10-Q: Verde Resources Reports Q2 Loss, Secures Ergon Orders

Verde Resources, a sustainable road construction materials company, reported a reduced net loss for Q2 2025 despite a significant revenue drop, driven by strategic shifts and new commercial partnerships.

Summary

• Verde Resources, Inc. (Verde) is focused on environmentally sustainable road construction and building materials, utilizing biochar asphalt technology to reduce emissions and generate carbon removal credits.
• The company reported a net loss of $934,076 for the three months ended December 31, 2025, a 65.3% decrease from the $2,694,329 net loss in the prior-year period.
• For the six months ended December 31, 2025, the net loss was $1,853,631, a 20.8% decrease compared to $2,339,614 in the same period of 2024.
• Revenue for the three months ended December 31, 2025, was $4,679, an increase of 93.1% from $2,423 in the prior period, primarily from bagged BioAsphalt sales.
• Revenue for the six months ended December 31, 2025, was $6,948, a 94.6% decrease from $127,993 in the prior period, attributed to a planned depletion of initial BioAsphalt formulation during a transition to an upgraded product.
• Selling, general, and administrative expenses decreased by 52.7% for the three-month period and 37.0% for the six-month period, largely due to the absence of a $1.25 million special bonus to the CEO in the prior year.
• Cash and cash equivalents increased by 98.4% to $2,025,854 as of December 31, 2025, from $1,021,112 as of June 30, 2025.
• The company secured its first two commercial purchase orders from Ergon Asphalt & Emulsions, Inc. (Ergon) for its Verde V24 biochar asphalt emulsifying agent, totaling $460,000, with delivery scheduled for Q1 2026.
• Verde filed a Form S-1 Registration Statement on December 23, 2025, for an up to $5.75 million public offering and concurrent uplisting to the Nasdaq Capital Market, which will require a reverse stock split.
• The uplisting will trigger a $3,000,000 payment to C-Twelve Pty Ltd, comprising a $1,000,000 additional license fee and a $2,000,000 loan.
• The company's biochar asphalt technology has received positive preliminary performance results from NCAT, demonstrating consistent durability and exceeding industry specifications for cold-recycled asphalt.
• Verde is officially registered as a Carbon Removal Credit supplier with Puro.earth, positioning it to generate and monetize carbon removal credits (CORCs).

Sentiment

Score: 6

Explanation: StockSavvy.ai views this filing as cautiously optimistic. While significant revenue declines and internal control weaknesses are concerning, the substantial reduction in net loss, increased cash, and the critical Ergon partnership, coupled with technology validation and NASDAQ uplisting plans, indicate strong strategic progress and future potential.

Positives

• Net loss significantly decreased by 65.3% for the three months and 20.8% for the six months ended December 31, 2025, compared to the prior year periods.
• Cash and cash equivalents nearly doubled, increasing by 98.4% to $2,025,854 as of December 31, 2025.
• Secured first commercial purchase orders from Ergon Asphalt & Emulsions, Inc. for Verde V24, valued at $460,000, marking a significant step in commercialization.
• The exclusive licensing agreement with Ergon for North America provides a scalable, asset-light business model for Verde V24 distribution.
• Positive preliminary performance results from NCAT validate the durability and strength of the company's Cold-Mix Biochar-Asphalt and cold recycling mix.
• Official registration as a Carbon Removal Credit supplier with Puro.earth opens a new, substantial revenue stream through CORC generation and sales.
• The planned uplisting to Nasdaq Capital Market and associated public offering could significantly improve liquidity and market visibility.
• Reduced selling, general, and administrative expenses by 37.0% for the six-month period, primarily due to the absence of a large one-time bonus from the prior year.

Negatives

• Revenue for the six months ended December 31, 2025, decreased by 94.6% to $6,948, primarily due to a planned scale-back during a product formulation transition.
• Gross profit for the six months ended December 31, 2025, decreased by 93.1% due to lower sales volume and a shift to lower-margin distribution-level sales.
• Accumulated operating losses increased by approximately 10% to $20,114,112 as of December 31, 2025.
• Disclosure controls and procedures were deemed not effective as of December 31, 2025, with identified material weaknesses in internal controls.
• The company has a limited operating history in the supply of net-zero road constructions and building materials, posing significant business risks.
• A significant payment of $3,000,000 to C-Twelve (loan and license fee) is contingent on a successful NASDAQ uplisting, with a breach clause if not funded by July 31, 2026.

