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Item 7. Management’s Discussion and Analysis

2025-10-23 compared with 2024-10-16 · 181 added, 80 removed, 43 unchanged (86% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this annual report.

The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

Our actual results could differ materially from those discussed in the forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report, particularly in the section entitled “Risk Factors” of this annual report.

The following discussion should be read in conjunction with our consolidated financial statements and the related notes contained elsewhere in this Annual Report on Form 10-K and in our other Securities and Exchange Commission filings.

The following discussion may contain predictions, estimates, and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

These risks could cause our actual results to differ materially from any future performance suggested below.

Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

We are a road construction and building materials company offering proprietary, environmentally sustainable materials and seeking to redefine our industry with a clear mission:

enabling the “Transition to Zero.” Our proprietary product BioAsphalt™ incorporates biochar , a powerful carbon sequestering material, into infrastructure with the goal of reducing emissions, improving performance, and lowering overall costs.

We also offer a licensed proprietary cold mix biochar asphalt emulsifying agent, which we call “ Verde V24 ”.

Further, we expect to generate revenues from the generation by our products, and our subsequent sale, of carbon removal credits .

We believe our proprietary products, know-how and business plan place us at the forefront of sustainable innovation in the construction and building materials sector, an industry we believe is long overdue for transformation.

Our strategic roadmap for achieving net-zero emissions—what we call the Verde Net Zero Blueprint —has achieved the following significant milestones:

The issuance to our company in April 2025 of the world’s first carbon removal credit from asphalt production and application, certified by Puro.earth, the leading global registry for engineered carbon removal.

Technological validation of our BioAsphalt™ by the National Center for Asphalt Technology (NCAT), including receipt of preliminary performance results from NCAT in July 2025 that demonstrated consistent durability, particularly under low-volume roadway conditions.

Most recently, in September 2025, NCAT’s latest evaluation of our cold recycling mix using 100% reclaimed asphalt pavement (“RAP”) from laboratory testing demonstrated that our cold-recycled mix not only meets but exceeds industry specifications for cold-recycled asphalt.

These results showed superior cohesion, high tensile strength ratio (“TSR”), and retained stability compared to standard cold mix benchmarks, validating its strength, durability, and moisture resistance.

Our Verde Net Zero Blueprint is comprised of our portfolio of validated technologies that enable the production of sustainable infrastructure materials with the integrated ability to generate certified carbon removal credits.

This positions carbon sequestration not just as an environmental co-benefit, but as a monetizable feature embedded in our business plan.

As the rise of artificial intelligence accelerates data center energy consumption, which is now projected to account for a growing share of global electricity use, enterprises worldwide are facing increasing pressure to offset their carbon footprints.

This is driving up demand for high-integrity, verifiable carbon credits.

Our model presents a novel combination of infrastructure performance with measurable climate impact, establishing us as a first mover in scalable Net Zero solutions, which we believe positions us well to meet the demands of a rapidly decarbonizing, carbon-constrained economy.

With key third-party validations from groups such as NCAT and Puro.earth in place, we are now focused on commercializing our solutions in the United States, our most strategic market.

To this end, we recently entered into an exclusive licensing agreement with Ergon Asphalt & Emulsions, Inc.

(“Ergon”), an industry leader in asphalt innovation and supply and one of the largest liquid asphalt and emulsion marketers in North America, for the production of asphalt surface course material containing our proprietary solution across North America.

As our domestic operations scale through Ergon, we plan to license the Verde Net Zero Blueprint globally, targeting infrastructure and materials companies in countries aligned with the Paris Climate Agreement and pursuing Net Zero by 2050.

To fully focus on this transition, we have exited all of our company’s legacy business lines unrelated to sustainable infrastructure technologies, including:

The sale of our Malaysian mining subsidiary Champmark Sdn Bhd (“CSB”), which was completed on April 20, 2023;

The discontinuation of our CBD business following the expiration of our supply agreement with MRX Xtractors, LLC on July 6, 2024.

