UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended December 31, 2020

 

☐  Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from __________ to __________

 

Commission File Number: 333-174194

 

GRAPHENE & SOLAR TECHNOLOGIES LIMITED

(Exact name of registrant as specified in its charter)

 

COLORADO		27-2888719
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

433 N. Camden Drive, Ste. 600

Beverly Hills, CA 90210

(Address of principal executive offices, including Zip Code)

 

(310) 887-9966

(Issuer’s telephone number, including area code)

 

(formally known as Solar Quartz Technologies Corporation)

(Former name or former address if changed since last report)

 

Check whether the issuer (1) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒  No  ☐

 

Indicate by check mark whether the registrant has submitted electronically , every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ☒  No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐  No  ☒

 

As of March 23, 2021, the registrant had 254,487,319 outstanding shares of common stock.

 

 

GRAPHENE & SOLAR TECHNOLOGIES LIMITED

 

FORM 10-Q

 

TABLE OF CONTENTS

 

PART I	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Balance Sheets (Unaudited)	3
Item 2.	Condensed Consolidated Statements of Operations (Unaudited)	4
Item 3.	Condensed Consolidated Statement of Stockholders’ Deficiency (Unaudited) Three Months Ended December 31, 2020 and 2019	5
Item 4.	Condensed Consolidated Statements of Cash Flows (Unaudited)	6
Item 5.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	11
Item 6.	Controls and Procedures.	13
PART II OTHER INFORMATION		14
Item 1	Legal Proceedings	14
Item 1A	Risk Factors	14
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3	Defaults on Senior Securities	14
Item 4	Mine Safety Disclosures	14
Item 5	Other Information	14
Item 6.	Exhibits.	14
	SIGNATURES	15

 

 

GRAPHENE & SOLAR TECHNOLOGIES LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

		December 31,				September 30,
		2020				2020
Assets
Current Assets:
Cash		$	3,266			$	12
Prepaid expenses			13,247				—
Other receivable			—				—
Total Current Assets			16,513				12
Other Assets:
Furniture and equipment, net of depreciation $75,434 and $71,803			8,628				12,259
Mineral rights			—				—
Total Assets		$	25,141			$	12,271
Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable and other payable		$	763,481			$	653,476
Accrued interest payable			141,283				132,099
Due to related party			722,520				717,075
Notes payable – in default			60,000				60,000
Convertible notes payable, net of discount $53,552 and $52,703, $100,747 in default			236,405				116,264
Other loans			5,811				5,632
Total Current Liabilities			1,929,500				1,684,546
Total Liabilities			1,929,500				1,684,546
Stockholders’ Deficit
Preferred stock: 10,000,000 shares authorized; $0.00001 par value; no shares issued and outstanding
Common stock: 500,000,000 shares authorized; $0.00001 par value; 250,798,723 and 246,248,723 shares issued and outstanding			2,509				2,463
Additional paid-in capital			9,998,635				9,508,943
Accumulated deficit			(11,874,881	)			(11,235,696	)
Accumulated other comprehensive income			(30,622	)			52,015
Total Stockholders’ Deficit			(1,904,359	)			(1,672,275	)
Total Liabilities and Stockholders’ Deficit		$	25,141			$	12,271

 

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

 

 

GRAPHENE & SOLAR TECHNOLOGIES Limited

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME

(Unaudited)

 

		Three Months Ending December 31,
		2020				2019
Revenues		$	—			$	—
Operating expenses
Professional Services			584,551				179,487
General and administrative			42,549				55,851
Total operating expenses			627,100				235,338
Loss from operations			(627,100	)			(235,338	)
Other income (expense)
Other income			2,191				2,050
Interest expense			(14,276	)			(7,366	)
Total other income (expense)			(12,085	)			(5,316	)
Net Income (Loss)			(639,185	)			(240,654	)
Other Comprehensive Income			(82,637	)			(21,101	)
Net Comprehensive Loss		$	(721,822	)		$	(261,755	)
Income (Loss) per share:
Basic and diluted		$	(0.00	)		$	(0.00	)
Weighted average shares outstanding			249,682,962				242,567,545

