GTIJF 10-Q
Graphjet Technology (GTIJF)
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, including area code)
(Former name, former address and former fiscal year, 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 | ||
| The |
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 requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405
of 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 registrant is 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 check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). No
As of September 5, 2025 there were
TABLE OF CONTENTS
i
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GRAPHJET TECHNOLOGY
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | September 30, | |||||||
| 2025 | 2024 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Advance in purchase of machinery | ||||||||
| Prepaid expenses | ||||||||
| Deposits | ||||||||
| Other receivables | ||||||||
| Total Current Assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Operating right-of-use assets | ||||||||
| Total Non-current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES | ||||||||
| Loans from third parties | $ | $ | ||||||
| Loans from prior shareholders | ||||||||
| Payables to prior shareholders | ||||||||
| Compensation payable to a prior shareholder | ||||||||
| Other payables and accrued expenses | ||||||||
| Deferred underwriting commission payable | ||||||||
| Provision for bonus | ||||||||
| Loans from a shareholder | ||||||||
| Operating lease liabilities, current | ||||||||
| Total Current Liabilities | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Payables to a prior shareholder | ||||||||
| Compensation payable to a prior shareholder | ||||||||
| Total Non-current Liabilities | ||||||||
| Total Liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES (See Note 19) | ||||||||
| SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
| 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 of these unaudited condensed consolidated financial statements.
1
GRAPHJET TECHNOLOGY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| For the Three Months Ended June 30, | For the Nine Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| As Restated | As Restated | |||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross loss | ( | ) | ( | ) | ||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Share compensation expense | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Interest income (expense), net | ( | ) | ( | ) | ||||||||||||
| Other expenses, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other expenses, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before income tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||||||
| 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 of these unaudited condensed consolidated financial statements.
2
GRAPHJET TECHNOLOGY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN SHAREHOLDERS’ EQUITY
(DEFICIT)
Ordinary Share (Restated) | Additional paid-in Capital | Accumulated Deficit | Accumulated other comprehensive | |||||||||||||||||||||
| Shares* | Amount* | (Restated) | (Restated) | income (loss) | Total | |||||||||||||||||||
| BALANCE, September 30, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation | — | ( | ) | ( | ) | |||||||||||||||||||
| BALANCE, December 31, 2023 (unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Issuance of ordinary shares upon completion of reverse recapitalization | ( | ) | ( | ) | ||||||||||||||||||||
| Issuance of ordinary shares for PIPE investment | ||||||||||||||||||||||||
| Loan payment converted to shares | ||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation | — | ( | ) | ( | ) | |||||||||||||||||||
| BALANCE, March 31, 2024 (unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation | — | ( | ) | ( | ) | |||||||||||||||||||
| BALANCE, June 30, 2024 (unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| BALANCE, September 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Sales of ordinary shares | ||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation | — | |||||||||||||||||||||||
| BALANCE, December 31, 2024 (unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation | — | ( | ) | ( | ) | |||||||||||||||||||
| BALANCE, March 31, 2025 (unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Issuance of ordinary shares to underwriter | ||||||||||||||||||||||||
| Issuance of warrants | — | |||||||||||||||||||||||
| Additional ordinary shares of round-up adjustment due to share consolidation | ||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation | — | ( | ) | ( | ) | |||||||||||||||||||
| BALANCE, June 30, 2025 (unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
GRAPHJET TECHNOLOGY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Nine Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| (unaudited) | (unaudited) | |||||||
| As Restated | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization | ||||||||
| Depreciation | ||||||||
| Share compensation expense | ||||||||
| Amortization of operating lease right-of-use assets | ||||||||
| Loss from debt settlement | ||||||||
| Loss from disposal of intangible assets | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivables | ( | ) | ||||||
| Advance in purchase of machinery | ( | ) | ||||||
| Prepaid expenses | ||||||||
| Advance to a related company | ||||||||
| Inventories | ||||||||
| Deposits | ( | ) | ||||||
| Other receivables | ( | ) | ||||||
| Interests payable | ||||||||
| Other payables and accrued expenses | ||||||||
| Provision for bonus | ||||||||
| Operating lease liabilities | ( | ) | ||||||
| Payables to shareholders | ||||||||
| 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 | ||||||||
| Repayments to long-term debt - related party | ( | ) | ||||||
| Payments of deferred merger costs | ( | ) | ||||||
| Proceeds from the completion of reverse recapitalization | ||||||||
| Proceeds from PIPE investment | ||||||||
| 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 | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Issuance of ordinary share upon the reverse recapitalization | $ | $ | ||||||
| Reclassification of deferred merger costs to additional paid-in capital | $ | $ | ||||||
| Issuance of shares for the settlement of amount due to shareholders | $ | $ | ||||||
| Issuance of ordinary share for the settlement of the deferred underwriting commission payable | $ | $ | ||||||
| Issuance of warrants for the settlement of salary payable and share compensation expense to shareholder | $ | $ | ||||||
| Operating lease assets obtained in exchange for operating lease liabilities | $ | |||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
GRAPHJET TECHNOLOGY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED JUNE 30, 2025 AND 2024
(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 manufacture
of 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. The breakthrough technology transforms a sustainable, abundant and renewable agricultural waste product, palm kernel shells into highly valued artificial 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 Advisor Panel to provide technology advisory for the applications. The Company is a member of Industrial Liaison Program (ILP) of Massachusetts Institute of Technology (MIT).