We plan to expand operations and generate and grow revenue over the next twelve (12) months primarily through marketing and selling our proprietary road technologies through Ergon exclusively in North America, with an initial focus on the United States.

Production planning of our materials has already commenced, with distribution anticipated to occur through the Ergon’s established sales channels, reaching asphalt mixing plants across the United States, Canada and Mexico for blending and placement.

Embedding our technology into Ergon’s nationwide business footprint would enable immediate scalability and near-term revenue generation.

We believe our asset light business model enables scalable growth while minimizing capital intensity, creating recurring revenue streams through licensing, sales, royalties, carbon monetization, and strategic partnerships.

We operate through our primary U.S.

subsidiary, Verde Renewables, Inc., headquartered in St.

Louis, Missouri.

Recent Developments

Ergon License

On October 10, 2025, Verde Renewables, Inc.

(“Verde Renewables”), our wholly owned subsidiary, entered into a license agreement with Ergon (the “Ergon License”), pursuant to which we have granted Ergon an exclusive, non-transferable license to use, manufacture, commercialize, market, sell and distribute any product that contains or is manufactured or formed by Ergon using our proprietary cold mix biochar asphalt emulsifying agent, which we call “Verde V24”, in the United States (including its territories), Canada and Mexico, in exchange for Ergon agreeing to purchase Verde V24 from us at a fixed price (which is inclusive of all fees associated with the license, but subject to consumer price index adjustments) for use in Ergon’s asphalt road materials products.

Ergon, the largest asphalt marketer in North America, is a subsidiary of Ergon, Inc., a diversified global organization engaged in multiple industries.

The privately held Ergon is an industry pioneer in asphalt innovation and supply, employing more than 4,000 people and serving customers and partners in over 90 countries worldwide.

We have agreed with Ergon to an initial fifteen (15) month “go-to-market period”, during which there will be no minimum purchase requirements for Ergon’s purchases of Verde V24.

For each calendar year beginning January 1, 2027, Ergon has agreed to negotiate with us in good faith towards the establishment of possible minimum purchase amounts based on certain customary factors.

We have also agreed with Ergon that if minimum purchase amounts are agreed to for any given calendar year, we and Ergon will agree in good faith to new minimum purchase amounts for each subsequent year, subject to consideration of customary factors,

We have also agreed to provide Ergon with forty percent (40%) of our share of the carbon removal credits generated from the mixing of the final carbon sequestering BioAsphalt™ surface material, so long as (a) the carbon removal credits are generated from bulk mixing or packaged mixed product, and (b) the mixing of the final BioAsphalt™ surface material includes biochar purchased from us.

The Ergon License additionally grants Ergon the right to use our trademarks and access to ongoing technical services to facilitate the monitoring, reporting, and verification process of each ton of carbon dioxide sequestered.

The term of the Ergon License is ten (10) years, with an automatic renewal for additional ten (10) year periods, subject to a minimum of six (6) months’ notice of cancellation prior to renewal.

The Ergon License may be terminated in the event of non-payment of amounts due, initiation of bankruptcy proceedings, or under other customary terms.

Additionally, Ergon may terminate the Ergon License upon sixty (60) days’ prior written notice in the event that our Chief Executive Officer, Jack Wong, or our Chief Operating Officer, Eric Bava, are removed from their respective positions with the Company for reasons other than termination for cause or voluntary resignation.

The Ergon License additionally contains provisions regarding confidentiality, indemnification, and representations and warranties of the parties that are customary for such an agreement.

The foregoing description of the Ergon License is not complete and is qualified in its entirety by reference to the full text of the Ergon License, a copy of which is filed as Exhibit 10.1 to this Annual report.

Key Factors that Affect Our Results of Operations

We believe the following key factors may affect our financial condition and results of operations:

Ergon License :

Our entry into the Ergon License is expected to drive long-term revenue growth through product sales of Verde V24 and related proprietary materials.

