Graphjet Technology(GTI) - 2025 Q2 - Quarterly Report

FORM 10-Q Quarterly Report Graphjet Technology submitted its quarterly report for the period ended June 30, 2025, registered in the Cayman Islands, trading as GTI on Nasdaq - Graphjet Technology submitted its quarterly report for the period ended June 30, 2025, registered in the Cayman Islands, with stock ticker GTI, listed on The Nasdaq Stock Market[1][2] | Metric | Details | | :--- | :--- | | Company Name | GRAPHJET TECHNOLOGY | | Place of Registration | Cayman Islands | | Ticker Symbol | GTI | | Listing Exchange | The Nasdaq Stock Market LLC | | Reporting Period | As of June 30, 2025 | | Class A Common Stock Issued | 3,210,062 shares (As of September 5, 2025) | | SEC Filing Status | All reports filed in the past 12 months, subject to filing requirements in the past 90 days (Yes) | | Interactive Data File Submission | All files submitted in the past 12 months (Yes) | | Company Type | Non-accelerated filer, Smaller reporting company, Emerging growth company | | Shell Company | No | PART I - FINANCIAL INFORMATION Item 1. Unaudited Condensed Consolidated Financial Statements This section presents the company's unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and September 30, 2024, including balance sheets, statements of operations, comprehensive loss, changes in shareholders' equity (deficit), and cash flows, along with related notes, noting a restatement of prior period financials to correct accounting errors Unaudited Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (Unaudited) | September 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash | $51,314 | $348,655 | | Total Current Assets | $402,413 | $577,773 | | Total Non-Current Assets | $1,488,608 | $1,593,662 | | Total Assets | $1,891,021 | $2,171,435 | | Liabilities and Shareholders' Equity (Deficit) | | | | Total Current Liabilities | $16,108,179 | $20,430,159 | | Total Non-Current Liabilities | $4,826,175 | $0 | | Total Liabilities | $20,934,354 | $20,430,159 | | Shareholders' Equity (Deficit) | $(19,043,333) | $(18,258,724) | | Total Liabilities and Shareholders' Equity (Deficit) | $1,891,021 | $2,171,435 | - As of June 30, 2025, the company's cash balance significantly decreased to $51,314, from $348,655 on September 30, 2024, indicating liquidity pressure[8] - Total shareholders' deficit expanded further to $(19,043,333) as of June 30, 2025, from $(18,258,724) on September 30, 2024[8] Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 (Restated) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 (Restated) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $49,316 | $0 | $49,316 | $0 | | Cost of Sales | $76,005 | $0 | $76,005 | $0 | | Gross Loss | $(26,689) | $0 | $(26,689) | $0 | | Total Operating Expenses | $20,872,011 | $2,012,938 | $22,077,016 | $16,328,960 | | Operating Loss | $(20,898,700) | $(2,012,938) | $(22,103,705) | $(16,328,960) | | Other Expenses, Net | $(603,257) | $(5,593) | $(664,430) | $(363,847) | | Net Loss | $(21,501,957) | $(2,018,531) | $(22,768,135) | $(16,692,807) | | Basic and Diluted Loss Per Share | $(8.74) | $(0.83) | $(9.27) | $(7.09) | - The company generated its first revenue of $49,316 for the three and nine months ended June 30, 2025, primarily from byproduct sales[11] - Net loss for the nine months ended June 30, 2025, increased to $(22,768,135), a 36.4% increase from $(16,692,807) in the prior year, mainly due to a significant $19.2 million increase in share-based compensation expense[11] Unaudited Condensed Consolidated Statements of Shareholders' Equity (Deficit) | Metric | Balance as of September 30, 2023 | Balance as of June 30, 2024 (Restated) | Balance as of June 30, 2025 (Unaudited) | | :--- | :--- | :--- | :--- | | Common Stock (Shares) | 2,295,833 | 2,445,647 | 2,467,337 | | Common Stock (Amount) | $13,775 | $14,674 | $14,804 | | Additional Paid-in Capital | $587,499 | $9,353,861 | $29,743,558 | | Accumulated Deficit | $(7,983,590) | $(24,676,397) | $(48,567,032) | | Accumulated Other Comprehensive Loss | $54,003 | $(140,318) | $(234,663) | | Total Shareholders' Equity (Deficit) | $(7,328,313) | $(15,448,180) | $(19,043,333) | - As of June 30, 2025, the accumulated deficit increased to $(48,567,032), reflecting continuous operating losses[13] - Additional paid-in capital significantly increased to $29,743,558, primarily due to the issuance of warrants and common stock[13] Unaudited Condensed Consolidated Statements of Cash Flows | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 (Restated) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(1,813,635) | $(2,578,471) | | Net Cash Used in Investing Activities | $(32,277) | $(1,271,734) | | Net Cash Provided by Financing Activities | $1,568,062 | $4,059,793 | | Effect of Exchange Rate Changes | $(19,491) | $(122,809) | | Net Change in Cash | $(297,341) | $86,779 | | Cash at