10-K: Verde Resources Scales BioAsphalt, Reports $4.78M Loss

Verde Resources, Inc. expands its sustainable infrastructure technology with an exclusive licensing agreement with Ergon for North America, despite reporting a net loss of $4.78 million for fiscal year 2025.

Summary

• Verde Resources, Inc. (VRDR) is a road construction and building materials company focused on proprietary, environmentally sustainable materials like BioAsphalt (with biochar), Verde V24 emulsifying agent, and TerraZyme soil stabilization, aiming for 'Transition to Zero' emissions and carbon removal credits.
• Key milestones include the issuance of the world's first carbon removal credit from asphalt production and application (April 2025), and technological validation by the National Center for Asphalt Technology (NCAT) for BioAsphalt durability (July 2025) and cold recycling mix exceeding industry specifications (September 2025).
• An exclusive licensing agreement was signed with Ergon Asphalt & Emulsions, Inc. on October 10, 2025, for the production of asphalt surface course material containing Verde V24 across North America (United States, Canada, and Mexico).
• The company has exited legacy businesses, including the sale of its Malaysian mining subsidiary (April 2023) and the discontinuation of its CBD business (July 2024), to focus entirely on sustainable infrastructure technologies.
• For the fiscal year ended June 30, 2025, revenue increased by 37.9% to $133,202 from $96,584 in the prior year, primarily due to higher-margin Biochar Asphalt Premix sales.
• Gross profit significantly increased by 142.3% to $81,413 in FY2025 from $33,606 in FY2024, driven by increased revenue and a favorable product mix.
• Net loss for FY2025 increased by 50% to $4,783,013, compared to a net loss of $3,187,774 in FY2024.
• Selling, general and administrative expenses surged by 104.3% to $5,889,024 in FY2025, largely due to a $1.25 million special bonus to CEO Jack Wong, increased share-based compensation ($1,779,153 total), and professional fees for a planned NASDAQ uplisting.
• The accumulated deficit reached $18,263,181 as of June 30, 2025, up from $13,480,204 in the prior year.
• Cash and cash equivalents increased to $1,021,112 as of June 30, 2025, from $279,137 in the prior year.
• The company will need to raise additional capital to fund its business plan and is required to fund $3 million to C-Twelve (a $2 million loan and a $1 million license fee) by July 31, 2026, contingent on its common stock listing on a U.S. national exchange.

Sentiment

Score: 6

Explanation: The company achieved major strategic milestones, including key technology validations and a significant exclusive licensing agreement with an industry leader, positioning it as a first-mover in a high-growth sustainable infrastructure and carbon credit market. However, these achievements are currently accompanied by a substantial increase in net losses and accumulated deficit, driven by high operating expenses including a large CEO bonus and share-based compensation. The reliance on a single licensee (Ergon) without initial minimum purchase commitments and the need for future capital raises introduce considerable financial risk.

Positives

• Secured an exclusive licensing agreement with Ergon Asphalt & Emulsions, Inc., a major industry leader, for Verde V24 in North America (United States, Canada, and Mexico), providing extensive market reach and scalability.
• Achieved the world's first carbon removal credit from asphalt production and application, certified by Puro.earth in April 2025, establishing a first-mover advantage in monetizing decarbonization.
• Received strong technological validation from the National Center for Asphalt Technology (NCAT), with BioAsphalt demonstrating consistent durability (July 2025) and cold recycling mix exceeding industry specifications for strength, durability, and moisture resistance (September 2025).
• Transitioned to an asset-light licensing business model, which is expected to enable scalable growth, minimize capital intensity, and create recurring revenue streams through licensing, sales, royalties, and carbon monetization.
• Successfully divested non-core legacy businesses (Malaysian mining and CBD operations) to focus entirely on sustainable infrastructure technologies.
• Reported a significant 37.9% increase in revenue to $133,202 and a 142.3% increase in gross profit to $81,413 for FY2025, driven by a favorable shift to higher-margin products.
• Cash and cash equivalents increased by 265.8% to $1,021,112 as of June 30, 2025, improving liquidity.
• The company's solutions align with global Net Zero targets and ESG goals, positioning it well to meet increasing demand for climate-smart infrastructure.

