-----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, OTKvNQuyijpzl/dRTlahe6kZQz4RAwdtBnMq/OrVUJazWcu9GrRPbV1u/RECNUMa qzHMMaPoKDjYqBOlUMbKqw== 0000356446-98-000008.txt : 19980515 0000356446-98-000008.hdr.sgml : 19980515 ACCESSION NUMBER: 0000356446-98-000008 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 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: 98620713 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 March 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000356446 PURE WORLD, INC. 1000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 7,457 132 3,307 132 4,826 16,134 6,229 831 26,728 3,444 0 0 0 75 20,913 26,728 5,095 5,275 2,520 3,712 0 0 6 1,557 127 1,430 0 0 0 1,430 .19 .18
10QSB 2 FOR QUARTER ENDED 03/31/98 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: March 31, 1998 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 April 30, 1998, the issuer had 7,517,256 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)
March 31, 1998 --------- ASSETS Current assets: Cash and cash equivalents $ 7,457 Marketable securities 132 Accounts receivable, net of allowance for uncollectible accounts and returns and allowances of $132 3,175 Inventories, net 4,826 Other 544 ------- Total current assets 16,134 ------- Securities available-for-sale 1,333 Investment in unaffiliated natural products company 1,510 Fixed assets, net 5,398 Notes receivable from affiliates 311 Goodwill, net of accumulated amortization of $310 1,681 Other assets 361 ------- Total assets $26,728 ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,982 Accrued expenses 1,462 ------- Total current liabilities 3,444 Long-term debt 2,296 ------- Total liabilities 5,740 ------- Stockholders' equity: Common stock, par value $.01; 30,000,000 shares authorized; 7,515,256 shares outstanding 75 Additional paid-in capital 43,304 Accumulated deficit ( 22,784) Unrealized gains on securities available-for-sale 393 ------- Total stockholders' equity 20,988 ------- Total liabilities and stockholders' equity $26,728 =======
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 March 31, ------------------------ 1998 1997 ---------- ---------- Revenues: Sales $ 5,095 $ 2,423 Net gains on investment securities 76 71 Interest and dividends 101 137 Other income 3 240 ------- ------- Total revenues 5,275 2,871 ------- ------- Expenses: Cost of goods sold 2,520 1,257 Personnel 637 497 Professional fees 92 117 Other 469 453 ------- ------- Total expenses 3,718 2,324 ------- ------- Income before income taxes 1,557 547 Provision for income taxes 127 42 ------- ------- Net income $ 1,430 $ 505 ======= ======= Basic net income per share $ .19 $ .06 ======= ======= Diluted net income per share $ .18 $ .06 ======= =======
See accompanying notes to consolidated financial statements. PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ($000 Omitted)
Three Months Ended March 31, ------------------------ 1998 1997 ---------- ---------- Cash flows from operating activities: Net income $ 1,430 $ 505 Adjustments: Depreciation and amortization 137 96 Net marketable securities transactions 247 ( 13) Gain on sale of securities available-for-sale ( 58) ( 71) Change in inventories ( 1,199) ( 488) Change in receivables ( 2,036) ( 202) Change in accounts payable and other accruals 2,049 156 Other, net ( 87) ( 115) ------- ------- Net cash provided by (used in) operating activities 483 ( 132) ------- ------- Cash flows from investing activities: Purchase of fixed assets ( 3,305) ( 75) Proceeds from sale of securities available-for-sale 155 90 Purchase of securities available-for-sale ( 16) ( 415) Loans to affiliates and others ( 60) - Repayment of loans to affiliates 246 40 Other, net ( 156) 15 ------- ------- Net cash used in financing activities ( 3,136) ( 345) ------- ------- Cash flows from financing activities: Repurchase of common stock - ( 183) Issuance of common stock upon exercise of stock options 17 - Change in long-term debt 1,993 - ------- ------- Net cash provided by (used in) financing activities 2,010 ( 183) ------- ------- Net decrease in cash and cash equivalents ( 643) ( 660) Cash and cash equivalents at beginning of period 8,100 10,865 ------- ------- Cash and cash equivalents at end of period $ 7,457 $10,205 ======= ======= Supplemental disclosure for cash flow information: Cash paid for: Interest expense $ 6 $ 4 Taxes $ 12 $ 7
See accompanying notes to consolidated financial statements. PURE WORLD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998 AND 1997 (UNAUDITED) 1. General ------- The accompanying unaudited consolidated financial statements of Pure World, Inc. and subsidiaries (the "Company") as of March 31, 1998 and for the quarters ended March 31, 1998 and 1997 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, 1997 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 quarters ended March 31, 1998 and 1997 are not necessarily indicative of the results to be expected for the entire year or any other period. 2. Investment Securities --------------------- At March 31, 1998, investment securities consisted of the following (in 000's): Gross Amortized Holding Fair Cost Gains Value --------- ------- ----- Marketable securities $ 132 $ - $ 132 Available-for-sale 940 393 1,333 ------ ------ ------ Total Investment Securities $1,072 $ 393 $1,465 ====== ====== ======
All investment securities were investments in common stock. Substantially all gains recorded in the three months ended March 31, 1998 and 1997 were realized. 3. Inventories ----------- Inventories are comprised of the following (in $000's): Raw materials $2,462 Work-in-progress 257 Finished goods 2,107 ------ Total inventories, net $4,826 ======
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. Fixed Assets ------------ At March 31, 1998, fixed assets consisted of the following (in $000's): Furniture, machinery and equipment $2,822 Construction in progress 3,407 Accumulated depreciation ( 831) ------ Total $5,398 ======
6. Long-term Debt -------------- Long-term debt consisted of the following at March 31, 1998 (in $000's): Loans payable to a bank bearing annual interest at the prime rate (currently 8.5%) maturing in 2003. Interest only payments until December 1998 $ 2,030 Leases payable for equipment 283 All other 154 ------- Total 2,467 ======= Less: Current portion of long- term debt 171 ------- Long-term debt $ 2,296 =======
