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SCOTT'S LIQUID GOLD-INC. Table of ContentsUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934FOR THE QUARTERLY PERIOD ENDED
June
September 30, 2001Commission File No. 0-5128
SCOTT'S LIQUID GOLD-INC.
4880 Havana Street
Denver, CO 80239
Phone: 303-373-4860COLORADO 84-0920811 - ---------------------- ------------------ State of Incorporation
Colorado
State of Incorporation84-0920811
I.R.S. Employer Identification No.Indicate by check mark whether the registrant (i) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (ii) has been subject to such filing requirements for the past 90 days.
YES /X/ NOYes /x/ No / /The Registrant had
10,103,05810,103,100 common shares, $0.10 par value, its only class of common stock, issued and outstanding onJuly 31,October 26, 2001.1
SCOTT'S LIQUID GOLD-INC.
Table of ContentsPART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
Three Months Six Months Ended June 30, Ended June 30, --------------------------------- ---------------------------------- 2001 2000 2001 2000 ------------ ------------ ------------ ------------Revenues: Net sales $ 7,765,700 $ 7,403,800 $ 15,124,100 $ 14,774,600 Other Income 59,200 168,900 148,600 437,300 ------------ ------------ ------------ ------------ 7,824,900 7,572,700 15,272,700 15,211,900 Costs and Expenses: Cost of sales 3,350,200 2,781,000 6,167,400 5,451,700 Advertising 1,239,000 1,995,900 3,403,300 5,326,100 Selling 1,684,500 1,384,600 3,292,100 2,942,300 General and administrative 1,391,700 1,471,900 2,790,500 3,050,400 Interest 140,300 301,600 285,600 607,900 ------------ ------------ ------------ ------------ 7,805,700 7,935,000 15,938,900 17,378,400 ------------ ------------ ------------ ------------ Income (loss) before income taxes 19,200 (362,300) (666,200) (2,166,500) Income tax expense (benefit) -- (123,100) -- (736,600) ------------ ------------ ------------ ------------ Net income (loss) $ 19,200 $ (239,200) $ (666,200) $ (1,429,900) ============ ============ ============ ============ Net income (loss) per common share (Note 4): Basic $ 0.00 $ (0.02) $ (0.07) $ (0.14) ============ ============ ============ ============ Diluted $ 0.00 $ (0.02) $ (0.07) $ (0.14) ============ ============ ============ ============ Weighted average shares outstanding: Basic 10,103,100 10,103,100 10,103,100 10,103,100 ============ ============ ============ ============ Diluted 10,103,100 10,103,100 10,103,100 10,103,100 ============ ============ ============ ============2
Three Months
Ended September 30,Nine Months
Ended September 30,2001 2000 2001 2000 Revenues: Net sales $ 5,398,900 $ 7,266,500 $ 20,523,000 $ 22,041,100 Other Income 88,500 214,800 237,100 652,100 5,487,400 7,481,300 20,760,100 22,693,200 Costs and Expenses: Cost of sales 2,404,800 2,620,100 8,572,200 8,071,800 Advertising 781,500 1,270,900 4,184,800 6,597,000 Selling 1,656,600 1,354,400 4,948,700 4,296,700 General and administrative 1,163,900 1,333,100 3,954,400 4,383,500 Interest 138,000 301,500 423,600 909,400 6,144,800 6,880,000 22,083,700 24,258,400 Income (loss) before income taxes (657,400 ) 601,300 (1,323,600 ) (1,565,200 ) Income tax expense (benefit) — 736,600 — — Net loss $ (657,400 ) $ (135,300 ) $ (1,323,600 ) $ (1,565,200 ) Net loss per common share (Note 3): Basic $ (0.07 ) $ (0.01 ) $ (0.13 ) $ (0.15 ) Diluted $ (0.07 ) $ (0.01 ) $ (0.13 ) $ (0.15 ) Weighted average shares outstanding: Basic 10,103,100 10,103,100 10,103,100 10,103,100 Diluted 10,103,100 10,103,100 10,103,100 10,103,100 SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Balance Sheets
June 30, December 31, 2001 2000 ----------- -----------ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 3,963,200 $ 5,485,000 Restricted cash (Note 2) 307,600 -- Trade receivables, net (Note 3) 399,200 772,300 Other receivables 23,400 59,000 Inventories: Finished goods 2,907,000 1,745,000 Raw materials 1,373,400 1,042,400 Prepaid expenses 117,200 88,500 Deferred tax asset 754,400 754,400 ----------- ----------- Total current assets 9,845,400 9,946,600 Property, plant and equipment at cost 27,121,000 27,062,800 Less accumulated depreciation 10,541,400 10,138,200 ----------- ----------- 16,579,600 16,924,600 Other assets 60,400 65,800 ----------- ----------- TOTAL ASSETS $26,485,400 $26,937,000 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,843,700 $ 2,706,800 Accrued expenses 2,132,000 1,742,900 Current maturities of long-term debt 666,000 640,000 ----------- ----------- Total current liabilities 5,641,700 5,089,700 Long-term debt 4,971,600 5,309,000 Deferred income taxes 1,189,700 1,189,700 ----------- ----------- 11,803,000 11,588,400 Shareholders' equity (Note 4): Common stock 1,010,300 1,010,300 Capital in excess of par 4,829,500 4,829,500 Retained earnings 8,842,600 9,508,800 ----------- ----------- Shareholders' equity 14,682,400 15,348,600 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $26,485,400 $26,937,000 =========== ===========3
September 30,
2001December 31,
2000(Unaudited) ASSETS Current assets: Cash and cash equivalents $ 4,119,800 $ 5,485,000 Trade receivables, net (Note 2) 463,000 772,300 Other receivables 24,000 59,000 Inventories: Finished goods 3,252,700 1,745,000 Raw materials 1,237,900 1,042,400 Prepaid expenses 7,800 88,500 Deferred tax asset 754,400 754,400 Total current assets 9,859,600 9,946,600 Property, plant and equipment at cost 27,148,624 27,062,800 Less accumulated depreciation 10,723,224 10,138,200 16,425,400 16,924,600 Other assets 57,700 65,800 TOTAL ASSETS $ 26,342,700 $ 26,937,000 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,830,400 $ 2,706,800 Accrued expenses 2,819,800 1,742,900 Current maturities of long-term debt 684,000 640,000 Total current liabilities 6,334,200 5,089,700 Long-term debt 4,793,800 5,309,000 Deferred income taxes 1,189,700 1,189,700 12,317,700 11,588,400 Shareholders' equity (Note 3): Common stock 1,010,300 1,010,300 Capital in excess of par 4,829,500 4,829,500 Retained earnings 8,185,200 9,508,800 Shareholders' equity 14,025,000 15,348,600 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 26,342,700 $ 26,937,000 SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30, -------------------------------- 2001 2000 ----------- -----------Cash flows from operating activities: Net loss $ (666,200) $(1,429,900) Adjustments to reconcile net loss to net cash (used) provided by operating activities: Depreciation and amortization 408,600 