Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.x[ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large"large accelerated filer,” “accelerated filer”" "accelerated filer" and “smaller"smaller reporting company”company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | ¨ |
Non-accelerated filer | ¨ | Smaller reporting company | x |
(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes [ ] o No [X]x
The aggregate market value of Common Stockthe voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold of $0.05 (or the Registrant on December 31, 2012, was $Nil based on a $Nil average bid and asked price of such common equity,equity) as of the last business day of the registrant’s most recently completed second fiscal quarter. (Therequarter, being December 31, 2015, was no bid or ask price of our common shares during this quarter).$3,740,308.
Indicate the number of shares outstanding of each of the registrant’sregistrant's classes of common stock as of the latest practicable date.
3,977,50091,288,909 as of September 30, 2013
26, 2016
DOCUMENTS INCORPORATED BY REFERENCE
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Part I
Cautionary Note Regarding Forward-Looking Statements
Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes”"expects," "anticipates," "intends," "believes" and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the sections “Business,” “Risk Factors”"Business," "Risk Factors" and “Management’s"Management's Discussion and Analysis of Financial Condition and Results of Operations.”" You should carefully review the risks described in this Annual Report on Form 10-K and in other documents we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.
Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
All references in this Form 10-K to the “Company,” “Verde,” “we,” “us”"Company," "Verde," "we," "us" or “our”"our" are to Verde Resources, Inc.
Description of BusinessOverview
We wereVerde Resources, Inc. (the "Company" or "VRDR") was incorporated in the State of Nevada on April 22, 2010. We are an exploration stage corporation. An exploration stage corporationThe Company conducts business operations in Pahang Malaysia through Champmark Sdn Bhd ("CSB"), a privately limited liability company incorporated in Malaysia, which is one engaged ina deemed subsidiary under the searchmanagement control of mineral deposits or reserves which are not in eitherour 100% subsidiary Gold Billion Global Limited ("GBL"), a company incorporated under the development or production stage. We intend to conduct exploration activities onlaws of the Payday Claims, Esmeralda County, Nevada. We maintain our statutory registered agent's office at Corporate Direct, Inc., 2248 Meridian Blvd Ste H, Minden, NV 89423 and our business office is located at 905 Ventura Way, Mill Valley, CA 94941. This is our mailing address as well. Our telephone number is (415) 251-8715. The business address is provided to us at $200 per month by the Company’s President, Stephen Spalding.British Virgin Islands.
There is no assurance thatOn October 25, 2013, we entered into an Assignment Agreement For the Assignment of Management Right in Merapoh Gold Mines in Malaysia ("Assignment Agreement") with Federal Mining Resources Limited ("FMR"), a commercially viable mineral deposit exists oncompany incorporated under the property and further exploration will be required before a final evaluation as tolaws of the economic feasibility is determined.British Virgin Islands.
BackgroundFMR owns 85% equity interest in CSB, a privately limited liability company incorporated in Malaysia. CSB is the Mining Contractor of the Mining Lease for Site IV-1 at the Merapoh Gold Mine under the Contract for Work with MMC Corporation Berhad, the Permit Holder of the Mining Lease.
On May 17, 2010, and as amended on February 8, 2012, and May 17, 2013, we executed a Mineral Claim Purchase Agreement with Gold Explorations, LLC. Steve Karolyi, a former director of Verde, is a managing director of Gold Explorations, LLC. Under the terms of the purchase agreement, we haveAssignment Agreement, FMR has assigned its management rights of CSB's mining operation in the rightMining Lease to explorethe Company, through its wholly-owned subsidiary Gold Billion Global Limited ("GBL"), in exchange for gold on 120 acres. The property (“Property”) is comprised80,000,000 shares of 6 lode mining claims in Esmeralda County, Nevada (the “Payday” claims).the Company's common stock, which constituted 95.26% of our issued and outstanding capital stock as of and immediately after the consummation of the acquisition.
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Upon executionGBL was formed on February 7, 2013, by the Board of Directors of FMR to monitor the CSB operation. The acquisition of 100% of the issued and outstanding capital stock of GBL was agreed upon on October 18, 2013, and completed on October 25, 2013, subject to the approval of the Board of Directors and the audit of GBL.
On February 17, 2014, we entered into a Supplementary Agreement to the Assignment Agreement and completed a reverse acquisition of GBL pursuant to the Supplementary Agreement. As a result of the acquisition, the Company holds 100% equity interest in GBL and 85% variable interest in CSB. Our consolidated subsidiaries include GBL being our wholly-owned subsidiary and 85% of CSB being a variable interest entity (VIE) and deemed subsidiary of GBL. On April 1, 2014, GBL purchased 85% equity interest of CSB, and CSB became indirect subsidiary of the Company.
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Corporate History and Structure
Verde Resources, Inc. was incorporated on April 22, 2010, in the State of Nevada, U.S.A. On October 17, 2013, Stephen Spalding and Michael Stiege resigned from all of their positions as officers and directors of the Company that complies with the requirements of Section 14f-1 of the Exchange Act. The following persons were appointed to serve as directors and to assume the responsibilities of officers on October 17, 2013. Mr. Wu Ming Ding, as President and Director; Mr. Balakrishnan B S Muthu as Treasurer Chief Financial Officer, General Manager and Director; and Mr. Liang Wai Keen as Secretary. Mr. Wu and Mr. Muthu were added to the Board of Directors.
On October 17, 2013, the Company provided written notice to Gold Explorations, LLC, (“Vendor”that the Purchase Agreement dated May 17, 2010, amended February 8, 2012, and further amended May 17, 2013 (the "Purchase Agreement") transferred 100%, has been cancelled according to the terms of the Purchase Agreement. By providing this notification, the Company has no further obligations under the Purchase Agreement and has released any interest in the mineral claims located in Esmeralda County, Nevada.
On April 1, 2014, the Board of Directors of Gold Billion Global Limited ("GBL") notified Federal Mining Resources Limited ("FMR") upon the decision to exercise the right of option to purchase 85% equity interest of Champmark Sdn Bhd ("CSB") under Management Agreement Section 3.2.4 dated July 1, 2013, between GBL and FMR. This acquisition was completed on April 1, 2014, with consideration of US$1, and GBL then became 85% shareholder of CSB.
Effective August 27, 2014, the Company's Articles of Incorporation were amended to increase the authorized shares of the Company for $100,000from 100,000,000 shares of common stock to be paid, at the Company’s option, as follows:
| Cash Payments | |
Upon signing of the agreement and transfer of title (paid) | $ | 10,000 |
On or before May 17, 2011 (paid) |
| 5,000 |
On or before May 17, 2012 (paid) |
| 10,000 |
On or before October 17, 2013 |
| 5,000 |
On or before May 17, 2014 |
| 15,000 |
On or before May 17, 2015 |
| 55,000 |
| $ | 100,000 |
All payments shall be made within 30 days250,000,000 shares of the due date or the Property and all rights will revert back to Gold Explorations, LLC.common stock.
The Property is subject to a 3% royalty, to Gold Explorations, LLC, onEffective February 20, 2016, Mr. Wu Ming Ding resigned all mineral commodities sold from the Property. This royalty shall be reduced to 1.5% upon payment to the Vendor of $1,000,000 USD at any time.
We are to make exploration expenditures in the amount of $50,000 USD by May 17, 2015. The exploration program on the Payday Claims was conducted November 28 to December 1, 2012 at a cost of $10,631.
We may terminate the agreement upon giving thirty (30) days’ notice. The Property is subject to the ruleshis positions as President and regulationsDirector of the Bureau of Land Management (BLM). We will be exploring for mineralized material. Mineralized material is a mineralized body, which has been delineated by appropriate spaced drilling or underground samplingCompany with Mr. Balakrishnan B S Muthu being appointed President to support sufficient tonnage and average grade of metals to justify removal. The Agreement grants usfill the right to enter the property with our employees, representatives and agents, and to prospect, explore, test, develop, work, and mine the property.
We will be responsible for payment of any taxes and maintenance fees due to the BLM for 2013 (paid August 2013), and every year thereafter. Pursuant to the Agreement, it is understood and agreed that in the event either party stakes additional claims within one milevacancy created. Effective February 20, 2016, Mr. Chen Ching was appointed Director of the existing outer boundaryCompany and the entire Board of the Payday claims, those claims will become part of this agreement.
We have no revenues, have achieved losses since inception, have no operations, have been issued a going concern opinion, and rely upon the sale of our securities and loans from our officer and director to fund operations.
Claims
The PropertyDirectors now consists of 6 lode claims. The claims have been locatedMr. Balakrishnan B S Muthu and legally filed with Esmeralda County, Nevada. A fee of $60 was paid in August 2013, to the BLM. The next annual fee will be due on or before September 1, 2014.Mr. Chen Ching.
The following diagram illustrates our current corporate structure:
According to ASC 810-05-08 A, CSB is a listdeemed subsidiary of claim numbers, location,GBL where GBL controls the Board of Directors of CSB, rights to receive future benefits and dateresidual value, and obligation to absorb loss and finance for CSB. GBL has the power to direct the activities of recordingCSB that most significantly impact CSB's economic performance and the obligation to absorb losses of our claims:CSB that could potentially be significant to the CSB or the right to receive benefits from CSB that could potentially be significant to CSB. GBL is the primary beneficiary of CSB because GBL can direct the activities of CSB through the common directors and 85% shareholder FMR. Under 810-23-42, 43, it is determined that CSB is de-facto agent of the principal GBL and so GBL will consolidate CSB from July 1, 2013. On April 1, 2014, GBL purchased 85% equity interest of CSB, and CSB became indirect subsidiary of the Company.
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Contractual Arrangements
Our exploration and mining business is currently provided through contractual arrangements with CSB through our wholly-owned subsidiary GBL.
CSB, the VIE of GBL, sells gold minerals directly to the registered gold trading company in Malaysia. We have been and are expected to continue to be dependent on our VIE to operate our exploration and mining business. GBL has entered into contractual arrangements with its VIE, which enable us to exercise effective control over the VIE, receive substantially all of the economic benefits from the VIE, and have the option to purchase equity interests in the VIE.
On July 1, 2013, the Company's subsidiary GBL entered into a series of agreements ("VIE agreements") with FMR and details of the VIE agreements are as follows :
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vi.) | entitlement to future benefits and residual value of CSB; | |||
vii.) | right to impose no dividend policy; | |||
viii.) | human resources management. | |||
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| Debt Assignment, FMR assigned to GBL the sum of money in the amount of three hundred nine thousand three hundred thirty one dollars and ninety-two cents (US$ 309,331.92), now due to GBL from CSB under the financing obligation from the FMR to CSB. | |||
In total 6 lode mineral claims.With the above agreements, GBL demonstrates its ability to control CSB as the primary beneficiary and the operating results of the VIE was included in the condensed consolidated financial statements for the year ended June 30, 2014.
LocationCSB holds the operating right to Merapoh Gold Mine (the "Mine") with all regulatory and Access government operating licenses in Malaysia.
On April 1, 2014, GBL purchased 85% equity interest of CSB, and CSB became indirect subsidiary of the Company.
Stage Of Operation
The Payday claims are locatedCompany does not own any title and/or concession right in any mines. The Company is undertaking natural mineral resource extraction management services. The Company expects to hire a mine management team to supervise the mineral resource extraction activities to ensure that the operations can be carried out without significant problems.
According to the United States Industry Guide 7 (a) (4) on mining operations, the Merapoh Gold Mine is currently in the Walker Lane lineamentproduction stage because the mine has produced approximately 30 kilograms of Esmeralda County, Nevada, a prominent mineralized area in Nevada. As pergold from July 2015 to June 2016. According to the enclosed map,ASC 930-330-20 Glossary, the Propertyproduction phase is 20 miles via the pole line roaddefined as "when saleable minerals are extracted (produced) from Tonopah, Nevada, the County seat of Nye County and the location for supplies. The paved road from Goldfield (14 miles) and Silver Peak (12 miles) passes within 1-½ milesan ore body, regardless of the Property whichlevel of production". However, the production is at an elevation of 5,500 feet. A 4-wheel drive accessible road of 2.8 miles reaches the south endlimited to a small part of the claims. Accesssite, and work are possible all year long.extraction is alluvial gold only. The objective of the Company is preparing to improve the productivity of the mines to ensure that the operation will be carried out effectively and efficiently at minimum cost.
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There is a water source as shown on the geologic map at the road intersection that goes north to Tonopah and a power line that runs along the paved road to Silver Peak.
HistoryTable of Contents
In Tonopah, County seat of Nye County, Nevada, silver was discovered in 1900. Current Mining Property and Location
In August 1992, 76 soil and rock samples were taken byMerapoh Gold Explorations, LLC. The samples were taken at five foot intervals along the altered face of the bank at the south end where the wash cuts it. This is a buried fault.
The samples were taken with a plastic scoop and placed in plastic bags or in the case of rock were broken into two inch fragments with a small pick and then bagged.
A UV light was used on the bagged sample to try and detect UV sensitive materials. The samples were then shipped by UPS to a lab.
The alteration and early workings at the south end of the Property showed anomalous gold and arsenic.
The following map, with accompanying legends, shows the location and geographical information regarding the location of the Payday claims.
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Geology
The Payday location is included in the Walker Lane lineament. The claims follow a thrust fault and a high angle fault from north to south.
The rocks here are Cambrian Harkless formation (Eh on the map), a dominantly green siltstone. This mineral is exposed in a prospect pit (early 1900s) at the south end of the Property. In contact with this formation is Cambrian Poleta formation (Ep on the map), mostly thick bedded carbonate in the lower part overlain by green siltstone with limestone and quartzite interbeds. In contact with the Harkless and across the wash at the south end of Payday is Cambrian Campito formation (Eca on the map) of the Andrews Mountain Member, a dominantly dark grey fine-grained quartzite.
Not shown on the map, but apparent on the ground is a fault running more or less east and west in the wash at the point of the red arrow, and under the alluvium shown in bright yellow on the map and delineated (Qal). This area has brecciated, fractured, altered, and rust-stained rock exposed in early pits.
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Glossary of Mining Terms
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Our Initial Exploration ProgramMine (the "Mine")
The exploration program onMerapoh Gold Mine is located in northern Pahang, with convenient road access through Kelantan directly to the Payday Claims was conducted November 28mine site and is about 400 kilometers away from Kuala Lumpur. The Mine is located in the middle of Malaysia's gold metallogenic belt. The central gold belt is the source of the majority of the gold deposits in the peninsula. It lies between the western and eastern tin belts and extends from Kelantan (Sungai Pergau, Sungai Galas) to December 1, 2012 by our consultant, Minerals Exploration & Environmental Geochemistry (MEG)Pahang (Merapoh, Kuala Lipis, Raub), Terengganu (Lubuk Mandi), Negri Sembilan and supervised by Gold Explorations, LLC.Johor (Gunung Ledang).
MEG collected 99 field samples. These samples were sent to ALS minerals for biogeochemical analysis, which was completed in January 2013. Mine Area:
Site IV-1 of the Merapoh Gold Mine consists of a mining area of 400 acres with mining lease.
Location and Access:
The biogeochemical interpretation report was completed by MEGMerapoh Gold Mine is about 280km from Kuala Lumpur, and 50km from Kuala Lipis, the former state capital of Pahang, accessible via secondary paved highways with a new major highway under construction expected to be complete d in February 2013.2018. The geological coordinates of the mine are 101 ° 58 ′ , 4 ° 35 ′ ,
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Type of Claim:
Champmark Sdn Bhd, the subsidiary of Gold Billion Global Limited, is the Mining Contractor of the Mining Lease for Site IV-1 of the Merapoh Gold Mine under the Contract for Work with MMC Corporation Berhad, the Permit Holder of the Mining Lease.
Identifying Information of the Merapoh Gold Mine:
Mining Right:
Mining Lease No.: ML 08/2008
Operational Mining Scheme No.: JMG.PHG.(M)24/2014/11(Au)
Concession Period: From April 4, 2014 to April 3, 2015
Regional Geology:
The total costMalaysia Central Gold Belt runs along the entire backbone of Peninsular Malaysia, extending further to the north. It was formed between the Sibumasu block in the west and Manabor block in the east that runs along major mineral deposits in Thailand, Myanmar and China. The regional gold deposits were made of Epithermal deposits that formed in a series of volcanic environment, where the tensional fractures along the subduction zone allows the intrusion of mineral rich acidic magma within deep faults.
Rock Formations and Mineralization:
Site IV-1 of the work program was $10,631.Merapoh Gold Mine covers an area of 400 acres with mineralization structure being Permian limestone dominating the South-East portion, felsic volcanic tuff in the Western portion of the area and intrusive dacite rock to the north-west of the area. Tectonic contact within the sheer zone of creates epithermal mineralization, forming mineral rich vein along the contact zone. The mineralized zone is made of highly altered tuffacaous rock with abundant pyrite dissemination and moderately spaced quartz vein.
CompetitionWork Completed and Present Condition:
Lode gold exploration on Site IV-1 has commenced since 2011 and still in progress with both in-house drilling team and third party drilling services running in parallel to expedite data collection to generate a comprehensive JORC compliant gold reserve report.
Equipment, Infrastructure and Other Facilities of the Merapoh Gold Mine:
Parlongs
These are basic production plants and the processing method employed five high powered manual water guns, angled water buffering control and 5-lane carpeted sluice with lateral barriers. The processing capacity is between 40 - 45 tons per hour.
OPS 1
This is a modified production plant and the processing method employed four high powered manual water guns, tapered rotating screen scrubber, angled water flow buffering and 3-lane carpeted sluice with lateral barriers. The processing capacity is between 30 - 35 tons per hour.
GS 150
This is a non-self-propelled mobile production plant and the processing method employed fixed spray guns, 6m x 2m rotating screen scrubber, 6-lane carpeted sluice with lateral barriers and conveyer belt pebble dispenser. The processing capacity is between 25 - 30 tons per hour.
GS 120
This is a self-propelled mobile plant with concentrator and the processing method employed fixed spray guns, 4m x 3m rotating screen scrubber, fixed screen, conveyer belt pebble dispenser and triple concentrator processor. The processing capacity is between 15 - 20 tons per hour.
