Verde AgriTech Limited (NPK) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to our conference call to introduce the results for the second quarter of 2024. My name is Cristiano Veloso. I'm the Founder and CEO of Verde AgriTech. Together with me, I have our Chief Financial Officer, Felipe Paolucci. As usual, we're going to be initially going through the results, the financials, a bit of comments in terms of the markets, what's going on and what we're seeing, what we're hearing from other companies, from other players, from the farmers, then Felipe will go into more detail on the numbers, each one of the results we've achieved. And then at the end of this call, we're going to be answering questions. [Operator Instructions] As I begin the presentation, I would like to remind you that there will be some forward-looking statements and actual results might be different. Please take the time, read in detail our disclaimers before progressing. First of all, if you were in the United States and if you haven't done so yet, you can go on Amazon.com as well as visit some distributors, and you can buy our product and start benefiting from them yourself as well in the United States. In Canada, we sell by distributors, and it's also available. Starting with the market overview of the first -- of the second quarter. In the next slide, we start looking at the price for KCI, which is the ultimate benchmark farmers look at when they are buying our products at the moment. So we witnessed in the second quarter of 2021, the beginning of a steep increase in potash prices. So you can see the price is doubling throughout the second quarter of 2021. If we were going to look before 2021, the graph show the price KCI all the way from 2014 until 2021, the price had been pretty much stable, flat around $250, perhaps $300. So for the farmer who is used to buying the price the project, at that price, it was a major change, which started then and just for the following quarters kept accentuating. It was a market I'm pretty sure all of us wished we were still living today. Unfortunately, we're seeing the opposite now. So from '22 until now, we've seen a steep decline of -- for the price of potash. But unfortunately, as we see in the next slide, not only the price of potash has significantly [ decreased ], but equally, the price of the main agricultural commodities grow in Brazil. So farmers were, on the one hand, happy to see the price of their agricultural imports going down, but at the same time, they were very pessimistic about the prices for everything from corn to soybeans. In addition to that, as we see in the next slide, there was a sharp increase in the interest rate in Brazil. So farmers who have been used to interest rates around 7% coming down significantly throughout the pandemic, were hit with a period which still continues with interest rates at a very high level. What you see in Brazil at the moment is the President of the country fighting the President of the Central Bank. The Central Bank in Brazil is independent. The present of the Central Bank was an economist from Santander, was appointed by the previous government, has kept interest rates in check to make sure inflation does not go out of control. And on the other hand, we have the President of Brazil criticizing the Central Bank and trying to apply pressure for him to reduce this interest rate. The problem, of course, is that the [indiscernible] for the government in Brazil [indiscernible] increasing there's a deficit budget that and the whole noise and the media doesn't help. So because of that what was, in the beginning of the year, expected for interest rates in Brazil to carry on coming down, the President of Central Bank had to stop this cycle of interest rate reductions. So for the last couple of meetings, the interest rate has been capped at 10.50% in the last meeting, even there was some ways some suggestion that the interest rates could even go higher unless the government did something to control its costs. So unfortunately, the reality for farmers at the moment is a reality where they are making much less money from what they harvest. And every single farmer have met has that every single for say every single but pretty much 90% or more will be relying on some sort of financing to produce. And at the moment, what you see there is the base rate you've seen a perspective where this will be for the short term staying where it is. What has also happened is that a lot of farmers who, as I have mentioned in previous calls, who had bought inputs at very high prices and built big debts, a lot of those farmers are still owing money to suppliers like ourselves and other players in the market. So there was a big conference in Brazil a couple of weeks ago. It's the main conference for fertilizer and distributors. The agriculture imports district as a whole and not all the attendance was much smaller than previous years, but the mood unfortunately in the conference among our peers was very bad. We heard from multiple distributors how much money they were to owe by farmers. There was the strange situation, and that is the reality we have been facing, and that's something we need to be sharing. On the next screen, we start talking about the results. So I'm sure I will have an opportunity to dive in deeper and get into more details about the market, but not only how we are trying to navigate this market, which is so difficult, I'm sure there will be more questions in details about the renegotiation of our debt and how we're seeing it, perspective for the company, and I will most certainly be addressing each one of those questions later on throughout the Q&A. But before that, let's allow Felipe Paolucci to bring all of us on same page so he can take us through the results. But the Felipe starts, and perhaps you can go to the first slide, one opening statement I was going to do -- your first slide, Felipe, but one first comment I was going to make, second slide, yes. So the next one, I think, will be that you people to visualize, yes, this one. But I wanted to give a spoiler here that whenever we disclose this number here, when you look at the average revenue per ton sold and the average production cost per ton, this number is -- it shows a blended cost and the blended sales price between different products. We sell multiple products now a days so this is a blended number, and a blended number and average number between several different products with different cost and definitely different sales price. So it makes it very hard for anyone to compare this number in comparison to the previous quarter because, unfortunately, one is never comparing apples to apples because you will have different mix of products to be sold, different mix of FOB or CIF, products picked up at my gate or products delivered to the farmer where the farmer has to pay for it. So there is a mix. So we've been trying now that we've set up SAP. So we've been trying to work out a way to give more transparency on those numbers. So we hope that for the next quarter, there will be something there that will allow one to properly follow the growth in -- or decrease in both sales price and production cost always comparing apples-to-apples. So with no further ado, Felipe Paolucci, if you wanted to take over and start the presentation. Please go ahead, and I look forward to addressing the Q&A. And if you're watching that on YouTube, please make sure you click subscribe. We have been sharing some new videos we've been making with some of our customers. Our markets and team has been very active compiling those feedbacks, which we use for our Brazilian marketing materials, but we'll also be making it available for investors with a subtitle. So whenever you get those emails from myself with a link to the video, when you click. If the CC, closed captions isn't activated. You can do that on YouTube and you're going to see we've translated -- we've translated from Portuguese to English and we've added all of that. So it's available, you can hear what they are talking and how the what is talking about the project. So Felipe, please, please go ahead.

