Verde AgriTech Limited (NPK) Earnings Call Transcript & Summary

Hi, everyone. My name is Cristiano Veloso, I'm the Founder and CEO of Verde AgriTech. Welcome to our call for the results of the first quarter of 2024. As usual, I will be opening today's presentation, I'll be talking a little bit about the market, what happens during this Q1 in a macro perspective. Then Felipe will present the financials, a detailed presentation about the accounts, our sales, costs, operating costs, investments and other related aspects. And then at the end, I will be answering questions on a Q&A. If you have any questions, please send those questions throughout the presentation. If you're watching this presentation on YouTube and wanted to reach out to the company, please e-mail us as well. Please reach out, and we're always happy to talk to you and answering any other question as well. Starting then the presentation for Q1. I'd like to remind you that this presentation contains forward-looking statements, and actual results might differ. I should also remind you of the very specific disclosures we have in our presentations in our marketing materials. Next slide. If you are in Canada or in the U.S., you can go on Amazon.com and join thousands of customers who have been using our product internationally as well. Next slide, market overview. So Q1 2024 was yet another tough year for agriculture and fertilizers. We saw the price of potash reaching some prices not seen for the last 3 years, went as low as $290. The good news, though, is it has stopped going down a few weeks ago and has been reversing and a little bit of improvement as of late. When we read some analyst notes, they start getting a little bit more, I want to use the word bullish. Certainly less pessimistic about the long-term potash prices. The way we operate in the company is really looking at current prices as the standard. So we don't plan, we don't expect, we're not basing our business plan, our business decisions on a recovery of potash for the foreseeable future. We are assuming prices will stay low for long, and we expect to be able to perform in that sort of environment. Next slide. This is another important graph showing the price for soybeans, the price for coffee. So if you look for, again, the price of soybeans in Q1, it continued its decline. You might remember our presentations throughout the last year when we kept highlighting how the price was decreasing. That unfortunately hasn't stopped yet. As a matter of fact, price for soybeans were the lowest pretty much since we started operations, pretty much since we started production. Soybeans is the main crop for potash in Brazil. Because it's the main crop for potash in Brazil, it ends up driving pricing. The international supplies that effectively control the market, they have to look at it. They will look at this price and see how much they can charge farmers for potash. So it makes economic sense for farmers to be using. So it doesn't matter if a niche crop has a higher price, it doesn't matter. What really matters is the one that drives the greatest consumption in the country, which in the case of Brazil, ends up being potash. The good news, as you can see from the graph, is that hopefully the worst is behind us. So we can see a small recovery. And fingers crossed, this will continue as such. What is also important to note from this slide, if we go back one slide, is what was happening throughout in 2022 because that explains, that will help you to understand, why there is such a sharp reduction in our results this quarter versus the results of the quarter in the previous year. So as we explained in the press release, in 2022, when prices were at record levels, farmers made the commitment to buy fertilizer from us to be delivered throughout Q1 2023. So Q1 2023, even though 2023, as you all know, was a tough year, there was a lot of orders already that we managed to deliver in Q1 2023 that had been placed in 2022 at record-high prices. This quarter is a quarter we get the full impact of a much more depressed price for grains and much more depressed price for soybeans. Soon, it will be 20 years since I started the company. Soon, it will be 17 years since we've been a public company. Soon, it will be 5 to 6 years since we started production. So having gone through several cycles of boom and bust, you start getting a little bit -- I won't say used to it. But you start developing a little bit of feeling of when things might be hitting bottom. And this is something that, of course, comes from an intuition. But when we look at everything around those, and we start looking at the recoveries, we start reading some analyst reports and we start seeing the behavior of the market, I would like to think that this is a bottom and things surely improve from here onwards. We already see plenty of farmers going bankrupt. And in it's a sign that, if we are to continue feeding the world as we have been doing so as a country, with significant share of food exports, something will have to happen in terms of prices for agricultural commodities. So next slide, please. This is an explanation of what happened from a further destruction in the demand of fertilizers which we witnessed taking place this quarter, as was widely publicized by the media. Farmers in Brazil last year had major issues with El Nino. So when it comes to planting soybeans last year, there was a significant drought. So lots of soybean farmers, they lost the first attempt to plant soybeans. They had to replant. This delayed the development of soybean crops. So when it comes to the second crop that's cultivated by Brazilian farmers, which is corn that gets planted during Q1, a lot of farmers just didn't have the window anymore to be able to harvest soybeans and then plant corn subsequent to it. So that was a massive impact. While we're talking here on the El Nino, I'm sure some of you have been following the news of the devastating floods in the South of Brazil. I guess most Brazilians will know someone down there who was -- or if you're not down there, but if you are based a bit further north, but several friends, families that were severely impacted. Was devastating. It's one of the wealthiest cities of Brazil, Porto Alegre that was impacted. It's one of the most important agriculture states of Brazil. And it's a state that is where a lot of farmers come from as well. It's a state that a lot of the farmers that went to Cerrado came from. So the whole agriculture space is grieving on the very sad news coming on a daily basis from the South of Brazil, which to continue to go on. So as of this morning, last I looked, the level was already at 5 meters. So the city is still underwater and people struggling for everything you may imagine. So it's a very sad situation and no doubt is already having a lot of impact on fertilizers and agriculture. I have a good friend who has a large blending company, a big fertilizer distribution. And essentially, he lost all his stock. He lost all his fertilizers. It was a big port in Porto Alegre where a lot of fertilizers arrived in Brazil. And a lot of the large companies like Yara, Mosaic and other regional blending facilities. They have large storage facilities