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Description of Processing Facilities:
Process for removing ore concentrates from the ore body
1. | The ore body is transported to the treatment plants in vehicles capable of hauling huge, heavy loads. |
2. | The ore body is separated into Ore Type 1 Stockpile and Ore Type 2 Stockpile. |
3. | The monitor washes finer gold bearing material off larger rocks which is screened on an inclined coarse wire screen. |
4. | An excavator is used to turn over the rocks so wash is removed from all sides of the coarse material. |
5. | A monitor pushes the rock down the inclined coarse screen where the course is removed and stockpiled at the bottom. |
6. | Finer material passes through the mesh screen into the sluice system and runs over the sluice. |
7. | The carpets are removed and taken to refining facility for gold recovery. |
8. | A suction pipe recovers water of the fine tailings pond for use in the system. |
Refining of the concentrate
1. | The carpets holding concentrate from the sluice are brought to a shed in the camp site where the gold is refined. |
2. | The first stage of the refining is to wash the gold containing concentrate into large bins. This is pumped to a jig and shaking table. |
3. | Nuggets are handpicked from the coarse fraction and the fine fraction is amalgamated to remove the gold. After distillation, gold from the amalgam and the coarse are melted with flux and the gold is poured into small bars. |
Current State of Exploration:
As of the date of this report, the Merapoh Gold Mine property is without known reserves.
The Merapoh Gold Mine commenced exploratory operation in alluvia mining and achieved its first gold mining industry is fragmented, that is there arepour in July 2011. Through the years of operation, the Company has performed ongoing exercises to improve upon the matching of processing method with the types of ore in order to optimize cost to recovery ratio. In July 2013, production was outsourced to a large numberreputable subcontractor, and developed a resource management system to match ore against processes to achieve the most cost efficient and highest recovery production procedure.
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Table of Contents
Gold ore extraction of the Merapoh Gold Mine for the twelve months ended June 30, 2016, was approximately 285,745 tons of gold prospectors and producers, small and large. We do not competeore or a monthly average of 23,812 tons (using a 12-month average), with anyone because there is no competitionan average gold grade of 0.106 g/t. Gold concentrate sold for the exploration or removaltwelve months ended June 30, 2016, was approximately 27.47 kg. The production level, in units of minerals from the claims we will be exploring. We will either find gold on the Property or not. If we do not, we will cease or suspend operations. We are onedaily tonnage of the smallestexploration companies in existence. Readily available gold markets exist in the United States and around the world for the sale of gold. Therefore, we will be able to sell any gold that we are able to recover.
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Regulations
Ourraw mineral exploration program is subject to the regulations of the BLM. The prospecting on the Property is provided under the existing 1872 Mining Law and all permits for exploration and testing must be obtained through the local BLM office of the Department of Interior. Obtaining permits for minimal disturbance as envisioned by this exploration program will require making the appropriate application and filing of the bond to cover the reclamation of the test areas. From time to time, an archeological clearance may need to be contracted to allow the testing program to proceed.
Claim/Rental Fee Requirements
A mining claim location notice must be filed with the BLM within 90 days from the date of location of the claim or site and must also be filed with the County Recording Office.
All new locations must be accompanied by the required fees of a $15 service charge, $34 location fee, and a $140 maintenance payment fee for the first year of location, for a total of $189 per claim or site. Claims will expire September 1st, if annual filings are not made.
On or before September 1of every year, a $140 maintenance payment fee must be paid to the BLM. Once a claim is serialized, an annual filing must be made on or before September 1, of each year to maintain the claim. Because we have fewer than 10 claims, we may choose to file either the maintenance fee payment or file the Maintenance Fee Waiver certification (a.k.a. small miner’s waiver). If we choose to file a small miner’s waiver, then we must also perform $100 worth of labor or improvements on all lode claimsrocks extracted, averaged 783 tons/day (12-month average) during the assessmentfiscal year (September 1, noon through September 1, noon). An Assessment Work Notice (Proof of Labor) form must be filed on or before December 30, along with the $10 filing fee per claim. A small miner’s waiver is short for maintenance fee payment waiver certification. A small miner’s waiver may be filed by those claimants holding 10 or fewer claims, instead of paying the $140 maintenance fee by September 1, of each year. If we choose to file a small miner’s waiver, we must also perform assessment work and file an assessment work notice by December 30 of each year.
Some of the activities that qualify for assessment work are construction and maintenance of access roads, development drilling and sampling, and buildings that benefit the claim.
Mining Claims on State Land2016.
The Nevada law authorizing locationMerapoh Gold Mine is currently at the production stage. In the effort to expand production capacity, the Company intends to purchase more vehicles, machineries and equipment as well as to conduct feasibility studies for exploration of claims on State lands was repealed in 1998. Acquisition of mineral rights on Nevada trust land can only be accomplished by application for a prospecting permit, mineral lease, or lease of common variety materials.alluvial and lode gold resources.
We areSubcontractors
In an effort to enhance the efficiency of mine operations at the Merapoh Gold Mine, Champmark Sdn Bhd ("CSB") entered into an Operation Term Sheet ("OTS") agreement in compliance with all lawsJuly 2013 to outsource the exploitation works of alluvial gold resources at Site IV-1 of the Merapoh Gold Mine to a third party subcontractor Borneo Oil & Gas Corporation Sdn Bhd ("BOG"). However, BOG became the Company's shareholder in January 29, 2014 and willwas no longer a third party subcontractor.
BOG has the experience and local knowledge in managing the exploitation of alluvial gold at the Merapoh Gold Mine. The Company currently intends to continue to complyoutsource the exploitation of alluvial gold at our mine site to BOG as our third party subcontractor. The Company will provide necessary disclosure when any significant agreements have been made with the lawssub-contractor in the future. We believe that compliance with the laws will not adversely affect our business operations.
We are responsible to provide a safe working environment, not disrupt archaeological sites and conduct our activities to prevent unnecessary damage to the Property.
Gold Explorations, LLC (co-owned by our former director Steve Karolyi), will secure all necessary permits for exploration and, if development is warranted on the Property, will file final plansNumber of operation before we start any mining operations. At that point, a permit from the BLM would be required. Also,we would be required to comply with the laws of the State of Nevada and federal regulations. We anticipate no discharge of water into active stream, creek, river, lake, or any other body of water regulated by environmental law or regulation. No endangered species will be disturbed. Restoration of the disturbed land will be completed according to law. All holes, pits, and shafts will be sealed upon abandonment of the Property. It is difficult to estimate the cost of compliance with the environmental law since the full nature and extent of our proposed activities cannot be determined until we start our operations and know what that will involve from an environmental standpoint.Employees
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The only "cost and effect" of compliance with environmental regulations inCompany had 3 employees during the State of Nevada is returning the surfaceyear from July 1, 2015 to its previous condition upon abandonment of the Property. We will only be using "non-intrusive" exploration techniques and will not leave any indication that a sample was taken from the area. Gold Explorations, LLC, and its employees will be required to leave the area in the same condition as they found it.June 30, 2016.
Subcontractors
We intend to use the services of Gold Explorations, LLC, who will supervise the subcontractors for exploration work on our properties.
Number of Employees
The Company has no employees. Our two officers and directors are donating their time to thedevelopment of the Company, and intend to do whatever work is necessary in order to bring it to the point of earning revenues. Mr. Karolyi, a former director of the company, is the general manager of Gold Explorations, LLC. Mr. Karolyi served as a member of the Board of Directors from October 29, 2010 until his resignation on September 25, 2013. Mr. Karolyi, through his association with Gold Explorations, LLC, received compensation for the work and exploration programs performed on the property, as previously described herein. We have no other employees, and do not foresee hiring any additional employees in the near future.
Reports to Security Holders
The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company files its reports electronically with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other electronic information regarding New Media and filed with the SEC at http://www.sec.gov.
Change of Control
Not Applicable.On October 25, 2013, the Company entered into an Assignment Agreement for the Assignment of Management Right ("AAMA") in Merapoh Gold Mines in Malaysia with Federal Mining Resources Limited ("FMR"). Under the terms of the Agreement and relevant subsequent Supplemental Agreement, FMR assigned its management rights to the Company Board of Directors of FMR agreed to transfer 1 share common stock of Gold Billion Global Limited ("GBL") which represented all shares of common stock of GBL owned by the Investor, and the Company's Board of Directors agreed to issue 80,000,000 million shares of common stock in full value as consideration. At the time of closing under the AAMA, the Investor transferred 100% ownership of GBL shares to the Company, and the Company issued 80,000,000 million shares of common stock to the shareholders of FMR in exchange for the GBL Shares. The effect of the transaction was to make GBL and its deemed subsidiaries become wholly-owned and 85.00% owned subsidiaries of the Company, and to cause a change of control of GBL. Following the closing, there was a change of control in the Company.
The Transaction was accounted for as a "reverse merger," since FMR owned a majority of the outstanding shares of VRDR's common stock immediately following the execution of the transaction. The Company was deemed to be the accounting acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations that were reflected in the financial statements for periods prior to the transaction were those of the Company and its deemed subsidiaries, and were recorded at the historical cost basis of the Company. After completion of the transaction, the Company's consolidated financial statements were include the assets and liabilities of the Company and its subsidiaries, the historical operations of the Company and its subsidiaries, and the operations of the Company and its subsidiaries from the closing date of the transaction.
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Risks Associated With Verde Resources, Inc.
Our planWe are dependent on certain key personnel and loss of operation is limited to finding an ore body. As such wethese key personnel could have no plans for revenue generation. Accordingly, you should not expect any revenues froma material adverse effect on our business, financial condition and results of operations.
Exploration doesMessrs. Balakrishnan Muthu, our current principal executive officer and financial officer, has extensive contacts and experience in the gold exploration and natural resource industry in Malaysia, and we are dependent upon his abilities and services to develop and market our business. He is responsible for overseeing all of our day-to-day business operations of our operating company, CSB, and its subsidiaries and VIEs, including the mining operations and negotiations for the sales of any gold concentrates extracted. We may not contemplate removalbe able to retain the executive officers/managers for any given period of time. The loss of their services could have a material adverse effect upon our business operations, financial condition and results of operations. In addition, we must attract, recruit and retain a sizeable workforce of technically competent employees in Malaysia to run our mining operations. Our ability to effectively implement our proposed business strategies and expand our operations will depend upon the ore. We have no plans or funds for ore removal.
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Because the probabilitysuccessful recruitment and retention of an individual prospect ever having reserves is extremely remote,additional highly skilled and experienced management and other key personnel in Malaysia. If we cannot maintain highly experienced and skilled management teams, our business could fail and you could lose any funds spent on exploration will probably be lost.
The probability of an individual prospect ever having reserves is extremely remote. In all probability, the property does not contain any reserves. As such, any funds spent on exploration will probably be lost.investment you make in our shares.
Since our business consists of managing gold mining projects, the drop in the price of gold would negatively impact our asset values, cash flows, potential revenues and profits.
We lackplan to pursue opportunities in properties with gold mineralized material or reserves with exploration potential. Our potential future revenues are expected to be derived from the production and sale of gold from these properties, or from the sale of some of these properties. The value of any gold reserves or other mineralized materials, and the value of any potential mineral production will vary in direct proportion to changes in those mineral prices. The price of gold has fluctuated widely as a result of numerous factors beyond our control. The effect of these factors on the price of gold and other minerals, and therefore the economic viability of any of our projects, cannot accurately be predicted. Any drop in the price of gold and other minerals we may produce would negatively affect our asset values, cash flows and potential revenues and profits.
We may not be able to find commercially viable reserves.
Mineral exploration and development involve a high degree of risk and few properties that are explored are ultimately developed into producing mines. The reserve estimates, if any, are based only on prefeasibility studies that are inherited with the following drawbacks:
- | Limited amount of drilling completed to date; | |
- | The process testing is limited to small pilot plants and bench scale testing; | |
- | Difficulty in obtaining expected metallurgical recoveries when scaling up to production scale from pilot plant scale; | |
- | Preliminary nature of the mine plans and processing concepts; | |
- | Preliminary nature of operating and capital cost estimates | |
- | Metallurgical flow sheets and recoveries still in development; | |
- | Limited history of prefeasibility studies that might be underestimating capital and operating costs. |
We cannot assure that any future mineral exploration and development activities will result in any discoveries of proven or probable reserves as defined by the SEC. Further, we cannot provide any assurance that, even if we discover commercial quantities of mineralization, a mineral property will be brought into commercial production. Development of our mineral property will follow only upon obtaining sufficient funding and satisfactory exploration results.
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Estimates of mineral reserves and of mineralized material are inherently forward-looking statements, subject to error, which could force us to curtail or cease our business operations.
Estimates of mineral reserves and of mineralized materials are inherently forward-looking statements subject to error. Unforeseen events and uncontrollable factors can have significant adverse impacts on the estimates. Actual conditions inherently differ from estimates. The unforeseen adverse events and uncontrollable factors may include: geologic uncertainties including inherent sample variability, metal price fluctuations, fuel price increases, variations in mining and processing parameters, and adverse changes in environmental or mining laws and regulations. The timing and effects of variances from estimated values cannot be predicted.
- | Geologic Uncertainty and Inherent Variability: Estimated reserves and additional mineralized materials are generally derived from appropriately spaced drilling to provide a high degree of assurance in the continuity of the mineralization; however, there is generally variability between duplicate samples taken adjacent to each other and between sampling points that cannot be reasonably eliminated. There are also unknown geologic details that are not always identified or correctly appreciated at the current level of delineation. This results in uncertainties that cannot be reasonably eliminated from the estimation process. Some of the resulting variances can have a positive effect, and others can have a negative effect on mining operations. Acceptance of these uncertainties is part of any mining operation. |
- | Gold Price Variability: The prices for gold fluctuate in response to many factors beyond any ability to predict. The prices used in making the reserve estimates are disclosed and differ from daily prices quoted in the news media. The percentage change in the price of a metal cannot be directly related to the estimated reserve quantities, which are affected by a number of additional factors. For example, a ten percent (10%) change in price may have little impact on the estimated reserve quantities and affect only the resultant positive cash flow, or it may result in a significant change in the amount of reserves. Because mining occurs over a number of years, it may be prudent to continue mining for some period during which cash flows are temporarily negative for a variety of reasons, including a belief that the low price is temporary and/or the greater expense would be incurred in closing a property permanently. |
- | Fuel Price Variability: The cost of fuel can be a major variable in the cost of mining; one that is not necessarily included in the contract mining prices obtained from mining contractors, but is passed on to the overall cost of operation. Future fuel prices and their impact are difficult to predict, but an increase in prices could force us to curtail or cease our business operations. |
- | Variations in Mining and Processing Parameters: The parameters used in estimating mining and processing efficiency are based on testing and experience with previous operations at the properties or on operations at similar properties. Various unforeseen conditions can occur that may materially affect the estimates. In particular, past operations indicate that care must be taken to ensure that proper ore grade control is employed and that proper steps are taken to ensure that the leaching operations are executed as planned. Unforeseen difficulties may occur in our current or future operations which would force us to curtail or cease our business operations. |
- | Changes in Environmental and Mining Laws and Regulations: Our reserve estimates contain cost estimates based on compliance with current laws and regulations in Malaysia. While there are no currently known proposed changes in these laws or regulations, significant changes have affected past operations of mining companies in Malaysia, and if additional changes do occur in the future, we may or may not be able to comply with them and continue our operations. |
We may not be able to successfully compete with other mineral exploration and mining companies.
We compete with other mineral exploration and mining companies or individuals, including large, well established mining companies with substantial capabilities and financial resources in Malaysia, to research and acquire rights to mineral properties containing gold and other minerals. There is a limited supply of desirable mineral lands available for claim staking, lease or other acquisition in Malaysia. We do not know if we will be able to successfully acquire any prospective mineral properties against competitors with substantially greater financial resources than we have. If we cannot successfully acquire other mining properties to manage and explore and generally expand our business operations, our results of operations, financial condition and future revenues could be reduced and you could suffer a loss of any investment made in our shares.
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We are subject to the many risks of doing business internationally, including but not limited to the difficulty of enforcing liabilities in foreign jurisdictions.
We are a Nevada corporation and, as such, are subject to the jurisdiction of the State of Nevada and the United States courts for purposes of any lawsuit, action or proceeding by investors. An investor would have the ability to effect service of process in any action against the Company within the United States. In addition, we are registered as a foreign corporation doing business in Malaysia, and as such, are subject to the local laws of Malaysia governing an operating historyinvestors' ability to bring actions in foreign courts and enforce liabilities against a foreign private issuer, or any person, based on U.S. federal securities laws. Generally, a final and conclusive judgment obtained by investors in U.S. courts would be recognized and enforceable against us in the Malaysia courts having jurisdiction without re-examination of the merits of the case.
Investors may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in Malaysia based upon U.S. laws, including the federal securities laws or other foreign laws against us or our management.
All of our current operations are conducted in Malaysia, and all of our directors and officers are nationals and residents of Malaysia and other foreign countries. All or substantially all of the assets of these persons are located outside the United States and in other foreign countries. As a result, it may not be possible to effect service of process within the United States or elsewhere outside Malaysia upon these persons. In addition, uncertainty exists as to whether the courts of Malaysia would recognize or enforce judgments of U.S. courts obtained against us or such officers and/or directors predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in Malaysia against us or such persons predicated upon the securities laws of the United States or any state thereof.
Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.
We are subject to the United States Foreign Corrupt Practices Act, which generally prohibits U.S. companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. In addition, we are required to maintain records that accurately and fairly represent our transactions and have had losses since inception,an adequate system of internal accounting controls. Foreign companies, including some that may compete with us, are not subject to these prohibitions, and therefore may have a competitive advantage over us. Our executive officers and employees have not been subject to the United States Foreign Corrupt Practices Act prior to 2010. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.
Mining risks and insurance could negatively effect on our profitability.
The business of mining for gold is generally subject to a number of risks and hazards including environmental hazards, industrial accidents, labor disputes, unusual or unexpected geological conditions, pressures, cave-ins, changes in the regulatory environment, and natural phenomena such as inclement weather conditions, floods, blizzards and earthquakes. At the present time, we have in effect statutory required social insurance for all employees and mine workers. There is currently no other insurance in place for the mining site and management, and even if we were to purchase additional insurance, we cannot be sure that such insurance would be available to us, or that we could afford the premiums. Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. In addition, insurance against risks such as environmental pollution or other hazards as a result of exploration and production is not generally available to companies in the mining industry on acceptable terms. We might also become subject to liability for pollution or other hazards which we expectmay not be insured against, or which we may elect not to continue intoinsure against, because of premium costs or other reasons. Any losses from any of these events may cause us to incur significant costs that could have a material adverse effect upon our financial performance and results of operations, which could negatively impact any investment you make in our shares.
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If we fail to maintain effective internal controls over financial reporting, the future.price of our common stock may be adversely affected.
Malaysian companies may not always adopt a Western style of management and financial reporting concepts and practices, which includes strong corporate governance, internal controls and computer, financial and other control systems. In addition, we may have difficulty in hiring and retaining a sufficient number of qualified employees to work in Malaysia. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards for foreign subsidiaries. As a result, we may have to suspendexperience difficulties in implementing and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act of 2002. This could result in significant deficiencies or cease operations.
