SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 22, 2003
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THE QUIGLEY CORPORATION
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(Exact name of registrant as specified in its charter)
Nevada 01-21617 23-2577138
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Kells Building, 621 Shady Retreat Road, P.O. Box 1349, Doylestown, PA 18901
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Address of principal executive offices
Registrant's telephone number, including area code: (215) 345-0919
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N/A
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(Former name or former address, if changed since last report.)
Item 2. Acquisition or Disposition of Assets.
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On January 22, 2003, the Board of Directors (the "Board") of The
Quigley Corporation (the "Corporation") approved the sale of the Corporation's
60% equity interest in Caribbean Pacific Natural Products, Inc. ("CPNP") to
Suncoast Naturals, Inc. ("Suncoast"). CPNP is a developer and marketer of all
natural sun and skin-care products for luxury resorts, theme parks and spas. In
exchange for its 60% equity interest in CPNP, the Corporation shall receive: (i)
750,000 shares of Suncoast's common stock, which Suncoast has agreed, at its
cost and within 60 days from the closing, to register for public resale through
an appropriate registration statement; and (ii) 100,000 shares of Suncoast's
Series A Redeemable Preferred Stock, which bears interest at a rate of 4.25% per
annum and which is redeemable from time to time after March 31, 2003 in such
amounts as is equal to 50% of the free cash flow reported by Suncoast in the
immediately preceding quarterly financial statements divided by the redemption
price of $10.00 per share. As of the date of this transaction, the Corporation
owns 19.5% of Suncoast's issued and outstanding capital stock.
Item 5. Other Events
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On January 22, 2003, the Board appointed Stephen W. Wouch to fill a
vacancy on the Board. Mr. Wouch is a certified public accountant with 19 years
of public accounting experience and is the Managing Partner of Wouch, Maloney
& Co., LLP, Certified Public Accounts.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(b) Pro Forma Financial Information:
Basis of Presentation
Effective July 1, 2000, The Quigley Corporation (the "Company") acquired a 60%
ownership position of Caribbean Pacific Natural Products, Inc., ("CPNP") which
is accounted for by the purchase method of accounting and accordingly, the
operating results have been included in the Company's consolidated financial
Statements from the date of acquisition. This majority ownership position
required a cash investment that approximated $812,000 and the provision for a
$1million line of credit, secured by inventory, accounts receivable and all
other assets of Caribbean Pacific Natural Products. The net assets of CPNP at
the acquisition date principally consisted of a product license and distribution
rights with no recorded value, inventory and fixed assets of $312,915 and
$510,000 of working capital with a contribution to minority interest of
$329,166.
On January 22, 2003, the Board of Directors (the "Board") of the Company
approved the sale of the Company's 60% equity interest in CPNP to Suncoast
Naturals, Inc. ("Suncoast"). In exchange for its 60% equity interest in CPNP,
the Company shall receive: (i) 750,000 shares of Suncoast's common stock, which
Suncoast has agreed, at its cost and within 60 days from the closing, to
register for public resale through an appropriate registration statement; and
(ii) 100,000 shares of Suncoast's Series A Redeemable Preferred Stock, which
bears interest at a rate of 4.25% per annum and which is redeemable from time to
time after March 31, 2003 in such amounts as is equal to 50% of the free cash
flow reported by Suncoast in the immediately preceding quarterly financial
statements divided by the redemption price of $10.00 per share. As of the date
of this transaction, the Company owns 19.5% of Suncoast's issued and outstanding
capital stock.
Accordingly, the Pro Forma information and corresponding adjustments of the
aforementioned transactions are made to reflect the removal of the original and
additional investments made during the periods of ownership.
