10QSB 1 purw10q.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2004 ------------------ [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the transition period from ___________ to _____________ Commission File No.: 0-10566 ------- Pure World, Inc. ---------------- (Exact name of small business issuer as specified in its charter) Delaware 95-3419191 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 376 Main Street, Bedminster, New Jersey 07921 --------------------------------------------- (Address of principal executive offices) (908) 234-9220 -------------- (Issuer's telephone number) N/A --- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of October 31, 2004, the issuer had 8,119,544 shares of its common stock, par value $.01 per share, outstanding. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] PART I - FINANCIAL INFORMATION ------ --------------------- Item 1. - Financial Statements ------- -------------------- PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 2004 (UNAUDITED) (in $000's) ASSETS ------ Current assets: Cash and cash equivalents $ 502 Accounts receivable, net of allowance for uncollectible accounts and returns and allowances of $313 6,487 Inventories 9,788 Other 628 -------- Total current assets 17,405 Plant and equipment, net 6,027 Investment in unaffiliated natural products company 1,510 Notes receivable from affiliates 189 Goodwill 1,144 Other assets 585 -------- Total assets $ 26,860 ======== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 5,555 Short-term borrowings 470 Accrued expenses and other 1,999 -------- Total current liabilities 8,024 Long-term debt 1,667 -------- Total liabilities 9,691 -------- Stockholders' equity: Common stock, par value $.01; 30,000,000 shares authorized; 8,119,544 shares issued and outstanding 81 Additional paid-in capital 43,210 Accumulated deficit ( 26,122) -------- Total stockholders' equity 17,169 -------- Total liabilities and stockholders' equity $ 26,860 ======== See accompanying notes to consolidated financial statements. 2 PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ($000 Omitted, except per share data) Three Months Ended September 30, ---------------------- 2004 2003 -------- -------- Revenues: Sales $ 10,859 $ 5,283 Interest income 5 3 -------- -------- Total revenues 10,864 5,286 -------- -------- Expenses: Cost of goods sold 9,704 4,094 Selling, general and administrative 1,393 1,106 -------- -------- Total expenses 11,097 5,200 -------- -------- Income (loss) before income taxes ( 233) 86 Provision for income taxes 3 20 -------- -------- Net income (loss) ($ 236) $ 66 ======== ======== Basic and diluted net income (loss) per share ($ .03) $ .01 ======== ======== See accompanying notes to consolidated financial statements. 3 PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ($000 Omitted, except per share data) Nine Months Ended September 30, --------------------- 2004 2003 -------- -------- Revenues: Sales $ 28,958 $ 17,237 Interest and other income 9 115 -------- -------- Total revenues 28,967 17,352 -------- -------- Expenses: Cost of goods sold 23,512 13,317 Selling, general and administrative 4,234 3,537 -------- -------- Total expenses 27,746 16,854 -------- -------- Income before income taxes 1,221 498 Provision for income taxes 116 123 -------- -------- Net income $ 1,105 $ 375 ======== ======== Basic and diluted net income per share $ .14 $ .05 ======== ======== See accompanying notes to consolidated financial statements. 4 PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ($000 Omitted) Nine Months Ended September 30, --------------------- 2004 2003 -------- -------- Cash flows from operating activities: Net income $ 1,105 $ 375 Adjustments: Depreciation 1,301 1,261 Change in inventories ( 2,318) 612 Change in receivables ( 3,685) 663 Change in accounts payable and other accruals 4,686 ( 1,448) Other, net ( 120) 42 ------- ------- Net cash provided by operating activities 969 1,505 ------- ------- Cash flows from investing activities: Purchases of plant and equipment ( 194) ( 927) Repayment of loans to affiliates and others 30 45 ------- ------- Net cash used in investing activities ( 164) ( 882) ------- ------- Cash flows from financing activities: Repurchase of common stock ( 135) ( 11) Issuance of common stock in connection with the exercise of stock options 526 - Term loan borrowings 58 138 Term loan repayments ( 345) ( 1,000) Net revolving line of credit repayments ( 1,607) ( 298) ------- ------- Net cash used in financing activities ( 1,503) ( 1,171) ------- ------- Net decrease in cash and cash equivalents ( 698) ( 548) Cash and cash equivalents at beginning of period 1,200 1,898 ------- ------- Cash and cash equivalents at end of period $ 502 $ 1,350 ======= ======= Supplemental disclosure of cash flow information: Cash paid for: Interest $ 167 $ 290 ======= ======= Taxes $ 71 $ 1 ======= ======= See accompanying notes to consolidated financial statements. 