UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended June 30, 2024
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.) |
| | |
8112 Maryland Ave, Suite 400, St. Louis, MO 63105 | | 63105 |
(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code: (314) 530-9071
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(b) of the Act: Title of Each Class | | Name of Each Exchange On Which Registered |
N/A | | N/A |
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☒ No ☐
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 last 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 registration statement was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒
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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | 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 Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold of $0.19 (or the average bid and asked price of such common equity) as of the last business day of the registrant’s most recently completed second fiscal quarter, being December 29, 2023, was $91,258,209.54.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.
1,240,374,345 as of September 13, 2024
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
Part I
Cautionary Note Regarding 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 in the sections “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should carefully review the risks described in this Annual Report on Form 10-K 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-K to the “Company,” “Verde,” “we,” “us” or “our” are to Verde Resources, Inc.
Item 1. Business.
Overview
Verde Resources, Inc. (the “We” or “Company” or “VRDR”) was incorporated on April 22, 2010, in the State of Nevada, U.S.A..
The Company is a leader in Net Zero road construction and building materials, driving innovations that enhance sustainability and advance environmental stewardship. By integrating biochar, a highly effective carbon sequester and performance enhancer, the Company facilitates the industry’s seamless Transition to Zero. This approach reduces GHG emissions, optimizes the use of native soils and recycled materials, speeds installation, and improves efficiency while cutting costs. Since 2021, the Company’s BioFraction™ facility in Borneo has been converting palm waste into biochar and other sustainable byproducts. Although operations in Borneo, Malaysia, experienced a temporary slowdown during the financial year, this is due to the strategic focus on a test track partnership between its US-based subsidiary, Verde Renewables Inc., and the National Center for Asphalt Technology (NCAT). This partnership is rigorously testing the Company’s innovative Biochar-Asphalt technology, which promises superior performance, environmental sustainability, and the generation of Carbon Removal and Avoidance Credits.
Once this groundbreaking, eco-friendly solution is certified at the highest industry standards, the same blueprint will be introduced in Malaysia. Ongoing discussions with PLUS Malaysia, the country’s largest highway operator, signal a growing demand for biochar in the region. This demand, coupled with the certification, will enable the BioFraction™ plant to secure a captive client, ensuring the resumption of normal operations in Malaysia with the potential for significant scale-up over time.
The Company has undergone a restructuring exercise to shift its focus towards renewable energy and sustainable development with the world faced with challenges of climate change and environmental dehydration. The Company has announced the disposition of the mining business through the sale of the entire issued and paid-up share capital of Champmark Sdn Bhd (“CSB”) on March 13, 2023. The disposition of CSB was completed on April 20, 2023. The Company has discontinued its distribution of THC-free cannabinoid (CBD) products following the expiration of its supply agreement with MRX Xtractors, LLC on July 6, 2024. In line with this transition, the Company has made a strategic decision to fully divest from the Cannabis and CBD industry, similar to its previous divestment from mining operations in Malaysia, to concentrate solely on advancing its sustainability agenda.
The Company conducts business operations in La Belle, Missouri, U.S.A., through Verde Renewables, Inc. (“VRI”), a company incorporated in the State of Missouri, U.S.A., and an indirect wholly-owned subsidiary Verde Estates, LLC (“VEL”), a Missouri limited liability company.
Puro.earth, the crediting platform for durable carbon removal, has officially registered the Company as a Carbon Removal Credit supplier as part of its Accelerate program. This partnership was formalized through a platform agreement signed in April 2023. The Company’s endeavors are poised to unlock revenue opportunities by generating Carbon Removal Credits (CORCs). This critical step incentivizes the broader adoption of climate technologies and enables the Company to supply these credits to companies seeking to offset their carbon footprint in pursuit of net-zero objectives. Simultaneously, this approach creates an additional and substantial revenue stream for the Company.
The following diagram illustrates our current corporate structure:
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 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 owned 85% equity interest in CSB, a private limited liability company incorporated in Malaysia. 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.
Under the terms of the Assignment Agreement, FMR had assigned its management rights of CSB’s mining operation in the Mining Lease to the Company, through its wholly-owned subsidiary Verde Resources Asia Pacific Limited (“VRAP”) in exchange for 80,000,000 shares of 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.
VRAP was formed 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 VRAP 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 VRAP.
Pursuant to the Assignment Agreement, and a Supplementary Agreement dated February 17, 2014, on further clarifications to the Assignment Agreement signed by the Company with FMR, the 100% interest of FMR in VRAP was transferred to VRDR at a consideration of One and no/100 Dollar ($1.00). 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 VRAP 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 VRAP 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 VRAP, on July 1, 2013, FMR had assigned its rights and obligations pursuant to its 85% interest in CSB to VRAP. According to ASC 810-05-08 A, CSB is a deemed subsidiary of VRAP because due to the assignment, VRAP had gained control of the Board of Directors of CSB, VRAP’s rights to receive future benefits and residual value, and VRAP’s obligation to absorb losses and provide financing for CSB. VRAP 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, VRAP was the primary beneficiary of CSB. Under 810-23-42, 43, it was determined that CSB was de-facto agent and VRAP, the principal, and consequently, CSB was considered as a deemed subsidiary of VRAP beginning July 1, 2013.
With the above transactions, VRAP became a wholly-owned subsidiary of the Company and CSB, its 85% deemed indirect subsidiary.
On April 1, 2014, the Board of Directors of VRAP notified 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 VRAP and FMR. This acquisition was completed on April 1, 2014, with consideration of $1, and VRAP then became an 85% shareholder of CSB.
Effective February 20, 2016, Mr. Wu Ming Ding resigned from 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 then consisted of Mr. Balakrishnan B S Muthu and Mr. Chen Ching.
Effective February 2, 2018, our 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 8-K 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 then consisted 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 (the “S&P 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. The acquisition from Borneo Energy Sdn Bhd the assets of its biofraction plant and the right to use its intellectual property license in Sabah, Malaysia was completed on February 24, 2023.
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 (“BRL”) from various unrelated third parties, Taipan International Limited, The Wision Project Limited, and other 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 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 $20,355,000 is repayable by May 12, 2023, and bearing zero coupon interest. The promissory note is priced at $16,290,550 considering the current market interest rate. On January 20, 2022, the Company reached a mutual agreement with the Lenders of the Notes to enter into a Supplement to Promissory Note, with each Lender, 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 acquisition of BRL was consummated on October 12, 2022.
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 USD 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, VRAP 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, one payment upon signing 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, VRAP 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 VRAP, 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 VRAP 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 VRAP exercising the option to purchase. The option to purchase was not exercised and lapsed on March 1, 2024.
On June 18, 2021, VRAP 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. Prior to this acquisition, VRAP owned 85% equity in CSB. Under the terms of the Shares Sale Agreement, the consideration for the acquisition shall be satisfied in full by the payment of Malaysia Ringgit MYR 150,000 (approximately $36,130) upon the execution of the Shares Sale Agreement. A deposit of MYR 150,000 (approximately $36,130) was paid to LGL on June 21, 2021. With the completion of the acquisition on October 20,2021, CSB became a wholly owned subsidiary of VRAP, and indirectly, of the Company. The Company had announced the disposition of the mining business through the sale of the entire issued and paid-up share capital of CSB on March 13, 2023. The disposition of CSB was completed on April 20, 2023.
On July 7, 2021, the Company through its wholly-owned subsidiary VRAP entered into a Product Supply Agreement (the “Product Supply Agreement”) with MRX Xtractors, LLC (“MRX”), an Oregon limited liability company. MRX is a market leader in commercial extraction systems for cannabis and hemp. The Product Supply Agreement is a partnership between VRAP and MRX to establish a purchase and supply arrangement that allows VRAP to distribute white-label THC-free CBD products from MRX. The Product Supply Agreement expired on July 6, 2024.
On August 10, 2021, we formed a wholly owned subsidiary, Verde Renewables, Inc., for the purpose of conducting business in Missouri (using straw bed and wood 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 subsidiary of Verde Renewables, Inc.
On November 15, 2021, we 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. The Company terminated its business in the distribution of THC-free cannabinoid (CBD) products with the expiry of its product supply agreement with MRX Xtractors, LLC on July 6, 2024.
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 February 10, 2022, the Company, through Verde Estates, LLC, entered into a Commercial Lease Agreement and Option to Purchase (the “La Belle 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 La Belle 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 La Belle Lease Agreement, together with a security deposit of $240,000. The La Belle 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, inclusive of the security payment, at any time during the two years period of the lease term. The Option to Purchase was exercised on September 27, 2022.
On March 23, 2022, we, through Verde Resources (Malaysia) Sdn Bhd., (“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, to acquire the one hundred percent (100%) of the issued and paid up ordinary shares in Wision. It was closed in May 2022.
On April 19, 2022, we, through our wholly-owned subsidiary Verde Malaysia, a company incorporated in Malaysia, entered into Term Sheet for Regenerative Carbon Negative Agriculture Initiative (the “Borneo 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 Borneo 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 the 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 Borneo 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, we 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 “Engineering Services Agreement”) with BioDiverse Energies, LLC (“BDE”). Under the Engineering Services 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 Engineering Services 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 May 4, 2022, the Company assigned the Engineering Services Agreement to its wholly owned subsidiary Verde Renewables, Inc. (“VRI”) to assume from the Company all the obligations, responsibilities and liabilities associated with the Engineering Services Agreement.
On April 29, 2022, Verde Renewables, Inc. (“VRI”) a wholly owned subsidiary of the Company, closed on the purchase of residential property located in Chesterfield, Missouri (the “Chesterfield Property”). The purchase price for the Chesterfield Property was $750,000.00, paid in cash at closing. The Company used cash on hand to purchase the Chesterfield Property. The Chesterfield Property was purchased from Yimin Huang and Claudine Huang (the “Sellers”). There were no material relationships between the Sellers and the Company or any of its affiliates. The Company plans on holding the Chesterfield Property as an investment and for corporate housing.
On June 8, 2022, the Company through its wholly owned subsidiary VRI entered into a Services 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 Services 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, par value $0.001 per share on or before July 15, 2022. The shares were issued during the financial year end.
On October 26, 2022, the Company entered into a corporate consulting services agreement (the “Consulting Agreement”) for investor communication and public relations services with Dutchess Group LLC (“DGL”). Pursuant to terms of the Consulting Agreement, the Company agreed to issue 1,500,000 shares of the Company’s restricted common stock to DGL within forty-five (45) days of signing the Consulting Agreement. These shares were subsequently issued in
December 2022.
On November 8, 2022, Jack Wong was appointed Chief Executive Officer of the Company’s wholly owned subsidiaries Verde Renewables, Inc and Verde Life Inc.
On November 30, 2022, Verde Resources, Inc. (the “Company”), through its wholly-owned subsidiary Verde Renewables, Inc. (“VRI”), a company incorporated in the State of Missouri, U.S.A., entered into a Services Agreement with Y M Tengku Chanela Jamidah Y A M Tengku Ibrahim (the “Ibrahim Agreement”) to engage her as its Director of Strategic Initiatives to promote and make introductions for the benefit of advancing the Company’s business and interests amongst her networks as designated in the Ibrahim Agreement. Under the Ibrahim Agreement, the Company will pay Y M Tengku Chanela Jamidah Y A M Tengku Ibrahim by the issuance of 1,000,000 shares of the Company’s restricted common stock, par value $0.001 per share (the “Common Stock”) in two tranches of 500,000 shares each on or before December 31, 2022 and December 31, 2023 respectively. The term of the Ibrahim Agreement will be for a fixed period of twenty-four (24) months commencing on November 30, 2022.
Subsequently on September 12, 2023, the Company through VRI entered into a Service and Stock Cancellation Agreement with Y M Tengku Chanela Jamidah Y A M Tengku Ibrahim to cancel the Ibrahim Agreement. Pursuant to the Ibrahim Agreement, 500,000 restricted common shares were issued at $0.20 on December 31, 2022 totaling $100,000. With the Service and Stock Cancellation Agreement, these shares were to be cancelled and subsequently 166,667 restricted common shares were to be re-issued at the same price. The cancellation of shares was completed on March 28, 2024 and subsequently 166,667 restricted common shares were re-issued on May 24, 2024.
On December 1, 2022, Verde Resources, Inc. (the “Company”), through its wholly-owned subsidiary Verde Renewables, Inc. (“VRI”), a company incorporated in the State of Missouri, U.S.A., entered into a Services Agreement with Steven Sorhus (the “Sorhus Agreement”) to engage him as its Financial Controller to prepare monthly financial reports and financial projections, and oversee daily accounting practices of the Company and its subsidiaries as designated in the Sorhus Agreement. Under the Sorhus Agreement, the Company will pay Steven Sorhus by the issuance of 800,000 shares of the Company’s restricted common stock, par value $0.001 per share (the “Common Stock”) in two tranches of 300,000 shares on or before December 31, 2022 and 500,000 shares on or before December 31, 2023. The term of the Sorhus Agreement will be for a fixed period of twenty-five (25) months commencing on December 1, 2022.
Subsequently on September 8, 2023, the Company through VRI entered into a Service and Stock Cancellation Agreement with Steven Sorhus to cancel the Sorhus Agreement. Pursuant to the Service Agreement, 300,000 restricted common shares were issued at $0.20 on December 31, 2022 totaling $60,000. With the Service and Stock Cancellation Agreement, these shares were to be cancelled and subsequently 128,409 restricted common shares were to be re-issued at the same price for services rendered till cancellation. The cancellation of shares was completed on March 28, 2024 and subsequently 128,409 restricted common shares were re-issued on May 24, 2024.
On December 1, 2022, Verde Resources, Inc. (the “Company”), through its wholly-owned subsidiary Verde Renewables, Inc. (“VRI”), a company incorporated in the State of Missouri, U.S.A., entered into a Services Agreement with EMGTA LLC (“EMGTA”) (the “EMGTA Agreement”). Under the EMGTA Agreement, EMGTA will provide services to develop business plan and marketing strategy to facilitate business growth, and identify new customers and markets for the Company. The Company will pay EMGTA by the issuance of 750,000 shares of the Company’s restricted common stock, par value $0.001 per share (the “Common Stock”) in two tranches of 375,000 shares each on or before December 31, 2022, and December 31, 2023 respectively. The term of the EMGTA Agreement will be for a fixed period of twenty-five (25) months commencing on December 1, 2022.
Subsequently on September 8, 2023, the Company through VRI entered into a Service and Stock Cancellation Agreement with EMGTA LLC to cancel the EMGTA Agreement including the cancellation of 375,000 restricted common shares issued at $0.20 on December 31, 2022 totaling $75,000 as consideration for certain services. The cancellation is still in process.
On December 7, 2022, the Company entered into a Supplementary Agreement to Promissory Note in relation to the acquisition of the entire issued and paid-up share capital of BRL with the 17 Lenders, including the Company’s President and CEO, Jack Wong, to convert the total principal loan amount of $20,355,000 into shares of the Company’s restricted Common Stock at the agreed conversion price of $0.0611 per share on or before December 9, 2022. With the consummation of the acquisition of BRL on October 12, 2022, on December 9, 2022 the conversion of Promissory Notes was completed pursuant to a Supplementary Agreement dated December 7, 2022, with the issuance of 333,142,389 shares of the Company’s restricted Common Stock, at the price of $0.0611 per share, to the 17 Lenders, including the Company’s CEO, Jack Wong.
On December 9, 2022, the Company issued a total of 334,642,389 restricted common shares comprising 333,142,389 restricted Common shares for the conversion of a total principal loan amount of $20,355,000 of promissory notes at $0.0611 per share to 17 lenders of the promissory notes and 1,500,000 restricted common shares at US$0.12 per share to Dutchess Group LLC for its consulting services.
On December 15, 2022, the Company entered into a Services Agreement with Looi Pei See (the “Looi Pei See Agreement”) to engage her as a consultant to develop the retail markets for the Company’s products and services in Malaysia and Singapore. The Company will pay Looi Pei See by the issuance of 1,140,000 shares of the Company’s restricted common stock, par value $0.001 per share (the “Common Stock”) on or before December 31, 2022. The shares were issued on December 31, 2022 for service period from December 15, 2022 to December 14, 2025.
On December 31, 2022, the Company issued a total of 2,315,000 restricted Common shares at $0.20 per share to four consultants, Y M Tengku Chanela Jamidah Y A M Tengku Ibrahim, Steven Sorhus, EMGTA LLC and Looi Pei See, as compensation for the engagement of their consulting services.
On March 13, 2023, the Company through its wholly-owned subsidiary VRAP, a company incorporated under the laws of the British Virgin Islands, entered into a Share Sale Agreement (the “SSA Agreement”) with Jusra Mining Merapoh Sdn Bhd (“JMM”), a company incorporated under the laws of Malaysia, to sell the entire issued and paid-up share capital of CSB, an indirect wholly-owned subsidiary of the Company engaged in the mining business. Under the terms of the SSA Agreement, the consideration for the sale of the entire issued and paid-up share capital of CSB shall be satisfied in full by the payment of Malaysia Ringgit MYR 500,000. The Company has been undergoing a restructuring exercise to shift its focus towards renewable energy and sustainability development with the world faced with challenges of climate change and environmental dehydration. The disposition of the mining business via the sale of the entire issued and paid-up share capital of CSB is in line with the Company’s restructuring effort to focus on renewable energy and sustainability.
On March 13, 2023, the Company and its indirect wholly-owned subsidiary CSB entered into a Settlement of Debts Agreement (the “SDA Agreement”) and a two year term period Promissory Note with CSB’s creditor Borneo Oil Corporation Sdn Bhd (the “Creditor”) to settle in full a total of USD 675,888 of CSB’s account payable to the Creditor either in cash or by the issuance of new restricted shares of the Company’s common stock at a price of $0.07 per share. As set out in the SDA Agreement, the new restricted shares for settlement of the account payable to the Creditor shall be issued to the Creditor or its nominee. Subsequently on August 16, 2024, the Company entered into a Supplementary Agreement to the SDA Agreement and Promissory Note with the Creditor to convert the total amount of USD 675,888 into 9,655,542 shares of the Company’s restricted Common Stock at the agreed conversion price of $0.07 per share for issuance on August 16, 2024. A total of 9,655,542 shares of the Company’s restricted Common Stock were issued on August 16, 2024 to Borneo Oil Berhad, the appointed nominee of the Creditor, to settle in full the total of USD 675,888 of CSB’s account payable to the Creditor.
On March 23, 2023, the Company, through its wholly-owned subsidiary Verde Resources (Malaysia) Sdn. Bhd. (“Verde Malaysia”), entered into a Shares Sale Agreement (the “SSA Agreement”) with Murugesu A/L M. Narasimha and Deivamalar A/P Kandiah (“Vendors”), the legal and beneficial owners of Vata VM Synergy (M) Sdn. Bhd. (“VATA”), a company incorporated under the laws of Malaysia, to acquire 60% of the issued and paid-up share capital of VATA, a company engaged in the business of providing green technology to government and private sectors and in creating high quality compost using agricultural waste and biomass products in Malaysia. In relation to the SSA Agreement, the Company through Verde Malaysia also entered into a Shareholders Agreement with Murugesu A/L M. Narasimha and VATA. Under the terms of the SSA Agreement, the consideration for the acquisition of 60% of the issued and paid-up share capital of VATA shall be satisfied by the total purchase consideration of Malaysia Ringgit MYR 2,250,000, which includes a first payment of Malaysia Ringgit MYR 100,000 upon the execution of the SSA Agreement, a second payment of Malaysia Ringgit MYR 150,000 within thirty (30) days from the date of fulfillment or waiver of all the conditions set out in the SSA Agreement, and the issuance of shares of the Company’s restricted common stock for the balance consideration of Malaysia Ringgit MYR 2,000,000 at a price per share of not more than ten percent (10%) discount from the immediate preceding five trading days volume weighted average price (“VWAP”) from the issuance date pursuant to the terms of the SSA Agreement. As of June 30, 2023, the first payment of MYR100,000 has been made. The SSA Agreement, however, has since been terminated on the basis of non-disclosure of material information by the Vendors, and the deposits written off during the year ended June 30, 2024.
Effective March 30, 2023, Carl Craven voluntarily resigned from his position as Director of the Company. By resolution of the Board of Directors, Jack Wong was appointed Director of the Company for a one (1) year term, effective March 30, 2023. Jack Wong will hold the Board position formerly held by Carl Craven. By Waiver and Consent of Shareholders, Jack Wong was re-elected Director of the Company, effective March 30, 2024.
On April 20, 2023, the disposition of CSB was completed. The Company had announced the Share Sale Agreement to sell the entire issued and paid-up share capital of CSB to Jusra Mining Merapoh Sdn Bhd (“JMM”) on March 13, 2023. The consideration for the sale of the entire issued and paid-up share capital of CSB shall be satisfied in full by the payment of Malaysia Ringgit MYR 500,000.
On August 7, 2023, the Company entered into a Memorandum of Understanding (the “MOU”) with Andre van Zyl (“AvZ”) & Green Carbon Industries Group of Companies (“GCI”), headquartered in Western Australia, to actively pursue and put in place a mutually agreeable and fully funded project venture in North America, through the Company to securely ring-fence, support, preserve and implement the existing and related Intellectual Property of both parties and their respective subsidiaries/representatives, as well as to fund and support ongoing and future Research and Developments. The intended project venture will also be responsible to establish a phased implementation plan for modified, scaled Biochar and Construction Char operations, that will be paired with new Cold Bio Emulsion and Cold Bio Mix technology plant production operations to be established for the production of low CO2 footprint construction material in the territory of North America. Upon successful implementation of the project venture, there will be further option to expand operations throughout the continents of South America’s, APAC, Europe, and Africa. This technology makes possible high duty road base and road wearing course installations with superior performance, utilizing more cost-effective local soils and gravels with extended life of road performance, and substantially lower maintenance activities and cost.
Subsequently on May 15, 2024, the Company, AvZ and GCI mutually agreed to terminate the collaboration laid out in the MOU that was entered into on August 7, 2023. The MOU is rendered null and void effective May 15, 2024.
On September 12, 2023, Jack Wong stepped down from his position as President of the Company, but remains as Chief Executive Office of the Company.
On September 12, 2023, the Board of Directors of the Company (the “Board”) appointed Jack Wong, CEO and Director of the Company, as Chairman of the Board.
On January 23, 2024, by resolution of the Board of the Company, approved an amendment to the Bylaws of the Company (the "Amendment"). The Amendment, which was adopted effective January 23, 2024, increases the number of members of the Board from three (3) to seven (7).
Subsequently, on January 23, 2024, Jack Wong stepped down from his position as Chairman of the Board, and Joseph Ambrose Lee was appointed Director and Chairman of the Board for a one year term, and Tay Hong Choon was appointed Special Advisor to the Board for a one year term.
On February 6, 2024, by resolution of the Board of the Company, Joseph Ambrose Lee, Jack Wong, Balakrishnan B.S. Muthu, Soo Yau Cho and Tay Hong Choon were appointed as members of the newly formed Management Committee of the Board, to oversee and manage the operations of the Company. The Management Committee shall be responsible for making decisions pertaining to the overall operations of the Company and shall report directly to the Board.
Subsequently on May 21, 2024, by resolution of the Board of the Company, Steven Sorhus was appointed as member of the Management Committee of the Board to replace Soo Yau Cho.
Effective June 18, 2024, Joesph Ambrose Lee tendered his resignation as Director and Chairman of the Board and member of the Management Committee of the Company. By resolution of the Board, Balakrishnan B S Muthu, Director and Chief Financial Officer of the Company, was appointed Chairman of the Board to replace Joesph Ambrose Lee effective June 18, 2024.
Effective June 18, 2024 also, Joesph Ambrose Lee tendered his resignation as member of the Management Committee of the Company. The Management Committee now consists of four (4) members: Balakrishnan B.S. Muthu, Jack Wong, Tay Hong Choon and Steven Sorhus.
On October 1, 2023, the Company appointed Eric Bava and Andre van Zyl as Chief Operating Officer and Chief Technology Officer respectively to drive the Company’s climate-tech innovation.
Subsequently on May 15, 2024, Andre van Zyl stepped down from his position as Chief Technology Officer of the Company.