The Ergon License establishes Ergon as the exclusive licensee for Verde V24 in the United States, Canada and Mexico, enabling large-scale commercialization of our Verde V24 technology while allowing us to expand our business without the capital demands of direct manufacturing or distribution.

Adoption of Biochar-Asphalt Technology :

Market acceptance of the Verde Net Zero Blueprint technologies by contractors, state Departments of Transportation, and private sector customers will influence royalty streams and future expansion opportunities.

Carbon Credit Monetization :

The issuance, pricing, and sales of certified carbon removal credits tied to our biochar-based asphalt applications will be a key driver of financial performance.

Operational and Integration Costs :

Expenses related to technology transfer, compliance monitoring, and integration into licensee production systems will impact near-term margins.

Regulatory and Environmental Policies :

Federal and state infrastructure spending, emissions reduction mandates, and climate policies may accelerate the adoption of our technology and corresponding revenue growth.

Continuous Improvement and Innovation:

Continuous improvement and innovation on our core technologies to enhance performance, durability, and environmental benefits.

Maintaining the Quality of our Products:

Maintain robust quality assurance and measurement systems to confirm that all licensed products consistently meet our technical specifications and industry standards.

Results of Operations

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Cost of revenue

Gross profit (loss)

Selling, general and administrative expenses

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$ (3,187,774 )

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

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

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

We have generated $133,202 in revenue for the year ended June 30, 2025, representing an increase of $36,618, or 37.9%, compared to revenue of $96,584 in the prior year.

The increase was primarily attributable to a shift in product mix, with greater sales of our higher-margin Biochar Asphalt Premix, which became the predominant revenue driver in 2025.

In contrast, revenue in 2024 also included sales of raw biochar, which carries lower margins and contributed a larger share of revenue in that year.

Cost of revenue

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

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

Cost of revenue in 2025 comprised the cost of Biochar Asphalt products sold whereas the cost for the year ended June 30, 2024 also included cost of biochar produced.

Consequently, cost of revenue decreased by $11,189 or 17.8%, from $62,978 in the year ended June 30, 2024, to $51,789 during the year ended June 30, 2025.

The decrease was primarily due to a change in the composition of products sold.

During fiscal 2024, the cost of revenue included the production costs associated with raw biochar, which carried higher relative production and handling costs.

Gross Profit (Loss)

Gross profit for the year ended June 30, 2025 was $81,413, an increase of $47,807, or 142.3%, compared to gross profit of $33,606 in 2024.

The improvement in gross profit was driven not only by increased revenues but also by a favorable product mix, as the Biochar Asphalt Premix that was our primary product sold in 2025 has significantly higher gross margins than raw biochar, which was a primary driver in 2024.

Selling, General and Administrative Expenses

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

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

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

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

We have incurred $5,889,024 and $2,882,376 in selling, general and administrative expenses through the years ended June 30, 2025 and 2024, respectively.

Selling, general and administrative expenses increased year over year by 104.3%, or $3,006,648, primarily due to a special bonus of $1.25 million to Jack Wong, our Chief Executive Officer, in recognition of his contributions in transforming the Company into a pioneer in the Net Zero building materials and carbon removal industry, increase of consultancy fees (share-based compensation to nonemployees of $1,341,373) as the new agreements were entered into in the last 2 months of the previous financial year, share based compensation to an employee and a director of $432,246 and $5,534 respectively, accrued professional fees of $110,000 in relation to the planned uplisting to NASDAQ, and research and development cost of $300,000 payable to C-Twelve pursuant to the C-Twelve Agreement.

Other Operating Expenses

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

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

Total other operating expenses for the year ended June 30, 2025 was $214,410, a decrease of $22,637, or 9.5%, compared to $237,047 for the year ended June 30 2024.

Other operating expenses comprised of expenditure related to the maintenance of the plant for the production and distribution of renewable commodities which was operating at reduced capacity due to strategic decisions of the Company.

