UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q/A10-Q

(Amendment No. 1)

 

(Mark One)

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  

For the quarterly period ended March 31, 20220221

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________________________ to ______________________________

 

Commission file number: 000-55276

 

Verde Resources, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

 

32-0457838

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

Block B-5, 20/F, Great Smart Tower, 230 Wanchai Road, Wanchai, Hong Kong

(Address of principal executive offices)

 

(852) 21521223(I.R.S. Employer

Identification No.)

(Address of principal executive offices)

2 Cityplace Drive, Suite 200, St. Louis, MO 63141

(323) 538-5799

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).

 

Large accelerated filer

Accelerated filer

Non-accelerated filerFiler

Smaller reporting company

(Do not check if a smaller reporting company)

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of  May 9, 2021June 10, 2022 there were 116,038,909819,188,055 shares of the issuer’s common stock, par value $0.001, outstanding.

 

 

 

EXPLANATORY NOTE

We are filing this Amendment No. 1 on Form 10-Q/A (the “Amendment”) to our Quarterly Report on Form 10-Q for the period ended March 31, 2021 (the “Form 10-Q”), filed with the United States Securities and Exchange Commission on May 21, 2021 (the “Original Filing Date”), solely to furnish the Interactive Data File exhibits required by Item 601(b)(101) of Regulation S-K. These exhibits were inadvertently not included with our Form 10-Q filing.  Exhibit 101 consists of the following materials from our Form 10-Q, formatted in XBRL (eXtensible Business Reporting Language):

101.INS

XBRL Instance Document

101.SCG

XBRL Taxonomy Schema

101.CAL

XBRL Taxonomy Calculation LinkBase

101.DEF

XBRL Taxonomy Definition Linkbase

101.LAB

XBRL Taxonomy Label Linkbase

101.PRE

XBRL Taxonomy Presentation Linkbase

VERDE RESOURCES, INC.

 

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 20212022

TABLE OF CONTENTS

 

 

 

PAGE

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

Item 1.

Unaudited Condensed Consolidated Financial Statements.

 

3

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

294

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

 

3611

 

 

 

 

 

 

Item 4.

Controls and Procedures.

 

3611

 

 

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

 

Item 1.

Legal Proceedings.

 

3712

 

 

 

 

 

 

Item 1A.

Risk Factors.

 

3712

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

 

3712

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities.

 

3712

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures.

 

3712

 

 

 

 

 

 

Item 5.

Other Information.

 

3712

 

 

 

 

 

 

Item 6.

Exhibits.

 

3813

 

 

 

 

 

 

 

SIGNATURES

 

3914

 

 

 
2

Table of Contents

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Item Regulation S-X, Rule 10-01(c) Interim Financial Statements, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the ninesix months ended March 31, 20212022 are not necessarily indicative of the results that can be expected for the year ended JuneendingJune 30, 2021.2022.

 

VERDE RESOURCES, INC.

 

INDEX TO INTERIMCONDENSEDUNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

FOR THE PERIOD OF ENDED MARCH 31, 20212022

 

 

 

Page

 

 

 

Condensed Consolidated Balance Sheets as at March 31, 20212022 (Unaudited) and June 30, 20202021

 

4F-1

 

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended March 31, 20212022 and 20202021 (Unaudited)

 

5

Condensed Consolidated Statements of Equity for the Three and Nine Months Ended March 31, 2021 and 2020 (Unaudited)

6F-2

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2022 and 2021 (Unaudited)

F-3

Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended March 31, 20212022 and 20202021 (Unaudited)

 

7F-4

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

8F-6

 

 

 
3

Table of Contents

 

Verde Resources, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In US$ except for number of shares)

 

 

As at

March 31,

 

As at

June 30,

 

 

2021

 

 

2020

 

 

As at

March 31,

 

As at

June 30,

 

 

(Unaudited)

 

(Audited)

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$27,629

 

$24,027

 

 

$1,722,583

 

$2,117,622

 

Other receivables

 

0

 

26,338

 

Advanced to related party

 

0

 

6,691

 

Other deposits & prepayments

 

117,200

 

6,137

 

Inventories

 

81,492

 

0

 

Trade receivables

 

14,230

 

-

 

 

 

14,818

 

 

 

0

 

Inventories

 

-

 

-

 

Deposit & prepayment

 

 

9,223

 

 

 

17,837

 

Total Current Assets

 

$51,082

 

 

$41,864

 

 

$1,936,093

 

 

$2,156,788

 

Long Term Assets

 

 

 

 

 

Non-current Assets

 

 

 

 

 

Property, plant and equipment

 

$601

 

 

$705

 

 

$123,567

 

$555

 

Total Long Term Assets

 

$601

 

 

$705

 

Right of use assets

 

931,429

 

0

 

Mining rights

 

36,142

 

60,131

 

Security deposit

 

80,000

 

0

 

Deposit paid for acquisition of subsidiaries

 

25,935,550

 

25,971,680

 

Deposit paid for acquisition of property, plant and equipment

 

5,000,000

 

4,870,000

 

Total Non-current Assets

 

$32,106,688

 

 

$30,902,366

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$51,683

 

 

$42,569

 

 

$34,042,781

 

 

$33,059,154

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$1,558,069

 

$1,507,258

 

 

$1,903

 

$2,655

 

Advanced from related parties

 

884,250

 

655,920

 

 

582,605

 

585,783

 

Accrual

 

33,622

 

50,843

 

Other payables

 

121,566

 

121,566

 

Loans from banks

 

 

-

 

 

 

-

 

Lease liabilities

 

10,440

 

0

 

Accrued liabilities and other payables

 

 

180,832

 

 

 

164,849

 

Total Current Liabilities

 

$2,597,507

 

 

$2,335,587

 

 

$775,780

 

 

$753,287

 

Long term Liabilities

 

 

 

 

 

 

 

 

 

 

Loans from banks (non-current)

 

$-

 

 

$-

 

Lease liabilities

 

$46,983

 

$0

 

Promissory notes

 

 

17,977,853

 

 

 

16,535,942

 

Total Long Term Liabilities

 

$-

 

 

$-

 

 

$18,024,836

 

 

$16,535,942

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

$2,597,507

 

 

$2,335,587

 

 

$18,800,616

 

 

$17,289,229

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Preferred stock, par value $0.001, 50,000,000 shares authorized, none issued and outstanding

 

-

 

-

 

 

0

 

0

 

Common stock, par value $0.001, 10,000,000,000 shares authorized, 116,038,909 shares issued and outstanding as of March 31, 2021 & June 30, 2020 respectively

 

$116,039

 

$116,039

 

Common stock, par value $0.001, 10,000,000,000 shares authorized, 810,742,109 and 779,742,109 shares issued and outstanding as of March 31, 2022 and June 30, 2021, respectively

 

$810,742

 

$779,742

 

Common stock, par value $0.001, 8,445,946 and 0 shares to be issued as of March 31, 2022 and June 30, 2021, respectively

 

8,446

 

0

 

Additional paid-in capital

 

2,427,243

 

2,427,243

 

 

22,873,870

 

20,699,067

 

Accumulated deficit

 

(5,296,220)

 

(5,138,406)

 

(9,327,647)

 

(5,913,255)

Accumulated other comprehensive income (loss)

 

753,084

 

839,818

 

 

 

876,754

 

 

 

646,205

 

Non-controlled interest

 

 

(545,970)

 

 

(537,712)

Total Stockholders’ Deficit

 

$(2,545,824)

 

$(2,293,018)

Stockholders’ equity to Verde Resources, Inc shareholders

 

15,242,165

 

16,211,759

 

Non-controlling interest

 

 

0

 

 

 

(441,834)

Total Stockholders’ Equity

 

$15,242,165

 

 

$15,769,925

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

$51,683

 

 

$42,569

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$34,042,781

 

 

$33,059,154

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 
4F-1

Table of Contents

 

Verde Resources, Inc.

Condensed Consolidated Statements of Operationsand Comprehensive Income

(Unaudited)

(In US$ except for number of shares)

 

 

 

Three Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$14,326

 

 

$-

 

 

$14,326

 

 

$-

 

Cost of revenue

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Gross profit

 

 

14,326

 

 

 

-

 

 

 

14,326

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative expenses

 

 

(81,606)

 

 

(96,858)

 

 

(180,398)

 

 

(276,904)

LOSS FROM OPERATIONS

 

$(67,280)

 

$(96,858)

 

$(166,072)

 

$(276,904)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME(EXPENSES)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS BEFORE INCOME TAX

 

$(67,280)

 

$(96,858)

 

$(166,072)

 

$(276,904)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision of Income Tax

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

NET PROFIT (LOSS)

 

$(67,280)

 

$(96,858)

 

$(166,072)

 

$(276,904)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled interest

 

 

1,272

 

 

 

3,386

 

 

 

8,258

 

 

 

8,665

 

Net loss contributed to the group

 

 

(66,008)

 

 

(93,472)

 

 

(157,814)

 

 

(268,239)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income(loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation income(loss)

 

$80,026

 

 

$136,228

 

 

$(86,734)

 

$242,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income(loss)

 

$14,018

 

 

$42,756

 

 

$(244,548)

 

$(25,785)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted Loss per Common Share

 

$(0.0006)

 

$(0.0008)

 

$(0.0014)

 

$(0.0023)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Common Shares Outstanding

 

 

116,038,909

 

 

 

115,038,909

 

 

 

116,038,909

 

 

 

115,038,909

 

 

 

Three Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues, net

 

$16,712

 

 

$14,326

 

 

$16,712

 

 

$14,326

 

Cost of revenue

 

 

(86,701)

 

 

0

 

 

 

(86,701)

 

 

0

 

Gross profit

 

 

(69,989)

 

 

14,326

 

 

(69,989

 

 

14,326

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative expenses

 

 

(498,774)

 

 

(81,606)

 

 

(1,221,875)

 

 

(180,398)

LOSS FROM OPERATIONS

 

 

(568,763)

 

 

(67,280)

 

 

(1,291,864)

 

 

(166,072)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expenses

 

 

(486,977)

 

 

0

 

 

 

(1,441,911)

 

 

0

 

Other income

 

 

99

 

 

 

0

 

 

 

12,214

 

 

 

0

 

 Total other income (expense), net

 

 

(486,878)

 

 

0

 

 

 

(1,429,697)

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS BEFORE INCOME TAX

 

 

(1,055,641)

 

$(67,280)

 

 

(2,721,561)

 

 

(166,072)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision of Income Tax

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

NET LOSS

 

$(1,055,641)

 

$(67,280)

 

$(2,721,561)

 

$(166,072)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Net loss attributable to non-controlling interest

 

 

(23,914)

 

 

1,272

 

 

 

(6,979)

 

 

8,258

 

Net loss attributable to Verde Resources Inc., shareholders

 

 

(1,079,555)

 

 

(66,008)

 

 

(2,728,540)

 

 

(157,814)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation income (loss)

 

$

24,935

 

 

$

68,022

 

 

$

27,971

 

 

$

(73,724

Less: Other comprehensive loss attributable to non-controlling interest

 

 

(13,285)

 

 

12,004

 

 

 

(12,750)

 

 

(13,010)

Other comprehensive income (loss) attributable to Verde Resources, Inc.

 

 

11,650

 

 

 

80,026

 

 

 

15,221

 

 

 

(86,734)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive (loss) income

 

$(1,067,905)

 

$14,018

 

 

$(2,713,319)

 

$(244,548)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

$(0.00)*

 

$0.00)*

 

$(0.00)*

 

$(0.00)*

- Diluted

 

$(0.00))*

 

$(0.00)*

 

$(0.00)*

 

$(0.00)*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

810,742,109

 

 

 

116,038,909

 

 

 

810,742,109

 

 

 

116,038,909

 

- Diluted

 

 

819,188,055

 

 

 

116,038,909

 

 

 

819,188,055

 

 

 

116,038,909

 

 

*Less than $0.01 per share

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 
5F-2

Table of Contents

  

Verde Resources, Inc.

Condensed Consolidated Statements of Equity (Deficit)

(Unaudited)

 

 

Common Shares

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Non-Controlling

 

 

Accumulated Other Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Interest

 

 

Income (Loss)

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - June 30, 2019

 

 

115,038,909

 

 

$115,039

 

 

$2,416,243

 

 

$(4,839,749)

 

$(526,967)

 

$614,603

 

 

$(2,220,831)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(268,239)

 

 

(8,665)

 

 

-

 

 

 

(276,904)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

242,454

 

 

 

242,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - March 31, 2020

 

 

115,038,909

 

 

$115,039

 

 

$2,416,243

 

 

$(5,107,988)

 

$(535,632)

 

$857,057

 

 

$(2,255,281)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - June 30, 2020

 

 

116,038,909

 

 

$116,039

 

 

$2,427,243

 

 

$(5,138,406)

 

$(537,712)

 

$839,818

 

 

$

(2,293,018

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(157,814)

 

 

(8,258)

 

 

-

 

 

 

(166,072)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(86,734)

 

 

(86,734)

 

 

 

 

 

 

 

 

 

��

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - March 31, 2021

 

 

116,038,909

 

 

$116,039

 

 

$2,427,243

 

 

$(5,296,220)

 

$(545,970)

 

$753,084

 

 

$(2,545,824)

 

 

Common Shares

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Non-Controlling

 

 

Accumulated Other Comprehensive

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Interest

 

 

Income (Loss)

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 2019

 

 

115,038,909

 

 

$115,039

 

 

$2,416,243

 

 

$(5,014,516)

 

$(532,246)

 

$720,829

 

 

$(2,294,651)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(93,472)

 

 

(3,386)

 

 

-

 

 

 

(96,858)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

136,228

 

 

 

136,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - March 31, 2020

 

 

115,038,909

 

 

$115,039

 

 

$2,416,243

 

 

$(5,107,988)

 

$(535,632)

 

$857,057

 

 

$(2,255,281)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - December 31, 2020

 

 

116,038,909

 

 

$116,039

 

 

$2,427,243

 

 

$(5,230,212)

 

$(544,698)

 

$673,058

 

 

$(2,558,570)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(66,008)

 

 

(1,272)

 

 

-

 

 

 

(67,280)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

80,026

 

 

 

80,026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - March 31, 2021

 

 

116,038,909

 

 

$116,039

 

 

$2,427,243

 

 

$(5,296,220)

 

$(545,970)

 

$753,084

 

 

$(2,545,824)

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Table of Contents

Verde Resources, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In US$ except for number of shares)

 

 

 

March 31,

2021

 

 

March 31,

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

Net profit(loss)

 

$(166,072)

 

$(276,904)

Adjustments to reconcile loss to net cash used in operations

 

 

 

 

 

 

 

 

Amortization and depreciation

 

 

9,417

 

 

 

3,136

 

Waiver of consultancy service fee

 

 

-

 

 

 

-

 

Stock-based compensation

 

 

-

 

 

 

-

 

Gain on disposal of property, plant and equipment

 

 

-

 

 

 

-

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

(Increase) decrease in:

 

 

 

 

 

 

 

 

Trade receivables

 

 

(14,326)

 

 

-

 

Deposits and prepayment

 

 

-

 

 

 

(23,593)

Inventory

 

 

-

 

 

 

-

 

Other receivable

 

 

-

 

 

 

-

 

Increase (decrease) in:

 

 

 

 

 

 

 

 

Accounts payable

 

 

(960)

 

 

(1,058)

Accrued liabilities

 

 

(17,376)

 

 

17,169

 

GST payable

 

 

-

 

 

 

-

 

Advanced from sub-contractor & related parties

 

 

72,389

 

 

 

(38,338)

Deposit received from customer

 

 

-

 

 

 

-

 

Net cash provided by (used in) operating activities

 

 

(116,928)

 

 

(319,588)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Proceeds from disposal of plant and equipment

 

 

-

 

 

 

-

 

Addition of motor vehicle

 

 

-

 

 

 

-

 

Net cash provided by investing activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from bank loans

 

 

-

 

 

 

-

 

Repayments of bank loans

 

 

-

 

 

 

(191)

Shareholders’ loans waived

 

 

-

 

 

 

-

 

Proceeds from issuance of common stock

 

 

-

 

 

 

-

 

Net cash (used in) provided by financing activities

 

 

-

 

 

 

(191)

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalent

 

 

(116,928)

 

 

(319,779)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

120,530

 

 

 

328,326

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

3,602

 

 

 

8,547

 

Cash and cash equivalents at beginning of period

 

 

24,027

 

 

 

10,662

 

Cash and cash equivalents at end of period

 

$27,629

 

 

$19,209

 

 

 

 

 

 

 

 

 

 

Supplementary cash flow information

 

 

 

 

 

 

 

 

Income taxes paid

 

$-

 

 

$-

 

Interest paid

 

$-

 

 

$1

 

Supplementary non-cash information

 

 

 

 

 

 

 

 

Reorganization

 

 

-

 

 

 

-

 

Issuance of common stock

 

 

-

 

 

 

-

 

 

 

Nine Months Ended

 

 

 

March 31,

2022

 

 

March 31,

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$(2,721,561)

 

$(166,072)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

Amortization

 

 

29,434

 

 

 

9,228

 

Depreciation

 

 

9,831

 

 

 

129

 

Stock-based compensation

 

 

284,249

 

 

 

0

 

Finance cost interest element of promissory notes

 

 

1,441,911

 

 

 

0

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivables

 

 

(14,818)

 

 

(14,326)

Other deposits and prepayment

 

 

(85,132)

 

 

0

 

Right of use assets

 

 

16,142

 

 

 

0

 

Inventory

 

 

(81,492)

 

 

0

 

Accounts payable

 

 

(719)

 

 

(960)

Accrued liabilities and other payables

 

 

24,774

 

 

 

(17,376)

Net cash used in operating activities

 

 

(1,097,381)

 

 

(189,317)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Deposit paid for property, plant and equipment

 

 

(240,000)

 

 

0

 

Purchase of property, plant and equipment

 

 

(70,332)

 

 

0

 

Net cash used in investing activities

 

 

(310,332)

 

 

0

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Repayments to lease liabilities

 

 

(5,220)

 

 

0

 

Advanced from related parties

 

 

9,417

 

 

 

72,389

 

Advanced to related party

 

 

690

 

 

 

0

 

Proceeds from common shares and additional paid in capital

 

 

1,000,000

 

 

 

0

 

Net cash provided by financing activities

 

 

1,004,887

 

 

 

72,389

 

 

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalent

 

 

(402,826)

 

 

(116,928)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

7,787

 

 

 

120,530

 

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

 

(395,039)

 

 

3,602

 

Cash and cash equivalents at beginning of year/ period

 

 

2,117,622

 

 

 

24,027

 

Cash and cash equivalents at end of year/ period

 

$1,722,583

 

 

$27,629

 

 

 

 

 

 

 

 

 

 

Supplementary cash flow information

 

 

 

 

 

 

 

 

Income taxes paid

 

$0

 

 

$0

 

Interest paid

 

$0

 

 

$0

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 
7F-3

Table of Contents

  

Verde Resources, Inc.