End of Period | $51,314 | $88,209 | - Net cash used in operating activities for the nine months ended June 30, 2025, was $(1,813,635), an improvement from the prior year but still negative[16] - Net cash provided by financing activities significantly decreased to $1,568,062 from $4,059,793 in the prior year, mainly due to reduced PIPE investments and long-term debt financing[16] - Cash balance at the end of the period decreased to $51,314 as of June 30, 2025, from $88,209 as of June 30, 2024[16] Notes To Unaudited Condensed Consolidated Financial Statements Note 1 – Description of Organization and Business Operations This note describes the company's organization, business, merger with Energem Corp., and acquisition of GTI US Corp., focusing on its patented technology to convert palm kernel shells into graphene and graphite, aiming to be a low-cost, high-quality producer, with initial byproduct revenue starting June 2025 - Graphjet Technology holds patented technology to convert palm kernel shells into graphene and graphite, aiming to be a low-cost, high-quality artificial graphite and graphene producer[19][20][21] - The company has not yet commenced commercial sales of graphene and graphite products but has generated revenue from byproduct sales since June 2025[23] - On August 25, 2025, the company underwent a capital reorganization and a one-for-sixty stock split, with all common stock amounts and per-share data retrospectively adjusted[24][25][27] Note 2 – Going Concern and Liquidity Management expresses significant doubt about the company's ability to continue as a going concern due to a net loss of $22,768,135 and negative working capital of $15,705,766 as of June 30, 2025, planning to seek additional funding through various sources without guarantee of success - As of June 30, 2025, the company reported a net loss of $22,768,135 and negative working capital of $15,705,766, raising significant doubt about its ability to continue as a going concern[34] - The company plans to supplement funding through banks, financial institutions, private loans, or equity financing, but there is no assurance of obtaining the necessary funds or acceptable terms[35][39] Note 3 – Summary of Significant Accounting Policies This note outlines the significant accounting policies used in preparing the unaudited condensed consolidated financial statements, including U.S. GAAP, consolidation principles, estimates, foreign currency translation, asset impairment, revenue recognition, and the impact of recently issued accounting pronouncements, also noting the company's status as an emerging growth company - The company's financial statements are prepared in accordance with U.S. GAAP and follow SEC rules for interim financial reporting[37] - The company's functional currency is the Malaysian Ringgit (RM), with financial statements translated using period-end and average exchange rates, and translation adjustments recorded in other comprehensive income (loss)[42][43] - The company applies equity classification accounting for warrants and assesses whether they meet all requirements for equity classification[53][54] - Revenue is primarily derived from the sale of graphene and graphite products and related byproducts, recognized when control of the product is transferred to the customer[59] - As an emerging growth company, the company has elected to delay the adoption of new accounting standards and is evaluating the potential impact of recently issued standards such as ASU 2023-07, ASU 2023-09, ASU 2024-03, and ASU 2025-05[73][74][75][76][78][79] Note 4 – Reverse Recapitalization This note details the business combination with Energem Corp. on March 14, 2024, accounted for as a reverse recapitalization where Graphjet was the accounting acquirer, with Energem's net assets recognized at historical cost, resulting in the issuance of common stock and approximately $1,200 in funds raised, with all common stock and per-share data retrospectively adjusted - The company completed a business combination with Energem Corp. on March 14, 2024, accounted for as a reverse recapitalization, with Graphjet considered the accounting acquirer[29][81] - Following the merger, the company issued 2,407,313 shares of common stock and raised approximately $1,200 in funds[81][82] - All common stock and per-share data have been retrospectively adjusted based on a 55.1 exchange ratio[84] Note 5 – Deposits This note discloses the composition of the company's deposits as of June 30, 2025, and September 30, 2024, primarily comprising security deposits for public relations consulting services and office copier leases | Deposit Category | Nature | June 30, 2025 (Unaudited) | September 30, 2024 | | :--- | :--- | :--- | :--- | | Public Relations Consulting Services | Refundable | $28,486 | $29,112 | | Office Copier Lease | Refundable | $760 | $776 | | Total Deposits | | $29,246 | $29,888 | Note 6 – Property and Equipment This note provides details on the company's property and equipment, including the cost, accumulated depreciation, and depreciation rates for office equipment, renovations, and plant and machinery, with a net book value of approximately $1.46 million as of June 30, 2025 | Category | June 30, 2025 (Unaudited) | September 30, 2024 | | :--- | :--- | :--- | | Office Equipment | $17,790 | $13,298 | | Renovations | $155,975 | $153,886 | | Plant and Machinery | $1,446,001 | $1,456,801 | | Subtotal | $1,619,766 | $1,623,985 | | Less: Accumulated Depreciation | $(163,353) | $(30,585) | | Total Property and Equipment, Net | $1,456,413 | $1,593,400 | - Depreciation expense for the nine months ended June 30, 2025, significantly increased to $128,200 from $3,858 in the prior year[87] Note 7 – Loans from Third Parties This note discloses loans obtained from external third parties, primarily for the acquisition of graphene patents, with a total of $607,253 in third-party loans (including accrued interest) as of June 30, 2025 | Lender | Principal | Interest Rate | Loan Date | Maturity Date | | :--- | :--- | :--- | :--- | :--- | | Goh Meng Keong | $474,777 | 5% p.a | March 22, 2022 | September 30, 2025 | | Goh Seng Wei | $47,478 | 5% p.a | May 26, 2022 | Repayable on demand | | Total Accrued Interest | | | | $84,998 | | Total Debt and Accrued Interest | | | | $607,253 | - Interest expense on third-party loans for the nine months ended June 30, 2025, was $18,766[88] Note 8 – Loans from Prior Shareholders This note details short-term loans from former shareholders Aw Jeen Rong and Liu Yu, payables to former shareholders Lim Hooi Beng and Aw Jeen Rong, including debt settlement agreements, and the reclassification of intellectual property compensation payable to Liu Yu following a debt settlement Short-Term Loans from Prior Shareholders (As of June 30, 2025) | Lender | Principal | Accrued Interest | Total Debt and Accrued Interest | | :--- | :--- | :--- | :--- | | Aw Jeen Rong | $299,110 | $15,711 | $314,821 | | Liu Yu | $152,308 | $7,074 | $159,382 | Payables to Prior Shareholders (As of June 30, 2025) | Shareholder | Amount | | :--- | :--- | | Lim Hooi Beng | $3,003,003 | | Aw Jeen Rong | $7,122 | | Total | $3,010,125 | - The company entered into a debt settlement agreement with Lim Hooi Beng on April 30, 2025, settling approximately $5.5 million in debt and bonuses through the issuance of common stock, recognizing a debt settlement loss of approximately $1.0 million[95][97] - As of June 30, 2025, intellectual property compensation payable to former shareholder Liu Yu was $1,250,459, settled via a debt settlement agreement on April 30, 2025, with amortized interest expense recognized[98][101][102] Note 9 – Other Payables and Accrued Liabilities This note presents the composition of the company's other payables and accrued liabilities as of June 30, 2025, and September 30, 2024, primarily including salaries payable, rent payable, professional service fees, and accrued expenses | Category | June 30, 2025 (Unaudited) | September 30, 2024 | | :--- | :--- | :--- | | Salaries Payable | $244,997 | $282,461 | | Rent Payable | $107,300 | $70,354 | | Professional Service Fees | $550,430 | $574,713 | | Accrued Expenses | $231,799 | $304,894 | | Total | $1,134,526 | $1,232,422 | Note 10 – Deferred Underwriting Commission Payable This note explains the company's settlement agreement with underwriters regarding deferred underwriting commissions, where approximately $1.5 million in "make-whole obligation" was settled by issuing 10,754 shares of common stock as of September 30, 2024, and reclassified to additional paid-in capital upon issuance on May 22, 2025, with no impact on the statement of operations - The company settled approximately $1.5 million in deferred underwriting commission "make-whole obligation" by issuing 10,754 shares of common stock, reclassified to additional paid-in capital on May 22, 2025[105] Note 11 – Provision for Bonus This note discloses the company's bonus plan for its senior management team for successfully completing the business combination and listing, with an initial total provision of $13,800,000, and a remaining bonus provision of $10,350,000 as of June 30, 2025, due to a debt settlement agreement with Lim Hooi Beng - The company established a bonus plan for its senior management team totaling $13,800,000[106] - As of June 30, 2025, the remaining bonus provision was $10,350,000, with a portion settled through the issuance of common stock via a debt settlement agreement with Lim Hooi Beng[107] Note 12 – Related Party Loans This note discloses unsecured loans from shareholder Lee Ping Wei for working capital, bearing an annual interest rate of 15% and repayable on demand, with a total of $502,633 (including accrued interest) as of June 30, 2025 | Lender | Principal | Interest Rate | Loan Date | Maturity Date | | :--- | :--- | :--- | :--- | :--- | | Lee Ping Wei | $118,694 | 15% p.a | May 28, 2025 | Repayable on demand | | Lee Ping Wei | $71,217 | 15% p.a | June 3, 2025 | Repayable on demand | | Lee Ping Wei | $71,217 | 15% p.a | June 10, 2025 | Repayable on demand | | Lee Ping Wei | $118,694 | 15% p.a | June 16, 2025 | Repayable on demand | | Lee Ping Wei | $118,694 | 15% p.a | June 26, 2025 | Repayable on demand | | Total Accrued Interest | | | | $4,117 | | Total Debt and Accrued Interest | | | | $502,633 | - Interest expense on related party loans for the three months ended June 30, 2025, was $3,956[109] Note 13 – Income Taxes This note explains the company's income tax status in the Cayman Islands, U.S., and Malaysia, reporting no income tax expense due to operating losses, and a full valuation allowance against deferred tax assets due to uncertainty regarding the utilization of approximately $20.3 million in net operating loss carryforwards as of June 30, 2025 - The company reported zero income tax expense for the reporting period across its tax jurisdictions in the Cayman Islands, U.S., and Malaysia, due to operating losses[110][111][112][113] - As of June 30, 2025, the company had approximately $20.3 million in net operating loss carryforwards and has recorded a full valuation allowance against deferred tax assets[114][116] Note 14 – Shareholders' Equity This note provides detailed information on the company's shareholders' equity, including authorized, issued, and outstanding common stock, financing through PIPE investments and common stock issuance to new external shareholders, with all share numbers and per-share amounts retrospectively adjusted for the one-for-sixty stock split effective August 25, 2025 - The company's authorized share capital is $50,000, divided into 8,333,333 shares of common stock with a par value of $0.006[119] - The company raised $2,500,000 through PIPE investments and approximately $1.0 million in net proceeds by issuing 10,885 shares of common stock to new external shareholders on November 1, 2024[120][122] - As of June 30, 2025, 2,467,337 shares of common stock were issued and outstanding, with all share numbers and per-share amounts retrospectively adjusted to reflect the stock split[124] Note 15 – Equity Incentive Plan This note describes the equity incentive plan approved on February 28, 2024, reserving 10% of the fully diluted common stock outstanding after the business combination for issuance, managed by the Board or Compensation Committee, and applicable to employees, consultants, and directors - The company approved an equity incentive plan on February 28, 2024, reserving 201,558 shares of common stock for future issuance, representing 10% of the fully diluted common stock outstanding after the business combination[124] - The plan is administered by the Board of Directors or the Compensation Committee and applies to employees, consultants, and directors of Graphjet Technology[126] Note 16 – Warrants This note provides details on the company's warrants, including those assumed from the merger and issued to Aiden Lee Ping Wei, all classified as equity instruments, with 533,801 warrants outstanding as of June 30, 2025, and a weighted-average exercise price of $261.19 - The company assumed 200,468 warrants from the merger and issued 333,333 warrants to Aiden Lee Ping Wei on May 15, 2025, totaling 533,801 outstanding warrants[127][131][132] - Each warrant allows the holder to purchase one share of common stock at an exercise price of $690, with newly issued warrants having an exercise price of $3.3[128][131] - The fair value of warrants issued to Aiden Lee Ping Wei was $19.4 million, with $19.2 million recognized as share-based compensation expense and additional paid-in capital[131] | Metric | September 30, 2024 | June 30, 2025 | | :--- | :--- | :--- | | Number of Warrants Outstanding | 200,468 | 533,801 | | Number of Common Shares Issuable | 200,468 | 533,801 | | Weighted-Average Exercise Price | $690.00 | $261.19 | | Average Remaining Contractual Term (Years) | 4.00 | 4.44 | Note 17 – Concentrations of Risks This note discusses the company's credit risk, primarily concentrated in cash, deposits, and other receivables, and supplier concentration risk, with one supplier accounting for 100% of raw material purchases for the three months ended June 30, 2025, and three suppliers for approximately 99.5% for the nine months ended June 30, 2025, also noting foreign exchange risk due to its Malaysian subsidiary's functional currency - The company faces credit risk concentrated in cash, deposits, and other receivables, with cash deposits in Malaysia and the U.S. within insured limits[133][134] - The company faces supplier concentration risk: for the three months ended June 30, 2025, one supplier accounted for 