5 PURE WORLD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. General ------- The accompanying unaudited consolidated financial statements of Pure World, Inc. and subsidiaries (the "Company" or "Pure World") as of September 30, 2004 and for the three and nine month periods ended September 30, 2004 and 2003 reflect all material adjustments consisting of only normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2003 as filed with the Securities and Exchange Commission. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the three and nine month periods ended September 30, 2004 and 2003 are not necessarily indicative of the results to be expected for the entire year or any other period. 2. Inventories ----------- At September 30, 2004, inventories are comprised of the following (in $000's): Raw materials $ 2,414 Work-in-progress 2,092 Finished goods 5,282 ------- Total inventories $ 9,788 ======= 6 3. Investment in Unaffiliated Natural Products Company --------------------------------------------------- In May 1996, the Company purchased 500 shares of common stock representing a 25% interest in Gaia Herbs, Inc. ("Gaia") for approximately $1 million. In June 1997, the Company purchased an additional 200 shares of common stock for $500,000, increasing its equity ownership to 35% of Gaia's outstanding shares of common stock ("Pure World's Gaia Stock"). Pure World's Gaia Stock is non-voting. The Company loaned Gaia $200,000 in July 1997 payable interest only on a quarterly basis for the first three years and 36 monthly payments of principal and interest thereafter (the "Pure World Loan"). The Pure World Loan bears interest at 6.33% which was the imputed rate required under the Internal Revenue Code and is classified as an other asset in the consolidated balance sheet. Gaia has not kept strict adherence to the agreed-upon 36 month payment schedule, but continues to make payments. The Pure World loan balance was approximately $76,000 at September 30, 2004. The parties also agreed that if any other party acquired voting shares, Pure World's Gaia Stock would become voting stock. Additionally, the parties agreed that Gaia and the principal stockholder of Gaia (the "Principal Stockholder") would have a right of first refusal to acquire any Gaia stock sold by Pure World and that Pure World would have a right of first refusal to acquire any Gaia stock sold by Gaia or the Principal Stockholder. The Company is monitoring its Gaia Investment and discusses its position with Gaia from time to time. Gaia manufactures and distributes fluid botanical extracts for the high-end consumer market. Gaia is a privately held company and does not publish financial results. The Company is accounting for this investment by the cost method. 4. Borrowings ---------- Borrowings consisted of the following at September 30, 2004 (in $000's): Loan payable to a bank, pursuant to a $5 million secured line of credit bearing annual interest at Prime plus .5% (5.25% at September 30, 2004) maturing in December 2006 $ 20 Loan payable to a bank, collateralized by certain property and equipment, bearing annual interest at Prime plus .75% (5.5% at September 30, 2004) maturing in December 2009 1,786 7 Lease payable for equipment for gross assets of $300,000 with imputed interest of approximately 5.9% maturing in October 2006 206 Leases payable for equipment 125 ------- Total borrowings 2,137 Less: Current portion of long-term debt 470 ------- Long-term debt $ 1,667 ======= Interest expense was $50,000 and $167,000 for the three and nine months ended September 30, 2004, respectively and $95,000 and $290,000 for the same periods in 2003. Interest expense is included in selling, general and administrative expenses on the consolidated statements of operations. 