 Statement of Changes in Stockholders’ Equity (Deficit)

Nine months ended March 31, 2022 and 2021 (Unaudited)

(In US$ except for number of shares)

 

 

Common Shares

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated Other Comprehensive

Income

 

 

Non-Controlling

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Loss)

 

 

Interest

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - June 30, 2020

 

 

116,038,909

 

 

$116,039

 

 

$2,427,243

 

 

$(5,138,406)

 

$839,818

 

 

$(537,712)

 

$(2,293,018)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

-

 

 

 

0

 

 

 

0

 

 

 

(157,814)

 

 

0

 

 

 

(8,258)

 

 

(166,072)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain

 

 

-

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(86,734)

 

 

0

 

 

 

(86,734)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – March 31, 2021

 

 

116,038,909

 

 

$116,039

 

 

$2,427,243

 

 

$(5,296,220)

 

$753,084

 

 

$(545,970)

 

$(2,545,824)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - June 30, 2021

 

 

779,742,109

 

 

$779,742

 

 

$20,699,067

 

 

$(5,913,255)

 

$646,205

 

 

$(441,834)

 

$15,769,925

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for acquisition

 

 

31,000,000

 

 

 

31,000

 

 

 

899,000

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

930,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

-

 

 

 

0

 

 

 

284,249

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

284,249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares to be issued

 

 

8,445,946

 

 

 

8,446

 

 

 

991,554

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

1,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

-

 

 

 

0

 

 

 

0

 

 

 

(2,728,540)

 

 

 

 

 

 

6,979

 

 

 

(2,721,561)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation loss

 

 

-

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

27,921

 

 

 

(12,750)

 

 

15,221

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretion of interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (685,852

 

 

 202,578

 

 

 

 447,605

 

 

 

 (35,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – March 31, 2022

 

 

819,188,055

 

 

$819,188

 

 

$22,873,870

 

 

$(9,327,647)

 

$876,754

 

 

$0

 

 

$15,242,165

 

F-4

Table of Contents

Verde Resources, Inc.

 Statement of Changes in Stockholders’ Equity (Deficit)

Three months ended March 31, 2022 and 2021

(Unaudited)

(In US$ except for number of shares)

 

 

Common Shares

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated Other Comprehensive

 

 

Non-Controlling

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Interest

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - December 31, 2020

 

 

116,038,909

 

 

$116,039

 

 

$2,427,243

 

 

$(5,230,212)

 

$673,058

 

 

$(544,698)

 

$(2,558,570)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

-

 

 

 

0

 

 

 

0

 

 

 

(66,008)

 

 

0

 

 

 

(1,272)

 

 

(67,280)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation loss

 

 

-

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

80,026

 

 

 

0

 

 

 

80,026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – March 31, 2021

 

 

116,038,909

 

 

$116,039

 

 

$2,427,243

 

 

$(5,296,220)

 

$753,084

 

 

$(545,970)

 

$(2,545,824)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 2021

 

 

810,742,109

 

 

$810,742

 

 

$21,789,289

 

 

$(7,562,240)

 

$649,241

 

 

$(458,234)

 

$15,228,798

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for share-based compensation

 

 

-

 

 

 

0

 

 

 

93,027

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

93,027

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares to be issued

 

 

8,445,946

 

 

 

8,446

 

 

 

991,554

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

1,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

-

 

 

 

0

 

 

 

0

 

 

 

(1,079,555)

 

 

 

 

 

 

923,914

 

 

 

(1,055,641)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation loss

 

 

-

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

24,935

 

 

 

(13,285)

 

 

11,650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretion of interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (685,852

 

 

202,578

 

 

 

447,605

 

 

 

(35,699

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – March 31, 2022

 

 

819,188,055

 

 

$819,188

 

 

$22,873,870

 

 

$(9,327,647)

 

$876,754

 

 

$0

 

 

$15,242,165

 

F-5

Table of Contents

Verde Resources, Inc.

Notes to Condensed Consolidated Financial Statements

For the three and nine months ended March 31, 20212021 and 2022

(Unaudited)

(In US$ except for number of shares)

 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Verde Resources, Inc. (the “Company” or “VRDR”) was incorporated on April 22, 2010, in the State of Nevada, U.S.A. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal year end is June 30.U.S.A..

 

Pursuant to an Assignment Agreement For The Assignment of Management Right in Merapoh Gold Billion Global LimitedMines in Malaysia (“Gold Billion” or “GBL”Assignment Agreement”) was incorporated in British Virgin Islandsdated October 25, 2013, and a Supplementary Agreement dated February 17, 2014 on February 7, 2013. GBL was setupfurther clarifications to the Assignment Agreement signed by the Board of Directors ofVerde Resources, Inc. (“VRDR”) with Federal Mining Resources Limited (“FMR”). The major operation of GBL is to manage and monitor, a company incorporated under the mineral exploration and mining projects of FMR.

On July 1, 2013, FMR assigned its rights and obligation on Champmark Sdn Bhd (“CSB”) to GBL. Fourlaws of the five membersBritish Virgin Islands, the 100% interest of CSB BoardFMR in Gold Billion Global Limited (“GBL”) was transferred to VRDR at a consideration of Directors were appointed by FMR, with two of the GBL Board of Directors currently sitting on the CSB Board. According to ASC 810-05-08 A, CSB is a deemed subsidiary of GBL, where it has controlled the CSB Board of Directors, has assigned rights to receive future benefits and residual value, and obligations to absorb loss and finance for CSB by GBL. GBL has the power to direct the activities of CSB that most significantly impact CSB’s economic performance and the obligation to absorb losses of CSB that could potentially be significant to the CSB or the right to receive benefits from CSB that could potentially be significant to CSB. GBL is the primary beneficiary of CSB because it has been assigned with all relevant rights and obligation and can direct the activities of CSB through the common directors and the 85% shareholder, FMR. Under 810-23-42, 43, it is determined that CSB is de-facto agent of GBL and GBL is the de-facto principal of CSB. GBL started to consolidate CSB from July 1, 2013, and the Company consolidated GBL and CSB from October 25, 2013, onwards.

On February 17, 2014, the Company entered into a Supplementary Agreement to the Assignment Agreement and completed an acquisition of GBL pursuant to the Supplementary Agreement. The acquisition$1. This transaction was recorded as a reverse acquisition in accordance with ASC 805-40 “Reverse Acquisitions”. The legal parent was VRDR, which was the accounting acquiree, while GBL was the accounting acquirer. There was a 15% non-controlling interest of Champmark SDN BHD (“CSB”)CSB after the acquisition. This transaction was accounted for as a recapitalization effected by a share exchange, wherein GBL with its 85% deemed subsidiary CSB was considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of the acquired entity have been brought forward at their book value and no goodwill has been recognized.

 

As a result ofPrior to the acquisition the Company holds 100% equityof GBL, on July 1, 2013, FMR had assigned its rights and obligations pursuant to its 85% interest in GBL and 85% variable interest in CSB. Our consolidated subsidiaries include GBL being our wholly-owned subsidiary and 85% ofChampmark Sdn Bhd (“CSB”) to GBL. According to ASC 810-05-08 A, CSB beingis a variable interest entity (VIE) and deemed subsidiary of GBL.GBL because due to the assignment, GBL had gained control of the Board of Directors of CSB, GBL's rights to receive future benefits and residual value, and GBL's obligation to absorb losses and provide financing for CSB. GBL had the power to direct the activities of CSB that most significantly impact CSB’s economic performance, and the obligation to absorb losses or receive benefits of CSB that could potentially be significant to CSB. Accordingly, GBL was the primary beneficiary of CSB. Under 810-23-42, 43, it was determined that CSB was de-facto agent and GBL, the principal, and consequently, CSB was considered as a deemed subsidiary of GBL beginning July 1, 2013. 

Furthermore, under the terms of the Assignment Agreement, FMR will assign its management rights of CSB’s mining operation in the Mining Lease to GBL in exchange for 80,000,000 shares of the Company’s common stock. CSB is the Mining Contractor of the Mining Lease for Site IV-1 at the Merapoh Gold Mine under the Contract for Work with MMC Corporation Berhad, the Permit Holder of the Mining Lease.

With the above transactions, GBL became a wholly-owned subsidiary of the Company and CSB, its 85% deemed indirect subsidiary.

 

On March 17, 2014, the Company through GBL and its deemed subsidiary CSB entered into a Sub-Contract Agreement with Borneo Oil & Gas Corporation Sdn Bhd (“BOG”) for the engagement of its sub-contractor services to carry out exploration and exploitation works on alluvial and lode gold resources at Site IV-1 of the Merapoh Mine. The Sub-Contract Agreement is for a period of 5 years with a renewal for another 5 years subject to review by both parties. BOG is a wholly-owned subsidiary of Borneo Oil Berhad (BOB) which is listed on the main market of Kuala Lumpur Stock Exchange. BOG being a local company in Malaysia provides the Company with the advantage of local knowledge and well-established connection in dealing with the relevant local authorities in our mining operations.

 

On April 1, 2014, the Board of Directors of GBL purchasednotified FMR of GBL's decision to exercise its option to purchase an 85% equity interest of CSB and CSB became indirect subsidiaryunder Section 3.2.4 of the Company.Management Agreement dated July 1, 2013 between GBL and FMR. This acquisition was completed on April 1, 2014 with consideration of $1. GBL then became 85% shareholder of CSB.

 

Effective February 20, 2016 Mr. Chen Ching was appointed Director of the Company and the entire Board of Directors now consistsconsisted of Mr. Balakrishnan B S Muthu and Mr. Chen Ching. The SC 14F1 and Form 8-K announcing the change in officers and directors were filed with SEC on February 10, 2016 and February 22, 2016 respectively.

 

Effective February 2, 2018, the Company sCompany’s Articles of Incorporation were amended to increase the authorized shares of the Company from 250,000,000 shares of common stock to 10,000,000,000 shares of common stock. A copy of the Certificate of Amendment was filed with the Nevada Secretary of State.

 

Effective March 31, 2021, Mr. Carl M. Craven was appointed as a Director of the Company and the entire Board of Directors now consistsconsisted of Mr. Balakrishnan B S Muthu, Mr. Chen Ching and Mr. Carl M. Craven. The Form 8-K announcing the change in officers and directors were filed with SEC on April 1, 2021.

 

On May 10, 2021, the Company announced the Sale and Purchase Agreement to acquire the assets of biofraction plant and the right to use intellectual property license in Sabah, Malaysia from Borneo Energy Sdn Bhd, in consideration of issuance of 166,666,667 shares of the Company’s common stock at $0.03 per share, valued at $5,000,000. 135,666,667 shares and 31,000,000 shares were issued on May 10, 2021 and July 1, 2021, respectively. The completion of the S&P Agreement is subject to all such acts necessary, including but not limited to due diligence exercise to ascertain the valuation of the assets of the biofraction plant and the right to use the licensed intellectual property in Sabah, Malaysia. The consideration shall be refundable if the transaction fails to complete. The Company also announced the Share Sale Agreement on May 12, 2021 for the acquisition of the entire issued and paid-up share capital of Bio Resources Limited from Taipan International Limited, an unrelated third party, The Wision Project Limited (formerly known as “Borneo Resources Limited”), an unrelated third party, and other unrelated third party individuals, in consideration of an issuance 321,500,000 shares of the Company’s restricted common stock at $0.03per share, valued at $9,645,000, and the issuance of promissory notes with two-year term period with a principal amount of $20,355,000.

321,500,000 shares were issued on May 12, 2021 and the promissory notes were issued on May 12, 2021. The face value (principal) amount of the promissory notes of $20,355,000 was repayable by May 12, 2023, and bearing zero coupon interest in accordance with the Share Sale Agreement. The promissory note is priced at $16,290,550 considering the current market interest rate. This acquisition is currently in progress and the completion of the S&P Agreement is subject to all such acts necessary, including but not limited to auditing and due diligence exercise to ascertain the valuation of Bio Resources Limited. However, on January 20, 2022, the Company reached a mutual agreement to enter into a Supplement to Promissory Note with each of the 17 lenders (“Lenders”) of the promissory notes that were issued on May 12, 2021, to convert the total principal loan amount of $20,355,000 into shares of the Company’s restricted common stock priced at $0.0611 per share, which represents the last ninety (90) days’ volume weighted average price (VWAP) as of the market closing of January 19, 2022. The Company and the Lenders further agreed that the actual date for the allotment and issue of new shares of the Company’s restricted common stock shall be confirmed in a subsequent written agreement. The consideration, nevertheless, shall be refundable if the acquisition of Bio Resourced Limited fails to complete.

 
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On June 9, 2021, the Company entered into a Settlement of Debt Agreement (the “Debt Settlement Agreement”) with the Company’s creditors Beijing Changxin Wanlin Technology Co., Ltd, Federal Mining Resources Ltd, Federal Capital Investment Limited and Yorkshire Capital Limited (collectively the “Creditors”) to convert a total of $1,945,096 of the Company’s accounts payable to the Creditors into equity by increasing the share capital by means of a subscription for 64,836,533 new restricted shares of the Company’s common stock at a subscription price of $0.03 per share. As set out in the Debt Settlement Agreements, the new restricted shares for settlement of the account payable to Beijing Changxin Wanlin Technology Co., Ltd, Federal Mining Resources Ltd and Federal Capital Investment Limited were issued to their nominee Internet.com Ltd on June 9, 2021.

On June 11, 2021, GBL entered into a Sale and Purchase of Assets Agreement (the “SPA Agreement”) to purchase a factory site from a Malaysia company Segama Ventures Sdn Bhd (“Segama Ventures”), an unrelated third party, in order to expand the Company’s biofraction plant in Malaysia. Under the terms of the SPA Agreement, the acquisition is satisfied by cash payment of $1,600,000 in two installments of $800,000 each , one payment upon signing of the SPA Agreement, and the second payment within three (3) months from the date of the SPA Agreement. A deposit of $800,000 was paid to Segama Ventures on June 10, 2021. On March 2, 2022, however, GBL entered into a Cancellation of Sale and Purchase of Assets Agreement (“Cancellation Agreement”) for the cancellation of the Sale and Purchase of Assets Agreement to purchase the factory site from Segama Ventures that was signed on June 11, 2021.

Simultaneously, on March 2, 2022, the Company, through GBL, entered into a Commercial Lease Agreement and Option to Purchase (“Lease Agreement”) for renting the factory site from Segama Ventures for a lease term of seven (7) years (“Lease Term”) at a monthly rental of MYR 36,000 ($8,571). The rental for the entire Lease Term amounts to the sum of MYR 3,024,000 ($720,000) (the “Lease Payment”) which shall be paid in advance upon commencement of the Lease Agreement together with a payment of security deposit for the sum of MYR 336,000 ($80,000) (the “Security Payment”). The refundable advance of $800,000 from the Cancellation Agreement above was utilized against the security deposit and payment of the advance rental. The Lease Agreement also provides GBL with an exclusive right and option to purchase the factory site together with all its right title and interest for a consideration of MYR 8,000,000 ($1,904,762) (the “Purchase Price”) or subject to a valuation report on the factory site by a Malaysian registered property valuer at any time during the period of two years from the date of the Lease Agreement. The Lease Payment and Security Payment shall be applied toward the Purchase Price upon GBL exercising the option to purchase.

On June 17, 2021, the Company through its prospective indirect subsidiary Bio Resources Limited (“BRL”), a company incorporated under the laws of Labuan, entered into a Shares Sale Agreement with Hermalis Binti Mohmad Tahir (“Hermalis”), a company incorporated under the laws of Malaysia, to acquire the entire issued and paid-up share capital of Global Renewables Sdn Bhd. Under the terms of the Shares Sale Agreement, the consideration for the acquisition shall be satisfied in full by the payment of MYR 25,000 ($6,000) upon the execution of the Shares Sale Agreement. The acquisition of Global Renewables Sdn Bhd however, was cancelled on April 18, 2022.

On June 18, 2021, GBL entered into a Shares Sale Agreement with Lamax Gold Limited (“LGL”), a company incorporated under the laws of the British Virgin Islands, in relation to acquisition of the remaining 15% of the issued and paid-up share capital of CSB for a consideration of MYR 150,000 ($35,669) payable upon the execution of the Shares Sale Agreement. Prior to this acquisition, GBL owned 85% equity in CSB and with the completion of this transaction, CSB. became a wholly owned subsidiary of GBL and indirectly of the Company.

Verde Renewables, Inc. (“VRI”) was incorporated on August 10, 2021, in the State of Missouri, U.S.A. The major operation of VRI will include management of a processing and packaging facility to process organic bio-waste into sources of renewable commodities using its biofraction technology, and distribution of biochar, wood vinegar and bio-gas. VRI is wholly owned by the Company.

Verde Estates LLC (“VEL”) was incorporated on August 10, 2021, in the State of Missouri, U.S.A. VEL was formed for the purpose of holding real property in Missouri. VEL is wholly owned by VRI.

Verde Life Inc. (“VLI”) was incorporated on November 15, 2021, in the State of Oregon, U.S.A. The major operation of VLI will include conducting business in the distribution of THC-free cannabinoid (CBD) products. VLI is wholly owned by the Company.

On January 17, 2022, the Company formed a wholly owned subsidiary, Verde Resources (Malaysia) Sdn Bhd (“Verde Malaysia”), a company incorporated under the laws of Malaysia, for the purpose of conducting consultation services and distribution of renewable agricultural commodities.

On February 10, 2022, the Company, through VEL, entered into a Commercial Lease Agreement and Option to Purchase (the “Lease Agreement”) to rent a 24-acre property in La Belle Missouri from Jon Neal Simmons and Betty Jo Simmon (the “Landlord”) to support carbon farming with biochar in Missouri. Under the Lease Agreement, the term of the lease will be for a period of two (2) years and the Company will have the right to renew the lease with a total of three renewal periods with each term being two years. The base rent is ten thousand dollars ($10,000) for the term, payable on the commencement of the Lease Agreement. The Lease Agreement also grants the Company the exclusive right and option to purchase the premises together with all the right title and interest from the Landlord for a consideration of $490,000 at any time during the two years period of the lease term.

On March 23, 2022, the Company, through Verde Malaysia, entered into a Sale of Shares Agreement (“SSA”) with The Wision Project Sdn Bhd (“Wision”), a company incorporated under the laws of Malaysia, and its sole shareholder Jack Wong, to acquire the one hundred percent (100%) of the issued and paid up ordinary shares in Wision from Mr. Wong. Under the terms of the SSA, the consideration for the acquisition shall be satisfied by the payment of MYR 1 ($0.23) upon the execution of the SSA. Wision is a digital development, marketing and consulting firm that provides public relations, branding, profile building, influencer marketing, event management and media relations services to the Company.

