Rust Problems Affect Imperial Ginseng's FY02

Rust Problems Affect Imperial Ginseng's FY02

VANCOUVER, British Columbia--Imperial GinsengProducts Ltd. (OTCBB:IGPFF) reported that for the year (FY02) ended June 30 andreported Oct. 28, a root rust problem in British Columbia made for discountedprices and a large net loss.

For the year, the company posted a sales decrease of 64.2percent to $3.4 million from FY01's $5.3 million. Gross margin was a negative91.2 percent, while operating expenses were slashed to $700,000 from $1.6million. This was due to an accrual of certain termination allowances associatedwith management restructuring during FY01. Net loss was $4.4 million, or $1.39per share lost, compared to FY01's net loss of $2.3 million, or $1.86 per sharelost.

Due to an extreme weather pattern of an unusually cold springand hot, dry summer, the company's Ontario crops were adversely affected. InFY02, the company harvested 138.9 acres of 4-year-old gardens, yielding 380,000pounds of ginseng root.

However, the Ontario farm had increased acreage for FY02 (354acres), and the company expects to increase it even more next year, to 415acres.

For the year, Imperial Ginseng sold 385,000 pounds of root at anaverage of $12.75 per pound, compared to 512,000 pounds at an average of $14.77per pound the year prior. This was the result of significant root rust inBritish Columbia, affecting more than 40 percent of the company's crops, whichthen had to be sold at a significant discount.

Because of uncertainty over the industry's ability to controlthe B.C. rust root problem, the company's board of directors decided to continuesuspending planting in the province for fall 2002.

Because of increased competition from Chinese-grown Americanginseng, the company expects lower grade root prices to remain flat over thenext few years. However, premium graded root is expected to increase in price.

Click Here to Enlarge