information: Cash paid for: Interest expense $ 7 $ 5 ======= ======= Taxes $ 87 $ 15 ======= =======
See accompanying notes to consolidated financial statements. PURE WORLD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 AND 1996 (Unaudited) 1. General ------- The accompanying unaudited consolidated financial statements of Pure World, Inc. and subsidiaries (the "Company") as of June 30, 1997 and for the three and six month periods ended June 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. The results of operations for the three and six month periods ended June 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 $ 876 Work-in-process 259 Finished goods 1,659 ------- Total inventories, net $ 2,794 =======
3. Securities Available-For-Sale ----------------------------- At June 30, 1997, securities available-for-sale were as follows (in 000's): Cost $ 904 Gross holding gains 733 ------- Fair value of securities available-for-sale $ 1,637 =======
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 also 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 is the imputed rate currently required under the Internal Revenue Code. 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. Item 2. Management's Discussion and Analysis or Plan of Operation --------------------------------------------------------- Liquidity and Capital Resources - ------------------------------- At June 30, 1997, the Company had cash and cash equivalents of approximately $9.9 million. Cash equivalents of $9.7 million consisted of U.S. Treasury bills with an original maturity of less than three months and yields ranging between 5.03% and 5.32%. The Company had net working capital of $12.2 million at June 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 $152,000 and $662,000 was provided by operations for the six months ended June 30, 1997 and 1996, respectively. The increases in inventory and accounts receivable are a result of the increase in sales in 1997 as the inventory and accounts receivable turnover in the six months ended June 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 also 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 is the imputed rate currently required under the Internal Revenue Code. Results of Operations - --------------------- The Company's operations resulted in net income of $662,000, or $.09 per share, for the three months ended June 30, 1997 compared to a net loss of $352,000, or $.05 per share, for the comparable period in 1996. Net income was $1,167,000, or $.15 per share for the six month period ended June 30, 1997, compared to a net loss of $522,000, or $.07 per share, for the comparable period in the prior year. The Company, through its majority-owned subsidiary, Madis Botanicals, Inc. ("Madis") and its wholly-owned subsidiary, Pure World Botanicals, Inc., had sales of $2.7 million for the quarter ended June 30, 1997, compared to sales of $1.7 million for the comparable quarter of 1996, an increase of $1.0 million, or 56%. For the six month period ended June 30, 1997, sales were $5.1 million compared to $3.3 million for the comparable period in 1996, an increase of $1.8 million, or 53%. The growth in sales is a result of the Company's sales and marketing efforts which increased the demand for many of the Company's products. Additionally, the introduction of new standardized products such as St. John's Wort, citrus pectin, olive leaf extract and KavaPure(R) had a positive impact on sales. For the three and six month periods ended June 30, 1997, the gross margin (sales less cost of goods sold) was $1.2 million, or 43.9% of sales and $2.3 million, or 45.9% of sales, respectively. This compares to a gross margin of $639,000, or 37.5% of sales and $1.3 million, or 37.8% of sales for the quarter and six month periods ended June 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 six month periods ended June 30, 1997, the Company recorded net gains on marketable securities of $178,000 and $249,000, respectively, compared to $17,000 and $309,000 for the same periods in 1996. Substantially all of the gains recorded in 1997 were realized. The changes 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 $140,000 and $277,000 for the three and six months ended June 30, 1997, respectively, compared to $124,000 and $266,000 for the three and six months ended June 30, 1996. Interest income was $277,000 during the six month period ended June 30, 1997, an increase of $14,000 from the $263,000 recorded in the comparable period of 1996. This increase was due primarily to higher invested balances. Dividend income for the six-month period ended June 30, 1997 was zero compared to $3,000 for the comparable period in 1996. Other income was $221,000 and $461,000 for the quarter and six months ended June 30, 1997, respectively, compared to $2,000 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. This income is being recorded on a cash basis. In 1996, other income consisted of revenue from the sale of unneeded equipment at Madis. Personnel expenses were $488,000 and $985,000 during the three and six months ended June 30, 1997 compared to $467,000 and $905,000 in the comparable periods in 1996. An increase in management and laboratory personnel as well as merit salary increases accounted for these increases. Professional fees, consisting of legal, accounting and consulting fees were $104,000 and $221,000 during the three and six month periods in 1997, compared to $280,000 and $661,000 in the three and six month periods in 1996. Legal fees decreased due to settlement in 1996 of litigations in which the Company was involved. Consulting fees, incurred principally in product development, also decreased. Other expenses were $410,000 and $863,000 for the three and six month periods ended June 30, 1997, compared to $387,000 and $787,000 for the same periods in 1996. Increased sales expenses, including advertising and travel and entertainment, depreciation expense and minority interest in the earnings of Madis were the primary reasons for the increased expenses in 1997 compared to 1996. New Accounting Standards - ------------------------ The Financial Accounting Standards 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 Statement 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 Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information" which will be effective for the Company beginning January 1, 1998. Statement No. 131 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 six months ended June 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: August 11, 1997 By: /s/ Mark Koscinski ------------------- Mark Koscinski Senior Vice President and Principal Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----