Negatives

• Reported a 50% increase in net loss, reaching $4,783,013 for FY2025, indicating continued unprofitability.
• Accumulated deficit grew to $18,263,181 as of June 30, 2025, highlighting a history of operating losses.
• Selling, general and administrative expenses more than doubled (104.3% increase) to $5,889,024 in FY2025, significantly impacting profitability, partly due to a $1.25 million special bonus to the CEO and substantial share-based compensation.
• Faces significant revenue concentration risk, as the business will be substantially reliant on the Ergon License, which currently has no minimum purchase requirements for Verde V24 during the initial 15-month go-to-market period (until end of 2026).
• The licensing model's revenue and income potential are unproven at scale, and market acceptance by end-users is uncertain.
• There is a risk that an exclusive license agreement for TerraZyme technology with Nature Plus Inc. may not be finalized, as the current MOU expires in December 2026.
• Management concluded that disclosure controls and procedures and internal controls over financial reporting were not effective as of June 30, 2025, due to material weaknesses, including lack of segregation of duties, formalized processes, regulatory reporting expertise, and a functioning audit committee.
• The company does not carry business interruption insurance, exposing it to unrecoverable losses in case of operational disruptions.

Risks

• Limited operating history in the current business model makes it difficult to evaluate past performance and future prospects, and there is no assurance of generating future revenue or profitability.
• A history of operating losses and accumulated deficit ($18.26 million as of June 30, 2025) indicates the company may never achieve cash flow positive or profitable results.
• High dependence on third-party licensees, particularly Ergon, for product manufacturing, distribution, and revenue generation; inability of licensees to perform or loss of these relationships would have a material adverse effect.
• Revenue concentration risk due to reliance on Ergon as the first and currently only licensee for Verde V24 in North America, with no minimum purchase requirements during the initial go-to-market period.
• Future operating results are difficult to predict and may vary significantly from quarter to quarter, potentially adversely affecting the price of common stock.
• Risk of not securing a definitive exclusive worldwide license agreement for TerraZyme technology with Nature Plus Inc. after the current MOU expires in December 2026.
• Business is susceptible to the cyclical nature of the construction industry and economic/political uncertainties, which can impede growth and demand for products.
• Operates in a competitive industry with larger, better-capitalized companies that may develop alternative sustainable products or replicate proprietary technology.
• Adverse public policy, economic, social, and political situations in operating regions (North America, Southeast Asia) could lead to reduced demand, business interruption, or restrictions on earnings repatriation.
• Dependence on key personnel (CEO Jack Wong, COO Eric Bava), with the Ergon License containing a termination clause if they are removed for reasons other than cause or voluntary resignation.
• Inability to adequately protect proprietary technology (trade secrets) and potential exposure to intellectual property claims or litigation.
• Risk of product liability claims, recalls, or market withdrawals, which could be expensive, divert management attention, and harm reputation.
• Exposure to material environmental liabilities and compliance costs due to federal, state, and local laws and regulations.
• Challenges in integrating future acquisitions or business combinations successfully, potentially leading to unforeseen expenses or failure to realize anticipated benefits.
• Reliance on a select number of suppliers for raw materials (e.g., biochar, Verde V24), with potential for supply chain disruptions or failure to meet quality standards.
• Asphalt market sensitivity to supply and price volatility, where declining traditional asphalt prices could make low-carbon solutions less competitive.
• Need to raise additional capital, which may result in dilution for existing stockholders or the issuance of debt with senior rights.
• Potential for penalties and adverse consequences for failure to comply with the U.S. Foreign Corrupt Practices Act.
• Changes in U.S. climate policy could reduce demand for the company's carbon-negative solutions.
• Failure to continuously develop and improve sustainable products could lead to falling behind competitors.
• Material weaknesses in internal controls over financial reporting and lack of an independent audit committee pose risks to financial reporting reliability.
• The company does not carry business interruption insurance, leaving it exposed to unrecoverable losses from operational disruptions.
• Common stock qualifies as a 'penny stock,' which may affect resale ability and market liquidity, and is susceptible to patterns of fraud and abuse.
• An active trading market for common stock may never develop, leading to significant price volatility.

