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EX-32.1 - CERTIFICATION - Solar Quartz Technologies Corpvnge_ex321.htm
EX-31.2 - CERTIFICATION - Solar Quartz Technologies Corpvnge_ex312.htm
EX-31.1 - CERTIFICATION - Solar Quartz Technologies Corpvnge_ex311.htm

 

FORM 10-K

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

(Mark One)

 

¨

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended September 30, 2016

 

OR

 

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: None

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

(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.)

 

21 Waterway Ave., Ste. 300

The Woodlands, Texas

 

 

77380

(Address of principal executive offices)

 

(Zip Code)

 

Registrant's telephone number, including area code: (281) 362-2725

 

Securities registered pursuant to Section 12(b) of the Act: None.

 

Title of each class

 

Name of each exchange

on which registered

 

Securities registered pursuant to Section 12(g) of the Act: None.

___________________

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

 

Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 o No x

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations 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 filing). Yes x No ¨

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “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

x

(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes o No x

 

The aggregate market value of the voting stock held by non-affiliates of the registrant on September 30, 2017 was approximately $225,116,996

 

As of September 30, 2017, the registrant had 214,404,889 outstanding shares of common stock. It was also contractually committed to issue an additional 10,021,340 shares of common stock to certain holders or their successors of its common stock prior to July 1, 2017.

 

 
 

Explanatory Note

 

Solar Quartz Technologies Corporation (“Company”, “we,” “us” or “our”) is filing this Comprehensive Annual Report on Form 10-K for the fiscal years ended September 39, 2016 and 2015 (this “Annual Report”) as part of its efforts to become current in its filing obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Since the Company has not filed its interim financial statements on Forms 10-Q as of, and for the periods ended December 31, 2015, March 31, 2016; June 30, 2016; December 31, 2016, March 31, 2017 and June 30, 2017, as of the date of this Annual Report (being filed by the Company after its due date), the Company is including the interim financial information along with management’s discussion and analysis for the applicable periods in this Annual Report. The Company has determined that it can best provide current and accurate information to investors and shareholders by focusing the Company’s efforts and resources on providing more timely information. Due to various factors more fully described throughout this report, the Company believes the interim financial information for the years ended September 30, 2016 and 2015 contained in this report is not comparable to similar periods in 2014, correspondingly, analysis deemed non critical to the overall mix of information being made available in this Annual Report specifically related to 2014 has been omitted.

 

Documents Incorporated by Reference: None

 

 
2
 

 

 

Page

 

Part I

 

Item 1.

Business.

 

5

 

Item 1A.

Risk Factors.

 

6

 

Item 1B.

Unresolved Staff Comments.

 

6

 

Item 2.

Properties.

 

6

 

Item 3.

Legal Proceedings.

 

6

 

Item 4.

Mine Safety Disclosures.

 

6

 

Part II

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

7

 

Item 6.

Selected Financial Data.

 

8

 

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

8

 

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk.

 

10

 

Item 8.

Financial Statements and Supplementary Data.

 

11

 

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

12

 

Item 9A.

Controls and Procedures.

 

12

 

Item 9B.

Other Information.

 

12

 

Part III

 

Item 10.

Directors, Executive Officers and Corporate Governance.

 

13

 

Item 11.

Executive Compensation.

 

14

 

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

15

 

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

 

16

 

Item 14.

Principal Accountant Fees and Services.

 

16

 

Part IV

 

Item 15.

Exhibits and Financial Statements Schedules.

 

17

 

Signatures

 

18

  

 
3
 

 

FORWARD-LOOKING STATEMENTS

 

This report contains forward-looking statements. The Securities and Exchange Commission (the “Commission”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results. Factors that could cause our actual results of operations and financial condition to differ materially are discussed in greater detail under Item 1A, “Risk Factors” of this annual report on Form 10-K.

 

We caution that the factors described herein and other factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

 

 
4
 
Table of Contents

 

PART I

 

ITEM 1. BUSINESS.

 

We were incorporated in Colorado on June 21, 2010. Between February 1, 2011 and June 14, 2014 we were involved in the exploration and development of oil and gas properties in southeast Texas.

 

We were never able to earn a profit and in January of 2013 we began investigating the possibility of selling our oil and gas properties.

 

On June 17, 2014 we sold our oil and gas properties to Vast Exploration, Inc..

 

The sale of our oil and gas properties represented the sale of substantially all of our assets.

 

On August 19, 2014, a 100-for-1 reverse split of our common stock became effective.

 

Subsequent Events

 

On July 1, 2017 the Company authorized an increase in its authorized common shares to 500,000,000 and its authorized preferred shares to 10,000,000.

 

On July 1, 2017 the company acquired all of the shares of Solar Quartz Technologies Limited, a company incorporated in New Zealand (“SQTNZ”). These shares were purchased from Solar Quartz Technologies, Inc. (“SQTI”). We subsequently changed our name to Solar Quartz Technologies Corporation in Colorado and with FINRA, and have also been cleared by FINRA to use the new trading symbol SQTX. The Company issued 213,402,755 new shares of common stock to SQTI in exchange for 122 (100%) of the common shares of SQTNZ. The issuance of these shares was equivalent to 95% of the Company's shares issued, after we issue an additional 10,021,224 shares of common stock to those holders of our common stock immediately prior to the acquisition. The Company does not anticipate any further reorganization of its common stock. We are currently preparing filing all necessary reports to the SEC with audited financial statements to resume our status as fully reporting with the SEC, and subsequently apply to trade on the more senior OTCQX exchange or NASDAQ.

 

SQTNZ is a corporation that has had no prior business activity other than being the title owner of the exclusive mining and development rights for two High Purity Quartz (HPQ) Silica deposits known as Quartz Hill (represented by leases ML 30235, ML 30236 and ML 30237) and White Springs (represented by leases ML 30238 and ML 30239) located in North Queensland, Australia. Together they contain deposits in excess of 15 million tons of 99% pure High Purity Quartz which is feedstock in high demand in the marketplace to be used in the production of High Purity Quartz Sand (HPQS) according to independent professional reports.

 

 
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HPQS is an essential primary material for the manufacture of: Photo-Voltaic (PV) solar panels; Semiconductors; all High-end Electronic products; Fiber Optical cables; Halogen Lamps; HD and LCD television screens; and Epoxy Mounding Compounds (EMC).

 

Employees and Offices

 

As of September 30, 2017, we did not have any employees.

 

Our office is located at 21 Waterway Avenue, Suite 300, The Woodlands, Texas 77380. This a virtual office leased for two years ended June 30, 2019 at a rate of $197 per month.

 

ITEM 1.A. RISK FACTORS.

 

Not applicable.

 

ITEM 1.B. UNRESOLVED STAFF COMMENTS.

 

Not Applicable

 

ITEM 2. PROPERTIES.

 

None.

 

ITEM 3. LEGAL PROCEEDINGS.

 

Not applicable

 

ITEM 4. MINE SAFETY DISCLOSURE.

 

Not applicable

 

 
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Table of Contents

 

PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

Our common stock trades in the over-the-counter market under the symbol “SQTX”. Shown below is the range of high and low closing prices for our common stock for the periods indicated as reported by the FINRA. The market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.

 

Quarter Ended

 

High

 

 

Low

 

December 31, 2014

 

$ 1.55

 

 

$ 0.40

 

March 31, 2015

 

$ 2.09

 

 

$ 0.90

 

June 30, 2015

 

$ 1.99

 

 

$ 1.01

 

September 30, 2015

 

$ 1.65

 

 

$ 1.01

 

 

 

 

 

 

 

 

 

 

December 31, 2015

 

$ 1.40

 

 

$ 0.80

 

March 31, 2016

 

$ 1.05

 

 

$ 0.85

 

June 30, 2016

 

$ 3.00

 

 

$ 0.85

 

September 30, 2016

 

$ 1.15

 

 

$ 0.75

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

$ 1.40

 

 

$ 0.90

 

March 31, 2017

 

$ 2.00

 

 

$ 0.95

 

June 30, 2017

 

$ 0.95

 

 

$ 0.91

 

September 30, 2017

 

$ 2.90

 

 

$ 0.76

 

 

Holders of our common stock are entitled to receive dividends as may be declared by the Board of Directors. Our Board of Directors is not restricted from paying any dividends but is not obligated to declare a dividend. No cash dividends have ever been declared and it is not anticipated that cash dividends will ever be paid.

