What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-10-16 compared with 2023-10-16 · 54 added, 31 removed, 69 unchanged (55% of the section changed)

9 unchanged sentences

Cost of revenue

Operating expenses

Goodwill impairment

Gross profit (loss)

Selling, general and administrative expenses

Other operating expenses

Loss from operation

2 unchanged sentences

Provision of Income Tax

Net loss attributable to non-controlling interests

Net loss attributable to shareholders of the group

$ (3,187,774 )

$ (3,998,960 )

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.

The revenue was derived from sale of Biochar Asphalt Premix in 2024 in addition to the distribution of renewable commodities and compost spreading in 2023.

We have generated $96,584 and $100,777 revenues for the years ended June 30, 2024, and 2023, respectively, Revenue decreased primarily due to the non-generation of revenue from compost spreading offset by the increase in the sale of Biochar Asphalt Premix in 2024.

A gross profit of $33,606 compared to a gross loss of $137,376 for the year ended June 30, 2024, and 2023 respectively.

Cost of revenue

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, 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 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.

Cost of revenue decreased from $238,153 to $62,978 during the year ended June 30, 2024 due to cessation of the operations in the production and distribution of renewable commodities.

Arising from this, the expenditure related to the plant have been categorized under other operating expenses.

Selling, General and Administrative Expenses

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

We have incurred $2,882,376 and $3,216,022 in selling, general and administrative expenses through June 30, 2024, and June 30, 2023 respectively.

Selling, general and administrative expenses decreased by 10.4%, or $333,646, primarily due to decrease of consultancy fee as most of the agreements with service providers expired in current financial year and the new agreements were only entered into in the last 2 months of the current financial year and selling, general and administrative expenses contributed by CSB which was disposed on April 20, 2023.

Other Operating Expenses

Other operating expenses comprised of expenditure related to the operations of the plant in the production and distribution of renewable commodities which have been categorized under other operating expenses.

This categorization was due there being no production processed by the plant for the year ended 30 June 2024.

Interest expense

The Company recorded interest expense of $116,917 and $1,881,807 on the promissory notes for the years ended June 30, 2024, and 2023, respectively.

Lease interest amounted to $36,765 and $1,065 for the years ended June 30, 2023, and 2022, respectively.

Lease interest expenses amounted to $45,926 and $35,344 for the years ended June 30, 2024, and 2023, respectively.

Bank loan interest amounted to $13,640 and $1,421 for the years ended June 30, 2024, and 2023, respectively.

The decrease in interest expense is mainly due to conversion of promissory notes with a principal amount of $20,355,000 on December 9, 2022 and accordingly no further interest charges recorded with regards to the PN thereafter.

The charge in the current period is in respect of a new PN issued of $675,888.

We have other income of $74,638 and $1,273,010 for the year ended June 30, 2024, and 2023.

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.

Other income of $1,215,689 for the year ended June 30, 2023, was mainly 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.

The balance mainly represented rental income earned.

As a result of the above factors, the Company recorded a net loss of $3,187,774 and $3,998,960 for the years ended June 30, 2024, and 2023, respectively.

Plan of Operation

3 unchanged sentences

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.

The Company is working to lay the foundation for revolutionary infrastructure development, marked by innovative biochar asphalt showcase projects within the United States.

Our 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.

1 unchanged sentence

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.

In 2023, 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.

3 unchanged sentences

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.

The partnership includes an agreement for Verde Resources to white-label THC-free CBD products from MRX Technologies.

The Company achieved a significant milestone by conducting the first-ever biochar-asphalt installation in the United States, just outside of Chicago, Illinois in August 2023.

Subsequently, we replicated this success at our own facility in La Belle, Missouri.

In September 2023, upon the invitation of the City of Gramercy, located near New Orleans, Louisiana, the Company executed another biochar-asphalt installation.

As a testament to our efforts, we have already received several Letters of Intent (LOIs), and we are confident that our transition from mining to climate-tech and the green economy will yield tremendous results for the company in the years ahead.

The Company entered into a Services Agreement with Donald R.

Fosnacht in October 2023 to engage him as National Certification and Extensive BCR (Biochar Carbon Removal) Implementation Specialist to develop and implement a comprehensive strategy to obtain national and regional certification and endorsement for carbon net-negative construction products with high biochar content, encompassing asphalt, concrete, and soil stabilization as designated in the Services Agreement.