The Company intends to be a low-cost producer of the highest quality artificial graphite and graphene. Graphjet has a patent on its bio-mass process and production method for graphite and a patent pending for graphene, and it believes it is the only producer currently capable of using biomass to produce graphite and graphene in mass production scale.
Since Graphjet Technology uses a widely available waste product as their source, they are able to produce a higher quality product at a significantly lower cost than other graphite and graphene production methods currently in use worldwide.
To date of this filing, Graphjet has not had any sales of its graphite and graphene products but plans to sample the products to multinational companies within the industry for market acceptance and procurement purposes, intending to replace current high-cost suppliers. Until now, the Company has funded its operations primarily with proceeds through equity investments from its current shareholders. Starting from June 2025, Graphjet has generated some revenues from selling its side products to fund its operations as well.
On August 25, 2025, the Company effected a share
capital reorganization of the Company’s outstanding ordinary shares, each Preferred share and Class B ordinary share was reclassified
into
On August 25, 2025, the Company effected a share
combination of the Company’s outstanding ordinary shares, par value $
Warrants and equity incentive plan, to purchase the Company’s ordinary shares were also proportionately adjusted in accordance with their terms to reflect the Share Combination.
All ordinary share amounts and per share numbers discussed herein have been retroactively adjusted for the Share Combination.
5
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 acquired all of the issued and outstanding Graphjet Pre-Transaction Shares from the Selling Shareholders and Graphjet became a wholly-owned subsidiary of Energem, (ii) Energem changed its name to Graphjet Technology, and (iii) each Selling Shareholder received a number of Energem Ordinary Shares subject to the Consideration Shares formula, which is the number of Energem Ordinary Shares equal to the aggregate Consideration Shares divided by the number of Graphjet Pre-Transaction Shares outstanding immediately prior to the Closing, multiplied by the number of Graphjet Pre-Transaction Shares held by such Selling Shareholder.
The Business Combination (see Note 4) was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Graphjet Technology was treated as the acquired company and Graphjet was treated as the acquirer for financial statement reporting purposes.
Pursuant to ASC 805-40 Reverse Acquisitions, for financial accounting and reporting purposes, Graphjet was deemed the accounting acquirer with Graphjet Technology being treated as the accounting 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 the Merger 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 were consolidated with Graphjet financial statements on the Closing Date. The number of Graphjet ordinary shares for all periods prior to the Closing Date have been retrospectively increased using the exchange ratio that was established in accordance with the Merger Agreement (the “Exchange Ratio”).
1.3 Acquisition of Subsidiary
In April 2024, the Company’s subsidiary,
Graphjet acquired
6
Note 2 – Going Concern and Liquidity
In assessing the Company’s ability to continue as a going concern, the Company monitors and analyses its cash on-hand and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses, and capital expenditure obligations.
The Company’s management has considered
whether 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’s operating 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. |
The Company can make no assurances that required financings will be available for the amounts needed, or on terms commercially acceptable to the Company, if at all. If one or all of these events does not occur or subsequent capital raises are insufficient to bridge financial and liquidity shortfall, there would likely be a 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 determined that the factors discussed above have raised substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty.
Note 3 – Summary of Significant Accounting Policies
Basis of presentation
The accompanying unaudited condensed consolidated financial 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 footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair statement of the financial position, operating results and cash flows for the periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year or any future interim period. The interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the years ended September 30, 2024 and 2023.
Principles of consolidation
The unaudited condensed consolidated financial statements include the financial 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 consolidated financial statements.
7
Use of estimates and assumptions
The preparation of unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting period and the accompanying notes, including allowance for expected credit losses, the useful lives of property and equipment, and impairment of long-lived assets.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term 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, assets and 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 translated at average rates prevailing during the period. Shareholders’ equity account is translated at historical exchange rate. Transaction gains and losses are recognized in the Company’s Unaudited Condensed Consolidated Statement of Operations and Comprehensive Loss based on the difference between the foreign exchange rates on the transaction date and on the reporting date. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income (loss) within the statements of shareholders’ equity. Cash flows are also translated at average translation rates for the periods; therefore, amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.
For Graphjet, Malaysian Ringgit (“RM”)
has been determined to be the functional currency.
| As of June 30, | As of September 30, | |||||||
| 2025 | 2024 | |||||||
| Period-end RM: US$1 exchange rate | ||||||||
| For the nine months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Period-average RM: US$1 exchange rate | ||||||||
Cash
Cash primarily consists of bank deposits, which are unrestricted as to withdrawal and use.
Accounts receivable, net
Accounts receivable includes trade accounts due from customers. Accounts receivables are recorded at the invoiced amount less an allowance for expected credit losses and do not bear interest. Accounts receivable usually are due after 7 to 60 days, depending on the credit term with its customers.