446,300 Provision for doubtful accounts receivable 69,000 78,000 Change in assets and liabilities: Accounts and other receivables 339,700 445,300 Inventories (1,493,000) (109,400) Prepaid expenses (28,700) 87,800 Accounts payable and accrued expenses 526,000 1,576,200 ----------- ----------- Total adjustments to net loss (178,400) 2,524,200 ----------- ----------- Net Cash (Used) Provided by Operating Activities (844,600) 1,094,300 ----------- ----------- Cash flows from investing activities: Purchase of property, plant & equipment (58,200) (46,500) ----------- ----------- Net Cash Used by Investing Activities (58,200) (46,500) ----------- ----------- Cash flows from financing activities: Principal payments on long-term borrowings (311,400) -- Increase in bond sinking fund -- (554,700) ----------- ----------- Net Cash Used by Financing Activities (311,400) (554,700) ----------- ----------- Net (Decrease) Increase in Cash and Cash Equivalents (1,214,200) 493,100 Cash Equivalents and Restricted Cash, beginning of period 5,485,000 5,008,600 ----------- ----------- Cash Equivalents and Restricted Cash, end of period $ 4,270,800 $ 5,501,700 =========== =========== Supplemental disclosures: Cash paid during period for: Interest $ 288,200 $ 616,000 =========== =========== Income taxes $ 1,100 $ 12,300 =========== ===========4
Nine Months Ended
September 30,2001 2000 Cash flows from operating activities: Net loss $ (1,323,600 ) $ (1,565,200 ) Adjustments to reconcile net loss to net cash (used) provided by operating activities: Depreciation and amortization 612,900 660,900 Provision for doubtful accounts receivable 103,500 117,000 Change in assets and liabilities: Accounts and other receivables 240,800 1,214,700 Inventories (1,703,200 ) (29,100 ) Prepaid expenses 80,700 74,500 Accounts payable and accrued expenses 1,200,500 1,107,100 Total adjustments to net loss 535,200 3,145,100 Net Cash (Used) Provided by Operating Activities (788,400 ) 1,579,900 Cash flows from investing activities: Purchase of property, plant & equipment (105,600 ) (69,700 ) Net Cash Used by Investing Activities (105,600 ) (69,700 ) Cash flows from financing activities: Principal payments on long-term borrowings (471,200 ) — Increase in bond sinking fund — (698,700 ) Net Cash Used by Financing Activities (471,200 ) (698,700 ) Net (Decrease) Increase in Cash and Cash Equivalents (1,365,200 ) 811,500 Cash and Cash Equivalents, beginning of period 5,485,000 5,008,600 Cash and Cash Equivalents, end of period $ 4,119,800 $ 5,820,100 Supplemental disclosures: Cash paid during period for: Interest $ 426,600 $ 919,500 Income taxes $ 1,100 $ — SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)Note 1.
BASIS OF PREPARATION OF FINANCIAL STATEMENTSBasis of Preparation of Financial Statements
These unaudited interim consolidated financial statements of Scott's Liquid Gold-Inc. and subsidiaries (collectively, the "Company") have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Such rules and regulations allow the omission of certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles as long as the statements are not misleading. In the opinion of management, all adjustments necessary for a fair presentation of these interim statements have been included and are of a normal recurring nature. These interim financial statements should be read in conjunction with the financial statements of the Company included in its 2000 Annual Report on Form 10-K.
Certain prior year amounts have been reclassified to conform to the current year presentation.
RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, Statement of FinancingRecent Accounting
Standard ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued. This statement was subsequently amended in June 1999 by SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133," which changed the effective date of SFAS No. 133 to fiscal quarters and fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. Since inception, the Company has not entered into any derivative instruments nor does it engage in hedging activities and, therefore, adoption of this standard did not have a material effect on its financial statements.PronouncementsIn April 2001, the Emerging Issues Task Force ("EITF") issued EITF Issue 00-25 "Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendor's Products", which requires consideration paid by vendors to the purchaser of the vendor's products to be classified as a reduction of revenue in the consolidated statement of operations, unless certain conditions can be met, as defined. The effective date of EITF Issue 00-25 is for quarters beginning after December 15, 2001, with prior financial statements restated, if practicable. Earlier adoption is encouraged. The Company will apply this issue in its year-end financial statements. Management estimates that adoption of this issue
willmay reduce revenues and selling expenses byapproximately 1-2%less than 10%.In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFASStatement of Financial Accounting Standards ("SFAS") No.141 "Business Combinations" which addresses financial accounting and reporting for business combinations and applies to all business combinations initiated after June 30, 2001. SFAS No. 141 also applies to all business combinations accounted for using the purchase method for which the date of acquisition is July 1, 2001, or later. The Companywill adoptadopted SFAS No. 141 in the thirdquarter. Management believesquarter of 2001. The adoptionwilldid not have a materialimpact. 5impact on the Company's financial statements. In June 2001, the FASB issued SFAS No. 142 "Goodwill and Other Intangible Assets" which addresses financial accounting and reporting for acquired goodwill and other intangible assets and also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. The provisions of SFAS No. 142 are required to be applied starting with fiscal years beginning after December 15, 2001. Management believes adoption will not have a material
impact. Note 2. At June 30, 2001, $307,600 of cash was pledged as collateral on an outstanding letter of credit related to inventory purchased and was classified as restricted cashimpact on thebalance sheet.Company's financial statements.In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement Obligations" which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. Management believes adoption will not have a material impact on the Company's financial statements.
