Verde Agritech Ltd T.NPK

Questions sent to Verde

[15Stanmore]

As posted previously, here are the questions I had suggested be addressed by the CEO and CFO during their presentations today. Hopefully all these will be covered in the slide deck shared with the presentation participants. If not, hopefully participants will be comfortable submitting these along with others I have not included, to be addressed during the Q&A portion of the presentation. That being said, it sure would be more efficient if the formal presentation piece would simply address these questions submitted in advance, rather than being told "we don't have that information in hand right now". Getting questions submitted in advance is meant to give the Company time to prepare a fulsome and articulate response, rather than an off-the-cuff and sometimes disrespectful comment.

1.  Mr.Veloso has formally reported to the UK regulatory authorities that he has moved his permanent residence to England, effective August 17, 2021. Can the CEO confirm he is now living in the UK, and share with us his plans and intentions regarding the management of the day-to-day operations of Verde, which we understand occur 100% domestically in Brazil.
2. The November 5 2021 amended Q1 financial statements reported the expensing of $609,000 of management bonuses paid to Mr. Veloso ($486,780) and Mr. Paolucci ($122,000) by way of an issue of Treasury shares in March. The issue of the 499,000 shares had been recorded in the original statements issued in May, but had been accounted for by booking an offsetting Trade Accounts Receivable. Given the CEO had been awarded and paid a $550,900 bonus in 2020 for achieving "certain targets" in that year, and is eligible to receive, on a sliding scale, between $210,000 and $420,000 for meeting specified adjusted EBITDA targets in 2021, can he please explain the reason for and the basis of the $486,780 bonus paid in March 2021. 
3. Given the confusion around the correct reporting of the $865,000 fair value of the 750,000 $1.22 stock options issued to Mr. Veloso in March 2020, and the need to ammend the previously ammended (August 2021) Q2 financial statements, can the CFO please provide the amount of the remaining unexpensed fair value of all outstaning stock otions as at September 30, 2021? In future, would he please include this updated figure in a continuity schedule as a note to the financial statements?
4. Can the CEO provide an update on the status of the 2.5 million tonne mining permit (which we believe is only awaiting the issuance of the final environmental sign off).
5. Can the CEO firm up a date for the delivery of the updated 2017 feasibility study for the Cerrado Verde Project, beyond the previous "before the end of 2021" which is now a mere 37 days away?
6. Can the CEO provide a slide show of current photographs taken at the Mine site, the construction area at the mine site for Plant 2, and of the Plant 1 compound? Shareholders would appreciate seeing this tangible display of their assets in Brazil and would add to the value of the presentation beyond representing the numbers already shared in detail in the financial statements and MD&A. Can these photographs be added to the Verde website and updated regularly?
7. Can the CEO provide an update on the health and availability of Mr. St Aldwyn who has been assigned the critical responsibility of Independent Lead Director given the conflict inherent in having the CEO take the formal position of Chairman of the Board of Directors? He has been unavailable to shareholders since May 2021.
8. In recognition that the Verde products must be "sold" to skeptical and resistant customers as opposed to simply being made available in an active commodity market, the Company has invested significantly in its Marketing and Sales strategies. As disclosed in the financial statements, and shared in prior presentations, this includes direct selling and delivery to individual end user customers (farmers) using an internal sales force (now numbering 57 sales professionals), ongoing relationships with established wholesale distributors where the products are provided at a discount for resale (averaging 30% off published retail prices), and most recently using independent commissioned salespersons - presumably also selling at retail to individual farmers. Can the CEO provide an update on these various initiatives, and share the relative contribution each one has mad to the total quarterly tonnes sold figures?
9. How much of the $16 per tonne Q3 production cost is currently attributable to the expense of transporting the ore from the mine site to Plant 1? When Plant 2 becomes operational, can we assume that this component of the cost of production at Plant 2 will be eliminated?
10. How much of the total production costs reported in Q3 was due to the cost of raw material purchased from sources other than the glauconite siltstone taken from our mine?
11. Could the CFO please provide a breakdown of the over $1 million reported as inventories at September 30, 2021, differentiating between raw materials from our mine, raw materials puchased from other suppliers, and finished products ready for shipping. If inventories include other consumables (gas, oil, diesel fuel, etc) can these also be provided?
12. Can the CEO speak to the over $8 million in accounts receivable and provide an aging of the outstanding accounts. Can the CFO provide the amount of the bad debt expense incurred to date in 2021 for the write off of uncollectable accounts.
13. Can the CEO address the construction of Plant 2, providing information as to the phasing in of the individual processing lines, whether the plant can operate at full capacity irrespective of the season, and anticipated start up dates and capacity available?
14. Can the CEO provide any update on the Brazil government's announced initiative to support the development of the domestic fertilizer supply chain?