UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (IRS Employer | |
| incorporation or organization) | Identification No.) |
| (Address of principal executive offices) | (Postal Code) |
(Registrant’s telephone number, includingarea code)
(Former name, former address and former fiscalyear, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant(1) has filed all reports required 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 requirementsfor the past 90 days.
Indicate by check mark whether the registranthas submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrantis a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accountingstandards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrantis a shell company (as defined in Rule 12b-2 of the Exchange Act). No
As of August 5, 2025 there were
TABLE OF CONTENTS
| PART I-FINANCIAL INFORMATION | ||
| Item 1. | Unaudited Condensed Consolidated Financial Statements | 1 |
| Unaudited Condensed Consolidated Balance Sheets | 1 | |
| Unaudited Condensed Consolidated Statements Of Operations | 2 | |
| Unaudited Condensed Consolidated Statements Of Comprehensive Loss | 2 | |
| Unaudited Condensed Consolidated Statements Of Shareholders’ Deficit | 3 | |
| Unaudited Condensed Consolidated Statements Of Cash Flows | 4 | |
| Notes To Unaudited Condensed Consolidated Financial Statements | 5 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |
| Item 4. | Controls and Procedures | 32 |
| PART II-OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 34 |
| Item 1A. | Risk Factors | 34 |
| Item 2. | Unregistered Sales of Equity Securities, and Use of Proceeds | 34 |
| Item 3. | Defaults Upon Senior Securities | 34 |
| Item 4. | Mine Safety Disclosures | 34 |
| Item 5. | Other Information | 34 |
| Item 6. | Exhibits | 35 |
| SIGNATURES | 36 | |
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GRAPHJET TECHNOLOGY
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, | September 30, | |||||||
| 2024 | 2024 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Inventories | ||||||||
| Prepaid expenses | ||||||||
| Deposits | ||||||||
| Other receivables | ||||||||
| Total Current Assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Total Non-current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Loans from third parties | ||||||||
| Other payables and accrued expenses | ||||||||
| Loan from a director | ||||||||
| Loan from a shareholder | ||||||||
| Payable to directors | ||||||||
| Compensation payable to a shareholder | ||||||||
| Deferred underwriting commission payable | ||||||||
| Provision for bonus | ||||||||
| Total Current Liabilities | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Total Non-current Liabilities | ||||||||
| Total Liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES (See Note 17) | ||||||||
| SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Preferred share, $ | ||||||||
| Class A ordinary share, $ | * | |||||||
| Class B ordinary share, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total Shareholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Shareholders’ Deficit | $ | $ | ||||||
| * |
The accompanying notes are an integral part ofthese unaudited condensed consolidated financial statements.
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GRAPHJET TECHNOLOGY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSAND COMPREHENSIVE LOSS
| For the Three Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| (unaudited) | (unaudited) | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expenses) | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Other expenses, net | ( | ) | ( | ) | ||||
| Total other expenses, net | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Foreign currency translation adjustment | ( | ) | ||||||
| Total comprehensive loss attributable to ordinary shareholders | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of ordinary shares outstanding* | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
| Loss per share ordinary share | ||||||||
| Basic | $ | ( | ) | $ | ( | ) | ||
| Diluted | $ | ( | ) | $ | ( | ) | ||
| * |
The accompanying notes are an integral part ofthese unaudited condensed consolidated financial statements.
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GRAPHJET TECHNOLOGY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGEIN SHAREHOLDERS’ EQUITY
(DEFICIT)
| Preferred Share | Class A Ordinary Share | Class B Ordinary Share | Additional paid-in | Accumulated Deficit | Accumulated other comprehensive | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares* | Amount | Shares | Amount | capital | (Restated) | income (loss) | Total | |||||||||||||||||||||||||||||||
| BALANCE, September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| BALANCE, December 31, 2023 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||
| BALANCE, September 30, 2024 | — | $ | $ | — | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
| Issuance of ordinary shares for unrelated third-party investors | — | — | ||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | — | |||||||||||||||||||||||||||||||||||||
| BALANCE, December 31, 2024 (unaudited) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| * |
The accompanying notes are an integral part ofthese unaudited condensed consolidated financial statements.
3
GRAPHJET TECHNOLOGY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Three Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| (unaudited) | (unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization | ||||||||
| Depreciation | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Advance to a related company | ||||||||
| Inventories | ( | ) | ||||||
| Deposits | ( | ) | ||||||
| Other receivables | ||||||||
| Accounts Payable | ||||||||
| Interests payable | ||||||||
| Other payables and accrued expenses | ( | ) | ( | ) | ||||
| Payable to directors | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Purchases of intangible assets | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from short-term loans - related party | ||||||||
| Proceeds from long-term debt - related party | ||||||||
| Payments of deferred merger costs | ( | ) | ||||||
| Proceeds from issuance of ordinary shares | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes | ( | ) | ||||||
| NET CHANGE IN CASH | ||||||||
| Cash, beginning of the period | ||||||||
| Cash, end of the period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for income tax | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
The accompanying notes are an integral part ofthese unaudited condensed consolidated financial statements.
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GRAPHJET TECHNOLOGY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIALSTATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2024AND 2023
(In U.S. dollars, unless stated otherwise)
Note 1 - Description of Organization and Business Operations
1.1 Organization and Nature of Business
Graphjet Technology (the “Company”,“we,” “us” or “our”) is the owner of the state-of-the-art patented technology for the manufactureof graphene and graphite. The Company is a former blank check company incorporated in the Cayman Islands on
The Company acquired Graphjet Technology Sdn.Bhd. (“Graphjet”), a Malaysian based company that produces graphite, graphene and graphene-based anode battery material. Thebreakthrough technology transforms a sustainable, abundant and renewable agricultural waste product, palm kernel shells into highly valuedartificial graphene and graphite at significantly lower carbon emissions. For research and development in graphite and graphene applications,Graphjet collaborates with National University of Malaysia (UKM) and University Teknikal Malaysia Melaka (UTEM) as Technology AdvisorPanel to provide technology advisory for the applications. The Company is a member of Industrial Liaison Program (ILP) of MassachusettsInstitute of Technology (MIT).
The Company intends to be a low-cost producerof the highest quality artificial graphite and graphene. Graphjet has a patent on its bio-mass process and production method for graphiteand a patent pending for graphene, and it believes it is the only producer currently capable of using biomass to produce graphite andgraphene in mass production scale.
Since Graphjet Technology uses a widely availablewaste product as their source, they are able to produce a higher quality product at a significantly lower cost than other graphite andgraphene production methods currently in use worldwide.
To date of this filing, Graphjet has not had anysales of its products but plans to sample its products to multinational companies within the industry for market acceptance and procurementpurposes, intending to replace current high-cost suppliers. Until now, the Company has funded its operations primarily with proceeds throughequity investments from its current shareholders.
1.2 Business Combination
On March 14, 2024 (the “Closing date”),Graphjet consummated a merger (the “Merger”) with Energem. Pursuant to the Business Combination Agreement, (i) Energem acquiredall of the issued and outstanding Graphjet Pre-Transaction Shares from the Selling Shareholders and Graphjet became a wholly-owned subsidiaryof Energem, (ii) Energem changed its name to Graphjet Technology, and (iii) each Selling Shareholder received a number of Energem ClassA Ordinary Shares subject to the Consideration Shares formula, which is the number of Energem Class A Ordinary Shares equal to the aggregateConsideration Shares divided by the number of Graphjet Pre-Transaction Shares outstanding immediately prior to the Closing, multipliedby the number of Graphjet Pre-Transaction Shares held by such Selling Shareholder.
The Business Combination was accountedfor as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Graphjet Technology was treated as theacquired company and Graphjet was treated as the acquirer for financial statement reporting purposes.
Pursuant to ASC 805-40 Reverse Acquisitions, forfinancial accounting and reporting purposes, Graphjet was deemed the accounting acquirer with Graphjet Technology being treated as theaccounting acquiree, and the Merger was accounted for as a reverse recapitalization (the “Reverse Recapitalization”). Accordingly,the audited consolidated financial statements of the Company represent a continuation of the financial statements of Graphjet, with theMerger being treated as the equivalent of Graphjet issuing stock for the net assets of Graphjet Technology, accompanied by a recapitalization.The net assets of Graphjet Technology were stated at historical costs, with no goodwill or other intangible assets recorded, and wereconsolidated with Graphjet financial statements on the Closing Date. The number of Graphjet ordinary shares for all periods prior to theClosing Date have been retrospectively increased using the exchange ratio that was established in accordance with the Merger Agreement(the “Exchange Ratio”).
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1.3 Acquisition of Subsidiary
In April 2024, the Company’s subsidiary, Graphjet acquired
Note 2 - Going Concern and Liquidity
In assessing the Company’s ability to continueas a going concern, the Company monitors and analyses its cash on-hand and its operating and capital expenditure commitments. The Company’sliquidity needs are to meet its working capital requirements, operating expenses, and capital expenditure obligations.