there, and now you literally have millions of tonnes of fertilizers underwater because of the heavy rains. Next slide, please. The Brazil economic scenario. We have been talking here about the strong expectations on a steep reduction of the Brazilian interest rate. The Central Bank has been reducing its annual rate by a rate of about 0.5 percentage point for a few quarters. However, the last meeting by the Central Bank instead of a reduction of 0.5%, they decided to slow down and reduce by 0.25%. Brazil is adopting a measure similar to what they did with COVID to support the populous certain region of Brazil. So there is enough financial assistance being sent by the country, which was already struggling with a very high debt when you look at the ratio to the country's GDP. So some analysts, they start becoming even more pessimistic about the possibility of the Brazilian Central Bank to continue cutting down interest rates in the coming quarters. The exchange rate against the Canadian dollar, as you can see on the screen, against the U.S. dollars, has been fluctuating at some point. We are told, again, as high as close to BRL 5.50. At the moment, is down to BRL 5.15. Of course, the weaker the Brazilian currency gets, the more expensive imported fertilizers get in Brazil. Next slide, please. So now Felipe Paolucci will be, as our Chief Financial Officer, taking you through the numbers. Before he does so, just on the next slide, let's just highlight one thing here. So throughout the presentation, Felipe is going to be comparing, what is our job, is going to be comparing all of our results versus Q1 last year. We have to do that. That's part of the analysis. But what I wanted to highlight here, and this slide shows that, and the press release also has this information. Is that we should look at 2021. The first quarter of 2021 is a very relevant quarter. It was the last quarter that wasn't completely impacted by geopolitical factors that drove an outstanding demand for and a very high price for grains and fertilizers, which we saw in '22 with a little impact in the first quarter of '23. And then when you look at our performance this quarter versus the performance in the first quarter of 2021, it was a significant growth. We are growing about 4x what we did in 2021. When we look at our CAGR since 2020, you'll see it's about 50%. So the company, if you were to eliminate this blip, it remains growing at a very strong pace. Certainly not as fast as we wished or hoped for. But nevertheless, whenever you compare it against any other company in this space or whenever you compare it within your other similar type of business, it's hard to argue against the strength of our current growth rate. I will stop here and let Felipe take you through the numbers. But most certainly, I'm looking forward to our Q&A session. Looking forward to answering questions. And I will stop here. Felipe, please go ahead.

Thank you, Cristiano. Thanks, everyone, for joining the conference. And first, I'll explain here a bit about our cash and profitability. As Cristiano has mentioned before, the comparison will be here from Q1 2024, but also against 2023 and 2021. So just for example, the first point, the cash and other receivables held by the group were Q1 2024, $17.3 million compared to $34 million last year, which is almost half. This is basically driven by lower sales volume and value, of course, compared from Q4 2024 to -- Q4 2023 to Q4 2022. So this drives our decrease in this cash and other receivables. But if you compare with 2021, you can see a significant growth that we had from $4.9 million to $17.3 million. In terms of bank loans, we've secured another couple of loans total at of CAD 1.8 million in Q1 2024. And the total loan balance, see, was $45.7 million at the end of March. In terms profitability, sales in Q1 2024 were 85,000 tonnes compared to 108,000 tonnes in Q1 2023. And as expected, we did not have the presales we had in 2022 for the coming year. And then Q4 last year wasn't that good. So yes, it had delivered this impact for us in Q1 2024. And if you compare to 2021, you can see like almost or more than 4x growth in terms of volumes. In terms of revenue, you can see a similar situation. We had almost half of the total revenue in this year compared to last year, achieving CAD 5.1 million in Q1 2024. And if you compare to 2023, that was $11.1 million and a bit less than $1 million in Q1 2021. In terms of EBITDA before non-cash events, we are negative this year on CAD 0.7 million compared to a positive Q1 EBITDA in 2023 of $2 million. But again, when we compare against 2021, we can see here that we are pretty close with $200,000 difference in comparison. In terms of net loss. We had a significant impact for some factors that I will show in the coming chart. But we have a net loss of CAD 4.8 million compared to a wash or $0.1 million last year and a loss of $1.8 million in 2021. In terms of financial statements that we've made public yesterday. As I've mentioned, the revenue reduced for 54%. The production cost as well went down. We have here a few impacts in terms of product mix that you will see, that the cost per tonne also had a significant reduction, which is a good situation. Also because when we grow volume again, if you grow volume or when, then we're going to dilute the fixed costs, especially on SG&A, and some other costs as well. And then it will increase our profitability and EBITDA. That's our expectation. In terms of gross margin, then we had a decrease on 10 basis points. This was mainly driven by the revenue per tonne ac hived that is much lower than we had last year. On this chart, also it's good to remind you that we had in terms of bad debt provision. We are still working on and looking at the numbers for this year, but we do expect to have, again, a significant bad debt provision. I have this number detailed in the coming charts. We are facing some issues on collecting from customers that are, some of them, like Cristiano mentioned, are under Chapter 11 or some other ones are renegotiating. And this also has impacted our EBITDA this quarter. And we do expect this for the coming quarters as well. But we do not know yet the final number. In terms of share-based and equity in bonus payment, we had no bonus pay, but we had stock options issued that had this feedback for us in Q1 2024. Then in the end of the day, we delivered a net loss of $4.7 million compared to $100,000 negative last year. This chart, as usual, we compare the cost and revenues per tonne. Considering the first part of the table, logistics. And then in the second one, excluding freight revenue, which is relevant for us. And we do not have any profitability on terms on freight, so in terms of analysis, the best number to analyze, for example, our revenue sold per tonne is in the second chart here. We can see that in terms of FOB, we reduced close to 39% year-on-year base on revenue per tonne. And in terms of costs, as I mentioned before, we had a decrease 20%, $25 to $20 per tonne this year. A good point to highlight as well, is that the gross margin we delivered this quarter, excluding the trade impact. We can see that although we have a reduction from 64% to 52%, but the company still delivering