5. Common Stock ------------ Stock Issuance -------------- In the nine months ended September 30, 2004, 675,000 shares of common stock were issued due to the exercise of stock options. Stock Repurchase ---------------- In connection with the Company's Common Stock Repurchase Plans, 69,022 shares of Common Stock were repurchased in the nine months ended September 30, 2004. All shares repurchased were returned to the status of authorized but unissued shares. Stock Options ------------- The Company applies Accounting Principles Board (APB) Opinion 25 and related interpretations in accounting for its options. Accordingly, no compensation cost has been recognized for stock options issued. Had compensation cost for the issued stock options been determined based upon the fair values at the dates of awards under those plans consistent with the method of FASB Statement 123, the Company's net income (loss) and net income (loss) per share would have been decreased to the pro forma amounts indicated below: 8 Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2004 2003 2004 2003 ------ ------ ------ ------ Net income (loss) (in $000's): As reported ($ 236) $ 66 $1,105 $ 375 Pro forma compensation expense ($ 46) ($ 40) ($ 133) ($ 120) Pro forma ($ 282) $ 26 $ 972 $ 255 Basic and diluted net income (loss) per share: As reported ($ .03) $ .01 $ .14 $ .05 Pro forma ($ .03) $ - $ .12 $ .03 6. Net Income (Loss) Per Share --------------------------- Basic income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding. Diluted income (loss) per share is computed by dividing net income (loss) by the sum of the weighted-average number of common shares outstanding plus the dilutive effect of shares issuable through the exercise of stock options. The shares used for basic income (loss) per share and diluted income (loss) per share are reconciled below (in 000's). Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2004 2003 2004 2003 ------ ------ ------ ------ Average shares outstanding for basic income (loss) per shares 8,139 7,518 7,778 7,514 Dilutive effect of stock options 275 586 274 649 ----- ----- ----- ----- Average shares outstanding for diluted income (loss) per share 8,414 8,104 8,052 8,163 ===== ===== ===== ===== 7. Income taxes ------------ The components of income tax expense for the three and nine months ended September 30, 2004 and 2003 are as follows ($000 Omitted): Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 2004 2003 2004 2003 ------ ------ ------ ------ Federal-Current $ - $ - $ - $ - State-Current 3 20 116 123 Deferred - - - - ----- ----- ----- ----- Total $ 3 $ 20 $ 116 $ 123 ===== ===== ===== ===== 9 Total income tax expense for the three and nine months ended September 30, 2004 and 2003 is different from the amounts computed by multiplying total earnings before income taxes by the statutory Federal income tax rate of 34%. The reasons for these differences and the related tax effects are ($000 Omitted): Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 2004 2003 2004 2003 ------ ------ ------ ------ Income tax expense (benefit) computed at statutory rates on total earnings before income taxes ($ 79) $ 29 $ 415 $ 169 Increase (decrease) in tax from: Valuation allowance on net operating loss carryforward 79 ( 29) ( 415) ( 169) State income tax, net of Federal benefit 3 20 116 123 ----- ----- ----- ----- Total $ 3 $ 20 $ 116 $ 123 ===== ===== ===== ===== 8. Other Events ------------ In January 2004, the Company announced that it had retained the investment banking firm of Adams, Harkness & Hill to review strategic alternatives including, but not necessarily limited to sale, merger or other extraordinary corporate transaction. In June 2004, the Company announced that its engagement of Adams, Harkness & Hill had expired. 10 Item 2. Management's Discussion and Analysis of Financial Condition and ------- Results of Operations --------------------- This Form 10-QSB contains forward-looking statements which may involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future periods or performance suggested by these statements. Liquidity and Capital Resources ------------------------------- At September 30, 2004, the Company had cash and cash equivalents of approximately $502,000. Cash equivalents consisted of U.S. Treasury bills with an original maturity of less than three months and yields ranging between 1.15% and 1.59%. The Company had working capital of $9.4 million at September 30, 2004. At September 30, 2004 the Company was in compliance with the covenants of its loan agreements. The management of the Company believes that its financial resources and anticipated cash flows will be sufficient for future operations for the next twelve months. Net cash of $969,000 was provided by operations in the nine months ended September 30, 2004, compared to net cash provided by operations of $1,505,000 for the same period in 2003. In the nine months ended September 30, 2004, cash flows from net income of $1,105,000 