Thank you, Cristiano. Thank you, everyone, for joining the conference and presentation. First on the highlights, cash and other receivables held by the group in 2024 were $15.3 million compared to $23.8 million last year. Of course, this happened due to a lower price as you will see in the next chart, and also lower volume in this quarter compared to the prior one. In terms of bank loans, the group secured another CAD 0.8 million in Q2 2024. At the end of June, the group had CAD 41 million on debt and loans. In terms of profitability, sales in Q2 2024 were 85,000 tons compared to 107,000 tons in Q2 2023. And the revenue has decreased from CAD 10.3 million last year to $6.5 million in 2024. In terms of EBITDA, before no cash event was low, really close to 0 in Q2 2024 compared to 2.1% in Q2 2023. If we compare the Q2 against Q1 this year, of course, we had an improvement and do expect to keep improving from our onwards in these times. The net loss in Q2 2024 was $2.6 million negative compared to $0.2 million net profit 2023. In terms of financial statements, we do have here on the left side the quarterly results 2024 and 2023, the difference. And also on the right side of the chart, you can see the year-to-date comparison between -- from revenue up to net profit and loss. What I'd like to highlight here is that, of course, as I said before, the revenue has decreased mainly for 2 reasons. One is lower volume, and the second one, a lower price, most likely driven by the KCl price reduction. Most of the sales delivered in Q2 2023 were made prior to that in Q1 or even in Q4 2021 or 2022 with higher prices, which has this impact now when you compare 2024 against 2023. In terms of margin, we remain with a significant gross margin, up to 72% and 70% cumulative. Also, there is a chart in the next one that demonstrates the gross margin excluding freight. We are now -- worst scenario, but we still a very good margin, which means that once we grow again and have higher volumes, the fixed costs will be diluted and we expect that this could mitigate a bit the price decrease that we had year-on-year impact. Also on EBITDA, as I've mentioned before, we had 0 in this quarter, and in cumulative scenario, we think we had a better result than we had in the first quarter of 2024, but we still are lower or worse than 2023. In terms of, let's see here, the freight expenses also have a chart that's demonstrated and show a bit on this, and I'll explain why we had a lower cost on logistics due to regions of products that we are selling, which are closer to the factory compared to prior years. But at the end of the day, we did have a net loss of $2.6 million compared to $241 million positive profit last year. And cumulative, we had $7.4 million negative compared to $133 million positive in 2023. On this chart, as Cristiano has mentioned before, we expect to bring to you in the next quarter a bit on more details on comparative and costs, especially when you compare some special projects [ Cerrado ] projects. And we will see that sometimes the increase on cost per ton does not mean that we are less efficient, but it also could be explained by a mix change in the sales. But here at end of the day, we did have a decrease in the average revenue sold per ton of 21% on this quarter and in accumulative 31%. And on production costs, we had a higher cost from $18 per ton to $21 per ton, an increase of 17%, which could be explained as we did at disclosing the G&A and press release, which is we had higher sales on special products. But in the second table, you can see when we exclude freight from revenue, which normally we do not expect or not to have margin on freight, and then when we exclude freight from the revenue, it's the same that we would exclude freight from SG&A. So at the end of the day here, we can see that we had a revenue decrease of 25% year-on-year, basically due to KCl price and some other reasons. And the average cost per ton had an increase of 19%. And the gross margin, at the end of the day, we had our margin of 54% against 71% last year. What I would like to highlight as well is that, as I said before, once we grow again, and we see it best from 90,000 tons to 120,000, 130,000 or 200,000 tons in the quarter, we do expect to have the significant growth in our margin especially on cost reduction and dilution on costs and also, of course, an improvement on [indiscernible] would also dilute the SG&A. As you can see on this chart that most of it is fixed cost except someone like commission, for example, but most of the salaries and also administrative costs are fixed. So once we grow, we have a lower cost per ton at the end of the day, higher EBITDA. But here, we can see that in terms on freight, as I've mentioned before, we had a lower cost, but also we did have a decrease on sales and marketing expenses, in general admin expenses. As remember, I don't know if you do, but last year, we had a