a very high gross margin which is very good in terms of when we increase volume again, we will dilute some fixed costs, and we expect to achieve a positive profitability, EBITDA, et cetera. So we are not selling. We do not -- are not selling anywhere below cost, but the opposite. Is still we have some good margin. And we do not carry long-term inventory with high cost like some other companies, they have to. We have a full chain, we do from the mining up to the delivery to the customer. So most of the costs are not carried a long period from the tests. So we do not have this inventory impact in our numbers, which is a very good position for synergy effect. On sales, general and administrative expenses, we can see here that we had a decrease in sales and marketing expenses due to a reduction in some investments that we decided to do in Q1. Fee-based sales agents remain very close last year besides we had a decrease in volume and value, but we had a mix change. We're using a bit more on sales agents than direct sales in the Q1. In terms of general and some other expenses. Like I've mentioned before, again, the bad debt provision is the one that it's a bit a point of concern in my point of view. Last year, we had maybe CAD 1.8 million or something during the year, and the biggest part of it would be in Q2 because this is when we have the highest level of collections from clients. In terms of logistics, FOB against CIF, this chart is very relevant to the company since the higher expense that we have currently is on freight, and it also impacts our working capital since the payment terms to the 3PLs are close to 30 days and the receivable terms, in general, are close to 100 days. So, this has an impact in our cash flow. We had last year compared to this year, a very close amount of percentage of CIF in the total volumes close to 66% to 68%. But an important point to highlight here as well is that, the cost per tonne delivered had a significant decrease. This is basically driven by sales that we've made closer to the factory in Minas Gerais, Goiás or South of Mato Grosso or Sao Paulo. And this is a very positive scenario for us in the middle term since as long as increased volume, the profitability will be higher since the cost per tonne to deliver is lower. So at the end of the day, the CIF price, the farm gate price, would be similar for the regions. But in terms of FOB, the company would have a higher profitability and revenue. The CAGR, the compounded annual growth rate, compared from 2020 to 2024, the idea on this chart is like Cristiano mentioned before, is compared to total sales volume and also the total revenue we had, but not only compared from last year or 2022, but comparing using the last 5 years on Q1. We can see that the total growth are over 50% in both case. And in terms of -- on percentage, it's like 700% growth in terms of volume and almost 1,000% growth, 10x, in the terms on the revenue. So this explains a bit that we are ready, if the market turns, to grow and to deliver more to the customers. Just to remind you, our current capacity is much, much higher than what we are asking to produce or are able to sell at this point so we do not need additional relevant investments to grow. And our expectations could be much better in the coming years or quarters, depends on the global end market scenario, not only depends on our internal team. A bit on financial condition. Cash held by the group was $3.2 million in March this year compared to $4.3 million last year. As I've mentioned as well, the total loans was $45.7 million. And if you compare to the December last year, we are a bit lower, we had for $46.1 million on total loans. As mentioned in our press release yesterday, the group initiated a strategic debt restructuring plan involving 7 banks that covers 100% of our group debt. The negotiations are under progress. The group, we anticipate that we expect to have a significant improvement in our terms, including extension of the payment period, grace period, and also reduction in interest rates. So we do not have, at this point, any formal agreement or updates, but we do expect to have this in the coming weeks or months. In the end of the day, compliance with legal requirements, our loan payments and obligations have been suspended since April 2024 until these renegotiations are set and concluded. This is what we have for today in terms of financials. I will move back to Cristiano who will keep going with the Q&A section. Thank you.

Thank you, Felipe. So we will now start answering questions. So we have 20 questions here so far. The first question. Could Verde implement a refer-a-farmer scheme like refer-a-friend marketing schemes? The referral farmer could be rewarded with a low-cost incentive to Verde, such as adding Bio Revolution for a growing seasons, or there are any cumulative amounts for farmers referred, depending on how Verde is running its production plants? I understand this would be low cost to do and would also engage and open up existing customers to use Verde's additional offerings. I understand small scale partners make a very significant percentage of Brazilian production. This method could penetrate and spread to this market without the risks experienced with a large marketing commitment that will be needed for the large number of relatively lower volume farmers. But significant market share as a group and referred to from a trusted source and additional marketing channel are the farmers. Mark, thank you for a very well thought out question/suggestion. I am a huge fan of that sort of strategy. In the past, we had something very similar to it, which for reasons I can't understand, it was discontinued. So it's something I'm making a note right now for us to go back and implement. When I had proposed that before to the team and we had implemented something similar to that, the feedback we had was, well, we know we have a lot of farmers recommending our products, have a lot of farmers doing it just because they like, to start giving them a further incentive. In some cases, they might say, "Are you trying to buy me to be able to recommend someone else?" But I don't think that's a reason strong enough to do that. What I will add to the message on how I will propose to our team to implement this, is that, if there is a -- if a farmer recommends another one, another farmer, both -- and the other farmer buys the product, both farmers will get product, or a percentage of their purchase in this year will be a bonus for the following year. So we're not giving a discount. We're just saying -- which is in, all honestly, very similar to what we had in the past. You buy 100 tonnes and you bring a friend who buys another 100 tonnes. Next year, if you both repurchase the product, each one has from the repurchase a certain amount for free. So Felipe, you can already crack the numbers and see what we can do without compromising margins and everything else. So this will get implemented, Mark. Thanks for the suggestion. The next one. A picture can say a thousand words and is psychologically more impactful and not overwhelming unlike a lot of statistics. That is very dis-marketing plan initially trying to engage your customers, show comparison