Management reviews the adequacy of the allowance for credit losses on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition and credit history to make adjustments in the allowance when it is considered necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company’s management continues to evaluate the reasonableness of the valuation allowance policy and update it if necessary. As of June 30, 2025, no allowance for credit losses of accounts receivable was recognized.
Inventories
Inventories are measured at the lower of cost and 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 June 30, 2025 and September 30, 2024,
the Company had $
8
Prepaid expenses
Prepaid expenses represent amounts advanced to suppliers 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 bearing and generally short-term in nature.
Other receivables
Other receivables primarily include receivables from employee advances and others. Management regularly reviews the aging of the accounts and changes in payment trends and records provision for credit losses when management believes collection of amounts due are at risk. Accounts considered uncollectable are written off against allowances after exhaustive efforts at collection are made. As of June 30, 2025 and September 30, 2024, the Company provided provision for credit losses, respectively.
Property and equipment, net
Property and equipment are stated at historical cost 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 related accumulated depreciation is removed from the accounts, and any difference between the selling price and net carrying amount is recorded as a gain or loss in the consolidated statements of operations and comprehensive loss. Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets.
Impairment for long-lived assets
Long-lived assets, including property and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus 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, when available and appropriate, to comparable market values. As of June 30, 2025 and September 30, 2024, impairment of long-lived assets was recognized.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own Common Stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of 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 equity accounting treatment.
Upon completion of the Business Combination, all of Graphjet’s outstanding public and private warrants (See Note 16) were replaced by the Company’s public and private warrants. The Company treated such warrants replacement as a warrant modification and no incremental fair value was recognized.
9
Fair value of financial instruments
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest 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. |
Revenue recognition
The Company follows the revenue accounting requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“Accounting Standards Codification (“ASC”) 606”). The core principle underlying the revenue recognition of this ASU allows the Company to recognize — revenue that represents the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange.
To achieve that core principle, the Company applies five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
The Company’s revenue is principally derived from sales of graphene and graphite products and related side products. Pursuant to the Company’s contracts with customers, the Company’s only performance obligation of the sales contract is the delivery of products to the customer, amounts charged per product is fixed and determinable. The Company recognized the product revenue when control of the products is passed to the customer, which is the point in time that the customers are able to direct the use of and obtain substantially all of the economic benefit of the goods. The transfer of control typically occurs at a point in time based on consideration of when the customer has an obligation to pay for the goods, and physical possession of, legal title to, and the risks and rewards of ownership of the goods has been transferred, and the customer has accepted the goods.
Cost of revenues
Cost of revenues mainly consists of cost to manufacture products, primarily includes the cost to purchase raw materials, direct labor, and other related costs that are attributable to production.
Operating Leases
Effective July 1, 2021, the Company adopted FASB ASU 2016-02, “Leases” (Topic 842), and elected the practical expedients that does not require us to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. The Company determines if a contract contains a lease at inception. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The right-of-use assets and related lease liabilities are recognized at the lease commencement date. The Company recognizes operating lease expenses for lease payments on a straight-line basis over the lease term.
10
Operating lease right-of-use of assets
The right-of-use of asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and less any lease incentive received.
Lease liabilities
Lease liability is initially measured at the present value of the outstanding lease payments at the commencement date, discounted using the Company’s incremental borrowing rate. The Company’s incremental borrowing rate is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. Lease payments included in the measurement of the lease liability comprise fixed lease payments.
Lease liability is measured at amortized cost using the effective interest rate method.
It is re-measured when there is a change in future lease payments, if there is a change in the estimate of the amount expected to be payable under a residual value guarantee, or if there is any change in the Company’s assessment of option purchases, contract extensions or termination options.
The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews there coverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and includes the associated operating lease payments in the undiscounted future pre-tax cash flows. For the three and nine months ended June 30, 2025, the Company did not recognize impairment loss on its ROU assets.
Income taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company’s management determined Cayman Islands, the United States and Malaysia are the Company’s only major tax jurisdictions. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were unrecognized tax benefits as of June 30, 2025 and September 30, 2024, and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position.
The Company is an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands. In Malaysia and Nevada US, current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years. Due to operating losses, the Company’s tax provision was for the nine months ended June 30, 2025 and 2024.
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 under GAAP 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.
11
Loss per share
The Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net loss per share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture. For the three and nine months ended June 30, 2025 and 2024, the calculation of diluted loss per share does not consider the effect of the warrants issued in connection with the Initial Public Offering and warrants issued as components of the Private Placement Units (the “Placement Warrants”) since the 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 and nine months ended June 30, 2025 and 2024, as a result, diluted loss 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 Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one 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, EGC can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” which expands annual and interim disclosure requirements for reportable segments. These requirements include: (i) disclosure of significant expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”); (ii) disclosure of an amount for other segment items (equal to the difference between segment revenue less segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss) by reportable segment and a description of their composition; (iii) annual disclosure of a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods; (iv) clarification that, if the CODM 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 and an explanation of how the CODM uses the reported measure(s) disclosure of segment profit or loss in assessing segment performance and deciding how to allocate resources; and (vi) requiring a public entity that has a single reportable segment provide all the disclosures required by the amendments in this ASU, and all existing segment disclosures in Topic 280. ASU 2023-07 is effective for the Company’s annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025. The Company adopted ASU 2023-07 in the year ended September 30, 2024, and applied the amendments retrospectively to all prior periods presented in these consolidated financial statements. Refer to Note 18 segment information.
