Verde Resources, Inc 10-Q for FY2023 Q1
Verde Resources, Inc. (VRDR)
About this 10-Q
Verde Resources, Inc filed this 10-Q on November 17, 2022, covering the quarter ended September 30, 2022 (FY2023 Q1).
Headline figures
Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $26.31K
- compared with $0 a year earlier
- Net loss
- $1.36M
- compared with a net loss of $822.67K 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
(Mark One)
For the quarterly period ended
or
For the transition period from ____________ to ____________
Commission file number:
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☐ | Smaller reporting company | ||
(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 15, 2022, there were
VERDE RESOURCES, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
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Unregistered Sales of Equity Securities and Use of Proceeds. |
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| Table of Contents |
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical facts, included in this Form 10-Q including, without limitation, statements in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof); expansion and growth of the Company’s business and operations; and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. However, whether actual results or developments will conform with the Company’s expectations and predictions is subject to a number of risks and uncertainties, including general economic, market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company.
These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as “believes,” “anticipates,” “expects,” “estimates,” “plans,” “may,” “will,” or similar terms. These statements appear in a number of places in this filing and include statements regarding the intent, belief or current expectations of the Company, and its directors or its officers with respect to, among other things: (i) trends affecting the Company’s financial condition or results of operations for its limited history; (ii) the Company’s business and growth strategies; and, (iii) the Company’s financing plans. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Such factors that could adversely affect actual results and performance include, but are not limited to, the Company’s limited operating history, potential fluctuations in quarterly operating results and expenses, government regulation, technological change and competition. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to our filings with the SEC under the Exchange Act and the Securities Act of 1933, as amended, including our Current Report on Form 10-K filed with the Securities and Exchange Commission on November 4, 2022.
Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements.
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| Table of Contents |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Item Regulation S-X, Rule 10-01(c) Interim Financial Statements, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the three months ended September 30, 2022 are not necessarily indicative of the results that can be expected for the year ended June 30, 2023.
VERDE RESOURCES, INC.
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022
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Condensed Consolidated Balance Sheets as at September 30, 2022 (Unaudited) and June 30, 2022 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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VERDE RESOURCES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
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| September 30, 2022 |
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| June 30, 2022 |
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ASSETS |
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Current asset: |
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Cash and cash equivalents |
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Accounts receivable |
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Inventories |
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Other receivables, deposits and prepayments |
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Total current assets |
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Non-current assets: |
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Property and equipment, net |
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Right of use assets, net |
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Mining rights |
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Security deposit |
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Deposit paid for acquisition of subsidiaries |
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Deposit paid for acquisition of property and equipment |
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Total non-current assets |
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TOTAL ASSETS |
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LIABILTIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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Accrued liabilities and other payables |
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Lease liabilities |
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Promissory notes |
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Amounts due to related parties |
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Total current liabilities |
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Non-current liabilities: |
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Lease liabilities |
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Total non-current liabilities |
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TOTAL LIABILITIES |
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Commitments and contingencies |
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STOCKHOLDERS’ EQUITY |
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Preferred stock, $ |
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Common stock, $ |
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Common stock, $ |
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Accumulated other comprehensive loss |
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Accumulated deficit |
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Stockholders’ equity |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
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See accompanying notes to unaudited condensed consolidated financial statements.
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| Table of Contents |
VERDE RESOURCES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
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| Three Months ended September 30, |
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Revenue, net |
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Cost of revenue |
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Gross loss |
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Operating expenses: |
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General and administrative expenses |
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Total operating expenses |
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LOSS FROM OPERATION |
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Other (expense) income : |
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Interest expense |
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Other income |
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Total other expense, net |
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LOSS BEFORE INCOME TAXES |
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Income tax expense |
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NET LOSS |
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Net loss attributable to non-controlling interest |
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Net loss attributable to Verde Resources Inc., shareholders |
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Other comprehensive income: |
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– Foreign currency adjustment gain |
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Less: other comprehensive income attributable to non-controlling interest |
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Add: other comprehensive income attributable to Verde Resources Inc., shareholders |
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COMPREHENSIVE LOSS |
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Net loss per share: |
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– Basic |
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– Diluted |
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Weighted average common shares outstanding: |
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– Diluted |
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See accompanying notes to unaudited condensed consolidated financial statements.
