Fertoz : Annual Report 31 December 2021

Fertoz Limited

ACN 145 951 622

Audited Financial Statements

For the year ended 31 December 2020

Fertoz Limited

Year ended 31 December 2020

Directors	Mr. Patrick Avery (Executive Chairman)
	Mr. Adrian Byass - Non-Executive Director (Resigned on 23 June 2020)
	Mr. James Chisholm - Non-Executive Director
	Mr. Stuart Richardson - Non- Executive Director
	Mr. Justyn Stedwell - Non-Executive Director (Appointed on 20 November 2020)
	Mr. Ronald Wilkinson - Non-Executive Director (Resigned on 14 October 2020)
Company Secretary	Mr. Justyn Stedwell
Registered office and Principal	Suite 103, Level 1, 2 Queen Street
Place of business	Melbourne, VIC 3000
Share Register	Computershare Investor Services Pty Limited
	Yarra Falls, 452 Johnston St
	Abbotsford VIC 3067
Auditor	BDO Audit Pty Ltd
	Level 10
	12 Creek Street
	Brisbane QLD 4000
Canadian Lawyer	Ontario Lawyers
	Petersen Law Professional Corporation
	390 Bay Street, Suite 806
	Toronto, Ontario, Canada, M5H
Australian Lawyers	Sierra Legal Pty Ltd.
	Level 5, 9 Sherwood Road
	Toowong QLD 4066
Banker	Commonwealth Bank of Australia
Stock Exchange Listing	Australian Securities Exchange (FTZ)
Website	www.fertoz.com

Fertoz Limited

Year ended 31 December 2020

DIRECTORS' REPORT

The directors present their report, together with the audited financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Fertoz Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 31 December 2020.

Directors

The following persons were directors of Fertoz Limited during the whole of the financial period and up to the date of this report, unless otherwise stated:

Mr. Patrick Avery

Mr. Adrian Byass (Resigned on 23 June 2020)

Mr. James Chisholm

Mr. Stuart Richardson

Mr. Justyn Stedwell (Appointed on 20 November 2020)

Mr. Ronald Wilkinson (Resigned on 14 October 2020)

Principal activities

The Company's key objective is to become a leading supplier of rock phosphate organic fertilizers in North America and a profitable marketer of organic fertilizer products in Australia and develop sufficient profits to pay dividends to shareholders.

Dividends

There were no dividends paid, recommended or declared during the current period or previous year.

Review of operations

Strategy

The Company's main efforts are on the development and commercialisation of its high-grade phosphate resources in North America, which can supply high-grade rock phosphate to organic and conventional fertilizer wholesalers, retailers and farms that are seeking low-leaching phosphate products.

Board Changes

During the year ended 31 December 2020, Mr. Adrian Byass and Mr. Ronald Wilkinson resigned as directors and Mr Justyn Stedwell was appointed as director.

Safety

There were no lost time, injuries or environmental incidents recorded during the period ended 31 December 2020.

Financials

The loss for the consolidated entity after providing for income tax amounted to $1,535,715 (2019: $1, 808,232).

Sales for the year ended 31 December 2020 were 53% higher than the previous year despite the restrictions due to COVID 19 in North America. The Group also spent $134,800 (2019: $554,339) on exploration expenditure during the year.

The Group impaired its inventory of phosphate materials in North America by an amount of $344,052. The impairment was necessary given that further works required to be carried out on the materials before sales was considered too expensive.

Available cash balance at year-end amounted to $1,156,678 (2019: $452,138).

Significant changes in the state of affairs

During the year ended 31 December 2020, the Group

1. raised $2,000,000 through the issuance of 25,000,000 shares
2. issued 922,500 ordinary shares to key members of the staff under the Employee Share Plan.

Other than disclosed in this report, in the opinion of the directors there were no significant changes in the state of affairs of the Company during the financial period under review.

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Fertoz Limited

Year ended 31 December 2020

DIRECTORS' REPORT

Matters subsequent to the end of the financial year

On 8 March 2021, the Company announced a proposed capital raising of approximately $1,109,440 by way of a non-renounceablepro-rata rights issue of 1 new share for every 7 shares held.

Likely developments and expected results of operations

The consolidated entity intends to continue its fertilizer development and production activities, to acquire further suitable fertilizer projects as opportunities arise, to add more services in relation to carbon trading, and to implement the Company's ESG policies to become at least carbon neutral.

Environmental regulation

The consolidated entity is subject to environmental regulations under laws of British Columbia and Alberta, Canada where it either holds or has a right to explore on such tenements. During the financial period the consolidated entity's activities recorded no non-compliance issues.