The Company’s management has consideredwhether there is substantial doubt about its ability to continue as a going concern due to the Company incurred a net loss of $
To sustain its ability to support the Company’soperating activities and to alleviate the situation, the Company considered supplementing its sources of funding through the following:
| ● | other available sources of financing from banks and other financial institutions or private lenders; |
| ● | and equity financing. |
On April 30, 2025, the Company signed debt settlementagreements with its director and shareholder to settle the debts with them.
The Company can make no assurances that requiredfinancings will be available for the amounts needed, or on terms commercially acceptable to the Company, if at all. If one or all of theseevents does not occur or subsequent capital raises are insufficient to bridge financial and liquidity shortfall, there would likely bea material adverse effect on the Company and would materially adversely affect its ability to continue as a going concern.
As such, the Company’s management has determinedthat the factors discussed above have raised substantial doubt about the Company’s ability to continue as a going concern withinone year after the date that the consolidated financial statements are issued. The consolidated financial statements have been preparedassuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from theoutcome of this uncertainty.
Note 3 - Summary of Significant Accounting Policies
Basis of presentation
The accompanying unaudited condensed consolidatedfinancial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.GAAP”) pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). Certain information or footnotedisclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant tothe rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotesnecessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanyingunaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessaryfor a fair statement of the financial position, operating results and cash flows for the periods presented. The results of operationsfor the interim periods presented are not necessarily indicative of the results to be expected for the full year or any future interimperiod. The interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidatedfinancial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended September 30,2024.
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Principles of consolidation
The unaudited condensed consolidated financial statements include thefinancial statements of the Company and its wholly owned subsidiaries, Graphjet and GTI US Corp. All intercompany balances and transactions,and any unrealized income and expenses arising from intercompany transactions, are eliminated in preparing the unaudited condensed consolidatedfinancial statements.
Use of estimates and assumptions
The preparation of unaudited condensed consolidatedfinancial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amountsof assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financialstatements and the reported amounts of expenses during the reporting period and the accompanying notes, including allowance for expectedcredit losses, the useful lives of property and equipment, and impairment of long-lived assets.
Making estimates requires management to exercisesignificant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstancesthat existed at the date of the financial statements, which management considered in formulating its estimate, could change in the nearterm due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Foreign currency
In general, for consolidation purposes, assetsand liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30,“Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translatedat average rates prevailing during the period. Shareholders’ equity account is translated at historical exchange rate. Transactiongains and losses are recognized in the Company’s Unaudited Condensed Consolidated Statement of Operations and Comprehensive Lossbased on the difference between the foreign exchange rates on the transaction date and on the reporting date. The gains and losses resultingfrom translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensiveincome (loss) within the statements of shareholders’ equity. Cash flows are also translated at average translation rates for theperiods; therefore, amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balanceson the consolidated balance sheets.
For Graphjet, Malaysian Ringgit (“RM”)has been determined to be the functional currency.
| As of December 31, | As of September 30, | |||||||
| 2024 | 2024 | |||||||
| Period-end RM: US$1 exchange rate | ||||||||
| For the three months ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Period-average RM: US$1 exchange rate | ||||||||
Cash
Cash primarily consists of bank deposits, whichare unrestricted as to withdrawal and use.
7
Inventories
Inventories are measured at the lower of costand net realizable value.
The cost of inventories is calculated using the weighted average method,and includes the cost incurred in acquiring the inventories and incidental cost in bringing them to their existing location and condition.For work-in-progress, cost of production comprised the costs of raw material, packaging material, manufacturing overhead and direct labor,which are allocated to products based on normal operating capacity. As of December 31, 2024 and September 30, 2024, the Company had $
Prepaid expenses
Prepaid expenses represent amounts advanced tosuppliers for goods or services that will be received in the future. Certain suppliers require advance payments when the orders are placed,and the prepaid expenses will be utilized to offset the Company’s future payments. These amounts are unsecured, non-interest bearingand generally short-term in nature.
Other receivables
Other receivables primarily include receivablesfrom employee advances and others. Management regularly reviews the aging of the accounts and changes in payment trends and records provisionfor credit losses when management believes collection of amounts due are at risk. Accounts considered uncollectable are written off againstallowances after exhaustive efforts at collection are made. As of December 31, 2024 and September 30, 2024, the Company provided provisionfor credit losses, respectively.
Property and equipment, net
Property and equipment are stated at historicalcost less accumulated depreciation. Expenditures for major renewals and betterments are capitalized, while minor replacements, maintenance,and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and relatedaccumulated depreciation is removed from the accounts, and any difference between the selling price and net carrying amount is recordedas a gain or loss in the consolidated statements of operations and comprehensive loss. Depreciation on property and equipment is calculatedusing the straight-line method over the estimated useful lives of the assets.
Impairment for long-lived assets
Long-lived assets, including property and equipmentand intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significantadverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may notbe recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expectedto generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the assetplus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified,the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, whenavailable and appropriate, to comparable market values. As of December 31, 2024 and September 30, 2024, impairment of long-lived assetswas recognized.
Warrants
The Company accounts for warrants as either equity-classifiedor liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidancein ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815, Derivatives and Hedging (“ASC815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definitionof a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, includingwhether the warrants are indexed to the Company’s own Common Stock and whether the warrant holders could potentially require “netcash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. Thisassessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterlyperiod end date while the warrants are outstanding.
8
For issued or modified warrants that meet allof the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance.The Company determined that upon further review of the warrant agreements, the Company concluded that its warrants qualify for equityaccounting treatment.
Upon completion of the Business Combination, all of Graphjet’soutstanding public and private warrants (See Note 14) were replaced by the Company’s public and private warrants. The Company treatedsuch warrants replacement as a warrant modification and no incremental fair value was recognized.
Fair value of financial instruments
Fair value is defined as the price that wouldbe received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurementdate. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy givesthe highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and thelowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Income taxes
The Company complies with the accounting and reportingrequirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting andreporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement andtax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicableto the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, toreduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes a recognition thresholdand a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken ina tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxingauthorities. The Company’s management determined Cayman Islands, the United States and Malaysia are the Company’s only majortax jurisdictions. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense.There were unrecognized tax benefits for the three months ended December 31, 2024 and 2023, and no amounts accrued for interest andpenalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or materialdeviation from its position.
The Company is an exempted Cayman Islands companywith no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements inthe Cayman Islands. In Malaysia and Nevada US, current tax is the expected tax payable on the taxable income for the year, using tax ratesenacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years. Dueto operating losses, the Company’s tax provision was $ for the three months ended December 31, 2024 and 2023.
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Comprehensive income (loss)
Comprehensive income (loss) consists of two components, net income(loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and losses that underGAAP are recorded as an element of shareholders’ equity but are excluded from net income (loss). Other comprehensive income (loss)consists of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies.
Loss per share
The Company complies with accounting and disclosurerequirements of ASC Topic 260, “Earnings Per Share.” Net loss per share is computed by dividing net loss by the weighted averagenumber of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture. For the three months ended December31, 2024 and 2023, the calculation of diluted loss per share does not consider the effect of the warrants issued in connection with theInitial Public Offering and warrants issued as components of the Private Placement Units (the “Placement Warrants”) sincethe exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.There are other potential dilutive securities outstanding for the three months ended December 31, 2024 and 2023, as a result, dilutedloss per share is the same as basic loss per share for the periods presented.
Related parties
A party is considered to be related to the Companyif the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control withthe Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principalowners of the Company and its management and other parties with which the Company may deal if one party controls or can significantlyinfluence management or operating policies of the other to an extent that one of the transacting parties might be prevented from fullypursuing its own separate interests. A party which can significantly influence the management or operating policies of the transactingparties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent thatone or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
Recent issued accounting standards
The Company is an “emerging growth company”(“EGC”) as defined in the Jumpstart Our Business Startup Act of 2012 (the “JOBS Act”). Under the JOBS Act, EGCcan delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standardsapply to private companies.
In November 2023, the FASB issued Accounting StandardsUpdate (“ASU”) 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” which expandsannual and interim disclosure requirements for reportable segments. These requirements include: (i) disclosure of significant expensesthat are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segmentprofit or loss (collectively referred to as the “significant expense principle”); (ii) disclosure of an amount for other segmentitems (equal to the difference between segment revenue less segment expenses disclosed under the significant expense principle and eachreported measure of segment profit or loss) by reportable segment and a description of their composition; (iii) annual disclosure of areportable segment’s profit or loss and assets currently required by Topic 280 in interim periods; (iv) clarification that, if theCODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources,a public entity may report those additional measures of segment profit or loss; (v) disclosure of the title and position of the CODM andan explanation of how the CODM uses the reported measure(s) disclosure of segment profit or loss in assessing segment performance anddeciding how to allocate resources; and (vi) requiring a public entity that has a single reportable segment provide all the disclosuresrequired by the amendments in this ASU, and all existing segment disclosures in Topic 280. ASU 2023-07 is effective for the Company’sannual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025. The Company adopted ASU 2023-07 in the yearended September 30, 2024, and applied the amendments retrospectively to all prior periods presented in these consolidated financial statements.Refer to Note 17 segment information.
