<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, 1997 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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 10,205
<SECURITIES> 0
<RECEIVABLES> 1,417
<ALLOWANCES> 136
<INVENTORY> 2,478
<CURRENT-ASSETS> 14,380
<PP&E> 1,986
<DEPRECIATION> 473
<TOTAL-ASSETS> 20,364
<CURRENT-LIABILITIES> 2,156
<BONDS> 0
0
0
<COMMON> 76
<OTHER-SE> 18,132
<TOTAL-LIABILITY-AND-EQUITY> 20,364
<SALES> 2,423
<TOTAL-REVENUES> 2,871
<CGS> 1,257
<TOTAL-COSTS> 2,320
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4
<INCOME-PRETAX> 547
<INCOME-TAX> 42
<INCOME-CONTINUING> 505
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 505
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</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, 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)
(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, 1997, the issuer had 7,505,378 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,
1997
-------------
<S> <C>
ASSETS
Cash and cash equivalents $ 10,205
Accounts receivable, net of allowance
for uncollectible accounts and
returns and allowances of $136 1,281
Inventories, net 2,478
Other current assets 416
--------
Total current assets 14,380
--------
Securities available-for-sale 1,678
Investment in unaffiliated natural products company 1,010
Furniture and equipment, net 1,513
Notes receivable from affiliates 563
Goodwill, net of accumulated amortization of $201 1,214
Other assets 6
--------
Total assets $ 20,364
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 436
Accrued expenses and other liabilities 1,720
--------
Total liabilities 2,156
--------
Stockholders' equity:
Common stock, par value $.01;
30,000,000 shares authorized;
7,570,378 shares issued and outstanding 76
Additional paid-in capital 43,461
Accumulated deficit ( 26,045)
Unrealized gains on securities
available-for-sale 716
--------
Total stockholders' equity 18,208
--------
Total liabilities and stockholders'
equity $ 20,364
========
</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,
-------------------------
1997 1996
-------- -------
<S> <C> <C>
Revenues:
Sales $ 2,423 $ 1,613
Net gains on marketable securities 71 292
Interest and dividends 137 142
Other income 240 1
------- -------
Total revenues 2,871 2,048
------- -------
Expenses:
Cost of goods sold 1,257 998
Personnel 497 438
Professional fees 117 381
Other 453 400
------- -------
Total expenses 2,324 2,217
------- -------
Income (loss) before income taxes 547 ( 169)
Provision for income taxes 42 1
------- -------
Net income (loss) $ 505 ($ 170)
======= =======
Net income (loss) per share $ .06 ($ .02)
======= =======
Weighted average shares outstanding
(in 000's) 7,853 7,705
======= =======
</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,
-------------------------
1997 1996
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 505 ($ 170)
Adjustments:
Depreciation and amortization 96 71
Net trading securities
transactions ( 13) 1,798
Gain on sale of securities
available-for-sale ( 71) -
Change in inventories ( 488) ( 291)
Change in receivables ( 202) ( 70)
Change in accounts payable and
other accruals 156 195
Other, net ( 115) 75
------- -------
Net cash provided by (used
in) operating activities ( 132) 1,608
------- -------
Cash flows from investing activities:
Purchase of furniture and
equipment, net ( 75) ( 47)
Proceeds from sale of securities
available-for-sale 90 -
Purchase of securities available-
for-sale ( 415) -
Repayment of loans to
affiliates 40 49
Other, net 15 ( 20)
------- -------
Net cash used in investing
activities ( 345) ( 18)
------- -------
Cash flows from financing activities:
Repurchase of common stock ( 183) -
------- -------
Net cash used in financing
activities ( 183) -
------- -------
Net increase (decrease) in cash
cash and cash equivalents ( 660) 1,590
Cash and cash equivalents at beginning
of period 10,865 9,357
------- -------
Cash and cash equivalents at end of
period $10,205 $10,947
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
PURE WORLD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
(UNAUDITED)
1. General
-------
The accompanying unaudited consolidated financial statements of Pure
World, Inc. and subsidiaries (the "Company"), as of March 31, 1997 and
for the quarters ended March 31, 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 quarters ended March 31, 1997 and
1996 are not necessarily indicative of the results to be expected for
the entire year or any other period.
Certain reclassifications have been made to the prior year's financial
statements to conform to the current year's presentation.
<PAGE>
2. Inventories, net
----------------
Inventories were comprised of the following (in 000's):
<TABLE>
<S> <C>
Raw materials $ 565
Work-in-process 148
Finished goods 1,765
------
Total inventories $2,478
======
</TABLE>
3. Securities available-for-sale
-----------------------------
At March 31, 1997, securities available-for-sale were as follows (in
000's):
<TABLE>
<S> <C>
Cost $ 962
Gross holding gains 716
------
Fair value of securities
available-for-sale $1,678
======
</TABLE>
4. Net earnings per common share
-----------------------------
Net earnings 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.
