<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Form 10-QSB of Pure World, Inc. for the three months ended March 31, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000356446
<NAME> PURE WORLD, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 10,947
<SECURITIES> 72
<RECEIVABLES> 1,029
<ALLOWANCES> 115
<INVENTORY> 1,852
<CURRENT-ASSETS> 14,106
<PP&E> 1,626
<DEPRECIATION> 204
<TOTAL-ASSETS> 19,023
<CURRENT-LIABILITIES> 2,539
<BONDS> 0
0
0
<COMMON> 77
<OTHER-SE> 16,407
<TOTAL-LIABILITY-AND-EQUITY> 19,023
<SALES> 1,613
<TOTAL-REVENUES> 2,048
<CGS> 998
<TOTAL-COSTS> 2,214
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3
<INCOME-PRETAX> (169)
<INCOME-TAX> 1
<INCOME-CONTINUING> (170)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (170)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
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, 1996
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)
(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, 1996, the issuer had 7,704,957 shares of its
common stock, par value $.01 per share, outstanding.
Transitional Small Business Disclosure Format (check one):
Yes _____ No X
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
<TABLE>
PURE WORLD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(000 Omitted)
<CAPTION>
March 31,
1996
---------
<S> <C>
ASSETS
Cash and cash equivalents $ 10,947
Trading securities 72
Accounts receivable, net of allowance
for uncollectible accounts and
returns and allowances of $115 914
Inventories, net 1,852
Other current assets 321
--------
Total current assets 14,106
--------
Securities available-for-sale 1,608
Furniture and equipment, net 1,422
Notes receivable from affiliates 578
Goodwill, net of accumulated amortization of $106 1,309
--------
Total assets $ 19,023
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 403
Accrued expenses and other liabilities 2,136
--------
Total liabilities 2,539
--------
Stockholders' equity:
Common stock, par value $.01;
30,000,000 shares authorized;
7,704,957 shares issued and outstanding 77
Additional paid-in capital 43,769
Accumulated deficit ( 26,949)
Unrealized losses on securities
available-for-sale ( 413)
--------
Total stockholder's equity 16,484
--------
Total liabilities and stockholders' equity $ 19,023
========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
PURE WORLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(000 Omitted, except per share data)
<CAPTION>
Three Months Ended
March 31,
1996 1995
-------- --------
<S> <C> <C>
Revenues:
Sales $ 1,613 $ 1,609
Net gains on marketable securities 292 6
Interest, dividend and other income 143 205
------- -------
Total revenues 2,048 1,820
------- -------
Expenses:
Cost of goods sold 998 1,024
Personnel 438 401
Professional fees 381 86
Other 400 216
------- -------
Total expenses 2,217 1,727
------- -------
Income (loss) before income taxes ( 169) 93
Provision for income taxes 1 23
------- -------
Net income (loss) ($ 170) $ 70
======= =======
Net income (loss) per share ($ .02) $ .01
======= =======
Weighted average shares outstanding
(in 000's) 7,705 7,725
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
PURE WORLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(000 Omitted)
<CAPTION>
Three Months Ended
March 31,
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($ 170) $ 70
Adjustments:
Depreciation and amortization 71 61
Net trading securities and
U.S. Treasury securities transactions 1,798 ( 1,621)
Change in inventories ( 291) 33
Change in receivables ( 70) ( 85)
Change in accounts payable and
other accruals 195 ( 680)
Other, net 75 ( 4)
------- -------
Net cash provided by (used
in) operating activities 1,608 ( 2,226)
------- -------
Cash flows from investing activities:
Purchase of a business less cash
acquired - ( 2,019)
Purchase of furniture and
equipment, net ( 47) ( 44)
Purchase of securities available-
for-sale - ( 16)
Repayment of loans to affiliates 49 10
Other, net ( 20) -
------- -------
Net cash used in investing activities ( 18) ( 2,069)
------- -------
Cash flows from financing activities:
Repurchase of common stock - ( 31)
Other, net - ( 2)
------- -------
Net cash used in financing
activities - ( 33)
------- -------
Net increase (decrease) in
cash and cash equivalents 1,590 ( 4,328)
Cash and cash equivalents at beginning
of period 9,357 13,427
------- -------
Cash and cash equivalents at end of
period $10,947 $ 9,099
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
PURE WORLD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(Unaudited)
1. General
-------
The accompanying unaudited consolidated financial statements of Pure World,
Inc. and subsidiaries (the "Company"), as of March 31, 1996 and for the three
month periods ended March 31, 1996 and 1995 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, 1995 as filed with the Securities and Exchange Commission.
The results of operations for the three month periods ended March 31, 1996
and 1995 are not necessarily indicative of the results to be expected for the
entire year or any other period.
<PAGE>
2. Marketable Securities
---------------------
At March 31, 1996, marketable securities consisted of the following (in
000's):
<TABLE>
<CAPTION>
Gross Gross
Amortized Holding Holding Fair
Cost Gain Losses Value
--------- ------- ------- -----
<S> <C> <C> <C> <C>
Trading securities:
Corporate debt securities $ 23 $ 2 $ -- $ 25
Equity securities 46 1 -- 47
------ ----- ----- ------
Total 69 3 -- 72
------ ----- ----- ------
Available-for-sale:
Equity securities 2,021 -- 413 1,608
------ ----- ----- ------
Total marketable
securities $2,090 $ 3 $ 413 $1,680
====== ===== ===== ======
</TABLE>
Substantially all gains recorded in the three months ended March 31, 1996
were realized. The realized gains and unrealized losses on trading securities
included in the results of operations for the three months ended March 31, 1995
were $9,000 and $3,000, respectively.