100% of raw material purchases; for the nine months ended June 30, 2025, three suppliers accounted for approximately 99.5% of raw material purchases[137] - The company faces foreign exchange risk as its Malaysian subsidiary's functional currency is the Malaysian Ringgit, but it has not yet entered into hedging transactions[135] Note 18 – Segment Reporting This note discloses the company's operating segment information in accordance with ASC 280 "Segment Reporting," determining, based on the Chief Operating Decision Maker's assessment, that the company has only one operating segment, which is its geographical operation in Malaysia - The company uses the management approach to determine reportable operating segments and, based on the CEO's assessment, identifies only one operating segment: its geographical operation in Malaysia[140][141] Segment Statements of Operations (Nine Months Ended June 30, 2025) | Metric | Amount | | :--- | :--- | | Revenue | $49,316 | | Cost of Sales | $76,005 | | Segment Gross Loss | $(26,689) | | Total Operating Expenses | $22,077,016 | | Segment Operating Loss | $(22,103,705) | | Net Loss | $(22,768,135) | Note 19 – Commitments and Contingencies This note discloses the company's lease commitments, including a factory operating lease agreement in Selangor expiring in January 2026 with renewal options, and two short-term operating lease agreements in Malaysia with initial terms of 12 months or less, which are not recognized on the balance sheet - The company has a factory operating lease agreement in Selangor expiring in January 2026, with a weighted-average remaining lease term of 0.58 years and a weighted-average discount rate of 6.4%[144][146] Schedule of Undiscounted Future Minimum Lease Payments (As of June 30, 2025) | Period | Lease Payments | | :--- | :--- | | Twelve Months Ending June 30, 2026 | $29,911 | | Total Lease Payments | $29,911 | | Less: Discount | $(472) | | Present Value of Lease Liabilities | $29,439 | | Current Lease Liabilities | $(29,439) | | Non-Current Lease Liabilities | $0 | - The company has two other operating lease agreements in Malaysia expiring in March 2026, not recognized on the balance sheet due to short initial terms, with lease expenses recorded in general and administrative expenses[147] Note 20 – Subsequent Events This note discloses significant events occurring after the reporting period until the financial statements' issuance, including the CEO/CFO's Nasdaq hearing, Nasdaq's conditional approval for continued listing, shareholder approval of a stock split, and debt settlements and property acquisitions through common stock issuance - On July 25, 2025, the Nasdaq Hearings Panel approved the company's continued listing, conditional on compliance with bid price rules by August 29, 2025, periodic filing rules by September 15, 2025, and an updated financing plan by September 30, 2025[151] - On August 7, 2025, shareholders approved a capital reorganization and a one-for-sixty stock split, effective August 25, 2025[152][155] - On August 14 and 19, 2025, the company settled debts to Yasuka Infinity SDN BHD and Goh Meng Keong and acquired property from Cosmo Esteem SDN BHD through the issuance of common stock[153][154] Note 21 – Restatement of Previously Issued Financial Statements This note details the restatement of the company's unaudited condensed consolidated financial statements for the periods ended June 30, 2024, and prior, to correct several material misstatements related to intellectual property costs, amortization expenses, unaccrued interest liabilities, misclassification of merger transaction costs, under-accrual of bonuses, and improper foreign currency exchange rates - The company restated its financial statements for the periods ended June 30, 2024, and prior, to correct errors in intellectual property costs, amortization expenses, unaccrued interest liabilities, merger transaction cost classification, bonus accruals, and foreign currency exchange rate usage[156][158] Impact of Restatement on Statements of Operations and Comprehensive Loss for the Three Months Ended June 30, 2024 | Metric | As Previously Stated | Adjustment | As Restated | | :--- | :--- | :--- | :--- | | General and Administrative Expenses | $2,132,149 | $(119,211) | $2,012,938 | | Net Loss | $(2,137,945) | $119,414 | $(2,018,531) | | Loss Per Share | $(0.87) | $0.04 | $(0.83) | Impact of Restatement on Statements of Operations and Comprehensive Loss for the Nine Months Ended June 30, 2024 | Metric | As Previously Stated | Adjustment | As Restated | | :--- | :--- | :--- | :--- | | General and Administrative Expenses | $14,139,078 | $2,189,882 | $16,328,960 | | Net Loss | $(14,156,518) | $(2,536,289) | $(16,692,807) | | Loss Per Share | $(14.55) | $7.46 | $(7.09) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's discussion and analysis of the company's financial