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| Table of Contents |
VERDE RESOURCES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed in United States Dollars (“US$”))
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| Three Months ended September 30, |
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Cash flows from operating activities: |
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Net loss |
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities |
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Depreciation of property and equipment |
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Amortization |
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Stock-based compensation |
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Finance cost interest element of promissory notes (non-cash) |
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Change in operating assets and liabilities: |
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Accounts receivable |
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Other receivables, deposits and prepayments |
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Inventories |
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Accounts payables |
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Accrued liabilities and other payables |
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Advanced from sub-contractor and related parties |
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Net cash used in operating activities |
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Cash flows from investing activity: |
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Purchase of property and equipment |
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Net cash used in investing activity |
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Cash flows from financing activities: |
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Repayments to related parties |
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Proceeds from common shares and additional paid in capital |
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Repayments to lease liabilities |
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Net cash provided by (used in) financing activities |
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Net change in cash and cash equivalent |
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Foreign currency translation adjustment |
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Net change in cash and cash equivalents |
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CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD |
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CASH AND CASH EQUIVALENTS, AT END OF PERIOD |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
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Cash paid for income taxes |
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Cash paid for interest |
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See accompanying notes to unaudited condensed consolidated financial statements.
| F-3 |
| Table of Contents |
VERDE RESOURCES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
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| Accumulated other |
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| Additional paid-in capital |
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| comprehensive income |
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| Accumulated losses |
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| controlling interest |
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| stockholders’ equity |
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Balance as of July 1, 2022 |
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Share issued to service provider |
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Shares to be issued |
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Net loss for the period |
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Foreign currency translation adjustment |
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Balance as of September 30, 2022 |
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Balance as of July 1, 2021 |
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Shares issued for acquisition |
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Stock based compensation |
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Net loss for the period |
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Foreign currency translation adjustment |
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Balance as of September 30, 2021 |
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See accompanying notes to unaudited condensed consolidated financial statements.
| F-4 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 1 - ORGANIZATION AND BUSINESS BACKGROUND
Verde Resources, Inc. (“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 engaged in 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 September 30, 2022, the Company has the following subsidiaries:-
Company name |
| Place of incorporation |
| Principal activities and place of operation |
| Effective interest held |
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Verde Resources Asia Pacific Limited (“VRAP”) (fka Gold Billion Global Limited) |
| British Virgin Islands |
| Investment holding |
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Verde Resources (Malaysia) Sdn Bhd (“VRSB”) |
| Malaysia |
| Provision of consultation service and distribution of renewable agricultural commodities |
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Verde Renewables, Inc. (“VRI”) |
| State of Missouri, U.S.A. |
| Management of a processing and packaging facility |
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Verde Life Inc. (“VLI”) |
| State of Oregon, U.S.A. |
| Distribution of THC-free cannabinoid (CBD) products |
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Champmark Sdn Bhd (“Champmark”) |
| Malaysia |
| Mining of minerals |
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The Wision Project Sdn Bhd (“Wision”) |
| Malaysia |
| Digital innovation, marketing & consulting service, PR, branding, influencer marketing, event management and media relations services |
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Verde Estates LLC (“VEL”) |
| State of Missouri, U.S.A. |
| Holding real property |
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The Company and its subsidiaries are hereinafter referred to as (the “Company”).
| F-5 |
| Table of Contents |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying unaudited condensed consolidated financial statements and notes.
· | Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.
In the opinion of management, the consolidated balance sheet as of June 30, 2022 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended September 30, 2022 are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 2023 or for any future period.
These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended June 30, 2022, filed with the SEC on November 4, 2022.
· | Use of Estimates and Assumptions |
The preparation of unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s periodic filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of the Company.
In preparing these unaudited condensed 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 periods reported. Actual results may differ from these estimates.
