Verde Resources, Inc 10-K for FY2022
Verde Resources, Inc. (VRDR)
About this 10-K
Verde Resources, Inc filed this 10-K on November 4, 2022, covering the fiscal year ended June 30, 2022 (FY2022).
Headline figures
Fiscal year ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $38.17K
- compared with $0 a year earlier
- Net loss
- $3.95M
- compared with a net loss of $793.01K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
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:
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(b) of the Act: Title of Each Class |
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Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
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.
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).
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.
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
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 $0.0935 (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 31, 2021, was $
Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
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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 “Company” or “VRDR”) was incorporated in the State of Nevada on April 22, 2010.
We currently operate in two lines of business: (i) gold exploration and mining through Champmark Sdn. Bhd., a Malaysian corporation (“CSB”); and (ii) production and distribution of renewable commodities through Verde Resources (Malaysia) Sdn. Bhd., a Malaysian corporation. We intend to develop operations in the distribution of THC-free cannabinoid products through Verde Life Inc., an Oregon corporation. The Company is also considering investment opportunities in other non-mining areas including the bioenergy industry and the food & beverage sector.
The Company conducts business operations in Pahang Malaysia through Champmark Sdn Bhd (“CSB”), a private limited liability company incorporated in Malaysia, and a 100% subsidiary Gold Billion Global Limited (“GBL”), a company incorporated under the laws of the British Virgin Islands.
The following diagram illustrates our current corporate structure:
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Corporate History and Structure
Verde Resources, Inc. was incorporated on April 22, 2010, in the State of Nevada, U.S.A.
The following persons were appointed to serve as directors and to assume the responsibilities of officers on October 17, 2013. Mr. Wu Ming Ding, as President and Director; Mr. Balakrishnan B S Muthu as Treasurer Chief Financial Officer, General Manager and Director; and Mr. Liang Wai Keen as Secretary.
On 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 Gold Billion Global Limited (“GBL”), 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.
GBL 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 GBL was agreed upon on October 18, 2013, and completed on October 25, 2013, subject to the approval of the Board of Directors and the audit of GBL.
Pursuant to the Assignment Agreement For The Assignment of Management Right in Merapoh Gold Mines in Malaysia (“Assignment Agreement”) dated October 25, 2013, and a Supplementary Agreement dated February 17, 2014 on further clarifications to the Assignment Agreement signed by the Company with Federal Mining Resources Limited, a company incorporated under the laws of the British Virgin Islands (“FMR”), the 100% interest of FMR in GBL was transferred to VRDR at a consideration of $1. This transaction was recorded as a reverse acquisition in accordance with ASC 805-40 “Reverse Acquisitions”. The legal parent was VRDR, which was the accounting acquiree, while GBL was the accounting acquirer. There was a 15% non-controlling interest of CSB after the acquisition. This transaction was accounted for as a recapitalization effected by a share exchange, wherein GBL with its 85% deemed subsidiary CSB was considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of the acquired entity have been brought forward at their book value and no goodwill has been recognized.
Prior to the acquisition of GBL, on July 1, 2013, FMR had assigned its rights and obligations pursuant to its 85% interest in Champmark Sdn Bhd (“CSB”) to GBL. According to ASC 810-05-08 A, CSB is a deemed subsidiary of GBL because due to the assignment, GBL had gained control of the Board of Directors of CSB, GBL’s rights to receive future benefits and residual value, and GBL’s obligation to absorb losses and provide financing for CSB. GBL had the power to direct the activities of CSB that most significantly impact CSB’s economic performance, and the obligation to absorb losses or receive benefits of CSB that could potentially be significant to CSB. Accordingly, GBL was the primary beneficiary of CSB. Under 810-23-42, 43, it was determined that CSB was de-facto agent and GBL, the principal, and consequently, CSB was considered as a deemed subsidiary of GBL beginning July 1, 2013.
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With the above transactions, GBL became a wholly-owned subsidiary of the Company and CSB, its 85% deemed indirect subsidiary.
On April 1, 2014, the Board of Directors of GBL notified Federal Mining Resources Limited (“FMR”) of the decision to exercise its option to purchase an 85% equity interest of Champmark Sdn Bhd (“CSB”) pursuant to Section 3.2.4 of the Management Agreement dated July 1, 2013, between GBL and FMR. This acquisition was completed on April 1, 2014, with consideration of $1, and GBL then became an 85% shareholder of CSB.
Effective February 20, 2016, Mr. Wu Ming Ding resigned from all of his positions as President and Director of the Company, with Mr. Balakrishnan B S Muthu being appointed President to fill the vacancy created. Effective February 20, 2016, Mr. Chen Ching was appointed Director of the Company and the entire Board of Directors 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 now consists of Mr. Balakrishnan B S Muthu, Mr. Chen Ching and Mr. Carl M. Craven. The Form 8-K announcing the change in officers and directors were filed with SEC on April 1, 2021.
On May 10, 2021, the Company announced the Sale and Purchase Agreement to acquire the assets of biofraction plant and the right to use intellectual property license in Sabah, Malaysia from Borneo Energy Sdn Bhd, in consideration of issuance of 166,666,667 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 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") with Taipan International Limited, an unrelated third party, The Wision Project Limited (formerly known as “Borneo Resources Limited”), an unrelated third party, and other unrelated third party individuals, in consideration of issuance of 321,500,000 shares of the Company’s restricted common stock at $0.03 per share, valued at $9,645,000, and the issuance of promissory notes with two-year term period 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, GBL entered into a Sale and Purchase of Assets Agreement (the “SPA Agreement”) to purchase a factory site from a Malaysian company, Segama Ventures Sdn Bhd (“Segama Ventures”), an unrelated third party , in order to expand the Company’s biofraction plant in Malaysia. Under the terms of the SPA Agreement, the acquisition is satisfied by cash payment of $1,600,000 in two instalments of $800,000 each, 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, GBL entered into a Cancellation of Sale and Purchase of Assets Agreement (“Cancellation Agreement”) for the cancellation of the Sale and Purchase of Assets Agreement to purchase the factory site from Segama Ventures that was signed on June 11, 2021.
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On June 17, 2021, we through our prospective indirect subsidiary Bio Resources Limited (“BRL”), a company incorporated under the laws of the Labuan, entered into a Shares Sale Agreement with Hermalisa Binti Mohamad Tahir (“Hermalisa”), a company incorporated under the laws of the Malaysia, to acquire the entire issued and paid-up share capital of Global Renewables. Under the terms of the Shares Sale Agreement, the consideration for the acquisition shall be satisfied in full by the payment of Malaysia Ringgit MYR25,000 (approximately US$6,032) upon the execution of the Shares Sale Agreement. The acquisition of Global Renewables was subject to the successful completion of the acquisition of the entire issued and paid-up share capital of BRL. Therefore, the acquisition of Global Renewables will dependent upon the successful acquisition of BRL.
On June 18, 2021, GBL entered into a Shares Sale Agreement with Lamax Gold Limited (“LGL”), a company incorporated under the laws of the British Virgin Islands, in relation to acquisition of the remaining 15% of the issued and paid-up share capital of CSB. Prior to this acquisition, GBL 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 GBL, and indirectly, of the Company.
On July 7, 2021, the Company through its wholly-owned subsidiary GBL entered into a Product Supply Agreement (the “Agreement”) with MRX Xtractors, LLC (“MRX”), a company incorporated in the state of Oregon. MRX is a market leader in commercial extraction systems for cannabis and hemp. The Agreement is a partnership between GBL and MRX to establish a purchase and supply arrangement that allows GBL to distribute white-label THC-free CBD products from MRX.
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.
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 “Lease Agreement”) to rent a 24-acre property in La Belle Missouri from Jon Neal Simmons and Betty Jo Simmon (the “Landlord”) to support carbon farming with biochar in Missouri. Under the Lease Agreement, the term of the lease will be for a period of two (2) years and the Company will have the right to renew the lease with a total of three renewal periods with each term being two years. The base rent is ten thousand dollars ($10,000) for the term, payable on the commencement of the Lease Agreement, together with a security deposit of $240,000. The Lease Agreement also grants the Company the exclusive right and option to purchase the premises together with all the right title and interest from the Landlord for a consideration of $490,000, 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 2, 2022, the Company, through GBL, entered into a Commercial Lease Agreement and Option to Purchase (“Lease Agreement”) for renting the factory site from Segama Ventures for a lease term of seven (7) years (“Lease Term”) at a monthly rental of MYR 36,000 ($8,571). The rental for the entire Lease Term amounts to the sum of MYR 3,024,000 ($720,000) (the “Lease Payment”) which shall be paid in advance upon commencement of the Lease Agreement together with a payment of security deposit for the sum of MYR 336,000 ($80,000) (the “Security Payment”). The refundable advance of $800,000 from the Cancellation Agreement above was utilized against the security deposit and payment of the advance rental. The Lease Agreement also provides GBL with an exclusive right and option to purchase the factory site together with all its right title and interest for a consideration of MYR 8,000,000 ($1,904,762) (the “Purchase Price”) or subject to a valuation report on the factory site by a Malaysian registered property valuer at any time during the period of two years from the date of the Lease Agreement. The Lease Payment and Security Payment shall be applied toward the Purchase Price upon GBL exercising the option to purchase. The Option to Purchase has not been exercised to date
On March 23, 2022, we, through Verde Resources (Malaysia) Sdn Bhd, entered into a Sale of Shares Agreement (“SSA”) with The Wision Project Sdn Bhd (“Wision”), a company incorporated under the laws of Malaysia, to acquire the one hundred percent (100%) of the issued and paid up ordinary shares in Wision. It was closed in May 2022.
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On April 19, 2022, we, through our wholly-owned subsidiary Verde Resources (Malaysia) Sdn Bhd (“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 “Agreement”) with BioDiverse Energies, LLC (“BDE”). Under the 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 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 Agreement to its wholly owned subsidiary Verde Renewables, Inc. (“VRI”) to assume from the Company all the obligations, responsibilities and liabilities associated with the 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 “Property”). The purchase price for the Property was $750,000.00 paid in cash at closing. The Company used cash on hand to purchase the Property. The Property was purchased from Yimin Huang and Claudine Huang (the “Sellers”). There were no material relationships between the Sellers and the Company or any of its affiliates. The Company plans on holding the property as an investment and using it for corporate housing.
On May 18, 2022, GBL, a company incorporated under the laws of the British Virgin Islands and a wholly-owned subsidiary of the Company, has changed its name to Verde Resources Asia Pacific Limited (“VRA”).
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 subsequent to the financial year end.
On October 12, 2022, we consummated the acquisition of Bio Resources Ltd (“BRL”), which 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.
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Stage of Operation
The Company has negotiated with Malaysia state agency PKNP on a 2-year lease for a new mining location that is about 5 km from the current Merapoh mine site. The leasing premium has been paid but the mining lease certificate will only be issued upon clearance from the Malaysia Forest Department, which is expected in mid 2023 subject to review on COVID-19 “Movement Control Order” by the Malaysian government.
For the current Site IV-1 of the Merapoh Gold Mine, our mining operation would focus on mining other resources such as limestones.
The Company believes that there are excellent growth opportunities for its business outside Malaysia. We periodically examine potential acquisitions of mining projects in other parts of the world.
As our business is affected by the fluctuations of gold prices, the Company may diversify its holdings by acquiring mining projects with potential for different mineral resources other than gold. We may look to other mining companies for potential collaboration to carry out exploration and exploitation works on other mineral resources in Southeast Asia regions. Apart from the mining industry, the Company has taken steps to look into investment opportunities in the non-mining areas that include the bioenergy industry and the food & beverage sector.
The Company is diversifying into the green industry with its acquisition of Bio Resources Ltd (“BRL”), the beneficial and/or registered proprietor of the 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 success of venturing into the green industry is dependent on the completion of the acquisition subject to auditing and due diligence exercise to ascertain the valuation of BRL.
Apart from the green industry, the Company is also working on a partnership with MRX Technologies, a market leader in commercial extraction systems for cannabis and hemp. The partnership includes an agreement for Verde Resources to white-label THC-free CBD products from MRX Technologies.
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Current Mining Property and Location
Merapoh Gold Mine (the “Mine”)
The Merapoh Gold Mine is located in northern Pahang, with convenient road access through Kelantan directly to the mine site and is about 400 kilometers away from Kuala Lumpur. The Mine is located in the middle of Malaysia’s gold metallogenic belt. The central gold belt is the source of the majority of the gold deposits in the peninsula. It lies between the western and eastern tin belts and extends from Kelantan (Sungai Pergau, Sungai Galas) to Pahang (Merapoh, Kuala Lipis, Raub), Terengganu (Lubuk Mandi), Negri Sembilan and Johor (Gunung Ledang).
