VERDE RESOURCES, INC. 10-K

Item 8. Financial Statements and Supplementary Data VERDE RESOURCES, INC. INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Page Reports of Independent Registered Accounting Firm - J&S Associate PLT (PCAOB ID: 6743) F-2 Consolidated Balance Sheets F-4 Consolidated Statements of Operations and Comprehensive Loss F-5 Consolidated Statements of Cash Flows F-6 Consolidated Statements of Changes in Stockholders’ Equity F-7 Notes to Consolidated Financial Statements F-8 F-1 Table of Contents J&S ASSOCIATE PLT 202206000037 (LLP0033395-LCA) & AF002380 (Registered with PCAOB and MIA) B-11-14, Megan Avenue II 12,Jalan Yap Kwan Seng, 50450, Kuala Lumpur, Malaysia Tel: +603-4813 9469 Email : info@jns-associate.com Website : jns-associate.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders of VERDE RESOURCES, INC. Opinion on the Financial Statement We have audited the accompanying consolidated balance sheet of Verde Resources, Inc. and its subsidiaries (the ‘Company’) as of June 30, 2024 and 2023, and the related consolidated statement of operations and comprehensive income, stockholders’ equity (deficit), and cash flows for the years ended June 30, 2024 and 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for the years ended June 30, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3, the Company has generated recurring losses and suffered from an accumulated deficit of $13,480,204 as of June 30, 2024. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regards to these matters are also described in Note 3 to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current year audit of the financial statements that were communicated or are required to be communicated to the audit committee, or in their absence, the directors, and that: (1) relate to accounts or disclosures that are material to the financial statements, and (2) involved especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Assessment for impairment of Intellectual Properties As described in Note 2 to the consolidated financial statements, the intangible assets acquired from third parties are measured initially at fair value with an infinite live that are not being amortized. The Company annually evaluates the recoverability of the infinite-lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. The recoverability of these assets is measured by a comparison of the carrying amounts to the future discounted cash flows the assets are expected to generate. If such a review indicates that the carrying amount of intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value. F-2 Table of Contents Our key considerations for the determination the fair value of the intangible assets, comprising Intellectual Properties (“IP”) as a critical audit matter was due to the high degree of judgement involved in the assessment of the assumptions used in deriving the future discounted cash flows as included in the worksheets presented to us to justify their carrying values of the IP. These were assessed by: i) Critically evaluating management’s assessment for their rationale and justification of the assumptions used; ii) Discussions with the key management and operational personnel of the Company to understand the future plans, their assumptions and expected income to be derived; ii) Obtained necessary supporting information and published reports to support the forecast demand and productions and prices used in the worksheets; ii) Ascertaining formulas and linkages in the worksheets were properly set up; iii) Performing stress tests by reducing assumed demand and production to determine impact on cash flows and carrying values. /s/ J&S Associate PLT Certified Public Accountants Firm ID: 6743 We have served as the Company’s auditor since 2022. Kuala Lumpur, Malaysia October 16, 2024 F-3 Table of Contents VERDE RESOURCES, INC. CONSOLIDATED BALANCE SHEETS (Currency expressed in United States Dollars (“US$”), except for number of shares) As of June 30, 2024 2023 ASSETS Current asset: Cash and cash equivalents $ 279,137 $ 200,409 Deposit with banks 2,000,000 - Accounts receivable 65,960 12,071 Inventories 309,144 96,036 Amounts due from related party 100 100 Advance to supplier - 177,200 Prepayment 227,173 375,680 Other receivables and deposits 6,862 26,436 2,888,376 887,932 Assets held for sale 606,043 - Total current assets 3,494,419 887,932 Non-current assets: Property, plant and equipment, net 2,916,006 4,009,090 Right of use assets, net 509,482 633,109 Intangible assets 33,160,631 33,191,991 Security deposit 80,000 80,000 Deposit paid for acquisition of subsidiaries - 21,423 Total non-current assets 36,666,119 37,935,613 TOTAL ASSETS $ 40,160,538 $ 38,823,545 LIABILTIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 92,250 $ 73,171 Other payables 517,189 504,995 Deposit and accrued liabilities 83,671 135,774 Finance lease liabilities 22,323 172,184 Finance lease liabilities – assets held for sale 603,252 - Operating lease liabilities 24,881 20,768 Bank loan 211,440 191,000 Promissory notes 591,170 - Amount due to director 4,188 9,660 Amounts due to related parties 327,867 369,729 Total current liabilities 2,478,231 1,477,281 Non-current liabilities: Finance lease liabilities 86,565 608,455 Operating lease liabilities 4,602 29,483 Promissory notes - 487,790 Total non-current liabilities 91,167 1,125,728 TOTAL LIABILITIES 2,569,398 2,603,009 Commitments and contingencies STOCKHOLDERS’ EQUITY Preferred stock, $ 0.001 par value, 50,000,000 shares authorized, none issued and outstanding - - Common stock, $ 0.001 par value; 10,000,000,000 shares authorized; 1,199,358,251 and 1,176,200,278 issued and outstanding as of June 30, 2024 and 2023 1,199,358 1,176,200 Common stock, $0.001 par value; 22,887,025 and 0 shares to be issued as of June 30, 2024 and 2023 22,887 - Common stock, $0.001 par value; 375,000 and 0 shares to be cancelled as of June 30, 2024 and 2023 ( 375 ) - Additional paid-in capital 49,921,380 45,415,958 Accumulated other comprehensive income ( 71,906 ) ( 79,192 ) Accumulated deficit ( 13,480,204 ) ( 10,292,430 ) Stockholders’ equity 37,591,140 36,220,536 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 40,160,538 $ 38,823,545 See accompanying notes to consolidated financial statements. F-4 Table of Contents VERDE RESOURCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (Currency expressed in United States Dollars (“US$”)) Years ended June 30, 2024 2023 Revenue, net $ 96,584 $ 100,777 Cost of revenue ( 62,978 ) ( 238,153 ) Gross profit (loss) 33,606 ( 137,376 ) Operating expenses: Selling, general and administrative expenses ( 2,882,376 ) ( 3,216,022 ) Other operating expenses ( 237,047 ) - Total operating expenses ( 3,119,423 ) ( 3,216,022 ) LOSS FROM OPERATION ( 3,085,817 ) ( 3,353,398 ) Other (expense) income: Interest expense ( 176,483 ) ( 1,918,572 ) Rental income 68,200 57,321 Other income 6,438 1,215,689 Total other expense, net ( 101,845 ) ( 645,562 ) LOSS BEFORE INCOME TAXES ( 3,187,662 ) ( 3,998,960 ) Income tax expense ( 112 ) - NET LOSS ( 3,187,774 ) ( 3,998,960 ) Other comprehensive income (loss): - Foreign currency adjustment income (loss) 7,286 ( 821,651 ) COMPREHENSIVE LOSS $ ( 3,180,488 ) $ ( 4,820,611 ) Net loss per share - Basic $ ( 0.00 ) $ ( 0.00 ) - Diluted $ ( 0.00 ) $ ( 0.00 ) Weighted average common shares outstanding - Basic 1,187,606,780 1,019,752,220 - Diluted 1,187,606,780 1,019,752,220 See accompanying notes to consolidated financial statements. F-5 Table of Contents VERDE RESOURCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Currency expressed in United States Dollars (“US$”)) Years ended June 30, 2024 2023 Cash flows from operating activities: Net loss $ ( 3,187,662 ) $ ( 3,998,960 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation of property, plant and equipment 417,517 254,852 Amortization 115,359 124,688 Stock-based compensation-consultants 252,369 519,671 Stock-based compensation-employee 135,679 - Finance cost interest element of promissory notes (non-cash) 103,380 1,877,739 Lease interest expense 45,926 36,765 Fair value adjustment on convertible promissory notes - ( 194,865 ) Deposit paid for acquisition of subsidiary written off 21,316 - Impairment on trade receivables 27,481 - Impairment on other receivables 29,842 - Impairment on advance to supplier 177,200 - Impairment on assets held for sale 134,042 - Write down of inventories 15,587 - Inventories written off 5,978 - Property, plant and equipment written off 3,979 - Gain on disposal of a subsidiary - ( 980,714 ) Gain on disposal of property and equipment - ( 600 ) Change in operating assets and liabilities: Accounts receivable ( 81,427 ) 7,785 Other receivables and deposits ( 22,918 ) ( 846 ) Prepayments ( 6,656 ) ( 103,624 ) Inventories ( 235,677 ) ( 13,850 ) Accounts payables 19,725 75,768 Accrued liabilities and other payables ( 38,272 ) 403,259 Advanced from director ( 5,472 ) ( 12,877 ) Advanced from related parties 30,640 348,913 Net cash used in operating activities ( 2,042,064 ) ( 1,656,896 ) Cash flows from investing activities: Proceeds from disposal of property, plant and equipment - 23,000 Deposit paid for acquisition of subsidiary - ( 21,423 ) Net inflow from disposal of subsidiary - 106,647 Net inflow on acquisition of subsidiary - 1,140 Placement of deposit with bank ( 2,000,000 ) - Purchase of property, plant and equipment ( 16,646 ) ( 497,302 ) Net cash used in investing activities ( 2,016,646 ) ( 387,938 ) Cash flows from financing activities: Repayment to lease liabilities ( 138,156 ) ( 102,234 ) Drawdown of bank loan 50,000 301,000 Repayment of bank loan ( 29,560 ) ( 110,000 ) Advanced from other payables 136,983 - Lease interest paid ( 45,926 ) ( 36,765 ) Proceeds from issuance of common stock and common stock to be issued 4,108,379 1,576,280 Net cash provided by financing activities 4,081,720 1,628,281 Net change in cash and cash equivalent 23,010 ( 416,553 ) Foreign currency translation adjustment 55,718 198,045 Net change in cash and cash equivalents 78,728 ( 218,508 ) BEGINNING OF YEAR 200,409 418,917 END OF YEAR $ 279,137 $ 200,409 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for income taxes $ - $ - Cash paid for interest $ - $ - See accompanying notes to consolidated financial statements. F-6 Table of Contents VERDE RESOURCES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) Common stock Common stock to be Common stock to be Additional paid-in Accumulated other comprehensive Accumulated Total stockholders’ No. of shares Amount issued cancelled capital income (loss) deficit equity Balance as of July 1, 2022 819,188,055 $ 810,742 $ 8,446 $ - $ 22,945,190 $ 742,459 $ ( 10,357,920 ) $ 14,148,917 Shares issued to service provider 5,315,000 5,315 - - 870,185 - - 875,500 Stock issued for previously committed private placement - 8,446 ( 8,446 ) - - - - - Shares issued for private placement 18,554,834 18,555 - - 1,578,725 - - 1,597,280 Shares issued arising from conversion of promissory notes 333,142,389 333,142 - - 20,021,858 - - 20,355,000 Fair value adjustment on conversion of promissory notes - - - - - - 4,064,450 4,064,450 Net loss for the year - - - - - - ( 3,998,960 ) ( 3,998,960 ) Foreign currency translation adjustment - - - - - ( 12,631 ) - ( 12,631 ) Cumulative translation adjustment transferred to profit/loss - - - - - ( 809,020 ) - ( 809,020 ) Balance as of June 30, 2023 1,176,200,278 $ 1,176,200 $ - $ - $ 45,415,958 $ ( 79,192 ) $ ( 10,292,430 ) $ 36,220,536 Balance as of July 1, 2023 1,176,200,278 $ 1,176,200 $ - $ - $ 45,415,958 $ ( 79,192 ) $ ( 10,292,430 ) $ 36,220,536 Shares issued to service provider 1,000,000 1,000 - - 99,000 - - 100,000 Shares issued for private placement 22,662,899 22,663 - - 2,128,544 - - 2,151,207 Shares to be issued for private placement 21,988,335 - 21,988 - 2,145,012 - - 2,167,000 Common stock subject to forfeiture - - ( 1,175 ) ( 175,105 ) - - ( 176,280 ) Shares cancelled ( 800,000 ) ( 800 ) - 800 - - - - Shares to be issued to service providers 397,108 - 397 - 138,794 - - 139,191 Shares to be issued to employee 501,580 - 502 - 135,177 - - 135,679 Share based payment - - - - - - - 107,040 Reissued of shares previously cancelled to service providers 295,076 295 - - - - - 295 Net loss for the year - - - - - - ( 3,187,774 ) ( 3,187,774 ) Foreign currency translation adjustment - - - - - 7,286 - 7,286 