Risks

• Ability to establish and implement the business plan and begin to generate consistent revenues, particularly through the licensing model strategy with partners like Ergon.
• Uncertainty regarding the anticipated benefits of the licensing and distribution model strategy and the relationship with Ergon.
• Challenges in generating and monetizing carbon removal credits utilizing the company's technology and products.
• Ability to effectively compete in the industry and execute on the business plan.
• Impact of governmental laws and regulations, and the ability to comply with new regulations and compliance requirements.
• Ability to effectively scale operations in North America and other regions, either independently or through third-party collaborators.
• Ability to adequately market products and services, and to develop additional product offerings.
• Difficulties with certain licensees (such as Ergon), licensors from whom key intellectual property rights are obtained, or other third parties upon which the company relies.
• Future capital needs and the ability to raise additional capital on favorable terms or at all, given the current reliance on securities sales for funding.
• Ability to attract, develop, and retain capable key personnel.
• Ability to protect intellectual property (including trade secrets) or manage threats posed by security breaches.
• Risks associated with geopolitical tension, inflationary and high-interest rate environments, and other macroeconomic factors.
• Concentration of credit risk in cash and cash equivalents, deposits with banks, and accounts receivable.
• Economic and political risks in operating territories, including the United States, Malaysia, Mexico, and Canada.
• Exchange rate risk due to fluctuations between the U.S. dollar and Malaysian Ringgit.
• Material weaknesses in the design and operation of disclosure controls and procedures and internal control over financial reporting, including segregation of duties, lack of formal policies, and absence of an audit committee.

Future Outlook

Verde Resources plans to expand operations and grow revenue over the next twelve months primarily through marketing and selling its proprietary road technologies exclusively through Ergon in North America, with an initial focus on the United States. The company intends to introduce the Verde Net Zero Blueprint in Malaysia after successful commercialization in North America. Future revenue streams are also expected from the generation and sale of carbon removal credits. The company is actively pursuing an uplisting to the Nasdaq Capital Market and a concurrent public offering to strengthen its financial position and support future development.

Management Comments

• "Our proprietary product BioAsphalt incorporates biochar, a powerful carbon sequestering material, into infrastructure with the goal of reducing emissions, improving performance, and lowering overall costs."
• "We believe our proprietary products, know-how and business plan place us at the forefront of sustainable innovation in the construction and building materials sector, an industry we believe is long overdue for transformation."
• "This achievement marked what the Company believes to be the worlds first carbon removal credits generated through asphalt production and installation."
• "The Company believes that the generation of CORCs and the demand for CORCs incentivizes the broader adoption of climate technologies and enables the Company to supply these credits to companies seeking to offset their carbon footprint in pursuit of net-zero objectives."
• "This positions carbon sequestration not just as an environmental co-benefit, but as a monetizable feature embedded in our business plan."
• "Our model presents a novel combination of infrastructure performance with measurable climate impact, establishing us as a first mover in scalable Net Zero solutions, which we believe positions us well to meet the demands of a rapidly decarbonizing, carbon-constrained economy."
• "Embedding our technology into Ergons nationwide business footprint would enable immediate scalability and near-term revenue generation."
• "We believe our asset light business model enables scalable growth while minimizing capital intensity, creating recurring revenue streams through licensing, sales, royalties, carbon monetization, and strategic partnerships."
• "We are committed to continuous improvement and innovation on our core technologies to enhance performance, durability, and environmental benefits."
• "We believe that the successful completion of the Offering has improved our liquidity and financial position for the near term."
• "We anticipate generating revenue in the future from the Ergon License; however, there can be no assurances that sufficient revenue will be generated or that revenues, if any are achieved, will be sufficient to fund our operations on a profitable basis, particularly given our negotiated 15 month go to market period with Ergon."
• "As we continue to make progress commercially, we believe we will have potential opportunities to strengthen our balance sheet as needed including, but not limited to, debt and/or equity financing, as well as through additional potential licensing arrangements."

Industry Context

StockSavvy.ai notes that Verde Resources is positioning itself at the intersection of infrastructure development and climate technology, an increasingly critical area as global enterprises face pressure to reduce carbon footprints. The focus on biochar asphalt and carbon removal credits aligns with broader industry trends towards sustainable construction and the growing demand for verifiable carbon offsets. The partnership with Ergon, a major player in North American asphalt, provides a significant distribution advantage, potentially accelerating market penetration compared to smaller, independent innovators. The validation by NCAT and Puro.earth lends credibility in a market where greenwashing concerns are prevalent, differentiating Verde from less rigorously tested solutions. However, the company's limited operating history and the nascent nature of the carbon credit market for construction materials suggest that while the potential is substantial, execution risks remain high.

Comparison to Industry Standards

• NCAT's latest evaluation demonstrated that Verde's cold recycling mix using 100% reclaimed asphalt pavement (RAP) not only meets but exceeds industry specifications for cold-recycled asphalt, showing superior cohesion, high tensile strength ratio (TSR), and retained stability compared to standard cold mix benchmarks.
• The successful demonstration of producing cold-mix biochar asphalt under winter conditions without heat, solvents, or odors, resulting in an estimated 50% increase in installation efficiency, sets a new benchmark for sustainable asphalt production.
• The generation of the world's first carbon removal credits from asphalt production and application, certified by Puro.earth, positions Verde as a pioneer in monetizing climate impact within the construction materials sector, a capability not yet widely adopted by traditional asphalt companies like Colas or Oldcastle Materials.

