Verde Agritech Ltd T.NPK

NPK Trading Since Q4 results

[15Stanmore]

Hello fellow Verde shareholders,

With the NPK shares changing hands at $1.26 today (up 51.8% from closing at $0.83 on December 31, 2020) but well off the high of $1.97 hit on March 18, 2021 (a decline of 36% in 25 days) any reasonable observer would have to say that the share price ran up to quickly in Q1 and got ahead of the story that supports its continued appreciation.

For those of you who have been following the story for some time, you might also point out that the most significant decline happened in the last 14 days following the release of the Q4 results and the Q&A session held on April 7 last week. 

While the 2020 audited results reported the first annual profit recorded by the Company, it also revealed the awarding of significant and, in the eyes of most Verde shareholders, totally unwarranted bonuses to the CEO and largest single shareholder. This, along with the revelation that Verde Board of Directors has operated without a formally appointed Board Chairman since 2013 (now filled by Mr. Veloso in addition to his current title as Founder, President and CEO) has cast a very negative cloud over the efficacy of Verde's governance practices, and the impact on shareholder value generation.

Mr. Veloso has on many occasions voiced his view that Verde cannot afford to consider recognizing shareholders by issuing even a 1 cent per share annual payout: it needs every penny to support its capital expansion and cannot support a $500,000 dividend. Yet he has no problem awarding himself a $550,900 bonus for meeting sales targets in Year 3 of Phase 1 which are less than 50% of the target set out for Year 1 of Phase 1 in the often touted 2017 Pre-Feasibility study.

In my opinion, the current malaise in the NPK stock price is a direct result of investors finally waking up to the fact that they need to evaluate what Mr. Veloso actually does (or doesn't do), rather than listening to what he says he has done (or is going to do). The fundementals of the Cerrado Verde Project have not changed - indeed if anything many of the assumptions and metrics used in the NPV calculations have improved since the 2017 study. What needs to be reassessed is the capacity for the existing governance environment to appropriaty guide and assist Mr. Veloso to implement the plan in a timely, cost effective and shareholder value creation focused manner.

What do other shareholders think and care to share on this board?

[PedroPistacio]

Thank you Stan. In my view the Q4 results were broadly in line with expectations, and the overall direction of travel and timeline is still the same as previously stated by the CEO in earlier quarterly presentations and so I doubt the Q4 announcement is the reason for the subsequent sell off, unless people who were recently buying the shares and pushing them up to 1.97 before the announcement have

[BCdude]

There seem to be many of us who beleive the CEO compensation package is out of line with the actual results of the company. What do you propose we do about it? Perhaps you could draft a letter to Mr. Veloso and have those shareholders who are willing sign their names on it?

[15Stanmore]

Hello BCdude, Thank you for your recent post in which you said: There seem to be many of us who beleive the CEO compensation package is out of line with the actual results of the company. What do you propose we do about it?  I believe Mr. Veloso has already acknowledged the concerns raised by shareholders and has communicated that he believes his compensation package is appropriate. On the

[BCdude]

Hi Stanmore, This was exactly the kind of response I was hoping for. As always, you've put a great deal of thought into how this situation can be handled. Much appreciation for you and the VSG you've organized for keeping tabs on the company. I only hold 8,000 shares, but would be happy to add my name to the list if you need additional signatures. All the best, BCdude