What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-02-22 compared with 2021-12-28 · 64 added, 38 removed, 179 unchanged (36% of the section changed)

5 unchanged sentences

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 October 11, 2019.

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.

41 unchanged sentences

The consideration shall be refundable if the transaction fails to complete.

On August 10, 2021, the Company formed a wholly owned subsidiary, Verde Renewables, Inc., for the purpose of conducting business in Missouri (using palm waste to create biochar and related products).

Another entity, Verde Estates, LLC, was also formed on August 10, 2021 to own property in Missouri.

Verde Estates, LLC is a wholly owned branch of Verde Renewables, Inc.

Verde Renewables, Inc.

(“VRI”) was incorporated on August 10, 2021, in the State of Missouri, U.S.A.

The major operation of VRI will include management of a processing and packaging facility to process organic bio-waste into sources of renewable commodities using its biofraction technology, and distribution of biochar, wood vinegar and bio-gas.

VRI is wholly owned by the Company.

Verde Estates LLC (“VEL”) was incorporated on August 10, 2021, in the State of Missouri, U.S.A.

VEL is formed for the purpose of holding property in Missouri.

VEL is wholly owned by VRI.

Verde Life Inc.

(“VLI”) was incorporated on November 15, 2021, in the State of Oregon, U.S.A.

The major operation of VLI will include conducting business in the distribution of THC-free cannabinoid (CBD) products.

VLI is wholly owned by the Company.

On January 17, 2022, the Company formed a wholly owned subsidiary, Verde Resources (Malaysia) Sdn Bhd, a company incorporated under the laws of the Malaysia, for the purpose of conducting consultation services and distribution of renewable agricultural commodities.

On January 20, 2022, the Company has reached a mutual agreement to enter into a Supplement to Promissory Note with each of the 17 lenders (“Lenders”) of the promissory notes that were issued on May 12, 2021, to convert the total principal loan amount of $20,355,000 into shares of the Company’s restricted common stock priced at $0.0611 per share, which represents the last ninety (90) days’ volume weighted average price (VWAP) as of the market closing of January 19, 2022.

The Company and the Lenders further agreed that the actual date for the allotment and issue of new shares of the Company’s restricted common stock shall be confirmed in a subsequent written agreement.

Corporate History and Structure

38 unchanged sentences

Verde Estates, LLC is a wholly owned branch of Verde Renewables, Inc.

On November 15, 2021, the Company formed a wholly owned subsidiary, Verde Life Inc., an Oregon corporation for the purpose of conducting business in the distribution of THC-free cannabinoid products.

Contractual Arrangements

14 unchanged sentences

Debt Assignment, FMR assigned to GBL the sum of money in the amount of US Dollars Three Hundred Nine Thousand Three Hundred Thirty One And Ninety Two cents (US$ 309,331.92), now due to GBL from CSB under the financing obligation from the FMR to CSB.

With the above agreements, GBL controls CSB as the primary beneficiary and the operating results of the VIE was included in the condensed consolidated financial statements for the nine months ended March 31, 2014.

With the above agreements, GBL controls CSB as the primary beneficiary and the operating results of the VIE was included in the condensed consolidated financial statements.

CSB holds the operating right to Merapoh Gold Mine (the “Mine”) with all regulatory and government operating licenses in Malaysia.

5 unchanged sentences

The Company is undertaking natural mineral resource extraction management services.

The Company is in the process of negotiating 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.

For the period between July 2020 to June 2021, there was no production at the Merapoh Gold Mine.

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 and is currently awaiting clearance approval from Malaysia Forest Department.

For the period between January 2021 to December 2021, there was no production at the Merapoh Gold Mine.

The objective of the Company is to improve the productivity at the new mine to ensure that the operation will be carried out effectively and efficiently at minimum cost.

7 unchanged sentences

In July 2013, production was outsourced to a reputable subcontractor, and developed a resource management system to match ore against processes to achieve the most cost efficient and highest recovery production procedure.

There was no gold ore extraction of the Merapoh Gold Mine and no gold concentrate sold for the three months ended September 30, 2021.

We have generated other income from the sales of wash sand to customers in Malaysia.

Our revenues have been derived from gold production from the Merapoh Gold Mine, but currently there is no production from that mine and we are not certain there will be production in the future.

We have generated other revenues through seeking new customers of wash sand sales during January to September 2021.

There was no gold ore extraction of the Merapoh Gold Mine and no gold concentrate sold for the period between January 1, 2021 and December 31, 2021.

Our revenues have been derived from gold production from the Merapoh Gold Mine, but currently there is no production from that mine and we are not certain that there will be production in the coming future.

Management continues to search for mining opportunities to generate revenues for the Company in the future.

Management continues to search for mining opportunities to generate revenues in the future.

Results of Operations

For the three months ended September 30, 2021 and 2020:

We have generated $0 and $0 revenues for the three months ended September 30, 2021 and 2020, and have recorded a gross loss of $0 and $0 for the three months ended September 30, 2021 and 2020.

We have incurred $363,996 and $64,280 in operating expenses through September 30, 2021 and 2020.

We have interest expense of $470,766 and $0 for the three months ended September 30, 2021 and 2020.

We have other income, net $12,090 and $0 for the three months ended September 30, 2021 and 2020.

The following table provides selected financial data about our Company for the three months ended September 30, 2021 and September 30, 2020.

For the three months ended December 31, 2021 and 2020:

We have generated $0 and $0 revenues for the three months ended December 31, 2021 and 2020, and have recorded a gross profit of $0 and $0 for the three months ended December 31, 2021 and 2020.

We have incurred $359,105 and $34,512 in operating expenses through December 31, 2021 and 2020.