Mine Area:
Site IV-1 of the Merapoh Gold Mine consists of a mining area of 400 acres with mining lease.
Location and Access:
The Merapoh Gold Mine is about 280km from Kuala Lumpur, and 50km from Kuala Lipis, the former state capital of Pahang, accessible via secondary paved highways with a new major highway under construction was completed in 2018/19. The geological coordinates of the mine are 101 ° 58 ′ , 4 ° 35 ′.
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Type of Claim:
Champmark Sdn Bhd, the subsidiary of Gold Billion Global Limited, is the Mining Contractor of the Mining Lease for Site IV-1 of the Merapoh Gold Mine under the Contract for Work with MMC Corporation Berhad, the Permit Holder of the Mining Lease.
Identifying Information of the Merapoh Gold Mine:
Mining Right:
Mining Lease No.: ML 01/2020
Operational Mining Scheme No.: PTG.PHG.(ML).16/015/08/23.2019
Concession Period: From June 14, 2021 to June 13, 2023.
Regional Geology:
The Malaysia Central Gold Belt runs along the entire backbone of Peninsular Malaysia, extending further to the north. It was formed between the Sibumasu block in the west and Manabor block in the east that runs along major mineral deposits in Thailand, Myanmar and China. The regional gold deposits were made of Epithermal deposits that formed in a series of volcanic environment, where the tensional fractures along the subduction zone allows the intrusion of mineral rich acidic magma within deep faults.
Rock Formations and Mineralization:
Site IV-1 of the Merapoh Gold Mine covers an area of 400 acres with mineralization structure being Permian limestone dominating the South-East portion, felsic volcanic tuff in the Western portion of the area and intrusive dacite rock to the north-west of the area. Tectonic contact within the sheer zone of creates epithermal mineralization, forming a mineral rich vein along the contact zone. The mineralized zone is made of highly altered tuffacaous rock with abundant pyrite dissemination and a moderately spaced quartz vein.
Work Completed and Present Condition:
Lode gold exploration on Site IV-1 of Merapoh Gold Mine has commenced since 2011 and still in progress with both in-house drilling team and third party drilling services running in parallel to expedite data collection to generate a comprehensive JORC compliant gold reserve report. There was no gold ore extraction since 2019 and the company has been engaged on the sales of wash sand extracted from Site IV-1 of Merapoh Gold Mine to customers in Malaysia from January 2021 to September 2021.
Equipment, Infrastructure and Other Facilities of the Merapoh Gold Mine:
Parlongs
These are basic production plants and the processing method employed five high powered manual water guns, angled water buffering control and 5-lane carpeted sluice with lateral barriers. The processing capacity is between 40 - 45 tons per hour.
OPS 1
This is a modified production plant and the processing method employed four high powered manual water guns, tapered rotating screen scrubber, angled water flow buffering and 3-lane carpeted sluice with lateral barriers. The processing capacity is between 30 - 35 tons per hour.
GS 150
This is a non-self-propelled mobile production plant and the processing method employed fixed spray guns, 6m x 2m rotating screen scrubber, 6-lane carpeted sluice with lateral barriers and conveyer belt pebble dispenser. The processing capacity is between 25 - 30 tons per hour.
GS 120
This is a self-propelled mobile plant with concentrator and the processing method employed fixed spray guns, 4m x 3m rotating screen scrubber, fixed screen, conveyer belt pebble dispenser and triple concentrator processor. The processing capacity is between 15 - 20 tons per hour.
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Description of Processing Facilities:
Process for removing ore concentrates from the ore body
1. | The ore body is transported to the treatment plants in vehicles capable of hauling huge, heavy loads. |
2. | The ore body is separated into Ore Type 1 Stockpile and Ore Type 2 Stockpile. |
3. | The monitor washes finer gold bearing material off larger rocks which is screened on an inclined coarse wire screen. |
4. | An excavator is used to turn over the rocks so wash is removed from all sides of the coarse material. |
5. | A monitor pushes the rock down the inclined coarse screen where the course is removed and stockpiled at the bottom. |
6. | Finer material passes through the mesh screen into the sluice system and runs over the sluice. |
7. | The carpets are removed and taken to refining facility for gold recovery. |
8. | A suction pipe recovers water of the fine tailings pond for use in the system. |
Refining of the concentrate
1. | The carpets holding concentrate from the sluice are brought to a shed in the camp site where the gold is refined. |
2. | The first stage of the refining is to wash the gold containing concentrate into large bins. This is pumped to a jig and shaking table. |
3. | Nuggets are handpicked from the coarse fraction and the fine fraction is amalgamated to remove the gold. After distillation, gold from the amalgam and the coarse are melted with flux and the gold is poured into small bars. |
Current State of Exploration:
As of the date of this report, the Merapoh Gold Mine property is without known reserves.
The Merapoh Gold Mine commenced exploratory operation in alluvia mining and achieved its first gold pour in July 2011. Through the years of operation, the Company has performed ongoing exercises to improve upon the matching of processing method with the types of ore in order to optimize cost to recovery ratio. In July 2013, production was outsourced to a reputable subcontractor, and developed a resource management system to match ore against processes to achieve the most cost efficient and highest recovery production procedure.
There was no gold ore extraction of the Merapoh Gold Mine and no gold concentrate sold for the twelve months ended June 30, 2022. We have generated other income from the sales of wash sand to customers in Malaysia.
Our revenues have been derived from gold production from the Merapoh Gold Mine, but currently there is no production from that mine and we are not certain there will be production in the future. We have generated other revenues through seeking new customers of wash sand sales during January to September 2021. Management continues to search for mining opportunities to generate revenues in the future.
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Subcontractors
In an effort to enhance the efficiency of mine operations at the Merapoh Gold Mine, Champmark Sdn Bhd (“CSB”) entered into an Operation Term Sheet (“OTS”) agreement in July 2013 to outsource the exploitation works of alluvial gold resources at Site IV-1 of the Merapoh Gold Mine to a subcontractor Borneo Oil & Gas Corporation Sdn Bhd (“BOG”). Throughout the financial years 2022 and 2021, BOG was a related party via its holding company Borneo Oil Berhad, a substantial shareholder of the Company.
BOG has the experience and local knowledge in managing the exploitation of alluvial gold at the Merapoh Gold Mine. The Company currently intends to continue to outsource the exploitation of alluvial gold at our mine site to BOG and will provide necessary disclosure when any significant agreements have been made with the sub-contractor in the future.
Employees
As of October 1, 2022, the Company has the following employees:
Senior Management |
|
| 8 |
|
Sales and Marketing |
|
| 3 |
|
Production |
|
| 17 |
|
Information System Technology |
|
| 4 |
|
Administration / Finance / HR |
|
| 4 |
|
Others |
|
| 2 |
|
Total |
|
| 38 |
|
30 and 8 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
The exploration and development of a mining prospect in Malaysia is subject to regulation by a number of governmental authorities. The regulations address many environmental issues relating to air, soil and water contamination and apply to many mining related activities including exploration, mine construction, mineral and ore extraction, ore milling, water use, waste disposal and use of toxic substances.
| ☐ | The Mineral Development Act of 1994 (“MDA”) defines the powers of the Federal Government on matters pertaining to the inspection and regulation of mineral exploration, mining and other related issues. The legislation is enforced by the Department of Minerals and Geosciences of Malaysia. |
|
|
|
| ☐ | The State Mineral Enactment (“SME”) provides that each State has its own legislation to govern mining activities within its jurisdiction. The State Mineral Enactment provides the States with the powers and rights to issue mineral prospecting and exploration licenses and mining leases and other related matters. |
|
|
|
| ☐ | Continental Shelf Act of 1966 is an Act relating to continental shelf of Malaysia, the exploration thereof and the exploitation of its natural resources. Application of license for mining activities on getting sand from sea-bed is regulated under this Act. |
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In addition, we are subject to regulations relating to labor standards, occupational health and safety, mine safety, general land use, export of minerals and taxation. Many of the regulations require permits or licenses to be obtained and the filing of certain notices, the absence of which or inability to obtain will adversely affect the ability for us to conduct our exploration, development and operation activities. The failure to comply with the regulations and terms of permits and licenses may result in fines or other penalties or in revocation of a permit or license or loss of a prospect.
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 2 Cityplace Drive, Suite 200, St. Louis, Missouri 63141, telephone number (323) 538 5799.
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.
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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.
Messrs. Balakrishnan B S Muthu, our current principal executive officer and financial officer, has extensive contacts and experience in the gold exploration and natural resource industry in Malaysia, 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, CSB, and its subsidiaries and VIEs, including the mining operations and negotiations for the sales of any gold concentrates extracted. We may not be able to retain the executive officers/managers for any given period of time. The loss of their 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 Malaysia to run our mining 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 Malaysia. 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.
Since our business consists of managing gold mining projects, the drop in the price of gold would negatively impact our asset values, cash flows, potential revenues and profits.
We plan to pursue opportunities in properties with gold mineralized material or reserves with exploration potential. Our potential future revenues are expected to be derived from the production and sale of gold from these properties, or from the sale of some of these properties. The value of any gold reserves or other mineralized materials, and the value of any potential mineral production will vary in direct proportion to changes in those mineral prices. The price of gold has fluctuated widely as a result of numerous factors beyond our control. The effect of these factors on the price of gold and other minerals, and therefore the economic viability of any of our projects, cannot accurately be predicted. Any drop in the price of gold and other minerals we may produce would negatively affect our asset values, cash flows and potential revenues and profits.
We may not be able to find commercially viable reserves.
Mineral exploration and development involve a high degree of risk and few properties that are explored are ultimately developed into producing mines. The reserve estimates, if any, are based only on prefeasibility studies that are inherited with the following drawbacks:
| - | Limited amount of drilling completed to date; |
| - | The process testing is limited to small pilot plants and bench scale testing; |
| - | Difficulty in obtaining expected metallurgical recoveries when scaling up to production scale from pilot plant scale; |
| - | Preliminary nature of the mine plans and processing concepts; |
| - | Preliminary nature of operating and capital cost estimates |
| - | Metallurgical flow sheets and recoveries still in development; |
| - | Limited history of prefeasibility studies that might be underestimating capital and operating costs. |
We cannot assure that any future mineral exploration and development activities will result in any discoveries of proven or probable reserves as defined by the SEC. Further, we cannot provide any assurance that, even if we discover commercial quantities of mineralization, a mineral property will be brought into commercial production. Development of our mineral property will follow only upon obtaining sufficient funding and satisfactory exploration results.
We may not be able to successfully compete with other mineral exploration and mining companies.
We compete with other mineral exploration and mining companies or individuals, including large, well established mining companies with substantial capabilities and financial resources in Malaysia, to research and acquire rights to mineral properties containing gold and other minerals. There is a limited supply of desirable mineral lands available for claim staking, lease or other acquisition in Malaysia. We do not know if we will be able to successfully acquire any prospective mineral properties against competitors with substantially greater financial resources than we have. If we cannot successfully acquire other mining properties to manage and explore and generally expand our business operations, our results of operations, financial condition and future revenues could be reduced and you could suffer a loss of any investment made in our shares.
We have a history of losses and we may not achieve or sustain profitability, particularly if we were to lose large contracts, and there is substantial doubt about our ability to continue as a going concern. Unless we increase our mining production or secure new sources, we may not be able to meet expenses and our business may fail
Our production of gold has steadily decreased over the past two years. This is a result of lower production of gold from our mine. Our revenues have been derived from gold production from the Merapoh Gold Mine, but currently there is no production from that mine and we are not certain there will be production in the future. We are also considering acquiring other mining properties to increase our overall production and income. However, if we are not successful in increasing production, either through new methods at our exiting mine, or by securing rights at other gold properties, we may not have sufficient revenues to maintain our business, and our business may fail.
Impact of recent COVID-19 outbreak has increased uncertainty of our business operation
The recent COVID-19 has affected our operation in Malaysia as the government announced stringent restrictions to lock down the country to stop further outbreak of the COVID-19 transmission. Many governmental departments that the company have dealing with are closed and not accepting new application. That has caused delay for the company in obtaining new mining lease. The Malaysia Government Movement Control Order has also disrupted our planning and allocation of our workforce. |
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.
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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.
Mining risks and insurance could negatively effect on our profitability.