We were incorporated on April 22, 2010, and we have not startedmaterial weaknesses in our proposed business operations or realized any revenues. We have no operating history uponinternal controls, which an evaluationcould impact the reliability of our future successfinancial statements and prevent us from complying with SEC rules and regulations and the requirements of the Sarbanes-Oxley Act of 2002. Any actual or failure canperceived weaknesses and conditions that need to be made. Our net loss from inception to June 30, 2013, is $132,127. To achieve and maintain profitability and positive cash flow we are dependent upon:
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Based upon current plans, we expect to incur operating lossesaddressed in future periods. This will happen because there are expenses associated with the research and explorationour internal control over financial reporting, disclosure of management's assessment of our mineral properties. As a result, weinternal controls over financial reporting or disclosure of our public accounting firm's attestation to or report on management's assessment of our internal controls over financial reporting may not generate revenues inhave an adverse impact on the future. Failure to generate revenues will cause us to suspend or cease operations.price of our common stock.
BecauseChanges in interest rates could negatively impact our management does not have technical training or experience in exploring for, starting,results of operations, stockholders' equity (deficit) and operating an exploration program, we will have to hire qualified personnel. If we can't locate qualified personnel, we may have to suspend or cease operations.fair value of net assets.
BecauseOur investment activities and credit guarantee activities expose us to interest rate and other market risks. Changes in interest rates, up or down, could adversely affect our management is inexperienced with exploring for minerals,net interest yield. Although the yield we earn on our assets and starting and operating an exploration program,our funding costs tend to move in the same direction in response to changes in interest rates, either can rise or fall faster than the other, causing our net interest yield to expand or compress. For example, due to the timing of maturities or rate reset dates on variable-rate instruments, when interest rates rise, our funding costs may rise faster than the yield we will haveearn on our assets. This rate change could cause our net interest yield to hire qualified persons to perform surveying, exploration, and excavationcompress until the effect of the Property.increase is fully reflected in asset yields. Changes in the slope of the yield curve could also reduce our net interest yield.
Interest rates can fluctuate for a number of reasons, including changes in the fiscal and monetary policies of the federal government and its agencies, such as the Federal Reserve. Federal Reserve policies directly and indirectly influence the yield on our interest-earning assets and the cost of our interest-bearing liabilities. The availability of derivative financial instruments (such as options and interest rate and foreign currency swaps) from acceptable counterparties of the types and in the quantities needed could also affect our ability to effectively manage the risks related to our investment funding. Our management has no direct training or experiencestrategies and efforts to manage our exposures to these risks may not be effective in these areasthe future, which could negatively impact our results of operations and the price of our common stock.
The audit report included in our Annual Report was prepared by auditors who are not inspected by the Public Accounting Oversight Board (“PCAOB”) and as a result, may not be fully aware of manyour shareholders are deprived of the specific requirements relatedbenefit of having PCAOB inspections.
The independent registered public accounting firm that issues the audit reports included in our annual reports filed with the SEC, as auditors of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or the “PCAOB”, is required by the laws of the United States to working withinundergo regular inspections by the industry. Management's decisionsPCAOB to assess its compliance with the laws of the United States and choicesprofessional standards. Because our auditors are located in Hong Kong SAR, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the Hong Kong authorities, our auditors are not currently inspected by the PCAOB.
Inspections of other firms that the PCAOB has conducted outside Hong Kong SAR have identified deficiencies in those firms' audit procedures and quality control procedures, which may not take into account standard engineering or managerial approaches mineral exploration companies commonly use. Consequently,be addressed as part of the inspection process to improve future audit quality. The inability of the PCAOB to conduct inspections in Hong Kong SAR prevents the PCAOB from regularly evaluating our operations, earnings,auditor's statements, audits and ultimate financial success could suffer irreparable harm due to management's lack of experience in this industry.quality control procedures. As a result, weinvestors may havebe deprived of the benefits of PCAOB inspections.
The inability of the PCAOB to suspend or cease operations.conduct inspections of auditors in Hong Kong SAR makes it more difficult to evaluate the effectiveness of our auditor's quality control and audit procedures as compared to auditors outside of Hong Kong SAR that are subject to PCAOB inspections. Investors may lose confidence in our reported financial information and procedures and the quality of our financial statements.
Because weWe may be exposed to risks relating to management’s conclusion that our disclosure controls and procedures and internal controls over financial reporting are small andineffective.
We do not have much capital, wean independent audit committee and our Board of Directors may havebe unable to limitfulfill the functions of such a committee, which may compromise the management of our exploration activity.business. Our Board of Directors functions as our audit committee and is comprised of two directors, none of whom are considered to be "independent" in accordance with the requirements of Rule 10A-3 under the Securities Exchange Act of 1934. An independent audit committee plays a crucial role in the corporate governance process, assessment of the Company's processes relating to its risks and control environment, oversight of financial reporting, and evaluation of internal and independent audit processes. The lack of an independent audit committee may prevent the Board of Directors from being independent in its judgments and decisions and its ability to pursue the committee's responsibilities, which could compromise the management of our business.
Because we are small and do not have much capital, we must limit our exploration activity. As such, we may not be able to complete an exploration program that is as thorough as we would like. In that event, an existing ore body may go undiscovered. Without an ore body, we cannot generate revenues.
Because Mr. Stephen Spalding and Mr. Michael Stiege have other outside business activities, our operations may be sporadic, which may result in periodic interruptions or suspensions of exploration.
Our directors and officers have outside business interests. Mr. Spalding will only be devoting 25% of his time, or 10 hours per week, and Mr. Stiege will only be devoting 10% of his time, or four hours per week to our operations. Therefore, our operations may be sporadic and occur at times which are not convenient to Mr. Spalding and Mr. Stiege. As a result, exploration of the Property may be periodically interrupted or suspended.
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If our officers and directors resign or die without having found replacements, our operations will be suspended or cease.
We have two officers and directors. We are entirely dependent upon them to conduct our operations. If they should resign or die, there will be no one to operate the Company. Further, we do not have key man insurance. If we lose the services of our officers and directors, and until we find other persons to replace them, our operations will be suspended or cease entirely.
Our independent auditors have issued an audit opinion for Verde Resources, Inc., which includes a statement describing our going concern status. Our financial status creates a doubt whether we will continue as a going concern.
As described in Note 7 of our accompanying financial statements, our auditors have issued a going concern opinion regarding the Company. This means there is substantial doubt we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty regarding our ability to continue in business. As such we may have to cease operations and investors could lose part or all of their investment in the Company.
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Risks Associated with Our Common Stock
Our shares are defined as "penny stock." The rules imposed on the sale of the shares may affect your ability to resell any shares you may purchase, if at all.
Our shares are defined as a “penny stock”"penny stock" under the Securities and Exchange Act of 1934, and rules of the Commission. The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than certain accredited investors who are, generally, institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly with spouse, or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker-dealer must make a suitability determination for each purchaser and receive the purchaser's written agreement prior to the sale. In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required by the Commission. Consequently, the penny stock rules may affect the ability of broker-dealers to make a market in or trade our common stock, and may also affect your ability to resell any shares you may purchase.
Market for penny stock has suffered in recent years from patterns of fraud and abuse
Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:
·Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
·Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
·Boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons;
·Excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and,
·The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses.
· | Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; | |
· | Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; | |
· | Boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; | |
· | Excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and, | |
· | The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses. |
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Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.
We will incur ongoing costs and expenses for SEC reporting and compliance. Without revenue we may not be able to remain in compliance, making it difficult for investors to sell their shares, if at all.
Going forward, the Company will have ongoing SEC compliance and reporting obligations. Such ongoing obligations will require the Company to expend additional amounts on compliance, legal and auditing costs. In order for us to remain in compliance we will require future revenues to cover the cost of these filings, which could comprise a substantial portion of our available cash resources. If we are unable to generate sufficient revenues to remain in compliance, it may be difficult for you to resell any shares you may purchase, if at all.
Our directors will control and make corporate decisions that may differ from those that might be made by the other shareholders.
Due to the controlling amount of their share ownership in our Company, our directors will have a significant influence in determining the outcome of all corporate transactions, including the power to prevent or cause a change in control. Their interests may differ from the interests of other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.
Inability and unlikelihood to pay dividends
To date, we have not paid, nor do we intend to pay in the foreseeable future, dividends on our common stock, even if we become profitable. Earnings, if any, are expected to be used to advance our activities and for general corporate purposes, rather than to make distributions to stockholders. Prospective investors will likely need to rely on an increase in the price of Company stock to profit from his or her investment. There are no guarantees that any market for our common stock will ever develop or that the price of our stock will ever increase.
Since we are not in a financial position to pay dividends on our common stock and future dividends are not presently being contemplated, investors are advised that return on investment in our common stock is restricted to an appreciation in the share price. The potential or likelihood of an increase in share price is questionable at best.
Item 1B. Unresolved Staff Comments.
None.
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The Company’s principal place of business and corporate offices are located at 905 Ventura Way, Mill Valley, CA 94941, the telephone number is (415) 251-8715. The office is a home office in the principal residence of the officer and director, Stephen Spalding. We pay rent at $200 per month.
We have no other property at this time. However,do not currently own any properties.
On October 25, 2013, we intend to conduct exploration activities on one property. Record title to the property upon which we intend to conduct exploration activities is not heldin our name. The property is owned by the BLM. The right to mine the claims has been obtained by Gold Explorations, LLC, of Minden, Nevada. The Company entered into an Assignment Agreement For the Assignment of Management Right in Merapoh Gold Mines in Malaysia ("Assignment Agreement") with Federal Mining Resources Limited ("FMR"), a company incorporated under the laws of the British Virgin Islands.
FMR owns 85% equity interest in Champmark Sdn Bhd ("CSB"), a privately limited liability company incorporated in Malaysia. CSB is the Mining Contractor of the Mining Lease for Site IV-1 at the Merapoh Gold Mine under the Contract for Work with MMC Corporation Berhad, the Permit Holder of the Mining Lease.
Under the terms of the Assignment Agreement, FMR assigned its management rights of CSB's mining operation in the Mining Lease to the Company, through its wholly-owned subsidiary Gold Billion Global Limited ("GBL"), in exchange for 80,000,000 shares of the Company's common stock, which constituted 95.26% of our issued and outstanding capital stock as of and immediately after the consummation of the acquisition.
On April 1, 2014, the Board of Director of Gold Billion Global Limited ("GBL") notified Federal Mining Resources Limited ("FMR") upon the decision to exercise the right of option agreement to purchase the claims through a five year payment program totaling $100,00085% equity interest of Champmark Sdn Bhd ("CSB") under Management Agreement Section 3.2.4 dated July 1, 2013, between GBL and a five year work program totaling $50,000. We intend to conduct exploration activitiesFMR. The original agreement was filed with SEC as ex10-2.htm of Form 8K on the Payday Claims located in Esmeralda County, Nevada. The one property consistsFebruary 20, 2014. This acquisition was completed on April 1, 2014, with consideration of six (6) lode mining claims. We intend to explore for gold on the property.US$1. GBL then became 85% shareholder of CSB.
15As at June 30, 2016, the property and equipment owned by CSB are summarized, at net book values as follows:
Land and Building |
| $ | 33,120 |
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Plant and Machinery |
| $ | 15,760 |
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Office equipment |
| $ | 921 |
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Project equipment |
| $ | 76,347 |
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Computer |
| $ | 403 |
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Motor Vehicle |
| $ | 25,074 |
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| $ | 151,625 |
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In the ordinary course of our business, we may from time to time become subject to routine litigation or administrative proceedings which are incidental to our business. We are not a party to nor are we aware of any existing, pending or threatened lawsuits or other legal actions involving us.
None
Item 4. Mine Safety Disclosures.
None.Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (" Dodd-Frank Act "), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic and annual reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities under the regulation of the Federal Mine Safety and Health Act of 1977. The Company did not have any mines in the United States during the year ended June 30, 2016.
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Market Information
Our common stock is now quoted on the OTC Bulletin Board,OTCQB, under the symbol “VRDR”"VRDR". Our stock was approved for quotation on the OTC BBOTCBB on September 26, 2012. However, the Company's common stock did not begin active trading until October, 2013.
The following table sets forth the high and low bid prices for our common stock per quarter as ofreported by the date of filing this Annual Report,OTCBB since trading began October 7, 2013, based on our stock hadfiscal year end June 30, 2016. These prices represent quotations between dealers without adjustment for retail mark-up, markdown or commission, and may not traded.represent actual transactions.
Fiscal Quarter Ended |
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December 31, 2015 |
| $ | 0.068 |
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| $ | 0.05 |
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March 31, 2016 |
| $ | 0.075 |
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| $ | 0.05 |
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June 30, 2016 |
| $ | 0.05 |
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| $ | 0.041 |
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As of September 30, 2013,26, 2016, we had 26 shareholders of record of our common stock and 3,977,50091,288,909 shares issued and outstanding.
Dividend Policy
We have not paid any cash dividends on our common stock and have no present intention of paying any dividends on the shares of our common stock. Our current policy is to retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be determined from time to time by our board of directors.
Equity Compensation Plan Information
None.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
We did not sell any equity securities which were not registered under the Securities Act during the year ended June 30, 2013,2016, that were not otherwise disclosed on our quarterly reports on Form 10-Q or our current reports on Form 8-K filed during the year ended June 30, 2013.2016.
We sold 1,477,500On October 25, 2013, the Company issued 80,000,000 common shares at $0.04par value under the terms of the Assignment Agreement whereby FMR will assign its management rights of CSB's mining operation in the Mining Lease to VRDR, through its wholly-owned subsidiary GBL, in exchange for 80,000,000 shares of the Company's common stock.
On November 11, 2013, the Company issued 75,000 common shares at US$1.75 per share to Marketing Management International, LLC ("MMI"), a Florida Limited Liability Company, under the terms of the Consulting Agreement for total proceedsthe engagement of $59,100, under our S-1 offering. The offering was effective on July 14, 2011 and closed on April 9, 2012. As of September 30, 2013, we have used the funds as follows:
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** The above expenditures are defined as follows:its consulting services.
Property Payment: This item refers to the fee owed by September 17, 2013, per our mineral claim purchase agreement with Gold Explorations, LLC. This payment has been made.
Exploration work: This item refers to the exploration work program that was completed during the quarter ended March 31, 2013.
BLM Claim Fees: This item refers to the cost of maintaining our 6 lode mining claims on an annual basis. Currently the Bureau of Land Management (BLM) charges $140 per claim per year, to be paid by September 1st.
Professional Fees: This item refers to all legal, accounting, and transfer agent fees.
Office and Miscellaneous Expenses: These are the costs of operating our offices, including telephone services, mail, stationery, acquisition of office equipment and supplies, bank service fees and charges, and other miscellaneous expenses associated with running our office.
| 16 |
| Table of Contents |
On January 29, 2014, the Company issued a total of 643,229 common shares for $665,238, of which 288,288 common shares at US$1.25 per share, 183,661 common shares at US$0.83 per share and 171,280 common shares at US$0.89 per share, to Borneo Oil & Gas Corporation Sdn Bhd ("BOG"), a Malaysia Limited Liability Company, under the terms of the Sub-Contractor Agreement for the engagement of its sub-contractor services.
On March 10, 2014, the Company issued a total of 693,180 common shares for $609,756, of which 179,340 common shares at US$0.85 per share and 513,840 common shares at US$0.89 per share, to Borneo Oil & Gas Corporation Sdn Bhd ("BOG"), a Malaysia Limited Liability Company, under the terms of the Sub-Contractor Agreement for the engagement of its sub-contractor services.
On January 21, 2015, the Company issued 5,900,000 common shares at US$0.05 per share to Borneo Oil & Gas Corporation Sdn Bhd ("BOG"), a Malaysia Limited Liability Company, under the terms of the Consultant Agreement for the additional services of its sub-contractor.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended June 30, 2013.2016.
Item 6. Selected Financial Data.
As a “smaller"smaller reporting company,”" we are not required to provide the information required by this Item.
The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report, particularly in the section entitled "Risk Factors" beginning on page 13 of this annual report.
Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Results of Operations
We have generated no$929,655 and $831,339 revenues since inceptionfor the year ended June 30, 2016 and 2015, respectively, and have recorded a gross loss of $205,153 and $731,989 for the year ended June 30, 2016 and 2015. We have incurred $132,127 in$498,411 and $803,741in operating expenses through June 30, 2013.2016 and June 30, 2015. We have other income $77,093 and $38,014 for the year ended June 30, 2016 and 2015.
17
The following table provides selected financial data about our company for the year ended June 30, 20132016 and 2012.June 30, 2015.
Balance Sheet Date |
| 6/30/13 |
| 6/30/12 | ||
|
|
|
|
|
|
|
Cash |
| $ | 2,102 | $ | 31,502 |
|
Total Assets |
| $ | 2,102 | $ | 31,502 |
|
Total Liabilities |
| $ | 50,129 | $ | 32,121 |
|
Stockholders’ Deficit |
| $ | (48,027) | $ | (619) |
|
Statement of Operation |
| June 30, 2016 |
|
| June 30, 2015 |
|
| Change |
| |||
| Amount |
|
| Amount |
|
| % |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
| $ | 929,655 |
|
| $ | 831,339 |
|
|
| 12 |
|
Cost of revenue |
| $ | 1,134,808 |
|
| $ | 1,563,328 |
|
|
| (27 | ) |
Gross Loss |
| $ | 205,153 |
|
| $ | 731,989 |
|
|
| (72 | ) |
Operating Expenses |
| $ | 498,411 |
|
| $ | 803,741 |
|
|
| (38 | ) |
Other Income |
| $ | 77,093 |
|
| $ | 38,014 |
|
|
| 103 |
|
PlanThe revenue derived from the sales of Operation
We are a start-up, exploration-stage company and have not yet generated or realized any revenues from our business operations.
Our auditors have issued a going concern opinion on our audited financial statementsgold mineral to customers in Malaysia. The increase of revenue for the yearperiod ended June 30, 2013. This means that2016 was mainly due to an increase in gold production and gold sales during the period. The decrease of cost of revenue was mainly due to a decrease of salaries and depreciation and increased of closing stock as at period ended and weakness of average rate for MYR:USD compared with last year. (2016: 0.2422 2015: 0.2883). Operating expenses comprised mainly of salaries, office costs, legal and professional fees and travelling expenses. The decrease in operating expenses for the period was mainly due to the due to the weakness of average rate for MYR:USD as mentioned above, and a reduction in the provision for professional and consultancy fees payable to related companies.