Corporate Governance

The Company's corporate governance statement and Appendix 4G can be found on the Company's website at: https://www.fertoz.com/company/corporate-governance/

Information on directors

Mr. Patrick Avery, MBA

Executive Chairman,

Mr. Avery has over 30 years of experience working in the industries of fertilizer, mining, specialty chemicals, petroleum, and construction/project management. In the fertilizer industry, he worked for 11 years with JR Simplot, one of the largest privately held food and agribusiness companies in the USA, where he held senior positions across all key business units such as mining, manufacturing, supply chain, wholesale sales and energy management, managing over 1500 employees, three mines(two phosphate and one silica), five major manufacturing facilities, and several warehouse/distribution locations, making dozens of products from chemical fertilizers, to specialty chemicals for lawns, gardens, golf courses, industrial products, resins, and water treatment. Mr. Avery was also president of Intrepid Potash, where he led all aspects of mining, manufacturing, logistics and sales.

Mr Avery has not been a director of any other listed company in the last three years.

Interests in shares:	2,107,143
Interests in options:	None
Contractual rights to shares:	4,000,000 (see below)

1. 1,000,000 fully paid ordinary shares upon the Company's share price closing at 28c or above for 10 consecutive trading days before 1 June 2021.
2. 1,000,000 fully paid ordinary shares upon the Company's share price closing at 38c or above for 10 consecutive trading days before 1 June 2021.
3. 1,000,000 fully paid ordinary shares upon the Company's share price closing at 50c or above for 10 consecutive trading days before 1 June 2021.
4. 1,000,000 fully paid ordinary shares upon the Company's share price closing at 60c or above for 10 consecutive trading days before 1 June 2021.

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Fertoz Limited

Year ended 31 December 2020

DIRECTORS' REPORT

Information on directors (continued)

Mr. James Chisholm, B.Eng, MBA

Non-executive Director

Mr Chisholm is a qualified engineer, having worked in the engineering, mining, oil and gas sectors for the past 35 years. Mr. Chisholm has worked on numerous resource construction and maintenance projects around Australia, primarily covering coal, iron ore, and agricultural mining and processing. Mr. Chisholm co-founded The Chairmen1 Pty Ltd which sold its assets to Guildford Coal Ltd (ASX: TER);Ebony Iron Pty Ltd, which sold its assets to Strategic Minerals (AIM: SML); and hydrogen development company, Ebony Energy Ltd, which was recently acquired by Hexagon Energy Materials Ltd (ASX: HXG). Mr. Chisholm is experienced in start-up exploration and development companies.

He was also a director of Atrum Coal Ltd until mid-2019 (ASX: ATU). Other than Atrum Coal Ltd., Mr. Chisholm has not been a director of a listed company for the last three years.

Interests in shares:	10,235,564
Interests in options:	None
Contractual rights to shares:	None

Mr. Stuart Richardson BBA, CPA

Non-executive Director

Mr Richardson has extensive experience over 35 years in capital markets both on Australia and overseas in the field of investment banking and stockbroking. He is a founding director of Blackwood Capital Limited an Australian based investment bank operating in capital markets, advisory and funds, management in equities and private equity.

Mr. Richardson is also a former director of Abundant Produce Limited (ASX:ABT) (resigned on 24 April 2019) and former director of XTD Limited (ASX:XTD) (resigned 1 November 2018)

Interests in shares:	9,559,460
Interests in options:	None
Contractual rights to shares:	None

'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.

'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.

Mr. Justyn Stedwell

Non-executive Director/Company Secretary

Mr. Stedwell is a professional company secretary with over 14 years' experience as a Secretary of ASX listed companies in various industries, including mining and exploration, IT & telecommunications, biotechnology and agriculture. Mr. Stedwell's qualifications include a Bachelor of Commerce (Economics and Management) from Monash University, a Graduate Diploma of Accounting at Deakin University and a Graduate Diploma in Applied Corporate Governance at the Governance Institute of Australia. He is currently Company Secretary at several ASX- listed companies, including Atrum Coal Ltd (ASX:ATU), Lifespot Health Ltd (ASX: LSH); Cirralto Ltd (ASX:CRO), Imugene Ltd (ASX:IMU), Rectifier Technologies Ltd (ASX:RFT), Golden Mile Resources Ltd (ASX:G88), and Broo Ltd (ASX:BEE).

Interests in shares:	350,000
Interests in options:	None
Contractual rights to shares:	None

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