UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 2020
☐ Transition Report Under
Section 13 or 15(d) of the Securities Exchange Act of
1934
For the transition period from __________ to __________
Commission File Number: 333-174194
|
GRAPHENE
& SOLAR TECHNOLOGIES LIMITED |
|
(Exact
name of registrant as specified in its charter) |
|
COLORADO |
|
27-2888719 |
| (State or other
jurisdiction of incorporation or organization) |
|
(I.R.S. Employer
Identification No.) |
433 N. Camden Drive, Ste. 600
Beverly Hills, CA 90210
(Address of principal executive offices, including Zip Code)
(310) 887-9966
(Issuer’s telephone number, including area code)
(formally known as Solar Quartz Technologies
Corporation)
(Former name or former address if changed since last report)
Check
whether the issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes ☐ No ☒
Indicate
by check mark whether the registrant has submitted electronically,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes ☐ No ☒
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a small reporting company. See the definitions of “large
accelerated filer,” “accelerated filer,” “non-accelerated filer,”
and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
|
Large
accelerated filer |
☐ |
Accelerated
filer |
☐ |
| Non-accelerated
filer |
☐ |
Smaller
reporting company |
☒ |
| |
|
Emerging
growth company |
☒ |
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of September 08, 2020, the registrant had 247,248,724
outstanding shares of common stock.
GRAPHENE & SOLAR TECHNOLOGIES LIMITED
FORM 10-Q
TABLE OF CONTENTS
GRAPHENE & SOLAR TECHNOLOGIES LIMITED
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
|
June
30, |
|
September 30, |
|
|
|
2020 (Unaudited) |
|
2019 |
| ASSETS |
|
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
747 |
|
|
$ |
74,241 |
|
|
Prepaid expenses |
|
|
— |
|
|
|
11,684 |
|
|
Other receivables |
|
|
12,490 |
|
|
|
5,197 |
|
|
Total Current Assets |
|
|
13,237 |
|
|
|
91,122 |
|
|
Other Assets: |
|
|
|
|
|
|
|
|
|
Furniture & Equipment, net of depreciation, $65,179 and
$51,946 |
|
|
15,985 |
|
|
|
27,869 |
|
|
Quartz Deposits |
|
|
28,895 |
|
|
|
28,415 |
|
|
Total Other Assets |
|
|
44,880 |
|
|
|
56,284 |
|
| |
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
58,117 |
|
|
$ |
147,406 |
|
| |
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
608,838 |
|
|
$ |
402,599 |
|
|
Accrued interest & other payables |
|
|
127,131 |
|
|
|
110,738 |
|
|
Short term notes payable |
|
|
60,000 |
|
|
|
60,000 |
|
|
Due to related parties |
|
|
582,011 |
|
|
|
455,577 |
|
|
Convertible notes payable-, net of discount $48,808 and $0 |
|
|
120,159 |
|
|
|
100,747 |
|
|
Total Current Liabilities |
|
|
1,498,139 |
|
|
|
1,129,661 |
|
| |
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
$ |
1,498,139 |
|
|
$ |
1,129,661 |
|
| |
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit: |
|
|
|
|
|
|
|
|
|
Preferred stock, $0.00001 par value; 5,000,000 shares authorized;
none, issued or outstanding |
|
|
|
|
|
|
|
|
|
Common stock, $0.00001 par value; 500,000,000 and 500,000,000
shares authorized; 247,248,724 and 242,449,767 shares issued and
outstanding |
|
|
2,463 |
|
|
|
2,424 |
|
|
Additional paid-in capital |
|
|
9,501,788 |
|
|
|
9,047,139 |
|
|
Accumulated other comprehensive income |
|
|
81,303 |
|
|
|
100,717 |
|
|
Accumulated deficit |
|
|
(11,025,576 |
) |
|
|
(10,132,535 |
) |
| |
|
|
|
|
|
|
|
|
|
Total stockholders’ deficit |
|
|
(1,440,022 |
) |
|
|
(982,255 |
) |
| |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ deficit |
|
$ |
58,117 |
|
|
$ |
147,406 |
|
The accompanying notes are an integral part of these
consolidated financial statements.