Plan of Operation
Our Industry and Principal Markets
Based on the forecast of Business Monitor International, a leading independent proprietary data provider, Malaysia's mining industry is anticipated to reach US$38.7bn by 2017, growing at an annual average rate of 2.5% from 2011 levels. The bulk of this growth will be led by the country's nascent gold mining sector, which has attracted a number of foreign investors in recent years. Our mineral exploration activities are subject to extensive national and local government regulations in Malaysia, which regulations may be revised or expanded at any time. Generally, compliance with these regulations requires the company to obtain the permits issued by government regulatory agencies. Certain permits require periodic renewal or review of their conditions. Malaysia provides an attractive mining legislative environment for foreign investors, but there is substantial doubtthe risk that we can continue as an on-going business forthese laws will change once the next twelve months unless we obtain additional capitalcountry is able to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we begin removing and selling minerals. There is no assurance we will ever reach this point. Accordingly, we must raise cash from sources other than the sale of minerals found on the Property. That cash must be raised from other sources. Our only other source for cash at this time is investments by others. We must raise cash to implement our project and stay in business. As of June 30, 2013, the Company had $2,102 in cash on hand.attract enough foreign money.
| 18 |
| Table of Contents |
The Property, consisting of 6 lode mining claims, is located in Esmeralda County, Nevada and is called the “Payday Claims.”
Our exploration target was to find an ore body containing gold. Our success depends upon finding mineralized material. This includes a determination by our consultant if the Property contains reserves. Mineralized material is a mineralized body, which has been delineated by appropriate spaced drilling or underground sampling to support sufficient tonnage and average grade of metals to justify removal. If we do not find mineralized material or we cannot remove mineralized material, either because we do not have the money to do it or because it is not economically feasible to do it, we will cease operations.Subcontractor
In addition, we may not have enough moneyan effort to complete additional explorationenhance the efficiency of mine operations at the Merapoh Gold Mine, Champmark Sdn Bhd ("CSB") entered into an Operation Term Sheet ("OTS") agreement in July 2013, to outsource the exploitation works of alluvial gold resources at Site IV-1 of the Property. If weMerapoh Gold Mine to a third party subcontractor Borneo Oil & Gas Corporation Sdn Bhd ("BOG").
BOG has the experience and local knowledge in managing the exploitation of alluvial gold at the Merapoh Gold Mine. The Company currently intends to continue to outsource the exploitation of alluvial gold at our mine site to BOG as our third party subcontractor. The Company will provide necessary disclosure when any significant agreements have not raised enough money to complete our exploration program, we will try to raise additional funds from a second public offering, a private placement, or loans. Except forbeen made with the verbal offer to advance funds by a director (See, Liquidity and Capital Resources, below), we have not made any plans to raise additional money and there is no assurance that we would be able to raise additional moneysub-contractor in the future. If
BOG became the Company's shareholder in January 29, 2014 and was no longer a third party subcontractor.
Expansion Plans
At present, we are unsuccessfulwell positioned working with our third party subcontractor, who has the experience and local knowledge, in raising additional funds, we will have to suspend or cease operations.
managing our exploitation of alluvial gold at the Merapoh Gold Mine. The Property is undeveloped raw land, owned by the BureauCompany believes that there are excellent growth opportunities for its business outside of Land Management (“BLM”). To our knowledge, except as noted herein, the Property has never been mined. The only event that has occurred is the locating and the recordingMalaysia. We are constantly exploring for potential acquisition of mining projects in other parts of the lode mining claims under the direction of Gold Explorations, LLC.
Our Initial Exploration Program
The exploration program on the Payday Claims was conducted November 28 to December 1, 2012, by our consultant, Minerals Exploration & Environmental Geochemistry (MEG), and supervised by Gold Explorations, LLC.
18
MEG collected 99 field samples. These samples were sent to ALS minerals for biogeochemical analysis, which was completed in January 2013.
The biogeochemical interpretation report was completed by MEG in February 2013. The total cost of the work program was $10,631.world.
The Company is currently reviewingoperating the information providedgold mining operation at a small scale and is still in its initial stages to expand the production capacity of the gold mining operation. The Company has purchased a number of units of vehicles such as excavators, wheel loader, mobile mining equipment, motor vehicles and trucks for the mining of alluvial gold at the Mining Area. In the effort to expand production capacity, the Company intends to purchase more vehicles, machineries and equipment as well as to conduct feasibility studies for exploration of alluvial and lode gold resources.
As our business is affected by the exploration program and will decide whether or not to proceed to the next phasefluctuations of exploration. Additional funding will be required to take the Property to a more advanced stage of exploration. As of the date of this Report,gold prices, the Company is still considering whetherintends to proceed..diversify its product line by acquiring mining projects with potential for different mineral resources other than gold. We are holding discussions with other mining companies for potential collaboration to carry out exploration and exploitation works on other mineral resources in Southeast Asia regions.
If we are unable to complete any phase of exploration because we do not have sufficient capital, we will cease operations until we raise more money. If we cannot or do not raise additional capital, we will cease operations. If we cease operations, we do not have any additional plans at this time.
We do not intend to hire additional employees at this time. All of the work on the Property will be conducted by unaffiliated independent contractors that we will hire.
Limited Operating History; Need for Additional Capital
There is nolimited historical financial information about us upon which to base an evaluation of our performance. We are an exploration stage corporation and have not generated any revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of our properties, and possible cost overruns due to price and cost increases in services.
To become profitable and competitive, we must conduct the research and exploration of our properties before we start production of any minerals we may find. We sought equity financing to provide for the capital required to implement our research and exploration phase. We have used the funds for our initial operations and exploration phase. We will require additional funds to operate for the next year.
We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.
Liquidity and Capital Resources
Stephen Spalding, a directorThe following table provides selected cash flow data about our company for the year ended June 30, 2016 and officer, has verbally agreed to advance funds, on an as-needed basis, to assist in start-up operations and to continue limited operations. Mr. Spalding proposed2015.
Cash Flow Date |
| June 30, 2016 |
|
| June 30, 2015 |
| ||
|
|
|
|
|
|
| ||
Net Loss from operation |
| $ | 626,471 |
|
| $ | 1,497,716 |
|
Net Cash Generated/(Used) from operating activities |
| $ | (32,387 | ) |
| $ | (322,244 | ) |
Net Cash Generated/(Used) from investing activities |
| $ | - |
|
| $ | 76,456 |
|
Net Cash Generated/(Used) from financing activities |
| $ | (39,866 | ) |
| $ | 39,642 |
|
For the verbal commitment to loan in order to ensure thatyear ended June 30, 2016, the Company wouldhad incurred net loss from operation of $626,471 which posted a negative impact to the company's cash flow. The reconciliation on non-cash items such as depreciation provides negative impact on cash.
In the operation analysis, the net cash used in operating activities decreased from $322,244 to $32,387 for the years ended June 30, 2015 and 2016, respectively. The operation loss of $626,471 was partially offset by the noncash expenses such as $290,774 in depreciation. In the operating assets and liabilities, the net decrease in current assets, such as accounts receivable, inventory and deposits was $46,973 whereas the net increase in current liabilities, such as accounts payable, accrued liabilities, advanced from sub-contractor & related parties and taxation payable was $256,337, which provided $303,310 positive cash flow effect but not enough to offset the $626,471 loss in operation and loss from non-cash loss in the reorganization. The final result of the cash flow from operating activities was $32,387 negative cash flow effect.
In the investing and financing analysis, the repayments of bank loans end up with a negative cash flow of $39,866. The negative factors contribute to increase the negative operating cash flow. In addition, the net decrease in exchange rate effect of $51,439 also provided positive cash flow effect. The cash and cash equivalents at the end of June 30, 2016, was decreased by $20,814 with $16,113 as balance.
The cash flow situation will not allow for operations in the coming next 12 months by self-generated cash provided from operating activities. The Company needs to increase cash flow supplies with a long term plan until the Company makes sustainable profits and has a positive cash flow. Otherwise, loans from related parties may be a temporary solution, although we have no written loan agreements. There is no guarantee that we will be able to continue its operations. While he has agreedsecure adequate financing. If we fail to advance thesecure sufficient funds, the agreement is verbal. Because there is no written agreement to loan funds and the verbal agreementour business activities may be withdrawn at any time, the verbal agreement is unenforceable. As of June 30, 2013, Mr. Spalding has advanced $42,919, net payments.curtailed, or we may cease to operate.
From inception until the date of this filing, we have had limited operating activities. Our financial statements from inception (April 22, 2010) through the period ended June 30, 2013, reported no revenues and a net loss of $132,127. To date, our only source of income has been from the sale of our common stock or from advances from officers and directors. The Company will need to seek out other opportunities for future financing needs.
Off-Balance Sheet Arrangements
19
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller"smaller reporting company”company", we are not required to provide the information required by this Item.
| 20 |
| Table of Contents |
20
Item 8. Financial Statements and Supplementary Data
VERDE RESOURCES, INC.
(An Exploration Stage Company)
INDEX TO AUDITED FINANCIAL STATEMENTS
FOR THE PERIOD OF APRIL 22, 2010 (INCEPTION) TO JUNE 30, 2013
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2016
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F-3 | |||
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| F-5 |
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F-6 |
| 21 |
CERTIFIED PUBLIC ACCOUNTANTS
7th Floor, Nan Dao Commercial Building
359-361 Queen's Road Central
Hong Kong
Tel : 2851 7954
Fax: 2545 4086
| To: | The board of |
|
| ||
|
| |
|
| |
|
|
21
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the BoardReport of Directors
Verde Resources, Inc. (A Development Stage Company)Independent Registered Public Accounting Firm
We have audited the accompanying consolidated balance sheetssheet of Verde Resources, Inc. and its subsidiaries as of June 30, 20132016 and 20122015, and the related consolidated statements ofoperations, stockholders’ deficit loss, stockholders' equity and cash flows for the years thenyear ended and for the period from inception on April 22, 2010 through June 30, 2013.2016 and 2015. These consolidated financial statements are the responsibility of the Company’sCompany's management. Our responsibility is to express an opinion on these financial statements based on our audits.audit.
We conducted our auditsaudit in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
We were not engaged to examine management's assertion about the effectiveness of the Company's internal control over financial reporting as of June 30, 2016 included in the Company's Item 9A "Controls and Procedures" in the Annual Report on Form 10-K and, accordingly, we do not express an opinion thereon.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Verde Resources, Inc. as of June 30, 20132016 and 20122015, and the related statementsresults of its operations, stockholders’ deficit and its cash flows for the years thenyear ended and for the period from inception on April 22, 2010 through June 30, 2013 are2016 and 2015 in conformity with U.S.accounting principles generally accepted accounting principles.in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 714 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a significant accumulated net losses of $132,127 and will need additional working capital for its planned activity anddeficit. In addition, the Company continues to service its debt.experience negative cash flows from operations. These mattersfactors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 7. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result shouldfrom the Company be unable to continue as a going concern.outcome of this uncertainty.
Hong Kong, China | DCAW (CPA) Limited |
September 26, 2016 | Certified Public Accountants |
| F-1 |
| Table of Contents |
Verde Resources, Inc
/s/ Sadler, Gibb & Associates, LLC
Salt Lake City, UT
September 30, 2013
F-2
Verde Resources, Inc.
(An Exploration Stage Company)
Balance Sheets
| As at June 30, | ||||
| 2013 |
| 2012 | ||
ASSETS |
|
|
|
| |
Current Assets |
|
|
|
|
|
Cash and cash equivalents | $ | 2,102 |
| $ | 31,502 |
Total Current Assets |
| 2,102 |
|
| 31,502 |
|
|
|
|
|
|
TOTAL ASSETS | $ | 2,102 |
| $ | 31,502 |
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
Accounts payable | $ | 7,210 |
| $ | 1,121 |
Notes payable – related party |
| 42,919 |
|
| 31,000 |
Total Current Liabilities |
| 50,129 |
|
| 32,121 |
|
|
|
|
|
|
TOTAL LIABILITIES |
| 50,129 |
|
| 32,121 |
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
Preferred stock, par value $0.001, 50,000,000 shares authorized, none issued and outstanding |
| - |
|
| - |
Common stock, par value $0.001, 100,000,000 shares authorized, 3,977,500 shares issued and outstanding |
| 3,978 |
|
| 3,978 |
Additional paid-in capital |
| 80,122 |
|
| 80,122 |
Deficit accumulated during the exploration stage |
| (132,127) |
|
| (84,719) |
Total Stockholders’ Deficit |
| (48,027) |
|
| (619) |
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 2,102 |
| $ | 31,502 |
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
F-3
Verde Resources, Inc.
(An Exploration Stage Company)
Statements of Operations
|
|
|
|
Year Ended June 30, |
| Cumulative From Inception (April 22, 2010) to June 30, | |||||||
|
|
|
|
|
|
| 2013 |
|
| 2012 |
| 2013 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES: |
|
|
|
|
| $ | - |
| $ | - |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mining property costs |
|
|
|
|
|
| 13,205 |
|
| 10,909 |
|
| 39,954 |
General and administrative |
|
|
|
|
|
| 2,605 |
|
| 2,784 |
|
| 5,685 |
Professional fees |
|
|
|
|
|
| 31,598 |
|
| 27,863 |
|
| 86,488 |
Total Operating Expenses |
|
|
|
|
|
| 47,408 |
|
| 41,556 |
|
| 132,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
|
|
|
|
| $ | (47,408) |
| $ | (41,556) |
| $ | (132,127) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic and Diluted Loss per Common Share |
|
|
|
|
| $ | (0.01) |
| $ | (0.01) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Weighted Average Number of Common Shares Outstanding |
|
|
|
|
|
| 3,977,500 |
|
| 3,233,770 |
|
|
|
|
| As at June 30, |
|
| As at June 30, |
| ||
|
| 2016 |
|
| 2015 |
| ||
ASSETS |
|
|
|
|
|
| ||
Current Assets |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 16,113 |
|
| $ | 36,927 |
|
Amount due from related parties |
|
| 3,619 |
|
|
| 3,017 |
|
Inventories |
|
| 123,238 |
|
|
| 11,865 |
|
Other deposit & prepayment |
|
| 1,546 |
|
|
| 161,431 |
|
Total Current Assets |
| $ | 144,516 |
|
| $ | 213,240 |
|
Long Term Assets |
|
|
|
|
|
|
|
|
Property, plant and equipment |
| $ | 151,625 |
|
| $ | 478,225 |
|
Total Long Term Assets |
| $ | 151,625 |
|
| $ | 478,225 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
| $ | 296,141 |
|
| $ | 691,465 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 1,626,524 |
|
| $ | 1,729,304 |
|
Advanced from related parties |
|
| 781,333 |
|
|
| 524,522 |
|
Accrual |
|
| 147,310 |
|
|
| 157,026 |
|
Taxation payable |
|
| 2,473 |
|
|
| 1,495 |
|
Loans from banks |
|
| 27,319 |
|
|
| 39,585 |
|
Total Current Liabilities |
| $ | 2,584,959 |
|
| $ | 2,451,932 |
|
Long term Liabilities |
|
|
|
|
|
|
|
|
Loans from banks (non-current) |
| $ | 7,777 |
|
| $ | 37,207 |
|
Total Long Term Liabilities |
| $ | 7,777 |
|
| $ | 37,207 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
| $ | 2,592,736 |
|
| $ | 2,489,139 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Preferred stock, par value $0.001, 50,000,000 shares authorized, none issued and outstanding |
|
| - |
|
|
| - |
|
Common stock, par value $0.001, 250,000,000 shares authorized, 91,288,909 shares issued and outstanding as of June 30, 2016 & June 30, 2015 |
| $ | 91,289 |
|
| $ | 91,289 |
|
Additional paid-in capital |
|
| 1,869,993 |
|
|
| 1,869,993 |
|
Accumulated deficit |
|
| (4,235,777 | ) |
|
| (3,653,699 | ) |
Accumulated other comprehensive income(loss) |
|
| 531,571 |
|
|
| 404,021 |
|
Non-controlled interest |
|
| (553,671 | ) |
|
| (509,278 | ) |
Total Stockholders' Deficit |
| $ | (2,296,595 | ) |
| $ | (1,797,674 | ) |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $ | 296,141 |
|
| $ | 691,465 |
|
The accompanying notes are an integral part of these consolidated financial statements.
| F-2 |
| Table of Contents |
F-4
Verde Resources, Inc.
(An Exploration Stage Company)
StatementConsolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the Period of Inception (April 22, 2010) to June 30, 2013Operations
| Common Shares |
| Additional Paid-In |
| Deficit Accumulated During the Exploration |
| Total Stockholders’ | ||
| Shares |
| Amount |
| Capital |
| Stage |
| Equity (Deficit) |
|
|
|
|
|
|
|
|
|
|
Balance- April 22, 2010 (Inception) | - | $ | - | $ | - | $ | - | $ | - |
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash at $0.01 per share | 2,500,000 |
| 2,500 |
| 22,500 |
| - |
| 25,000 |
Loss for the period | - |
| - |
| - |
| (11,788) |
| (11,788) |
Balance – June 30, 2010 | 2,500,000 |
| 2,500 |
| 22,500 |
| (11,788) |
| 13,212 |
|
|
|
|
|
|
|
|
|
|
Loss for the year | - |
| - |
| - |
| (31,375) |
| (31,375) |
Balance – June 30, 2011 | 2,500,000 |
| 2,500 |
| 22,500 |
| (43,163) |
| (18,163) |
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash at $0.04 per share | 1,477,500 |
| 1,478 |
| 57,622 |
| - |
| 59,100 |
Loss for the year | - |
| - |
| - |
| (41,556) |
| (41,556) |
Balance – June 30, 2012 | 3,977,500 |
| 3,978 |
| 80,122 |
| (84,719) |
| (619) |
|
|
|
|
|
|
|
|
|
|
Loss for the year | - |
| - |
| - |
| (47,408) |
| (47,408) |
Balance – June 30, 2013 | 3,977,500 | $ | 3,978 | $ | 80,122 | $ | (132,127) | $ | (48,027) |
|
| For the year |
|
| For the year |
| ||
|
| ended |
|
| Ended |
| ||
|
| June 30, |
|
| June 30, |
| ||
|
|
|
|
|
|
| ||
REVENUES |
|
|
|
|
|
| ||
Revenue |
| $ | 929,655 |
|
| $ | 831,339 |
|
Cost of revenue |
|
| (1,134,808 | ) |
|
| (1,563,328 | ) |
Gross loss |
|
| (205,153 | ) |
|
| (731,989 | ) |
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
Selling, general & administrative expenses |
|
| (498,411 | ) |
|
| (803,741 | ) |
LOSS FROM OPERATIONS |
| $ | (703,564 | ) |
| $ | (1,535,730 | ) |
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
| 77,093 |
|
|
| 38,014 |
|
|
|
|
|
|
|
|
|
|
NET LOSS BEFORE INCOME TAX |
| $ | (626,471 | ) |
| $ | (1,497,716 | ) |
|
|
|
|
|
|
|
|
|
Provision of Income Tax |
|
| - |
|
|
| - |
|
NET LOSS |
| $ | (626,471 | ) |
| $ | (1,497,716 | ) |
|
|
|
|
|
|
|
|
|
Non-controlled interest |
|
| 44,393 |
|
|
| 125,928 |
|
Net loss contributed to the group |
|
| (582,078 | ) |
|
| (1,371,788 | ) |
Other comprehensive income(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gain(loss) |
| $ | 127,550 |
|
| $ | 404,432 |
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
| $ | (454,528 | ) |
| $ | (967,356 | ) |
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss per Common Share |
| $ | (0.01 | ) |
| $ | (0.02 | ) |
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares Outstanding |
|
| 91,288,909 |
|
|
| 87,991,375 |
|
The accompanying notes are an integral part of these consolidated financial statements.