Balance as of June 30, 2024 1,222,245,276 $ 1,199,358 $ 22,887 $ ( 375 ) $ 49,921,380 $ ( 71,906 ) $ ( 13,480,204 ) $ 37,591,140 See accompanying notes to consolidated financial statements. F-7 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) NOTE 1 - ORGANIZATION AND BUSINESS BACKGROUND Verde Resources, Inc. (the “We” or “Company” or “VRDR”) was incorporated on April 22, 2010, in the State of Nevada, U.S.A.. We currently operate in the production and distribution of renewable commodities and real property holding. The Company has undergone a restructuring exercise to shift its focus towards renewable energy and sustainability development with the world faced with challenges of climate change and environmental dehydration. As of June 30, 2024, the Company has the following subsidiaries:- Name of subsidiary Place of incorporation Principal activities and place of operation Effective interest held Verde Resources Asia Pacific Limited (“VRAP”) British Virgin Islands Investment holding 100 % Verde Resources (Malaysia) Sdn Bhd (“Verde Malaysia”) Malaysia Manufacturing and distribution of renewable agricultural commodities, and provision of consultation services related thereto 100 % Verde Renewables, Inc. (“VRI”) State of Missouri, U.S.A. Management of a processing and packaging facility 100 % Verde Life Inc. (“VLI”) State of Oregon, U.S.A. Distribution of THC-free cannabinoid (CBD) products [Operation terminated] 100 % The Wision Project Sdn Bhd (“Wision”) Malaysia Digital innovation, marketing & consulting firm provides PR, Branding, influencer marketing, event management and media relations services 100 % Verde Estates LLC (“VEL”) State of Missouri, U.S.A. Holding real property 100 % Bio Resources Limited (“BRL”) Labuan, Malaysia Proprietor of pyrolysis technology 100 % The Company and its subsidiaries are hereinafter referred to as (the “Company”). F-8 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) During the years ended June 30, 2024, and 2023, there are the major transactions, as below: The Company announced the Share Sale Agreement on May 12, 2021 for the acquisition of the entire issued and paid-up share capital of Bio Resources Limited from various unrelated third parties being Taipan International Limited, The Wision Project Limited, and other individuals, for a consideration of $ 30,000,000 by way of an issuance of 321,500,000 shares of the Company’s restricted Common Stock at $ 0.03 per share, valued at $ 9,645,000 , and the issuance of promissory notes with two-year term period with a principal amount of $ 20,355,000 . The acquisition of Bio Resources Limited was subsequently closed on October 12, 2022. BRL owns the intellectual property known as “Catalytic Biofraction Process”, 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 degree Celsius to 500 degree Celsius to yield commercially valuable bio products: bio-oil, wood vinegar (pyroligneous acid), biochar and bio-syngas. The intellectual property is a second-generation pyrolysis process where non-food feedstock like the palm biomass wastes is used as feedstock. On March 13, 2023, the Company through its wholly-owned subsidiary Verde Resources Asia Pacific Limited (“VRAP”), a company incorporated under the laws of the British Virgin Islands, entered into a Share Sale Agreement (the “SSA Agreement”) with Jusra Mining Merapoh Sdn Bhd (“JMM”), a company incorporated under the laws of Malaysia, to sell the entire issued and paid-up share capital of Champmark Sdn Bhd (“CSB”), an indirect wholly-owned subsidiary of the Company engaged in the mining business. Under the terms of the SSA Agreement, the consideration for the sale of the entire issued and paid-up share capital of CSB shall be satisfied in full by the payment of Malaysia Ringgit MYR 500,000. The Company has been undergoing a restructuring exercise to shift its focus towards renewable energy and sustainability development with the world faced with challenges of climate change and environmental dehydration. The disposition of the mining business via the sale of the entire issued and paid-up share capital of CSB is in line with the Company’s restructuring effort to focus on renewable energy and sustainability. The disposition of Champmark Sdn Bhd (“CSB”) was completed on April 20, 2023. Effective March 30, 2023, Carl Craven voluntarily resigned from his position as Director of the Company. By resolution of the Board of Directors, Jack Wong was appointed Director of the Company for a one (1) year term, effective March 30, 2023. Jack Wong was to hold the Board position formerly held by Carl Craven. Effective September 12, 2023, Jack Wong stepped down from his position as President of the Company, but remains as Chief Executive Office of the Company. Effective September 12, 2023, the Board of Directors of the Company appointed Jack Wong, CEO and Director of the Company, as Chairman of the Board. Subsequently, on January 23, 2024, Jack Wong stepped down from his position as Chairman of the Board, and Joseph Ambrose Lee was appointed Director and Chairman of the Board for a one year term. Effective June 18, 2024, Joesph Ambrose Lee tendered his resignation as Director and Chairman of the Board. By resolution of the Board, Balakrishnan B S Muthu, Director and Chief Financial Officer of the Company, was appointed Chairman of the Board to replace Joesph Ambrose Lee effective June 18, 2024. Effective October 1, 2023, the Company appointed Eric Bava and Andre van Zyl as Chief Operating Officer and Chief Technology Officer respectively to drive the Company’s climate-tech innovation. Subsequently on May 15, 2024, Andre van Zyl stepped down from his position as Chief Technology Officer of the Company. F-9 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes. · Basis of Presentation These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). · Use of Estimates and Assumptions The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the years presented. Significant accounting estimates reflected in the Company’s consolidated financial statements include the useful lives of plant and equipment, impairment of long-lived assets (including intangible assets, allowance for expected credit losses, revenue recognition, income tax provision, deferred taxes and uncertain tax position. The inputs into the management’s judgments and estimates consider the geopolitical tension, inflationary and high-interest rate environment and other macroeconomic factors on the Company’s critical and significant accounting estimates. Actual results could differ from these estimates. · Basis of Consolidation The consolidated financial statements include the financial statements of Verde Resources, Inc. and its subsidiaries. All significant inter-company balances and transactions within the Company and its subsidiaries have been eliminated upon consolidation. The Company accounts for acquisitions in accordance with guidance found in ASC 805, Business Combinations. The guidance requires consideration given, including contingent consideration, assets acquired, and liabilities assumed to be valued at their fair market values at the acquisition date. · Segment Reporting Accounting Standard Codification (“ASC”) Topic 280, Segment Reporting establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in consolidated financial statements. Currently, the Company operates in three reportable operating segments. · Concentrations of Credit Risk The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and future receivables. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited. · Risks and Uncertainties The Company is venturing into the production and distribution of renewable commodities that are subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with a production operation for renewable commodities, including the potential risk of business failure. F-10 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) · Cash and Cash Equivalents Cash and cash equivalents are carried at cost and represent cash in banks, money market funds, and certificates of term deposits with maturities of less than three months, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had $ 279,137 and $ 200,409 in cash and cash equivalents at June 30, 2024 and 2023. At June 30, 2024, and 2023, cash and cash equivalents consisted of bank deposits and petty cash on hands. · Deposits with bank Deposits held for investments that are not debt securities are included in short-term investments in the consolidated balance sheets. Investments in time deposits with original maturities of more than three months but remaining maturities of less than one year are considered short-term investments. Investments held with the intent to reinvest or hold for longer than a year, or with remaining maturities of one year or more, are considered long-term investments. At June 30, 2024, the interest rates and maturies of deposits with bank is 4.64 % per annum and 60 to 365 days respectively. · Accounts Receivable Accounts receivables are recognized and carried at net realizable value. An allowance for doubtful accounts will be recorded in the period when a loss is probable based on an assessment of specific evidence indicating troubled collection, historical experience, accounts aging, ongoing business relation and other factors. Accounts are written off after exhaustive efforts at collection. If accounts receivable are to be provided for, or written off, they would be recognized in the consolidated statement of operations within operating expenses. As of June 30, 2024, and 2023, the longest credit term for certain customers are 60 days. At June 30, 2024 and 2023, the allowance for doubtful accounts for accounts receivables amounted to $ 27,481 and $ 0 respectively, and for other receivables amounted to $ 29,842 and $ 0 respectively. · Expected Credit Loss ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments requires entities to use a current lifetime expected credit loss methodology to measure impairments of certain financial assets. Using this methodology will result in earlier recognition of losses than under the previous incurred loss approach, which requires waiting to recognize a loss until it is probable of having been incurred. There are other provisions within the standard that affect how impairments of other financial assets may be recorded and presented, and that expand disclosures. The Company adopted the new standard effective July 1, 2023, the first day of the Company’s fiscal year and applied to accounts receivable and other financial instruments. The adoption of this guidance did not materially impact the net earning and financial position and has no impact on the cash flows. · Inventories Inventories are stated at the lower of cost or market value (net realizable value), cost being determined on a first-in-first-out method. Cost of raw materials include cost of materials and incidental costs in bringing the inventory to its current location. Costs of finished goods, on the other hand include material, labor and overhead costs. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand. As of June 30, 2024, and 2023, the write down of inventories amounted to $ 15,587 and $ 0 respectively, and inventories written off amounted to $ 5,978 and $ 0 respectively. · Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values: Expected useful life Land and buildings 3 - 27.5 years Plant and machinery 5 - 10 years Office equipment 3 years Project equipment 5 years Computers 5 years Motor vehicles 5 years Furniture and fittings 5 years Renovation 10 years Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterment which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other comprehensive income in other income or expenses. F-11 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) Depreciation expense for the years ended June 30, 2024 and 2023 totaled $ 417,517 and $ 254,852 , respectively. Plant and machinery written off for the years ended June 30, 2024 and 2023 amounted to$ 3,979 and $ 0 respectively. · Intangible assets Intangible assets acquired from third parties are measured initially at fair value and those with an infinite live are not amortized. The Company annually evaluates the recoverability of the infinite-lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. The recoverability of these assets is measured by a comparison of the carrying amounts to the future discounted cash flows the assets are expected to generate. If such a review indicates that the carrying amount of intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value. As of June 30, 2024, and 2023, the Company did not record an impairment on the intangible assets. · Assets held for sale The Company classifies assets as held-for-sale (“disposal group”) in the period when all of the relevant criteria to be classified as held for sale are met. These criteria include management’s commitment to sell the disposal group in its present condition and the sale being deemed probable of being completed within one year. Assets held for sale are reported at the lower of their carrying value or fair value less cost to sell. The fair values of disposal groups are estimated using accepted valuation techniques, including indicative listing prices. The Company considers historical experience, guidance received from third parties, and all information available at the time the estimates are made to derive fair value. Any loss resulting from the measurement is recognized in the period when the held for sale criteria are met. The Company assesses the fair value of a disposal group, less any costs to sell, each reporting period it remains classified as held for sale and reports any subsequent changes as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the initial carrying value of the disposal group. Assets held-for-sale are not amortized or depreciated. The impairment loss on assets held for sale for the years ended June 30, 2024 and 2023 was $ 134,042 and $ 0 respectively. · Impairment of Long-lived Assets In accordance with the provisions of ASC Topic 360, Impairment or Disposal of Long-Lived Assets , all long-lived assets such as property, plant and equipment owned and held by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has been no impairment charge for the years ended June 30, 2024 and 2023. · Advance to Supplier Advance to supplier is provided for the provision of goods and services and they are secured either by a security deposit or a legally enforceable right to recover. As of June 30, 2024, and 2023, the Company recorded a write-off of $ 177,200 and $ 0 respectively. · Revenue Recognition ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfils its obligations under each of its agreements: · identify the contract with a customer; · identify the performance obligations in the contract; · determine the transaction price; · allocate the transaction price to performance obligations in the contract; and · recognize revenue as the performance obligation is satisfied. Revenue is recognized when the Company satisfies its performance obligation under the contract by transferring the promised product to its customer that obtains control of the product and collection is reasonably assured. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. Most of the Company’s contracts have a single performance obligation, as the promise to transfer products or services is not separately identifiable from other promises in the contract and, therefore, not distinct. The Company considers customer order confirmations, whether formal or otherwise, to be a contract with the customer. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. F-12 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) The Company also follows the guidance provided in ASC 606, Revenue from Contracts with Customers, for determining whether the Company is the principal or an agent in arrangements with customers that involve another party that contributes to the provision of goods to a customer. In these instances, the Company determines whether it has promised to provide the goods itself (as principal) or to arrange for the specified goods to be provided by another party (as an agent). This determination is a matter of judgment that depends on the facts and circumstances of each arrangement. The Company derives its revenue from the sale of products and services in its role as a principal. Rental income Rental income is recognized on a straight line basis over the term of the respective lease agreement. · Cost of revenue Cost of revenue consists primarily of the cost of goods sold, which are directly attributable to the sales of products. · Leases The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use (“ROU assets”) assets represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC Topic 360, Property, Plant, and Equipment , as ROU assets are long-lived nonfinancial assets. ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The Company recognized no impairment of ROU assets as of June 30, 2024, and 2023. The operating lease is included in operating lease right-of-use assets and operating lease liabilities as current and non-current liabilities in the consolidated balance sheets at June 30, 2024 and 2023. Leases that transfer substantially all the rewards and risks of ownership to the lessee, other than legal title, are accounted for as finance leases. Substantially all of the risks or benefits of ownership are deemed to have been transferred if any one of the four criteria is met: (i) transfer of ownership to the lessee at the end of the lease term, (ii) the lease containing a bargain purchase option, (iii) the lease term exceeding 75% of the estimated economic life of the leased asset, (iv) the present value of the minimum lease payments exceeding 90% of the fair value. At the inception of a finance lease, we as the lessee records an asset and an obligation at an amount equal to the present value of the minimum lease payments. The leased asset is amortized over the shorter of the lease term or its estimated useful life if title does not transfer to us, while the leased asset is depreciated in accordance with our depreciation policy if the title is to eventually transfer to us. The periodic rent payments made during the lease term are allocated between a reduction in the obligation and interest element using the effective interest method in accordance with the provisions of ASC Topic 842. · Income Taxes The Company adopted the ASC Topic 740, Income tax provisions of paragraph 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13. The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary. · Uncertain Tax Positions The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the ASC Topic 740 provisions of Section 740-10-25 for the years ended June 30, 2024, and 2023. · Foreign Currencies Translation F-13 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) The Company’s reporting currency is the United States dollar (“US$”) and the accompanying consolidated financial statements have been expressed in United States dollars. The Company’s functional currency is the Malaysian Ringgit (“MYR”) which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statement of operations. For reporting purposes, in accordance with ASC Topic 830 “Translation of Financial Statements”, capital accounts of the consolidated financial statements are translated into United States dollars from MYR at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the respective year. The gains and losses resulting from translation of financial statements subsidiaries to the reporting currency are recorded as a separate component of accumulated other comprehensive income within the statements of changes in stockholder’s equity. Translation of MYR into U.S. dollars has been made at the following exchange rates for the following periods:- June 30, 2024 June 30, 2023 Year-end MYR:US$ exchange rate 4.71717 4.66795 Annualized average MYR:US$ exchange rate 4.69230 4.50684 · Comprehensive Income ASC Topic 220, Comprehensive Income , establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying consolidated statements of changes in stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit. · Net Loss per Share The Company calculates net loss per share in accordance with ASC Topic 260, Earnings per Share . Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive. · Stock Based Compensation The Company accounts for stock-based compensation in accordance with ASC Topic 718-10, Compensation-Stock Compensation , which requires the measurement and recognition of compensation expense for all share-based payment arrangements related to the acquisition of goods and services from both non employees and employees based on fair values of the shares to be issued estimated at grant date. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. Fair value is determined based on the estimated market prices of the Company’s common stock at the respective issuance date in accordance with ASC 718, taking into consideration the volatility of the market price of the shares, the terms of the instruments and the conditions upon which they were granted. During the financial year ended June 30, 2024 and 2023, $ 252,369 and $ 519,671 respectively, were recorded as share based compensation for non employees. During the financial year ended June 30, 2024 and 2023, $ 135,679 and $ 0 respectively, were recorded as share based compensation for an employee. · Retirement Plan Costs Contributions to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying statements of operation as the related employee service are provided. · Related Parties The Company follows the ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions. Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. F-14 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. · Commitments and Contingencies The Company follows the ASC 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. · Fair Value of Financial Instruments The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below: Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 Pricing inputs that are generally observable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, loan and fee receivable, prepayments and other receivables, amounts due from related parties, accrued liabilities and other payables, loans payable, amounts due to related parties approximate their fair values because of the short maturity of these instruments. F-15 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2023 AND 2022 (Currency expressed in United States Dollars (“US$”), except for number of shares) · Recent Accounting Pronouncements During the year ended June 30, 2024, there have been no new, or existing, recently issued accounting pronouncements that are of significance, or potential significance, that impact the Company’s consolidated financial statements. In June 2016, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance ASU 2016-13 for recognition of credit losses on financial instruments, which is effective January 1, 2020, with early adoption permitted on January 1, 2019. The guidance introduces a new credit reserving model known as the Current Expected Credit Loss (“CECL”) model, which is based on expected losses, and differs significantly from the incurred loss approach used today. The CECL model requires measurement of expected credit losses not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information and will likely result in earlier recognition of credit reserves. In November 2019, the FASB issued ASU No. 2019-10, which is to update the effective date of ASU No. 2016-13 for private companies, not-for-profit organizations and certain smaller reporting companies applying for credit losses standard. The new effective date for these preparers is for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company has adopted this update on July 1, 2023, and the adoption does not have material impact on Company’s consolidated financial statements and related disclosures. CECL adoption will have broad impact on the financial statements of financial services firms, which will affect key profitability and solvency measures. Some of the more notable expected changes include: - Higher allowance on financial guarantee reserve and finance lease receivable levels and related deferred tax assets. While different asset types will be impacted differently, the expectation is that reserve levels will generally increase across the board for all financial firms. - Increased reserve levels may lead to a reduction in capital levels. - As a result of higher reserving levels, the expectation is that CECL will reduce cyclicality in financial firms’ results, as higher reserving in “good times” will mean that less dramatic reserve increases will be loan related income (which will continue to be recognized on a periodic basis based on the effective interest method) and the related credit losses (which will be recognized upfront at origination). This will make periods of loan expansion seem less profitable due to the immediate recognition of expected credit losses. Periods of stable or declining loan levels will look comparatively profitable as the income trickles in for loans, where losses had been previously recognized. In March 2023, the FASB issued new accounting guidance, ASU 2023-01, for leasehold improvements associated with common control leases, which is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. The new guidance introduced two issues: terms and conditions to be considered with leases between related parties under common control and accounting for leasehold improvements. The goals for the new issues are to reduce the cost associated with implementing and applying Topic 842 and to promote diversity in practice by entities within the scope when applying lease accounting requirements. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires the disclosure of additional segment information. ASU No. 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024; this ASU allows for early adoption. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU No. 2023-09 is effective for annual periods beginning after December 15, 2024. The guidance is to be applied on a prospective basis with the option to apply the standard retrospectively; this ASU allows for early adoption. The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and believe the future adoption of any such pronouncements may not be expected to cause a material impact on its financial condition or the results of its operations. NOTE 3 - GOING CONCERN UNCERTAINTIES The accompanying consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has generated recurring losses and suffered from an accumulated deficit of $ 13,480,204 as of June 30, 2024. The Company’s ability to continue as a going concern over the next twelve months depends on the successful validation and certification of its Net Zero road construction blueprint by the National Center for Asphalt Technology (NCAT) and its adherence to established carbon removal and avoidance methodologies. Achieving these milestones will enable the Company to generate revenue through the commercial licensing of the blueprint, royalties from biochar-asphalt mix designs, carbon credits, and sales of biochar and bio-fuel. On August 8th, CRH, the largest building materials company in North America and Europe, listed on both the NYSE and the London Stock Exchange, announced through its investment arm, CRH Ventures, that it has selected the Company to scale up its biochar-asphalt technology for commercialization. There can be no assurance that the Company will be successful in its plans described above. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern. F-16 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) NOTE 4 - BUSINESS SEGMENT INFORMATION Currently, the Company has three reportable business segments: (i) Production and distribution of renewable commodities; (ii) Holding of real property; and (iii) Licensor of proprietary pyrolysis technology. In the following table, revenue is disaggregated by primary major product line. The table also includes a reconciliation of the disaggregated revenue with the reportable segments for the years ended June 30, 2024, and 2023: Year ended June 30, 2024 Production and distribution of renewable commodities Holding property Licensor of proprietary pyrolysis technology Corporate unallocated Consolidated Revenue $ 91,356 $ - $ - $ 5,228 $ 96,584 Cost of revenue ( 58,343 ) - - ( 4,635 ) ( 62,978 ) Gross profit 33,013 - - 593 33,606 Selling, general & administrative expenses ( 1,985,104 ) ( 110,294 ) ( 4,466 ) ( 782,512 ) ( 2,882,376 ) Other operating expenses ( 237,047 ) - - - ( 237,047 ) Loss from operations ( 2,189,138 ) ( 110,294 ) ( 4,466 ) ( 781,919 ) ( 3,085,517 ) Interest expense ( 59,566 ) - - ( 116,917 ) ( 176,483 ) Rental income - 68,200 - - 68,200 Other income 1,735 - 227 4,476 6,438 Loss before income tax ( 2,246,969 ) ( 42,094 ) ( 4,239 ) ( 894,360 ) ( 3,187,662 ) Income tax - - - ( 112 ) ( 112 ) Net loss $ ( 2,246,969 ) $ ( 42,094 ) $ ( 4,239 ) $ ( 894,472 ) $ ( 3,187,774 ) Total assets at June 30, 2024 $ 7,922,462 $ 1,201,186 $ 30,193,231 $ 843,659 $ 40,160,538 Year ended June 30, 2023 Gold mineral mining Distribution of THC-free cannabinoid (CBD) products Production and distribution of renewable commodities Holding property Licensor of proprietary pyrolysis technology Corporate unallocated Consolidated Revenue $ - $ - $ 92,995 $ - $ - $ 7,782 $ 100,777 Cost of revenue - - ( 235,704 ) - - ( 2,449 ) ( 238,153 ) Gross loss - - ( 142,709 ) - - 5,333 ( 137,376 ) Selling, general & administrative expenses ( 245,565 ) ( 2,875 ) ( 1,688,983 ) ( 158,260 ) ( 13,802 ) ( 1,106,537 ) ( 3,216,022 ) Loss from operations ( 245,565 ) ( 2,875 ) ( 1,831,692 ) ( 158,260 ) ( 13,802 ) ( 1,101,204 ) ( 3,353,398 ) Interest expense - - ( 36,765 ) - - ( 1,881,807 ) ( 1,918,572 ) Rental income - - - 57,321 - - 57,321 Other income 35,596 - 1,109 - 2,439 1,176,545 1,215,689 Loss before income tax ( 209,969 ) ( 2,875 ) ( 1,867,348 ) ( 100,939 ) ( 11,363 ) ( 1,806,466 ) ( 3,998,960 ) Income tax - - - - - - - Net loss $ ( 209,969 ) $ ( 2,875 ) $ ( 1,867,348 ) $ ( 100,939 ) $ ( 11,363 ) $ ( 1,806,466 ) $ ( 3,998,960 ) Total assets at June 30, 2023 $ - $ 215,929 $ 6,293,027 $ 1,236,128 $ 30,194,966 $ 883,495 $ 38,823,545 F-17 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) The below revenues are based on the countries in which the customer is located. Summarized financial information concerning the geographic segments is shown in the following tables: Years ended June 30, 2024 2023 Malaysia $ 34,024 $ 32,134 United States 62,560 68,643 $ 96,584 $ 100,777 NOTE 5 - INVENTORIES Inventories as of June 30, 2024 and 2023 consisted of the following: As of June 30, 2024 2023 Manufactured bio produce $ 70,560 $ 96,036 Trading goods 238,584 - $ 309,144 $ 96,036 Trading goods represent bio asphalt products purchased from an external supplier. NOTE 6 – ADVANCE TO SUPPLIER This represents advance to a supplier for the supply of THC-free cannabinoid (CBD) products pursuant to an agreement dated July 7, 2021 and are secured by a security deposit with legally enforceable right to recover. The advance has been written off during the year ended June 30, 2024 following the expiration of product supply agreement on July 6, 2024. NOTE 7 – OTHER RECEIVABLE, DEPOSITS AND PREPAYMENTS Other receivable, deposits and prepayments as of June 30, 2024 and 2023 consisted of the following: As of June 30, 2024 2023 Deposits 4,775 16,795 Other receivables 31,929 9,641 36,704 26,436 Less: impairment on other receivables ( 29,842 ) - Other receivables and deposits, net 6,862 26,436 Prepayments 121,468 192,149 Prepaid share based compensation 105,705 183,531 $ 234,035 $ 402,116 NOTE 8 – PROPERTY, PLANT AND EQUIPMENT A summary of property, plant and equipment at June 30, 2024 and 2023 is as follows: As of June 30, 2024 2023 Land and building $ 1,258,360 $ 1,258,360 Plant and machinery 2,289,794 2,291,724 Office equipment 6,168 6,168 Computers 13,908 5,415 Motor vehicles 777,457 708,051 Furniture and fittings 16,359 12,935 Renovation 4,431 - 4,366,477 4,282,653 Less: accumulated depreciation ( 688,600 ) ( 273,757 ) Less: Accumulated impairment ( 134,042 ) - Less: transfer to assets held for sale ( 606,043 ) - Less: written off ( 3,957 ) - Foreign exchange adjustment ( 17,829 ) 194 $ 2,916,006 $ 4,009,090 F-18 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) Depreciation expense for the years ended June 30, 2024 and 2023 totaled $ 417,517 and $ 254,852 , respectively. Plant and machinery written off for the years ended June 30, 2024 and 2023 amounted to$ 3,979 and $ 0 respectively. Land and building with net carrying amount of $ 701,817 at June 30, 2024 and $ 723,981 at June 30, 2023 was pledged to a financial institution for facilities granted. Plant and machinery and motor vehicles with carrying values of $ 7,688 and $ 98,362 ($ 295,701 and $ 553,674 at June 30, 2023) are acquired under financing arrangements. The fair value less cost of assets held for disposal was less than the net carrying amount, and impairment loss of $ 134,042 has been recognised during the financial year end. NOTE 9 –INTANGIBLE ASSETS The intangible assets comprise (i) a global intellectual property (“IP”) of $ 30,192,771 known as “Catalytic Biofraction Process”, whereby, subsidiary Bio Resources Limited (“BRL”) is the beneficial and/or registered proprietor and (ii) an exclusive licence assigned to Verde Malaysia for the operation of the IP in the state of Sabah, Malaysia of MYR 14,000,000 ($ 2,967,860 ). The “Catalytic Biofraction Process” is a slow pyrolysis process using a proprietary catalyst to depolymerize palm biomass wastes (empty fruit bunches or palm kernel shells) in temperature range of 350 degrees Celsius to 500 degrees Celsius to yield commercially valuable bio products: bio-oil, wood vinegar (pyroligneous acid), biochar and bio-syngas. The intellectual property is a second-generation pyrolysis process where non-food feedstock like palm biomass wastes is used as feedstock. Upon fulfilling UN’s (United Nations) ACM 22 protocol as well as LCA (Life Cycle Assessment) requirements, it is anticipated that the by-products from this IP would lead to certification and issuance of Carbon Avoidance Credits as well as Carbon Removal Credits to generate carbon revenue for the Company. During the annual impairment assessment, a quantitative assessment was conducted, which involved estimating the fair value of the asset using the income approach. The results indicated that the carrying amount of the asset was not impaired, and therefore no impairment loss was recognized for the period. Key assumptions in the quantitative assessment included: ● Discount Rate : 9 % ● Plant daily capacity : The plant daily capacity is 0.8 MT per hour for the existing plant and 2.5 MT per hour for the additional new plants that will be commissioned. ● Additional plants : One new biofraction plant with a 3.0 MT/hour production rate will be added every year from FYE2027 up to FYE 2034. ● Projected Production and Sales : Based on a ten-year forecast. Production and sales volumes are linked to the plants in operation for each year in the forecasted period based on the output yield percentages. ● Inflation : 2% The use of the estimates in the quantitative assessment are highly judgmental and actual results may differ significantly from what is currently assessed. Accordingly, fluctuations in any of the key attributes may result in a significant change in the projected cash flows underlying the quantitative assessment, which could have a material impact on the assessed values of the Intangible Asset. NOTE 10 – ASSETS HELD FOR SALE At June 30,2024 and 2023, assets held for sale are as follows: As of June 30, 2024 2023 Plant and machinery $ 213,494 $ - Motor vehicles 392,549 - $ 606,043 $ - On June 27 2023, the Company through its wholly-owned subsidiary Verde Renewables, Inc. (“VRI”), a company incorporated in the State of Missouri, U.S.A, entered into a Consignment Contract with ED’s Machinery LLC (“EDM”) to dispose plant and machinery and motor vehicles with a carrying amount of $ 606,043 . The disposal is pending completion as at June 30,2024 and thus the assets have been presented separately in the balance sheets as assets held for sale. The disposal of assets with carrying values totaling USD 580,989 was subsequently completed in August 2024. The remaining assets are expected to be disposed by December 2024. Plant and machinery and motor vehicles with carrying values of $ 168,994 and $ 350,217 were acquired under financing arrangements. NOTE 11 - DEPOSITS PAID At June 30, 2024 and 2023, deposits consist of the following: As of June 30, 2024 2023 Deposits paid for acquisition of subsidiaries - Vata VM Synergy (M) Sdn Bhd (“VATA”) (#1) $ - $ 21,423 Security deposit - Factory site (#2) $ 80,000 $ 80,000 (#1) On March 23, 2023, the Company, through its wholly-owned subsidiary Verde