· | Basis of Consolidation |
The unaudited condensed 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 |
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables it will likely incur in the near future. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
· | Risks and Uncertainties |
The Company operates in the resource exploration industry that is subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating a resource exploration business, including the potential risk of business failure.
| F-6 |
| Table of Contents |
· | 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 September 30, 2022 and June 30, 2022, cash and cash equivalents consisted of bank deposits in a Malaysian bank and petty cash on hand.
· | 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 September 30, 2022 and June 30, 2022, the Company has no allowance for doubtful accounts, as per management’s judgment based on their best knowledge. As of September 30, 2022 and June 30, 2022, 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 September 30, 2022 and June 30, 2022, 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:
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Land and buildings |
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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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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 unaudited condensed 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, plant and equipment owned and held by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
| F-7 |
| Table of Contents |
· | 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 fulfills its obligations under each of its agreements:
· | identify the contract with a customer; |
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· | identify the performance obligations in the contract; |
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· | determine the transaction price; |
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· | allocate the transaction price to performance obligations in the contract; and |
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· | recognize revenue as the performance obligation is satisfied. |
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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.
| F-8 |
| Table of Contents |
· | 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 September 30, 2022 and June 30, 2022.
The operating lease is included in operating lease right-of-use assets and operating lease liabilities as current and non-current liabilities in the unaudited condensed consolidated balance sheets at September 30, 2022 and June 30, 2022.
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 unaudited condensed 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 unaudited condensed 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 three months ended September 30, 2022 and 2021.
| F-9 |
| Table of Contents |
· | Foreign Currencies Translation |
The Company’s reporting currency is the United States dollar (“US$”) and the accompanying unaudited condensed consolidated financial statements have been expressed in United States dollars. The Company’s functional currency is the Malaysian Ringgit (“MYR”) which is a functional currency as being the primary currency of the economic environment in which their operations are conducted.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the unaudited condensed consolidated statement of operations.
For reporting purposes, in accordance with ASC Topic 830 ”Translation of Financial Statements”, capital accounts of the unaudited condensed consolidated financial statements are translated into United States dollars from MYR at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the respective period. The gains and losses resulting from translation of financial statements subsidiaries to the reporting currency are recorded as a separate component of accumulated other comprehensive income within the statements of changes in stockholder’s equity.
Translation of MYR into U.S. dollars has been made at the following exchange rates for the following periods:-
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| September 30, 2021 |
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Period-end MYR:US$ exchange rate |
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Average period MYR:US$ exchange rate |
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· | 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 unaudited condensed 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.
· | 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”.
· | 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.
| F-10 |
| Table of Contents |
· | 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.
The unaudited condensed 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 unaudited condensed 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.
| F-11 |
| Table of Contents |
· | 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. |
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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.
· | Recent Accounting Pronouncements |
During the three months ended September 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 unaudited condensed consolidated financial statements.
| F-12 |
| Table of Contents |
NOTE 3 - GOING CONCERN UNCERTAINTIES
The accompanying unaudited condensed 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 unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.
