Verde Agritech Ltd.

Hello and welcome to Verdi Agritech E1 results conference call. I am here with our Chief Financial Officer, Felipe Polluch, and I am glad to report there are a growing number of shareholders and interest parties joining the call as well. Thank you very much for watching this video on YouTube. Thank you for your interest. If you like what you hear or if you know anyone who might be interested, please forward this video as well and hit that like button so other people can find out more about Verde Agrotech. We will start today's presentation, like the usual, with the market analysis, the market update of what's going on with fertilizer sector in Brazil. Then, Felipe Paulucci is going to give a detailed presentation of the numbers of the financials, which were found on the press release released earlier today. And at the end, I will be answering So, if you have any questions throughout this presentation, please click on the Q&A button at the bottom of the screen and type in the question. I'm going to go over them during the call. So, Felipe, would you like to share your screen so we can start the presentation? So, as we begin, I would like to remind you that this presentation contains forward-looking statements, and actual results might be different to take the time to read our disclaimer and forward-looking statements. In the next slide, we start talking a little bit about the fertilizer market, which, if you have been following Verdi Agritech for the last two years, or, Three years now, there won't be much surprise here. There isn't much difference here. So we continue operating in Brazil with some of the highest interest rates among developed economies, presently at 14.5%. There's a lot of discussion about inflation globally at the moment. A lot of it should do with the conflict in the Middle East. And what is happening in Brazil up to this stage is that our state-controlled company, Petrobras, has been holding up the prices for diesel. So most of the price for diesel haven't been transferred to the Brazilian yet. So they've been absorbing that, but at some point, this will happen. Of course, this has an impact on the perspective of the central bank to continue lowering interest rates. And the last forecast, the last commentary is that it's unlikely to start a radical reduction anytime soon, and we will continue to operate with high interest rates, which obviously aren't good for us or farmers operating in the country. Exchange rates has also been moving against us, has been a pattern for a while, as you know, because we sell a product that also replace imported potash as the Brazilian currency strengthens. The price for potash for our product becomes less competitive against imported, but also very importantly, Farmers sell their agricultural commodities also priced in U.S. dollars, and as the Brazilian currency strengthens, it represents, as a consequence, they get less money in the bank. The next slide. In the next slide, we see the results of everything we have just discussed on the top right-hand side of this slide. So the number of companies in Brazil, in the agribusiness sector, applying to the courts for creditor protection continues to increase significantly. So this is the data from 2025, the full year versus full year, but there's already reports, plenty of reports of how much it has been accelerating throughout 2026 as well. As a matter of fact, it's very sad to report that the country's largest fertilizer distributor, the country's largest agricultural input distributor, a public company called Laboro, has been reported in the news that it stopped paying all of its creditors as well. So it sounds like there's another colossal, colossal insolvency in the making with this company called Lahoran and alongside thousands of founders. So the situation is, and it's a situation We follow daily, of course, because a lot of our customers, they were able to apply for this judicial recovery, as the slide decides to name it. And what we see is that they end up getting a bombastic 90% haircut to the amount of money they owe us. So for all the process, They managed to reduce their total debt, let's say, from 100 down to 10. But not only that, the 10 left should be repaid. It gets to be repaid over several years without any sort of correction. So, this is the system we've been operating. Farmers haven't been paying anyone, and the agricultural imports, the distributors like this company, Lavoro, also decided they don't pay anyone. So, it's a bit crazy. It's a bit surreal, but it has been a reality, as you can see, growing reality from 2033. There is some speculation that the government in Brazil might be putting together some sort of bailout for the sector, for the agriculture sector. But those are unconfirmed, speculative reports of some sort of sector bailout, which would help not just farmers, but would also help the sector as a whole. What we're seeing underneath, which is a bit of good news, is that the price of potash has been going up. So throughout this year, the price went up around $50, which has offset the strengthening of the Brazilian currency. So at the end of the day, the delivered price of potash to the farmers, because the Brazilian currency also strengthened significantly, didn't change that much. But at least it's moving in the right direction. Before we move to the next slide, what I would like to add as a forward-looking statement is that there is always a possibility that given the conflict in the Middle East and the significant increase in the price of male urea, phosphate, but male urea, we will see a potential significant increase in food prices. It hasn't materialized yet, but there's a lot of speculation that as some of the harvest might suffer from farmers reducing the amount of nitrogen fertilizer they use, there's a possibility that we might see lower yields, and as a result, we might end up seeing a strengthening of food prices. This is what drives farmers' economics, obviously. This is what helps turning this situation around. and allowing us to get back to some sort of normality, allowing the whole Brazilian agriculture sector to get back to some sort of normality, which has not been the case. I was talking this weekend with the fund manager from one of the world's largest natural resource funds, and he was telling me how bullish their fund is on nitrogen. But at the same time, how they'd be shortening the suppliers, like John Deere and the other suppliers, even how or cash farmers currently are. Next slide, please. Q1 results. So I'll allow Filipe to talk a little bit about the results. And after he talks a little bit about the results, I can start to answer questions. But I can also comment a little bit on the renegotiation or the discussions with banks. Please go ahead, Filipe.

Thank you, Christian. Thanks, everyone, for joining. Related to Q1 financial key highlights, we can see that revenue in the first quarter was 1.7 million Canadian dollars compared to 2.9 million in the prior year. The total volume sold decreased from 47,000 tons to 27,000 tons. On the other hand, in terms of ECL, which is related to debt provision, the company declined to close to zero the amount that was booked in the Q1. compared to 500K last year. This is mainly driven by the strategy that we are working on since 2023, where we do not provide credit to anyone that we have doubts on terms on if you want to collect or not. So, at the end of the day, it impacts our sales. On the other hand, we expect to have lower ACL as well. In the end, we have an EBITDA. before low cash events improved modestly to negative 1.32.

Just so I add a little bit more color to this sentence here from our Chief Financial Officer, Filipe Palucci. You guys have no idea the Homeric battles going on between our sales team and our credit team. Of course, you know, our sales team eager to sell. uh uh but on the other hand you know we have to keep them check given all the risks which we are seeing in this space there has been some some very very interesting fights to say the least which is good which is good to see you know but it is the reality of the the stack for the moment yeah so what happened is that uh we