VRDR.OQBVerde Resources, INC
10-K: Verde Resources Inc. Shifts Focus to Sustainable Tech, Reports Annual Results
Sentiment:
Annual Results
Verde Resources Inc. has transitioned from mining and CBD to focus on renewable energy and sustainable development, highlighted by a partnership with the National Center for Asphalt Technology (NCAT) to test its biochar-asphalt technology.
Capital raiseThe company believes that it will require approximately $2 million over the next 18 months to implement its business plan.The company intends to finance its business expansion efforts through loans and investments from existing shareholders, financial institutions and investors.
Worse than expectedThe company's revenue decreased and it reported a net loss, indicating worse than expected financial performance.
Summary
- Verde Resources Inc. has shifted its focus to renewable energy and sustainable development, moving away from mining and THC-free cannabinoid (CBD) products.
- The company's BioFraction facility in Borneo experienced a slowdown but is expected to resume operations with a potential for scale-up after the certification of its biochar-asphalt technology.
- A key partnership with the National Center for Asphalt Technology (NCAT) is underway to test the company's innovative Biochar-Asphalt technology.
- The company is registered as a Carbon Removal Credit supplier with Puro.earth, aiming to generate revenue through Carbon Removal Credits (CORCs).
- The company reported a net loss of $3,187,774 for the year ended June 30, 2024, compared to a net loss of $3,998,960 in the previous year.
- Revenue decreased to $96,584 in 2024 from $100,777 in 2023, primarily due to the non-generation of revenue from compost spreading.
- The company believes it will require approximately $2 million over the next 18 months to implement its business plan.
Sentiment
Score: 5
Explanation: The document presents a mixed picture. While the company is making strategic shifts towards sustainability and has secured key partnerships, it is also facing financial challenges and operational hurdles. The transition is promising but carries significant risks.
Positives
- The company is actively pursuing a transition to renewable energy and sustainable development.
- The partnership with NCAT could lead to the certification of its biochar-asphalt technology, opening up new revenue streams.
- The company's registration as a Carbon Removal Credit supplier with Puro.earth provides an opportunity to generate revenue through CORCs.
- The company has completed the disposition of its mining business, allowing it to focus on its core sustainability agenda.
- The company has secured a partnership with CRH Ventures to scale up its biochar-asphalt technology for commercialization.
Negatives
- The company reported a net loss of $3,187,774 for the year ended June 30, 2024.
- Revenue decreased to $96,584 in 2024 from $100,777 in 2023.
- The company's operations in Borneo experienced a temporary slowdown.
- The company has limited operating history and may require additional capital to implement its business plan.
- The company's independent registered auditors have expressed substantial doubt about its ability to continue as a going concern.
Risks
- The company is dependent on key personnel, and the loss of these individuals could have a material adverse effect on the business.
- The COVID-19 pandemic and other future pandemics may result in significant deterioration and disruption in national and local economic conditions.
- Changes in global economic conditions, including inflation, may negatively impact the company's business, revenues, and earnings.
- The company is subject to the many risks of doing business internationally, including the difficulty of enforcing liabilities in foreign jurisdictions.
- Failure to comply with the United States Foreign Corrupt Practices Act could subject the company to penalties and other adverse consequences.
- Climate change and related legislative and regulatory initiatives may result in operational changes and expenditures that could significantly impact the business.
- The company may be exposed to risks relating to managements conclusion that its disclosure controls and procedures and internal controls over financial reporting are ineffective.
- The company does not have an independent audit committee, which may compromise the management of its business.
- The company's shares are defined as penny stock, which may affect the ability to resell any shares purchased.
- The company has not paid dividends and does not intend to pay dividends in the foreseeable future.
Future Outlook
The company's future depends on the successful validation and certification of its Net Zero road construction blueprint by NCAT, which will enable the company to generate revenue through licensing, royalties, carbon credits, and sales of biochar and bio-fuel. The company believes it will require approximately $2 million over the next 18 months to implement its business plan.
Management Comments
- The company has been undergoing a restructuring exercise to shift its focus towards renewable energy and sustainability development.
- The disposition of the mining business via the sale of the entire issued and paid-up share capital of CSB is in line with the Companys restructuring effort to focus on renewable energy and sustainability.
- The company is confident in its Verde-ZymTec technology and aspires to attain the highest level of certification from NCAT.
- Success in this Project is expected to drive widespread adoption of a net-zero road construction blueprint by DOTs across the United States and the federal DOT.
Industry Context
The company's shift towards sustainable technologies aligns with the growing global focus on climate change and environmental stewardship. The development of biochar-asphalt and carbon removal credits positions the company to capitalize on the increasing demand for eco-friendly solutions in the construction and infrastructure sectors. The partnership with NCAT and Puro.earth also indicates a move towards industry validation and market acceptance.