condition and operating results, covering an overview, key influencing factors, operating performance, liquidity, and critical accounting estimates, highlighting the company's patented technology for graphene and graphite production, initial byproduct revenue, and the impact of intellectual property, market prices, and geopolitical risks Overview - Graphjet Technology, a former blank check company, completed a business combination with Graphjet Technology Sdn. Bhd. on March 14, 2024, and was renamed Graphjet Technology[164][165][166] - The company possesses patented technology to convert palm kernel shells into high-quality graphene and graphite, aiming to be a low-cost producer, collaborating with Universiti Kebangsaan Malaysia and MIT for R&D[168][169] - The company has not yet commenced commercial sales but plans to provide product samples to multinational corporations for market acceptance, generating revenue from byproduct sales since June 2025[172][173] Key Factors Affecting Operating Results - The company's success depends on the protection and enforcement of its intellectual property to prevent others from replicating its technology[174][176] - Declining graphite prices, increasing palm kernel shell supply prices, border control measures between Malaysia and China, and the US-China trade war and China's graphite export ban adversely affect the company's operations[177][178][179][180][182] - Geopolitical conflicts, falling critical mineral prices, intense market competition, evolving regulatory environments, and long product qualification cycles also impact the company's performance[181][183][184][185][187] - Semiconductor industry slowdowns, raw material shortages leading to production cuts or halts by industry leaders, China's control over raw material supply chains, and challenges in entering the electric vehicle battery manufacturer market pose risks to the company[192][193][194][195][196][197][198] - Political uncertainties, regulatory compliance burdens, changes in international investment and compliance, shifts in SEC enforcement priorities, and potential market saturation and price volatility from the lifting of China's export restrictions increase operational risks[199][200][201][202][203][204][205] - Lack of cross-functional backup, succession planning, and technology transfer training could lead to business continuity risks and skill gaps[206][207] - The company is committed to enhancing its ESG profile through green manufacturing methods and sustainable innovation, leveraging Malaysia's abundant palm kernel shell resources to significantly reduce carbon footprint and production costs[208] - With its advanced manufacturing processes and low-cost raw materials, the company holds a unique leadership position and cost-quality advantage in high-growth industries such as biomedical, automotive, semiconductor, and energy storage[209][210][211] - An experienced management team with a proven track record in clean and sustainable manufacturing further strengthens the company's leadership in the graphene and graphite sector[212] Components of Results of Operations Comparison for the three months ended June 30, 2025 and 2024 For the three months ended June 30, 2025, the company generated its first revenue of $49,316 but incurred a gross loss of $(26,689), with operating loss significantly increasing by 938.2% to $(20,898,700) primarily due to a $19.2 million increase in share-based compensation expense, leading to a 965.2% rise in net loss to $(21,501,957) Comparison of Operating Results for the Three Months Ended June 30, 2025 | Metric | 2025 | 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | $49,316 | $0 | $49,316 | 100% | | Cost of Sales | $(76,005) | $0 | $(76,005) | 100% | | Gross Loss | $(26,689) | $0 | $(26,689) | 100% | | General and Administrative Expenses | $(1,672,011) | $(2,012,938) | $340,927 | (16.9)% | | Share-Based Compensation Expense | $(19,200,000) | $0 | $(19,200,000) | 100% | | Operating Loss | $(20,898,700) | $(2,012,938) | $(18,885,762) | 938.2% | | Other Expenses, Net | $(603,257) | $(5,593) | $(597,664) | 10,685.9% | | Net Loss | $(21,501,957) | $(2,018,531) | $(19,483,426) | 965.2% | - Revenue increased by 100% to $49,316, primarily from byproduct sales commencing in June 2025[215] - Gross loss was $(26,689), mainly due to inefficient production lines and discounted sales of byproducts affected by prolonged storage[217] - General and administrative expenses decreased by 16.9% to $1.7 million, primarily due to reduced professional and travel expenses related to the business combination, partially offset by increased employee costs[220] - Share-based compensation expense increased by $19.2 million, mainly due to the issuance of warrants to shareholders[221] Comparison for the nine months ended June 30, 2025 and 2024 For the nine months ended June 30, 2025, the company