The business of mining for gold is generally subject to a number of risks and hazards including environmental hazards, industrial accidents, labor disputes, unusual or unexpected geological conditions, pressures, cave-ins, changes in the regulatory environment, and natural phenomena such as inclement weather conditions, floods, blizzards and earthquakes. At the present time, we have in effect statutory required social insurance for all employees and mine workers. There is currently no other insurance in place for the mining site and management, and, even if we were to purchase additional insurance, we cannot be sure that such insurance would be available to us, or that we could afford the premiums. Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. In addition, insurance against risks such as environmental pollution or other hazards as a result of exploration and production is not generally available to companies in the mining industry on acceptable terms. We might also become subject to liability for pollution or other hazards which we may not be insured against, or which we may elect not to insure against, because of premium costs or other reasons. Any losses from any of these events may cause us to incur significant costs that could have a material adverse effect upon our financial performance and results of operations, which could negatively impact any investment you make in our shares.
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.
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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, 2022. These conditions raise substantial doubts about our ability to continue as a going concern. Our plan for continuing as a going concern included improving our profitability, and obtaining additional debt financing, loans from existing directors and shareholders and private placements of capital stock for additional funding to meet our operating needs. There can be no assurance that we will be successful in our plans described above or in attracting equity or alternative financing on acceptable terms, or if at all. 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 two 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.
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Our former auditor is not inspected by the Public Company Accounting Oversight Board and as such, our investors are deprived of the benefits of such inspection.
As a public company with securities quoted on the OTQB, we are required to have our financial statements audited by an independent registered public accounting firm registered with the PCAOB. A requirement of being registered with the PCAOB is that if requested by the SEC or PCAOB, such accounting firm is required to make its audits and related audit work papers be subject to regular inspections to assess its compliance with the applicable professional standards. Since our former auditor is located in Hong Kong and China, a jurisdiction where the PCAOB has been unable to conduct inspections without the approval of the Chinese authorities due to various state secrecy laws and the revised Securities Law, the PCAOB currently does not have free access to inspect the work of our auditor. This lack of the PCAOB inspections in China prevents the PCAOB from fully evaluating audits and quality control procedures of our former auditor.
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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.
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Item 2. Properties.
Our corporate and executive office is located at 2 Cityplace Drive, Suite 200, St. Louis, Missouri 63141, telephone number (323) 538-5799. 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 | Lease # | NA | Factory Site |
St. Louis Missouri | Lease | Expires May 1, 2023 | Corporate Headquarters |
Chesterfield, Missouri | Own | NA | Corporate Housing |
Jalan Silam, Sabah Malaysia | Rent | NA | Factory Site |
Pahang, Malaysia | Lease | Expires June 13, 2023 | Merapoh Gold Mine |
# - Exercised Option to Purchase on September 27, 2022 and accordingly became an owned property.
Item 3. Legal Proceedings.
None
Item 4. Mine Safety Disclosures.
Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“ Dodd-Frank Act “), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic and annual reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities under the regulation of the Federal Mine Safety and Health Act of 1977. The Company did not have any mines in the United States during the year ended June 30, 2022.
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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 OTCBB for the most recent two (2) fiscal years, based on our fiscal year end June 30, 2022. 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 |
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| Low |
| ||
|
|
|
|
|
|
| ||
June 30, 2021 |
| $ | 0.14 |
|
| $ | 0.02 |
|
September 30, 2021 |
| $ | 0.08 |
|
| $ | 0.045 |
|
December 31, 2021 |
| $ | 0.04 |
|
| $ | 0.01 |
|
March 31, 2022 |
| $ | 1.00 |
|
| $ | 0.01 |
|
June 30, 2022 |
| $ | 0.14 |
|
| $ | 0.02 |
|
September 30, 2022 |
| $ | 0.08 |
|
| $ | 0.045 |
|
As of October 12, 2022, we had 108 shareholders of record of our common stock and 820,688,055 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, 2022, 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, 2022 except the following transaction.:
On May 10, 2021, the Company announced the Sale and Purchase Agreement to acquire the assets of biofraction plant and the right to use intellectual property license in Sabah, Malaysia from Borneo Energy Sdn Bhd, in consideration of issuance of 166,666,667 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.
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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 with Taipan International Limited, an unrelated third party, The Wision Project Limited (formerly known as “Borneo Resources Limited”), an unrelated third party, and other unrelated third party individuals, in consideration of issuance of 321,500,000 shares of the Company’s restricted common stock at $0.03 per share, valued at $9,645,000, and the issuance of promissory notes with two-year term period 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. However, on January 20, 2022, the Company reached a mutual agreement to enter into a Supplement to Promissory Note with each of the 17 lenders (“Lenders”) of the promissory notes that were issued on May 12, 2021, to convert the total principal loan amount of $20,355,000 into shares of the Company’s restricted common stock priced at $0.0611 per share, which represents the last ninety (90) days’ volume weighted average price (VWAP) as of the market closing of January 19, 2022. The Company and the Lenders further agreed that the actual date for the allotment and issue of new shares of the Company’s restricted common stock shall be confirmed in a subsequent written agreement. The acquisition of Bio Resourced Limited was closed on October 12, 2022.
On April 25, 2022, the Company issued a total of 8,445,946 restricted common shares for $1,000,000 at $0.1184 per share to two non-US shareholders.
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, 2022.
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.
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Results of Operations
The following table provides selected financial data about our company for the year ended June 30, 2022 and June 30, 2021.
Statement of Operation |
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|
| June 30, |
|
|
|
| ||||||||
|
| 2022 |
|
| 2021 |
|
| Change |
| |||||||
|
| USD |
|
| USD |
|
| USD |
|
| % |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
| $ | 38,169 |
|
| $ | - |
|
|
| 38,169 |
|
| $ | 100 | % |
Cost of revenue |
|
| (145,356 | ) |
|
| - |
|
|
| (145,356 | ) |
|
| 100 | % |
Gross loss |
|
| (107,187 | ) |
|
| - |
|
|
| (107,187 | ) |
|
| 100 | % |
Operating expenses |
|
| (1,905,301 | ) |
|
| (574,174 | ) |
|
| (1,331,127 | ) |
|
| 231.8 | % |
Goodwill impairment |
|
| (4,879 | ) |
|
| - |
|
|
| (4,879 | ) |
|
| 100.0 | % |
Loss from operation |
|
| (2,017,367 | ) |
|
| (574,174 | ) |
|
| (1,443,193 | ) |
|
| 251.4 | % |
Interest expense |
|
| (1,949,151 | ) |
|
| (245,392 | ) |
|
| (1,703,759 | ) |
|
| 694.3 | % |
Other income |
|
| 12,104 |
|
|
| 26,559 |
|
|
| (14,455 | ) |
|
| (54.4 | )% |
Net loss before income tax |
|
| (3,954,414 | ) |
|
| (793,007 | ) |
|
| (3,161,407 | ) |
|
| 398.7 | % |
Provision of Income Tax |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
NET LOSS |
|
| (3,954,414 | ) |
|
| (793,007 | ) |
|
| (3,161,407 | ) |
|
| 398.7 | % |
Net loss attributable to non-controlling interests |
|
| 6,979 |
|
|
| 18,158 |
|
|
| (11,179 | ) |
|
| (61.6 | )% |
Net loss attributable to shareholders of the group |
| $ | (3,947,435 | ) |
| $ | (774,849 | ) |
|
| (3,172,586 | ) |
|
| 409.4 | % |
Revenue
The revenue derived from the sales production and distribution of renewable commodities of gold mineral to customers in Malaysia. We have generated $38,169 and $0 revenues for the years ended June 30, 2022 and 2021, respectively, and have recorded a gross loss of 107,187 and $0 for the year ended June 30, 2022 and 2021.
Cost of revenue
We incurred cost of revenue of $145,356 in the production and distribution of renewable commodities during the year ended June 30, 2022. No cost of revenue was incurred during the year ended June 30, 2021.
Operating Expenses
Operating expenses comprised mainly of salaries, office costs, legal and professional fees and travelling expenses. We have incurred $1,905,301 and $574,174 in operating expenses through June 30, 2022 and June 30, 2021. Operating expenses increased by 231.8%, or $1,331,127, primarily due to increase of professional fees charged for the potential acquisition and increase of directors’ emolument for the year ended June 30, 2022.
Interest expense
The Company recorded interest expense of $1,948,086 and $245,392 on the promissory notes for the years ended June 30, 2022 and 2021, respectively. Lease interest amounted to $1,065 and $0 for the years ended June 30, 2022 and 2021, respectively.
Other income
We have other income of $12,104 and $26,559 for the year ended June 30, 2022 and 2021. We generated other income from the sales of wash sand to customers in Malaysia since January 2021 to September 2021.
Net loss
We recorded a net loss of $3,954,414 and $793,007 for the years ended June 30, 2022 and 2021, respectively.
Plan of Operation
Our Industry and Principal Markets
The report by BMI Research states that global gold mine output growth will pick up in the next few years, supported by higher gold prices and solid projects in key countries. BMI Research forecasts global gold production to increase from 105moz in 2018 to 125moz by 2026, averaging 2.3% annual growth. While a steady pace of growth, this represents a slight deceleration in growth rate compared with the previous eight-year average of 3.1%.
Subcontractor
In an effort to enhance the efficiency of mine operations at the Merapoh Gold Mine, Champmark Sdn Bhd (“CSB”) entered into an Operation Term Sheet (“OTS”) agreement in July 2013, to outsource the exploitation works of alluvial gold resources at Site IV-1 of the Merapoh Gold Mine to subcontractor, Borneo Oil & Gas Corporation Sdn Bhd (“BOG”), who throughout the financial years 2022 and 2021 was a related party via its holding company Borneo Oil Berhad, a substantial shareholder of the Company..
BOG has the experience and local knowledge in managing the exploitation of alluvial gold at the Merapoh Gold Mine. The Company currently intends to continue to outsource the exploitation of alluvial gold at our mine site to BOG and will provide necessary disclosure when any significant agreements have been made with the sub-contractor in the future.
Expansion Plans
The Company is in the process of negotiating with Malaysia state agency PKNP on a 2-year lease for a new mining location that is about 5 km from the current Merapoh mine site. The leasing premium has been paid but the mining lease certificate will only be issued upon clearance from the Malaysia Forest Department, which is expected in mid 2023 subject to review on COVID-19 “Movement Control Order” by the Malaysian government.
For the current Site IV-1 of the Merapoh Gold Mine, our mining operation would focus on mining other resources such as limestones.
The Company believes that there are excellent growth opportunities for its business outside Malaysia. We are constantly exploring for potential acquisition of mining projects in other parts of the world.
| 22 |
| Table of Contents |
As our business is affected by the fluctuations of gold prices, the Company intends to diversify its product line by acquiring mining projects with potential for different mineral resources other than gold. We continue to hold discussions with other mining companies for potential collaboration to carry out exploration and exploitation works on other mineral resources in Southeast Asia regions. Apart from the mining industry, the Company is taking steps to look into investment opportunities in the non-mining areas that include the bioenergy industry and the food & beverage sector.
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.
Apart from the green industry, the Company is also working on a partnership with MRX Technologies, a market leader in commercial extraction systems for cannabis and hemp. The partnership includes an agreement for Verde Resources to white-label THC-free CBD products from MRX Technologies.
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 $0.4 million as of June 30, 2022, and $2.1 million as of June 30, 2021
The following table provides selected cash flow data about our company for the year ended June 30, 2022 and 2021.
Cash Flow Date |
| June 30, 2022 |
|
| June 30, 2021 |
| ||
|
|
|
|
|
|
| ||
Net cash used in operating activities |
| $ | (1,595,961 | ) |
| $ | (126,011 | ) |
Net cash used in investing activities |
| $ | (1,348,823 | ) |
| $ | (905,575 | ) |
Net cash generated from financing activities |
| $ | 989,594 |
|
| $ | 3,100,000 |
|
Effect of exchange rate changes on cash and cash equivalents |
| $ | 256,485 |
|
| $ | 25,181 |
|
Net increase in cash and cash equivalents |
| $ | (1,698,705 | ) |
| $ | 2,093,595 |
|
Cash and cash equivalents at beginning of year |
| $ | 2,117,622 |
|
| $ | 24,027 |
|
Cash and cash equivalents at end of year |
| $ | 418,917 |
|
| $ | 2,117,622 |
|
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 intangible assets, asset impairments, and stock-based compensation, and the effects of changes in operating assets and liabilities. The increase in cash used in operating activities for the year ended June 30, 2022 as compared to 2021 was primarily due to higher net loss adjusted for non-cash interest expense of promissory notes and the increase of other deposits and prepayments.
Net Cash Used In Investing Activities.
For the year ended June 30, 2022, net cash used for investing activities consisted primarily of $1.1 million of expenditures for property, plant, and equipment.