Resources (Malaysia) Sdn. Bhd. (“Verde Malaysia”), entered into a Shares Sale Agreement (the “SSA Agreement”) with Murugesu A/L M. Narasimha and Deivamalar A/P Kandiah (“Vendors”), the legal and beneficial owners of Vata VM Synergy (M) Sdn. Bhd. (“VATA”), a company incorporated under the laws of Malaysia, to acquire 60% of the issued and paid-up share capital of VATA, a company engaged in the business of providing green technology to government and private sectors and in creating high quality compost using agricultural waste and biomass products in Malaysia. In relation to the SSA Agreement, the Company through Verde Malaysia also entered into a Shareholders Agreement with Murugesu A/L M. Narasimha and VATA. Under the terms of the SSA Agreement, the consideration for the acquisition of 60% of the issued and paid-up share capital of VATA shall be satisfied by the total purchase consideration of MYR 2,250,000 , which includes a first payment of MYR100,000 upon the execution of the SSA Agreement , a second payment of MYR 150,000 within thirty (30) days from the date of fulfilment or waiver of all the conditions set out in the SSA Agreement, and the issuance of shares of the Company’s restricted Common Stock for the balance consideration of MYR 2,000,000 at a price per share of not more than ten percent ( 10 %) discount from the immediate preceding five trading days volume weighted average price (“VWAP”) from the issuance date pursuant to the terms of the SSA Agreement. As of June 30, 2023, the first payment of MYR 100,000 has been made. F-19 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) The SSA Agreement, however, has since been terminated on the basis of non-disclosure of material information by the Vendors, and the deposits written off during the year ended June 30, 2024. (#2) On March 2, 2022, the Company, through VRAP, entered into a Commercial Lease Agreement and Option to Purchase (“Segama Lease Agreement”) the factory site from Segama Ventures for a lease term of seven ( 7 ) years (“Lease Term”) at a monthly rental of MYR 36,000 ($ 8,571 ). The rental for the entire Lease Term amounts to the sum of MYR 3,024,000 ($ 720,000 ) (the “Lease Payment”) which shall be paid in advance upon commencement of the Segama Lease Agreement together with a payment of security deposit for the sum of MYR 336,000 ($80,000) (the “Security Payment”). NOTE 12 - MINING RIGHT A lump sum payment of MYR260,500 ($ 62,260 ) was made for a mining right over a period of 2 years up to June 13, 2023. The mining right was amortized on a straight-line basis over the term of the right. Nevertheless, on April 20, 2023, the subsidiary, CSB, to whom the right belongs, was disposed. The table below presents the movement of the right as recorded on the balance sheets. As of June 30, 2024 2023 Balance as at the July 1, 2023 and July 1, 2022 $ - $ 27,088 Amortization charge for the year - ( 21,832 ) Foreign exchange adjustment - ( 363 ) Disposal of subsidiary - ( 4,893 ) Balance as of June 30, 2024 and June 30, 2023 $ - $ - Amortization charge of mining right was $ 0 and $ 21,832 for the year ended June 30, 2024 and 2023, respectively. NOTE 13 – BANK LOAN The bank loan represents a rolling facility to a maximum principal of $ 250,000 and is secured by deed of trusts from VRDR, land and building of VEL and a subsidiary who act as guarantor for the performance of debts. The interest on loan is fixed at 5.25 %. per annum. For the year ended June 30, 2024 and 2023, the interest expense amounted to $ 13,640 and $ 1,421 respectively. NOTE 14 - AMOUNTS DUE TO RELATED PARTIES AND DIRECTOR The following breakdown of the balances due to related parties and director, consisted of:- As of June 30, 2024 2023 Amount due to related parties Borneo Oil Corporation Sdn (“BOC”) (#1) $ 70,677 $ 57,125 Borneo Oil Berhad (“BOB”) (#1) 3,007 70,711 Taipan International Limited (#2) 119,153 119,153 Borneo Energy Sdn Bhd (#1) 14,599 14,770 Victoria Capital Sdn Bhd (#3) 93,270 107,970 UnitiMart Sdn Bhd (4#) 7,782 - Makin Teguh Sdn Bhd (4#) 19,379 - $ 327,867 $ 369,729 Amount due to director Mr. Jack Wong (#5) $ 4,188 $ 9,660 (#1) Borneo Energy Sdn Bhd is a wholly owned subsidiary of Borneo Oil Corporation Sdn Bhd (“BOC”) and BOC is a wholly owned subsidiary of Borneo Oil Berhad (“BOB”) (holding 13.2 % of the Company’s issued and outstanding common stock as of June 30, 2024). The advances are related to ordinary business transactions and bear no interest or collateral, and are repayable on demand. (#2) Taipan International Limited who, pursuant to the disposal of BRL to the Company, became one of the shareholders of the Company and held 32.5 % of the Company’s issued and outstanding Common Stock as of June 30, 2024. The advances are related to ordinary business transactions and bear no interest or collateral, and are repayable on demand. F-20 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) (#3) Victoria Capital Sdn. Bhd. is one of the shareholders of the Company, and held 0.2 % of the Company’s issued and outstanding Common Stock as of June 30, 2024. The advances are related to ordinary business transactions and bear no interest or collateral, and are repayable on demand. (#4) Borneo Oil Berhad (“BOB”) is ultimate holding company of UnitiMart Sdn. Bhd., and held 13.2 % of the Company’s issued and outstanding common stock as of June 30, 2024. Makin Teguh Sdn Bhd is associates of BOB. (#5) Mr. Jack Wong is the President and Chief Executive of the Company effective October 1, 2022. Effective March 30, 2023, Jack Wong was appointed Director of the Company for a one ( 1 ) year term, effective March 30, 2023. Jack Wong will hold the Board position formerly held by Carl Craven. On September 12, 2023, Jack Wong stepped down from his position as President of the Company, but remains as Chief Executive Office of the Company. By Waiver and Consent of Shareholders, Jack Wong was re-elected Director of the Company, effective March 30, 2024. NOTE 15 - PROMISSORY NOTES June 30 June 30 2024 2023 Promissory Notes (#1) $ - $ - Promissory Notes (#2)- related party 591,170 487,790 $ 591,170 $ 487,790 The following is a reconciliation of the beginning and ending balances of promissory notes payable using Level 3 inputs: June 30 June 30 2024 2023 Balance at the beginning of year $ 487,790 $ 18,484,028 Promissory notes issued to related party at fair value (#2) - 481,023 Interest expense #1 - 1,870,972 Interest expense #2 103,380 6,767 Converted to Company’s restricted Common Stock - ( 20,355,000 ) Balance at the end of year $ 591,170 $ 487,790 (#1) Promissory notes with a principal amount of $ 20,355,000 and a two-year term period were issued on May 12, 2021 pursuant to the acquisition of subsidiary, BRL. The face value (principal) amount of $ 20,355,000 was repayable by May 12, 2023, and bore zero coupon interest. On January 20, 2022, the Company had reached a mutual agreement with the Lenders of the Notes to enter into a Supplement to Promissory Note, with each Lender, 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. With the consummation of the acquisition of BRL on October 12, 2022, on December 9, 2022 the conversion of Promissory Notes was completed pursuant to a Supplementary Agreement dated December 7, 2022, with the issuance of 333,142,389 shares of the Company’s restricted Common Stock, at the price of $ 0.0611 per share, to the 17 Lenders, including the Company’s CEO, Jack Wong. (#2) On March 13, 2023, the Company and its indirect wholly-owned subsidiary CSB entered into a Settlement of Debts Agreement (the “SDA Agreement”) for the settlement in full of CSB’s account payable to a related party, Borneo Oil Corporation Sdn Bhd (“BOC”) by way of the issuance on March 13, 2023 of a two year term Promissory Notes with the face value (principal) amount of $ 675,888 , and bearing 2 % coupon interest. The Notes are repayable by May 12, 2025, either in cash or by the issuance of the Company’s restricted Common Stock priced at $ 0.07 per share at the discretion of the holder of the Promissory Note. The fair value of the Promissory Notes of $ 481,023 was calculated using the net present value of estimated future cash flows with the assumptions of risk free rate at 4.03 %, credit spread of 11.6 % and liquidity risk premium of 5.6 %. On August 16, 2024, the Company entered into a Supplementary Agreement to the SDA Agreement and Promissory Note with the Creditor to convert the total amount of $ 675,888 into 9,655,542 shares of the Company’s restricted Common Stock at the agreed conversion price of $0.07 per share for issuance on August 16, 2024. A total of 9,655,542 shares of the Company’s restricted Common Stock were issued on August 16, 2024 to Borneo Oil Berhad, the appointed nominee of the Creditor, to settle in full the total of USD 675,888 of CSB’s account payable to the Creditor. The Company recorded accretion of liability on promissory notes of $ 103,380 and $ 0 and presented as interest expense on promissory notes for the year ended June 30, 2024 and 2023, respectively. Interest on promissory notes at 2 % were $ 13,536 and $ 0 for the year ended June 30, 2024 and 2023 respectively. F-21 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) NOTE 16 - LEASES The Company adopted ASU No. 2016-02, Leases and determines whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if we obtain the rights to direct the use of and to obtain substantially all of the economic benefit from the use of the underlying asset. Some of our leases include both lease and non-lease components which are accounted for as a single lease component as the Company has elected the practical expedient. Some of the operating lease agreements include variable lease costs, primarily taxes, insurance, common area maintenance or increases in rental costs related to inflation. Substantially all of our equipment leases and some of our real estate leases have terms of less than one year and, as such, are accounted for as short-term leases as we have elected the practical expedient. Operating leases are included in the right-of-use lease assets, other current liabilities and long-term lease liabilities on the Consolidated Balance Sheet. Right-of-use assets and lease liabilities are recognized at each lease’s commencement date based on the present values of its lease payments over its respective lease term. When a borrowing rate is not explicitly available for a lease, the incremental borrowing rate is used based on information available at the lease’s commencement date to determine the present value of its lease payments. Operating lease payments are recognized on a straight-line basis over the lease term. The Company adopts a 5 % as weighted average incremental borrowing rate to determine the present value of the lease payments. The weighted average remaining life of the lease was 3 years ending September 30, 2025. The table below presents the lease-related assets and liabilities recorded on the balance sheet. As of June 30, 2024 2023 Assets Right-of-use asset (#1) $ 720,000 $ 720,000 Right-of-use asset (#2) 64,910 64,910 Total RoU assets $ 784,910 $ 784,910 Less: Amortisation ( 275,428 ) ( 151,801 ) 509,482 633,109 Liabilities Current: Operating lease liabilities $ 24,881 $ 20,768 Finance lease liabilities 22,323 172,184 Finance lease liabilities – assets held for disposal 603,252 - Non-current: Operating lease liabilities 4,602 29,483 Finance lease liabilities 86,565 608,455 Total lease liabilities $ 741,623 $ 830,890 As of June 30, 2024, right-of-use assets were $ 509,482 and lease liabilities were $ 741,623 . As of June 30, 2023, right-of-use assets were $ 633,109 and lease liabilities were $ 830,890 . For the year ended June 30, 2024 and 2023, the amortization charge on right-of-use assets was $ 123,625 and $ 117,517 , respectively. (#1) This leasing arrangement for the lease of the Segama factory amounting to $ 720,000 is for a lease term of seven ( 7 ) years and included an exclusive right and option to purchase the factory site, together with all its right title and interest, for a consideration to be mutually agreed between the parties at any time during the period of two years from the date of the Lease Agreement ended March 1, 2024. The option was not exercised and has lapsed. There are no corresponding lease liabilities recorded as the lease payments for the entire lease