In August 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets" which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The
restrictions and letterprovisions ofcredit expirethis statement are generally to be applied prospectively. Management believes adoption will not have a material impact onAugust 31, 2001.the Company's financial statements.The allowances for doubtful accounts at
JuneSeptember 30, 2001 and December 31, 2000 were$653,800$687,300 and $595,000, respectively.Note
4.3.Per share data was determined by using the weighted average number of common shares outstanding. Common equivalent shares are considered only for diluted earnings per share, unless considered anti-dilutive.
As of
JuneSeptember 30, 2001 and 2000, the Company had 1,184,200 and 829,400 stock options outstanding, respectively.A reconciliation of the weighted average number of common shares outstanding follows:
Three Months Ended Six Months Ended June 30, June 30, ----------------------------- ----------------------------- 2001 2000 2001 2000 ---------- ---------- ---------- ----------Common shares outstanding, beginning of period 10,103,100 10,103,100 10,103,100 10,103,100 Stock options exercised -- -- -- -- ---------- ---------- ---------- ---------- Weighted average number of shares outstanding 10,103,100 10,103,100 10,103,100 10,103,100 ========== ========== ========== ========== Diluted weighted average number of common shares outstanding 10,103,100 10,103,100 10,103,100 10,103,100 ========== ========== ========== ==========
Three Months Ended
September 30,Nine Months Ended
September 30,2001 2000 2001 2000 Common shares outstanding, beginning of period 10,103,100 10,103,100 10,103,100 10,103,100 Stock options exercised — — — — Weighted average number of shares outstanding 10,103,100 10,103,100 10,103,100 10,103,100 Diluted weighted average number of common shares outstanding 10,103,100 10,103,100 10,103,100 10,103,100 At
JuneSeptember 30, 2001, there were authorized 50,000,000 shares of the Company's $0.10 par value common stock and 20,000,000 shares of preferred stock issuable in one or more series.On February 22, 2001, the Company's Board of Directors adopted a shareholder rights plan for its common stock. One right was issued for each share of common stock issued and outstanding on March 2, 2001 and will also be issued for each share of common stock that is issued or sold after that date and prior to the "Distribution Date." The Distribution
6Date means generally a date which is ten days after a person becomes an "Acquiring Person" or the commencement of a tender offer that would make a person a beneficial owner of 15% or more of the Company's common stock. An Acquiring Person means generally a person or group owning beneficially 15% or more of the outstanding shares of common stock, with certain exceptions. Each right entitles shareholders to buy one share of the Company's common stock at an exercise price of $8.00 per share, subject to adjustments; however, the rights are not exercisable until the Distribution Date. The rights will expire on February 21, 2011 or upon earlier redemption of the rights. If any person becomes an Acquiring Person, or certain other events relating to an Acquired Person occur, the right will entitle each holder to receive shares of common stock (or stock of the acquiring party after a merger or business combination) having a market value of two times the exercise price of the right. The Board of Directors may redeem the rights at a redemption price of $.01 per right at any time prior to a Distribution Date or the expiration date of the rights on February 21, 2011.
The following provides information on the Company's segments for the three and
sixnine months endedJuneSeptember 30, 2001 and 2000:
Three Months Ended June 30, ------------------------------------------------------------------------- 2001 2000 -------------------------------- -------------------------------- Household Skin Care Household Skin Care Products Products Products Products ----------- ----------- ----------- -----------Net sales to external customers $ 2,972,700 $ 4,793,000 $ 3,311,500 $ 4,092,300 =========== =========== =========== =========== Income (loss) before profit sharing, bonuses and income taxes $ (402,000) $ 421,200 $ (29,800) $ (332,500) =========== =========== =========== ===========
Six Months Ended June 30, -------------------------------------------------------------------------- 2001 2000 -------------------------------- -------------------------------- Household Skin Care Household Skin Care Products Products Products Products ----------- ----------- ----------- -----------Net sales to external customers $ 5,844,000 $ 9,280,100 $ 6,317,000 $ 8,457,600 =========== =========== =========== =========== Loss before profit sharing, bonuses and income taxes $ (377,100) $ (289,100) $ (274,500) $(1,892,000) =========== =========== =========== ===========7
Three Months Ended September 30, 2001 2000 Household
ProductsSkin Care
ProductsHousehold
ProductsSkin Care
ProductsNet sales to external customers $ 2,900,700 $ 2,498,200 $ 3,031,100 $ 4,235,400 Income (loss) before profit sharing, bonuses and income taxes $ 118,300 $ (775,700 ) $ 258,000 $ 343,300
Nine Months Ended September 30, 2001 2000 Household
ProductsSkin Care
ProductsHousehold
ProductsSkin Care
ProductsNet sales to external customers $ 8,744,700 $ 11,778,300 $ 9,348,100 $ 12,693,000 Loss before profit sharing, bonuses and income taxes $ (258,800 ) $ (1,064,800 ) $ (16,500 ) $ (1,548,700 ) The following is a reconciliation of segment information to consolidated information for the three and
