The company valued VRM, which stands for Vital Resource Management, at $A4.8 million when it announced the purchase and said at the time the company would be earnings per share positive from the first year.
VRM is based in Townsville, Queensland, and manufactures pro-biotic formulation-based products used in farming and by cleaning companies.
Since then CER Group has expressed doubts about the sustainability of the acquisition and made a provision of $NZ5.8 million ($A5.15 million) to cover it and problems encountered by the company's Certified Organics operation.
"CER now advises that it is in dispute with the vendors of VRM in respect of a number of matters. The directors of CER have resolved not to pay to the vendors of VRM an $A1 million deferred settlement payment."
Talks are continuing on the issue.
CER Group said in August it had put strict cost controls in place "to safeguard the group's future" and preserve cash flow.
The company said it had cash reserves of $NZ700,000 ($A621,090.46) at June 30 and a further $NZ900,000 ($A798,544.87) of lines of credit in place.
The company is reviewing all of its businesses and has developed concerns about the sustainability of the income base of VRM.
The concerns about VRM related to its dependence on sales of its bio-fertilisers to Queensland sugar growers.
"Following a prolonged period of higher than expected rainfall in the major growing area, Northern Queensland, and this year's pronounced squeeze between low sugar prices and rocketing fuel and chemical costs, the sugar market has become significantly depressed; prospects for sales in the critical forthcoming spring season are now significantly in doubt," the company said in August.
"The group is now of the view that the lack of sales revenue development will mean that the profits in this business (VRM) will fall significantly short of the $A1 million contemplated at the time of acquisition."
CER Group also owns The New Zealand Nature Company, a multi-channel retailer of natural products, which it said was performing strongly.