3. Inventories
-----------
Inventories are comprised of the following (in 000's):
<TABLE>
<S> <C>
Raw materials $ 525
Work-in-process 72
Finished goods 1,255
------
Total inventories $1,852
======
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis
or Plan of Operation
----------------------------------------
Liquidity and Capital Resources
- -------------------------------
At March 31, 1996, the Company had cash and cash equivalents of $10.9
million. Cash equivalents of $10.8 million consisted of U.S. Treasury bills with
an original maturity of less than three months and yields ranging between 4.759%
and 5.170%. The Company also had trading securities with a current market value
of approximately $72,000 at March 31, 1996. The Company had net working capital
of $11.6 million at March 31, 1996. 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 approximately $1.6 million was provided by operations in the
first quarter of 1996, due principally to net sales of marketable securities of
$1.8 million. In the first quarter of 1995, net cash of approximately $2.2
million was used in operations. Net purchases of marketable securities and U.S.
Treasury securities with maturities greater than three months of $1.6 million
and decreases in current liabilities of $.7 million, principally at the
Company's subsidiary, Madis Botanicals, Inc. ("Madis"), were the principal
reasons for this use of cash.
The Company did not repurchase shares of its common stock in the first
quarter of 1996 compared to the repurchase of 20,926 shares at an aggregate cost
of $30,500 in the first quarter of 1995. All shares purchased in 1995 were
returned to the status of authorized but unissued shares.
Results of Operations
- ---------------------
The Company had a net loss of $170,000, or $.02 per share, for the three
months ended March 31, 1996 compared to net income of $70,000, or $.01 per
share, for the comparable period in 1995.
Madis had sales of approximately $1.6 million in the first quarter of both
1996 and 1995. For the three months ended March 31, 1996 and 1995 the cost of
goods sold was approximately $1.0 million. Gross margin was approximately $.6
million for both of the quarters ended March 31, 1996 and 1995. The gross profit
percentage was 38.1% and 36.4% for the three month periods ended March 31, 1996
and 1995, respectively.
<PAGE>
For the three months ended March 31, 1996, the Company recorded net gains
on marketable securities of $292,000 compared to net gains of $6,000 in the same
period of 1995. Substantially all of the gains recorded in 1996 were realized.
The increase in net gains on marketable securities was due to the changes in
portfolio composition and general market conditions.
Interest, dividend and other income was $143,000 for the three months ended
March 31, 1996, compared to $205,000 for the comparable period in 1995. Interest
income was $140,000 during the first quarter of 1996, a decrease of $23,000 from
the $163,000 recorded in the comparable period of 1995. This decrease was due to
a combination of lower average interest rates and lower invested balances of the
Company's cash equivalents. Dividend income for the first quarter was $2,000 in
1996 compared to $42,000 in the first quarter of 1995. The decrease in dividends
was due to a change in portfolio composition. All other income was $1,000 in the
first quarter of 1996, compared to no other income in the first quarter of 1995.
Personnel expenses were $.4 million during the three month periods ended
March 31, 1996 and 1995. Professional fees were $381,000 during the first
quarter of 1996, compared to $86,000 in the first quarter of 1995. This increase
can be attributed to fees spent to conduct litigation to protect the Company's
investment in a real estate investment trust and consulting fees associated with
new product introduction (KavaPureTM).
Other expenses increased from $216,000 in the first quarter of 1995 to
$400,000 in the first quarter of 1996 an increase of $184,000. Advertising
expenses increased from $2,000 in the three months ended March 31, 1995 to
$74,000 in the comparable period in 1996, an increase of $72,000. The increase
was due primarily to the introduction of the new KavaPureTM product by the
Company's wholly-owned subsidiary, Pure World Botanicals Inc., in March 1996.
General office expenses increased by $71,000 for various reasons, including the
new product introduction, the above-mentioned litigation, and increased
equipment rental expenses. Bad debt expense and franchise tax expenses increased
in the aggregate by $26,000. All other expenses increased by $15,000.
New Accounting Standards
- ------------------------
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" ("SFAS No. 123") was issued in October 1995 and was
effective January 1, 1996. SFAS No. 123 requires entitites that have employee
stock option plans to estimate the value of grants awarded to employees and
disclose in a pro forma footnote the impact on the entities' earnings per share
as if the estimated option value were expensed over the vesting period of the
same.
The Company has granted to key employees and directors options to buy
shares of the Company's common stock at the current market value of the stock at
the date of grant. Since SFAS No. 123 only requires additional disclosure of the
cost of stock options, implementation will not have a material impact on the
Company's results of operations.
<PAGE>
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, 1996.
(b) Reports on Form 8-K
On January 24, 1996, the Company filed a Current Report on Form 8-K
disclosing the litigation commenced by American Industrial Properties REIT
("AIP") against the Company.
On February 16, 1996, the Company filed an Amendment to the Current Report
on Form 8-K disclosing that the Company had filed its response to the litigation
as well as commencing suit against AIP and its executive officer and trust
managers as well as instituting a derivative action on behalf of the
shareholders of AIP against the officers and trust managers of AIP.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PURE WORLD, INC.
Dated: May 13, 1996 By: /s/ Mark Koscinski
---------------------------
Mark Koscinski
Senior Vice President and
Chief Accounting Officer