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Condensed Consolidated Financial Statements

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The results of operations for the periods ended March 31, 2021 are not necessarily indicative of the operating results for the full years.

 

Basis of Presentation

 

The accounting and reporting policies of the Company conform toaccompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of America (GAAP). These condensed consolidatedRegulation S-X. Certain information and note disclosures normally included in audited financial statements are expressed in United States dollars ($). Financial statements prepared in accordance with GAAP contemplategenerally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the realization of assets andCompany believes that the satisfaction of liabilities indisclosures made are adequate to make the normal course of business. These condensed consolidated audited financial statements include all adjustments that, ininformation not misleading.

In the opinion of management, are necessary in order to make the consolidated balance sheet as of June 30, 2021 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended March 31, 2022 are not misleading.necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 2022 or for any future period.

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended June 30, 2021, filed with the SEC on November 12, 2021.

 

Basis of Consolidation

 

The condensed consolidated financial statements include the financial statements of Verde Resources, Inc., its wholly owned subsidiary Gold Billion Global Limited (“GBL”) and the 85% of the deemed subsidiary variable interest of Champmark SDN BHD (“CSB”).subsidiaries. All inter-company balances and transactions between the Company and variable interest entity (VIE)its subsidiaries have been eliminated upon consolidation.

 

The Company has adopted ASC Topic 810-10-5-8, “Variable Interest Entities”, which requires a variable interest entity or VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns.

Variable Interest Entity

On July 1, 2013, the Company’s subsidiary, GBL entered into a series of agreements (“VIE agreements”) with FMR and details of the VIE agreements are as follows :

1.

Management Agreement, FMR entrusted the management rights of its subsidiary CSB to GBL that include:

i)

management and administrative rights over the day-to-day business affairs of CSB and the mining operation at Site IV-1 of the Merapoh Gold Mine;

ii)

final right for the appointment of members to the Board of Directors and the management team of CSB;

iii)

act as principal of CSB;

iv)

obligation to provide financial support to CSB;

v)

option to purchase an equity interest in CSB;

vi)

entitlement to future benefits and residual value of CSB;

vii)

right to impose no dividend policy;

viii)

human resources management.

2.

Debt Assignment, FMR assigned to GBL the sum of money in the amount of US Dollars One Hundred Nine Thousand Eight Hundred One And Cents Seventy-Two Only (US$ 109,801.72), now due to GBL from CSB under the financing obligation from the FMR to CSB.

With the above agreements, GBL demonstrates its ability to control CSB as the primary beneficiary and the operating results of the VIE was included in the condensed consolidated financial statements for the year ended June 30, 2014.

On April 1, 2014, the Board of Director of GBL notified FMR upon the decision to exercise the right of option to purchase 85% equity interest of CSB under Management Agreement Section 3.2.4 dated July 1, 2013 between GBL and FMR. This acquisition was completed on April 1, 2014 with consideration of US$1. GBL then became 85% shareholder of CSB and is required to consolidate CSB as a subsidiary.

 
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Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s periodic filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of the Company.

 

The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business slowdowns or shutdowns, depress demand for the Company’s business, and adversely impact its results of operations. The Company expects uncertainties around its key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. Its estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in its consolidated financial statements.

Identified below are the accounting policies that reflect the Company’s most significant estimates and judgments, and those that the Company believes are the most critical to fully understanding and evaluating its unaudited condensed consolidated financial statements.

Cash and Cash Equivalents

 

Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had $27,629$1,722,583 and $24,027$2,117,622 in cash and cash equivalents at March 31, 20212022 and June 30, 2020,2021, respectively.

At March 31, 2022 and June 30, 2021 cash and cash equivalents consisted of bank deposits in a Malaysian bank and petty cash on hands.

 

Concentrations of Credit Risk

 

The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables it will likely incur in the near future. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.

 

Risks and Uncertainties

 

The Company operates in the resource exploration industry that is subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating a resource exploration business, including the potential risk of business failure.

 

Property, plant and equipment

Property, plant and equipment are stated at cost. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets with a 5% estimated residual values, as follows: 

Useful Lives

Land and buildings

3-6 years

Machinery

5 years

Furniture, fixture and electronic equipment

3 years

Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterment which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other comprehensive income in other income or expenses.

Accounts Receivable

 

Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts will be recorded in the period when a loss is probable based on an assessment of specific evidence indicating troubled collection, historical experience, accounts aging, ongoing business relation and other factors. Accounts are written off after exhaustive efforts at collection. If accounts receivable are to be provided for, or written off, they would be recognized in the consolidated statement of operations within operating expenses. At March 31, 2022 and June 30, 2021, the Company has no allowance for doubtful accounts, as per management’s judgment based on their best knowledge. As of March 31, 20212022 and June 30, 2020,2021, the longest credit term for certain customers are 60 days.

 

Provision for Doubtful AccountsInventories

 

Inventories are stated at the lower of cost or market value (net realizable value), cost being determined on a first-in-first-out method. Costs include material, labor and overhead costs. The Company maintainsprovides inventory allowances based on excess and obsolete inventories determined principally by customer demand.

As of March 31, 2022 and June 30, 2021, the Company did not record an allowance for doubtful accounts to reserve for potentially uncollectible receivables and reviews accounts receivable by amounts due by customers which are past due to identify specific customers with known disputes or collectability issues. In determining the amount of the reserve, the Company makes judgments about the creditworthiness of customers based on past collection experience and ongoing credit risk evaluations. At March 31, 2021 and June 30, 2020obsolete inventories, nor have there was no allowance for doubtful accounts.been any write-offs

 

Fair Value

  

ASC Topic 820Fair Value Measurement and Disclosures” establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

 

 
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These tiers include:

 

 

·

Level 1—defined as observable inputs such as quoted prices in active markets;

 

·

Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

 

·

Level 3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

 

The Company’s financial instruments consist of cash and cash equivalents, trade receivables, other receivables, payables, and short term and long term debt. The carrying values of cash and cash equivalents, trade receivables, other receivables, and payables approximate their fair value due to their short maturities. The carrying value of long term debt approximates the fair value of debt of similar terms and remaining maturities available to the company.

 

The Company’s non-financial assets are measured on a recurring basis. These non-financial assets are measured for impairment annually on the Company’s measurement date at the reporting unit level using Level 3 inputs. For most assets, ASC 820 requires that the impact of changes resulting from its application be applied prospectively in the year in which the statement is initially applied.

 

The Company’s non-financial assets measured on a non-recurring basis include the Company’s property, plant and equipment and finite-use intangible assets which are measured for recoverability when indicators for impairment are present. ASC 820 requires companies to disclose assets and liabilities measured on a non-recurring basis in the period in which the re-measurement at fair value is performed.

 

Leases

The Company diddetermines if an arrangement is a lease or contains a lease at inception. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not have any convertible bondsreadily determinable for the operating lease, the Company generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use (“ROU assets”) assets represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term.

ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets.

ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

The Company recognized no impairment of ROU assets as of March 31, 20212022 and June 30, 2020.2021.

The operating lease is included in operating lease right-of-use assets and operating lease liabilities as current and non-current liabilities in the consolidated balance sheets at March 31, 2022 and June 30, 2021.

Leases that transfer substantially all the rewards and risks of ownership to the lessee, other than legal title, are accounted for as finance leases. Substantially all of the risks or benefits of ownership are deemed to have been transferred if any one of the four criteria is met: (i) transfer of ownership to the lessee at the end of the lease term, (ii) the lease containing a bargain purchase option, (iii) the lease term exceeding 75% of the estimated economic life of the leased asset, (iv) the present value of the minimum lease payments exceeding 90% of the fair value. At the inception of a finance lease, we as the lessee records an asset and an obligation at an amount equal to the present value of the minimum lease payments. The leased asset is amortized over the shorter of the lease term or its estimated useful life if title does not transfer to us, while the leased asset is depreciated in accordance with our depreciation policy if the title is to eventually transfer to us. The periodic rent payments made during the lease term are allocated between a reduction in the obligation and interest element using the effective interest method in accordance with the provisions of ASC 842.

 

Foreign Currency Translation

 

The Company’s reporting currency is the United States dollar (“$”) and the accompanying consolidated financial statements have been expressed in United States dollars. The Company’s functional currency is the Malaysian Ringgit ( “MYR”(“MYR”) which is a functional currency as being the primary currency of the economic environment in which their operations are conducted.

 

InMonetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statement of operations.

For reporting purposes, in accordance with ASC Topic 830Translation of Financial Statements”, capital accounts of the consolidated financial statements are translated into United States dollars from MYR at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the respective year. The gains and losses resulting exchange differencesfrom translation of financial statements subsidiaries to the reporting currency are recorded as a separate component of accumulated other comprehensive income within the statements of changes in the consolidated statement of operations.stockholder’s equity.

 

 

 

March 31,

2021

 

 

June 30,

2020

 

Period-end MYR : $1 exchange rate

 

 

0.2414

 

 

 

0.2334

 

Average MYR : $1 exchange rate

 

 

0.2430

 

 

 

0.2376

 

                 Translation of RM into U.S. dollars has been made at the following exchange rates:

Balance sheet items, except for equity accounts

June 30, 2021

RM 4.1511 to 1

March 31, 2022

RM 4.2045 to 1

Statement of operations and cash flow items

For the nine months ended March 31, 2021

RM 4.1152 to 1

For the nine months ended March 31, 2022

RM 4.1845 to 1

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Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718-10 “Compensation-Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options, restricted stock units, and stock appreciation rights are based on estimated fair values. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period.

The Company accounts for non-employee stock-based awards at fair value in accordance with the measurement and recognition criteria of ASC 505-50 “Equity-Based Payments to Non-Employees.

 

Comprehensive Income

 

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. Comprehensive income includes net income and the foreign currency translation changes.

 

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Segment ReportingRelated Party

 

The Company currently engagesfollows the ASC 850-10, “Related Party Disclosures” for the identification of related parties and disclosure of related party transactions.

Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one operation segment: Gold Mining. of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The expenses incurredconsolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were consisting principallyascribed, for each of management services. the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Non-controlling Interest

The Company’s major operation is locatednon-controlling interest represents the minority shareholder’s ownership interest related to the Company’s subsidiary, CSB. The Company reports its non-controlling interest in Malaysia.subsidiaries as a separate component of equity in the Consolidated Balance Sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common shareholders on the face of the Consolidated Statements of Operations.

 

Mineral Acquisition and Exploration Costs

The Company has been primarily engaged in the acquisition, exploration, and development of mining properties. The Company was no longer considered an exploration stage company after the reverse take-over with its subsidiary GBL.

 

Mineral property acquisition and exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserves.

 

Environmental Expenditures

 

The operations of the Company have been, and may in the future be affected from time to time in varying degree by changes in environmental regulations, including those for future reclamation and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Company’s policy is to meet or, if possible, surpass standards set by relevant legislation by application of technically proven and economically feasible measures.

 

Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against earnings as incurred or capitalized and amortized depending on their future economic benefits. All of these types of expenditures incurred since inception have been charged against earnings due to the uncertainty of their future recoverability. Estimated future reclamation and site restoration costs, when the ultimate liability is reasonably determinable, are charged against earnings over the estimated remaining life of the related business operation, net of expected recoveries.

 

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Commitments and contingencies

The Company follows the ASC 450-20, “Contingencies” to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. 

Revenue Recognition

 

In accordanceThe Company recognizes revenues when its customers obtain control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five-step model prescribed under ASU No. 2014-09: (i) identifies contract(s) with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenues when (or as) it satisfies the performance obligation.

Revenues are recognized when control of the promised goods or services is transferred to the customers, which may occur at a point in time or over time depending on the terms and conditions of the agreement, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

Product sales

Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial.

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with the ASC Topic 605, “Revenue Recognition”, the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectibility is reasonably assured.Company’s customers.

 

The Company derivesProduct revenue reserves, which are classified as a reduction in product revenues, primarilyare generally characterized in the following categories: discounts, returns and rebates. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable as the amount is payable to the Company’s customer.

Gold mining

Revenue from the sales of gold mineral or other minerals to registered gold trading companies or other customers in Malaysia. The Company generally recognizes its revenuesMalaysia is recognized as revenue in accordance with the following core principles: at the time of gold or minerals sales, the contract with customers and itsthe performance obligations are identified. The transaction and selling price is determined by the prevailing market value of gold bullion quoted by the leading registered gold trading company in Malaysia.Malaysia or at an agreed price. Sales invoice will be duly presentedprepared to reflect the trading companies whenproper transaction price based on the performance obligation allocation. After delivery is completed and the performance obligation is satisfied, sales invoice will be presented to the customers and so revenue is then recognized.recognized accordingly.

Cost of Revenue

The cost of revenue consists of exploration cost, mine equipment depreciation, production cost, mine site management cost, sub-contractor cost, and royalty and tribute payment which are levied on the gross revenue at the rate of 18% on the invoiced value of gold sales.

Advertising Expenses

Advertising costs are expensed as incurred under ASC Topic 720, “Advertising Costs” . Advertising expenses incurred for the periods ended March 31, 2021 and June 30, 2020 were $0.

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Income Taxes

 

The provision for income taxes is determined in accordance with the provisions of ASC Topic 740,Accounting for Income Taxes” (“(“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. As of March 31, 20212022 and June 30, 2020,2021, the Company did not have any significant unrecognized uncertain tax positions.

 

Recent Accounting Pronouncements

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

The FASB has issued Accounting Standards Update (ASU) No. 2018-01, Leases (Topic 842):Land Easement Practical Expedient for Transition to Topic 842, which clarifies the application of the new leases guidance to land easements and eases adoption efforts for some land easements.

ASU 2018-01 is expected to reduce the cost of adopting the new leases standard for certain land easements. It is also an attempt to help ensure that companies can make a successful transition to the standard without compromising the quality of information provided to investors about these transactions.

Land easements (also commonly referred to as rights of way) represent the right to use, access, or cross another entity’s land for a specified purpose. Land easements are used by utility and telecommunications companies, for example, when they need to take a small strip of land, or easement, to bury wires. Not all companies have historically accounted for them as leases.

Stakeholders pointed out that the requirement to evaluate all old and existing land easements, sometimes numbering in the tens of thousands, to determine if they meet the definition of a lease under the new standard could be very costly. They also noted there would be limited benefit to applying this requirement, as many of their land easements would not meet the definition of a lease, or even if they met that definition, many of their easements are prepaid and, therefore, already are recognized on the balance sheet.

The land easements ASU addresses this by:

·

Providing an optional transition practical expedient that, if elected, would not require an organization to reconsider their accounting for existing land easements that are not currently accounted for under the old leases standard; and

·

Clarifying that new or modified land easements should be evaluated under the new leases standard, once an entity has adopted the new standard.

The FASB issued an Accounting Standards Update (ASU) that helps organizations address certain stranded income tax effects in accumulated other comprehensive income (AOCI) resulting from the Tax Cuts and Jobs Act.

ASU No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, provides financial statement preparers with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded.

 

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The ASU requires financial statement preparers to disclose:

·

A description of the accounting policy for releasing income tax effects from AOCI;

·

Whether they elect to reclassify the stranded income tax effects from the Tax Cuts and Jobs Act; and

·

Information about the other income tax effects that are reclassified.

The amendments affect any organization that is required to apply the provisions of Topic 220, Income Statement—Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP.

The amendments affect any organization that is required to apply the provisions of Topic 220, Income Statement—Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments are effective for all organizationsIn May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), (“ASU 2021-04”). This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU became effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Organizations should apply the proposed amendments either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized.

ASU 2018-05 adds the following guidance, among other things, to the FASB Accounting Standards Codification™ regarding the Act:

·

Question 1:If the accounting for certain income tax effects of the Act is not completed by the time a company issues its financial statements that include the reporting period in which the Act was enacted, what amounts should a company include in its financial statements for those income tax effects for which the accounting under Topic 740 is incomplete?

·

Answer 1:In a company’s financial statements that include the reporting period in which the Act was enacted, a company must first reflect the income tax effects of the Act in which the accounting under Topic 740 is complete. These completed amounts would not be provisional amounts. The company would then also report provisional amounts for those specific income tax effects of the Act for which the accounting under Topic 740 will be incomplete, but a reasonable estimate can be determined. For any specific income tax effects of the Act for which a reasonable estimate cannot be determined, the company would not report provisional amounts and would continue to apply Topic 740 based on the provisions of the tax laws that were in effect immediately prior to the Act being enacted. For those income tax effects for which a company was not able to determine a reasonable estimate (such that no related provisional amount was reported for the reporting period in which the Act was enacted), the company would report provisional amounts in the first reporting period in which a reasonable estimate can be determined.

·

Question 2: If an entity accounts for certain income tax effects of the Act under a measurement period approach, what disclosures should be provided?

·

Answer 2:The staff believes an entity should include financial statement disclosures to provide information about the material financial reporting impacts of the Act for which the accounting under Topic 740 is incomplete, including:

a.

Qualitative disclosures of the income tax effects of the Act for which the accounting is incomplete;

b.

Disclosures of items reported as provisional amounts;

c.

Disclosures of existing current or deferred tax amounts for which the income tax effects of the Act have not been completed;

d.

The reason why the initial accounting is incomplete;

e.

The additional information that is needed to be obtained, prepared, or analyzed in order to complete the accounting requirements under Topic 740;

f.

The nature and amount of any measurement period adjustments recognized during the reporting period;

g.

The effect of measurement period adjustments on the effective tax rate; and

h.

When the accounting for the income tax effects of the Act has been completed.

ASU 2018-05 is effective upon inclusion in the FASB Codification.

The FASB has issued an Accounting Standards Update (ASU) 2018-07 intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments.

The ASU expands the scope of Topic 718, Compensation—Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees.

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The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other companies, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers.

FASB Releases ASU No. 2018-09. The FASB has released Accounting Standards Update (ASU) No. 2018-09, Codification Improvements. ASU 2018-09 affects a wide variety of Topics in the Codification including:

·

Amendments to Subtopic 220-10,Income Statement— Reporting Comprehensive Income—Overall. The guidance in paragraph 220-10-45-10B(b) states that taxes not payable in cash are required to be reported as a direct adjustment to paid-in capital. This requirement conflicts with other guidance in Topic 740,Income Taxes, Subtopic 805-740,Business Combinations—Income Taxes, and Subtopic 852-740,Reorganizations—Income Taxes, which generally states that income taxes and adjustments to those accounts upon a business combination or a bankruptcy that is eligible for fresh-start reporting must be recognized in income. ASU No. 2018-09 clarifies the guidance in paragraph 220-10-45-10B by removing the generic phrase taxes not payable in cash and adding guidance that is specific to certain quasi-reorganizations.