GRAPHENE & SOLAR TECHNOLOGIES Limited
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND OTHER COMPREHENSIVE INCOME
(Unaudited)
|
|
|
Three Months Ending June 30 |
|
Nine Months Ending June 30, |
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| Revenues |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional Services |
|
|
426,111 |
|
|
|
— |
|
|
|
739,835 |
|
|
|
100,200 |
|
|
General and administrative |
|
|
37,999 |
|
|
|
384,477 |
|
|
|
123,409 |
|
|
|
754,182 |
|
|
Total costs and expenses |
|
|
464,110 |
|
|
|
384,477 |
|
|
|
863,244 |
|
|
|
854,382 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(464,110 |
) |
|
|
(384,477 |
) |
|
|
(863,244 |
) |
|
|
(854,382 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest
income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Other
income |
|
|
1,972 |
|
|
|
— |
|
|
|
5,997 |
|
|
|
— |
|
| Foreign
currency transaction loss |
|
|
— |
|
|
|
(3,585 |
) |
|
|
— |
|
|
|
(3,585 |
) |
| Loan
repayment penalty |
|
|
— |
|
|
|
(17,860 |
) |
|
|
— |
|
|
|
(17,860 |
) |
| Loss on
conversion of note payable |
|
|
— |
|
|
|
(9,818 |
) |
|
|
— |
|
|
|
(9,818 |
) |
| Change in
the fair value of derivative liability |
|
|
— |
|
|
|
(2,540 |
) |
|
|
— |
|
|
|
(2,540 |
) |
| Other |
|
|
— |
|
|
|
(5,918 |
) |
|
|
— |
|
|
|
4,901 |
|
| Interest
expense |
|
|
(13,349 |
) |
|
|
(20,692 |
) |
|
|
(35,794 |
) |
|
|
(71,223 |
) |
|
Total other income (expense) |
|
|
(11,377 |
) |
|
|
(60,413 |
) |
|
|
(29,797 |
) |
|
|
(100,125 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
(475,487 |
) |
|
$ |
(444,890 |
) |
|
$ |
(893,041 |
) |
|
$ |
(954,507 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (Loss) |
|
$ |
(74,818 |
) |
|
$ |
(14,504 |
) |
|
|
(19,414 |
) |
|
$ |
30,352 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Comprehensive Income (Loss) |
|
$ |
(550,305 |
) |
|
$ |
(459,394 |
) |
|
$ |
(912,455 |
) |
|
$ |
(924,155 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and
diluted |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average
shares outstanding |
|
|
244,152,338 |
|
|
|
240,230,306 |
|
|
|
243,135,417 |
|
|
|
238,799,401 |
|
The accompanying notes are an integral part of these
consolidated financial statements.
GRAPHENE & SOLAR TECHNOLOGIES LIMITED
(Formerly Solar Quartz Technologies Corporation)
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF
STOCKHOLDERS’ DEFICIENCY
(Unaudited)
Three and Nine Months Ended June 30, 2020 and 2019
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
Common Stock |
|
Additional |
|
Other |
|
|
|
Total |
|
|
|
|
|
Par |
|
Paid-in |
|
Comprehensive |
|
Accumulated |
|
Stockholders’ |
|
|
|
Shares |
|
Value |
|
Capital |
|
Income |
|
Deficit |
|
Deficiency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2020 |
|
|
242,959,567 |
|
|
$ |
2,430 |
|
|
$ |
9,184,139 |
|
|
$ |
156,121 |
|
|
$ |
(10,550,089 |
) |
|
$ |
(1,207,399 |
) |
|
Shares issued in connection with the sale of common stock |
|
|
289,156 |
|
|
|
3 |
|
|
|
17,679 |
|
|
|
|
|
|
|
|
|
|
|
17,682 |
|
|
Stock-based compensation expense |
|
|
3,000,000 |
|
|
|
30 |
|
|
|
299,970 |
|
|
|
|
|
|
|
|
|
|
|
300,000 |
|
|