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In December 2023, the FASB issued Accounting StandardsUpdate No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), whichmodifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) theincome or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) incometax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclosetheir income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective forannual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issuedor made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. TheCompany is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and relateddisclosures.
In November 2024, the FASB issued Accounting Standards Update No. 2024-03, “IncomeStatement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income StatementExpenses” (“ASU 2024-03”), which requires additional disclosures about specific types of expenses included in the expensecaptions presented on the face of the financial statements. The guidance is effective for fiscal years beginning after December 15, 2026and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The guidance may be appliedeither: (1) prospectively to financial statements issued for reporting periods after the effective date, or (2) retrospectively to allprior periods presented in the financial statements. The Company is currently evaluating the potential impact of adopting this new guidanceon its unaudited condensed consolidated financial statements and related disclosures.
Except as mentioned above, the Company does notbelieve other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’sconsolidated balance sheets, statements of operations and comprehensive loss and statements of cash flows.
Note 4 – Deposits
| Deposit allocation | Nature | As of December 31, 2024 (unaudited) | As of September 30, 2024 | |||||||
| Public Relations Consulting Services | ||||||||||
| Photocopiers rent for offices use | ||||||||||
| Total other receivables and other current assets, net | $ | $ | ||||||||
Note 5 – Property and Equipment
Property and equipment included in continuing operations consist ofthe following:
| As of December 31, 2024 (unaudited) | As of September 30, 2024 | |||||||
| Office equipment | $ | $ | ||||||
| Renovation | ||||||||
| Plant and Machinery | ||||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation of property and equipment is computed on a straight-linebasis over its estimated useful life at the following annual rates:
| Office equipment | % | |||
| Renovation | % | |||
| Plant and machinery | % |
Depreciation expense for the three months endedDecember 31, 2024 and 2023 amounted to $
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The Company has entered into four contracts withBeijing Xi Yu International Trade Co. Ltd from China in the year 2024, for the purchase of artificial graphite machineries for a totalcost of approximately $
Note 6 – Loans from Third Parties
The Company obtained loans of $
| December 31, 2024 (unaudited) | September 30, 2024 | |||||||
| Total interest payable | $ | $ | ||||||
| Total debt and interest payable | $ | $ | ||||||
| Lender | Principle | Interest rate | Lending date | Due date | |||||
| Goh Meng Keong | $ | ||||||||
| Goh Seng Wei | $ | ||||||||
Note 7 – Other Payables and Accrued Liabilities
| December 31, 2024 (unaudited) | September 30, 2024 | |||||||
| Payroll payable | $ | $ | ||||||
| Rental payable | ||||||||
| Professional Fees | ||||||||
| Accrued expenses | ||||||||
| Total other payables and accrued liabilities | $ | $ | ||||||
Note 8 – Deferred Underwriting Commission Payable
On December 21, 2023, the Company entered intoa Satisfaction and Discharge of Indebtedness Agreement (the “Agreement”) with its underwriter in satisfaction of the$
As of September 30, 2024, the Company had finalizedthe settlement of the True-Up Obligation by agreeing to issue
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Note 9 – Provision for Bonus
On February 29, 2024, the Board of Directors ofGraphjet approved the proposed bonus plan to reward the senior management team of Graphjet for the successful business combination andcorporate listing. The total provision made is $
Note 10 – Related Party Loans
Short Term Loan
Loan from a director
On August 4, 2024, August 15, 2024 and October25, 2024, the Company entered three loan agreements with Mr. Aw Jeen Rong for working capital purpose. Aw Jeen Rong owned
| Lender | Principal | Interest Rate | Lending Date | Due | ||||||
| Aw Jeen Rong | $ | (extended to April 30, 2026) | ||||||||
| Aw Jeen Rong | $ | (extended to April 30, 2026) | ||||||||
| Aw Jeen Rong | $ | |||||||||
| December 31, 2024 (unaudited) | September 30, 2024 | |||||||
| Total interest payable | $ | $ | ||||||
| Total debt and interest payable | ||||||||
Loan from a shareholder
On September 4, 2024 and November 5, 2024, theCompany entered two loan agreements with Mr. Liu Yu for working capital purpose. Liu Yu owned
| Lender | Principal | Interest Rate | Lending Date | Due | ||||||
| Liu Yu | $ | (extended to April 30, 2026) | ||||||||
| Liu Yu | $ | |||||||||
| December 31, 2024 (unaudited) | September 30, 2024 | |||||||
| Total interest payable | $ | $ | ||||||
| Total debt and interest payable | ||||||||
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Payable to directors
Mr. Lim Hooi Beng and Mr. Aw Jeen Rong are the shareholders of theCompany and directors of Graphjet.
| December 31, 2024 (unaudited) | September 30, 2024 | |||||||
| Lim Hooi Beng | $ | $ | ||||||
| Aw Jeen Rong | ||||||||
| Payables to directors | $ | $ | ||||||
Mr. Lim Hooi Beng and Mr. Aw Jeen Rongown
On March 11, 2024, the Company enteredinto the debt-to-equity conversion agreements with Mr. Lim Hooi Beng. The Company issued
As of December 31, 2024 and September 30, 2024, the outstanding balanceon the payable is $
Compensation payable to a shareholder
On March 10, 2022, Graphjet entered into IntellectualProperty Sales Agreement with Mr. Liu Yu, as supplemented by the letter from Mr. Liu Yu to Graphjet dated July 29, 2022, pursuant to whichGraphjet purchased the process for producing palm-based graphene, an intellectual property held by Mr. Liu Yu for approximately $
As of September 30, 2022, the Company repaid approximately$
The approximately $
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Note 11 – IncomeTaxes
Cayman Islands
Under the current laws of the Cayman Islands,the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islandswithholding tax will be imposed.
USA
GTI US Corp is incorporated in the United Statesand is subject to a federal tax rate of
Malaysia
The Company’s subsidiaryGraphjet was incorporated in Malaysia and is subject to Malaysian Profits Tax on the taxable income as reported in its statutory financialstatements adjusted in accordance with relevant Malaysian tax laws. The applicable tax rate is
To date, Graphjet Technologyhas not had any sales of its products, the Company’s tax provision was
The components of the Company’sincome tax provision were as follows for the period indicated:
| For the three months ended December 31, 2024 (unaudited) | For the three months ended December 31, 2023 (unaudited) | |||||||
| Current | $ | $ | ||||||
| Deferred | ||||||||
| Total income tax expense | $ | $ | ||||||
The following table sets forth the significantcomponents of the aggregate deferred tax assets and liabilities of the Company as of:
| December 31, 2024 (unaudited) | September 30, 2024 | |||||||
| Deferred Tax Assets: | ||||||||
| Net operating loss carry-forwards | $ | $ | ||||||
| Capital allowances | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net | ||||||||
| Deferred tax liabilities: | ||||||||
| Capitalized R&D expenses | ||||||||
| Deferred tax (liabilities) assets, net | $ | $ | ||||||
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Movement of valuation allowance:
| December 31, 2024 (unaudited) | September 30, 2024 | |||||||
| Balance at beginning of the year | $ | $ | ||||||
| Addition | ||||||||
| Balance at end of the year | $ | $ | ||||||
As of December 31, 2024 and September 30, 2024,the Company had net operating losses carry forward of approximately $
Valuation allowance is provided against deferredtax assets when the Company determines that it is more likely than not that the deferred tax assets will not be utilized in the future.In making such determination, the Company considered factors including future taxable income exclusive of reversing temporary differencesand tax loss carry forwards. If events occur in the future that allow the Company to realize part or all of its deferred income tax, anadjustment to the valuation allowances will result in a decrease in tax expense when those events occur.
Due to the limited operating history of the Malaysiansubsidiary, the Company is uncertain when these net operating losses can be utilized. As a result, the Company provided a
Uncertain tax positions
The Company evaluates each uncertain tax position(including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefitsassociated with the tax positions. An uncertain tax position is recognized as a benefit only if it is “more likely than not”that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized isthe largest amount of tax benefit that is greater than
Note 12 – Shareholders’ Equity
The Company’s ordinary shares trade on theNASDAQ stock exchange under the symbol “GTI”. Pursuant to the terms of the Amended and Restated Certificate of Incorporation,the company’s authorized share capital is $
On December 20, 2023, Energem and Graphjet negotiatedand entered into a definitive purchase agreement for a PIPE investment (the “PIPE Investment Purchase Agreement”) with Dato’Sri Pang Chow Huat and/or investment vehicles directly managed by such investor (the “PIPE Investor”) as amendedand restated on January 10, 2024, pursuant to which the PIPE Investor and/or investment vehicles directly managed by such investor, hasagreed to purchase, and Graphjet has agreed to sell to the PIPE Investor,
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On March 14, 2024, the Company completed its reverserecapitalization with Energem. The shares and corresponding capital amounts and all per share data related to Graphjet’s outstandingordinary shares prior to the reverse recapitalization in the accompanying consolidated financial statements have been retrospectivelyadjusted using the Exchange Ratio of
On November 1, 2024, the Company successfullycompleted a fundraising exercise amounting to approximately $
As of December 31, 2024 and September 30, 2024,we had issued and outstanding Class A Ordinary Shares
Note 13 – Equity Incentive Plan
At the Special Meeting on February 28, 2024, Energemshareholders considered and approved the Equity Incentive Plan and reserved an amount of ordinary shares equal to
Graphjet Technology’s employees, consultantsand directors, and employees, consultants and directors of its subsidiaries will be eligible to receive awards under the Equity IncentivePlan. The Equity Incentive Plan is expected to be administered by the Graphjet Technology Board with respect to awards to non-employeedirectors and by Graphjet Technology’s remuneration committee with respect to other participants, each of which may delegate itsduties and responsibilities to committees of Graphjet Technology directors and/or officers (referred to collectively as the “planadministrator” below), subject to certain limitations that may be imposed under stock exchange rules. The plan administrator willhave the authority to interpret and adopt rules for the administration of the Equity Incentive Plan, subject to its express terms andconditions. The plan administrator will also set the terms and conditions of all awards under the Equity Incentive Plan, including anyvesting and vesting acceleration conditions.