On October 23, 2023, the Company, through its wholly-owned subsidiary VRI, entered into a Services Agreement (the “Agreement”) with Donald R. Fosnacht to engage him as National Certification and Extensive BCR (Biochar Carbon Removal) Implementation Specialist to develop and implement a comprehensive strategy to obtain national and regional certification and endorsement for carbon net-negative construction products with high biochar content, encompassing asphalt, concrete, and soil stabilization as designated in the Agreement. Under the Agreement, the Company will pay Donald R. Fosnacht by the issuance of 1,000,000 shares of the Company’s restricted common stock, par value $0.001 per share (the “Common Stock”) on or before January 31, 2024. The term of the Agreement will remain effective until December 31, 2025 and both parties may renew the agreement or enter into a new agreement as may be mutually agreed on terms to be separately negotiated.
Subsequently on January 31, 2024, the Company issued 1,000,000 restricted common shares to Donald R. Fosnacht.
On November 22, 2023, the Company issued a total of 14,931,624 restricted Common Shares comprising 11,538,461 restricted Common Shares for $1,050,000 at $0.091 per share to five non-US shareholders, 100,000 restricted Common Shares for $10,000 at $0.10 per share to one non-US shareholder, 1,943,163 restricted Common Shares for $176,828 at $0.091 per share to ten US shareholders and 1,350,000 restricted Common Shares for $135,000 at $0.10 per share to nine US shareholders
On December 4, 2023, the Company issued a total of 1,238,889 restricted Common Shares comprising of 850,000 restricted Common Shares for $85,000 at $0.10 per share to four US shareholders and 388,889 restricted Common Shares for $35,000 at $0.09 per share to one US shareholders.
On February 26, 2024, the Company issued 555,555 restricted Common Shares for $50,000 at $0.09 per share to one US shareholder.
On April 12, 2024, shares that were committed to be issued as of March 31, 2024 were fully settled by way of issuance of 2,881,274 restricted Common Shares at $0.108 per share to three non-US shareholders and one non-US related party in settlement of $311,178 subscription amounts paid, and issuance of 200,000 restricted Common Shares on April 15, 2024 at $0.091 per share to one US shareholder in settlement of $18,200 subscription amount paid.
On April 15, 2024, the Company further issued a total of 2,855,555 restricted Common Shares to four US shareholders, in which 2,300,000 restricted Common Shares were issued at $0.10 per share to two US shareholders, and 555,555 restricted Common Shares were issued at $0.09 per share to one US shareholder.
On April 20, 2024, the Company entered into two Services Agreements (the “Agreements”) with Dr. Nam Tran and Dr. Raymond Powell to engage them as National Implementation Experts for its wholly-owned subsidiary Verde Renewables, Inc. (“VRI”) to initiate connections with esteemed asphalt contractors, identify potential partners, explore potential collaborations through their extensive networks in the asphalt industry and recommend strategies to capitalize on emerging opportunities as designated in the Agreements. Under the Agreements, the Company will pay Dr. Nam Tran and Dr. Raymond Powell each by the issuance of 3,000,000 shares of the Company’s restricted Common Shares in three tranches of 1,000,000 shares each on or before July 31, 2024, October 31, 2025 and October 31, 2026 respectively. The term of the Agreements will remain effective until April 30, 2027 and both parties may renew the agreement or enter into a new agreement as may be mutually agreed on terms to be separately negotiated. Pursuant to the respective addendum to Service Agreement dated June 29, 2024, each tranche of shares to be issued is compensation for each service period of 12 months beginning from May 1, 2024, May 1, 2025 and May 1, 2026 respectively.
Subsequently on July 31, 2024, the Company issued 1,000,000 of the Company’s restricted Common Shares each to Dr. Nam Tran and Dr. Raymond Powell as part of the compensation package in the Agreements.
On May 14, 2024, the Company entered into a Heads of Agreement (the “HOA”) with Zym-Tec Technologies Limited (“ZT”), granting the Company (i) the right to form a collaboration entity (“Collaboration”) to further develop ZT’s aforementioned technologies by incorporating Biochar as a carbon input for use in the road infrastructure and construction industry (the “Products”) and (ii) the Master Licensing Rights for the USA Territory for ZT’s patented technologies to the Collaboration entity, including Soil Stabilization, Reclaimed Asphalt Pavement (RAP), wearing course materials, concrete, other building material products. This Collaboration aims to generate Carbon Removal Credits through the use of biochar and create new net-zero or carbon net-negative IP products that are higher performing, more durable, sustainable, and cost-effective. These new IPs will be co-owned equally by the Company and ZT. In consideration of the Collaboration, the Company and ZT will establish a new Special Purpose Vehicle (the "SPV") to be equally held by both parties. The SPV will be responsible for executing the new VERDE-ZymTec Net-Zero and Carbon-Negative Technologies and Building Material Products. The Company and ZT will integrate the collaborative activities into the SPV. The share structure and income split shall be confirmed by the Company and ZT in the final agreement. Subsequently, the Company will apply for an uplift to the Nasdaq stock exchange as part of the final restructuring process. The Collaboration will distribute the royalties, license fees, carbon avoidance credits, and carbon removal credits (the “Income”) to the Company and ZT. The HOA outlines the terms and conditions for the cooperation between both parties, with the intent to execute a more detailed agreement (the "Detailed Agreement") within an agreed timeframe. The Detailed Agreement will supersede the obligations outlined in the HOA.
On June 1, 2024, the Company entered into a multi-year Services Agreement (the “Agreement”) with Dale Ludwig to engage him as Strategic Advisor for the Company and all its subsidiaries, to maintain and build strong relationships with policymakers at both state and federal levels, collaborate with Missouri Department of Transportation, build relationships with Missouri Asphalt Pavement Association (MAPA) members, collaborate with Missouri contractors to encourage the use of the Company's technologies, identify current biochar producers in Missouri and engage with the Missouri Department of Economic Development. Pursuant to the Agreements, the Company agreed to issue a total of 2,000,000 restricted shares of the Company’s common stock to Dale Ludwig over three tranches of 700,000 shares on or before August 31, 2024, 700,000 shares on or before October 31, 2025 and 600,000 shares on or before October 31, 2026. Pursuant to the addendum to Service Agreement dated June 29, 2024, each tranche of shares to be issued is compensation for each service period beginning 11 months from June 1, 2024 and 12 months from May 1, 2025 and May 1, 2026 respectively.
Subsequently on August 8, 2024, the Company issued 700,000 of the Company’s restricted Common Shares to Dale Ludwig as part of the compensation package in the Agreement.
On June 27, 2024, the Company entered into an agreement with The National Center for Asphalt Technology at Auburn University ("NCAT") to undertake a 3-year Performance Testing Project titled “Structural Capacity of Sustainable Pavement”. The Project, led by Dr. Nam Tran, Associate Director and Research Professor at NCAT, will involve comprehensive performance testing on the NCAT Test Track in Opelika, Alabama. This facility, sponsored by various state Departments of Transportation (DOTs) and in partnership with the Minnesota Road Research Facility (MnROAD), is dedicated to advancing sustainable pavement technologies. The NCAT Test Track will be constructed in the summer of 2024 to evaluate cutting-edge technologies co-developed by the Company and Zym-Tec. These innovations utilize enzymes to treat expansive soils and stabilize marginal base materials, potentially reducing or eliminating the need for carbon-intensive materials such as hydrated lime and Portland cement. Additionally, integrating biochar from biomass pyrolysis into enzyme-treated pavement materials is expected to improve performance, substantially reduce greenhouse gas (GHG) emissions, and sequester carbon dioxide. This pioneering approach is projected to generate Carbon Removal Credits upon completion of the test track installation, proving the viability of this next-generation blueprint for net-zero road construction. The Company is confident in its Verde-ZymTec technology and aspires to attain the highest level of certification from NCAT. Success in this Project is expected to drive widespread adoption of a net-zero road construction blueprint by DOTs across the United States and the federal DOT. Additionally, the substantial Carbon Removal Credits generated will create a significant and separate revenue stream for the Company. The Project commences on June 24, 2024, and is expected to conclude on September 30, 2027, with the first draft of the final report expected in spring 2027. The Company has committed $750,000 to support the Project, with an initial payment of $100,000 upon execution of the Agreement, followed by quarterly payments of $50,000 from September 2024 to March 2025, and $62,500 from June 2025 to September 2026.
Stage of Operation
The Company has diversified 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 depolymerise palm biomass wastes (empty fruit bunches or palm kernel shells) in temperature range of 350 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 palm biomass wastes is used as feedstock.
The Company’s BioFraction technology produces high-quality raw biochar using recycled organic biomass from the dairy, palm, and other natural resource industries. The Company also produces activated biochar, which undergoes further processing combined with natural enzymes, minerals, and microbial additives.
Biochar can be the key component towards rebuilding and enhancing coral life and marine ecosystems throughout coastal regions. The Company will explore developing blue carbon technologies using biochar as an additive within carbon-negative cement mixtures that can be molded into a variety of useful marine structures and environments. We have begun research and development of various biochar cement compound mixtures, such as raw atmospheric injected CO2, precast eco-friendly cement. We will engage international and regional industry experts, institutes and educational communities, focused towards developing a unique line of blue carbon capturing products for coastal aquatic and marine environments.
The Company is working alongside lawmakers that will assist in shaping future climate bills, where increased standards and beneficial solutions in agriculture can be implemented to help aid with further political legislation towards climate mitigation and adaptation. We will engage key stakeholders to develop licensed and accountable measures that will assist in shaping and defining a sustainable credit exchange for the commercial market.
On August 7, 2023, the Company announced a momentous partnership with Green Carbon Industries (“GCI”), securing exclusive access to their invaluable intellectual property (IP) rights. This groundbreaking collaboration lays the foundation for revolutionary infrastructure development, marked by innovative biochar asphalt showcase projects within the United States. These projects complement GCI’s established successes in the Asia Pacific (APAC), Middle East, and Africa regions. Our shared commitment revolves around validating the concept’s feasibility and scalability for carbon sequestration, thereby transforming global infrastructure development, and proactively addressing pressing environmental challenges. Subsequently on May 15, 2024, the Company and GCI mutually agreed to terminate the collaboration laid out in this partnership in its entirety.
Biochar-asphalt, an innovative, eco-friendly, high performance, and cost-saving alternative to conventional high CO2 footprint asphalt production and installation, holds immense promise in addressing environmental concerns. Through the integration and extensive utilization of biochar – a carbon-rich material derived from organic waste, the Company aims to reduce carbon emissions and the carbon footprint of infrastructure projects. The American showcase projects will serve as compelling evidence of the technology’s capability in carbon sequestration, efficiently mitigating greenhouse gas, enhancing durability and cost efficiencies, all while simultaneously addressing pressing environmental challenges.
In 2023, Puro.earth, the world’s foremost crediting platform for durable carbon removal, officially registered the Company as a Carbon Removal Credit supplier as part of its Accelerate program. This partnership was formalized through a platform agreement signed in April 2023. It is worth noting that Puro.earth was acquired by Nasdaq in June 2021.
Furthermore, the Company’s endeavors are poised to unlock revenue opportunities by generating Carbon Removal Credits (CORCs). This critical step incentivizes the broader adoption of climate technologies and enables the Company to supply these credits to companies seeking to offset their carbon footprint in pursuit of net-zero objectives. Simultaneously, this approach creates an additional and substantial revenue stream for the Company.
On August 30, 2023, the Company achieved a significant milestone by conducting the first-ever biochar-asphalt installation in the United States, just outside of Chicago, Illinois. Subsequently, we replicated this success at our own facility in La Belle, Missouri. As a testament to our efforts, we have already received Letter of Intent (LOI), and we are confident that our transition from mining to climate-tech and the green economy will yield tremendous results for the company in the years ahead.
On October 23, 2023, the Company, through its wholly-owned subsidiary VRI, entered into a Services Agreement with Donald R. Fosnacht to engage him as National Certification and Extensive BCR (Biochar Carbon Removal) Implementation Specialist to develop and implement a comprehensive strategy to obtain national and regional certification and endorsement for carbon net-negative construction products with high biochar content, encompassing asphalt, concrete, and soil stabilization as designated in the Services Agreement.
On June 1, 2024, the Company entered into a Services Agreement with Dale Ludwig to engage him as Strategic Advisor to maintain and build strong relationships with policymakers at both state and federal levels, collaborate with Missouri Department of Transportation, build relationships with Missouri Asphalt Pavement Association (MAPA) members, collaborate with Missouri contractors to encourage the use of the Company's technologies, identify current biochar producers in Missouri and engage with the Missouri Department of Economic Development.
On June 27, 2024, the Company entered into an agreement with The National Center for Asphalt Technology at Auburn University ("NCAT") to undertake a 3-year Performance Testing Project titled “Structural Capacity of Sustainable Pavement”. The Project, led by Dr. Nam Tran, Associate Director and Research Professor at NCAT, will involve comprehensive performance testing on the NCAT Test Track in Opelika, Alabama. This facility, sponsored by various state Departments of Transportation (DOTs) and in partnership with the Minnesota Road Research Facility (MnROAD), is dedicated to advancing sustainable pavement technologies. The NCAT Test Track will be constructed in the summer of 2024 to evaluate cutting-edge technologies that utilize enzymes to treat expansive soils and stabilize marginal base materials, potentially reducing or eliminating the need for carbon-intensive materials such as hydrated lime and Portland cement. Additionally, integrating biochar from biomass pyrolysis into enzyme-treated pavement materials is expected to improve performance, substantially reduce greenhouse gas (GHG) emissions, and sequester carbon dioxide. This pioneering approach is projected to generate Carbon Removal Credits upon completion of the test track installation, proving the viability of this next-generation blueprint for net-zero road construction. The Company is confident in its technology and aspires to attain the highest level of certification from NCAT. Success in this Project is expected to drive widespread adoption of a net-zero road construction blueprint by DOTs across the United States and the federal DOT. Additionally, the substantial Carbon Removal Credits generated will create a significant and separate revenue stream for the Company. The Project is expected to conclude in September 2027, with the first draft of the final report expected in spring 2027.
Employees
As of September 1, 2024, the Company has the following employees:
Senior Management | | | 5 | |
Sales and Marketing | | | 4 | |
Production | | | 4 | |
Information System Technology | | | 1 | |
Administration / Finance / HR | | | 5 | |
| | | | |
Total | | | 19 | |
14 and 5 of our employees are located in Malaysia and the United States, respectively. None of our employees are members of a trade union. We believe that we maintain good relationships with our employees and have not experienced any strikes or shutdowns and have not been involved in any material labor disputes.
We are required to contribute to the Employees Provident Fund (EPF) under a defined contribution pension plan for all eligible employees in Malaysia between the ages of eighteen and seventy. We are required to contribute a specified percentage of the participant’s income based on their ages and wage level. The participants are entitled to all of our contributions together with accrued returns regardless of their length of service with the Company.
The EPF is a social security institution formed according to the Laws of Malaysia, Employees Provident Fund Act 1991 (Act 452) which provides retirement benefits for members through management of their savings in an efficient and reliable manner. The EPF also provides a convenient framework for employers to meet their statutory and moral obligations to their employees.
We intend to hire more staff to assist in the development and execution of our business operations.
Government and Industry Regulations
Malaysia has not yet enacted regulations specifically for pyrolysis systems. The Company using a pyrolysis system will operate in designated industrial zones and maintain valid operating and trading licenses that may include Environmental Impact Assessments, and inspections by Malaysian government agencies for health & safety such as Bomba.
Insurance
Insurance companies in Malaysia offer limited business insurance products. While business interruption insurance is available to a limited extent in Malaysia, we have determined that the risks of interruption, cost of such insurance and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. As a result, we could face liability from the interruption of our business as summarized under “Risk Factors - Risks Related to Our Business - We do not carry business interruption insurance so we could incur unrecoverable losses if our business is interrupted.
Corporate Information
Our corporate and executive office is located at 8112 Maryland Ave, Suite 400, St. Louis, MO 63105, telephone number (314) 530 9071.
Reports to Security Holders
The public may read and copy any materials filed with the SEC at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company files its reports electronically with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other electronic information regarding New Media and filed with the SEC at http://www.sec.gov.
Near-term Requirements For Additional Capital
We believe that we will require approximately $2 million over the next 18 months to implement our business plan. For the immediate future, we intend to finance our business expansion efforts through loans and investments from existing shareholders, financial institutions and investors.
Item 1A. Risk Factors
Risks Associated with Verde Resources, Inc.
We are dependent on certain key personnel and loss of these key personnel could have a material adverse effect on our business, financial condition and results of operations.
Mr. Jack Wong, our current principal executive officer, has extensive contacts and experience in the green climate-tech industry in U.S.A., and we are dependent upon his abilities and services to develop and market our business. He is responsible for overseeing all of our day-to-day business operations of our operating company, VRI, and its subsidiary VEL, including the operations and negotiations for the sales of its activated biochar and other bio products. We may not be able to retain the executive officer/manager for any given period of time. The loss of his services could have a material adverse effect upon our business operations, financial condition and results of operations. In addition, we must attract, recruit and retain a sizeable workforce of technically competent employees in U.S.A. to run our operations. Our ability to effectively implement our proposed business strategies and expand our operations will depend upon the successful recruitment and retention of additional highly skilled and experienced management and other key personnel in U.S.A. If we cannot maintain highly experienced and skilled management teams, our business could fail and you could lose any investment you make in our shares.
The COVID-19 and other future pandemics may result in significant deterioration and disruption in national and local economic conditions and record levels of unemployment, which may have a material impact on our business operations.
The COVID-19 and future pandemics may create extensive disruptions to the global economy, to businesses, and to the lives of individuals throughout the world. Federal and state governments would have to take actions to contain the spread of the disease, including quarantines, travel bans, closures of businesses and schools, fiscal stimulus, and legislation designed to deliver monetary aid and other relief. The spread of COVID-19 has decreased substantially but there may be potential risk to the increased spread of new, more transmissible coronavirus variants, the number of individuals diagnosed with COVID-19 and other future pandemics may increase again. The substantial increase in these infections may cause state and local governments to consider, and in some cases implement, various activity restrictions and containment measures that previously had been lifted. The uncertain future development of the pandemic situations could materially and adversely affect our business operations.
Impact of current global economic climate has increased uncertainty of our future operations
Impact of changes in global economic conditions, including inflation, has increased uncertainty of our business operations.
Changes in global economic conditions, including inflation which resulted in lower consumer confidence, may continue to have negative impact on our business, revenues and earnings. Inflation rates have increased and may continue to rise. Our suppliers may continue to raise prices that we may not be able to pass on to our customers. This may continue to affect our business, including our competitive position, market share, revenues and profit margins.
Impact of global tensions may increase uncertainty of our future operations.
The global tensions arising from the Ukraine-Russian war and Hamas-Israel war may result in disruptions in the broader global economic environment.
We are subject to the many risks of doing business internationally, including but not limited to the difficulty of enforcing liabilities in foreign jurisdictions.
We are a Nevada corporation and, as such, are subject to the jurisdiction of the State of Nevada and the United States courts for purposes of any lawsuit, action or proceeding by investors. An investor would have the ability to effect service of process in any action against the Company within the United States. In addition, we are registered as a foreign corporation doing business in Malaysia, and as such, are subject to the local laws of Malaysia governing an investors’ ability to bring actions in foreign courts and enforce liabilities against a foreign private issuer, or any person, based on U.S. federal securities laws.
Investors may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in Malaysia based upon U.S. laws, including the federal securities laws or other foreign laws against us or our management.
Some of our current operations are conducted in Malaysia, and some of our directors and officers are nationals and residents of Malaysia and other foreign countries. All or substantially all of the assets of these persons are located outside the United States and in other foreign countries. As a result, it may not be possible to effect service of process within the United States or elsewhere outside Malaysia upon these persons. In addition, uncertainty exists as to whether the courts of Malaysia would recognize or enforce judgments of U.S. courts obtained against us or such officers and/or directors predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in Malaysia against us or such persons predicated upon the securities laws of the United States or any state thereof.
Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.
We are subject to the United States Foreign Corrupt Practices Act, which generally prohibits U.S. companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. In addition, we are required to maintain records that accurately and fairly represent our transactions and have an adequate system of internal accounting controls. Foreign companies, including some that may compete with us, are not subject to these prohibitions, and therefore may have a competitive advantage over us. Our executive officers and employees have not been subject to the United States Foreign Corrupt Practices Act prior to 2010. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.
Climate change and related legislative and regulatory initiatives may result in operational changes and expenditures that could significantly impact our business.
The current and anticipated effects of climate change are creating an increasing level of concern for the state of the global environment. As a result, political and social attention to the issue of climate change has increased. In recent years, governments across the world have entered into international agreements to attempt to reduce global temperatures, in part by limiting greenhouse gas emissions. The U.S. Congress, state legislatures and federal and state regulatory agencies have continued to propose and advance numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change. Such initiatives have been pursued with rigor under the current Administration. To the extent that these initiatives lead to the promulgation of new regulations or supervisory guidance applicable to the Company, we would expect to experience increased compliance costs and other compliance-related risks.
If we fail to maintain effective internal controls over financial reporting, the price of our common stock may be adversely affected.
Malaysian companies may not always adopt a Western style of management and financial reporting concepts and practices, which includes strong corporate governance, internal controls and computer, financial and other control systems. In addition, we may have difficulty in hiring and retaining a sufficient number of qualified employees to work in Malaysia. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards for foreign subsidiaries. As a result, we may experience difficulties in implementing and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act of 2002. This could result in significant deficiencies or material weaknesses in our internal controls, which could impact the reliability of our financial statements and prevent us from complying with SEC rules and regulations and the requirements of the Sarbanes-Oxley Act of 2002. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of our internal controls over financial reporting or disclosure of our public accounting firm’s attestation to or report on management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our Common Stock.
Our independent registered auditors have expressed substantial doubt about our ability to continue as a going concern.
Our audited financial statements included in this report include an explanatory paragraph that indicates that they were prepared assuming that we would continue as a going concern. We have suffered recurring net losses, and record an accumulated deficits as of June 30, 2024. These conditions raise substantial doubts about our ability to continue as a going concern. The Company’s ability to continue as a going concern over the next twelve months depends on the successful validation and certification of its Net Zero road construction blueprint by the National Center for Asphalt Technology (NCAT) and its adherence to established carbon removal and avoidance methodologies. Achieving these milestones will enable the Company to generate revenue through the commercial licensing of the blueprint, royalties from biochar-asphalt mix designs, carbon credits, and sales of biochar and bio-fuel. On August 8th, CRH, the largest building materials company in North America and Europe, listed on both the NYSE and the London Stock Exchange, announced through its investment arm, CRH Ventures, that it has selected the Company to scale up its biochar-asphalt technology for commercialization. There can be no assurance that we will be successful in our plans described above. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Changes in interest rates could negatively impact our results of operations, stockholders’ equity (deficit) and fair value of net assets.
Our investment activities and credit guarantee activities expose us to interest rate and other market risks. Changes in interest rates, up or down, could adversely affect our net interest yield. Although the yield we earn on our assets and our funding costs tend to move in the same direction in response to changes in interest rates, either can rise or fall faster than the other, causing our net interest yield to expand or compress. For example, due to the timing of maturities or rate reset dates on variable-rate instruments, when interest rates rise, our funding costs may rise faster than the yield we earn on our assets. This rate change could cause our net interest yield to compress until the effect of the increase is fully reflected in asset yields. Changes in the slope of the yield curve could also reduce our net interest yield.
Interest rates can fluctuate for a number of reasons, including changes in the fiscal and monetary policies of the federal government and its agencies, such as the Federal Reserve. Federal Reserve policies directly and indirectly influence the yield on our interest-earning assets and the cost of our interest-bearing liabilities. The availability of derivative financial instruments (such as options and interest rate and foreign currency swaps) from acceptable counterparties of the types and in the quantities needed could also affect our ability to effectively manage the risks related to our investment funding. Our strategies and efforts to manage our exposures to these risks may not be effective in the future, which could negatively impact our results of operations and the price of our common stock.
We may be exposed to risks relating to management’s conclusion that our disclosure controls and procedures and internal controls over financial reporting are ineffective.
We do not have an independent audit committee and our Board of Directors may be unable to fulfill the functions of such a committee, which may compromise the management of our business. Our Board of Directors functions as our audit committee and is comprised of three directors, none of whom are considered to be “independent” in accordance with the requirements of Rule 10A-3 under the Securities Exchange Act of 1934. An independent audit committee plays a crucial role in the corporate governance process, assessment of the Company’s processes relating to its risks and control environment, oversight of financial reporting, and evaluation of internal and independent audit processes. The lack of an independent audit committee may prevent the Board of Directors from being independent in its judgments and decisions and its ability to pursue the committee’s responsibilities, which could compromise the management of our business.
If we fail to maintain effective internal controls over financial reporting, the price of our common stock may be adversely affected.