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(74,818 |
) |
|
|
|
|
|
|
(74,818 |
) |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(475,487 |
) |
|
|
(475,487 |
) |
|
Balance, June 30, 2020 |
|
|
246,248,723 |
|
|
$ |
2,463 |
|
|
$ |
9,501,788 |
|
|
$ |
81,303 |
|
|
$ |
(10,935,573 |
) |
|
$ |
(1,440,022 |
) |
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
Common Stock |
|
Additional |
|
Other |
|
|
|
Total |
|
|
|
|
|
Par |
|
Paid-in |
|
Comprehensive |
|
Accumulated |
|
Stockholders’ |
|
|
|
Shares |
|
Value |
|
Capital |
|
Income |
|
Deficit |
|
Deficiency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2019 |
|
|
242,449,767 |
|
|
|
2,424 |
|
|
|
9,047,139 |
|
|
|
100,717 |
|
|
|
(10,132,535 |
) |
|
|
(982,255 |
) |
|
Shares issued in connection with the sale of common stock |
|
|
798,956 |
|
|
|
9 |
|
|
|
86,459 |
|
|
|
— |
|
|
|
— |
|
|
|
86,468 |
|
|
Stock-based compensation expense |
|
|
3,000,000 |
|
|
|
30 |
|
|
|
299,970 |
|
|
|
|
|
|
|
|
|
|
|
300,000 |
|
|
Debt discount on Convertible Notes |
|
|
— |
|
|
|
— |
|
|
|
68,220 |
|
|
|
— |
|
|
|
— |
|
|
|
68,220 |
|
|
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(19,414 |
) |
|
|
— |
|
|
|
(19,414 |
) |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
(893,041 |
) |
|
|
(893,041 |
) |
|
Balance, June 30, 2020 |
|
|
246,248,723 |
|
|
$ |
2,463 |
|
|
$ |
9,501,788 |
|
|
$ |
81,303 |
|
|
$ |
(11,025,576 |
) |
|
$ |
(1,440,022 |
) |
|
|
|
Common Stock |
|
Additional |
|
Other |
|
|
|
Total |
|
|
|
|
|
Par |
|
Paid-in |
|
Comprehensive |
|
Accumulated |
|
Stockholders’ |
|
|
|
Shares |
|
Value |
|
Capital |
|
Income |
|
Deficit |
|
Deficiency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2019 |
|
|
238,861,939 |
|
|
$ |
2,389 |
|
|
$ |
8,425,626 |
|
|
$ |
136,902 |
|
|
$ |
(9,395,598 |
) |
|
$ |
(830,681 |
) |
|
Shares issued in connection with the sale of common stock |
|
|
3,014,192 |
|
|
|
30 |
|
|
|
499,970 |
|
|
|
|
|
|
|
|
|
|
|
500,000 |
|
|
Stock issued in connection with the conversion of note payable |
|
|
363,636 |
|
|
|
3 |
|
|
|
19,997 |
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
Terminal balance of derivative liability |
|
|
|
|
|
|
|
|
|
|
42,716 |
|
|
|
|
|
|
|
|
|
|
|
42,716 |
|
|
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,504 |
) |
|
|
|
|
|
|
(14,504 |
) |
|
Net Loss |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
(444,890 |
) |
|
|
(444,890 |
) |
|
Balance June 30, 2019 |
|
|
242,239,767 |
|
|
$ |
2,422 |
|
|
$ |
8,988,309 |
|
|
$ |
121,659 |
|
|
$ |
(9,840,488 |
) |
|
$ |
(727,359 |
) |
|
|
|
Common Stock |
|
Additional |
|
Other |
|
|
|
Total |
|
|
|
|
|
Par |
|
Paid-in |
|
Comprehensive |
|
Accumulated |
|
Stockholders’ |
|
|
|
Shares |
|
Value |
|
Capital |
|
Income |
|
Deficit |
|
Deficiency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance September 30, 2018 |
|
|
236,046,151 |
|
|
|
2,360 |
|
|
|
7,972,361 |
|
|
|
92,046 |
|
|
|
(8,885,981 |
) |
|
|
(819,214 |
) |
|
Shares issued in connection with the sale of common stock |
|
|
5,084,525 |
|
|
|
51 |
|
|
|
844,949 |
|
|
|
|
|
|
|
|
|
|
|
845,000 |
|
|
Stock-based compensation expense |
|
|
600,000 |
|
|
|
6 |
|
|
|
100,194 |
|
|
|
|
|
|
|
|
|
|
|
100,200 |