For the year ended June 30, 2021, net cash used for investing activities consisted primarily of $0.9 million from the payment of acquisition of equity interest, right of use assets and property and equipment.
Net Cash Generated From Financing Activities.
For the year ended June 30, 2022, net cash generated from financing activities included $1.0 million for the issuance of our common stock under private placement.
For the year ended June 30, 2021, net cash generated from financing activities included $3.1 million for the issuance of our common stock under private placement.
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.
| 23 |
| Table of Contents |
Item 8. Financial Statements and Supplementary Data
VERDE RESOURCES, INC.
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2022
| F-1 |
| Table of Contents |
| J&S ASSOCIATE (AF002380) (Registered with US PCAOB and Malaysia MIA) Block C-6-3, Megan Avenue 1, 189 Off Jalan Tun Razak, 50400, Kuala Lumpur, Malaysia. | Tel : +6019 280 2989 Email : info@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, 2022, and the related consolidated statement of operations and comprehensive income, stockholders’ equity (deficit), and cash flows for the year ended June 30, 2022, 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, 2022, and the results of its operations and its cash flows for the year ended June 30, 2022, 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 $10,357,920 as of June 30, 2022. 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 and that: (1) relate to accounts or disclosures that are material to the financial statements, and (2) involved especially challenging, subjective, or complex judgements.
We determined that there are no critical audit matters.
/s/
Certified Public Accountants
Firm ID:
We have served as the Company’s auditor since 2022.
November 4, 2022
F-2 |
| Table of Contents |
| 中正達會計師事務所 Centurion ZD CPA & Co.Certified Public Accountants (Practising) Unit 1304, 13/F., Two Harbourfront, 22 Tak Fung Street, Hunghom, Hong Kong 香港紅磡德豐街22號海濱廣場二期13樓1304室 Tel : (852) 2126 2388 Fax: (852) 2122 9078 |
Report of Independent Registered Public Accounting Firm
To: | The board of directors and stockholders of |
| Verde Resources, Inc. (“the Company”) |
Opinion of the Financial Statements
We have audited the accompanying consolidated balance sheet of Verde Resources, Inc. and its subsidiaries (the “Company”) as of June 30, 2021, and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at June 30, 2021, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Consideration of 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 to the consolidated financial statements, the Company has suffered recurring net losses, and records an accumulated deficits as of June 30, 2021. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated 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 audits 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 consolidated 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 audits, 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 audits included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. 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.
Basis of Presentation and Going Concern - Disclosure
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has an accumulated deficit from recurring net losses as of June 30, 2021. The Company has contractual obligations such as commitments for acquisition of property, plant and equipment, and subsidiaries and promissory notes (collectively “obligations”). Currently management’s forecasts and related assumptions illustrate their ability to meet the obligations through management of expenditures and, if necessary, obtaining additional debt financing, loans from existing directors and shareholders and private placements of capital stock for additional funding to meet its operating needs. Should there be constraints on the ability to access such financing, the Company can manage cash outflows to meet the obligations through reductions in capital expenditures and other operating expenditures.
We identified management’s assessment of the Company’s ability to continue as a going concern as a critical audit matter. Management made judgments to conclude that it is probable that the Company’s plans will be effectively implemented and will provide the necessary cash flows to fund the Company’s obligations as they become due. Specifically, the judgments with the highest degree of impact and subjectivity in determining it is probable that the Company’s plans will be effectively implemented included its ability to reduce capital expenditures and other operating expenditures, its ability to access funding from the capital market and its ability to obtaining loans from existing directors and shareholders. Auditing the judgments made by management required a high degree of auditor judgment and an increased extent of audit effort.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included the following, among others: (i) evaluating the probability that the Company will be able to access funding from the capital market; (ii) evaluating the probability that the Company will be able to reduce capital expenditures and other operating expenditures if required and (iii) evaluating the probability that the Company will be able to obtain the loan from existing directors and shareholders.
/s/ Centurion ZD CPA & Co.
Centurion ZD CPA & Co.
We have served as the Company’s auditor since 2014 to 2022.
Hong Kong, China
November 12, 2021
F-3 |
| Table of Contents |
VERDE RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
|
| As of June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
ASSETS |
|
|
|
|
|
| ||
Current asset: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Accounts receivable |
|
|
|
|
|
| ||
Inventories |
|
|
|
|
|
| ||
Amounts due from related parties |
|
|
|
|
|
| ||
Deposits and prepayments |
|
|
|
|
|
| ||
Other receivables |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
|
|
|
| ||
Right of use assets, net |
|
|
|
|
|
| ||
Mining rights |
|
|
|
|
|
| ||
Security deposit |
|
| |
|
|
| |
|
Deposit paid for acquisition of subsidiaries |
|
|
|
|
|
| ||
Deposit paid for acquisition of property and equipment |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total non-current assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILTIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
| $ |
|
| $ |
| ||
Accrued liabilities and other payables |
|
|
|
|
|
| ||
Lease liabilities |
|
|
|
|
|
| ||
Promissory notes |
|
| |
|
|
| |
|
Amounts due to related parties |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
Lease liabilities |
|
|
|
|
|
| ||
Promissory notes |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total non-current liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Preferred stock, $ |
|
|
|
|
|
| ||
Common stock, $ |
|
|
|
|
|
| ||
Additional paid-in capital |
|
|
|
|
|
| ||
Accumulated other comprehensive income |
|
|
|
|
|
| ||
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
| ||
Non-controlling interest |
|
|
|
|
| ( | ) | |
Stockholders’ equity |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ |
|
| $ |
| ||
See accompanying notes to consolidated financial statements.
| F-4 |
| Table of Contents |
VERDE RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(Currency expressed in United States Dollars (“US$”))
|
| Years ended June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Revenue, net |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
Gross loss |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
| ( | ) |
|
| ( | ) |
Goodwill impairment |
|
| ( |
|
|
| |
|
Total operating expenses |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATION |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
| ( | ) |
|
| ( | ) |
Other income |
|
|
|
|
|
| ||
Total other expense, net |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME TAXES |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
NET LOSS |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Net loss attributable to noncontrolling interest |
|
| ( | ) |
|
| ( | ) |
Net loss attributable to Verde Resources Inc., shareholders |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
- Foreign currency adjustment income /(loss) |
|
|
|
| ( | ) | ||
Less: other comprehensive loss attributable to non-controlling interest |
| ( |
|
|
| ( | ) | |
Add: other comprehensive income (loss) attributable to Verde Resources Inc., shareholders |
|
|
|
| ( | ) | ||
|
|
|
|
|
|
|
|
|
COMPREHENSIVE LOSS |
| $ | ( |
|
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Net loss per share |
| $ | ( | ) |
| $ | ( | ) |
- Basic |
| $ | ( | ) |
| $ | ( | ) |
- Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
- Basic |
|
|
|
|
|
| ||
- Diluted |
|
|
|
|
|
| ||
See accompanying notes to consolidated financial statements.
| F-5 |
| Table of Contents |
VERDE RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed in United States Dollars (“US$”))
|
| Years ended June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Cash flows from operating activities: |
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
|
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|
|
Depreciation of property and equipment |
|
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|
|
| ||
Amortization |
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|
| ||
Goodwill |
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| |
|
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| |
Stock-based compensation |
|
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|
|
| ||
Finance cost interest element of promissory notes (non-cash) |
|
|
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|
| ||
Lease interest expense |
|
| |
|
|
| |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| ( | ) |
|
|
| |
Other deposits and prepayments |
|
| ( | ) |
|
|
| |
Extractive activities mining |
|
| ( |
|
|
| |
|
Other receivables |
|
|
|
|
| ( | ) | |
Inventories |
|
| ( | ) |
|
|
| |
Accounts payables |
|
|
|
|
|
| ||
Accrued liabilities and other payables |
|
|
|
|
| ( | ) | |
Advanced from sub-contractor and related parties |
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|
| ||
Net cash used in operating activities |
|
| ( | ) |
|
| ( | ) |
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|
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|
Cash flows from investing activities: |
|
|
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|
|
|
|
Acquisition of right of use assets |
|
| - |
|
|
| (62,754 | ) |
Advanced to related parties |
|
|
|
| ( | ) | ||
Deposit paid for equity acquisition and property and equipment |
|
| ( | ) |
|
| ( | ) |
Acquisition of equity interest from non-controlling interests |
|
| ( |
|
|
|
|
|
Purchase of property and equipment |
|
| ( | ) |
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| |
Net cash used in investing activities |
|
| ( | ) |
|
| ( | ) |
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|
Cash flows from financing activities: |
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|
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|
Repayment to lease liabilities |
|
| ( | ) |
|
|
| |
Lease interest paid |
|
| ( |
|
|
| - |
|
Proceeds from issuance of common stock |
|
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|
|
| ||
Net cash provided by financing activities |
|
|
|
|
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| ||
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|
|
|
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|
|
Net change in cash and cash equivalent |
|
| ( | ) |
|
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| |
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
BEGINNING OF YEAR |
|
|
|
|
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| ||
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|
|
|
|
|
|
END OF YEAR |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid for income taxes |
| $ |
|
| $ |
| ||
Cash paid for interest |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
| ||
Issuance of common stock |
|
|
|
|
|
| ||
- Offset accounts payable |
| $ |
|
| $ |
| ||
- Offset advanced from related parties |
| $ |
|
| $ |
| ||
- Deposit paid for acquisition of subsidiaries |
| $ |
|
| $ |
| ||
- Deposit paid for acquisition of property and equipment |
| $ |
|
| $ |
| ||
See accompanying notes to consolidated financial statements.
| F-6 |
| Table of Contents |
VERDE RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
|
| Common stock |
|
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| |||||||||||||||||
|
| No. of shares |
|
| Amount |
|
| Common stock to be issued |
|
| Additional paid-in capital |
|
| Accumulated other comprehensive income (loss) |
|
| Accumulated deficit |
|
| Non-controlling interest |
|
| Total stockholders’ equity |
| ||||||||
|
|
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|
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| ||||||||
Balance as of July 1, 2020 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |||||
|
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Shares issued for debt repayment and acquisition |
|
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Shares issued to directors |
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Shares issued to service providers |
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Shares issued in private placement |
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|
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| ||||||||
Net loss for the year |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | ||||
Foreign currency translation adjustment |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) | ||||
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2021 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of July 1, 2021 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
| ||||||
|
|
|
|
|
|
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|
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|
|
|
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|
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|
Shares issued for acquisition |
|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
| ||||||||
Stock based compensation |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| |||||||
Shares to be issued for private placement |
|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
| ||||||||
Accretion of interest |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||||
Net loss for the year |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| (3,954,414 | ) | ||||
Foreign currency translation adjustment |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2022 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
| |||||||
See accompanying notes to consolidated financial statements.
| F-7 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(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 two lines of business: (i) gold exploration and mining through Champmark Sdn. Bhd., a Malaysian corporation (“CSB”); and (ii) production and distribution of renewable commodities through Verde Resources (Malaysia) Sdn. Bhd., a Malaysian corporation. We intend to develop operations in the distribution of THC-free cannabinoid products through Verde Life Inc., an Oregon corporation. We are also considering investment opportunities in other non-mining areas including the bioenergy industry, real properties and the food & beverage sector.
The Company currently is engaged in the sale of gold mineral, distribution of THC-free cannabinoid (CBD) products, production and distribution of renewable commodities and real property holding.
As of June 30, 2022, the Company has the following subsidiaries:-
Name of subsidiary |
|
Place of incorporation |
| Principal activities and place of operation |
| Effective interest held |
|
|
|
|
|
|
|
Gold Billion Global Limited (“GBL”) |
| British Virgin Islands |
| Investment holding |
| |
|
|
|
|
|
|
|
Verde Resources (Malaysia) Sdn Bhd |
| Malaysia |
| Provision of consultation service and distribution of renewable agricultural commodities |
| |
|
|
|
|
|
|
|
Verde Renewables, Inc. (“VRI”) |
| State of Missouri, U.S.A. |
| Management of a processing and packaging facility |
| |
|
|
|
|
|
|
|
Verde Life Inc. (“VLI”) |
| State of Oregon, U.S.A. |
| Distribution of THC-free cannabinoid (CBD) products |
| |
|
|
|
|
|
|
|
Champark Sdn Bhd |
| Malaysia |
| Mining of minerals |
| |
|
|
|
|
|
|
|
The Wision Project Sdn Bhd |
| Malaysia |
| Digital innovation, marketing & consulting firm provides PR, Branding, influencer marketing, event management and media relations services |
| |
|
|
|
|
|
|
|
Verde Estates LLC (“VEL”) |
| State of Missouri, U.S.A. |
| Holding real property |
|
The Company and its subsidiaries are hereinafter referred to as (the “Company”).