pictures of yields of crops along with the profile picture of K Forte plant against the KCL-grown crop. Could Verde also have a trial farm on site working with an independent source, such as University, to show results against KCL? Including over a few harvests, if K Forte improved soil and crops cumulatively over years of continuously improving soil? Also comparisons can be bad using just K Forte and then additionally adding K Forte is value-added products. So there's a lot of good stuff here you wrote. In the past, we looked at potentially setting up our own farm. It was never done, because there was always a lot going on that we never went down that path. We do have some research institutes very close to the mine that -- or haven't been undertaken task for very long. We are actually planning a trip from some large distribution companies to the plant, and we will be taking this group to visit those research institute. Some of the shareholders who have visited our operations have gone there as well. So this is something -- this is how we try to address that. The other part of your excellent message here, Mark, talks about using the marketing material, a comparison of fields with photos and everything like that. This is something which we will do more of, for sure. We have -- and it's such a coincidence. We were talking about this in a meeting with our new Technical Director who joined this week. So we were having a conversation with him, and this is one thing he was talking about. Like the amount of very interesting photos and data that our field teams and agents and our farmers have of our product in comparison to KCL. There's a phenomenal photos I saw the other day comparing the roots of soybeans grown using our product versus the roots of KCL. So it's something we will indeed be adding even more to the marketing materials. We will be launching a new set of marketing materials in the product, which we've been working on. And I'm very excited. We launched a new product as well. And there's a lot of trials, long-term trials where we get to the results. Some of those results have shown nearly 20 bags more of coffee than conventional. And in the past, we would press release this kind of exciting stuff. We stopped press releasing it because we had some feedback saying, "Hey, you guys already are a producing company. This is kind of more of the same, press-releasing it." So if you are on this call or if you're watching this on YouTube and if you think that we should go back to press-releasing some exciting results from agronomic trials, a new product, please reach out. And if it's something of interest to you, our co-owners of the company, we will put together a couple of press releases on that topic. One, about the new product and the other one on some trial results. So just yesterday, I had a conversation with one of our technical sales people and he was visiting an experiment, a very large experiment for new collectors. And the large corporation was testing several different projects, different technologies, and she was very excited because by far, ours had been the heading in the best. These results and sugar cane showed like 10 tonnes more sugar cane per hectare with the new products. So there's a lot going on, which in the past, people would tell, "This isn't material." But if there are plenty of you who are interested in seeing it, again, do reach out, even here on this call, send here some comments on YouTube, and we will put together some press release. Won't be material press release. It's not material news, but it's exciting, informative stuff in terms of what's going on. A new question about olives, a new growing market in Gerais states and Southeast, have a high potassium requirement. Could Verde position itself as a go-to fertilizer for olive production, expand with its market? Yes, it's an exciting crop. You can see how high olive oil prices have gone recently. There is a lot of people planting it. There were some growers that had a massive issue as well trying to grow them in Brazil. But there is a trend, I agree with you, and it's something we will be looking into as well. Another question, citrus. So the question here is, are you engaged with citrus growers, particularly orange? Would Verde's product produce superior-tasting fruit? And also possibly, could the health benefits of Verde's produce products give more resilience to citrus greening disease, improve yields and effective plantations? Excellent question. Brazil is the world's largest exporter of orange juice. We have a trial which has been going on, on orange for 3 -- coming to the fourth year now. Results, again, are very exciting. We have like some household names as customers in the orange business already. I'd say probably 1 in each 4 person in Brazil drinks orange juice that's grown from -- make that they use our product. But it's certainly set to grow a lot more. This test we've been doing is very relevant, so is the smaller carbon footprint of our projects, which I saw this morning as well. But the carbon footprint for KCL, even greater than what people have -- they are very high in number. We thought it was. It's getting close to 600 kilograms of CO2 per tonne. It's massive. It's absolutely massive. This is something else which we should be hearing from in the coming months, which is interesting. A lot of people paying attention, a lot of growers are having to pay attention to that. And perhaps that's another press release we can be doing on orange. We're launching a lot of products which are based on trials that took 3, 4, 5, sometimes even 6 years on different crops. We're giving different names, different technologies and coming up with results showing, yes, the focus, but also all of the scientific data showing the significant improvements. We didn't do anything specific to citrus greening disease, which, yes, it's a big issue for orange. And I will look into it even on this test that's ongoing. To see if the researcher, if he can do some specific measurement of the incidence of this disease versus other control plots. There might not be some results because they would be looking to prevent the disease like that, but you never know. Next question. I was surprised to hear Verde had to have such high costs of debt to farmers. Can Verde afford to have a real term discount of 5% to KCL? Yes, we can afford. I think it's very psychologically significant and important Verde is offering a better product at a slightly lower price to engage reluctant farmers to try their products. Agreed. A bit of the problem we have, Mark, with the debt cost is sometimes, our competitors, be it a trader, be it a Nutrien and Mosaic or another large distributor, they will be offering the full package as it stands. So they're going to be turning to a farmer and say, "Hey, don't buy potash from Verde because I'm going to be giving you also nitrogen and phosphate. And by the way, I'm going to be funding nitrogen and phosphate at a very competitive credit rate -- interest rates. But for you to do that, I also wanted to buy potash from us." So it's that kind of interference we also have. And that's why, with this new product which we are launching, Eva. It's all over social media already, so some of you have already seen it. But we will be doing that press release if you like, more of our shows, you feel like it will be interesting, where we can talk about some of the results. And the interesting thing the exciting thing about this product is that, in addition to potash, it also provides nitrogen and phosphate. So it's a one-product solution for farmers. And amazingly, when you look at the phosphate results from this product, given the technologies, it performs better than any other commercial phosphate available in Brazil, including some very expensive premium sources of phosphate. So amazing results which we will be disclosing. I imagine farming, with all the uncertainties of weather and the prices crops will receive on a volatile market produces a certain kind of identifiable mindset in farmers. Possibly risk-adverse, protective, rather than open and engaging. Does Verde research for the prevailing mindset is and how to approach markets and to best engage mindset? Yes, we do. Also, are you making sure you're marketing in a way that Verde isn't seen as a niche specialist growth product and it's something your average farmer would use? We do. We are very lucky to have Newton Nagumo, who joined the company at the end of last year as our Chief Marketing Officer. Newton has an amazing experience on marketing strategy. He has of course been learning a lot about agriculture, which wasn't an industry he had experience with. He has spent hours and hours already talking to farmers, driving around Brazil, doing a lot of legwork. And yes, looking at your comments on your question here, if there's one thing I would add to the mindset of farmers in Brazil, is that, by nature, they're also innovators. If you look at the area where nowadays, 90% of all food production in Brazil takes place, it's an area known as Cerrado. It's an area that 30, 40 years ago, it was barren land. It was land no one would cultivate anything because there wasn't technology, there wasn't innovation there. So the whole agricultural system in Brazil was developed and grew thanks to strong innovation, all the way from how you treat the soil to become more productive, to how the sort of seeds to use, how you do direct planting. So Brazilian farmers, they are open to innovation. However, as you pointed out to your question, the good farmers, they're innovators, but they have a good eye and they'll look and try to assess risk. So whenever there's a new technology, a new product, they are very carefully about incorporating it, but they're open to testing it. And we're glad that so many farmers have given us the opportunity to test the product. And in all honesty, I remember like when I was there on the ground, not in the very first stores to talk about the product and how we've got 2017, 2018, the very first farmers to start adopting it and testing it. Versus what we have now, quite honestly, with years of commercial usage, with thousands of customers. So I think we're now in a position where we should and we will really expect to be ramping up our growth. The next question -- that's a good one. I feel a bit like I've spoken so much about it, and I surely speak even more. But the question is, I feel the company has been a little dismissive of the threat of Amazon Potash which has now received its license for construction. Though there are legal appeals, in my mind, the project had and does have significant political support and lobbying. And unfortunately, sometimes, especially in mind, things that are less than ethical go ahead through less than ethnical means. I am and would be very concerned to see if they should gain significant market share, commercial large CapEx, debt for expansion, only to see itself massively undercut and having to drop prices to compete with a very low-cost producer, which would be disastrous to the company's survival. Are you now factoring Amazon Potash or planning a strategy or at least carefully monitoring the situation? I've been talking about this project since 2008 when it began. We're now in 2024. Still nowadays, Mark, if you want to do a copycat project just like this one, there's plenty of available exploration license with confirmed mineralization. You can go apply and build your own potash mine in the Amazon rain forest. Very recently in Brazil, there was another salt mine, similar to the salt mine being proposed in the Amazon that caused some significant subsidence in a town in Brazil called Maceio. It's a salt mine owned by Braskem. It was all over the news. If you type in Braskem, salt mine, destruction, you'll see everything. So this is the same thing. It's in the Amazon. If it ever gets built, I feel very sorry for the environment. It's just literally watching a car accident about to happen. And with most certainly devastating consequence. The main Brazilian news outfits put a very extensive article on all the risks, all the problems or the technical issues with the proposal, including finding some room for millions of tonnes of salt in one of the wettest areas of Brazil. So it's something that I still frankly believe won't get built. If it gets built, it will take forever. And here comes the most important element of it. If it's ever economic, if it ever gets built in whatever, however many years, given its location in the Amazon, it's very little -- it will have very little impact on the target markets we have. And if you want to look at the balance of potash demand/supply, the proposed potash production that would eventually come from that mine is also insignificant in terms of the Brazilian demand, even in terms of what our proposed demand is. And if there's a worry about it causing a causing pressure on potash price, I think this isn't really the real worry. The real worry is the project owned by BHP in Canada currently under construction, Jensen, which will indeed be putting pressure on potash prices, that one. And that's why, Mark, it's so important for us to be coming up with those new technologies where we don't see ourselves anymore just as a potash supplier. What you will see from the new technologies, what you can see from the new yields, as you can see from products like IBA, we're becoming much more than just a potash company. We're really a specialty multinutrient fertilizer business. Potash is one of the nutrients we supply. And then even if you say, "Oh, but you're going to have better margins from your mine." Not really. There's some micronutrients and even macronutrients we're now adding to the project where the margin is equivalent to the sort of margins we get from our rock given the much lower price for potash nowadays. So I hope I wasn't dismissive talking about the business now. And if you have any other comments or questions, I will be more than glad to readdress the topic. Next question. I've read Verde's currently supply farmers who have potential to use around 9 million tonnes of products if they completely switched. This concerns me as if these are the most willing farmers who have engaged with Verde and the product superior to KCL. Why are they not committing to moving completely to Verde's offerings and faster? And there's a number of reasons here. There's more questions -- let me stop it. There's a number of reasons. There is credit issues. There is competition where we're talking about the competitors pooling all their nutrients altogether. There's our inability, incapability to fund farmers. All farmers will need funding. Our balance sheet is restricted, so we can't provide as much funding. And in some cases, some added risks. We're seeing a lot of insolvency from farmers. So there's a number of elements which are in association with it. And they're also like our own mistakes. Sometimes we make with the relationship with some of those farmers where our field sales team which was operating last year wasn't as effective as I'm pretty sure we are seeing or starting to see now with the new team we have in place, now led by a phenomenal executive who became our Chief Revenue Officer very recently. The other question is, this perhaps shows Verde needs to offer more incentive possibly on a price basis? Or is it a problem with trusting the product? I do not want to see pride over pragmatist and rather sell 25 million tonnes at a fair price quickly than 5 million at a better price. As I said, it's not just price. It's credit, it's all the products being added to the mix. It's the need for you to be right there and following farmers and seeing what's happening. But the underlying element here from your question, which I agree with you, is that, price methods, looking at the final cost of buying potash, it plays a huge role. And that is where the perhaps carbon credits can become a major change to everything going on here. And that fits in with the additionality issue. So whenever you issue carbon credits, you have to -- you can't issue carbon credits if you're already achieving your expected financial results without the need for carbon credits. That's additionality. However, if you can prove that, with carbon credits, you can indeed accelerate your market development and you can indeed achieve this sort of production size you would expect to do so, then you comply with the requirement of additionality for issuing carbon credits. So in an ideal scenario, we would be able to prove -- in terms of carbon credits, we'll need to prove that providing we can sell carbon credits, we can cut the price, we can discount the price of our products enough that will result in a significant adoption of our products. So if the guys paying at the moment, $100 of our product, we can sell now for $40 and get the other $60 from carbon credit. The farmer will get product for less than half the price, what it was originally anticipated, and the balance of it comes from carbon credits. So yes, carbon credits can be a major change in that regard. Do you ask open questions to existing farmers who are not converting quickly or in high quantity along the lines of, "Is there anything you'd like to see from Verde to fully commit to our products?" The right open questions might be helpful rather than trying to second-guess what needs to be done and active and adapting strategy accordingly. Excellent. Excellent point. I know our marketing team has been doing that in combination with our sales team, and we have been making change in connection to that sort of feedback. That's a very important one, it's one of those obvious things that sometimes people forget. Next question. Just to say, I'm very happy with the way Verde has respected shareholders in terms of dilution, going down the path of an agritech company to exploit and maximize the benefits of its commodity, and giving the opportunity to communicate and express ideas, concerns in conference calls. Thinking about the potential and the progressive of the company, I understand it's a very challenging time. I'm confident Verde can find the best strategy going forward. Thank you for your feedback. I wish we could be doing more. I really wish, but in the interest of cutting costs and focusing on the sales team, I have to apologize that not as much of my time and even in some of our IR, Isabella's time, is dedicated to investor relations as we wish we could. But rest assured that what isn't being invested in Investor Relations is being fully committed to developing the company. Next question. That's an important one. So 2 chief revenue offices have moved away from Verde AgriTech in the last few months. Could you please explain why? What exactly were the actions and foreclosures by 7 banks? How long will the grace period extend? It's a very important question here as it is the first one about changing the leadership in the sales team. As a small company, you need to recognize your mistakes and you need to move fast. And if anything, I feel like I should have moved faster in some cases than I actually did. There was a first change. And then on the second change, what it became very clear was that we had hired 2 very senior, very good sales executives to very strong sales leaders. And frankly, there wasn't space for both of them in the company. So we decided to go forward with the one who we believed was the best fit. And oh boy! how happy I am, how excited we are. The work he has been doing is phenomenal. How fast he has been able to put together a strong team around him is phenomenal. Phenomenal how fast, how hard he's working, how committed is, how much he believes, how much he's contributing, how much the people who he has built around him are contributing to the business. So I'm 100% certain we have never in the history of the company had a team as strong as we do now for sales. We've never had a team as strong as we have now by miles, by -- you can't even compare. And I'm not saying that team will make any miracles because in agriculture, it takes time to develop some market development. It's not something done overnight to bring in a new team. But I believe so strongly in the capability of our current team to perform some very exciting and deliver some very exciting results in the coming years. Next question -- sorry, there were more questions here. So the actions and foreclosures by 7 banks. So essentially addressing here the issue with the bank. We have been trying to negotiate with the banks for a few months. We weren't getting anywhere. At the same time, we were seeing a lot of insolvency, a lot of our customers applying for creditor protection. And we went to explore what it would look like for us. We spoke to some advisers. They told us that banks had been so busy in the agriculture space dealing with that sort of procedure that banks were only really paying attention and acting on companies that were falling that sort of path. So we decided to be sane. And we are in constructive conversations with those 7 banks. All of them they see, understand the situation of the agriculture sector in Brazil. They have been very open about it. And I'm very confident that they are doing the best they can to reach a mutually beneficial solution. The next question, is there any progress on carbon credit sale? Nothing I can report at this point. We are working with WayCarbon. And I am more optimistic than I have ever been in terms of the potential to issue carbon credits. And hopefully, it's something we can get an update sooner rather than later. Next question. Do you know NetZero company and these biochar plants in Brazil? Yes, I know them. I really admire