|
|
Stock issued in connection with the conversion of note payable |
|
|
509,091 |
|
|
|
5 |
|
|
|
41,813 |
|
|
|
|
|
|
|
|
|
|
|
41,818 |
|
|
Terminal balance of derivative liability |
|
|
|
|
|
|
|
|
|
|
28,992 |
|
|
|
|
|
|
|
|
|
|
|
42,716 |
|
|
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,352 |
|
|
|
— |
|
|
|
30,352 |
|
|
Net Loss |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
(954,507 |
) |
|
|
(954,507 |
) |
|
Balance June 30, 2019 |
|
|
242,239,767 |
|
|
$ |
2,422 |
|
|
$ |
8,988,309 |
|
|
$ |
122,398 |
|
|
$ |
(9,840,488 |
) |
|
$ |
(727,359 |
) |
The accompanying notes are an integral part of these
consolidated financial statements
GRAPHENE & SOLAR TECHNOLOGIES Limited
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
For the Nine-Month Period Ended June 30, 2020 and 2019
(Unaudited)
|
|
|
2020 |
|
2019 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
Net Income (loss) |
|
$ |
(893,041 |
) |
|
$ |
(954,507 |
) |
|
Adjustments to reconcile net income/(loss) to net cash from
operating activities: |
|
|
|
|
|
|
(11,738 |
) |
|
Stock-based compensation |
|
|
300,000 |
|
|
|
100,200 |
|
|
Depreciation expense |
|
|
11,995 |
|
|
|
11,738 |
|
| Amortization of
discount |
|
|
19,411 |
|
|
|
31,495 |
|
|
Change in book value of quartz assets |
|
|
— |
|
|
|
— |
|
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
| Accounts
payable |
|
|
206,230 |
|
|
|
77,869 |
|
| Accrued
interest payable |
|
|
16,402 |
|
|
|
13,464 |
|
| Accrued
liabilities |
|
|
|
|
|
|
|
|
|
Derivative liability |
|
|
— |
|
|
|
42,747 |
|
| Change in
derivative liability |
|
|
— |
|
|
|
(2,540 |
) |
| Loss on
conversion |
|
|
|
|
|
|
9,818 |
|
| Receivables |
|
|
5,197 |
|
|
|
|
|
| Pre-Payments |
|
|
(806 |
) |
|
|
(13,168 |
) |
| Other
Assets |
|
|
|
|
|
|
1,329 |
|
| Due to
related parties |
|
|
120,845 |
|
|
|
(116,213 |
) |
|
Net cash used in operating activities |
|
|
(213,764 |
) |
|
|
(835,795 |
) |
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Due to Affiliates |
|
|
— |
|
|
|
— |
|
|
Proceeds from issuance of common stock |
|
|
86,468 |
|
|
|
845,000 |
|
|
Principal paid on note payable |
|
|
— |
|
|
|
(31,000 |
) |
|
Issuance of short term note payable |
|
|
68,220 |
|
|
|
|
|
|
Net cash from financing activities |
|
|
154,688 |
|
|
|
814,000 |
|
|
Effect of currency translations to cash flow |
|
|
(14,415 |
) |
|
|
30,352 |
|
|
Net change in cash and cash equivalents |
|
|
(73,494 |
) |
|
|
8,557 |
|
| Beginning of
period |
|
|
74,241 |
|
|
|
6,704 |
|
| End of
period |
|
$ |
747 |
|
|
$ |
15,261 |
|
|
Supplemental cash flow information |
|
Quarter ended June 30, |
|
|
|
2020 |
|
2019 |
|
Interest paid |
|
$ |
— |
|
|
$ |
4,719 |
|
|
Noncash investing and financing activities: |
|
|
|
|
|
|
|
|
| Discount
on note payable credited to derivative liability |
|
|
|
|
|
|
55,109 |
|
| Debt
discount on convertible notes |
|
|
68,220 |
|
|
|
— |
|
| Terminal
Balance of derivative liability credited to additional paid in
capital |
|
|
— |
|
|
|
28,992 |
|
|
Conversion of loan principal into shares |
|
$ |
— |
|
|
$ |
32,000 |
|
The accompanying notes are an integral part of these
consolidated financial statements.