period has been paid upfront upon inception of the agreement. (#2) This leasing arrangement as stated at fair value above is for the lease of an executive vehicle with a total liability of $ 84,718 and for a lease term of three ( 3 ) years ending September 30, 2025. The lease arrangement includes an option to purchase the said vehicle at an agreed consideration of $ 57,087 (“Purchase Price”) as stated in the Lease Agreement. The Company’s lease agreements do not contain any material restrictive covenants. The accretion of lease liability for the year ended June 30, 2024 and 2023, were $ 7,471 and $ 8,873 , respectively. F-22 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) The Company excludes short-term leases (those with lease terms of less than one year at inception) from the measurement of lease liabilities or right-of-use assets. The following tables summarize the lease expense for the years. Years ended June 30, 2024 2023 Finance lease cost: Interest on lease liabilities (per ASC 842) $ 45,926 $ 36,765 Operating lease cost: Operating lease expense (per ASC 842) 131,096 126,388 Total lease expense $ 177,022 $ 163,153 Components of Lease Expense The Company recognizes operating lease expense on a straight-line basis over the term of the operating leases, comprising interest expense determined using the effective interest method, and amortization of the right-of-use asset, as reported within “general and administrative” expense on the accompanying consolidated statement of operations. Finance lease expense comprise of interest expenses determined using the effective interest method. Future Contractual Lease Payments as of June 30, 2024 The below table summarizes our (i) minimum lease payments over the next five years, (ii) lease arrangement implied interest, and (iii) present value of future lease payments for the next five years and thereafter ending June 30: Years ending June 30, Operating and finance lease amount 2025 $ 784,877 2026 24,771 2027 24,771 2028 23,674 2029 4,836 Total minimum finance lease liabilities payment 862,929 Less: interest ( 121,306 ) Present value of lease liabilities $ 741,623 Representing:- Current liabilities $ 650,456 Non-current liabilities 91,167 $ 741,623 F-23 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) NOTE 17 - STOCKHOLDERS’ EQUITY Authorized Stock The Company has authorized 10,000,000,000 Common shares and 50,000,000 preferred shares, both with a par value of $ 0.001 per share. Each Common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought. Preferred stock outstanding There are no preferred shares outstanding as of June 30, 2024, and 2023. Common stock outstanding On September 8, 2023, the Company, through its wholly-owned subsidiary Verde Renewables, Inc. (“VRI”) entered into a Service and Stock Cancellation Agreement with Steven Sorhus to cancel the Services Agreement dated December 1, 2022. Pursuant to the Service Agreement, 300,000 restricted common shares were issued at $ 0.20 on December 31, 2022 totaling $ 60,000 . With the Service and Stock Cancellation Agreement, these shares were to be cancelled and subsequently 128,409 restricted common shares were to be re-issued at the same price for services rendered till cancellation. The cancellation of shares was completed on March 28, 2024 and subsequently 128,409 restricted common shares were re-issued to Steven Sorhus on May 24, 2024. On September 8, 2023, the Company, through its wholly-owned subsidiary Verde Renewables, Inc. (“VRI”) entered into a Service and Stock Cancellation Agreement with EMGTA LLC to cancel the Services Agreement dated December 1, 2022, including the cancellation of 375,000 restricted common shares issued at $ 0.20 on December 31, 2022 totaling $ 75,000 as consideration for certain services. The cancellation is still in process. On September 12, 2023, the Company, through its wholly-owned subsidiary Verde Renewables, Inc. (“VRI”) entered into a Service and Stock Cancellation Agreement with Y M Tengku Chanela Jamidah Y A M Tengku Ibrahim to cancel the Services Agreement dated November 30, 2022. Pursuant to the Service Agreement, 500,000 restricted common shares were issued at $ 0.20 on December 31, 2022 totaling $ 100,000 . With the Service and Stock Cancellation Agreement, these shares were to be cancelled and subsequently 166,667 restricted common shares were to be re-issued at the same price for services rendered till cancellation. The cancellation of shares was completed on March 28, 2024 and subsequently 166,667 restricted common shares were re-issued to Y M Tengku Chanela Jamidah Y A M Tengku Ibrahim on May 24, 2024. On October 23, 2023, the Company, through its wholly-owned subsidiary VRI, entered into a Services Agreement (the “Agreement”) with Donald R. Fosnacht 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 Agreement. Under the Agreement, the Company will pay Donald R. Fosnacht by the issuance of 1,000,000 shares of the Company’s restricted common stock, par value $ 0.001 per share (the “Common Stock”) on or before January 31, 2024. The term of the Agreement will remain effective until December 31, 2025 and both parties may renew the agreement or enter into a new agreement as may be mutually agreed on terms to be separately negotiated. Subsequently on January 31, 2024, the Company issued 1,000,000 restricted common shares to Donald R. Fosnacht. On November 22, 2023, the Company issued a total of 14,931,624 restricted Common Shares comprising 11,538,461 restricted Common Shares for $ 1,050,000 at $ 0.091 per share to five non-US shareholders, 100,000 restricted Common Shares for $ 10,000 at $ 0.10 per share to one non-US shareholder, 1,943,163 restricted Common Shares for $ 176,828 at $ 0.091 per share to ten US shareholders and 1,350,000 restricted Common Shares for $ 135,000 at $ 0.10 per share to nine US shareholders. On December 4, 2023, the Company issued a total of 1,238,889 restricted Common Shares comprising of 850,000 restricted Common Shares for $ 85,000 at $ 0.10 per share to four US shareholders and 388,889 restricted Common Shares for $ 35,000 at $ 0.09 per share to one US shareholders. On April 12, 2024, shares that were committed to be issued as of March 31, 2024 were fully settled by way of issuance of 2,881,274 restricted Common Shares at $ 0.108 per share to four non-US shareholders in settlement of $ 311,178 subscription amounts paid, and issuance of 200,000 restricted Common Shares on April 15, 2024 at $ 0.091 per share to one US shareholder in settlement of $ 18,200 subscription amount paid. On April 15, 2024, the Company issued a total of 3,055,555 restricted Common Shares to four US shareholders, in which 2,300,000 restricted Common Shares were issued at $ 0.10 per share to two US shareholders, 200,000 restricted Common Shares were issued at $ 0.091 per share to one US shareholder, and 555,555 restricted Common Shares were issued at $ 0.09 per share to one US shareholder. F-24 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) On April 20, 2024, the Company entered into two Services Agreements with Dr. Nam Tran and Dr. Raymond Powell 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. Under the Agreements, the Company will pay Dr. Nam Tran and Dr. Raymond Powell each by the issuance of 3,000,000 shares of the Company’s restricted Common Shares in three tranches of 1,000,000 shares each on or before July 31, 2024, October 31, 2025 and October 31, 2026 respectively . Subsequently on July 31, 2024, the Company issued 1,000,000 of the Company’s restricted Common Shares each to Dr. Nam Tran and Dr. Raymond Powell as part of the compensation package for their services to be rendered for the period from May 1, 2024 to April 30, 2025 as stated in their Services Agreements. On June 1, 2024, the Company entered into a multi-year Services Agreement with Dale Ludwig to engage him as Strategic Advisor for the Company and all its subsidiaries, 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. Pursuant to the Agreement, the Company agreed to issue a total of 2,000,000 restricted shares of the Company’s common stock to Dale Ludwig over three tranches of 700,000 shares on or before August 31, 2024, 700,000 shares on or before October 31, 2025 and 600,000 shares on or before October 31, 2026 . Subsequently on August 8, 2024, the Company issued 700,000 of the Company’s restricted Common Shares to Dale Ludwig as part of the compensation package for their services to be rendered for the period from June 1, 2024 to April 30, 2025 as stated in the Services Agreement. On August 30, 2024, the Company issued 670,000 of the Company’s restricted Common Shares to Eric Bava, Chief Operating Officer of the Company, as part of the compensation package in the Employment Agreement that the Company entered into with Eric Bava on October 1, 2023 for his first year of service from October 1, 2023 to September 30, 2024. There were 1,199,358,251 and 1,176,200,278 shares of common stock issued and outstanding at June 30, 2024 and 2023, respectively. The Company has no stock option plan, warrants, or other dilutive securities as at June 30, 2024 and 2023 other than stocks committed to be issued of 2,700,000 and 670,000 to non employees and an employee respectively. F-25 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) NOTE 18 - NET LOSS PER SHARE The following table sets forth the computation of basic and diluted net (loss) income per share for the respective years: Years ended June 30, 2024 2023 Net loss $ ( 3,187,774 ) $ ( 3,998,960 ) Weighted average common shares outstanding: - Basic 1,187,606,780 1,019,752,220 - Diluted 1,187,606,780 1,019,752,220 Net loss per share: - Basic $ ( 0.00 ) $ ( 0.00 ) - Diluted $ ( 0.00 ) $ ( 0.00 ) # less than $0.005 For the years ended June 30, 2024, and 2023, diluted weighted-average common shares outstanding is equal to basic weighted-average common shares, due to the Company’s net loss position. Hence, no common stock equivalents were included in the computation of diluted net loss per share since such inclusion would have been antidilutive. The Company has no potentially dilutive securities, such as, options or warrants, currently issued and outstanding. F-26 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) NOTE 19 - INCOME TAX For the years ended June 30, 2024, and 2023, the local (“United States of America”) and foreign components of loss before income taxes were comprised of the following: Years ended June 30, 2024 2023 Tax jurisdiction from: - Local (US regime) $ ( 2,444,654 ) $ ( 3,795,326 ) - Foreign, including British Virgin Island ( 160,538 ) 594,580 Malaysia ( 578,231 ) ( 786,851 ) Labuan, Malaysia ( 4,239 ) ( 11,363 ) Loss before income taxes $ ( 3,187,662 ) $ ( 3,998,960 ) The provision for income taxes consisted of the following: Years ended June 30, 2024 2023 Current tax: $ - $ - - Local - - - Foreign - - Deferred tax - Local - - - Foreign - - Income tax expense (benefit) $ - $ - The effective tax rate in the years presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company mainly operates in U.S.A. and Malaysia that is subject to taxes in the jurisdictions in which they operate, as follows: United States of America VRDR, VRI and VLI are subject to the tax laws of United States of America. The U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law. The Tax Reform Act significantly revised the U.S. corporate income tax regime to 21 % effective January 1, 2018. The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in its income tax provision. The Company has not accrued or paid interest or penalties which were not material to its results of operations for the periods presented. The Company has provided for a full valuation allowance against the deferred tax assets of $ 1,439,384 on the expected future tax benefits from the net operating loss (“NOL”) carry forwards of $ 6,854,210 as the management believes it is more likely than not that these assets will not be realized in the future. Net Operating Losses (NOLs) generated prior to January 1, 2018, are able to be carried forward up to twenty subsequent years. Any NOLs created for tax years subsequent to that may be carried forward indefinitely. However, any NOLs arising from tax years ending after December 31, 2020, can only be used to offset up to 80% of taxable income. For the years ended June 30, 2024, and 