| F-13 |
| Table of Contents |
NOTE 4 – BUSINESS SEGMENT INFORMATION
Currently, the Company has four reportable business segments, mainly operating in:
(i) | Gold mineral mining; |
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(ii) | Distribution of THC-free cannabinoid (CBD) products, |
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(iii) | Production and distribution of renewable commodities; and |
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(iv) | Holding of real property. |
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 three months ended September 30, 2022 and 2021:
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| Three Months ended September 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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Cost of revenue |
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Gross loss |
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General & administrative expenses |
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Loss from operations |
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Interest expense |
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Other income |
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Loss before income tax |
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Income tax |
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Net loss |
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Total assets at September 30, 2022 |
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| Three Months ended September 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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Cost of revenue |
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Gross loss |
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General & administrative expenses |
|
| ( | ) |
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| ( | ) |
|
| ( | ) |
|
| ( | ) | ||
Loss from operations |
|
| ( | ) |
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| ( | ) |
|
| ( | ) |
|
| ( | ) | ||
Interest expense |
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| ( | ) |
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| ( | ) | ||||
Other income |
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| ||||||
Loss before income tax |
|
| ( | ) |
|
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|
| ( | ) |
|
| ( | ) |
|
| ( | ) | ||
Income tax |
|
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| ||||||
Net loss |
| $ | ( | ) |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | ||
|
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Total assets as September 30, 2021 |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
|
|
|
| $ |
| ||||||
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:
|
| Three Months ended September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Malaysia |
| $ |
|
| $ |
| ||
United States of America |
|
| |
|
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| |
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| |
|
|
| |
|
| F-14 |
| Table of Contents |
NOTE 5 – OTHER RECEIVABLE, DEPOSITS AND PREPAYMENTS
Other receivable, deposits and prepayments as of September 30, 2022 and June 30, 2022 consist of the following:
|
| September 30, 2022 |
|
| June 30, 2022 |
| ||
|
|
|
|
|
|
| ||
Deposits |
| $ |
|
| $ |
| ||
Prepayments |
|
|
|
|
|
| ||
Other receivables |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
| $ |
|
| $ |
| ||
NOTE 6 – PROPERTY AND EQUIPMENT
A summary of property and equipment at September 30, 2022 and June 30, 2022 is as follows:
|
| September 30, 2022 |
|
| June 30, 2022 |
| ||
|
|
|
|
|
|
| ||
Land and building |
| $ |
|
| $ |
| ||
Plant and machinery |
|
|
|
|
|
| ||
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 |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Less: accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
|
| $ |
|
| $ |
| ||
Depreciation expense for the three months ended September 30, 2022 and 2021 totaled $
Land and building with the net carrying value of $
| F-15 |
| Table of Contents |
NOTE 7 – DEPOSITS PAID
At September 30, 2022 and June 30, 2022, deposits consist of the following:
|
| September 30, 2022 |
|
| June 30, 2022 |
| ||
Deposits paid for acquisition of subsidiaries |
|
|
|
|
|
| ||
- Bio Resources Limited (#1) |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Deposits paid for acquisition of property and equipment |
|
|
|
|
|
|
|
|
- Intellectual property license (#2) |
|
|
|
|
|
| ||
- Factory site (#3) |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Security deposit (#4) |
| $ |
|
| $ |
| ||
___________
(#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 unrelated third party, and other unrelated third party individuals, in consideration of issuance of
(#2) On May 10, 2021, the Company announced the Sale and Purchase Agreement to acquire the assets of a biofraction plant and the right to use intellectual property license in Sabah, Malaysia from Borneo Energy Sdn Bhd, in consideration of issuance of
(#3) On June 11, 2021, VRAP 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 $
Also on March 2, 2022, the Company, through VRAP, entered into a Commercial Lease Agreement and Option to Purchase (“Lease Agreement”) to lease the factory site from Segama Ventures for a lease term of seven (
(#4) 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”) 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 was for a period of two (
| F-16 |
| Table of Contents |
NOTE 8 - MINING RIGHT
A lump sum payment of RM260,500 ($
The table below presents the movement of the right as recorded on the balance sheets.
|
| Three months ended September 30, 2022 |
|
| Year Ended June 30, 2022 |
| ||
Balance as at July 1, 2022 and July 1, 2021 |
| $ |
|
| $ |
| ||
Amortization charge for the period |
|
| ( | ) |
|
| ( | ) |
Foreign exchange adjustment |
|
| ( | ) |
|
| ( | ) |
Balance as of September 30, 2022 and June 30, 2022 |
| $ |
|
| $ |
| ||
Amortization charge of mining right was $
NOTE 9 – AMOUNTS DUE TO RELATED PARTIES
The following breakdown of the balances due to related parties, consisted of:-
|
| September 30, 2022 |
|
| June 30, 2022 |
| ||
|
|
|
|
|
|
| ||
BOG |
| $ |
|
| $ |
| ||
Borneo Oil and Gas Corporation Sdn Bhd (“BOG”) is a wholly owned subsidiary of Borneo Oil Berhad (“BOB”) (holding
NOTE 10 – PROMISSORY NOTES
On May 13, 2021, the Company announced the Share Sale Agreement dated 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 issuance of
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:
|
| September 30, |
|
| June 30, |
| ||
|
| 2022 |
|
| 2022 |
| ||
Balance at the beginning of period or year |
| $ |
|
| $ |
| ||
Interest expense |
|
|
|
|
|
| ||
Balance at the end of period or year |
| $ |
|
| $ |
| ||
The Company recorded $
| F-17 |
| Table of Contents |
NOTE 11 - 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 Condensed 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.