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued Accounting Standards Update No. 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires additional disclosures about specific types of expenses included in the expense captions presented on the face of the financial statements. The guidance is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The guidance may be applied either: (1) prospectively to financial statements issued for reporting periods after the effective date, or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the potential impact of adopting this new guidance on its unaudited condensed consolidated financial statements and related disclosures.
12
In January 2025, the FASB issued Accounting Standards Update No. 2025-01 to clarify the effective date of ASU 2024-03 (disaggregation of income statement expenses) for non-calendar year-end entities. The clarification ensures that initial adoption is required in an annual reporting period (rather than unintentionally in an interim period) for entities with non-calendar year ends. The amendments align with the effective dates stated in ASU 2024-03 (annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027) and early adoption is permitted. The Company is currently evaluating the potential impact of ASU 2024-03 (as clarified by ASU 2025-01) on its unaudited condensed consolidated financial statements and related disclosures.
In July 2025, the FASB issued Accounting Standards Update No. 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets” (“ASU 2025-05”), which introduces a practical expedient (for all entities) and an accounting policy election for non-public entities when estimating expected credit losses for current receivables and contract assets under ASC 606. The standard is effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years, and early adoption is permitted. The amendments are applied prospectively, and eligible entities can choose to apply the practical expedient and accounting policy election, with required disclosures. The Company is currently evaluating the potential impact of adopting ASU 2025-05 on its unaudited condensed consolidated financial statements and related disclosures.
Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of operations and comprehensive loss and statements of cash flows.
Note 4 – Reverse Recapitalization
Upon the consummation of the Business Combination, the following transactions were completed, based on the Company’s capitalization as of March 14, 2024:
| (i) | All Energem public shares of |
| (ii) |
| (iii) | All |
| (iv) |
The following table presents the number of the Company’s ordinary shares issued and outstanding immediately following the Reverse Recapitalization (as defined below):
| Ordinary | ||||
| Share | ||||
| Energem’s ordinary shares outstanding prior to Reverse Recapitalization | ||||
| Less: redemption of Energem’s ordinary shares | ( | ) | ||
| Ordinary shares issued to underwriter | ||||
| Ordinary shares issued to financial advisor | ||||
| Total ordinary shares issued upon completion of reverse recapitalization | ||||
| Conversion of Graphjet’s ordinary shares | ||||
| Total ordinary shares issued and outstanding upon completion of reverse recapitalization | ||||
Graphjet was determined to be the accounting acquirer given Graphjet effectively controlled the combined entity after the Transactions. The transaction is accounted for as a reverse recapitalization (“Reverse Recapitalization”), which is equivalent to the issuance of ordinary shares by Graphjet for the net monetary assets of Energem, accompanied by a recapitalization. Graphjet is determined as the accounting acquirer and the historical financial statements of Graphjet became the Company’s historical financial statements, with retrospective adjustments to give effect of the Reverse Recapitalization. The net assets of Energem were recognized as of the closing date at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of Graphjet and Graphjet’s operations are the only ongoing operations of the Company.
In connection with the Reverse Recapitalization,
the Company raised approximately $
13
The following table reconcile the elements of the Reverse Recapitalization to the consolidated statements of cash flows and the changes in shareholders’ deficit:
| March 14, | ||||
| 2024 | ||||
| Funds held in Energem’s trust account | $ | |||
| Funds held in Energem’s operating cash account | ||||
| Less: payments of transaction costs incurred by Energem | ( | ) | ||
| Proceeds from the Reverse Recapitalization | ||||
| Less: non-cash net deficit assumed from Energem | ( | ) | ||
| Net distributions from issuance of ordinary shares upon the Reverse Recapitalization | $ | ( | ) | |
The shares and corresponding capital amounts and all per share data related to Graphjet’s outstanding ordinary share prior to the Reverse Recapitalization have been retroactively adjusted using the Exchange Ratio of 55.1.
