8-K: Verde Resources Secures $2M Strategic Investment

Verde Resources Inc. announced a $2 million strategic investment from commercial partner Ergon Asphalt & Emulsions, strengthening its balance sheet and advancing its BioAsphalt technology.

Summary

• Verde Resources, Inc. (VRDR) completed a $2 million strategic investment from Ergon Asphalt & Emulsions, Inc. on October 31, 2025.
• Ergon purchased 24,943,876 shares of Verde's common stock and a warrant to purchase an equal number of shares.
• The combined purchase price was $0.08018 per share, representing a 5% discount to the volume-weighted average price of the common stock for the thirty trading days immediately preceding the offering.
• Gross proceeds of $2 million were received by Verde, excluding any future proceeds from the exercise of the warrant.
• Proceeds from the offering are intended for working capital and general corporate purposes.
• The investment follows a 10-year exclusive licensing agreement, dated October 10, 2025, granting Ergon rights to commercialize Verde's emulsion-based carbon sequestering BioAsphalt technology across the United States, Canada, and Mexico.
• Ergon is prohibited from selling any shares acquired in the offering without Verde's prior written consent until 180 days after a firm commitment public offering and concurrent uplisting to a national market exchange (Uplist), or until September 30, 2026, if the Uplist has not occurred.
• Ergon gains the right to appoint a non-voting observer to Verde's board of directors as long as it holds one-third (1/3) of the shares acquired and the License Agreement remains active.
• Ergon also receives certain piggyback registration rights and a three-year right of participation in any future equity financing transactions by Verde, up to its then-current percentage holdings of outstanding common stock.
• The warrant is exercisable until October 31, 2030, at an exercise price of $0.08018 per share, with cashless exercise options available if no effective registration statement exists for resale of the warrant shares.
• Ergon's beneficial ownership is limited to 4.99% of outstanding common stock immediately after exercise, adjustable to 9.99% with 61 days' prior notice.

Sentiment

Score: 8

Explanation: The strategic investment from a major industry player like Ergon, coupled with the validation of BioAsphalt technology and the existing licensing agreement, represents a significant positive development for Verde Resources. The capital infusion strengthens the balance sheet and accelerates commercialization efforts in a growing sustainable market. While there are inherent risks and a discount on the share price, the overall outlook is highly positive due to the strong partnership and validated technology.

Positives

• Secured $2 million in gross proceeds, significantly strengthening the balance sheet.
• Strategic investment from a major industry player, Ergon Asphalt & Emulsions, Inc., validating Verde's technology and market potential.
• Reinforces the existing 10-year exclusive licensing agreement with Ergon for BioAsphalt commercialization in North America (US, Canada, Mexico).
• BioAsphalt technology validated by independent testing (National Center for Asphalt Technology NCAT) to meet and exceed industry specifications for strength, durability, and moisture resistance.
• The partnership aims to accelerate large-scale decarbonization of the road construction industry.
• Ergon's deep expertise and extensive nationwide infrastructure are ideal for scaling BioAsphalt across North America.
• Joint teams are already mobilizing for large-scale projects to demonstrate BioAsphalt at full commercial scale and generate verified carbon removal credits.

Negatives

• The shares and warrants were sold at a 5% discount to the 30-day volume-weighted average price, indicating potential dilution for existing shareholders.
• Ergon's shares are subject to a 180-day standstill period, which could limit liquidity for a significant block of shares if the uplisting occurs.
• The beneficial ownership limitation for Ergon (4.99%, adjustable to 9.99%) could restrict its ability to quickly increase its stake or influence without prior notice.
• The warrant does not include price-based anti-dilution protection, meaning its value could be eroded if the stock price drops significantly below the exercise price.
• The company is dependent on Ergon as its exclusive North American distributor, posing a risk if Ergon is unable to sell Verde-enabled products in sufficient volume.

Risks

• Risk that Ergon will be unable to sell Verde-enabled products in the marketplace in sufficient volume so as to generate meaningful revenue for Verde.
• Risks resulting from Verde's dependence on Ergon as Verde's exclusive North American distributor.
• Risk that the commercial relationship between Verde and Ergon may face known or unknown challenges that result in material adverse effects on Verde.
• Investment in the Securities is speculative and subject to significant risks, including the risk that the Company's business might fail, which could result in the loss of the Purchaser's investment.
• The Company's existing insurance coverage renewal may result in a significant increase in cost.

Future Outlook

Verde Resources and Ergon Asphalt & Emulsions anticipate advancing large-scale decarbonization of the road construction industry through the commercialization of BioAsphalt technology across North America. Joint teams are mobilizing to engage major customers for large-scale projects, aiming to demonstrate BioAsphalt's performance, durability, and ease of installation, while generating verified carbon removal credits. The company expects to continue its growth in sustainable infrastructure solutions.

