Verde Agritech Ltd T.NPK

Q3 Fully Diluted Share count

[15Stanmore]

Hello fellow Verde shareholders.

As a retired Chartered Accountant and former Chartered Financial Analyst charterholder I enjoy looking through the details in the financial statements and Management Discussion and Analysis (MD&A) documents issued by the companies in my portfolio. Regular readers of this board will be aware of this particular habit of mine, and the impact it can have on the information shared by a company with its shareholders when a mistake or error is uncovered.

During the process of updating my tracking and forecast models with the just released Q3 2021 data I noticed the MD&A reported the following information regarding the Company's common shares (on page 24):

Ordinary shares issued and outstanding:          50,378,619
Warrants outstanding                                               nil
Stock options (currently vested)                          3,103,808
Stock options (not yet vested)                                744,711

Fully diluted share count at Sept 30, 2021    54,227,128

If a reader continues through the MD&A to page 29 and reads the section headed Dilution, you will see the following:

"The Group currently has 50,378,619 Ordinary Shares outstanding and 51,676,785 on a fully diluted basis."

My understanding of Fully diluted is  the total number of common shares of a company that will be outstanding and available to trade on the open market after all possible sources of conversion, such as convertible bonds and employee stock options, are exercised. Fully diluted shares include not only those which are currently issued but also those that could be claimed through conversion. This number of shares is needed for a company’s earning per share (EPS) calculations because applying fully diluted shares increases the share basis in the calculation while reducing the dollars earned per share of common stock.

Given this definition I do not understand where the Company derived the figure of 51,676,785 shown on page 28, instead of using the 54,227,128 from the calculation on page 24.

Perhaps just another "typographical error"?

Cheers,

S.

[Ciao]

Stan, You're absolutely right. Pretty straightforward as to what fully diluted means. I would believe that most of the retail investors here understand this as such. If some numbers add up to that fully diluted share count, maybe carelessness here, else incompetence....

[15Stanmore]

Hello Ciao, Thanks for the post - I agree this is one number that most investors, retail and professional alike, fully comprehend and understand. As such, it is one of the most critical numbers that public companies should ensure is correctly presented when financial statements and MD&A documents are released to the public. Unfortunately, Verde's 2021 history of reporting missteps

[sparkdog]

It's unacceptable for this recent accounting error. Mistakes happen....but twice? It's quite frankly bullcrap. Time to hammer the CEO and CFO on these points at the next Q & A show....