During the years ended June 30, 2022 and 2021, there are the major transactions, as below:
On May 10, 2021, the Company announced the Sale and Purchase Agreement to acquire the assets of biofraction plant and the right to use intellectual property license in Sabah, Malaysia from Borneo Energy Sdn Bhd, in consideration of issuance of
The Company also announced the Share Sale Agreement on May 12, 2021 for the acquisition of the entire issued and paid-up share capital of Bio Resources Limited from Taipan International Limited, an unrelated third party, The Wision Project Limited (formerly known as “Borneo Resources Limited”), an unrelated third party, and other unrelated third party individuals, in consideration of an issuance
On July 7, 2021, the Company through its wholly-owned subsidiary GBL entered into a Product Supply Agreement (the “Agreement”) with MRX Xtractors, LLC (“MRX”), a company incorporated in the state of Oregon. MRX is a market leader in commercial extraction systems for cannabis and hemp. The Agreement is a partnership between GBL and MRX to establish a purchase and supply arrangement that allows GBL to distribute white-label THC-free CBD products from MRX.
| F-8 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
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
On June 11, 2021, GBL entered into a Sale and Purchase of Assets Agreement (the “SPA Agreement”) to purchase a factory site from a Malaysia company Segama Ventures Sdn Bhd (“Segama Ventures”), an unrelated third party, in order to expand the Company’s biofraction plant in Malaysia. Under the terms of the SPA Agreement, the acquisition is to be satisfied by cash payment of $
Simultaneously, on March 2, 2022, the Company, through GBL, entered into a Commercial Lease Agreement and Option to Purchase (“Lease Agreement”) for renting the factory site from Segama Ventures for a lease term of seven (7) years (“Lease Term”) at a monthly rental of MYR 36,000 ($
On June 17, 2021, the Company through its prospective indirect subsidiary Bio Resources Limited (“BRL”), a company incorporated under the laws of Labuan, entered into a Shares Sale Agreement with Hermalis Binti Mohmad Tahir (“Hermalis”), a company incorporated under the laws of Malaysia, to acquire the entire issued and paid-up share capital of Global Renewables Sdn Bhd. Under the terms of the Shares Sale Agreement, the consideration for the acquisition shall be satisfied in full by the payment of MYR 25,000 ($6,000) upon the execution of the Shares Sale Agreement. The acquisition of Global Renewables Sdn Bhd, however, was cancelled on April 18, 2022.
On June 18, 2021, GBL entered into a Shares Sale Agreement with Lamax Gold Limited (“LGL”), a company incorporated under the laws of the British Virgin Islands, in relation to acquisition of the remaining
On July 7, 2021, the Company through its wholly-owned subsidiary GBL entered into a Product Supply Agreement (the “Agreement”) with MRX Xtractors, LLC (“MRX”), a company incorporated in the state of Oregon. MRX is a market leader in commercial extraction systems for cannabis and hemp. The Agreement is a partnership between GBL and MRX to establish a purchase and supply arrangement that allows GBL to distribute white-label THC-free CBD products from MRX.
On February 10, 2022, the Company, through VEL, entered into a Commercial Lease Agreement and Option to Purchase (the “Lease Agreement”) to rent a 24-acre property in La Belle Missouri from Jon Neal Simmons and Betty Jo Simmon (the “Landlord”) to support carbon farming with biochar in Missouri. Under the Lease Agreement, the term of the lease will be for a period of two (
On March 23, 2022, the Company, through Verde Malaysia, entered into a Sale of Shares Agreement (“SSA”) with The Wision Project Sdn Bhd (“Wision”), a company incorporated under the laws of Malaysia, and its sole shareholder Jack Wong, to acquire the one hundred percent (
On April 19, 2022, the Company, through its wholly-owned subsidiary, Verde Resources (Malaysia) Sdn Bhd (“Verde Malaysia”), a company incorporated in Malaysia, entered into 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 (
On April 27, 2022, the Company entered into a Professional Engineering Services Contract (the “Agreement”) with BioDiverse Energies, LLC (“BDE”). Under the 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 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 Agreement to its wholly owned subsidiary VRI to assume from the Company all the obligations, responsibilities and liabilities associated with the Agreement.
On April 29, 2022, the Company through its wholly owned subsidiary VRI closed on the purchase of residential real property located in Chesterfield, Missouri (the “Property”). The purchase price for the Property was $
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
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.
· | Basis of Presentation |
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 |
| F-9 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Identified below are the accounting policies that reflect the Company’s most significant estimates and judgments, and those that the Company believes are the most critical to fully understand and evaluate its consolidated financial statements.
In preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the years reported. Actual results may differ from these estimates.
· | Basis of Consolidation |
The consolidated financial statements include the financial statements of Verde Resources, Inc. and its subsidiaries. All significant inter-company balances and transactions within the Company and its subsidiaries have been eliminated upon consolidation.
· | Segment Reporting |
Accounting Standard Codification (“ASC”) Topic 280, Segment Reporting establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in consolidated financial statements. Currently, the Company operates in four reportable operating segments.
· | Concentrations of Credit Risk |
| F-10 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables it will likely incur in the near future. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
· | Risks and Uncertainties |
|
|
The Company operates in the resource exploration industry that is subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating a resource exploration business and venturing into new biofraction and CBD product industries, including the potential risk of business failure.
· | 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 $
At and June 30, 2022 and 2021, cash and cash equivalents consisted of bank deposits in a Malaysian bank and petty cash on hands.
· | Accounts Receivable |
|
|
Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts will be recorded in the period when a loss is probable based on an assessment of specific evidence indicating troubled collection, historical experience, accounts aging, ongoing business relation and other factors. Accounts are written off after exhaustive efforts at collection. If accounts receivable are to be provided for, or written off, they would be recognized in the consolidated statement of operations within operating expenses. At June 30, 2022 and 2021, the Company has no allowance for doubtful accounts, as per management’s judgment based on their best knowledge. As of June 30, 2022 and 2021, the longest credit term for certain customers are
· | Inventories |
Inventories are stated at the lower of cost or market value (net realizable value), cost being determined on a first-in-first-out method. Costs include material, labor and overhead costs. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand.
As of June 30, 2022 and 2021, the Company did not record an allowance for obsolete inventories, nor have there been any write-offs.
· | Property and Equipment |
Property 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 |
|
|
| |
Plant and machinery |
|
|
| |
Office equipment |
|
|
| |
Project equipment |
|
|
| |
Computer |
|
|
| |
Motor vehicle |
|
|
| |
Furniture & fittings |
|
|
|
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.
· | 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 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.
| F-11 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
· | Revenue Recognition |
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.
Product sales
Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial.
Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with the Company’s customers.
Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories: discounts, returns and rebates. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable as the amount is payable to the Company’s customer.
Gold mining
Revenue from the sales of gold mineral or other minerals to registered gold trading companies or other customers in Malaysia is recognized as revenue in accordance with the following core principles: at the time of gold or minerals sales, the contract with customers and the performance obligations are identified. The transaction and selling price is determined by the prevailing market value of gold bullion quoted by the leading registered gold trading company in Malaysia or at an agreed price. Sales invoice will be prepared to reflect the proper transaction price based on the performance obligation allocation. After delivery is completed and the performance obligation is satisfied, sales invoice will be presented to the customers and so revenue is then recognized accordingly.
· | Leases |
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, 2022 and 2021.
| F-12 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
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, 2022 and 2021.
Leases that transfer substantially all the rewards and risks of ownership to the lessee, other than legal title, are accounted for as finance leases. Substantially all of the risks or benefits of ownership are deemed to have been transferred if any one of the four criteria is met: (i) transfer of ownership to the lessee at the end of the lease term, (ii) the lease containing a bargain purchase option, (iii) the lease term exceeding 75% of the estimated economic life of the leased asset, (iv) the present value of the minimum lease payments exceeding 90% of the fair value. At the inception of a finance lease, we as the lessee records an asset and an obligation at an amount equal to the present value of the minimum lease payments. The leased asset is amortized over the shorter of the lease term or its estimated useful life if title does not transfer to us, while the leased asset is depreciated in accordance with our depreciation policy if the title is to eventually transfer to us. The periodic rent payments made during the lease term are allocated between a reduction in the obligation and interest element using the effective interest method in accordance with the provisions of ASC Topic 842.
· | Income Taxes |
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.
· | Uncertain Tax Positions |
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, 2022 and 2021.
· | Foreign Currencies Translation |
The Company’s reporting currency is the United States dollar (“US$”) and the accompanying consolidated financial statements have been expressed in United States dollars. The Company’s functional currency is the Malaysian Ringgit (“MYR”) which is a functional currency as being the primary currency of the economic environment in which their operations are conducted.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statement of operations.
For reporting purposes, in accordance with ASC Topic 830 ”Translation of Financial Statements”, capital accounts of the consolidated financial statements are translated into United States dollars from MYR at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the respective year. The gains and losses resulting from translation of financial statements subsidiaries to the reporting currency are recorded as a separate component of accumulated other comprehensive income within the statements of changes in stockholder’s equity.
Translation of MYR into U.S. dollars has been made at the following exchange rates for the following periods:-
|
| June 30, 2022 |
| June 30, 2021 |
Year-end MYR:US$ exchange rate |
|
| ||
Annualized average MYR:US$ exchange rate |
|
|
· | Comprehensive Income |
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.
| F-13 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
· | Noncontrolling Interest |
The Company accounts for noncontrolling interest in accordance with ASC Topic 810-10-45, which requires the Company to present noncontrolling interests as a separate component of total shareholders’ equity on the consolidated balance sheets and the consolidated net loss attributable to the noncontrolling interest be clearly identified and presented on the face of the consolidated statements of operations and comprehensive loss.
· | Net Loss per Share |
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 awards made to employees and directors including employee stock options, restricted stock units, and stock appreciation rights are based on estimated fair values. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period.
The Company accounts for non-employee stock-based awards at fair value in accordance with the measurement and recognition criteria of ASC Topic 505-50, “Equity-Based Payments to Non-Employees”.
· | Retirement Plan Costs |
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.
· | Mineral Acquisition and Exploration Costs |
Mineral property acquisition and exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserves.
· | Environmental Expenditures |
The operations of the Company have been, and may in the future, be affected from time to time in varying degree by changes in environmental regulations, including those for future reclamation and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Company’s policy is to meet or, if possible, surpass standards set by relevant legislation by application of technically proven and economically feasible measures.
Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against earnings as incurred or capitalized and amortized depending on their future economic benefits. All of these types of expenditures incurred since inception have been charged against earnings due to the uncertainty of their future recoverability. Estimated future reclamation and site restoration costs, when the ultimate liability is reasonably determinable, are charged against earnings over the estimated remaining life of the related business operation, net of expected recoveries.
· | Related Parties |
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.
| F-14 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(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. |
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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.
| F-15 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
· | Recent Accounting Pronouncements |
ASU 2020-06 - Debt - Debt with conversion and other options (subtopic 470-20) and derivatives and hedging - contracts in entity’s own equity (subtopic 815-40): accounting for convertible instruments and contracts in an entity’s own equity. The amendments in this update are intended to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. For public business entities that are not smaller reporting companies, the ASU’s amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. For all other entities, the effective date is for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company adopted ASU 2020-06 effective July 1, 2021. The adoption of ASU 2020-06 did not have a material impact on the Company’s financial statements.
During the year ended June 30, 2022, 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.
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 $
The ability of the Company to survive is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. In response to these problems, management intends to raise additional funds through public or private placement offerings, and related party loans.
No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stockholders, in the case of equity financing.
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.