In February 1997, the Financial Accounting Standards Board issued
Financial Accounting Standards 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.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of
Operation
-----------------------------------------------
Liquidity and Capital Resources
- -------------------------------
At March 31, 1997, the Company had cash and cash equivalents of $10.2
million. Cash equivalents of $9.9 million consisted of U.S. Treasury
bills with an original maturity of less than three months and yields
ranging between 5.05% and 5.41%. The Company had net working capital of
$12.2 million at March 31, 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 approximately $132,000 was used in operations in the first
quarter of 1997, due principally to an increase in inventory and
accounts receivables offsetting net income of $505,000. The
increases in inventory and accounts receivables is a result of the
increase in sales, as the inventory and accounts receivables turnover
in the first quarter of 1997 has remained relativity consistent with
the inventory and accounts receivables turnover in the first quarter
of 1996. Depreciation and amortization increased in the first quarter
of 1997 compared to the first quarter of 1996 due to the continued
additions to and enhancements of laboratory and production equipment.
In the first quarter of 1996, net cash of approximately $1.6 million
was provided by operations due principally to net sales of trading
securities of $1.8 million.
The Company repurchased 64,000 shares of its common stock in the first
quarter of 1997 at an aggregate cost of approximately $183,000. The
Company did not repurchase shares of its common stock in the first
quarter of 1996. All shares purchased in 1997 were returned to the
status of authorized but unissued shares.
Results of Operations
- ---------------------
The Company had net income of $505,000, or $.06 per share, for the
three months ended March 31, 1997 compared to a net loss of $170,000,
or $.02 per share, for the comparable period in 1996.
The Company through its majority owned subsidiary Madis Botanicals,
Inc. ("Madis") and its wholly owned subsidiary, Pure World Botanicals,
Inc., had consolidated combined sales of $2,423,000 in the first
quarter of 1997, compared to sales of $1,613,000 in the first quarter
of 1996, an increase of
<PAGE>
more than 50%. The growth in sales is primarily 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
products such as citrus pectin, olive leaf extract and KavaPureTM had
a positive impact on sales. For the three months ended March 31, 1997,
gross margin (sales less cost of goods sold) was $1,166,000 or 48.12%
of sales, compared to gross margin of $615,000, or 38.13% of sales
for the three months ended March 31, 1996. The increase in gross
margin was primarily due to the change in the product mix.
For the three months ended March 31, 1997, the Company recorded net
gains on marketable securities of $71,000 compared to net gains of
$292,000 in the comparable period of 1996. Substantially all of the
gains recorded in 1997 and 1996 were realized. The decrease in net
gains on marketable securities was due to the changes in portfolio
composition.
Interest and dividend income was $137,000 for the three months ended
March 31, 1997, compared to $142,000 for the comparable period in 1996.
Interest income was $136,000 during the first quarter of 1997, a
decrease of $4,000 from the $140,000 recorded in the comparable period
of 1996. This decrease was due to a combination of lower average
interest rates and lower invested balances of the Company's cash
equivalents. Dividend income was $1,000 for the first quarter of 1997
compared to $2,000 in the first quarter of 1996. The decrease in
dividends was due to a change in portfolio composition. Other income
was $240,000 in the first quarter of 1997, which was revenue received
in connection with the sale of a prior business in 1994. In the first
quarter of 1996, other income was $1,000, which consisted of the sale
of unneeded equipment.
Personnel expenses were $497,000 and $438,000 during the three month
periods ended March 31, 1997 and 1996 respectively, an increase of
$59,000 or 13.5%. The principal reason for the increase was added
management and laboratory personnel at Madis and merit increases
throughout the Company. Professional fees, consisting of legal,
accounting and consulting fees, were $117,000 during the first quarter
of 1997, compared to $381,000 in the first quarter of 1996, a decrease
of $264,000, or 69%. Legal fees decreased $250,000 from $282,000 in the
first quarter of 1996 to $32,000 in the first quarter of 1997. This
decrease was primarily related to the settlement in 1996 of litigations
in which the Company was involved. Consulting fees, primarily
associated with new product introduction, decreased by $24,000, from
$76,000 in the first quarter of 1996 to $52,000 in the first quarter of
1997.
<PAGE>
Other expenses were $453,000 in the first quarter of 1997 compared to
$400,000 in the first quarter of 1996, an increase of $53,000. Sales
expenses, including advertising, travel and entertainment, increased by
$16,000; depreciation expense increased by $13,000; minority interest
in the earnings of Madis, recorded in other expenses, increased by
$30,000; and all other expenses had a net decrease of $6,000.
<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, 1997.
(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 Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PURE WORLD, INC.
Dated: May 6, 1997 By:/S/ MARK KOSCINSKI
----------------------------
Mark Koscinski
Senior Vice President and
Chief Accounting Officer