lot of reduction in number of people. It also impacted the 2023 cost on a higher level since we had severance fee expenses that we did not have in Q2 2024. So this helps to explain why we had a lower cost, and so we did not have a significant allowance or bad debt provision allowance for expected credit losses compared to last year. We did have $87,000, but at the end of the day, last year, the big impact we had in the second half of the year in Q3 Q4. So this, most of the sales were made probably in 2022 and had late collection and agreements that were not able to be made, then we have the bad debt provision in Q2 2024. In terms of logistics, you can see in the left side here, the Q2 2024 sales split between FOB, CIF in total. This is a relevant chart because logistics is our higher expenses currently, apart from the other ones. It's a very important cost center that we have in the company. And most of the clients are asking us for CIF, especially in a situation where the farmers are short on cash, for example. So you can see that we had like 81% of the total volume sold was through CIF compared to 72% in 2023. In the prior years, we started like 2020, maybe with 50% CIF and FOB. And now I do expect that this 81% remains as is from now onwards, and it's something that should be -- remain now stable in my opinion because some farmers they do have their own trucks and they want to collect the product. But most of the other ones, they do not have the logistics by themselves and they asked us to do so. And of course, we should be more efficient since our quotation for freight of [ 3PLs ] are more frequent and do have a lot of volume to deliver every day. So it helps the cost improvement and the efficiency of the freight. And the average freight cost per ton decreased to $37 in Q2 2024 compared to $48 in 2023. So this decrease as mentioned as well, it's mainly attributed to a reduction in the price of sales made to regions that are more decent from the on these production facilities. So last year or, yes, most last year, we had a lot of sales to North of Mato Grosso, for example, or even to Para, north of Brazil. And now we are selling much more in South of Mato Grosso or Mina Gerais or even Sao Paulo and Goias. So those regions we have a lower cost per ton of freight. So this means that to have more efficient logistics and less -- lower expenses in general of freight per ton sold as CIF. On this chart, you can see the CAGR growth in the last 4 years per quarter, on the left side on volume and the right side on revenue. We can see that we remain positive here, but in terms of volume is [ 0.4% ] now. Hopefully, this comes to grow again in the coming quarters. And in the right side, the revenue is still in a good shape on 21% growth. Especially we -- excluding, let's say, '23, 2022, we are growing again compared to 2021, for example, in terms of revenue, in terms of volume, not yet, but hopefully, we do start to have growth again in the coming quarters. On cash flow and debt overview, the cash held by the company was $2.7 million at the end of the quarter compared to $6.2 million in 2023. In terms of trade receivables, we did have $12.8 million in Q2 2024 compared to $17.6 million last year. This, of course, is an effect on the sales price and volume compared to last year. So in the end of the June or the second quarter, total loan balance was $41 million compared to $38.4 million in Q2 2023. In April 2024, the group initiated a strategic debt restructuring plan involving 7 banks, which encompasses the full of 100% of the group's current debt. And what I can add here is that the negotiations are progressing constructively and the group anticipates achieving significant results already with a substantial extension of debt payment term period, a grace period and also a reduction in the interest rate. These negotiations are expected to be concluded by the end of Q3 2024. And of course, when we are able to -- when we sign agreements and we are able to do the disclosure, we do so immediately. So all the shareholders will be the first ones to know when we are ready here. Now I'd like to come back to Cristiano, and then we handle the Q&A section. Thank you, Cristiano. Thank you, everyone, for joining.

Thank you, Felipe. Just before I start answering questions, and there's some quite good questions here. Well thought out questions and look forward to answering them. Before that, Felipe, our -- and a lot of questions about debt. So I think I'll start talking about it the way we will answer a few of those questions. As it stands, Felipe, we have a total debt of about CAD 40 million. Precisely, it's CAD 41 point-something million. Most of this debt, as it stands, would have to be payable in the next 12 to 18 months. What would you say, Felipe?

Yes. I would say that no more than 3 years, but half of it should be paid in the next -- from this April 2025 and then most of it in 24 months, yes.