Future Outlook

The company plans to expand operations and generate revenue over the next twelve months primarily through marketing and selling its proprietary road technologies via the exclusive licensing agreement with Ergon in North America, focusing initially on the United States. Production planning has commenced, with distribution anticipated through Ergon's established sales channels. Following successful scaling in North America, the company intends to shift focus to Southeast Asia, restarting and increasing operations at its BioFraction facility in Borneo. Discussions for minimum purchase amounts with Ergon will begin in 2027. The company also plans to explore licensing its BioFraction intellectual property to palm oil waste processors in Malaysia to produce designer-grade biochar and generate additional revenue through carbon credit royalties, product resale margins, and licensing fees.

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.
• 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 believe our products are positioned to lead in this transition (to sustainable construction materials).
• We believe our ability to monetize decarbonization through a scalable, licensable model places us at the forefront of engineered carbon removal and gives us a significant first-mover advantage.
• We believe that the benefits of these provisions (anti-takeover), including increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our company, outweigh the disadvantages of discouraging takeover proposals, because negotiation of takeover proposals could result in an improvement of their terms.

Industry Context

The company operates at the intersection of the sustainable building materials and carbon removal industries. The global road construction market, valued at $572.9 billion in 2023, is projected to grow, driven by increased infrastructure investment and a shift towards sustainable materials. The global carbon market for carbon dioxide removal (CDR) credits is expected to surge from $2.7 billion in 2023 to as much as $100 billion by 2030-35, fueled by corporate demand (e.g., Microsoft's 3.5 million carbon credit purchase) to offset rapidly expanding carbon footprints. The industry is moving away from reliance on avoided-emission credits towards verifiable carbon removal. The U.S. market alone has the potential to produce over 2 billion tons of carbon-sequestering asphalt annually from available biogenic waste. While the construction materials industry is fragmented and dominated by large incumbents, there is a growing investment in sustainable alternatives, positioning Verde Resources as a first-mover in combining asphalt production with certified carbon credit generation.

Comparison to Industry Standards

• The company's BioAsphalt technology, incorporating biochar, is positioned as a breakthrough in sustainable infrastructure and climate mitigation, being the first carbon-sequestering asphalt surface course to maintain competitive strength and flexibility for road applications and enable verified carbon removal credits.
• Preliminary performance results from the National Center for Asphalt Technology (NCAT) in July 2025 demonstrated consistent durability of BioAsphalt under low-volume roadway conditions after approximately 50,000 equivalent single-axle loads (ESALs) of heavy truck traffic.
• NCAT's September 2025 evaluation of the company's cold recycling mix, utilizing 100% reclaimed asphalt pavement (RAP), showed it not only meets but exceeds industry specifications for cold-recycled asphalt, exhibiting superior cohesion, high tensile strength ratio (TSR), and retained stability compared to standard cold mix benchmarks.
• Unlike traditional hot mix asphalt, which requires high temperatures and generates significant greenhouse gas emissions, the company's cold mix solution is applied at ambient temperature, eliminating the need for heat or solvents, and is durable, cost-effective, and suitable for year-round use.
• TerraZyme, the company's enzyme-based soil stabilization technology, offers a low-emission, cost-effective alternative to conventional cement, lime, or chemical additives for road base preparation, delivering superior long-term performance and carbon reduction without imported aggregates.

Management Changes

Corporate Governance

Legal Proceedings

• Not involved in any material legal proceedings.
• Not aware of any threatened legal proceedings or those in which any director or officer or their affiliates is a party adverse to the company or has a material interest adverse to the company.

Related Party Transactions

• Sale of the Chesterfield Property to CEO Jack Wong for $857,500 on December 10, 2024, resulting in a gain on disposal of $161,156. The payment is structured in installments over 26 pay cycles, with no cash exchange involved.
• Settlement of $675,888 in accounts payable from the former indirect wholly-owned subsidiary Champmark Sdn Bhd (CSB) to Borneo Oil Corporation Sdn Bhd (a related party) by issuing 9,655,542 restricted common shares to Borneo Oil Berhad (the appointed nominee) on August 16, 2024.
• An amount of $209,640 was due to CEO Jack Wong as of June 30, 2025, representing the remaining balance of a $1.25 million special bonus, partially offset by the property sale.
• Various amounts due to/from other related parties, including subsidiaries of Borneo Oil Berhad, Taipan International Limited, Victoria Capital Sdn Bhd, J. Ambrose & Partners, and Vetrolysis Limited, arising from ordinary business transactions with no interest or collateral, repayable on demand.
• Karl Strahl, a director, is also the Chief Operating Officer of Oregon Biochar Solutions, a supplier of biochar to the company.