adjusted for depreciation and the change in accounts payable and other accruals was offset by changes in receivables and inventory. In the nine months ended September 30, 2003, cash flows from the net income of $375,000 adjusted for depreciation and the change in receivables and inventory was offset by the change in accounts payable and other accruals. Net cash of $164,000 and $882,000 was used in investing activities for the nine months ended September 30, 2004 and 2003, respectively due primarily to the purchase of machinery and equipment. Net cash used in financing activities was $1,503,000 for the nine months ended September 30, 2004, compared to cash used in financing activities in the nine months ended September 30, 2003 of $1,171,000. For the nine months ended September 30, 2004, cash used for the repayment of debt was partially offset by cash received in connection with the issuance of common stock in connection with the exercise of stock options. Net payments of notes payable and the repurchase of common stock was the primary reasons for the cash used in 2003. For more information of borrowings, see Note 4 of Notes to Consolidated Financial Statements. Results of Operations --------------------- The Company's operations resulted in a net loss of $236,000 ($.03 per share) for the three months ended September 30, 2004, compared to net income 11 of $66,000 ($.01 per share) for the comparable period in 2003. Net income was $1,105,000 ($.14 per share) for the nine months ended September 30, 2004, compared to $375,000 ($.05 per share) for the comparable period in 2003. The decrease in net income in the quarter ended September 30, 2004 compared to the same quarter in 2003 is a result of a lower gross profit on the mix of the products that were sold. The increase in net income for the nine months ended September 30, 2004 is primarily a result of the increase in sales from the same period on 2003. The Company, through its wholly-owned subsidiary, Pure World Botanicals, Inc., had sales of $10.9 million for the quarter ended September 30, 2004, compared to sales of $5.3 million for the same period in 2003, an increase of $5.6 million or 106%. For the nine months ended September 30, 2004, sales were $29 million, compared to sales of $17.2 million for the comparable period in 2003, an increase of $11.7 million or 68%. The increase in sales was due to the introduction of new products in 2004. One new product accounted for approximately $7 million and $15 million in sales to one customer for the three and nine months ended September 30, 2004. There can be no assurance that sales of this product will continue or that this customer will result in significant business in the future. For the quarter ended September 30, 2004, the gross profit margin (sales less cost of goods sold) was $1,155,000 or 11% of sales compared to the same quarter last year when the gross profit margin was $1,189,000 or approximately 23% of sales. For the nine months ended September 30, 2004, the gross profit margin was $5,446,000 or 19% of sales compared to the gross profit margin $3,920,000 or 23% of sales for the comparable nine months in 2003. Although total sales for the nine months ended September 30, 2004 were significantly higher than sales for the nine months ended September 30, 2003, sales of extracts were lower in 2004. The decrease in extract sales resulted in a less profitable product sales mix and lower gross profit margins for the three and nine months ended September 30, 2004 compared to the same period in 2003. Interest income increased from $3,000 in the quarter ended September 30, 2003 to $5,000 for the quarter ended September 30, 2004. Higher invested balances were the primary reason for the increase in interest income in the third quarter of 2004. For the nine months ended September 30, 2003 and September 30, 2004, interest income declined from $15,000 to $9,000, respectively. Lower yields on investments for most of 2004 accounted for the decline. Other income of $100,000 in the nine months ended September 30, 2003 was derived from a research and development agreement with a pharmaceutical company. Selling, general and administrative expenses were $1,393,000 for the three months ended September 30, 2004, an increase of $287,000 or 26% from 12 $1,106,000 for the comparable period in 2003. Selling, general and administrative expenses were $4,234,000 for the nine months ended September 30, 2004 compared to $3,537,000 for the comparable period in 2003, an increase of $697,000 or 20%. This increase was due principally to