GRAPHENE & SOLAR TECHNOLOGIES Limited
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
NOTE 1 – BASIS OF PRESENTATION
These consolidated financial statements of Graphene & Solar
Technologies Limited (GSTX or the Company) have been prepared in
accordance with accounting principles generally accepted in the
United States of America (U.S. GAAP). In the opinion of management,
these financial statements include all adjustments, consisting only
of normal recurring adjustments, necessary for a fair statement of
the results for the interim periods. Certain information,
accounting policies and footnote disclosures normally included in
financial statements prepared in accordance with U.S. GAAP have
been omitted pursuant to Securities and Exchange Commission (SEC)
rules and regulations. These financial statements should be read
along with Solar Quartz’s audited financial statements as of
September 30, 2019.
Going Concern – The Company has incurred cumulative net
losses throughout 2019 financial periods and currently in 2020
periods. Accordingly, it requires capital to fund working capital
deficits and for future operating activities to take place. The
Company’s ability to raise new funds through the future issuances
of debt or common stock is unknown. The obtainment of additional
financing, the successful development of a plan of operations, and
its transition, ultimately, to the attainment of profitable
operations are necessary for the Company to continue operations.
The ability to successfully resolve these factors raise substantial
doubt about the Company’s ability to continue as a going
concern.
Going Concern – The Company has incurred cumulative net
losses since its inception and will require capital for future
operating activities to take place. The Company’s ability to raise
new funds through the future issuances of debt or common stock is
unknown. The obtainment of additional financing, the successful
development of a plan of operations, and its transition,
ultimately, to the attainment of profitable operations are
necessary for the Company to continue operations. The ability to
successfully resolve these factors raise substantial doubt about
the Company’s ability to continue as a going concern.
Future issuances of the Company’s equity or debt securities will be
required for the Company to finance operations and continue as a
going concern. The financial statements do not include any
adjustments that may result from the outcome of these
uncertainties.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF
PRESENTATION
Principles of Consolidation and Basis of Presentation — The
consolidated financial statements include the accounts of Graphene
& Solar Technologies Limited and its subsidiary. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
The accompanying financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States of America (“GAAP”) and pursuant to the accounting
and disclosure rules and regulations of the U.S. Securities
and Exchange Commission (“SEC”). A summary of the significant
accounting policies applied in the preparation of the accompanying
financial statements can be found in the Company’s Annual Report in
form 10-K for the year ended September 30, 2019.
Use of Estimates - The preparation of financial statements
in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Significant estimates include but are not limited to the estimated
useful lives of equipment for purposes of depreciation and the
valuation of common shares issued for services, equipment and the
liquidation of liabilities.
Cash and Cash Equivalents-Cash and cash equivalents are
carried at cost and represent cash on hand, demand deposits placed
with banks or other financial institutions and all highly liquid
investments with an original maturity of three months or less as of
the purchase date of such investments. As of June 30 2020 and 2019,
the Company had $747 and $15,261 in cash, respectively, and no cash
equivalents.
Derivative Financial Instruments - The Company accounts for
freestanding contracts that are settled in a company’s own stock,
including common stock warrants, to be designated as an equity
instrument or generally as a liability. A contract so designated is
carried at fair value on a company’s balance sheet, with any
changes in fair value recorded as a gain or loss in a company’s
results of operations.
The Company records all derivatives on the balance sheet at fair
value, adjusted at the end of each reporting period to reflect any
material changes in fair value, with any such changes classified as
changes in derivatives valuation in the statement of operations.
The calculation of the fair value of derivatives utilizes highly
subjective and theoretical assumptions that can materially affect
fair values from period to period. The recognition of these
derivative amounts does not have any impact on cash flows.
At the date of the conversion of any convertible debt, the pro rata
fair value of the related embedded derivative liability is
transferred to additional paid-in capital.
The Company determined our derivative liabilities to be a Level 3
fair value measurement and uses the Binomial pricing model to
calculate the fair value. The Binomial model requires six basic
data inputs: the exercise or strike price, time to expiration, the
risk free interest rate, the current stock price, the estimated
volatility of the stock price in the future, and the dividend rate.