sixnine months endedJuneSeptember 30, 2001 and 2000:
Three Months Ended Six Months Ended June 30, June 30, --------------------------------- ---------------------------------- 2001 2000 2001 2000 ------------ ------------ ------------ ------------Net sales to external customers $ 7,765,700 $ 7,403,800 $ 15,124,100 $ 14,774,600 Other income 59,200 168,900 148,600 437,300 ------------ ------------ ------------ ------------ $ 7,824,900 $ 7,572,700 $ 15,272,700 $ 15,211,900 ============ ============ ============ ============ Income (loss) before profit sharing, bonuses and income taxes for reportable segments $ 19,200 $ (362,300) $ (666,200) $ (2,166,500) Corporate activities -- -- -- -- ------------ ------------ ------------ ------------ Consolidated income (loss) before income taxes $ 19,200 $ (362,300) $ (666,200) $ (2,166,500) ============ ============ ============ ============
Three Months Ended
September 30,Nine Months Ended
September 30,2001 2000 2001 2000 Net sales to external customers $ 5,398,900 $ 7,266,500 $ 20,523,000 $ 22,041,100 Other income 88,500 214,800 237,100 652,100 Consolidated revenues $ 5,487,400 $ 7,481,300 $ 20,760,100 $ 22,693,200 Income (loss) before profit sharing, bonuses and income taxes for reportable segments $ (657,400 ) $ 601,300 $ (1,323,600 ) $ (1,565,200 ) Corporate activities — — — — Consolidated income (loss) before income taxes $ (657,400 ) $ 601,300 $ (1,323,600 ) $ (1,565,200 ) Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operation (Unaudited) RESULTS OF OPERATIONSOperationsResults of Operations
Summary of Results as a Percentage of Net Sales
Year Ended Six Months Ended December 31, June 30, ------------ --------------------------- 2000 2001 2000 ------------ ----------- ----------- (Audited) (Unaudited) (Unaudited)Net sales Scott's Liquid Gold household products 42.9% 38.6% 42.8% Neoteric Cosmetics 57.1% 61.4% 57.2% ----- ----- ----- Total Net Sales 100.0% 100.0% 100.0% Cost of Sales 36.4% 40.8% 36.9% ----- ----- ----- Gross profit 63.6% 59.2% 63.1% Other revenue 3.1% 1.0% 3.0% ----- ----- ----- 66.7% 60.2% 66.1% ----- ----- ----- Operating Expenses 70.7% 62.7% 76.6% Interest 3.9% 1.9% 4.1% ----- ----- ----- 74.6% 64.6% 80.7% ----- ----- ----- Loss before Income taxes (7.9)% (4.4)% (14.6)% ===== ===== =====8Six
Nine Months Ended
September 30,Year Ended
December 31,2001 2000 2000 (Unaudited) (Unaudited) (Audited) Net sales Scott's Liquid Gold household products 42.6 % 42.4 % 42.9 % Neoteric Cosmetics 57.4 % 57.6 % 57.1 % Total Net Sales 100.0 % 100.0 % 100.0 % Cost of Sales 41.8 % 36.6 % 36.4 % Gross profit 58.2 % 63.4 % 63.6 % Other revenue 1.2 % 3.0 % 3.1 % 59.4 % 66.4 % 66.7 % Operating Expenses 63.8 % 69.3 % 70.7 % Interest 2.1 % 4.1 % 3.9 % 65.9 % 73.4 % 74.6 % Loss before Income taxes (6.5 %) (7.0 %) (7.9 %)
Nine Months EndedJuneSeptember 30, 2001
Compared toSixNine Months EndedJuneSeptember 30, 2000Consolidated net sales for the first
halfthree quarters ofthe current year2001 were$15,124,100 vs. $14,774,600$20,523,000 vs $22,041,100 for the firstsixnine months of 2000,an increasea decrease of$349,500$1,518,100 or about2.4%6.9%.AverageProduct volumes declined while average selling prices for thefirst sixnine months of the year 2001 were up by$208,000$350,000 over those of the comparable period of 2000, prices of household products being up by$44,200,$19,600, while average selling prices of skin care products were up by$163,800.$330,400.During the first
halfnine months ofthe year,2001, net sales ofskin careskincare products accounted for61.4%57.4% of consolidated net sales compared to57.2%57.6% for thefirst six monthscomparable period of 2000. Net sales of these products for those periods were$9,280,100$11,778,300 in 2001 compared to$8,457,600$12,693,000 in 2000,an increasea decrease of$822,500$914,700 or9.7%7.2%.The Company has continued to experience a drop in unit sales of the Company's earlier developed alpha hydroxy acid products due at least in part to maturing in the market for alpha hydroxy acid-based skin care products and intense competition from producers of similar or alternative products, many of whom are considerably larger than Neoteric Cosmetics, Inc. Sales of the Company's alpha hydroxy acid-based products in 2001 have also been affected by a decrease in distribution of those products at retail stores, including the Company's largest customer having reduced the number of those products carried on its shelves. The Company continues to address the decrease in sales of products in the alpha hydroxy acid category of skin care products through the introduction of new products which target "niche" market opportunities and by the distribution and sale of products purchased from Montagne Jeunesse as described below. In the
first halfnine months of 2001, the sales of the new products, primarily Montagne Jeunesse, were not sufficient to offset the declining shipments of the alpha hydroxy acid-based products. The Company believes that its future success is highly dependent on the favorable acceptance in the marketplace of its new products and the sales of its Alpha Hydrox products.During the second half of the year 2000, the Company introduced a new Alpha Hydrox Facial Moisturizing Cleanser and a new Alpha Hydrox Under Eye Renewal treatment. Sales of these products
and of the diabetic products have been satisfactory. New products for 2001 include a line of skin care products specifically designed for problems common to mature women and a unique topical analgesic which helps fade the discoloration of bruises and eases the pain from muscle sprains and bruises. These products began shipping in early 2001.