higher salary and commission expenses. Selling, general and administrative expenses were approximately 13% of sales and 15% of sales for the three and nine months ended September 30, 2004, compared to 21% of sales for the three and nine months ended September 30, 2003. The decrease of selling, general and administrative expenses as a percentage of sales is primarily the result of the sale of one new product to one customer of $7 million and $15 million in the three and nine month periods ended September 30, 2004, respectively which did not result in substantially higher selling, general and administrative expenses. Other Events ------------ In January 2004, the Company announced that it had retained the investment banking firm of Adams, Harkness & Hill to review strategic alternatives including, but not necessarily limited to sale, merger or other extraordinary corporate transaction. In June 2004, the Company announced that its engagement of Adams, Harkness & Hill had expired. Item 3. - Controls and Procedures ------- ----------------------- As of the end of the period covered by this report, the Company carried out, under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based upon and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures are effective. There were no significant changes in the Company's internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended September 30, 2004 that have materially affected or are reasonably likely to materially affect the company's internal controls over financial reporting evaluation. 13 PART II - OTHER INFORMATION ------- ----------------- Item 2. - Changes in Securities ------- --------------------- In the quarter ended September 30, 2004, the Company issued 160,000 shares of its common stock, par value $.01 per share, for proceeds of $160,000, upon the exercise of 160,000 common stock options. These options and the underlying shares were registered on Form S-8. SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES (COMMON STOCK) (c) Total Number of (d) Maximum Shares Number of Purchased as Shares that Part of May Yet Be (a) Total Publicly Purchased Number of (b) Announced Under the Shares Average Price Plans or Plans or Period Purchased Paid per Share Programs Programs (1) July 1, 2004- July 31, 2004 41,062 $ 1.95 41,062 875,010 August 1, 2004- 7,500 2.03 7,500 867,510 August 31, 2004 September 1, 2004- September 30, 2004 10,700 1.91 10,700 856,810 Total 59,262 $ 1.96 59,262 856,810 (1) In May 2002, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to 1,000,000 shares of its common stock. This program has no expiration date. 14 Item 6. - Exhibits and Reports on Form 8-K ------- -------------------------------- (a) Exhibits -------- 31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K ------------------- On August 6, 2004 Pure World filed a Form 8-K reporting that the Company had issued a press release announcing results for the three and six months ended June 30, 2004. 15 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PURE WORLD, INC. Dated: November 11, 2004 By:/s/ Sue Ann Merrill -------------------------------- Sue Ann Merrill Chief Financial Officer, Vice President & Treasurer (Principal Financial and Accounting Officer) 16 EXHIBIT 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Paul O. Koether, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Pure World, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. November 11, 2004 /s/ PAUL O. KOETHER --------------------------------- Paul O. Koether Chairman EXHIBIT 31.2 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Sue Ann Merrill, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Pure World, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. November 11, 2004 /s/ SUE ANN MERRILL --------------------------------- Sue Ann Merrill Chief Financial Officer Exhibit 32 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002 (18 U.S.C. 1350, as adopted), Paul O. Koether, the Chairman of Pure World, Inc., (the "Company"), and Sue Ann Merrill, the Chief Financial Officer, Treasurer and Assistant Secretary of the Company each hereby certifies that, to the best of their knowledge: 1. The Company's Quarterly Report on Form 10-QSB for the period ended September 30, 2004, to which this Certification is attached as Exhibit 32 (the "Periodic Report"), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 11, 2004 /s/ Paul O. Koether ----------------------------------- Paul O. Koether Chairman /s/ Sue Ann Merrill ----------------------------------- Sue Ann Merrill Chief Financial Officer