Changes to these inputs could produce a significantly higher or
lower fair value measurement. The fair value of each convertible
note is estimated using the Binomial valuation model.
Stock-Based Compensation - The Company accounts for employee
stock-based compensation using the fair value method. However, the
Company did not evaluate employee-based compensation as the Company
has no employees. The Company did issue stock to
vendors/consultants for services performed. The fair value
attributable to stock options is calculated based on the
Black-Scholes option pricing model and is amortized to expense over
the service period which is equivalent to the time required to vest
the stock options.
Foreign Currency Translations – The functional currency of
the Company’s foreign subsidiary is primarily the respective local
currency. Assets and liabilities of the Company’s foreign
subsidiary are translated into U.S. Dollars at the year-end
exchange rate, and revenues and expenses are translated at average
monthly exchange rates. Translation gains and losses are recorded
as a component of accumulated other comprehensive income (loss)
within stockholders’ equity. All other foreign currency transaction
gains and losses are included in other (income) expense, net.
Earnings Per Share - Basic earnings per share have been
calculated based upon the weighted-average number of common shares
outstanding. Diluted earnings per share were not calculated as such
potential shares would be anti-dilutive.
Reclassifications - Certain amounts previously presented for
prior periods have been reclassified to conform to the current
presentation. The reclassifications had no effect on net loss,
working capital or equity previously reported.
Recently Issued Accounting Pronouncements - Various
accounting standards updates have been recently issued, most of
which represented technical corrections to the accounting
literature or were applicable to specific industries. Recently
accounting pronouncements have been issued that are likely to have
a material impact to the Company’s consolidated financial
statements. These include accounting standards as they apply to
leases. The Company will treat its development of mineral rights
under standards for operating leases commonly applied in mineral
extraction industries.
Mineral Rights- Investment in mineral rights consists of the
exclusive mining and development rights for the two high purity
quartz silica deposits known as Quartz Hill (represented by mining
leases ML 30235, ML 30236 and ML 30237) and White Springs
(represented by leases ML 30238 and ML 30239) located in North
Queensland, Australia. The investment in mineral rights is carried
on the books of the Company at the cost of the lease rights.
Mineral rights assets are tested for impairment if facts and
circumstances indicate that impairment exists.
NOTE 3 – CONVERTIBLE NOTES PAYABLE
The Company’s indebtedness as of June 30,2020 and September 30,
2019 were as follows:
| Description |
|
June 30,
2020 |
|
September 30,
2019 |
| |
|
|
|
|
|
Convertible notes |
|
$ |
168,967 |
|
|
$ |
100,747 |
|
| Notes
Payable |
|
$ |
60,000 |
|
|
$ |
60,000 |
|
$70,747 of the convertible notes bear interest at 15% and are also
due on demand. The principal and accrued interest of these
convertible notes can be converted at the discretion of the holders
into common shares at $3.31/share.
$68,220 of the convertible notes bear interest at 10% and the
principal and accrued interest of these convertible notes can be
converted at the discretion of the holders into common shares at
45% discount to the ADR 20 days prior to notification of
conversion. The majority shareholder agreed to increase authorized
shares if needed in order to settle this debt. This note was
discounted for the full amount and the amount of amortization
during the period.
The Notes Payable bear interest at 10% and are due on demand.
NOTE 4- RELATED PARTY
PGRNZ
Limited, a management company controlled by the Company’s Chief
Executive Officer, and a Company Director, provides management
services to the Company for which the Company is charged
$75,000(AUD) quarterly, approximately $51,225 (US). During the nine
months ended June 30, 2020 and 2019, the Company incurred charges
to operations of $68,240 (US) and $52,675(US), respectively, with
respect to this arrangement.
As of June 30,2020 and September 30, 2019, accrued expenses due to
related parties was $582,011 and $455,577 respectively.
NOTE 5 – STOCKHOLDERS’ EQUITY
Common shares of 3,289,156 were issued resulting in an increase to
capital stock of $33 and an increase to Additional Paid-in Capital
of $317,649.
During the 3 month period ending June 30, 2020 period 289,156 new
Common shares were issued for cash proceeds of $17,682.