2023, there were no operating income in US tax regime. BVI Under the current BVI law, VRAP is not subject to tax on income. F-27 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) Labuan Under the current laws of the Labuan applicable to BRL, income derived from an intellectual property right is subject to tax under the Malaysian Income Tax Act 1967 (ITA) at 24 % of its chargeable income. However, BRL is not subject to income tax, given that it was a net loss position during the current period presented. The losses are presently not able to be carried forward to offset against its future operation income as income generating activities have not yet been undertaken. Malaysia The Company’s subsidiaries, Verde Malaysia and Wision is registered in Malaysia and are subject to the Malaysia corporate income tax at a standard income tax rate of 24 % on chargeable income. The operation in Malaysia incurred $ 854,275 of cumulative net operating losses as of June 30, 2024 which can be carried forward to offset future taxable income. The net operating loss are allowed to be carried forward up to a maximum of ten (10) years of assessments under the current tax legislation in Malaysia. The Company has provided for a full valuation allowance against the deferred tax assets of $ 205,026 on the expected future tax benefits from the net operating loss (“NOL”) carry forwards as the management believes it is more likely than not that these assets will not be realized in the future. Years ended June 30, 2024 2023 Loss before income taxes $ ( 578,231 ) $ ( 786,851 ) Statutory income tax rate 24 % 24 % Income tax expense at statutory rate ( 138,775 ) ( 188,844 ) Non-deductible items 52,249 26,603 Tax losses unable to be carried forward 1,017 2,727 Net operating loss 85,509 159,514 Income tax expense $ - $ - The following table sets forth the significant components of the deferred tax assets of the Company: As of June 30, 2024 2023 Deferred tax assets: Net operating loss carry forwards, from US tax regime $ 1,439,384 $ 1,079,890 Malaysia tax regime 205,026 113,516 Less: valuation allowance ( 1,644,410 ) ( 1,193,406 ) Deferred tax assets, net $ - $ - The Company has recorded valuation allowances for certain tax attribute carry forwards and other deferred tax assets due to uncertainty that exists regarding future realizability. If in the future the Company believes that it is more likely than not that these deferred tax benefits will be realized, the majority of the valuation allowances will be reversed in the consolidated statement of operations. The Company did not have uncertainty tax positions or events leading to uncertainty tax position within the next 12 months. NOTE 20 - PENSION COSTS The Company is required to make contribution to their employees under a government-mandated defined contribution pension scheme for its eligible full-times employees in Malaysia. The Company is required to contribute a specified percentage of the participants’ relevant income based on their ages and wages level. During the years ended June 30, 2024, and 2023, $ 10,064 and $ 19,961 contributions were made accordingly. NOTE 21 – SHARES ISSUED TO NON EMPLOYEE AND EMPLOYEE On December 15, 2022, the Company entered into a Services Agreement with Looi Pei See (the “Looi Pei See Agreement”) to engage her as a consultant to develop the retail markets for the Company’s products and services in Malaysia and Singapore. The Company will pay Looi Pei See by the issuance of 1,140,000 shares of the Company’s restricted common stock, par value $ 0.001 per share (the “Common Stock”) on or before December 31, 2022. The shares were issued on December 31, 2022 for service period from December 15, 2022 to December 14, 2025 . The fair value of 1,140,000 shares was $ 228,000 which calculated based on stock price of $ 0.20 per share on December 15, 2022 (date of issuance) and is being amortised over the service period. During the year ended June 30, 2024, the Company charged $ 77,338 to selling, general and administrative expenses as consulting expenses. On October 23, 2023, the Company, through its wholly-owned subsidiary VRI, entered into a Services Agreement (the “Agreement”) with Donald R. Fosnacht 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 Agreement. Under the Agreement, the Company will pay Donald R. Fosnacht by the issuance of 1,000,000 shares of the Company’s restricted common stock, par value $ 0.001 per share (the “Common Stock”) on or before January 31, 2024. The term of the Agreement will remain effective until December 31, 2025 and both parties may renew the agreement or enter into a new agreement as may be mutually agreed on terms to be separately negotiated . The fair value of 1,000,000 shares was $ 134,000 which calculated based on stock price of $ 0.134 per share on January 31, 2024 (date of issuance) and is being amortised over the service period. During the year ended June 30,2024, the Company charged $ 42,157 to selling, general and administrative expenses as consulting expenses. On April 20, 2024, the Company entered into two Services Agreements (the “Agreements”) with Dr. Nam Tran and Dr. Raymond Powell to engage them as National Implementation Experts for its wholly-owned subsidiary Verde Renewables, Inc. (“VRI”) 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. Under the Agreements, the Company will pay Dr. Nam Tran and Dr. Raymond Powell each by the issuance of 3,000,000 shares of the Company’s restricted Common Shares in three tranches of 1,000,000 shares each on or before July 31, 2024, October 31, 2025 and October 31, 2026 respectively. The term of the Agreements will remain effective until April 30, 2027 and both parties may renew the agreement or enter into a new agreement as may be mutually agreed on terms to be separately negotiated. Pursuant to the respective addendum to Service Agreement dated June 29, 2024, each tranche of shares to be issued is compensation for each service period of 12 months beginning from May 1, 2024, May 1, 2025 and May 1, 2026 respectively . The fair value of first 1,000,000 shares was $ 360,000 each, calculated based on stock price of $ 0.36 per share on July 31,2024 (date of issuance) and is being amortised over the respective service period. During the year ended June 30, 2024, the Company charged a total of $ 120,329 to selling, general and administrative expenses as consulting expenses. On June 1, 2024, the Company entered into a multi-year Services Agreement (the “Agreement”) with Dale Ludwig to engage him as Strategic Advisor for the Company and all its subsidiaries, 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. Pursuant to the Agreements, the Company agreed to issue a total of 2,000,000 restricted shares of the Company’s common stock to Dale Ludwig over three tranches of 700,000 shares on or before August 31, 2024, 700,000 shares on or before October 31, 2025 and 600,000 shares on or before October 31, 2026 . Pursuant to the addendum to Service Agreement dated June 29, 2024, each tranche of shares to be issued is compensation for each service period beginning 11 months from June 1, and 12 months from 2024, May 1, 2025 and May 1, 2026 respectively . The fair value of first 700,000 shares was $ 210,000 , calculated based on stock price of $ 0.30 per share on August 8,2024 (date of issuance) and is being amortised over the service period. During the year ended June 30, 2024, the Company charged $ 18,862 to selling, general and administrative expenses as consulting expenses. The Company agreed to issue 670,000 of the Company’s restricted Common Shares to Eric Bava, Chief Operating Officer of the Company, as part of the compensation package in the Employment Agreement upon completing each full year of service. The term of the Agreements will remain effective until September 30, 2027 . On August 30, 2024, the Company issued 670,000 of the Company’s restricted Common Shares to Eric Bava, Chief Operating Officer of the Company, as part of the compensation package in the Employment Agreement that the Company entered into with Eric Bava on October 1, 2023. The fair value of 670,000 shares was $ 181,235 which calculated based on stock price of $ 0.2705 per share on August 30, 2024 (date of issuance) and is being amortised over the service period from October 1, 2023 to September 30, 2024. During the year ended June 30,2024, the Company charged $ 135,678 to selling, general and administrative expenses as salary expenses. On July 31,2024, Verde Renewables, Inc, a wholly owned subsidiary of the Company, entered into Service Agreement with Jeremy P. Concannon (Chief Growth Officer (“CGO”) of the Company effective from August 1, 2024). Pursuant to the Services Agreement, the Company agreed to issue a total of 4,050,000 restricted shares of the Company’s common stock to Jeremy P. Concannon over three tranches of 1,350,000 shares each on or before August 31, 2024, August 31, 2025 and August 31, 2026 respectively. The term of the Agreements will remain effective until September 30, 2027 and both parties may renew the agreement or enter into a new agreement as may be mutually agreed on terms to be separately negotiated. Pursuant to the addendum to Service Agreement dated September 27, 2024, each tranche of shares to be issued as compensation for each service period beginning 12 months from August 1, 2024 and 2025 and for 14 months from August 1, 2026 to September 30, 2027 respectively . During the year ended June 30, 2024, pursuant to the service and stock cancellation agreements signed with Y M Tengku Chanela Jamidah Y A M Tengku Ibrahim, Steven Sorhus and EMGTA LLC, there was a net reversal of consulting fees previously recognized of $ 6,317 . F-28 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) NOTE 22 - RELATED PARTY TRANSACTIONS For the Years ended June 30, 2024 2023 Related party transactions: Sales to: Borneo Eco Food Sdn Bhd (#1) $ 4,071 $ 12,238 BOC (#2) $ - $ 2,062 SB Resorts Sdn Bhd (#2) $ 25,441 $ - Rental income: Mr. Jack Wong (#3) $ 60,000 $ 49,121 Site expenses: Warisan Khidmat Sdn Bhd (#4) $ - $ 9,776 Professional services provided by: Warisan Khidmat Sdn Bhd (#4) $ 17,905 $ 18,652 Interest expense paid to: BOC (#2) $ 13,536 $ 4,068 Rental expense paid to: SB Resorts Sdn Bhd (#2) $ 1,918 $ - Related party balances: June 30, 2024 2023 Advanced from related parties BOC (#2) $ 70,677 $ 57,125 Borneo Oil Berhad (“BOB”) (#1) $ 3,007 $ 70,712 Borneo Energy Sdn Bhd (#1) $ 14,599 $ 14,770 Taipan International Limited (#5) $ 119,153 $ 119,153 Victoria Capital Sdn Bhd (#6) $ 93,270 $ 107,970 UnitiMart Sdn Bhd (9#) $ 7,782 $ - Makin Teguh Sdn Bhd (9#) $ 19,379 $ - Trade payables Warisan Khidmat Sdn Bhd (#4) $ 1,484 $ - BOC (#2) $ 462 $ 467 J. Ambrose & Partners (#7) $ 716 $ 724 Advanced to related party Vetrolysis Limited (#8) $ 100 $ 100 Trade receivables Borneo Eco Food Sdn Bhd (#2) $ - $ 901 J. Ambrose & Partners (#7) $ 250 $ 253 SB Resorts Sdn Bhd (#2) $ 25,291 $ - Other payables J. Ambrose & Partners (#7) $ 48,122 $ 48,650 SB Supplies & Logistic Sdn Bhd (#1) $ 5,936 $ 5,998 SB Resorts Sdn Bhd (#2) $ 2,120 $ - Borneo Eco Food Sdn Bhd (#2) $ 1,039 $ - Promissory notes issued to related party BOC (#2) $ 591,170 $ 487,790 (#1) Borneo Oil Berhad (“BOB”) is ultimate holding company of Borneo Eco Food Sdn. Bhd., Borneo Energy Sdn Bhd and SB Supplies & Logistic Sdn Bhd, and held 13.2% of the Company’s issued and outstanding common stock as of June 30, 2024 . (#2) SB Resorts Sdn Bhd and Borneo Oil Corporation Sdn Bhd (“BOC”) are wholly owned subsidiaries of Borneo Oil Berhad (“BOB”) (holding 13.2% of the Company’s issued and outstanding common stock as of June 30, 2024) . The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms. (#3) Mr. Jack Wong was the President and Chief Executive of the Company effective October 1, 2022. Effective March 30, 2023, Carl Craven voluntarily resigned from his position as Director of the Company. By resolution of the Board of Directors, Jack Wong was appointed Director of the Company for a one ( 1 ) year term, effective March 30, 2023 . Jack Wong will hold the Board position formerly held by Carl Craven. On September 12, 2023, Jack Wong stepped down from his position as President of the Company, but remains as Chief Executive Office of the Company. By Waiver and Consent of Shareholders, Jack Wong was re-elected Director of