Plant Impact Regulatory News (PIM)

Plant Impact plc

("Plant Impact" or the "Company")

Amendment of BugOil® License Agreement and Development Loan

Plant Impact announces today that Arysta LifeScience Corporation ("Arysta") and the Company have amended the terms of their 2009 BugOil® License and Development Loan Agreements.

Under the terms of this amendment, the Company and Arysta have narrowed the geographic scope of Arysta's exclusive license to Plant Impact's product BugOil®, reduced the value of the remaining regulatory milestone payments potentially due to Plant Impact and extended the repayment date for the £750,000 development loan from Arysta to 31 May 2013.

The Plant Impact Board believes that these amendments improve the financial position and cash flow outlook of the Company and are likely to be neutral to the current carrying value of BugOil® on the balance sheet.

Background to the Agreement and Amendments

BugOil® is a plant essential oil technology that is effective against economically impactful insect and mite species. It is a non-toxic, environmentally friendly compound that has been tested and found to be commercially promising for a wide range of food and ornamental crops.

In May 2009, Plant Impact and Arysta entered into agreements whereby Arysta was granted an exclusive, worldwide license to manufacture and sell BugOil®. Under these agreements, Plant Impact was to secure regulatory approvals for BugOil® in the United States (US), the United Kingdom (UK) and the European Union (EU). Upon receipt of these approvals, Arysta agreed to make milestone payments to Plant Impact of up to £2,250,000. £500,000 was paid to Plant Impact around the time of original license, and the remaining £1,750,000 were to be awarded to Plant Impact on the achievement of a US federal registration (£500,000), a UK provisional registration (£500,000) and an EU registration (£750,000). To assist the Company with the regulatory and development expense for BugOil®, Arysta advanced £750,000 to Plant Impact via a secured loan which was due for repayment on 22nd February 2012.

At the time of the 2009 agreements, the Company anticipated regulatory approvals in the United States and the European Union during the first six months of 2010 due to BugOil®'s potential review under "fast track" biopesticide regulatory regimes. Since that time, both the US Environmental Protection Agency (EPA) and the UK Chemicals Regulatory Directorate (CRD) have moved away from the concept of 'fast track' and have determined that BugOil® is required to be examined under standard and exhaustive pesticide regulatory processes.

The Company now expects to receive US EPA registration of BugOil® in the first six months of 2012, and in the United Kingdom by early 2013; subject to the successful review of a final set of studies now underway. Since the UK is the lead reviewer of BugOil® on behalf of the EU, approval across Europe is dependent on a successful outcome of the UK process.

Amendments to the Agreement

Arysta will continue to license BugOil® in the European Union and selected Eastern European countries, in Africa and several countries of the Middle East as well as in Mexico, Japan and South Korea. Plant Impact will regain all other global commercial rights to the product including in the United States, South America, Asia (including China, India and Southeast Asia) and Australasia.

The regulatory milestones potentially due to Plant Impact have been reduced to reflect the regulatory delays and the smaller scope of Arysta's future rights to the product. The milestones now potentially receivable by Plant Impact upon regulatory approval have been amended to £250,000 for US EPA, £250,000 for the UK, and £354,000 upon acceptance of BugOil® into the European Union Annex I listing.

The due date of the currently outstanding loan from Arysta LifeScience to Plant Impact (£838,408 of principal and capitalized interest) has been extended to 31 May 2013. The interest rate on this loan will be increased to LIBOR + 6%, (versus LIBOR +3%) with interest accrued and paid at the end of the term.

Financial Impact of the Amendment

The Plant Impact Directors believe that these amendments markedly improve the financial position and cash flow outlook of the Company. The extension of the Arysta loan provides the Company with additional time to achieve regulatory milestones as well as the ability - in the event regulatory milestones are not achieved - to repay the Arysta loan from internal cash generated from the growth in revenues of the Company's nutritional product range.

The BugOil® commercial rights returned to Plant Impact in the United States, South America and Asia free the Company to achieve full value with the product in these markets, including the flexibility to deal with other distribution partners.

The potential milestones achievable by Plant Impact were not carried as current trade receivables on the Company's most recent 30 September 2011 balance sheet. Their potential, discounted value did, however, account for a portion of the £583,383 of Goodwill listed as part of the Company's Intangible Assets. Management expects it is likely that Plant Impact's ability to capture the full value of BugOil® in the United States, South America and Asia will offset any potential Goodwill impairment due to the reduction of the potential milestone payments under the amended agreement. The Company tests the BugOil® intangible asset for impairment annually and will consider these offsetting factors in its upcoming review for the financial year ending 31 March 2012.

Management Summary

John Brubaker, CEO of Plant Impact commented: "I am delighted to announce this agreement with Arysta LifeScience. It eliminates considerable near-term cash pressure from our business and returns to Plant Impact a valuable commercial asset in the major markets of the United States, South America and Asia."

"The regulatory and financial hurdles of insecticide development are well illustrated by the protracted review process of BugOil® since 2009. In contrast, the streamlined regulatory profile of enhanced plant nutrients makes this sector far more promising for a small and agile innovation company such as Plant Impact. Indeed, as we have consistently emphasized in our announcements over the last year, Plant Impact remains focused on growth through the rapid development of our plant nutrition products. The additional short-term cash flexibility of our agreement with Arysta improves the Company's ability to grow sales of InCa and PiNT in the coming season."

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