Note 5 – Deposits
| Deposit allocation | Nature | As of | As of September 30, 2024 | |||||||
| (unaudited) | ||||||||||
| Public relations consulting services | ||||||||||
| Photocopiers rented for offices use | ||||||||||
| Total deposits | $ | $ | ||||||||
Note 6 – Property and Equipment
Property and equipment included in continuing operations consist of the following:
| As of June 30, 2025 | As of September 30, | |||||||
| (unaudited) | 2024 | |||||||
| Office equipment | $ | $ | ||||||
| Renovation | ||||||||
| Plant and machinery | ||||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
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Depreciation of property and equipment is computed on a straight-line basis over its estimated useful life at the following annual rates:
| Office equipment | % | |||
| Renovation | % | |||
| Plant and machinery | % |
Depreciation expense amounted to $
Note 7 – Loans from Third Parties
The Company obtained loans of $
| June 30, 2025 | September 30, | |||||||
| (unaudited) | 2024 | |||||||
| Total interest payable | $ | $ | ||||||
| Total debt and interest payable | $ | $ | ||||||
| Lender | Principle | Interest Rate | Lending Date | Due Date | ||||||||
| Goh Meng Keong | $ | |||||||||||
| Goh Seng Wei | $ | |||||||||||
Note 8 – Loans from Prior Shareholders
Short-term Loans
Loans from prior shareholders
(1). On August 4, 2024, August 15, 2024 and October
25, 2024, the Company entered three loan agreements with Mr. Aw Jeen Rong for working capital purpose. Aw Jeen Rong is the Company’s
prior shareholder and owned
| Lender | Principal | Interest Rate | Lending Date | Due Date | ||||||||
| Aw Jeen Rong* | $ | (extended to April 30, 2026) | ||||||||||
| Aw Jeen Rong* | $ | (extended to April 30, 2026) | ||||||||||
| Aw Jeen Rong* | $ | |||||||||||
| June 30, | ||||||||
2025 (unaudited) | September 30, 2024 | |||||||
| Total interest payable | $ | $ | ||||||
| Total debt and interest payable | ||||||||
| * |
15
(2). On September 4, 2024 and November 5, 2024,
the Company entered two loan agreements with Mr. Liu Yu for working capital purpose. Liu Yu is the Company’s prior shareholder and
owned
| Lender | Principal | Interest Rate | Lending Date | Due Date | ||||||||
| Liu Yu | $ | (extended to April 30, 2026) | ||||||||||
| Liu Yu | $ | |||||||||||
| June 30, 2025 | September 30, | |||||||
| (unaudited) | 2024 | |||||||
| Total interest payable | $ | $ | ||||||
| Total debt and interest payable | ||||||||
Payables to prior shareholders
Mr. Lim Hooi Beng and Mr. Aw Jeen Rong are the prior shareholders of the Company.
| June 30, 2025 | September 30, | |||||||
| (unaudited) | 2024 | |||||||
| Lim Hooi Beng* | $ | $ | ||||||
| Aw Jeen Rong | ||||||||
| Payables to prior shareholders | $ | $ | ||||||
| * |
Mr. Lim Hooi Beng and Mr. Aw Jeen Rong own
On March 11, 2024, the Company entered into the
debt-to-equity conversion agreements with Mr. Lim Hooi Beng. The Company issued
On April 30, 2025, the Company signed a debt
settlement agreement with Lim Hooi Beng to settle the amount of $
16
Long-term Loans
Payables to a prior shareholder
| June 30, 2025 | September 30, | |||||||
| (unaudited) | 2024 | |||||||
| Lim Hooi Beng | $ | $ | ||||||
Mr. Lim Hooi Beng is the prior shareholder of the Company and owned
On April 30, 2025, the Company signed a debt
settlement agreement with Lim Hooi Beng to settle the amount of $
Compensation payable to a prior shareholder
On March 10, 2022, Graphjet entered into Intellectual
Property Sales Agreement with Mr. Liu Yu, as supplemented by the letter from Mr. Liu Yu to Graphjet dated July 29, 2022, pursuant to which
Graphjet 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 $
On April 30, 2025, the Company signed a debt settlement
agreement with Liu Yu to settle the amount owing of approximately $
As of June 30, 2025 and September 30, 2024, the
outstanding balance on the payable is $
17
Note 9 – Other Payables and Accrued Liabilities
June 30, (unaudited) | September 30, 2024 | |||||||
| Payroll payable | $ | $ | ||||||
| Rental payable | ||||||||
| Professional fees | ||||||||
| Accrued expenses | ||||||||
| Total other payables and accrued liabilities | $ | $ | ||||||
Note 10 – Deferred Underwriting Commission Payable
On December 21, 2023, the Company entered into
a Satisfaction and Discharge of Indebtedness Agreement (the “Agreement”) with its underwriter in satisfaction of the
$
As of September 30, 2024, the Company had finalized
the settlement of the True-Up Obligation by agreeing to issue
Note 11 – Provision for Bonus
On February 29, 2024, the Board of Directors of
Graphjet approved the proposed bonus plan to reward the senior management team of Graphjet for the successful business combination and
corporate listing. The total provision made is $
On April 30, 2025, the Company signed a debt settlement
agreement with Lim Hooi Beng to settle the amount of $
18
Note 12 – Related Party Loans
Loans from a shareholder
In May and June 2025, the Company entered five
loan agreements with Mr. Lee Ping Wei for working capital purpose. Lee Ping Wei owned
| Lender | Principal | Interest Rate | Lending Date | Due Date | ||||||||
| Lee Ping Wei | $ | |||||||||||
| Lee Ping Wei | $ | |||||||||||
| Lee Ping Wei | $ | |||||||||||
| Lee Ping Wei | $ | |||||||||||
| Lee Ping Wei | $ | |||||||||||
| June 30, 2025 | September 30, | |||||||
| (unaudited) | 2024 | |||||||
| Total interest payable | $ | $ | ||||||
| Total debt and interest payable | ||||||||
Note 13 – Income Taxes
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 Islands withholding tax will be imposed.
