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:
[[Image Removed: vrdr_10qimg2.jpg]]
On July 15, 2022, the Company issued a total of 1,500,000 restricted common
shares at US$0.155 per share to two consultants pursuant to two consultant
agreements; 1,000,000 restricted common shares were issued to Gary F. Zimmer and
500,000 restricted common shares were issued to Lisa Leilani Zimmer Durand, to
serve as consultants to the Company. An aggregate of $232,500 was recognized as
stock-based compensation under general and administrative expenses during the
period ended September 30, 2022.
On October 1, 2022, Balakrishnan B S Muthu resigned from his position as
President of 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
("VRSB") 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"). The Agreement provides
for an employment term of five (5) years. Mr. Wong will receive an annual salary
of $287,650 inclusive of any tax payable as required by law. The Company will
also provide Mr. Wong an executive vehicle, executive housing, health benefits,
and equity incentives upon the Company adopting an equity incentive plan.
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On October 26, 2022, the Company entered into a corporate consulting services
agreement (the "Consulting Agreement") for investor communication and public
relations services with Dutchess Group LLC ("DGL"). Pursuant to terms of the
Consulting Agreement, the Company agreed to issue 1,500,000 shares of the
Company's restricted common stock to DGL within forty-five (45) days of signing
the Consulting Agreement.
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.
On November 22, 2022, the Company through its wholly-owned subsidiary Verde Life
Inc. ("VLI"), a company incorporated in the State of Oregon, entered into a
Product Distribution Agreement (the "Agreement") with Country Farms Sdn Bhd
("CF"), a company incorporated in Malaysia and a wholly-owned subsidiary of
Berjaya Corporation Berhad, to grant CF with the exclusive right to distribute
white-label CBD products from VLI to its customers in Malaysia. Under the
Agreement, CF shall pay VLI a deposit of $200,000 upon execution of this
Agreement. Upon submission of the first purchase order, CF shall pay 50% of the
purchase order value to VLI. Prior to any product shipment, CF shall pay VLI the
balance 50% of the purchase order value less an initial deposit of $70,000. The
remaining deposit of $130,000 shall be retained for the exclusivity and
subsequent orders. The term of the Agreement will commence on November 22, 2022
for a period of three (3) years.
On November 30, 2022, the Company through its wholly-owned subsidiary Verde
Renewables, Inc. ("VRI"), a company incorporated in the State of Missouri,
U.S.A., entered into a Services Agreement (the "Agreement") with Y M Tengku
Chanela Jamidah Y A M Tengku Ibrahim to engage her as its Director of Strategic
Initiatives to promote and make introductions for the benefit of advancing the
Company's business and interests amongst her networks as designated in the
Agreement. Under the Agreement, the Company will pay Y M Tengku Chanela Jamidah
Y A M Tengku Ibrahim by the issuance of 1,000,000 shares of the Company's
restricted common stock, par value $0.001 per share (the "Common Stock") in two
tranches of 500,000 shares each on or before December 31, 2022 and December 31,
2023 respectively. The term of the Agreement will be for a fixed period of
twenty-four (24) months commencing on November 30, 2022.
On December 1, 2022, the Company, through its wholly-owned subsidiary VRI,
entered into a Services Agreement (the "Agreement") with Steven Sorhus to engage
him as its Financial Controller to prepare monthly financial reports and
financial projections, and oversee daily accounting practices of the Company and
its subsidiaries as designated in the Agreement. Under the Agreement, the
Company will pay Steven Sorhus by the issuance of 800,000 shares of the
Company's restricted common stock, par value $0.001 per share (the "Common
Stock") in two tranches of 300,000 shares on or before December 31, 2022 and
500,000 shares on or before December 31, 2023. The term of the Agreement will be
for a fixed period of twenty-five (25) months commencing on December 1, 2022.
On December 1, 2022, the Company, through its wholly-owned subsidiary VRI,
entered into a Services Agreement (the "Agreement") with EMGTA LLC ("EMGTA").
Under the Agreement, EMGTA will provide services to develop business plan and
marketing strategy to facilitate business growth, and identify new customers and
markets for the Company. The Company will pay EMGTA by the issuance of 750,000
shares of the Company's restricted common stock, par value $0.001 per share (the
"Common Stock") in two tranches of 375,000 shares each on or before December 31,
2022 and December 31, 2023 respectively. The term of the Agreement will be for a
fixed period of twenty-five (25) months commencing on December 1, 2022.
