Verde Resources revenue falls to $37 in Sept. quarter
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Verde Resources, Inc. (VRDR) reported revenue of $37 for the three months ended September 30, 2026, compared with $2,269 a year earlier, and a net loss of $868,081, versus $919,555. Net cash used in operating activities was $641,871, compared with $777,851 in the prior-year quarter; cash and cash equivalents were $1,164,262 at September 30, 2026.
Under a 10-year initial Master Commercialization and Collaboration Agreement, VRDR is a preferred biochar supplier to Ergon and provides carbon-credit services. Project #1 covers biochar for a cold-mix paving product; the parties share net revenue from related sales, and Ergon pays a cash royalty per gallon of its emulsion product sold in connection with the project. VRDR expects the project to begin immediately and continue over several years through pilot testing and commercialization.
A separate 12-month memorandum with Singapore-based Highway is non-binding except for specified provisions. Highway is expected to lead a proposed pilot with Singapore’s Land Transport Authority, with VRAPPL providing support; an exclusive Singapore license is conditional on pilot validation, LTA sign-off, studies, due diligence, regulatory approvals and definitive agreements. VRDR anticipates resuming commercial production at its dormant BioFraction facility during 2027, subject to Singapore initiatives and Southeast Asian demand.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointOperating cash use fell to $641,871 from $777,851.
- Minor pointNet loss narrowed to $868,081 from $919,555.
Negative
- Minor pointQuarterly revenue was $37, versus $2,269 in 2025.
Filing Explained
The new lease commits Verde to 1,043,100 dollars in future rent, which was not recorded as a lease liability at September 30.
The Verde Resources 10-Q reports a 62-month office lease that began
Because the lease had not begun by
Key Figures
Key Terms
pyrolysis technical
carbon removal credits technical
monitoring, reporting and verification technical
performance obligation financial
valuation allowance financial
net operating loss carryforwards financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue and net loss did VRDR report for the quarter ended September 30, 2026?
How long is VRDR’s Ergon agreement, and when does it renew?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
OR
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to _________
Commission
file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class: | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
| None | None | None |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐
Yes
As of November 12, 2026, there were shares of common stock outstanding.
VERDE RESOURCES, INC.
TABLE OF CONTENTS
| Page | ||
| PART I - FINANCIAL INFORMATION | ||
| Cautionary Note Regarding Forward-Looking Statements | iii | |
| Key Definitions | iv | |
| Item 1. | Financial Statements (unaudited) | F-1 |
| Condensed Consolidated Balance Sheets as of September 30, 2026 and June 30, 2026 | F-1 | |
| Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended September 30, 2026 and 2025 | F-2 | |
| Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended September 30, 2026 and 2025 | F-3 | |
| Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2026 and 2025 | F-4 | |
| Notes to Unaudited Condensed Consolidated Financial Statements | F-5 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 1 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 12 |
| Item 4. | Controls and Procedures | 12 |
| PART II - OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 13 |
| Item 1A. | Risk Factors | 13 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 14 |
| Item 3. | Defaults upon Senior Securities | 14 |
| Item 4. | Mine and Safety Disclosure | 14 |
| Item 5. | Other Information | 14 |
| Item 6. | Exhibits | 14 |
| Signatures | 15 | |
| ii |
| Table of Contents |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (the “Quarterly Report”), and any documents we incorporate by reference, contain, or may contain, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable rules and regulations. Such forward-looking statements involve significant risks and uncertainties. All statements contained in this Quarterly Report and any documents we incorporate by reference, other than statements of historical facts, are forward-looking statements including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
The words “may,” “will,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “potential,” “seek,” “aim,” “goal” and derivatives of such words or similar expressions regarding the future are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements include statements regarding, and important factors that could cause actual outcomes to differ materially from those stated or implied in the forward-looking statements include, but are not limited to, the matters summarized below:
| ● | our ability to establish and implement our business plan and begin to generate revenues, including through sales of biochar and our licensing model strategy in conjunction with key commercial partners like Ergon Asphalt & Emulsions, Inc. (“Ergon”) and, potentially, Highway International Pte. Ltd. (“Highway”) in Singapore; | |
| ● | our expectations about the anticipated benefits of our Master Commercialization and Collaboration Agreement with Ergon (the “MCCA”), including our capacity to source sufficient amounts of biochar, our licensing and distribution model strategy and our relationship with Ergon; | |
| ● | the expected benefits of our proprietary technologies and road construction materials, including our engineered biochar to be utilized with Ergon’s asphalt liquids for cold paving and other road applications for use in its products in North America pursuant to the MCCA, and other technologies to which we have access, such as TerraZyme; | |
| ● | our ability to generate and monetize carbon renewal credits utilizing our technology and products; | |
| ● | our ability to effectively compete in our industry and execute on our business plan; | |
| ● | the impact of governmental laws and regulation, and our ability to comply with new regulations and compliance requirements that affect our business; | |
| ● | our ability to effectively conduct and scale our operations in North America and other regions, either on our own or through third-party collaborators like Ergon and others, including the challenges associated with conducting business globally; our ability to adequately market our products and services, and to develop additional products and product offerings; | |
| ● | our ability to successfully expand our operations into foreign markets, including in Singapore via our memorandum of understanding with Highway; | |
| ● | assumptions related to the size of the market for our products and solutions, including whether our carbon sequestering products will be desirable to potential customers; | |
| ● | our future capital needs and our ability to raise additional capital when needed; | |
| ● | our ability to expand our licensing and distribution model to third parties beyond Ergon (including parties such as Highway, with whom we currently only have a memorandum of understanding); | |
| ● | our ability to expand our revenue streams beyond our licensing and distribution model; | |
| ● | difficulties with certain licensees (such as Ergon), licensors from whom we have the rights to key intellectual property, or other third parties upon which we rely; | |
| ● | our ability to attract, develop, and retain capable key personnel; | |
| ● | our ability to protect our intellectual property (including our trade secrets) or manage threats posed by breaches of security; and | |
| ● | other risks and uncertainties, including those listed in the “Risk Factors” section of this Quarterly Report, and our Annual Report on Form 10-K for the fiscal year ended June 30, 2026, filed with the Securities and Exchange Commission (“SEC”) on September 14, 2026. |
| iii |
| Table of Contents |
These and other forward-looking statements are only predictions and we may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, so you should not place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report or, in the case of exhibits hereto, the date of those documents. In addition, the factors listed above may not be the only ones that impact our ability to achieve the results anticipated by our forward-looking statements. Actual results or events could differ materially and adversely from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. You are cautioned that forward-looking statements involve significant risks and uncertainties that are subject to change based on various factors (many of which are beyond our control). We have included important factors in the cautionary statements included in this Quarterly Report that could cause actual future results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
You should read this Quarterly Report and the documents that we incorporate by reference with the understanding that our actual future results may be materially different from what we expect. All subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events, except as may be required under applicable U.S. securities law. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
KEY DEFINITIONS
Unless the context requires otherwise, references in this Quarterly Report to “we,” “us,” “our,” “the Company,” “Verde,” or similar terminology refer to Verde Resources, Inc. and its consolidated subsidiaries
Unless the context requires otherwise, references in this Quarterly Report to “common stock” refer to the Company’s common stock, par value $0.001 per share.
| iv |
| Table of Contents |
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
VERDE RESOURCES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts expressed in U.S. dollars, except share and per share amounts)
September 30, 2026 | June 30, 2026 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Prepaid share-based compensation- nonemployees | ||||||||
| Prepayments | ||||||||
| Other receivables and deposits | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Property, plant and equipment, net | ||||||||
| Right of use assets, net | ||||||||
| Intangible assets | ||||||||
| Deposits paid | ||||||||
| Prepayments | ||||||||
| Prepaid share-based compensation- nonemployees | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Other payables | ||||||||
| Deposit and accrued liabilities | ||||||||
| Accrued share-based compensation for nonemployee | ||||||||
| Accrued share-based compensation for employee | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Amount due to a director | ||||||||
| Amounts due to related parties | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities: | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| Commitments and contingencies | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, $ par value, shares authorized, issued and outstanding | ||||||||
| Common Stock, $ par value; shares authorized; and issued and outstanding as of September 30, 2026 and June 30, 2026 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive losses | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| Stockholders’ equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| F-1 |
| Table of Contents |
VERDE RESOURCES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Amounts expressed in U.S. dollars, except share and per share amounts)
Three Months ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Revenue, net | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross (loss) profit | ( | ) | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative expenses | ||||||||
| Research and development expenses | ||||||||
| Other operating expenses | ||||||||
| Total operating expenses | ||||||||
| LOSS FROM OPERATION | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Unrealized foreign exchange gain | ||||||||
| Interest income | ||||||||
| Other income | ||||||||
| Total other income, net | ||||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ||||
| Income tax expense | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| Net (loss) income attributable to non-controlling interest | ||||||||
| Net loss attributable to Verde Resources Inc., shareholders | ( | ) | ( | ) | ||||
| $ | ( | ) | $ | ( | ) | |||
| Other comprehensive (loss) income: | ||||||||
| Foreign currency adjustment income (loss) | ( | ) | ||||||
| COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | ||
| Net loss per share, basic and diluted | $ | ) | $ | ) | ||||
| Weighted average common stock outstanding, basic and diluted | ||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| F-2 |
| Table of Contents |
VERDE RESOURCES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025
(Amounts expressed in U.S. dollars, except share and per share amounts)
| Common Stock | Additional paid-in | Accumulated other comprehensive | Accumulated | Non controlling | Total stockholders’ | |||||||||||||||||||||||
No. of shares | Amount | capital | loss | losses | interest | equity | ||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| Share based compensation to employee | - | |||||||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||
| Balance as of September 30, 2026 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| Shares issued for private placement | ||||||||||||||||||||||||||||
| Share based compensation to employee | - | |||||||||||||||||||||||||||
| Share based compensation to director | - | |||||||||||||||||||||||||||
| Shares issued to service provider | ||||||||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance as of September 30, 2025 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||
| F-3 |
| Table of Contents |
VERDE RESOURCES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts expressed in U.S. dollars, except share and per share amounts)
Three Months ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation of property, plant and equipment | ||||||||
| Amortization | ||||||||
| Stock-based compensation-nonemployee | ||||||||
| Stock-based compensation-employee | ||||||||
| Stock-based compensation-director | ||||||||
| Operating lease expense | ||||||||
| Unrealized foreign exchange gain | ( | ) | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Other receivables and deposits | ( | ) | ( | ) | ||||
| Prepayments | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued liabilities and other payables | ( | ) | ||||||
| Advanced from director | ( | ) | ( | ) | ||||
| Advanced from/to related parties | ( | ) | ||||||
| Repayment of operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Withdrawal of short-term investments | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of Common Stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents before effect of exchange-rate activities | ( | ) | ||||||
| Effect of exchange-rate changes on cash and cash equivalents | ( | ) | ||||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS, AT END OF PERIOD | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental disclosure of noncash activities: | ||||||||
| Shares issuance for employee compensation | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| F-4 |
| Table of Contents |
VERDE RESOURCES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts expressed in U.S. dollars, except share and per share amounts)
NOTE 1 - ORGANIZATION AND BUSINESS BACKGROUND
Core Business & Technology Overview
Verde Resources, Inc. was incorporated under the laws of the state of Nevada on April 22, 2010.
The Company is a road construction and building materials company offering proprietary, environmentally sustainable materials, designed to drive innovations that enhance sustainability and advance environmental stewardship. By integrating biochar, a carbon sequestering material and performance enhancer, the Company aims to facilitate the industry’s transition toward lower-emission infrastructure solutions. The Company believes its approach reduces greenhouse gas (“GHG”) emissions, optimizes the use of native soils and recycled materials, accelerates installation timelines, improves operational efficiency, and reduces overall project costs. The Company’s strategic focus is the commercialization of its biochar asphalt technology through its wholly owned subsidiary, Verde Renewables Inc. As part of this initiative, the Company has collaborated with the National Center for Asphalt Technology (“NCAT”) to deploy and evaluate its biochar asphalt technology at the NCAT test track. This endeavor is intended to validate the technology’s performance characteristics, environmental sustainability attributes, and potential to support the generation of carbon removal and avoidance credits.
BioFraction and Regional Development
The Company’s subsidiary, Verde Resources (Malaysia) Sdn Bhd (“Verde Malaysia”), operates the BioFraction facility in Sabah, Borneo, Malaysia, which was established in 2021. The facility uses pyrolysis to convert palm oil waste into biochar and other byproducts. Commercial operations at the BioFraction facility have remained dormant in recent years while the Company prioritized its U.S. testing activities with NCAT. During this period, the Company continued maintenance and test production runs to preserve the facility’s operational capability, for planned future use.
The Company anticipates resuming commercial production during 2027, subject to the progress of the Company’s initiatives in Singapore and the development of demand in the Southeast Asian region (see Note 3). The Company is also evaluating additional supply and licensing arrangements in Southeast Asia, including potential licensing of its BioFraction technology to palm oil waste processors in Malaysia. The timing and scale of production will depend on commercial agreements, customer demand and available resources.
Corporate Structure
As of September 30, 2026, the Company has the following subsidiaries:
| Company name | Place of incorporation | Principal activities and place of operation | Effective interest held | ||||
| Verde Resources Asia Pacific Limited (“VRAP”) | |||||||
| Verde Resources (Malaysia) Sdn Bhd (“Verde Malaysia”) | |||||||
| Verde Renewables, Inc. (“Verde Renewables”) | |||||||
| VerdePlus Inc. (“VerdePlus”) | |||||||
| Verde Life Inc. (“VLI”) | |||||||
| The Wision Project Sdn Bhd (“Wision”) | |||||||
| Verde Estates LLC (“VEL”) | |||||||
| Verde Resources Asia Pacific Pte. Ltd. (“VRAPPL”) |
| F-5 |
| Table of Contents |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying unaudited condensed consolidated financial statements and notes.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements, which include the accounts of the Company and those of its wholly owned subsidiaries, are unaudited and have been prepared on a basis substantially consistent with the Company’s audited financial statements and notes as of and for the year ended June 30, 2026 included in the Company’s Annual Report on Form 10-K (the “2026 Form 10-K”). These unaudited condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted (“GAAP”) in the United States of America (“U.S. GAAP”) and follow the requirements of the SEC for interim reporting. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of adjustments of a normal and recurring nature) considered necessary for a fair statement of its financial position, operating results and cash flows for the periods presented. The condensed consolidated balance sheet at June 30, 2026 has been derived from audited consolidated financial statements, but does not contain all of the footnote disclosures from the 2026 Form 10-K. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for a full fiscal year. The statements should be read in conjunction with the audited consolidated financial statements and related notes included in the 2026 Form 10-K as filed with SEC on September 14, 2026.
Comparative Presentation
Certain
prior-period amounts have been reclassified to conform to the current-period presentation. Research and development expenses of $
| F-6 |
| Table of Contents |
Use of Estimates and Assumptions
The preparation of condensed 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the years presented. Significant accounting estimates reflected in the Company’s condensed 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, share based compensation, classification of warrants, 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 condensed 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 Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). 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.
Accounts Receivables
Accounts receivables are recognized and carried at amortized cost. The Company accounts for expected credit losses in accordance with ASC Topic 326, Financial Instruments—Credit Losses. ASC 326 requires the use of a current expected credit loss (“CECL”) methodology to estimate lifetime expected credit losses on financial assets measured at amortized cost, including accounts receivable.
The Company maintains an allowance for expected credit losses based on a combination of quantitative and qualitative factors, including knowledge of a client’s financial condition, historical loss experience, customer-specific credit risk, aging of receivables, current economic conditions and reasonable and supportable forecasts of future conditions.
Management applies significant judgment in identifying relevant risk factors, evaluating the impact of macroeconomic conditions, including inflation, interest rates and geopolitical uncertainty, and determining the appropriate expected loss rates. Changes in these assumptions or economic conditions could materially affect the timing and amount of credit loss provisions recognized in future periods. Bad debts are written off against allowances. 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 condensed consolidated statement of operations within operating expenses.
As
of September 30, 2026 and June 30, 2026, the longest credit term for certain customers are 30 to 90 days. Additionally, as of September
30, 2026 and June 30, 2026, there has been
| F-7 |
| Table of Contents |
Intangible Assets and Impairment of Long-Lived Assets
The Company accounts for intangible assets in accordance with ASC Topic 350, Intangibles—Goodwill and Other (“ASC 350”) and accounts for impairment of long-lived assets in accordance with ASC Topic 360, Impairment or Disposal of Long-Lived Assets (“ASC 360”).
Intangible assets acquired from third parties are initially measured at fair value. Indefinite-lived intangible assets are not amortized and are evaluated for impairment at least annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired.
In accordance with ASC 360, the Company evaluates long-lived assets, including property, plant and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability is assessed by comparing the carrying amount of the asset or asset group to the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset. If the carrying amount exceeds the estimated undiscounted future cash flows, an impairment loss is recognized based on the excess of the carrying amount over the asset’s fair value.
To evaluate indefinite-lived intangible assets for impairment under ASC 350, the Company may first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the asset is less than its carrying amount. Alternatively, the Company may bypass the qualitative assessment and perform a quantitative impairment test. The qualitative assessment considers factors including business performance, market conditions, macroeconomic trends, strategic plans, recent market transactions and projected future cash flows.
If a quantitative assessment is performed, the fair value of the indefinite-lived intangible asset is compared to its carrying amount. Fair value is generally determined using discounted cash flow models, appraised values or other valuation techniques, as appropriate, and requires management to make significant estimates and assumptions, including projected revenues, operating margins, future cash flows and discount rates. If the carrying amount exceeds fair value, an impairment loss is recognized for the excess carrying value.
These estimates are inherently subjective and sensitive to changes in assumptions and market conditions. Actual results or changes in estimates could result in material impairment charges in future periods.
As of September 30, 2026 and June 30, 2026, the Company did not record an impairment on the intangible assets.
Research and Development
Research and development costs are expensed as incurred in accordance with ASC 730, Research and Development, and presented separately in the consolidated statements of operations. These costs include materials, third-party research and testing, and allocable facility and equipment costs attributable to developing new products or processes or significantly improving existing products or processes. Equipment with alternative future uses is capitalized and depreciated over its estimated useful life, with depreciation attributable to research and development included in research and development expense.
Revenue Recognition
The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), which 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.
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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. Accordingly, the transaction price is allocated in its entirety to the single performance obligation and recognized upon its fulfilment.
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. The Company has determined that consideration is fixed and is not subject to variable consideration, refunds, cancellation or termination provisions.
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. As such, the Company derives its revenue from the sale of products and services in its role as a principal.
Cost of Revenue
Cost of revenue consists primarily of the cost of goods sold, which are directly attributable to the sales of products.
Foreign Currencies Translation
The Company’s reporting currency is the U.S. dollar (“US$”) and the accompanying condensed consolidated financial statements have been expressed in U.S. dollars. The Company and its subsidiaries in the United States have functional currency of US$ whereas the functional currencies of the Company’s subsidiaries in Malaysia and Singapore are Malaysian Ringgit (“MYR”) and Singapore Dollar (“SGD”), respectively. The functional currencies represent the primary currencies of the economic environment in which the respective companies’ 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 condensed consolidated statement of operations.
For reporting purposes, in accordance with ASC Topic 830 “Translation of Financial Statements”, (“ASC 830”) capital accounts of the condensed consolidated financial statements are translated into U.S. dollars from MYR and SGD 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.
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Translation of MYR and SGD into U.S. dollars has been made at the following exchange rates for the following periods:
| September 30, 2026 | September 30, 2025 | |||||||
| Period-end MYR:US$ exchange rate | ||||||||
| Period-end SGD:US$ exchange rate | ||||||||
| Average period MYR:US$ exchange rate | ||||||||
| Average period SGD:US$ exchange rate | ||||||||
Comprehensive Income (Loss)
ASC Topic 220, Comprehensive Income, (“ASC 220”) establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income (loss) as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed 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.
Non-controlling Interest
The Company accounts for non-controlling interest in accordance with ASC Topic Consolidation 810-10-45, (“ASC 810”) which requires the Company to present non-controlling interests as a separate component of total shareholders’ equity on the condensed consolidated balance sheets and the condensed consolidated net loss attributable to the non-controlling interest be clearly identified and presented on the face of the condensed consolidated statements of operations and comprehensive loss.
The Company calculates net loss per share in accordance with ASC Topic 260, Earnings per Share (“ASC 260”). Basic loss per share is computed by dividing the net income by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed similarly to basic net loss per share, except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential common stock equivalents had been issued, if dilutive.
The Company’s share-based awards consist of shares of common stock that are legally issued, fully vested, and nonforfeitable upon grant. Accordingly, such shares are included in the weighted-average shares outstanding from the date of issuance, and there are no unvested or forfeitable awards requiring separate consideration in the calculation of basic or diluted net loss per share.
Stock Cancellation and Reissuance Policy
In certain circumstances, after the Company grants fully vested and nonforfeitable share-based awards to nonemployees, the Company may subsequently enter into mutual agreements with the recipients to cancel shares associated with services not yet performed or no longer expected to be performed under the applicable arrangements. In such instances, the Company evaluates the substance of the arrangement in accordance with ASC Topic 718 Compensation- Stock Compensation (“ASC 718”), 718-10-25-2 and ASC 718-10-35-1, which require that compensation cost be recognized based on the goods or services received. In accordance with ASC 718-10-45-3, the grant date fair value of these awards are initially recognized as a prepaid share-based compensation, which is recognized as compensation expense over the period in which the related goods or services are received. When mutual agreements are executed to cancel shares associated with services which are not performed or are no longer expected to be performed, the Company reverses the remaining balance of the prepaid share-based compensation, which represents the value of services not yet performed. There are no reversals of previously recognized share-based compensation expense relating to services already performed under the applicable arrangements.
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Treasury Stock Policy
The Company may also, if required, cancel shares of its common stock that have been repurchased or otherwise reacquired, including shares acquired through share repurchase programs or forfeited under equity compensation plans. Cancelled shares are retired and removed from the issued and outstanding share count in accordance with applicable corporate law and the Company’s Articles of Incorporation.
Upon cancellation, the par value of the shares is deducted from common stock, and any excess of repurchase cost over the par value is charged against additional paid-in capital (“APIC”) or retained earnings, as applicable. If the original issuance price is not known or determinable, the cost is first charged to APIC to the extent available, with any remaining amount charged to retained earnings.
The Company accounts for reissuance of treasury shares in accordance with ASC 505-30 – Equity: Treasury Stock (“ASC 505”). Treasury shares may be reissued for various purposes, including the settlement of employee equity awards, acquisitions, or other corporate purposes.
If treasury shares are reissued:
| ● | The proceeds received upon reissuance are credited to treasury stock at the cost of the shares. | |
| ● | Any difference between the reissuance price and the cost of the treasury shares is recorded as an adjustment to APIC. | |
| ● | If the reissuance price exceeds the cost, the excess is credited to APIC. | |
| ● | If the reissuance price is less than the cost and APIC related to treasury stock transactions is insufficient to absorb the difference, the remainder is charged to retained earnings. |
The Company uses the cost method to account for treasury stock transactions. Reissued shares are included in the number of shares issued and outstanding as of the date of reissuance.
As of September 30, 2026, there have been no treasury stock purchases by the Company.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, 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 employees and nonemployees based on the fair value of the awards at grant date.
Grant Date and Measurement
The grant date represents the date on which all key terms and conditions of the award are approved and understood by both the Company and the recipient, which generally corresponds to the date of final board approval. The fair value of share-based awards is measured based on the closing market price of the common stock on the grant date.
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The Company considers stock-based compensation to be a significant accounting estimate due to the judgment involved in determining the grant date, estimating the fair value of awards, evaluating the timing and recognition of compensation expense and assessing the substance of certain share-based arrangements. Because the Company issues common stock awards that are measured based on the market price of its common stock at the grant date, changes in the timing of grant approvals, service periods and the Company’s stock price, may impact the amount and timing of compensation expense recognized in future periods.
Fully Vested and Nonforfeitable Awards
The Company issues shares that are fully vested and nonforfeitable upon grant, and the Company does not retain the ability to cancel such shares. For these awards, the recipient has an unconditional right to the shares at the grant date.
When such awards are issued to non-employees in advance of the receipt of goods or services, the Company records prepaid share-based compensation at the grant date in accordance with ASC 718-10-45-3. The prepaid amount represents the fair value of the goods or services to be received and is recognized as compensation expense over the period in which the related goods or services are received.
For employee awards, when shares are issued in advance of the receipt of services, the Company does not recognize a prepaid asset. Instead, consistent with ASC 718-10-25 and ASC 718-10-35, compensation cost is recognized over the requisite service period as the services are rendered.
Awards Without an Established Grant Date
For certain share-based payment arrangements, the service inception date precedes the establishment of the grant date. In such cases, compensation cost is recognized based on the best estimate of the fair value of the Company’s common stock at each reporting period until the grant date is established, with a corresponding liability recorded in accordance with ASC 718.
Once the grant date is established, the cumulative compensation cost is adjusted to reflect the grant-date fair value of the award.
Recognition of Compensation Expense
Share-based compensation cost is recognized over the requisite service period for employee awards and over the service period for nonemployee awards.
Presentation Considerations
Awards are fully vested and nonforfeitable and as such are included in shares issued and outstanding at the grant date.
Accordingly:
| ● | For non-employees: APIC, together with shares issued, is recognized at the grant date fair value of the awards, with a corresponding increase in prepaid share-based compensation, which is recognized as compensation expense over the period in which the related goods or services are received; and | |
| ● | For employees and directors: APIC is recognized to the extent that, together with shares issued, reflect the compensation cost for the requisite service period rendered as of the reporting date. Any remaining unrecognized compensation cost is recorded in APIC over the remaining requisite service period. |
The impact of such awards on earnings per share is evaluated in accordance with ASC 718-10-45-1.
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Related Parties
The Company follows the ASC 850-10, Related Party (“ASC 850”) 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.
The condensed 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.
Recent Accounting Pronouncements
The following summarizes accounting standards recently adopted by the Company and recently issued standards not yet adopted.
Recently Adopted Accounting Standards
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Account Receivable and Contract Assets. This update introduces a practical expedient for all entities when estimating expected credit losses on current accounts receivable and current contract assets arising from revenue transactions accounted for under Topic 606. The expedient allows entities to assume current conditions as of the balance sheet date remain unchanged over the remaining life of the asset. The amendments are required to be applied prospectively and are effective for annual and interim periods beginning after December 15, 2025. Early adoption is permitted. The Company adopted this standard effective July 1, 2026. The adoption did not have a material impact on the Company’s condensed consolidated financial statements.
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Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The guidance requires additional disclosures about specified expense categories included in income statement line items. As clarified by ASU 2025-01, the guidance is effective for the Company’s fiscal year ending June 30, 2028, and interim periods beginning with the quarter ending September 30, 2028. Early adoption is permitted. The Company is evaluating the impact of this guidance but does not currently expect its adoption to have a material impact on its consolidated related disclosures.
In May 2025, the FASB issued ASU 2025-04, Compensation - Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer. The amendments clarify the accounting for share-based consideration payable to customers, including the treatment of vesting conditions and forfeitures. The guidance is effective for the Company beginning July 1, 2027, including interim periods, with early adoption permitted. The Company is evaluating the impact of this guidance but does not currently expect its adoption to have a material impact on its consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This update provides amendments to clarify and modernize the accounting for costs incurred to develop or acquire internal-use software. The amendments address the capitalization of implementation costs by utilizing a principles-based approach and consolidates website development guidance under Subtopic 350-40. The amendments can be applied prospectively, modified prospectively, or retrospectively and are effective for annual and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact of this guidance but does not currently expect its adoption to have a material impact on its consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU No. 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract. This update introduces a scope exception to derivative accounting for certain contracts with underlying tied to operations or activities specific to one of the parties. Additionally, the update clarifies that share-based noncash consideration received from a customer should be accounted for under Topic 606 until the right to receive or retain the consideration becomes unconditional. The amendments can be applied prospectively or modified retrospectively and are effective for annual and interim periods beginning after December 15, 2026. The Company is evaluating the impact of this guidance but does not currently expect its adoption to have a material impact on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This update clarifies the applicability, form and content, and interim disclosure requirements in ASC Topic 270 and enhances navigability of the interim reporting guidance. The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities and after December 15, 2028, for entities other than public business entities. Early adoption is permitted. The Company is evaluating the impact of this guidance but does not currently expect its adoption to have a material impact on its consolidated related disclosures.
In December 2025, the FASB issued ASU 2025-12, “Codification Improvements,” which updates the FASB Accounting Standards Codification to clarify, correct errors, and improve the overall usability of GAAP. The improvements consist of narrow-scope amendments, technical corrections, clarification of existing guidance, and updates to clarify the appropriate scope and application of certain disclosure requirements. ASU 2025-12 is effective for annual and interim periods beginning after December 15, 2026. Early adoption is permitted. The Company is evaluating the impact of this guidance but does not currently expect its adoption to have a material impact on its consolidated financial statements and related disclosures.
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In May 2026, the FASB issued ASU 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818)”, which establishes accounting requirements for environmental credits and environmental credit obligations (“ECOs”). This ASU introduces a comprehensive model that establishes recognition, measurement, presentation, and disclosure requirements for environmental credits and, when applicable, compliance obligations that may be settled by using environmental credits. The new accounting standard will be effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
The Company has reviewed all recently issued but not yet effective accounting pronouncements. Except for those discussed above, the Company does not expect their adoption to have a material impact on its consolidated financial statements and related disclosures.
NOTE 3 – STRATEGIC COMMERICAL AGREEMENTS
Highway International Pte. Ltd. Memorandum of Understanding
On August 26, 2026, the Company’s wholly owned Singapore subsidiary, VRAPPL, entered into a non-binding Memorandum of Understanding (the “Highway MoU”) with Highway, a Singapore-based integrated asphalt and road-infrastructure company, establishing a strategic framework for the proposed deployment, validation, commercialization and licensing of the Company’s engineered biochar carbon platform in Singapore. Under the Highway MoU, the parties intend to collaborate on an initial pilot project with Singapore’s Land Transport Authority (“LTA”) to evaluate the Company’s technology’s technical performance, production readiness, carbon accounting, digital monitoring, reporting and verification (“MRV”) framework, and broader commercial rollout potential. Highway is expected to lead the proposed LTA pilot project, with VRAPPL providing operational and technical support.
Subject to successful pilot validation and LTA sign-off, feasibility studies, mutual due diligence, applicable regulatory approvals, and the negotiation and execution of definitive agreements, the parties intend to pursue an exclusive licensing arrangement for the use and commercialization of our engineered biochar carbon platform in Singapore. The proposed licensing arrangement would be expected to include minimum engineered biochar purchase commitments, commercial supply terms, technical support and knowledge transfer, performance milestones, and provisions relating to carbon removal credits, sustainability and related data and reporting.
The
Highway MoU has a term of twelve (
Except for certain provisions, including those relating to public disclosure, confidentiality, costs and expenses, exclusivity, governing law and termination, the Highway MoU is non-binding, serves principally as a framework for future exploration and potential binding agreements and does not obligate either party to enter into a definitive licensing agreement or complete any transaction.
Ergon Master Commercialization and Collaboration Agreement
On July 1, 2026, the Company entered into a MCCA with Ergon, whereby the Company shall act as a supplier of biochar to Ergon on a preferred vendor basis and provide carbon credit monetization and related services to Ergon, and Ergon shall endeavor to use its good faith efforts to develop, manufacture, and market products containing the Company’s engineered biochar (the “Ergon-Verde Products”), with the initial Ergon-Verde Product being a cold mix road paving product (the “Initial Product”).
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During the term of the MCCA, if Ergon or any of its affiliates desire to utilize biochar in any of Ergon’s products, Ergon shall afford the Company the first opportunity to supply any such biochar required (in the form of the Company’s engineered biochar), and the parties will negotiate to establish agreed-upon applicable commercial terms related to such projects or applications to be memorialized in an addendum to the MCCA, or in a direct agreement between the Company and a customer introduced by Ergon. Commencing in 2027 and for each year during the term of the MCCA thereafter, the parties shall also in good faith discuss whether to establish mutually agreed-upon purchase commitments of the Company’s biochar product.
Under the MCCA, the Company shall, at Ergon’s request and in coordination with Ergon, use its commercially reasonable efforts to perform the services described in the MCCA to assist Ergon, which includes the distribution of the Company’s engineered biochar to Ergon or its customers or otherwise for use in Ergon’s products which utilize biochar, to ensure continuity of biochar supply to support commercialization of Ergon-Verde Products, as well as to provide technical and field support services to facilitate market adoption of Ergon-Verde Products. The Company is also responsible under the MCCA for the management of carbon removal credits generated by Ergon-Verde Products, including registration, methodology management, verification, registry management, and carbon credit sales. It is anticipated that carbon removal credits shall be generated from: (i) bulk mixing, and (ii) packaged mix of Ergon-Verde Products. The Company shall provide to Ergon a percentage of the net proceeds of its share of the biochar carbon removal credits generated.
Concurrently with the execution of the MCCA, the parties also entered into an addendum to the MCCA to provide for the terms of the first project under the MCCA (“Project #1”), which involves providing engineered biochar for use in the Initial Product. Such addendum sets out non-binding annual target supply volumes of Ergon’s emulsion products for which the Company will aim to supply its biochar. The Company and Ergon shall share in the net revenue of any such sales of its biochar to Ergon’s customers, or any customers introduced by Ergon, in connection with Project #1. Additionally, Ergon will pay the Company a cash royalty per gallon of Ergon’s emulsion product sold in connection with Project #1. For any products beyond the Initial Product for which Ergon utilizes the Company’s biochar, the parties will negotiate in good faith to establish mutually agreed-upon commercial terms related to such additional applications to be memorialized in an addendum or amendment to the MCCA. The Company expects Project #1 to commence immediately and continue over the next several years as the Initial Product is manufactured, tested in pilot programs and commercialized.
The initial term of the MCCA shall be for a period of ten years (the “Initial Term”), and shall automatically renew for a period of five years unless at least six months prior to the expiration of the Initial Term, either party provides notice to the other party that it wishes to terminate this MCCA at expiration of the Initial Term. Either party may also terminate the MCCA at any time upon written notice upon the occurrence of customary events such as breach of the MCCA and upon bankruptcy of a party (subject to notice and cure periods as provided for in the MCCA). Additionally, in the case of termination (except for cause) of either Mr. Jack Wong, the Chief Executive Officer of the company, or Eric Bava, the Chief Operating Officer of the company, Ergon shall have the right to terminate the MCCA upon sixty days’ written notice.
NOTE 4 - BUSINESS SEGMENT INFORMATION
The Company applies the provisions of ASC 280, which requires disclosure of information about operating segments based on how management organizes the Company’s business activities for making operating decisions and assessing performance. The Company’s Chief Executive Officer serves as the CODM.
The CODM reviews consolidated financial information, including revenue, operating expenses and net income (loss), when evaluating performance and allocating resources. The CODM uses net income (loss) as the primary measure of performance and uses revenue as the primary measure for allocating resources.
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The Company operates as a single operating and reportable segment under ASC 280 and the CODM reviews financial information on a consolidated basis. The significant expense categories and other segment items regularly provided to and reviewed by the CODM are presented below.
| Three months ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross (loss) profit | ( | ) | ||||||
| Operating expenses: | ||||||||
| Depreciation and amortization | ||||||||
| Payroll expenses | ||||||||
| Consultant fees | ||||||||
| Research and development expense | ||||||||
| Legal and professional fees | ||||||||
| Other segment expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Unrealized foreign exchange gains | ||||||||
| Interest income | ||||||||
| Other income | ||||||||
| Loss before income tax | ( | ) | ( | ) | ||||
| Income tax | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
Substantially all of the Company’s revenue is generated in the United States and Malaysia. Long-lived assets are located primarily in the United States and in its subsidiaries in Malaysia, Singapore and the British Virgin Islands, with the Company’s key intellectual property held by its British Virgin Islands subsidiary.
NOTE 5 - INVENTORIES
The Company evaluates inventories for excess, obsolete or slow-moving items, records an allowance when the net realizable value is less than cost, and consisted of the following:
September 30, 2026 | June 30, 2026 | |||||||
| Manufactured bio produce | $ | $ | ||||||
| Trading goods | ||||||||
| $ | $ | |||||||
| ● | Write-off
of inventories: Write off of inventories as of September 30, 2026 and June 30, 2026 was
$ | |
| ● | Inventory
allowance: |
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NOTE 6 – OTHER RECEIVABLE, DEPOSITS AND PREPAYMENTS
Other receivables, deposits and prepayments consisted of the following:
| September 30, 2026 | June 30, 2026 | |||||||
| Current portion | ||||||||
| Deposits | $ | $ | ||||||
| Other receivables | ||||||||
| Less: impairment on other receivables | ( | ) | ( | ) | ||||
| Other receivables and deposits, net | ||||||||
| Prepayments | ||||||||
| Prepaid share based compensation – nonemployees | ||||||||
| $ | $ | |||||||
| Non-current portion | ||||||||
| Prepaid share based compensation – nonemployees | ||||||||
| Prepayments | ||||||||
| $ | $ | |||||||
The Company accounts for share-based compensation in accordance with ASC 718 based on the grant-date fair value of the awards. When awards are granted to non-employees in advance of the related services, the Company records the fair value as prepaid share-based compensation and recognizes the expense over the service period. Share-based compensation for employees is recognized over the requisite service period without the recognition of a prepaid asset. The portion of prepaid share-based compensation to non-employees expected to be recognized within twelve months is classified as a current asset, with the remainder classified as non-current. This classification reflects the expected timing of the underlying service periods as defined in the applicable agreements.
NOTE 7 – PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment is as follows:
| September 30, 2026 | June 30, 2026 | |||||||
| Plant and machinery | $ | $ | ||||||
| Office equipment | ||||||||
| Computers | ||||||||
| Motor vehicles | ||||||||
| Furniture and fittings | ||||||||
| Renovation | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Foreign exchange adjustment | ( | ) | ||||||
| Total Property, plant and equipment | $ | $ | ||||||
| ● | Depreciation
expense: For the three months ended September 30, 2026 and 2025, totaled $ | |
| ● | Impairment
losses: | |
| ● | Write-offs
of plant and machinery: |
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NOTE 8 – INTANGIBLE ASSETS
A summary of intangible assets is as follows:
| September 30, 2026 | June 30, 2026 | |||||||
| Catalytic Biofraction Process (1) | $ | $ | ||||||
| License for the Catalytic Biofraction Process (2) | ||||||||
| $ | $ | |||||||
The
amounts above represent separate components of the Company’s consolidated intangible asset carrying amount. The MYR
| (1) | |
| (2) |
The “Catalytic BioFraction Process” is a slow pyrolysis process using a proprietary catalyst to depolymerize palm biomass waste (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 waste 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.
Based on this qualitative assessment, management did not identify any events or changes in circumstances that would indicate that the carrying amounts of the Company’s intangible assets are not recoverable. Accordingly, no quantitative impairment test was deemed necessary, and no impairment losses were recognized for the year ended June 30, 2026.
Subsequently, management evaluated the situation for the three months ended September 30, 2026, and determined that no significant changes had occurred. Accordingly, it is concluded that no impairment is required.
NOTE 9 - DEPOSIT PAID
Deposits consist of the following:
September 30, 2026 | June 30, 2026 | |||||||
| Security deposit | ||||||||
| Factory site | $ | $ | ||||||
| ● | Security
Deposit: VRAP paid a security deposit of MYR |
| F-19 |
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NOTE 10 - AMOUNTS DUE TO/FROM RELATED PARTIES (INCLUDING CHAIRMAN AND CHIEF EXECUTIVE OFFICER)
The following breakdown of the balances due to related parties and director, consisted of:
| September 30, 2026 | June 30, 2026 | |||||||
| Amount due to related parties | ||||||||
| Borneo Oil Corporation Sdn. Bhd (“BOC”) (1) | $ | $ | ||||||
| Borneo Oil Berhad (“BOB”) (2) | ||||||||
| Taipan International Limited (3) | ||||||||
| Borneo Energy Sdn Bhd (2) | ||||||||
| J. Ambrose & Partners (4) | ||||||||
| SB Resorts Sdn Bhd (1) | ||||||||
| SB Supplies & Logistics Sdn Bhd (2) | ||||||||
| Borneo Eco Food Sdn. Bhd. (2) | ||||||||
| Total due to related parties | $ | $ | ||||||
| Amount due to director | ||||||||
| Mr. Jack Wong (5) | $ | $ | ||||||
| (1) | ||
| (2) | ||
| (3) | ||
| (4) | ||
| (5) |
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NOTE 11 - LEASES
The Company determines whether an arrangement is or contains a lease at inception. Right-of-use (“ROU”) assets and lease liabilities are recognized at lease commencement based on the present value of lease payments over the lease term. When the implicit rate is not readily determinable, the Company uses its incremental borrowing rate at commencement. Operating lease expense is recognized on a straight-line basis over the lease term.
The Company has elected to account for lease and non-lease components together for applicable asset classes and not to recognize ROU assets and lease liabilities for qualifying short-term leases. Certain agreements include variable payments for taxes, insurance, common area maintenance and inflation-related rent adjustments.
Lease-related assets and liabilities included in the condensed consolidated balance sheets were as follows:
| September 30, 2026 | June 30, 2026 | |||||||
| Assets | ||||||||
| Right-of-use asset (1) | $ | $ | ||||||
| Right-of-use assets (2) | ||||||||
| Total RoU assets | $ | $ | ||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| $ | ||||||||
| Liabilities | ||||||||
| Current: | ||||||||
| Operating lease liabilities | $ | $ | ||||||
| Non-current: | ||||||||
| Operating lease liabilities | $ | $ | ||||||
| Total lease liabilities | $ | $ | ||||||
Leases Arrangements:
| (1) | ||
| (2) |
For
the three months ended September 30, 2026 and 2025, ROU asset amortization associated with the Segama lease was $
The table below presents the information related to weighted average discount rate and the remaining lease term (years) of the operating leases.
| September 30, 2026 | June 30, 2026 | |||||||
| Operating leases | ||||||||
| Weighted average discount rate | % | % | ||||||
| Weighted average remaining lease term (years) | ||||||||
Accretion
of lease liability was $
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Operating lease expense, included in selling, general and administrative expenses, was as follows:
| Three months ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Operating lease expense (per ASC 842) | $ | $ | ||||||
| Total lease expense | $ | $ | ||||||
Future Contractual Lease Payments as of September 30, 2026
Undiscounted payments for operating leases recognized as of September 30, 2026, and their reconciliation to recorded lease liabilities, were as follows:
| Years ending September 30, | Operating lease amount | |||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total minimum lease liabilities payment | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
Office lease commencing after quarter-end
On
June 24, 2026, the Company entered into a
Future rental commitments under this lease, excluded from the preceding lease-liability table, are as follows:
| Years ending September 30, | Annual rental payable | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Thereafter | ||||
| $ | ||||
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NOTE 12 – WARRANTS
The Company has issued warrants to purchase shares of common stock. Warrant activity for the three months ended September 30, 2026 is summarized below:
| Number
of warrants | Weighted average exercise price | Weighted average remaining contractual term (years) | Aggregate intrinsic value | |||||||||||||
| Outstanding at June 30, 2026 | $ | $ | ||||||||||||||
| Issued | $ | - | $ | - | ||||||||||||
| Exercised | $ | - | $ | - | ||||||||||||
| Outstanding at September 30, 2026 | $ | $ | ||||||||||||||
As
of September 30, 2026, all
NOTE 13 - STOCKHOLDERS’ EQUITY
Authorized Stock
The Company has authorized shares of common stock and shares of preferred stock, both with a par value of $ per share. Each share of common stock 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 shares of preferred stock outstanding as of September 30, 2026, and June 30, 2026.
Common Stock Outstanding
Share-based awards represent unregistered securities and are subject to resale restrictions under Rule 144 of the Securities Act of 1933, as amended.
| Number
of shares | Weighted
average price per share (1) | Proceeds (1) | ||||||||||
| Outstanding at June 30, 2026 | ||||||||||||
| Issued to shareholders | - | |||||||||||
| Issued to employees and directors | - | - | ||||||||||
| Issued to non-employees | - | - | ||||||||||
| Cancellations | - | - | ||||||||||
| Outstanding at September 30, 2026 (2) | - | - | ||||||||||
| (1) | ||
| (2) |
| F-23 |
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| Three months ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Less: Net loss attributable to non-controlling interest | ||||||||
| Net loss attributable to Verde Resources, Inc. shareholders | $ | ( | ) | $ | ( | ) | ||
| Weighted average shares
of common stock outstanding, basic and diluted | ||||||||
| Net loss per share, basic and diluted | $ | ) | $ | ) | ||||
For the three months ended September 30, 2026, and 2025, diluted weighted-average shares of common stock outstanding is equal to basic weighted-average shares of common stock, 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 evaluated all share-based awards in accordance with ASC 260 and ASC 718 to determine whether any awards represented contingently issuable shares for purposes of calculating basic and diluted net loss per share. Management considered whether any awards were subject to substantive service, performance, market, forfeiture, repurchase, clawback, or other contingent provisions.
The Company determined that the shares included in weighted-average common stock outstanding were legally issued, fully vested, and nonforfeitable upon issuance. Such shares were not subject to substantive service, market, or performance conditions and were not subject to contractual forfeiture, repurchase, clawback, or automatic cancellation provisions. Upon issuance, holders possessed the same rights as all other holders of common stock, including voting, dividend and other ownership rights, and the shares were not subject to contractual restrictions on ownership, transfer or retention.
Management further considered that the shares were not subject to vesting schedules, repurchase rights, or other contractual mechanisms that would cause the shares to be treated as contingently issuable under ASC 260.
While certain shares were issued in advance of related service periods and compensation expense was recognized over those periods in accordance with ASC 718, management distinguished the accounting treatment of the related compensation expense from the determination of whether the shares were outstanding for purposes of calculating net loss per share. Because the shares were legally issued and outstanding and holders possessed the same rights as all other holders of common stock, management concluded such shares did not represent contingently issuable shares under ASC 260 and were appropriately included in weighted-average common stock outstanding upon issuance.
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NOTE 15 - INCOME TAX
The Company is subject to income taxes in the jurisdictions in which it operates. The domestic and foreign components of loss before income taxes were as follows:
| Three months ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Tax jurisdiction from: | ||||||||
| Local (U.S. regime) | $ | ( | ) | $ | ( | ) | ||
| Foreign, including | ||||||||
| British Virgin Island | ( | ) | ( | ) | ||||
| Malaysia | ( | ) | ( | ) | ||||
| Singapore | ( | ) | ||||||
| Labuan, Malaysia | ||||||||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | ||
The effective tax rate in the periods presented reflects the impact of losses incurred across various tax jurisdictions, each with different applicable income tax rates.
The Company mainly operates in the United States, Malaysia and Singapore, and is subject to taxes in the jurisdictions in which they operate, as follows:
United States of America
The
Company and its U.S. subsidiaries, Verde Renewables, VerdePlus and VLI, are subject to U.S. income tax laws, including a federal corporate
income tax rate of
British Virgin Islands
VRAP is incorporated in the British Virgin Islands and is not subject to income tax under current BVI law.
Malaysia
Verde
Malaysia and Wision are subject to Malaysian corporate income tax at a standard rate of
Singapore
The
Company operates in Singapore through its wholly owned subsidiary, VRAPPL, which is subject to a corporate income tax rate of
Labuan
Under
the current laws of the Labuan applicable to Bio Resources Limited (“BRL”), a wholly owned subsidiary of the Company, income
derived from an intellectual property right is subject to tax under the Malaysian Income Tax Act 1967 (ITA) at
| F-25 |
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The Company’s deferred tax assets by jurisdiction and related valuation allowances were as follows:
| September 30, 2026 | June 30, 2026 | |||||||
| Deferred tax liability: | ||||||||
| Share based compensation | $ | ( | ) | $ | ( | ) | ||
| Deferred tax assets: | ||||||||
| Net operating loss carry forwards, from | ||||||||
| US tax regime | $ | $ | ||||||
| Malaysia tax regime | ||||||||
| Singapore tax regime | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net | $ | $ | ||||||
Management evaluates the realizability of deferred tax assets each reporting period based on available positive and negative evidence, including historical operating results, expected future taxable income and applicable carryforward periods. Valuation allowances are recorded when it is more likely than not that some or all of the deferred tax assets will not be realized.
As of September 30, 2026, the Company maintained full valuation allowances against its net deferred tax assets in the United States and Malaysia. Changes in management’s assessment of realizability may result in adjustments to the valuation allowances and the related income tax expense or benefit.
Uncertain Tax Positions
The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. Further, the Company did not have any uncertain tax positions or events which have lead to uncertainty tax positions within the next 12 months.
Additional information regarding the Company’s income taxes is included in the notes to the condensed consolidated financial statements in its Annual Report on Form 10-K for the year ended June 30, 2026, as filed with the SEC on September 14, 2026.
NOTE 16 - RELATED PARTY TRANSACTIONS
| Three months ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Related party transactions: | ||||||||
| Services provided by: | ||||||||
| Makin Teguh Sdn Bhd (1) | $ | $ | ||||||
| (1) |
Related party balances are disclosed in Note 10.
Apart from the transactions and balances detailed elsewhere in these accompanying unaudited condensed consolidated financial statements, the Company has no other significant or material related party transactions during the periods presented.
| F-26 |
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NOTE 17 - CONCENTRATIONS OF RISKS
The Company is exposed to the following concentrations of risk:
Major Customers
For the three months ended September 30, 2026 and 2025, there was one single customer in each period, whose revenue accounted for more than 10% of total revenue.
| Revenue | ||||||||||||||||
| September 30, 2026 | September 30, 2025 | |||||||||||||||
| US$ | % | US$ | % | |||||||||||||
| Customer A | $ | % | $ | % | ||||||||||||
| Customer B | $ | % | $ | % | ||||||||||||
Accounts Receivable Concentration
Accounts receivable concentrations from customers representing more than 10% of total accounts receivable were as follows:
| Account receivable | ||||||||
| September 30, 2026 | June 30, 2026 | |||||||
| Customer A | $ | $ | ||||||
Major Vendors
The Company relies on a limited number of vendors for certain materials and services used in its operations.
For the three months ended September 30, 2026 and 2025, the Company did not have any vendors whose purchases accounted for more than 10% of total direct costs included in cost of revenue.
Accounts Payable Concentration
Accounts payable concentrations from vendors representing more than 10% of total accounts payable were as follows:
| Account payable | ||||||||
| September 30, 2026 | June 30, 2026 | |||||||
| Vendor A | $ | $ | ||||||
Revenue by Geographic Location
The revenues below are based on the countries in which the Company’s customers are located. Summarized financial information concerning the geographic locations are shown in the following table:
| Geographic locations | ||||||||
| September 30, 2026 | September 30, 2025 | |||||||
| Malaysia | $ | $ | ||||||
| United States | ||||||||
| $ | $ | |||||||
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Economic and Political Risk
The Company’s primary operations are conducted in the United States and Malaysia. Accordingly, the political, economic, and legal environments in these jurisdictions, as well as broader macroeconomic conditions may influence the Company’s business, financial condition, and results of operations.
In addition, ongoing geopolitical developments, including the armed conflict involving Iran and military actions in the Middle East, the conflict between Russia and Ukraine, and broader global trade uncertainties, have increased volatility in global economic conditions. The Middle East conflict has involved direct military strikes, retaliatory actions, and disruptions to key global trade routes and energy infrastructure, contributing to fluctuations in energy prices, inflationary pressures, and supply chain disruptions.
The extent and duration of these geopolitical and economic uncertainties remain unpredictable, and any resulting adverse developments could have a material impact on the Company’s business, financial condition, and results of operations.
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 US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
The Company enters into consulting, employment, and advisory agreements pursuant to which compensation may be paid, in whole or in part, through the issuance of shares of common stock.
Share-based awards issued under these arrangements are generally structured as separate equity awards with distinct grant dates corresponding to final board approval. Shares are issued as fully vested and nonforfeitable upon grant; however, such awards are often granted in advance of the performance of the related services. For certain arrangements, shares are awarded based on tranches covering varying service periods within the entire service agreement. Each tranche represents a separate share-based award with a distinct grant date.
These awards are legally issued, fully vested and nonforfeitable upon issuance, and recipients obtain the same ownership rights as other holders of common stock. The shares are recorded within stockholders’ equity upon issuance. For nonemployee awards that qualify for prepaid treatment, the related prepaid share-based compensation is recognized as an asset and amortized over the applicable service period as the related services are received. No prepaid share-based compensation asset is recognized for employee or director awards. The Company’s accounting policies for these arrangements are described in Note 2.
If services underlying nonemployee prepaid share-based compensation are not completed, the Company evaluates the recoverability of the remaining unamortized balance and accounts for any adjustment based on the applicable contractual terms and circumstances. The Company may seek to negotiate the voluntary cancellation of shares previously issued; however, such shares are not subject to contractual forfeiture, repurchase, or automatic cancellation provisions.
| F-28 |
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| Three months ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Employees | $ | $ | ||||||
| Directors | ||||||||
| Nonemployees | ||||||||
| Total share based compensation expense | $ | $ | ||||||
Awards Without an Established Grant Date
For certain share-based payment arrangements, the service inception date precedes the establishment of the grant date. In such cases, compensation cost is recognized based on the best estimate of the fair value of the common stock at each reporting period until the grant date is established, with a corresponding liability recorded in accordance with ASC 718.
| Three months ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Accrued compensation cost for share-based arrangements for which the grant date had not yet been established | $ | $ | ||||||
Share-Based Compensation Commitments
As of September 30, 2026, the Company had commitments to issue common stock under compensation and service agreements, as summarized below. These commitments are subject to the terms and conditions of the applicable agreements, including Board approval where required. For fixed-dollar commitments, the number of shares will be determined in accordance with the applicable agreements and Board approvals.
Fixed dollar amount | Number of shares | |||||||
| Compensation payable in common stock based on fixed dollar amounts | $ | |||||||
| Compensation payable in a fixed number of shares of common stock (1) | ||||||||
| (1) |
As of September 30, 2026, the Company remained obligated to cancel shares of common stock pursuant to a service agreement and related Service and Stock Cancellation Agreement with EMGTA LLC.
Unrecognized Stock-Based Compensation
Although shares are issued as fully vested upon grant, certain awards are granted in advance of the performance of services. Accordingly, the Company has unrecognized stock-based compensation cost related to services to be rendered in future periods.
| F-29 |
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As of September 30, 2026 and June 30, 2026:
| ● | Nonemployee awards: $ and $, respectively, to be recognized over a weighted-average period of and years remaining, respectively. | |
| ● | Employee and director awards: $ and $, respectively, to be recognized over a weighted-average period of and years remaining, respectively. |
There was no income tax benefit recognized in connection with stock-based compensation expenses.
NOTE 19 - COMMITMENTS AND CONTINGENCIES
Future lease payment obligations and stock-based compensation commitments are disclosed in Notes 11 and 18, respectively.
The Company was subject to the following contractual commitments and contingencies as of September 30, 2026:
| ● | Commitment
to make quarterly advance payments of $ | |
| ● | Commitment to allocate to Ergon 40% of the Company’s share of carbon removal credits generated from qualifying BioAsphalt™ products, provided such credits arise from bulk-mixed or packaged mixed products containing biochar purchased from the Company. |
C-Twelve License
On May 19, 2025, the Company entered into a Joint Development Agreement with C-Twelve Pty Ltd. (“C-Twelve”) providing an exclusive ten-year license to certain binder and biochar asphalt technologies in the United States. An amendment dated October 8, 2025 expanded the licensed territory to Canada and Mexico. The Company is not currently utilizing the licensed technologies.
Under
the agreement, as amended, Verde Renewables committed to pay an additional license fee of $
The required funding was not provided by July 31, 2026, giving C-Twelve the right, upon ten business days’ notice, to declare the Company in breach of the agreement. As of September 30, 2026, the funding obligations remained outstanding.
NOTE 20 - SUBSEQUENT EVENTS
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 condensed consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after September 30, 2026, up through the date the Company issued the condensed consolidated financial statements.
Private Placement
On October 7, 2026, the Company commenced a
private placement offering of up to $
C-Twelve License and Contractual Dispute
On May 19, 2025, the Company entered into a Joint Development Agreement with C-Twelve Pty Ltd. (“C-Twelve”) providing an exclusive ten-year license to certain binder and biochar asphalt technologies (which is referred to as Verde V24) in the United States. An addendum effective October 8, 2025, expanded the licensed territory to Canada and Mexico. The Company is not currently utilizing the licensed technologies.
Under
the agreement, as amended, the Company committed to pay an additional license fee of $
The agreement provides for minimum annual purchases of Verde 24, including 400,000 liters for calendar year 2026. As of September 30, 2026, the Company had not placed purchase orders during 2026 because, as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2026, a report from the National Center for Asphalt Technology indicated that the C-Twelve binder and biochar asphalt technologies remain in development and are not yet ready for commercial deployment.
Subsequent
to quarter-end, the Company received a letter dated October 28, 2026, from counsel for C-Twelve alleging breaches of the agreement and
related addendum, including provisions concerning minimum purchases, royalties, competition, sublicensing and the expansion payment.
C-Twelve demands approximately $
The Company disputes C-Twelve’s allegations and intends to vigorously defend its position and protect its rights, is consulting with legal counsel, and will respond to C-Twelve as appropriate.
| F-30 |
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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed financial statements and the related notes appearing elsewhere in this Quarterly Report. See “Cautionary Note Regarding Forward-Looking Statements.” Actual results could differ materially from those discussed below.
Overview
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 #TransitiontoZero®. Our proprietary product BioAsphalt™ incorporates a highly engineered blend of biochar, a powerful carbon sequestering material, into asphalt infrastructure with the goal of reducing emissions, improving performance, and lowering overall costs. 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 potentially at the forefront of sustainable innovation in the construction and building materials sector, an industry we believe is long overdue for transformation. We primarily operate through our wholly-owned U.S. subsidiary Verde Renewables, headquartered in St. Louis, Missouri.
Our strategic roadmap for helping achieve net-zero emissions—what we call our Verde Net Zero Blueprint—has achieved the following significant milestones in its evolution to date:
| ● | 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. | |
| ● | the successful laboratory-level validation by the National Center for Asphalt Technology (“NCAT”) of our BioAsphalt™ 100% reclaimed asphalt pavement (“RAP”) cold recycling mix incorporating our engineered biochar and an engineered cationic emulsion manufactured by Ergon. In February 2026, NCAT’s latest laboratory testing demonstrated that the 100% RAP BioAsphalt™ cold recycling formulation met or exceeded the applicable industry specifications evaluated during testing. The results demonstrated superior cohesion, high tensile strength ratio, a measure of the loads or stretching forces a material can sustain before permanently bending or breaking, (“TSR”), and retained stability compared to standard cold mix benchmarks, validating its strength, durability, and moisture resistance. |
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Our Verde Net Zero Blueprint is comprised of our portfolio of proprietary and tested 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.
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 relationships. In particular, 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, potentially 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 testing and validations activities completed to date with groups such as NCAT and Puro.earth, we are now focused on commercializing our solutions in the United States, our most strategic market. To this end, in October 2025 we entered into an exclusive licensing agreement with 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. Building on that relationship, we recently entered into a Master Commercialization and Collaboration Agreement (“MCCA”) with Ergon establishing us as Ergon’s preferred vendor of engineered biochar and engaging us as the supplier of biochar for an initial cold mix road paving product project. 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.
We plan to expand operations and generate and grow revenue in the coming years primarily through marketing and selling our proprietary biochar and other road technologies to and through Ergon 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 potentially enable rapid scalability and revenue generation.
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In addition, we are advancing the implementation of our Verde NetZero Blueprint in Southeast Asia, where we have had our BioFraction facility in Sabah, Borneo since 2021. BioFraction refers to the biological fractionalization of waste through pyrolysis, a thermal decomposition process in an oxygen-free environment that converts organic waste into valuable outputs including biochar, biofuel, bio-syngas, and wood vinegar. At our BioFraction facility, we plan to convert palm oil waste into biochar and other renewable byproducts. The BioFraction facility was strategically placed into dormant status in recent years in order to prioritize our U.S.-based proof-of-concept activities with NCAT, although we have continued regular maintenance and test production runs to preserve its operational capability. We currently anticipate restarting and ramping up operations at the BioFraction facility during 2027 as we advance commercialization activities and complete planned pilot projects in Southeast Asia. We expect that successful completion of these projects could increase demand for our engineered biochar in the region and create additional licensing opportunities, which could, in turn, require increased production capacity at the BioFraction facility.
Environmental Attributes and Carbon Credits
Puro.earth, a crediting platform for durable carbon removal, has officially registered our Company as a Carbon Removal Credit supplier as part of its Accelerate program. This registration was formalized through a platform agreement signed in April 2023. We are positioned to potentially create additional revenue opportunities through the generation of carbon removal credits (“CORCs”). We believe that the generation of CORCs and the demand for CORCs incentivizes the broader adoption of climate technologies and enables us to supply these credits to companies seeking to offset their carbon footprint in pursuit of net-zero objectives. Simultaneously, this approach creates the potential for an additional and substantial revenue stream for us.
In addition, on March 9, 2026, we engaged with Isometric (a leading certifier of carbon removal) in connection with the audit and verification of our BioFraction™ facility in Sabah, Borneo, to support the production of biochar and the potential generation of carbon removal credits associated with the use of engineered carbon in our road technologies. We view Isometric as a complementary carbon registry and methodology provider alongside Puro.earth and believe maintaining relationships with multiple registries may support future commercialization and expansion efforts across North America and other international markets.
Technology Development and Validation
On June 27, 2024, we entered into an agreement with NCAT at Auburn University to undertake a 3-year Performance Testing Project titled “Structural Capacity of Sustainable Pavement” (the “Project”). The Project, led by Dr. Nam Tran, Associate Director and Research Professor at NCAT, involved a 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. 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. The Project commenced on June 24, 2024, and includes ongoing field demonstrations, performance evaluations and laboratory testing of our cold-mix BioAsphalt™ technologies at NCAT. The Project is expected to conclude on September 30, 2027, with the first draft of the final report expected in Spring 2027.
Our work with NCAT has included the evaluation of distinct BioAsphalt™ formulations, including a 100% reclaimed asphalt pavement (“RAP”) cold recycling formulation utilizing our engineered biochar and an engineered emulsion manufactured by Ergon.
100% RAP Cold Recycling Development
As part of the Project, our Company and NCAT developed and evaluated a 100% RAP cold recycling BioAsphalt™ formulation incorporating our engineered biochar and an engineered cationic emulsion manufactured by Ergon. In February 2026, NCAT laboratory testing of this formulation, conducted in accordance with ASTM D6927 (Marshall Stability and Flow), ASTM D6931 (Indirect Tensile Strength), and AASHTO T283 (Moisture Susceptibility), demonstrated that the formulation met or exceeded applicable industry specifications evaluated during testing. Results showed superior cohesion, high tensile strength ratio (“TSR”) and retained stability compared to standard cold-mix benchmarks, supporting the formulation’s strength, durability and moisture resistance.
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The 100% RAP cold recycling formulation is the technology platform we currently intend to advance toward commercialization with Ergon. As part of its go-forward development strategy, we intend to incorporate additional industry testing capabilities earlier in the development process to generate initial performance data and utilize Paragon, Ergon’s technical arm, for additional technical testing and validation. NCAT is expected to remain an important independent research and third-party validation resource, including for additional independent testing and validation, as appropriate, we continue to develop and commercialize new road materials and applications.
Recent Developments
Ergon Master Commercialization and Collaboration Agreement
On July 1, 2026, Verde Renewables entered into the MCCA with Ergon, whereby Verde Renewables shall act as a supplier of biochar to Ergon on a preferred vendor basis and provide carbon credit monetization and related services to Ergon, and Ergon shall endeavor to use its good faith efforts to develop, manufacture, and market products containing our engineered biochar, with the initial Ergon-Verde Product being a cold mix road paving product. See “Note 3. Strategic Commercial Agreements” of our condensed consolidated financial statements included in this Quarterly Report for more information.
Highway International Pte. Ltd. Memorandum of Understanding
On August 26, 2026, VRAPPL entered into the Highway MoU with Highway, a Singapore-based integrated asphalt and road-infrastructure company, establishing a strategic framework for the proposed deployment, validation, commercialization and licensing of our engineered biochar carbon platform in Singapore. Under the Highway MoU, the parties intend to collaborate on an initial pilot project with Singapore’s LTA to evaluate the technology’s technical performance, production readiness, carbon accounting, digital MRV framework, and broader commercial rollout potential. Subject to successful pilot validation and LTA sign-off, feasibility studies, mutual due diligence, applicable regulatory approvals, and the negotiation and execution of definitive agreements, the parties intend to pursue an exclusive licensing arrangement for the use and commercialization of our engineered biochar carbon platform in Singapore. This arrangement would be expected to include minimum biochar purchase commitments, commercial supply terms, technical support, and provisions relating to carbon removal credit generation and sustainability. While it is non-binding and serves principally as a framework for future exploration and potential binding agreements, we believe the Highway MoU represents an important step in our strategy to establish Singapore as a regional launchpad for commercializing our technologies and potential expansion throughout the Asia-Pacific region. See “Note 3. Strategic Commercial Agreements” of our condensed consolidated financial statements included in this Quarterly Report for more information.
Environmental Product Declaration
On October 13, 2026, we announced the completion of third-party verification and publication of the Environmental Product Declaration (“EPD”) for our engineered biochar through the ASTM International EPD library. Developed following a life cycle assessment conducted by WAP Sustainability, part of SLR, the EPD provides standardized environmental-impact data to assist customers and infrastructure partners in evaluating products incorporating our engineered biochar. We expect the EPD to support our commercialization activities with Ergon under our 10-year Master Commercialization and Collaboration Agreement and our international licensing initiatives, including the planned pilot program with Highway International Private Limited in Singapore. The environmental data also supports our work with Isometric to advance the quantification and verification of eligible carbon removals associated with infrastructure applications. Publication of the EPD does not itself constitute issuance or certification of carbon removal credits. The timing and extent of any resulting revenue remain dependent on further technical validation, customer adoption and execution of our commercialization initiatives.
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TerraZyme Test Results
On November 11, 2026, we announced findings from a two-year study at the National Center for Asphalt Technology (NCAT) at Auburn University showing that a pavement section incorporating our TerraZyme-based soil stabilization technology achieved comparable overall pavement performance to a conventional control section while using approximately 61% less cement in the stabilized base and eliminating lime treatment from the subgrade. The results support further evaluation of TerraZyme as a material-efficient approach to road construction, pavement rehabilitation and soil stabilization, particularly where challenging soils require substantial treatment or replacement.
Extension of Memorandum of Understanding with Nature Plus, Inc.
On November 5, 2026, the Company and Nature Plus, Inc. (“NPI”) entered into an amendment to the memorandum of understanding (the “NPI MOU”) originally executed on August 14, 2024, to extend the term of the NPI MOU for an additional two years effective January 1, 2027. We entered into the NPI MOU to formalize our collaboration on the NCAT test track project in connection with testing of TerraZyme and to explore subsequent business opportunities arising from the successful completion of the NCAT testing.
Engagement of ThinkEquity
On October 23, 2026, we engaged ThinkEquity LLC (“ThinkEquity”) as our exclusive advisor to provide general corporate, strategic, financial and capital markets advisory services. The engagement supports our efforts to evaluate and prepare for a potential listing on a national securities exchange.
Relocation of Principal Executive Offices
In October 2026, we relocated of our principal executive offices to 7800 Forsyth Blvd., Suite 850, St. Louis, Missouri. The new office lease commenced on October 1, 2026 and has a term of 62 months. See “Note 11 Leases” to the accompanying condensed consolidated financial statements for additional information regarding the lease.
Key Factors that Affect Our Results of Operations
We believe the following key factors may affect our financial condition and results of operations:
| ● | MCCA and Ergon License: Our commercial relationship with Ergon is expected to support the commercialization and broader deployment of our sustainable infrastructure technologies and contribute to future revenue through licensing, product sales, and related commercial opportunities. | |
| ● | Engineered Biochar Supply: Our ability to scale the production and supply of high-quality engineered biochar in order to support an increase in customer demand, commercial project deployments, and our goal of long-term revenue growth. | |
| ● | Adoption of Biochar-Asphalt Technology: Market acceptance of the Verde Net Zero Blueprint technologies by contractors, state Departments of Transportation, governmental authorities outside the United States (such as in Singapore, Canada and Mexico) and private sector customers will influence royalty streams and future expansion opportunities. | |
| ● | Carbon Credit Monetization: The issuance, pricing, and sales by us 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: We are committed to continuous improvement and innovation on our core technologies to enhance performance, durability, and environmental benefits. | |
| ● | Maintaining the Quality of our Products: We seek to maintain robust quality assurance and measurement systems to confirm that all licensed products consistently meet our technical specifications and industry standards. |
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Results of Operations
The following table sets forth selected financial information from our statements of comprehensive loss for the three months ended September 30, 2026 and 2025:
| Statement of Operation | September 30, 2026 | September 30, 2025 | Change | |||||||||||||
| (Unaudited) | (Unaudited) | US$ | % | |||||||||||||
| Revenue | $ | 37 | $ | 2,269 | $ | (2,232 | ) | (98 | )% | |||||||
| Cost of revenue | 90 | 1,335 | (1,245 | ) | (93 | )% | ||||||||||
| Gross (loss) profit | (53 | ) | 934 | (987 | ) | (106 | )% | |||||||||
| Selling, general and administrative expenses | 515,340 | 539,195 | (23,855 | ) | (4 | )% | ||||||||||
| Research and development expenses | 296,128 | 349,781 | (53,653 | ) | (15 | )% | ||||||||||
| Other operating expenses | 60,721 | 55,896 | 4,825 | 9 | % | |||||||||||
| Loss from operation | (872,242 | ) | (943,938 | ) | 71,696 | 8 | % | |||||||||
| Other income | 4,161 | 24,383 | (20,222 | ) | (83 | )% | ||||||||||
| NET LOSS | $ | (868,081 | ) | $ | (919,555 | ) | 51,474 | 6 | % | |||||||
Revenue
| ● | Revenue for the period ended September 30, 2026 was $37, representing a decrease of $2,232, or 98%, compared to $2,269 for the prior year. | |
| ● | Revenue for the period ended September 30, 2026 was primarily derived from Biochar sales at the subsidiary level. | |
| ● | Revenue during the current period was limited as the Company remained focused on advancing commercialization initiatives, strategic partnerships and market development activities. These efforts are intended to support the Company’s transition toward broader commercial deployment and future revenue generation from its sustainable infrastructure technologies and related products |
Cost of revenue
| ● | Cost of revenue for the period ended September 30, 2026 was $90, representing a decrease of $1,245, or 93%, compared to $1,335 for the period ended September 30, 2025. | |
| ● | The decrease was primarily attributable to the significantly lower level of product sales during the current period. Cost of revenue consists primarily of costs directly attributable to products sold, including applicable procurement and fulfillment costs. |
Gross profit
| ● | Gross loss for the period ended September 30, 2026 was $53, compared to gross profit of $934 for the period ended September 30, 2025. | |
| ● | The change was primarily attributable to the lower level of revenue recognized during the current period relative to the associated cost of revenue. |
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Selling, General and Administrative Expenses
| ● | Selling, general and administrative expenses for the period ended September 30, 2026 was $515,340, representing a decrease of $23,855, or 4%, compared to $539,195 for the period ended September 30, 2025. | |
| ● | The decrease was primarily attributable to: |
| ○ | a reduction in share-based compensation expense for nonemployee consultants, as the related service periods for certain consultants were completed during the second quarter of fiscal year 2026 in accordance with their respective consulting and advisory agreements; and | |
| ○ | lower employee share-based compensation expense recognized during the three months ended September 30, 2026, compared with the prior-year period. The decrease reflected differences in the grant-date fair values of equity awards granted in prior periods and the related compensation expense recognized during each period. |
| ● | These decreases were partially offset by an increase in legal and professional fees of $110,941, reflecting higher legal, accounting, audit and other professional advisory activities during the current quarter, as well as approximately $13,000 of website and graphic design costs. |
Research and Development Expenses
| ● | Research and development expenses for the period ended September 30, 2026 was $296,128, representing an decrease of $53,653, or 15%, compared to $349,781 for the period ended September 30 2025. | |
| ● | The decrease was primarily attributable to: |
| ○ | lower personnel costs allocated to research and development as executive management devoted more time to corporate strategy and overall business development. Other research and development costs, including vendor, licensing and consulting expenses, remained relatively consistent with the prior-year period. |
Other operating expenses
| ● | Other operating expenses for the period ended September 30, 2026 was $60,721, an increase of $4,825, or 9%, compared to $55,896 for the period ended September 30 2025. | |
| ● | These expenses primarily relate to costs associated with maintaining and preparing the BioFraction facility in Sabah, Borneo, for reactivation. The facility was strategically placed into dormant status as we prioritized our North American operations, while continuing necessary maintenance to preserve its operational capability. The increase during the period was primarily attributable to higher maintenance and recommissioning costs as we prepare the facility for the potential resumption of operations. |
Other income
| ● | Other income for the period ended September 30, 2026 was $4,161, representing a decrease of $20,222, or 83%, compared to $24,383 for the three months ended September 30, 2025. | |
| ● | The decrease was primarily attributable to the absence of an unrealized foreign exchange gain of approximately $17,339 recognized during the prior-year period and a decrease in interest income to $825 during the current period from $7,044 in the prior-year period. These decreases were partially offset by approximately $3,336 of other income recognized during the three months ended September 30, 2026. |
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Net loss
| ● | Net loss for the three months ended September 30, 2026 was $868,081, a decrease of $51,474, or 6%, compared to net loss of $919,555 for the three months ended September 30, 2025. | |
| ● | The decrease in net loss was primarily attributable to an $83,978 decrease in selling, general and administrative expenses, partially offset by a $20,222 decrease in other income, increases of $6,470 in research and development expenses and $4,825 in other operating expenses, and a $987 decline in gross profit. |
Need for Additional Capital
Our ability to generate meaningful, sustainable revenue and achieve profitability depends substantially on the successful commercialization and market acceptance of our sustainable infrastructure technologies and biochar-related products. Our commercialization efforts may not proceed according to our anticipated timelines, achieve market acceptance, or generate sufficient revenue to support our operations.
Our business remains subject to risks associated with the commercialization and expansion of our sustainable infrastructure platform, including limited capital resources; uncertain and potentially fluctuating revenue streams; customer and strategic partner concentration; reliance on third-party manufacturers, suppliers, and service providers; delays in project implementation, customer acceptance, and commercialization; the availability and cost of biochar, raw materials, transportation, and labor; and the need to obtain applicable certifications, permits, regulatory approvals, and other third-party validations. Any of these factors could increase our costs, delay commercialization, or adversely affect demand for our technologies and products. We cannot guarantee we will be successful in commercializing our products at scale or in our business generally.
Historically, we have financed our operations primarily through the issuance of equity securities, and we may require additional financing to support our operations and execute our business plan. Our future capital requirements will depend on, among other things, the pace of commercialization, customer adoption, expansion into new markets, and the timing of licensing opportunities. Additional financing may not be available when required or on terms acceptable to us. If we are unable to obtain sufficient financing, we may be required to delay, reduce, or discontinue certain operations, commercialization activities, or expansion initiatives, which could materially and adversely affect our business, financial condition, and results of operations. Any future issuance of equity securities may result in substantial dilution to our existing shareholders.
Liquidity and Capital Resources
Our primary sources of liquidity are cash generated from private placements of our common stock and revenue from the sale of our products. Our ability to generate cash from operations depends largely on the successful commercialization and sale of our products. Cash and cash equivalents totaled $1.2 million for each of September 30, 2026 and September 30, 2025.
The following summarizes the key component of our cash flows for the three months ended September 30, 2026 and 2025.
| Cash Flow Date | September 30, 2026 | September 30, 2025 | ||||||
| Net cash used in operating activities | $ | (641,871 | ) | $ | (777,851 | ) | ||
| Net cash provided by investing activities | - | 500,000 | ||||||
| Net cash provided by financing activities | - | 448,000 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 19,726 | (15,722 | ) | |||||
| Net (decrease) increase in cash and cash equivalents | $ | (622,145 | ) | $ | 154,427 | |||
| Cash and cash equivalents beginning of period | 1,786,407 | 1,021,112 | ||||||
| Cash and cash equivalents at end of period | $ | 1,164,262 | $ | 1,175,539 | ||||
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Net cash used in operating activities.
| ● | Net cash used in operating activities was $641,871 for the period ended September 30, 2026, representing a decrease of $135,980, or 17%, compared to $777,851 for the period ended September 30, 2025. | |
| ● | The decrease was primarily attributable to a lower net loss compared to the prior year, together with non-cash adjustments, partially offset by changes in operating assets and liabilities. | |
| ● | Net cash used in operating activities reflected: |
| ○ | net loss of $868,081; | |
| ○ | partially offset by non-cash adjustments of $262,133; and | |
| ○ | net cash used in changes in operating assets and liabilities of $35,923. |
| ● | Non-cash adjustments primarily reflected: |
| ○ | depreciation of $56,086; | |
| ○ | amortization of right-of-use assets of $25,714; | |
| ○ | share-based compensation of $114,800 to nonemployees; | |
| ○ | share-based compensation of $50,746 to employees; and | |
| ○ | operating lease expense of $14,787. |
| ● | Changes in working capital primarily reflected: |
| ○ | an increase in accounts receivable of $3,337; | |
| ○ | decreases in accounts payable and payments of operating lease liabilities; and | |
| ○ | increases in prepayments, repayments of advances from a director and related parties and accrued liabilities. |
| ● | Cash used in operating activities primarily reflects the company’s net loss, adjusted for non-cash items and changes in working capital. |
Net Cash Provided by Investing Activities
| ● | There was no net cash from investing activities for the period ended September 30, 2026 compared to $500,000 in the corresponding period of the previous year. | |
| ● | Net cash provided by investing activities for the period ended September 30, 2025 primarily reflected withdrawal of $500,000 from a matured certificate of deposit to support general working capital and operating activities; |
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Net Cash Provided by Financing Activities
| ● | There was no net cash from financing activities for the period ended September 30, 2026 compared to $448,000 in the corresponding period of the previous year. | |
| ● | Financing activities during the period ended September 30, 2025 consisted of $448,000 proceeds from several private placements of common stock. |
Critical Accounting Estimates
The preparation of our unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as related disclosures of contingent assets and liabilities. These estimates and assumptions are based on historical experience, current market conditions and various other factors that management believes to be reasonable under the circumstances. Actual results may differ materially from those estimates.
Management believes that the accounting estimates involving significant judgment and estimation primarily relate to:
| ● | impairment of long-lived assets and intangible assets; | |
| ● | allowance for expected credit losses; | |
| ● | revenue recognition; | |
| ● | stock-based compensation; | |
| ● | classification of warrants; | |
| ● | deferred taxes; and | |
| ● | uncertain tax positions. |
Management evaluates its estimates and assumptions on an ongoing basis and adjusts such estimates prospectively when facts and circumstances change. Certain of these estimates require the use of significant assumptions and judgments, including assumptions related to future operating results, market conditions, economic trends and the interpretation and application of applicable accounting guidance.
For additional information regarding our significant accounting policies and critical accounting estimates, see Note 2 – Summary of Significant Accounting Policies included in the unaudited condensed consolidated financial statements contained in this Quarterly Report.
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Working Capital
Liquidity and Accumulated Deficit
As of September 30, 2026 compared to June 30, 2026:
| ● | Cash and cash equivalents: $1,164,262 and $1,786,407, respectively (decrease of $622,145 or 35%). The decrease primarily reflects cash used to fund the Company’s operating activities during the three months ended September 30, 2026. Net cash used in operating activities during the period was $641,871, while there were no cash flows from investing or financing activities. | |
| ● | Accumulated deficit: $22,510,580 and $21,642,499, respectively (increase of $884,785, or approximately 4%), primarily reflecting continued investment in the development and commercialization of our products and operations. |
Our future liquidity requirements include rental payments under a 62-month lease for office premises commencing October 1, 2026. Total contractual rental payments over the lease term are approximately $1.04 million. See Note 11 - Leases for additional information.
Our future liquidity requirements may also include a $1.0 million license fee and financing of at least $2.0 million under the C-Twelve agreement, subject to its terms. The funding remains outstanding. See Note 19 - Commitments and Contingencies for additional information.
We expect to seek additional funding for our operations over the next twelve months through additional public and private offerings of our securities.
Our primary source of cash is currently generated from the sale of our securities. We will need to raise additional funds beyond our current working capital balance in order to finance future development of our products and services until such time as future revenues are achieved. We anticipate generating revenue in the future from our relationship with Ergon; however, there can be no assurances that sufficient revenue will be generated or that revenues, if any are achieved, will be sufficient to fund our operations on a profitable basis, particularly given our negotiated 15 month “go to market” period with Ergon.
As we continue to make progress commercially, we believe we will have potential opportunities to strengthen our balance sheet as needed including, but not limited to, debt and/or equity financing, as well as through additional potential licensing arrangements. All these financing options should provide our company with flexibility as we continue working to drive shareholder value. However, we may not be able to obtain financing on favorable terms when needed, or at all. Our ability to obtain additional financing will be subject to a number of factors, including market conditions, fluctuations in interest rates, our operating performance and investor sentiment. If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay or scale back our operations or obtain funds by entering into agreements on unfavorable terms. Failure to obtain additional capital on acceptable terms, or at all, would result in a material and adverse impact on our operations.
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 are material to investors.
Trend Information
Other than as disclosed elsewhere in this Quarterly 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.
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ITEM 3: Quantitative and Qualitative Disclosure About Market Risk
As a “smaller reporting company”, we are not required to provide the information by this Item.
ITEM 4: Controls and Procedures
Disclosure Controls and Procedures
Under the supervision and with the participation of our senior management, including our principal executive officer and principal financial officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Quarterly Report. We are continuing to enhance our internal control environment; however, as a smaller reporting company with limited personnel, we have identified certain material weaknesses that still require further remediation. These include (1) constraints inherent in a small finance team that impact segregation of duties, (2) the need for additional formalization and documentation of accounting policies, procedures, and review controls, (3) the need for regulatory reporting processes and oversight, (4) the absence of an internal audit function to independently assess and monitor the effectiveness of internal controls, and (5) the lack of a functioning audit committee to provide appropriate oversight of the financial reporting and internal control process. Since March 2026, the Company has supplemented its financial reporting resources through the engagement of an external advisor with public-company financial reporting and SEC compliance expertise. This engagement forms part of management’s remediation efforts, together with enhancements to accounting procedures, documentation, and review controls.
Changes in Internal Control over Financial Reporting
During the three months ended September 30, 2026, management continued its efforts to improve the Company’s internal control over financial reporting, including continued support from an external advisor with public-company financial reporting and SEC compliance expertise. Although this support has strengthened the Company’s financial reporting resources, the related material weakness has not been remediated as of yet.
As such, there were no changes during the quarter that materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting. Remediation efforts remain ongoing, and all five material weaknesses described above remained unremediated as of September 30, 2026.
Inherent Limitations of Controls
Internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. Because of inherent limitations, internal controls may not prevent or detect all misstatements. In addition, the design, implementation, and effectiveness of controls may be affected by changes in conditions over time. Accordingly, even effective internal controls can provide only reasonable, not absolute, assurance that the objectives of the control system will be achieved.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be subject to legal proceedings, investigations and claims incidental to the conduct of our business.
We are not a party to, nor are we aware of, any legal proceedings, investigations or claims which, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition or results of operations.
Item 1A. Risk Factors
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. Our current risk factors are set forth in our Annual Report on Form 10-K for the fiscal year ended June 30, 2026, filed with the SEC on September 14, 2026.
Except as set forth below, there have been no material changes to the risk factors previously disclosed in the 2026 Form 10-K.
We have not funded certain amounts under our agreement with C-Twelve, and C-Twelve has asserted that we are in breach of the C-Twelve Agreement. Any dispute arising under the C-Twelve Agreement, whether resolved in our favor or not, could require significant time and resources of our company to be devoted to it, and could have adverse effects on our business, financial condition, and results of operations, as well as other adverse consequences.
Under the C-Twelve Agreement, we hold an exclusive ten-year license in the United States, Canada and Mexico relating to Verde V24. Pursuant to the C-Twelve Agreement and related addendum, we were required to pay C-Twelve an additional $1.0 million exclusive licensing fee and provide C-Twelve with a $2.0 million loan. If such funding was not achieved by July 31, 2026, C-Twelve has the right, upon ten business days’ notice, to hold us in breach of the C-Twelve Agreement. As of the date of this Quarterly Report, we have not provided C-Twelve with the $2.0 million loan or the $1.0 million licensing fee.
In August 2026, we received the completed NCAT report relating to testing of material utilizing C-Twelve’s emulsifier. The findings indicated that the C-Twelve binder and biochar asphalt technologies remain in development and are not yet ready for commercial market deployment. We have shared the report with C-Twelve and have communicated with C-Twelve regarding the report and its findings. On October 28, 2026, we received a letter from C-Twelve (the “Notice”) notifying us that C-Twelve considers us in breach of the C-Twelve Agreement , including provisions concerning minimum purchases, royalties, competition, sublicensing and the expansion payment. C-Twelve demands approximately $13.2 million relating to alleged minimum purchase obligations over the remaining contractual term, the $1.0 million expansion payment, and unspecified royalties, and requests that the Company cease certain allegedly competing product development activities. We dispute C-Twelve’s allegations and intend to vigorously defend our position and protect our rights.
Our current go-forward commercialization strategy with Ergon does not contemplate the use of Verde V24 and instead focuses on combining Ergon’s asphalt liquids, including emulsions and liquid binders, with our engineered biochar for multiple road applications. Accordingly, we do not currently expect our decision not to utilize Verde V24 in our go-forward commercialization strategy to materially adversely affect our business growth. However, the C-Twelve Agreement still remains in effect at this time, and any dispute regarding our obligations under the C-Twelve Agreement, including as a result of the alleged breach of the C-Twelve Agreement contained in the Notice, could require us to renegotiate the agreement, incur additional costs, engage in litigation or arbitration, or otherwise expend management and financial resources, any of which could adversely affect our business, liquidity, financial condition and results of operations. Should any dispute under the C-Twelve Agreement result in arbitration, litigation or similar proceedings, there can be no assurance that any defense of our position, or the outcome any such proceedings, will be successful. If we are required to devote substantial time or resources to such proceedings, regardless of the outcome, such proceedings could have material adverse effects on our business, liquidity, financial condition or results of operations.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
None
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine and Safety Disclosure
Not applicable.
Item 5. Other Information
No
director or Section 16 officer
Item 6. Exhibits
The following is a complete list of exhibits filed or furnished, as applicable, as part of this Quarterly Report on Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.
| Exhibit | Description | |
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1** | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2** | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS* | Inline XBRL Instance Document | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Filed herewith. | |
| ** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: November 12, 2026 | VERDE RESOURCES, INC. | |
| By: | /s/ Jack Wong | |
| Jack Wong | ||
Chief Executive Officer (Principal Executive Officer) |
||
| By: | /s/ Sherina Chui | |
| Sherina Chui | ||
Chief Financial Officer (Principal Financial and Accounting Officer) |
||
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