USA
GTI US Corp is incorporated in the United States
and is subject to a federal tax rate of
Malaysia
The Company’s subsidiary
Graphjet was incorporated in Malaysia and is subject to Malaysian Profits Tax on the taxable income as reported in its statutory financial
statements adjusted in accordance with relevant Malaysian tax laws. The applicable tax rate is
Since Graphjet has had no taxable income, the Company’s tax provision was
19
The components of the Company’s income tax provision were as follows for the period indicated:
| For the three months ended June 30, 2025 (unaudited) | For the three months ended June 30, 2024 (unaudited) | For the nine months ended June 30, 2025 (unaudited) | For the nine months ended June 30, 2024 (unaudited) | |||||||||||||
| Current | $ | $ | $ | $ | ||||||||||||
| Deferred | ||||||||||||||||
| Total income tax expense | $ | $ | $ | $ | ||||||||||||
The following table sets forth the significant components of the aggregate deferred tax assets and liabilities of the Company as of:
June 30, (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 | $ | $ | ||||||
Movement of valuation allowance:
June 30, (unaudited) | September 30, 2024 | |||||||
| Balance at beginning of the year | $ | $ | ||||||
| Addition | ||||||||
| Balance at end of the year | $ | $ | ||||||
As of June 30, 2025 and September 30, 2024, the
Company had net operating losses carry forward of approximately $
Valuation allowance is provided against deferred tax 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 differences and tax loss carry forwards. If events occur in the future that allow the Company to realize part or all of its deferred income tax, an adjustment to the valuation allowances will result in a decrease in tax expense when those events occur.
Due to the limited operating history of the Malaysian
subsidiary, 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 benefits
associated 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 is
the largest amount of tax benefit that is greater than
20
Note 14 – Shareholders’ Equity
The Company’s ordinary shares trade on the
NASDAQ 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 negotiated
and 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 amended
and restated on January 10, 2024. Pursuant to the PIPE Investment Purchase Agreement, Graphjet sold to the PIPE Investor 76 Graphjet Pre-Transaction
Shares before the Closing of the Business Combination that was exchanged for
On March 14, 2024, the Company completed its reverse
recapitalization with Energem (see Note 4). The shares and corresponding capital amounts and all per share data related to Graphjet’s
outstanding ordinary shares prior to the reverse recapitalization in the accompanying consolidated financial statements have been retrospectively
adjusted using the Exchange Ratio of
On November 1, 2024, the Company successfully
completed a fundraising exercise amounting to approximately $
On May 22, 2025, the Company issued an
additional
As of June 30, 2025 and September 30, 2024, we
had issued and outstanding Ordinary Shares
All share amounts and per share amounts above have been retroactively adjusted for the sixty-for-one share combination, effective August 25, 2025. (See Note 1)
Note 15 – Equity Incentive Plan
At the Special Meeting on February 28, 2024, Energem
shareholders considered and approved the Equity Incentive Plan and reserved an amount of ordinary shares equal to
21
Graphjet Technology’s employees, consultants and directors, and employees, consultants and directors of its subsidiaries will be eligible to receive awards under the Equity Incentive Plan. The Equity Incentive Plan is expected to be administered by the Graphjet Technology Board with respect to awards to non-employee directors and by Graphjet Technology’s remuneration committee with respect to other participants, each of which may delegate its duties and responsibilities to committees of Graphjet Technology directors and/or officers (referred to collectively as the “plan administrator” below), subject to certain limitations that may be imposed under stock exchange rules. The plan administrator will have the authority to interpret and adopt rules for the administration of the Equity Incentive Plan, subject to its express terms and conditions. The plan administrator will also set the terms and conditions of all awards under the Equity Incentive Plan, including any vesting and vesting acceleration conditions.
Note 16 – Warrants
In connection with the reverse recapitalization,
the Company has assumed
Each whole warrant entitles the registered holder
to 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
The Company may call the
warrants for redemption, in whole and not in part, at a price of $
| ● | at any time while the warrants are exercisable; |
| ● | upon not less than |
| ● | if, and only if, the reported last sale price of the ordinary shares equals or exceeds $ |
22
| ● | 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 |
On May 15, 2025, Graphjet Technology and Aiden
Lee Ping Wei entered into a Warrant Subscription Agreement, pursuant to which Graphjet Technology issued
| Share price | $ | |||
| Exercise price | $ | |||
| Expected terms (in years) | ||||
| Expected volatility | % | |||
| Annual risk-free interest rate | % |
The $
The summary of warrants activity is as follows:
| Warrants Outstanding | Ordinary Shares Issuable | Weighted Average Exercise Price | Average Remaining Contractual Life | |||||||||||||
| September 30, 2024 | $ | |||||||||||||||
| Granted | $ | |||||||||||||||
| Forfeited | $ | — | ||||||||||||||
| Exercised | $ | — | ||||||||||||||
| June 30, 2025 | $ | |||||||||||||||
The Company accounted for the
Note 17 – Concentrations of Risks
Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, deposits and other receivables.