·

Amendments to Subtopic 470-50,Debt—Modifications and Extinguishments. The guidance in paragraph 470-50-40-2 requires that the difference between the reacquisition price of debt and the net carrying amount of extinguished debt be recognized in income in the period of extinguishment. The guidance in that paragraph was not amended by FASB Statement No. 155, Accounting for Certain Hybrid Financial Instruments, or FASB Statement No. 159,The Fair Value Option for Financial Assets and Financial Liabilities; therefore, it does not specifically address extinguishments of debt when the fair value option is elected. ASU No. 2018-09 clarifies that:

1.

When the fair value option has been elected on debt that is extinguished, the net carrying amount of the extinguished debt equals its fair value at the reacquisition date, and

2.

Related gains or losses in other comprehensive income must be included in net income upon extinguishment of the debt.

·

Amendments to Subtopic 480-10, Distinguishing Liabilities from Equity—Overall. The guidance in paragraph 480-10-25-15 prohibits the combination of freestanding financial instruments within the scope of Subtopic 480-10 with noncontrolling interest, unless the combination is required by Topic 815,Derivatives and Hedging. The example in paragraphs 480-10-55-55 and 480-10-55-59 conflicts with that guidance by stating that freestanding option contracts with the terms in Derivative 2 should be accounted for on a combined basis with the noncontrolling interest. The source of the example in paragraph 480-10-55-59 is from EITF Issue No. 00-4, “Majority Owner’s Accounting for a Transaction in the Shares of a Consolidated Subsidiary and a Derivative Indexed to the Noncontrolling Interest in That Subsidiary.” Issue 00-4 was nullified by FASB Statement No. 150,Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, but a conforming amendment to the example in paragraph 480-10-55-59 was not made to align it with the guidance in Statement 150. The amendment in this Update conforms the guidance in paragraphs 480-10-55-55 and 480-10-55-59 with the guidance in Statement 150.

·

Amendments to Subtopic 718-740,Compensation—Stock Compensation—Income Taxes. The guidance in paragraph 718-740-35-2, as amended, is unclear on whether an entity should recognize excess tax benefits (or tax deficiencies) for compensation expense that is taken on the entity’s tax return. The amendment to paragraph 718-740-35-2 in ASU No. 2018-09 clarifies that an entity should recognize excess tax benefits (that is, the difference in tax benefits between the deduction for tax purposes and the compensation cost recognized for financial statement reporting) in the period when the tax deduction for compensation expense is taken on the entity’s tax return. This includes deductions that are taken on the entity’s return in a different period from when the event that gives rise to the tax deduction occurs and the uncertainty about whether (1) the entity will receive a tax deduction and (2) the amount of the tax deduction is resolved.

·

Amendments to Subtopic 805-740,Business Combinations— Income Taxes. The amendments to paragraph 805-740-25-13 removes a list of three methods for allocating the consolidated tax provision to an acquired entity after acquisition that is inconsistent with guidance in Topic 740. The three methods for tax allocation described in paragraph 805-740-25-13 do not follow the broad principles of being systematic, rational, and consistent with Topic 740. The amendment removes the allocation methods in paragraph 805-740-25-13 and conforms the guidance in Subtopic 805-740 with the guidance in Topic 740.

·

Amendments to Subtopic 815-10,Derivatives and Hedging— Overall. The amendment to paragraphs 815-10-45-4 and 815-10-45-5 in ASU No. 2018-09 clarifies the circumstances in which derivatives may be offset. Under certain specific conditions, derivatives may be offset if three of the four criteria in paragraph 210-20-45-1 are met. One of the criteria—the intent to set off—is not required to offset derivative assets and liabilities for certain amounts arising from derivative instruments recognized at fair value and executed with the same counterparty under a master netting agreement.

·

Amendments to Subtopic 820-10,Fair Value Measurement— Overall. The amendments to paragraph 820-10-35-16D in ASU No. 2018-09 clarify the Board’s decisions about the measurement of the fair value of a liability or instrument classified in a reporting entity’s shareholder’s equity from the perspective of a market participant that holds an identical item as an asset at the measurement date. A technical inquiry questioned how transfer restrictions embedded in an asset should affect the fair value of the corresponding liability or equity instrument from the perspective of the issuer. The amendments correct the wording of paragraph 820-10-35-16D to clarify how an entity should account for those restrictions. The amendments are not intended to substantively change the application of GAAP. However, it is possible that the amendments may result in a change to existing practice for some entities.

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The amendments to paragraphs 820-10-35-18D through 35-18F and 820-10-35- 18H through 35-18L revise the current guidance to allow portfolios of financial instruments and nonfinancial instruments accounted for as derivatives in accordance with Topic 815 to use the portfolio exception to valuation. The amendments improve guidance by adding wording that explicitly states that a group of financial assets, financial liabilities, nonfinancial items accounted for as derivatives in accordance with Topic 815, or a combination of these items that otherwise meet the criteria to do so are permitted to apply the portfolio exception for measuring fair value of the group. This allows entities to measure fair value on a net basis for those portfolios in which financial assets and financial liabilities and nonfinancial instruments are managed and valued together.

·

Amendments to Subtopic 940-405, Financial Services—Brokers and Dealers—Liabilities. Paragraph 940-405-55-1 contains incomplete guidance about offsetting on the balance sheet. The current guidance focuses only on explicit settlement dates as a determining criterion for offsetting when, in fact, an entity should consider all the requirements in Section 210-20-45,Balance Sheet—Offsetting—Other Presentation Matters, to determine whether a right of offset exists. There is similar guidance in paragraph 942-210-45-3. Paragraphs 940-405-55-1 and 942-210-45- 3 originated from two different AICPA Audit and Accounting Guides and paraphrase the guidance in Subtopic 210-20, albeit each slightly differently. The Board decided to amend both paragraphs so that the industry Topic guidance refers to the complete guidance for offsetting.

·

Amendments to Subtopic 962-325,Plan Accounting—Defined Contribution Pension Plans—Investments—Other. The amendment to Subtopic 962-325 removes the stable value common collective trust fund from the illustrative example in paragraph 962-325-55-17 to avoid the interpretation that such an investment would never have a readily determinable fair value and, therefore, would always use the net asset value per share practical expedient. Rather, a plan should evaluate whether a readily determinable fair value exists to determine whether those investments may qualify for the practical expedient to measure at net asset value in accordance with Topic 820.

Transition and Effective Date. The transition and effective date guidance is based on the facts and circumstances of each amendment. Some of the amendments in ASU No. 2018-09 do not require transition guidance and will be effective upon issuance of ASU No. 2018-09. However, many of the amendments do have transition guidance with effective dates for annual periods beginning after December 15, 2018, for public business entities.

In addition, there are some conforming amendments in ASU No. 2018-09 that have been made to recently issued guidance that is not yet effective that may require application of the transition and effective date guidance in the original ASU. For example, there are conforming amendments to Topic 820 and Subtopic 944-310, Financial Services—Insurance—Receivables, that are related to2021. An entity should apply the amendments in Accounting Standards Update No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which require application of the transition and effective date guidance in that ASU.

The FASB has issued Accounting Standards Update (ASU) No. 2018-10, Codification Improvementsprospectively to Topic 842, Leases.

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ASU No. 2018-10, among other things, amends Topic 842 as follows:

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Issue 1: Residual Value Guarantees - Paragraph 460-10-60-32 in Topic 460, Guarantees - This paragraph incorrectly refers readers to the guidance in Topic 842 about sale-leaseback-sublease transactions, when, in fact, it should refer readers to the guidance about guarantees by a seller-lessee of the underlying asset’s residual value in a sale and leaseback transaction. The amendment corrects the cross-reference in paragraph 460-10-60-32.

·

Issue 2: Rate Implicit in the Lease - The amendment clarifies that a rate implicit in the lease of zero should be used when applying the definition of the term “rate implicit” in the lease results in a rate that is less than zero.

·

Issue 3: Lessee Reassessment of Lease Classification - The amendment consolidates the requirements about lease classification reassessments into one paragraph and better articulates that an entity should perform the lease classification reassessmentmodifications or exchanges occurring on the basis of the facts and circumstances, and the modified terms and conditions, if applicable, as of the date the reassessment is required.

·

Issue 4: Lessor Reassessment of Lease Term and Purchase Option - The amendment clarifies that a lessor should account for the exercise by a lessee of an option to extend or terminate the lease or to purchase the underlying asset as a lease modification unless the exercise of that option by the lessee is consistent with the assumptions that the lessor made in accounting for the lease at the commencement date of the lease (or the most recent effective date of a modification that is not accounted for as a separate contract).

·

Issue 5: Variable Lease Payments That Depend on an Index or a Rate - The amendment clarifies that a change in a reference index or rate upon which some or all of the variable lease payments in the contract are based does not constitute the resolution of a contingency subject to the guidance in paragraph 842-10-35-4(b). Variable lease payments that depend on an index or a rate should be remeasured, using the index or rate at the remeasurement date, only when the lease payments are remeasured for another reason (that is, when one or more of the events described in paragraph 842-10-35- 4(a) or (c) occur or when a contingency unrelated to a change in a reference index or rate under paragraph 842-10-35-4(b) is resolved).

·

Issue 6: Investment Tax Credits - There is an inconsistency in terminology used about the effect that investment tax credits have on the fair value of the underlying asset between the definition of the term rate implicit in the lease and the lease classification guidance in paragraph 842-10-55-8. The amendment removes that inconsistency by clarifying that the period covered by a lessor-only option to terminate the lease is included in the lease term.

·

Issue 7: Lease Term and Purchase Option - The description in paragraph 842-10-55- 24 about lessor-only termination options is inconsistent with the description in paragraph 842-10-55- 23 about the noncancellable period of a lease. The amendment removes that inconsistency by clarifying that the period covered by a lessor-only option to terminate the lease is included in the lease term.

·

Issue 8: Transition Guidance for Amounts Previously Recognized in Business Combinations - The transition guidance for lessors in paragraph 842-10-65-1(h)(3) is unclear because it relates to leases classified as direct financing leases or sales-type leases under Topic 840, while the lead-in sentence to paragraph 842-10-65-1(h) provides transition guidance for leases classified as operating leases under Topic 840. The amendment clarifies that paragraph 842-10-65-1(h)(3) applies to lessors for leases classified as direct financing leases or sales-type leases under Topic 842, not Topic 840. In other words, paragraph 842- 10-65-1(h)(3) applies when an entity does not elect the package of practical expedients in paragraph 842-10-65-1(f), and, for a lessor, an operating lease acquired as part of a previous business combination is classified as a direct financing lease or a sales-type lease when applying the lease classification guidance in Topic 842. The amendment also cross-references to other transition guidance applicable to those changes in lease classification for lessors.

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·

Issue 9: Certain Transition Adjustments - The amendments clarify whether to recognize a transition adjustment to earnings rather than through equity when an entity initially applies Topic 842 retrospectively to each prior reporting period.

·

Issue 10: Transition Guidance for Leases Previously Classified as Capital Leases under Topic 840 - Paragraph 842-10-65-1(r) provides guidance to lessees for leases previously classified as capital leases under Topic 840 and classified as finance leases under Topic 842. Paragraph 842-10-65-1(r)(4) provides subsequent measurement guidance before the effective date when an entity initially applies Topic 842 retrospectively to each prior reporting period, but it refers readers to the subsequent measurement guidance in Topic 840 about operating leases. It should refer them to the subsequent measurement guidance applicable to capital leases. The amendment corrects that reference.

·

Issue 11: Transition Guidance for Modifications to Leases Previously Classified as Direct Financing or Sales-Type Leases under Topic 840 - Paragraph 842-10-65-1(x) provides transition guidance applicable to lessors for leases previously classified as direct financing leases or sales-type leases under Topic 840 and classified as direct financing leases or sales-type leases under Topic 842. For modifications to those leases beginning after the effective date, paragraph 842-10-65-1(x)(4) refers readers to other applicable guidance in Topic 842 to account for the modification, specifically paragraphs 842-10-25-16 through 25- 17, depending on how the lease is classified after the modification. Stakeholders noted that it should refer to how the lease is classified before the modification to be consistent with the guidance provided in paragraphs 842-10-25-16 through 25-17. The amendment corrects that inconsistency.

·

Issue 12: Transition Guidance for Sale and Leaseback Transactions - The amendments clarify that the transition guidance on sale and leaseback transactions in paragraph 842-10-65-1(aa) through (ee) applies to all sale and leaseback transactions that occur before the effective date and corrects the referencing issues noted.

·

Issue 13: Impairment of Net Investment in the Lease - Paragraph 842-30-35-3 provides guidance to lessors for determining the loss allowance of the net investment in the lease and describes the cash flows that should be considered when the lessor determines that loss allowance. Stakeholders questioned whether the guidance, as written, would accelerate and improperly measure the loss allowance because the cash flows associated with the unguaranteed residual asset appear to be excluded from the evaluation. The amendment clarifies the application of the guidance for determining the loss allowance of the net investment in the lease, including the cash flows to consider in that assessment.

·

Issue 14: Unguaranteed Residual Asset - The amendment clarifies that a lessor should not continue to accrete the unguaranteed residual asset to its estimated value over the remaining lease term to the extent that the lessor sells substantially all of the lease receivable associated with a direct financing lease or a sales-type lease, consistent with Topic 840.

·

Issue 15: Effect of Initial Direct Costs on Rate Implicit in the Lease - The ordering of the illustration in Case C of Example 1 in paragraphs 842-30-55- 31 through 55-39 raised questions about how initial direct costs factor into determining the rate implicit in the lease for lease classification purposes for lessors only. The amendment more clearly aligns the illustration to the guidance in paragraph 842-10-25-4.

·

Issue 16: Failed Sale and Leaseback Transaction - The amendment clarifies that a seller lessee in a failed sale and leaseback transaction should adjust the interest rate on its financial liability as necessary to ensure that the interest on the financial liability does not exceed the total payments (rather than the principal payments) on the financial liability. This clarification is also reflected in the relevant illustration on failed sale and leaseback transactions that is contained in Subtopic 842-40.

FASB Issues Targeted Improvements to Lease Standard . The FASB has issued Accounting Standards Update (ASU) No. 2018-11, Leases (Topic 842): Targeted Improvements. This ASU is intended to reduce costs and ease implementation of the leases standard for financial statement preparers.

“The targeted improvements in the ASU address areas our stakeholders identified as sources of unnecessary cost or complexity in the leases standard,” stated FASB Chairman Russell G. Golden. “They represent the FASB’s commitment to proactively address implementation issues raised by our stakeholders to ensure a successful transition to the new standard without compromising the quality of information provided to investors.”

ASU 2018-11 provides a new transition method and a practical expedient for separating components of a contract.

 The FASB has issued Accounting Standards Update (ASU) No. 2019-01, Leases (Topic 842): Codification Improvements .

The new ASU aligns the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance. As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in Topic 820, Fair Value Measurement) should be applied.

The ASU also requires lessors within the scope of Topic 942, Financial Services—Depository and Lending, to present all “principal payments received under leases” within investing activities.

Finally, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard.

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In June 2016, the FASB issued Accounting Standards Update No. 2016-13, In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale Debt Securities. Since the issuance of Update 2016-13, the Board has assisted stakeholders in implementing the amendments formally through the activities of the Credit Losses Transition Resource Group (TRG) and informally through other implementation assistance activities. Through this assistance, the Board has identified certain areas that require clarification and improvement. The FASB received several agenda request letters asking that the Board consider amending the transition guidance for Update 2016-13. The entities that submitted the agenda request letters noted that certain financial statement preparers have begun (or are planning) to elect the fair value option on newly originated or purchased financial assets, although those entities historically have measured similar financial assets at amortized cost basis. Without the targeted transition relief provided by the amendments in this Update, those entities noted that they would be required to maintain dual measurement methodologies for identical or similar financial instruments that are being managed in the same manner and that they would not provide financial statement users with decision-useful information because the financial statement information would not be comparable. That is, the portion of an entity’s financial instruments measured at fair value may not be comparable to other identical, or similar, financial instruments measured at amortized cost basis that are owned by the same entity. The amendments in this Update address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information.

Transition: Comparative Reporting at Adoption

The amendments ASU 2018-11 provide entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption consistent with preparers’ requests. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with current GAAP in Topic 840, Leases.

An entity that elects this additional (and optional) transition method must provide the required Topic 840 disclosures for all periods that continue to be in accordance with Topic 840. The amendments do not change the existing disclosure requirements in Topic 840 (for example, they do not create interim disclosure requirements that entities previously were not required to provide).

Separating Components of a Contract

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The amendments in ASU 2018-11 provide lessors with a practical expedient, by class of underlying asset, to not separate nonlease components from the associated lease component and, instead, to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue guidance (Topic 606) and both of the following are met:

·

The timing and pattern of transfer of the nonlease component(s) and associated lease component are the same.

·

The lease component, if accounted for separately, would be classified as an operating lease.

An entity electing this practical expedient (including an entity that accounts for the combined component entirely in Topic 606) is required to disclose certain information, by class of underlying asset, as specified in the ASU.

Effective Date

The amendments in ASU 2018-11 related to separating components of a contract affect the amendments in ASU No. 2016-02, which are not yet effective but can be early adopted.

For entities that have not adopted Topic 842 before the issuance of this ASU, the effective date and transition requirements for the amendments in this update related to separating components of a contract are the same as the effective date and transition requirements in ASU 2016-02.

For entities that have adopted Topic 842 before the issuance of ASU 2018-11, the transition and effective date of the amendments relatedamendments. The adoption of ASU 2021-04 on July 1, 2022 is not expected to separating components ofhave a contract in this ASU are as follows:

·

The practical expedient may be elected either in the first reporting period following the issuance of this ASU or at the original effective date of Topic 842 for that entity.

·

The practical expedient may be applied either retrospectively or prospectively.

The FASB has further issued Accounting Standards Update (ASU) No. 2019-01, Leases (Topic 842): Codification Improvements.

The new ASU alignsmaterial impact on the guidance for fair value of the underlying asset by lessors that are not manufacturersCompany’s financial statements or dealers in Topic 842 with that of existing guidance. As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in Topic 820, Fair Value Measurement) should be applied.

The ASU also requires lessors within the scope of Topic 942, Financial Services—Depository and Lending, to present all “principal payments received under leases” within investing activities.

Finally, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard.

All entities, including early adopters that elect the practical expedient related to separating components of a contract in this ASU must apply the expedient, by class of underlying asset, to all existing lease transactions that qualify for the expedient at the date elected.  

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NOTE 3 - CASH AND CASH EQUIVALENTdisclosures.

 

The Company considershas reviewed all highly liquid investments purchased with original maturitiesrecently issued, but not yet effective, accounting pronouncements and believes that the future adoption of three monthsany such pronouncements may not be expected to cause a material impact on its financial condition or less to be cash equivalents. Atthe results of its operations.