Management Changes

Corporate Governance

Related Party Transactions

• Amounts due to Borneo Oil Corporation Sdn (BOC) of $72,822 as of December 31, 2025.
• Amounts due to Borneo Oil Berhad (BOB) of $3,007 as of December 31, 2025 (BOB holds 13.0% of common stock).
• Amounts due to Taipan International Limited of $119,153 as of December 31, 2025.
• Amounts due to Borneo Energy Sdn Bhd of $16,298 as of December 31, 2025.
• Amounts due to Victoria Capital Sdn Bhd of $6,176 as of December 31, 2025.
• Amounts due to Makin Teguh Sdn Bhd of $19,379 as of December 31, 2025.
• Amounts due to J. Ambrose & Partners of $76,336 as of December 31, 2025.
• Amounts due to SB Resorts Sdn Bhd of $6,917 as of December 31, 2025 (SB Resorts Sdn Bhd is a wholly owned subsidiary of BOB).
• Amounts due to SB Supplies & Logistics Sdn Bhd of $4,817 as of December 31, 2025.
• Amounts due to Borneo Eco Food Sdn. Bhd. of $1,210 as of December 31, 2025.
• Amount due to Mr. Jack Wong (CEO and Chairman) of $4,302 as of December 31, 2025.
• Creative and technical services fee of $37,756 paid to Mr. Teo Zye Keun (Director of The Wision Project Sdn Bhd) for the six months ended December 31, 2025.
• Sundeo Pty Ltd, an affiliate designated by C-Twelve, received 1,500,000 restricted shares of common stock on June 1, 2025, pursuant to the C-Twelve Agreement.

Stakeholder Impact

• Shareholders: Potential for increased value through commercialization with Ergon and NASDAQ uplisting, but diluted by ongoing share issuances and potential reverse stock split. Financial performance remains a concern with accumulated losses.
• Employees: Compensation packages include significant share-based components, aligning interests with company performance. Management changes are minimal, providing stability.
• Customers: The partnership with Ergon and validated technology from NCAT suggest improved product availability and performance in North America, potentially offering more sustainable road construction options.
• Suppliers: The company's strategic shift and temporary cessation of the Borneo biofraction plant may impact local suppliers in Malaysia. New product formulations may require new supply chains.
• Creditors: Improved cash position and potential capital raise could enhance the company's ability to meet obligations, but the accumulated deficit and reliance on future financing remain factors.
• Regulatory Authorities: The company's focus on carbon removal credits and sustainable materials aligns with environmental goals, potentially attracting favorable regulatory attention, but internal control weaknesses could draw scrutiny.

Next Steps

• Commercialization of Verde V24 through Ergon in North America, with initial focus on the United States.
• Delivery of first two purchase orders to Ergon for Verde V24 within the quarter ending March 31, 2026.
• Continued testing of TerraZyme technology efficacy and exploration of potential applications at NCAT.
• Negotiation of minimum purchase amounts with Ergon for calendar years beginning January 1, 2027.
• Completion of the NCAT Performance Testing Project, with the first draft of the final report expected in Spring 2027.
• Pursuit of the planned uplisting to the Nasdaq Capital Market and concurrent public offering, including a reverse stock split.
• Funding of the $3,000,000 payment to C-Twelve (loan and license fee) within 30 days of NASDAQ uplisting or by July 31, 2026.
• Introduction of the Verde Net Zero Blueprint in Malaysia after successful commercialization in North America, including ongoing discussions with PLUS Malaysia.
• Continued efforts to address and remediate identified material weaknesses in internal controls over financial reporting.

Key Dates

Recommendation

Verde Resources presents a mixed bag for investors. While the significant reduction in net loss, increased cash, and the pivotal partnership with Ergon for North American commercialization are strong positives, the dramatic revenue decline in the six-month period, ongoing accumulated losses, and identified material weaknesses in internal controls warrant caution. The planned NASDAQ uplisting and associated capital raise offer potential for future growth and liquidity, but also introduce execution risks and significant financial commitments. A 'hold' recommendation is appropriate as the company navigates this critical transition period, with investors advised to monitor the successful execution of the Ergon partnership, progress on the NASDAQ uplisting, and remediation of internal control issues before considering further investment.

Keywords

BioAsphalt, carbon removal credits, sustainable construction, biochar, road construction, Verde V24, Ergon, SEC filing, 10-Q, renewable materials, carbon sequestration, NASDAQ uplisting, Puro.earth, NCAT