|
| September 30, 2022 |
|
| June 30, 2022 |
| ||
|
|
|
|
|
|
| ||
Assets |
|
|
|
|
|
| ||
Right-of-use asset # |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Current: |
|
|
|
|
|
|
|
|
Finance lease liabilities |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Non-current: |
|
|
|
|
|
|
|
|
Finance lease liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total lease liabilities |
| $ |
|
| $ |
| ||
As of September 30, 2022, right-of-use assets were $
As of June 30, 2022, 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 periods.
|
| Three Months ended September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Finance lease cost: |
|
|
|
|
|
| ||
Interest on lease liabilities (per ASC 842) |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Operating lease cost: |
|
|
|
|
|
|
|
|
Operating lease expense (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” expenses on the accompanying unaudited condensed consolidated statement of operations.
| F-18 |
| Table of Contents |
Future Contractual Lease Payments as of September 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 September 30:
Years ending September 30, |
| Operating and finance lease amount |
| |
|
|
|
| |
2023 |
| $ |
| |
2024 |
|
|
| |
2025 |
|
|
| |
2026 |
|
|
| |
2027 |
|
|
| |
Thereafter |
|
|
| |
|
|
|
|
|
Total minimum finance lease liabilities instalment payment |
| $ |
| |
|
|
|
|
|
Representing:- |
|
|
|
|
Current liabilities |
| $ |
| |
Non-current liabilities |
|
|
| |
|
| $ |
| |
For the three months ended September 30, 2022 and 2021, the amortization charge was $
# This leasing arrangement for the lease of the Segama factory amounting to $
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.
| F-19 |
| Table of Contents |
NOTE 12 - STOCKHOLDERS’ EQUITY
Authorized Stock
The Company has authorized
Preferred stock outstanding
There are no preferred shares outstanding as of September 30, 2022 and June 30, 2022.
The Company has no stock option plan, warrants, or other dilutive securities.
Common stock outstanding
On July 15, 2022, the Company issued a total of
There were
NOTE 13 - INCOME TAX
For the three months ended September 30, 2022 and 2021, the local (“United States of America”) and foreign components of loss before income taxes were comprised of the following:
|
| Three Months ended September 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:
|
| Three Months ended September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Current tax: |
|
|
|
|
|
| ||
- Local |
| $ |
|
| $ |
| ||
- Foreign |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Deferred tax |
|
|
|
|
|
|
|
|
- Local |
|
|
|
|
|
| ||
- Foreign |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
| $ |
|
| $ |
| ||
The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company mainly operates in U.S.A. and Malaysia that is subject to taxes in the jurisdictions in which they operate, as follows:
United States of America
VRDR, VRI and VLI are subject to the tax laws of United States of America. The U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law on December 22, 2017. 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
Net Operating Losses (NOLs) generated prior to January 1, 2018 are able to be carried forward up to twenty subsequent years. Any NOLs created for tax years subsequent to that may be carried forward indefinitely. However, any NOLs arising from tax years ending after December 31, 2020, can only be used to offset up to 80% of taxable income.
For the three months ended September 30, 2022 and 2021, there were no operating income under US tax regime. A full valuation allowance has been provided against the deferred tax assets of $
| F-20 |
| Table of Contents |
BVI
Under the current BVI law, VRAP is not subject to tax on income.