Malaysian companies may not always adopt a Western style of management and financial reporting concepts and practices, which includes strong corporate governance, internal controls and computer, financial and other control systems. In addition, we may have difficulty in hiring and retaining a sufficient number of qualified employees to work in Malaysia. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards for foreign subsidiaries. As a result, we may experience difficulties in implementing and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act of 2002. This could result in significant deficiencies or material weaknesses in our internal controls, which could impact the reliability of our financial statements and prevent us from complying with SEC rules and regulations and the requirements of the Sarbanes-Oxley Act of 2002. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of our internal controls over financial reporting or disclosure of our public accounting firm’s attestation to or report on management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our Common Stock.
Risks Associated with Our Common Stock
Our shares are defined as “penny stock.” The rules imposed on the sale of the shares may affect your ability to resell any shares you may purchase, if at all.
Our shares are defined as a “penny stock” under the Securities and Exchange Act of 1934, and rules of the Commission. The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than certain accredited investors who are, generally, institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly with spouse, or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker-dealer must make a suitability determination for each purchaser and receive the purchaser’s written agreement prior to the sale. In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required by the Commission. Consequently, the penny stock rules may affect the ability of broker-dealers to make a market in or trade our Common Stock and may also affect your ability to resell any shares you may purchase.
Market for penny stock has suffered in recent years from patterns of fraud and abuse
Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:
| • | Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; |
| • | Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; |
| • | Boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; |
| • | Excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and, |
| • | The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses. |
Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.
Inability and unlikelihood to pay dividends
To date, we have not paid, nor do we intend to pay in the foreseeable future, dividends on our Common Stock, even if we become profitable. Earnings, if any, are expected to be used to advance our activities and for general corporate purposes, rather than to make distributions to stockholders. Prospective investors will likely need to rely on an increase in the price of Company stock to profit from his or her investment. There are no guarantees that any market for our common stock will ever develop or that the price of our stock will ever increase.
Since we are not in a financial position to pay dividends on our common stock and future dividends are not presently being contemplated, investors are advised that return on investment in our common stock is restricted to an appreciation in the share price. The potential or likelihood of an increase in share price is questionable at best.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Our corporate and executive office is located at 8112 Maryland Ave, Suite 400, St. Louis, Missouri 63105, telephone number (314) 530-9071. We believe that our existing facilities are adequate to meet our current requirements.
We own or lease the following real properties:
Location | Rent/Own | Mortgage/Lease Terms | Use |
La Belle | Own | NA | Warehouse |
St. Louis Missouri | Lease | NA | Corporate Headquarters |
Chesterfield, Missouri | Own | NA | Corporate Housing |
Jalan Silam, Sabah Malaysia | Rent | NA | BioFraction Factory Site |
Item 3. Legal Proceedings.
None
Item 4. Mine Safety Disclosures.
N/A
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our Common Stock is now quoted on the OTCQB, under the symbol “VRDR”. Our stock was approved for quotation on the OTCBB on September 26, 2012. However, the Company’s Common Stock did not begin active trading until October 2013.
The following table sets forth the high and low bid prices for our Common Stock per quarter as reported by the OTCQB for the most recent two (2) fiscal years, based on our fiscal year end June 30, 2024. These prices represent quotations between dealers without adjustment for retail mark-up, markdown or commission, and may not represent actual transactions.
Fiscal Quarter Ended | | High | | | Low | |
| | | | | | |
June 30, 2023 | | $ | 0.20 | | | $ | 0.071 | |
September 30, 2023 | | $ | 0.43 | | | $ | 0.0651 | |
December 31, 2023 | | $ | 0.17 | | | $ | 0.0721 | |
March 31, 2024 | | $ | 0.15 | | | $ | 0.101 | |
June 30, 2024 | | $ | 0.57 | | | $ | 0.105 | |
September 30, 2024 | | $ | 0.37 | | | $ | 0.1721 | |
As of September 13, 2024, we had 211 shareholders of record of our common stock and 1,240,374,345 shares issued and outstanding.
Dividend Policy
We have not paid any cash dividends on our Common Stock and have no present intention of paying any dividends on the shares of our Common Stock. Our current policy is to retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be determined from time to time by our board of directors.
Equity Compensation Plan Information
None.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
We did not sell any equity securities which were not registered under the Securities Act during the year ended June 30, 2024, that were not otherwise disclosed on our quarterly reports on Form 10-Q or our current reports on Form 8-K filed during the fiscal year ended June 30, 2024, except the following transaction.
On April 12, 2024, shares that were committed to be issued as of March 31, 2024 were fully settled by way of issuance of 2,881,274 restricted Common Shares at $0.108 per share to four non-US shareholders in settlement of $311,178 subscription amounts paid, and issuance of 200,000 restricted Common Shares on April 15, 2024 at $0.091 per share to one US shareholder in settlement of $18,200 subscription amount paid.
On April 15, 2024, the Company issued a total of 2,855,555 restricted Common Shares to four US shareholders, in which 2,300,000 restricted Common Shares were issued at $0.10 per share to two US shareholders and 555,555 restricted Common Shares were issued at $0.09 per share to one US shareholder.
On May 24, 2024, pursuant to the Service and Stock Cancellation Agreements with Steven Sorhus and YM Tengku Chanela Jamidah YAM Tengku Ibrahim dated September 8, 2023 and September 12, 2023 respectively, the Company re-issued 128,409 and 166,667 restricted Common Shares to Steven Sorhus and YM Tengku Chanela Jamidah YAM Tengku Ibrahim respectively for their services rendered till cancellation.
On August 8, 2024, the Company issued 700,000 of the Company’s restricted Common Shares to Dale Ludwig as part of the compensation package for their services to be rendered for the period from June 1, 2024 to April 30, 2025 as stated in the Services Agreement.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our shares of common stock or other securities during our fiscal year ended June 30, 2024.
Item 6. [Reserved].
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report, particularly in the section entitled “Risk Factors” of this annual report.
Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Results of Operations
The following table provides selected financial data about our company for the years ended June 30, 2024, and June 30, 2023.
Statement of Operation | | June 30, | | | | |
| | 2024 | | | 2023 | | | Change | |
| | USD | | | USD | | | USD | | | % | |
| | | | | | | | | | | | |
Revenue | | $ | 96,584 | | | $ | 100,777 | | | | (4,193 | ) | | $ | (4.2 | )% |
Cost of revenue | | | (62,978 | ) | | | (238,153 | ) | | | 175,175 | | | | (73.6 | )% |
Gross profit (loss) | | | 33,606 | | | | (137,376 | ) | | | 170,982 | | | | (124.5 | )% |
Selling, general and administrative expenses | | | (2,882,376 | ) | | | (3,216,022 | ) | | | 333,646 | | | | (10.4 | )% |
Other operating expenses | | | (237,047 | ) | | | - | | | | (237,047 | ) | | | | |
Loss from operation | | | (3,085,817 | ) | | | (3,353,398 | ) | | | 267,581 | | | | (8.0 | )% |
Interest expense | | | (176,483 | ) | | | (1,918,572 | ) | | | 1,742,089 | | | | (90.8 | )% |
Other income | | | 74,638 | | | | 1,273,010 | | | | (1,198,372 | ) | | | (94.1 | )% |
Net loss before income tax | | | (3,187,662 | ) | | | (3,998,960 | ) | | | 811,298 | | | | (20.3 | )% |
Provision of Income Tax | | | (112 | ) | | | - | | | | (112 | ) | | | | |
NET LOSS | | $ | (3,187,774 | ) | | $ | (3,998,960 | ) | | | 811,186 | | | | (20.3 | )% |
Revenue
The revenue was derived from sale of Biochar Asphalt Premix in 2024 in addition to the distribution of renewable commodities and compost spreading in 2023. We have generated $96,584 and $100,777 revenues for the years ended June 30, 2024, and 2023, respectively, Revenue decreased primarily due to the non-generation of revenue from compost spreading offset by the increase in the sale of Biochar Asphalt Premix in 2024. A gross profit of $33,606 compared to a gross loss of $137,376 for the year ended June 30, 2024, and 2023 respectively.
Cost of revenue
Cost of revenue decreased from $238,153 to $62,978 during the year ended June 30, 2024 due to cessation of the operations in the production and distribution of renewable commodities. Arising from this, the expenditure related to the plant have been categorized under other operating expenses.
Selling, General and Administrative Expenses
Selling, general and administrative expenses comprised mainly of salaries, office costs, legal and professional fees, consultancy fee and travelling expenses. We have incurred $2,882,376 and $3,216,022 in selling, general and administrative expenses through June 30, 2024, and June 30, 2023 respectively. Selling, general and administrative expenses decreased by 10.4%, or $333,646, primarily due to decrease of consultancy fee as most of the agreements with service providers expired in current financial year and the new agreements were only entered into in the last 2 months of the current financial year and selling, general and administrative expenses contributed by CSB which was disposed on April 20, 2023.
Other Operating Expenses
Other operating expenses comprised of expenditure related to the operations of the plant in the production and distribution of renewable commodities which have been categorized under other operating expenses. This categorization was due there being no production processed by the plant for the year ended 30 June 2024.
Interest expense
The Company recorded interest expense of $116,917 and $1,881,807 on the promissory notes for the years ended June 30, 2024, and 2023, respectively. Lease interest expenses amounted to $45,926 and $35,344 for the years ended June 30, 2024, and 2023, respectively. Bank loan interest amounted to $13,640 and $1,421 for the years ended June 30, 2024, and 2023, respectively.
The decrease in interest expense is mainly due to conversion of promissory notes with a principal amount of $20,355,000 on December 9, 2022 and accordingly no further interest charges recorded with regards to the PN thereafter. The charge in the current period is in respect of a new PN issued of $675,888.
Other income
We have other income of $74,638 and $1,273,010 for the year ended June 30, 2024, and 2023. Other income of $1,215,689 for the year ended June 30, 2023, was mainly due to gain on disposal of a subsidiary of $980,714 and fair value adjustment on convertible promissory notes issued to BOC of $194,865. The balance mainly represented rental income earned.
Net loss
As a result of the above factors, the Company recorded a net loss of $3,187,774 and $3,998,960 for the years ended June 30, 2024, and 2023, respectively.
Plan of Operation
Expansion Plans
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 depolymerise palm biomass wastes (empty fruit bunches or palm kernel shells) in temperature range of 350 degC to 500 degC 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 Company is working to lay the foundation for revolutionary infrastructure development, marked by innovative biochar asphalt showcase projects within the United States. Our commitment revolves around validating the concept’s feasibility and scalability for carbon sequestration, thereby transforming global infrastructure development, and proactively addressing pressing environmental challenges. Biochar-asphalt, an innovative, eco-friendly, high performance, and cost-saving alternative to conventional high CO2 footprint asphalt production and installation, holds immense promise in addressing environmental concerns. Through the integration and extensive utilization of biochar – a carbon-rich material derived from organic waste, The Company aims to reduce carbon emissions and the carbon footprint of infrastructure projects. The American showcase projects will serve as compelling evidence of the technology’s capability in carbon sequestration, efficiently mitigating greenhouse gas, enhancing durability and cost efficiencies, all while simultaneously addressing pressing environmental challenges.
In 2023, Puro.earth, the world’s foremost crediting platform for durable carbon removal, officially registered the Company as a Carbon Removal Credit supplier as part of its Accelerate program. This partnership was formalized through a platform agreement signed in April 2023. It is worth noting that Puro.earth was acquired by Nasdaq in June 2021.
The Company’s endeavors are poised to unlock revenue opportunities by generating Carbon Removal Credits (CORCs). This critical step incentivizes the broader adoption of climate technologies and enables the Company to supply these credits to companies seeking to offset their carbon footprint in pursuit of net-zero objectives. Simultaneously, this approach creates an additional and substantial revenue stream for the Company.
The Company achieved a significant milestone by conducting the first-ever biochar-asphalt installation in the United States, just outside of Chicago, Illinois in August 2023. Subsequently, we replicated this success at our own facility in La Belle, Missouri. In September 2023, upon the invitation of the City of Gramercy, located near New Orleans, Louisiana, the Company executed another biochar-asphalt installation. As a testament to our efforts, we have already received several Letters of Intent (LOIs), and we are confident that our transition from mining to climate-tech and the green economy will yield tremendous results for the company in the years ahead.
The Company entered into a Services Agreement with Donald R. Fosnacht in October 2023 to engage him as National Certification and Extensive BCR (Biochar Carbon Removal) Implementation Specialist to develop and implement a comprehensive strategy to obtain national and regional certification and endorsement for carbon net-negative construction products with high biochar content, encompassing asphalt, concrete, and soil stabilization as designated in the Services Agreement.
The Company entered into two Services Agreements with Dr. Nam Tran and Dr. Raymond Powell in April 2024 to engage them as National Implementation Experts for its wholly-owned subsidiary Verde Renewables, Inc. to initiate connections with esteemed asphalt contractors, identify potential partners, explore potential collaborations through their extensive networks in the asphalt industry and recommend strategies to capitalize on emerging opportunities as designated in the Agreements.
Furthermore, the Company entered into a Services Agreement with Dale Ludwig in June 2024 to engage him as Strategic Advisor to maintain and build strong relationships with policymakers at both state and federal levels, collaborate with Missouri Department of Transportation, build relationships with Missouri Asphalt Pavement Association (MAPA) members, collaborate with Missouri contractors to encourage the use of the Company's technologies, identify current biochar producers in Missouri and engage with the Missouri Department of Economic Development.
On June 27, 2024, the Company entered into an agreement with The National Center for Asphalt Technology at Auburn University ("NCAT") to undertake a 3-year Performance Testing Project titled “Structural Capacity of Sustainable Pavement”. The Project, led by Dr. Nam Tran, Associate Director and Research Professor at NCAT, will involve comprehensive performance testing on the NCAT Test Track in Opelika, Alabama. This facility, sponsored by various state Departments of Transportation (DOTs) and in partnership with the Minnesota Road Research Facility (MnROAD), is dedicated to advancing sustainable pavement technologies. The NCAT Test Track will be constructed in the summer of 2024 to evaluate cutting-edge technologies that utilize enzymes to treat expansive soils and stabilize marginal base materials, potentially reducing or eliminating the need for carbon-intensive materials such as hydrated lime and Portland cement. Additionally, integrating biochar from biomass pyrolysis into enzyme-treated pavement materials is expected to improve performance, substantially reduce greenhouse gas (GHG) emissions, and sequester carbon dioxide. This pioneering approach is projected to generate Carbon Removal Credits upon completion of the test track installation, proving the viability of this next-generation blueprint for net-zero road construction. The Company is confident in its technology and aspires to attain the highest level of certification from NCAT. Success in this Project is expected to drive widespread adoption of a net-zero road construction blueprint by DOTs across the United States and the federal DOT. Additionally, the substantial Carbon Removal Credits generated will create a significant and separate revenue stream for the Company. The Project is expected to conclude in September 2027, with the first draft of the final report expected in spring 2027.
Limited Operating History; Need for Additional Capital
There is limited 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.
Liquidity and Capital Resources
Our primary sources of liquidity are cash generated from private placements. Cash generated from operations is highly dependent on the sale of our products, which are still under development stage. Cash and cash equivalents totaled $0.3 million as of June 30, 2024, and $0.2 million as of June 30, 2023.
The following table provides selected cash flow data about our company for the years ended June 30, 2024, and 2023.
Cash Flow Date | | June 30, 2024 | | | June 30, 2023 | |
| | | | | | |
Net cash used in operating activities | | $ | (2,042,064 | ) | | $ | (1,656,896 | ) |
Net cash used in investing activities | | $ | (2,016,646 | ) | | $ | (387,938 | ) |
Net cash provided by financing activities | | $ | 4,081,720 | | | $ | 1,628,281 | |
Effect of exchange rate changes on cash and cash equivalents | | $ | 55,718 | | | $ | 198,045 | |
Net increase in cash and cash equivalents | | $ | 78,728 | | | $ | (218,508 | ) |
Cash and cash equivalents at beginning of year | | $ | 200,409 | | | $ | 418,917 | |
Cash and cash equivalents at end of year | | $ | 279,137 | | | $ | 200,409 | |
Net Cash Used In Operating Activities.
Cash used in operating activities reflects net loss adjusted for certain non-cash items, including depreciation expense, amortization of right of use assets and stock-based compensation, impairment on receivables and the effects of changes in operating assets and liabilities. The increase in cash used in operating activities for the year ended June 30, 2024, as compared to 2023 was primarily due to increase of inventories for production and distribution of renewable commodities and decrease of advanced from related parties.
In the operation analysis, the net cash used in operating activities decreased from $1,656,896 to $2,042,064. The operation loss of $3,187,662 was partially offset by the noncash expenses such as $417,517 in depreciation, $115,359 in amortization, $388,048 in share-based compensation, $103,380 in interest expenses on promissory notes, $45,926 in lease interest expense, $57,323 in impairment of receivables, $177,200 from advance to supplier written off, $134,042 in impairment of assets held for sale, property, plant and equipment written off of $3,979, write down of inventories of $15,587, inventories written off of $5,978 and $21,316 from deposit on acquisition of subsidiary written off. In the operating assets and liabilities, the net increase of cash outflow in current assets such as other receivables, deposits and prepayments, inventories and accounts receivables and current liabilities such as accrued liabilities and other payables which are greater than the net increase of cash inflow in current liabilities such as, advances from related parties, and accounts payable which resulted in $368,297 negative cash flow effect adding to loss in operation and after offset by non-cash expenses , the final result of the cash flow used in operating activities was $2,042,064.
Net Cash Used In Investing Activities.
The net cash used by investing activity of $16,646 resulted from purchase of property, plant and equipment of $16,646 and placement of deposit in bank of $2,000,000 for the year ended June 30, 2024.
Net Cash Provided By Financing Activities.
The net cash provided by financing activities of $4,081,720 resulted from proceeds from shares issued and shares to be issued of $4,108,379, advance from other payables of $136,983 and net proceeds from drawdown of loans of $20,440, set off partially by repayments to lease liabilities and related interests of $138,156 and $45,926 for the year ended June 30, 2024 respectively.
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.
Item 7A. 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 8. Financial Statements and Supplementary Data
VERDE RESOURCES, INC.
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2024
| | J&S ASSOCIATE PLT 202206000037 (LLP0033395-LCA) & AF002380 (Registered with PCAOB and MIA) B-11-14, Megan Avenue II 12,Jalan Yap Kwan Seng, 50450, Kuala Lumpur, Malaysia | | Tel: +603-4813 9469 Email : info@jns-associate.com Website : jns-associate.com |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders of
VERDE RESOURCES, INC.
Opinion on the Financial Statement
We have audited the accompanying consolidated balance sheet of Verde Resources, Inc. and its subsidiaries (the ‘Company’) as of June 30, 2024 and 2023, and the related consolidated statement of operations and comprehensive income, stockholders’ equity (deficit), and cash flows for the years ended June 30, 2024 and 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for the years ended June 30, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3, the Company has generated recurring losses and suffered from an accumulated deficit of $13,480,204 as of June 30, 2024. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regards to these matters are also described in Note 3 to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current year audit of the financial statements that were communicated or are required to be communicated to the audit committee, or in their absence, the directors, and that: (1) relate to accounts or disclosures that are material to the financial statements, and (2) involved especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Assessment for impairment of Intellectual Properties
As described in Note 2 to the consolidated financial statements, the intangible assets acquired from third parties are measured initially at fair value with an infinite live that are not being amortized. The Company annually evaluates the recoverability of the infinite-lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. The recoverability of these assets is measured by a comparison of the carrying amounts to the future discounted cash flows the assets are expected to generate. If such a review indicates that the carrying amount of intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value.
Our key considerations for the determination the fair value of the intangible assets, comprising Intellectual Properties (“IP”) as a critical audit matter was due to the high degree of judgement involved in the assessment of the assumptions used in deriving the future discounted cash flows as included in the worksheets presented to us to justify their carrying values of the IP. These were assessed by:
| i) | Critically evaluating management’s assessment for their rationale and justification of the assumptions used; |
| | |
| ii) | Discussions with the key management and operational personnel of the Company to understand the future plans, their assumptions and expected income to be derived; |
| | |
| ii) | Obtained necessary supporting information and published reports to support the forecast demand and productions and prices used in the worksheets; |
| | |
| ii) | Ascertaining formulas and linkages in the worksheets were properly set up; |
| | |
| iii) | Performing stress tests by reducing assumed demand and production to determine impact on cash flows and carrying values. |
/s/ J&S Associate PLT
Certified Public Accountants
Firm ID: 6743
We have served as the Company’s auditor since 2022.
Kuala Lumpur, Malaysia
October 16, 2024
VERDE RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| | As of June 30, | |
| | 2024 | | | 2023 | |
ASSETS | | | | | | |
Current asset: | | | | | | |
Cash and cash equivalents | | $ | 279,137 | | | $ | 200,409 | |
Deposit with banks | | | 2,000,000 | | | | - | |
Accounts receivable | | | 65,960 | | | | 12,071 | |
Inventories | | | 309,144 | | | | 96,036 | |
Amounts due from related party | | | 100 | | | | 100 | |
Advance to supplier | | | - | | | | 177,200 | |
Prepayment | | | 227,173 | | | | 375,680 | |
Other receivables and deposits | | | 6,862 | | | | 26,436 | |
| | | | | | | | |
| | | 2,888,376 | | | | 887,932 | |
| | | | | | | | |
Assets held for sale | | | 606,043 | | | | - | |
| | | | | | | | |
Total current assets | | | 3,494,419 | | | | 887,932 | |
| | | | | | | | |
Non-current assets: | | | | | | | | |
Property, plant and equipment, net | | | 2,916,006 | | | | 4,009,090 | |
Right of use assets, net | | | 509,482 | | | | 633,109 | |
Intangible assets | | | 33,160,631 | | | | 33,191,991 | |
Security deposit | | | 80,000 | | | | 80,000 | |
Deposit paid for acquisition of subsidiaries | | | - | | | | 21,423 | |
| | | | | | | | |
Total non-current assets | | | 36,666,119 | | | | 37,935,613 | |
| | | | | | | | |
TOTAL ASSETS | | $ | 40,160,538 | | | $ | 38,823,545 | |
| | | | | | | | |
LIABILTIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 92,250 | | | $ | 73,171 | |
Other payables | | | 517,189 | | | | 504,995 | |
Deposit and accrued liabilities | | | 83,671 | | | | 135,774 | |
Finance lease liabilities | | | 22,323 | | | | 172,184 | |
Finance lease liabilities – assets held for sale | | | 603,252 | | | | - | |
Operating lease liabilities | | | 24,881 | | | | 20,768 | |
Bank loan | | | 211,440 | | | | 191,000 | |
Promissory notes | | | 591,170 | | | | - | |
Amount due to director | | | 4,188 | | | | 9,660 | |
Amounts due to related parties | | | 327,867 | | | | 369,729 | |
| | | | | | | | |
Total current liabilities | | | 2,478,231 | | | | 1,477,281 | |
| | | | | | | | |
Non-current liabilities: | | | | | | | | |
Finance lease liabilities | | | 86,565 | | | | 608,455 | |
Operating lease liabilities | | | 4,602 | | | | 29,483 | |
Promissory notes | | | - | | | | 487,790 | |
| | | | | | | | |
Total non-current liabilities | | | 91,167 | | | | 1,125,728 | |
| | | | | | | | |
TOTAL LIABILITIES | | | 2,569,398 | | | | 2,603,009 | |
| | | | | | | | |
Commitments and contingencies | | | | | | | | |
| | | | | | | | |
STOCKHOLDERS’ EQUITY | | | | | | | | |
Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding | | | - | | | | - | |
Common stock, $0.001 par value; 10,000,000,000 shares authorized; 1,199,358,251 and 1,176,200,278 issued and outstanding as of June 30, 2024 and 2023 | | | 1,199,358 | | | | 1,176,200 | |
Common stock, $0.001 par value; 22,887,025 and 0 shares to be issued as of June 30, 2024 and 2023 | | | 22,887 | | | | - | |
Common stock, $0.001 par value; 375,000 and 0 shares to be cancelled as of June 30, 2024 and 2023 | | | (375 | ) | | | - | |
Additional paid-in capital | | | 49,921,380 | | | | 45,415,958 | |
Accumulated other comprehensive income | | | (71,906 | ) | | | (79,192 | ) |
Accumulated deficit | | | (13,480,204 | ) | | | (10,292,430 | ) |
Stockholders’ equity | | | 37,591,140 | | | | 36,220,536 | |
| | | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 40,160,538 | | | $ | 38,823,545 | |
See accompanying notes to consolidated financial statements.
