Verde Agritech Ltd T.NPK

Amazon Canada Greensand Sales

[15Stanmore]

Hello Fellow Verde Shareholders,

I recently ordered and received two twenty kg bags of Verde Greensand (regular and ionized) which cost about $200 Canadian, bought through Amazon Canada. This sale will be recorded at its gross value in the Verde financial statements, representing a selling price of about $5,000 per tonne.

Those of you familiar with the Amazon business model will know that there are 5 types of fee levied by Amazon against the business wishing to use its services to make and fulfill sales. Most telling for Verde beyond the expected selling commision are the storage fees which are calculted on the size and weight of the product required to be stored in the Amazon warhehouses (distribution centres). Based on my estimates, the total of these fees would run between $75 and $95 per $100 bag of Greensand sold. If after 6 months there are still bags of unsold product, these additional fees could well take the total costs charged by Amazon above the gross selling price of the product.

The conclusion from this is that while Amazon might be a novel marketing or promotional stunt for Verde, it is not a profitable way to sell its product in Canada. You might price the product at $5,000 per ton, but end up incurring selling and distribution costs of over $5,000 per tonne, actually making a net loss in the process.

Clearly better to focus on domestic sales to local farmers where the $100 per tonne realized selling price offers an 80% gross margin.

Cheers,

S.

[sparkdog]

CV has never had the inclination to try to enter the Cdn fertilizer market. Why bother. Takes massive infrastructure to be in place (good roads, rail lines, processing facilities both on site and in port etc etc) Maybe in the future. Brazilian market is more than big enough. I'm sure it's a bigger market than Canada.  The next qtrs will be a outstanding regardless of what some may

[15Stanmore]

Hello Sparkdog, Domestic sales in Q2 and Q3 look likely to consume all 50,000 tonnes per month of current production capacity leaving no product available for export sales. That being said, CV has readily agreed that it would be very beneficial to be able to run the plant in Q4 and Q1 using the excess capacity to produce product for bulk export, if an appropriate market with a single buyer