the Company, effective March 30, 2024. (#4) Warisan Khidmat Sdn. Bhd. is a company whose shareholdings is entirely held by a Director of Verde Malaysia. (#5) Taipan International Limited is one of the shareholders of the Company, and held 32.5% of the Company’s issued and outstanding Common Stock as of June 30, 2024 . F-29 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) (#6) Victoria Capital Sdn. Bhd. is one of the shareholders of the Company and held 0.2% of the Company’s issued and outstanding Common Stock as of June 30, 2024 . (#7) Datuk Joseph Lee Yok Min, an indirect significant shareholder, is a partner of J. Ambrose & Partners. The advances received are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms. Mr. Joseph Ambrose Lee who was also appointed as a Director and Chairman of the Board of Directors of the Company effective January 23, 2024, is also the Managing Director of BOB. On February 6, 2024, by resolution of the Board of the Company, Joseph Ambrose Lee appointed as a member of the newly formed Management Committee of the Board. Subsequently on June 18, 2024, Joesph Ambrose Lee tendered his resignation as Director and Chairman of the Board and member of the Management Committee of the Company. (#8) Encik Anuar bin Ismail, an indirect significant shareholder, is a director of Vetrolysis Limited. (#9) Borneo Oil Berhad (“BOB”) is ultimate holding company of UnitiMart Sdn. Bhd., and held 13.2% of the Company’s issued and outstanding common stock as of June 30, 2024. Makin Teguh Sdn Bhd is associates of BOB. Apart from the transactions and balances detailed elsewhere in these accompanying consolidated financial statements, the Company has no other significant or material related party transactions during the years presented. NOTE 23 - CONCENTRATIONS OF RISK The Company is exposed to the following concentrations of risk: (a) Major customers and major vendors For the years ended June 30, 2024, there was 2 customers whose revenue exceeded 10% of the revenue in the segment of production and distribution of renewable commodities. Revenue June 30, 2024 Accounts Receivable June 30, 2024 USD % USD Customer A $ 62,560 64.8 % 62,560 Customer B* 25,441 26.3 % 25,441 * impaired and represents a related party. For the year ended June 30, 2023 there were no customers which exceeded 10% of revenue for the period. For the years ended June 30, 2024, there was 2 vendors whose revenue exceeded 10% of the revenue in the segment of production and distribution of renewable commodities Direct Costs June 30, 2024 Accounts Payable June 30, 2024 USD % USD Vendor A 118,621 45 % 118,621 Vendor B 135,200 51 % - For the year ended June 30, 2023 there were no vendors which exceeded 10% of direct costs for the period. (b) Economic and political risk The Company’s major operations are conducted in U.S.A. and Malaysia. Accordingly, the political, economic, and legal environments in U.S.A. and Malaysia, as well as the general state of U.S.A. and Malaysia’s economy may influence the Company’s business, financial condition, and results of operations. Further, the escalation tensions in the Middle East, including the continuing Russian – Ukraine conflict may impact the global economic situation, which indirectly may impact the Company’s operations. (c) Exchange rate risk The Company cannot guarantee that the current exchange rate will remain steady; therefore, there is a possibility that the Company could post the same amount of losses for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of MYR converted to USD on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice. NOTE 24 - COMMITMENTS AND CONTINGENCIES Future commitments with regards to repayment of lease liabilities are disclosed in Notes 16. Apart from the above, as of June 30, 2024, the Company had the following commitments: a) commitment to issue restricted Common Shares to the following service provider on or before October 31, 2026, for services to be performed pursuant to the Service Agreements signed with non employees as disclosed in Note 17: Number of shares to be issued FYE 2025 Nam Tran 1,000,000 Raymond Powell 1,000,000 Dale Ludwig 700,000 2,700,000 FYE 2026 and 2027 Nam Tran 2,000,000 Raymond Powell 2,000,000 Dale Ludwig 1,300,000 5,300,000 b) commitment to repay Promissory Notes with the face value (principal) amount of $ 675,888 , bearing 2 % coupon interest by issuance of 9,655,542 shares of the Company’s restricted Common Shares priced at $ 0.07 per share as disclosed in Note 15. c) commitment to cancel 375,000 restricted common shares pursuant to the Service Agreement signed and Service and Stock Cancellation Agreement as disclosed in Note 17. d) commitment to issue restricted Common Shares, comprising of 3,183,335 restricted Common Shares at $ 0.09 per share to six US shareholders, 3,000,000 restricted Common Shares at $0.10 per share to three non-US shareholders and 15,805,000 restricted Common Shares at $ 0.10 per share to forty-two US shareholders. e) Quarterly committed payments of $50,000 from September 2024 to March 2025, and $62,500 from June 2025 to September 2026 to support a 3-year Performance Testing Project titled “Structural Capacity of Sustainable Pavement” pursuant to an agreement entered with The National Center for Asphalt Technology at Auburn University ("NCAT") on June 27, 2024. f) commitment to issue 670,000 of the Company’s restricted Common Shares to Eric Bava, Chief Operating Officer of the Company, as part of the compensation package in the Employment Agreement that the Company entered into with Eric Bava on October 1, 2023 for his first year of service from October 1, 2023 to September 30, 2024. As of June 30, 2024, the Company has no material contingencies. F-30 Table of Contents VERDE RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”), except for number of shares) NOTE 25- SUBSEQUENT EVENTS On July 24, 2024, the Company issued 3,194,443 restricted Common Shares for $ 287,500 at $ 0.09 per share to four US shareholders and 6,005,000 restricted Common Shares for $ 600,500 at $ 0.10 per share to twenty US shareholders and one non-US shareholder. On July 31, 2024, the Company issued 1,000,000 of the Company’s restricted Common Shares each to Dr. Nam Tran and Dr. Raymond Powell as part of the compensation package in the Services Agreements that the Company entered into with Dr. Nam Tran and Dr. Raymond Powell on April 20, 2024 for the service period from May 1, 2024 to April 30, 2025. Effective August 1, 2024, Jeremy P. Concannon was appointed as Chief Growth Officer (“CGO”) of the Company. Pursuant to the Services Agreement entered into between Jeremy P. Concannon and Verde Renewables, Inc, a wholly owned subsidiary of the Company as of July 31, 2024, the Company agreed to issue a total of 4,050,000 restricted shares of the Company’s common stock to Jeremy P. Concannon over three tranches of 1,350,000 shares on or before August 31, 2024, 1,350,000 shares on or before August 31, 2025 and 1,350,000 shares on or before August 31, 2026 . Pursuant to the addendum to Service Agreement dated September 27, 2024, each tranche of shares to be issued as compensation for each service period beginning 12 months from August 1, 2024 and 2025 and for 14 months from August 1, 2026 to September 30, 2027 respectively. On August 8, 2024, the Company issued 700,000 of the Company’s restricted Common Shares to Dale Ludwig as part of the compensation package in the Services Agreement that the Company entered into with Dale Ludwig on June 1, 2024 for the service period from June 1, 2024 to April 30, 2025. On August 9, 2024, the Company issued 888,888 restricted Common Shares for $ 80,000 at $ 0.09 per share to one US shareholder and 11,840,000 restricted Common Shares for $ 1,184,000 at $ 0.10 per share to twenty-three US shareholders and one non-US shareholder. On August 14, 2024, the Company entered into a Memorandum of Understanding (the “MoU”) with Nature Plus Inc. (“NPI”) to formalize the collaboration on the National Center for Asphalt Technology (“NCAT") Test Track Project (the “Project”) and explore subsequent business opportunities arising from the successful completion of the Project. The Project will involve the application of TerraZyme technology for the stability of subgrade and base layers, with the overarching goal of advancing road construction methodologies. The Company holds a three-year agreement with the National Center for Asphalt Technology at Auburn University ("NCAT") for the research, development and testing of road construction technologies. The Company has committed to funding the Project at a minimum cost of $ 750,000 , This funding will support the necessary performance testing by NCAT to secure the highest level of certification for the commercial adoption of the technology by the Departments of Transportation (“DOTs”). NPI will work in close collaboration with the Company and NCAT to provide critical technical expertise to support the Project and assist the Company in obtaining NCAT certification and other relevant approvals。The Company will procure and utilize 6 liters of TerraZyme for the NCAT test track. The Company and NPI will jointly develop mixed designs and materials incorporating biochar, aimed at enhancing performance and promoting carbon sequestration. The MoU shall be effective until December 31, 2026 or until replaced by a subsequent distributor agreement. Upon the successful completion of the Project, the Company and NPI intend to continue the collaboration on future initiatives, including soil stabilization and material development, carbon removal credits, certification and compliance, and exclusive rights to distributing TerraZyme. On August 16, 2024, the Company issued 9,655,542 shares of the Company’s restricted Common Stock at the price of $ 0.07 per share to Borneo Oil Berhad in relation to the Settlement of Debts Agreement (the “SDA Agreement”) and a two year term period Promissory Note entered into with its former indirect wholly-owned subsidiary Champmark Sdn Bhd (“CSM”) and CSM’s creditor Borneo Oil Corporation Sdn Bhd (the “Creditor”) to settle in full a total of USD 675,888 of CSM’s account payable. On March 13, 2023, the Company and CSM entered into a SDA Agreement and a two year term period Promissory Note with the Creditor to settle in full a total of USD 675,888 of CSM’s account payable to the Creditor either in cash or by the issuance of new restricted shares of the Company’s common stock at a price of $ 0.07 per share. As set out in the SDA Agreement, the new restricted shares for settlement of the account payable to the Creditor shall be issued to the Creditor or its nominee. On August 16, 2024, the Company entered into a Supplementary Agreement to the SDA Agreement and Promissory Note with the Creditor to convert the total amount of $ 675,888 into 9,655,542 shares of the Company’s restricted Common Stock at the agreed conversion price of $ 0.07 per share for issuance on August 16, 2024. On August 26, 2024, the Company issued 722,221 restricted Common Shares for $ 65,000 at $ 0.09 per share to three US shareholders, 3,990,000 restricted Common Shares for $ 399,000 at $ 0.10 per share to six US shareholders and two non-US shareholders. On August 30, 2024, the Company issued 1,350,000 of the Company’s restricted Common Shares to Jeremy P. Concanon, Chief Growth Officer of the Company, as part of the compensation package in the Services Agreement that the Company entered into with Jeremy P. Concanon on July 31, 2024. On August 30, 2024, the Company issued 670,000 of the Company’s restricted Common Shares to Eric Bava, Chief Operating Officer of the Company, as part of the compensation package in the Employment Agreement that the Company entered into with Eric Bava on October 1, 2023 for his first year of service from October 1, 2023 to September 30, 2024. In accordance with ASC Topic 855, “ Subsequent Events ”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after June 30, 2024, up through the date the Company issued the audited consolidated financial statements. NOTE 26 – RECLASSIFICATION Certain prior year amounts have been reclassified to conform to the current year’s presentation. These reclassifications had no impact on reported income or losses and are considered to be immaterial. F-31 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None