Stakeholder Impact

• Shareholders face potential significant dilution from future equity capital raises and conversion of promissory notes, alongside increased net losses and accumulated deficit impacting shareholder equity. The penny stock status and unproven business model contribute to stock price volatility, though strategic wins offer long-term appreciation potential.
• Employees, particularly executives, received substantial share-based compensation and a significant bonus to the CEO. The company plans to hire more staff, indicating potential growth in employment opportunities.
• Customers, especially Ergon, benefit from exclusive licensing of proprietary technology, access to carbon removal credits (40% of Verde's share), and technical support, with initial flexibility due to no minimum purchase requirements.
• Suppliers like Oregon Biochar Solutions (related party) and C-Twelve Pty Ltd are key partners, with C-Twelve set to receive a $2 million loan and a $1 million license fee, strengthening their manufacturing capabilities.
• Regulatory bodies will observe the company's alignment with climate policies and ESG goals, as well as its efforts to remediate identified material weaknesses in internal controls over financial reporting.

Next Steps

• Conduct initial marketing, technology transfer, and production ramp-up with Ergon for North America (October 2025 – March 2026).
• Establish nationwide distribution and deployment across multiple asphalt plants with Ergon, with early sales-based revenues expected (April 2026 – September 2026).
• Initiate discussions with Ergon regarding minimum purchase quantities for Verde V24 for the calendar year 2027 (October 2026 – December 2026).
• Fund $3 million to C-Twelve (a $2 million loan and a $1 million license fee) by July 31, 2026, contingent on the company's common stock listing on a U.S. national exchange.
• Continue negotiations with Nature Plus Inc. (NPI) for a definitive exclusive worldwide license for TerraZyme, as the current MOU is effective until December 31, 2026.
• Scale North American operations and subsequently expand licensing opportunities to Southeast Asia, focusing on Malaysia and Singapore.
• Restart and increase the operation of the BioFraction facility in Borneo to convert palm oil waste into biochar and other renewable byproducts.
• Target major Malaysian highway operators for Net Zero solutions and require exclusive sourcing of biochar from Verde Resources (Malaysia) Sdn Bhd.
• Explore licensing BioFraction intellectual property and know-how to qualified palm oil waste processors in Malaysia.
• Invest more in registered patent protection for larger systems that integrate trade secret technologies.
• Continue recruitment of management talents and professional staff to address personnel shortages, including financial personnel.
• Provide ongoing training to financial personnel on internal control, risk management, and U.S. GAAP accounting guidelines.
• Engage with external consultants to facilitate compliance with regulatory reporting requirements.
• Appoint additional independent directors to assist in corporate governance and establish a functioning audit committee to remediate identified material weaknesses in internal controls.

Key Dates

Recommendation

Verde Resources presents a compelling long-term growth story in the sustainable infrastructure and carbon removal markets, evidenced by its exclusive licensing agreement with industry leader Ergon and validated proprietary technologies. The first-mover advantage in carbon-sequestering asphalt and the potential for monetizing carbon credits are significant upsides. However, the company's financial performance shows a substantial increase in net losses and accumulated deficit, driven by high operating expenses including a large CEO bonus and share-based compensation. The reliance on a single major licensee without initial minimum purchase commitments and the explicit need for future capital raises introduce considerable near-term financial risk and potential dilution. Until the licensing model demonstrates consistent, scalable revenue generation and moves towards profitability, and internal control weaknesses are fully remediated, a 'Hold' recommendation is appropriate, balancing the strong strategic potential against current financial challenges and execution risks.

Keywords

BioAsphalt, Carbon Removal Credits, Sustainable Infrastructure, Verde V24, Biochar, Ergon, Net Zero, Road Construction, Licensing Agreement, SEC Filing, Renewable Commodities, Climate-Tech, ESG, NCAT, TerraZyme, Financial Reporting