So half of our debt payable in the next 12 months and pretty much all of it payable in the next 3 years. So that's the situation of the debt as it stands. We have been trying -- as we saw the market deteriorate, we have been trying to renegotiate with banks for a while. But we kept paying. We kept paying the debt, and we felt that the banks weren't giving us or paying attention. Then we retain the consultant lawyer [ to advise us on that ] and what the advice was is that until you're paying, they won't do anything. If you want them to bring them to the table and get it renegotiated, you need to stop payments. So that's what we did a few months ago. We stopped paying the debt. Immediately, all banks who were very much ignoring, they came to talk to us to try to find a solution to the problem. And they were very open to finding a solution. Of course, some banks were more open and ordered to finding a solution for the debt. What we are lucky is that most of our debt is held by Banco do Brasil, which is a state controlled bank. It's a public company, but it's controlled by the government. And it's the main bank to fund farmers in Brazil. The advantage that gives us is that it's a bank that understands very well the agricultural sector. It's a bank that sees what's happening to farmers, what's happening to the market, and the feedback we were given, and I was personally given by the director several times is how much they want to support Verde, how much they understand it's nothing to do with us, it's about the market, and how they want to carry on supporting us for the foreseeable future. So as the main creditor, this conversation has been progressing really well. And then Brazil has a legal system, which protects the debtor if he can agree on renewed terms with the main creditor, in this case, Banco do Brazil. So the -- how it works is that essentially, if we can agree on those terms, the other banks, they will have either to accept to the same terms and follow them so all of the transactions would be the same. Or if they don't do so, the -- as part of your submission, as restructuring, they may be subject to a significant reduction on the amount they are owed -- a significant haircut to the amount they are owed. Some banks -- the natural thought whenever one here is there is that we every bank is just going to prefer accepting terms, which aren't great, but better than writing off the entire debt or most of their debt that would be the reasonable thing today. But unfortunately, some banks, they have some systems in place, procedures where they just can't agree to those circumstances and they end up, unfortunately, with debt that's significantly reduced. So when we announced an agreement, what you should be looking for is a renegotiation agreement with our biggest creditor, a proposal for other banks to join that renegotiation. The consequences for the other banks who don't join this agreement with the leading bank and the terms, the terms we would be looking and what we will be expecting from what we already said. It's a material reduction in interest rates. What do I think is a material reduction in interest rates? Anything from 2% to 3% in my mind, in comparison to what we're paying, I consider that material. A material increase in the time we have for payment. What I consider a material increase, I would say, again, another 4, 5, 6, 7 perhaps 8, 10 years for that repayment to be made. A grace period for you to start making back those payments in interest and capital. And above all -- and above all, a consolidation of what has to be the foundation of any of those negotiations or renegotiations with banks which is a worse case scenario cash flow, which would be enough for the company to guarantee its financial stability. In other words, what's really the minimum amount we would need to be selling, we would expect to be selling in a worst case scenario that would generate enough funds to pay for the costs we have. So of course, that's sort of the financial model we've been shared with the banks have been discussed being vetted and would be a bit of a foundation for that sort of renegotiation. Considering that any upside to this worst-case scenario, that would allow banks to get a little bit more repayment than they already have. I think the final say is that what we are negotiating with the banks at the moment is essentially already below their cost of capital in Brazil. So if some of those banks, the way they fund themselves by issuing certain types of debt for private investors or any retail investors. The -- especially when I say that the retail invested with money that bank will get paid, the bank is charging more then he will be able to charge us. I think that was a bit confusing. So if you put the money in that bank that you are earning more interest from the bank than we would be paying the bank back. So there is -- it's just -- there is a share that just to demonstrate how much we've been able to stress the negotiations wasn't easy. Felipe has been doing a very good job to control the different banks and all the different lawyers. And we hope that in the coming months, we should be able to, but no later, hopefully, than this quarter, we should be able to provide a pretty good press release with an update. The press release is already being written. We hope that -- we hope to have the press release written and ready to be published as soon as something is in sight. So I believe I gave a long answer, but that covered several of the questions that will be...

And Cristiano, just one comment as well, adding on your point that also what we are negotiating is not a fixed payment per year, but we would start a lower amount of payment in the year 1 and then increasing year by year. So this also helps the short term and middle term cash flow. That's one very important point as well that we are negotiating.