Note 14 – Warrants
In connection with the reverse recapitalization,the Company has assumed
Each whole warrant entitles the registered holderto purchase one whole share of the Company’s common stock at a price of $
The Company has agreed that as soon as practicable,but in no event later than
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The Company may call thewarrants for redemption, in whole and not in part, at a price of $
| ● | at any time while the warrants are exercisable; |
| ● | upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and |
| ● | if, and only if, the reported last sale price of the ordinary shares equals or exceeds $ |
| ● | if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire |
The summary of warrants activityis as follows:
| Warrants Outstanding | Ordinary Shares Issuable | Weighted Average Exercise Price | Average Remaining Contractual Life | |||||||||||||
| September 30, 2024 | $ | |||||||||||||||
| Granted | $ | |||||||||||||||
| Forfeited | $ | — | ||||||||||||||
| Exercised | $ | — | ||||||||||||||
| December 31, 2024 | $ | |||||||||||||||
The Company accounted for the
Note 15 – Concentrations of Risks
Financial instruments that potentially exposethe Company to concentrations of credit risk consist primarily of cash, deposits and other receivables.
(a) Credit risk
Financial instruments that potentially subjectthe Company to significant concentrations of credit risk consist primarily of cash. In Malaysia, the insurance coverage for cash depositsof each depositor at each bank is RM
The Company’s operating subsidiary is inMalaysia, and their functional currency is RM. As a result, the Company is exposed to foreign exchange risk as the Company’sresults of operations may be affected by fluctuations in the exchange rate between USD and RM. If the RM appreciates against theUSD, the value of the Company’s RM revenues, earnings, and assets as expressed in the Company’s USD financial statements willdecline. The Company has not entered any hedging transactions in an effort to reduce the Company’s exposure to foreign exchangerisk.
The Company is also exposed to risk from its depositsand other receivables. These assets are subjected to credit evaluations. An allowance has been made for estimated unrecoverable amountswhich have been determined by reference to past default experience and the current economic environment.
(b) Vendor concentration risk
For the three months ended December 31, 2024,three suppliers accounted for approximately
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Note 16 – Segment Reporting
ASC 280, “Segment Reporting”,establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizationalstructure as well as information about geographical areas, business segments and major customers in financial statements for detailingthe Company’s business segments.
The Company uses the management approach to determine reportable operatingsegments. The management approach considers the internal organization and reporting used by the Company’s chief operating decisionmaker (“CODM”) for making decisions, allocating resources and assessing performance. The Company’s CODM has been identifiedas the Company’s chief executive officer, who reviews consolidated results when making decisions about allocating resources andassessing performance of the Company. The Company has only one geographic operating location in Malaysia, so the Company determines thatreporting operating segments by geographic locations is not necessary.
The Company’s organizational structure isbased on a number of factors that the CODM uses to evaluate, view and run its business operations which include, but not limited to, customerbase, homogeneity of service and technology. The Company’s operating segments are based on such organizational structure and informationreviewed by the CODM to evaluate the operating segment results. Based on management’s assessment, the Company determined that ithas only
The following table presents major accounts ofstatements of operations by segments for the three months ended December 31, 2024 and 2023.
| For the Three Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Advertising and marketing expenses | $ | $ | ||||||
| Salaries and benefits expenses | ||||||||
| Legal and consulting expenses | ||||||||
| Other operating expenses | ||||||||
| Total operating expenses | ||||||||
| Segment operating loss | ( | ) | ( | ) | ||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Other expenses, net | ( | ) | ( | ) | ||||
| Income tax expense | ||||||||
| Segment net loss | $ | ( | ) | $ | ( | ) | ||
Note 17 – Commitments and Contingencies
Lease commitments
Effective July 1, 2019, the Company adopted FASBASU 2016-02, “Leases” (Topic 842), and elected the practical expedients that does not require us to reassess: (1) whetherany expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initialdirect costs for any expired or existing leases. For lease terms of
19
The Company entered in four operating lease agreementsin New York and Malaysia, which will expire till July 2025. The Company’s lease agreements do not contain any material residualvalue guarantees or material restrictive covenants. The leases contain options to extend at the time of expiration, but the Company willnot exercise it. The Company did not recognize the operating lease ROU assets and lease liabilities on the balance sheet as this leasehad an initial term of
Operating lease expenses was recorded under generaland administrative expenses for the three months ended December 31, 2024 and 2023 amounted to $
The following table sets forth the Company’sundiscounted future minimum lease payment schedule as of December 31, 2024. There were no commitment and contingency other than thosestated below:
| Commitments and Contingencies | Terms | Amount | ||||
| Rental of premise | $ | |||||
| Rental of factory | ||||||
| $ | ||||||
Note 18 – Subsequent Events
The Company has evaluated all events that occurredafter December 31, 2024 through the date the consolidated financial statements were available for issuance and identified the followingsubsequent events occurred that would require recognition or disclosure in the Company’s consolidated financial statements.
On February 28, 2025, Graphjet received a notificationletter (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) indicatingthat, as a result of (i) the Company’s delay in filing its Quarterly Report on Form 10-K for the period ended September 30, 2024(the “Initial Delinquent Filing”) with the Securities and Exchange Commission (the “SEC”) and (ii) the Company’sdelay in filing its Annual Report on Form 10-Q for the period ended December 31, 2024 (the “Second Delinquent Filing”), theCompany is not in compliance with the requirements for continued listing under Nasdaq Listing Rule 5250(c)(1) (the “Listing Rule”).
The Notice states that the Company has 60 calendardays, or until April 29, 2025, to submit a plan to regain compliance with the Listing Rule with respect to the delinquent reports. OnApril 29, 2025, Graphjet had submitted the plan to regain compliance.
On April 30, 2025, the Company signed a debt settlementagreement with Lim Hooi Beng to settle the amount of $
On April 30, 2025, the Company signed a debt settlementagreement with Liu Yu to settle the amount owing of $
20
On May 15, 2025, Graphjet Technology and AidenLee Ping Wei entered into a Warrant Subscription Agreement, pursuant to which Graphjet Technology issued
On May 22, 2025, the Company issued anadditional
On June 4, 2025, the Company received a determinationletter (the “Determination”) from Nasdaq advising the Company that Nasdaq had determined that the Company had not provideda definitive plan evidencing its ability to achieve compliance with the “Listing Rule” before July 15, 2025. The Determinationstated that, as a result, (i) the Company’s request for continued listing on Nasdaq was denied,(ii) the trading of the Company’sClass A Ordinary Shares would be suspended at the opening of business on June 13, 2025 and (iii)a Form 25-NSE would be filed with theSecurities and Exchange Commission (the “SEC”),which will remove the Company’s securities from listing and registrationon Nasdaq.
On June 11, 2025, the Company submitted anappeal to Nasdaq requesting a hearing before the Panel pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series.The Company intended to present to the Panel its plan to regain and thereafter maintain compliance with the Listing Rule. The hearingrequest stayed the suspension of the Company’s securities and the filing of the Form 25-NSE for a period of 15 daysfrom the date of the request. In connection with the hearing request, the Company also requested a stay of the suspension pending thehearing. The Company submitted the payment of a hearing fee in the amount of $
On June 12, 2025, the Company received aletter that the Staff’s determination has been stayed, pending a final written decision by the Panel. The hearing would be heldon July 17, 2025. Thus, the Company’s Class A Ordinary Shares continued to trade at least until the Company receives thewritten response to hearing.
On June 18, 2025, the Company received awritten notice from Nasdaq indicating that the Company no longer complied with Nasdaq Listing Rule 5450(a)(1) (“Rule 5450(a)(1)”)requiring that listed securities maintain a minimum bid price of $
On June 26, 2025, the Company purchased new equipmentat a total value of approximately $
On July 17, 2025, Chris Lai, the Company’sCEO/CFO attended the hearing with the Nadsaq Hearing Panel (the “Hearing Panel”) and, together with the Company’s attorney,presented the Company’s case to the Hearing Panel. During the hearing, Chris Lai made a commitment to the Hearing Panel that theCompany’s Forms 10Q for the three months ended December 31, 2024, March 31, 2025, and June 30, 2025 would be filed by the middleof September 2025.