The Company entered into two Services Agreements with Dr.

Nam Tran and Dr.

Raymond Powell in April 2024 to engage them as National Implementation Experts for its wholly-owned subsidiary Verde Renewables, Inc.

to initiate connections with esteemed asphalt contractors, identify potential partners, explore potential collaborations through their extensive networks in the asphalt industry and recommend strategies to capitalize on emerging opportunities as designated in the Agreements.

Furthermore, the Company entered into a Services Agreement with Dale Ludwig in June 2024 to engage him as Strategic Advisor to maintain and build strong relationships with policymakers at both state and federal levels, collaborate with Missouri Department of Transportation, build relationships with Missouri Asphalt Pavement Association (MAPA) members, collaborate with Missouri contractors to encourage the use of the Company's technologies, identify current biochar producers in Missouri and engage with the Missouri Department of Economic Development.

On June 27, 2024, the Company entered into an agreement with The National Center for Asphalt Technology at Auburn University ("NCAT") to undertake a 3-year Performance Testing Project titled “Structural Capacity of Sustainable Pavement”.

The Project, led by Dr.

Nam Tran, Associate Director and Research Professor at NCAT, will involve comprehensive performance testing on the NCAT Test Track in Opelika, Alabama.

This facility, sponsored by various state Departments of Transportation (DOTs) and in partnership with the Minnesota Road Research Facility (MnROAD), is dedicated to advancing sustainable pavement technologies.

The NCAT Test Track will be constructed in the summer of 2024 to evaluate cutting-edge technologies that utilize enzymes to treat expansive soils and stabilize marginal base materials, potentially reducing or eliminating the need for carbon-intensive materials such as hydrated lime and Portland cement.

Additionally, integrating biochar from biomass pyrolysis into enzyme-treated pavement materials is expected to improve performance, substantially reduce greenhouse gas (GHG) emissions, and sequester carbon dioxide.

This pioneering approach is projected to generate Carbon Removal Credits upon completion of the test track installation, proving the viability of this next-generation blueprint for net-zero road construction.

The Company is confident in its 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.

Additionally, the substantial Carbon Removal Credits generated will create a significant and separate revenue stream for the Company.

The Project is expected to conclude in September 2027, with the first draft of the final report expected in spring 2027.

Limited Operating History;

20 unchanged sentences

Net increase in cash and cash equivalents

$ (1,698,705 )

Cash and cash equivalents at beginning of year

1 unchanged sentence

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, 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.

Cash used in operating activities reflects net loss adjusted for certain non-cash items, including depreciation expense, amortization of right of use assets and stock-based compensation, impairment on receivables and the effects of changes in operating assets and liabilities.

The increase in cash used in operating activities for the year ended June 30, 2024, as compared to 2023 was primarily due to increase of inventories for production and distribution of renewable commodities and decrease of advanced from related parties.

In the operation analysis, the net cash used in operating activities decreased from $1,656,896 to $2,042,064.

The operation loss of $3,187,662 was partially offset by the noncash expenses such as $417,517 in depreciation, $115,359 in amortization, $388,048 in share-based compensation, $103,380 in interest expenses on promissory notes, $45,926 in lease interest expense, $57,323 in impairment of receivables, $177,200 from advance to supplier written off, $134,042 in impairment of assets held for sale, property, plant and equipment written off of $3,979, write down of inventories of $15,587, inventories written off of $5,978 and $21,316 from deposit on acquisition of subsidiary written off.

In the operating assets and liabilities, the net increase of cash outflow in current assets such as other receivables, deposits and prepayments, inventories and accounts receivables and current liabilities such as accrued liabilities and other payables which are greater than the net increase of cash inflow in current liabilities such as, advances from related parties, and accounts payable which resulted in $368,297 negative cash flow effect adding to loss in operation and after offset by non-cash expenses , the final result of the cash flow used in operating activities was $2,042,064.

Net Cash Used In Investing Activities.

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.

The net cash used by investing activity of $16,646 resulted from purchase of property, plant and equipment of $16,646 and placement of deposit in bank of $2,000,000 for the year ended June 30, 2024.

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 net cash provided by financing activities of $4,081,720 resulted from proceeds from shares issued and shares to be issued of $4,108,379, advance from other payables of $136,983 and net proceeds from drawdown of loans of $20,440, set off partially by repayments to lease liabilities and related interests of $138,156 and $45,926 for the year ended June 30, 2024 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