So it's a grace period and then the repayment starts off with the repayment of principal, but the repayment of interest and then just much later on throughout the payment schedule, we would be paying back, as Felipe just said. So starting with the questions. But before I start with the questions here, just with the attendee list has been increasing. So of course, back in the old days, we used to have a sizable number of people following our calls. The last couple of ones were pretty light. Today, I'm very pleased to report to you all that there is a much greater interest of investors attending this conference live. I'm very thankful for your patience and interest and it's good. And look, scrolling through the numbers here, considering we've just gone through the Olympic Games in France, I should mention to the great joy of as all in this call, we are lucky to have an Olympic gold medalist among us, not just an Olympic gold medalist, but also a bronze medalist. So attending and winning medals in 2 different Olympic games. Thank you for participating. Thank you for you all. First question. [indiscernible] here, there's a section of very well thought out questions, very elaborative questions, which I will read to you all. So the first one, can you give any information regarding addressing the relative high cost of finance to farmers versus KCl? And are you any nearer or in a position to give a real test 5% to 10% discount to KCl after all costs, including cost of financing? The short answer is that, in some cases, we can be very aggressive. So in some cases, if a farmer is closer to the mine, if the farmer has very good credit, we can be very aggressive on offering terms which would undercut the price of imported potash. The problem about doing that is that our balance sheet, as you may expect, is very small. So our capability of borrowing funds to operate in this way is restricted. So that has been a problem for us to carry on, on an accelerated growth trajectory as we have experienced in the past. The way we're trying to address that mark is by focusing on high value-added products. So we have a new line of products with different benefits, different raw materials, different technologies. And if before we weren't very effective on selling this product because our team was essentially at home trying to cold call farmers and achieve this market via over the phone, now we have a very strong team in the field with about 30 salespeople, all very experience in sales, all very experienced in selling specialty fertilizers, led both by a Vice President of sales, but also overseen by 5 other sales directors who equally have an outstanding resume with a lot of experience. So it's still early days. This team has really just started working this quarter. We know this takes time to materialize and mainly makes me very bullish for next year might be a bit too soon, we'll be able to soon to see the full results, the full potential this year, but I am growing more and more optimistic about what we can deliver managing to dissociate ourselves from KCL and starting to demonstrate farmers following the field and allow farmers choose [indiscernible] put in a [ dollars ] time on the other benefits they're seeing from using all projects. The other question, given the potential change in the economic climate and what looks like we may be nearing a top decline in overvalued stock markets, does Verde have an actionable survival game plan should the economic climate in agricultural commodity prices and demand [indiscernible] for some time? I believe I've answered this question with the opening plus the second question. We are planning for the worst. We're hoping for the best when it comes to the renegotiation of all debt terms. The numbers we see then this financial modeling or what we believe would be worse case scenario, which we strongly believe in those worst case scenarios could be achievable. And with the team, we're doing taking the actions we can to increase sales. If I didn't answer the question, if I didn't answer any of the question and you want more information, please just send a question again, I just go through them again and make sure they get -- make sure they get answered. The other question we have here, do you have any developments you can share about using nitrogen fixing bacteria as part of meaningfully reducing the amount and cost of nitrogen fertilizer for farmers? It's a good question. The main market, of course, in Brazil is grains. When you look at grains, farmers or Brazilian farmers and Brazil as a whole has been a pioneer in using [ microbes ] to fixate nitrogen. Back in the '80s, some researchers and [indiscernible] developed microorganisms that in association with soybeans, they can fixate nitrogen. So you grow first your soybeans, those microbes increase the amount of nitrogen in the soil, and then when it comes to growing core, you don't need to apply much nitrogen and anymore. So it's already a pioneer. But because it's such a pioneer, it's the cheapest source of microorganism you can come across. And it's a very commoditized market, very cheap, very, very low margins. Where we are focusing our microbial business development, I had a talk about this morning again about this topic with our technical team. We have a phenomenal [ driven ] an amazing new technical director. It's more in line with the products that bring other the meaningful benefits to the soil, for example, phosphate. Brazil has a record amount of phosphate, phosphorus in soils, which react with soil aluminum and can no longer be available for crops. So there's some microbes, and we have those developments where those microbes can make that phosphate available back. That's the [indiscernible]. Then there are other microbes, which can address soil diseases. The main soil disease we have in Brazil in the moment is nematodes. So you have, again, a couple of microorganisms [indiscernible] and basis [indiscernible], which are very effective. And farmers are already buying products that deliver those microbes. So that's all along the lines of our new development when it comes to microorganisms. The key advantage we have, of course, is that the recent patent vehicle from one to apply microbes to soils then our product. It creates this perfect environment with a number of micro ecosystems, micropores where microbes stay there protected from when they get to the point of the soil to when they can start bringing benefits to the soil. The conventional way of applying microbes is literally just spraying it to the field or adding it to some hostile environment, which are now seeds. So it's quite unique, the technology we have. And now with this team on the ground, specialized on selling premium products, it's something we expect to see more and better development in the coming years. We're also registering a product as a soil conditioner, which also opens up the range of microbes we can