 

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

 

 

GRAPHENE & SOLAR TECHNOLOGIES LIMITED

(Formerly Solar Quartz Technologies Corporation)

AND SUBSIDIARY

 

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY

(Unaudited)

 

Three Months Ended December 31, 2020 and 2019

 

														Accumulated
		Common Stock								Additional				Other								Total
						Par				Paid-in				Comprehensive				Accumulated				Stockholders’
		Shares				Value				Capital				Income				Deficit				Deficiency
Balance, September 30, 2020			246,248,723				2,463				9,508,943				52,015				(11,235,696	)			(1,672,275	)
Shares issued in connection with the sale of common stock			1,450,000				15				84,723				—				—				84,738
Stock-based compensation expense			3,100,000				31				404,969				—				—				405,000
Foreign currency translation adjustment			—				—				—				(82,637	)			—				(82,637	)
Net loss			—				—				—				—				(639,185	)			(639,185	)
Balance, December 31, 2020			250,798,723				2,509				9,998,635				(30,622	)			(11,874,881	)			(1,904,359	)

 

						Par				Paid-in				Comprehensive				Accumulated				Stockholders’
		Shares				Value				Capital				Income				Deficit				Deficiency
Balance, September 30, 2019			242,499,767			$	2,424			$	9,047,139			$	100,717			$	(10,132,535	)		$	(982,255	)
Shares issued in connection with the sale of common stock			153,333				3				52,999				—				—				53,002
Debt discount											68,220												68,220
Foreign currency translation adjustment			—				—				—				(21,101	)			—				(21,101	)
Net loss			—				—								—				(240,654	)			(240,654	)
Balance, December 31, 2019			242,603,100			$	2,427			$	9,168,358			$	79,616			$	(10,373,189	)		$	(1,122,788	)

  

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

 

 

GRAPHENE & SOLAR TECHNOLOGIES Limited

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the Three-Month Period Ended December 31, 2020 and 2019

(Unaudited)

 

		2020				2019
Cash flows from operating activities
Net Income (loss)		$	(639,185	)		$	(240,654	)
Adjustments to reconcile net income/(loss) to net cash from operating activities:			—				—
Stock-based compensation			405,000				—
Depreciation expense			4,415				4,130
Amortization of discount			5,151				2,426
Change in operating assets and liabilities:
Accounts payable			110,005				59,665
Accrued interest payable			9,184				4,943
Accrued liabilities							—
Receivables							(198	)
Pre-Payments			(13,247	)			(921	)
Due to related parties			5,445				51,245
Net cash used in operating activities			(113,232	)			(119,364	)
Cash flows from financing activities
Due to Affiliates			—				—
Proceeds from issuance of common stock			84,738				53,002
Repayments to related party			—				(36,933	)
Issuance of short term note payable, net of OID			114,990				68,220
Net cash from financing activities			199,728				84,289
Effect of currency translations to cash flow			(83,242	)			—
Net change in cash and cash equivalents			3,254				(35,075	)
Beginning of period			12				74,241
End of period		$	3,266			$	39,166

 

Supplemental cash flow information		Quarter ended December 31,
		2020				2019
Interest paid		$	—			$	—
Taxes			—				—
Noncash investing and financing activities:
Debt discount		$	68,220			$	68,220

 

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

 

 

GRAPHENE & SOLAR TECHNOLOGIES Limited

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 1 – BASIS OF PRESENTATION

 

These consolidated financial statements of Graphene &Solar Technologies Limited (GSTX or the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). In the opinion of management, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to Securities and Exchange Commission (SEC) rules and regulations. These financial statements should be read along with Solar Quartz’s audited financial statements as of September 30, 2020.

