Pharmaceutical Formulations, Inc. announced that it has completed its acquisition of the stock of Konsyl Pharmaceuticals, Inc. of Fort Worth, Texas for approximately $8.9 million, subject to possible future purchase price adjustments. The transaction has been financed by a combination of asset-based and term loan financing, including advances from ICC Industries Inc., as well as a five year note to the former stockholder of Konsyl for $2.5 million. In addition, as part of the purchase price, PFI has issued warrants to the former stockholder of Konsyl equal to a total of 1.2 million shares of common stock of PFI at an exercise price of $.204 per share. The warrants are exercisable until April 15, 2010.

Konsyl is a manufacturer and distributor of powdered, dietary natural fiber supplements, which has been in business over 35 years. The products are manufactured at their plant in Easton, Maryland and are sold, both domestically and internationally, to pharmaceutical wholesalers, drugstore chains, mass merchandisers, grocery store chains, and grocery distributors. Products are sold under both the "Konsyl" brand name and various private labels. The "Konsyl" brand product line and private label products are generally merchandised in pharmacy sections with other bulk forming laxatives. Konsyl also manufactures a gastrointestinal diagnostic product, "Sitzmarks," that is sold to hospitals, colon and rectal surgeons, and radiologists. For the year ended December 31, 2002, Konsyl's unaudited net sales were $11.2 million and unaudited net income was $945,000.

PFI believes this acquisition provides an opportunity to increase its presence in both the private label and branded pharmaceutical markets. It also affords PFI the opportunity to introduce new products and product line extensions under the "Konsyl" brand and PFI's own laxative products. There also exist considerable opportunities for cost savings through consolidation of the two companies.

In addition, PFI announced that it has reached agreement with the CIT Group to extend its existing revolving credit facilities to December 31, 2006 and the credit line with CIT was increased from $15 million to $20 million, including a term loan of $2 million to be repaid over forty months with interest at prime plus 0.75 per cent.

ICC Industries Inc. is the holder of approximately 74.5 million shares (approximately 87 per cent) of the common stock of PFI. As a majority-owned subsidiary of ICC, PFI enjoys the resources associated with ICC's position as a global leader in the manufacturing, marketing and trading of chemical, plastic and pharmaceutical products. Founded as a trading enterprise in 1952, ICC has expanded its line of business to include manufacturing and production facilities in 23 locations throughout the United States, Europe, Israel, Russia, China and Turkey.