be adding to the product. So it's exciting. We haven't been able to devote as much time as we wish we could. And now with our new Technical Director and the consolidated team, I hope to start seeing more traction. Next question, is there anything worthy of mentioning in Verde using biological agents to break down organic matter more efficiently in plowed fields after harvest, and before the second planting to improve soil? That is an interesting one, which we haven't looked at. So in Brazil, farmers do direct planting. So they leave over the soil, the organic residues from the previous one, and that is an interesting one. The use of those biological agents, it's more of a newer market in Brazil. And Mark, I'm not aware of -- I haven't done much research. So if you want to reach out and share what you have in mind, it will be very much appreciated. It's not entirely in our radar. In the past, we communicated with companies that do composting, and accelerated composting to industry culture partners. They have some microorganisms. They used for accelerated composting. We did have some proposition, but it's a smaller market in Brazil to the other sort of soil conditions, as I've mentioned, it's more of a niche market. It doesn't mean it's a bad market, but it's not something we were focusing on it, but I absolutely welcome your thoughts here. The other question, as a long-term shareholder and on the news of the parting of ways with WayCarbon, I would just like to say financial conditions providing, I would like to see Verde come through carefully considered and explore option for progressing with carbon credits rather than rush and choose the wrong optimum beneficial part and make sure it is mapped out and actionable. That's a good feedback. We appreciate it. It's, as we've been saying all along, enhanced rock weathering had a boom a good few months ago when a number of companies that were spin out from universities like Sheffield University, Stanford, Yale, so those spin-outs, which you can read in the media, they were able to presell carbon credits from some heavy weight players like JPMorgan, Microsoft and others in order to generate in the future those copper credits. So there was a lot of interest in that. That interest, it mainly came from the usage of the rock, which had been the main one used for ERW or one might say the only one that is monetize -- being monetized so far, which is basalt, the most abundant rock aboard and one that has been widely used because it also can capture carbon. They were there. They were ready. They got this first wave of funding. More recently, over the last few months after this big boom where we thought we would be selling straightaway, when we had that report from the University of Newcastle, we thought that would be able -- should carry on the same way. But at the same time, the market started changing. And buyers -- given everything which was happening in the market, buyers started looking for more in terms of confirmation of carbon precipitating. That is what we've been working on ever since. Because it's a new science and because you have numerous smart people working on with very big egos, which is natural and different views and different agendas, it's an industry that has been accelerating and shaping itself as we speak [ whether it is in ] the conference and we've been trying to navigate. But it's a different framework what it was before. I was personally a bit frustrated with all of that, and this uncertainty and especially frustrated when talking to different scientists, we should be saying similar stuff with different views. But one interesting realization or essential realization was that there was a big disconnect between a scientist and a carbon verifier, a company that issues carbon credit certificates. The first carbon certificate company to try to bridge that gap was Puro. Puro, which was taken over by NASDAQ. Now it's Puro NASDAQ. They launched over a year ago now, the very first ERW guideline documents. But their very first ERW guideline document didn't go very well. The sort of requirements they had proved to be not just complicated, but a bit -- I think it's [indiscernible] to say that nobody has issued carbon credits using the guideline they launched. Then another organization from San Francisco called Isometric, they launched their own guidelines, which then got immediately criticized by everyone in the space saying that would be just too expensive, prohibitively expensive. And that also reduce the interest in -- they also like didn't go [indiscernible]. So what's happening right now is that Puro NASDAQ, which has the backing of course, the ownership of NASDAQ, and it's an interesting carbon verifier because they've been specialized exclusively on what's called permanent carbon removal, so the sort of carbon removed from the atmosphere with a very small risk of reversion of it going back, think about planting trees and wildfires and all the carbon going back. So that is the problem still technologies like ours like ERW can fix. And that's what NASDAQ has been focusing on. So Puro NASDAQ is working on a new methodology, which the -- some people in the industry include ourselves expect will be a major milestone and will allow a company like ourselves to effectively unlock the capability to start certify and monetizing carbon credits. So we -- in order to try to develop that, and in that regards, I will answer a couple of questions below what I've seen here. So when we started this development, we tried to bring a phenomenal diplomat, Lucas Brown, from former British council to help us leading the project. And even though he was a fantastic diplomat, on the size element it just didn't work as we would as we would expect. Then we thought we would be resolving this problem with a credible local project developer, who would, of course, be sharing some results, sharing some of the upside of the financial, which was way carbon. We started working, but way weigh carbon was just as lost as we were in terms of the shortcut towards carbon credit monetization issuing the fact that those carbon credits. The best day was when we managed few weeks now ago, to hire, to help us validating, doing MRV and effectively issue those carbon credits, a phenomenal scientist who not only has the academic experience for ERW, not only was one of the founders of one of the most successful carbon credit, ERW carbon credit companies are there, but also who has now moved to the other side and is working on the carbon certification from the certifiers, from the carbon certifies. So for the first time in all this time, I was able to talk to someone who understood all problems, all issues, understood in the problems from a developer like ourselves, the issues with science, the issues with what the buyers obsessed carbon credits wants to do, the issues with what is required to get certified? And after she started working for