The decrease was mainly attributable to the reduction in the direct labor cost related to the plant from $31,526 to $7,408 for the years ended June 30, 2024 and 2025, respectively.

Interest expense

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

Total interest expense for the year ended June 30, 2025 was $102,703, a decrease of $73,780, or 41.8%, compared to $176,483 for the year ended June 30, 2024.The Company recorded interest expense of $86,456 and $116,916 for the years ended June 30, 2025, and 2024, respectively, on certain promissory notes issued to a related party as discussed in more detail in “Note 13 – Promissory Note to Related Party” to our audited financial statements.

Lease interest expenses amounted to $5,368 and $45,926 for the years ended June 30, 2025, and 2024, respectively.

Bank loan interest amounted to $10,879 and $13,640 for the years ended June 30, 2025, and 2024, respectively.

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

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

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

Other income of $1,215,689 for the year ended June 30, 2023, was mainly due to gain on disposal of a subsidiary of $980,714 and fair value adjustment on convertible promissory notes issued to BOC of $194,865.

The balance mainly represented rental income earned.

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

Plan of Operation

Expansion Plans

The Company is diversifying into the green industry with its acquisition of Bio Resources Ltd (“BRL”), the beneficial and/or registered proprietor of the intellectual property known as “Catalytic Biofraction Process”, which is a slow pyrolysis process using a proprietary catalyst to depolymerise palm biomass wastes (empty fruit bunches or palm kernel shells) in temperature range of 350 degC to 500 degC to yield commercially valuable bio products:

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.

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

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

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

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

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

In 2023, Puro.earth, the world’s foremost crediting platform for durable carbon removal, officially registered the Company as a Carbon Removal Credit supplier as part of its Accelerate program.

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

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

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

This critical step incentivizes the broader adoption of climate technologies and enables the Company to supply these credits to companies seeking to offset their carbon footprint in pursuit of net-zero objectives.

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

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

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

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

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

The Company entered into a Services Agreement with Donald R.

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

The Company entered into two Services Agreements with Dr.

Nam Tran and Dr.

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

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

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

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

The Project, led by Dr.

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

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

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

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

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

The Company is confident in its technology and aspires to attain the highest level of certification from NCAT.

Success in this Project is expected to drive widespread adoption of a net-zero road construction blueprint by DOTs across the United States and the federal DOT.

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

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

Limited Operating History;

The decrease in interest expenses is mainly due to settlement of lease liabilities associated with the disposal of an asset held for sale and certain property, plant and equipment which were under financing arrangements, and the early conversion of promissory notes with a principal amount of $675,888 on August 16, 2024.

We have other income of $1,341,711 for the year ended June 30, 2025, an increase of $1,267,073, or 1,697.6%, compared to $74,638 for the year ended June 30, 2024.

The significant increase in other income was primarily driven by gain on insurance claim of $481,513, gain from disposal of property, plant and equipment of $164,624, interest income from placement of deposit with bank of $70,650 and unrealized foreign exchange gain of $582,034.

The remaining balance of other income mainly represented rental income earned.

As a result of the above factors, the Company incurred a net loss of $4,783,013 for the year ended June 30, 2025, representing an increase in net loss of $1,595,239, or 50%, compared to a net loss of $3,187,774 for the years ended June 30, 2025, and 2024, respectively.

Need for Additional Capital

There is limited historical financial information about us upon which to base an evaluation of our performance.

We cannot guarantee we will be successful in our business operations.

Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of our properties, and possible cost overruns due to price and cost increases in services.

We cannot guarantee we will be successful in our business operations and we have historically financed our operating activities through the sale of our equity securities.

Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, uncertain revenue streams, customer concentration, possible delays in the exploration of our properties, and possible cost overruns due to price and cost increases in services.

We have no assurance that future financing will be available to us on acceptable terms.