NOTE 4 - BUSINESS SEGMENT INFORMATION
Currently, the Company has four reportable business segments:
(i) | Gold mineral mining; |
(ii) | Distribution of THC-free cannabinoid (CBD) products, mainly operates; |
(iii) | Production and distribution of renewable commodities; and |
(iv) | Real property holding |
| F-16 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
In the following table, revenue is disaggregated by primary major product line, and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue with the reportable segments for the years ended June 30, 2022 and 2021:
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| Year ended June 30, 2022 |
| |||||||||||||||||||||
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| Gold mineral mining |
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| Distribution of THC-free cannabinoid (CBD) products |
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| Production and distribution of renewable commodities |
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| Holding property |
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| Corporate unallocated |
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| Consolidated |
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Revenue |
| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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Cost of revenue |
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| ( | ) |
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| ( | ) | ||||
Gross loss |
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| ( | ) |
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| ( | ) | ||||
Selling, general & administrative expenses |
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| ( | ) |
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| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Loss from operations |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Interest expense |
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|
| ( |
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| ( | ) |
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| ( | ) | |||
Other income |
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Loss before income tax |
|
| ( | ) |
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| ( | ) |
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| ( | ) |
|
| ( | ) |
|
| ( | ) |
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| ( | ) |
Income tax |
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Net loss |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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| ( | ) |
| $ | ( | ) |
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Total assets at June 30, 2022 |
| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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|
| Year ended June 30, 2021 |
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| Gold mineral mining |
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| Distribution of THC-free cannabinoid (CBD) products |
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| Production and distribution of renewable commodities |
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| Holding property |
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| Corporate unallocated |
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| Consolidated |
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Revenue |
| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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Cost of revenue |
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Gross loss |
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Selling, general & administrative expenses |
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| ( | ) |
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| ( | ) |
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| ( | ) | |||
Loss from operations |
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| ( | ) |
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| ( | ) |
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| ( | ) | |||
Interest expenses |
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| ( | ) |
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Other income |
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Loss before income tax |
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| ( | ) |
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| ( | ) |
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| ( | ) | |||
Income tax |
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Net loss |
| $ | ( | ) |
| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( |
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Total assets as June 30, 2021 |
| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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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, |
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| 2022 |
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| 2021 |
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Malaysia |
| $ |
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| $ |
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NOTE 5 - INVENTORIES
Inventories as of June 30, 2022 and 2021 consisted of the following:
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| As of June 30, |
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| 2022 |
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| 2021 |
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Bio produce |
| $ |
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| $ |
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| F-17 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 6 - DEPOSITS AND PREPAYMENTS
Deposits and prepayments as of June 30, 2022 and 2021 consisted of the following:
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| As of June 30, |
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| 2022 |
| 2021 |
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Deposits |
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Prepayments |
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| $ |
| $ |
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NOTE 7 - PROPERTY AND EQUIPMENT
A summary of property and equipment at June 30, 2022 and 2021 is as follows:
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| As of June 30, |
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| 2022 |
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| 2021 |
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Land and building |
| $ |
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| $ |
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Plant and machinery |
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Office equipment |
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Project equipment |
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Computer |
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Motor vehicle |
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Furniture & fittings |
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Less: accumulated depreciation |
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| ( | ) |
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| ( | ) |
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| $ |
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| $ |
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Depreciation expense for the years ended June 30, 2022 and 2021 totaled $
Subsequent to year, land and building with a carrying amount of $
NOTE 8 - DEPOSITS PAID
At June 30, 2022 and 2021, deposits consist of the following:
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| As of June 30, |
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| 2022 |
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| 2021 |
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Deposits paid for acquisition of subsidiaries |
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- Bio Resources Limited (#1) |
| $ |
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| $ |
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- Champmark Sdn Bhd (#2) |
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| $ |
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| $ |
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Deposits paid for acquisition of property and equipment |
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- Intellectual property license (#3) |
| $ |
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| $ |
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- Factory site (#4) |
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| $ |
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| $ |
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Security deposit (#5) |
| $ | |
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| $ | |
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___________
(#1) The Company announced the Share Sale Agreement on May 12, 2021 for the acquisition of the entire issued and paid-up share capital of Bio Resources Limited from Taipan International Limited, an unrelated third party, The Wision Project Limited (formerly known as “Borneo Resources Limited”), an related third party, and other unrelated third party individuals, in consideration of issuance of
| F-18 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(#2) On June 18, 2021, GBL entered into a Shares Sale Agreement with Lamax Gold Limited (“LGL”), a company incorporated under the laws of the British Virgin Islands, in relation to acquisition of the remaining
(#3) On May 10, 2021, the Company announced the Sale and Purchase Agreement to acquire the assets of biofraction plant and the right to use intellectual property license in Sabah, Malaysia from Borneo Energy Sdn Bhd, in consideration of issuance of
(#4) On June 11, 2021, GBL entered into a Sale and Purchase of Assets Agreement (the “SPA Agreement”) to purchase a factory site from a Malaysia company Segama Ventures Sdn Bhd (“Segama Ventures”), an unrelated third party, in order to expand the Company’s biofraction plant in Malaysia. Under the terms of the SPA Agreement, the acquisition is satisfied by cash payment of $
Simultaneously, on March 2, 2022, the Company, through GBL, entered into a Commercial Lease Agreement and Option to Purchase (“Lease Agreement”) for renting the factory site from Segama Ventures for a lease term of seven (
(#5) On February 10, 2022, the Company, through VEL, a limited liability company incorporated in the State of Missouri, which is an indirect wholly-owned subsidiary of the Company via Verde Renewables, Inc., entered into a Commercial Lease Agreement and Option to Purchase (the “Lease Agreement”) to rent a 24-acre property in La Belle from Jon Neal Simmons and Betty Jo Simmon (the “Landlord”) in order to kickstart carbon farming with biochar in Missouri.
Under the Lease Agreement, the term of the lease will be for a period of two (
NOTE 9 - MINING RIGHT
On June 14, 2021, a lump sum payment of RM260,500 ($
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The table below presents the operating lease related assets and liabilities recorded on the balance sheets.
|
| Ended June 30, 2022 |
| |
Balance as at the 1 July 2021 |
| $ |
| |
Amortization charge for the period |
|
| ( | ) |
Foreign exchange adjustment |
|
| ( | ) |
Balance as of June 30, 2022 |
| $ |
| |
Amortization charge of rights of use lease assets was $
NOTE 10 - AMOUNTS DUE TO RELATED PARTIES
The following breakdown of the balances due to related parties, consisted of:-
|
| As of June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
BOG (#1) |
| $ |
|
| $ |
| ||
Federal Capital Investment Limited (#2) |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
(#1) Borneo Oil and Gas Corporation Sdn Bhd (“BOG”) is a wholly owned subsidiary of Borneo Oil Berhad (“BOB”) which holds
(#2) One of the directors of Federal Capital Investment Limited, Mr. Wu Ming Ding, has resigned as director of the Company effective on February 20, 2016. The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms. On June 9, 2021, the Company entered into a Settlement of Debt Agreement (the “Debt Settlement Agreement”) with Federal Capital Investment Limited, to convert a total of USD 142,000 of the Company’s accounts payable to the creditor as of December 31, 2020 into equity by means of a subscription for
NOTE 11 - PROMISSORY NOTES
On May 10, 2021, the Company announced the Share Sale Agreement on May 12, 2021 for the acquisition of the entire issued and paid-up share capital of Bio Resources Limited from Taipan International Limited, an unrelated third party, The Wision Project Limited (formerly known as “Borneo Resources Limited”), an un-related third party, and other unrelated third party individuals, in consideration of issuance of
| F-19 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
The fair value of the outstanding promissory notes was calculated with the following assumptions:
Risk free rate |
|
| % | |
Credit spread |
|
| % | |
Liquidity risk premium |
|
| % |
The following is a reconciliation of the beginning and ending balances of promissory notes payable using Level 3 inputs:
|
| June 30 |
|
| June 30 |
| ||
|
| 2022 |
|
| 2021 |
| ||
Balance at the beginning of year |
| $ |
|
| $ |
| ||
Promissory notes issued to unrelated third parties at fair value |
|
|
|
|
|
| ||
Interest expense |
|
|
|
|
|
| ||
Balance at the end of year |
| $ |
|
| $ |
| ||
The Company recorded $
NOTE 12 - 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
The table below presents the lease-related assets and liabilities recorded on the balance sheet.
|
| As of June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Assets |
|
|
|
|
|
| ||
Right-of-use asset # |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Current: |
|
|
|
|
|
|
|
|
Finance lease liabilities |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Non-current: |
|
|
|
|
|
|
|
|
Finance lease liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total lease liabilities |
| $ |
|
| $ |
| ||
| F-20 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
As of June 30, 2022, right-of-use assets were $
As of June 30, 2021, right-of-use assets were $
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, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Finance lease cost: |
|
|
|
|
|
| ||
Interest on lease liabilities (per ASC 842) |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Operating lease cost: |
|
|
|
|
|
|
|
|
Amortisation charge for the year (per ASC 842) |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total lease expense |
| $ |
|
| $ |
| ||
Components of Lease Expense
The Company recognizes lease expense on a straight-line basis over the term of the operating leases, as reported within “general and administrative” expense on the accompanying consolidated statement of operations.
Future Contractual Lease Payments as of June 30, 2022
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 |
| |
|
|
|
| |
2023 |
| $ |
| |
2024 |
|
|
| |
2025 |
|
|
| |
2026 |
|
|
| |
2027 |
|
|
| |
Thereafter |
|
|
| |
Total minimum finance lease liabilities payment |
|
|
| |
Less: interest |
|
|
| |
|
|
|
|
|
Present value of lease liabilities |
| $ |
| |
|
|
|
|
|
Representing:- |
|
|
|
|
Current liabilities |
| $ |
| |
Non-current liabilities |
|
|
| |
|
| $ |
| |
For the years ended June 30, 2022 and 2021, the amortization charge was $
# This leasing arrangement for the lease of the Segama factory amounting to $
| F-21 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
There are no corresponding lease liabilities recorded as the lease payments for the entire lease period has been paid upfront upon inception of the agreement.
NOTE 13 - STOCKHOLDERS’ EQUITY
Authorized Stock
The Company has authorized
Preferred stock outstanding
There are no preferred shares outstanding as of June 30, 2022 and 2021.
The Company has no stock option plan, warrants, or other dilutive securities.
Common stock outstanding
On May 10, 2021, the Company announced the Sale and Purchase Agreement to acquire the assets of biofraction plant and the right to use intellectual property license in Sabah, Malaysia from Borneo Energy Sdn Bhd, in consideration of issuance of
On May 12, 2021, the Company, through its wholly-owned subsidiary GBL, entered into a Share Sale Agreement in relation to acquisition of the entire issued and paid-up share capital of Bio Resources Limited ("BRL")with Taipan International Limited, an unrelated third party, The Wision Project Limited (formerly known as “Borneo Resources Limited”), an unrelated third party and other individuals unrelated third parties, in consideration of issuance of
On June 4, 2021, the Company issued a total of
On June 9, 2021, the Company entered into a Settlement of Debt Agreement (the “Debt Settlement Agreement”) with the Company's creditors Beijing Changxin Wanlin Technology Co., Ltd, Federal Mining Resources Ltd, Federal Capital Investment Limited and Yorkshire Capital Limited (collectively the “Creditors”) to convert a total of USD
| F-22 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
On June 10, 2021, the Company issued a total of
On June 10, 2021, the Company issued a total of
On June 18, 2021, the Company issued a total of
On April 25, 2022, the Company issued a total of
There were
NOTE 14 - 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, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
Less: Net loss attributable to non-controlling interest |
|
|
|
|
|
| ||
Net loss attributable to Verde Resources, Inc. shareholders |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
- Basic |
|
| |
|
|
| |
|
- Diluted |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
|
|
|
- Basic |
| $ | ( | ) |
| $ | ( | ) |
- Diluted |
| $ | ( | ) |
| $ | ( | ) |
# less than $0.001
For the years ended June 30, 2022 and 2021, diluted weighted-average common shares outstanding is equal to basic weighted-average common shares, due to the Company’s net loss position. Hence, no common 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 other than the restricted common stock to be issued at $
NOTE 15 - INCOME TAX
For the years ended June 30, 2022 and 2021, the local (“United States of America”) and foreign components of loss before income taxes were comprised of the following:
|
| Years ended June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Tax jurisdiction from: |
|
|
|
|
|
| ||
- Local (US regime) |
| $ | ( | ) |
| $ | ( | ) |
- Foreign, including |
|
|
|
|
|
|
|
|
British Virgin Island |
|
| ( | ) |
|
| ( | ) |
Malaysia |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Loss before income taxes |
| $ | ( | ) |
| $ | ( | ) |
The provision for income taxes consisted of the following:
|
| Years ended June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Current tax: |
| $ |
|
| $ |
| ||
- Local |
|
|
|
|
|
| ||
- Foreign |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Deferred tax |
|
|
|
|
|
|
|
|
- Local |
|
|
|
|
|
| ||
- Foreign |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
| $ |
|
| $ |
| ||
| F-23 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
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
The Company is registered in the State of Nevada and is 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 by, among other things, lowering the U.S. corporate tax rate from
For the years ended June 30, 2022 and 2021, there were no operating income in US tax regime.
BVI
Under the current BVI law, the Company is not subject to tax on income.