Comparison to Industry Standards
- The company's biochar-asphalt technology is comparable to other sustainable pavement solutions being developed by companies like CarbonBuilt and Solidia Technologies, which focus on reducing the carbon footprint of concrete and cement.
- The partnership with NCAT is similar to other industry collaborations where companies seek third-party validation and certification for their innovative technologies, such as the work being done by the Minnesota Road Research Facility (MnROAD).
- The company's efforts to generate Carbon Removal Credits (CORCs) are in line with the growing trend of companies seeking to offset their carbon footprint, similar to the work being done by companies like Climeworks and Carbon Engineering.
- The company's focus on using biochar in construction materials is comparable to other companies exploring the use of bio-based materials in construction, such as those using hempcrete or mycelium-based materials.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| President | Jack Wong | NA | 2023-09-12 | Jack Wong stepped down from his position as President, but remains as Chief Executive Officer. |
| Chairman of the Board | Jack Wong | Joseph Ambrose Lee | 2024-01-23 | Jack Wong stepped down from his position as Chairman of the Board. |
| Director and Chairman of the Board | Joseph Ambrose Lee | Balakrishnan B S Muthu | 2024-06-18 | Joesph Ambrose Lee tendered his resignation as Director and Chairman of the Board. |
| Chief Operating Officer | NA | Eric Bava | 2023-10-01 | To drive the Companys climate-tech innovation. |
| Chief Technology Officer | Andre van Zyl | NA | 2024-05-15 | Andre van Zyl stepped down from his position as Chief Technology Officer. |
| Chief Growth Officer | NA | Jeremy P. Concannon | 2024-08-01 | To drive the Companys growth. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Board Size | The number of members of the Board was increased from three (3) to seven (7). | 2024-01-23 | This change may improve the diversity of perspectives and expertise on the board. |
| Management Committee | A Management Committee of the Board was formed to oversee and manage the operations of the Company. | 2024-02-06 | This change may improve the efficiency and effectiveness of the company's operations. |
Related Party Transactions
- The company has various transactions with related parties, including sales, rental income, site expenses, professional services, interest expenses, and advances.
- The company has significant balances due to and from related parties, including Borneo Oil Corporation Sdn Bhd (BOC), Borneo Oil Berhad (BOB), Taipan International Limited, and Victoria Capital Sdn Bhd.
Stakeholder Impact
- Shareholders may experience volatility in the share price due to the company's transition and financial challenges.
- Employees may be affected by the company's restructuring and potential changes in operations.
- Customers may benefit from the company's sustainable products and services.
- Suppliers may be impacted by changes in the company's supply chain and procurement practices.
- Creditors may be concerned about the company's ability to repay its debts given its financial challenges.
Next Steps
- The company will continue to test and certify its biochar-asphalt technology with NCAT.
- The company will work to secure commercial licensing for its Net Zero road construction blueprint.
- The company will focus on generating revenue through royalties, carbon credits, and sales of biochar and bio-fuel.
- The company will seek additional funding to support its business plan.
Key Dates
| Date | Description |
|---|---|
| 2010-04-22 | Verde Resources, Inc. was incorporated in the State of Nevada, U.S.A. |
| 2013-10-17 | Mr. Wu Ming Ding, Mr. Balakrishnan B S Muthu, and Mr. Liang Wai Keen were appointed as Directors and officers. |
| 2013-10-25 | The company entered into an Assignment Agreement for the Assignment of Management Right in Merapoh Gold Mines in Malaysia. |
| 2016-02-20 | Mr. Wu Ming Ding resigned, and Mr. Balakrishnan B S Muthu was appointed President. Mr. Chen Ching was appointed Director. |
| 2018-02-02 | The company's Articles of Incorporation were amended to increase the authorized shares. |
| 2021-03-31 | Mr. Carl M. Craven was appointed Director of the Company. |
| 2021-05-10 | The company announced the Sale and Purchase Agreement to acquire the assets of a biofraction plant. |
| 2021-05-12 | The company announced the Share Sale Agreement for the acquisition of Bio Resources Limited (BRL). |
| 2021-06-09 | The company entered into a Settlement of Debt Agreement with creditors. |
| 2021-06-11 | VRAP entered into a Sale and Purchase of Assets Agreement to purchase a factory site. |
| 2021-06-18 | VRAP entered into a Shares Sale Agreement with Lamax Gold Limited (LGL) to acquire the remaining 15% of CSB. |