F-5
| F-3 |
| Table of Contents |
Verde Resources, Inc.
(An Exploration Stage Company)
StatementsStatement of Cash FlowsChanges in Stockholders' Equity (Deficit)
| Year Ended June 30, |
| Cumulative From Inception (April 22, 2010) to June 30, | |||||
|
| 2013 |
|
| 2012 |
| 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net loss | $ | (47,408) |
| $ | (41,556) |
| $ | (132,127) |
|
|
|
|
|
|
|
|
|
Changes in Operating Assets and Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
| 6,089 |
|
| (2,489) |
|
| 7,210 |
Net cash used in operating activities |
| (41,319) |
|
| (44,045) |
|
| (124,917) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds received from notes payable - related party |
| 11,919 |
|
| 5,000 |
|
| 43,919 |
Payments on notes payable – related party |
| - |
|
| - |
|
| (1,000) |
Issuance of common stock for cash |
| - |
|
| 59,100 |
|
| 84,100 |
Net cash provided by financing activities |
| 11,919 |
|
| 64,100 |
|
| 127,019 |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
| (29,400) |
|
| 20,055 |
|
| 2,102 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - beginning of period |
| 31,502 |
|
| 11,447 |
|
| - |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - end of period | $ | 2,102 |
| $ | 31,502 |
| $ | 2,102 |
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Disclosure: |
|
|
|
|
|
|
|
|
Cash paid for interest | $ | - |
| $ | - |
| $ | - |
Cash paid for income taxes | $ | - |
| $ | - |
| $ | - |
|
| Common Shares |
|
| Additional Paid-In |
|
| Accumulated |
|
| Non-Controlling |
|
| Accumulated Other |
|
|
| |||||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Interest |
|
| Income (Loss) |
|
| Total |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance - June 30, 2014 |
|
| 85,388,909 |
|
| $ | 85,389 |
|
| $ | 1,580,893 |
|
| $ | (2,281,911 | ) |
| $ | (383,350 | ) |
| $ | (411 | ) |
| $ | (999,390 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued |
|
| 5,900,000 |
|
|
| 5,900 |
|
|
| 289,100 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 295,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,371,788 | ) |
|
| (125,928 | ) |
|
| - |
|
|
| (1,497,716 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gain |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 404,432 |
|
|
| 404,432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - June 30, 2015 |
|
| 91,288,909 |
|
| $ | 91,289 |
|
| $ | 1,869,993 |
|
| $ | (3,653,699 | ) |
| $ | (509,278 | ) |
| $ | 404,021 |
|
| $ | (1,797,674 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (582,078 | ) |
|
| (44,393 | ) |
|
| - |
|
|
| (626,471 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gain |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 127,550 |
|
|
| 127,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - June 30, 2016 |
|
| 91,288,909 |
|
| $ | 91,289 |
|
| $ | 1,869,993 |
|
| $ | (4,235,777 | ) |
| $ | (553,671 | ) |
| $ | 531,571 |
|
| $ | (2,296,595 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
F-6
| F-4 |
| Table of Contents |
Verde Resources, Inc.
(An Exploration Stage Company)Consolidated Statements of Cash Flows
Notes to Financial Statements
|
| June 30, 2016 |
|
| June 30, 2015 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
| ||
Net loss |
| $ | (626,471 | ) |
| $ | (1,497,716 | ) |
Adjustments to reconcile loss to net cash used in operations |
|
|
|
|
|
|
|
|
Depreciation |
|
| 290,774 |
|
|
| 564,117 |
|
Gain on disposal of fixed assets |
|
| - |
|
|
| (16,996 | ) |
Issuance of common stock (non-cash) |
|
| - |
|
|
| 295,000 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
(Increase) decrease in: |
|
|
|
|
|
|
|
|
Amount due from related party |
|
| (773 | ) |
|
| 9,874 |
|
Deposits and prepayment |
|
| 159,792 |
|
|
| (103,309 | ) |
Inventory |
|
| (112,046 | ) |
|
| 42,701 |
|
Increase (decrease) in: |
|
|
|
|
|
|
|
|
Accounts payable |
|
| (4,673 | ) |
|
| 199,373 |
|
Accrued liabilities |
|
| (7,419 | ) |
|
| 3,223 |
|
Advanced from sub-contractor & related parties |
|
| 267,366 |
|
|
| 179,994 |
|
GST Tax payable |
|
| 1,063 |
|
|
| 1,495 |
|
Net cash (used in) operating activities |
|
| (32,387 | ) |
|
| (322,244 | ) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Proceeds from disposal of plant and equipment |
|
| - |
|
|
| 92,646 |
|
Addition of motor vehicle |
|
| - |
|
|
| (16,190 | ) |
Net cash provided by investing activities |
|
| - |
|
|
| 76,456 |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from bank loans |
|
| - |
|
|
| 137,774 |
|
Repayments of bank loans |
|
| (39,866 | ) |
|
| (98,132 | ) |
Net cash (used in) provided by financing activities |
|
| (39,866 | ) |
|
| 39,642 |
|
|
|
|
|
|
|
|
|
|
Net (decrease) in cash and cash equivalents |
|
| (72,253 | ) |
|
| (206,146 | ) |
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
| 51,439 |
|
|
| 121,292 |
|
|
|
|
|
|
|
|
|
|
Net (decrease) in cash and cash equivalents |
|
| (20,814 | ) |
|
| (84,854 | ) |
Cash and cash equivalents at beginning of year |
|
| 36,927 |
|
|
| 121,781 |
|
Cash and cash equivalents at end of year |
| $ | 16,113 |
|
| $ | 36,927 |
|
|
|
|
|
|
|
|
|
|
Supplementary cash flow information |
|
|
|
|
|
|
|
|
Income taxes paid |
| $ | - |
|
| $ | - |
|
Interest paid |
| $ | 2,453 |
|
| $ | 5,242 |
|
Supplementary non-cash information |
|
|
|
|
|
|
|
|
Reorganization |
| $ | - |
|
| $ | - |
|
Issuance of common stock (non-cash) |
| $ | - |
|
| $ | 295,000 |
|
June 30, 2013 and 2012The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
| Table of Contents |
Verde Resources, Inc .
Notes to Consolidated Financial Statements
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Verde Resources, Inc. (the “Company”"Company" or "VRDR") was incorporated on April 22, 2010 in the State of Nevada, U.S.A. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, and the Company’sCompany's fiscal year end is June 30.
Gold Billion Global Limited ("Gold Billion" or "GBL") was incorporated in British Virgin Islands on February 7, 2013. GBL is setup by the Board of Director of Federal Mining Resources Limited ("FMR"). The major operation of GBL is to manage and monitor the mineral exploration and mining projects of FMR.
On July 1, 2013, FMR has assigned its rights and obligation on Champmark Sdn Bhd ("CSB") to GBL. Four of the five members of CSB Board of Directors were appointed by FMR, with two of the GBL Board of Directors currently sitting on the CSB Board. According to ASC 810-05-08 A, CSB is a deemed subsidiary of GBL where it has controlled the CSB Board of Directors, has assigned rights to receive future benefits and residual value, and obligation to absorb loss and finance for CSB by GBL. GBL has the power to direct the activities of CSB that most significantly impact CSB's economic performance and the obligation to absorb losses of CSB that could potentially be significant to the CSB or the right to receive benefits from CSB that could potentially be significant to CSB. GBL is the primary beneficiary of CSB because it has been assigned with all relevant rights and obligation and can direct the activities of CSB through the common directors and the 85% shareholder, FMR. Under 810-23-42, 43, it is determined that CSB is de-facto agent of GBL and GBL is the de-facto principal of CSB. GBL will start to consolidate CSB from July 1, 2013 and the Company iswill consolidated GBL and CSB from October 25, 2013 onwards.
On February 17, 2014, the Company entered into a Supplementary Agreement to the Assignment Agreement and completed an exploration stage company that intendsacquisition of GBL pursuant to engage principallythe Supplementary Agreement. The acquisition was a reverse acquisition in accordance with ASC 805-40 "Reverse Acquisitions". The legal parent was VRDR which was the accounting acquiree while GBL was the accounting acquirer. There was a 15% non-controlling interest of Champmark SDN BHD ("CSB") after the acquisition. This transaction was accounted for as a recapitalization effected by a share exchange, wherein GBL with its 85% deemed subsidiary CSB was considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of the acquired entity have been brought forward at their book value and no goodwill has been recognized.
As a result of the acquisition, explorationthe Company holds 100% equity interest in GBL and development85% variable interest in CSB. Our consolidated subsidiaries include GBL being our wholly-owned subsidiary and 85% of resource properties. The Company signed an option agreement to acquireCSB being a property(Note 6). Prior to this, the Company’s activities had been limited to its formationvariable interest entity (VIE) and the raisingdeemed subsidiary of equity capital.GBL.
Exploration StageOn March 17, 2014, the Company through GBL and its deemed subsidiary CSB entered into a Sub-Contract Agreement with Borneo Oil & Gas Corporation Sdn Bhd ("BOG") for the engagement of its sub-contractor services to carry out exploration and exploitation works on alluvial and lode gold resources at Site IV-1 of the Merapoh Mine. The Sub-Contract Agreement is for a period of 5 years with a renewal for another 5 years subject to review by both parties. BOG is a wholly-owned subsidiary of Borneo Oil Berhad (BOB) which is listed on the main market of Kuala Lumpur Stock Exchange. BOG being a local company in Malaysia provides the Company with the advantage of local knowledge and well-established connection in dealing with the relevant local authorities in our mining operations.
On April 1, 2014, GBL purchased 85% equity interest of CSB, and CSB became indirect subsidiary of the Company.
Effective August 27, 2014, the Company's Articles of Incorporation were amended to increase the authorized shares of the Company from 100,000,000 shares of common stock to 250,000,000 shares of common stock. A copy of the Certificate of Amendment was filed with the Nevada Secretary of State. The Form 8K announcing the increase of the authorized shares of the Company is considered to be in the exploration stage as defined in ASC 915-10-05 “Development Stage Entities,” and interpreted by the Securities and Exchange Commission for mining companies in Industry Guide 7. The Company is devoting substantiallywas filed with SEC on September 15, 2014.
Effective February 20, 2016, Mr. Wu Ming Ding resigned all of its effortshis positions as President and Director of the Company with Mr. Balakrishnan B S Muthu being appointed President to developmentfill the vacancy created. Effective February 20, 2016, Mr. Chen Ching was appointed Director of business plansthe Company and the acquisitionentire Board of mineral properties.Directors now consists of Mr. Balakrishnan B S Muthu and Mr. Chen Ching. The SC 14F1 and Form 8-K announcing the change in officers and directors were filed with SEC on February 10, 2016 and February 22, 2016 respectively.
| F-6 |
| Table of Contents |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP). These consolidated financial statements are expressed in United States dollars ($). Financial statements prepared in accordance with GAAP contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. These condensed consolidated audited financial statements include all adjustments that, in the opinion of management, are necessary in order to make the financial statements not misleading.
Basis of Consolidation
The condensed consolidated financial statements include the financial statements of Verde Resources, Inc., its wholly owned subsidiary Gold Billion Global Limited ("GBL") and the 85% of the deemed subsidiary variable interest of Champmark SDN BHD ("CSB"). All inter-company balances and transactions between the Company and its subsidiary and variable interest entity (VIE) have been eliminated upon consolidation.
The Company has adopted ASC Topic 810-10-5-8, "Variable Interest Entities", which requires a variable interest entity or VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE's residual returns.
Variable Interest Entity
On July 1, 2013, the Company's subsidiary, GBL entered into a series of agreements ("VIE agreements") with FMR and details of the VIE agreements are as follows :
1. | Management Agreement, FMR entrusted the management rights of its subsidiary CSB to GBL that include: | |
i) | management and administrative rights over the day-to-day business affairs of CSB and the mining operation at Site IV-1 of the Merapoh Gold Mine; | |
ii) | final right for the appointment of members to the Board of Directors and the management team of CSB; | |
iii) | act as principal of CSB; | |
iv) | obligation to provide financial support to CSB; | |
v) | option to purchase an equity interest in CSB; | |
vi) | entitlement to future benefits and residual value of CSB; | |
vii) | right to impose no dividend policy; | |
viii) | human resources management. |
2. | Debt Assignment, FMR assigned to GBL the sum of money in the amount of US Dollars One Hundred Nine Thousand Eight Hundred One And Cents Seventy-Two Only (US$ 109,801.72), now due to GBL from CSB under the financing obligation from the FMR to CSB. |
With the above agreements, GBL demonstrates its ability to control CSB as the primary beneficiary and the operating results of the VIE was included in the condensed consolidated financial statements for the year ended June 30, 2014.
On April 1, 2014, the Board of Director of GBL notified FMR upon the decision to exercise the right of option to purchase 85% equity interest of CSB under Management Agreement Section 3.2.4 dated July 1, 2013 between GBL and FMR. This acquisition was completed on April 1, 2014 with consideration of US$1. GBL then became 85% shareholder of CSB and is required to consolidate CSB as a subsidiary.
| F-7 |
| Table of Contents |
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’sCompany's periodic filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of the Company.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had $2,102$16,113 and $31,502$36,927 in cash and cash equivalents at June 30, 20132016 and 2012,June 30, 2015, respectively.
Mineral Acquisition and Exploration Costs
The Company has been in the exploration stage since its formation on April 22, 2010 and has not yet realized any revenue from its planned operations. It has been primarily engaged in the acquisition, exploration, and development of mining properties. Mineral property acquisition and exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserves.
Start-Up Costs
In accordance with ASC 720-15-20, “Start-Up Costs,” the Company expenses all costs incurred in connection with the start-up and organizationConcentrations of the Company.
F-7
Net Income or (Loss) Per Share of Common Stock
The Company has adopted ASC Topic No. 260,“Earnings Per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures, and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.Credit Risk
The following table sets forth the computation of basic and diluted earnings per share:
|
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| Year Ended June 30, | ||||
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| 2013 |
| 2012 |
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Net loss applicable to common shares |
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| $ | (47,408) | $ | (41,556) | |||
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Weighted average common shares |
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outstanding (Basic) |
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| 3,977,500 |
| 3,233,770 | ||
| Options |
| ` |
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| - |
| - |
| Warrants |
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|
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|
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| - |
| - |
Weighted average common shares |
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| |||
outstanding (Diluted) |
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| 3,977,500 |
| 3,233,770 | ||
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Net loss per share (Basic and Diluted) |
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| $ | (0.01) | $ | (0.01) | |||
The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
Concentrations of Credit Risk
The Company’sCompany's financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables it will likely incur in the near future. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’sCompany's management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Risks and Uncertainties
The Company operates in the resource exploration industry that is subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating a resource exploration business, including the potential risk of business failure.
Accounts Receivable
Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts will be recorded in the period when a loss is probable based on an assessment of specific evidence indicating troubled collection, historical experience, accounts aging, ongoing business relation and other factors. Accounts are written off after exhaustive efforts at collection. If accounts receivable are to be provided for, or written off, they would be recognized in the consolidated statement of operations within operating expenses. At June 30, 2016 and June 30, 2015, the Company has no allowance for doubtful accounts, as per management's judgment based on their best knowledge. As of June 30, 2016 and June 30, 2015, the longest credit term for certain customers are 60 days.
Provision for Doubtful Accounts
The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible receivables and reviews accounts receivable by amounts due by customers which are past due to identify specific customers with known disputes or collectability issues. In determining the amount of the reserve, the Company makes judgments about the creditworthiness of customers based on past collection experience and ongoing credit risk evaluations. At June 30, 2016 and June 30, 2015 there was no allowance for doubtful accounts.
| F-8 |
| Table of Contents |
Fair Value
ASC Topic 820 "Fair Value Measurement and Disclosures" establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.
These tiers include:
· | Level 1 - defined as observable inputs such as quoted prices in active markets; | |
· | Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and | |
· | Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
The Company's financial instruments consist of cash and cash equivalents, trade receivables, other receivables, payables, and short term and long term debt. The carrying values of cash and cash equivalents, trade receivables, other receivables, and payables approximate their fair value due to their short maturities. The carrying value of long term debt approximates the fair value of debt of similar terms and remaining maturities available to the company.
The Company's non-financial assets are measured on a recurring basis. These non-financial assets are measured for impairment annually on the Company's measurement date at the reporting unit level using Level 3 inputs. For most assets, ASC 820 requires that the impact of changes resulting from its application be applied prospectively in the year in which the statement is initially applied.
The Company's non-financial assets measured on a non-recurring basis include the Company's property, plant and equipment and finite-use intangible assets which are measured for recoverability when indicators for impairment are present. ASC 820 requires companies to disclose assets and liabilities measured on a non-recurring basis in the period in which the re-measurement at fair value is performed.
The Company did not have any convertible bonds as of June 30, 2016 and June 30, 2015.
Foreign Currency Translation
The Company's reporting currency is the United States dollar ("$") and the accompanying consolidated financial statements have been expressed in United States dollars. The Company's functional currency is the Malaysian Ringgit ( "MYR") which is a functional currency as being the primary currency of the economic environment in which their operations are conducted.
In accordance with ASC Topic 830 "Translation of Financial Statements" , capital accounts of the consolidated financial statements are translated into United States dollars from MYR at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the respective year. The resulting exchange differences are recorded in the consolidated statement of operations.
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| June 30, 2016 |
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| June 30, 2015 |
| ||
Year-end MYR : $1 exchange rate |
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| 0.2494 |
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| 0.2644 |
|
Average MYR : $1 exchange rate |
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| 0.2442 |
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| 0.2883 |
|
Comprehensive Income
Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. Comprehensive income includes net income and the foreign currency translation changes.
| F-9 |
| Table of Contents |
Segment Reporting
The Company currently engages in one operation segment: Gold Mining. The expenses incurred were consisting principally of management services. The Company's major operation is located in Malaysia.
Mineral Acquisition and Exploration Costs
The Company has been in the exploration stage since its formation on April 22, 2010. It has been primarily engaged in the acquisition, exploration, and development of mining properties. The Company was no longer considered to be in the exploration stage after the reverse take-over with its subsidiary GBL.
Mineral property acquisition and exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserves.
