Weekly News Update

October 19, 2000

Gaiam, Real Goods Announce Merger

Lifestyles products seller Gaiam (GAIA) and environmental products maker Real Goods Trading Corp. (RGTC) on Oct. 16 announced the signing of a merger agreement. The deal, which is subject to RGTC shareholder approval and is expected to close in January, is a tax-free stock-for-stock exchange valued at $8.7 million, the companies say. Under the terms of the agreement, RGTC shareholders will receive one share of GAIA Class A stock in exchange for every 10 shares of RGTC. Additionally, RGTC shareholders will receive $1 Gaiam gift certificates for each Real Goods share they own--up to $100. RGTC CEO John Schaeffer is expected to stay with the company. Upon news of the merger, Tucker Anthony Cleary Gull and U.S Bancorp Piper Jaffray reiterated their Strong Buy and Buy ratings, respectively, for GAIA. The company on Oct. 18 closed at $15/share, down $2 from its Oct. 13 closing price of $17/share.

Four Shareholder Groups Lock Up Two-thirds of ZONE Shares

In what it calls a vote of confidence in its upcoming growth initiatives, Omni Nutraceuticals (ZONE) on Oct. 18 announced that four of its largest shareholder groups have agreed to lock up nearly 19 million of the company’s shares. According to Klee Irwin, a member of one shareholder group, the current price of the company’s stock is not in line with its true value. Also involved in the lock up are former ZONE Board Chairman R. Lindsey Duncan, and John Liviakis, a ZONE shareholder and CEO of American Equities LLC, the company’s investor firm. The agreements--some of which have exclusions and contain requirements for their continued effectiveness—are expected to expire on Sept. 25, 2001.

More Stock News: ANII Extends Stock Warrants Deadline; HAUS Amends Credit Facility; More

Advanced Nutraceuticals (ANII) has extended the exercise period of its common stock purchase warrants from Oct. 15, 2000, to April 30, 2001. Each warrant entitles the holder to purchase one common share at $3.75/share.

Hauser (HAUS) said it has amended its credit facility with Wells Fargo Bank (WFC). As a condition of the amendment, international holding company Zatpack--which indirectly owns 46 percent of Hauser’s outstanding stock shares--purchased a $3 million subordinated promissory note. The amended credit facility calls for Hauser’s $24.5 million loan to be reduced to $17 million by March 31, 2001. The note will accrue interest at 6.5 percent, is payable in three years and has five-year warrants attached, which permit Zatpack to purchase 992,789 shares of HAUS common stock for about $.59/share.

William Blair on Oct. 18 initiated new coverage on the Hain Celestial Group (HAIN) at Buy.

Nutritional ingredients maker GalaGen (GGENC) announced that a group of investors led by Swiss bank Lomard Odier & Cie has purchased 1.75 million shares of GGENC common stock at $.80/share and will receive warrants to purchase 175,000 shares.

Horizon Debuts its Organic Milk in the U.K., Opens Maryland Farm to Public

Horizon Organic (HCOW) on Oct. 17 announced that it has begun delivery of its Horizon-brand ""lunchbox-size"" organic milk to Sainsbury's, a leading U.K. grocery chain with more than 300 outlets. According to HCOW, its brightly colored packaging, which features Horizon’s signature ""happy cow,"" is unique in the U.K. and has generated positive responses from children and parents. Separately, one year after leasing a former Naval Academy farm in Gambrills, Md., and spending $2 million to renovate it, HCOW on Oct. 14 opened the farm to the public. The remodeled farm touts a store, discovery barn, picnic pavilion and a children’s party room. Additionally, the farm has already booked numerous tours to teach visitors about organic growing and the benefits of organic living, the Associated Press said.

Financial News: GBUR Warns of FY00; CNXS, NAII Post Net Losses; WNI Reports Net Income

Gardenburger (GBUR) on Oct. 12 says it expects to record an FY00 operating loss of about $2.7 million on sales of $71 million. Included in the loss is an expense of roughly $1.2 million related to the resignation of former CEO Lyle Hubbard. Additionally, the company says it is generating positive cash flow and has paid down its line of credit from $5 million in September 1999 to $2.9 million.

CNS Inc. (CNXS) posted a 3Q00 net loss of $393,000 or $.03/diluted share vs. a 3Q99 net loss of $5.8 million or $.39/diluted share. CNS had 3Q00 net sales of $19.2 million, up 84 percent from net sales of $10.5 million in 3Q99.

Natural Alternatives Intl. (NAII) reported a 4Q00 net loss of $385,000 or $.07/diluted share vs. a 4Q99 net loss of $505,000 or $.09/diluted share. Net revenues for the quarter were $11 million vs. $10 million in 4Q99. NAII posted an FY00 net loss of $4.5 million or $.78/diluted share vs. a FY99 net loss of $2.9 million or $.50/diluted share. The company had FY00 revenues of $47.8 million, a 17 percent decrease from FY99 revenues of $57.4 million.

Weider Nutrition Intl. (WNI) reported a 1Q01 net income of $2.0 million or $.07/diluted share vs. a 1Q00 net income of $246,000 or $.01/diluted share.

Scottsdale Scientific (STDS) posted an FY99 net operating loss of $1.8 million vs. a net operating loss of $1.3 million for FY98. Revenues for FY99 were $13.2 million, down 1.8 percent from revenues of $13.5 million in FY98. The earnings release did not include FY99 EPS.

Briefly:

Russell Parker, Whole Foods Market (WFMI) VP of purchasing and distribution, on Oct. 6 announced his resignation from the company. Parker has not revealed his future plans.

Forbes magazine ranked Green Mountain Coffee (GMCR) No. 129 in its list of the 200 best small companies in America.

Houston, Texas-based Minute Maid Co. has introduced its Premium Extra Vitamins C and E plus Zinc orange juice fortified with a combination of nutrients it says are essential for normal immune function.

QAI Japan Ltd., a wholly owned subsidiary of San Diego, Calif., organic certifier Quality Assurance Intl. (QAI), has been approved by the Japanese Ministry of Agriculture, Forestry & Fisheries. The distinction will allow QAI clients to be certified to Japanese Agriculture Standards (JAS) and to export as organic with the JAS seal.

Boulder, Colo.-based Pharmaca Integrative Pharmacy announced its intention to open its flagship store in Boulder in early November. The store was originally slated to open Oct. 21.

According to the Wall Street Journal, ConAgra Foods (CAG) has temporarily stopped operations at a Kansas mill it fears may have received the Starlink variety of genetically modified corn not approved for human consumption.

According to the IADSA Newsflash, the American Herbal Products Association (AHPA) has partnered with the Natural Marketing Institute (NMI) to conduct a survey of the U.S. market for botanical supplements, which will tabulate sales data in various trade channels.