On December 15, 2022, the Company entered into a Services Agreement (the
"Agreement") with Looi Pei See to engage her as a consultant to develop the
retail markets for the Company's products and services in Malaysia and
Singapore. The Company will pay Looi Pei See by the issuance of 1,140,000 shares
of the Company's restricted common stock, par value $0.001 per share (the
"Common Stock") on or before December 31, 2022.
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.
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. The acquisition was
completed on October 12, 2022.
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 December 31, 2022 and 2021:
The following table sets forth selected financial information from our
statements of comprehensive loss for the three months ended December 31, 2022
and 2021:
December 31, 2022 December 31, 2021 Change
Amount Amount %
(Unaudited) (Unaudited)
Revenue $ 81,140 $ - 100 %
Cost of revenue $ (31,656 ) $ - 100 %
Gross profit $ 49,484 $ - 100 %
Operating expenses $ 862,080 $ 359,105 203.6 %
Interest expense $ 1,349,548 $ 484,168 178.7 %
Other income, net $ 1,878 $ 25 7,412 %
NET LOSS $ (2,160,266 ) (843,248 ) 183.2 %
The average rate of MYR : USD for three months ended December 31, 2022 and
December 31, 2021 was 0.2207 and 0.2398 respectively.
Revenue
The revenue is mainly derived from the rental income and sales of products in
Malaysia.
We have generated $81,140 and $0 revenues for the three months ended December
31, 2022 and 2021.
Cost of revenue
We have generated $31,656 and $0 cost of revenues for the three months ended
December 31, 2022 and 2021.
Gross profit
We have recorded a gross profit of $49,484 and $0 for the three months ended
December 31, 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 consultancy fee and legal and professional fees during
the period.
We have incurred $862,080 and $359,105 in operating expenses through December
31, 2022 and 2021.
Interest expense and Other income, net
We have interest expense of $1,349,548 and $484,168 for the three months ended
December 31, 2022 and 2021. The increase in interest expenses for the period was
mainly due to early conversion of promissory note.
We have other net income of $1,878 and $25 for the three months ended December
31, 2022 and 2021.
Net loss
As a result of the above factors, the Company incurred a net loss of $2,160,266
and $843,248 for the three months ended December 31, 2022 and 2021,
respectively.
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For the six months ended December 31, 2022 and 2021:
The following table sets forth selected financial information from our
statements of comprehensive loss for the six months ended December 31, 2022 and
2021:
December 31, 2022 December 31, 2021 Change
Amount Amount %
(Unaudited) (Unaudited)
Revenue $ 107,452 $ - 100 %
Cost of revenue $ (79,595 ) $ - 100 %
Gross profit $ 27,857 $ - 100 %
Operating expenses $ 1,672,522 $ 723,101 131.3 %
Interest expense $ 1,879,660 $ 954,934 96.84 %
Other income, net $ 7,653 $ 12,115 (36.83) %
NET LOSS $ (3,516,672 ) (1,665,920 ) 111.1 %
The average rate of MYR : USD for six months ended December 31, 2022 and
December 31, 2021 was 0.2210 and 0.2393 respectively.
Revenue
The revenue is mainly derived from the rental income and sales of products in
Malaysia.
We have generated $107,452 and $0 revenues for the six months ended December 31,
2022 and 2021.
Cost of revenue
We have generated $79,595 and $0 cost of revenues for the six months ended
December 31, 2022 and 2021.
Gross profit
We have recorded a gross profit of $27,857 and $0 for the six months ended
December 31, 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 consultancy fee and legal and professional fees during
the period.
We have incurred $1,672,522 and $723,101 in operating expenses through December
31, 2022 and 2021.
Interest expense and Other income, net
We have interest expense of $1,879,660 and $954,934 for the six months ended
December 31, 2022 and 2021. The increase in interest expenses for the period was
mainly due to early conversion of promissory notes.
We have other net income of $7,653 and $12,115 for the six months ended December
31, 2022 and 2021.
Net loss
As a result of the above factors, the Company incurred a net loss of $3,516,672
and $1,665,920 for the six months ended December 31, 2022 and 2021,
respectively.
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VERDE RESOURCES, INC. 