THE QUIGLEY CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
Unaudited
ASSETS September 30, 2002
CURRENT ASSETS: Historical Adjustments Pro Forma
Cash and cash equivalents $ 11,292,421 ($ 74,190) $ 11,218,231
Accounts receivable 4,243,491 (220,943) 4,022,548
Inventory 6,346,190 (514,233) 5,831,957
Prepaid expenses and other current assets 672,134 (56,166) 615,968
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TOTAL CURRENT ASSETS 22,554,236 (865,532) 21,688,704
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PROPERTY, PLANT AND EQUIPMENT - net 2,332,122 (67,969) 2,264,153
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OTHER ASSETS:
Excess cost over net assets - net 327,014 (296,251) 30,763
Other assets 28,849 51,516 80,365
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TOTAL OTHER ASSETS 355,863 (244,735) 111,128
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TOTAL ASSETS $ 25,242,221 ($ 1,178,236) $ 24,063,985
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 846,529 ($ 146,917) $ 699,612
Accrued royalties and sales commissions 892,365 (83,317) 809,048
Accrued advertising 548,508 548,508
Other current liabilities 1,728,927 (88,024) 1,640,903
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TOTAL CURRENT LIABILITIES 4,016,329 (318,258) 3,698,071
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COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST IN CONSOLIDATED AFFILIATES
STOCKHOLDERS' EQUITY:
Common stock, $.0005 par value; authorized 50,000,000;
Issued: 16,102,670 and 15,321,206 shares 8,051 8,051
Additional paid-in-capital 32,592,222 32,592,222
Retained earnings 13,813,778 (859,978) 12,953,800
Less: Treasury stock, 4,646,053 shares, at cost (25,188,159) (25,188,159)
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TOTAL STOCKHOLDERS' EQUITY 21,225,892 (859,978) 20,365,914
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,242,221 ($ 1,178,236) $ 24,063,985
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THE QUIGLEY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
Nine Months Ended
September 30, 2002
Historical Adjustments Pro Forma
SALES:
Sales $ 20,638,300 ($ 1,643,898) $ 18,994,402
Co-operative advertising promotions 1,121,923 1,121,923
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NET SALES 19,516,377 (1,643,898) 17,872,479
SETTLED LITIGATION 148,866 148,866
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TOTAL REVENUE 19,665,243 (1,643,898) 18,021,345
COST OF SALES 11,203,157 (358,799) 10,844,358
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GROSS PROFIT 8,462,086 (1,285,099) 7,176,987
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OPERATING EXPENSES:
Sales and marketing 3,471,813 (953,547) 2,518,266
Administration 6,868,602 (630,827) 6,237,775
Research and Development 1,897,403 1,897,403
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TOTAL OPERATING EXPENSES 12,237,818 (1,584,374) 10,653,444
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LOSS FROM OPERATIONS (3,775,732) 299,275 (3,476,457)
INTEREST AND OTHER INCOME 124,349 (6,478) 117,871
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LOSS BEFORE TAXES (3,651,383) 292,797 (3,358,586)
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INCOME TAXES (BENEFIT)
MINORITY INTEREST IN LOSS
OF CONSOLIDATED AFFILIATE
LOSS FROM CONTINUING OPERATIONS ($ 3,651,383) $ 292,797 ($ 3,358,586)
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Earnings (Loss) per common share:
Basic ($ 0.34) $ 0.03 ($ 0.31)
Diluted ($ 0.34) $ 0.03 ($ 0.31)
Weighted average common shares outstanding:
Basic 10,870,393 10,870,393 10,870,393
Diluted 10,870,393 10,870,393 10,870,393
THE QUIGLEY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
Nine Months Ended
September 30, 2001
Historical Adjustments Pro Forma
SALES:
Sales $ 15,756,212 ($ 1,902,410) $ 13,853,802
Co-operative advertising promotions 791,472 791,472
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NET SALES 14,964,740 (1,902,410) 13,062,330
SETTLED LITIGATION 1,410,228 1,410,228
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TOTAL REVENUE 16,374,968 (1,902,410) 14,472,558
COST OF SALES 7,139,086 (493,720) 6,645,366
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GROSS PROFIT 9,235,882 (1,408,690) 7,827,192
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OPERATING EXPENSES:
Sales and marketing 3,721,366 (1,192,374) 2,528,992
Administration 5,848,927 (707,849) 5,141,078
Research and Development 970,575 970,575
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TOTAL OPERATING EXPENSES 10,540,868 (1,900,223) 8,640,645
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LOSS FROM OPERATIONS (1,304,986) 491,533 (813,453)
INTEREST AND OTHER INCOME 349,985 (28,372) 321,613
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LOSS BEFORE TAXES (955,001) 463,161 (491,840)
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INCOME TAXES (BENEFIT)
MINORITY INTEREST IN LOSS
OF CONSOLIDATED AFFILIATE (185,264) 185,264
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LOSS FROM CONTINUING OPERATIONS ($ 769,737) $ 277,897 ($ 491,840)
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Earnings (Loss) per common share:
Basic ($ 0.07) $ 0.03 ($ 0.05)
Diluted ($ 0.07) $ 0.03 ($ 0.05)
Weighted average common shares outstanding:
Basic 10,675,153 10,675,153 10,675,153
Diluted 10,675,153 10,740,400 10,675,153