Environmental Expenditures
The operations of the Company have been, and may in the future be affected from time to time in varying degree by changes in environmental regulations, including those for future reclamation and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Company’sCompany's policy is to meet or, if possible, surpass standards set by relevant legislation by application of technically proven and economically feasible measures.
Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against earnings as incurred or capitalized and amortized depending on their future economic benefits. All of these types of expenditures incurred since inception have been charged against earnings due to the uncertainty of their future recoverability. Estimated future reclamation and site restoration costs, when the ultimate liability is reasonably determinable, are charged against earnings over the estimated remaining life of the related business operation, net of expected recoveries.
F-8Revenue Recognition
In accordance with the ASC Topic 605, "Revenue Recognition", the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectibility is reasonably assured.
The Company derives revenues primarily from the sales of gold mineral to registered gold trading companies in Malaysia. The Company generally recognizes its revenues at the time of gold sales and its selling price is determined by the prevailing market value of gold bullion quoted by the leading registered gold trading company in Malaysia. Sales invoice will be duly presented to the trading companies when delivery is completed and revenue is then recognized.
Cost of Revenue
The cost of revenue consists of exploration cost, mine equipment depreciation, production cost, mine site management cost, sub-contractor cost, and royalty and tribute payment which are levied on the gross revenue at the rate of 18% on the invoiced value of gold sales.
Advertising Expenses
Advertising costs are expensed as incurred under ASC Topic 720, "Advertising Costs" . Advertising expenses incurred for the years ended June 30, 2016 and year ended June 30, 2015 were $0.
| F-10 |
| Table of Contents |
Income Taxes
The provision for income taxes is determined in accordance with the provisions of ASC Topic 740, "Accounting for Income Taxes" ("ASC 740"). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. As of June 30, 2016 and June 30, 2015, the Company did not have any significant unrecognized uncertain tax positions.
Recent Accounting Pronouncements
The FASB has issued Accounting Standards Update (ASU) No. 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.
The FASB issued this ASU as part of its initiative to reduce complexity in accounting standards. The objective of the simplification initiative is to identify, evaluate, and improve areas of U.S. GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to the users of financial statements.
This ASU eliminates from U.S. GAAP the concept of extraordinary items. Subtopic 225-20, Income Statement - Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item.
If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. The entity also is required to disclose applicable income taxes and either present or disclose earnings-per-share data applicable to the extraordinary item.
The FASB heard from stakeholders that the concept of extraordinary items causes uncertainty because it is unclear when an item should be considered both unusual and infrequent. Additionally, some stakeholders said that although users find information about unusual or infrequent events and transactions useful, they do not find the extraordinary item classification and presentation necessary to identify those events and transactions. Other stakeholders noted that it is extremely rare in current practice for a transaction or event to meet the requirements to be presented as an extraordinary item.
This ASU will also align more closely U.S. GAAP income statement presentation guidance with IAS 1, Presentation of Financial Statements, which prohibits the presentation and disclosure of extraordinary items.
The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The effective date is the same for both public business entities and all other entities.
The FASB has issued an Accounting Standards Update (ASU) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions).
The ASU focuses on the consolidation evaluation for reporting organizations (public and private companies and not-for-profit organizations) that are required to evaluate whether they should consolidate certain legal entities.
| F-11 |
| Table of Contents |
In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification™ and improves current GAAP by:
- | Placing more emphasis on risk of loss when determining a controlling financial interest. A reporting organization may no longer have to consolidate a legal entity in certain circumstances based solely on its fee arrangement, when certain criteria are met. | |
- | Reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (VIE). | |
- | Changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or VIEs. |
The ASU will be effective for periods beginning after December 15, 2015, for public companies. For private companies and not-for-profit organizations, the ASU will be effective for annual periods beginning after December 15, 2016; and for interim periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period.
The FASB has issued Accounting Standards Update (ASU) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.
For public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016.
Early adoption of the amendments is permitted for financial statements that have not been previously issued.
The amendments should be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect of the change on the financial statement line items (i.e., debt issuance cost asset and the debt liability).
The FASB has issued Accounting Standards Update (ASU) No. 2015-04, Compensation - Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets. For an entity with a fiscal year-end that does not coincide with a month-end, the amendments in this ASU provide a practical expedient that permits the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity’s fiscal year-end and apply that practical expedient consistently from year to year. The practical expedient should be applied consistently to all plans if an entity has more than one plan. Employee benefit plans are not within the scope of the amendments.
If a contribution or significant event (such as a plan amendment, settlement, or curtailment that calls for a remeasurement in accordance with existing requirements) occurs between the month-end date used to measure defined benefit plan assets and obligations and an entity’s fiscal year-end, the entity should adjust the measurement of defined benefit plan assets and obligations to reflect the effects of those contributions or significant events. However, an entity should not adjust the measurement of defined benefit plan assets and obligations for other events that occur between the month-end measurement and the entity’s fiscal year-end that are not caused by the entity (e.g., changes in market prices or interest rates).
If an entity applies the practical expedient and a contribution is made between the month-end date used to measure defined benefit plan assets and obligations and the entity’s fiscal year-end, the entity should not adjust the fair value of each class of plan assets for the effects of the contribution. Instead, the entity should disclose the amount of the contribution to permit reconciliation of the total fair value of all the classes of plan assets in the fair value hierarchy to the ending balance of the fair value of plan assets
| F-12 |
| Table of Contents |
An entity is required to disclose the accounting policy election and the date used to measure defined benefit plan assets and obligations in accordance with the amendments in this ASU.
The amendments are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Earlier application is permitted. The amendments should be applied prospectively.
IFRS does not have a practical expedient that permits an entity to measure defined benefit plan assets and obligations as of the month-end that is closest to the entity’s fiscal year-end (or the month-end that is closest to the date of a significant event that occurred in an interim period), whereas the amendments in this Update provide that practical expedient.
The amendments add guidance to Subtopic 350-40, Intangibles - Goodwill and Other - Internal-Use Software, which will help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement. The guidance already exists in the FASB Accounting Standards Codification™ in paragraphs 985-605-55-121 through 55-123, but it is included in a Subtopic applied by cloud service providers to determine whether an arrangement includes the sale or license of software.
The amendments provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments do not change the accounting for a customer’s accounting for service contracts. As a result of the amendments, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets.
For public business entities, the amendments will be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. For all other entities, the amendments will be effective for annual periods beginning after December 15, 2015, and interim periods in annual periods beginning after December 15, 2016. Early adoption is permitted for all entities.
An entity can elect to adopt the amendments either: (1) prospectively to all arrangements entered into or materially modified after the effective date; or (2) retrospectively. For prospective transition, the only disclosure requirements at transition are the nature of and reason for the change in accounting principle, the transition method, and a qualitative description of the financial statement line items affected by the change. For retrospective transition, the disclosure requirements at transition include the requirements for prospective transition and quantitative information about the effects of the accounting change.
The amendments specify that for purposes of calculating historical earnings per unit under the two-class method, the earnings (losses) of a transferred business before the date of a dropdown transaction should be allocated entirely to the general partner. In that circumstance, the previously reported earnings per unit of the limited partners (which is typically the earnings per unit measure presented in the financial statements) would not change as a result of the dropdown transaction. Qualitative disclosures about how the rights to the earnings (losses) differ before and after the dropdown transaction occurs for purposes of computing earnings per unit under the two-class method also are required.
| F-13 |
| Table of Contents |
Current GAAP does not contain guidance for master limited partnerships that specifies how historical earnings per unit should be affected when a dropdown transaction occurs that is accounted for as a transaction between entities under common control.
The amendments are effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Earlier application is permitted. The amendments should be applied retrospectively for all financial statements presented.
The FASB has issued Accounting Standards Update 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). The amendments apply to reporting entities that elect to measure the fair value of an investment using the net asset value per share (or its equivalent) practical expedient.
Topic 820, Fair Value Measurement, permits a reporting entity, as a practical expedient, to measure the fair value of certain investments using the net asset value per share of the investment. Currently, investments valued using the practical expedient are categorized within the fair value hierarchy on the basis of whether the investment is redeemable with the investee at net asset value on the measurement date, never redeemable with the investee at net asset value, or redeemable with the investee at net asset value at a future date. For investments that are redeemable with the investee at a future date, a reporting entity must consider the length of time until those investments become redeemable to determine the classification within the fair value hierarchy.
The amendments remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient.
The amendments are effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. A reporting entity should apply the amendments retrospectively to all periods presented. The retrospective approach requires that an investment for which fair value is measured using the net asset value per share practical expedient be removed from the fair value hierarchy in all periods presented in an entity’s financial statements. Earlier application is permitted.
The FASB has issued ASU No. 2015-08, Business Combinations (Topic 805): Pushdown Accounting-Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115. This ASU amends various SEC paragraphs of the FASB Accounting Standards CodificationTM pursuant to the issuance of SEC Staff Accounting Bulletin No. 115.
The FASB has issued Accounting Standards Update (ASU) No. 2015-10, Technical Corrections and Improvements. The amendments cover a wide range of Topics in the FASB Accounting Standards Codification™ (Codification). The amendments generally fall into one of the types of amendments listed below.
1. | Amendments Related to Differences between Original Guidance and the Codification. These amendments arose because of differences between original guidance (e.g., FASB Statements, EITF Issues, and so forth) and the Codification. These amendments principally carry forward pre-Codification guidance or subsequent amendments into the Codification. Many times, either the writing style or phrasing of the original guidance did not directly translate into the Codification format and style. As a result, the meaning of the guidance might have been unintentionally altered. Alternatively, amendments in this section may relate to guidance that was codified without some text, references, or phrasing that, upon review, was deemed important to the guidance. | |
2. | Guidance Clarification and Reference Corrections. These amendments provide clarification through updating wording, correcting references, or a combination of both. In most cases, the feedback suggested that, without these enhancements, guidance may be misapplied or misinterpreted. | |
3. | Simplification. These amendments streamline or simplify the Codification through minor structural changes to headings or minor editing of text to improve the usefulness and understandability of the Codification. | |
4. | Minor Improvements. These amendments improve the guidance and are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. |
| F-14 |
| Table of Contents |
The amendments represent changes to clarify the Codification, correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. In addition, some of the amendments will make the Codification easier to understand and easier to apply by eliminating inconsistencies, providing needed clarifications, and improving the presentation of guidance in the Codification.
Transition guidance varies based on the amendments. The amendments that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments will be effective upon issuance.
The FASB has issued Accounting Standards Update (ASU) No, 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory.
Topic 330, Inventory, currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin.
The amendments do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost.
An entity should measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method.
The amendments more closely align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards.
For public business entities, the amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period.
The FASB has issued Accounting Standards Update (ASU) No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in ASU 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in ASU 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in ASU 2014-09.
The FASB has issued Accounting Standards Update (ASU) No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance is intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities.
| F-15 |
| Table of Contents |
The new guidance makes targeted improvements to existing U.S. GAAP by:
-Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income;
-Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; -Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements;
-Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities;
-Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and
-Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.
The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For private companies, not-for-profit organizations, and employee benefit plans, the new guidance becomes effective for fiscal years beginning after December 15, 2018, and for interim periods within fiscal years beginning after December 15, 2019.
The new guidance permits early adoption of the own credit provision. In addition, the new guidance permits early adoption of the provision that exempts private companies and not-for-profit organizations from having to disclose fair value information about financial instruments measured at amortized cost.
On February 25, 2016, the Financial Accounting Standards Board (FASB) issued its new lease accounting guidance in Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842).
Under the new guidance, lessees will be required recognize the following for all leases (with the exception of short-term leases) at the commencement date:
-A lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and-A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.
Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers.
The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing.
Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). Nonpublic business entities should apply the amendments for fiscal years beginning after December 15, 2019 (i.e., January 1, 2020, for a calendar year entity), and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted for all public business entities and all nonpublic business entities upon issuance.
| F-16 |
| Table of Contents |
Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach.
The FASB has issued Accounting Standards Update (ASU) No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments relate to when another party, along with the entity, is involved in providing a good or service to a customer. Topic 606 Revenue from Contracts with Customers requires an entity to determine whether the nature of its promise is to provide that good or service to the customer (i.e., the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (i.e., the entity is an agent).
The amendments are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations by clarifying the following:
-An entity determines whether it is a principal or an agent for each specified good or service promised to a customer.
-An entity determines the nature of each specified or service (e.g., whether it is a good, service, or a right to a good or service).
-When another entity is involved in providing goods or services to a customer, an entity that is a principal obtains control of: (a) a good or another asset from the other party that it then transfers to the customer; (b) a right to a service that will be performed by another party, which gives the entity the ability to direct that party to provide the service to the customer on the entity’s behalf; or (c) a good or service from the other party that it combines with other goods or services to provide the specified good or service to the customer.
-The purpose of the indicators in paragraph 606-10-55-39 is to support or assist in the assessment of control. The amendments in paragraph 606-10-55-39A clarify that the indicators may be more or less relevant to the control assessment and that one or more indicators may be more or less persuasive to the control assessment, depending on the facts and circumstances.
The amendments amend certain existing illustrative examples and add additional illustrative examples to assist in the application of the guidance.
The effective date and transition of these amendments is the same as the effective date and transition of ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Public entities should apply the amendments in ASU 2014-09 for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Private entities must apply the amendments one year later.
The FASB has issued Accounting Standards Update No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees.
Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The amendments also simplify two areas specific to private companies:
1. Practical Expedient for Expected Term: In lieu of estimating the period of time that a share-based award will be outstanding, private companies can now apply a practical expedient to estimate the expected term for all awards with performance or service conditions that have certain characteristics.
2. Intrinsic Value: Private companies can now make a one-time election to switch from measuring all liability-classified awards at fair value to measuring them at intrinsic value. Previously, private companies were provided an option to measure all liability-classified awards at intrinsic value, but some private companies were unaware of that option.
| F-17 |
| Table of Contents |
Accounting for employee share-based awards was identified by the Private Company Council (PCC) as an area of concern among private company stakeholders. The PCC worked with the FASB to discuss and analyze the issues that private companies have encountered in this area when applying the standard. The PCC also asked the FASB staff to conduct outreach with users as a part of the FASB’s pre-agenda research on the topic.
The FASB also considered the conclusions in the Financial Accounting Foundation’s Post-Implementation Review Report on Statement 123(R), Share-Based Payment. Though the report concluded that the prior standard achieved its purpose, it noted that certain areas within Statement 123(R) may be costly and difficult to apply.
For public companies, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For private companies, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any organization in any interim or annual period.
The FASB has issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606.
The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The effective date for nonpublic entities is deferred by one year.
Identifying Performance Obligations
Before an entity can identify its performance obligations in a contract with a customer, the entity first identifies the promised goods or services in the contract. The amendments add the following guidance:
1. An entity is not required to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer.
2. An entity is permitted, as an accounting policy election, to account for shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill the promise to transfer the good rather than as an additional promised service.
To identify performance obligations in a contract, an entity evaluates whether promised goods and services are distinct. The amendments improve the guidance on assessing the promises are separately identifiable criterion by:
1. Better articulating the principle for determining whether promises to transfer goods or services to a customer are separately identifiable by emphasizing that an entity determines whether the nature of its promise in the contract is to transfer each of the goods or services or whether the promise is to transfer a combined item (or items) to which the promised goods and/or services are inputs.
2. Revising the related factors and examples to align with the improved articulation of the separately identifiable principle.
| F-18 |
| Table of Contents |
Licensing Implementation Guidance
Topic 606 includes implementation guidance on determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments are intended to improve the operability and understandability of the licensing implementation guidance by clarifying the following:
1. An entity’s promise to grant a customer a license to intellectual property that has significant standalone functionality (e.g., the ability to process a transaction, perform a function or task, or be played or aired) does not include supporting or maintaining that intellectual property during the license period.
2. An entity’s promise to grant a customer a license to symbolic intellectual property (that is, intellectual property that does not have significant standalone functionality) includes supporting or maintaining that intellectual property during the license period.
3. An entity considers the nature of its promise in granting a license, regardless of whether the license is distinct, in order to apply the other guidance in Topic 606 to a single performance obligation that includes a license and other goods or services (in particular, the guidance on determining whether a performance obligation is satisfied over time or at a point in time and the guidance on how best to measure progress toward the complete satisfaction of a performance obligation satisfied over time).
The FASB has issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations.
The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.
Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances.
The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements.
In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.
The ASU is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (i.e., January 1, 2020, for calendar year entities). For public companies that are not SEC filers, the ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other organizations, the ASU on credit losses will take effect for fiscal years beginning after December 15, 2020, and for interim periods within fiscal years beginning after December 15, 2021.
Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.[u2]
The Company has implementedconsidered all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believehas concluded that there are any otherno new accounting pronouncements that have been issued that mightmay have a material impact on its financial position or results of operations.operations, financial condition, or cash flows, based on current information
| F-19 |
| Table of Contents |
NOTE 3 - CASH AND CASH EQUIVALENT
The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. At of June 30, 2016 and June 30, 2015 cash and cash equivalents consisted of bank deposits in banks in Malaysia and petty cash on hands.
NOTE 4 - AMOUNT DUE FROM RELATED PARTIES
Amount due from related parties at June 30, 2016 and June 30, 2015 consist of the following items:
|
| June 30, 2016 |
|
| June 30, 2015 |
| ||
Amount due from Stable Treasure Sdn. Bhd. (*) |
| $ | 3,619 |
|
| $ | 3,017 |
|
_______
(*) One of the directors of Stable Treasure Sdn. Bhd., Mr. Balakrishnan B S Muthu is also the director of the Company. The advances related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.
NOTE 5 - INVENTORIES
Inventories are valued at cost, not in excess of market. Inventories are determined at first in first out basis and comprised of production cost, mine site management cost and sub-contractor cost. Inventories, at June 30, 2016 and June 30, 2015 are summarized as follows:
|
| June 30, 2016 |
|
| June 30, 2015 |
| ||
Inventories |
| $ | 123,238 |
|
| $ | 11,865 |
|
The inventories represent the gold minerals as at June 30, 2016 and June 30, 2015, which were comprised of 8% share by the Company and 92% share by the sub-contractor and the other parties such as original mine assigner.
