<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Form 10-QSB of Pure World, Inc. for the six months ended June 30, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 8,854
<SECURITIES> 31
<RECEIVABLES> 1,075
<ALLOWANCES> 129
<INVENTORY> 2,019
<CURRENT-ASSETS> 12,244
<PP&E> 1,085
<DEPRECIATION> 258
<TOTAL-ASSETS> 18,062
<CURRENT-LIABILITIES> 2,148
<BONDS> 0
0
0
<COMMON> 77
<OTHER-SE> 16,377
<TOTAL-LIABILITY-AND-EQUITY> 18,602
<SALES> 3,315
<TOTAL-REVENUES> 3,893
<CGS> 2,061
<TOTAL-COSTS> 4,409
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> (521)
<INCOME-TAX> 1
<INCOME-CONTINUING> (522)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (522)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</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: June 30, 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)
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, 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>
<CAPTION>
PURE WORLD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
($000 Omitted)
June 30,
1996
--------
<S> <C>
ASSETS
Cash and cash equivalents $ 8,854
Trading securities 31
Accounts receivable, net of
allowance for uncollectible
accounts and returns and
allowances of $129 946
Inventories, net 2,019
Other current assets 394
-------
Total current assets 12,244
-------
Securities available-for-sale 1,918
Furniture and equipment, net 1,547
Notes receivable from affiliates 547
Goodwill, net of accumulated
amortization of $130 1,285
Other assets 1,061
-------
Total assets $18,602
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 322
Accrued expenses 1,826
-------
Total current liabilities 2,148
-------
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 ( 27,301)
Unrealized losses on securities
available-for-sale ( 91)
-------
Total stockholders' equity 16,454
-------
Total liabilities and stockholders' equity $18,602
=======
</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
June 30,
1996 1995
-------------------------
<S> <C> <C>
Revenues:
Sales $ 1,702 $ 1,669
Net gains on marketable securities 17 136
Interest, dividend and other income 126 211
------- -------
Total revenues 1,845 2,016
------- -------
Expenses:
Cost of goods sold 1,063 943
Personnel 467 363
Professional fees 280 236
Other 387 364
------- -------
Total expenses 2,197 1,906
------- -------
Income (loss) before income taxes ( 352) 110
Provision for income taxes - 22
------- -------
Net income (loss) ($ 352) $ 88
======= =======
Net income (loss) per share ($ .05) $ .01
======= =======
Weighted average shares outstanding
(in 000's) 7,705 7,705
======= =======
</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>
Six Months Ended
June 30,
1996 1995
-----------------------
<S> <C> <C>
Revenues:
Sales $ 3,315 $ 3,278
Net gains on marketable securities 309 142
Interest, dividend and other income 269 416
------- -------
Total revenues 3,893 3,836
------- -------
Expenses:
Cost of goods sold 2,061 1,967
Personnel 905 764
Professional fees 661 322
Other 787 580
------- -------
Total expenses 4,414 3,633
------- -------
Income (loss) before income taxes ( 521) 203
Provision for income taxes 1 45
------- -------
Net income (loss) ($ 522) $ 158
======= =======
Net income (loss) per share ($ .07) $ .02
======= =======
Weighted average shares outstanding
(in 000's) 7,705 7,712
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
PURE WORLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
($000 Omitted)
<CAPTION>
Six Months Ended
June 30,
1996 1995
-----------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($ 522) $ 158
Adjustments:
Depreciation and amortization 148 129
Net trading securities and
U.S. Treasury securities
transactions 1,776 ( 1,717)
Change in inventories ( 458) ( 140)
Change in receivables ( 93) ( 130)
Change in accounts payable and
other accruals ( 196) ( 758)
Other, net 7 ( 73)
------- -------
Net cash provided by (used in)
operating activities 662 ( 2,531)
------- -------
Cash flows from investing activities:
Purchase of a business less cash
acquired - ( 2,144)
Purchase of furniture and
equipment, net ( 226) ( 110)
Purchase of securities
available-for-sale - ( 28)
Repayment of loans to affiliates 79 50
Investment in Gaia Herbs, Inc. ( 1,010) -
Other, net ( 8) ( 86)
------- -------
Net cash used in investing
activities ( 1,165) ( 2,318)
------- -------
Cash flows from financing activities:
Repurchase of common stock - ( 31)
Other, net - ( 5)
------- -------
Net cash used in financing
activities - ( 36)
------- -------
Net decrease in cash and cash
equivalents ( 503) ( 4,885)
Cash and cash equivalents at beginning
of period 9,357 13,427
------- -------
Cash and cash equivalents at end of
period $ 8,854 $ 8,542
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
PURE WORLD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
(Unaudited)
1. General
-------
The accompanying unaudited consolidated financial statements of Pure World,
Inc. and subsidiaries (the "Company") as of June 30, 1996 and for the three and
six month periods ended June 30, 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 and six month periods ended June 30,
1996 and 1995 are not necessarily indicative of the results to be expected for
the entire year or any other period.