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NOTE 3 - GOING CONCERN AND LIQUIDITY CONSIDERATIONS

The accompanying condescend consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of March 31, 20212022, the Company had suffered from recurring operating losses and June 30, 2020 cashrecorded an accumulated deficit of $9,327,647. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company intends to fund operations through debt and cash equivalents consisted of bank deposits in Malaysia bank and petty cash on hands.equity financing arrangements.

 

NOTE 4 - ACCOUNTS RECEIVABLE, NETThe ability of the Company to survive is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan.

 

Amount due fromIn response to these problems, management intends to raise additional funds through public or private placement offerings, and related parties at March 31, 2021 and June 30, 2020 consist of the following items:party loans.

 

 

 

March 31,

2021

 

 

June 30,

2020

 

 

 

 (Unaudited)

 

 

 

Accounts receivable

 

$14,230

 

 

$-

 

Less: allowance for doubtful debts

 

 

-

 

 

 

-

 

 

 

 

14,230

 

 

 

-

 

________No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stockholders, in the case of equity financing.

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic, which continues to spread around the world. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the Malaysia’s and global economy. While it is difficult to estimate the financial impact of COVID-19 on the Company’s operations, management believes that COVID-19 could have a material impact on its financial results at this time.

These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.

NOTE 4 – MINING RIGHT

On June 14, 2021, a lump sum payment of RM260,500 ($62,260) was made upfront to rent under a non-cancellable operating lease, the mining space with lease period for 2 years up to June 13, 2023, and no ongoing payments will be made under the terms of these mining leases. Lease expense for lease payment is recognized on a straight-line basis over the lease term.

 

The Company experienced $ nil bad debts duringCompany’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The table below presents the operating lease related assets and liabilities recorded on the balance sheets.

 

 

Ended

March 31,

2022

 

Balance as at the 1 July 2021

 

$60,131

 

Amortization charge for the period

 

 

(23,345)

Foreign exchange adjustment

 

 

(644)

Balance as of March 31, 2022

 

$36,142

 

Amortization charge of rights of use lease assets was $23,345 and $0 for the nine months ended March 31, 2022 and 2021, and 2020.respectively.

 

Amortization charge of rights of use lease assets was $8,150 and $0 for the three months ended March 31, 2022 and 2021, respectively.

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NOTE 5 - AMOUNT DUE FROM RELATED PARTIES– RIGHT OF USE ASSET AND LEASE LIABILITIES

 

Amount due from related parties at March 31, 2021 and June 30, 2020 consist of the following items:

March 31,

2021

June 30,

2020

Amount due from Stable Treasure Sdn. Bhd. (*)

$-

$-

________ 

(*) One of the directors of Stable Treasure Sdn. Bhd., Mr. Balakrishnan B S Muthu is also the director of the Company. The advances related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.a) Lease liabilities

 

NOTE 6 - INVENTORIESThe lease liabilities for motor vehicle, include long term and short term liabilities and are summarized as follow:

 

 

 

March 31,

2022

 

 

June 30,

2021

 

Current finance lease liabilities

 

$10,440

 

 

$0

 

Non-current finance lease liabilities

 

 

46,983

 

 

 

0

 

Total

 

$57,423

 

 

$0

 

Inventories are valued at cost,

The lease facilities do not in excess of market. Inventories are determined at first in first out basisimpose any interest charge and comprised of production cost, mine site management cost and sub-contractor cost. Inventories, at March 31, 2021 and June 30, 2020the payables are summarized as follows:

 

March 31,

2021

June 30,

2020

Inventories

$-

$-

 

 

Interest

Rate

 

 

Monthly

Due

 

 

March 31,

2022

 

 

June 30,

2021

 

Finance lease liabilities in the hire purchase loan

 

 

0%

 

 

870

 

 

 

57,423

 

 

 

0

 

Finance lease liabilities to a hire purchase creditor

 

 

-

 

 

 

-

 

 

$57,423

 

 

$0

 

 

The inventories representimputed interest element within the gold mineralscontract has been assessed as not significant.

The scheduled maturities of the finance lease liabilities installment loans are as follows:

March 31,

 

 

 

2023

 

 

7,830

 

2024

 

 

10,441

 

2025

 

 

10,440

 

2026

 

 

10,441

 

Thereafter

 

 

18,271

 

Total minimum finance lease liabilities installment payment

 

$

57,423

 

Less: Imputed interest

 

 

0

 

Present value of net minimum lease payments (#)

 

$

57,423

 

(#) Minimum payment are reflected in the balance sheet as current and non-current obligations under finance lease liabilities as at March 31, 20212022.

b) Right to use asset – Leasing of Segama Factory and La-Belle

 

 

Ended

March 31,

2022

 

Balance as at the 1 July 2021

 

$0

 

Addition

 

960,000

 

Amortization charge for the period

 

 

(28,571)

Balance as of March 31, 2022

 

$931,429

 

This leasing arrangement for the lease of the Segama factory amounting to $720,000 is for a lease term of seven (7) years and includes an exclusive right and option to purchase the factory site, together with all its right title and interest, for a consideration to be mutually agreed between the parties at any time during the period of two years from the date of the Lease Agreement. The Lease Payment and Security Payment shall be applied toward the Purchase Price upon GBL exercising the option to purchase. The Company’s lease agreements do not contain any material restrictive covenants.

On February 10, 2022, the Company, through VEL, a limited liability company incorporated in the State of Missouri, which is an indirect wholly-owned subsidiary of the Company via Verde Renewables, Inc., entered into a Commercial Lease Agreement and Option to Purchase (the “Lease Agreement”) to rent a 24-acre property in La Belle from Jon Neal Simmons and Betty Jo Simmon (the “Landlord”) in order to kickstart carbon farming with biochar in Missouri.

Under the Lease Agreement, the term of the lease will be for a period of two (2) years and the Company will have the right to renew the lease with a total of three renewal periods with each term being two years. The monthly base rent is $10,000 for the term, was payable on the commencement of the Lease Agreement. The Lease Agreement also grants the Company the exclusive right and option to purchase the premises together with all the right title and interest from the Landlord for a consideration of $490,000 at any time during the two-year term of the lease. If the Company exercises the option to purchase the premises from the Landlord, the upfront lease payment may be utilized as part payment of the purchase consideration.

There are no corresponding lease liabilities recorded as the lease payments for the entire lease period has been paid upfront upon inception of the agreement.

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NOTE 6 – OTHER DEPOSITS & PREPAYMENT

Other deposits & prepayment as of March 31, 2022 and June 30, 2020,2021 consisted of the following:

 

 

March 31,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Prepayment to suppliers

 

$117,200

 

 

$0

 

Prepaid operating expenses

 

 

0

 

 

 

6,137

 

 

 

$117,200

 

 

$6,137

 

NOTE 7 – INVENTORIES

Inventories as of March 31, 2022 and June 30, 2021 consisted of the following:

 

 

March 31,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Bio produce

 

 

81,492

 

 

 

0

 

 

 

$81,492

 

 

$0

 

NOTE 8 – SECURITY DEPOSIT, AND DEPOSITS PAID FOR ACQUISITION OF SUBSIDIARIES AND PROPERTY, PLANT AND EQUIPMENT

At March 31, 2022 and June 30, 2021, the deposits consist of the following:

 

 

March 31,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Deposits paid for acquisition of subsidiaries

 

 

 

 

 

 

- Bio Resources Limited (#1)

 

$25,935,550

 

 

$25,935,550

 

- Champmark Sdn Bhd (#2)

 

 

0

 

 

$36,130

 

 

 

$25,935,550

 

 

$25,971,680

 

 

 

 

 

 

 

 

 

 

Deposits paid for acquisition of Intellectual Property

 

 

 

 

 

 

 

 

- Intellectual property license (#3)

 

$5,000,000

 

 

$4,070,000

 

 

 

 

 

 

 

 

 

 

Other deposits

 

 

 

 

 

 

- Factory site (#4)

 

$80,000

 

 

$800,000

 

(#1) The Company announced the Share Sale Agreement on May 12, 2021 for the acquisition of the entire issued and paid-up share capital of Bio Resources Limited from Taipan International Limited, an unrelated third party, The Wision Project Limited (formerly known as “Borneo Resources Limited”), a unrelated third party, and other unrelated third party individuals, in consideration of the issuance of 321,500,000 shares of the Company’s restricted common stock at $0.03 per share, valued at $9,645,000, and the issuance of promissory notes with two-year term period with a principal amount of $20,355,000. 321,500,000 shares were issued on May 12, 2021 and the promissory notes were issued on May 12, 2021. The face value (principal) amount of the promissory notes of $20,355,000 was convertible into shares by May 12, 2023 and bearing zero coupon interest in accordance with the Share Sale Agreement. The promissory note is priced at $16,290,550 considering the current market interest rate. This acquisition is currently in progress and the completion of the S&P Agreement is subject to all such acts necessary, including but not limited to auditing and due diligence exercise to ascertain the valuation of Bio Resources Limited.

On January 20, 2022, however, the Company reached a mutual agreement to enter into a Supplement to Promissory Note with each of the 17 lenders (“Lenders”) of the promissory notes that were issued on May 12, 2021, to convert the total principal loan amount of $20,355,000 into shares of the Company’s restricted common stock priced at $0.0611 per share, which were comprisedrepresents the last ninety (90) days’ volume weighted average price (VWAP) as of 8%the market closing of January 19, 2022. The Company and the Lenders further agreed that the actual date for the allotment and issue of new shares of the Company’s restricted common stock shall be confirmed in a subsequent written agreement. The consideration, nevertheless, shall be refundable if the acquisition of Bio Resources Limited fails to complete.

(#2) On June 18, 2021, GBL entered into a Shares Sale Agreement with Lamax Gold Limited (“LGL”), a company incorporated under the laws of the British Virgin Islands, in relation to acquisition of the remaining 15% of the issued and paid-up share capital of CSB for a consideration of MYR150,000 ($35,669) upon the execution of the Shares Sale Agreement. Prior to this acquisition, GBL owned 85% equity in CSB and with the completion of this transaction, CSB became a wholly owned subsidiary of GBL and indirectly, of the Company.

(#3) On May 10, 2021, the Company announced the Sale and Purchase Agreement to acquire a biofraction plant and the right to use intellectual property license in Sabah, Malaysia from Borneo Energy Sdn Bhd, for a consideration of $5,000,000 to be satisfied by the Companyissuance of 166,666,667 share of the Company’s common stock at $0.03 per share. 135,666,667 shares and 92% share by the sub-contractor31,000,000 shares were issued on May 10, 2021 and July 1, 2021, respectively. This acquisition is currently in progress and the other partiescompletion of the S&P Agreement is subject to all such as original mine assigner.acts necessary, including but not limited to due diligence exercise to ascertain the valuation of the assets of the biofraction plant and the right to use the licensed intellectual property in Sabah, Malaysia. The consideration shall be refundable if the transaction fails to complete.

(#4) On June 11, 2021, GBL entered into a Sale and Purchase of Assets Agreement (the “SPA Agreement”) to purchase a factory site from a Malaysian company Segama Ventures Sdn Bhd (“Segama Ventures”), an unrelated third party, in order to expand the Company’s biofraction plant in Malaysia. Under the terms of the SPA Agreement, the acquisition is satisfied by cash payment of $1,600,000 in two instalments of $800,000 each, with one payment upon signing the SPA Agreement, and the second payment due within three (3) months from the date of the SPA Agreement. A deposit of $800,000 was paid to Segama Ventures on June 10, 2021.On March 2, 2022, however, GBL entered into a Cancellation of Sale and Purchase of Assets Agreement (“Cancellation Agreement”) for the cancellation of the Sale and Purchase of Assets Agreement to purchase the factory site from Segama Ventures that was signed on June 11, 2021.

Simultaneously, on March 2, 2022, the Company, through GBL, entered into a Commercial Lease Agreement and Option to Purchase (“Lease Agreement”) for renting the factory site from Segama Ventures for a lease term of seven (7) years (“Lease Term”) at a monthly rental of MYR 36,000 ($8,571). The rental for the entire Lease Term amounts to the sum of MYR 3,024,000 ($720,000) (the “Lease Payment”) which shall be paid in advance upon commencement of the Lease Agreement together with a payment of security deposit for the sum of MYR 336,000 ($80,000) (the “Security Payment”). The refundable advance of $800,000 from the Cancellation Agreement above was utilized against the security deposit and payment of the advance rental.

 

 
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NOTE 7 - ACCOUNTS PAYABLE AND ADVANCED9 –ADVANCED FROM RELATED PARTIESPARITES

 

Accounts Payable

Accounts payable at March 31, 2021 and June 30, 2020 consist of the following items:

 

 

March 31,

2021

 

 

June 30,

2020

 

Due to Changxin Wanlin Technology Co Ltd(*)

 

$1,556,138

 

 

$1,504,469

 

Other accounts payable

 

 

1,931

 

 

 

2,789

 

 

 

$1,558,069

 

 

$1,507,258

 

__________ 

(*) Due to Changxin Wanlin Technology Co Ltd are accounts payable derived from ordinary business transactions. One of the directors of Changxin Wanlin Technology Co. Ltd., Mr. Wu Ming Ding, has resigned as director of VRDR (as of February 20, 2016), GBL (as of February 11, 2016) and CSB (as of February 17, 2016). This accounts payable bears no interest or collateral, repayable and renewable under normal business accounts payable terms.

Advanced from related parties

Advanced from related parties at March 31, 20212022 and June 30, 2020,2021, consist of the following items:

 

 

 

March 31,

2021

 

 

June 30,

2020

 

Advanced from BOG (#1)

 

$535,785

 

 

$319,455

 

Advanced from Federal Mining Resources Limited(#2)

 

$173,465

 

 

$173,465

 

Advanced from Federal Capital Investment Limited (#3)

 

$148,000

 

 

$136,000

 

Advanced from Yorkshire Capital Limited (#4)

 

$27,000

 

 

$27,000

 

 

 

$884,250

 

 

$655,920

 

 

 

March 31,

2022

 

 

June 30,

2021

 

 

 

 

 

 

 

 

Advanced from BOG (#1)

 

$582,605

 

 

$579,783

 

Advanced from Federal Capital Investment Limited (#2)

 

 

0

 

 

 

6,000

 

 

 

$582,605

 

 

$585,783

 

___________ ______________

(#1) BOGBorneo Oil and Gas Corporation SDN BHD (“BOG”) is onea wholly owned subsidiary of Borneo Oil Berhad Group (“BOB”) (holding 19.23% and 19.96% of the shareholdersCompany’s issued and outstanding common stock as of the Company.March 31, 2022 and June 30, 2021, respectively). The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.

 

(#2) OnePursuant to a Settlement of the directors of Federal Mining Resources Limited, Mr. Chen Ching, has been appointed as director ofDebt Agreement (the “Debt Settlement Agreement”) entered into by the Company effective February 20, 2016. Another director of Federal Mining Resources Limited, Mr. Wu Ming Ding, has resigned as director of the Company effective February 20, 2016. The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.

(#3) One of the directors ofon June 9, 2021 with Federal Capital Investment Limited Mr. Wu Ming Ding, has resigned as director(“FCIL”), payables of $142,000 of the Company effective February 20, 2016. The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.

(#4) Oneas of December 31, 2020 were converted into equity by means of a subscription for 4,733,333 new restricted shares of the directorsCompany’s common stock at a subscription price of Yorkshire Capital Limited, Mr. Lai Kui Shing, Andy, has resigned as director$0.03 per share. Consequently, FCIL became a shareholder of CSB effective February 17, 2016. The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.the Company.

 

 
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NOTE 8 -10 – PROPERTY, PLANT AND EQUIPMENT

 

Property, plant and equipment at March 31, 20212022 and June 30, 20202021 are summarized as follows:

 

 

 

March 31,

2021

 

 

June 30,

2020

 

Land and Building

 

$949,353

 

 

$917,831

 

Plant and Machinery

 

 

16,435

 

 

 

15,889

 

Office equipment

 

 

19,009

 

 

 

18,378

 

Project equipment

 

 

654,796

 

 

 

633,054

 

Computer

 

 

11,196

 

 

 

10,825

 

Motor Vehicle

 

 

35,787

 

 

 

34,599

 

Accumulated depreciation

 

 

(1,685,975)

 

 

(1,629,871)

 

 

$601

 

 

$705

 

 

 

March 31,

2022

 

 

June 30,

2021

 

 

 

(Unaudited)

 

 

 

Land and building

 

$965,398

 

 

$947,292

 

Plant and machinery

 

 

16,669

 

 

 

16,399

 

Office equipment

 

 

27,675

 

 

 

18,968

 

Project equipment

 

 

645,172

 

 

 

653,374

 

Computer

 

 

13,942

 

 

 

11,170

 

Motor vehicle

 

 

125,905

 

 

 

35,710

 

Sub-total

 

 

1,794,761

 

 

 

1,682,913

 

Less: accumulated depreciation

 

 

(1,671,194)

 

 

(1,682,358)

 

 

$123,567

 

 

$555

 

 

The depreciation expenses charged for the periodthree months ended March 31, 2022 and 2021 was $4,611 and 2020$129.

The depreciation expenses charged for the nine months ended March 31, 2022 and 2021 was $129$9,831 and $126.$129.

Included in property, plant and equipment, is a motor vehicle purchased under finance lease arrangement with a carrying amount of $55,335 and $0 as of March 31, 2022 and June 30, 2021, respectively. The amount of depreciation expenses related to assets purchased under finance lease arrangements were $7,308 and $0 for the nine months ended of March 31, 2022 and 2021, respectively and $3,132 and $0 for the three months ended of March 31, 2022 and 2021, respectively.

 

 
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NOTE 11 - PROMISSORY NOTES

On May 10, 2021, the Company announced the Share Sale Agreement on May 12, 2021 for the acquisition of the entire issued and paid-up share capital of Bio Resources Limited from Taipan International Limited, an unrelated third party, The Wision Project Limited (formerly known as “Borneo Resources Limited”) and other unrelated third party individuals, for a consideration to be satisfied by way of the issuance of 321,500,000 shares of the Company’s restricted common stock at $0.03 per share, valued at $9,645,000, and the issuance of promissory notes with two-year term period with a principal amount of $20,355,000. The promissory note is priced at $16,290,550 considering the current market interest rate.