In
the first half of2001, the Company commenced purchases of skin care sachets from Montagne Jeunesse under a distributorship agreement. Montagne Jeunesse is the sole supplier of these products. The Company made its first sale of these products in April of 2001. Montagne Jeunesse is a trading division of Medical Express (UK) Ltd., a company located in England. The distributor agreement is dated as of December 1, 2000 and was entered into during April, 2001. Under the agreement, Montagne Jeunesse appointed the Company as a distributor of Montagne Jeunesse skin care sachets in the United States, the Caribbean and Puerto Rico. The agreement may be terminated by either party upon three months written notice and also in certain other events, including if minimum sales levels are not met. The agreement requires the Company to expend a certain amount on advertising if a minimum sales level is achieved in the first calendar year.Payment under the agreement is by letter of credit or as agreed upon from time to time. 9Sales of household products for the first
halfnine months ofthis year2001 accounted for38.6%42.6% of consolidated net sales compared to42.8%42.4% for the same period of 2000. These products are comprised of "Scott's Liquid Gold" for wood, a wood cleaner which preserves as it cleans, and "Touch of Scent", a room air freshener.DuringFor thesix months ended June 30,first three quarters of 2001, sales of household products were$5,844,000, as$8,744,700 compared tosales of $6,317,000$9,348,100 for the samesix monthsperiod of2000.2000, a decrease of $603,400 or 6.5%. Sales of "Scott's Liquid Gold" for wood were down by$119,500,$160,100, a decrease of2.8%. Sales2.5%, while sales of "Touch of Scent" were down by$353,500$443,300 or17.5%15.0%. As noted in previous reports to shareholders, efforts in recent years to revitalize Touch of Scent have produced less than satisfactory results. The Company continues to seek products to replace or augment Touch of Scent, particularly products which would increase the utilization of the Company's manufacturing facilities.On a consolidated basis, cost of goods sold was
$6,167,400$8,572,200 during the firstsix monthsthree quarters of 2001 compared to$5,451,700$8,071,800 for the same period of 2000, a increase of$715,700 (13.1%$500,400 or 6.2%, but on a decrease in salesincreaseof2.4%)6.9%. As a percentage of consolidated net sales forthe first half of2001 through September, cost of goods sold was40.8%41.8% compared to36.9%36.6% in 2000, an increase of10.6%14.1% which was essentially due to a change in product mix (the cost for Montagne Jeunesse is higher than products manufactured by the Company, and some products are more costly to produce than others) and to the spreading of fixed manufacturing costs over lower unit production in the firsthalfthree quarters of 2001 than in 2000.Operating expenses, comprised primarily of advertising, selling and administrative expenses, decreased
18.1% as a percentage of sales14.3% inthefirsthalfthree quarters of 2001, when compared to the firsthalfthree quarters of 2000, largely because of the decline in advertising expenses. The various components of operating expenses are discussed below.Advertising expenses for the first
six monthsthree quarters of 2001 were$3,403,300$4,184,800 compared to$5,326,100$6,597,000 for the comparablesix monthsperiod of 2000, a decrease of$1,922,800$2,412,200 or36.1%36.6%.AdvertisingCompared to the first nine months of 2000, advertising expenses applicable to household products decreased by$126,800 (12.0%$133,500 (10.9%)during the first half of 2001, whereas,, while advertising expenses for Alpha Hydrox products, decreasedfor the comparative six-month periodby$1,796,000 (42.1%$2,278,700 (42.4%). With respect toadvertising expenses forhousehold products, the amount expended to advertise Scott's Liquid Gold for wood decreased by$20,900,$30,000 while expenditures to advertise Touch of Scent decreased by$105,900. Advertising$103,500. The Company's management currently believes that temporary sales increases that seem attributable to television advertising in 2001 have not been sufficient to incur expensesduringof television advertisements for thesecond half of 2001 are expected to decrease from those of the first half.Company's products above relatively low budgeted amounts for 2001.In
the year2000, the Company implemented a revised approach to its television advertising, emphasizing short advertising spots on various television channels. Further, as a result of the license agreement entered into with TriStrata Technology Inc. in the fourth quarter of 2000, the Company has revised its advertisements for the Alpha Hydrox products with alpha hydroxy acid to include that the products reduce or diminish fine lines and wrinkles. The Company is alsoreviewingin thepossibilityprocess of producing new television advertisements for its Alpha Hydrox products. Irrespective of year to year changes inexpenditures to advertise its products, the Company recognizes that, whenever it is fiscally responsible to do so, it must seek to advertise both effectively and aggressively because the markets for skin care products, furniture polish and air fresheners are highly competitive and, accordingly, the Company's brand names need to be kept in front of current and potential consumers. Sustaining the Company's advertising program is highly dependent upon sales of its skin care products.
Selling expenses for the nine months ended September 30, 2001 were $4,948,700 compared to $4,296,700 for the comparable nine months of 2000, an increase of $652,000 or 15.2%. That increase was comprised of an increase of $146,700 in freight costs, an increase in travel expenses of $213,600, an increase in depreciation and royalty expense of $187,400, an increase in promotional expenses of $278,600, and a net increase in a variety of other expenses, none of which, by itself, was material, of $7,000 all offset by a decrease in brokerage commissions of $88,100, and a decrease in slotting allowances of $93,200.
Administrative expenses for the first nine months of 2001 were $3,954,400 compared to $4,383,500 for the comparable period of 2000, a decrease of $429,100 or 9.8%. That decrease is made up of a decrease in salary and fringe benefits costs of $252,200, a decrease in professional fees of $128,300 and a net decrease in other administrative expenses, none of which, by itself, was material, of $48,600.
As a result of the Company having refinanced its 10% bonds with a long-term loan bearing interest at the prime rate and because the Company no longer has the sinking fund relating to the bonds, both interest expense and income have decreased in 2001. Interest expense for the first nine months of 2001 was $423,600 versus $909,400 for the comparable period of 2000. Other income for the nine months ended September 30, 2001 was $237,100 compared to $652,100 for the same period of 2000. Other income essentially consists of interest earned on the Company's cash reserves in 2001 and also cash deposits into its bond sinking fund in 2000.
During the first three quarters of 2001 and of 2000, expenditures for research and development were not material (under 2% of revenues).
Three Months Ended September 30, 2001
Compared to Three Months Ended September 30, 2000Consolidated net sales for the third quarter of 2001 were $5,398,900 vs. $7,266,500 for the comparable quarter of 2000, a decrease of $1,867,600 or about 25.7%. Average selling prices for the third quarter of 2001 were higher by $137,900 than those of the comparable period of 2000, with prices of household products down by $24,600, while average selling prices of skincare products were up by $162,500.
During the third quarter of 2001, net sales of skincare products accounted for 46.3% of consolidated net sales compared to 58.3% for the third quarter of 2000. Net sales of these products for those periods were $2,498,200 in 2001 compared to $4,235,400 in 2000, a decrease of $1,737,200 or 41.0%. Please see the discussion above for the first nine months of 2001 for additional information regarding sales of skin care products, which is also applicable to sales of skin care products in the third quarter.