2. Marketable Securities
----------------------
At June 30, 1996, marketable securities consisted of the following (in
$000's):
<TABLE>
<CAPTION>
Gross Gross
Amortized Holding Holding Fair
Cost Gains Losses Value
--------- -------- -------- -------
<S> <C> <C> <C> <C>
Trading securities $ 14 17 - 31
Available-for-sale 2,009 81 ( 172) 1,918
------ ----- ----- ------
Total marketable
securities $2,023 $ 98 ($ 172) $1,949
====== ===== ===== ======
</TABLE>
All marketable securities were investments in common stock. Substantially
all gains recorded in the three and six month periods ended June 30, 1996 were
realized.
<PAGE>
3. Inventories
-----------
Inventories are comprised of the following (in $000's):
<TABLE>
<S> <C>
Raw materials $ 670
Finished goods 1,349
-------
Total inventories, net $ 2,019
=======
</TABLE>
4. Other Assets
------------
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. Gaia manufactures and distributes natural products. Gaia is a privately
held company and does not publish financial results.
The Company is accounting for this investment by the cost method. The cost
method is a method of accounting for an investment under which an investor
records an investment in the stock of an investee at cost, and recognizes as
income dividends received that are distributed from net accumulated earnings of
the investee since the date of acquisition by the investor. The net accumulated
earnings of an investee subsequent to the date of investment are recognized by
the investor only to the extent distributed by the investee as dividends.
Dividends received in excess of earnings subsequent to the date of investment
are considered a return of investment and are recorded as reductions of cost of
the investment.
<PAGE>
Item 2. Management's Discussion and Analysis
or Plan of Operation
------------------------------------
Liquidity and Capital Resources
- -------------------------------
At June 30, 1996, the Company had cash and cash equivalents of $8.9
million. Cash equivalents of $8.7 million consisted of U.S. Treasury bills with
an original maturity of less than three months and yields ranging between 5.05%
and 5.67%. The Company had net working capital of $10.1 million at June 30,
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 $700,000 was provided by operations for the six
months ended June 30, 1996 compared to a net use of cash of $2.5 million in the
first six months of 1995. The principal reasons for the increase in net cash
flows were the sale of marketable securities and the change in investments in
U.S. Treasury Securities to securities with maturities of less than three
months.
Results of Operations
- ---------------------
The Company's operations resulted in a net loss of $352,000, or $.05 per
share, for the three months ended June 30, 1996 compared to net income of
$88,000 for the comparable period in 1995. The net loss was $522,000, or $.07
per share for the six months ended June 30, 1996, compared to net income of
$158,000 for the comparable period in the prior year.
Madis had sales of $1.7 million and $3.3 million for the three and six
month periods ended June 30, 1996, respectively, which was comparable to the
same periods of the prior years. For the three and six months ended June 30,
1996, the cost of goods sold was $1.1 million and $2.1 million, respectively,
and remained consistent with 1995 levels. Gross margin was $.6 million and $1.1
million for the three and six months ended June 30, 1996, which was also
comparable to the results for the respective periods in the prior year.
For the three and six month periods ended June 30, 1996, the Company
recorded net gains on marketable securities of $17,000 and $309,000,
respectively, compared to $136,000 and $142,000 for the same periods in 1995.
Substantially all of the gains recorded in 1996 were realized. The changes in
net gains on marketable securities from 1996 to 1995 were due to changes in
portfolio composition and general market conditions.
<PAGE>
Interest, dividend and other income was $126,000 and $269,000 for the three
and six months ended June 30, 1996, respectively, compared to $211,000 and
$416,000 for the three and six months ended June 30, 1995. Interest income was
$263,000 during the six month period in 1996, a decrease of $70,000 from the
$333,000 recorded in the comparable period of 1995. This decrease was due to
lower average interest rates on the Company's cash equivalents and U.S. Treasury
securities and lower invested balances. Dividend income for the six-month period
was $3,000 in 1996 compared to $77,000 in 1995. All other income was $3,000 in
the six months ended June 30, 1995 compared to $6,000 for the first six months
of 1995.
Personnel expenses were $467,000 and $905,000 during the three and six
months ended June 30, 1996 compared to $363,000 and $764,000 in the comparable
periods in 1995. An increase in sales and management personnel accounted for
these increases. Professional fees were $280,000 and $661,000 during the three
and six month periods in 1996, compared to $236,000 and $322,000 in the three
and six month periods in 1995. The professional fees in 1996 were incurred to
conduct litigation to protect the Company's investment in a real estate
investment trust and consulting fees associated with new product introduction
("KavaPure(TM")).
Other expenses were $387,000 and $787,000 for the three and six month
periods ended June 30, 1996, compared to $364,000 and $580,000 for the same
periods in 1995. Travel expenses increased by $78,000 in the first six months of
1996 compared to the first six months of 1995 and advertising expenses increased
by $63,000 for the same period. The increase was due primarily to the
introduction of a new product, KavaPure(TM) and other sales efforts. General
office expenses increased by $77,000 for the first six months of 1996 compared
to the first six months of 1995, for various reasons, including the new product
introduction, the above-mentioned litigation, and increased equipment rental
expenses. All other expenses had a net decrease of $11,000 in the first six
months of 1996 compared to the first six months of 1995.
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 entities 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 shares
as if the estimated option value were expensed over the vesting period of the
same.
<PAGE>
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 six months ended June 30, 1996.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this report
is being filed.
<PAGE>
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 14, 1996 By: /s/ Mark Koscinski
-----------------------------
Mark Koscinski
Senior Vice President and
Principal Accounting Officer