Also during the 3 month period ending June 30, 2020, the Company
issued 3,000,000 shares of the Company’s common stock to
consultants. The fair value of the shares, as determined by
reference to the closing price of the Company’s common stock,
aggregated $300,000 ($0.10 per share).
The Company has a total of 8,638,167 shares that remain approved,
reserved and outstanding and not yet issued by the Transfer Agent
at June 30, 2020.
NOTE 6 – SUBSEQUENT EVENTS
During
the month of July 2020 additional Common shares of 1,000,000 were
issued to members of the Board of Directors.
ITEM 2. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATION
The following discussion of our financial condition and results
of operations should be read in conjunction with our financial
statements and the related notes, and other financial information
included in this Form 10-Q.
Our Management’s Discussion and Analysis contains not only
statements that are historical facts, but also statements that are
forward-looking. Forward-looking statements are, by their very
nature, uncertain and risky. Although the forward-looking
statements in this Quarterly Report reflect the good faith judgment
of our management, such statements can only be based on facts and
factors currently known by them. Consequently, and because
forward-looking statements are inherently subject to risks and
uncertainties, the actual results and outcomes may differ
materially from the results and outcomes discussed in the
forward-looking statements. You are urged to carefully review and
consider the various disclosures made by us in this report as we
attempt to advise interested parties of the risks and factors that
may affect our business, financial condition, and results of
operations and prospects.
FORWARD LOOKING STATEMENTS
The information contained in this Form 10-Q contains certain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, Section 21E of the Securities
Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
involve risks and uncertainties, including among other things,
statements regarding our capital needs, business strategy and
expectations. Any statement which does not contain a historical
fact may be deemed to be a forward-looking statement. In some
cases, you can identify forward-looking statements by terminology
such as “may”, “will”, “should”, “expect”, “plan”, “intend”,
“anticipate”, “believe”, “estimate”, “predict”, “potential” or
“continue”, the negative of such terms or other comparable
terminology. In evaluating forward looking statements, you should
consider various factors outlined in our Form 10-K report for the
year ended September 30, 2019, filed with the U.S. Securities
Exchange Commission (“SEC”) and, from time to time, in other
reports we file with the SEC. These factors may cause our actual
results to differ materially from any forward-looking statement. We
disclaim any obligation to publicly update these statements or
disclose any difference between our actual results and those
reflected in these statements.
Overview
In July 2017 we acquired Solar Quartz Technologies Limited, a New
Zealand corporation. We are now seeking new financing in the form
of equity, debt or a combination thereof to meet development and
general operating obligations. Absent achieving sufficient funds
soon, our viability is in doubt. The Company has managed to raise
some capital by sale of shares, but as of June, 2020, the Company
has not been successful in raising sufficient funds; However, work
is underway to secure funding, and we believe that funding for the
Company is possible in the near future although no assurance can be
made as to the amount of funds, if any, or the terms thereof.
Current Business and Operations
On July 2017 we acquired Solar Quartz Technologies Limited, a
New Zealand Corporation.
With the acquisition of Solar Quartz Technologies Limited we now
own mining exploration and development rights to significant
deposits of High Purity Quartz that we have determined in our
evaluation of independent reports and considered judgment to have
reserves which are adequate to provide the Company with adequate
resources for 25-30 years of production. See Item 1 in the FY 2019
10-K Business for greater details.
We are
currently actively seeking interim working capital in order to
complete mining plans and build a pre-processing plant in
Townsville, North Queensland, Australia, build upon our management
team and market high purity quartz (HPQS) to established markets
with whom our management team have had prior relationships. These
organizational efforts will be to secure significant new capital
for the acquisition of a site and the building of the
pre-processing plant. Upon completion, that plant will enable the
Company to upgrade its newly mined HPQS to a higher level of purity
that has a significant world-wide demand for use in the production
of advanced PV solar Panels and all high-end electronics, lighting,
telecom, optic and microelectronics. Failure to secure these
financings will have a negative impact on the Company’s ability to
continue as a going concern.
Results of Operations
For
the fiscal quarters ended June 30, 2020 and 2019 we generated no
revenues, and thus no cost of sales or gross profits.