VERDE RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(Currency expressed in United States Dollars (“US$”))
| | Years ended June 30, | |
| | 2024 | | | 2023 | |
| | | | | | |
Revenue, net | | $ | 96,584 | | | $ | 100,777 | |
| | | | | | | | |
Cost of revenue | | | (62,978 | ) | | | (238,153 | ) |
| | | | | | | | |
Gross profit (loss) | | | 33,606 | | | | (137,376 | ) |
| | | | | | | | |
Operating expenses: | | | | | | | | |
Selling, general and administrative expenses | | | (2,882,376 | ) | | | (3,216,022 | ) |
Other operating expenses | | | (237,047 | ) | | | - | |
Total operating expenses | | | (3,119,423 | ) | | | (3,216,022 | ) |
| | | | | | | | |
LOSS FROM OPERATION | | | (3,085,817 | ) | | | (3,353,398 | ) |
| | | | | | | | |
Other (expense) income: | | | | | | | | |
Interest expense | | | (176,483 | ) | | | (1,918,572 | ) |
Rental income | | | 68,200 | | | | 57,321 | |
Other income | | | 6,438 | | | | 1,215,689 | |
Total other expense, net | | | (101,845 | ) | | | (645,562 | ) |
| | | | | | | | |
LOSS BEFORE INCOME TAXES | | | (3,187,662 | ) | | | (3,998,960 | ) |
| | | | | | | | |
Income tax expense | | | (112 | ) | | | - | |
| | | | | | | | |
NET LOSS | | | (3,187,774 | ) | | | (3,998,960 | ) |
| | | | | | | | |
Other comprehensive income (loss): | | | | | | | | |
- Foreign currency adjustment income (loss) | | | 7,286 | | | | (821,651 | ) |
| | | | | | | | |
COMPREHENSIVE LOSS | | $ | (3,180,488 | ) | | $ | (4,820,611 | ) |
| | | | | | | | |
Net loss per share | | | | | | | | |
- Basic | | $ | (0.00 | ) | | $ | (0.00 | ) |
- Diluted | | $ | (0.00 | ) | | $ | (0.00 | ) |
| | | | | | | | |
Weighted average common shares outstanding | | | | | | | | |
- Basic | | | 1,187,606,780 | | | | 1,019,752,220 | |
- Diluted | | | 1,187,606,780 | | | | 1,019,752,220 | |
See accompanying notes to consolidated financial statements.
VERDE RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed in United States Dollars (“US$”))
| | Years ended June 30, | |
| | 2024 | | | 2023 | |
| | | | | | |
Cash flows from operating activities: | | | | | | |
Net loss | | $ | (3,187,662 | ) | | $ | (3,998,960 | ) |
| | | | | | | | |
Adjustments to reconcile net loss to net cash used in operating activities | | | | | | | | |
Depreciation of property, plant and equipment | | | 417,517 | | | | 254,852 | |
Amortization | | | 115,359 | | | | 124,688 | |
Stock-based compensation-consultants | | | 252,369 | | | | 519,671 | |
Stock-based compensation-employee | | | 135,679 | | | | - | |
Finance cost interest element of promissory notes (non-cash) | | | 103,380 | | | | 1,877,739 | |
Lease interest expense | | | 45,926 | | | | 36,765 | |
Fair value adjustment on convertible promissory notes | | | - | | | | (194,865 | ) |
Deposit paid for acquisition of subsidiary written off | | | 21,316 | | | | - | |
Impairment on trade receivables | | | 27,481 | | | | - | |
Impairment on other receivables | | | 29,842 | | | | - | |
Impairment on advance to supplier | | | 177,200 | | | | - | |
Impairment on assets held for sale | | | 134,042 | | | | - | |
Write down of inventories | | | 15,587 | | | | - | |
Inventories written off | | | 5,978 | | | | - | |
Property, plant and equipment written off | | | 3,979 | | | | - | |
Gain on disposal of a subsidiary | | | - | | | | (980,714 | ) |
Gain on disposal of property and equipment | | | - | | | | (600 | ) |
Change in operating assets and liabilities: | | | | | | | | |
Accounts receivable | | | (81,427 | ) | | | 7,785 | |
Other receivables and deposits | | | (22,918 | ) | | | (846 | ) |
Prepayments | | | (6,656 | ) | | | (103,624 | ) |
Inventories | | | (235,677 | ) | | | (13,850 | ) |
Accounts payables | | | 19,725 | | | | 75,768 | |
Accrued liabilities and other payables | | | (38,272 | ) | | | 403,259 | |
Advanced from director | | | (5,472 | ) | | | (12,877 | ) |
Advanced from related parties | | | 30,640 | | | | 348,913 | |
Net cash used in operating activities | | | (2,042,064 | ) | | | (1,656,896 | ) |
| | | | | | | | |
Cash flows from investing activities: | | | | | | | | |
Proceeds from disposal of property, plant and equipment | | | - | | | | 23,000 | |
Deposit paid for acquisition of subsidiary | | | - | | | | (21,423 | ) |
Net inflow from disposal of subsidiary | | | - | | | | 106,647 | |
Net inflow on acquisition of subsidiary | | | - | | | | 1,140 | |
Placement of deposit with bank | | | (2,000,000 | ) | | | - | |
Purchase of property, plant and equipment | | | (16,646 | ) | | | (497,302 | ) |
Net cash used in investing activities | | | (2,016,646 | ) | | | (387,938 | ) |
| | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
Repayment to lease liabilities | | | (138,156 | ) | | | (102,234 | ) |
Drawdown of bank loan | | | 50,000 | | | | 301,000 | |
Repayment of bank loan | | | (29,560 | ) | | | (110,000 | ) |
Advanced from other payables | | | 136,983 | | | | - | |
Lease interest paid | | | (45,926 | ) | | | (36,765 | ) |
Proceeds from issuance of common stock and common stock to be issued | | | 4,108,379 | | | | 1,576,280 | |
Net cash provided by financing activities | | | 4,081,720 | | | | 1,628,281 | |
| | | | | | | | |
Net change in cash and cash equivalent | | | 23,010 | | | | (416,553 | ) |
| | | | | | | | |
Foreign currency translation adjustment | | | 55,718 | | | | 198,045 | |
| | | | | | | | |
Net change in cash and cash equivalents | | | 78,728 | | | | (218,508 | ) |
| | | | | | | | |
BEGINNING OF YEAR | | | 200,409 | | | | 418,917 | |
| | | | | | | | |
END OF YEAR | | $ | 279,137 | | | $ | 200,409 | |
| | | | | | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | | | |
Cash paid for income taxes | | $ | - | | | $ | - | |
Cash paid for interest | | $ | - | | | $ | - | |
See accompanying notes to consolidated financial statements.
VERDE RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| | Common stock | | | Common stock to be | | | Common stock to be | | | Additional paid-in | | | Accumulated other comprehensive | | | Accumulated | | | Total stockholders’ | |
| | No. of shares | | | Amount | | | issued | | | cancelled | | | capital | | | income (loss) | | | deficit | | | equity | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Balance as of July 1, 2022 | | | 819,188,055 | | | $ | 810,742 | | | $ | 8,446 | | | $ | - | | | $ | 22,945,190 | | | $ | 742,459 | | | $ | (10,357,920 | ) | | $ | 14,148,917 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shares issued to service provider | | | 5,315,000 | | | | 5,315 | | | | - | | | | - | | | | 870,185 | | | | - | | | | - | | | | 875,500 | |
Stock issued for previously committed private placement | | | - | | | | 8,446 | | | | (8,446 | ) | | | - | | | | - | | | | - | | | | - | | | | - | |
Shares issued for private placement | | | 18,554,834 | | | | 18,555 | | | | - | | | | - | | | | 1,578,725 | | | | - | | | | - | | | | 1,597,280 | |
Shares issued arising from conversion of promissory notes | | | 333,142,389 | | | | 333,142 | | | | - | | | | - | | | | 20,021,858 | | | | - | | | | - | | | | 20,355,000 | |
Fair value adjustment on conversion of promissory notes | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 4,064,450 | | | | 4,064,450 | |
Net loss for the year | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (3,998,960 | ) | | | (3,998,960 | ) |
Foreign currency translation adjustment | | | - | | | | - | | | | - | | | | - | | | | - | | | | (12,631 | ) | | | - | | | | (12,631 | ) |
Cumulative translation adjustment transferred to profit/loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | (809,020 | ) | | | - | | | | (809,020 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance as of June 30, 2023 | | | 1,176,200,278 | | | $ | 1,176,200 | | | $ | - | | | $ | - | | | $ | 45,415,958 | | | $ | (79,192 | ) | | $ | (10,292,430 | ) | | $ | 36,220,536 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance as of July 1, 2023 | | | 1,176,200,278 | | | $ | 1,176,200 | | | $ | - | | | $ | - | | | $ | 45,415,958 | | | $ | (79,192 | ) | | $ | (10,292,430 | ) | | $ | 36,220,536 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shares issued to service provider | | | 1,000,000 | | | | 1,000 | | | | - | | | | - | | | | 99,000 | | | | - | | | | - | | | | 100,000 | |
Shares issued for private placement | | | 22,662,899 | | | | 22,663 | | | | - | | | | - | | | | 2,128,544 | | | | - | | | | - | | | | 2,151,207 | |
Shares to be issued for private placement | | | 21,988,335 | | | | - | | | | 21,988 | | | | - | | | | 2,145,012 | | | | - | | | | - | | | | 2,167,000 | |
Common stock subject to forfeiture | | | | | | | - | | | | - | | | | (1,175 | ) | | | (175,105 | ) | | | - | | | | - | | | | (176,280 | ) |
Shares cancelled | | | (800,000 | ) | | | (800 | ) | | | - | | | | 800 | | | | - | | | | - | | | | - | | | | - | |
Shares to be issued to service providers | | | 397,108 | | | | - | | | | 397 | | | | - | | | | 138,794 | | | | - | | | | - | | | | 139,191 | |
Shares to be issued to employee | | | 501,580 | | | | - | | | | 502 | | | | - | | | | 135,177 | | | | - | | | | - | | | | 135,679 | |
Share based payment | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 107,040 | |
Reissued of shares previously cancelled to service providers | | | 295,076 | | | | 295 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 295 | |
Net loss for the year | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (3,187,774 | ) | | | (3,187,774 | ) |
Foreign currency translation adjustment | | | - | | | | - | | | | - | | | | - | | | | - | | | | 7,286 | | | | - | | | | 7,286 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance as of June 30, 2024 | | | 1,222,245,276 | | | $ | 1,199,358 | | | $ | 22,887 | | | $ | (375 | ) | | $ | 49,921,380 | | | $ | (71,906 | ) | | $ | (13,480,204 | ) | | $ | 37,591,140 | |
See accompanying notes to consolidated financial statements.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 1 - ORGANIZATION AND BUSINESS BACKGROUND
Verde Resources, Inc. (the “We” or “Company” or “VRDR”) was incorporated on April 22, 2010, in the State of Nevada, U.S.A..
We currently operate in the production and distribution of renewable commodities and real property holding. The Company has undergone a restructuring exercise to shift its focus towards renewable energy and sustainability development with the world faced with challenges of climate change and environmental dehydration.
As of June 30, 2024, the Company has the following subsidiaries:-
Name of subsidiary | | Place of incorporation | | Principal activities and place of operation | | Effective interest held |
| | | | | | |
Verde Resources Asia Pacific Limited (“VRAP”) | | British Virgin Islands | | Investment holding | | 100% |
| | | | | | |
Verde Resources (Malaysia) Sdn Bhd (“Verde Malaysia”) | | Malaysia | | Manufacturing and distribution of renewable agricultural commodities, and provision of consultation services related thereto | | 100% |
| | | | | | |
Verde Renewables, Inc. (“VRI”) | | State of Missouri, U.S.A. | | Management of a processing and packaging facility | | 100% |
| | | | | | |
Verde Life Inc. (“VLI”) | | State of Oregon, U.S.A. | | Distribution of THC-free cannabinoid (CBD) products [Operation terminated] | | 100% |
| | | | | | |
The Wision Project Sdn Bhd (“Wision”) | | Malaysia | | Digital innovation, marketing & consulting firm provides PR, Branding, influencer marketing, event management and media relations services | | 100% |
| | | | | | |
Verde Estates LLC (“VEL”) | | State of Missouri, U.S.A. | | Holding real property | | 100% |
| | | | | | |
Bio Resources Limited (“BRL”) | | Labuan, Malaysia | | Proprietor of pyrolysis technology | | 100% |
The Company and its subsidiaries are hereinafter referred to as (the “Company”).
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
During the years ended June 30, 2024, and 2023, there are the major transactions, as below:
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 various unrelated third parties being Taipan International Limited, The Wision Project Limited, and other individuals, for a consideration of $30,000,000 by way of an 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 acquisition of Bio Resources Limited was subsequently closed on October 12, 2022.
BRL owns the intellectual property known as “Catalytic Biofraction Process”, a slow pyrolysis process using a proprietary catalyst to depolymerise palm biomass wastes (empty fruit bunches or palm kernel shells) in temperature range of 350 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 palm biomass wastes is used as feedstock.
On March 13, 2023, the Company through its wholly-owned subsidiary Verde Resources Asia Pacific Limited (“VRAP”), a company incorporated under the laws of the British Virgin Islands, entered into a Share Sale Agreement (the “SSA Agreement”) with Jusra Mining Merapoh Sdn Bhd (“JMM”), a company incorporated under the laws of Malaysia, to sell the entire issued and paid-up share capital of Champmark Sdn Bhd (“CSB”), an indirect wholly-owned subsidiary of the Company engaged in the mining business. Under the terms of the SSA Agreement, the consideration for the sale of the entire issued and paid-up share capital of CSB shall be satisfied in full by the payment of Malaysia Ringgit MYR 500,000. The Company has been undergoing a restructuring exercise to shift its focus towards renewable energy and sustainability development with the world faced with challenges of climate change and environmental dehydration. The disposition of the mining business via the sale of the entire issued and paid-up share capital of CSB is in line with the Company’s restructuring effort to focus on renewable energy and sustainability. The disposition of Champmark Sdn Bhd (“CSB”) was completed on April 20, 2023.
Effective March 30, 2023, Carl Craven voluntarily resigned from his position as Director of the Company. By resolution of the Board of Directors, Jack Wong was appointed Director of the Company for a one (1) year term, effective March 30, 2023. Jack Wong was to hold the Board position formerly held by Carl Craven.
Effective September 12, 2023, Jack Wong stepped down from his position as President of the Company, but remains as Chief Executive Office of the Company.
Effective September 12, 2023, the Board of Directors of the Company appointed Jack Wong, CEO and Director of the Company, as Chairman of the Board.
Subsequently, on January 23, 2024, Jack Wong stepped down from his position as Chairman of the Board, and Joseph Ambrose Lee was appointed Director and Chairman of the Board for a one year term.
Effective June 18, 2024, Joesph Ambrose Lee tendered his resignation as Director and Chairman of the Board. By resolution of the Board, Balakrishnan B S Muthu, Director and Chief Financial Officer of the Company, was appointed Chairman of the Board to replace Joesph Ambrose Lee effective June 18, 2024.
Effective October 1, 2023, the Company appointed Eric Bava and Andre van Zyl as Chief Operating Officer and Chief Technology Officer respectively to drive the Company’s climate-tech innovation.
Subsequently on May 15, 2024, Andre van Zyl stepped down from his position as Chief Technology Officer of the Company.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes.
These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
· | Use of Estimates and Assumptions |
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the years presented. Significant accounting estimates reflected in the Company’s consolidated financial statements include the useful lives of plant and equipment, impairment of long-lived assets (including intangible assets, allowance for expected credit losses, revenue recognition, income tax provision, deferred taxes and uncertain tax position.
The inputs into the management’s judgments and estimates consider the geopolitical tension, inflationary and high-interest rate environment and other macroeconomic factors on the Company’s critical and significant accounting estimates. Actual results could differ from these estimates.
The consolidated financial statements include the financial statements of Verde Resources, Inc. and its subsidiaries. All significant inter-company balances and transactions within the Company and its subsidiaries have been eliminated upon consolidation. The Company accounts for acquisitions in accordance with guidance found in ASC 805, Business Combinations. The guidance requires consideration given, including contingent consideration, assets acquired, and liabilities assumed to be valued at their fair market values at the acquisition date.
Accounting Standard Codification (“ASC”) Topic 280, Segment Reporting establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in consolidated financial statements. Currently, the Company operates in three reportable operating segments.
· | 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 future receivables. 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.
The Company is venturing into the production and distribution of renewable commodities that are subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with a production operation for renewable commodities, including the potential risk of business failure.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
· | Cash and Cash Equivalents |
Cash and cash equivalents are carried at cost and represent 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 $279,137 and $200,409 in cash and cash equivalents at June 30, 2024 and 2023.
At June 30, 2024, and 2023, cash and cash equivalents consisted of bank deposits and petty cash on hands.
Deposits held for investments that are not debt securities are included in short-term investments in the consolidated balance sheets. Investments in time deposits with original maturities of more than three months but remaining maturities of less than one year are considered short-term investments. Investments held with the intent to reinvest or hold for longer than a year, or with remaining maturities of one year or more, are considered long-term investments.
At June 30, 2024, the interest rates and maturies of deposits with bank is 4.64% per annum and 60 to 365 days respectively.
Accounts receivables 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. As of June 30, 2024, and 2023, the longest credit term for certain customers are 60 days.
At June 30, 2024 and 2023, the allowance for doubtful accounts for accounts receivables amounted to $27,481 and $0 respectively, and for other receivables amounted to $29,842 and $0 respectively.
ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments requires entities to use a current lifetime expected credit loss methodology to measure impairments of certain financial assets. Using this methodology will result in earlier recognition of losses than under the previous incurred loss approach, which requires waiting to recognize a loss until it is probable of having been incurred. There are other provisions within the standard that affect how impairments of other financial assets may be recorded and presented, and that expand disclosures. The Company adopted the new standard effective July 1, 2023, the first day of the Company’s fiscal year and applied to accounts receivable and other financial instruments. The adoption of this guidance did not materially impact the net earning and financial position and has no impact on the cash flows.
Inventories are stated at the lower of cost or market value (net realizable value), cost being determined on a first-in-first-out method. Cost of raw materials include cost of materials and incidental costs in bringing the inventory to its current location. Costs of finished goods, on the other hand include material, labor and overhead costs. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand.
As of June 30, 2024, and 2023, the write down of inventories amounted to $15,587 and $0 respectively, and inventories written off amounted to $5,978 and $0 respectively.
· | Property, Plant and Equipment |
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
| | Expected useful life | | |
Land and buildings | | 3-27.5 years | | |
Plant and machinery | | 5-10 years | | |
Office equipment | | 3 years | | |
Project equipment | | 5 years | | |
Computers | | 5 years | | |
Motor vehicles | | 5 years | | |
Furniture and fittings | | 5 years | | |
Renovation | | 10 years | | |
Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterment which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other comprehensive income in other income or expenses.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Depreciation expense for the years ended June 30, 2024 and 2023 totaled $417,517 and $254,852, respectively.
Plant and machinery written off for the years ended June 30, 2024 and 2023 amounted to$3,979 and $0 respectively.
Intangible assets acquired from third parties are measured initially at fair value and those with an infinite live are not amortized. The Company annually evaluates the recoverability of the infinite-lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. The recoverability of these assets is measured by a comparison of the carrying amounts to the future discounted cash flows the assets are expected to generate. If such a review indicates that the carrying amount of intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value.
As of June 30, 2024, and 2023, the Company did not record an impairment on the intangible assets.
The Company classifies assets as held-for-sale (“disposal group”) in the period when all of the relevant criteria to be classified as held for sale are met. These criteria include management’s commitment to sell the disposal group in its present condition and the sale being deemed probable of being completed within one year. Assets held for sale are reported at the lower of their carrying value or fair value less cost to sell. The fair values of disposal groups are estimated using accepted valuation techniques, including indicative listing prices. The Company considers historical experience, guidance received from third parties, and all information available at the time the estimates are made to derive fair value. Any loss resulting from the measurement is recognized in the period when the held for sale criteria are met. The Company assesses the fair value of a disposal group, less any costs to sell, each reporting period it remains classified as held for sale and reports any subsequent changes as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the initial carrying value of the disposal group. Assets held-for-sale are not amortized or depreciated.
The impairment loss on assets held for sale for the years ended June 30, 2024 and 2023 was $134,042 and $0 respectively.
· | Impairment of Long-lived Assets |
In accordance with the provisions of ASC Topic 360, Impairment or Disposal of Long-Lived Assets, all long-lived assets such as property, plant and equipment owned and held by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
There has been no impairment charge for the years ended June 30, 2024 and 2023.
Advance to supplier is provided for the provision of goods and services and they are secured either by a security deposit or a legally enforceable right to recover.
As of June 30, 2024, and 2023, the Company recorded a write-off of $177,200 and $0 respectively.
ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers.
The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfils its obligations under each of its agreements:
· | identify the contract with a customer; |
· | identify the performance obligations in the contract; |
· | determine the transaction price; |
· | allocate the transaction price to performance obligations in the contract; and |
· | recognize revenue as the performance obligation is satisfied. |
Revenue is recognized when the Company satisfies its performance obligation under the contract by transferring the promised product to its customer that obtains control of the product and collection is reasonably assured. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. Most of the Company’s contracts have a single performance obligation, as the promise to transfer products or services is not separately identifiable from other promises in the contract and, therefore, not distinct.
The Company considers customer order confirmations, whether formal or otherwise, to be a contract with the customer. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
The Company also follows the guidance provided in ASC 606, Revenue from Contracts with Customers, for determining whether the Company is the principal or an agent in arrangements with customers that involve another party that contributes to the provision of goods to a customer. In these instances, the Company determines whether it has promised to provide the goods itself (as principal) or to arrange for the specified goods to be provided by another party (as an agent). This determination is a matter of judgment that depends on the facts and circumstances of each arrangement.
The Company derives its revenue from the sale of products and services in its role as a principal.
Rental income
Rental income is recognized on a straight line basis over the term of the respective lease agreement.
Cost of revenue consists primarily of the cost of goods sold, which are directly attributable to the sales of products.
The Company determines 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 readily 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 Topic 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 June 30, 2024, and 2023.
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 June 30, 2024 and 2023.
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 Topic 842.
The Company adopted the ASC Topic 740, Income tax provisions of paragraph 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the ASC Topic 740 provisions of Section 740-10-25 for the years ended June 30, 2024, and 2023.
· | Foreign Currencies Translation |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
The Company’s reporting currency is the United States dollar (“US$”) and the accompanying consolidated financial statements have been expressed in United States dollars. The Company’s functional currency is the Malaysian Ringgit (“MYR”) which is a functional currency as being the primary currency of the economic environment in which their operations are conducted.
Monetary 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 830 “Translation 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 from 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 stockholder’s equity.
Translation of MYR into U.S. dollars has been made at the following exchange rates for the following periods:-
| | June 30, 2024 | | | June 30, 2023 | |
Year-end MYR:US$ exchange rate | | | 4.71717 | | | | 4.66795 | |
Annualized average MYR:US$ exchange rate | | | 4.69230 | | | | 4.50684 | |
ASC Topic 220, Comprehensive Income, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying consolidated statements of changes in stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
The Company calculates net loss per share in accordance with ASC Topic 260, Earnings per Share. Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
· | Stock Based Compensation |
The Company accounts for stock-based compensation in accordance with ASC Topic 718-10, Compensation-Stock Compensation, which requires the measurement and recognition of compensation expense for all share-based payment arrangements related to the acquisition of goods and services from both non employees and employees based on fair values of the shares to be issued estimated at grant date. 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.
Fair value is determined based on the estimated market prices of the Company’s common stock at the respective issuance date in accordance with ASC 718, taking into consideration the volatility of the market price of the shares, the terms of the instruments and the conditions upon which they were granted.
During the financial year ended June 30, 2024 and 2023, $252,369 and $519,671 respectively, were recorded as share based compensation for non employees.
During the financial year ended June 30, 2024 and 2023, $135,679 and $0 respectively, were recorded as share based compensation for an employee.
Contributions to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying statements of operation as the related employee service are provided.
The Company follows the ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
The consolidated 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 ascribed, for each of 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.
· | Commitments and Contingencies |
The Company follows the ASC 450-20, Commitments 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.