 

Going Concern – The Company has incurred cumulative net losses since inception of $11,874,881 at December 31, 2020. Accordingly, it requires capital to fund working capital deficits and for future operating activities to take place. The Company’s ability to raise new funds through the future issuances of debt or common stock is unknown. The obtainment of additional financing, the successful development of a plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability of the Company to continue its operations is dependent on management’s plans, which include the raising of capital through debt and/or equity markets, with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur additional liabilities with certain related parties to sustain the Company’s existence. There can be no assurance that the Company will be able to raise any additional capital and therefore raise doubt about the Company’s ability to continue as a going concern. 

 

Future issuances of the Company’s equity or debt securities will be required for the Company to finance operations and continue as a going concern. The financial statements do not include any adjustments that may result from the outcome of these uncertainties.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

 

Principles of Consolidation and Basis of Presentation — The consolidated financial statements include the accounts of Graphene & Solar Technologies Limited and its subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). A summary of the significant accounting policies applied in the preparation of the accompanying financial statements can be found in the Company’s Annual Report in form 10-K for the year ended September 30, 2020.

 

Use of Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Significant estimates include but are not limited to the estimated useful lives of equipment for purposes of depreciation and the valuation of common shares issued for services, equipment and the liquidation of liabilities.

 

 

Cash and Cash Equivalents-Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. As of December 31, 2020 and December 31, 2019 the Company had $3,266 and $39,166 in cash, respectively and no cash equivalents.

 

Derivative Financial Instruments - The Company accounts for freestanding contracts that are settled in a company’s own stock, including common stock warrants, to be designated as an equity instrument or generally as a liability. A contract so designated is carried at fair value on a company’s balance sheet, with any changes in fair value recorded as a gain or loss in a company’s results of operations.

 

The Company records all derivatives on the balance sheet at fair value, adjusted at the end of each reporting period to reflect any material changes in fair value, with any such changes classified as changes in derivatives valuation in the statement of operations. The calculation of the fair value of derivatives utilizes highly subjective and theoretical assumptions that can materially affect fair values from period to period. The recognition of these derivative amounts does not have any impact on cash flows.

 

At the date of the conversion of any convertible debt, the pro rata fair value of the related embedded derivative liability is transferred to additional paid-in capital.

 

There was no derivative activity in fiscal quarter ending December 31, 2020. Therefore, no derivative liabilities were recorded during the quarter ended December 31, 2020.

 

Stock-Based Compensation -ASC 718, “Compensation - Stock Compensation,” prescribes accounting and reporting standards for all share-based payment transactions in which employee and non-employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees and non-employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values on the grant date. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

 

During the quarter ended December 31, 2020, the Company issued 3,100,000 shares of the Company’s common stock to members of the Board of Directors, employees and consultants. The fair value of the shares, as determined by reference market price of the Company’s common stock on each grant date, aggregated $405,000.

 

During the quarter ended December 31, 2019, the Company issued no shares of the Company’s common stock to members of the Board of Directors, employees and consultants.

 

Total stock-based compensation expense was $405,000 and $0 for the quarters ended December 31, 2020 and 2019, respectively.

 

Foreign Currency Translations – The functional currency of the Company’s foreign subsidiary is primarily the respective local currency. Assets and liabilities of the Company’s foreign subsidiary are translated into U.S. Dollars at the year-end exchange rate, and revenues and expenses are translated at average monthly exchange rates. Translation gains and losses are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity. All other foreign currency transaction gains and losses are included in other (income) expense, net.

 

 

Earnings Per Share - Basic earnings per share have been calculated based upon the weighted-average number of common shares outstanding. Diluted earnings per share were not calculated as such potential shares would be anti-dilutive.

 

Reclassifications - Certain amounts previously presented for prior periods have been reclassified to conform to the current presentation. The reclassifications had no effect on net loss, working capital or equity previously reported.

 

NOTE 3 – NOTES PAYABLE

 

The Company’s indebtedness as of December 31 and September 30, 2020 were as follows:

 

Description		December 31, 2020				September 30, 2020
Convertible notes		$	289,967			$	168,967
Notes Payable		$	60,000			$	60,000
Other loan		$	5,811			$	5,632

 

Notes Payable and Other Loans

 

During 2015 and 2016, the Company executed promissory notes payable with six individuals with an aggregate principal balance of $60,000. The notes were due on demand and included interest at 10%. As of December 30, 2020 and September 30, 2020, the total promissory notes payable balance was $92,222 and $90,710 including accrued interest of $32,222 and $30,710, respectively. On January 15, 2019, the holder of a note with a principal balance of $10,000 made demand for payment. To date, the note has not been paid.

 

During the year ended September 30, 2020 a Company Advisor, loaned the Company $5,811. The loan is a demand note at zero interest.

 

Convertible Notes Payable

 

As of December 31, 2020 and September 30, 2020, noteholders representing $70,747 in outstanding principal had not requested the exchange of shares of common stock. As of December 31, 2020 and September 30, 2020, the exchange obligation payable was $150,348 and $147,673 including accrued interest of $79,601 and $76,926, respectively. As of December 31, 2020 and September 30, 2020, the exchange obligation was for 45,442 shares and 44,614 shares of common stock, respectively.

 

On February 1, 2016, the Company issued convertible secured note payable of $30,000 to an individual. The note was due on January 31, 2017 and included interest at 10%. The note was convertible at discretion of the holder into common shares of the Company at the rate of $0.50 per shares. The Company has not extended the maturity date and the note is in default. As of December 31, 2020 and September 30, 2020, the total convertible note payable balance was $44,753 and $43,997, including accrued interest of $14,753 and $13,997 respectively. As of December 31, 2020 and 2019, the exchange obligation was for 89,470 shares and 87,994 shares of common stock, respectively.

 

On December 5, 2019, the Company issued a convertible note payable in the amount of $68,220. The convertible note bear interest at 10% and matures on December 5, 2021 the principal and accrued interest of this convertible note can be converted at the discretion of the holder into common shares at 45% discount to the ADR 20 days prior to notification of conversion. The majority shareholder agreed to increase authorized shares if needed in order to settle this debt. This note was discounted for the full amount and the amount of amortization during the period was $5,151.

 

On October 2, 2020, the Company closed a Securities Purchase Agreement with Geneva Roth Remark Holdings Inc (“GRRH”). In connection therewith, the Company issued GRRH a convertible note payable in the amount of $68,000. The note, including interest at 10%, matures on September 24, 2020. After 180 days, the note is convertible at a conversion price which is at 39% discount to the lowest trading price during the previous twenty trading days prior to the date of a conversion notice. As the conversion date had not become effective as of December 31, 2020 no derivative liability was recorded. The note contained an original issue discount of $3,000. There was no amortization expense recognized during the period.

 

 

On November 11, 2020, the Company closed a Securities Purchase Agreement with Geneva Roth Remark Holdings Inc (“GRRH”). In connection therewith, the Company issued GRRH a convertible note payable in the amount of $53,000. The note, including interest at 10%, matures on November 11, 2020. After 180 days, the note is convertible at a conversion price which is at 39% discount to the lowest trading price during the previous twenty trading days prior to the date of a conversion notice. As the conversion date had not become effective as of December 31, 2020 no derivative liability was recorded. The note contained an original issue discount of $3,000. There was no amortization expense recognized during the period.

  

NOTE 4- RELATED PARTY

 

PGRNZ Limited, a management company controlled by the Company’s Chief Executive Officer, and a Company Director, provides management services to the Company for which the Company is charged $75,000(AUD) quarterly, approximately $50,914 (US). During the three months ended Dec 31, 2020 and 2019, the Company incurred charges to operations of $50,914 (US) and $51,245(US), respectively, with respect to this arrangement.