On July 25, 2025, the Company received a decision letter from the Nasdaq Hearings Panel granting the Company’s request to continueits listing on The Nasdaq Stock. The decision is conditioned on the Company (i) demonstrating compliance with Nasdaq Listing Rule 5450(a)(1)(the “Bid Price Rule”) on or before August 29, 2025, (ii) demonstrating compliance with Nasdaq Listing Rule 5450(c)(1) (the“Periodic Filing Rule”) on or before September 15, 2025, and (iii) providing the Panel with an update regarding the Company’sfundraising plans on or before September 30, 2025.
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Item 2. Management’s Discussionand Analysis of Financial Condition and Results of Operations
References in this report (the “QuarterlyReport”) to “we,” “us” or the “Company” refer to Graphjet Technology. References to our “management”or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’sfinancial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements,which have been prepared in accordance with GAAP, and the related notes thereto contained elsewhere in this Quarterly Report. Certaininformation contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-lookingstatements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section21E of the Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts and involve risks and uncertaintiesthat could cause actual results to differ materially from those expected and projected. All statements, other than statements of historicalfact included in this Quarterly Report including, without limitation, statements under “Management’s Discussion and Analysisof Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plansand objectives of management for future operations, are forward-looking statements. When used in this Quarterly Report, words such as“expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek”and variations and similar words and expressions, as they relate to us or the Company’s management, identify forward-looking statements.Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently availableto the Company’s management. A number of factors could cause actual events, performance or results to differ materially from theevents, performance and results discussed in the forward-looking statements. For information identifying important factors that couldcause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors sectionof the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on July15, 2025. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Exceptas expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-lookingstatements whether as a result of new information, future events or otherwise.
Overview
Graphjet Technology (the “Company”,“Graphjet”, “we,” “us” or “our”), is a former blank check company incorporated under thelaws of the Cayman Islands on August 6, 2021 under the name Energem Corp., (“Energem”), and formed for the purpose of enteringinto a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination withone or more businesses.
Business Combination
On November 18, 2021, we consummated an initialpublic offering (“IPO”). On March 14, 2024 (the “Closing Date”), we consummated a series of transactions thatresulted in the combination (the “Merger”) with Graphjet Technology Sdn. Bhd., a Malaysian private limited company (“Graphjet”),pursuant to a share purchase agreement, dated as of August 1, 2022 (the “SPA”) by and among Energem, Graphjet, Swee Guan Hoo,solely in his capacity as the representative for the shareholders of Energem after the closing of the sale and purchase of the GraphjetPre-Transaction Shares (the “Closing”) for Energem’s shareholders (the “Purchaser Representative”), theindividuals listed on the signature page of the SPA under the heading “Selling Shareholders” (each, a “Selling Shareholder”and together, the “Selling Shareholders”), and Lee Ping Wei in his additional capacity as representative for the Selling Shareholders(the “Shareholder Representative”).
The Merger and other transactions contemplatedthereby (collectively, the “Business Combination”) closed on March 14, 2024 when pursuant to the SPA, Energem acquired allof the issued and outstanding shares Graphjet Pre-Transaction Shares from the Selling Shareholders and Graphjet became a wholly ownedsubsidiary of Energem. Pursuant to the SPA, Energem changed its name to “Graphjet Technology” and the business of the Companybecame the business of Graphjet.
The Business Combination was accounted for asa reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Energem was treated as the acquired companyand Graphjet was treated as the acquirer for financial statement reporting purposes.
22
Organization and Nature of Business
The Company is the owner of the state-of-the-artpatented technology for the manufacture of high-quality graphene and graphite, critical raw materials utilized across various industriesincluding energy storage, electronics, aerospace and advanced manufacturing. For graphene, is an extraordinary material that has sparkeda global rush in industry. Graphjet Technology produces graphite, graphene and graphene-based anode battery material with over 98% similarityand greater consistent compared to other synthetic graphite and graphene which are produced from petroleum coke and coal. The breakthroughtechnology transforms a sustainable, abundant and renewable agricultural waste product, palm kernel shells into highly valuable artificialgraphene and graphite, significantly reducing carbon emissions in the process. For research and development in graphite and graphene applications,Graphjet Technology collaborates closely with prestigious institutions such as the National University of Malaysia (UKM) and UniversityTeknikal Malaysia Melaka (UTEM), which serve as the Company’s Technology Advisor Panel, providing expect insights and guidance intechnology advisory for the applications. Additionally, Graphjet’s strategic membership in the Industrial Liaison Program (ILP)at Massachusetts Institute of Technology (MIT) underscores its commitment to continuous innovation and cutting-edge research partnership.
Positioning itself as a leader in cost efficiency,Graphjet aims to be the foremost low-cost producer of premium artificial graphite and graphene. The Company holds a patent for its proprietarybio-mass conversion process and graphite production method, and its graphene manufacturing technique. This unique capability positionsGraphjet as the sole producer capable of mass-scale production of graphite and graphene using sustainable biomass sources, setting itapart from competitor worldwide.
Since Graphjet Technology uses a widely availablewaste product as their source, they are able to produce a higher quality product at a significantly lower cost than other graphite andgraphene production methods currently in use worldwide.
Leveraging this innovation approach, GraphjetTechnology aims to produce superior products at a significantly reduced cost compared to conventional graphite and graphene productionmethods that rely on non-renewable sources. This competitive advantage ensures the company’s products not only meet but exceed industrystandards for quality and sustainability.
As for now, Graphjet Technology has not commencedcommercial sales, but plans to strategically sample its products to leading multinational companies to gain market acceptance and facilitateprocurement. The Company’s ultimate goal is to displace high-cost suppliers with its competitively priced, eco-friendly alternatives.To date, the Company has funded its operations primarily with proceeds through equity investments provided by its current shareholders.
In July 2023, the Company secured a productionfacility in Kampung Baru Subang, Selangor State, Central Malaysia,. Machinery commissioning was completed and production was started.The Company has generated revenue since June 2025.
Key Factors Affecting Operating Results
The Company believes the key factors affectingthe financial condition and results of operations include the following:
Intellectual Properties
Graphjet Technology acquired a palm-based syntheticgraphite and the preparation method thereof with the application no. PI2021002802, a palm-based synthetic graphite and the preparationmethod thereof with the application no. CN111892048A and a preparation system of palm-based synthetic graphite with the application no.CN111675214A and all the intellectual property rights attached thereto. The Company also purchased the process for producing palm-basedgraphene. The Company currently owns all of the intellectual property rights to its technology and manufacturing process and the Company’stechnology is not subject to any ownership, intellectual property, or other rights of any parties other than Graphjet Technology.
23
The Company’s innovative technology offersa strong alternative option in the artificial graphite market. Traditionally, artificial graphite is preferred by the technology industrydue to its superior quality over mineral graphite. Conventional artificial graphite usually sourced from coal or petroleum coke, whichis a byproduct in its respective industry. Therefore, conventional artificial graphite may be limited by shortages or supply chain issuesrelated to coal and petroleum coke. At this time, there are no similar supply chain issues that would affect Graphjet Technology’saccess to palm kernel shells used to produce its version of artificial graphite.
The Company’s success hinges on sourcing,maintaining, and enforcing strong intellectual property protections for its technology and methodologies. Should we fail to achieve comprehensiveprotection, others could potentially duplicate and commercialize similar technologies, undermining our competitive advantages and hinderingour ability to successfully market our innovations or strategic.
Graphite Pricing
Graphite prices have receded with the ban of Chinagraphite since December 1, 2023. Our business, financial condition and operating results could be materially and adversely affected tothe extent prices for graphite continue to decline in future.
Supply of Palm Kernel Shells
Palm kernel shells are the critical raw materialfor our graphite production. Since initiating the merger exercise in August 2022, we have witnessed a surge in palm kernel shell pricesdriven by heightened demand, adversely impacting our operational performance due to increased raw material cost.
Customer and Border Control Issues between Malaysia and China
The recent border control measures implementedby Malaysia and China have disrupted critical raw material supply chains. These restrictions have impacted our ability to transport andtrade graphite efficiently, resulting in delays to qualification timelines, production schedule and timelines and overall costs escalations.
US-China Trade War and China Banning Export of Graphite and Grapheneand its related machineries
The ongoing trade tensions between the US andChina continue to reshape global economic landscapes, with critical implications for strategic materials. Graphite, being a critical rawmaterial, sourcing for its machineries amidst trade war is not immune to these effects. In response, we are proactively diversifying oursourcing strategy to mitigate risks associated with this trade war. China’s restriction on graphite exports, coupled with the EU’sregulations limiting the use of graphite and graphene due to environmental concerns, underscore the need for strategic adaptation. Whilethe potential of these materials remains significant, we are committed to balancing their advantages with sustainable and responsiblepractices.
