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Item 7. Management’s Discussion and Analysis

2023-10-16 compared with 2022-11-04 · 33 added, 32 removed, 67 unchanged (49% of the section changed)

6 unchanged sentences

Results of Operations

The following table provides selected financial data about our company for the year ended June 30, 2022 and June 30, 2021.

The following table provides selected financial data about our company for the years ended June 30, 2023, and June 30, 2022.

Statement of Operation

9 unchanged sentences

$ (3,998,960 )

The revenue derived from the sales production and distribution of renewable commodities of gold mineral to customers in Malaysia.

$ (3,947,435 )

The revenue derived from the rental income, compost spreading and distribution of renewable commodities.

We have generated $158,098 and $38,169 revenues for the years ended June 30, 2023, and 2022, respectively, and have recorded a gross loss of $80,055 and $107,187 for the year ended June 30, 2023, and 2022.

Cost of revenue

We incurred cost of revenue of $145,356 in the production and distribution of renewable commodities during the year ended June 30, 2022.

No cost of revenue was incurred during the year ended June 30, 2021.

We incurred cost of revenue of $238,153 and $145,356 in the production and distribution of renewable commodities during the year ended June 30, 2023, and 2022, respectively.

Operating Expenses

Operating expenses comprised mainly of salaries, office costs, legal and professional fees and travelling expenses.

Operating expenses comprised mainly of salaries, office costs, legal and professional fees, consultancy fee and travelling expenses.

We have incurred $3,216,022 and $1,905,301 in operating expenses through June 30, 2023, and June 30, 2022.

Operating expenses increased by 231.8%, or $1,331,127, primarily due to increase of professional fees charged for the potential acquisition and increase of directors’ emolument for the year ended June 30, 2022.

Operating expenses increased by 68.8%, or $1,310,721, primarily due to increase of consultancy fee and legal and professional fee for the year ended June 30, 2023.

Interest expense

2 unchanged sentences

We have other income of $1,215,689 and $12,104 for the year ended June 30, 2023, and 2022.

We generated other income from the sales of wash sand to customers in Malaysia since January 2021 to September 2021.

Other income increased by $1,203,585, primarily due to gain on disposal of a subsidiary of $980,714 and fair value adjustment on convertible promissory notes issued to BOC of $194,865 as disclosed in Note 12 of the financial statements.

We recorded a net loss of $3,998,960 and $3,954,414 for the years ended June 30, 2023, and 2022, respectively.

Plan of Operation

Our Industry and Principal Markets

The report by BMI Research states that global gold mine output growth will pick up in the next few years, supported by higher gold prices and solid projects in key countries.

BMI Research forecasts global gold production to increase from 105moz in 2018 to 125moz by 2026, averaging 2.3% annual growth.

While a steady pace of growth, this represents a slight deceleration in growth rate compared with the previous eight-year average of 3.1%.

Subcontractor

In an effort to enhance the efficiency of mine operations at the Merapoh Gold Mine, Champmark Sdn Bhd (“CSB”) entered into an Operation Term Sheet (“OTS”) agreement in July 2013, to outsource the exploitation works of alluvial gold resources at Site IV-1 of the Merapoh Gold Mine to subcontractor, Borneo Oil & Gas Corporation Sdn Bhd (“BOG”), who throughout the financial years 2022 and 2021 was a related party via its holding company Borneo Oil Berhad, a substantial shareholder of the Company..

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 and will provide necessary disclosure when any significant agreements have been made with the sub-contractor in the future.

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 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.

The Company believes that there are excellent growth opportunities for its business outside Malaysia.

We are constantly exploring for potential acquisition of mining projects in other parts of the world.

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 is taking 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 degC to 500 degC to yield commercially valuable bio products:

1 unchanged sentence

The intellectual property is a second-generation pyrolysis process where non-food feedstock like the palm biomass wastes is used as feedstock.

The Company announced a momentous partnership with Green Carbon Industries (“GCI”) in August 2023, securing exclusive access to their invaluable intellectual property (IP) rights.

This groundbreaking collaboration lays the foundation for revolutionary infrastructure development, marked by innovative biochar asphalt showcase projects within the United States.

These projects complement GCI’s established successes in the Asia Pacific (APAC), Middle East, and Africa regions.

Our shared commitment revolves around validating the concept’s feasibility and scalability for carbon sequestration, thereby transforming global infrastructure development, and proactively addressing pressing environmental challenges.

Biochar-asphalt, an innovative, eco-friendly, high performance, and cost-saving alternative to conventional high CO 2 footprint asphalt production and installation, holds immense promise in addressing environmental concerns.