Sales of household products for the third quarter of 2001 accounted for 53.7% of consolidated net sales compared to 41.7% for the same period of 2000. These products are comprised of "Scott's Liquid Gold" for wood, a wood cleaner which preserves as it cleans, and "Touch of Scent", a room air freshener. During the third quarter of 2001, sales of household products were $2,900,700 compared to $3,031,100 for the same three months of 2000, a decrease of $130,400 or 4.3%. Sales of "Scott's Liquid Gold" for wood were down by $39,200, a decrease of 1.9%, while sales of "Touch of Scent" were down by $91,200 or 9.8%. As noted in previous reports to shareholders, efforts in recent years to revitalize Touch of Scent have produced less than satisfactory results.
On a consolidated basis, cost of goods sold was $2,404,800 during the third quarter of 2001 compared to $2,620,100 for the same quarter of 2000, a decrease of $215,300 or 8.2%, on a sales
decrease of 25.7% for the quarter. As a percentage of consolidated net sales for the third quarter of 2001, cost of goods sold was 44.5% compared to 36.1% in 2000, an increase of 23.3%, which was essentially due to a change in product mix (some products are more costly to produce than others) and to the spreading of fixed manufacturing costs over lower unit production in the first three quarters of 2001 than in 2000.
Operating expenses, comprised primarily of advertising, selling and administrative expenses, decreased 9.0% in third quarter of 2001, when compared to the third quarter of 2000, largely because of the decline in advertising expenses. The various components of operating expenses are discussed below.
Advertising expenses for the three months ended September 30, 2001 were $781,500 compared to $1,270,900 for the comparable period of 2000, a decrease of $489,400 or 38.5%. Compared to the third quarter of 2000, advertising expenses applicable to household products, decreased by $6,700, whereas advertising expenses for Alpha Hydrox products decreased by $482,700 (43.7%).
In 2000, the Company implemented a revised approach to its television advertising, emphasizing short advertising spots on various television channels. Further, as a result of the license agreement entered into with TriStrata Technology Inc. in the fourth quarter of 2000, the Company has revised its advertisements for the Alpha Hydrox products with alpha hydroxy acid to include that the products reduce or diminish fine lines and wrinkles. The Company is also in the process of producing new television advertisements for its Alpha Hydrox products. Irrespective of year to year changes in expenditures to advertise its products, the Company recognizes that, whenever it is fiscally responsible to do so, it must seek to advertise both effectively and aggressively because the markets for skin care products, furniture polish and air fresheners are highly competitive and, accordingly, the Company's brand names need to be kept in front of current and potential consumers. Sustaining the Company's advertising program is highly dependent upon sales of its skin care products.
10Selling expenses for the
first half ofthree months ended September 30, 2001 were$3,292,100$1,656,600 compared to$2,942,300$1,354,400 for the comparablesixthree months of 2000, an increase of$349,800$302,200 or11.9%22.3%. That increase was comprised of an increase of$165,500$244,200 infreight costs,promotional expenses, an increase in travel expenses of$160,000,$53,600, an increase in depreciation and royalty expense of$124,900, an increase in promotional expenses of $70,700,$62,500, all offset by a decrease inbrokerage commissions of $77,700, a decrease in salary and fringe benefits of $53,600, a decrease inslotting expenses of$26,300,$66,900 and a netdecreaseincrease in a variety of other expenses, none of which, by itself, was material of$13,700.$8,800.Administrative expenses for the
first six monthsthird quarter of 2001 were$2,790,500$1,163,900 compared to$3,050,400$1,333,100 for the comparableperiodquarter of 2000, a decrease of$259,900$169,200 or8.5%12.7%.ThatSuch decreaseis made up ofwas attributable to adecreasereduction insalarysalaries and fringe benefitscostof$159,500,$65,100, a decrease of $30,400 in legal and professional fees,of $57,700,and by a net decrease in other administrative expenses, none of which, by itself, was material, of$42,700.$73,700.As a result of the Company having refinanced its 10% bonds with a long-term loan bearing interest at the prime rate and because the Company no longer has the sinking fund relating to the bonds, both interest expense and income have decreased in 2001. Interest expense for the
first halfthird quarter of 2001 was$285,600$138,000 versus$607,900$301,500 for the comparable period of 2000. Other income for thesixthree months endedJuneSeptember 30, 2001 was$148,600$88,500 compared to$437,300$214,800 for the same period of 2000. Other income essentially consists of interest earned on the Company's cash reserves in 2001 and also cash deposits into its bond sinking fund in 2000.During the
first six months of 2001 and of 2000, expenditures for research and development were not material (under 2% of revenues). Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000 Consolidated net sales for the second quarter of the current year were $7,765,700 vs. $7,403,800 for the comparable quarter of 2000, an increase of $361,900 or about 4.9%. Average selling prices for the second quarter of 2001 were up by $153,200 over those of the comparable period of 2000, prices of household products being down by $21,900, while average selling prices of skin care products were up by $175,100. During the second quarter of 2001, net sales of skin care products accounted for 61.7% of consolidated net sales compared to 55.3% for the second quarter of 2000. Net sales of these products for those periods were $4,793,000 in 2001 compared to $4,092,300 in 2000, an increase of $700,700 or 17.1%. Please see the discussion above for the first half of 2001 for additional information regarding sales of skin care products, which is also applicable to sales of skin care products in the second quarter. Sales of household products for the second quarter of this year accounted for 38.3% of consolidated net sales compared to 44.7% for the same period of 2000. These products are comprised of "Scott's Liquid Gold" for wood, a wood cleaner which preserves as it cleans, and "Touch of Scent", a room air freshener. During the second quarter of 2001, sales of household products were $2,972,700, as compared to sales of $3,311,500 for the same three months of 2000. Sales of "Scott's Liquid Gold" for wood were down by $90,700, a decrease of 4.0%. Sales 11of "Touch of Scent" were down by $248,100 or 24.0%. As noted in previous reports to shareholders, efforts in recent years to revitalize Touch of Scent have produced less than satisfactory results. The Company continues to seek products to replace or augment Touch of Scent, particularly products which would increase the utilization of the Company's manufacturing facilities. On a consolidated basis, cost of goods sold was $3,350,200 during the second quarter of 2001 compared to $2,781,000 for the same period of 2000, an increase of $569,200 (20.5%, on a sales increase of 4.9%). As a percentage of consolidated net sales for the second quarter of 2001, cost of goods sold was 43.1% compared to 37.6% in 