· | Fair Value of Financial Instruments |
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:
Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
| |
Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
| |
Level 3 | Pricing inputs that are generally observable inputs and not corroborated by market data. |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, loan and fee receivable, prepayments and other receivables, amounts due from related parties, accrued liabilities and other payables, loans payable, amounts due to related parties approximate their fair values because of the short maturity of these instruments.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
· | Recent Accounting Pronouncements |
During the year ended June 30, 2024, there have been no new, or existing, recently issued accounting pronouncements that are of significance, or potential significance, that impact the Company’s consolidated financial statements.
In June 2016, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance ASU 2016-13 for recognition of credit losses on financial instruments, which is effective January 1, 2020, with early adoption permitted on January 1, 2019. The guidance introduces a new credit reserving model known as the Current Expected Credit Loss (“CECL”) model, which is based on expected losses, and differs significantly from the incurred loss approach used today. The CECL model requires measurement of expected credit losses not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information and will likely result in earlier recognition of credit reserves. In November 2019, the FASB issued ASU No. 2019-10, which is to update the effective date of ASU No. 2016-13 for private companies, not-for-profit organizations and certain smaller reporting companies applying for credit losses standard. The new effective date for these preparers is for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company has adopted this update on July 1, 2023, and the adoption does not have material impact on Company’s consolidated financial statements and related disclosures.
CECL adoption will have broad impact on the financial statements of financial services firms, which will affect key profitability and solvency measures. Some of the more notable expected changes include:
- | Higher allowance on financial guarantee reserve and finance lease receivable levels and related deferred tax assets. While different asset types will be impacted differently, the expectation is that reserve levels will generally increase across the board for all financial firms. |
| |
- | Increased reserve levels may lead to a reduction in capital levels. |
| |
- | As a result of higher reserving levels, the expectation is that CECL will reduce cyclicality in financial firms’ results, as higher reserving in “good times” will mean that less dramatic reserve increases will be loan related income (which will continue to be recognized on a periodic basis based on the effective interest method) and the related credit losses (which will be recognized upfront at origination). This will make periods of loan expansion seem less profitable due to the immediate recognition of expected credit losses. Periods of stable or declining loan levels will look comparatively profitable as the income trickles in for loans, where losses had been previously recognized. |
In March 2023, the FASB issued new accounting guidance, ASU 2023-01, for leasehold improvements associated with common control leases, which is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. The new guidance introduced two issues: terms and conditions to be considered with leases between related parties under common control and accounting for leasehold improvements. The goals for the new issues are to reduce the cost associated with implementing and applying Topic 842 and to promote diversity in practice by entities within the scope when applying lease accounting requirements.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires the disclosure of additional segment information. ASU No. 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024; this ASU allows for early adoption.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU No. 2023-09 is effective for annual periods beginning after December 15, 2024. The guidance is to be applied on a prospective basis with the option to apply the standard retrospectively; this ASU allows for early adoption.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and believe the future adoption of any such pronouncements may not be expected to cause a material impact on its financial condition or the results of its operations.
NOTE 3 - GOING CONCERN UNCERTAINTIES
The accompanying consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
The Company has generated recurring losses and suffered from an accumulated deficit of $13,480,204 as of June 30, 2024.
The Company’s ability to continue as a going concern over the next twelve months depends on the successful validation and certification of its Net Zero road construction blueprint by the National Center for Asphalt Technology (NCAT) and its adherence to established carbon removal and avoidance methodologies. Achieving these milestones will enable the Company to generate revenue through the commercial licensing of the blueprint, royalties from biochar-asphalt mix designs, carbon credits, and sales of biochar and bio-fuel. On August 8th, CRH, the largest building materials company in North America and Europe, listed on both the NYSE and the London Stock Exchange, announced through its investment arm, CRH Ventures, that it has selected the Company to scale up its biochar-asphalt technology for commercialization.
There can be no assurance that the Company will be successful in its plans described above.
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 4 - BUSINESS SEGMENT INFORMATION
Currently, the Company has three reportable business segments:
(i) | Production and distribution of renewable commodities; |
(ii) | Holding of real property; and |
(iii) | Licensor of proprietary pyrolysis technology. |
In the following table, revenue is disaggregated by primary major product line. The table also includes a reconciliation of the disaggregated revenue with the reportable segments for the years ended June 30, 2024, and 2023:
| | Year ended June 30, 2024 | |
| | Production and distribution of renewable commodities | | | Holding property | | | Licensor of proprietary pyrolysis technology | | | Corporate unallocated | | | Consolidated | |
| | | | | | | | | | | | | | | |
Revenue | | $ | 91,356 | | | $ | - | | | $ | - | | | $ | 5,228 | | | $ | 96,584 | |
Cost of revenue | | | (58,343 | ) | | | - | | | | - | | | | (4,635 | ) | | | (62,978 | ) |
Gross profit | | | 33,013 | | | | - | | | | - | | | | 593 | | | | 33,606 | |
Selling, general & administrative expenses | | | (1,985,104 | ) | | | (110,294 | ) | | | (4,466 | ) | | | (782,512 | ) | | | (2,882,376 | ) |
Other operating expenses | | | (237,047 | ) | | | - | | | | - | | | | - | | | | (237,047 | ) |
Loss from operations | | | (2,189,138 | ) | | | (110,294 | ) | | | (4,466 | ) | | | (781,919 | ) | | | (3,085,517 | ) |
Interest expense | | | (59,566 | ) | | | - | | | | - | | | | (116,917 | ) | | | (176,483 | ) |
Rental income | | | - | | | | 68,200 | | | | - | | | | - | | | | 68,200 | |
Other income | | | 1,735 | | | | - | | | | 227 | | | | 4,476 | | | | 6,438 | |
Loss before income tax | | | (2,246,969 | ) | | | (42,094 | ) | | | (4,239 | ) | | | (894,360 | ) | | | (3,187,662 | ) |
Income tax | | | - | | | | - | | | | - | | | | (112 | ) | | | (112 | ) |
Net loss | | $ | (2,246,969 | ) | | $ | (42,094 | ) | | $ | (4,239 | ) | | $ | (894,472 | ) | | $ | (3,187,774 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total assets at June 30, 2024 | | $ | 7,922,462 | | | $ | 1,201,186 | | | $ | 30,193,231 | | | $ | 843,659 | | | $ | 40,160,538 | |
| | Year ended June 30, 2023 | |
| | Gold mineral mining | | | Distribution of THC-free cannabinoid (CBD) products | | | Production and distribution of renewable commodities | | | Holding property | | | Licensor of proprietary pyrolysis technology | | | Corporate unallocated | | | Consolidated | |
| | | | | | | | | | | | | | | | | | | | | |
Revenue | | $ | - | | | $ | - | | | $ | 92,995 | | | $ | - | | | $ | - | | | $ | 7,782 | | | $ | 100,777 | |
Cost of revenue | | | - | | | | - | | | | (235,704 | ) | | | - | | | | - | | | | (2,449 | ) | | | (238,153 | ) |
Gross loss | | | - | | | | - | | | | (142,709 | ) | | | - | | | | - | | | | 5,333 | | | | (137,376 | ) |
Selling, general & administrative expenses | | | (245,565 | ) | | | (2,875 | ) | | | (1,688,983 | ) | | | (158,260 | ) | | | (13,802 | ) | | | (1,106,537 | ) | | | (3,216,022 | ) |
Loss from operations | | | (245,565 | ) | | | (2,875 | ) | | | (1,831,692 | ) | | | (158,260 | ) | | | (13,802 | ) | | | (1,101,204 | ) | | | (3,353,398 | ) |
Interest expense | | | - | | | | - | | | | (36,765 | ) | | | - | | | | - | | | | (1,881,807 | ) | | | (1,918,572 | ) |
Rental income | | | - | | | | - | | | | - | | | | 57,321 | | | | - | | | | - | | | | 57,321 | |
Other income | | | 35,596 | | | | - | | | | 1,109 | | | | - | | | | 2,439 | | | | 1,176,545 | | | | 1,215,689 | |
Loss before income tax | | | (209,969 | ) | | | (2,875 | ) | | | (1,867,348 | ) | | | (100,939 | ) | | | (11,363 | ) | | | (1,806,466 | ) | | | (3,998,960 | ) |
Income tax | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Net loss | | $ | (209,969 | ) | | $ | (2,875 | ) | | $ | (1,867,348 | ) | | $ | (100,939 | ) | | $ | (11,363 | ) | | $ | (1,806,466 | ) | | $ | (3,998,960 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total assets at June 30, 2023 | | $ | - | | | $ | 215,929 | | | $ | 6,293,027 | | | $ | 1,236,128 | | | $ | 30,194,966 | | | $ | 883,495 | | | $ | 38,823,545 | |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
The below revenues are based on the countries in which the customer is located. Summarized financial information concerning the geographic segments is shown in the following tables:
| | Years ended June 30, | |
| | 2024 | | | 2023 | |
| | | | | | |
Malaysia | | $ | 34,024 | | | $ | 32,134 | |
United States | | | 62,560 | | | | 68,643 | |
| | $ | 96,584 | | | $ | 100,777 | |
NOTE 5 - INVENTORIES
Inventories as of June 30, 2024 and 2023 consisted of the following:
| | As of June 30, | |
| | 2024 | | | 2023 | |
| | | | | | |
Manufactured bio produce | | $ | 70,560 | | | $ | 96,036 | |
Trading goods | | | 238,584 | | | | - | |
| | $ | 309,144 | | | $ | 96,036 | |
Trading goods represent bio asphalt products purchased from an external supplier.
NOTE 6 – ADVANCE TO SUPPLIER
This represents advance to a supplier for the supply of THC-free cannabinoid (CBD) products pursuant to an agreement dated July 7, 2021 and are secured by a security deposit with legally enforceable right to recover. The advance has been written off during the year ended June 30, 2024 following the expiration of product supply agreement on July 6, 2024.
NOTE 7 – OTHER RECEIVABLE, DEPOSITS AND PREPAYMENTS
Other receivable, deposits and prepayments as of June 30, 2024 and 2023 consisted of the following:
| | As of June 30, | |
| | 2024 | | | 2023 | |
Deposits | | | 4,775 | | | | 16,795 | |
Other receivables | | | 31,929 | | | | 9,641 | |
| | | 36,704 | | | | 26,436 | |
Less: impairment on other receivables | | | (29,842 | ) | | | - | |
Other receivables and deposits, net | | | 6,862 | | | | 26,436 | |
Prepayments | | | 121,468 | | | | 192,149 | |
Prepaid share based compensation | | | 105,705 | | | | 183,531 | |
| | $ | 234,035 | | | $ | 402,116 | |
NOTE 8 – PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment at June 30, 2024 and 2023 is as follows:
| | As of June 30, | |
| | 2024 | | | 2023 | |
| | | | | | |
Land and building | | $ | 1,258,360 | | | $ | 1,258,360 | |
Plant and machinery | | | 2,289,794 | | | | 2,291,724 | |
Office equipment | | | 6,168 | | | | 6,168 | |
Computers | | | 13,908 | | | | 5,415 | |
Motor vehicles | | | 777,457 | | | | 708,051 | |
Furniture and fittings | | | 16,359 | | | | 12,935 | |
Renovation | | | 4,431 | | | | - | |
| | | 4,366,477 | | | | 4,282,653 | |
Less: accumulated depreciation | | | (688,600 | ) | | | (273,757 | ) |
Less: Accumulated impairment | | | (134,042 | ) | | | - | |
Less: transfer to assets held for sale | | | (606,043 | ) | | | - | |
Less: written off | | | (3,957 | ) | | | - | |
Foreign exchange adjustment | | | (17,829 | ) | | | 194 | |
| | $ | 2,916,006 | | | $ | 4,009,090 | |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Depreciation expense for the years ended June 30, 2024 and 2023 totaled $417,517 and $254,852, respectively.
Plant and machinery written off for the years ended June 30, 2024 and 2023 amounted to$3,979 and $0 respectively.
Land and building with net carrying amount of $701,817 at June 30, 2024 and $723,981 at June 30, 2023 was pledged to a financial institution for facilities granted.
Plant and machinery and motor vehicles with carrying values of $7,688 and $98,362 ($295,701 and $553,674 at June 30, 2023) are acquired under financing arrangements.
The fair value less cost of assets held for disposal was less than the net carrying amount, and impairment loss of $134,042 has been recognised during the financial year end.
NOTE 9 –INTANGIBLE ASSETS
The intangible assets comprise (i) a global intellectual property (“IP”) of $30,192,771 known as “Catalytic Biofraction Process”, whereby, subsidiary Bio Resources Limited (“BRL”) is the beneficial and/or registered proprietor and (ii) an exclusive licence assigned to Verde Malaysia for the operation of the IP in the state of Sabah, Malaysia of MYR 14,000,000 ($2,967,860).
The “Catalytic Biofraction Process” is a slow pyrolysis process using a proprietary catalyst to depolymerize palm biomass wastes (empty fruit bunches or palm kernel shells) in temperature range of 350 degrees Celsius to 500 degrees 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 palm biomass wastes is used as feedstock. Upon fulfilling UN’s (United Nations) ACM 22 protocol as well as LCA (Life Cycle Assessment) requirements, it is anticipated that the by-products from this IP would lead to certification and issuance of Carbon Avoidance Credits as well as Carbon Removal Credits to generate carbon revenue for the Company.
During the annual impairment assessment, a quantitative assessment was conducted, which involved estimating the fair value of the asset using the income approach. The results indicated that the carrying amount of the asset was not impaired, and therefore no impairment loss was recognized for the period.
Key assumptions in the quantitative assessment included:
| ● | Discount Rate: 9% |
| | |
| ● | Plant daily capacity: The plant daily capacity is 0.8 MT per hour for the existing plant and 2.5 MT per hour for the additional new plants that will be commissioned. |
| | |
| ● | Additional plants: One new biofraction plant with a 3.0 MT/hour production rate will be added every year from FYE2027 up to FYE 2034. |
| | |
| ● | Projected Production and Sales: Based on a ten-year forecast. Production and sales volumes are linked to the plants in operation for each year in the forecasted period based on the output yield percentages. |
| | |
| ● | Inflation: 2% |
| | |
The use of the estimates in the quantitative assessment are highly judgmental and actual results may differ significantly from what is currently assessed. Accordingly, fluctuations in any of the key attributes may result in a significant change in the projected cash flows underlying the quantitative assessment, which could have a material impact on the assessed values of the Intangible Asset.
NOTE 10 – ASSETS HELD FOR SALE
At June 30,2024 and 2023, assets held for sale are as follows:
| | As of June 30, | |
| | 2024 | | | 2023 | |
| | | | | | |
Plant and machinery | | $ | 213,494 | | | $ | - | |
Motor vehicles | | | 392,549 | | | | - | |
| | $ | 606,043 | | | $ | - | |
On June 27 2023, the Company through its wholly-owned subsidiary Verde Renewables, Inc. (“VRI”), a company incorporated in the State of Missouri, U.S.A, entered into a Consignment Contract with ED’s Machinery LLC (“EDM”) to dispose plant and machinery and motor vehicles with a carrying amount of $606,043. The disposal is pending completion as at June 30,2024 and thus the assets have been presented separately in the balance sheets as assets held for sale.
The disposal of assets with carrying values totaling USD580,989 was subsequently completed in August 2024. The remaining assets are expected to be disposed by December 2024.
Plant and machinery and motor vehicles with carrying values of $168,994 and $350,217 were acquired under financing arrangements.
NOTE 11 - DEPOSITS PAID
At June 30, 2024 and 2023, deposits consist of the following:
| | As of June 30, | |
| | 2024 | | | 2023 | |
Deposits paid for acquisition of subsidiaries | | | | | | |
- Vata VM Synergy (M) Sdn Bhd (“VATA”) (#1) | | $ | - | | | $ | 21,423 | |
| | | | | | | | |
Security deposit | | | | | | | | |
- Factory site (#2) | | $ | 80,000 | | | $ | 80,000 | |
(#1) On March 23, 2023, the Company, through its wholly-owned subsidiary Verde Resources (Malaysia) Sdn. Bhd. (“Verde Malaysia”), entered into a Shares Sale Agreement (the “SSA Agreement”) with Murugesu A/L M. Narasimha and Deivamalar A/P Kandiah (“Vendors”), the legal and beneficial owners of Vata VM Synergy (M) Sdn. Bhd. (“VATA”), a company incorporated under the laws of Malaysia, to acquire 60% of the issued and paid-up share capital of VATA, a company engaged in the business of providing green technology to government and private sectors and in creating high quality compost using agricultural waste and biomass products in Malaysia. In relation to the SSA Agreement, the Company through Verde Malaysia also entered into a Shareholders Agreement with Murugesu A/L M. Narasimha and VATA. Under the terms of the SSA Agreement, the consideration for the acquisition of 60% of the issued and paid-up share capital of VATA shall be satisfied by the total purchase consideration of MYR 2,250,000, which includes a first payment of MYR100,000 upon the execution of the SSA Agreement, a second payment of MYR 150,000 within thirty (30) days from the date of fulfilment or waiver of all the conditions set out in the SSA Agreement, and the issuance of shares of the Company’s restricted Common Stock for the balance consideration of MYR 2,000,000 at a price per share of not more than ten percent (10%) discount from the immediate preceding five trading days volume weighted average price (“VWAP”) from the issuance date pursuant to the terms of the SSA Agreement. As of June 30, 2023, the first payment of MYR100,000 has been made.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
The SSA Agreement, however, has since been terminated on the basis of non-disclosure of material information by the Vendors, and the deposits written off during the year ended June 30, 2024.
(#2) On March 2, 2022, the Company, through VRAP, entered into a Commercial Lease Agreement and Option to Purchase (“Segama Lease Agreement”) 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 Segama Lease Agreement together with a payment of security deposit for the sum of MYR 336,000 ($80,000) (the “Security Payment”).
NOTE 12 - MINING RIGHT
A lump sum payment of MYR260,500 ($62,260) was made for a mining right over a period of 2 years up to June 13, 2023. The mining right was amortized on a straight-line basis over the term of the right. Nevertheless, on April 20, 2023, the subsidiary, CSB, to whom the right belongs, was disposed.
The table below presents the movement of the right as recorded on the balance sheets.
| | As of June 30, | |
| | 2024 | | | 2023 | |
| | | | | | |
Balance as at the July 1, 2023 and July 1, 2022 | | $ | - | | | $ | 27,088 | |
Amortization charge for the year | | | - | | | | (21,832 | ) |
Foreign exchange adjustment | | | - | | | | (363 | ) |
Disposal of subsidiary | | | - | | | | (4,893 | ) |
Balance as of June 30, 2024 and June 30, 2023 | | $ | - | | | $ | - | |
Amortization charge of mining right was $0 and $21,832 for the year ended June 30, 2024 and 2023, respectively.
NOTE 13 – BANK LOAN
The bank loan represents a rolling facility to a maximum principal of $250,000 and is secured by deed of trusts from VRDR, land and building of VEL and a subsidiary who act as guarantor for the performance of debts. The interest on loan is fixed at 5.25%. per annum.
For the year ended June 30, 2024 and 2023, the interest expense amounted to $13,640 and $1,421 respectively.
NOTE 14 - AMOUNTS DUE TO RELATED PARTIES AND DIRECTOR
The following breakdown of the balances due to related parties and director, consisted of:-
| | As of June 30, | |
| | 2024 | | | 2023 | |
Amount due to related parties | | | | | | |
Borneo Oil Corporation Sdn (“BOC”) (#1) | | $ | 70,677 | | | $ | 57,125 | |
Borneo Oil Berhad (“BOB”) (#1) | | | 3,007 | | | | 70,711 | |
Taipan International Limited (#2) | | | 119,153 | | | | 119,153 | |
Borneo Energy Sdn Bhd (#1) | | | 14,599 | | | | 14,770 | |
Victoria Capital Sdn Bhd (#3) | | | 93,270 | | | | 107,970 | |
UnitiMart Sdn Bhd (4#) | | | 7,782 | | | | - | |
Makin Teguh Sdn Bhd (4#) | | | 19,379 | | | | - | |
| | $ | 327,867 | | | $ | 369,729 | |
| | | | | | | | |
Amount due to director | | | | | | | | |
Mr. Jack Wong (#5) | | $ | 4,188 | | | $ | 9,660 | |
(#1) Borneo Energy Sdn Bhd is a wholly owned subsidiary of Borneo Oil Corporation Sdn Bhd (“BOC”) and BOC is a wholly owned subsidiary of Borneo Oil Berhad (“BOB”) (holding 13.2% of the Company’s issued and outstanding common stock as of June 30, 2024). The advances are related to ordinary business transactions and bear no interest or collateral, and are repayable on demand.
(#2) Taipan International Limited who, pursuant to the disposal of BRL to the Company, became one of the shareholders of the Company and held 32.5% of the Company’s issued and outstanding Common Stock as of June 30, 2024. The advances are related to ordinary business transactions and bear no interest or collateral, and are repayable on demand.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(#3) Victoria Capital Sdn. Bhd. is one of the shareholders of the Company, and held 0.2% of the Company’s issued and outstanding Common Stock as of June 30, 2024. The advances are related to ordinary business transactions and bear no interest or collateral, and are repayable on demand.
(#4) Borneo Oil Berhad (“BOB”) is ultimate holding company of UnitiMart Sdn. Bhd., and held 13.2% of the Company’s issued and outstanding common stock as of June 30, 2024. Makin Teguh Sdn Bhd is associates of BOB.
(#5) Mr. Jack Wong is the President and Chief Executive of the Company effective October 1, 2022. Effective March 30, 2023, Jack Wong was appointed Director of the Company for a one (1) year term, effective March 30, 2023. Jack Wong will hold the Board position formerly held by Carl Craven. On September 12, 2023, Jack Wong stepped down from his position as President of the Company, but remains as Chief Executive Office of the Company. By Waiver and Consent of Shareholders, Jack Wong was re-elected Director of the Company, effective March 30, 2024.
NOTE 15 - PROMISSORY NOTES
| | June 30 | | | June 30 | |
| | 2024 | | | 2023 | |
Promissory Notes (#1) | | $ | - | | | $ | - | |
Promissory Notes (#2)- related party | | | 591,170 | | | | 487,790 | |
| | $ | 591,170 | | | $ | 487,790 | |
The following is a reconciliation of the beginning and ending balances of promissory notes payable using Level 3 inputs:
| | June 30 | | | June 30 | |
| | 2024 | | | 2023 | |
Balance at the beginning of year | | $ | 487,790 | | | $ | 18,484,028 | |
Promissory notes issued to related party at fair value (#2) | | | - | | | | 481,023 | |
Interest expense #1 | | | - | | | | 1,870,972 | |
Interest expense #2 | | | 103,380 | | | | 6,767 | |
Converted to Company’s restricted Common Stock | | | - | | | | (20,355,000 | ) |
Balance at the end of year | | $ | 591,170 | | | $ | 487,790 | |
(#1) Promissory notes with a principal amount of $20,355,000 and a two-year term period were issued on May 12, 2021 pursuant to the acquisition of subsidiary, BRL. The face value (principal) amount of $20,355,000 was repayable by May 12, 2023, and bore zero coupon interest. On January 20, 2022, the Company had reached a mutual agreement with the Lenders of the Notes to enter into a Supplement to Promissory Note, with each Lender, 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. With the consummation of the acquisition of BRL on October 12, 2022, on December 9, 2022 the conversion of Promissory Notes was completed pursuant to a Supplementary Agreement dated December 7, 2022, with the issuance of 333,142,389 shares of the Company’s restricted Common Stock, at the price of $0.0611 per share, to the 17 Lenders, including the Company’s CEO, Jack Wong.
(#2) On March 13, 2023, the Company and its indirect wholly-owned subsidiary CSB entered into a Settlement of Debts Agreement (the “SDA Agreement”) for the settlement in full of CSB’s account payable to a related party, Borneo Oil Corporation Sdn Bhd (“BOC”) by way of the issuance on March 13, 2023 of a two year term Promissory Notes with the face value (principal) amount of $675,888, and bearing 2% coupon interest. The Notes are repayable by May 12, 2025, either in cash or by the issuance of the Company’s restricted Common Stock priced at $0.07 per share at the discretion of the holder of the Promissory Note. The fair value of the Promissory Notes of $ 481,023 was calculated using the net present value of estimated future cash flows with the assumptions of risk free rate at 4.03%, credit spread of 11.6% and liquidity risk premium of 5.6%. On August 16, 2024, the Company entered into a Supplementary Agreement to the SDA Agreement and Promissory Note with the Creditor to convert the total amount of $675,888 into 9,655,542 shares of the Company’s restricted Common Stock at the agreed conversion price of $0.07 per share for issuance on August 16, 2024. A total of 9,655,542 shares of the Company’s restricted Common Stock were issued on August 16, 2024 to Borneo Oil Berhad, the appointed nominee of the Creditor, to settle in full the total of USD 675,888 of CSB’s account payable to the Creditor.