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Liquidity and Capital Resources

Our primary sources of liquidity are cash generated from private placements.

Cash generated from operations is highly dependent on the sale of our products, which are still under development stage.

Our primary sources of liquidity are cash generated from private placements of our Common Stock.

Cash generated from operations is highly dependent on the sale of our products.

Cash and cash equivalents totaled $1 million as of June 30, 2025, and $0.3 million as of June 30, 2024.

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$ (2,087,990 )

Net cash used in investing activities

Net cash provided by (used in) investing activities

$ (2,016,646 )

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Net Cash Used in Operating Activities.

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

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

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

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

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

Net Cash Used In Investing Activities.

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

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

Our net cash used in operating activities increased $1,322,781, or 63.4%, from $2,087,990 for the fiscal year ended June 30, 2024, to $3,410,771 for the fiscal year ended June 30, 2025.

The increase in cash used in operating activities for the year ended June 30, 2025, as compared to 2024 was primarily due to operational loss of $4,783,013 offset by non cash movements of $1,176,720 and net increase in working capital of $195,522.

The noncash expenses comprised $248,940 in depreciation, $102,857 in amortization, $1,341,373 in share based compensation to nonemployee, $432,246 in share-based compensation to employees, $5,534 in share-based compensation to a director, $84,718 in interest expenses on promissory notes, loss on disposal of assets held for sale of $2,877, impairment of property, plant and equipment of $137,632, impairment of asset held for sale of $5,866, operating lease expense of $42,848 and offset by unrealized foreign exchange gain of $582,034, gain from insurance claim of $481,513 and gain on disposal of property, plant and equipment of $164,624.

The net increase in working capital was generated from amount due to director, receivables from sale of inventories, other receivables, deposits and prepayments, and accrued liabilities and other payables, offset against decrease of working capital from inventories, accounts payable, related parties and repayments on leases.

Net Cash Provided by (Used in) Investing Activities.

The net cash provided by investing activities for the year ended June 30, 2025 was $3,182,138, representing an increase of $5,198,784, or 257.8%, compared to net cash used by investing activities of $2,016,646 for the year ended June 30, 2024.

The significant increase was due to proceeds from disposal of assets held for sale of $943,300, proceeds from disposal of property, plant and equipment of $947,995, proceeds from insurance recoveries of $541,221 and withdrawal of deposit in bank of $750,000, offset with purchase of property, plant and equipment of $378 for the year ended June 30, 2025.

Meanwhile, during year ended June 30, 2024, the net cash used by investing activities of $2,016,646 resulted from purchase of property, plant and equipment of $16,646 and placement of deposit in bank of $2,000,000, representing a strategic allocation of surplus cash from private placements completed during the year, and is intended to support future operational or investment initiatives.

Net Cash Provided by Financing Activities.

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

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

The Company needs to increase cash flow supplies with a long-term plan until the Company makes sustainable profits and has a positive cash flow.

Otherwise, loans from related parties may be a temporary solution, although we have no written loan agreements.

There is no guarantee that we will be able to secure adequate financing.

If we fail to secure sufficient funds, our business activities may be curtailed, or we may cease to operate.

The net cash provided by financing activities was $979,420, representing a decrease of $3,148,226, or 76.3%, compared to net cash provided by financing activities of $4,127,646.

The decrease due to reduction of proceeds from shares issued and to be issued of $1,983,000 in 2025 compared to $4,108,379 in 2024, set off partially by repayment of bank loan of $211,440, refund from cancellation of Common Stock of $80,000 and repayments to lease liabilities of $712,140 for the year ended June 30, 2025.

Meanwhile, for the year ended June 30, 2024, the net cash provided by financing activities of $4,127,646 resulted from proceeds from shares issued and shares to be issued of $4,108,379, proceeds from bank loan of $50,000 and advance from other payables of $136,983 set off partially by repayment of bank loan of $29,560 and repayments to lease liabilities of $138,156.