7. Net Income Per Share -------------------- In February 1997, the Financial Accounting Standards Board issued SFAS No. 128 "Earnings per Share." This standard revises certain methodology for computing earnings per common share and requires the reporting of two earnings per share figures: basic earnings per share and diluted earnings per share. Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings 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. All prior period earnings per share figures have been restated in accordance with the adoption of SFAS No. 128. The shares used for basic earnings per common share and diluted earnings per common share are reconciled as follows:
(Shares in Thousands) Quarter Ended March 31, ----------------------- 1998 1997 ------ ------ Basic earnings per common share: Average shares outstanding for basic earnings per share 7,507 7,611 ===== ===== Diluted earnings per common share: Average shares outstanding for basic earnings per share 7,507 7,611 Dilutive effect of stock options 640 242 ----- ----- Average shares outstanding for diluted earnings per share 8,147 7,853 ===== =====
8. Comprehensive Income -------------------- Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" ("SFAS No. 130") is effective for fiscal years beginning after December 15, 1997. SFAS No. 130 requires reporting and display of comprehensive income. Comprehensive income of the company for the quarters ended March 31, 1998 and 1997 are (in $000's):
Three Months Ended March 31, ------------------ 1998 1997 ------ ------ Net income $ 1,430 $ 505 Unrealized gains (losses) on securities available-for-sale ( 239) 434 ------- ------- Comprehensive income $ 1,191 $ 939 ======= =======
Item 2. Management's Discussion and Analysis of - ------- Financial Condition and Results of Operations --------------------------------------------- Liquidity and Capital Resources - ------------------------------- At March 31, 1998, the Company had cash and cash equivalents of approximately $7.5 million. Cash equivalents of $6.8 million consisted of U.S. Treasury bills with an original maturity of less than three months and yields ranging between 4.98% and 5.43%. The Company had net working capital of $12.7 million at March 31, 1998. 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 $483,000 was provided by operations for the three month period ended March 31, 1998, compared to a net use of cash of $132,000 for the same period in 1997. The increases in inventory and accounts receivable is a result of the increase in sales in 1997 and 1998. In 1998, the increase in accounts payable is a result of the increase in inventory as well as the additions to fixed assets (described below). Depreciation and amortization increased in the first quarter of 1998 compared to the first quarter of 1997 due to continued additions and enhancements to the laboratory and production facilities. Net cash of $3,136,000 and $345,000 was used in investing activities in the quarters ended March 31, 1998 and 1997, respectively. The Company, which has been increasing its investment in laboratory and manufacturing facilities, began an expansion program in 1997 to upgrade and expand its productive capacity and to build a new warehouse facility. The total cost of the warehouse and expansion will be approximately $6 million, including certain equipment purchases for the laboratories. The Company has obtained an equipment line of credit of $3 million from a bank of which $2 million was utilized as of March 31, 1998. The balance will be paid from working capital. The expansion is scheduled to be completed by the end of the Second Quarter of 1998. Cash flows provided by financing activities in the first quarter of 1998 were $2,010,000 compared to a net use of $183,000 in the same period in 1997. The increase in long-term debt in 1998 is a result of the expansion program and financing described above. Results of Operations - --------------------- The Company's operations resulted in net income of $1,430,000, or $.19 basic earnings per share, for the three months ended March 31, 1998 compared to net income of $505,000, or $.06 basic earnings per share, for the comparable period in 1997. Diluted earnings per share were $.18 and $.06 for the quarters ended March 31, 1998 and 1997 respectively. The Company, through its wholly-owned subsidiary, Madis Botanicals, Inc. ("Madis") had sales of $5.1 million for the quarter ended March 31, 1998, compared to sales of $2.4 million for the comparable quarter of 1997, an increase of $2.7 million, or 110%. For the three month periods ended March 31, 1998 and 1997, the gross margin (sales less cost of goods sold) was $2.6 million, or approximately 50% and $1.2 million, or approximately 48%, respectively. The improved results are attributed to increases in the sales of Madis' line of standardized botanical products, particularly St. Johns Wort, kava, and black cohosh. For the three month period ended March 31, 1998, the Company recorded net gains on marketable securities of $76,000 compared to $71,000 for the same period in 1997. Substantially all of the gains recorded in 1997 and 1998 were realized. Interest and dividend income was $101,000 for the three month period ended March 31, 1998, compared to $137,000 for the three month period ended March 31, 1997. Interest income was $100,000 during the three month period ended March 31, 1998, a decrease of $36,000 from the $136,000 recorded in the comparable period of 1997. This increase was due primarily to lower invested balances. Dividend income in the three month periods ended March 31, 1998 and 1997 was $1,000. Other income was $3,000 for the quarter ended March 31, 1998 compared to $240,000 for the comparable period in 1997. 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. Personnel expenses were $637,000 during the three months ended March 31, 1998 compared to $497,000 in the comparable period in 1997. An increase in management and laboratory personnel as well as merit salary increases accounted for the increase. Professional fees, consisting of legal, accounting and consulting fees were $92,000 during the three months ended March 31, 1998, compared to $117,000 in the same period in 1997. This decrease was primarily due to a reduction in legal fees. Other expenses were $469,000 for the three month period ended March 31, 1998, compared to $453,000 for the same period in 1997. The increased level of sales and depreciation expense were the primary reasons for the increase. 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, 1998. (b) Reports on Form 8-K ------------------- None. 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 14, 1998 By: /s/ Mark Koscinski ------------------ Mark Koscinski Senior Vice President and Principal Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----