Management Comments

• "We're thrilled to welcome Ergon as a strategic shareholder of Verde. This investment strengthens our balance sheet and reinforces our shared vision and long-term commitment." Jack Wong, CEO of Verde Resources.
• "We're honored that Ergon recognizes Verde as a trusted partner in advancing large-scale decarbonization of the road construction industry through an innovative yet pragmatic approach. With Ergon's deep expertise and extensive nationwide infrastructure, they are the ideal partner to scale BioAsphalt across North America." Jack Wong, CEO of Verde Resources.
• "Our partnership with Verde underscores Ergon's commitment to leading the industry toward a more sustainable future. Our investment reflects genuine enthusiasm to advance Verde's proprietary technology and bring it to market." Patrick Nation, President of Ergon Asphalt & Emulsions.
• "BioAsphalt provides a practical, scalable solution to decarbonize our sector without compromising quality or performance, and we're proud to support Verde's growth as both a commercial partner and strategic shareholder." Patrick Nation, President of Ergon Asphalt & Emulsions.

Industry Context

This strategic investment and expanded partnership between Verde Resources and Ergon Asphalt & Emulsions highlights a growing trend in the road construction industry towards sustainable and environmentally friendly solutions. With 94% of US roads paved with asphalt, there's significant pressure to reduce the energy-intensive production and installation processes, as well as greenhouse gas emissions. Verde's BioAsphalt, which utilizes 100% recycled asphalt pavement (RAP) and biochar for carbon sequestration, positions the company at the forefront of this shift. The collaboration with Ergon, a major player in liquid asphalt, provides a strong distribution channel and market validation, potentially accelerating the adoption of such technologies across North America and setting new benchmarks for sustainable infrastructure.

Comparison to Industry Standards

• BioAsphalt, enhanced with biochar, has been validated by the National Center for Asphalt Technology (NCAT) to meet and exceed industry specifications for strength, durability, and moisture resistance in surface applications, suggesting superior or at least comparable performance to traditional asphalt mixes.
• The technology enables the use of 100% recycled asphalt materials in cold-mix applications, eliminating burners, heat, and solvents, which significantly lowers costs and reduces greenhouse gas emissions compared to conventional hot-mix asphalt production.
• The integration of permanent carbon storage directly into roads through biochar offers a verifiable and measurable carbon removal solution, addressing the 'credibility crisis' in voluntary carbon markets and setting a new standard for sustainable road construction.

Corporate Governance

Related Party Transactions

• Verde Resources, Inc. entered into a Securities Purchase Agreement with Ergon Asphalt & Emulsions, Inc., a commercial partner with whom Verde Renewables, Inc. (a wholly-owned subsidiary) has a 10-year exclusive licensing agreement. This agreement involved Ergon's purchase of common stock and warrants from Verde Resources.

Stakeholder Impact

• Shareholders: Potential dilution from the issuance of new shares and warrants, but also potential for increased value due to strengthened balance sheet, strategic partnership, and accelerated commercialization of BioAsphalt. Ergon's standstill period could affect liquidity for a significant block of shares.
• Customers (Road Construction Industry): Access to an innovative, environmentally sustainable, and cost-effective BioAsphalt technology that uses 100% recycled materials, reduces greenhouse gas emissions, and extends paving seasons.
• Employees: Potential for growth and expansion as the company scales its BioAsphalt technology with Ergon.
• Regulatory Bodies: The BioAsphalt technology's carbon sequestration and emission reduction benefits align with environmental regulations and sustainability goals.

Next Steps

• Verde and Ergon will continue mobilizing joint teams and engaging major customers across Ergon's network for large-scale BioAsphalt projects.
• Demonstrate BioAsphalt at full commercial scale, showcasing its performance, durability, and ease of installation.
• Generate verified carbon removal credits through BioAsphalt projects.
• The Company aims for a firm commitment public offering and concurrent uplisting to a national market exchange (Uplist).

Key Dates

Recommendation

The strategic investment of $2 million by Ergon Asphalt & Emulsions, a leading industry player, is a strong validation of Verde Resources' BioAsphalt technology and its commercial potential. This capital infusion significantly strengthens the company's balance sheet and provides the necessary resources for scaling operations. The existing 10-year exclusive licensing agreement, coupled with Ergon's extensive infrastructure and market reach, creates a powerful synergy for rapid market penetration. Independent validation by NCAT confirming BioAsphalt's superior performance further de-risks the technology. The focus on decarbonization and sustainable infrastructure aligns with major global trends and regulatory pressures, positioning Verde for substantial long-term growth. While there is some dilution from the share issuance and the warrant lacks price-based anti-dilution, the overall strategic benefits and market opportunity outweigh these factors, making it a compelling 'strong buy' for long-term investors.

Keywords

Verde Resources, Ergon Asphalt & Emulsions, Strategic Investment, BioAsphalt, Carbon Sequestration, Road Materials, Sustainable Infrastructure, SEC Filing, Warrant, Common Stock, Private Placement, Decarbonization, NCAT, Recycled Asphalt Pavement, RAP, Biochar