Through the integration and extensive utilization of biochar – a carbon-rich material derived from organic waste, The Company aims to reduce carbon emissions and the carbon footprint of infrastructure projects.

The American showcase projects will serve as compelling evidence of the technology’s capability in carbon sequestration, efficiently mitigating greenhouse gas, enhancing durability and cost efficiencies, all while simultaneously addressing pressing environmental challenges.

Earlier this year, Puro.earth, the world’s foremost crediting platform for durable carbon removal, officially registered the Company as a Carbon Removal Credit supplier as part of its Accelerate program.

This partnership was formalized through a platform agreement signed in April 2023.

It is worth noting that Puro.earth was acquired by Nasdaq in June 2021.

The Company’s endeavors are poised to unlock revenue opportunities by generating Carbon Removal Credits (CORCs).

This critical step 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.

Simultaneously, this approach creates an additional and substantial revenue stream for the Company.

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.

12 unchanged sentences

Cash and cash equivalents totaled $0.2 million as of June 30, 2023, and $0.4 million as of June 30, 2022.

The following table provides selected cash flow data about our company for the year ended June 30, 2022 and 2021.

The following table provides selected cash flow data about our company for the years ended June 30, 2023, and 2022.

Cash Flow Date

1 unchanged sentence

$ (1,656,896 )

$ (1,595,961 )

Net cash used in investing activities

$ (1,348,823 )

Net cash generated from financing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

4 unchanged sentences

Net Cash Used In Operating Activities.

Cash used in operating activities reflects net loss adjusted for certain non-cash items, including depreciation expense, amortization of intangible assets, asset impairments, and stock-based compensation, and the effects of changes in operating assets and liabilities.

The increase in cash used in operating activities for the year ended June 30, 2022 as compared to 2021 was primarily due to higher net loss adjusted for non-cash interest expense of promissory notes and the increase of other deposits and prepayments.

Cash used in operating activities reflects net loss adjusted for certain non-cash items, including depreciation expense, amortization of intangible assets, gain on disposal of subsidiary, fair value adjustment on convertible promissory notes, and stock-based compensation, and the effects of changes in operating assets and liabilities.

The increase in cash used in operating activities for the year ended June 30, 2023, as compared to 2022 was primarily due to higher net loss adjusted for non-cash interest expense of promissory notes and the increase of accrued liabilities and other payables and advanced from related parties.

In the operation analysis, the net cash used in operating activities increased from $1,595,961 to $1,656,896.

The operation loss of $3,998,960 was partially offset by the noncash expenses such as $254,852 in depreciation, $124,688 in amortization, $519,671 in share-based compensation, $1,877,739 in interest expenses on promissory notes, $60,297 in lease interest expense, fair value adjustment on convertible promissory note of $194,865, gain on disposal of subsidiary of $980,714 and $600 from gain on disposal of property, plant and equipment.

In the operating assets and liabilities, the net decrease in current assets resulted from an increase of other receivables, deposits and prepayments of $104,470, an increase in inventories held of $13,850 and a decrease in accounts receivables of $7,785.

The net increase in current liabilities resulted from $348,913 increase in advances from related parties, $403,259 increase in accrued liabilities and other payables and $75,768 increase in accounts payable, offset by a decrease in advances from director of $12,877.

The final result of the cash flow used in operating activities was $1,656,896.

Net Cash Used In Investing Activities.

For the year ended June 30, 2022, net cash used for investing activities consisted primarily of $1.1 million of expenditures for property, plant, and equipment.

For the year ended June 30, 2021, net cash used for investing activities consisted primarily of $0.9 million from the payment of acquisition of equity interest, right of use assets and property and equipment.

Net Cash Generated From Financing Activities.

For the year ended June 30, 2022, net cash generated from financing activities included $1.0 million for the issuance of our common stock under private placement.

For the year ended June 30, 2021, net cash generated from financing activities included $3.1 million for the issuance of our common stock under private placement.

The net cash used by investing activity of $387,938 resulted from purchase of property, plant and equipment of $497,302, deposit paid for acquisition of subsidiary company of $21,423, offset by proceeds on disposal of property, plant and equipment of $23,000, net cash inflow from disposal of subsidiary company of $106,647 and net cash inflow on acquisition of a subsidiary company of $1,140 for the year ended June 30, 2023.

Net Cash Provided By Financing Activities.

The net cash provided by financing activities of $1,628,281 resulted from proceeds from shares issued of $1,576,280 and net proceeds from drawdown of loans of $191,000, set off partially by repayments to lease liabilities and related interests for the years ended June 30, 2023, of $138,999 and $10,406 respectively.

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-K

Item 7. Management’s Discussion and Analysis