 

Our Articles of Incorporation authorize our Board of Directors to issue up to 500,000,000 shares of common stock and up to 10,000,000 shares of preferred stock. The provisions in the Articles of Incorporation relating to the preferred stock allow our directors to issue preferred stock with multiple votes per share and dividend rights which would have priority over any dividends paid with respect to the holders of our common stock. The issuance of preferred stock with these rights may make the removal of management difficult even if the removal would be considered beneficial to shareholders generally, and will have the effect of limiting shareholder participation in certain transactions such as mergers or tender offers if these transactions are not favored by our management.

 

As of September 30, 2017, we had approximately 215 shareholders of record.

 

We have not declared or paid any dividends on our common stock since our inception, and we do not anticipate declaring or paying any dividends on our common stock for the foreseeable future. We currently intend to retain any future earnings to finance future growth. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements and other factors the board of directors considers relevant.

 

 
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ITEM 6. SELECTED FINANCIAL DATA.

 

Not applicable.

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

As a result of the sale of our oil and gas properties in June of 2014, as discussed in Item 1 of this report, we no longer have any oil and gas assets or related operations during the periods reported herein, resulting in no revenue or revenue related expenses.

 

During the fiscal year ended September 30, 2015, the Company issued 860,353 shares of common stock in satisfaction of $2,677,698 of convertible debt and 5,970 shares in satisfaction of other payables in the amount of approximately $15,000. This resulted in a reported gain on debt extinguishment of $2,576,890.

 

During the fiscal year ended September 30,2016, the Company issued 23,025 common shares in satisfaction of $76,190 of convertible debt resulting in $76,190 in gain on debt extinguishment.

 

Since we have had no field activity since the sale of our oil and gas leases and had only minimal administrative operations during the periods reported herein, a comparison of our financial statements with any prior period would not be meaningful.

 

With the acquisition of Solar Quartz Technologies Limited we now own significant deposits of High Purity Quartz Silica that we have determined have an aggregate market value of $530,000,000. See Item 1 Business – Subsequent Events for greater details.

 

Contractual Obligations

 

Principal balances of our material future contractual obligations as of September 30, 2016 were as follows:

 

 

 

Total

 

 

2016

 

 

 

 

 

 

 

 

2012 Convertible notes 

 

$ 70,747

 

 

$ 70,747

 

Notes Payable

 

$ 85,000

 

 

$ 85,000

 

 

Critical Accounting Policies and New Accounting Pronouncements

 

The Company’s critical accounting policies are as described below

 

Principles of Consolidation and Basis of Presentation— The consolidated financial statements include the accounts of Solar Quartz Technologies Corporation and its subsidiaries. Solar Quartz’s significant accounting policies are consistent with those discussed in the audited financial statements as of September 30, 2016 and 2015. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

The Company's fiscal year-end is September 30. 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 follows

 

Cash and Cash Equivalents—The Company considers all highly liquid instruments purchased with a maturity date of three months or less to be cash equivalents.

 

Debt Issuance Costs—Costs incurred in connection with the issuance of long-term debt are capitalized and amortized over the term of the related debt.

 

 
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Conversion Feature Liability and Warrant Liabilities—The conversion feature liability and warrant liabilities are recorded at fair value based upon valuation models utilizing relevant factors such as expected life, estimated volatility, risk-free interest and expected dividend rate. Changes in the fair value of these liabilities are reported in the statements of operations.

 

Stock-Based Compensation—The Company accounts for employee stock-based compensation using the fair value method. 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.

 

Income Taxes—Income taxes are provided based on the liability method for financial reporting purposes. Under this method deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.

 

Uncertain tax positions are recognized in the financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

 

The Company is required to file federal income tax returns in the United States and in various state and local jurisdictions. The Company's tax returns filed since inception are subject to examination by taxing authorities in the jurisdictions in which it operates in accordance with the normal statutes of limitations in the applicable jurisdiction.

 

Earnings Per Share – Basic earnings per share have been calculated based upon the weighted-average number of common shares outstanding. Diluted earnings per share have been calculated based upon the weighted-average number of common and potential shares.

 

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. No new accounting pronouncements have been issued that are likely to have a material impact to the Company’s consolidated financial statements.

 

Fair Value Measurements—The carrying value of cash and cash equivalents, accounts receivable, and accounts payable, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. The estimated fair value of long-term debt was determined by discounting future cash flows using rates currently available to the Company for debt with similar terms and remaining maturities. The Company calculated that the estimated fair value of the long-term debt is not significantly different than the carrying value of the debt. The participation liability associated with outstanding long-term debt was determined by utilizing a present value factor of 10 applied to proved developed reserves associated with the wells drilled with the proceeds of the notes.

 

Fair value is defined as the price that would be received to sell an asset or price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used in determining fair value are classified for disclosure purposes according to a hierarchy that prioritizes those inputs based upon the degree to which they are observable. The three levels of the fair-value-measurement hierarchy are as follows:

 

 

· Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

 

 

 

· Level 2—Inputs that reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or the liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

 
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· Level 3—Unobservable inputs reflecting the Company's own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

 

In determining fair value, the Company utilizes observable market data when available, or models that incorporate observable market data. In addition to market information, the Company incorporates transaction-specific details that, in management's judgment, market participants would take into account in measuring fair value. The Company utilizes the most observable inputs available for the valuation technique employed. If a fair value measurement reflects inputs at multiple levels within the hierarchy, the fair-value measurement of both financial and nonfinancial assets and liabilities are characterized based upon the lowest level of input that is significant to the fair value measurement.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable.

 

 
10
 
Table of Contents

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

 

Page

 

 

 

Report of Independent Registered Public Accounting Firm

 

F-1

 

 

 

Consolidated Balance Sheets

 

F-2

 

 

 

Consolidated Statements of Operations

 

F-3

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

 

F-4

 

 

 

Consolidated Statements of Cash Flows

 

F-5

 

 

 

Notes to the Consolidated Financial Statements

 

F-6

 

 

 
11
 
 

 

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Stockholders of

Solar Quartz Technologies Corporation

 

We have audited the accompanying consolidated balance sheets of Solar Quartz Technologies Corporation as of September 30, 2016 and 2015 and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Solar Quartz Technologies Corp. at September 30, 2016 and 2015, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1 to the consolidated financial statements, the Company sold its oil and gas properties that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/S/ Thayer O’Neal Company, LLC

 

Thayer O’Neal Company, LLC

Houston, Texas

 

November 15, 2017

 

 
F-1
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEETS

 

 

 

September 30,

 

 

September 30,

 

 

2016

 

 

2015

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$ 35

 

 

$ 5

 

Other receivables

 

 

966

 

 

 

-

 

Total current assets

 

 

1,001

 

 

 

5

 

Total assets

 

$ 1,001

 

 

$ 5

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$ 48,212

 

 

$ 20,217

 

Due to related party

 

 

3,000

 

 

 

-

 

Accrued interest payable

 

 

36,044

 

 

 

38,571

 

Accrued liabilities

 

 

17,511

 

 

 

10,463

 

Short term notes payable

 

 

85,000

 

 

 

50,000

 

Other liabilities

 

 

92

 

 

 

275

 

Current portion of notes payable, net of discount $0 and $71,754

 

 

70,747

 

 

 

146,937

 

Total current liabilities

 

 

260,606

 

 

 

266,463

 

 

 

 

 

 

 

 

 

 

Stockholders' deficit

 

 

 

 

 

 

 

 

Preferred stock, $0.00001 par value; 5,000,000 shares

 

 

 

 

 

 

 

 

authorized; none issued or outstanding

 

 

-

 

 

 

-

 

Common stock, $0.00001 par value; 100,000,000

 

 

 

 

 

 

 

 

shares authorized; 1,002,134 and 979,109 shares issued and

 

 

 

 

 

 

 

 

outstanding

 

 

1,002

 

 

 

979

 

Additional paid-in capital

 

 

6,318,920

 

 