NOTE 6 - ACCOUNTS PAYABLE AND ADVANCED FROM RELATED PARTIES
Accounts Payable
Accounts payable at June 30, 2016 and June 30, 2015 consist of the following items:
|
| June 30, 2016 |
|
| June 30, 2015 |
| ||
Due to Changxin Wanlin Technology Co Ltd(*) |
| $ | 1,607,775 |
|
| $ | 1,704,474 |
|
Other accounts payable |
|
| 18,749 |
|
|
| 24,830 |
|
|
| $ | 1,626,524 |
|
| $ | 1,729,304 |
|
_______
(*) Due to Changxin Wanlin Technology Co Ltd are accounts payable derived from ordinary business transactions. One of the directors of Changxin Wanlin Technology Co. Ltd., Mr. Wu Ming Ding, has resigned as director of VRDR (as of February 20, 2016), GBL (as of February 11, 2016) and CSB (as of February 17, 2016). This accounts payable bears no interest or collateral, repayable and renewable under normal business accounts payable terms .
| F-20 |
| Table of Contents |
Advanced from related parties
Advanced from related parties at June 30, 2016 and June 30, 2015 consist of the following items:
|
| June 30, 2016 |
|
| June 30, 2015 |
| ||
Advanced from BOG (#1) |
| $ | 492,868 |
|
| $ | 186,057 |
|
Advanced from Federal Mining Resources Limited(#2) |
| $ | 173,465 |
|
| $ | 173,465 |
|
Advanced from Federal Capital Investment Limited (#3) |
| $ | 88,000 |
|
| $ | 120,000 |
|
Advanced from Yorkshire Capital Limited (#4) |
| $ | 27,000 |
|
| $ | 45,000 |
|
|
| $ | 781,333 |
|
| $ | 524,522 |
|
________
(#1) BOG is one of the shareholders of the Company. The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.
(#2) One of the directors of Federal Mining Resources Limited, Mr. Chen Ching, has been appointed as director of the Company effective February 20, 2016. Another director of Federal Mining Resources Limited, Mr. Wu Ming Ding, has resigned as director of the Company effective February 20, 2016. The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.
(#3) One of the directors of Federal Capital Investment Limited, Mr. Wu Ming Ding, has resigned as director of the Company effective February 20, 2016. The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.
(#4) One of the directors of Yorkshire Capital Limited, Mr. Lai Kui Shing, Andy, has resigned as director of CSB effective February 17, 2016. The advances are related to ordinary business transactions and bear no interest or collateral, repayable and renewable under normal business advancement terms.
NOTE 7 - PROPERTY, PLANT AND EQUIPMENT
Property and equipment at June 30, 2016, and June 30, 2015, are summarized as follows:
|
| June 30, 2016 |
|
| June 30, 2015 |
| ||
Land and Building |
| $ | 980,855 |
|
| $ | 1,039,848 |
|
Plant and Machinery |
|
| 154,489 |
|
|
| 163,780 |
|
Office equipment |
|
| 19,640 |
|
|
| 20,821 |
|
Project equipment |
|
| 1,112,294 |
|
|
| 1,179,193 |
|
Computer |
|
| 10,683 |
|
|
| 11,325 |
|
Motor Vehicle |
|
| 114,988 |
|
|
| 121,904 |
|
Accumulated depreciation |
|
| (2,241,324 | ) |
|
| (2,058,646 | ) |
|
| $ | 151,625 |
|
| $ | 478,225 |
|
The depreciation expenses charged for the year ended June 30, 2016 and 2015 were $290,774 and $564,117 respectively.
| F-21 |
| Table of Contents |
NOTE 8 - LOANS FROM BANKS (HIRE PURCHASE INSTALLMENT LOANS)
The loans from banks include long term and short term and are summarized as follow:
|
| June 30, 2016 |
|
| June 30, 2015 |
| ||
Loans from banks |
| $ | 27,319 |
|
| $ | 39,585 |
|
Loans from banks(non-current) |
|
| 7,777 |
|
|
| 37,207 |
|
Total |
| $ | 35,096 |
|
| $ | 76,792 |
|
Hire purchase installment loans with total amount $36,377 and $80,828 as at June 30, 2016, and June 30, 2015, are $35,096 and $76,792 net of imprest charges equivalent to interest $1,281 and $4,036 respectively are summarized as follows:
|
|
Interest Rate |
| Monthly Due |
|
| June 30, 2016 |
|
| June 30, 2015 |
| |||
Financial institution in Malaysia |
| N/A* |
|
| 655 |
|
|
| - |
|
|
| 655 |
|
Financial institution in Malaysia |
| N/A* |
|
| 283 |
|
|
| 1,405 |
|
|
| 5,085 |
|
Financial institution in Malaysia |
| N/A* |
|
| 283 |
|
|
| 1,405 |
|
|
| 5,085 |
|
Financial institution in Malaysia |
| N/A* |
|
| 1,055 |
|
|
| - |
|
|
| 7,387 |
|
Financial institution in Malaysia |
| N/A* |
|
| 1,627 |
|
|
| 21,141 |
|
|
| 43,105 |
|
Financial institution in Malaysia |
| N/A* |
|
| 285 |
|
|
| 4,558 |
|
|
| 8,461 |
|
Financial institution in Malaysia |
| N/A* |
|
| 213 |
|
|
| 7,868 |
|
|
| 11,050 |
|
Hire purchase loans payable to banks |
|
|
|
|
|
|
| $ | 36,377 |
|
| $ | 80,828 |
|
_____
(*) Hire purchase installment loans with Motor Vehicles as collateral. The financial institutions in Malaysia are Islamic banks and bear no interest in the installment agreement. However, there are certain imprest charges equivalent to interests which are being calculated at an average annual rate of approximate 5.26% for the rest of entire loans life and periods.
The scheduled maturities of the CSB's hire purchase installment loans are as follows:
June 30, |
|
|
| |
2017 |
| $ | 28,310 |
|
2018 |
|
| 5,311 |
|
2019 |
|
| 2,556 |
|
2020 |
|
| 200 |
|
Later years |
|
|
|
|
Total minimum hire purchase installment payment |
| $ | 36,377 |
|
Less: Amount representing imprest charges equivalent to interest (current portion: $991 and non-current portion:$290) |
|
| 1,281 |
|
Present value of net minimum lease payments (#) |
| $ | 35,096 |
|
_____
(#) Minimum payment reflected in the balance sheet as current and non-current obligations under hire purchases installment loans as at June 30, 2016.
| F-22 |
| Table of Contents |
NOTE 9 - INCOME TAX
The Company and its subsidiaries are subject to income taxes on an entity basis on income arising in, or derived from, the tax jurisdiction in which they operate. The Company is a Nevada incorporated company and subject to United State Federal Income Tax. GBL is a British Virgin Islands incorporated company and not required to pay income tax on corporate income. CSB is a Malaysia incorporated company and required to pay corporate income tax at 25% of taxable income.
A reconciliation between the income tax computed at the relevant statutory rate and the Company's provision for income tax is as follows:
|
| For the year ended |
|
| For the period ended |
| ||
|
| June 30, 2016 |
|
| June 30, 2015 |
| ||
US Federal Income Tax Rate. |
|
| 34 | % |
|
| 34 | % |
Valuation allowance - US Rate |
|
| (34 | )% |
|
| (34 | )% |
BVI Income Tax Rate |
|
| 0 | % |
|
| 0 | % |
Valuation allowance - BVI Rate |
|
| (0 | )% |
|
| (0 | )% |
Malaysia Income Tax Rate |
|
| 25 | % |
|
| 25 | % |
Valuation allowance - Malaysia Rate |
|
| (25 | )% |
|
| (25 | )% |
Provision for income tax |
|
| - |
|
|
| - |
|
Summary of the Company's net deferred tax liabilities and assets are as follows:
|
| June 30, 2016 |
|
| June 30, 2015 |
| ||
Deferred tax assets: |
|
|
|
|
|
| ||
Tax attribute carryforwards |
| $ | 229,475 |
|
| $ | 509,223 |
|
Valuation allowances |
|
| (229,475 | ) |
|
| (509,223 | ) |
Total |
| $ | - |
|
| $ | - |
|
The Company has recorded valuation allowances for certain tax attribute carry forwards and other deferred tax assets due to uncertainty that exists regarding future realizability. If in the future the Company believes that it is more likely than not that these deferred tax benefits will be realized, the majority of the valuation allowances will be recognized in the consolidated statement of operations. The Company did not have any interest and penalty provided or recognized in the income statements for years ended June 30, 2016 and June 30, 2015 or balance sheet as of June 30, 2016 and June 30, 2015. The Company did not have uncertainty tax positions or events leading to uncertainty tax position within the next 12 months.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
As at June 30, 2016, the Company's office rent has expired and is currently being rent under month to month term. There are no commitments and contracts on such rental expenses as at June 30, 2016.
As at June 30, 2016, the Company's hire purchase installment agreements are disclosed in Note 8. See Note 8 for the commitments for minimum installment payments under these agreements.
NOTE 11 - EARNINGS/(LOSS) PER SHARE
The Company has adopted ASC Topic No. 260, "Earnings Per Share," ("EPS") which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures, and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year.
| F-23 |
| Table of Contents |
The following table sets forth the computation of basic and diluted earnings per share:
|
| Year Ended June 30, |
| |||||
|
| 2016 |
|
| 2015 |
| ||
|
|
|
|
|
|
| ||
Net loss applicable to common shares |
| $ | (582,078 | ) |
| $ | (1,371,788 | ) |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding (Basic) |
|
| 91,288,909 |
|
|
| 87,991,375 |
|
Options |
|
| - |
|
|
| - |
|
Warrants |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
| |
Weighted average common shares outstanding (Diluted) |
|
| 91,288,909 |
|
|
| 87,991,375 |
|
|
|
|
|
|
|
|
|
|
Net loss per share (Basic and Diluted) |
| $ | (0.01 | ) |
| $ | (0.02 | ) |
The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
NOTE 12 - CAPITAL STOCK
Authorized Stock
The Company has authorized 100,000,000250,000,000 common shares and 50,000,000 preferred shares, both with a par value of $0.001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
Share Issuance
Since inception (April 22, 2010) to JuneAs of September 30, 2013, the Company has issued 2,500,000 and 1,477,500 common shares at $0.01 and $0.04 per share, respectively, resulting in total cash proceeds of $84,100, being $3,978 for par value shares and $80,122 for capital in excess of par value.
On October 25, 2013, the Company issued 80,000,000 common shares at par value under the terms of the Assignment Agreement whereby FMR will assign its management rights of CSB's mining operation in the Mining Lease to VRDR, through its wholly-owned subsidiary GBL, in exchange for 80,000,000 shares of the Company's common stock.
On November 11, 2013, the Company issued 75,000 common shares at US$1.75 per share to Marketing Management International, LLC ("MMI"), a Florida Limited Liability Company, under the terms of the Consulting Agreement for the engagement of its consulting services.
On January 29, 2014, the Company issued a total of 643,229 common shares for $665,238, of which 288,288 common shares at US$1.25 per share, 183,661 common shares at US$0.83 per share and 171,280 common shares at US$0.89 per share, to Borneo Oil & Gas Corporation Sdn Bhd ("BOG"), a Malaysia Limited Liability Company, under the terms of the Sub-Contractor Agreement for the engagement of its sub-contractor services.
On March 10, 2014, the Company issued a total of 693,180 common shares for $609,756, of which 179,340 common shares at US$0.85 per share and 513,840 common shares at US$0.89 per share, to Borneo Oil & Gas Corporation Sdn Bhd ("BOG"), a Malaysia Limited Liability Company, under the terms of the Sub-Contractor Agreement for the engagement of its sub-contractor services.
On January 21, 2015, the Company issued 5,900,000 common shares at US$0.05 per share to Borneo Oil & Gas Corporation Sdn Bhd ("BOG"), a Malaysia Limited Liability Company, under the terms of the Consultant Agreement for the additional services of its sub-contractor.
There were 3,977,50091,288,909 common shares issued and outstanding at June 30, 20132016 and 2012. Of these shares, 2,500,000 were issued to directors and officers of the Company.June 30, 2015.
There are no preferred shares outstanding. The Company has issued no authorized preferred shares. The Company has no stock option plan, warrants, or other dilutive securities.
NOTE 4 - PROVISION FOR INCOME TAXES
| F-24 |
| Table of Contents |
The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under ASC 718-740-20 to give effect to the resulting temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, and start-up costs based on the income taxes expected to be payable in future years.NOTE 13 - RELATED PARTY TRANSACTIONS
Exploration stage deferred tax assets arising as a result of net operating loss carryforwards have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Operating loss carryforwards generated during the period from April 22, 2010 (date of inception) through June 30, 2013 of $132,127 will begin to expire in 2030. The provision for income taxes differs from the
amounts which would be provided by applying the combined statutory federal and state income tax rate of 43.8% to net the loss before provision for income taxes for the following reasons:
|
| June 30, 2013 |
|
| June 30, 2012 |
Income tax expense at statutory rate | $ | (20,765) |
| $ | (18,202) |
Change in Valuation allowance |
| 20,765 |
|
| 18,202 |
Income tax expense per books | $ | - |
| $ | - |
Net deferred tax assets consist of the following components as of:
|
| June 30, 2013 |
|
| June 30, 2012 |
NOL carryover | $ | 132,127 |
| $ | 84,719 |
Valuation allowance |
| (132,127) |
|
| (84,719) |
Net deferred tax asset | $ | - |
| $ | - |
The Company follows the provisions of uncertain tax positions as addressed in FASC 740-10-65-1. The Company recognized approximately no increase in the liability for unrecognized tax benefits.
The Company has no tax positionAs at June 30, 2013 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing2016, advances were made by five companies of such deductibility. The Company recognizes interestaccrued$2,389,108 related to unrecognized tax benefits in interest expense and penalties in operating expenses. No suchordinary business transactions. All advances related to ordinary business transactions, bear no interest or penalties were recognized during the periods presented. The Company had no accruals for interestcollateral, repayable and penalties at June 30, 2013. The Company’s utilization of any net operating loss carry forward may be unlikely as a result of its intended exploration stage activities. All tax years from inceptionrenewable under normal advancement terms. Details are open for examination.
F-9
NOTE 5 - DUE TO RELATED PARTYdisclosed in Note 6.
As of June 30, 20132016, amounts due from one company of $3,619 related to ordinary business transactions. The receivable amounts related to ordinary business transactions bear no interest or collateral, repayable and 2012,renewable under normal advancement terms. Details are disclosed in Note 4.
During the year ended June 30, 2016, the Company was obligatedsold $428 worth of gold to a director, who is also an officer and stockholder, for a non-interest bearing demand loan with a balance of $42,919 and 31,000, respectively. The Company plans to pay the loan back as cash flows become available.BOG.
A director ofDuring the year ended June 30, 2016, the Company through his association with Gold Explorations, LLC (see Note 6), will receive compensation for the work and exploration programs performed on the property. Gold Explorations, LLC received $29,167 per our Mineral Claim Purchase Agreement, as described in Note 6.
NOTE 6 - MINERAL PROPERTY COSTS
By agreement dated May 17, 2010, as amended on February 8, 2012 and May 17, 2013, with Gold Explorations, LLC,incurred cost of Minden, Nevada, the Company acquired an optionrevenue worth of $687,628 to earn a 100% undivided interest in certain properties consisting of 6 unpatented mineral claims (the “Property”), located in Esmeralda County, Nevada, USA.BOG.
Upon execution of the agreement, Gold Explorations, LLC transferred 100% interest in the mineral claims to the Company for $100,000 to be paid, at the Company’s option, as follows:
| Cash Payments | |
Upon signing of the agreement and transfer of title (paid) | $ | 10,000 |
On or before May 17, 2011 (paid) |
| 5,000 |
On or before May 17, 2012 (paid) |
| 10,000 |
On or before October 17, 2013 |
| 5,000 |
On or before May 17, 2014 |
| 15,000 |
On or before May 17, 2015 |
| 55,000 |
| $ | 100,000 |
All payments shall be made within 30 days of the due date or the Property and all rights will revert back to Gold Explorations, LLC.
In addition, the Company must incur exploration expenditures of $50,000 on the Property by May 17, 2015. The Company has a report recommending a work program of $10,000. During the quarter ended March 31, 2013, the work program was completed. A Bio Gem Chem sampling is proposed which will sample along the main strike of the Property and will also sample at the fault area on the southern end of the claims. The recommended program will be part of the expenditure commitment and was completed in 2012.
The Company is also responsible for maintaining the mineral claims in good standing by paying all the necessary rents, taxes, and filing fees associated with the Property. As of June 30, 2013, the Company met these obligations.
The Property is subject to a 3% royalty, to Gold Explorations, LLC, on all mineral commodities sold from the Property. This royalty shall be reduced to 1.5% upon payment to Gold Explorations, LLC of $1,000,000 USD at any time. As of June 30, 2013, no such royalties were incurred or payable.
NOTE 714 - GOING CONCERN AND LIQUIDITY CONSIDERATIONS
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of and for the year ended June 30, 2013,2016, the Company has a loss from operations of $47,408, an accumulated deficit of $132,127,$703,564 and working capital deficiency of $48,027, and has earnedno revenues since inception.$2,288,818. The Company intends to fund operations through debt and equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending June 30, 2014 and subsequently.arrangements.
F-10
The ability of the Company to emerge from the exploration stagesurvive is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan.
In response to these problems, management intends to raise additional funds through public or private placement offerings, and related party loans.
These factors, among others, raise substantial doubt about the Company’sCompany's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| F-25 |
| Table of Contents |
NOTE 15 - CONCENTRATIONS
Suppliers
The Company's major suppliers for the year ended June 30, 2016 and 2015 are listed as following:
|
| Subcontractors |
|
| Accounts Payable |
| ||||||||||
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| Year |
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| Year |
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| ||||
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| Ended |
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| Ended |
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| ||||
Major Suppliers |
| June 30, 2016 |
|
| June 30, 2015 |
|
| June 30, 2016 |
|
| June 30, 2015 |
| ||||
Company A |
|
| 100 | % |
|
| 100 | % |
|
| 0 | % |
|
| 0 | % |
Customers
The Company's major customers for the year ended June 30, 2016 and 2015 are listed as following:
|
| Sales |
|
| Accounts Receivable |
| ||||||||||
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| Year |
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| Year |
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| Ended |
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| Ended |
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Major Customers |
| June 30, 2016 |
|
| June 30, 2015 |
|
| June 30, 2016 |
|
| June 30, 2015 |
| ||||
Company M |
|
| 0 | % |
|
| 21 | % |
|
| 0 | % |
|
| 0 | % |
Company N |
|
| 1 | % |
|
| 32 | % |
|
| 0 | % |
|
| 0 | % |
Company O |
|
| 0 | % |
|
| 35 | % |
|
| 0 | % |
|
| 0 | % |
Company P |
|
| 99 | % |
|
| 12 | % |
|
| 0 | % |
|
| 0 | % |
NOTE 816 - SUBSEQUENT EVENTS
The Company's office rent has expired as at June 30, 2016 and the Company intends to renew the rental agreement for one year period pending final execution with the landlord.
The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and determined that there are no additional items to disclose.disclose except above mentioned matters.
