An Ontario vermicomposting company making soil enrichments has run up against the sort of weather that keeps potential customers from blending such products into their acreages.
Forterra Environmental Corp. on Monday reported a net loss of $561,618 for its second quarter ending June 30, compared to a net loss of $434,794 in the year-earlier period.
The company markets its red wiggler worm castings as an organic soil enrichment for markets such as nurseries, orchards, vineyards, golf courses, sports fields, lawn care and parks.
The company reported having substantially pared back its expenses, having vacated its office at Concord, Ont. and plant at Downsview, Ont. Its “active” plant and head office are in Puslinch, southeast of Guelph.
Forterra also noted that its worm population has grown to more than 24,000 pounds of red wigglers as of July 31, up from over 18,000 pounds last Dec. 31.
The current retail price for such worms is $30 per pound, the company noted, valuing its inventory of an estimated 24 million worms at about US$720,000.
When Forterra reported its Q1 results in May, “we noted that our business was being adversely affected by the unseasonably cool and wet weather conditions that were causing certain of our customers to delay their blending operations and therefore their purchasing from Forterra,” company president Rick Denyes said in a release Monday.
“Unfortunately, those conditions persisted through the second quarter and even into the summer months, resulting in further deferrals and even the outright loss of expected sales.
“As the result of the significantly lower-than-budget sales and the company’s larger-than-anticipated loss, Forterra’s cash flow and working capital were well below budget in the first half of the year.”
However, the company said, it has negotiated with “major new customers” at the regional and national level and expects to receive “significant” orders soon for its products, noting one pledge in writing from a company planning to buy between $375,000 and $500,000 worth of worm castings with deliveries starting in September.
Meanwhile, however, the company said it “does not currently have sufficient resources to complete the commercialization of its products or to carry out its entire business strategy. Therefore, the company needs to raise additional capital to fund operations.”
Forterra said it “believes that it will be able to secure sufficient working capital to fund its operations through 2009 and into 2010,” having had “favourable indication from certain institutional investors” that they’d be willing to take part in equity-based financing, to be completed in September.
“As well, several of the company’s directors have stated their willingness to participate in a bridge financing of up to $160,000, if required.”