Graphjet Technology(GTI) - 2024 Q4 - Annual Report

PART I Item 1. Business Graphjet Technology produces artificial graphene and graphite from palm kernel shells using patented technology, targeting the EV battery market as a pre-revenue company - Graphjet's core business is based on a patented technology that converts palm kernel shells, an abundant agricultural waste product, into high-value artificial graphene and graphite[31] - The company's manufacturing process is designed to be more cost-effective and produce higher quality products compared to traditional methods using mined graphite or petroleum-based sources. It can produce graphite at approximately $4,500 per ton and graphene at a price 80-90% below the current market rate[32][47][60] - Graphjet has an executed supply agreement with Toyoda worth $30 million annually. However, no revenue was generated in 2023, as the company is still working to complete its production facility in Malaysia[40][52] - The company is in a pre-revenue stage and plans to construct its first major production facility in Malaysia, with an additional plant planned for Nevada to serve the U.S. EV market. The Nevada plant is expected to produce 10,000 metric tons of battery-grade graphite annually[39][53][66] Projected Market Growth | Market | 2023/2024 Value | 2030/2031 Projected Value | CAGR | Source Chunk | | :--- | :--- | :--- | :--- | :--- | | Global Graphite Market | $15.67B (2021) | $36.40B (2030) | 15.1% | 35 | | Global Graphene Market | $1.53B (2023) | $8.58B (2031) | 24.0% | 35 | Item 1A. Risk Factors The company faces significant risks including limited operating history, substantial net losses, going concern doubts, supply chain dependence, and Nasdaq non-compliance issues - The company has a limited operating history, has not recorded any revenue, and incurred a net loss of approximately $17.8 million for the fiscal year ended September 30, 2024. Its independent auditor has expressed substantial doubt about its ability to continue as a "going concern"[71][72] - The company has received multiple non-compliance notices from Nasdaq regarding late filings, failure to maintain minimum bid price, minimum market value of listed securities (MVLS), and minimum market value of publicly held shares (MVPHS). These issues create a significant risk of the company's securities being delisted from the exchange[170][171][173] - The company restated its FY2023 financial statements due to an incorrect accounting treatment of an intellectual property acquisition from a former officer. This error and the resulting material weakness in internal controls could erode investor confidence and lead to litigation[179][180][182] - Business success is heavily dependent on the palm oil industry for the supply of palm kernel shells. Fluctuations in this industry, including price volatility and supply disruptions, could materially harm business operations[119] - The company faces intense competition in the graphite and graphene industry based on price, quality, and innovation. It also faces risks related to protecting its intellectual property, as its patent applications may not be granted or may be challenged[76][96] Item 1B. Unresolved Staff Comments The company reports that it has no unresolved staff comments - Not applicable[184] Item 1C. Cybersecurity The company is developing its cybersecurity risk management program with Board oversight, engaging experts, and has not experienced material incidents - The Board of Directors delegates cybersecurity risk oversight to the Audit Committee[189] - The company is developing its risk management program and intends to engage external experts for evaluation and testing[186][187] - The company has not encountered any cybersecurity challenges that have materially impaired its operations or financial standing[188] Item 2. Properties The company's main offices are in Malaysia, with plans for primary manufacturing plants in Malaysia and Nevada - The company's main office is located at Lot 3895, Lorong 6D, Kampung Baru Subang, Seksyen U6, 40150 Shah Alam, Selangor, Malaysia[190] - A commercial artificial graphite production facility is planned for Nevada, with a projected capacity to produce 10,000 metric tons of battery-grade graphite per year[66] Item 3. Legal Proceedings The company reports that it is not currently involved in any legal proceedings that are expected to have a material adverse effect on its financial condition, results of operations, or cash flows - Management believes there are currently no pending claims or actions that could have a material adverse effect on the company[191] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not Applicable[192] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Graphjet's Class A shares trade on Nasdaq, with no dividends planned, and an equity incentive