The Company recorded accretion of liability on promissory notes of $103,380 and $0 and presented as interest expense on promissory notes for the year ended June 30, 2024 and 2023, respectively. Interest on promissory notes at 2% were $13,536 and $0 for the year ended June 30, 2024 and 2023 respectively.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 16 - LEASES
The Company adopted ASU No. 2016-02, Leases and determines whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if we obtain the rights to direct the use of and to obtain substantially all of the economic benefit from the use of the underlying asset. Some of our leases include both lease and non-lease components which are accounted for as a single lease component as the Company has elected the practical expedient. Some of the operating lease agreements include variable lease costs, primarily taxes, insurance, common area maintenance or increases in rental costs related to inflation. Substantially all of our equipment leases and some of our real estate leases have terms of less than one year and, as such, are accounted for as short-term leases as we have elected the practical expedient.
Operating leases are included in the right-of-use lease assets, other current liabilities and long-term lease liabilities on the Consolidated Balance Sheet. Right-of-use assets and lease liabilities are recognized at each lease’s commencement date based on the present values of its lease payments over its respective lease term. When a borrowing rate is not explicitly available for a lease, the incremental borrowing rate is used based on information available at the lease’s commencement date to determine the present value of its lease payments. Operating lease payments are recognized on a straight-line basis over the lease term.
The Company adopts a 5% as weighted average incremental borrowing rate to determine the present value of the lease payments. The weighted average remaining life of the lease was 3 years ending September 30, 2025.
The table below presents the lease-related assets and liabilities recorded on the balance sheet.
| | As of June 30, | |
| | 2024 | | | 2023 | |
| | | | | | |
Assets | | | | | | |
Right-of-use asset (#1) | | $ | 720,000 | | | $ | 720,000 | |
Right-of-use asset (#2) | | | 64,910 | | | | 64,910 | |
Total RoU assets | | $ | 784,910 | | | $ | 784,910 | |
Less: Amortisation | | | (275,428 | ) | | | (151,801 | ) |
| | | 509,482 | | | | 633,109 | |
| | | | | | | | |
Liabilities | | | | | | | | |
Current: | | | | | | | | |
Operating lease liabilities | | $ | 24,881 | | | $ | 20,768 | |
Finance lease liabilities | | | 22,323 | | | | 172,184 | |
| | | | | | | | |
Finance lease liabilities – assets held for disposal | | | 603,252 | | | | - | |
| | | | | | | | |
Non-current: | | | | | | | | |
Operating lease liabilities | | | 4,602 | | | | 29,483 | |
Finance lease liabilities | | | 86,565 | | | | 608,455 | |
| | | | | | | | |
Total lease liabilities | | $ | 741,623 | | | $ | 830,890 | |
As of June 30, 2024, right-of-use assets were $509,482 and lease liabilities were $741,623.
As of June 30, 2023, right-of-use assets were $633,109 and lease liabilities were $830,890.
For the year ended June 30, 2024 and 2023, the amortization charge on right-of-use assets was $123,625 and $117,517, respectively.
(#1) This leasing arrangement for the lease of the Segama factory amounting to $720,000 is for a lease term of seven (7) years and included 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 ended March 1, 2024. The option was not exercised and has lapsed.
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.
(#2) This leasing arrangement as stated at fair value above is for the lease of an executive vehicle with a total liability of $84,718 and for a lease term of three (3) years ending September 30, 2025. The lease arrangement includes an option to purchase the said vehicle at an agreed consideration of $57,087 (“Purchase Price”) as stated in the Lease Agreement. The Company’s lease agreements do not contain any material restrictive covenants.
The accretion of lease liability for the year ended June 30, 2024 and 2023, were $7,471 and $8,873, respectively.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
The Company excludes short-term leases (those with lease terms of less than one year at inception) from the measurement of lease liabilities or right-of-use assets. The following tables summarize the lease expense for the years.
| | Years ended June 30, | |
| | 2024 | | | 2023 | |
| | | | | | |
Finance lease cost: | | | | | | |
Interest on lease liabilities (per ASC 842) | | $ | 45,926 | | | $ | 36,765 | |
| | | | | | | | |
Operating lease cost: | | | | | | | | |
Operating lease expense (per ASC 842) | | | 131,096 | | | | 126,388 | |
| | | | | | | | |
Total lease expense | | $ | 177,022 | | | $ | 163,153 | |
Components of Lease Expense
The Company recognizes operating lease expense on a straight-line basis over the term of the operating leases, comprising interest expense determined using the effective interest method, and amortization of the right-of-use asset, as reported within “general and administrative” expense on the accompanying consolidated statement of operations.
Finance lease expense comprise of interest expenses determined using the effective interest method.
Future Contractual Lease Payments as of June 30, 2024
The below table summarizes our (i) minimum lease payments over the next five years, (ii) lease arrangement implied interest, and (iii) present value of future lease payments for the next five years and thereafter ending June 30:
Years ending June 30, | | Operating and finance lease amount | |
| | | |
2025 | | $ | 784,877 | |
2026 | | | 24,771 | |
2027 | | | 24,771 | |
2028 | | | 23,674 | |
2029 | | | 4,836 | |
Total minimum finance lease liabilities payment | | | 862,929 | |
Less: interest | | | (121,306 | ) |
| | | | |
Present value of lease liabilities | | $ | 741,623 | |
| | | | |
Representing:- | | | | |
Current liabilities | | $ | 650,456 | |
Non-current liabilities | | | 91,167 | |
| | $ | 741,623 | |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 17 - STOCKHOLDERS’ 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.
Preferred stock outstanding
There are no preferred shares outstanding as of June 30, 2024, and 2023.
Common stock outstanding
On September 8, 2023, the Company, through its wholly-owned subsidiary Verde Renewables, Inc. (“VRI”) entered into a Service and Stock Cancellation Agreement with Steven Sorhus to cancel the Services Agreement dated December 1, 2022. Pursuant to the Service Agreement, 300,000 restricted common shares were issued at $0.20 on December 31, 2022 totaling $60,000. With the Service and Stock Cancellation Agreement, these shares were to be cancelled and subsequently 128,409 restricted common shares were to be re-issued at the same price for services rendered till cancellation.
The cancellation of shares was completed on March 28, 2024 and subsequently 128,409 restricted common shares were re-issued to Steven Sorhus on May 24, 2024.
On September 8, 2023, the Company, through its wholly-owned subsidiary Verde Renewables, Inc. (“VRI”) entered into a Service and Stock Cancellation Agreement with EMGTA LLC to cancel the Services Agreement dated December 1, 2022, including the cancellation of 375,000 restricted common shares issued at $0.20 on December 31, 2022 totaling $75,000 as consideration for certain services. The cancellation is still in process.
On September 12, 2023, the Company, through its wholly-owned subsidiary Verde Renewables, Inc. (“VRI”) entered into a Service and Stock Cancellation Agreement with Y M Tengku Chanela Jamidah Y A M Tengku Ibrahim to cancel the Services Agreement dated November 30, 2022. Pursuant to the Service Agreement, 500,000 restricted common shares were issued at $0.20 on December 31, 2022 totaling $100,000. With the Service and Stock Cancellation Agreement, these shares were to be cancelled and subsequently 166,667 restricted common shares were to be re-issued at the same price for services rendered till cancellation.
The cancellation of shares was completed on March 28, 2024 and subsequently 166,667 restricted common shares were re-issued to Y M Tengku Chanela Jamidah Y A M Tengku Ibrahim on May 24, 2024.
On October 23, 2023, the Company, through its wholly-owned subsidiary VRI, entered into a Services Agreement (the “Agreement”) with Donald R. Fosnacht to engage him as National Certification and Extensive BCR (Biochar Carbon Removal) Implementation Specialist to develop and implement a comprehensive strategy to obtain national and regional certification and endorsement for carbon net-negative construction products with high biochar content, encompassing asphalt, concrete, and soil stabilization as designated in the Agreement. Under the Agreement, the Company will pay Donald R. Fosnacht by the issuance of 1,000,000 shares of the Company’s restricted common stock, par value $0.001 per share (the “Common Stock”) on or before January 31, 2024. The term of the Agreement will remain effective until December 31, 2025 and both parties may renew the agreement or enter into a new agreement as may be mutually agreed on terms to be separately negotiated.
Subsequently on January 31, 2024, the Company issued 1,000,000 restricted common shares to Donald R. Fosnacht.
On November 22, 2023, the Company issued a total of 14,931,624 restricted Common Shares comprising 11,538,461 restricted Common Shares for $1,050,000 at $0.091 per share to five non-US shareholders, 100,000 restricted Common Shares for $10,000 at $0.10 per share to one non-US shareholder, 1,943,163restricted Common Shares for $176,828 at $0.091 per share to ten US shareholders and 1,350,000 restricted Common Shares for $135,000 at $0.10 per share to nine US shareholders.
On December 4, 2023, the Company issued a total of 1,238,889 restricted Common Shares comprising of 850,000 restricted Common Shares for $85,000 at $0.10 per share to four US shareholders and 388,889 restricted Common Shares for $35,000 at $0.09 per share to one US shareholders.
On April 12, 2024, shares that were committed to be issued as of March 31, 2024 were fully settled by way of issuance of 2,881,274 restricted Common Shares at $0.108 per share to four non-US shareholders in settlement of $311,178 subscription amounts paid, and issuance of 200,000 restricted Common Shares on April 15, 2024 at $0.091 per share to one US shareholder in settlement of $18,200 subscription amount paid.
On April 15, 2024, the Company issued a total of 3,055,555 restricted Common Shares to four US shareholders, in which 2,300,000 restricted Common Shares were issued at $0.10 per share to two US shareholders, 200,000 restricted Common Shares were issued at $0.091 per share to one US shareholder, and 555,555 restricted Common Shares were issued at $0.09 per share to one US shareholder.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
On April 20, 2024, the Company entered into two Services Agreements with Dr. Nam Tran and Dr. Raymond Powell to engage them as National Implementation Experts for its wholly-owned subsidiary Verde Renewables, Inc. to initiate connections with esteemed asphalt contractors, identify potential partners, explore potential collaborations through their extensive networks in the asphalt industry and recommend strategies to capitalize on emerging opportunities as designated in the Agreements. Under the Agreements, the Company will pay Dr. Nam Tran and Dr. Raymond Powell each by the issuance of 3,000,000 shares of the Company’s restricted Common Shares in three tranches of 1,000,000 shares each on or before July 31, 2024, October 31, 2025 and October 31, 2026 respectively.
Subsequently on July 31, 2024, the Company issued 1,000,000 of the Company’s restricted Common Shares each to Dr. Nam Tran and Dr. Raymond Powell as part of the compensation package for their services to be rendered for the period from May 1, 2024 to April 30, 2025 as stated in their Services Agreements.
On June 1, 2024, the Company entered into a multi-year Services Agreement with Dale Ludwig to engage him as Strategic Advisor for the Company and all its subsidiaries, to maintain and build strong relationships with policymakers at both state and federal levels, collaborate with Missouri Department of Transportation, build relationships with Missouri Asphalt Pavement Association (MAPA) members, collaborate with Missouri contractors to encourage the use of the Company's technologies, identify current biochar producers in Missouri and engage with the Missouri Department of Economic Development. Pursuant to the Agreement, the Company agreed to issue a total of 2,000,000 restricted shares of the Company’s common stock to Dale Ludwig over three tranches of 700,000 shares on or before August 31, 2024, 700,000 shares on or before October 31, 2025 and 600,000 shares on or before October 31, 2026.
Subsequently on August 8, 2024, the Company issued 700,000 of the Company’s restricted Common Shares to Dale Ludwig as part of the compensation package for their services to be rendered for the period from June 1, 2024 to April 30, 2025 as stated in the Services Agreement.
On August 30, 2024, the Company issued 670,000 of the Company’s restricted Common Shares to Eric Bava, Chief Operating Officer of the Company, as part of the compensation package in the Employment Agreement that the Company entered into with Eric Bava on October 1, 2023 for his first year of service from October 1, 2023 to September 30, 2024.
There were 1,199,358,251 and 1,176,200,278 shares of common stock issued and outstanding at June 30, 2024 and 2023, respectively.
The Company has no stock option plan, warrants, or other dilutive securities as at June 30, 2024 and 2023 other than stocks committed to be issued of 2,700,000 and 670,000 to non employees and an employee respectively.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 18 - NET LOSS PER SHARE
The following table sets forth the computation of basic and diluted net (loss) income per share for the respective years:
| | Years ended June 30, | |
| | 2024 | | | 2023 | |
| | | | | | |
Net loss | | $ | (3,187,774 | ) | | $ | (3,998,960 | ) |
| | | | | | | | |
Weighted average common shares outstanding: | | | | | | | | |
- Basic | | | 1,187,606,780 | | | | 1,019,752,220 | |
- Diluted | | | 1,187,606,780 | | | | 1,019,752,220 | |
| | | | | | | | |
Net loss per share: | | | | | | | | |
- Basic | | $ | (0.00 | ) | | $ | (0.00 | ) |
- Diluted | | $ | (0.00 | ) | | $ | (0.00 | ) |
# less than $0.005
For the years ended June 30, 2024, and 2023, diluted weighted-average common shares outstanding is equal to basic weighted-average common shares, due to the Company’s net loss position. Hence, no common stock equivalents were included in the computation of diluted net loss per share since such inclusion would have been antidilutive.
The Company has no potentially dilutive securities, such as, options or warrants, currently issued and outstanding.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 19 - INCOME TAX
For the years ended June 30, 2024, and 2023, the local (“United States of America”) and foreign components of loss before income taxes were comprised of the following:
| | Years ended June 30, | |
| | 2024 | | | 2023 | |
| | | | | | |
Tax jurisdiction from: | | | | | | |
- Local (US regime) | | $ | (2,444,654 | ) | | $ | (3,795,326 | ) |
- Foreign, including | | | | | | | | |
British Virgin Island | | | (160,538 | ) | | | 594,580 | |
Malaysia | | | (578,231 | ) | | | (786,851 | ) |
Labuan, Malaysia | | | (4,239 | ) | | | (11,363 | ) |
| | | | | | | | |
Loss before income taxes | | $ | (3,187,662 | ) | | $ | (3,998,960 | ) |
The provision for income taxes consisted of the following:
| | Years ended June 30, | |
| | 2024 | | | 2023 | |
| | | | | | |
Current tax: | | $ | - | | | $ | - | |
- Local | | | - | | | | - | |
- Foreign | | | - | | | | - | |
| | | | | | | | |
Deferred tax | | | | | | | | |
- Local | | | - | | | | - | |
- Foreign | | | - | | | | - | |
| | | | | | | | |
Income tax expense (benefit) | | $ | - | | | $ | - | |
The effective tax rate in the years presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company mainly operates in U.S.A. and Malaysia that is subject to taxes in the jurisdictions in which they operate, as follows:
United States of America
VRDR, VRI and VLI are subject to the tax laws of United States of America. The U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law. The Tax Reform Act significantly revised the U.S. corporate income tax regime to 21% effective January 1, 2018. The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in its income tax provision. The Company has not accrued or paid interest or penalties which were not material to its results of operations for the periods presented.
The Company has provided for a full valuation allowance against the deferred tax assets of $1,439,384 on the expected future tax benefits from the net operating loss (“NOL”) carry forwards of $6,854,210 as the management believes it is more likely than not that these assets will not be realized in the future.
Net Operating Losses (NOLs) generated prior to January 1, 2018, are able to be carried forward up to twenty subsequent years. Any NOLs created for tax years subsequent to that may be carried forward indefinitely. However, any NOLs arising from tax years ending after December 31, 2020, can only be used to offset up to 80% of taxable income.
For the years ended June 30, 2024, and 2023, there were no operating income in US tax regime.
BVI
Under the current BVI law, VRAP is not subject to tax on income.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Labuan
Under the current laws of the Labuan applicable to BRL, income derived from an intellectual property right is subject to tax under the Malaysian Income Tax Act 1967 (ITA) at 24% of its chargeable income. However, BRL is not subject to income tax, given that it was a net loss position during the current period presented. The losses are presently not able to be carried forward to offset against its future operation income as income generating activities have not yet been undertaken.
Malaysia
The Company’s subsidiaries, Verde Malaysia and Wision is registered in Malaysia and are subject to the Malaysia corporate income tax at a standard income tax rate of 24% on chargeable income.
The operation in Malaysia incurred $854,275 of cumulative net operating losses as of June 30, 2024 which can be carried forward to offset future taxable income. The net operating loss are allowed to be carried forward up to a maximum of ten (10) years of assessments under the current tax legislation in Malaysia. The Company has provided for a full valuation allowance against the deferred tax assets of $205,026 on the expected future tax benefits from the net operating loss (“NOL”) carry forwards as the management believes it is more likely than not that these assets will not be realized in the future.
| | Years ended June 30, | |
| | 2024 | | | 2023 | |
| | | | | | |
Loss before income taxes | | $ | (578,231 | ) | | $ | (786,851 | ) |
Statutory income tax rate | | | 24 | % | | | 24 | % |
Income tax expense at statutory rate | | | (138,775 | ) | | | (188,844 | ) |
Non-deductible items | | | 52,249 | | | | 26,603 | |
Tax losses unable to be carried forward | | | 1,017 | | | | 2,727 | |
Net operating loss | | | 85,509 | | | | 159,514 | |
Income tax expense | | $ | - | | | $ | - | |
The following table sets forth the significant components of the deferred tax assets of the Company:
| | As of June 30, | |
| | 2024 | | | 2023 | |
| | | | | | |
Deferred tax assets: | | | | | | |
Net operating loss carry forwards, from | | | | | | |
US tax regime | | $ | 1,439,384 | | | $ | 1,079,890 | |
Malaysia tax regime | | | 205,026 | | | | 113,516 | |
Less: valuation allowance | | | (1,644,410 | ) | | | (1,193,406 | ) |
Deferred tax assets, net | | $ | - | | | $ | - | |
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 reversed in the consolidated statement of operations. The Company did not have uncertainty tax positions or events leading to uncertainty tax position within the next 12 months.
NOTE 20 - PENSION COSTS
The Company is required to make contribution to their employees under a government-mandated defined contribution pension scheme for its eligible full-times employees in Malaysia. The Company is required to contribute a specified percentage of the participants’ relevant income based on their ages and wages level. During the years ended June 30, 2024, and 2023, $10,064 and $19,961 contributions were made accordingly.
NOTE 21 – SHARES ISSUED TO NON EMPLOYEE AND EMPLOYEE
On December 15, 2022, the Company entered into a Services Agreement with Looi Pei See (the “Looi Pei See Agreement”) to engage her as a consultant to develop the retail markets for the Company’s products and services in Malaysia and Singapore. The Company will pay Looi Pei See by the issuance of 1,140,000 shares of the Company’s restricted common stock, par value $0.001 per share (the “Common Stock”) on or before December 31, 2022. The shares were issued on December 31, 2022 for service period from December 15, 2022 to December 14, 2025. The fair value of 1,140,000 shares was $228,000 which calculated based on stock price of $0.20 per share on December 15, 2022 (date of issuance) and is being amortised over the service period. During the year ended June 30, 2024, the Company charged $77,338 to selling, general and administrative expenses as consulting expenses.
On October 23, 2023, the Company, through its wholly-owned subsidiary VRI, entered into a Services Agreement (the “Agreement”) with Donald R. Fosnacht to engage him as National Certification and Extensive BCR (Biochar Carbon Removal) Implementation Specialist to develop and implement a comprehensive strategy to obtain national and regional certification and endorsement for carbon net-negative construction products with high biochar content, encompassing asphalt, concrete, and soil stabilization as designated in the Agreement. Under the Agreement, the Company will pay Donald R. Fosnacht by the issuance of 1,000,000 shares of the Company’s restricted common stock, par value $0.001 per share (the “Common Stock”) on or before January 31, 2024. The term of the Agreement will remain effective until December 31, 2025 and both parties may renew the agreement or enter into a new agreement as may be mutually agreed on terms to be separately negotiated. The fair value of 1,000,000 shares was $134,000 which calculated based on stock price of $0.134 per share on January 31, 2024 (date of issuance) and is being amortised over the service period. During the year ended June 30,2024, the Company charged $42,157 to selling, general and administrative expenses as consulting expenses.
On April 20, 2024, the Company entered into two Services Agreements (the “Agreements”) with Dr. Nam Tran and Dr. Raymond Powell to engage them as National Implementation Experts for its wholly-owned subsidiary Verde Renewables, Inc. (“VRI”) to initiate connections with esteemed asphalt contractors, identify potential partners, explore potential collaborations through their extensive networks in the asphalt industry and recommend strategies to capitalize on emerging opportunities as designated in the Agreements. Under the Agreements, the Company will pay Dr. Nam Tran and Dr. Raymond Powell each by the issuance of 3,000,000 shares of the Company’s restricted Common Shares in three tranches of 1,000,000 shares each on or before July 31, 2024, October 31, 2025 and October 31, 2026 respectively. The term of the Agreements will remain effective until April 30, 2027 and both parties may renew the agreement or enter into a new agreement as may be mutually agreed on terms to be separately negotiated. Pursuant to the respective addendum to Service Agreement dated June 29, 2024, each tranche of shares to be issued is compensation for each service period of 12 months beginning from May 1, 2024, May 1, 2025 and May 1, 2026 respectively. The fair value of first 1,000,000 shares was $360,000 each, calculated based on stock price of $0.36 per share on July 31,2024 (date of issuance) and is being amortised over the respective service period. During the year ended June 30, 2024, the Company charged a total of $120,329 to selling, general and administrative expenses as consulting expenses.
On June 1, 2024, the Company entered into a multi-year Services Agreement (the “Agreement”) with Dale Ludwig to engage him as Strategic Advisor for the Company and all its subsidiaries, to maintain and build strong relationships with policymakers at both state and federal levels, collaborate with Missouri Department of Transportation, build relationships with Missouri Asphalt Pavement Association (MAPA) members, collaborate with Missouri contractors to encourage the use of the Company's technologies, identify current biochar producers in Missouri and engage with the Missouri Department of Economic Development. Pursuant to the Agreements, the Company agreed to issue a total of 2,000,000 restricted shares of the Company’s common stock to Dale Ludwig over three tranches of 700,000 shares on or before August 31, 2024, 700,000 shares on or before October 31, 2025 and 600,000 shares on or before October 31, 2026. Pursuant to the addendum to Service Agreement dated June 29, 2024, each tranche of shares to be issued is compensation for each service period beginning 11 months from June 1, and 12 months from 2024, May 1, 2025 and May 1, 2026 respectively. The fair value of first 700,000 shares was $210,000, calculated based on stock price of $0.30 per share on August 8,2024 (date of issuance) and is being amortised over the service period. During the year ended June 30, 2024, the Company charged $18,862 to selling, general and administrative expenses as consulting expenses.
The Company agreed to issue 670,000 of the Company’s restricted Common Shares to Eric Bava, Chief Operating Officer of the Company, as part of the compensation package in the Employment Agreement upon completing each full year of service. The term of the Agreements will remain effective until September 30, 2027. On August 30, 2024, the Company issued 670,000 of the Company’s restricted Common Shares to Eric Bava, Chief Operating Officer of the Company, as part of the compensation package in the Employment Agreement that the Company entered into with Eric Bava on October 1, 2023. The fair value of 670,000 shares was $181,235 which calculated based on stock price of $0.2705 per share on August 30, 2024 (date of issuance) and is being amortised over the service period from October 1, 2023 to September 30, 2024. During the year ended June 30,2024, the Company charged $135,678 to selling, general and administrative expenses as salary expenses.
On July 31,2024, Verde Renewables, Inc, a wholly owned subsidiary of the Company, entered into Service Agreement with Jeremy P. Concannon (Chief Growth Officer (“CGO”) of the Company effective from August 1, 2024). Pursuant to the Services Agreement, the Company agreed to issue a total of 4,050,000 restricted shares of the Company’s common stock to Jeremy P. Concannon over three tranches of 1,350,000 shares each on or before August 31, 2024, August 31, 2025 and August 31, 2026 respectively. The term of the Agreements will remain effective until September 30, 2027 and both parties may renew the agreement or enter into a new agreement as may be mutually agreed on terms to be separately negotiated. Pursuant to the addendum to Service Agreement dated September 27, 2024, each tranche of shares to be issued as compensation for each service period beginning 12 months from August 1, 2024 and 2025 and for 14 months from August 1, 2026 to September 30, 2027 respectively.