THE QUIGLEY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
Year Ended
December 31, 2001
Historical Adjustments Pro Forma
SALES:
Sales $ 25,224,362 ($ 2,176,470) $ 23,047,892
Co-operative advertising promotions 1,822,272 1,822,272
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NET SALES 23,402,090 (2,176,470) 21,225,620
SETTLED LITIGATION 1,546,592 1,546,592
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TOTAL REVENUE 24,948,682 (2,176,470) 22,772,212
COST OF SALES 11,006,509 (785,650) 10,220,859
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GROSS PROFIT 13,942,173 (1,390,820) 12,551,353
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OPERATING EXPENSES:
Sales and marketing 4,660,549 (1,439,760) 3,220,789
Administration 8,375,982 (946,216) 7,429,766
Research and Development 1,331,639 1,331,639
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TOTAL OPERATING EXPENSES 14,368,170 (2,385,976) 11,982,194
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INCOME (LOSS) FROM OPERATIONS (425,997) 995,156 569,159
INTEREST AND OTHER INCOME 404,632 (39,676) 364,956
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INCOME (LOSS) BEFORE TAXES (21,365) 955,480 934,115
INCOME TAXES (BENEFIT)
MINORITY INTEREST IN LOSS
OF CONSOLIDATED AFFILIATE (237,329) 237,329
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INCOME FROM CONTINUING
OPERATIONS $ 215,964 $ 718,151 $ 934,115
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Earnings (Loss) per common share:
Basic $ 0.02 $ 0.07 $ 0.09
Diluted $ 0.02 $ 0.07 $ 0.09
Weighted average common shares outstanding:
Basic 10,675,153 10,675,153 10,675,153
Diluted 10,750,687 10,750,687 10,750,687
THE QUIGLEY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
Year Ended
December 31, 2000
Historical Adjustments Pro Forma
SALES:
Sales $ 19,364,186 ($ 798,866) $ 18,565,320
Co-operative advertising promotions 3,038,367 3,038,367
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NET SALES 16,325,819 (798,866) 15,526,953
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SETTLED LITIGATION
TOTAL REVENUE 16,325,819 (798,866) 15,526,953
COST OF SALES 6,259,512 (143,308) 6,116,204
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GROSS PROFIT 10,066,307 (655,558) 9,410,749
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OPERATING EXPENSES:
Sales and marketing 8,599,083 (373,842) 8,225,241
Administration 6,216,510 (511,316) 5,705,194
Research and Development 1,185,750 1,185,750
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TOTAL OPERATING EXPENSES 16,001,343 (885,158) 15,116,185
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LOSS FROM OPERATIONS (5,935,036) 229,600 (5,705,436)
INTEREST AND OTHER INCOME 646,723 646,723
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LOSS BEFORE TAXES (5,288,313) 229,600 ($ 5,058,713)
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INCOME TAXES (BENEFIT)
MINORITY INTEREST IN LOSS
OF CONSOLIDATED AFFILIATE (91,840) 91,840
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LOSS FROM CONTINUING OPERATIONS ($ 5,196,473) $ 137,760 ($ 5,058,713)
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Earnings (Loss) per common share:
Basic ($ 0.49) $ 0.01 ($ 0.48)
Diluted ($ 0.49) $ 0.01 ($ 0.48)
Weighted average common shares outstanding:
Basic 10,551,027 10,551,027 10,551,027
Diluted 10,551,027 10,720,861 10,551,027
HE QUIGLEY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
Year Ended
December 31, 1999
Historical Adjustments Pro Forma
SALES:
Sales $ 24,819,942 $ 24,819,942
Co-operative advertising promotions 3,246,091 3,246,091
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NET SALES 21,573,851 21,573,851
SETTLED LITIGATION
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TOTAL REVENUE 21,573,851 21,573,851
COST OF SALES 8,334,219 8,334,219
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GROSS PROFIT 13,239,632 13,239,632
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OPERATING EXPENSES:
Sales and marketing 14,236,995 14,236,995
Administration 5,692,661 5,692,661
Research and Development 297,650 297,650
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TOTAL OPERATING EXPENSES 20,227,306 20,227,306
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LOSS FROM OPERATIONS (6,987,674) (6,987,674)
INTEREST AND OTHER INCOME 881,274 881,274
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LOSS BEFORE TAXES (6,106,400) (6,106,400)
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INCOME TAXES (BENEFIT) (1,902,615) (1,902,615)
MINORITY INTEREST IN LOSS
OF CONSOLIDATED AFFILIATE
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LOSS FROM CONTINUING OPERATIONS ($ 4,203,785) ($ 4,203,785)
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Earnings (Loss) per common share:
Basic ($ 0.37) ($ 0.37)
Diluted ($ 0.37) ($ 0.37)
Weighted average common shares outstanding:
Basic 11,351,960 11,351,960
Diluted 11,351,960 11,351,960
(c) Exhibits.
Exhibit Number Description
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2.1 Share Exchange Agreement dated as of
December 31, 2002 by and between The
Quigley Corporation and Suncoast Naturals,
Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: February 6, 2003 THE QUIGLEY CORPORATION
By: /s/ George J. Longo
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Name: George J. Longo
Title: Vice President and
Chief Financial Officer