For the fiscal quarters ended June 30, 2020 and 2019, we incurred
$464,110 and $384,477 respectively in operating expenses.
For the fiscal quarter ended June 30, 2020 we recorded other
expenses of $13,349 while for quarter ended June 30, 2019 we
incurred expenses of $20,692 both items are represented by accrued
interest on debt. In June quarter 2019 additional expenses of
$30,218 were recorded for loss on conversion and early payment
penalty on Note payment. Other income of $1,972 was earned in the
fiscal quarter, June 30, 2020.
For the year quarter June 30, 2020, we reported net loss before
taxes of $475,487 while in the fiscal quarter ended March 31, 2019,
we reported a net loss before taxes of $459,394. Since there were
no tax obligations in either year, net income / loss in each year
was the same as that reported before taxes.
For the periods ended September 30, 2019 and June 30, 2020, our
cash positions were $74,241 and $747 respectively.
As of June 30, 2020, we had total current liabilities of $1,498,139
while as of September 30, 2019, we had total current liabilities of
$1,129,661 an increase of about 33%. Accrued interest payable
increased from $110,738 to $127,131 all attributable to accruals on
the loans and the convertible notes payable.
NOTE: We have recorded a total of $228,967 payable as a liability
due to loan and note holders. We have been attempting to
substantiate notes relating to $160,747 of this total amount. Our
efforts to get the debt holders to show further evidence of this
debt and communicate with the debtholders thus far have not been
effective. These notes were issued and loans recorded by Vanguard
Energy prior to the acquisition of Solar Quartz Technologies Ltd in
July 2017. However, in accordance with generally accepted
accounting principles the liability remains on our balance sheet at
this time.
Liquidity and Capital Resources
As of June 30, 2020, we had $58,118 in total assets and $1,498,139
in total current liabilities. Accordingly, we had a working capital
deficit of $1,440,022.
NOTE – MINERAL ASSETS While the Company maintains that it has
quartz and other mineral assets that exceed the current carrying
value on the balance sheet any such additional value would only be
recognized upon sale and accordingly in accordance with generally
accepted accounting principles the assets in question are carried
at lower of cost or market. The Company has asserted that there
have been offers and a share exchange that would result in an
indicated asset value above the current balance sheet value. No
accounting or provision for this possible gain has been reflected
in these financial statements.
Off-Balance Sheet Arrangements
There
are no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
For a
discussion of our accounting policies and related items, please see
the Notes to the Financial Statements, included in Item 1.
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURE ABOUT MARKET RISK.
Not
applicable.
ITEM 4. CONTROLS AND
PROCEDURES.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in reports filed
under the Securities Exchange Act of 1934, as amended, or the
Exchange Act, is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms, and that
such information is accumulated and communicated to our management
to allow timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures,
our management recognizes that any controls and procedures, no
matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives.
Our Principal Executive Officer and Principal Financial Officer,
after evaluating the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) as of the end of the period covered by this Quarterly
Report on Form 10-Q, have concluded that, based on such evaluation,
our disclosure controls and procedures were effective to ensure
that information required to be disclosed by us in the reports that
we file or submit under the Exchange Act is recorded, processed,
summarized and reported, with the time periods specified in the
SEC’s rules and forms, and is accumulated and communicated to our
management, including our Principal Executive Officer and Principal
Financial Officer as appropriate to allow timely decisions
regarding required disclosure.
Changes in Internal Controls over Financial Reporting
There were no significant changes to our internal controls over
financial reporting that occurred during the three months ended
June 30, 2020 that has materially affected, or is reasonably likely
to materially affect, our internal control over financial
reporting.
PART II
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Our business is subject to numerous risks and uncertainties
including but not limited to those discussed in “Risk Factors” in
our annual report on Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS
Please see Note 5 to our Financial Statements.
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES
None.
ITEM 4. MINE SAFETY
DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
| |
GRAPHENE
& SOLAR TECHNOLOGIES LIMITED |
|
|
|
|
| Date:
September 08, 2020 |
By: |
/s/ David
AB Halstead |
| |
|
David AB
Halstead |
| |
|
Director and Interim
Chief Financial Officer |
16