Malaysia
The Company’s subsidiary is registered in Malaysia and is subject to the Malaysia corporate income tax at a standard income tax rate of
For the year ended June 30, 2022, the operation in Malaysia incurred $
|
| Years ended June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Loss before income taxes |
| $ | ( | ) |
| $ | ( |
|
Statutory income tax rate |
|
| % |
|
| % | ||
Income tax expense at statutory rate |
|
| ( | ) |
|
| ( | ) |
Non-deductible items |
|
| |
|
|
| |
|
Net operating loss |
|
|
|
|
|
| ||
Income tax expense |
| $ |
|
| $ |
| ||
The following table sets forth the significant components of the deferred tax assets of the Company:
|
| As of June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
US tax regime |
| $ |
|
| $ |
| ||
Malaysia tax regime |
|
|
|
|
|
| ||
Less: valuation allowance |
|
| ( | ) |
|
| ( | ) |
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 recognized in the consolidated statement of operations. The Company did not have any interest and penalty provided or recognized in the income statements for years ended June 30, 2022 and June 30, 2021. The Company did not have uncertainty tax positions or events leading to uncertainty tax position within the next 12 months.
| F-24 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
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, 2022 and 2021, $
NOTE 17 - RELATED PARTY TRANSACTIONS
|
| For the Years ended |
| |||||
|
| June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Related party transactions: |
|
|
|
|
|
| ||
Sales to: |
|
|
|
|
|
| ||
Borneo Eco Food Sdn Bhd (#3) |
| $ |
|
| $ |
| ||
Other income – Sales of wash sand to: |
|
|
|
|
|
|
|
|
Jusra Mining Merapoh Sdn Bhd (#1) |
| $ |
|
| $ |
| ||
Site expenses: |
|
|
|
|
|
|
|
|
Warisan Khidmat Sdn Bhd (#5) |
| $ |
|
| $ |
| ||
Professional services provided by: |
|
|
|
|
|
|
|
|
Federal Capital Investment Limited (#2) |
| $ |
|
| $ |
| ||
Warisan Khidmat Sdn Bhd (#5) |
| $ |
|
| $ |
| ||
Related party balances: |
|
|
| |||||
|
| June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Trade receivables |
|
|
|
|
|
| ||
Borneo Eco Food Sdn Bhd (#3) |
| $ |
|
| $ | |
| |
|
|
|
|
|
|
|
| |
Deposits paid for acquisition of property and equipment |
|
|
|
|
|
|
| |
Borneo Energy Sdn Bhd (#3) |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Other receivable |
|
|
|
|
|
|
|
|
Jusra Mining Merapoh Sdn Bhd (#1) |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Advanced to related parties |
|
|
|
|
|
|
|
|
Advanced to Global Renewable Sdn Bhd (#4) |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Trade Payables |
|
|
|
|
|
|
|
|
Warisan Khidmat Sdn Bhd (#5) |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Advanced from related parties |
|
|
|
|
|
|
|
|
Advanced from BOG (#6) |
| $ |
|
| $ |
| ||
Advanced from Federal Capital Investment Limited (#7) |
| $ |
|
| $ |
| ||
(#1) Lamax Gold Limited (“LGL”) held
(#2) One of the directors of Federal Capital Investment Limited, Mr. Wu Ming Ding, has resigned as director of the Company effective February 20, 2016.
(#3)
(#4) Balakrishnan B.S. Muthu was a common director of Global Renewable Sdn Bhd and the Company, and had since resigned from Global Renewables Sdn. Bhd. in January 2022.
(#5) Warisan Khidmat Sdn. Bhd. is a company whose shareholdings is entirely held by a Director of Verde Malaysia.
(#6) Borneo Oil and Gas Corporation Sdn Bhd (“BOG”) is a wholly owned subsidiary of Borneo Oil Berhad (“BOB”) (holding 20.0% and 22.8% of the Company’s issued and outstanding common stock as of June 30, 2021 and June 30, 2022, respectively). The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.
(#7) One of the directors of Federal Capital Investment Limited, Mr. Wu Ming Ding, has resigned as director of the Company effective on February 20, 2016. The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms. On June 9, 2021, the Company entered into a Settlement of Debt Agreement (the “Debt Settlement Agreement”) with Federal Capital Investment Limited, to convert a total of USD
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 18 - CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
(a) | Major customers |
For the years ended June 30, 2022 and 2021, there was no single customer whose revenue exceeded
(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.
(c) | Exchange rate risk |
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 profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HKD converted to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
NOTE 19 - COMMITMENTS AND CONTINGENCIES
As of June 30, 2022, the Company has no material commitments or contingencies.
| F-25 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 20 - SUBSEQUENT EVENTS
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, 2022, up through the date the Company issued the audited consolidated financial statements.
On May 12, 2021, the Company, through its wholly-owned subsidiary Gold Billion Global Limited (“GBL”), a company incorporated under the laws of the British Virgin Islands, entered into a Share Sale Agreement in relation to the acquisition of the entire issued and paid-up share capital of Bio Resources Limited (the “Share Sale Agreement”) with Taipan International Limited, a company incorporated under the laws of the Labuan, and Borneo Resources Limited, a company incorporated under the laws of the Labuan, and other individuals. Under the terms of the Share Sale Agreement, the acquisition of the entire issued and paid-up share capital of BRL, through the Company’s wholly-owned subsidiary GBL, shall be satisfied by the issuance of
Bio Resources Limited (“BRL”) is 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 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, we anticipate 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.
On July 8, 2022, 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 (the “Agreement”) with Lisa Leilani Zimmer Durand to engage her as its corporate consultant to provide training on biological farming, write articles and white papers on the Company’s products and develop new product formulations as designated in the Agreement. Under the Agreement, the Company will pay Lisa Leilani Zimmer Durand by the issuance of
On July 15, 2022, the Company issued
On September 27, 2022, the Company exercised its Option to Purchase a 24-acre property in La Belle Missouri pursuant to a Commercial Lease Agreement and Option to Purchase (the “Lease Agreement”) entered into on February 10,2022 by the Company through Verde Estates, LLC, with Jon Neal Simmons and Betty Jo Simmon (the “Landlord”) to support carbon farming with biochar in Missouri, for a consideration of $
On October 1, 2022, Balakrishnan B S Muthu resigned his position as President of Verde Resources, Inc. (“Verde” or the “Company”). Balakrishnan B S Muthu shall remain as Treasurer, Chief Financial Officer, General Manager and Director of Verde and Liang Wai Keen shall remain as Secretary of the Company.
Mr. Jack Wong has been appointed President and Chief Executive Officer of the Company effective October 1, 2022. Mr. Wong was the sole shareholder of The Wision Project Sdn Bhd (“Wision”), a subsidiary which was acquired by the Company through its wholly owned subsidiary Verde Resources (Malaysia) Sdn Bhd (“Verde Malaysia”) pursuant to Share Sale Agreement (“SSA”) signed on March 23, 2022 for the acquisition of one hundred percent 100% of the issued and paid-up ordinary shares in Wision from Mr. Wong.
On October 1, 2022, the Company’s Board of Directors adopted an employment and compensation agreement for Mr. Wong (the “Agreement”).
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
| F-26 |
| Table of Contents |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Independent Accountants:
On March 30, 2022, the Board replaced Centurion ZD CPA & Co. (“CZD”) as its independent public accountants with J&S Associate (“J&S”) as the independent public accountants, effective immediately, to audit the financial statements of Verde and its consolidated subsidiaries for the fiscal year ending June 30, 2022.
The reports of CZD on the consolidated financial statements of Verde as of and for the years ended June 30, 2021 and 2020 did not contain any adverse opinion or disclaimer of opinion. These reports were not qualified or modified as to uncertainty, audit scope or accounting principles, except that the report contained an explanatory paragraph stating that there was substantial doubt about Verde’s ability to continue as a going concern.
During the fiscal years ended June 30, 2021 and 2020, and in the subsequent interim period through March 31, 2022, there were no “disagreements” (as described in Item 304(a)(1)(iv) of Regulation S-K) between CZD and Verde on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of CZD, would have caused CZD to make reference to the subject matter of such disagreements in connection with their reports. Furthermore, no “reportable events” occurred during the two fiscal years ended June 30, 2021 and 2020, or subsequently up to March 30, 2022. As used herein, the term “reportable event” means any of the items listed in paragraphs (a)(1)(v) of Item 304 of Regulation S-K.
During the two fiscal years ended June 30, 2021 and 2020 and in the subsequent periods through March 31, 2022, neither Verde nor anyone on its behalf consulted J&S regarding either (i) the application of accounting principles to a specified transaction (either completed or proposed), or the type of audit opinion that might be rendered on Verde's consolidated financial statements, or (ii) any matter that was either the subject of a disagreement (as described in Item 304(a)(1)(iv) of Regulation S-K) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).
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 2021, the Company has been undertaking tremendous changes and expansion which rendered the management to re-consider the available 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, 2022, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. During the 2022, the Company has been undertaking tremendous enlargement and expansion which rendered the management to re-consider the available 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; and (4) management is dominated by three individuals without adequate compensating controls. The aforementioned material weaknesses were identified by our Chief Executive and Financial Officers in connection with the review of our financial statements as of June 30, 2022.
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, 2022, 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, 2022, 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.
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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 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.
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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 |
| President and Chief Executive Officer |
|
| 39 |
|
| October 1, 2022 |
|
Balakrishnan B S Muthu |
| Treasurer, Chief Financial Officer, General Manager and Director |
|
| 60 |
|
| October 17, 2013 |
|
Chen Ching |
| Director |
|
| 62 |
|
| February 20, 2016 |
|
Carl M. Craven |
| Director |
|
| 61 |
|
| March 31, 2021 |
|
Liang Wai Keen |
| Secretary |
|
| 51 |
|
| October 17, 2013 |
|
Mr. Jack Wong, age 39, has been appointed President and 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 60, has served our Chief Financial Officer, Treasurer, General Manager and Director since October 17, 2013. He was also serving 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 62, 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. Carl M. Craven, age 61, has served as our director since March 31, 2021. From 1980-1991 Mr. Craven worked in the family-owned electrical wholesale company (Heintz Electric Company) and eventually managed several retail stores. In 1992-1998 he started and managed a Fireplace manufacturing company, (Fuego Flame Fireplace company). From 1998 to 2005, Mr. Craven served as the President of Hide-A-Rake in Scottsdale, Arizona and was responsible for the research and development of new golf course products that received two United States Patents. From 2005-2008 he had the pleasure of being the first mate on the sailboat Satori. Since then, he has been heavily involved in the ongoing development of the pyrolysis Biofraction system. Mr. Craven brings to our board his leadership in management and his vast experience in pyrolysis Biofraction system.
Mr. Liang Wai Keen, age 51, has served as our 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 a 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.
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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. |
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| Table of Contents |
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, 2022, 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 2 Cityplace Drive, Suite 200, St. Louis, Missouri 63141.
Board Committees
Our board of directors currently consists of three members, Balakrishnan B S Muthu, Chen Ching and Carl M. Craven. The Board held no formal meetings during the year ended June 30, 2022.
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, 2022, 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 president 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.
| 28 |
| Table of Contents |
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.
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| Table of Contents |
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, 2022 and 2021 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, 2021, whose total compensation was in excess of $100,000, and (iv) up to two additional individuals who would have been within the two-other-most-highly compensated but were not serving as executive officers on June 30, 2021.
SUMMARY COMPENSATION TABLE | ||||||||||||||||||||||||||||||||||
Name and Principal Position |
| Year |
| Salary ($) |
|
| Bonus ($) |
|
| Stock Awards ($) |
|
| Option Awards ($) |
|
| Non-Equity Incentive Plan Compensation ($) |
|
| Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) |
|
| All Other Compensation ($) |
|
| Total ($) |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Balakrishnan B S Muthu (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
President, Treasurer, Chief Financial Officer, General Manager, and Director |
| 2022 |
|
| 60,547 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 60,547 |
|
President, Treasurer, Chief Financial Officer, General Manager, and Director |
| 2021 |
|
| 66,338 |
|
|
| 0 |
|
|
| 62,857 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 129,195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chen Ching (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director |
| 2022 |
|
| 24,000 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 24,000 |
|
Director |
| 2021 |
|
| 0 |
|
|
| 0 |
|
|
| 77,858 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 77,858 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carl M. Craven (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director |
| 2022 |
|
| 26,440 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 26,440 |
|
Director |
| 2021 |
|
| 6,000 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 6,000 |
|
______________
(1) | 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. Mr. Balakrishnan was paid a total salary of $63,055 and $129,195 for the years ended June 30, 2022 and 2021 respectively. |
(2) | Mr. Chen was paid a total salary of $24,000 and $77,858 for the years ended June 30, 2022 and 2021 respectively. |
(3) | Mr. Craven was paid a total salary of $26,440 and $6,000 for the years ended June 30, 2022 and 2021 respectively. |
Narrative disclosure to Summary Compensation Table.