 

6,318,920

 

Accumulated deficit

 

 

(6,579,527 )

 

 

(6,586,357 )

 

 

 

 

 

 

 

 

 

Total stockholders' deficit

 

 

(259,605 )

 

 

(266,458 )

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' deficit

 

$ 1,001

 

 

$ 5

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
F-2
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

September 30

 

 

September 30

 

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

Revenues

 

$ -

 

 

$ -

 

Operating expenses

 

 

64,790

 

 

 

109,593

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(64,790 )

 

 

(109,593 )

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

Other income

 

 

-

 

 

 

(23,810 )

Interest expense

 

 

(12,408 )

 

 

(31,608 )

Other interest costs

 

 

(7,074 )

 

 

-

 

Gain on debt extinguishment

 

 

91,102

 

 

 

2,576,890

 

Total other income (expense)

 

 

71,620

 

 

 

2,521,472

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) before income taxes

 

 

6,830

 

 

 

2,411,879

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$ 6,830

 

 

$ 2,411,879

 

 

 

 

 

 

 

 

 

 

Income (Loss) per share:

 

 

 

 

 

 

 

 

Basic

 

$ 0.00

 

 

$ 2.90

 

Diluted

 

$ 0.00

 

 

$ 2.65

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

999,392

 

 

 

831,241

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
F-3
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS' DEFICIT

 For the years ended September 30, 2016 and 2015

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance September 30, 2014

 

 

115,243

 

 

$ 115

 

 

$ 5,522,216

 

 

$ (9,022,045 )

 

$ (3,499,714 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return of common stock

 

 

(2,484 )

 

 

(2 )

 

 

2

 

 

 

-

 

 

 

-

 

Cancellation of treasury shares

 

 

-

 

 

 

-

 

 

 

-

 

 

 

23,810

 

 

 

23,810

 

Issuance of shares for debt settlement

 

 

866,350

 

 

 

866

 

 

 

796,702

 

 

 

-

 

 

 

797,568

 

Net Income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,411,879

 

 

 

2,411,879

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance September 30, 2015

 

 

979,109

 

 

 

979

 

 

 

6,318,920

 

 

 

(6,586,357 )

 

 

(266,458 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of shares for debt settlement

 

 

23,025

 

 

 

23

 

 

 

-

 

 

 

-

 

 

 

23

 

Net Income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,830

 

 

 

6,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance September 30, 2016

 

 

1,002,134

 

 

$ 1,002

 

 

$ 6,318,920

 

 

$ (6,579,527 )

 

$ (259,605 )

The accompanying notes are an integral part of these consolidated financial statements.

 

 
F-4
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

 

 

 

Year Ended

 

 

 

2016

 

 

2015

 

Cash flows from operating activities

 

 

 

 

 

 

Net Income (loss)

 

$ 6,830

 

 

$ 2,411,878

 

Adjustments to reconcile net income/(loss)

 

 

 

 

 

 

 

 

to net cash from operating activities:

 

 

 

 

 

 

 

 

Interest expense

 

 

19,455

 

 

 

31,608

 

Cancellation of treasury shares

 

 

 

 

 

 

23,810

 

Amortization of debt issuance costs

 

 

-

 

 

 

-

 

Gain on debt extinguishment

 

 

(91,101 )

 

 

(2,576,890 )

Other receivables

 

 

(966 )

 

 

12,500

 

Accounts payable

 

 

27,995

 

 

 

25,605

 

Due to related party

 

 

3,000

 

 

 

-

 

Accrued liabilities

 

 

-

 

 

 

(9,432 )

Other liabilities

 

 

(183 )

 

 

(8,325 )

Net cash from operating activities

 

 

(34,970 )

 

 

(89,246 )

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Issuance of short term note payable

 

 

35,000

 

 

 

50,000

 

Net cash from financing activities

 

 

35,000

 

 

 

50,000

 

Net change in cash and cash equivalents

 

 

30

 

 

 

(39,246 )

Cash and cash equivalents

 

 

 

 

 

 

 

 

Beginning of period

 

 

5

 

 

 

39,251

 

End of period

 

$ 35

 

 

$ 5

 

 

 

 

 

 

 

 

 

 

Amounts paid during the year for:

 

 

 

 

 

 

 

 

Interest

 

 

-

 

 

 

-

 

Income taxes

 

 

-

 

 

 

-

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

Noncash investing and financing activities:

 

 

 

 

 

 

 

 

Issuance of shares for settlement of debt

 

 

23,017

 

 

 

866,323

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
F-5
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – BASIS OF PRESENTATION

 

These consolidated audited financial statements of Solar Quartz Technologies Corporation (Solar Quartz 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 financials statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of 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.

 

The sale of the Company’s oil and gas properties, as explained in Note 3, raised substantial doubt of the Company to continue as a going concern. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation and Basis of Presentation— The consolidated financial statements include the accounts of Solar Quartz Technologies Corporation and its subsidiaries. Solar Quartz’s significant accounting policies are consistent with those discussed in the audited financial statements as of September 30, 2016 and 2015. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

The Company's fiscal year-end is September 30. 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 follows

 

Cash and Cash Equivalents—The Company considers all highly liquid instruments purchased with a maturity date of three months or less to be cash equivalents.

 

Debt Issuance Costs—Costs incurred in connection with the issuance of long-term debt are capitalized and amortized over the term of the related debt.

 

Conversion Feature Liability and Warrant Liabilities—The conversion feature liability and warrant liabilities are recorded at fair value based upon valuation models utilizing relevant factors such as expected life, estimated volatility, risk-free interest and expected dividend rate. Changes in the fair value of these liabilities are reported in the statements of operations.

 

Stock-Based Compensation—The Company accounts for employee stock-based compensation using the fair value method. 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.

 

Income Taxes—Income taxes are provided based on the liability method for financial reporting purposes. Under this method deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.

 

Uncertain tax positions are recognized in the financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

 

 
F-6
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

The Company is required to file federal income tax returns in the United States and in various state and local jurisdictions. The Company's tax returns filed since inception are subject to examination by taxing authorities in the jurisdictions in which it operates in accordance with the normal statutes of limitations in the applicable jurisdiction.

 

Earnings Per Share – Basic earnings per share have been calculated based upon the weighted-average number of common shares outstanding. Diluted earnings per share have been calculated based upon the weighted-average number of common and potential shares.

 

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. No new accounting pronouncements have been issued that are likely to have a material impact to the Company’s consolidated financial statements.

 

Fair Value Measurements—The carrying value of cash and cash equivalents, accounts receivable, and accounts payable, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. The estimated fair value of long-term debt was determined by discounting future cash flows using rates currently available to the Company for debt with similar terms and remaining maturities. The Company calculated that the estimated fair value of the long-term debt is not significantly different than the carrying value of the debt. The participation liability associated with outstanding long-term debt was determined by utilizing a present value factor of 10 applied to proved developed reserves associated with the wells drilled with the proceeds of the notes.

 

Fair value is defined as the price that would be received to sell an asset or price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used in determining fair value are classified for disclosure purposes according to a hierarchy that prioritizes those inputs based upon the degree to which they are observable. The three levels of the fair-value-measurement hierarchy are as follows:

 

 

· Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

 

 

 

· Level 2—Inputs that reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or the liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

 

· Level 3—Unobservable inputs reflecting the Company's own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

 

In determining fair value, the Company utilizes observable market data when available, or models that incorporate observable market data. In addition to market information, the Company incorporates transaction-specific details that, in management's judgment, market participants would take into account in measuring fair value. The Company utilizes the most observable inputs available for the valuation technique employed. If a fair value measurement reflects inputs at multiple levels within the hierarchy, the fair-value measurement of both financial and nonfinancial assets and liabilities are characterized based upon the lowest level of input that is significant to the fair value measurement.

 

NOTE 3 – SUBSEQUENT EVENT

 

On July 1, 2017 the company acquired all of the shares of Solar Quartz Technologies Limited, a company incorporated in New Zealand (“SQTNZ”). These shares were purchased from Solar Quartz Technologies, Inc. (“SQTI”). We subsequently changed our name to Solar Quartz Technologies Corporation in Colorado and with FINRA, and have also been cleared by FINRA to use the new trading symbol SQTX. During July 2017 the Company issued 213,402,755 new shares of common stock to SQTI in exchange for 122 (100%) of the common shares of SQTNZ. The issuance of these shares was equivalent to 95% of the Company's shares issued, after we issue in the future an additional 10,021,224 shares of common stock to those holders of our common stock immediately prior to the acquisition. The Company does not anticipate any further reorganization of its common stock. We plan to apply to trade on the more senior OTCQX exchange or NASDAQ.

 

 
F-7
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

SQTNZ is a corporation that has no prior business activity other than being the title owner of the exclusive mining and development rights for two High Purity Quartz (HPQ) Silica deposits known as Quartz Hill (represented by leases ML 30235, ML 30236 and ML 30237) and White Springs (represented by leases ML 30238 and ML 30239) located in North Queensland, Australia. Together they contain deposits in excess of 15 million tons of 99% pure High Purity Quartz which is feedstock in high demand in the marketplace to be used in the production of High Purity Quartz Sand (HPQS) according to independent professional reports.

 

HPQS is an essential primary material for the manufacture of: Photo-Voltaic (PV) solar panels; Semiconductors; all High-end Electronic products; Fiber Optical cables; Halogen Lamps; HD and LCD television screens; and Epoxy Mounding Compounds (EMC).

 

NOTE 4 – INCOME TAXES

 

The Company operates in the United States; accordingly, federal and state income taxes have been provided based upon the tax laws and rates of the U.S. The Company has incurred losses since inception and, accordingly has a net operating loss carry forward as of September 30, 2016, of approximately $5,756,365. Since the Company has, on a cumulative basis, experienced net losses for tax purposes, the provisions for income taxes consists of the following:

 

Description

 

2016

 

 

2015

 

Tax provision at expected tax rate (35%)

 

$ 2,391

 

 

$ 149,083

 

Impact of permanent differences

 

 

-

 

 

 

500

 

Increase (decrease) to valuation allowance

 

 

(2,391 )

 

 

(149,583 )

Income tax provision

 

$ -

 

 

$ -

 

 

NOTE 5 – STOCKHOLDERS' EQUITY

 

Preferred Stock— In July 2017 the Company increased its authorized preferred stock from 5,000,000 to 10,000,000 shares authorized none issued or outstanding.

 

Common Stock—In July 2017 the Company increased its authorized common shares from an aggregate of 100,000,000 shares to an aggregate of 500,000,000 shares of common stock with $0.00001 par value.

 

Treasury Stock— There were 14,355 shares previously accounted for as treasury charged to income as a cancellation of treasury shares for the year ended September 30, 2015.

 

Common shares of 866,350 and 23,025 were issued in conjunction with the settlement of debt during the years ended September 30, 2016 and 2015, respectively, resulting in increases to common stock of $866 and $23, respectively and additional paid-in capital of $796,702 and $0, respectively.

 

NOTE 6 – STOCK-BASED COMPENSATION

 

On January 10, 2011, the Board of Directors approved a Non-Qualified Stock Option Plan (the "Plan") which authorizes the issuance of up to 1,500,000 shares of Company common stock to persons that exercise options granted pursuant to the Plan. The Company's employees, directors, officers, consultants and advisors are eligible to be granted options pursuant to the Plan, provided however, that bona fide services must be rendered by such consultants or advisors, and such services must not be in connection with the offer or sale of securities in a capital-raising transaction. As of September 30, 2017, no options were outstanding.

 

 
F-8
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 7 – COMMITMENTS AND CONTINGENCIES

 

Office Lease – The Company leases a virtual office lease in The Woodlands, Texas until June 30, 2019 at $197 per month..

 

Contractual Obligations – The Company’s material future contractual obligations by fiscal year as of September 30, 2016 were as follows:

 

 

 

Total

 

 

2016

 

 

Thereafter

 

Convertible notes

 

$ 70,747

 

 

$ 70,747

 

 

 

-

 

Notes Payable

 

$ 85,000

 

 

$ 85,000

 

 

 

-

 

 

The Company has contractual capital commitments outstanding in the principal balance of $70,474 at September 30, 2016. Accrued interest of $36,044 is due in addition to the principal balance of the Convertible notes.

 

NOTE 8 – FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The following table summarizes the financial liabilities measured at fair value on a recurring basis as of September 30, 2016 and 2015:

 

Description

 

Level

 

 

September 30,

2016

 

 

September 30,

2015

 

Convertible Notes

 

1

 

 

$ 70,474

 

 

$ 146,937

 

 

NOTE 9 - INTERIM PERIOD DISCLOSURES

 

Interim period unaudited disclosures for the years ended September 30, 2017 and 2016 are detailed in the following schedules.

 

The consolidated unaudited balance sheets as of June 30, 2017, March 31, 2017 and December 31, 2016, are detailed below:

 

ASSETS

 

June 30,

2017

 

 

March 31,

2017

 

 

December 31,

2016

 

Current Assets

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

Cash and cash equivalents

 

$ 66

 

 

$ 68

 

 

$ 98

 

Total current assets

 

 

66

 

 

 

68

 

 

 

98

 

TOTAL ASSETS

 

$ 66

 

 

$ 68

 

 

$ 98

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$ 62,772

 

 

$ 59,013

 

 

$ 55,030

 

Accrued interest payable

 

 

44,003

 

 

 

41,350

 

 

 

38,696

 

Accrued liabilities

 

 

23,885

 

 

 

21,761

 

 

 

19,635

 

Short term notes payable

 

 

85,000

 

 

 

85,000

 

 

 

85,000

 

Other liabilities

 

 

92

 

 

 

92

 

 

 

92

 

Current portion of notes payable, net of discount

 

 

70,747

 

 

 

70,747

 

 

 

70,747

 

Total current assets

 

 

286,500

 

 

 

277,963

 

 

 

269,201

 

Commitments and contingencies

 

 

-

 

 

 

-

 

 

 

-

 

Stockholders' Deficit

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.00001 par value; 5,000,000 shares authorized; none issued or outstanding

 

 

-

 

 

 

-

 

 

 

-

 

Common stock, $0.00001 par value; 100,000,000 and 50,000,000 shares authorized; 1,002,134 shares issued and outstanding

 

 

1,002

 

 

 

1,002

 

 

 

1,002

 

Additional paid-in capital

 

 

6,318,920

 

 

 

6,318,920

 

 

 

6,318,920

 

Accumulated deficit

 

 

(6,606,356 )

 

 

(6,597,817 )

 

 

(6,589,025 )

Total stockholders' deficit

 

 

(286,434 )

 

 

(277,895 )

 

 

(269,103 )

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$ 66

 

 

$ 68

 

 

$ 98

 

 

 
F-9
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

The unaudited consolidated statements of operations for the three and nine-month periods ended June 30, 2016, are detailed in the following schedules:

 

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

Three Months Ended

June 30

 

 

Nine Months

Ended June 30

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Oil and gas sales

 

$ -

 

 

$ -

 

 

$ -

 

 

$ -

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

3,788

 

 

 

2,754

 

 

 

12,522

 

 

 

27,549

 

Total costs and expenses

 

 

3,788

 

 

 

2,754

 

 

 

12,522

 

 

 

27,549

 

Loss from Operations

 

 

(3,788 )

 

 

(2,754 )

 

 

(12,522 )

 

 

(27,549 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

27

 

 

 

-

 

 

 

27

 

 

 

-

 

Interest expense

 

 

(2,653 )

 

 

(2,624 )

 

 

(7,959 )

 

 

(11,004 )

Other interest costs

 

 

(2,125 )

 

 

(2,096 )

 

 

(6,375 )

 

 

(3,699 )

Gain on debt extinguishment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

91,102

 

Total other income (expense)

 

 

(4,751 )

 

 

(4,720 )

 

 

(14,307 )

 

 

76,399

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) before income taxes

 

 

(8,539 )

 

 

(7,474 )

 

 

(26,829 )

 

 

48,850

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$ (8,539 )

 

$ (7,474 )

 

$ (26,829 )

 

$ 48,850

 

Income (Loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$ (0.01 )

 

$ (0.02 )

 

$ (0.03 )

 

$ 0.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

1,002,134

 

 

 

1,002,134

 

 

 

1,002,134

 

 

 

1,002,134

 

 

 
F-10
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

The unaudited consolidated statements of operations for the three and six-month periods ended March 31, 2016, are detailed in the following schedules:

 

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

Three Months Ended

March 31

 

 

Six Months Ended

March 31

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenue

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

Oil and gas sales

 

$ -

 

 

$ -

 

 

$ -

 

 

$ -

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

4,014

 

 

 

20,563

 

 

 

8,734

 

 

 

24,795

 

Total costs and expenses

 

 

4,014

 

 

 

20,563

 

 

 

8,734

 

 

 

24,795

 

Loss from Operations

 

 

(4,014 )

 

 

(20,563 )

 

 

(8,734 )

 

 

(24,795 )

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(2,653 )

 

 

(2,854 )

 

 

(5,306 )

 

 

(7,131 )

Other interest costs

 

 

(2,125 )

 

 

(1,603 )

 

 

(4,250 )

 

 

(2,852 )

Gain on debt extinguishment

 

 

-

 

 

 

43,382

 

 

 

-

 

 

 

91,102

 

Total other income (expense)

 

 

(4,778 )

 

 

38,925

 

 

 

(9,556 )

 

 

81,119

 

Net Income (Loss) before income taxes

 

 

(8,792 )

 

 

18,362

 

 

 

(18,290 )

 

 

56,324

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net Income (Loss)

 

$ (8,792 )

 

$ 18,362

 

 

$ (18,290 )

 

$ 56,324

 

Income (Loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$ (0.01 )

 

$ 0.02

 

 

$ (0.02 )

 

$ 0.06

 

Weighted average shares outstanding

 

 

1,002,134

 

 

 

1,002,134

 

 

 

1,002,134

 

 

 

1,002,134

 

 

 
F-11
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

The unaudited consolidated statements of operations for the three-month periods ended March 31, 2016 and 2015, are detailed in the following schedules:

 

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

Three Months Ended

December 31

 

 

 

2016

 

 

2015

 

Revenue

 

(Unaudited)

 

 

(Unaudited)

 

Oil and gas sales

 

$ -

 

 

$ -

 

Costs and expenses

 

 

 

 

 

 

 

 

General and administrative

 

 

4,720

 

 

 

4,232

 

Total costs and expenses

 

 

4,720

 

 

 

4,232

 

Loss from Operations

 

 

(4,720 )

 

 

(4,232 )

Other income (expense)

 

 

 

 

 

 

 

 

Interest expense

 

 

(2,653 )

 

 

(4,276 )

Other interest costs

 

 

(2,125 )

 

 

(1,250 )

Gain on debt extinguishment

 

 

-

 

 

 

47,720

 

Total other income (expense)

 

 

(4,778 )

 

 

42,194

 

Net Income (Loss) before income taxes

 

 

(9,498 )

 

 

37,962

 

Provision for income taxes

 

 

-

 

 

 

-

 

Net Income (Loss)

 

$ (9,498 )

 

$ 37,962

 

Income (Loss) per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$ (0.01 )

 

$ 0.04

 

Weighted average shares outstanding

 

 

831,241

 

 

 

991,119

 

 

 
F-12
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

The unaudited consolidated statements of cash flow for the three and nine-month periods ended June 30, 2017 and 2016, are detailed in the following schedule:

 

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

 

Nine Months Ended

June 30,

 

 

 

2017

 

 

2016

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Cash flows from Operating Activities

 

 

 

 

 

 

Net Income (loss)

 

$ (26,829 )

 

$ 48,850

 

Adjustments to reconcile net income/(loss)

 

 

 

 

 

 

 

 

to net cash from operating activities:

 

 

 

 

 

 

 

 

Gain on debt extinguishment

 

 

-

 

 

 

(76,190 )

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Other assets

 

 

966

 

 

 

(966 )

Accounts payable

 

 

8,560

 

 

 

(6,217 )

Due to related party

 

 

3,000

 

 

 

 

 

Accrued interest payable

 

 

7,959

 

 

 

(5,180 )

Accrued liabilities

 

 

6,374

 

 

 

4,923

 

Other liabilities

 

 

0

 

 

 

(183 )

Net cash from operating activities

 

 

31

 

 

 

(34,963 )

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

-

 

 

 

23

 

Issuance of short term note payable

 

 

-

 

 

 

35,000

 

Net cash from financing activities

 

 

-

 

 

 

35,023

 

 

 

 

 

 

 

 

 

 

Net Change in Cash and Cash Equivalents

 

 

31

 

 

 

60

 

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

 

 

 

 

 

 

 

Beginning of period

 

 

35

 

 

 

5

 

 

 

 

 

 

 

 

 

 

End of period

 

$ 66

 

 

$ 65

 

 

 
F-13
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

The unaudited consolidated statements of cash flow for the three and six-month periods ended March 31, 2017 and 2016, are detailed in the following schedule:

 

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

Six Months Ended

March 31,

 

 

 

2017

 

 

2016

 

Cash flows from Operating Activities

 

(Unaudited)

 

 

(Unaudited)

 

Net Income (loss)

 

$ (67,784 )

 

$ 56,324

 

Adjustments to reconcile net income/(loss)

 

 

 

 

 

 

 

 

to net cash from operating activities:

 

 

 

 

 

 

 

 

Gain on debt extinguishment

 

 

-

 

 

 

(76,190 )

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

 

39,030

 

 

 

(234 )

Accrued interest payable

 

 

10,584

 

 

 

(7,805 )

Accrued liabilities

 

 

8,471

 

 

 

2,827

 

Other liabilities

 

 

(208 )

 

 

25

 

Net cash from operating activities

 

 

(9,907 )

 

 

(25,053 )

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

-

 

 

 

23

 

Issuance of short term note payable

 

 

-

 

 

 

35,000

 

Net cash from financing activities

 

 

-

 

 

 

35,023

 

Net Change in Cash and Cash Equivalents

 

 

(9,907 )

 

 

9,970

 

Cash and Cash Equivalents

 

 

 

 

 

 

 

 

Beginning of period

 

 

9,975

 

 

 

5

 

End of period

 

$ 68

 

 

$ 9,975

 

  

 
F-14
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

The unaudited consolidated statements of cash flow for the three and three-month periods ended December 31, 2016 and 2015, are detailed in the following schedules:

 

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

 

Three Months Ended

December 31

 

 

 

2016

 

 

2015

 

Cash Flows from Operating Activities

 

(Unaudited)

 

 

(Unaudited)

 

Net Income (loss)

 

$ (9,498 )

 

$ 37,962

 

Adjustments to reconcile net income/(loss)

 

 

 

 

 

 

 

 

to net cash from operating activities:

 

 

 

 

 

 

 

 

Gain on debt extinguishment

 

 

-

 

 

 

(39,909 )

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Other assets

 

 

966

 

 

 

-

 

Accounts payable

 

 

818

 

 

 

3,586

 

Due to Related Party

 

 

3,000

 

 

 

 

 

Accrued interest payable

 

 

2,652

 

 

 

(3,547 )

Accrued liabilities

 

 

2,124

 

 

 

1,250

 

Other liabilities

 

 

-

 

 

 

410

 

Net Cash from Operating Activities

 

 

63

 

 

 

(248 )

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

-

 

 

 

12

 

Net Cash from Financing Activities

 

 

-

 

 

 

12

 

 

 

 

 

 

 

 

 

 

Net Change in Cash and Cash Equivalents

 

 

63

 

 

 

(236 )

Cash and Cash Equivalents

 

 

 

 

 

 

 

 

Beginning of period

 

 

35

 

 

 

5

 

End of period

 

$ 98

 

 

$ (231 )

 

 
F-15
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

The consolidated unaudited balance sheets as of June 30, 2016, March 31, 2016 and December 31, 2015, are detailed below:

 

UNAUDITED CONSOLIDATED BALANCE SHEETS

ASSETS

 

June 30,

2016

 

 

March 31,

2016

 

 

December 31,

2015

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

Current Assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$ 65

 

 

$ 9,975

 

 

$ -

 

Other receivables

 

 

966

 

 

 

-

 

 

 

-

 

Total current assets

 

 

1,031

 

 

 

9,975

 

 

 

-

 

Debt issuance costs

 

 

-

 

 

 

-

 

 

 

-

 

TOTAL ASSETS

 

$ 1,031

 

 

$ 9,975

 

 

$ -

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$ 14,000

 

 

$ 19,983

 

 

$ 23,253

 

Bank overdraft

 

 

-

 

 

 

-

 

 

 

231

 

Accrued interest payable

 

 

33,391

 

 

 

30,766

 

 

 

35,024

 

Accrued liabilities

 

 

15,386

 

 

 

13,290

 

 

 

11,713

 

Short term notes payable

 

 

85,000

 

 

 

85,000

 

 

 

50,000

 

Other liabilities

 

 

92

 

 

 

300

 

 

 

685

 

Current portion of notes payable, net of discount $- and $71,754

 

 

70,747

 

 

 

70,747

 

 

 

107,028

 

TOTAL CURRENT LIABILITIES

 

 

218,616

 

 

 

220,086

 

 

 

227,934

 

Commitments and contingencies

 

 

-

 

 

 

-

 

 

 

-

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.00001 par value; 5,000,000 shares authorized; none issued or outstanding

 

-

 

 

-

 

 

 

-

 

Common stock, $0.00001 par value; 100,000,000 and 50,000,000 shares authorized; 1,002,134 and 979,109 shares issued and outstanding

 

 

1,002

 

 

 

1,002

 

 

 

991

 

Additional paid-in capital

 

 

6,318,920

 

 

 

6,318,920

 

 

 

6,318,920

 

Accumulated deficit

 

 

(6,537,507 )

 

 

(6,530,033 )

 

 

(6,547,845 )

Total stockholders' deficit

 

 

(217,585 )

 

 

(210,111 )

 

 

(227,934 )

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$ 1,031

 

 

$ 9,975

 

 

$ -

 

 

 
F-16
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

The unaudited consolidated statements of operations for the three and nine-month periods ended June 30, 2016 and 2015, are detailed in the following schedules:

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

Three Months Ended

June 30

 

 

Nine Months Ended

June 30

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

Oil and gas sales

 

$ -

 

 

$ -

 

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

2,754

 

 

 

11,005

 

 

 

27,549

 

 

 

90,419

 

Total costs and expenses

 

 

2,754

 

 

 

11,005

 

 

 

27,549

 

 

 

90,419

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from Operations

 

 

(2,754 )

 

 

(11,005 )

 

 

(27,549 )

 

 

(90,419 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Interest expense

 

 

(2,624 )

 

 

(5,510 )

 

 

(11,004 )

 

 

(24,161 )

Other interest costs

 

 

(2,096 )

 

 

-

 

 

 

(3,699 )

 

 

-

 

Gain on debt extinguishment

 

 

-

 

 

 

-

 

 

 

91,102

 

 

 

2,570,926

 

Total other income (expense)

 

 

(4,720 )

 

 

(5,510 )

 

 

76,399

 

 

 

2,546,765

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) before income taxes

 

 

(7,474 )

 

 

(5,500 )

 

 

48,850

 

 

 

2,456,346

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$ (7,474 )

 

$ (16,515 )

 

$ 48,850

 

 

$ 2,456,346

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$ 0.02

 

 

$ (0.02 )

 

 

0.06

 

 

$ 2.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

1,002,134

 

 

 

973,139

 

 

 

996,650

 

 

 

973,139

 

 

 
F-17
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

The unaudited consolidated statements of operations for the three and six-month periods ended March 31, 2016 and 2015, are detailed in the following schedules:

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

Three Months Ended

March 31

 

 

Six Months Ended

March 31

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Oil and gas sales

 

$ -

 

 

$ -

 

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

21,113

 

 

 

11,005

 

 

 

24,795

 

 

 

98,035

 

Total costs and expenses

 

 

21,113

 

 

 

11,005

 

 

 

24,795

 

 

 

98,035

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from Operations

 

 

(21,113 )

 

 

(11,005 )

 

 

(24,795 )

 

 

(98,035 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(2,854 )

 

 

(5,510 )

 

 

(7,131 )

 

 

(18,650 )

Other interest costs

 

 

(1,603 )

 

 

-

 

 

 

(2,852 )

 

 

-

 

Gain on debt extinguishment

 

 

43,382

 

 

 

-

 

 

 

91,102

 

 

 

2,570,926

 

Total other income (expense)

 

 

38,925

 

 

 

(5,510 )

 

 

81,119

 

 

 

2,552,276

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) before income taxes

 

 

17,812

 

 

 

(5,500 )

 

 

56,324

 

 

 

2,454,241

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$ 17,812

 

 

$ (16,515 )

 

$ 56,324

 

 

$ 2,454,241

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$ 0.02

 

 

$ (0.02 )

 

$ 0.06

 

 

$ 2.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

1,002,134

 

 

 

973,139

 

 

 

996,650

 

 

 

973,139

 

 

 
F-18
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

The unaudited consolidated statements of operations for the three-month periods ended March 31, 2016 and 2015, are detailed in the following schedules:

 

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

Three Months Ended

December 31

 

 

 

2015

 

 

2014

 

Revenue

 

(Unaudited)

 

 

(Unaudited)

 

Oil and gas sales

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

General and administrative

 

 

3,682

 

 

 

87,030

 

Total costs and expenses

 

 

3,682

 

 

 

87,030

 

 

 

 

 

 

 

 

 

 

Loss from Operations

 

 

(3,682 )

 

 

(87,030 )

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

Interest expense

 

 

(5,526 )

 

 

(13,140 )

Gain from extinguishment of debt

 

 

47,720

 

 

 

2,570,927

 

Total other income (expense)

 

 

42,194

 

 

 

2,557,787

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) before income taxes

 

 

38,512

 

 

 

2,470,757

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$ 38,512

 

 

$ 2,470,757

 

 

 

 

 

 

 

 

 

 

Income (Loss) per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$ 0.04

 

 

$ 2.54

 

Weighted average shares outstanding (2)

 

 

989,291

 

 

 

973,139

 

 

 
F-19
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The unaudited consolidated statements of cash flow for the nine-month periods ended June 30, 2016 and 2015, are detailed in the following schedules:

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

 

 

 

 

Nine Months Ended

June 30,

 

 

 

2016

 

 

2015

 

Cash Flows from Operating Activities

 

(Unaudited)

 

 

(Unaudited)

 

Net Income (loss)

 

$ 48,850

 

 

$ 2,456,346

 

Adjustments to reconcile net income/(loss)

 

 

 

 

 

 

 

 

to net cash from operating activities:

 

 

 

 

 

 

 

 

Amortization of debt issuance costs

 

 

-

 

 

 

4,107

 

Gain on debt extinguishment

 

 

(76,190 )

 

 

(2,677,698 )

Amortization of debt discount

 

 

-

 

 

 

3,523

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Other assets

 

 

(966 )

 

 

12,500

 

Accounts payable

 

 

(6,217 )

 

 

8,813

 

Accrued interest payable

 

 

(5,180 )

 

 

105,341

 

Accrued liabilities

 

 

4,923

 

 

 

-

 

Other liabilities

 

 

(183 )

 

 

-

 

Net Cash from Operating Activities

 

 

(34,963 )

 

 

(87,068 )

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

23

 

 

 

-

 

Issuance of short term note payable

 

 

35,000

 

 

 

50,000

 

Net Cash from Financing Activities

 

 

35,023

 

 

 

50,000

 

 

 

 

 

 

 

 

 

 

Net Change in Cash and Cash Equivalents

 

 

60

 

 

 

(37,068 )

Cash and Cash Equivalents

 

 

 

 

 

 

 

 

Beginning of period

 

 

5

 

 

 

39,251

 

End of period

 

$ 65

 

 

$ 2,183

 

 

 
F-20
 
Table of Contents

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

The unaudited consolidated statements of cash flow for the three and six-month periods ended March 31, 2016 and 2015, are detailed in the following schedule:

 

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

 

 

 

 

Six Month Ended

March 31,

 

 

 

2016

 

 