The Company generated a net cash inflow of $741,975 for the year ended June 30, 2025.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with U.S.

GAAP requires management to make judgments, assumptions, and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes.

Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements describes the significant accounting policies and methods used in the preparation of the consolidated financial statements.

The accounting policies described below are significantly affected by critical accounting estimates.

Such accounting policies require significant judgments, assumptions, and estimates used in the preparation of the consolidated financial statements, and actual results could differ materially from the amounts reported based on these policies.

Useful Lives and Depreciation of Property, Plant and Equipment

The Company’s property, plant and equipment are stated at cost, net of accumulated depreciation and impairment losses, if any.

We depreciate our property, plant and equipment on a straight-line basis over their estimated useful lives, which range from 3 to 27.5 years for land and buildings, 5 to 10 years for plant and machinery, and 3 to 10 years for other asset categories, including office equipment, computers, motor vehicles, furniture and fittings, and renovations.

The depreciation method and estimated useful lives reflect management’s judgment based on historical experience, the nature of the assets, their anticipated use, and technological and economic factors.

The estimation of useful lives is a critical accounting estimate because it requires significant management judgment and has a material impact on our consolidated financial statements.

Changes in the estimated useful lives of our assets could significantly affect the timing of depreciation expense recognized in future periods.

For the fiscal years ended June 30, 2025 and 2024, depreciation expense totaled $248,940 and $417,517, respectively.

We periodically review the estimated useful lives of our assets and revise them when events or changes in circumstances indicate that the current estimates are no longer appropriate.

We also review our assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Impairment of Long-Lived Assets and Intangible Assets

We assess long-lived assets, including property, plant and equipment and indefinite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Recoverability of long-lived assets is measured by comparing the carrying value to the estimated undiscounted future cash flows expected from the asset or asset group.

If the carrying value exceeds the expected undiscounted cash flows, the impairment loss is measured as the excess of the carrying amount over the fair value, which is generally determined using discounted cash flow models involving significant estimates and assumptions, such as future revenues, operating margins, and discount rates.

These estimates are inherently subjective and sensitive to changes in assumptions.

Changes in these assumptions or actual results that differ from those used in our estimates could result in material impairment charges in future periods.

For the fiscal years ended June 30, 2025 and 2024, we recognized impairment losses of $137,632 and $134,042, respectively, related to plant and machinery.

No plant and machinery were written off during the year ended June 30, 2025, while write-offs amounted to $3,979 in the prior year.

Allowance for Expected Credit Losses

We maintain an allowance for expected credit losses on accounts receivable and other financial instruments based on a current expected credit loss (CECL) model under ASC 326.

The allowance is estimated using a combination of quantitative and qualitative factors, including historical loss experience, current economic conditions, customer-specific credit risk, and reasonable and supportable forecasts of future conditions.

Significant judgment is involved in identifying relevant risk factors, evaluating the impact of macroeconomic variables (e.g., inflation, interest rates, geopolitical instability), and determining the appropriate loss rates.

A change in these factors could materially affect the timing and amount of credit loss provisions.

As of June 30, 2025, and 2024, the allowance for expected credit losses on accounts receivable was $0 and $27,481, respectively.

Revenue Recognition and Principal vs.

Agent Determination

We recognize revenue in accordance with ASC 606 by identifying performance obligations in contracts, determining the transaction price, and allocating the price to each performance obligation.

Significant estimates and judgments are involved in determining the point in time when control of a product transfers to the customer and whether we act as principal or agent in arrangements involving third-party contributions to the delivery of goods.

These judgments affect the timing and amount of revenue recognized.

Factors considered include our role in the transaction, control of inventory before transfer, and pricing discretion.

Incorrect judgments could materially impact reported revenue and profitability.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with Accounting Standards Codification (“ASC”) Topic 718-10, Compensation—Stock Compensation, which requires all share-based payment arrangements with employees, directors, and nonemployees to be measured and recognized in the financial statements based on the fair value of the equity instruments granted.

We consider the accounting for stock-based compensation to be a critical accounting estimate due to the significant judgment and assumptions involved in determining the grant date, estimating the fair value of the awards, and the timing and recognition of related expenses.

These estimates have a material impact on our results of operations.

For both employee and nonemployee awards, the grant date is determined based on the date of final Board approval of the award, in accordance with ASC 718.

The fair value of stock awards is generally determined based on the market price of the Company’s Common Stock on the grant date.

For awards where the grant date has not yet been established but the service inception date has commenced, we accrue compensation expense based on the estimated fair value of the Company’s Common Stock at the end of each reporting period, which may introduce variability in the reported compensation expense.

As of the years ended June 30, 2025 and 2024, the Company recorded accrued compensation costs related to these arrangements of $89,165 and $274,870, respectively.

In certain instances, the Company issues fully vested, nonforfeitable share-based awards to nonemployees prior to receiving the goods or services, resulting in the recognition of prepaid share-based compensation.

These awards are accounted for under ASC 718-10-45-3 and are recorded as prepaid assets when issued, with expense recognized as the goods or services are received.

The fair value of such awards is determined at the grant date, based on the market price of the Company’s Common Stock.

The Company recognizes share-based compensation expense over the requisite service period for employees, and the vesting period for nonemployees, in accordance with ASC 718.

The Company’s policy is to recognize forfeitures as they occur, rather than estimating forfeitures at the grant date, which may result in increased volatility in compensation expense.

During the fiscal years ended June 30, 2025 and 2024, the Company recognized total share-based compensation expense as follows:

For the year ended June 30,

The fair value of the Company’s Common Stock, particularly in periods of volatility, is a key source of estimation uncertainty.

Changes in assumptions or market conditions could significantly impact the fair value of awards and the related compensation expense.

Deferred Taxes and Valuation Allowances

We assess the realizability of deferred tax assets by evaluating both positive and negative evidence, including future taxable income, tax planning strategies, and recent financial performance.

If it is more likely than not that some or all of the deferred tax assets will not be realized, a valuation allowance is recorded.

Judgment is required to estimate future taxable income and assess the impact of economic trends or changes in tax law.

Adjustments to valuation allowances could materially impact our income tax expense or benefit.

We believe the estimates and assumptions used in preparing our consolidated financial statements are reasonable and appropriate.

However, actual results could differ materially from those estimates, which could have a significant impact on our financial condition, results of operations, and cash flows.

Working Capital

As of June 30, 2025 and 2024, we had cash and cash equivalent of $1,021,112, representing an increase of $741,975, or 265.8%, compared to $279,137 as of June 30, 2024, respectively.

Deposits with banks decreased by $723,516, or 36%, from $2,000,000 as of June 30, 2024, to $1,276,484 as of June 30, 2025.

The Company’s accumulated operating losses increased by $4,782,977, or approximately 35%, from $13,480,204 as of June 30, 2024 to $18,263,181 as of June 30, 2025.

Related Party Transactions

On March 13, 2023, the Company and its former indirect wholly-owned subsidiary Champmark Sdn Bhd (“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 of a two year term Promissory Note with the face value (principal) amount of $675,888, and bearing 2% coupon interest.

The Note was 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.

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 $675,888 of CSB’s account payable to the Creditor.

This transaction allowed us to eliminate the outstanding debt without the use of cash and resulted in a corresponding increase in stockholders’ equity.

We accounted for the settlement at the carrying amount of the liability in accordance with ASC 470-50 and ASC 850, with no gain or loss recognized on the extinguishment.

We believe this transaction strengthens our balance sheet and improves our liquidity position by reducing liabilities through equity-based financing.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

Trend Information

Other than as disclosed elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Financial Statements and Supplementary Data

The financial statements begin on page F-1 and are incorporated in their entirety into this Item 8.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis