Organic Weed Killer Receives Green Light

Organic Weed Killer Receives Green Light For Sales To Farmers & Commercial Users

Certified Organics has received “New Zealand commercial registration” for its Organic Interceptor™ weed killer, the last of the regulatory consents required for it to freely market the product in New Zealand.

The company has been advised by the Agricultural Chemicals and Veterinary Medicines Group of the Food Safety Authority it has approved Organic Interceptor™ for sale in commercial sized packs, typically to farmers and other large-scale users of herbicides.

This follows on the ERMA consent Certified Organics received in April 2002 to market its pine based, organic weed killer ready-to-use range to the New Zealand home & garden market. Organic Interceptor™ has organic certification in New Zealand from BIO-GRO and AgriQuality Certenz.

We will commence marketing Organic Interceptor™ immediately to agricultural and commercial users as the production capability and a distribution network has been assembled in expectation of the registration being granted, albeit nearly four month later than we had anticipated. Original advice by authorities indicated a two month process which would have seen us well placed for a spring launch to farmers and commercial users, late August. Regrettably because of this delay we have missed the bulk of potential spring sales to farmers.

Australia is our next target market and we have been working all year on obtaining the necessary regulatory consents for both home & garden and commercial applications. However, the progress in Australia has been even slower than in New Zealand and this means that we don’t expect the key approvals until early to mid 2003, a six to nine month delay on what we had hoped for.

Now that we have the New Zealand commercial registration we will be focusing strongly on introducing Organic Interceptor™ to the more than 900 certified organic farmers in New Zealand and those in conventional agriculture who are still looking for alternatives to chemicals to control weeds at this stage of the growing season. We are also geared up to promote the product to less seasonal users such as local authorities, sporting facilities, golf courses and educational institutions.

Our market research indicates that there are an increasing number of farmers who want to switch from conventional chemical herbicides. Similarly, a large number of local authorities and urban maintenance contractors are very interested in a certified organic weed killer as more and more local-body constituents reject chemical usage in their streets. Trials have been conducted by a number of farmers and local authorities and the results have been encouraging.

Sales of the recently launched home and garden range of Organic Interceptor™ demonstrate there is a good market for a chemical free, organic weed killer. Sales for the first half of the year were only $97,000 but since we launched our home and garden product range mid June sales have shown a steady increase. In July we achieved sales of $55,000, although approximately 60% of this related to our first shipment of certified organic shampoos to Australia. Sales in August were $70,000, September $105,000 and in October were in excess of $180,000.

While this increasing sales momentum is extremely encouraging, the slower than anticipated start to the year and the slow speed of processing our New Zealand commercial registration application, along with delays in Australian registrations, mean we will not break the $1 million revenue mark for the 2002 financial year. We now expect revenue to be around $800-900,000 for the year.

While the delays have reduced the 2002 revenues, there have also been decreases in operating and market-launch costs here and in Australia so that we expect to be still on target to hold the year’s forecast operating loss to some $1.8 million, which will include an amortisation and depreciation payment in the order of $600,000.

Achieving this result will require us to continue to maintain a tight control over operating costs and the successful completion of the current capital raising.

The capital raising process commissioned earlier this year based around the private placement of up to 10 million new shares, as approved by shareholders at the June 2002 annual meeting was expected to have been concluded some time in the third quarter 2002. We have to date, however, been unable to obtain firm commitments from the parties who have expressed interest over the last few months.

While we are still working through the placement process with several interested parties, the Board has decided that it is prudent to actively review its capital-raising strategy and timing. The Board is also giving consideration to the possibility of introducing an additional investment banking advisor to widen the pool of potential investors.

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