2015

 

Cash Flows from Operating Activities

 

(Unaudited)

 

 

(Unaudited)

 

Net Income (loss)

 

$ 56,324

 

 

$ 2,454,241

 

Adjustments to reconcile net income/(loss)

 

 

 

 

 

 

 

 

to net cash from operating activities:

 

 

 

 

 

 

 

 

Amortization of debt issuance costs

 

 

-

 

 

 

4,107

 

Gain on debt extinguishment

 

 

(76,190 )

 

 

(2,677,698 )

Amortization of debt discount

 

 

-

 

 

 

3,523

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Other assets

 

 

-

 

 

 

12,500

 

Accounts payable

 

 

(234 )

 

 

55,945

 

Accrued interest payable

 

 

(7,805 )

 

 

99,831

 

Accrued liabilities

 

 

2,827

 

 

 

-

 

Other liabilities

 

 

25

 

 

 

8,332

 

Net Cash from Operating Activities

 

 

(25,053 )

 

 

(39,219 )

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Capital expenditures on oil and gas properties

 

 

-

 

 

 

-

 

Net Cash from Investing Activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

23

 

 

 

-

 

Issuance of short term note payable

 

 

35,000

 

 

 

-

 

Net Cash from Financing Activities

 

 

35,023

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net Change in Cash and Cash Equivalents

 

 

9,970

 

 

 

(39,219 )

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

 

 

 

 

 

 

 

Beginning of period

 

 

5

 

 

 

39,251

 

 

 

 

 

 

 

 

 

 

End of period

 

$ 9,975

 

 

$ 32

 

 

 
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SOLAR QUARTZ TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

The unaudited consolidated statements of cash flow for the three-month periods ended December 31, 2016 and 2015, are detailed in the following schedule:

 

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

Three Month Ended

December 31,

 

 

 

2015

 

 

2014

 

Cash Flows from Operating Activities

 

(Unaudited)

 

 

(Unaudited)

 

Net Income (loss)

 

$ 38,512

 

 

$ 2,470,757

 

Adjustments to reconcile net income/(loss)

 

 

 

 

 

 

 

 

to net cash from operating activities:

 

 

 

 

 

 

 

 

Amortization of debt issuance costs

 

 

-

 

 

 

4,107

 

Gain on debt extinguishment

 

 

-

 

 

 

(2,677,698 )

Amortization of debt discount

 

 

(39,897 )

 

 

3,523

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Other assets

 

 

-

 

 

 

12,500

 

Accounts payable

 

 

3,036

 

 

 

46,127

 

Accrued interest payable

 

 

(3,547 )

 

 

94,321

 

Accrued liabilities

 

 

1,250

 

 

 

-

 

Other liabilities

 

 

410

 

 

 

7,232

 

Net Cash from Operating Activities

 

 

(236 )

 

 

(39,131 )

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Purchase of furniture and equipment

 

 

-

 

 

 

-

 

Capital expenditures on oil and gas properties

 

 

-

 

 

 

-

 

Net Cash from Investing Activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Repayment of note payable

 

 

-

 

 

 

-

 

Net Cash from Financing Activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net Change in Cash and Cash Equivalents

 

 

(236 )

 

 

(39,131 )

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

 

 

 

 

 

 

 

Beginning of period

 

 

5

 

 

 

39,251

 

 

 

 

 

 

 

 

 

 

End of period

 

$ (231 )

 

$ 120

 

 
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

None.

 

ITEM 9A. CONTROLS AND PROCEDURES.

 

An evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive and Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-K. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-K, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Principal Executive and Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of September 30, 2016, our disclosure controls and procedures were not effective.

 

Management's Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. As defined by the Securities and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision of our Principal Executive and Financial Officer and implemented by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements in accordance with U.S. generally accepted accounting principles.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Warren Dillard, our Principal Executive and Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of September 30, 2017 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework (1992). Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls.

 

Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of September 30, 2016. Material weaknesses are inherent when we are unable to file current and periodic reports with the SEC as required by regulation. This limitation resulted from a general lack of financial support and resources in accounting and financial reporting systems to enable us to provide accurate reports on a timely basis

 

Changes in Internal Control Over Financial Reporting

 

There was no change in our internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Management is in the process of addressing the underlying causes for our weaknesses in internal control. We plan to raise both debt and equity capital in the near future and to use those resources to engage outside consultants to assist with the processing of date and drafting financial reports on a timely basis in future reporting periods.

 

ITEM 9B. OTHER INFORMATION.

 

None.

 

 
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PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 

Our officers and directors are listed below. Our directors are generally elected at our annual shareholders’ meeting and hold office until the next annual shareholders’ meeting, or until their successors are elected and qualified. Our executive officers are elected by our directors and serve at their discretion.

 

Name

 

Age

 

Position

 

Warren Dillard

 

75

 

President, Chief Executive, Financial and Accounting Officer and a Director

 

Steven M. Powers

 

75

 

Vice President of Business Development, Secretary and a Director

 

Roger T. May

 

71

 

Director

 

 

 

 

 

David AB Halstead

 

70

 

Director

 

 

 

 

 

Michael Selsman

 

80

 

Director

 

The principal occupations of our officers and directors during the past several years are as follows:

 

Warren M. Dillard has been our President, Chief Executive, Financial and Accounting Officer and a director since June 2010. Since February 2011 Mr. Dillard has been our Principal Financial and Accounting Officer. He has previously managed mutual funds with the American Funds group of funds, was CFO of Pepperdine University and has been active in the development of numerous early stage companies in a variety of industries. Since 2005, Mr. Dillard has served as the President and a director of Enercor, Inc., a private corporation involved in oil and gas exploration and development in the western United States. Since the spring of 2010, Mr. Dillard’s involvement with Enercor has been minimal. Mr. Dillard holds a degree in Accounting from Texas A & M University and an MBA in Finance from the Harvard Business School.

 

Steven M. Powers has been a director since June 2010. Since February 2011, Mr. Powers has been our Vice President of Business Development and our Secretary. Since 2005, Mr. Powers has served as Chief Executive Officer, Chairman and a director of Enercor, Inc., a private corporation involved in oil and gas exploration and development. Prior to his association with Enercor, Mr. Powers was a real estate developer. Mr. Powers earned a degree in philosophy from the University of California at Santa Barbara as well as an MBA from the University of California at Los Angeles.

 

Roger May has been a director since July 1, 2017. Mr. May has extensive international business experience over the last 40 years, resided in the USA for 22 years, returning to Australia September 2001. Recognized Expert in "start-up" enterprises from inception to fully operational commercial ventures. He has overcome obstacles with great ability, tenacity, flexibility and creative initiative. Acknowledged visionary and creator combined with strong implementation skills. He has excellent capital raising skills in tens of millions of dollars. He has been Founder, Chairman & CEO of five (5) publicly listed companies in the USA and Australia. He resided in the USA for 22 years. He has founded several high-tech. communications and mineral resource development companies. Presently focused on Global commercialization of primary component material essential in manufacture of PV Solar panels, Semi-conductor, and all high-end electronics in the USA and Australia.

 

 
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David A B Halstead has been a director since July 1, 2017. David has a wide range of corporate, secretarial and trusts experience, in both offshore and onshore companies. In 1973 he became a partner in a local chartered accounting firm and in 1984 a principal in the Hong Kong office of Coopers & Lybrand [now PWC] specializing in international corporate and secretarial services, and offshore tax structures. Upon his return to Auckland in 1994, he established and operated, several integrated medical centers, a surgical hospital in Auckland and a state of the art diagnostic center. He then spent 3 years working with World Vision fund raising for its micro finance arm “Vision Fund” involved with the capitalization and establishment of Vision Fund Cambodia. Reflecting his interest in health care delivery, in 2003 to this day, he became, and is a Trustee of the New Zealand based international medical aid charity, Medical Aid Abroad. Since 2006, David has acted as a director, company secretary and treasurer for a group of international clients. Contemporaneously he established and operated, until recently, a unique world-first web based joint venture service for the New Zealand Government processing immigration medicals online in a secure platform through a company called NZimed Limited. He is a director of an immigration sector “lead generation” company, Leadgen Matrix Ltd, Business Epic Ltd, a company focused on assisting baby boomer SME owner operators maximise their business exit strategies and value, and Asia Capital (China) Ltd, a NZ registered Financial Services Provider facilitating investment into Australia and New Zealand. He is a director of several Hong Kong and Singapore companies as well as other NZ entities. Mr. Halstead was educated at Kings College, Auckland, the son of a former New Zealand Cabinet Minister and diplomat. He is a graduate of the University of Auckland with a Bachelor of Commerce and further qualifications in accounting and taxation.”