321,500,000 shares were issued on May 12, 2021 and the promissory notes were issued on May 12, 2021. The face value (principal) amount of the promissory notes of $20,355,000 which was repayable by May 12, 2023 and bearing zero coupon interest were subsequently, on January 20, 2022 agreed to be converted, pursuant to a mutual agreement to enter into a Supplement to Promissory Note with each of the 17 lenders (“Lenders”) of the promissory notes that were issued on May 12, 2021, into shares of the Company’s restricted common stock priced at $0.0611 per share, which represents the last ninety (90) days’ volume weighted average price (VWAP) as of the market closing of January 19, 2022. The Company and the Lenders further agreed that the actual date for the allotment and issue of new shares of the Company’s restricted common stock shall be confirmed in a subsequent written agreement. The consideration, nevertheless, shall be refundable if the acquisition of Bio Resources Limited fails to complete.

The fair value of the outstanding promissory notes was calculated with the following assumptions:

Risk free rate

0.268

%

Credit spread

6.513

%

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Liquidity risk premium

5.000

%

 

The following is a reconciliation of the beginning and ending balances of promissory notes payable using Level 3 inputs:

 

 

March 31

 

 

June 30

 

 

 

2022

 

 

2021

 

Balance at the beginning of period

 

$16,535,942

 

 

$0

 

Promissory notes issued to unrelated third parties at fair value

 

 

0

 

 

 

16,290,550

 

Interest expense

 

 

1,441,911

 

 

 

245,392

 

Balance at the end of period

 

$17,977,853

 

 

$16,535,942

 

The Company recorded $486,978 and $0 interest expenses for the three months ended March 31, 2022 and 2021, respectively.

The Company recorded $1,441,911 and $0 interest expense for the nine months ended March 31, 2022 and 2021, respectively.

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NOTE 9 -12 – INCOME TAX

 

The Company and its subsidiaries are subject to income taxes on an entity basis on income arising in, or derived from, the tax jurisdiction in which they operate. The Company is a Nevada incorporated company and subject to United State Federal Income Tax. The Tax Cuts and Jobs Act of (“TCJ Act”) was signed into law in December 2017, and among its many provisions, it imposed a mandatory one-time transition tax on undistributed international earnings and reduced the U.S. corporate income tax rate to 21%, effective January 1, 2018. No provision for income taxes in the United States has been made as the Company had no taxable income for the periods ended March 31, 20202022 and 2019.2021. GBL is a British Virgin Islands incorporated company and not required to pay income tax on corporate income. CSB is a Malaysia incorporated company and required to pay corporate income tax at 25%24% of taxable income. VRI and VEL are incorporated in the State of Missouri, U.S.A and required to pay United State Federal Income Tax at 21% of taxable income. VLI is a U.S.A incorporated company in the State of Oregon and required to pay United State Federal Income Tax at 21% of taxable income.

 

A reconciliation between the income tax computed at the relevant statutory rate and the Company’s provision for income tax is as follows:

 

 

 

Period ended

 

 

 

March 31,

2021

 

 

June 30,

2020

 

US Federal Income Tax Rate.

 

 

21%

 

 

21%

Valuation allowance – US Rate

 

 

(21)%

 

 

(21)%

BVI Income Tax Rate

 

 

0%

 

 

0%

Valuation allowance – BVI Rate

 

 

(0)%

 

 

(0)%

Malaysia Income Tax Rate

 

 

25%

 

 

25%

Valuation allowance – Malaysia Rate

 

 

(25)%

 

 

(25)%

Provision for income tax

 

 

-

 

 

 

-

 

 

 

Nine months period ended

 

 

 

March 31,

2022

 

 

March 31,

2021

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

21

 

 

 

21

 

Non-deductible items/non-taxable income

 

 

(4)

 

 

(5)

Tax effect of tax exempt entity

 

 

(2)

 

 

(6)

Share based payments

 

 

(2)

 

 

-

 

Changes in valuation allowances

 

 

(13)

 

 

(11)

Effect of different tax rate of subsidiaries operating in other jurisdictions

 

 

-

 

 

 

1

 

Effective tax rate

 

 

-

 

 

 

-

 

 

Summary of the Company’s net deferred tax liabilities and assets are as follows:

 

 

March 31,

2021

 

 

June 30,

2020

 

 

March 31,

2022

 

 

June 30,

2021

 

Deferred tax assets:

 

 

 

 

 

 

 

 

 

 

Tax attribute carryforwards

 

$37,077

 

$67,840

 

Valuation allowances

 

 

(37,077)

 

 

(67,840)

Net operating loss

 

$1,318,653

 

$1,198,944

 

Less: Valuation allowances

 

 

(1,318,653)

 

 

(1,198,944)

Total

 

$-

 

 

$-

 

 

$0

 

 

$0

 

 

The Company has recorded valuation allowances for certain tax attribute carry forwards and other deferred tax assets due to uncertainty that exists regarding future realizability. If in the future the Company believes that it is more likely than not that these deferred tax benefits will be realized, the majority of the valuation allowances will be recognized in the consolidated statement of operations. The Company did not have any interest and penalty provided or recognized in the income statements for periodnine month periods ended March 31, 20212022 and June 30, 2020March 31, 2021, or balance sheet as of March 31, 20212022 and June 30, 2020.2021. The Company did not have uncertainty tax positions or events leading to uncertainty tax position within the next 12 months.

 

 
24F-19

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NOTE 10 -13 – COMMITMENTS AND CONTINGENCIES

 

As atof March 31, 2021,2022, the Company’s hire purchase installment agreements are disclosed in Note 8. See Note 8Group had the following contracted capital commitments:

 

 

March 31,

2022

 

 

June 30,

2021

 

 

 

 

 

 

 

 

For purchase of property, plant and equipment

 

$0

 

 

$1,730,000

 

For acquisition of subsidiary

 

 

0

 

 

 

6,023

 

Total

 

$0

 

 

$1,736,023

 

The agreement for the commitmentspurchase of property, plant and equipment for minimum installment payments under these agreements.the purchase of factory site from Segama Ventures was cancelled on March 2, 2022 and is replaced with commercial lease agreement and option to purchase. The deposit paid was utilized as deposit and advance lease payment for the lease. 

 

NOTE 11 - EARNINGS/(LOSS)14 – NET LOSS PER SHARE

 

The Company has adopted ASC Topic No. 260, “Earnings Per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures, and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.

 

The following table sets forth the computation of basic and diluted earnings per share:

 

 

Three Months Ended

March 31,

 

 

Three Months Ended

March 31,

 

 

2021

 

 

2020

 

 

2022

 

 

2021

 

Net loss applicable to common shares

 

$(66,008)

 

$(93,472)

 

(Unaudited)

 

(Unaudited)

 

Net income applicable to common shares

 

$(1,067,905)

 

$14,018

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding (Basic)

 

116,038,909

 

115,038,909

 

 

810,742,109

 

116,038,909

 

Shares to be issued under promissory notes

 

8,445,946

 

-

 

Options

 

-

 

-

 

 

-

 

-

 

Warrants

 

-

 

-

 

 

-

 

-

 

Weighted average common shares outstanding (Diluted)

 

 

116,038,909

 

 

 

115,038,909

 

 

 

819,188,055

 

 

 

116,038,909

 

 

 

 

 

 

 

 

 

 

 

Net loss per share (Basic and Diluted)

 

$(0.0006)

 

$(0.0008)

 

$(0.00)*

 

$(0.00)*

 

 

Nine Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

 

2021

 

 

2020

 

 

2022

 

 

2021

 

Net profit (loss) applicable to common shares

 

$(157,814)

 

$(268,239)

 

(Unaudited)

 

(Unaudited)

 

Net income (loss) applicable to common shares

 

$(2,713,319)

 

$(244,548)

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding (Basic)

 

116,038,909

 

115,038,909

 

 

810,742,109

 

116,038,909

 

Shares to be issued under promissory notes

 

8,445,946

 

-

 

Options

 

-

 

-

 

 

-

 

-

 

Warrants

 

-

 

-

 

 

-

 

-

 

Weighted average common shares outstanding (Diluted)

 

 

116,038,909

 

 

 

115,038,909

 

 

 

819,188,055

 

 

 

116,038,909

 

 

 

 

 

 

 

 

 

 

 

Net profit (loss) per share (Basic and Diluted)

 

$(0.0014)

 

$(0.0023)

Net loss per share (Basic and Diluted)

 

$(0.00)*

 

$(0.00)*

*Less than $0.01 per share

 

The Company has no other potentially dilutive securities, such as options or warrants, currently issued and outstanding.

 

The promissory notes issued for the acquisition of BRL for $20,355,000 convertible by May 12, 2023 has not been included in the computation of the weighted average dilutive common shares as the transaction for which it was issued is pending completion.

For the nine months ended March 31, 2022 and 2021, diluted weighted-average common shares outstanding is equal to basic weighted-average common shares, due to the Company’s net loss position. Hence no common stocks equivalents were included in the computations of diluted net loss per share since such inclusion would have been antidilutive.

 
25F-20

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NOTE 1215 - CAPITAL STOCKSTOCKHOLDERS’ EQUITY

 

Authorized Stock

The Company has authorized 10,000,000,000 common shares and 50,000,000 preferred shares, both with a par value of $0.001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

 

Effective February 2, 2018, the Company’s Articles of Incorporation were amended to increase the authorized shares of the Company from 250,000,000 shares of common stock to 10,000,000,000 shares of common stock. A copy of the Certificate of Amendment was filed with the Nevada Secretary of State. The Form 8K announcing the increase of the authorized shares of the Company was filed with SEC on February 6, 2018.

 

Share Issuance

On June 15, 2020, the Company issued a total of 1,000,000 common shares for US$12,000 at US$0.012 per share, of which 50,000 common shares to each of the twenty non-US shareholders.

There were 116,038,909 common shares issued and outstanding at March 31, 2021 and June 30, 2020 respectively.

There are no preferred shares outstanding. The Company has issued no authorized preferred shares. The Company has no stock option plan, warrants, or other dilutive securities.

26

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NOTE 13 - RELATED PARTY TRANSACTIONS

As of March 31, 2022 and June 30, 2021, advances were made by five companiesthe Company has authorized 10,000,000,000 common shares and 50,000,000 preferred shares, both with a par value of $2,440,389 related$0.001 per share. Each common share entitles the holder to ordinary business transactions. All advances related to ordinary business transactions, bear no interestone vote, in person or collateral, repayable and renewable under normal advancement terms. Details are disclosed in Note 6.

Asproxy, on any matter on which action of March 31, 2021, amounts due from one companythe stockholders of $0 related to ordinary business transactions. The receivable amounts related to ordinary business transactions bear no interest or collateral, repayable and renewable under normal advancement terms. Details are disclosed in Note 4.the corporation is sought.

 

NOTE 14 - GOING CONCERN AND LIQUIDITY CONSIDERATIONS

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of and for the period ended March 31, 2021, the Company had a net loss of $166,072 and working capital deficiency of $2,546,425. The Company intends to fund operations through debt and equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the period ending March 31, 2021 and subsequently.

The ability of the Company to survive is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan.

In response to these problems, management intends to raise additional funds through public or private placement offerings, and related party loans.

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

27

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NOTE 15 - CONCENTRATIONS

Suppliers

The Company’s major suppliers for the period ended March 31, 2021 and 2020 are listed as following:

 

 

Subcontractors

 

 

Accounts Payable

 

 

 

Nine

 

 

Nine

 

 

 

 

 

 

 

Months

 

 

Months

 

 

 

 

 

 

 

Ended

 

 

Ended

 

 

 

 

 

Major Suppliers

 

March 31,

2021

 

 

March 31,

2020

 

 

March 31,

2021

 

 

 March 31,

2020

 

Company A

 

 

0%

 

 

0%

 

 

0%

 

 

0%

Customers

The Company’s major customers for the period ended March 31, 2021 and 2020 are listed as following:

 

 

Sales

 

 

Accounts Receivable

 

 

 

Nine

 

 

Nine

 

 

 

 

 

 

 

Months

 

 

Months

 

 

 

 

 

 

 

Ended

 

 

Ended

 

 

 

 

 

Major Customers

 

March 31,

2021

 

 

March 31,

2020

 

 

March 31,

2021

 

 

March 31,

2020

 

Company M

 

 

100%

 

 

0%

 

 

100%

 

 

0%

Company N

 

 

0%

 

 

0%

 

 

0%

 

 

0%

Company O

 

 

0%

 

 

0%

 

 

0%

 

 

0%

NOTE 16 - SUBSEQUENT EVENTSCommon stock

 

On May 10, 2021, Verde Resources, Inc.the Company announced the Sale and Purchase Agreement to acquire the assets of biofraction plant and the right to use intellectual property license in Sabah, Malaysia from Borneo Energy Sdn Bhd, in consideration of issuance of 166,666,667 share of the Company’s stock at $0.03 per share, valued at $5,000,000. 135,666,667 shares and 31,000,000 shares were issued on May 10, 2021 and July 1, 2021, respectively. The completion of the S&P Agreement is subject to all such acts necessary, including but not limited to due diligence exercise to ascertain the valuation of the assets of the biofraction plant and the right to use the licensed intellectual property in Sabah, Malaysia.

On May 12, 2021, the Company, also announced thethrough its wholly-owned subsidiary GBL, entered into a Share Sale Agreement on May 12, 2021 for thein relation to acquisition of the entire issued and paid-up share capital of Bio Resources Limited with Taipan International Limited, an unrelated third party, The Wision Project Limited (formerly known as “Borneo Resources Limited”), an unrelated third party and other unrelated third party individuals, in consideration of issuance of 321,500,000 shares of the Company’s restricted common stock at $0.03 per share, valued at $9,645,000, and the issuance of promissory notes with two-year term period for thea principal amount of $20,355,000. Detailed321,500,000 shares were issued on May 12, 2021 and the promissory notes were issued on May 12, 2021.

On January 20, 2022, the Company reached a mutual agreement to enter into a Supplement to Promissory Note with each of the 17 lenders (“Lenders”) of the promissory notes that were issued on May 12, 2021, to convert the total principal loan amount of $20,355,000 into shares of the Company’s restricted common stock priced at $0.0611 per share, which represents the last ninety (90) days’ volume weighted average price (VWAP) as of the market closing of January 19, 2022. The Company and the Lenders further agreed that the actual date for the allotment and issue of new shares of the Company’s restricted common stock shall be confirmed in a subsequent written agreement. The consideration, nevertheless, shall be refundable if the acquisition of Bio Resourced Limited fails to complete.

On June 4, 2021, the Company issued a total of 65,900,000 restricted common shares for $1,647,500 at $0.025 per share to six non-US shareholders, who Borneo Oil Berhad and Victor Subbrayan Paul are existing shareholders

On June 9, 2021, the Company entered into a Settlement of Debt Agreement (the “Debt Settlement Agreement”) with the Company’s creditors Beijing Changxin Wanlin Technology Co., Ltd, Federal Mining Resources Ltd, Federal Capital Investment Limited and Yorkshire Capital Limited (collectively the “Creditors”) to convert a total of $1,945,096 of the Company’s accounts payable to the Creditors into equity by increasing the share capital by means of a subscription for 64,836,533 new restricted shares of the Company’s common stock at a subscription price of $0.03 per share. As set out in the Debt Settlement Agreements, the new restricted shares for settlement of the accounts payable to Beijing Changxin Wanlin Technology Co., Ltd, Federal Mining Resources Ltd and Federal Capital Investment Limited issued to their nominee Internet.com Ltd on June 9, 2021.

On June 10, 2021, the Company issued a total of 4,690,500 restricted common shares at $0.03 per share to each of the two directors, of which 2,095,233 restricted common shares to Balakrishnan B S Muthu and 2,595,267 restricted common shares to Chen Ching to serve as a director of the Company for a one-year term (from July 1, 2020 to June 30, 2021). An aggregate of $140,715 for this transaction was filedrecognized as stock-based compensation under selling, general and administrative expenses for the year ended June 30, 2021.

On June 10, 2021, the Company issued a total of 13,009,500 restricted common shares at $0.03 per share to five consultants under the Consultant Agreements, of which 3,695,233 restricted common shares to Vincent Yong Tuck Seng, 3,695,233 restricted common shares to Lai Kui Shing Andy, 2,095,233 restricted common shares to Chan Hoi Kwong Paul, 2,095,233 restricted common shares to Sylvia Chan and 1,428,568 restricted common shares to Ng Tung to serve as a consultant of the Company for a one-year term (from June 10, 2021 to June 9, 2022). An aggregate of $390,285 for this transaction, $34,716 was recognized as stock-based compensation according to the service period under selling, general and administrative expenses for the year ended June 30, 2021. Of the aggregate $390,285 for this transaction, $191,222 and nil were recognized for the six months ended December 31, 2021 and 2020, respectively. Also, $95,094 and nil were recognized for the three months ended December 31, 2021 and 2020, respectively.

On June 18, 2021, the Company issued a total of 58,100,000 restricted common shares for $1,452,500 at $0.025 per share to twenty-four non-US shareholders.

There were 810,742,109 and 779,742,109 common shares issued and outstanding at March 31, 2022 and June 30, 2021 respectively.

There are no preferred shares outstanding. The Company has not issued any preferred shares. The Company also has no stock option plan, warrants, or other dilutive securities other than 8,445,946 shares to be issued under promissory notes.

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NOTE 16 - RELATED PARTY TRANSACTIONS

Related party balances

 

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Deposits paid for acquisition of Intellectual Property

 

 

 

 

 

 

- Intellectual property license of Borneo Energy Sdn Bhd (#1) (note 8)

 

$5,000,000

 

 

$0

 

(#1) Borneo Oil Berhad (“BOB”) is ultimate holding company of Borneo Energy Sdn Bhd and holding 19.23% of the Company’s issued and outstanding common stock as of March 31, 2022.

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NOTE 17 – SEGMENT INFORMATION

The Company’s segments are business units that offer different products and services and are reviewed separately by the chief operating decision maker (the “CODM”), or the decision-making group, in Form 8-Kdeciding how to allocate resources and in assessing performance. The Company’s CODM is the Company’s Chief Executive Officer.