We have interest expense of $484,168 and $0 for the three months ended December 31, 2021 and 2020.

We have other income $25 and $0 for the three months ended December 31, 2021 and 2020.

The following table provides selected financial data about our company for the three months ended December 31, 2021 and December 31, 2020.

Statement of Operation

Cost of revenue

Gross Profit(Loss)

Operating Expenses

2 unchanged sentences

The revenue is normally derived from the sales of gold mineral to customers in Malaysia.

There was no revenue for the three months ended September 30, 2021 and 2020 because of the depletion of mineral reserves in the mine.

There was no revenue for the three months ended December 31, 2021 and 2020 because of the depletion of mineral reserves in the mine.

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.

Net other income comprises mainly of the sale of wash sand.

The increase in net other income for the period was mainly due the sale of wash sand which occurred during the three months ended September 30, 2021.

The increase in operating expenses for the period was mainly due to the increase of consultancy, salary, legal and professional fees during the period.

The increase in salary expenses for the period was mainly due to the increase number of staff for new segment development during the period.

For the six months ended December 31, 2021 and 2020:

We have generated $0 and $0 revenues for the six months ended December 31, 2021 and 2020, and have recorded a gross profit of $0 and $0 for the six months ended December 31, 2021 and 2020.

We have incurred $723,101 and $98,792 in operating expenses through December 31, 2021 and 2020.

We have interest expense of $954,934 and $0 for the six months ended December 31, 2021 and 2020.

We have other income $12,115 and $0 for the six months ended December 31, 2021 and 2020.

The following table provides selected financial data about our company for the six months ended December 31, 2021 and December 31, 2020.

Statement of Operation

Cost of revenue

Operating Expenses

Interest expense

Other Income, net

The revenue is normally derived from the sales of gold mineral to customers in Malaysia.

There was no revenue for the six months ended December 31, 2021 and 2020 because of the depletion of mineral reserves in the mine.

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, salary, legal and professional fees during the period.

The increase in salary expenses for the period was mainly due to the increase number of staff for new segment development during the period.

The average rate of MYR :

USD for three months ended September 30, 2021 and September 30, 2020 was 0.2388 and 0.2389 respectively.

USD for six months ended December 31, 2021 and December 31, 2020 was 1 to 0.2393 and 1 to 0.2419 respectively.

Plan of Operation

6 unchanged sentences

BOG has the experience and local knowledge in managing the exploitation of alluvial gold at the Merapoh Gold Mine.

The Company currently intends to continue to outsource the exploitation of alluvial gold at our mine site to BOG as our third party subcontractor.

The Company will provide necessary disclosure when any significant agreements have been made with sub-contractors in the future.

1 unchanged sentence

Expansion Plans

The Company is in the process of negotiating 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 early 2022 subject to review on COVID-19 “Movement Control Order” by the Malaysian government.

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 2022 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.

19 unchanged sentences

Liquidity and Capital Resources

The following table provides selected cash flow data about our company for the three months ended September 30, 2021 and 2020.

The following table provides selected cash flow data about our company for the six months ended December 31, 2021 and December 31, 2020.

Cash Flow Date

Net Profit(Loss) from operation

Net Loss from operation

$ (1,665,920 )

Net Cash Generated/(Used) from operating activities

1 unchanged sentence

Net Cash Generated/(Used) from financing activities

Effect of exchange rate fluctuation on cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, ending of period

For the three months ended September 30, 2021, the Company had incurred net loss from operation of $806,515 which posted a negative impact to the company’s cash flow.

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

For the six months ended December 31, 2021, the Company had incurred net loss from operation of $1,665,920 which posted a negative impact to the company’s cash flow.

The reconciliation on non-cash items such as interest expenses, depreciation and amortization provides positive impact on cash.

In the operation analysis, the net cash used in operating activities increased from $54,029 to $543,559.

The operation loss of $822,672 was partially offset by the noncash expenses such as $1,086 in depreciation, $7,776 in amortization and $470,766 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 at $2,955 and a decrease of deposits and prepayments of $3,042 whereas the net increase in current liabilities resulted from $2,015 increase of accrued liabilities and accounts payable.

The operation loss of $1,665,920 was partially offset by the noncash expenses such as $5,220 in depreciation, $15,585 in amortization, 191,222 in share based compensation and $954,934 in interest expenses on promissory notes.

In the operating assets and liabilities, the net decrease in current assets resulted from a decrease of other receivables at $26,169 and an increase of other deposits and prepayments of $111,102 whereas the net increase in current liabilities resulted from increase of accrued liabilities and other payables at 28,433, advance from sub-contractor & related parties at $12,623 and $723 decrease of accounts payable.

The final result of the cash flow used in operating activities was $543,559 negative cash flow effect.

The net cash used by investing activities of $79,518 resulted from advances to related parties for the three months ended September 30, 2021.

In the financing analysis, there was also no change for the three months ended September 30, 2021.

Despite the net decrease in exchange rate effect of $5,805 provided a positive cash flow effect, the overall cash and cash equivalents at the end of September 30, 2021, was decreased by $318,527 with $1,799,095 as the closing balance.

The net cash used by investing activities of $390,836 resulted from advances to related party at $118,848, security deposit paid at $240,000 and acquisition of plant and equipment at $31,988 for the six months ended December 31, 2021.

The net cash used by financing activities of $2,610 resulted from repayment of hire purchase creditor for the six months ended December 31, 2021.

The net increase in exchange rate effect of $3,888 provided a negative cash flow effect and the overall cash and cash equivalents at the end of December 31, 2021, was decreased by $940,893 with $1,176,729 as the closing balance.

The cash flow situation will not allow for operations in the coming next 12 months by self-generated cash provided from operating activities.

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis