Verde Resources, Inc. 2024 10-K Review: A Transition to Sustainability

Introduction

Verde Resources, Inc. (VRDR) has been making significant strides in transitioning from its traditional mining operations to a focus on renewable energy and sustainable development. This shift is evident in their 2024 10-K filing, which outlines the company's strategic direction, financial performance, and the challenges it faces. This review will delve into the key aspects of the 10-K filing, providing insights into the company's business model, financial health, and potential risks.

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Business Overview

Verde Resources, Inc. is a Nevada-based company that has pivoted towards becoming a leader in Net Zero road construction and building materials. The company integrates biochar, a carbon sequester, into its products to enhance sustainability. This transition is part of a broader strategy to address climate change and environmental challenges.

The company operates through several subsidiaries, including Verde Renewables, Inc. in Missouri, and Verde Resources (Malaysia) Sdn Bhd. The focus is on converting palm waste into biochar and other sustainable byproducts, with operations in Borneo, Malaysia, and a test track partnership in the U.S. with the National Center for Asphalt Technology (NCAT).

Financial Performance

Revenue and Profitability

For the fiscal year ending June 30, 2024, Verde Resources reported revenues of $96,584, a slight decrease from $100,777 in 2023. The company achieved a gross profit of $33,606, a significant improvement from a gross loss of $137,376 in the previous year. This improvement is attributed to the cessation of operations in the production and distribution of renewable commodities, which reduced costs.

Operating Expenses

The company reported selling, general, and administrative expenses of $2,882,376, down from $3,216,022 in 2023. This decrease is primarily due to reduced consultancy fees and the disposal of its mining business. However, the company still reported a net loss of $3,187,774, an improvement from the $3,998,960 loss in 2023.

Cash Flow and Liquidity

Verde Resources' cash flow from operations was negative, with a net cash outflow of $2,042,064. The company raised $4,081,720 through financing activities, primarily from the issuance of common stock. As of June 30, 2024, the company had cash and cash equivalents of $279,137.

Strategic Initiatives

Verde Resources is actively pursuing strategic partnerships and projects to enhance its sustainability agenda. The company has entered into agreements with various entities to develop biochar-asphalt technology and other carbon-negative products. These initiatives are expected to generate Carbon Removal Credits (CORCs), providing a new revenue stream.

The company is also involved in a 3-year Performance Testing Project with NCAT to evaluate sustainable pavement technologies. This project aims to generate Carbon Removal Credits and drive the adoption of net-zero road construction.

Risk Factors

Key Personnel and Operational Risks

The company is heavily reliant on its CEO, Jack Wong, and other key personnel. The loss of these individuals could adversely affect operations. Additionally, the company faces risks related to its international operations, particularly in Malaysia, where regulatory and economic conditions could impact business.

Financial and Market Risks

Verde Resources has a history of net losses and may require additional capital to sustain operations. The company is also exposed to market risks, including changes in interest rates and global economic conditions.

Legal and Compliance Risks

The company must comply with various environmental regulations, which could result in increased costs. Additionally, as a "penny stock," Verde Resources faces challenges related to market perception and trading restrictions.

Conclusion

Verde Resources, Inc. is at a pivotal point in its transition to a sustainable business model. While the company has made progress in reducing losses and securing strategic partnerships, it still faces significant challenges. The success of its initiatives in generating Carbon Removal Credits and achieving profitability will be crucial in determining its future viability.

Investors should consider the company's potential for growth in the green technology sector against the backdrop of its financial and operational risks. With a focus on innovation and sustainability, Verde Resources has the opportunity to carve out a niche in the burgeoning market for eco-friendly construction materials.