that company. I really admire their CEO. They are not a competitor. They can be a partner. They do biochar. It's interesting you mentioned biochar plus [ blockonite ] because there was actually someone who did just that and tested it for agronomic results. The results were amazing. There was a paper. Nothing to do with us. But some academic did that. So it's an interesting one. I can see you are from France. If Isabella can reach out to him and then let's reach out to this company and say it's a good one. It's a good connection. I actually know the sister of the founder, who is a French lady but let's reach out to him. It appears first quarter losses were about $5 million. Your full year forecast was $5 million to $6 million for all of 2024. What's your current loss forecast for full year 2024? We're working as hard and as best as we possibly can to deliver the guidance. The team is all committed to it. Some are committed to going beyond the guidance, and we will continue to do so. Even knowing of all the pushbacks, the risks, the problems and the challenges and everything else, because our plant has such a big production capacity, if we have 1 or 2 good months, we can pretty much deliver all of the -- or very close to all of the guidance. So we're still working, everyone's working too, and we're investing to deliver on that. Next question. Please describe the efforts of the company to provide better payment terms for its customers. It was mentioned in the previous conference call, the same collaborations with local banks are coming. This is something, Felipe Paolucci, keep saying I believe we should and we must be doing more. And I think it's something which has to be more and more of a priority in terms of when I had a conversation to update you last night. There is another possibility here. So it's something which we have to be doing a much better job than we are currently doing. Next question. Do you see any change for better or worse in the conditions of the agriculture market in Brazil? I'd like to think we can't get much lower than that performance. Do you have any thoughts about long-term trends, change of crops, better or worse visibility of new types of crops? Weather fluctuations in this market? No, no, no. I don't have anything relevant to say in that regard. Another question about carbon credits, which I've just spoken about it. The other one. How long is the typical cycle in the agricultural markets? Namely, using past statistics, how long do you think it will take for the market to exit its unfavorable conditions? If you look at the chart, you do get some points in the history where the cycle comes back very fast or if not go up to another top very fast, at least to come off the bottom relatively fast. So that's what we are hoping we will see in the next months. Next question. There's a question about senior management which I think I addressed in another question. So what's the company plan to stop cash burn since the company cash today is short? And it obviously fit one more quarter. This is not. I mean, this is the cash flow. You need to look at each of our receivables as well. So answering this question about our cash position. Even if we sell a significant smaller amount from our guidance, you fail to meet our guidance, we can continue operating. The next question. If you're finding that quote requesting you to stop paying the loans, how will you get more money if the quarters continue to make losses if cash is already restricted? The planning we did is that, by selling a much smaller amount than from our guidance, we can carry on surviving as a business without paying the banks. When are sales of CO2 credits expected? Again, that's the comment I made that hopefully sooner rather than later. Of course, release those. So there's one first feedback here. It's a ballot. We have quite a pipeline here of press releases to get out there. I might go back to that pace of one per week because there's a lot. I can think about some update then on carbon footprint of our products. I can think of those agronomic results which can be broken down by its main crops, something on new products being launched. So we will do that. Will you be considering a financing for these debt issues? I would like to believe that the banks understand the overall market situation, and we will be able to work it out with the banks. And that's the sort of feedback we already getting. What are we doing to decrease our bad debt going forward, that helps us deposits and commitments? We do a lot. We do a lot to try to mitigate that. If we compare our solvency rate over the overall market in solvency rates from customers, ours is much smaller. We do ask for collaterals. But the problem is, and this is the same thing as Verde AgriTech, okay? If a farmer gives its farm as collateral, the current understanding in the courts is that the bank can't take ownership of that farm, of that land, because that's an asset essential for the farmers' business activities, which is the same with Verde AgriTech. We've given not a mine -- but we've given the plant as collateral, which is the understanding that the bank can't come and take the plant away from us because it's an asset which we need to rely on to produce. So it's the same thing with farmers, which makes the market be complicated, to say least. Can we consolidate more of the debt to decrease rates, perhaps? The negotiations with the banks, we expect a significant, drastic, enormous reduction on interest rates. We expect an enormous decrease in the payment terms, the number of years to pay it back. We expect a reduction on the overall debt. So we do expect an arrangement with the banks that will allow us to have financial stability to carry on growing the company and carrying, then growing together with all the business opportunities with the banks. Will the nature of current bank negotiations have any effect on future CapEx loans for future expansion in the years ahead potentially? So there's a potential that some of the banks that were in that negotiation might not be pleased with the new terms potentially imposed via court procedures and might not be looking to fund us in the future. So there is that risk which we understand as well. So those have been the questions we received. If anyone has any further questions, there is still time. Given no other questions showed up, I shall conclude the presentation here. But before I conclude, for those of you watching this presentation on YouTube, I thank you for staying up to the end. Anyone watching it live, thank you for allocating the time to listen to us. Thank you for the excellent questions that came. I made a few notes here, follow-ups and some ideas. Always reach out, always reach out. Any idea, any comment, any question, always reach out. We have been, through in the history of the company, all the times when everything was tough, difficult, if not even more difficult than now. So what we will carry on doing is management, as co-owners of the company, is to be walking this path alongside with you. We're going to be holding hands together, we're going to be working through this tough time together. So do not hesitate to reach out. I'm the company's biggest shareholder. I have