 

As of December 31, 2020 and September 30, 2020, accrued expenses due to PGRNZ and other related parties was $722,520 and $717,075 respectively.

 

NOTE 5 – STOCKHOLDERS’ EQUITY

 

Common shares were issued resulting in an increase to capital stock of $46 and an increase to Additional Paid-in Capital of $489,692. 1,450,000 shares were issued for proceeds totaling $84,738. The Company issued 3,100,000 shares of the Company’s common stock to members of the Board of Directors, employees and consultants for services rendered totaling $405,000 based on the closing market price on the date of grant. The Company has a total of 5,778,367 shares that remain approved, reserved and outstanding and not yet issued by the Transfer Agent at December 31, 2020.

 

NOTE 6 – SUBSEQUENT EVENTS

 

During the quarter (ending March 31, 2021) Common shares of 3,688,596 have been approved in lieu of services rendered by advisors and consultants to the Company.

 

The Company has evaluated events occurring subsequent to September 30, 2020 through to the date these financial statements were issued and has identified no additional events requiring disclosure.

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATION

 

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this Form 10-Q.

 

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

 

FORWARD LOOKING STATEMENTS

 

The information contained in this Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, including among other things, statements regarding our capital needs, business strategy and expectations. Any statement which does not contain a historical fact may be deemed to be a forward-looking statement. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. In evaluating forward looking statements, you should consider various factors outlined in our Form 10-K report for the year ended September 30, 2020, filed with the U.S. Securities Exchange Commission (“SEC”) and, from time to time, in other reports we file with the SEC. These factors may cause our actual results to differ materially from any forward-looking statement. We disclaim any obligation to publicly update these statements or disclose any difference between our actual results and those reflected in these statements.

 

Overview

 

In July 2017 we acquired Solar Quartz Technologies Limited, a New Zealand corporation. We are now seeking new financing in the form of equity, debt or a combination thereof to meet development and general operating obligations. In the absence of achieving sufficient funds soon, our viability will be in doubt. Having said that, the Company has managed to raise some capital by sale of shares, but as of December 31, 2020, it has not been successful in raising sufficient funds; However, work is underway to secure funding, and we believe that funding for the Company is possible in the near future although no assurance can be made as to the amount of funds, if any, or the terms thereof.

 

Current Business and Operations

 

With the acquisition of Solar Quartz Technologies Limited we owned mining exploration and development rights to significant deposits of High Purity Quartz that we have determined in our evaluation of independent reports and considered judgment to have reserves which are adequate to provide the Company with adequate resources for 25-30 years of production. See Item 1 in the FY 2020 10-K Business for further details.

 

However, in November 2020 the Queensland Department of Natural Resources Mines and Energy, DNRME, questioned the validity of the mining leases which had been originally filed by the Company in 2011 and held in good standing since. In December 2020, the Company engaged legal assistance to protect these interests of the Company.

 

During January and February2021 Australian based lawyers continued preparation of evidence to address the dispute with the Queensland Department Natural Resources, Mines and Energy in respect of the mining leases held by the wholly owned subsidiary company Graphene & Solar Technologies Limited (New Zealand).

 

 

The Company is actively seeking interim working capital in order to complete mining plans and build a pre-processing plant in Townsville, North Queensland, Australia, build upon our management team and market high purity quartz (HPQS) to established markets with whom our management team have had prior relationships. These organizational efforts will be to secure significant new capital for the acquisition of a site and the building of the pre-processing plant. Upon completion, that plant will enable the Company to upgrade its newly mined HPQS to its crushed grades and higher purity level sand and powder products that have significant world-wide demand for use in the production of advanced PV solar Panels and all high-end electronics, lighting, telecom, optic and microelectronics. Failure to secure these financings will have potential impact on the Company’s ability to continue as a going concern.