For the three months ended March 31, 2022:

 

 

Gold

mineral mining

 

 

Distribution of THC-free cannabinoid (CBD) products

 

 

Production and distribution of renewable commodities

 

 

Holding property

 

 

Corporate unallocated

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$0

 

 

$0

 

 

$16,712

 

 

$0

 

 

$0

 

 

$16,712

 

Cost of revenue

 

 

0

 

 

 

0

 

 

 

(86,701)

 

 

0

 

 

 

0

 

 

 

(86,701)

Gross loss

 

 

0

 

 

 

0

 

 

 

(69,989)

 

 

0

 

 

 

0

 

 

 

(69,989)

Selling, general & administrative expenses

 

 

(43,405)

 

 

(1,378)

 

 

(75,958)

 

 

(180,497)

 

 

(197,536)

 

 

(498,774)

Loss from operations

 

 

(43,405)

 

 

(1,378)

 

 

(145,947)

 

 

(180,497)

 

 

(197,536)

 

 

(568,763)

Interest expenses

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(486,977)

 

 

(486,977)

Other income

 

 

(17)

 

 

0

 

 

 

0

 

 

116-

 

 

 

0

 

 

 

99

 

Loss before income tax

 

 

(43,422)

 

 

1,378)

 

 

(145,947)

 

 

(180,381)

 

 

(684,513)

 

 

(1,055,641)

Income tax

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Net loss

 

$(43,422)

 

$(1,378)

 

$(145,947)

 

$(180,381)

 

$(684,513)

 

$(1,055,641)

For the nine months ended March 31, 2022:

 

 

Gold

mineral

 mining

 

 

Distribution of THC-free cannabinoid (CBD) products

 

 

Production and distribution of renewable commodities

 

 

Holding property

 

 

Corporate unallocated

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$0

 

 

$0

 

 

$16,712

 

 

$0

 

 

$0

 

 

$16,712

 

Cost of revenue

 

 

0

 

 

 

0

 

 

 

(86,701)

 

 

0

 

 

 

0

 

 

 

(86,701)

Gross loss

 

 

0

 

 

 

0

 

 

 

(69,989)

 

 

0

 

 

 

0

 

 

 

(69,989)

Selling, general & administrative expenses

 

 

(150,781)

 

 

(3,134)

 

 

(93,598)

 

 

(283,239)

 

 

(691,123)

 

 

(1,221,875)

Loss from operations

 

 

(150,781)

 

 

(3,134)

 

 

(163,587)

 

 

(283,239)

 

 

(691,123)

 

 

(1,291,864)

Interest expenses

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(1,441,911)

 

 

(1,441,911)

Other income

 

 

12,098

 

 

 

0

 

 

 

0

 

 

 

116

 

 

 

0

 

 

 

12,214

 

Loss before income tax

 

 

(138,683)

 

 

(3,134)

 

 

(163,587)

 

 

(283,123)

 

 

(2,133,034)

 

 

(2,721,561)

Income tax

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

 

 

Net loss

 

$(138,683)

 

$(3,134)

 

$(163,587)

 

$(283,123)

 

$(2,133,034)

 

$(2,721,561)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2022

 

 

317,471

 

 

 

0

 

 

 

101,066

 

 

 

505,432

 

 

 

33,118,811

 

 

 

34,042,781

 

 As of June 30, 2021

 

$97,952

 

 

 

0

 

 

$0

 

 

$0

 

 

 

32,961,202

 

 

 

33,059,154

 

The Company conducts its Gold Mineral Mining operation through CSB. The expenses incurred were consisting principally of management services and its major operation is located in Malaysia.

The Company conducts business in the distribution of THC-free cannabinoid (CBD) products through Verde Life Inc. which is incorporated in the State of Oregon, U.S.A. Its major operation is located in U.S.A.

The Company conducts business in production and distribution of renewable commodities through Verde Resources (Malaysia) Sdn. Bhd. which is incorporated in Malaysia. Its major operation is located in Malaysia.

The Company formed VEL on August 10, 2021, for the purpose of holding property in Missouri. Its major operation is located in U.S.A.

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NOTE 18 - SUBSEQUENT EVENTS

On June 17, 2021, Verde Resources, Inc. (the “Company”), through its prospective indirect subsidiary Bio Resources Limited (“BRL”), a company incorporated under the laws of Labuan, entered into a Shares Sale Agreement (“SSA Agreement”) with Global Renewables Sdn Bhd (“Global Renewables”), a company incorporated under the laws of Malaysia, to acquire the entire issued and paid-up share capital of Global Renewables. Under the terms of the Shares Sale Agreement, the consideration for the acquisition shall be satisfied in full by the payment of MYR 25,000 ($6,000) upon the execution of the Shares Sale Agreement. The acquisition of Global Renewables was subject to the successful completion of the acquisition of the entire issued and paid-up share capital of BRL. Therefore, the acquisition of Global Renewables was dependent upon the successful acquisition of BRL.

On April 18, 2022, the Company, through its prospective indirect subsidiary BRL, entered into a Cancellation Agreement for the cancellation of the SSA Agreement to acquire the entire issued and paid-up share capital of Global Renewables. The SSA Agreement is rendered null and void upon terms and conditions provided in the Cancellation Agreement.

On April 19, 2022, the Company, through its wholly-owned subsidiary Verde Resources (Malaysia) Sdn Bhd (“Verde Malaysia”), a company incorporated in Malaysia, entered into an Agreement for Regenerative Carbon Negative Agriculture Initiative (the “Agreement”) with The Borneo Food Group Sdn Bhd (“SB”), a company incorporated in Malaysia, to supply proprietary blend of various carbon negative agricultural products such as plant natural enzyme, FAA bio enzyme and enriched biochar to SB. SB is a wholly-owned subsidiary of Borneo Oil Berhad (BORNOIL), a company listed on the Main Board Stock Exchange of Malaysia and an affiliate of the Company by virtue of owning more than 10% shares of the Company’s Common Stock. Under the Agreement, Verde Malaysia has the expertise, technical know-how supply of proprietary blend of various carbon negative agricultural products to assist SB in achieving a long term and consistent supply of various agriculture produce for its business while ensuring that all ingredients utilized by SB is farmed in a sustainable and environmentally friendly manner which is not just carbon neutral but carbon negative to create a long term carbon negative footprint. Verde Malaysia will provide the services and supply the proprietary blend of various carbon negative agricultural products to SB at SEC websitethe agreed fixed rates which may be subject to price increase in the event of any drastic fluctuations in the cost of fuel and/or related production costs with a minimum notice of two weeks in writing to SB. The term of the Agreement will be for a fixed period of five (5) years commencing from May 1, 2022 to April 30, 2027 and both parties may extend the agreement for a further term as may be mutually agreed on terms to be separately negotiated. 

On April 25, 2022, the Company issued a total of 8,445,946 restricted common shares for $1,000,000 at $0.1184 per share to two non-US shareholders.

On April 27, 2022, the Company, entered into a Professional Engineering Services Contract (the “PES Agreement”) with BioDiverse Energies, LLC (“BDE”). Under the PES Agreement, BDE will provide professional services on the feasibility assessment, preliminary engineering and preliminary market analysis related to the biochar enhanced compost project. The Company will pay BDE a total of $42,000 for completion of the professional services under the PES Agreement. An initial payment of $25,000 will be paid prior to the commencement of work by BDE, with another $10,000 and $7,000 to be paid upon completion of the professional services in two stages respectively.

On April 29, 2022, Verde Renewables, Inc.(“VRI”) a wholly owned subsidiary of the Company, closed on the purchase of residential real property located in Chesterfield, Missouri (the “Property”). The purchase price for the Property was $750,000.00 paid in cash at closing. The Company used cash on hand to purchase the Property. The Property was purchased from Yimin Huang and Claudine Huang (the “Sellers”). There are no material relationships between the Sellers and the Company or any of its affiliates. The Company plans on holding the property as an investment and using it for corporate housing.

On May 13, 2021.18, 2022, GBL, a company incorporated under the laws of the British Virgin Islands and a wholly-owned subsidiary of the Company, has changed its name to Verde Resources Asia Pacific Limited.

On June 8, 2022, the Company through its wholly-owned subsidiary VRI, entered into a Services Agreement (the “Agreement”) with Gary F. Zimmer to engage him as its corporate consultant to develop and formulate a designer compost and the Company's integrated regenerative farming programs as designated in the Agreement. Under the Agreement, the Company will pay Gary F. Zimmer by the issuance of 1,000,000 shares of the Company’s restricted common stock on or before July 15, 2022.

 

The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and determined that there are no additional materialfurther significant subsequent items which are required to be required to adjust and disclose except for the above mentioned matters.disclosed. 

 

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Forward-Looking Statements

 

Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed herein as well as in the “Description of Business – Risk Factors” section in our Annual Report on Form 10-K, as filed on September 30, 2013.November 12, 2021. You should carefully review the risks described in our Annual Report and in other documents we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

 

Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

 

All references in this Form 10-Q to the “Company,” “Verde Resources,” “we,” “us,” or “our” are to Verde Resources, Inc.

 

Business Overview

 

The Company has negotiated with Malaysia state agency PKNP on a 2-year lease for a new mining location that is a Nevada corporation that conducts business operations in Pahangabout 5 km from the current Merapoh mine site. The leasing premium has been paid but the mining lease certificate will only be issued upon clearance from the Malaysia through Champmark Sdn Bhd (“CSB”), a privately limited liability company incorporated in MalaysiaForest Department, which is a deemed subsidiary underexpected in mid 2022 subject to review on COVID-19 “Movement Control Order” by the management control of our 100% subsidiary GBL.Malaysian government.

 

On October 25, 2013, we entered into an Assignment Agreement For the Assignment of Management Right in Merapoh Gold Mines in Malaysia (“Assignment Agreement”) with Federal Mining Resources Limited (“FMR”), a company incorporated under the laws of the British Virgin Islands.

FMR owns 85% equity interest in CSB, a privately limited liability company incorporated in Malaysia. CSB is the Mining Contractor of the Mining Lease forcurrent Site IV-1 atof the Merapoh Gold Mine, under the Contractour mining operation would focus on mining other resources such as limestones.

The Company believes that there are excellent growth opportunities for Work with MMC Corporation Berhad, the Permit Holderits business outside Malaysia. We are constantly exploring for potential acquisition of mining projects in other parts of the Mining Lease.world.

 

UnderAs our business is affected by the termsfluctuations of gold prices, the Company intends to diversify its product line by acquiring mining projects with potential for different mineral resources other than gold. We continue to hold discussions with other mining companies for potential collaboration to carry out exploration and exploitation works on other mineral resources in Southeast Asia regions. Apart from the mining industry, the Company has taken steps to look into investment opportunities in the non-mining areas that include the bioenergy industry and the food & beverage sector.

The Company is diversifying into the green industry with its acquisition of Bio Resources Ltd (“BRL”), the beneficial and/or registered proprietor of the Assignment Agreement, FMR assigned its management rightsintellectual property known as “Catalytic Biofraction Process”, which is a slow pyrolysis process using a proprietary catalyst to depolymerise palm biomass wastes (empty fruit bunches or palm kernel shells) in temperature range of CSB’s mining operation in350 degree Celsius to 500 degree Celsius to yield commercially valuable bio products: bio-oil, wood vinegar (pyroligneous acid), biochar and bio-syngas. The intellectual property is a second-generation pyrolysis process where non-food feedstock like the Mining Lease topalm biomass wastes is used as feedstock. The success of venturing into the Company, through its wholly-owned subsidiary Gold Billion Global Limited (“GBL”), in exchange for 80,000,000 shares ofgreen industry is dependent on the Company’s common stock, which constituted 95.26% of our issued and outstanding capital stock as of and immediately after the consummation of the acquisition.

GBL was established on February 7, 2013, by the Board of Directors of FMR to monitor the CSB operation. The acquisition of 100% of the issued and outstanding capital stock of GBL was agreed upon on October 18, 2013, and completed on October 25, 2013, subject to the approval of the Board of Directors and the audit of GBL.

On February 17, 2014, we entered into a Supplementary Agreement to the Assignment Agreement and completed a reverse acquisition of GBL pursuant to the Supplementary Agreement. As a resultcompletion of the acquisition subject to auditing and due diligence exercise to ascertain the valuation of BRL.

Apart from the green industry, the Company holds 100% equity interestis also working on a partnership with MRX Technologies, a market leader in GBLcommercial extraction systems for cannabis and 85% variable interest in CSB. Our consolidated subsidiaries include GBL being our wholly-owned subsidiary and 85% of CSB being a variable interest entity (VIE) and deemed subsidiary of GBL. On April 1, 2014, GBL purchased 85% equity interest of CSB, and CSB became indirect subsidiary of the Company.hemp. The partnership includes an agreement for Verde Resources to white-label THC-free CBD products from MRX Technologies.

 

 
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Corporate History and Structure

 

Verde Resources, Inc. was incorporated on April 22, 2010, in the State of Nevada, U.S.A. The following persons were appointed to serve as directors and to assume the responsibilities of officers on October 17, 2013. Mr. Wu Ming Ding, as President and Director; Mr. Balakrishnan B S Muthu as Treasurer Chief Financial Officer, General Manager and Director; and Mr. Liang Wai Keen as Secretary.

 

On April 1, 2014, the Board of Directors of Gold Billion Global Limited (“GBL”)GBL notified Federal Mining Resources Limited (“FMR”) uponof the decision to exercise the right ofits option to purchase an 85% equity interest of Champmark Sdn Bhd (“CSB”) underpursuant to Section 3.2.4 of the Management Agreement Section 3.2.4 dated July 1, 2013, between GBL and FMR. This acquisition was completed on April 1, 2014, with consideration of US$1,$1, and GBL then became an 85% shareholder of CSB.

 

Effective February 20, 2016, Mr. Wu Ming Ding resigned from all of his positions as President and Director of the Company, with Mr. Balakrishnan B S Muthu being appointed President to fill the vacancy created. Effective February 20, 2016, Mr. Chen Ching was appointed Director of the Company and the entire Board of Directors now consiststhen consisted of Mr. Balakrishnan B S Muthu and Mr. Chen Ching.

 

Effective February 2, 2018, the Company sCompany’s Articles of Incorporation were amended to increase the authorized shares of the Company from 250,000,000 shares of common stock to 10,000,000,000 shares of common stock. A copy of the Certificate of Amendment was filed with the Nevada Secretary of State. The Form 8K announcing the increase of the authorized shares of the Company was filed with SEC on February 6, 2018.

 

Effective March 31, 2021, Mr. Carl M. Craven was appointed Director of the Company and the entire Board of Directors now consists of Mr. Balakrishnan B S Muthu, Mr. Chen Ching and Mr. Carl M. Craven. The Form 8-K announcing the change in officers and directors were filed with SEC on April 1, 2021.

 

The following diagram illustrates our current corporate structure:

 

vrdr_10qimg2.jpg

 

Pursuant to an Assignment Agreement For The Assignment of Management Right in Merapoh Gold Mines in Malaysia (“Assignment Agreement”) dated October 25, 2013, and a Supplementary Agreement dated February 17, 2014 on further clarifications to the Assignment Agreement signed by the Company with FMR, a company incorporated under the laws of the British Virgin Islands, the 100% interest of FMR in GBL was transferred to VRDR at a consideration of $1. This transaction was recorded as a reverse acquisition in accordance with ASC 805-40 “Reverse Acquisitions”. The legal parent was VRDR, which was the accounting acquiree, while GBL was the accounting acquirer. There was a 15% non-controlling interest of CSB after the acquisition. This transaction was accounted for as a recapitalization effected by a share exchange, wherein GBL with its 85% deemed subsidiary CSB was considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of the acquired entity have been brought forward at their book value and no goodwill has been recognized.

Prior to the acquisition of GBL, on July 1, 2013, FMR had assigned its rights and obligations pursuant to its 85% interest in Champmark Sdn Bhd (“CSB”) to GBL. According to ASC 810-05-08 A, CSB is a deemed subsidiary of GBL wherebecause due to the assignment, GBL hashad gained control of the Board of Directors of CSB, GBL’s rights to receive future benefits and residual value, and GBL’s obligation to absorb losslosses and financeprovide financing for CSB. GBL hashad the power to direct the activities of CSB that most significantly impact CSB’s economic performance, and the obligation to absorb losses or receive benefits of CSB that could potentially be significant to the CSB or the right to receive benefits from CSB that could potentially be significant to CSB. Accordingly, GBL iswas the primary beneficiary of CSB because GBL can direct the activities of CSB through the common directors and 85% shareholder FMR.CSB. Under 810-23-42, 43, it iswas determined that CSB iswas de-facto agent ofand GBL, the principal, and consequently, CSB was considered as a deemed subsidiary of GBL and so GBL will consolidate CSB frombeginning July 1, 2013.

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Contractual Arrangements

Our exploration and mining business is currently provided through contractual arrangements with CSB through our wholly-owned subsidiary GBL.

CSB, the VIE of GBL, sells gold minerals directly to the registered gold trading company in Malaysia. We have been and are expected to continue to be dependent on our VIE to operate our exploration and mining business. GBL has entered into contractual arrangements with its VIE, which enable us to exercise effective control over the VIE, receive substantially all of the economic benefits from the VIE, and have the option to purchase equity interests in the VIE.

On July 1, 2013, the Company’s subsidiary GBL entered into a series of agreements (“VIE agreements”) with FMR and details of the VIE agreements are as follows :

1.

Management Agreement, FMR entrusted the management rights of its subsidiary CSB to GBL that include:

i)

management and administrative rights over the day-to-day business affairs of CSB and the mining operation at Site IV-1 of the Merapoh Gold Mine;

ii)

final right for the appointment of members to the Board of Directors and the management team of CSB;

iii)

act as principal of CSB;

iv)

obligation to provide financial support to CSB;

v)

option to purchase an equity interest in CSB;

vi)

entitlement to future benefits and residual value of CSB;

vii)

right to impose no dividend policy;

viii)

human resources management.

2.

Debt Assignment, FMR assigned to GBL the sum of money in the amount of US Dollars Three Hundred Nine Thousand Three Hundred Thirty One And Ninety Two cents (US$ 309,331.92), now due to GBL from CSB under the financing obligation from the FMR to CSB.

 

With the above agreements,transactions, GBL controls CSB as the primary beneficiary and the operating resultsbecame a wholly-owned subsidiary of the VIE was included in the condensed consolidated financial statements for the nine months ended March 31, 2014.

Company and CSB, holds the operating right to Merapoh Gold Mine (the “Mine”) with all regulatory and government operating licenses in Malaysia.its 85% deemed indirect subsidiary.

 

On April 1, 2014, the Board of Directors of GBL purchasednotified FMR of the decision to exercise its option to purchase an 85% equity interest of CSB pursuant to Section 3.2.4 of the Management Agreement dated July 1, 2013, between GBL and FMR. This acquisition was completed on April 1, 2014, with consideration of $1, and GBL then became an 85% shareholder of CSB. 

On June 18, 2021, GBL entered into a Shares Sale Agreement with Lamax Gold Limited (“LGL”), a company incorporated under the laws of the British Virgin Islands, in relation to acquisition of the remaining 15% of the issued and paid-up share capital of CSB for a consideration of MYR 150,000 ($35,669). Prior to this acquisition, GBL owned 85% equity in CSB. Upon completion of the acquisition on October 20,2021, CSB became indirecta wholly owned subsidiary of GBL, and indirectly, of the Company.

 

On August 10, 2021, the Company formed a wholly owned subsidiary, VRI. for the purpose of conducting business in Missouri (using palm waste to create biochar and related products). Another entity, Verde Estates, LLC, was also formed on August 10, 2021 to own property in Missouri. Verde Estates, LLC is a wholly owned branch of Verde Renewables, Inc.

On November 15, 2021, the Company formed a wholly owned subsidiary, Verde Life Inc., an Oregon corporation for the purpose of conducting business in the distribution of THC-free cannabinoid products.