us I think the project became even more stronger. We're excited. The number of tests which -- and assessments and soil sampling and testing, which we have done following her recommendation. So I hope that this will move us to a much better position. It's exciting. But as I said at the beginning, it's -- there is still a lot of scientists with some big egos working on this, and things have been changing a lot. So my hope is that the publication of this new standard by Puro will consolidate and will unlock the market. So that was a very long answer. I apologize, but it's a very important topic, and there were several questions further down, which dealt with different elements of this question, which I believe I've answered them all in here. If I didn't, please come back and ask the question again. The next question, how are things going in working with existing clients that currently only purchase small amounts relatively to their acreage? Is there any progress on getting them to change fully to those project, incentivizing all the marketing methods, even if they have indicated this is something they will do in coming seasons given they would go to market conditions were difficult at the moment. It's so hard to answer this question with a one-size-fits-all answer. I think the only way I can answer this question is to say, for example, we recently had a customer who we were -- has been buying our product for a few years now, and we have been negotiating with them. And as part of this negotiation, our brilliant sales person just said, "oh, just asking, do you have anyone else who you think might benefit from our products?" And immediately, the farmer said, "yes, this is my friend here, who we should talk to." She wants to talk to this farmer, to dissolve a client. And this other clients who have never used the product before, had never used this product before, on the back of the positive feedback from his friend, our client, he went on and bought 8,000 tons of products, 8,000 tons of product, which is about 8,000 hectares, 8,000 hectares. So it's a good decent-sized farm, 8,000 hectares. If you think a hectare in Brazil at the moment to cost anything from $20,000 to $40,000. He went and bought product all at once without doing any test -- proofs, tests -- just on the back of what his friends said and was a good product. So we see stuff like that happening. And especially when something like that happens, we kind of get worried. Is this guy actually going to pay us back because this is the only buying, because his credit is going to push interested in paying for the product. But in this case, he actually paid in advance. So even as we were [indiscernible] finalized initiation, we had signed contract [indiscernible] 8,000 tons of product. So we see that happening. We also see all the clients who are happy with the product, but sometimes changed the consultant who was advising the farm. And then this consultant who is advising the farm, sometimes they would have some sort of arrangement with another supplier, be it one of the large international companies or whatever. And then this consultant will say, okay, fine, this is a good product, but if [indiscernible] now to look after the farm technically, and I want to use this products because this is the one I have been using and then we lose the sale. So it's so hard to do -- to have just the one size. In terms of the second part of your question, in terms of marketing methods that we try to use that, do we try to create long-lasting relationships, so we try to incentives farmers as best as we could gain on the relationships. We have -- in the previous quarter, we had discussed some sort of members, some sort of discount or something that is done for people who recommend all the customers. The bit of the consensus of the sales team was that the most farmers, they already deal with, they already -- they want to do it because they want to help [indiscernible] because they're going to get something. So what we'll be doing -- forced to keeping a track of people who have been helping us and then come Christmas [indiscernible], we shall give them some sort of gift, but noting institutional where there is a commission for them to be -- should be compensated. The next question, it's about our YouTube channel. You will see our YouTube channel is -- we were restructuring it. We're cleaning up a lot of the material that we say. We had some feedback. We couldn't find what was the most relevant, most recent stuff. So we decided to clean up the channel and what you're getting there is in line with our last marketing communication. A few of those questions are answered. There's one question here. Will the things I think I've addressed. There's one question. On a prior call, last year, Felipe said, plan to recharge to the banks to arrange more competitive financing terms, enabling you to offer farmers increased line of credit why has there been no improvement? The reason there has been improvement is that for us to give more competitive terms. We need to be able to have a greater, a bigger balance sheet. That's number one. Number two, farmers themselves became a risky business. So if in the past, a lot of banks and investors were very eager to finance farmers. There are several financial products raised with that purpose in Brazil. But then after what we saw this year with so busy going up a lot of those investors have lost a lot of money. So some of those funds went into default and got big haircuts, a lot of [indiscernible] from farmers. So the market at the moment in Brazil isn't very bullish. So for example, there is a certificate of CRA, which allows an investor, private investor in Brazil to fund activities in the agricultural space free of income tax. So it's a benefit, a government benefit, which translates into more competitive rates for farmers and companies in the business. If -- before, you would go to your bank and there would be a wide range of products, several different offerings. They pretty much dried up. It's [indiscernible] for to cross. So everyone became much more cautious this year in providing that. So that gave a much bigger impact to stop looking the [indiscernible] at the moment. Another question, is there a case for cautious optimism with, what I believe, have heard better climatic conditions with La Niña coming next year? Yes. So yes, yes and yes. There is a more bullish view for agriculture next year. If you read the research reports from the good analysts, market analysts, research analysts of [indiscernible], some of them have been talking about it. There's one analyst who covers in very detail the potash space. So he's starting to see some -- [indiscernible] a little bit more bullish from next year onwards. It's cyclical, isn't it? It's cyclical. It's like that farmer, I have mentioned before, who I know in Brazil, this -- or the gentleman who told me how he loves and always throughout