NOTE 14 – WARRANTS

On October 31, 2025, the Company entered into a securities purchase agreement (the “Ergon Purchase Agreement”) with Ergon, pursuant to which Ergon purchased a total of 24,943,876 shares (the “Ergon Shares”) of the Company’s Common Stock and a warrant (the “Warrant”) to purchase 24,943,876 shares of Common Stock (the “Warrant Shares”), at a combined purchase price of $0.08018 per share (the “Offering Price”), which represented a five percent (5%) discount to the volume-weighted average price of the Company’s Common Stock for the thirty (30) trading days immediately preceding the closing of the offering of the Ergon Shares and Warrant by the Company to Ergon (the “Offering”). No warrants have been exercised from the date of issuance through June 30, 2026.

The Warrant is exercisable beginning on October 31, 2025 and expires on October 31, 2030, and was issued in certificated form. The exercise price of $0.08018 per share and number of Warrant Shares issuable upon exercise are subject to customary adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the Common Stock, but are not subject to price-based anti-dilution protection.

The Warrant is exercisable in whole or in part for cash, except that if, at the time the holder exercises the Warrant, a registration statement registering the resale of the Warrant Shares under the Securities Act of 1933, as amended (the “Securities Act”), is not then effective or available for the issuance of such Warrant Shares, then in lieu of making the cash exercise payment, the holder may elect to exercise the Warrant on a “cashless” basis and receive a net number of Warrant Shares determined according to a formula set forth in the common stock Purchase Warrant.

The Company evaluated the Warrant under ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. Management concluded that the Warrant qualifies for equity classification pursuant to ASC 815-40 because the Warrant is indexed to the Company’s own stock and may be settled through issuance of a fixed number of shares for a fixed exercise price. Accordingly, the Warrant was recorded within shareholders’ equity and are not subsequently remeasured.

The proceeds received from the financing were allocated between the Common Stock and Warrant using the relative fair value method. The fair value of the warrants was estimated using the Black-Scholes option pricing model utilizing the following assumptions:

SCHEDULE OF FAIR VALUE OF THE WARRANTS  

The estimated fair value of the Warrant at issuance was approximately $1.98 million. Based on the relative fair value allocation methodology, approximately $977,925 of the proceeds were allocated to the Warrant and recorded with in additional paid-in capital.

As of June 30, 2026, the Warrant remained outstanding and exercisable. Additional paid-in capital includes approximately $977,925 attributable to the outstanding equity-classified Warrant issued in October 2025.

VERDE RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)