plan approved, alongside recent warrant issuances - The company's Class A ordinary shares trade on the Nasdaq Global Market under the symbol 'GTI'[195] - No cash dividends have been paid to date, and future dividends are not anticipated as earnings will be retained for growth[197] - The company has reserved 14,903,075 Class A ordinary shares for issuance under its 2023 Omnibus Equity Incentive Plan[198] - On May 15, 2025, the company issued 20,000,000 warrants to Aiden Lee Ping Wei to purchase up to 200,000,000 Class A ordinary shares at an exercise price of $0.055[199] Item 6. [Reserved] This item is reserved Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations As a pre-revenue entity, the company reported a significant net loss in FY2024, faces going concern doubts due to liquidity issues, but anticipates sufficient capital from recent financing Results of Operations Comparison (Fiscal Years Ended Sep 30) | Metric | 2024 | 2023 | Change (%) | | :--- | :--- | :--- | :--- | | General and administrative expenses | $(17,438,014) | $(1,225,501) | 1,322.9% | | Loss from operations | $(17,438,014) | $(1,225,501) | 1,322.9% | | Net loss | $(17,815,307) | $(1,841,899) | 867.2% | - The significant increase in general and administrative expenses in FY2024 was primarily driven by a one-time provision for a bonus of $13.8 million to the senior management team for the successful business combination and corporate listing[260][264] - The company has an accumulated deficit of $25.8 million as of September 30, 2024, and has incurred cumulative losses from operations and negative cash flows, raising substantial doubt about its ability to continue as a going concern[267][385] Cash Flow Summary (Fiscal Years Ended Sep 30) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(3,026,529) | $410,323 | | Net cash used in investing activities | $(1,438,033) | $(1,598) | | Net cash provided by (used in) financing activities | $4,706,973 | $(700,810) | - Management believes that recent financing, including a $2.5 million PIPE investment and a $1.4 million fundraising exercise, will provide sufficient working capital for the next 12 months, despite the going concern uncertainty[268] Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company's market risk is minimal, primarily interest rate risk on short-term U.S. government treasury investments - The company's funds are invested in short-term U.S. government treasury bills, notes, or bonds with maturities of 185 days or less, or in money market funds investing in U.S. treasuries[280] - Due to the short-term nature of these investments, management believes there is no material exposure to interest rate risk[280] Item 8. Financial Statements and Supplementary Data This section presents audited financial statements, highlighting a going concern uncertainty, restated FY2023 financials, and a significant net loss with a shareholders' deficit - The independent auditor's report expresses substantial doubt about the Company's ability to continue as a going concern due to net losses of $17.8 million in FY2024 and a working capital deficit of $19.9 million[385] - The FY2023 financial statements were restated to correct errors in the accounting treatment of an intellectual property acquisition from a related party, merger transaction costs, and other items[389][519] Consolidated Balance Sheet Highlights (as of Sep 30, 2024) | Account | Amount (USD) | | :--- | :--- | | Total Current Assets | $577,773 | | Total Assets | $2,171,435 | | Total Current Liabilities | $20,430,159 | | Total Liabilities | $20,430,159 | | Total Shareholders' Deficit | $(18,258,724) | Consolidated Statement of Operations Highlights (Year Ended Sep 30, 2024) | Account | Amount (USD) | | :--- | :--- | | Revenues | $0 | | General and administrative expenses | $17,438,014 | | Net Loss | $(17,815,307) | | Loss per share (Basic & Diluted) | $(0.12) | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no disagreements with its accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure - None reported[282] Item 9A. Controls and Procedures Management concluded disclosure controls were ineffective due to material weaknesses in internal control over financial reporting, with remediation plans underway - Management concluded that disclosure controls and procedures were not effective as of the end of the reporting period[283] - Material weaknesses were identified in internal control over financial reporting, including: lack of comprehensive written policies, insufficient segregation of duties, and inadequate US GAAP expertise[286] - Remediation plans include hiring an external internal control reviewer, enhancing the board's composition, and consulting with third-party accounting professionals[287] Item 9B. Other Information The company reports no other information for this item - None[290] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable[291] PART III Item 10. Directors, Executive Officers and Corporate Governance This section details the company's leadership, including the CEO/CFO/Chairman, a five-member board with independent directors, staggered classes, and established committees - Chris Lai Ther Wei holds the combined roles of Chief Executive Officer, Chief Financial Officer, Chairman, and Director[295] - The Board of Directors is composed of five members and is divided into three staggered classes for three-year terms[300][301] - A majority of the board is independent, with Tan Song Jie, Chen Siow Woon, and Ang Chee Yong qualifying as independent directors under Nasdaq rules[304] - The Board has established an Audit Committee, a Remuneration Committee, and a Nominating and Corporate Governance Committee, each with a written charter and composed of independent directors[306] - Tan Song Jie is identified as the Audit Committee Financial Expert[310] Item 11. Executive Compensation This section details executive and director compensation, including the CEO's package and the 2023 Omnibus Equity Incentive Plan for share-based awards CEO Compensation Package | Component | Amount (Malaysian Ringgit) | | :--- | :--- | | Annual Base Salary | RM 300,000 | | Annual Allowance | RM 400,000 | | Company Shares | RM 500,000 worth | - Non-employee directors receive compensation of RM 2,500 per month for their service on the Board[331] - The Equity Incentive Plan reserves 14,903,075 Class A Ordinary Shares, representing 10% of the fully diluted shares post-business combination, for equity-based awards[333][337] - The plan allows for various types of awards, including stock options (ISOs and NSOs), restricted stock units (RSUs), and performance shares, to be administered by the remuneration committee[340][344] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section details beneficial ownership, showing high concentration with Aiden Lee Ping Wei holding approximately 68% of outstanding Class A shares Beneficial Ownership (as of July 11, 2025) | Name of Beneficial Owner | Number of Shares Beneficially Owned | % of Class | | :--- | :--- | :--- | | Directors and Named Executive Officers | | | | Chris Lai Ther Wei | — | — | | Tan Song Jie | — | — | | Ang Chee Yong | — | — | | Chen Siow Woon | — | — | | Pwa Yee Guo | — | — | | Greater than 5% Holders | | | | Aiden Lee Ping Wei | 100,789,569 | 68% | - Ownership percentage is based on 148,037,022 Class A ordinary shares outstanding as of July 11, 2025[357] - Aiden Lee Ping Wei's beneficial ownership includes 71,789,569 shares of Class A ordinary shares and 29,000,000 shares issuable upon the exercise of warrants[367] Item 13. Certain Relationships and Related Transactions, and Director Independence The company engaged in significant related party transactions, including an IP acquisition from a former officer, with formal committee oversight for approval - Graphjet purchased the process for producing palm-based graphene from Liu Yu, a related party, for RM 29,000,000 (approx. $6.3 million). This transaction was central to the restatement of the company's financial statements[365][473] - The company entered into a commission processing contract and a tenancy agreement with ZhongHe Industries Sdn. Bhd., an entity where Liu Yu is a shareholder and director[363][366] - The company's Nominating and Corporate Governance Committee is responsible for reviewing and approving all related party transactions to ensure they are on terms no less favorable than those available from unaffiliated third parties[368] Item 14. Principal Accountant Fees and Services This section summarizes fees paid to independent accountants for audit and other services, with all engagements subject to Audit Committee pre-approval Accountant Fees Summary | Service | FY 2024 Fees | FY 2023 Fees | | :--- | :--- | :--- | | Audit Fees | $403,943 (Kreit & Chiu) + $65,000 (Adeptus) | $135,000 (Adeptus) | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | - The Audit Committee pre-approves all audit and permissible non-audit services provided by the independent registered public accounting firm[375] PART IV Item 15. Exhibits and Financial Statement Schedules This section lists all exhibits filed with the Form 10-K, including key agreements, corporate documents, and an index to financial statements - Provides an index to the Consolidated Financial Statements, which begin on page F-1 of the filing[378][379] - Lists key exhibits filed with the report, including the Share Purchase Agreement (Exhibit 2.1), Amended and Restated Memorandum of Association (Exhibit 3.1), and the Equity Incentive Plan (Exhibit 10.2)[382] Item 16. Form 10-K Summary This item is noted as 'None', indicating no summary is provided in this section of the report - None[529]