generated its first revenue of $49,316 but incurred a gross loss of $(26,689), with operating loss increasing by 35.4% to $(22,103,705) primarily due to a $19.2 million increase in share-based compensation expense, despite a significant decrease in general and administrative expenses from reduced bonus provisions, leading to a 36.4% rise in net loss to $(22,768,135) Comparison of Operating Results for the Nine Months Ended June 30, 2025 | Metric | 2025 | 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | $49,316 | $0 | $49,316 | 100% | | Cost of Sales | $(76,005) | $0 | $(76,005) | 100% | | Gross Loss | $(26,689) | $0 | $(26,689) | 100% | | General and Administrative Expenses | $(2,877,016) | $(16,328,960) | $13,451,944 | (82.4)% | | Share-Based Compensation Expense | $(19,200,000) | $0 | $(19,200,000) | 100% | | Operating Loss | $(22,103,705) | $(16,328,960) | $(5,774,745) | 35.4% | | Other Expenses, Net | $(664,430) | $(363,847) | $(300,583) | 82.6% | | Net Loss | $(22,768,135) | $(16,692,807) | $(6,075,328) | 36.4% | - Revenue increased by 100% to $49,316, primarily from byproduct sales commencing in June 2025[225] - General and administrative expenses significantly decreased by 82.4% to $2.9 million, mainly due to a reduction in the $13.8 million bonus provision accrued in the prior year, and decreased professional fees related to the business combination, partially offset by increased employee costs[230] - Share-based compensation expense increased by $19.2 million, mainly due to the issuance of warrants to shareholders[231] Liquidity and Capital Resources The company primarily funds internal operations through self-financing and relies on additional capital investments and debt as its main liquidity sources, with accumulated operating losses and negative cash flow leading to an accumulated deficit of $48.6 million as of June 30, 2025, and while management expects existing funds to support operations for the next 12 months, significant uncertainty remains regarding its ability to continue as a going concern thereafter, potentially requiring further equity or debt financing - The company primarily meets its liquidity needs through self-financing, additional capital investments, and debt[234] - As of June 30, 2025, the company had accumulated operating losses and negative cash flow from operations, resulting in an accumulated deficit of $48.6 million[236] - Management expects existing funds to support operations for the next 12 months, but significant uncertainty remains regarding its ability to continue as a going concern thereafter, potentially requiring further equity or debt financing[236][237] Cash Flow Summary (Nine Months Ended June 30, 2025) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(1,813,635) | $(2,578,471) | | Net Cash Used in Investing Activities | $(32,277) | $(1,271,734) | | Net Cash Provided by Financing Activities | $1,568,062 | $4,059,793 | | Effect of Exchange Rate Changes | $(19,491) | $(122,809) | | Net Change in Cash | $(297,341) | $86,779 | | Cash at End of Period | $51,314 | $88,209 | - Net cash used in operating activities for the nine months of 2025 was approximately $1.8 million, primarily due to net loss and increased prepayments for machinery, partially offset by increased payables to shareholders and other payables[240] - Net cash provided by financing activities for the nine months of 2025 was approximately $1.6 million, mainly from the issuance of common stock and short-term related party loans[243] Off-Balance Sheet Arrangements As of June 30, 2025, the company had no off-balance sheet arrangements, including those that could affect its liquidity, capital resources, market risk support, and credit risk support - As of June 30, 2025, the company had no off-balance sheet arrangements[245] Critical Accounting Estimates This section discusses critical accounting estimates in the preparation of the company's financial statements, particularly the impairment assessment of long-lived assets, including property, equipment, and finite-lived intangible assets, which involve assumptions about future cash flows and asset useful lives, where changes could significantly impact asset carrying values - The company makes estimates and judgments in preparing its financial statements, including the fair value of financial instruments and accrued expenses[246] - Impairment assessment of long-lived assets, including property, equipment, and finite-lived intangible assets, is a critical accounting estimate, relying on assumptions about future cash flows and estimated useful lives[247][248] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's net proceeds after its IPO, including funds in the trust account, are invested in U.S. government treasury bills, notes, or bonds with maturities of 185 days or less, or money market funds investing solely in U.S. Treasuries, leading