 

Michael Selsman has been a director since July 17, 2017. Mr. Selsman, as principal of Public Communications Company, Beverly Hills, CA, represents publicly traded companies as a consultant in both public relations and investor relations. He is a Director of Gawk, Inc. and is CEO of Archer Entertainment Media Communications, Inc. He also researches and writes due diligence reports for brokerages, public and private companies (www.publiccommunicationsco.com). He is also a partner in Troika Publishing Media, a digital new media company. He entered the entertainment industry with 20th Century-Fox in New York City, and was subsequently hired by Paramount Pictures as East Coast Publicity manager. In Hollywood, he became a public relations executive for motion picture actors, directors and writers. As a talent agent at Artists Agency (now ICM), he structured arrangements for prominent films and TV series. Becoming a producer, he re-joined 20th Century-Fox, and then MGM, and became an independent producer making films in various states. He has recently published his autobiography, “All is Vanity”. He has been a talent agent with Artist Agency Corporation (now ICM) participating in many highly regarded television series and talent. He has provided investor relations counsel to numerous publicly traded companies. Mr. Selsman has served on the boards of a number of major charities and lectured at most of the major universities in the Los Angeles area.

 

We believe that each of our directors’ experience in high quality minerals and/or business development qualifies him to serve as one of our directors.

 

Warren Dillard acts as our Principal Financial Officer.

 

We have adopted a code of ethics applicable to our principal executive, financial and accounting officers and persons performing similar functions.

 

ITEM 11. EXECUTIVE COMPENSATION

 

The following table summarizes the compensation received by our principal executive and financial officers during the two years ended September 30, 2016.

 

Name and

 

Fiscal

 

 

 

Other

 

 

 

 

Principal Position

 

Year

 

Salary (1)

 

 

Compensation (2)

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Warren Dillard

 

2016

 

$ 3,000

 

 

 

-

 

 

$ 3,000

 

President, Principal

 

2015

 

$ 20,000

 

 

 

-

 

 

$ 20,000

 

Financial and Accounting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steven M Powers

 

2016

 

 

-

 

 

 

-

 

 

 

-

 

Vice President, Business

 

2015

 

 

-

 

 

 

-

 

 

 

-

 

________________

(1) The dollar value of base salary (cash and non-cash) earned.

 

 

(2) All other compensation received that could not be properly reported in any other column of the table.

 

 
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Long-Term Incentive Plans. We do not provide our officers or employees with pension, stock appreciation rights, long-term incentive or other plans.

 

Employee Pension, Profit Sharing or other Retirement Plans. We do not have a defined benefit, pension plan, profit sharing or other retirement plan, although we may adopt one or more of such plans in the future.

 

Compensation of Directors During Year Ended September 30, 2016. During the year ended September 30, 2016, we did not compensate our directors for acting as such.

 

Compensation Committee Interlocks and Insider Participation. During the year ended September 30, 2016, none of our officers was also a member of the compensation committee or a director of another entity, which other entity had one of its executive officers serving as one of our directors.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

The following table shows the beneficial ownership of our common stock, as of September 30, 2017 by (i) each person whom we know beneficially owns more than 5% of the outstanding shares of our common stock, (ii) each of our officers, (iii) each of our directors, and (iv) all the officers and directors as a group. Unless otherwise indicated, each owner has sole voting and investment powers over his shares of common stock. Unless otherwise indicated, beneficial ownership is determined in accordance with the Rule 13d-3 promulgated under the Securities and Exchange Act of 1934, as amended, and includes voting or investment power with respect to shares beneficially owned.

 

 

 

Number of Shares

 

 

 

 

 

 

Beneficially

 

 

Percentage

 

Name and Address of Beneficial Owner

 

Owned

 

 

of Class  

 

Warren M. Dillard

 

 

 

 

 

 

21 Waterway Ave., Ste. 300

 

 

 

 

 

 

The Woodlands, TX 77380

 

 

--

 

 

 

--

 

 

 

 

 

 

 

 

 

 

Steven M. Powers

 

 

7,750 (1)

 

 

0.03 %

2426 Topanga Canyon Blvd.

 

 

 

 

 

 

 

 

Topanga, CA 90290 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Roger May

 

 

 

 

 

 

 

 

96 Margaret Street

 

 

 

 

 

 

 

 

Macedon 3440 Australia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David AB Halstead

 

 

 

 

 

 

 

 

758 Moleworth Drive

 

 

 

 

 

 

 

 

Mangawhai 0505

 

 

 

 

 

 

 

 

New Zealand

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Michael Selsman

 

 

 

 

 

 

 

 

433 N. Camden Dr., Suite 400

 

 

 

 

 

 

 

 

Beverly Hills, CA 90212

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All officers and directors as a group (5 persons)

 

 

7,750

 

 

 

0.03 %

______________

(1) Mr. Powers is entitled to the issuance of an additional 77,500 shares pursuant to the Purchase and Sale Agreement in which the Company purchased the shares of Solar Quartz Technologies Limited on July 1, 2017 as reported in the Company’s Form 8-K filing on July 11, 2017.

 

 
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Table of Contents

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

 

None.

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

 

Briggs & Veselka Co. provided certain audit related services during the year ended September 30, 2015. Thayer O’Neal Company, LLC was engaged to audit our financial statements for the years ended September 30, 2015 and September 30, 2017 in September of 2017. The following table shows the fees billed to us for the periods presented by Briggs & Veselka.

 

 

 

Year Ended

 

 

Year Ended

 

 

 

September 30,

2016

 

 

September 30,

2015

 

Audit Fees

 

$ -

 

 

$ -

 

Audit-Related Fees

 

$ 14,225

 

 

$ 16,337

 

Tax Fees

 

$ 5,908

 

 

$ 18,058

 

 

Audit fees represent amounts billed for professional services rendered for the audit of our annual financial statements and reviews of our quarterly financial statements.

 

Audit-related fees represent amounts billed for consents related to regulatory filings, audit/review of financial statements included in our registration statements filed with the Securities and Exchange Commission, and consulting related to the implementation of accounting standards.

 

Tax fees include professional services for tax return preparation and income tax audit support.

 

The policy of our directors is to pre-approve all audit and non-audit services provided by our independent auditors.

 

 
16
 
Table of Contents

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

 

Exhibits

 

 

 

 

 

The following exhibits were filed with the company’s Registration Statement in 2011:

 

 

 

3.1*

 

Articles of Incorporation

3.2**

 

Amendment to Articles of incorporation

3.3*

 

Bylaws

10.10*

 

Form of Convertible Note

14*

 

Code of Ethics

21*

 

Subsidiaries

31

 

Rule 13a-14(a) Certifications

32

 

Section 1350 Certifications

 

 

 

 

 

The following exhibit was filed with the company’s Form 8-K on July 11, 2017:

 

 

 

Amendment to Articles of Incorporation

___________________

*

 

Incorporated by reference to the same exhibit filed with the Company’s Registration Statement on Form S-1 (File # 333-174194).

**

 

Incorporated by reference to the same exhibit filed with the Company’s Form 8-K (File #333-174194).

  

 
17
 
Table of Contents

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on the 16th day of November, 2017.

 

 

SOLAR QUARTZ TECHNOLOGIES CORPORATION

 

By:

/s/ Warren M. Dillard

 

Warren Dillard, Chief Executive Officer

 

Pursuant to the requirements of the Securities Exchange Act of l934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

Signature

 

Title

 

Date

 

/s/s Warren Dillard

 

Principal Executive, Financial and

 

November 16, 2017

Accounting Officer and Director

 

/s/s Steven Powers

 

Secretary, Director

 

November 16, 2017

Steven M. Powers

 

 

18