his life he's always and he learned in old early days to love the bad markets because that was how he made his billions or reals. So that's how we made this balance, which was by buying, in his case, farms when markets crashed, and understanding whenever there was a big cyclical, he wasn't the time to get too confident and played it safe. So he just did that consistently over his lifetime and it's a impressive company he built from nothing really, literally nothing. Next question here is a very good one. So talking about a soil activator company. So this is another question who I think would be interesting. We have -- one thing I love about these calls, and I have about communicate with you the number of highly -- not just highly educated, but people covering those as investors and following us who understand the market really well, most probably executives from the market or the space or farmers themselves. So we have a phenomenal community of investors and people following us, which I'm very thankful for. And always, please do reach out, we love talking to you. And in this case, it's another one is to talk, but he's talking about soil activator, which is something, which has been growing. The market that has been growing. Our products has some benefits in that regard. We've seen that. We should be put in the press release is soon, I hope, and showing some of that. But historically here about nitrogen and phosphorus, how some elements can increase that availability of nitrogen and phosphorus in the soil. So we do -- we have that. We would put a press release on that. And you asked a very, very specific question, which I want to discuss to you. I can't even answer here. I think I need to understand a little bit more what you mean. There's some questions here about the extraction capacity and the fact we filed for another mining permits. It's essentially renewing something we already had that had expired. It's something just as ordinary renewal from this mining permit. There is nothing there. The question is, if you already have capacity or you are applying for more? We will carry on a plant more. Just remember, we aren't talking about it, but we carry on with our submission for getting a permit to produce 25 million tons per year. Now we now given everything which is happening in the market, it does sound a bit out of whack to talk about our application on file for an additional 25 million downs of production. But we remain committed and we remain committed that it's our job to make sure as much of this rock gets spread to fields as fast as possible. Because the more that gets spread to field the healthier we all get because of all the traces of elements it has, the healthy the world gets because of its capability to remove carbon and to increase soil microbial and by removing chloride from [indiscernible] KCl. Other question, options have been shared to management lately, sometimes at the price under recent share prices, how [indiscernible]. So there is -- it's impossible to issue options below market price. You need to follow a metric on your -- I guess, it's a 5-day view more kind of we never do the work. We do like the last trades in day. So sometimes, what might happen, which is what you might be referring to is that sometimes when there's the Board meeting, options to a certain sales director might be issued. And then when it gets filed, you have like a number of days they're drawn after when you file those things. Once it gets filed, the share price came down. So there's a mismatch when the auction gets granted in board meetings. Sometimes when it gets -- it gets filed, it doesn't happen the same day. More questions about the mine permit, more about the carbon. Questions about carbon, the YouTube channel, just going through to see anything else. We last question here about Elon Musk award. So we didn't win it. We didn't win the $100 million, unfortunately. I think Elon made a mistake, But we're thankful that we were ranked among the world's top 100 solutions as part of this world top 100 solutions, we are getting a lot of attention from them. So this conference taking place in September only for the top 100 companies, where there is a phenomenal list of lineup and [indiscernible] on the carbon and from buyers and everything. So they are making sure they work towards [indiscernible] mentoring as well, which there's some people behind it offering investors. There's an interesting community, which we hope to benefit, but [indiscernible], not with $100 million, even though I think we deserved it. Another question about sales to coffee clients. The purchase season for coffee is at full swing. We're trying to do as much as we can. And I think I've addressed all the questions here. Let me go back to the beginning here, and I can't see any new questions here. So if you send a question, and you feel like that I didn't fully answer it, or you want more detail, please do so. If you haven't sent a question yet, and you're thinking about this, there is something bugging you or if you just want to give us a feedback, please go ahead and do so. I shall wait here a little bit to see something was popped up. Nothing's showing up. I think the way I would like to end today's call is by sharing a meeting we had 3 weeks ago, with our senior commercial team or VP Sales, our Marketing Director. It was like stepping into a different company in comparison to what we used to be last year. It was like stepping into a different company in comparison to what we were, I wouldn't say, 2 or 3 months ago. For the very first time in our history, we have a very, very robust sales team. If before, we are very good and we are very successful with inside sales with a team of very young fresh people out of university, working the farms, trying to create online relationship with farmers and trying to grow the company exclusively that way. This time, we have a hybrid system where we have that team working alongside a very experienced, very successful team of field sales and senior leadership. So it's exciting. It's at the same time frustrating because it's just happening now and frustrating because -- we understand the cycle of agriculture and with the sense those results will not be happening overnight, but it is a very material improvement on what we had seen in the past. So it's very exciting to see that. And we hope this will translate into much [indiscernible] against in the coming months. I'd like to thank you all for Attending this conference live, if you to watched us on YouTube, please share, please hit that like button, if you like it, always reach out. Clearly, some people offer in this space from the industry are following us. Hopefully, shareholders, please reach out. We're always eager to learn. We always have an open mind the growth mindset, so let's carry on growing the company together. Thank you very much, everyone. Stay safe, and hope to see you soon. Bye-bye.