F-11
| F-26 |
| Table of Contents |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.Independent Accountants:
On April 30, 2016, our independent public accounting firm, AWC (CPA) Limited (“AWC”) had merged with Dominic K.F. Chan & Co (“DKFC”) and formed DCAW (CPA) Limited, which is registered with the Public Company Accounting Oversight Board (PCAOB). As a result of the Merger, AWC resigned as the Company’s independent registered public accounting firm on April 30, 2016. On May 10 2016, the Company engaged DCAW (CPA) Limited (“DCAW”) as its independent registered public accounting firm. The engagement of DCAW was approved by the Company’s board of directors on May 10, 2016. A current report on Form 8-K under item 4.01 pertaining to this event was filed on May 10, 2016.
Item 9A. Controls and Procedures.
Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we conducted 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”"Exchange Act"), as of the end of the period covered by this Annual Report on Form 10-K (the “Evaluation Date”"Evaluation Date"). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to us required to be disclosed in our Securities and Exchange Commission (“SEC”("SEC") reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Management’sManagement's Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. With the participation of our Chief Executive and Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 20132016 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”("COSO") in Internal Control –- Integrated Framework. Based upon such evaluation, our management concluded that we did maintain effective internal control over financial reporting as of June 30, 20132016 based on the COSO framework criteria.
This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’sManagement's report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers from the internal control audit requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.
Officers’Officers' Certifications
Appearing as exhibits to this Annual Report are “Certifications”"Certifications" of our Chief Executive Officer and Chief Financial Officer. The Certifications are required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section"Section 302 Certifications”Certifications"). This section of the Annual Report contains information concerning the Controls Evaluation referred to in the Section 302 Certification. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarteryear ended June 30, 2013,2016, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
32
Not applicable.
| 22 |
| Table of Contents |
Item 10. Directors, Executive Officers and Corporate Governance
All directors of the Company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of the Company are appointed by the board of directors and hold office until their death, resignation or removal from office. The directors and executive officers, their ages, positions held, and duration as such, are as follows:
Name |
| Position Held | Age |
|
| ||
|
|
| |||||
| President | 54 | February 20, 2016 | ||||
Balakrishnan B S Muthu | Treasurer, Chief Financial Officer, |
|
| October 17, 2013 | |||
| Director | 56 | February 20, 2016 | ||||
Liang Wai Keen | Secretary |
|
| October 17, 2013 |
Business Experience
The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of the Company, indicating the person’sperson's principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
Stephen SpaldingMr. Balakrishnan B S Muthu
Apr 1987 - Dec 1989: | Graduated with Diploma in Business Administration, The Association of Business Executives ABE, UK. |
Dec 2007 - Present: | General Manager, Champmark Sdn. Bhd |
Mr. Spalding, our Chief Executive Officer and Director since April of 2010,Muthu has over thirtymore than 20 years of experience in executive management, corporate governance, risk management, control, design,financial auditing and development.business strategic planning. He has servedbeen involved in preliminary alluvial mine planning and initial development of Merapoh Project since 2008. His previous experience includes working for Petroliam Nasional Berhad (Petronas) in various departments including the roles in compilation of seismic data, kiosk coordination and upstream financial auditing. He has also worked as a partner in the following public accounting firms:
·consultant providing financial and technical services for several oil and gas projects. He recently served asis also a partner with the Greater Bay Area Business Advisory Services (BAS) of Grant Thornton, from October 2007 to January 2008. At Grant Thornton, Google was his main client.
·He served as Regional Practice Partner with Deloitte and Touche’s Controls Technology Development & Implementation and Enterprise Risk Services Practices, from 1997 to 2001. At Deloitte and Touche, his key clients were Microsoft, Boeing, and Safeway.
·He also served as founding partner with KPMG’s Information Risk Management Practices and served as a partner in their Strategic Services & Enabling Technology practice from 1985 to 1997. At KPMG, his major clients were Wells Fargo and VISA.
Stephen is currently serving the following companies:
·Verde Resources, Inc: Since April 22, 2010, Stephen has been serving as the President, ChiefChartered Financial Officer, Treasurer and Director of Verde Resources, Inc.
·Spectral Capital Corporation: Since October, 2010, Stephen has served as Chief Financial Officer and director of this early stage mineral development company.
Stephen has served the following companies in the past five years:
33
·Cytta Corp.: From October 2009 to November 2011 as CEO and Director.
·Paxton Energy Inc.: From August 2010 to August 2011 as CFO.
·USA Uranium Corp.: From January 2008 – October 2010 as President, CFO, and Director.
Promia Inc.: From February 2008 to August 2012 as a consulting CFO.He served as a partner in Get2Volume from March 2008 to August 2010.
Education and Teaching
·Stephen currently instructs a senior/graduate class in IT Audit and Controls in the Accounting Department at San Francisco State University (SFSU)Planner (CFP). He has done this for the last fifteen years (due to the University’s budget the class is currently on hold).
·Stephen is a frequent guest lecturer at Singapore Management University (SMU)
·MBA, Quantitative Analysis, University of Arizona
·B.S., Finance and Management, Eastern Illinois University
·B.S., Physics (solid state), Eastern Illinois University
·B.S., Mathematics, Eastern Illinois University
Michael StiegeMr. Chen Ching
1979 - 1982: | Graduated with BA in Business Administration, University of Santa Clara |
1990 - Present: | Managing Director, C&K Holdings Pte Ltd. |
Michael Stiege has 30 yearsMr. Chen is an entrepreneur with many successes through his investment holding company C&K Holdings Pte Ltd, with which he currently serves as the Managing Director. C&K Holdings. Pte Ltd was founded in Singapore in 1990 with diverse interests in Singapore, Malaysia, Taiwan, China, UK, Thailand and Vietnam; its portfolio spans property development and management, furniture manufacturing, fuel product technology, public transportation, software development, commodity electronic trading platform, and gold mining. Mr. Chen is also a director of business managementDynamic Offshore Pte Ltd, Premier International Holdings Pte Ltd and technology experience, in Canada, USA, and Internationally.Dynamics Holding (Thailand) Co., Ltd.
Michael is currently serving as Verde’s Secretary and Director. He has been Director of the Company since June, 2010 and Secretary since November, 2011.
Michael is currently a Director, Secretary and principal officer of Kukulcan Diversified Corp of Canada (KDC). In the USA KDC acquired the assets of Manitoulin Holdings LLC, a private CA company formed in 2000. Kukulcan has interests in property and land development, software, communications, and manufacturing operations. Mr. Stiege is also currently a trustee for trusts and estates in Canada.
Michael has also served in business management and technology in the following firms:
Total staff and line responsibility for IT and telecommunications including Senior Information Services Officer of Alberta Wheat Pool now part of Agrium Inc. and led capital investment and profit planning for 13 profit centers across 142 countries for manufacturer/marketer Cooper Industries.
He has been Director of Technology for Canada Metal Corp (non ferrous refining and manufacturing). Initiated and led business and technical development of Sun Microsystems’ first hosted ASP business with Nokia.
Michael has 5 years of “big five” management consulting leadership experience in progressively expanding roles. Sample representative clients include, Korea Telecom, Deutsche Bank, Netscape, Yahoo, PG&E, Delta Dental, Stanford Medical Center/UCSF. Recently Michael has assisted Sybase in development of green field technology business opportunities. Bringing new technologies, and or identifying new market opportunities and helping the firm “cross the chasm”.
Employment Agreements
Other than as set out below, we have no formal employment agreements with any of our employees, directors or officers.
Family Relationships
34
There are no family relationships between any of our directors, executive officers and proposed directors or executive officers.
Involvement in Certain Legal Proceedings
None of our directors, executive officers, promoters or control persons has been involved in any of the following events during the past five years:None.
1. A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
2. Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
3. Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
|
| |
|
| |
|
| |
4. Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
5. Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
6. Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7. Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
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| |
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| |
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| |
35
8. Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Compliance with Section 16(a) of the Exchange Act
The Company’sAs of August 27, 2014, the Company's common stock is not registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”"Exchange Act"). Accordingly, officers, directors and principal shareholders are not subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act. As of the date of this Annual Report, no officer or director has filed beneficial ownership reports as required by Section 16(a).
Code of Ethics
We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. The Company will provide to any person, without charge and upon request, a copy of the code of ethics. Any such request must be made in writing to the Company at, 905 Ventura Way, Mill Valley, CA 94941.unit 701, 7/F, The Phoenix, 21-25 Luard Rd, Wanchai, Hong Kong.
Board and Committee Meetings
Our board of directors currently consists of two members, Stephen SpaldingBalakrishnan B S Muthu and Michael Stiege.Chen Ching. The Board held no formal meetings during the year ended June 30, 2013.2016. Until the Company develops a more comprehensive Board of Directors, all proceedings will be conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada General Corporate Law and our Bylaws, as valid and effective as if they had been passed at a meeting of the directors duly called and held.
Nomination Process
As of June 30, 2013,2016, we did not effect any material changes to the procedures by which our shareholders may recommend nominees to our board of directors. Our board of directors does not have a policy with regards to the consideration of any director candidates recommended by our shareholders. Our board of directors has determined that it is in the best position to evaluate our company’scompany's requirements as well as the qualifications of each candidate when the board considers a nominee for a position on our board of directors. If shareholders wish to recommend candidates directly to our board, they may do so by sending communications to the president of our company at the address on the cover of this annual report.
Audit Committee
36
Currently, the Company is developing a comprehensive Board of Directors and does not have an Audit Committee. The Company intends to appoint audit, compensation and other applicable committee members as it appoints individuals with pertinent expertise.
Audit Committee Financial Expert
Our board of directors does not have a member that qualifies as an "audit committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K.
| 24 |
| Table of Contents |
Item 11. Executive Compensation.
The particulars of the compensation paid to the following persons:
| (a) | our principal executive officer; and | |||||||||
| (b) | each of our two | |||||||||
|
| ||||||||||
2016. | |||||||||||
who we will collectively refer to as the named executive officers of the Company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than the principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year.
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SUMMARY COMPENSATION TABLE | |||||||||||||||||||||||||||||||||||
Name and Principal Position |
| Year |
|
| Salary |
|
| Bonus |
|
| Stock Awards |
|
| Option Awards |
|
| Non-Equity Incentive Plan Compensation |
|
| Change in Pension Value and Nonqualified Deferred Compensation Earnings |
|
| All Other Compensation |
|
| Total |
| ||||||||
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| ||||||||
Balakrishnan B S Muthu (1) |
| 2016 |
|
|
| 53,591 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 53,591 |
|
|
|
|
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|
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|
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|
|
President, Treasurer, Chief Financial Officer, General Manager, and Director |
| 2015 |
|
|
| 52,424 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 52,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
Wu Ming Ding (2) |
| 2016 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2015 |
|
|
| 4,613 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 4,613 |
|
(1) | Mr. |
the year ended June 30, 2016. | |
(2) | Mr. |
|
|
37
Other than set out below, there are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive share options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that share options may be granted at the discretion of our board of directors.
Grants of Plan-Based Awards
There were no grants of plan based awards during the year ended June 30, 2013.2016.
Outstanding Equity Awards at Fiscal Year End
There were no outstanding equity awards at the year ended June 30, 2013.2016.
Option Exercises and Stock Vested
During our Fiscal year ended June 30, 2013,2016, there were no options exercised by our named officer.any officer or director.
Compensation of Directors
We do not have any agreements for compensating our directors for their services in their capacity as directors.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.
The following table sets forth, as of September 30, 2013,26, 2016, certain information with respect to the beneficial ownership of our common shares by each shareholder known by us to be the beneficial owner of more than 5% of our common shares, as well as by each of our current directors and executive officers as a group. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
Name and Address of Beneficial Owner |
| Amount and Nature of |
| Percentage |
| |
|
| |||||
Balakrishnan B.S. Muthu Wanchai, Hong Kong | 500,000 common shares Indirect ownership through Banavees Resources | 0.5 | % | |||
Chen Ching Wanchai, Hong Kong | 4,746,341 common shares Indirect ownership through Goldlynn Invest Limited | 5.2 | % | |||
Directors and Executive Officers as a Group (1) | 5,246,341 common shares | 5.7 | % | |||
Borneo Oil & Gas Corporation Sdn Bhd | 11,236,409 common shares Direct ownership |
| 12.3 | % | ||
|
| 6,406,910 common shares Direct ownership |
| 7.0 | % | |
|
|
Direct ownership | 6.2 | % | ||
Goldlynn Invest Limited | 4,746,341 common shares Direct ownership | 5.2 | % | |||
38
(1) Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on September 30, 2013. As of September 30, 2013, there were 3,977,500 shares of our company’s
(1) | Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person's actual ownership or voting power with respect to the number of shares of common stock actually outstanding on September 26, 2016. As of September 26, 2016, there were 91,288,909 shares of our company's common stock issued and outstanding. | |
(2) | Balakrishnan Muthu, our President, CFO and a director, Chen Ching, our director, and Borneo Oil & Gas Corporation Sdn Bhd have not filed their respective Forms 3. These shareholders expect to file the forms in the near future. |
Changes in Control
We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change in control of our company.
| 26 |
| Table of Contents |
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Messrs. Spalding, and Stiege,Muthu, one of our onlytwo directors, areis not an independent directorsdirector as theyhe also serveserves as our executive officers.
Asofficer. Messrs Chen, one of June 30, 2013, the Company was obligated to Stephen Spalding, a Director and sole Officer of the Company, for a non-interest bearing demand loan with a balance of $42,919.
As of July 1, 2011, we have been paying office rent of $200 per month to Stephen Spalding, on a month-to-month basis.
Steve Karolyi, a formerour two directors, is an independent director of the Company, who is co-owner of Gold Explorations, LLC, received compensation for the work and exploration programs performed on the Property, as previously described herein. Gold Exploration, LLC received $29,167, from the Company, perhe does not hold any position as our Mineral Claim Purchase Agreement.executive officer.
Item 14. Principal Accounting Fees and Services.
The aggregate fees billed for the most recently completed fiscal year ended June 30, 20132016 and 20122015 for professional services rendered by the principal accountant for the audit of our annual financial statements on Form 10-K, and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
Year Ended June 30, 2013 |
Year Ended June 30, 2012 | |
Audit Fees (1) | $9,500 | $11,000 |
Audit Related Fees (2) | $0 | $0 |
Tax Fees (3) | $0 | $0 |
All Other Fees (4) | $0 | $0 |
Total | $9,500 | $11,000 |
|
| Year Ended June 30, 2016 |
|
| Year Ended June 30, 2015 |
| ||
Audit Fees (1) |
| $ | 40,000 |
|
| $ | 40,000 |
|
Audit Related Fees (2) |
| $ | - |
|
| $ | - |
|
Tax Fees (3) |
| $ | 2,000 |
|
| $ | 2,000 |
|
All Other Fees (4) |
| $ | - |
|
| $ | - |
|
Total |
| $ | 42,000 |
|
| $ | 42,000 |
|
39
(1) | Audit fees consist of fees incurred for professional services rendered for the audit of our financial statements, for reviews of our interim financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements. |
(1) Audit fees consist of fees incurred for professional services rendered for the audit of our financial statements, for reviews of our interim financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements.
(2) | Audit-related fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our financial statements, but are not reported under "Audit fees." |
(2) Audit-related fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our financial statements, but are not reported under “Audit fees.”
(3) | Tax fees consist of fees billed for professional services relating to tax compliance only. |
(4) |
|
Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’auditors' independence.
PART IV
| 27 |
| Table of Contents |
Item 15. Exhibits, Financial Statement Schedules
Exhibits
In reviewing the agreements included as exhibits to this Form 10-K, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
· | should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; |
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
· | have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; |
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
· | may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and |
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
· | were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. |
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Form 10-K and the Company’sCompany's other public filings, which are available without charge through the SEC’sSEC's website at http://www.sec.gov.
The following exhibits are included as part of this report:
Exhibit No. |
| SEC Report Reference No. |
| Description |
|
|
|
|
|
3.1 |
| 3.1 |
| Articles of Incorporation of Registrant (1) |
|
|
|
|
|
3.2 |
| 3.2 |
| By-Laws of Registrant (2) |
|
|
|
|
|
14.1 |
| 14.1 |
| Code of Ethics (3) |
|
|
|
|
|
31.1 |
| * |
| Rule 13a-14(a)/15d-14(a) Certification of Principal Executive and Financial Officer |
|
|
|
|
|
32.1 |
| * |
| Rule 1350 Certification of Chief Executive and Financial Officer |
|
|
|
|
|
101.INS(4) |
| * |
| XBRL Instance |
|
|
|
|
|
101.SCH(4) |
| * |
| XBRL Taxonomy Extension Schema |
|
|
|
|
|
101.CAL(4) |
| * |
| XBRL Taxonomy Extension Calculations |
|
|
|
|
|
101.DEF(4) |
| * |
| XBRL Taxonomy Extension Definitions |
|
|
|
|
|
101.LAB(4) |
| * |
| XBRL Taxonomy Extension Labels |
|
|
|
|
|
101.PRE(4) |
| * |
| XBRL Taxonomy Extension Presentation |
Exhibit No. |
| SEC Report Reference No. |
| Description |
| ||||
3.1 |
| 3.1 |
| Articles of Incorporation of Registrant (1) |
|
| |||
3.2 |
| 3.2 |
| By-Laws of Registrant (2) |
|
| |||
14.1 |
| 14.1 |
| Code of Ethics (3) |
| ||||
| * |
| Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer | |
| ||||
| * |
| Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer | |
|
| |||
| * |
| ||
|
|
| ||
| * |
| ||
|
| |||
101.INS (4) |
| * |
| XBRL Instance |
|
| |||
101.SCH (4) |
| * |
| XBRL Taxonomy Extension Schema |
|
| |||
101.CAL (4) |
| * |
| XBRL Taxonomy Extension Calculations |
|
| |||
101.DEF (4) |
| * |
| XBRL Taxonomy Extension Definitions |
|
|
| ||
101.LAB (4) |
| * |
| XBRL Taxonomy Extension Labels |
| ||||
101.PRE (4) |
| * |
| XBRL Taxonomy Extension Presentation |
40
| 28 |
| Table of Contents |
| (1) | Filed with the Securities and Exchange Commission on December 2, 2010 as an exhibit, numbered as indicated above, to the |
| (2) | Filed with the Securities and Exchange Commission on July 19, 2011 as an exhibit, numbered as indicated above, to the |
| (3) | Filed with the Securities and Exchange Commission on September 28, 2011 as an exhibit, numbered as indicated above, to the |
| (4) | XBRL Information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
_______
* Filed herewith.
41
| 29 |
| Table of Contents |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
| VERDE RESOURCES, INC. | ||
| (Registrant) | ||
| |||
Dated: September | By: | /s/ | |
|
| ||
| President | ||
| (Principal Executive | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Dated: September | By: | /s/ | |
|
| ||
| President | ||
| (Principal Executive | ||
| |||
Date: September | By: | /s/ | |
|
| ||
|
| ||
(Principal Financial Officer) |
30 |