the company to believe it has no significant interest rate risk exposure due to the short-term nature of these investments - The company's net IPO proceeds are primarily invested in short-term U.S. government treasury bills or money market funds, thus it believes there is no significant interest rate risk exposure[249] Item 4. Controls and Procedures Management assessed the effectiveness of disclosure controls and procedures as of the end of the reporting period and concluded they were ineffective, also reporting material weaknesses in internal control, including a lack of comprehensive written policies and procedures, insufficient segregation of duties in accounting processes, and inadequate U.S. GAAP expertise, with plans to improve internal controls by engaging external reviewers, enhancing board size and composition, and increasing staff with required experience and training - As of the end of the reporting period, the company's disclosure controls and procedures were deemed ineffective[250] - Management assessed that the company's internal controls had material weaknesses, including a lack of comprehensive written policies and procedures, insufficient segregation of duties in accounting processes, and inadequate U.S. GAAP expertise[253] - The company plans to improve internal controls by engaging external internal control reviewers, enhancing the size and composition of the board of directors, and increasing staff with required experience and training[254] - The internal control report in this quarterly report does not include an attestation report from an independent registered public accounting firm, as the company is an emerging growth company[255] - No significant changes in internal controls occurred during the most recent fiscal quarter[256] PART II - OTHER INFORMATION Item 1. Legal Proceedings Management believes there are no pending claims or litigation against the company whose final outcome could have a material adverse effect on its operating results, financial condition, or cash flows - Management believes there are no pending claims or litigation against the company whose final outcome could have a material adverse effect on its operating results, financial condition, or cash flows[259] Item 1A. Risk Factors No new material risk factors were disclosed in this quarterly report, and investors are advised to refer to the risk factors disclosed in the company's Form 10-K annual report filed with the SEC on July 15, 2025, which could cause actual results to differ materially from expectations - No material changes to the risk factors disclosed in the company's Form 10-K annual report occurred as of the filing date of this quarterly report[260] Item 2. Unregistered Sales of Equity Securities, and Use of Proceeds This section discloses the company's unregistered sales of equity securities, including warrants issued to Aiden Lee Ping Wei on May 15, 2025, and common stock issued on August 14 and 19, 2025, to settle various debts and acquire property, all issued after the stock split - On May 15, 2025, the company issued warrants to Aiden Lee Ping Wei, exercisable for 200,000,000 shares of Class A common stock[261] - On August 14, 2025, the company settled debts to Yasuka Infinity SDN BHD and Goh Meng Keong by issuing 3,261 and 185,000 shares, respectively (post-stock split)[261] - On August 19, 2025, the company acquired property from Cosmo Esteem SDN BHD by issuing 1,624,375 shares to Tan Chin Teong (post-stock split)[262] - As of September 30, 2024, the company had not authorized any securities for issuance under an equity incentive plan, but on February 28, 2024, shareholders approved the 2023 Omnibus Equity Incentive Plan, reserving 14,903,075 shares of Class A common stock for issuance[264] Item 3. Defaults Upon Senior Securities No defaults upon senior securities occurred during this reporting period - No defaults upon senior securities occurred during this reporting period[263] Item 4. Mine Safety Disclosures Not applicable - Mine safety disclosures are not applicable[263] Item 5. Other Information No other information is required to be disclosed in this reporting period - No other information is required to be disclosed in this reporting period[265] Item 6. Exhibits This section lists the exhibits filed with or incorporated by reference into this Form 10-Q quarterly report, including stock purchase agreements, amended articles of association, warrant agreements, and XBRL documents - Exhibits include stock purchase agreements, amended articles of association, warrant agreements, CEO and CFO certifications, and XBRL documents[267] SIGNATURES This report was signed by Chris Lai Ther Wei, CEO and CFO of Graphjet Technology, on September 5, 2025 - This report was signed by Chris Lai Ther Wei, Chief Executive Officer and Chief Financial Officer of Graphjet Technology, on September 5, 2025[272]