been developing the company for close to 20 years now. And I have never been as excited about our potential, I've never been as excited about what we can deliver as I am today. Several reasons. One, our team today is the strongest team we've ever had in the history of the company. Our sales and marketing team in the company are phenomenal. I'm extremely, extremely convinced that we will be able to deliver some very, very strong results for the company in the long term. This doesn't happen overnight, it doesn't happen in 1, 2 quarters, it's something you grow over the years. But I have no reason to think that, together, we are not capable as a team to do that. I'm very excited with the caliber of talent, motivation, commitment from people who are joining the company. Number two. Our asset becomes what it is, a very, very low-cost source of a multi-nutrient fertilizer. Location advantage will always be cheaper to deliver it than bringing it from anywhere else. Number three. We have been very lucky with the technologies we developed over the years. Have about 10 patents we've applied for it. We've done a lot of work on new technologies. And as I hope you will see from the several press releases we're going to be putting out then, if that's of interest, you will see how much it can translate into an improvement for farmers. And when I talk about the improvement, I classify, one, we've been able to prove we can increase productivity consistently over a long period of time. Two, we can improve the soil. We can make the wealth, which is the land, we can make the farmers' land more valuable, increase the nutrients, we increase the microbiome, increase the micronutrients of this crop. We can improve the soil infrastructure. So we're going to be showing that. Three, we're succeeding in reducing risks for farmers, the way our product is impacting the soil, the way it's impacting crops. We're allowing farmers to grow better. As you will see from the press release, we see coffee of better quality, proven by data. We are seeing soybeans and corn with a greater content of protein consistently. Those elements which are directly connected to our technology is something which really excites me. And it's something that going, back to point number one, this phenomenal sales and marketing team, it's something that I'm very excited they will be able to deliver on it. And farmers will see it and be able to benefit. And then finally, the world has to change. We're seeing what's happening in the south of Brazil with these massive floods. It's real. Climate change is real. It's costing governments a lot of money, it's costing society a lot of money, it's destroying business, destroying lives. So there's no doubt there will be an ever-growing trend towards moving away wherever you can from imports with a far greater carbon footprint than others. And our product, from the latest data we could see, already had a lower carbon print in comparison to KCL which was about 90% smaller. It's going to be greater from some other studies going on, but it's a significant reduction in carbon footprint for the world. If you switch from potassium chloride to our product, you're immediately releasing less CO2 to the atmosphere. I think, agreeing with the phenomenal article from The Economist that was put out a few months ago, that this change is happening. This change is creating a $1 trillion industry. And a lot of this change is being driven and will be driven by regulatory changes. And I think probably one of the most meaningful regulatory change took place recently, which was the requirement by the European Union that every cloth to be manufactured and sold in Europe or to be sold in Europe, in a few years will need to have the carbon footprint on the label. You're going to pick clothes and you're going to see what is the carbon footprint on the cloth you're wearing. This has a knockdown effect on the chain because now the cotton growers in Brazil needs to look at their own carbon emissions and make sure they can carry on supplying the European companies or the exporters to Europe. And these drive change, this starts asking the question. And then as customers will very soon be going and witness that, witnessing that carbon footprint. And then what's the immediate question that will come to everyone's mind? if you can see the carbon footprint of the clothes you're buying, if you can choose what you're going to wear depending on the carbon footprint, why should we not be allowed to choose the food we eat based on its carbon footprint? Why shouldn't we go to a supermarket and choose -- I want to buy this coffee because it has a smaller carbon footprint than the other one, or beef or rice or pasta or whatever it is? So there's no doubt in my mind that very soon, the whole food production chain will be changed. So everyone, every farmer, every supply, will start to race towards sourcing and adopting the measures which can deliver the smallest carbon footprint possible. If this changed overnight, and so much farmers could start doing straightaway without adding the costs that would already have an immediate impact on reducing carbon footprint. So I think this is a huge change which we will very soon need to see in order to tackle climate change. And then finally, it's enhanced rock weathering which we've been talking about. We've been doing the work. We're not just sitting on our hands. We're trying to find a way to talk and attend a conference doing work, talking to buyers, talking to developers, talking to partners. And it's something which, again, is a game-changer. There's a lot of money in it. In 12 months about $0.25 billion have been committed to this enhanced rock weathering we're doing. And if -- yes, if you can succeed as we discussed earlier on in one of the conversations there, if you can think about the scenario where those carbon footprints, they can fund and allow farmers to pay a significant smaller price to our product in comparison to KCL. Again, that's a major change. So I am very excited, very confident about the importance, about what we're doing. And as I tell the team, as I tell people who asks me about the company, we don't have the option to slow down how fast we deploy our rock to soils. The faster and with greater quantities we can deploy our rock to soils, the more carbon we capture, the more nutritious food is grown around the world. And that's something we've telling the banks as well. They have to look at us, and we're a partner because it's not just about Verde, it's not about us as its shareholder, it's about the world. And yes, it's a meaningful contribution. We're talking, if you look at our total resources, you look at one of the world's largest potential carbon capture projects in development. If look how much carbon we've captured already as a company, it's in a massive great multiple of most of the companies out there. So we will continue doing our job. We're going to be working very hard, and we're very excited, and I look forward to talking to you all very soon. Thank you very much for listening. Thank you very much for joining. And do reach out if you want to, if you like, if you have any questions or if you wanted to contradict. Thanks very much. Bye-bye.