Malaysia
VRSB, Champmark and Wision are registered in Malaysia and Champmark is subject to the Malaysian corporate income tax at a standard income tax rate of
As of September 30, 2022, the operation in Malaysia incurred $
|
| Three Months ended September 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:
|
| September 30, 2022 |
|
| June 30, 2022 |
| ||
|
|
|
|
|
|
| ||
Deferred tax assets: |
|
|
|
|
|
| ||
Net operating loss carry forwards, from |
|
|
|
|
|
| ||
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 reversed in the unaudited condensed consolidated statement of operations. The Company did not have any interest and penalty provided or recognized in the income statements for the three months ended September 30, 2022 and 2021. The Company did not have uncertainty tax positions or events leading to uncertainty tax position within the next 12 months.
| F-21 |
| Table of Contents |
NOTE 14 - RELATED PARTY TRANSACTIONS
|
| For the Three Months ended |
| |||||
|
| September 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 (#4) |
| $ |
|
| $ |
| ||
Professional services provided by: |
|
|
|
|
|
|
|
|
Warisan Khidmat Sdn Bhd (#4) |
| $ |
|
| $ |
| ||
Related party balances: |
|
| ||||||
|
| As of |
| |||||
|
| September 30, 2022 |
|
| June 30, 2022 |
| ||
Trade receivables |
|
|
|
|
|
| ||
Borneo Eco Food Sdn Bhd (#2) |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Deposits paid for acquisition of property and equipment |
|
|
|
|
|
|
|
|
Borneo Energy Sdn Bhd (#2) |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Trade Payables |
|
|
|
|
|
|
|
|
Warisan Khidmat Sdn Bhd (#3) |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Advanced from related parties |
|
|
|
|
|
|
|
|
Advanced from BOG (#4) |
| $ |
|
| $ |
| ||
(#1) Lamax Gold Limited (“LGL”) held
(#2) Borneo Oil Berhad (“BOB”) is the ultimate holding company of
(#3) Warisan Khidmat Sdn, Bhd. is a company whose shareholdings is entirely held by Director of Verde Malaysia.
(#4) Borneo Oil and Gas Corporation Sdn Bhd (“BOG”) is a wholly owned subsidiary of
Apart from the transactions and balances detailed elsewhere in these accompanying unaudited condensed consolidated financial statements, the Company has no other significant or material related party transactions during the periods presented.
| F-22 |
| Table of Contents |
NOTE 15 - CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
(a) Major customers
For the three months ended September 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. 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.
(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 16 - COMMITMENTS AND CONTINGENCIES
As of September 30, 2022, the Company has no material commitments or contingencies.
NOTE 17 - 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 unaudited condensed consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after September 30, 2022, up through the date the Company issued the audited unaudited condensed consolidated financial statements.
On October 1, 2022, Balakrishnan B S Muthu resigned from 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
On November 7, 2022, the Company issued a total of
On November 8, 2022, Jack Wong has been appointed Chief Executive Officer of the Company’s wholly owned subsidiaries Verde Renewables, Inc and Verde Life Inc.
| F-23 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed herein as well as in the “Description of Business – Risk Factors” section in our Annual Report on Form 10-K, as filed on November 4, 2022. You should carefully review the risks described in our Annual Report and in other documents we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.
Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
All references in this Form 10-Q to the “Company,” “Verde Resources,” “we,” “us,” or “our” are to Verde Resources, Inc.
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 engaged in the 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 Verde Resources Asia Pacific Limited (“VRAP”) (formerly known as Gold Billion Global Limited), a company incorporated under the laws of the British Virgin Islands.
The following diagram illustrates our current corporate structure:
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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 are constantly exploring for potential acquisition of mining projects in other parts of the world.
As our business is affected by the fluctuations of gold prices, the Company intends to diversify its product line by acquiring mining projects with potential for different mineral resources other than gold. We continue to hold discussions with other mining companies for potential collaboration to carry out exploration and exploitation works on other mineral resources in Southeast Asia regions. Apart from the mining industry, the Company 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.