 

Results of Operations

 

For the fiscal quarters ended December 31, 2020 and December 31, 2019 we generated no revenues, and thus no cost of sales or gross profits.

 

For the fiscal quarters ended December 31, 2020 and December 31, 2019, we incurred $627,100 and $235,338, respectively, in operating expenses.

 

For the fiscal quarter ended December 31, 2020 we recorded other expenses of $14,276 while in December 31, 2019 we incurred expenses of $7,366 both items are represented by accrued interest on debt. Other income of $2,191 was earned in the fiscal quarter, December 31, 2020 and $2,050 in fiscal quarter, December 31, 2019.

 

For the fiscal quarter ended December 31, 2020, we reported net loss of $639,185 while in the fiscal quarter ended December 31, 2019, we reported a net loss before taxes of $240,654.

 

For the periods ended December 31, 2020 and September 30, 2020, our cash positions were $3,266 and $12 respectively.

 

As of December 31, 2020, we had total current liabilities of $1,929,500 while as of September 30, 2020, we had total current liabilities of $1,684,546 an increase of about 14%. Accrued interest payable increased from $132,099 to $141,283 on notes and other loans payable that increased from $181,896 to $302,216 and other accounts payable and related party debt that increased from $1,370,551 to $1,486,001 during the period.

 

Liquidity and Capital Resources

 

As of December 31, 2020, we had $25,141 in total assets and $1,929,500 in total liabilities. Accordingly, we had a working capital deficit of $1,904,359.

 

Operating activities used $113,232 for the quarter ended December 31, 2020, as compared to $119,364 for the quarter ended December 31, 2019.

 

 

Off-Balance Sheet Arrangements

 

There are no off-balance sheet arrangements.

 

Critical Accounting Policies and Estimates

 

For a discussion of our accounting policies and related items, please see the Notes to the Financial Statements, included in Item 1.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

An evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive and Interim 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-Q. 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-Q, 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 December 31, 2020, our disclosure controls and procedures were not effective.

 

Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020, based on the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 (“COSO”).

 

As of period covered by this Quarterly Report on Form 10-Q, we have concluded that our internal control over financial reporting was ineffective. The Company’s assessment identified certain material weaknesses which are set forth below:

 

Functional Controls and Segregation of Duties

 

Because of the Company’s limited resources, there are limited controls over information processing.

 

There is an inadequate segregation of duties consistent with control objectives. Our Company’s management is composed of a small number of individuals resulting in a situation where limitations on segregation of duties exist. In order to remedy this situation, we would need to hire additional staff to provide greater segregation of duties. Currently, it is not feasible to hire additional staff to obtain optimal segregation of duties. Management will reassess this matter in the following year to determine whether improvement in segregation of duty is feasible.

 

Accordingly, as the result of identifying the above material weakness we have concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the Company’s internal controls.

 

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.

 

Roger May, our Principal Executive Officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2020 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework (2013). 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.

 

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 has addressed the underlying causes for our weaknesses in internal control since early FY 2020. Our efforts to raise both debt and equity capital soon will allow us to undertake additional engagement of external independent consultants to assist with the processing of data and drafting financial reports on a timely basis in future reporting periods.

 

 

PART II

 

ITEM 1. LEGAL PROCEEDINGS

 

The are no legal proceedings at the date of this filing. Legal guidance only has been sought in relation the mining leases as referenced above under Current Business & Operations section.

 

ITEM 1A. RISK FACTORS

 

Our business is subject to numerous risks and uncertainties including but not limited to those discussed in “Risk Factors” in our annual report on Form 10-K.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

Please see Note 5 to our Financial Statements.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

Exhibits

 

31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act.
32.2	Certification pursuant to Section 906 of the Sarbanes-Oxley Act.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	GRAPHENE & SOLAR TECHNOLOGIES LIMITED
Date: March 23, 2021	By:	/s/ Roger May
		Chief Executive Officer and Director

 

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