(a) Credit risk
Financial instruments that potentially subject
the Company to significant concentrations of credit risk consist primarily of cash. In Malaysia, the insurance coverage for cash deposits
of each depositor at each bank is RM
23
The Company’s operating subsidiary is in Malaysia, and their functional currency is RM. As a result, the Company is exposed to foreign exchange risk as the Company’s results of operations may be affected by fluctuations in the exchange rate between USD and RM. If the RM appreciates against the USD, the value of the Company’s RM revenues, earnings, and assets as expressed in the Company’s USD financial statements will decline. The Company has not entered any hedging transactions in an effort to reduce the Company’s exposure to foreign exchange risk.
The Company is also exposed to risk from its deposits and other receivables. These assets are subjected to credit evaluations. An allowance has been made for estimated unrecoverable amounts which have been determined by reference to past default experience and the current economic environment.
(b) Vendor concentration risk
For the three months ended June 30, 2025, one
supplier accounted for
For the three and nine months ended June 30, 2024, the Company did not make any raw material purchases.
Note 18 – Segment Reporting
ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company’s business segments.
The Company uses the management approach to determine
reportable operating segments.
The Company’s organizational structure is
based on a number of factors that the CODM uses to evaluate, view and run its business operations which include, but not limited to, customer
base, homogeneity of service and technology. The Company’s operating segments are based on such organizational structure and information
reviewed by the CODM to evaluate the operating segment results. Based on management’s assessment, the Company determined that it
has only
24
The following table presents major accounts of statements of operations by segments for the three and nine months ended June 30, 2025 and 2024.
| For the Three Months Ended June 30, | For the Nine Months Ended June 30, | |||||||||||||||
2025 (unaudited) | 2024 (unaudited) | 2025 (unaudited) | 2024 (unaudited) | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Segment gross loss | ( | ) | ( | ) | ||||||||||||
| Advertising and marketing expenses | ||||||||||||||||
| Salaries and benefits expenses | ||||||||||||||||
| Provision for bonus | ||||||||||||||||
| Insurance, legal and consulting expenses | ||||||||||||||||
| Other operating expenses | ||||||||||||||||
Share compensation expense | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Segment operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income (expense), net | ( | ) | ( | ) | ||||||||||||
| Other expenses, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||||||
| Segment net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Note 19 – Commitments and Contingencies
Lease commitments
The Company has entered in one operating factory
lease agreement in Selangor expiring through January 2026. The lease contains an option to extend at the time of expiration, and
the Company has the right of priority of exercising the option. The Company’s lease agreement does not contain any material residual
value guarantees or material restrictive covenants. The lease is classified as an operating lease, and lease expense for the lease is
recognized on the straight-line basis over the lease term which the Company estimated to be
Operating lease right-of-use assets and liabilities
are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate
present value is incremental borrowing rate or, if available, the rate which is implicit in the lease. The Company determines the incremental
borrowing rate for each lease based primarily on its lease term in Malaysia, which is approximately
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Weighted-average remaining term and discount rate related to leases were as follows:
| As of June 30, 2025 | As of September 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Weighted-average remaining term in number of years | ||||||||
| Operating leases | ||||||||
| Weighted-average discount rate | ||||||||
| Operating leases | | |||||||
The following table sets forth the Company’s undiscounted future minimum lease payment schedule as of June 30, 2025:
| Lease payments | ||||
| Twelve months ending June 30, 2026 | $ | |||
| Total lease payments | ||||
| Less: discount | ||||
| Present value of lease liabilities | ||||
| Current lease liabilities | ( | ) | ||
| Non-current lease liabilities | $ | |||
The Company also entered in two operating lease
agreements in Malaysia, which will expire till March 2026. The Company’s lease agreements do not contain any material residual value
guarantees or material restrictive covenants. The leases contain options to extend at the time of expiration, but the Company will not
exercise it. The Company did not recognize the operating lease ROU assets and lease liabilities on the balance sheet as this lease had
an initial term of
Operating lease expenses for the two lease agreements
amounted to $
The following table sets forth the Company’s undiscounted future minimum lease payment schedule as of June 30, 2025. There were no commitment and contingency other than those stated below:
| Commitments and Contingencies | Terms | Amount | ||||
| Rental of premise | $ | |||||
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Note 20 – Subsequent Events
The Company has evaluated all events that occurred after June 30, 2025 through the date the unaudited condensed consolidated financial statements were available for issuance and identified the following subsequent events occurred that would require recognition or disclosure in the Company’s unaudited condensed consolidated financial statements.
On July 17, 2025, Chris Lai, the Company’s CEO/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 the Company’s Forms 10Q for the three months ended December 31, 2024, March 31, 2025, and June 30, 2025 would be filed by the middle of September 2025.