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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Results of Operations
For the three months ended September 30, 2022 and 2021:
The following table sets forth selected financial information from our statements of comprehensive loss for the three months ended September 30, 2022 and 2021:
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| September 30, 2022 |
|
| September 30, 2021 |
|
| Change |
| |||
|
| Amount |
|
| Amount |
|
| % |
| |||
|
| (Unaudited) |
|
| (Unaudited) |
|
|
| ||||
Revenue |
| $ | 26,312 |
|
| $ | - |
|
|
| 100 | % |
Cost of revenue |
| $ | (47,939 | ) |
| $ | - |
|
|
| -100 | % |
Gross loss |
| $ | (21,627 | ) |
| $ | - |
|
|
| -100 | % |
Operating expenses |
| $ | 810,442 |
|
| $ | 363,996 |
|
|
| 122.7 | % |
Interest expense |
| $ | 530,112 |
|
| $ | 470,766 |
|
|
| 12.6 | % |
Other income, net |
| $ | 5,775 |
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| $ | 12,090 |
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|
| -52.2 | % |
NET LOSS |
| $ | (1,356,406 | ) |
|
| (822,672 | ) |
|
| 64.9 | % |
The average rate of MYR : USD for three months ended September 30, 2022 and September 30, 2021 was 0.2213 and 0.2388 respectively.
Revenue
The revenue is mainly derived from the marketing fee and sales of products in Malaysia.
We have generated $26,312 and $0 revenues for the three months ended September 30, 2022 and 2021.
Cost of revenue
We have generated $47,939 and $0 cost of revenues for the three months ended September 30, 2022 and 2021.
Gross loss
We have recorded a gross loss of $21,627 and $0 for the three months ended September 30, 2022 and 2021.
Operating expense
Operating expenses comprised mainly of salaries, office costs, legal and professional fees. The increase in operating expenses for the period was mainly due to the increase of legal and professional fees during the period.
We have incurred $810,442 and $363,996 in operating expenses through September 30, 2022 and 2021.
Other income (expense), net
We have interest expense of $530,112 and $470,766 for the three months ended September 30, 2022 and 2021.
We have other net income of $5,775 and $12,090 for the three months ended September 30, 2022 and 2021.
Net loss
As a result of the above factors, the Company incurred a net loss of $1,356,406 and $822,672 for the three months ended September 30, 2022 and 2021, respectively.
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Liquidity and Capital Resources
The following summarizes the key component of our cash flows for the three months ended September 30, 2022 and 2021.
Cash Flow Date |
| September 30, 2022 |
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| September 30, 2021 |
| ||
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|
|
|
|
|
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Net Cash (Used in) operating activities |
| $ | (600,984 | ) |
| $ | (244,814 | ) |
Net Cash (Used in) investing activity |
|
| (424,248 | ) |
|
| - |
|
Net Cash Provided by (Used in) financing activities |
|
| 1,311,386 |
|
| (79,518 | ) | |
Effect of exchange rate fluctuation on cash and cash equivalents |
|
| 43,280 |
|
|
| 5,805 |
|
Net increase in cash and cash equivalents |
|
| 329,434 |
|
|
| (318,527 | ) |
Cash and cash equivalents, beginning of period |
|
| 418,917 |
|
|
| 2,117,622 |
|
Cash and cash equivalents, ending of period |
| $ | 748,351 |
|
| $ | 1,799,095 |
|
Net Cash Provided by (Used in) Operating Activities
For the three months ended September 30, 2022, the Company had incurred net loss from operation of $1,356,406 which posted a negative impact to the Company’s cash flow. The reconciliation on non-cash items such as interest expenses, depreciation and amortization provide positive impact on cash.
In the operation analysis, the net cash used in operating activities increased from $244,814 to $600,984. the operation loss of $1,356,406 was partially offset by the noncash expenses such as $27,952 in depreciation, $32,919 in amortization, $232,500 in share-based compensation and $526,227 in interest expenses on promissory notes. In the operating assets and liabilities, the net increase in current assets resulted mainly from an increase of other receivables, deposits and prepayments of $70,165 whereas the net increase in current liabilities resulted mainly from $17,091 increase of advanced from sub-contractor and related parties. The final result of the cash flow used in operating activities was $600,984.