Our executive officers are not parties 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. |
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| Table of Contents |
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, 2022, 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
Chen Ching
Carl M. Craven
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| Table of Contents |
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth, as of October 12, 2022, 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 |
|
| 0.45 | % |
|
|
|
|
|
|
|
|
| 52,371,391 common shares Indirect ownership through Borneo Resources Limited |
|
| 4.54 | % |
|
|
|
|
|
|
|
Balakrishnan B.S. Muthu (2) Block B-5, 20/F., Great Smart Tower, 230 Wanchai Road, |
| 7,095,233 common shares Direct ownership |
|
| 0.61 | % |
Wanchai, Hong Kong |
|
|
|
|
|
|
|
| 500,000 common shares Indirect ownership through Banavees Resources |
|
| 0.04 | % |
|
|
|
|
|
|
|
Chen Ching Block B-5, 20/F., Great Smart Tower, 230 Wanchai Road, |
| 7,595,267 common shares Direct ownership |
|
| 0.66 | % |
Wanchai, Hong Kong |
|
|
|
|
|
|
|
| 4,746,341 common shares Indirect ownership through Goldlynn Invest Limited |
|
| 0.41 | % |
|
|
|
|
|
|
|
Directors and Executive Officers as a Group (4) |
| 77,545,371common shares |
|
| 6.72 | % |
|
|
|
|
|
|
|
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 |
|
| 34.04 | % |
|
|
|
|
|
|
|
Borneo Oil Berhad 1ST & 2ND FLOOR , VICTORIA POINT JALAN OKK AWANG BESAR W.P. LABUAN 87007, MALAYSIA |
| 186,666,667 common shares Direct ownership |
|
| 16.18 | % |
|
|
|
|
|
|
|
Internet.com Ltd SUITE 4703, CENTRAL PLAZA, 18 HARBOUR ROAD, WANCHAI, HONG KONG |
| 70,343,443 common shares Direct ownership |
|
| 6.10 | % |
|
|
|
|
|
|
|
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 |
|
| 11.35 | % |
_____________
(1) | Applicable percentage ownership is based on 1,153,830,444 shares of common stock outstanding as of October 12, 2022, together with securities exercisable or convertible into shares of common stock within 60 days of October 12, 2022. 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. Shares of common stock that a person has the right to acquire beneficial ownership of upon the exercise or conversion of options, convertible stock, warrants or other securities that are currently exercisable or convertible or that will become exercisable or convertible within 60 days of October 12, 2022, are deemed to be beneficially owned by the person holding such securities for the purpose of computing the number of shares beneficially owned and percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. |
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|
(2) | Jack Wong, our President and Chief Executive Officer, Balakrishnan B S Muthu, our CFO and a director, and Chen Ching, our director have not filed their respective Forms 3. These shareholders expect to file the forms in the near future. |
Changes in Control
On May 12, 2021, the Company, through its wholly-owned subsidiary Gold Billion Global Limited, a company incorporated under the laws of the British Virgin Islands, entered into a Share Sale Agreement in relation to acquisition of the entire issued and paid-up share capital of Bio Resources Limited with Taipan International Limited, a company incorporated under the laws of the Labuan, and Borneo Resources Limited, a company incorporated under the laws of the Labuan, and other individuals. Under the terms of the Share Sale Agreement, the acquisition of the entire issued and paid-up share capital of BRL, through the Company’s wholly-owned subsidiary GBL, shall be satisfied by the issuance of 321,500,000 shares of the Company’s restricted common stock, par value $0.001 per share (the “Common Stock”) at a price per share of $0.03, and the issuance of promissory notes with a two-year term period for the amount of $20,355,000. The acquisition of BRL consummated on October 12, 2022. The foregoing description of the Share Sale Agreement is qualified in its entirety by reference to the Share Sale Agreement which is filed as Exhibit 10.1 to this Current Report and is incorporated herein by reference.
| 32 |
| Table of Contents |
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Messrs. Balakrishnan, one of our three directors, is not an independent director as he also serves as our executive officer. Messrs Chen, one of our three directors, is an independent director as he does not hold any position as an executive officer. Mr. Craven, one of our three directors, is not an independent director as he also serves as the executive officer of the Company’s wholly owned subsidiary Verde Renewables, Inc as of August 10, 2021.
Except as set forth below, there are no transactions during our two most recent fiscal years ended June 31, 2022 and 2021, 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 |
| |||||
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| June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Related party transactions: |
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|
|
|
|
| ||
Sales to: |
|
|
|
|
|
| ||
Borneo Eco Food Sdn Bhd (#3) |
| $ | 7,314 |
|
| $ | - |
|
Other income – Sales of wash sand to: |
|
|
|
|
|
|
|
|
Jusra Mining Merapoh Sdn Bhd (#1) |
| $ | 10 |
|
| $ | 26,559 |
|
Site expenses: |
|
|
|
|
|
|
|
|
Warisan Khidmat Sdn Bhd (#5) |
| $ | 16,085 |
|
| $ | - |
|
Professional services provided by: |
|
|
|
|
|
|
|
|
Federal Capital Investment Limited (#2) |
| $ | - |
|
| $ | 24,000 |
|
Warisan Khidmat Sdn Bhd (#5) |
| $ | 9,091 |
|
| $ | - |
|
Related party balances: |
|
| ||||||
|
| June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Trade receivables |
|
|
|
|
|
| ||
Borneo Eco Food Sdn Bhd (#3) |
| $ | 5,933 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Deposits paid for acquisition of property and equipment |
|
|
|
|
|
|
|
|
Borneo Energy Sdn Bhd (#3) |
| $ | 5,000,000 |
|
| $ | 4,070,000 |
|
|
|
|
|
|
|
|
|
|
Other receivable |
|
|
|
|
|
|
|
|
Jusra Mining Merapoh Sdn Bhd (#1) |
| $ | - |
|
| $ | 26,338 |
|
|
|
|
|
|
|
|
|
|
Advanced to related parties |
|
|
|
|
|
|
|
|
Advanced to Global Renewable Sdn Bhd (#4) |
| $ | - |
|
| $ | 6,691 |
|
|
|
|
|
|
|
|
|
|
Trade Payables |
|
|
|
|
|
|
|
|
Warisan Khidmat Sdn Bhd (#5) |
| $ | 7,253 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Advanced from related parties |
|
|
|
|
|
|
|
|
Advanced from BOG (#6) |
| $ | 555,527 |
|
| $ | 579,783 |
|
Advanced from Federal Capital Investment Limited (#7) |
| $ | - |
|
| $ | 6,000 |
|
___________
(#1) Lamax Gold Limited (“LGL”) held 15% equity interests of Champmark Sdn Bhd which was disposed off on October 20, 2021 to Verde Resources Asia Pacific Limited (formerly known as Gold Billion Global Limited) and is also the major shareholder of Jusra Mining Merapoh Sdn Bhd.
(#2) One of the directors of Federal Capital Investment Limited, Mr. Wu Ming Ding, has resigned as director of the Company effective February 20, 2016.
(#3) Borneo Oil Berhad (“BOB”) is ultimate holding company of Borneo Eco Food Sdn. Bhd. and Borneo Energy Sdn Bhd, and held 20.0% and 22.8% of the Company’s issued and outstanding common stock as of June 30, 2021 and June 30, 2022, respectively.
(#4) Balakrishnan B.S. Muthu is the common director of Global Renewable Sdn Bhd and the Company, and had since resigned from Global Renewable Sdn. Bhd. in January 2022.
(#5) Warisan Khidmat Sdn. Bhd. is a company whose shareholdings is entirely held by a Director of Verde Malaysia.
(#6) Borneo Oil and Gas Corporation Sdn Bhd (“BOG”) is a wholly owned subsidiary of Borneo Oil Berhad (“BOB”) (holding 20.0% and 22.8% of the Company’s issued and outstanding common stock as of June 30, 2021 and June 30, 2022, respectively). The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.
(#7) One of the directors of Federal Capital Investment Limited, Mr. Wu Ming Ding, has resigned as director of the Company effective on February 20, 2016. The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.
On June 9, 2021, the Company entered into a Settlement of Debt Agreement (the “Debt Settlement Agreement”) with Federal Capital Investment Limited, to convert a total of USD 142,000 of the Company’s accounts payable to the creditor as of December 31, 2020 into equity by means of a subscription for 4,733,333 new restricted shares of the Company’s common stock at a subscription price of $0.03 per share.
| 33 |
| Table of Contents |
Item 14. Principal Accounting Fees and Services.
The aggregate fees billed for the most recently completed fiscal year ended June 30, 2022 and 2021 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, 2022 |
|
| Year Ended June 30, 2021 |
| ||
Audit Fees (1) |
| $ | 55,000 |
|
| $ | 48,200 |
|
Audit Related Fees (2) |
| $ | - |
|
| $ | - |
|
Tax Fees (3) |
| $ | 2,040 |
|
| $ | 2,000 |
|
All Other Fees (4) |
| $ | - |
|
| $ | - |
|
Total |
| $ | 57,040 |
|
| $ | 50,200 |
|
_____________
(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.
| 34 |
| Table of Contents |
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.
| 35 |
| Table of Contents |
The following exhibits are included as part of this report:
Exhibit No. |
| SEC Report Reference No. |
| Description |
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| Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer | ||
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| Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer | ||
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101.INS (4) |
| * |
| XBRL Instance |
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101.SCH (4) |
| * |
| XBRL Taxonomy Extension Schema |
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101.CAL (4) |
| * |
| XBRL Taxonomy Extension Calculations |
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101.DEF (4) |
| * |
| XBRL Taxonomy Extension Definitions |
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101.LAB (4) |
| * |
| XBRL Taxonomy Extension Labels |
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101.PRE (4) |
| * |
| XBRL Taxonomy Extension Presentation |
_____________
(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. |
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* | Filed herewith. |
| 36 |
| Table of Contents |
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) |
| |
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|
Dated: November 4, 2022 | By: | /s/ Balakrishnan B S Muthu |
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| Balakrishnan B S Muthu |
|
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| Chief Financial Officer and Director |
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| (Principal Executive Officer) |
|
Dated: November 4, 2022 | By: | /s/ Chen Ching |
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| Chen Ching |
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| Director |
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Dated: November 4, 2022 | By: | /s/ Carl M. Craven |
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| Carl M. Craven |
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| 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: November 4, 2022 | By: | /s/ Jack Wong |
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| Jack Wong |
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| President and Chief Executive Officer |
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| (Principal Executive Officer) |
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Dated: November 4, 2022 | By: | /s/ Balakrishnan B S Muthu |
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| Balakrishnan B S Muthu |
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| Chief Financial Officer, Treasurer, General Manager and Director |
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| (Principal Financial Officer) |
|
| 37 |
EXHIBIT 31.1
CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Jack Wong, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of Verde Resources, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
|
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
| (d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
| (a) | All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
| Date: November 4, 2022 |
| /s/ “Jack Wong" |
|
|
|
| Jack Wong |
|
|
|
| President and Chief Executive Officer |
|
EXHIBIT 31.2
CERTIFICATIONS OF PRINCIPAL FINANCIAL OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Balakrishnan B S Muthu, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of Verde Resources, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
|
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
| (d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
| (a) | All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
| Date: November 4, 2022 |
| /s/ "Balakrishnan B S Muthu" |
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| Balakrishnan B S Muthu |
|
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| Chief Financial Officer |
|
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Verde Resources, Inc. (the "Company") on Form 10-K for the year ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jack Wong, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sect. 1350, as adopted pursuant to Sect. 906 of the Sarbanes-Oxley Act of 2002, that:
|
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
IN WITNESS WHEREOF, the undersigned has executed this certification as of the 4th day of November 2022
| /s/ Jack Wong |
|
| Jack Wong, |
|
| President and Chief Executive Officer |
|
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Verde Resources, Inc. (the "Company") on Form 10-K for the year ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Balakrishnan B S Muthu, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sect. 1350, as adopted pursuant to Sect. 906 of the Sarbanes-Oxley Act of 2002, that:
|
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
IN WITNESS WHEREOF, the undersigned has executed this certification as of the 4th day of November 2022
| /s/ Balakrishnan B S Muthu |
|
| Balakrishnan B S Muthu, Chief Financial Officer |
|