2000, an increase of 14.6%, which was essentially due to a change in product mix (the cost for Montagne Jeunesse is higher than products manufactured by the Company, and some products are more costly to produce than others) and to the spreading of fixed manufacturing costs over lower unit production in the second quarter of 2001 than in 2000. Operating expenses, comprised primarily of advertising, selling and administrative expenses, decreased 15.2% as a percentage of sales in the second quarter of 2001, when compared to the same period during 2000, largely because of the decline in advertising expenses. Advertising expenses for the second quarter of 2001 were $1,239,000 compared to $1,995,900 for the comparable quarter of 2000, a decrease of $756,900 or 37.9%. Advertising expenses applicable to household products increased by $119,200 (23.2%) during the second quarter of 2001, whereas, advertising expenses for Alpha Hydrox products decreased for the comparative three-month period by $876,100 (59.1%). With respect to advertising expenses for household products, the amount expended to advertise Scott's Liquid Gold for wood increased by $201,800, while expenditures to advertise Touch of Scent decreased by $82,600. Advertising expenses during thethirdquarter of 2001 are expected to decrease from those of the second quarter. In the year 2000, the Company implemented a revised approach to its television advertising, emphasizing short advertising spots on various television channels. Further, as a result of the license agreement entered into with TriStrata Technology Inc. in the fourth quarter of 2000, the Company has revised its advertisements for the Alpha Hydrox products with alpha hydroxy acid to include that the products reduce or diminish fine lines and wrinkles. The Company is also reviewing the possibility of new television advertisements for its Alpha Hydrox products. Irrespective of year to year changes in expenditures to advertise its products, the Company recognizes that, whenever it is fiscally responsible to do so, it must seek to advertise both effectively and aggressively because the markets for skin care products, furniture polish and air fresheners are highly competitive and, accordingly, the Company's brand names need to be kept in front of current and potential consumers. Sustaining the Company's advertising program is highly dependent upon sales of its skin care products. Selling expenses for the three months ended June 30, 2001 were $1,684,500 compared to $1,384,600 for the comparable three months of 2000, an increase of $299,900 or 21.7%. That increase was comprised of an increase of $85,100 in freight costs, an increase in travel expenses of $54,400, an increase in depreciation and royalty expense of $62,400, an increase in promotional expenses of $68,300, an increase in slotting expenses of $48,000, an increase in 12salaries and fringe benefits of $36,300, all offset by a decrease in brokerage commissions of $28,900, and a net decrease in a variety of other expenses, none of which, by itself, was material, of $25,700. Administrative expenses for the second quarter of 2001 were $1,391,700 compared to $1,471,900 for the comparable period of 2000, a decrease of $80,200 or 5.4%. Such decrease was attributable to a decrease in legal and professional fees of $29,600, a decrease in loan fee expenses of $19,000 and a net decrease in other administrative expenses, none of which, by itself, was material, of $31,600. As a result of the Company having refinanced its 10% bonds with a long-term loan bearing interest at the prime rate and because the Company no longer has the sinking fund relating to the bonds, both interest expense and income have decreased in 2001. Interest expense for the second quarter of 2001 was $140,300 versus $301,600 for the comparable period of 2000. Other income for the three months ended June 30, 2001 was $59,200 compared to $168,900 for the same period of 2000. Other income essentially consists of interest earned on the Company's cash reserves in 2001 and also cash deposits into its bond sinking fund in 2000. During the secondquarter of 2001 and of 2000, expenditures for research and development were not material (under 2% of revenues).Liquidity and Capital Resources
On November 21, 2000, the Company redeemed the entire 1994 $12 million bond issue and entered into a seven-year bank loan at the prime rate (9.5% at that time and on December 31, 2000), adjustable yearly, secured by the Company's land and buildings, with principal and interest payable
monthly. The loan agreement with the bank contains a number of covenants, including the requirement for maintaining a current ratio of at least 1:1 and a ratio of consolidated long-term debt to consolidated net worth of not more than 1:1. The Company may not declare any dividends that would result in a violation of either of these covenants. The foregoing requirements were met at
JuneSeptember 30, 2001.During the first
halfthree quarters of 2001, the Company's working capital decreased by$653,200,$1,331,500, and concomitantly, its current ratio (current assets divided by current liabilities) decreased from2.0:1.95:1 at December 31, 2000 to1.7:1.56:1 atJuneSeptember 30, 2001. This decrease in working capital is attributable to a net loss in the firstsixnine months of 2001 of$666,200,$1,323,600 and a reduction in long-term debt of$337,400,$515,200, both offset by depreciation in excess of capital additions of$345,000$499,200 and a decrease in other assets of$5,400.$8,100. The Company has cash and cash equivalents of approximately$4.3$4.1 million atJuneSeptember 30,2001, of which $307,600 is being used as collateral for a letter of credit for a similar amount. The letter of credit was issued to facilitate the purchase of inventory from our new distribution partner Montagne Jeunesse and expires August 31,2001. Cash used by operating activities for thesixnine months endedJuneSeptember 30, 2001 amounted to$844,600$788,400 and the Company spent$58,200$105,600 on new equipment. AtJune 30,September, 2001, the ratio of consolidated funded debt to consolidated net worth was .34:1.At
JuneSeptember 30, 2001, trade accounts receivable were$373,100$309,300 lower than at year end, largely because sales inJuneSeptember of 2001 were less than those of December of 2000. Accounts payable13increased from the end of 2000 through JuneSeptember of 2001 by$136,900$123,600 primarily due to the increase in advertising payables at the end of thesecondthird quarter versus at the end of last year. AtJuneSeptember 30, 2001, inventories were$1,493,000$1,703,200 greater than at December 31, 2000, largely due to the purchase of products to support our new distribution agreement with Montagne Jeunesse. Accrued expenses increased by$389,100$1,076,900 from December 31, 2000 toJuneSeptember 30, 2001 primarily from an increase in accrued advertising of $483,000, an increase in accrued salaries and related items of$300,100,$262,100, an increase in accrued professional fees of$167,200 all offset by a decrease in accrued property taxes of $86,600$311,100 and a netdecreaseincrease in other accruals of$8,400.$20,700.The Company does not anticipate any significant capital expenditures during the remainder of the year and expects that its cash and cash equivalents plus available cash flows from operating activities will fund the next twelve months' cash requirements.
