Graphjet Technology(GTI) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Unaudited Condensed Consolidated Financial Statements Graphjet Technology reported no revenue for the periods ended March 31, 2025, and 2024. The company incurred a net loss of $1.27 million for the six months ended March 31, 2025, a significant reduction from the $14.67 million loss in the prior-year period, which was inflated by a $13.8 million one-time bonus provision. The balance sheet shows a significant shareholders' deficit of $18.3 million and negative working capital of $19.8 million, raising substantial doubt about its ability to continue as a going concern. Notably, the company restated its previously issued financial statements for the period ended March 31, 2024, due to material misstatements Financial Statements Condensed Consolidated Balance Sheet Data (Unaudited) | Account | March 31, 2025 ($) | September 30, 2024 ($) | | :--- | :--- | :--- | | Total Current Assets | 507,733 | 577,773 | | Total Assets | 1,977,239 | 2,171,435 | | Total Current Liabilities | 20,311,678 | 20,430,159 | | Total Liabilities | 20,311,678 | 20,430,159 | | Total Shareholders' Deficit | (18,334,439) | (18,258,724) | Condensed Consolidated Statements of Operations (Unaudited) | Metric | Six Months Ended Mar 31, 2025 ($) | Six Months Ended Mar 31, 2024 ($) (Restated) | | :--- | :--- | :--- | | Revenues | 0 | 0 | | General and administrative expenses | 1,205,005 | 14,316,022 | | Loss from operations | (1,205,005) | (14,316,022) | | Net loss | (1,266,178) | (14,674,276) | | Loss per share (Basic & Diluted) | (0.01) | (0.11) | Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | Six Months Ended Mar 31, 2025 ($) | Six Months Ended Mar 31, 2024 ($) (Restated) | | :--- | :--- | :--- | | Net cash used in operating activities | (1,148,794) | (1,170,778) | | Net cash used in investing activities | (32,006) | (1,266,837) | | Net cash provided by financing activities | 1,088,233 | 3,685,507 | | Net change in cash | (120,827) | 1,144,911 | | Cash, end of the period | 227,828 | 1,146,341 | Notes to Financial Statements - The company possesses patented technology to manufacture graphene and graphite from palm kernel shells, a renewable agricultural waste product. It is currently pre-revenue but plans to sample products to multinational companies[13][14][17] - Management has identified substantial doubt about the company's ability to continue as a going concern due to a net loss of $1.27 million for the six months ended March 31, 2025, and a negative working capital of $19.8 million[23][26] - A provision for a bonus of $13.8 million was approved on February 29, 2024, to reward senior management for the successful business combination and corporate listing[72] - Subsequent events include receiving non-compliance and delisting notices from Nasdaq, entering debt settlement agreements, issuing new warrants, and planning a 1-for-60 share consolidation to regain compliance with the minimum bid price rule[117][118][122][130] - The company restated its March 31, 2024 financial statements due to material misstatements related to the cost of intellectual property, merger transaction costs, bonus accruals, and incorrect accounting for the reverse recapitalization[132][133][134] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's pre-revenue status and its patented technology for producing graphite and graphene from palm kernel shells. Key operational risks include intellectual property protection, graphite pricing volatility, raw material supply, US-China trade tensions, and intense competition. The significant decrease in net loss for the three and six months ended March 31, 2025, compared to the same periods in 2024, is primarily attributed to a one-time $13.8 million bonus provision recorded in 2024. The company's liquidity is severely constrained, with an accumulated deficit of $27.1 million and reliance on shareholder funding, raising going concern issues Key Factors Affecting Operating Results - The company's success depends on its patented technology that transforms palm kernel shells into high-quality artificial graphite and graphene at a lower cost and with a smaller carbon footprint[150][151][156] - Key risks include declining graphite prices, rising costs and supply chain issues for palm kernel shells, border control issues with China, and the broader US-China trade war impacting machinery sourcing and graphite exports[159][160][161][162] - The product qualification process with prospective customers is lengthy, typically spanning 12 to 18 months, which delays revenue generation[169] - Management sees opportunities in leading the market with its sustainable technology, serving diverse high-growth industries (biomedical, automotive, energy storage), and leveraging its experienced leadership team[191][192][193] Results of Operations Comparison of Results for the Three Months Ended March 31 | Metric | 2025 ($) | 2024 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | General and administrative expenses | (552,947) | (14,090,612) | 13,537,665 | (96.1)% | | Net loss | (577,023) | (14,269,147) | 13,692,124 | (96.0)% | Comparison of Results for the Six Months Ended March 31 | Metric | 2025 ($) | 2024 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | General and administrative expenses | (1,205,005) | (14,316,022) | 13,111,017 | (91.6)% | | Net loss | (1,266,178) | (14,674,276) | 13,408,098 | (91.4)% | - The substantial decrease in net loss for both the three and six-month periods was primarily driven by a one-time $13.8 million provision for a management bonus related to the business combination, which was recorded in the 2024 period[200][206] Liquidity and Capital Resources - As of March 31, 2025, the company has an accumulated deficit of $27.1 million and is a pre-revenue organization, raising significant uncertainty about its ability to meet the going concern assumption beyond the next 12 months without additional capital[211] - Net cash used in operating activities was approximately $1.1 million for the six months ended March 31, 2025, primarily due to the net loss[215] - Financing activities provided approximately $1.1 million in cash for the six months ended March 31, 2025, mainly from the issuance of ordinary shares[218] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section was listed in the table of contents, but no substantive content was provided in the report Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of the end of the reporting period. Material weaknesses were identified in internal control over financial reporting, citing a lack of comprehensive written policies, insufficient segregation of duties due to limited personnel, and inadequate US GAAP expertise. Management intends to implement remediation steps, including hiring an external reviewer and enhancing the board's composition - Management concluded that the company's disclosure controls and procedures were not effective as of the end of the period covered by the report[224] - Material weaknesses were identified in internal control over financial reporting. Key issues include a lack of comprehensive written policies, insufficient segregation of duties, and inadequate US GAAP expertise[228] - Remediation plans include hiring an external internal control reviewer, enhancing the board's size and composition, and consulting with third-party professionals on complex accounting matters[229] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company reports that there are currently no pending claims or actions that could have a material adverse effect on its financial condition or results of operations - Management believes there are currently no pending legal claims or actions that would have a material adverse effect on the company[234] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K filed with the SEC on July 15, 2025 - As of the date of this report, there have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K[235] Item 5. Other Information On May 15, 2025, the company entered into a Warrant Subscription Agreement to issue 20,000,000 warrants to purchase up to 200,000,000 Class A ordinary shares. Additionally, the company has reserved 14,903,075 Class A ordinary shares for issuance under its 2023 Omnibus Equity Incentive Plan - On May 15, 2025, the company issued 20,000,000 warrants to purchase up to 200,000,000 Class A ordinary shares at an exercise price of $0.055[237] - A total of 14,903,075 Class A ordinary shares have been reserved for issuance under the 2023 Omnibus Equity Incentive Plan, which was approved by shareholders on February 28, 2024[237] Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report, including the Share Purchase Agreement, Amended and Restated Memorandum of Association, a Warrant Agreement, and officer certifications