During the year ended June 30, 2024, pursuant to the service and stock cancellation agreements signed with Y M Tengku Chanela Jamidah Y A M Tengku Ibrahim, Steven Sorhus and EMGTA LLC, there was a net reversal of consulting fees previously recognized of $6,317.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 22 - RELATED PARTY TRANSACTIONS
| | For the Years ended | |
| | June 30, | |
| | 2024 | | | 2023 | |
Related party transactions: | | | | | | |
Sales to: | | | | | | |
Borneo Eco Food Sdn Bhd (#1) | | $ | 4,071 | | | $ | 12,238 | |
BOC (#2) | | $ | - | | | $ | 2,062 | |
SB Resorts Sdn Bhd (#2) | | $ | 25,441 | | | $ | - | |
Rental income: | | | | | | | | |
Mr. Jack Wong (#3) | | $ | 60,000 | | | $ | 49,121 | |
Site expenses: | | | | | | | | |
Warisan Khidmat Sdn Bhd (#4) | | $ | - | | | $ | 9,776 | |
Professional services provided by: | | | | | | | | |
Warisan Khidmat Sdn Bhd (#4) | | $ | 17,905 | | | $ | 18,652 | |
Interest expense paid to: | | | | | | | | |
BOC (#2) | | $ | 13,536 | | | $ | 4,068 | |
Rental expense paid to: | | | | | | | | |
SB Resorts Sdn Bhd (#2) | | $ | 1,918 | | | $ | - | |
Related party balances: | | | |
| | June 30, | |
| | 2024 | | | 2023 | |
Advanced from related parties | | | | | | |
BOC (#2) | | $ | 70,677 | | | $ | 57,125 | |
Borneo Oil Berhad (“BOB”) (#1) | | $ | 3,007 | | | $ | 70,712 | |
Borneo Energy Sdn Bhd (#1) | | $ | 14,599 | | | $ | 14,770 | |
Taipan International Limited (#5) | | $ | 119,153 | | | $ | 119,153 | |
Victoria Capital Sdn Bhd (#6) | | $ | 93,270 | | | $ | 107,970 | |
UnitiMart Sdn Bhd (9#) | | $ | 7,782 | | | $ | - | |
Makin Teguh Sdn Bhd (9#) | | $ | 19,379 | | | $ | - | |
| | | | | | | | |
Trade payables | | | | | | | | |
Warisan Khidmat Sdn Bhd (#4) | | $ | 1,484 | | | $ | - | |
BOC (#2) | | $ | 462 | | | $ | 467 | |
J. Ambrose & Partners (#7) | | $ | 716 | | | $ | 724 | |
| | | | | | | | |
Advanced to related party | | | | | | | | |
Vetrolysis Limited (#8) | | $ | 100 | | | $ | 100 | |
| | | | | | | | |
Trade receivables | | | | | | | | |
Borneo Eco Food Sdn Bhd (#2) | | $ | - | | | $ | 901 | |
J. Ambrose & Partners (#7) | | $ | 250 | | | $ | 253 | |
SB Resorts Sdn Bhd (#2) | | $ | 25,291 | | | $ | - | |
| | | | | | | | |
Other payables | | | | | | | | |
J. Ambrose & Partners (#7) | | $ | 48,122 | | | $ | 48,650 | |
SB Supplies & Logistic Sdn Bhd (#1) | | $ | 5,936 | | | $ | 5,998 | |
SB Resorts Sdn Bhd (#2) | | $ | 2,120 | | | $ | - | |
Borneo Eco Food Sdn Bhd (#2) | | $ | 1,039 | | | $ | - | |
| | | | | | | | |
Promissory notes issued to related party | | | | | | | | |
BOC (#2) | | $ | 591,170 | | | $ | 487,790 | |
(#1) Borneo Oil Berhad (“BOB”) is ultimate holding company of Borneo Eco Food Sdn. Bhd., Borneo Energy Sdn Bhd and SB Supplies & Logistic Sdn Bhd, and held 13.2% of the Company’s issued and outstanding common stock as of June 30, 2024.
(#2) SB Resorts Sdn Bhd and Borneo Oil Corporation Sdn Bhd (“BOC”) are wholly owned subsidiaries of Borneo Oil Berhad (“BOB”) (holding 13.2% of the Company’s issued and outstanding common stock as of June 30, 2024). The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.
(#3) Mr. Jack Wong was the President and Chief Executive of the Company effective October 1, 2022. Effective March 30, 2023, Carl Craven voluntarily resigned from his position as Director of the Company. By resolution of the Board of Directors, Jack Wong was appointed Director of the Company for a one (1) year term, effective March 30, 2023. Jack Wong will hold the Board position formerly held by Carl Craven. On September 12, 2023, Jack Wong stepped down from his position as President of the Company, but remains as Chief Executive Office of the Company. By Waiver and Consent of Shareholders, Jack Wong was re-elected Director of the Company, effective March 30, 2024.
(#4) Warisan Khidmat Sdn. Bhd. is a company whose shareholdings is entirely held by a Director of Verde Malaysia.
(#5) Taipan International Limited is one of the shareholders of the Company, and held 32.5% of the Company’s issued and outstanding Common Stock as of June 30, 2024.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(#6) Victoria Capital Sdn. Bhd. is one of the shareholders of the Company and held 0.2% of the Company’s issued and outstanding Common Stock as of June 30, 2024.
(#7) Datuk Joseph Lee Yok Min, an indirect significant shareholder, is a partner of J. Ambrose & Partners. The advances received are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms. Mr. Joseph Ambrose Lee who was also appointed as a Director and Chairman of the Board of Directors of the Company effective January 23, 2024, is also the Managing Director of BOB. On February 6, 2024, by resolution of the Board of the Company, Joseph Ambrose Lee appointed as a member of the newly formed Management Committee of the Board. Subsequently on June 18, 2024, Joesph Ambrose Lee tendered his resignation as Director and Chairman of the Board and member of the Management Committee of the Company.
(#8) Encik Anuar bin Ismail, an indirect significant shareholder, is a director of Vetrolysis Limited.
(#9) Borneo Oil Berhad (“BOB”) is ultimate holding company of UnitiMart Sdn. Bhd., and held 13.2% of the Company’s issued and outstanding common stock as of June 30, 2024. Makin Teguh Sdn Bhd is associates of BOB.
Apart from the transactions and balances detailed elsewhere in these accompanying consolidated financial statements, the Company has no other significant or material related party transactions during the years presented.
NOTE 23 - CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
(a) | Major customers and major vendors |
For the years ended June 30, 2024, there was 2 customers whose revenue exceeded 10% of the revenue in the segment of production and distribution of renewable commodities.
| | Revenue June 30, 2024 | | | Accounts Receivable June 30, 2024 | |
| | USD | | | % | | | USD | |
| | | | | | | | | |
Customer A | | $ | 62,560 | | | | 64.8 | % | | | 62,560 | |
Customer B* | | | 25,441 | | | | 26.3 | % | | | 25,441 | |
* impaired and represents a related party.
For the year ended June 30, 2023 there were no customers which exceeded 10% of revenue for the period.
For the years ended June 30, 2024, there was 2 vendors whose revenue exceeded 10% of the revenue in the segment of production and distribution of renewable commodities
| | Direct Costs June 30, 2024 | | | Accounts Payable June 30, 2024 | |
| | USD | | | % | | | USD | |
| | | | | | | | | |
Vendor A | | | 118,621 | | | | 45 | % | | | 118,621 | |
Vendor B | | | 135,200 | | | | 51 | % | | | - | |
For the year ended June 30, 2023 there were no vendors which exceeded 10% of direct costs for the period.
(b) | Economic and political risk |
The Company’s major operations are conducted in U.S.A. and Malaysia. Accordingly, the political, economic, and legal environments in U.S.A. and Malaysia, as well as the general state of U.S.A. and Malaysia’s economy may influence the Company’s business, financial condition, and results of operations.
Further, the escalation tensions in the Middle East, including the continuing Russian – Ukraine conflict may impact the global economic situation, which indirectly may impact the Company’s operations.
The Company cannot guarantee that the current exchange rate will remain steady; therefore, there is a possibility that the Company could post the same amount of losses for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of MYR converted to USD on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
NOTE 24 - COMMITMENTS AND CONTINGENCIES
Future commitments with regards to repayment of lease liabilities are disclosed in Notes 16.
Apart from the above, as of June 30, 2024, the Company had the following commitments:
a) commitment to issue restricted Common Shares to the following service provider on or before October 31, 2026, for services to be performed pursuant to the Service Agreements signed with non employees as disclosed in Note 17:
| | Number of shares to be issued | |
FYE 2025 | | | |
Nam Tran | | | 1,000,000 | |
Raymond Powell | | | 1,000,000 | |
Dale Ludwig | | | 700,000 | |
| | | 2,700,000 | |
FYE 2026 and 2027 | | | | |
Nam Tran | | | 2,000,000 | |
Raymond Powell | | | 2,000,000 | |
Dale Ludwig | | | 1,300,000 | |
| | | 5,300,000 | |
b) commitment to repay Promissory Notes with the face value (principal) amount of $675,888, bearing 2% coupon interest by issuance of 9,655,542 shares of the Company’s restricted Common Shares priced at $0.07 per share as disclosed in Note 15.
c) commitment to cancel 375,000 restricted common shares pursuant to the Service Agreement signed and Service and Stock Cancellation Agreement as disclosed in Note 17.
d) commitment to issue restricted Common Shares, comprising of 3,183,335 restricted Common Shares at $0.09 per share to six US shareholders, 3,000,000 restricted Common Shares at $0.10 per share to three non-US shareholders and 15,805,000 restricted Common Shares at $0.10 per share to forty-two US shareholders.
e) Quarterly committed payments of $50,000 from September 2024 to March 2025, and $62,500 from June 2025 to September 2026 to support a 3-year Performance Testing Project titled “Structural Capacity of Sustainable Pavement” pursuant to an agreement entered with The National Center for Asphalt Technology at Auburn University ("NCAT") on June 27, 2024.
f) commitment to issue 670,000 of the Company’s restricted Common Shares to Eric Bava, Chief Operating Officer of the Company, as part of the compensation package in the Employment Agreement that the Company entered into with Eric Bava on October 1, 2023 for his first year of service from October 1, 2023 to September 30, 2024.
As of June 30, 2024, the Company has no material contingencies.
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 25- SUBSEQUENT EVENTS
On July 24, 2024, the Company issued 3,194,443 restricted Common Shares for $287,500 at $0.09 per share to four US shareholders and 6,005,000 restricted Common Shares for $600,500 at $0.10 per share to twenty US shareholders and one non-US shareholder.
On July 31, 2024, the Company issued 1,000,000 of the Company’s restricted Common Shares each to Dr. Nam Tran and Dr. Raymond Powell as part of the compensation package in the Services Agreements that the Company entered into with Dr. Nam Tran and Dr. Raymond Powell on April 20, 2024 for the service period from May 1, 2024 to April 30, 2025.
Effective August 1, 2024, Jeremy P. Concannon was appointed as Chief Growth Officer (“CGO”) of the Company. Pursuant to the Services Agreement entered into between Jeremy P. Concannon and Verde Renewables, Inc, a wholly owned subsidiary of the Company as of July 31, 2024, the Company agreed to issue a total of 4,050,000 restricted shares of the Company’s common stock to Jeremy P. Concannon over three tranches of 1,350,000 shares on or before August 31, 2024, 1,350,000 shares on or before August 31, 2025 and 1,350,000 shares on or before August 31, 2026.
Pursuant to the addendum to Service Agreement dated September 27, 2024, each tranche of shares to be issued as compensation for each service period beginning 12 months from August 1, 2024 and 2025 and for 14 months from August 1, 2026 to September 30, 2027 respectively.
On August 8, 2024, the Company issued 700,000 of the Company’s restricted Common Shares to Dale Ludwig as part of the compensation package in the Services Agreement that the Company entered into with Dale Ludwig on June 1, 2024 for the service period from June 1, 2024 to April 30, 2025.
On August 9, 2024, the Company issued 888,888 restricted Common Shares for $80,000 at $0.09 per share to one US shareholder and 11,840,000 restricted Common Shares for $1,184,000 at $0.10 per share to twenty-three US shareholders and one non-US shareholder.
On August 14, 2024, the Company entered into a Memorandum of Understanding (the “MoU”) with Nature Plus Inc. (“NPI”) to formalize the collaboration on the National Center for Asphalt Technology (“NCAT") Test Track Project (the “Project”) and explore subsequent business opportunities arising from the successful completion of the Project. The Project will involve the application of TerraZyme technology for the stability of subgrade and base layers, with the overarching goal of advancing road construction methodologies. The Company holds a three-year agreement with the National Center for Asphalt Technology at Auburn University ("NCAT") for the research, development and testing of road construction technologies. The Company has committed to funding the Project at a minimum cost of $750,000, This funding will support the necessary performance testing by NCAT to secure the highest level of certification for the commercial adoption of the technology by the Departments of Transportation (“DOTs”). NPI will work in close collaboration with the Company and NCAT to provide critical technical expertise to support the Project and assist the Company in obtaining NCAT certification and other relevant approvals。The Company will procure and utilize 6 liters of TerraZyme for the NCAT test track. The Company and NPI will jointly develop mixed designs and materials incorporating biochar, aimed at enhancing performance and promoting carbon sequestration. The MoU shall be effective until December 31, 2026 or until replaced by a subsequent distributor agreement. Upon the successful completion of the Project, the Company and NPI intend to continue the collaboration on future initiatives, including soil stabilization and material development, carbon removal credits, certification and compliance, and exclusive rights to distributing TerraZyme.
On August 16, 2024, the Company issued 9,655,542 shares of the Company’s restricted Common Stock at the price of $0.07 per share to Borneo Oil Berhad in relation to the Settlement of Debts Agreement (the “SDA Agreement”) and a two year term period Promissory Note entered into with its former indirect wholly-owned subsidiary Champmark Sdn Bhd (“CSM”) and CSM’s creditor Borneo Oil Corporation Sdn Bhd (the “Creditor”) to settle in full a total of USD 675,888 of CSM’s account payable. On March 13, 2023, the Company and CSM entered into a SDA Agreement and a two year term period Promissory Note with the Creditor to settle in full a total of USD 675,888 of CSM’s account payable to the Creditor either in cash or by the issuance of new restricted shares of the Company’s common stock at a price of $0.07 per share. As set out in the SDA Agreement, the new restricted shares for settlement of the account payable to the Creditor shall be issued to the Creditor or its nominee. On August 16, 2024, the Company entered into a Supplementary Agreement to the SDA Agreement and Promissory Note with the Creditor to convert the total amount of $675,888 into 9,655,542 shares of the Company’s restricted Common Stock at the agreed conversion price of $0.07 per share for issuance on August 16, 2024.
On August 26, 2024, the Company issued 722,221 restricted Common Shares for $65,000 at $0.09 per share to three US shareholders, 3,990,000 restricted Common Shares for $399,000 at $0.10 per share to six US shareholders and two non-US shareholders.
On August 30, 2024, the Company issued 1,350,000 of the Company’s restricted Common Shares to Jeremy P. Concanon, Chief Growth Officer of the Company, as part of the compensation package in the Services Agreement that the Company entered into with Jeremy P. Concanon on July 31, 2024.
On August 30, 2024, the Company issued 670,000 of the Company’s restricted Common Shares to Eric Bava, Chief Operating Officer of the Company, as part of the compensation package in the Employment Agreement that the Company entered into with Eric Bava on October 1, 2023 for his first year of service from October 1, 2023 to September 30, 2024.
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after June 30, 2024, up through the date the Company issued the audited consolidated financial statements.
NOTE 26 – RECLASSIFICATION
Certain prior year amounts have been reclassified to conform to the current year’s presentation. These reclassifications had no impact on reported income or losses and are considered to be immaterial.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None
Item 9A. 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 Annual Report on Form 10-K (the “Evaluation Date”). During the financial 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 June 30, 2024, 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 2023 and into 2024, the Company had undertaken tremendous enlargement and expansion, including restructuring of operations, 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, the 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; (4) management is dominated by three individuals without adequate compensating controls; and (5) lack of financial personnel with sufficient knowledge and experience with U.S. GAAP accounting guidelines and SEC regulations. The aforementioned material weaknesses were identified by our Chief Executive and Financial Officers in connection with the review of our financial statements as of June 30, 2024.
Management believes that the material weaknesses set forth above may have an immediate negative effect on our financial results because of our enlargement 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 after the expansion move was materialized.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. With the participation of our Chief Executive and Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2024, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework. Based upon such evaluation, our management concluded that we did not maintain effective internal control over financial reporting as of June 30, 2024, based on the COSO framework criteria because of the enlargement in operation. The management acknowledged that there is room for further improvement in maintaining effective internal control and shall take steps to implement management’s remediation initiatives during and after that expansion, This includes recruiting more management talents and professional staff, committing the entire organization to allocate necessary organizational resources, and cross-functional collaboration focused on strengthening the Company’s quality systems and operating culture.
This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers from the internal control audit requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.
In order to cure the foregoing material weakness, we have taken or are taking the following remediation measures:
| - | We have been working on recruitment of more management talents and professional staff to fill in the gap of shortage of personnel under enlargement of operation during and after this expansion move. With the enlargement of operation, the management needs to re-consider and re-evaluate the entire internal control reporting system and related risk and changes. |
| - | We have regularly offered our financial personnel trainings on internal control and risk management. Also, we have regularly provided trainings to our financial personnel on U.S. GAAP accounting guidelines. We plan to continue to provide trainings to our financial team and our other relevant personnel on the U.S. GAAP accounting guidelines applicable to our financial reporting requirements. |
| - | We have engaged with an external consultant to ascertain compliance with the regulatory reporting requirements. The Company utilizes this third-party independent contractor for the preparation of its financial statements. Although the financial statements and footnotes are reviewed by our management, we do not have a formal policy to review significant accounting transactions and the accounting treatment of such transactions. The third-party independent contractor is not involved in the day to day operations of the Company and may not be provided information from management on a timely basis to allow for adequate reporting/consideration of certain transactions |
We intend to complete the remediation of the material weaknesses discussed above as soon as practicable, but we can give no assurance that we will be able to do so. Designing and implementing an effective disclosure controls and procedures is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to devote significant resources to maintain a financial reporting system that adequately satisfies our reporting obligations. The remedial measures that we have taken and intend to take may not fully address the material weakness that we have identified, and material weaknesses in our disclosure controls and procedures may be identified in the future. Should we discover such conditions, we intend to remediate them as soon as practicable. We are committed to taking appropriate steps for remediation, as needed.
Officers’ Certifications
Appearing as exhibits to this Annual Report are “Certifications” of our Chief Executive Officer and Chief Financial Officer. The Certifications are required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the Annual Report contains information concerning the Controls Evaluation referred to in the Section 302 Certification. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
Changes in Internal Control Over Financial Reporting
The Company initiated its remediation of material weaknesses identified above, which steps were being implemented during the period covered by this Annual Report.
Item 9B. Other Information.
Not applicable.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
All Directors of the Company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of the Company are appointed by the Board of Directors and hold office until their death, resignation or removal from office. The Directors and executive officers, their ages, positions held, and duration as such, are as follows:
Name | | Position Held with the Company | | Age | | | Date First Elected or Appointed | |
| | | | | | | | |
Jack Wong | | Chief Executive Officer and Director | | | 41 | | | October 1, 2022 | |
Balakrishnan B S Muthu | | Treasurer, Chief Financial Officer, General Manager and Director | | | 62 | | | October 17, 2013 | |
Chen Ching | | Director | | | 64 | | | February 20, 2016 | |
Eric Bava | | Chief Operating Officer | | | 44 | | | October 1, 2023 | |
Jeremy P. Concannon | | Chief Growth Officer | | | 47 | | | August 1, 2024 | |
Liang Wai Keen | | Corporate Secretary | | | 53 | | | October 17, 2013 | |
Mr. Jack Wong, age 41, has been appointed Chief Executive Officer effective October 1, 2022. He has been serving as the CEO of The Wision Project Sdn Bhd, a subsidiary which was acquired by the Company in March 2022; his division has been instrumental in the Company’s transition to the carbon and CBD realm. Mr. Wong also previously worked with Fun Characters International Pte Ltd, which was then the master licensee for Disney Consumer Products, Inc. in the ASEAN countries of Singapore, Malaysia, Indonesia, and Thailand. The company Mr. Wong represented then was granted third party rights to reproduce and use certain Disney characters, Disney materials, and Disney trademarks in connection with manufacturing, distribution, and sale of Disney consumer products in the region. He then went on to build and run a seaside dive resort - Scuba Tiger, which is located 45 minutes away from one of the world’s best dive spots - Sipadan island, in Sabah, Borneo, where he hosted scuba divers from all over the world, until the pandemic hit. Mr. Wong graduated with a bachelor’s degree in Business Administration from Wichita State University in 2007.
Mr. Balakrishnan B S Muthu, age 62, has served our Chief Financial Officer, Treasurer, General Manager and Director since October 17, 2013. He also served as our President from February 20, 2016 to September 30, 2022. He has served as the General Manager of Champmark Sdn. Bhd., our subsidiary, since December 2007. Mr. Balakrishnan has more than 20 years of experience in financial auditing and business strategic planning. He has been involved in preliminary alluvial mine planning and initial development of Merapoh Project since 2008. Prior to joining us, Mr. Balakrishnan worked for Petroliam Nasional Berhad (Petronas) from February 1981 to February 1992 in various departments including the roles in compilation of seismic data (1981-1984), kiosk coordination (1984-1987) and upstream financial auditing (1987-1992). He has also worked as a consultant providing financial and technical services for several oil and gas projects. Mr. Balakrishnan brings his deep audit and financial and mining experiences to our board. Mr. Balakrishnan graduated with a Diploma in Business Administration from Association of Business Executives (ABE) UK in December 1989. He is also a Chartered Financial Planner (CFP).
Mr. Chen Ching, age 64, has served as our Director since February 20, 2016. He has served as the Managing Director of C&K Holdings Pte. Ltd., his investment holding company, since 1990. C&K Holdings. Pte Ltd was founded in Singapore in 1990 with diverse interests in Singapore, Malaysia, Taiwan, China, UK, Thailand and Vietnam. Its portfolio spans property development and management, furniture manufacturing, fuel product technology, public transportation, software development, commodity electronic trading platform, and gold mining. Mr. Chen has also served as a director of Dynamic Offshore Pte Ltd since April 18, 2011, Premier International Holdings Pte Ltd since June 23, 2011, and Dynamics Holding (Thailand) Co., Ltd. since August 23, 2013. Mr. Chen brings to our board his experience as a serial entrepreneur with many successes through his investment holding company C&K Holdings Pte Ltd. Mr. Chen graduated with a BA in Business Administration from Santa Clara University in 1982.
Mr. Eric Bava, age 44, is a highly accomplished business leader with a successful track record in various industries. Prior to joining the Company, Mr. Bava’s most recent endeavor as Co-Founder & Chief Operations Officer of Plantwise, he leveraged his extensive expertise in manufacturing and distribution to orchestrate seamless operations and elevate the standard of customer service, safeguarding the reputation of Plantwise's product line. Having excelled as a legal consultant, his entrepreneurial drive and relationship-building skills led him to undertake a bold business endeavor, in 2010, when he established his own wine distribution enterprise. Here, he adeptly navigated the intricacies of large-scale operations, optimized logistics, and orchestrated strategic marketing and sales campaigns, all guided by a singular mission – maximize profitability while ensuring product quality and customer satisfaction. In 2013, Bava embarked on a pioneering journey with the inception of King Extracts, a revolutionary cannabis brand rooted in California's medical landscape, later making waves in the burgeoning adult-use market. At the helm, he exercised comprehensive control over every facet of the business, from operations and manufacturing to distribution and sales. The brand's extraordinary ascent culminated in an acquisition by a Canadian corporation, solidifying his status as an esteemed luminary in the industry.
Mr. Jeremy P. Concannon, age 47, has begun his career in his family's business, progressing from entry-level roles to inside and outside sales. He played a key role in driving substantial growth, leading to the company's acquisition by a major strategic buyer. As Vice President of Sales, Jeremy led a high-performing team, managed the hiring and onboarding of top sales talent, and developed effective sales strategies. His leadership consistently delivered year-over-year growth and profitability, positioning the business as an industry leader. Jeremy is adept at developing and expanding sales teams, building cohesive, motivated groups focused on achieving sales success and company growth objectives.