Market Risks
Market risk represents the risk of loss due to adverse changes in financial and commodity market prices and rates. The Company is not materially exposed to market risks regarding interest rates because the Company's outstanding debt is at the prime rate, adjusted yearly. Further, the Company does not use foreign currencies in its business. Currently, it receives payments for sales to parties in foreign countries through letters of credit in U.S. dollars. Additionally, the Company does not use derivative instruments or engage in hedging activities. As a result, the Company does not believe that near-term changes in market risks will have a material effect on its results of operations, financial position or cash flows of the Company.
Forward-Looking Statements
This report may contain "forward-looking statements" within the meaning of U.S. federal securities laws. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements and the Company's performance inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products in the marketplace; the degree of success of any new product or product line introduction by the Company; competitive factors; continuation of the Company's distributorship agreement with Montagne Jeunesse; the need for effective advertising of the Company's products; limited resources available for such advertising; new competitive products and/or technological changes by others; dependence upon third party vendors and upon sales to major customers; changes in the regulation of the Company's products, including applicable environmental regulations; adverse developments in pending litigation; the loss of any executive officer; and other
matters discussed in the Company's periodic filings with the Securities and Exchange Commission. By making these forward-looking statements the Company undertakes no obligation to update these statements for revisions or changes after the date the statements are made.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Please see "Market Risks" in Item 2 of Part I of this Report which information is incorporated herein by this reference.
14PART II OTHER INFORMATION
Item 1. Not Applicable
Item 2.
Not ApplicableChanges in Securities and Use of ProceedsOn October 23, 2001, the Company issued a stock certificate for 50,000 shares of its common stock to a party which was designated by Montagne Jeunesse and which the Company believes to be related to Montagne Jeunesse. These shares, which are 100% vested, were granted by the Company without any proceeds being received for their issuance. The Company initiated this grant as a means to enhance the common goals of Montagne Jeunesse and the Company in their relationship. There was no underwriter involved in this grant. Montagne Jeunesse and the party receiving the shares are located outside of the United States and are not U.S. persons; the party receiving the shares agreed to receive the shares as restricted securities under the federal securities laws; and the Company believes that Montagne Jeunesse, which is a manufacturer of skin care products and has a distributorship agreement with the Company, and the party receiving the shares are capable of evaluating the merits and risks of an investment in the Company's common stock. This grant was only offered to Montagne Jeunesse and the party designated by Montagne Jeunesse. The Company did not register the shares under the Securities Act of 1933 because the grant is not a sale under the 1933 Act and because the grant was also made in reliance upon exemptions from registration under Regulation S, Rules 505 and 506, and Section 4(2) of the 1933 Act.
Item 3. Not Applicable
Item 4.
Submission of Matters to a Vote of Security Holders On May 2, 2001, the Company held its 2001 Annual Meeting of Shareholders. At that meeting, the seven existing directors were nominated and re-elected as directors of the Company. These seven persons constitute all members of the Board of Directors of the Company. These directors and the votes for and withheld for each of them were as follows:
For Withheld --- --------Mark E. Goldstein 8,895,046 173,845 Carolyn J. Anderson 8,895,296 173,595 Jeffery R. Hinkle 8,921,620 147,271 Jeffry B. Johnson 8,913,546 155,345 Carl A. Bellini 8,913,420 155,471 Dennis H. Field 8,905,746 163,145 James F. Keane 8,911,820 157,071In addition, at the 2001 Annual Meeting, the Company's shareholders approved an amendment to increase the shares available under its 1998 Stock Option Plan by 750,000 shares. The votes at the 2001 Annual Meeting with respect to this amendment were as follows:Not Applicable
For Against Abstained Broker Non-Votes --- ------- --------- ----------------5,768,078 shares 394,389 shares 56,880 shares 2,849,654 sharesItem 5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K
- (a)
- Reports on Form 8-K
There were no reports filed by the Company on Form 8-K during the
secondthird quarter of 2001.
- (b)
- Exhibits
15
Exhibit No. Document ------- --------10.1 Sales Distribution Rights AgreementAmendment dated December 1, 2000August 15, 2001 between Montagne Jeunesse, a trading division of Medical Express (UK) Ltd., and the Company.16Pursuant 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 thereunto duly authorized.
SCOTT'S LIQUID GOLD-INC. August 10, 2001 BY: /s/ Mark E. Goldstein ----------------------------- Mark E. Goldstein President and Chief Executive Officer August 10, 2001 BY: /s/ Jeffry B. Johnson ----------------------------- Jeffry B. Johnson Treasurer, Chief Financial Officer, and Assistant Corporate Secretary 17
SCOTT'S LIQUID GOLD-INC.
November 8, 2001
By:
/s/ MARK E. GOLDSTEIN
Mark E. Goldstein
President and Chief Executive Officer
November 8, 2001
By:
/s/ JEFFRY B. JOHNSON
Jeffry B. Johnson
Treasurer, Chief Financial Officer, and Assistant Corporate Secretary
Exhibit No. Document - ------- --------10.1 Sales Distribution Rights AgreementAmendment dated December 1, 2000August 15, 2001 between Montagne Jeunesse, a trading division of Medical Express (UK) Ltd., and the Company.18