On January 17, 2022, the Company formed a wholly owned subsidiary, Verde Resources (Malaysia) Sdn Bhd, a company incorporated under the laws of Malaysia, for the purpose of conducting consultation services and distribution of renewable agricultural commodities.

On March 23, 2022, the Company, through Verde Resources (Malaysia) Sdn Bhd, entered into a Sale of Shares Agreement (“SSA”) with The Wision Project Sdn Bhd (“Wision”), a company incorporated under the laws of Malaysia, to acquire the one hundred percent (100%) of the issued and paid up ordinary shares in Wision.

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Stage of Operation

The Company does not own any title and/or concession right in any mines. The Company is undertaking natural mineral resource extraction management services.

 

The Company has negotiated with Malaysia state agency PKNP on a 2-year lease for a new mining location that is about 5 km from the current Merapoh mine site. ForThe leasing premium has been paid but the period between January 2020mining lease certificate will only be issued upon clearance from the Malaysia Forest Department, which is expected in mid 2022 subject to December 2020, there was no production atreview on COVID-19 “Movement Control Order” by the Merapoh Gold Mine. The objective of the Company is to improve the productivity at the new mine to ensure that the operation will be carried out effectively and efficiently at minimum cost.

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Current Mining Property and LocationMalaysian government.

 

Merapoh Gold Mine (the “Mine”)

The Merapoh Gold Mine is located in northern Pahang, with convenient road access through Kelantan directly to mine site and is about 400 kilometers away from Kuala Lumpur.

Current State of Exploration:

As ofFor the date of this report, the Merapoh Gold Mine property is without significant known reserves.

The Merapoh Gold Mine commenced exploratory operation in alluvia mining and achieved its first gold pour in July 2011. Through the years of operation, the Company has performed ongoing exercises to improve upon the matching of processing method with the types of ore in order to optimize cost to recovery ratio. In July 2013, production was outsourced to a reputable subcontractor, and developed a resource management system to match ore against processes to achieve the most cost efficient and highest recovery production procedure.

There was no gold ore extractioncurrent Site IV-1 of the Merapoh Gold Mine, and no gold concentrate sold for the period between January 1, 2020 and December 31, 2020.our mining operation would focus on mining other resources such as limestones.

 

Our revenues have been derived fromThe Company believes that there are excellent growth opportunities for its business outside Malaysia. We are constantly exploring for potential acquisition of mining projects in other parts of the world.

As our business is affected by the fluctuations of gold productionprices, the Company intends to diversify its product line by acquiring mining projects with potential for different mineral resources other than gold. We continue to hold discussions with other mining companies for potential collaboration to carry out exploration and exploitation works on other mineral resources in Southeast Asia regions. Apart from the Merapoh Gold Mine, but currently there is no production from that mine and we are not certain that there will be productionmining industry, the Company has taken steps to look into investment opportunities in the coming future. Management continuesnon-mining areas that include the bioenergy industry and the food & beverage sector.

The Company is diversifying into the green industry with its acquisition of Bio Resources Ltd (“BRL”), the beneficial and/or registered proprietor of the intellectual property known as “Catalytic Biofraction Process”, which is a slow pyrolysis process using a proprietary catalyst to search for mining opportunitiesdepolymerise palm biomass wastes (empty fruit bunches or palm kernel shells) in temperature range of 350 degree Celsius to generate revenues for500 degree Celsius to yield commercially valuable bio products: bio-oil, wood vinegar (pyroligneous acid), biochar and bio-syngas. The intellectual property is a second-generation pyrolysis process where non-food feedstock like the palm biomass wastes is used as feedstock. The success of venturing into the green industry is dependent on the completion of the acquisition subject to auditing and due diligence exercise to ascertain the valuation of BRL.

Apart from the green industry, the Company is also working on a partnership with MRX Technologies, a market leader in the future.commercial extraction systems for cannabis and hemp. The partnership includes an agreement for Verde Resources to white-label THC-free CBD products from MRX Technologies.

  

 
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Results of Operations

 

For the three months ended March 31, 20212022 and 2020:2021:

 

We have generated $14,326$16,712 and $0$14,326 revenues for the three months ended March 31, 20212022 and 2020,2021, and have recorded a gross (loss)/ profit of $14,326 and gross profit of $0 for the three months ended March 31, 2021 and 2020. We have incurred $81,605 and $96,858 in operating expenses through March 31, 2021 and March 31, 2020. We have other income $0($69,989) and $0 for the three months ended March 31, 20212022 and 2020.2021. We have incurred $498,773 and $81,606 in operating expenses through March 31, 2022 and 2021. We have interest expense of $486,977 and $0 for the three months ended March 31, 2022 and 2021. We have other income $99 and $0 for the three months ended March 31, 2022 and 2021.

 

The following table provides selected financial data about our company for the three months ended March 31, 20212022 and March 31, 2020.2021.

 

 

3/31/2021

 

3/31/2020

 

Change

 

 

03/31/2022

 

03/31/2021

 

Change

 

Statement of Operation

 

Amount

 

 

Amount

 

 

%

 

 

Amount

 

 

Amount

 

 

%

 

 

(Unaudited)

 

(Unaudited)

 

 

Revenue

 

$14,326

 

$-

 

100%

 

$16,712

 

$14,326

 

17%

Cost of revenue

 

$-

 

$-

 

-

%

 

$86,701

 

$-

 

100%

Gross Profit (Loss)

 

$14,326

 

$-

 

100%

Operating Expenses

 

$81,605

 

$96,858

 

(16)%

Other Income

 

$-

 

$-

 

-

%

Gross (loss) profit

 

$(69,989)

 

$14,326

 

-589%

Operating expenses

 

$498,774

 

$81,606

 

511%

Interest expense

 

$486,977

 

$-

 

100%

Other income, net

 

$99

 

$-

 

100%

The revenue is normally derived from the sales of gold mineral to customers in Malaysia. There was no revenue for the three months ended March 31, 2022 and 2021 because of the depletion of mineral reserves in the mine. The revenue instead was derived from sales of wood vinegar and bio char for these periods. Operating expenses comprised mainly of salaries, office costs, legal and professional fees. The increase in operating expenses for the period was mainly due to the increase of consultancy, salary, legal and professional fees during the period. The increase in salary expenses for the period was mainly due to the increase number of staff for segment development during the period.

 

For the nine months ended March 31, 20212022 and 2020:2021:

 

We have generated $14,326$16,712 and $0$14,326 revenues for the nine months ended March 31, 20212022 and 2020,2021, and have recorded a gross profit(loss) / income of $14,326($69,989) and gross profit of $0$14,326 for the nine months ended March 31, 20212022 and 2020.2021. We have incurred $180,398$1,221,874 and $276,904$180,398 in operating expenses through March 31, 20212022 and March 31, 2020.2021. We have other income $0interest expense of $1,441,911 and $0 for the nine months ended March 31, 20212022 and 2020.2021. We have other income $12,214 and $0 for the nine months ended March 31, 2022 and 2021.

 

The following table provides selected financial data about our company for the nine months ended March 31, 20212022 and March 31, 2020.2021.

 

 

3/31/2021

 

3/31/2020

 

Change

 

 

03/31/2022

 

03/31/2021

 

Change

 

Statement of Operation

 

Amount

 

 

Amount

 

 

%

 

 

Amount

 

 

Amount

 

 

%

 

 

(Unaudited)

 

(Unaudited)

 

 

Revenue

 

$14,326

 

$-

 

100%

 

$16,712

 

$

 14,326

 

17%

Cost of revenue

 

$-

 

$-

 

-

%

 

$86,701

 

$-

 

100%

Gross Profit (Loss)

 

$14,326

 

$-

 

100%

Operating Expenses

 

$180,398

 

$276,904

 

(35)%

Other Income

 

$-

 

$-

 

-

%

Gross (loss) profit

 

$(69,989)

 

$14,326

 

-589%

Operating expenses

 

$1,221,875

 

$180,398

 

577%

Interest expense

 

$1,441,911

 

$-

 

100%

Other income, net

 

$12,214

 

$-

 

100%

 

The revenue wasis normally derived from the sales of wash sandgold mineral to customers in Malaysia. The increase ofThere was no revenue for the threenine months period ended March 31, 2022 and 2021 because of the depletion of mineral reserves in the mine. The revenue instead was mainly due to seeking new customerderived from sales of wash sand sales duringwood vinegar and bio char for the three months period.periods mentioned Operating expenses comprised mainly of salaries, office costs, legal and professional fees and travelling expenses.fees. The decreaseincrease in operating expenses for the three months period was mainly due to the decreaseincrease of salariesconsultancy, salary, legal and professional fees during the period. The increase in salary expenses for the period was mainly due to the increase in the number of staff for new segment development during the period.

 

The revenue derived from the sales of wash sand to customers in Malaysia. The increase of revenue for the nine months period ended March 31, 2021, was mainly due to seeking new customer of wash sand sales during the last three months period. Operating expenses comprised mainly of salaries, office costs, legal and professional fees, consultancy service fee, stock-based compensation and travelling expenses. The operating expenses were mainly denominated in MYR and decrease compared with nine months period ended March 31, 2021. Moreover, the average rate of MYR :USD for nine months March 31, 2021 and March 31, 2020 was 0.2430 and 0.2395 respectively.

 
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Plan of Operation

 

Our Industry and Principal Markets

 

The report by BMI Research states that global gold mine output growth will pick up in the next few years, supported by higher gold prices and solid projects in key countries. BMI Research forecasts global gold production to increase from 105moz in 2018 to 125moz by 2026, averaging 2.3% annual growth. While a steady pace of growth, this represents a slight deceleration in growth rate compared with the previous eight-year average of 3.1%.

 

Subcontractor

 

In an effort to enhance the efficiency of mine operations at the Merapoh Gold Mine, Champmark Sdn Bhd (“CSB”) entered into an Operation Term Sheet (“OTS”) agreement in July 2013 to outsource the exploitation works of alluvial gold resources at Site IV-1 of the Merapoh Gold Mine to a subcontractor Borneo Oil & Gas Corporation Sdn Bhd (“BOG”).

 

BOG has the experience and local knowledge in managing the exploitation of alluvial gold at the Merapoh Gold Mine. The Company will provide necessary disclosure when any significant agreements have been made with sub-contractors in the future.

BOG became the Company’s shareholder in January 29, 2014, and was no longer a third party subcontractor.

Expansion Plans

The Company has negotiated with Malaysia state agency PKNP on a 2-year lease for a new mining location that is about 5 km from the current Merapoh mine site. The leasing premium has been paid but the mining lease certificate will only be issued upon clearance from the Malaysia Forest Department, which is expected around mid-2021 subject to review on COVID-19 “Movement Control Order” by the Malaysian government.

The Company believes that there are excellent growth opportunities for its business outside Malaysia. We are constantly exploring for potential acquisition of mining projects in other parts of the world.

As our business is affected by the fluctuations of gold prices, the Company intends to diversify its product line by acquiring mining projects with potential for different mineral resources other than gold. We continue to hold discussions with other mining companies for potential collaboration to carry out exploration and exploitation works on other mineral resources in Southeast Asia regions. Apart from the mining industry, the Company is taking steps to look into investment opportunities in the non-mining areas that include the bioenergy industry and the food & beverage sector.

 

Limited Operating History; Need for Additional Capital

 

There is no historical financial information about us upon which to base an evaluation of our performance. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of our properties, and possible cost overruns due to price and cost increases in services.

 

We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.

 

 
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Liquidity and Capital Resources

 

The following table provides selected cash flow data about our company for the nine months ended March 31, 20212022 and March 31, 2020.2021.

 

Cash Flow Date

 

3/31/2021

 

 

3/31/2020

 

Net Profit (Loss) from operation

 

$(166,072)

 

$(276,904)

Net Cash Generated/(Used) from operating activities

 

$(116,928)

 

$(319,588)

Net Cash Generated/(Used) from investing activities

 

$-

 

 

$-

 

Net Cash Generated/(Used) from financing activities

 

$-

 

 

$(191)

Effect of exchange rate changes on cash and cash equivalents

 

$120,530

 

 

$328,326

 

Net increase (decrease) in cash and cash equivalents

 

$3,602

 

 

$8,547

 

Cash and cash equivalents at beginning of year

 

$24,027

 

 

$10,662

 

Cash and cash equivalents at end of year

 

$27,629

 

 

$19,209

 

Cash Flow Date

 

03/31/2022

 

 

03/31/2021

 

Net Loss from operation

 

$(2,721,561)

 

$(166,072)

Net Cash Used in operating activities

 

 

(1,097,381)

 

 

(189,317)

Net Cash Used in investing activities

 

 

(310,332)

 

 

-

 

Net Cash Generated from/(Used in) financing activities

 

 

1,004,887

 

 

 

(72,389)

Effect of exchange rate changes on cash and cash equivalents

 

 

7,787

 

 

 

120,530

 

Net (decrease) increase in cash and cash equivalents

 

 

(395,039)

 

 

3,602

 

Cash and cash equivalents at beginning of year

 

 

2,117,622

 

 

 

24,027

 

Cash and cash equivalents at end of year

 

$1,722,583

 

 

$27,629

 

 

For the nine months ended March 31, 2021,2022, the Company had incurred net loss from operation of $166,072,$2,721,561 which posted a negative impact to the company’s cash flow. The reconciliation on non-cash items such as depreciation and amortization provide positive impact on cash.

 

In the operation analysis, the net cash used in operating activities decreasedincreased from $319,588$189,317 to $116,928.$1,097,381. The $166,072 netoperation loss of $2,721,561 was partially offset by the noncash expenseexpenses such as $9,417$9,831 in depreciation, $29,434 in amortization, $284,249 in share based compensation and amortisation.$1,441,911 in interest expenses on promissory notes. In the operating assets and liabilities, the net increasedecrease in current assets such asresulted from an increase of trade receivables was $14,326,at $14,818, increase of other deposits and prepayments of $85,132, an increase in inventories of $81,492 and decrease in right of use assets of $16,142 whereas the net increase in current liabilities such as accounts payable,resulted from an increase of accrued liabilities and advanced from related parties was $54,053, which provided positive cash flow effect to the $166,072 loss in operation. The final resultother payables at $24,774 and $719 decrease of the cash flow from operating activities was a negative cash flow effect.accounts payable.

 

In theThe net cash used by investing activities of $310,332 resulted from security deposit paid at $240,000 and financing cash flow analysis, there was no changeacquisition of plant and equipment at $70,332 for the nine months ended March 31, 2021.2022.

 

Besides,The net cash provided by financing activities of $1,004,887 resulted from proceeds from shares to be issued of $1,000,000, net of repayment of lease liabilities for the nine months ended March 31, 2022 of $5,220 and advances from/(to) related parties of $10,107

The net increasedecrease in exchange rate effect of $120,530$7,787 provided a positive cash flow effect. Theeffect and the overall cash and cash equivalents at the end of March 31, 2021,2022, was increaseddecreased by $3,602$396,039 with $27,629$1,722,583 as athe closing balance.

 

The cash flow situation will not allow for operations in the coming next 12 months by self-generated cash provided from operating activities. The Company needs to increase cash flow supplies with a long term plan until the Company makes sustainable profits and has a positive cash flow. Otherwise, loans from related parties may be a temporary solution, although we have no written loan agreements. There is no guarantee that we will be able to secure adequate financing. If we fail to secure sufficient funds, our business activities may be curtailed, or we may cease to operate.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

 

 
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). During the past one year, the Company has been undertaking tremendous changes and expansion which rendered the management to re-consider the availability of more management talents and professional staff to meet the enlargement in operation under the coming acquisition and expansion move. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of the Evaluation Date that our disclosure controls and procedures were not effective such that the information relating to us required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

As of March 31, 2021,2022 management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. During the past one year, the Company has been undertaking tremendous enlargement and expansion which rendered the management to re-consider the availability of more management talents and professional staff to meet the enlargement in operation during and after the coming acquisition and expansion move. Based on this consideration and that evaluation, theythe current management concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

 

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee, (2) lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (3) inadequate segregation of duties consistent with control objectives; and (4) management is dominated by three individuals without adequate compensating controls. The aforementioned material weaknesses were identified by our Chief Executive and Financial Officers in connection with the review of our financial statements as of March 31, 2021.2022.

 

Management believes that the material weaknesses set forth above did not have an immediate negative effect on our financial results because of our small size of operation. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements if the Company were growing substantially inafter the future periods.expansion move was materialized.

 

Changes in Internal Controls

 

There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the nine months ended March 31, 20212022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

Item 1A. Risk Factors.

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

N/A.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosure.

 

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act “)”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic and annual reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities under the regulation of the Federal Mine Safety and Health Act of 1977. The Company did not have any mines in the United States during the period ended March 31, 2021.2022.

 

Item 5. Other Information.

 

There were changes in Directors and Executive Officers effective on March 31, 2021. For details, please refer to Form 8-K filed by the registrant to SEC on April 1, 2021, at SEC website: www.sec.gov.

The Company announced the Sale and Purchase Agreement on May 10, 2021 to acquire the assets of biofraction plant and the right to use intellectual property license in Sabah, Malaysia from Borneo Energy Sdn Bhd in consideration of issuance of 166,666,667 shares of the Company’s restricted common stock at $0.03 per share, valued at $5,000,000. On May 12, 2021, the Company also announced the Share Sale Agreement for the acquisition of the entire issued and paid-up share capital of Bio Resources Limited in consideration of issuance of 321,500,000 shares of the Company’s restricted common stock at $0.03 per share, valued at $9,645,000, and the issuance of promissory notes with two-year term period for the amount of $20,355,000. For details, please refer to Form 8-K filed by the registrant at SEC website on May 13, 2021.None.

 

 
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Item 6. Exhibits.

 

The following exhibits are included as part of this report:

 

Exhibit No.

 

Description

31.1

 

Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.

31.2

 

Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.

32.1

 

Rule 1350 Certifications of Chief Executive Officer and Chief Financial Officer.

______________ 

101*

 

____________

* The following financial information from Verde Resources, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021,2022, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of March 31, 2021,2022, and June 30, 2020,2021, (ii) Condensed Statements of Operations for the three and nine months ended March 31, 20212022 and 2020,2021, (iii) Condensed Statements of Cash Flows for the nine months ended March 31, 20212022 and 2020,2021, and (iv) Notes to Condensed Financial Statements.

 

 
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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

VERDE RESOURCES, INC.

 

 

(Registrant)

 

 

 

 

 

Dated: May 21, 2021June 30, 2022

By:

/s/ Balakrishnan B S Muthu

Balakrishnan B S Muthu

 

 

 

Balakrishnan B S MuthuPresident

 

 

 

President(Principal Executive Officer)

 

(Principal Executive Officer)

 

 
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