Mr. Liang Wai Keen, age 53, has served as our Corporate Secretary since October 17, 2013. Mr. Liang started his career as a Project Officer with the Singapore Armed Forces before embarking into the private sector. At the Singapore Armed Forces, he was accountable for the timely delivery of project milestones for a S$100M defense system. He possesses project management and administrative experiences from his exposure to various industries, including corporate finance, mining and engineering fields. He joined Federal Capital Investment Ltd as a project manager in October 2006 till present, he was involved in management, project planning and program implementation. He was also responsible for interfacing and communicating directly with senior management and various professional parties. He graduated with an honors degree in Electrical Engineering from Nanyang Technological University, Singapore in June 1996.
Employment Agreements
Other than as set out below, we have no formal employment agreements with any of our employees, Directors or officers.
Family Relationships
There are no family relationships between any of our directors, executive officers and proposed directors or executive officers.
Involvement in Certain Legal Proceedings
No executive officer or director is a party in a legal proceeding adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our subsidiaries.
No executive officer or director has been involved in the last ten years in any of the following:
| · | Any bankruptcy petition filed by or against any business or property of such person, or of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; |
| | |
| · | Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| · | Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; |
| | |
| · | Being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
| | |
| · | Being the subject of or a party to any judicial or administrative order, judgment, decree or finding, not subsequently reversed, suspended or vacated relating to an alleged violation of any federal or state securities or commodities law or regulation, or any law or regulation respecting financial institutions or insurance companies, including but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail, fraud, wire fraud or fraud in connection with any business entity; or |
| | |
| · | Being the subject of or a party to any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act, any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
On September 5th, 2024, former director of Verde Renewables Inc., Mr. Yau Cho Soo, attempted to deposit an altered Verde Life check into the bank account of former employee Yan Fung without authorization, in violation of company protocols. The transaction was flagged by HomeBank, and the company immediately halted it. The check’s date had been altered from December 10th, 2023, to May 10th, 2024, to falsely suggest Mr. Soo still had signing authority. Both Mr. Soo and Ms. Fung were terminated on May 21st, 2024, for conduct detrimental to the company. On September 11th, 2024, the company, through its attorney, issued a legal letter to Mr. Soo, notifying him that it is aware of his criminal actions and has issued a final warning before considering legal action.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act requires our executive officers and Directors, and persons who own more than 10% of our Common Stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended June 30, 2024, and up to the date of this Current Report, our officers, Directors and greater than 10% percent beneficial owners have not filed any reports required by Section 16(a) of the Securities Exchange Act.
Code of Ethics
We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. The Company will provide to any person, without charge and upon request, a copy of the code of ethics. Any such request must be made in writing to the Company at 8112 Maryland Ave, Suite 400, St. Louis, Missouri 63105.
Board Committees
Our Board of Directors currently consists of three members, Jack Wong, Balakrishnan B S Muthu and Chen Ching. The Board held no formal meetings during the year ended June 30, 2024.
We have not yet established Compensation, Audit, and Nominations and Corporate Governance committees nor do we have an Audit Committee financial expert as defined in Item 407(d)(5) of Regulation S-K promulgated under the Securities Act. Currently, the functions of these committees are performed by our entire Board of Directors. We hope to establish these committees and appoint an Audit Committee financial expert as our business develops.
Nomination Process
As of June 30, 2024, we did not effect any material changes to the procedures by which our shareholders may recommend nominees to our Board of Directors. Our Board of Directors does not have a policy with regards to the consideration of any Director candidates recommended by our shareholders. Our Board of Directors has determined that it is in the best position to evaluate our company’s requirements as well as the qualifications of each candidate when the Board considers a nominee for a position on our Board of Directors. If shareholders wish to recommend candidates directly to our Board, they may do so by sending communications to the CEO of our company at the address on the cover of this annual report.
Audit Committee
Currently, the Company is developing a comprehensive Board of Directors and does not have an Audit Committee. The Company intends to appoint audit, compensation and other applicable committee members as it appoints individuals with pertinent expertise.
Audit Committee Financial Expert
Our Board of Directors does not have a member that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K.
Item 11. Executive Compensation.
Compensation Philosophy and Objectives
Our executive compensation philosophy is to create a long-term direct relationship between pay and our performance. Our executive compensation program is designed to provide a balanced total compensation package over the executive’s career with us. The compensation program objectives are to attract, motivate and retain the qualified executives that help ensure our future success, to provide incentives for increasing our profits by awarding executives when corporate goals are achieved and to align the interests of executives and long-term stockholders. The compensation package of our named executive officers consists of two main elements:
| 1. | base salary for our executives that is competitive relative to the market, and that reflects individual performance, retention and other relevant considerations; and |
| 2. | discretionary bonus awards payable in cash or equity and tied to the satisfaction of corporate objectives. |
Process for Setting Executive Compensation
Until such time as we establish a Compensation Committee, our Board is responsible for developing and overseeing the implementation of our philosophy with respect to the compensation of executives and for monitoring the implementation and results of the compensation philosophy to ensure compensation remains competitive, creates proper incentives to enhance stockholder value and rewards superior performance. We expect to annually review and approve for each named executive officer, and particularly with regard to the Chief Executive Officer, all components of the executive’s compensation. We process and factors (including individual and corporate performance measures and actual performance versus such measures) used by the Chief Executive Officer to recommend such awards. Additionally, we expect to review and approve the base salary, equity-incentive awards (if any) and any other special or supplemental benefits of the named executive officers.
The Chief Executive Officer periodically provides the Board with an evaluation of each named executive officer’s performance, based on the individual performance goals and objectives developed by the Chief Executive Officer at the beginning of the year, as well as other factors. The Board provides an evaluation for the Chief Executive Officer. These evaluations serve as the bases for bonus recommendations and changes in the compensation arrangements of our named executives.
Our Compensation Peer Group
We currently engage in informal market analysis in evaluating our executive compensation arrangements. As the Company and its businesses mature, we may retain compensation consultants that will assist us in developing a formal benchmark and selecting a compensation peer group of companies similar to us in size or business for the purpose of comparing executive compensation levels.
Program Components
Our executive compensation program consists of the following elements:
Base Salary
Our base salary structure is designed to encourage internal growth, attract and retain new talent, and reward strong leadership that will sustain our growth and profitability. The base salary for each named executive officer reflects our past and current operating profits, the named executive officer’s individual contribution to our success throughout his career, internal pay equity and informal market data regarding comparable positions within similarly situated companies. In determining and setting base salary, the Board considers all of these factors, though it does not assign specific weights to any factor. The Board generally reviews the base salary for each named executive officer on an annual basis. For each of our named executive officers, we review base salary data internally obtained by the Company for comparable executive positions in similarly situated companies to ensure that the base salary rate for each executive is competitive relative to the market.
Discretionary Bonus
The objectives of our bonus awards are to encourage and reward our employees, including the named executive officers, who contribute to and participate in our success by their ability, industry, leadership, loyalty or exceptional service and to recruit additional executives who will contribute to that success.
Summary Compensation Table
The following summary compensation table sets forth the aggregate compensation we paid or accrued during the fiscal years ended June 30, 2024 and 2023 to (i) our Chief Executive Officer (principal executive officer), (ii) our Chief Financial Officer (principal financial officer), (iii) our three most highly compensated executive officers other than the principal executive officer and the principal financial officer who were serving as executive officers on June 30, 2023, whose total compensation was in excess of $100,000, and (iv) up to two additional individuals who would have been within the two-other-most-highly compensated but were not serving as executive officers on June 30, 2023.
SUMMARY COMPENSATION TABLE |
Name and Principal Position | | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | | | All Other Compensation ($) | | | Total ($) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Jack Wong (1) | | | | | | | | | | | | | | | | | | | | | | | | | | |
Chief Executive Officer, and Director | | 2024 | | | 287,650 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 14,356 | | | | 302,006 | |
President, Chief Executive Officer, and Director | | 2023 | | | 264,088 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 13,800 | | | | 277,888 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balakrishnan B S Muthu (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Treasurer, Chief Financial Officer, General Manager, and Director | | 2024 | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
President, Treasurer, Chief Financial Officer, General Manager, and Director | | 2023 | | | 41,838 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 41,838 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Carl M. Craven (3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Director | | 2024 | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
Director | | 2023 | | | 26,010 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 26,010 | |
______________
(1) | Mr. Jack Wong was appointed President and Chief Executive Officer on October 1, 2022, and resigned as President on September 12, 2023. He was also appointed as Director on March 30, 2023, and Chairman of the Board of Directors on September 12, 2023. Subsequently, on January 23, 2024, Jack Wong stepped down from his position as Chairman of the Board. By Waiver and Consent of Shareholders, Jack Wong was re-elected Director of the Company, effective March 30, 2024. Mr. Wong was paid a total salary of $287,650 and $264,088 for the years ended June 30, 2024, and 2023 respectively. |
(2) | Mr. Balakrishnan B.S. Muthu was appointed Treasurer, Chief Financial Officer, General Manager and a Director of the Company on October 17, 2013. He was also appointed President of the Company on February 20, 2016, and resigned as President on October 1, 2022. By resolution of the Board, Balakrishnan B S Muthu was appointed Chairman of the Board to replace Joesph Ambrose Lee effective June 18, 2024. Mr. Balakrishnan was paid a total salary of $0 and $41,838 for the years ended June 30, 2024, and 2023 respectively. |
(3) | Mr. Craven was paid a total salary of $0 and $26,010 for the years ended June 30, 2024, and 2023 and resigned as Director on March 30, 2023. |
Narrative disclosure to Summary Compensation Table.
Our executive officers are not parties to written compensation agreements but have agreed orally to receive the compensation indicated in the above summary compensation table. The Company hopes to enter into written compensation agreements with each officer and Director in the future.
Equity Awards
Except as discussed above, there are no options, warrants or convertible securities outstanding. At no time during the last fiscal year with respect to any of any of our executive officers was there:
| · | any outstanding option or other equity-based award repriced or otherwise materially modified (such as by extension of exercise periods, the change of vesting or forfeiture conditions, the change or elimination of applicable performance criteria, or the change of the bases upon which returns are determined); |
| · | any waiver or modification of any specified performance target, goal or condition to payout with respect to any amount included in non-stock incentive plan compensation or payouts; |
| · | any option or equity grant; |
| · | any non-equity incentive plan award made to a named executive officer; |
| · | any nonqualified deferred compensation plans including nonqualified defined contribution plans; or |
| · | any payment for any item to be included under All Other Compensation in the Summary Compensation Table. |
Compensation of Directors
We do not have any agreements for compensating our directors for their services in their capacity as directors.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.
Compensation Risk Management
Our Board of directors and human resources staff conducted an assessment of potential risks that may arise from our compensation programs. Based on this assessment, we concluded that our policies and practices do not encourage excessive and unnecessary risk taking that would be reasonably likely to have material adverse effect on the Company. The assessment included our cash incentive programs, which awards non-executives with cash bonuses for punctuality. Our compensation programs are substantially identical among business units, corporate functions and global locations (with modifications to comply with local regulations as appropriate). The risk-mitigating factors considered in this assessment included:
| · | the alignment of pay philosophy, peer group companies and compensation amounts relative to local competitive practices to support our business objectives; and |
| · | effective balance of cash, short- and long-term performance periods, caps on performance-based award schedules and financial metrics with individual factors and Board and management discretion. |
Compensation Committee Interlocks and Insider Participation
We do not currently have a compensation committee and, for the year ended June 30, 2024, the compensation, if any, of our executive officers was recommended by our Chief Executive Officer and Chairman and such recommendations were approved by our Board of Directors. None of our executive officers currently serves as a member of the compensation committee or as a Director with compensation duties of any entity that has executive officer serving on our Board of Directors. None of our executive officers has served in such capacity in the past 12 months.
Compensation Committee Report
Our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis in this report with management. Based on its review and discussion with management, the Board of Directors recommended that the Compensation Discussion and Analysis be included in this Current Report. The material in this report is not deemed filed with the SEC and is not incorporated by reference in any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made on, before, or after the date of this Annual Report and irrespective of any general incorporation language in such filing.
Submitted by members of the Board of Directors:
Balakrishnan B. S. Muthu
Jack Wong
Chen Ching
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth, as of September 13, 2024, certain information with respect to the beneficial ownership of our Common shares by each shareholder known by us to be the beneficial owner of more than 5% of our Common shares, as well as by each of our current directors and executive officers as a group. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percentage of Class (1) | |
| | | | | |
Jack Wong (2) | | 5,237,139 common shares Direct ownership | | | 0.42 | % |
| | | | | | |
| | 130,928,478 common shares Indirect ownership through Borneo Resources Limited | | | 10.56 | % |
| | | | | | |
Balakrishnan B.S. Muthu (2) | | 7,095,233 common shares Direct ownership | | | 0.57 | % |
| | | | | | |
| | 500,000 common shares Indirect ownership through Banavees Resources | | | 0.04 | % |
| | | | | | |
Chen Ching (2) | | 12,341,608 common shares Direct ownership | | | 1.00 | % |
| | | | | | |
Eric Bava (2) | | 670,000 common shares Direct ownership | | | 0.05 | % |
| | | | | | |
Jeremy P. Concannon (2) | | 3,845,011 common shares Direct ownership | | | 0.31 | % |
| | | | | | |
Directors and Executive Officers as a Group (4) | | 160,617,469 common shares | | | 12.95 | % |
| | | | | | |
Taipan International Limited LEVEL 1, LOT 7, BLOCK F , SAGUKING COMMERCIAL BUILDING , JALAN PATAU-PATAU LABUAN F.T. 87000 MALAYSIA | | 392,785,434 common shares Direct ownership | | | 31.41 | % |
| | | | | | |
Borneo Oil Berhad 1ST & 2ND FLOOR , VICTORIA POINT JALAN OKK AWANG BESAR W.P. LABUAN 87007, MALAYSIA | | 168,775,944 common shares Direct ownership | | | 13.50 | % |
| | | | | | |
Borneo Resources Limited LEVEL 1, LOT 7 , BLOCK F , SAGUKING COMMERCIAL BUILDING , JALAN PATAU-PATAU LABUAN F.T. 87000, MALAYSIA | | 130,928,478 common shares Direct ownership | | | 10.47 | % |
| | | | | | |
Internet.com Ltd SUITE 4703, CENTRAL PLAZA, 18 HARBOUR ROAD, WANCHAI, HONG KONG | | 70,343,443 common shares Direct ownership | | | 5.63 | % |
_____________
(1) | Applicable percentage ownership is based on 1,240,374,345 shares of Common Stock outstanding as of September 13, 2024. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. |
| |
(2) | Jack Wong, our Chief Executive Officer and a Director, Balakrishnan B S Muthu, our Chief Financial Officer and a Director, Chen Ching, our director， Eric Bava, our Chief Operating Officer and Jeremy P. Concannon, our Chief Growth Officer have not filed their respective Forms 3. These Shareholders expect to file the forms in the near future. |
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Messrs. Wong and Balakrishnan, two of our three Directors, are not independent Directors as they also serve as our executive officers. Mr. Chen, one of our three Directors, is an independent Director as he does not hold any position as an executive officer.
Except as set forth below, there are no transactions during our two most recent fiscal years ended June 30, 2024, and 2023, or any currently proposed transaction, in which our Company was or to be participant and the amount exceeds the lesser of $120,000 or one percent of the average of our Company’s total assets at year end for our last two completed years, and in which any of our Directors, officers or principal stockholders, or any other related person as defined in Item 404 of Regulation S-K, had or have any direct or indirect material interest.
| | For the Years ended | |
| | June 30, | |
| | 2024 | | | 2023 | |
Related party transactions: | | | | | | |
Sales to: | | | | | | |
Borneo Eco Food Sdn Bhd (#1) | | $ | 4,071 | | | $ | 12,238 | |
BOC (#2) | | $ | - | | | $ | 2,062 | |
SB Resorts Sdn Bhd (#2) | | $ | 25,441 | | | $ | - | |
Rental income: | | | | | | | | |
Mr. Jack Wong (#3) | | $ | 60,000 | | | $ | 49,121 | |
Site expenses: | | | | | | | | |
Warisan Khidmat Sdn Bhd (#4) | | $ | - | | | $ | 9,776 | |
Professional services provided by: | | | | | | | | |
Warisan Khidmat Sdn Bhd (#4) | | $ | 17,905 | | | $ | 18,652 | |
Interest expense paid to: | | | | | | | | |
BOC (#2) | | $ | 13,536 | | | $ | 4,068 | |
Rental expense paid to: | | | | | | | | |
SB Resorts Sdn Bhd (#2) | | $ | 1,918 | | | $ | - | |
Related party balances: | | | |
| | June 30, | |
| | 2024 | | | 2023 | |
Advanced from related parties | | | | | | |
BOC (#2) | | $ | 70,677 | | | $ | 57,125 | |
Borneo Oil Berhad (“BOB”) (#1) | | $ | 3,007 | | | $ | 70,712 | |
Borneo Energy Sdn Bhd (#1) | | $ | 14,599 | | | $ | 14,770 | |
Taipan International Limited (#5) | | $ | 119,153 | | | $ | 119,153 | |
Victoria Capital Sdn Bhd (#6) | | $ | 93,270 | | | $ | 107,970 | |
UnitiMart Sdn Bhd (9#) | | $ | 7,782 | | | $ | - | |
Makin Teguh Sdn Bhd (9#) | | $ | 19,379 | | | $ | - | |
| | | | | | | | |
Trade payables | | | | | | | | |
Warisan Khidmat Sdn Bhd (#4) | | $ | 1,484 | | | $ | - | |
BOC (#2) | | $ | 462 | | | $ | 467 | |
J. Ambrose & Partners (#7) | | $ | 716 | | | $ | 724 | |
| | | | | | | | |
Advanced to related party | | | | | | | | |
Vetrolysis Limited (#8) | | $ | 100 | | | $ | 100 | |
| | | | | | | | |
Trade receivables | | | | | | | | |
Borneo Eco Food Sdn Bhd (#2) | | $ | - | | | $ | 901 | |
J. Ambrose & Partners (#7) | | $ | 250 | | | $ | 253 | |
SB Resorts Sdn Bhd (#2) | | $ | 25,291 | | | $ | - | |
| | | | | | | | |
Other payables | | | | | | | | |
J. Ambrose & Partners (#7) | | $ | 48,122 | | | $ | 48,650 | |
SB Supplies & Logistic Sdn Bhd (#1) | | $ | 5,936 | | | $ | 5,998 | |
SB Resorts Sdn Bhd (#2) | | $ | 2,120 | | | $ | - | |
Borneo Eco Food Sdn Bhd (#2) | | $ | 1,039 | | | $ | - | |
| | | | | | | | |
Promissory notes issued to related party | | | | | | | | |
BOC (#2) | | $ | 591,170 | | | $ | 487,790 | |
(#1) Borneo Oil Berhad (“BOB”) is ultimate holding company of Borneo Eco Food Sdn. Bhd., Borneo Energy Sdn Bhd and SB Supplies & Logistic Sdn Bhd, and held 13.2% of the Company’s issued and outstanding common stock as of June 30, 2024.
(#2) SB Resorts Sdn Bhd and Borneo Oil Corporation Sdn Bhd (“BOC”) are wholly owned subsidiaries of Borneo Oil Berhad (“BOB”) (holding 13.2% of the Company’s issued and outstanding common stock as of June 30, 2024). The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.
(#3) Mr. Jack Wong was the President and Chief Executive of the Company effective October 1, 2022. Effective March 30, 2023, Carl Craven voluntarily resigned from his position as Director of the Company. By resolution of the Board of Directors, Jack Wong was appointed Director of the Company for a one (1) year term, effective March 30, 2023. Jack Wong will hold the Board position formerly held by Carl Craven. On September 12, 2023, Jack Wong stepped down from his position as President of the Company, but remains as Chief Executive Office of the Company. By Waiver and Consent of Shareholders, Jack Wong was re-elected Director of the Company, effective March 30, 2024.
(#4) Warisan Khidmat Sdn. Bhd. is a company whose shareholdings is entirely held by a Director of Verde Malaysia.
(#5) Taipan International Limited is one of the shareholders of the Company, and held 32.5% of the Company’s issued and outstanding Common Stock as of June 30, 2024.
(#6) Victoria Capital Sdn. Bhd. is one of the shareholders of the Company and held 0.2% of the Company’s issued and outstanding Common Stock as of June 30, 2024.
(#7) Datuk Joseph Lee Yok Min, an indirect significant shareholder, is a partner of J. Ambrose & Partners. The advances received are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms. Mr. Joseph Ambrose Lee who was also appointed as a Director and Chairman of the Board of Directors of the Company effective January 23, 2024, is also the Managing Director of BOB. On February 6, 2024, by resolution of the Board of the Company, Joseph Ambrose Lee appointed as a member of the newly formed Management Committee of the Board. Subsequently on June 18, 2024, Joesph Ambrose Lee tendered his resignation as Director and Chairman of the Board and member of the Management Committee of the Company.
(#8) Encik Anuar bin Ismail, an indirect significant shareholder, is a director of Vetrolysis Limited.
(#9) Borneo Oil Berhad (“BOB”) is ultimate holding company of UnitiMart Sdn. Bhd., and held 13.2% of the Company’s issued and outstanding common stock as of June 30, 2024. Makin Teguh Sdn Bhd is associates of BOB.
Item 14. Principal Accounting Fees and Services.
The aggregate fees billed for the most recently completed fiscal year ended June 30, 2024, and 2023 for professional services rendered by the principal accountant for the audit of our annual financial statements on Form 10-K, and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
| | Year Ended June 30, 2024 | | | Year Ended June 30, 2023 | |
Audit Fees (1) | | $ | 49,382 | | | $ | 114,999 | |
Audit Related Fees (2) | | $ | - | | | $ | - | |
Tax Fees (3) | | $ | - | | | $ | - | |
All Other Fees (4) | | $ | - | | | $ | - | |
Total | | $ | 49,382 | | | $ | 114,999 | |
_____________
(1) | Audit fees consist of fees incurred for professional services rendered for the audit of our financial statements, for reviews of our interim financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements. |
(2) | Audit-related fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our financial statements, but are not reported under “Audit fees.” |
(3) | Tax fees consist of fees billed for professional services relating to tax compliance only. |
(4) | All other fees consist of fees billed for all other services. |
Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.
PART IV
Item 15. Exhibits, Financial Statement Schedules
Exhibits
In reviewing the agreements included as exhibits to this Form 10-K, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:
| • | should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; |
| • | have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; |
| • | may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and |
| • | were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. |
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Form 10-K and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
The following exhibits are included as part of this report:
_____________
(1) | Filed with the Securities and Exchange Commission on December 2, 2010 as an exhibit, numbered as indicated above, to the Registrant’s registration statement on Form S-1 (file no. 333-17093 5), which exhibit is incorporated herein by reference. |
(2) | Filed with the Securities and Exchange Commission on July 19, 2011 as an exhibit, numbered as indicated above, to the Registrant’s Form 8-K (file no. 333-170935), which exhibit is incorporated herein by reference. |
(3) | Filed with the Securities and Exchange Commission on September 28, 2011 as an exhibit, numbered as indicated above, to the Registrant’s Form 10-K (file no. 333-170935), which exhibit is incorporated herein by reference. |
(4) | XBRL Information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
| |
* | Filed herewith. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
| VERDE RESOURCES, INC. | |
| (Registrant) | |
| | | |
Dated: October 16, 2024 | By: | /s/ Jack Wong | |
| | Jack Wong | |
| | Chief Executive Officer and Director | |
| | (Principal Executive Officer) | |
Dated: October 16, 2024 | By: | /s/ Balakrishnan B S Muthu | |
| | Balakrishnan B S Muthu | |
| | Chief Financial Officer and Director | |
| | (Principal Executive Officer) | |
Dated: October 16, 2024 | By: | /s/ Chen Ching | |
| | Chen Ching | |
| | Director | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Dated: October 16, 2024 | By: | /s/ Jack Wong | |
| | Jack Wong | |
| | Chief Executive Officer and Director | |
| | (Principal Executive Officer) | |
| | | |
Dated: October 16, 2024 | By: | /s/ Balakrishnan B S Muthu | |
| | Balakrishnan B S Muthu | |
| | Chief Financial Officer, Treasurer, General Manager and Director | |
| | (Principal Financial Officer) | |
