Weekly News Update

November 9, 2000

MotherNature.com Calls it Quits

MotherNature.com (MTHR) on Nov. 7 said its board of directors has unanimously voted to liquidate and dissolve the company due to a lack of financing prospects. According to the company, it has been unable to identify an acceptable buyer or strategic-alliance partner despite a ""significant effort"" to find one.

The announcement comes just three weeks after Internet holding company SiteStar Corp. (SYTE) withdrew its $17.4 million buyout offer due to what it calls MotherNature’s refusal to enter into acquisition discussions. Similarly, Boynton Beach, Fla.-based vitacost.com President Allen Josephs expressed disappointment in MotherNature’s decision to close down before formally considering vitacost’s one-for-one stock merger offer, which it submitted in September.

MotherNature.com says it will hold a special meeting Nov. 30 for shareholders to consider its plan of dissolution. Upon approval, the company says it anticipates the initial distribution of liquidated proceeds to be about $13.4 million or $.85/common share, which will be made available to shareholders before the end of the year. Shareholders could also receive additional liquidation proceeds of $.15/share over the next three years, the company says.

There is no word yet on when MotherNature.com plans to close its website or how its dissolution will affect United Natural Foods’ (UNFI) new turnkey e-commerce strategy, which it developed with MotherNature.com. Calls to MotherNature and United Natural Foods were not returned by press time.

New Study Slams Ephedra; Industry Groups Counter Findings

Researchers at the University of California at San Francisco on Nov. 6 said that ephedra can cause heart attacks, stroke, seizure and death in healthy young people. The study, which was commissioned by FDA, found that one-third of the complications that occurred in 140 ephedra users were ""definitely or probably"" caused by ephedra, while another one-third were ""definitely"" caused by it, the Associated Press (AP) reported.

According to the Washington-based Ephedra Education Council (EEC), the findings ""represent old information that has already been reviewed by scientific and medical experts."" EEC says a panel of experts, including leading scientists with backgrounds in cardiology, cardiac pathology, toxicology and neurotoxicology, has already reviewed and discredited the same adverse events and found no association with ephedra and serious adverse events when it is taken as directed.

The Washington-based Council for Responsible Nutrition (CRN) criticized the criteria used to classify which complications were likely caused by ephedra, citing a soon-to-be-released study that found no link between complications and the supplements ingredient. FDA will decide by the end of the year whether to impose strict restrictions on ephedra or to commission further research, AP says.

Wild Oats President Outlines Road to Recovery at Industry Conference

During a presentation at the Whole Health Marketing & Retail Strategies conference in Broomfield, Colo., Wild Oats Markets (OATS) President Jim Lee on Nov. 5 listed steps his company plans to take to in an effort to improve its bottom line. Wild Oats on Oct. 26 released disappointing 3Q00 earnings that sent analysts reeling. According to Lee, OATS plans to increase its staff levels and in-store service kiosks, as well as expand its marketing budget, marketing frequency and initiate a media campaign. The results, he says, should yield a more compelling store offering, a defensible store base, an expanded customer base, and improved sales and results. For the full story, see the December issue of Natural Business.

Nature’s Sunshine Acquires WorldWide Financial Holdings, Synergy Worldwide

Encapsulated herb and vitamin maker Nature’s Sunshine (NATR) on Nov. 2 said it has acquired the assets of Orem, Utah-based WorldWide Financial Holdings and its wholly owned subsidiary Synergy Worldwide, a supplements maker, for roughly $4.7 million. According to Nature’s Sunshine, the purchase almost doubles the size of the company’s current operations in Japan.

Financial News:

Real Goods (RGTC) posted a 2Q01 net loss of $575,000 or $.12/share vs. a 2Q00 net loss of $198,000 or $.05/share. Real Goods had 2Q01 net sales of $3.47 million, down 13 percent vs. 2Q00 net sales of $3.98 million.

Galaxy Foods (GXY) reported a 2Q01 net income of $712,230 or $.07/diluted share vs. a 2Q00 net income of $784,720 or $.08/diluted share.

Hansen Natural (HANS) posted a 3Q00 net income of $1.4 million or $.13/diluted share, up 2.1 percent from a 3Q99 net income of $1.3 million or $.13/diluted share.

AMBI Inc. (AMBI) reported a 1Q01 net income of $6,000 or $.00/diluted share vs. 1Q00 net income of $2 million or $.06 /diluted share. Separately, Adams, Harkness & Hill on Nov. 6 downgraded AMBI from Accumulate to Market Perform.

Spectrum Organic Products (SPOP) posted a 3Q00 net loss of $636,300 vs. a 3Q99 net income of $105,500. SPOP had 3Q00 gross sales of $11.4 million vs. 3Q99 gross sales of $4.5 million.

Natrol (NTOL) reported a 3Q00 net loss of $521,000 or $.04/diluted share vs. a 3Q99 net income of $2.5 million or $.19/diluted share. NTOL had 3Q00 sales of $22.3 million, up 5.2 percent vs. 3Q99 net sales of $21.2 million. U.S. Bancorp Piper Jaffray reduced its estimates on NTOL and gave it a $4 price target.

Briefly:

Wayne, N.J.-based supplements ingredients supplier Triarco Industries on Nov. 3 said that it has acquired Phyto-Cal Inc., an East Coast-based supplier of primary reference standards. Terms of the deal were not disclosed.

Napa, Calif.-based Fantastic Foods announced that Sacramento, Calif.-based Interpac Technologies will serve as the manufacturing supplier for Fantastic Foods. Under the terms of the deal, Interpac will assume the lease and production assets of Fantastic’s Petaluma, Calif., manufacturing facility.

Greenville, S.C.-based General Nutrition Products on Nov. 2 announced that it has changed its name to Nutricia Manufacturing USA. According to the company, the name reflects its new role as a key U.S. manufacturer for Royal Numico (N.NUM), its parent company.

Eastbrook, Maine-based Indian Meadow Herbals says it plans to certify organic all of the items in its liquid herbal extracts and body care products.

Healthnet Intl. (HLNT) has entered into a best-efforts financing agreement with Los Angeles-based Watley Group LLC to raise about $7 million. The Watley Group will act as lead manager for the equity-based financing, Healthnet says. As a result of its strengthened equity position, HLNT hopes to be listed on the NASDAQ market.