Conflicts and Geopolitical Positions
The complex geopolitical landscape, particularlythe ongoing conflicts, further escalation of the war, as well as further escalation of tensions between various countries could resultin a global economic slowdown and long-term changes to global trade, which continues affects global supply chains and trade dynamics.As a result, the Company’s ability to procure raw materials at the desired price may be affected. Furthermore, the Company’sability to raise equity and debt financing may be impacted by these events, including as a result of increased market volatility, or decreasedmarket liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of these events onthe world economy and the specific impact on the Company’s financial position, results of operations and its cash flows are notyet determinable. We remain acutely aware of these developments and prepared to pivot out strategic to mitigate their impact on our operation.
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Impact of China’s Export Ban on Graphite
China’s ban on graphite exports has significantimpact on the global supply chain. Graphite, a critical raw material in anode materials and battery production, has seen supply constraintsthat have led to production slowdowns across the electric vehicle (EV) industry. While we are actively exploring alternative sourcingchannels to maintain our supply, we acknowledge the widespread challenges posed by the reduced global graphite demand. Our resolve tonavigate these disruptions remains steadfast, as we continuously adapt to evolving market conditions to support sustainable growth andresilience.
Price Reduction and Market Slow Down of Critical Minerals
The reduction in the price of critical mineralshas implications market slowdown, posing significant challenges for industry growth and revenue stability. As responsible stewards ofmarket expansions and resilience, we are closely monitoring these pricing and market dynamics. We are committed to recalibrating our financialforecasts and operational strategies to ensure sustainable business practices and competitiveness. We value the trust of our stakeholdersas we navigate these adjustments to align with market realities.
Competition
The competitive landscape in the graphene andgraphite industry is driven by several factors, including market acceptance, material differentiation and quality, delivery reliabilityand customer service. The competition is expected to remain fierce, based primarily on price, performance and cost effectiveness, customerservice and product innovation. Competition could prevent implementation of price increases, require price reductions or require increasedspending on research and development, marketing and sales that could adversely affect us. Market shifts, such as changing customer preferencesand advancements technology, could directly affected our ability to remain competitive and sustain profitability. Failure to achieve anticipatedsales volumes and customers adoption rates could have a detrimental impact on Graphjet Technology’s business, financial health,operating results and future prospects.
Regulatory Environment
The graphene and graphite industry are governedby laws, which continue to evolve and change over time. The costs and resources necessary to comply with these laws are significant. Ourprofitability depends in part upon our ability, and that of our affiliated providers and independent contractors, to operate in compliancewith applicable laws and to maintain all applicable licenses. To the extent any of our employees or third-party contractors engages inany misconduct or activity in violation of an applicable law, we may be subject to increased liability under the law or increased governmentscrutiny. If any such action is instituted against us, and we are not successful in defending ourselves or asserting our rights, suchaction could have a significant impact on our business, including the imposition of significant fines or other sanctions. Complying withany new legislation and regulations could be time-intensive and expensive, resulting in a material adverse effect on our business, prospects,financial condition and/or results of operations.
Business Development and Marketing
Our commitment to excellence extends well beyondproduction. We recognize that robust business development and effective marketing strategies are fundamental for sustained success. Toensure our position in the competitive market, we are dedicating ample resources to enhance our business developing various strategiesto better reach our customers with new marketing tools. The focus of our business development is the development of quality products thatis able to meet the demand of our customers, building trust with customers and foster long term business relationship with our customers.
Qualification Process Duration
The qualification process for our products byprospective customers is a rigorous and necessary step, in line with industry standards. Industry standards dictate that this processgenerally spans 12 to 18 months, involves comprehensive testing, stringent quality assurance protocols, and detailed compliance checks.Our commitment during this period is to uphold the highest standards of performance and reliability in our product to our customers. Whilethe timeline may seem extended, it represents a strategic investment in ensuring that our offerings consistently meet or exceed industryexpectations.
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Political and Regulatory Risks for Green Energy Policies
Graphjet may face significant uncertainty stemmingfrom changing political landscapes and shifting green energy policies. Lawmakers’ shifting position on supporting green energy initiativemake it difficult for company to project revenues and make investment decision confidently. This inconsistent support affects innovationand the adoption of sustainable materials like graphite and graphene. In addition, the lack of a consistent approach to subsidies andincentives poses a considerable challenge. Company may face reduced funding and stalled research and development efforts, limiting theirability to stay competitive and innovate. Election cycles and new government leadership can result in abrupt changes in policy, impactingstrategic plans and long-term investments. Companies must continuously adapt to these policy shifts, which can be resource-intensive anddisrupt operation.
Environmental Compliance and Regulation
Strict and evolving environment regulations arenecessary for sustainability but add complexity to operations. Company must invest significantly in eco-friendly technologies and productionmethods to comply, which can increase operating costs and lengthen production cycles. Failure to comply can lead to penalties, legal challengesand reputational damage. The financial burden of compliance diverts funds from other growth-oriented activities, putting smaller companiesat risk of failing behind larger competitors with more resources.
Geopolitical Tensions and Policy Shifts
Geopolitical tensions, such as presidential electionsand policy shifts, affect trade relations, market access, and the availability of key raw materials. The uncertainty surrounding theseevents can cause delays in corporate decision-making, hinder expansion plans, and affect operational efficiency. Graphjet Technology mayexperience disrupted supply chains, unpredictable regulatory changes, and an inability to plan for long term growth, impacting profitabilityand stability.
Export and Import Regulations
Stringent import and export regulations in keymarkets such as Malaysia and US pose significant operational challenges. Company needs to navigate complex customs procedures and adaptto frequent policy changes that can delay shipments and increase costs. Political tensions further complicate this, leading to uncertaintyin international trade. Regulatory barriers can lead to delays in product delivery, increased logistical expenses, and missed businessopportunities.
Semiconductor Industry Challenge
The slowdown in the semiconductor industry, highlightedby Intel’s financial struggles, has a domino effect on industries reliant on high-tech components. Graphjet, which supplies criticalmaterials for chip production, may face reduced demand and disrupted partnership. The heavy reliance of Nvidia and AMD on TSMC, alongsideChina’s influence over Taiwan, creates additional risks. Graphjet Technology may find it harder to secure contracts and partnershipswithin the semiconductor sector, leading to decreased revenue streams and limited market reach.
Impact of Raw Material Shortages on Industry Leaders
Major players such as Posco and Samsung SDI havescaled back operation due to raw material shortages and political uncertainties. This reflects broader market challenges that we faced,including securing a steady supply chain and maintaining production levels. Reduced availability of raw materials drives up cost and forcesproduction cuts, which could weaken company’s market position and profitability.
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Market Pricing and Global Control
China’s dominance over raw materials supplychains continues to influence global market pricing. This control not only adds prices volatility but also creates uncertainty aroundsupply continuity. Graphjet may find it difficult to compete on cost and scale, impacting their bottom line. High dependency on a single,dominant supplier exposes companies to price fluctuations and potential shortages, threatening their ability to meet contractual obligationand remain competitive.
Access to Market and Strategic Partnership
Developing direct relationships with EV batterymanufacturers is essential for growth, yet remain challenging due to competitive pressures, regional economic uncertainties and frequentmanagement changes driven by financial pressures. Graphjet aims to bridge this gap by ensuring a reliable supply of essential materialsto these manufacturers. Despite this, barriers without strategic support and government cooperation make it difficult to access thesekey contacts and establish long-term partnership. This inability to secure partnerships limits market penetration, slow revenue growth,and hinders Graphjet’s ability to showcase its capacity to supply high quality materials, thus impacting overall market growth andresilience.
Government Disruptions and Ceased Operations
Raw materials shortages and supply chain disruptionshave led some industry leaders to reduce or cease operations. The lack of cohesive government support exacerbates these issues, makingit challenging for company to sustain the operation and meet market demand. Company may risk reduced output, lost revenues, and potentialclosure, underscoring the need for a diversified supply chain and strategic support from both industry and government.
Operational Disruptions and Ceased Operations
The industry has witness significant operationalhalts, with major players such as LG and GM ceasing certain operations due to persistent raw materials shortages. This highlights thefragility of current supply chains and the pressing need for robust, diversified sourcing strategies. Graphjet is well-positioned to supportthese industries by providing alternative sources that can bridge these supply chain gaps. However, without sufficient government backing,it becomes challenging to form strategic alliances with major manufacturers like GM and LG to secure consistent materials flow and ensurestability in the markets.
Supply Chain Disruptions and Strategic Support Challenges
Global supply chain vulnerabilities can significantlydisrupt the availability of raw materials essential for graphite and graphene production. Factor such as natural disasters, geopoliticaltensions, and pandemic can create instability in supply chains. Additionally, the challenge of developing effective supply chain strategiesand partnership adds complexity. Without strategic support from suppliers and stakeholders, Graphjet may struggle to secure reliable sourcesfor critical materials. Disruptions in the supply chain can lead to production delays, increased operational costs, and potential revenueloss. If key materials become unavailable, Graphjet may be unable to meet customer demand, leading to damaged relationship and reducedmarket share. Additionally, the inability to establish robust supply chain partnerships could hinder Graphjet’s operational efficiencyand long-term growth, ultimately impacting stakeholder confidence and overall financial performance.