| 2021-07-07 | The company entered into a Product Supply Agreement with MRX Xtractors, LLC. |
| 2021-08-10 | The company formed Verde Renewables, Inc. and Verde Estates, LLC. |
| 2021-11-15 | The company formed Verde Life Inc. |
| 2022-01-17 | The company formed Verde Resources (Malaysia) Sdn Bhd. |
| 2022-02-10 | The company entered into a Commercial Lease Agreement and Option to Purchase in La Belle, Missouri. |
| 2022-02-24 | The acquisition from Borneo Energy Sdn Bhd the assets of its biofraction plant was completed. |
| 2022-03-02 | VRAP entered into a Cancellation of Sale and Purchase of Assets Agreement and a Commercial Lease Agreement. |
| 2022-03-23 | The company entered into a Sale of Shares Agreement (SSA) with The Wision Project Sdn Bhd (Wision). |
| 2022-04-19 | The company entered into a Term Sheet for Regenerative Carbon Negative Agriculture Initiative with The Borneo Food Group Sdn. Bhd. |
| 2022-04-27 | The company entered into a Professional Engineering Services Contract with BioDiverse Energies, LLC. |
| 2022-04-29 | Verde Renewables, Inc. (VRI) closed on the purchase of residential property in Chesterfield, Missouri. |
| 2022-06-08 | The company entered into a Services Agreement with Gary F. Zimmer. |
| 2022-07-06 | The Product Supply Agreement with MRX Xtractors, LLC expired. |
| 2022-10-12 | The acquisition of BRL was consummated. |
| 2022-10-20 | CSB became a wholly owned subsidiary of VRAP. |
| 2022-10-26 | The company entered into a corporate consulting services agreement with Dutchess Group LLC (DGL). |
| 2022-11-08 | Jack Wong was appointed Chief Executive Officer of Verde Renewables, Inc and Verde Life Inc. |
| 2022-11-30 | The company entered into a Services Agreement with Y M Tengku Chanela Jamidah Y A M Tengku Ibrahim. |
| 2022-12-01 | The company entered into a Services Agreement with Steven Sorhus and EMGTA LLC. |
| 2022-12-07 | The company entered into a Supplementary Agreement to Promissory Note in relation to the acquisition of BRL. |
| 2022-12-15 | The company entered into a Services Agreement with Looi Pei See. |
| 2023-03-13 | The company entered into a Share Sale Agreement to sell the entire issued and paid-up share capital of CSB. |
| 2023-03-23 | The company entered into a Shares Sale Agreement to acquire 60% of Vata VM Synergy (M) Sdn. Bhd. |
| 2023-03-30 | Carl Craven resigned, and Jack Wong was appointed Director. |
| 2023-04-20 | The disposition of CSB was completed. |
| 2023-08-07 | The company entered into a Memorandum of Understanding with Andre van Zyl (AvZ) & Green Carbon Industries Group of Companies (GCI). |
| 2023-09-12 | Jack Wong stepped down as President, and was appointed Chairman of the Board. The company entered into a Service and Stock Cancellation Agreement with Y M Tengku Chanela Jamidah Y A M Tengku Ibrahim. |
| 2023-10-01 | The company appointed Eric Bava and Andre van Zyl as Chief Operating Officer and Chief Technology Officer respectively. |
| 2023-10-23 | The company entered into a Services Agreement with Donald R. Fosnacht. |
| 2024-01-23 | The company approved an amendment to the Bylaws, increasing the number of members of the Board. Jack Wong stepped down as Chairman of the Board, and Joseph Ambrose Lee was appointed Director and Chairman of the Board. |
| 2024-02-06 | The company appointed members to the newly formed Management Committee of the Board. |
| 2024-04-20 | The company entered into two Services Agreements with Dr. Nam Tran and Dr. Raymond Powell. |
| 2024-05-15 | Andre van Zyl stepped down as Chief Technology Officer. The company terminated the collaboration with AvZ and GCI. |
| 2024-05-21 | Steven Sorhus was appointed as member of the Management Committee of the Board to replace Soo Yau Cho. |
| 2024-06-01 | The company entered into a multi-year Services Agreement with Dale Ludwig. |
| 2024-06-18 | Joesph Ambrose Lee tendered his resignation as Director and Chairman of the Board. Balakrishnan B S Muthu was appointed Chairman of the Board. |
| 2024-06-27 | The company entered into an agreement with The National Center for Asphalt Technology at Auburn University (NCAT). |
| 2024-07-06 | The Product Supply Agreement with MRX Xtractors, LLC expired. |
| 2024-07-31 | The company issued 1,000,000 of the Companys restricted Common Shares each to Dr. Nam Tran and Dr. Raymond Powell. |
| 2024-08-08 | The company issued 700,000 of the Companys restricted Common Shares to Dale Ludwig. |
| 2024-08-16 | The company entered into a Supplementary Agreement to the SDA Agreement and Promissory Note with the Creditor to convert the total amount of USD 675,888 into 9,655,542 shares of the Companys restricted Common Stock. |
Keywords
biochar, sustainable development, renewable energy, carbon removal credits, bio-asphalt, pyrolysis, Net Zero, road construction, National Center for Asphalt Technology, Puro.earth
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