In the operation analysis, the operation loss of $1,395,606 was partially offset by the noncash expenses such as $27,952 in depreciation, $32,919 in amortization, $232,500 in share-based compensation and $526,227 in interest expenses on promissory notes. In the operating assets and liabilities, the net increase in current assets resulted from an increase of other receivables, deposits and prepayments of $30,965 whereas the net increase in current liabilities resulted from $1,332,613 increase of accrued liabilities and accounts payable. The final result of the cash flow used in operating activities was $722,216 positive cash flow effect.
Net Cash Provided by (Used in) Investing Activity
The net cash used by investing activity of $424,248 resulted from purchase of property and equipment for the three months ended September 30, 2022.
Net Cash Provided by (Used in) Financing Activities
The net cash provided by financing activities of $1,311,386 resulted from proceeds from shares to be issued of $1,323,200 net off repayments to lease liabilities for the three months ended September 30, 2022 of $11,814.
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.
Working Capital
As of September 30, 2022 and June 30, 2022, we had cash and cash equivalent of $748,351 and $418,917, respectively. As of September 30, 2022 and June 30, 2022, we have incurred accumulated operating losses of $11,714,326 and $10,357,920, respectively.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). During the 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 September 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 September 30, 2022. In the meantime, management has appointed external consultants to minimise risk and ascertain compliance of the requirements.
Management believes that the material weaknesses set forth above did not have an immediate negative effect on our financial results because of our small size of operation. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements if the Company were growing substantially after the expansion move was materialized.
Changes in Internal Controls
There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the nine months ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
Item 1A. Risk Factors.
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
N/A.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosure.
Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“ Dodd-Frank Act “), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic and annual reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities under the regulation of the Federal Mine Safety and Health Act of 1977. The Company did not have any mines in the United States during the period ended September 30, 2022.
Item 5. Other Information.
None.
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Item 6. Exhibits.
The following exhibits are included as part of this report:
___________
* The following financial information from Verde Resources, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of September 30, 2022, and June 30, 2022, (ii) Condensed Statements of Operations for the three months ended September 30, 2022 and 2021, (iii) Condensed Statements of Cash Flows for the nine months ended September 30, 2022 and 2021, and (iv) Notes to Condensed Financial Statements.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| VERDE RESOURCES, INC. |
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| (Registrant) |
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Dated: November 17, 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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EXHIBIT 31.1
CERTIFICATION
I, Jack Wong, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Verde Resources, Inc.; |
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| 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; |
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| 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; |
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| 4. | The registrant’s other certifying officer(s) and I are 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: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our 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; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our 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 |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our 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): |
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| (a) | All significant deficiencies and material weaknesses 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 |
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| (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 17, 2022 | By: | /s/ Jack Wong |
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| Jack Wong |
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| President and Chief Executive Officer |
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EXHIBIT 31.2
CERTIFICATION
I, Balakrishnan B S Muthu, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q 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. | The registrant’s other certifying officer(s) and I are 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: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our 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; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our 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 |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our 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): |
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| (a) | All significant deficiencies and material weaknesses 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 |
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| (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 17, 2022 | By: | /s/ Balakrishnan B S Muthu |
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| Balakrishnan B S Muthu |
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| Chief Financial Officer |
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EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Balakrishnan B S Muthu, certify, as of the dates hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Verde Resources, Inc. on Form 10-Q for the period ended September 30, 2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Verde Resources, Inc. at the dates and for the periods indicated.
| Date: November 17, 2022 | By: | /s/ Jack Wong |
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| Jack Wong |
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| President and Chief Executive Officer |
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I, Balakrishnan B S Muthu, certify, as of the dates hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Verde Resources, Inc. on Form 10-Q for the period ended September 30, 2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Verde Resources, Inc. at the dates and for the periods indicated.
| Date: November 17, 2022 | By: | /s/ Balakrishnan B S Muthu |
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| Balakrishnan B S Muthu |
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| Chief Financial Officer |
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A signed original of this written statement required by Section 906 has been provided to Verde Resources, Inc. and will be retained by Verde Resources, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.