Investor Sentiment and Market Stability
Political uncertainty during election periodscan lead to fluctuations in investor confidence and market stability. A deadline in investor sentiment may result in reduced capital abilityto fund growth initiatives and research. Market volatility could also impact stock prices, making it challenging to raise funds throughequity financing.
Regulatory Compliance Burdens
New political leadership can lead to the introductionof additional regulations that require compliance. Increased regulatory burdens could result in higher operational costs and divert resourcesfrom core business activities to compliance-related functions. This can strain financial resources and impact profitability.
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International Investments and Compliance
The SEC’ global cooperation stance underGensler could be altered, affecting international agreement and compliance protocols, impacting how Graphjet interacts with global marketsand U.S based investors.
Specific Policy Areas
The directions of policies around ESG (Environmental,Social, and Governance) disclosure requirements and oversight on innovative technologies may change, influencing how Graphjet and similarcompanies navigate these evolving regulatory expectations.
Shift in Enforcement Priorities
A new SEC chair may shift focus away from Gensler’semphasis on transparency and investor protection, potentially leading to lighter regulatory burdens or heightened scrutiny, dependingon the new leadership’s priorities.
Increased Global Supply and Price Volatility
A removal of export restrictions could flood theglobal market with cheaper Chinese graphite and graphene, leading to price volatility. Companie like Graphjet could face margin pressuresdue to increased competitions and potential price war, particularly in market where they rely on high value or premium materials.
Market Saturation
With China being one of the largest producersof graphite and graphene, lifting export restrictions could lead to market oversupply, driving down prices and potentially reducing thedemand for alternative suppliers, affecting the sales and market positioning of companies.
Business Continuity Risk
Without cross-functional backups or a successionplan, the company could face significant challenges in maintaining operational continuity, potentially impacting customer satisfactionand company performance. The lack of a contingency plan may led to halted operations, revenue loss, or reduced market confidence duringtransitions.
Technology Transfer and Training Gaps
A lack of knowledge transfer leads to skill gaps,inefficiencies, and increased reliance on external consultants. The absence of structured training processes for employees on the company’stechnology creates a reliance on the China Technician and increases risks during transitions or expansions.
Management Opportunities
Sustainability Practices
Enhancing the company’s ESG profile by adoptinggreen manufacturing methods and contributing to sustainable innovations. Company’ commitments to excellence in environmental, qualityand health & safety management, driving operational, financial, and reputational gains that aligns with global best practices. InMalaysia, approximately 5 million tons of palm kernel shells (PKS) annually, but we only utilized a small fraction of that amount. Increasingthe usage of palm kernel shells in producing graphene and graphite could significantly help reduce waste in Malaysia. Graphjet’saward-winning proprietary manufacturing technology achieved up to an 83% reduction in carbon footprint and up to an 80% reduction in productioncosts, setting a new benchmark for sustainability and efficiency in the industry.
Leadership in Graphene and Graphite Production
The Company is uniquely positioned to become aglobal leader in the production of high-quality graphene and graphite materials. With its state-of -the-art manufacturing processes, thecompany is poised to meet the increasing demand for these materials, which are integral to advanced technology sectors.
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Diverse Market Applications
The Company’s products are essential fornumerous high-growth industries, including biomedical advancements such as medical sensors and drug delivery system, automotive innovationslike electric vehicle batteries and lightweight composites, semiconductor and sensor technologies critical for modern digital devices,and energy storage solutions, particularly in batteries for renewable energy systems. This wide range of applications ensures the company’srelevance across multiple billion-dollar markets.
Cost and Quality Advantage
The Company’s patented production technologyand its use of low- cost raw materials, such as palm kernel shells, give it a significant edge over traditional suppliers. The Companycan offer graphene and graphite at a lower production cost while maintaining higher quality standards, enhancing its higher quality standards,enhancing its competitiveness in the market.
Experienced Leadership Driving Sustainability
The Company’s experienced management teambrings a proven track record in clean and sustainable manufacturing. Their dedication to using renewable waste materials reflects a strongcommitment to environmental stewardship, positioning the company as a responsible leader in the graphene and graphite sector. This expertisealso ensures operational excellence and drives investor confidence.
Components of Results of Operations
Results of Operations
The following information includes, in GraphjetTechnology’s opinion, all adjustments necessary to state fairly its consolidated resultsof operations for the three months ended December 31, 2024 and 2023. This data should be read in conjunction with Graphjet Technology’sunaudited condensed consolidated financial statements and notes thereto.
Comparison for the three months ended December 31, 2024 and 2023
| For the Three Months Ended December 31, | Changes | |||||||||||||||
| 2024 | 2023 | Amount | % | |||||||||||||
| USD | USD | USD | ||||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | (652,058 | ) | (225,410 | ) | (426,648 | ) | 189.3 | % | ||||||||
| Loss from operations | (652,058 | ) | (225,410 | ) | (426,648 | ) | 189.3 | % | ||||||||
| Other expenses, net | (37,097 | ) | (179,719 | ) | 142,622 | (79.4 | )% | |||||||||
| Net loss | (689,155 | ) | (405,129 | ) | (284,026 | ) | 70.1 | % | ||||||||
Operating Expenses
Operating expenses included only general and administrativeexpenses in the three months ended December 31, 2024 and 2023 as we had no sales or selling expenses.
General and administrative expenses consist ofa range of critical business activities, including staff cost, marketing initiatives, audit fees, consulting and legal fees. Additionally,these expenses cover the depreciation of property and equipment. This diverse allocation reflects our commitment to maintaining robustoperations, supporting strategic business functions, and ensuring compliance and transparency across all facets of our organization.
General and administrative expenses increasedby approximately $0.4 million, or 189.3%, from approximately $0.2 million for the three months ended December 31, 2023, to approximately$0.6 million for the year ended December 31, 2024. The increase was primarily driven by an increase in staff costs of approximately $0.2million due to headcount increased, an increase in professional fees of approximately $0.1 million related to business development asa public entity, and an increase in advertising and marketing expenses of approximately $49,000. Subsequently, in 2025, as part of theeffort to rationalize our business operations, we had undertaken an internal restructuring exercise which includes the right-sizing ofemployees which led to a reduction in our operation costs.
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Other Expenses, net
Other expenses mainly include loan interest andthe amortization of imputed interest of compensation payable to a shareholder of approximately $37,000 and approximately $0.2 millionfor the three months ended December 31, 2024 and 2023, respectively.
Net Loss
Net loss increased by approximately $0.3 million,or 70.1%, from approximately $0.4 million for the three months ended December 31, 2023, to approximately $0.7 million for the three monthsended December 31, 2024. Such change was mainly due to the reasons discussed above.
Liquidity and Capital Resources
We currently finance our internal operations primarilywith self-funding. Our fundamental principles are to build and maintain a financial base for the purpose of maintaining soundness andefficiency of operations and achieving sustainable growth. Our liquidity requirements are primarily to fund our business operations, includingcapital expenditures and working capital requirements. Our primary sources of liquidity are additional capital investment and debt.
The source, timing and availability of any futurefinancing will depend principally upon market conditions, and, more specifically, on the market acceptance of our products. Funding maynot be available when needed, at all, or on terms acceptable to us. Lack of necessary funds may require us to, among other things, delay,scale back or eliminate expenses including some or all of our planned development, including the production of plant.
Through December 31, 2024, we have incurred cumulativelosses from operations, negative cash flows from operating activities, and have an accumulated deficit of $26.5 million. We are a pre-revenueorganization possess patented technologies and in production testing phase of operation at the factory located at Kampung Baru Subangdistrict of Selangor State in Central Malaysia. While management expects that the proceeds from fundraising from new external shareholdersand the net impact of the Business Combination along with our cash balances held prior to the Closing Date will be sufficient to fundour current operating plan for next 12 months from the date these consolidated financial statements were available to be issued, thereis significant uncertainty around our ability to meet the going concern assumption beyond that period without raising additional capital.
Our short-term liquidity requirements are primarilylinked to the business operations, including payments for operating costs, production costs, staffing expenses and marketing expenses.Our long-term liquidity requirements are primarily linked to the expenses incurred in connection with our contract manufacturing facilityand the construction of our manufacturing facility. We successfully completed the Business Combination on March 14, 2024, and receivedthe $2,500,000 PIPE Investment pursuant to the PIPE Investment Purchase Agreement. On November 1, 2024, we successfully completed a fundraisingexercise amounting to approximately $1.4 million (MYR 6 million) gross proceeds from new external shareholders. On April 30, 2025, wesigned debt settlement agreements with our director and shareholder to settle the debts with them. We believe we will have sufficientworking capital for the next 12 months. If additional funds are required to support our working capital requirements, construction plans,and other purposes, we may seek to raise additional funds through equity and debt financing or from other sources. If we raise additionalfunds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictionson our business that could impair our operating flexibility and would also require us to incur interest expense. If we raise additionalfunds through the issuance of equity, the percentage ownership of our equity holders could be diluted. We can provide no assurance thatadditional financing will be available at all or, if available, that we would be able to obtain additional financing on terms favorableto us.
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The following tables set forth a summary of ourkey components of cash flows for the three months ended December 31, 2024 and 2023.
| For the Three Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| USD | USD | |||||||
| Net cash used in operating activities | $ | (800,690 | ) | $ | (1,081,308 | ) | ||
| Net cash used in investing activities | (9,333 | ) | (4,056 | ) | ||||
| Net cash provided by financing activities | 1,088,812 | 1,139,493 | ||||||
| Effect of exchange rate changes | (30,777 | ) | 1,329 | |||||
| Net change in cash | 248,012 | 55,458 | ||||||
| Cash, beginning of period | 348,655 | 1,430 | ||||||
| Cash, end of period | $ | 596,667 | $ | 56,888 | ||||
Operating activities
Net cash used in operating activities for thethree months ended December 31, 2024 was approximately $0.8 million and was primarily attributable to a net loss of approximately $0.7million with non-cash expenses of approximately $42,000. Cash outflowwas also attributable to the increase in inventories of approximately $69,000, and the decrease in other payables and accrued expensesof approximately $0.1 million.
Net cash used in operating activities for thethree months ended December 31, 2023 was approximately $1.1 million and was primarily attributable to net loss of approximately $0.4 millionwith non-cash expenses of approximately $0.2 million. Cash outflow wasalso attributable to the increase in prepaid expenses of approximately $0.8 million which was mainly due to the prepayments for purchaseof machinery, and the decrease in other payables and accrued expenses of approximately $61,000.
Investing activities
Net cash used in investing activities for thethree months ended December 31, 2024 was approximately $9,000, which was due to purchases of fixed assets and intangible assets.
Net cash used in investing activities for thethree months ended December 31, 2023 was approximately $4,000, which was due to purchase of fixed assets.
Financing activities
Net cash provided by financing activitiesfor the three months ended December 31, 2024 was approximately $1.1 million which consisted of proceeds from issuance of ordinary sharesof approximately $1.0 million, and proceeds from short-term loans related-party of approximately $0.1 million.
Net cash provided by financing activitiesfor the three months ended December 31, 2023 was approximately $1.1 million, which consisted of proceeds from long-term loans related-partyof approximately $1.2 million. The cash provided by financing activities was partially offset by the payments of deferred merger costsof approximately $0.1 million.
Off-Balance Sheet Arrangements
As of December31, 2024, we did not have any off-balance sheet arrangements,including arrangements that would affect our liquidity, capital resources, market risk support, and credit risk support, or otherbenefits.
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Critical Accounting Estimates
This management’s discussion and analysisof our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which havebeen prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). The preparation ofthese unaudited condensed consolidated financial statements and accompanying notes requires us to make estimates and judgements that affectthe reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. On an ongoingbasis, we evaluate our estimates and judgements, including those related to fair value of financial instruments and accrued expenses.We base our estimates on historical experience, known trends and events and various other factors that we believed to be reasonable underthe circumstances, the results of which form the basis for making judgements about the carrying values of assets and liabilities thatare not readily apparent from other sources. We have identified certain accounting estimates that are critical to the preparation of financialstatements. Certain accounting estimates are particularly sensitive because of their significance to financial statements and becauseof the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believethat the critical accounting estimates, assumptions, and judgments that have the most significant impact on our consolidated financialstatements are described below.
Impairment for long-lived assets
Long-lived assets, including property and equipmentand intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significantadverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may notbe recoverable. We assess the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generateand recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceedsexpected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, we wouldreduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate,to comparable market values.
These estimates and assumptions can include, butare not limited to, the cash flows that an asset is expected to generate in the future and the estimated useful lives. Changes in theseassumptions could affect the carrying value of these assets. Our estimates of fair value are based upon assumptions believed to be reasonable,but which are inherently uncertain and, as a result, actual results may differ from estimates.
Item 4. Controls and Procedures
Under the supervision and with the participationof our management, including our Chief Executive Officer and our Chief Financial Officer (together, the “Certifying Officers”),we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined inRules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controlsand procedures were not effective as of the end of the period covered by this Report.
Disclosure controls and procedures are controlsand other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the ExchangeAct is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controlsand procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in ourreports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, orpersons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
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Management’s Report on Internal Controlsover Financial Reporting
As required by SEC rules and regulations implementingSection 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financialreporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with GAAP. Our internalcontrol over financial reporting includes those policies and procedures that:
| (1) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactionsand dispositions of the assets of our company, |
| (2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidatedfinancial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizationsof our management and directors, and |
| (3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, useor disposition of our assets that could have a material effect on the consolidated financial statements |
Because of its inherent limitations, internalcontrol over financial reporting may not prevent or detect errors or misstatements in our consolidated financial statements. Also, projectionsof any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes inconditions, or that the degree or compliance with the policies or procedures may deteriorate. Management assessed the effectiveness ofour internal control over financial reporting as of September 30, 2024. In making these assessments, management used the criteria setforth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013).Based on our assessments and those criteria has determined that material weaknesses existed whereby the Company lacked lacks comprehensivewritten policies and procedures related to accounting, IT operations, financial reporting, and record keeping; due to limited personnel,there is insufficient segregation of duties within accounting processes and inadequate US GAAP expertise, increasing the risk of controlweaknesses; and as a result of inadequate inherent controls, the Company’s internal control over financial reporting may fail toprevent or detect errors or material misstatements in its consolidated financial statements. In addition, the management has assessedthat there was a significant deficiency in the Company’s internal controls whereby the company does not have written policy formonitoring of control activities by management which led to inconsistencies in monitoring practices and insufficiency of entity levelcontrols, making it difficult to identify emerging risks, detect control deficiencies, and take corrective actions in a timely manner.
Management intends to implement remediation stepsto improve our internal controls including to hire an external internal control reviewer to review our internal controls to strengthenand document the internal control policies and procedures of the Company. We also to further improve this process by enhancing thesize and composition of our board upon the closing of the business and to identify third-party professionals with whom to consult regardingcomplex accounting applications and consideration of additional staff with the requisite experience and training to supplement existingaccounting professionals and implemented additional layers of reviews in the financial close process.
This Quarterly Report on Form 10-Q does not includean attestation report of our independent registered public accounting firm due to our status as an emerging growth company under the JOBSAct.
Changes in Internal Control over FinancialReporting
There were no changes in our internal controlover financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscalquarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in legalproceedings relating to claims arising from the ordinary course of business. Our management believes that there are currently no claimsor actions pending against us, the ultimate disposition of which could have a material adverse effect on our results of operations, financialcondition or cash flows.
Item 1A. Risk Factors
Factors that could cause our actual results todiffer materially from those in this Quarterly Report are any of the risks described in our Annual Report on Form 10-K filed with theSEC on July 15, 2025 (the “Annual Report”). Any of these factors could result in a significant or material adverse effecton our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterialmay also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes tothe risk factors disclosed in our Annual Report filed with the SEC.
Item 2. Unregistered Sales of Equity Securitiesand Use of Proceeds
| (a) | On May 15, 2025, Graphjet Technology and Aiden Lee Ping Wei entered into a Warrant Subscription Agreement,pursuant to which Graphjet Technology issued 20,000,000 warrants to purchase up to 200,000,000 of the Company’s Class A ordinaryshares, at an exercise price of $0.055 to Aiden Lee Ping Wei. |
| (b) | As of September 30, 2024, we did not have any securities authorized for issuance under equity compensationplans. On February 28, 2024, in connection with the Transactions, our shareholders approved the Graphjet Technology 2023 Omnibus EquityIncentive Plan (the “2023 Equity Incentive Plan”). We have reserved a total of 14,903,075 Class A ordinary shares for issuancepursuant to the 2023 Equity Incentive Plan. |
| (c) | None. |
Item 3. Defaults Upon Senior Securities
[None.]
Item 4. Mine Safety Disclosures
[Not Applicable.]
Item 5.
| (a) | None. |
| (b) | None. |
| (c) | None. |
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Item 6. Exhibits
The following exhibits are filed as part of, orincorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed with this Report. |
| ** | Furnished with this Report. |
| + | Indicates a management or compensatory plan. |
| † | Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Registration S-K. The Registrant hereby agrees to furnish a copy of any omitted schedules to the SEC upon request. |
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SIGNATURES
Pursuant to the requirements of Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Graphjet Technology | ||
| Date: August 5, 2025 | /s/ Chris Lai | |
| Name: | Chris Lai Ther Wei | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer and Principal Financial and Accounting Officer) | ||
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Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIESEXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEYACT OF 2002
I, Chris Lai Ther Wei, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Graphjet Technology for the period ended December 31, 2024; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 5, 2025 | By: | /s/ Chris Lai Ther Wei |
| Chris Lai Ther Wei | ||
| Chief Executive Officer, Chief Financial Officer and Director |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANTTO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the QuarterlyReport of Graphjet Technology (the “Company”) on Form 10-Q for the period ended December 31, 2024 as filed with the Securitiesand Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuantto Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents,in all material respects, the financial condition and result of operations of the Company. |
| Date: August 5, 2025 | By: | /s/ Chris Lai Ther Wei |
| Chris Lai Ther Wei | ||
| Chief Executive Officer, Chief Financial Officer and Director |