On July 25, 2025, the Company received a decision letter from the Nasdaq Hearings Panel granting the Company’s request to continue its 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’s fundraising plans on or before September 30, 2025.
On August 7, 2025, the Company held an extraordinary general meeting of the shareholders of the Company to vote and approve 1) The Share Capital Reorganization Proposal 2) The Share Consolidation Proposal 3) The Charter Amendment Proposal and 4) The Adjournment Proposal. On the same day, the Board approved the implementation of the share consolidation at a ratio of 1-for-60 (the “Share Consolidation”). The share consolidation is expected to become effective on August 25, 2025.
On August 14, 2025, the Company executed two separate
Subscription Agreements with Yasuka Infinity SDN BHD (“Yasuka Infinity”) and Goh Meng Keong. The Subscription Agreement with
Yasuka Infinity is to settle a debt of USD$
On August 19, 2025, the Company entered into a
Sale and Purchase Agreement (the “Sale and Purchase Agreement”) with Cosmo Esteem SDN BHD, a company incorporated in and under
the laws of Malaysia (the “Vendor”) and Graphjet Technology SDN BHD, a wholly owned subsidiary of the Company (the “Purchaser”).
Pursuant to the Sale and Purchase Agreement, the Purchaser will buy the property from which the Company currently operates from, which
is owned by the Vendor. As payment for the property to the Vendor, the Company agreed to issue
On August 25, 2025, the Share Consolidation became
effective, causing every
Note 21 – Restatement of Previously Issued Financial Statements
The Company identified material misstatements in its previously issued unaudited condensed financial statements as of June 30, 2024 and for the three and nine months ended June 30, 2024 as below, and as a result the Company has restated the previously issued unaudited condensed consolidated financial statements as of June 30, 2024 and for the three and nine months ended June 30, 2024 in accordance with ASC 250 Accounting Changes and Error Corrections, to reflect the effects of the restatement adjustments and to make certain corresponding disclosures.
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The categories of adjustments and their impacts on previously issued financial statements are described below and identified in the Restatement Reconciliation Tables in the column entitled “Reference”:
| a. | The Company failed to record the correct cost of the intellectual property purchased from a related party, incorrectly recorded the amortization expense, and incorrectly recorded the liability without considering imputed interest related to the intellectual property purchased. Such failure has resulted in the misstatements of “Intangible assets, net”, “Accumulated deficit” and “Accumulated other comprehensive (loss) profit” as of June 30, 2024, and misstatements of “General and administrative expenses” and “Net loss” for the three and nine months ended June 30, 2024. |
| b. | The Company incorrectly recorded the merger transaction costs as general and administrative expenses. Such failure has resulted in the misstatements of “Deferred merger costs”, “Additional paid-in capital”, “Accumulated deficit” and “Accumulated other comprehensive (loss) profit” as of June 30, 2024, and misstatements of “General and administrative expenses” and “Net loss” for the nine months ended June 30, 2024. |
| c. | The Company incorrectly classified other expenses as general and administrative expenses, and under accrued the bonus of the senior management team of Graphjet for the successful business combination and corporate listing, and classified changes in payable to director as operating activities. Such failure has resulted in the misstatements of “Provision for bonus”, “Accumulated deficit” and “Accumulated other comprehensive (loss) profit” as of June 30, 2024, and misstatements of “General and administrative expenses”, “Other expenses, net” and “Net loss” for the three and nine months ended June 30, 2024, and misstatements of “Statements of cash flows” for the nine months ended June 30, 2024. |
| d. | The Company incorrectly recorded the accounts related to reverse recapitalization. Such failure has resulted in the misstatements of “Balance sheet” as of June 30, 2024, misstatements of “Weighted average number of ordinary shares outstanding - basic and diluted” for the three and nine months ended June 30, 2024, and misstatements of “Statements of cash flows” for the nine months ended June 30, 2024. |
| e. | The Company incorrectly used historical exchange rate to translated certain accounts from Malaysian Ringgit (“RM”) into US$. Such failure has resulted in the misstatements of “Balance sheet” as of June 30, 2024, and misstatements of “Statements of operations and comprehensive loss” for the three and nine months ended June 30, 2024, and misstatements of “Statements of cash flows” for the nine months ended June 30, 2024. |
In the following tables, the Company presented a reconciliation of consolidated balance sheets, statements of operations and comprehensive loss, and cash flows as previously issued for these prior periods to the restated and revised amounts.
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Summary of Restatements – Unaudited Condensed Consolidated Statements of Operations and Comprehensive loss:
| For the Three Months Ended June 30, 2024 | ||||||||||||||
| As previously reported | Adjustments | Reference | As restated | |||||||||||
| Operating expenses: | ||||||||||||||
| General and administrative expenses | $ | $ | ( | ) | a, c, e | $ | ||||||||
| Total operating expenses | ( | ) | a, c, e | |||||||||||
| Loss from operations | ( | ) | a, c, e | ( | ) | |||||||||
| Other income (expenses) | ||||||||||||||
| Interest expense, net | ( | ) | e | ( | ) | |||||||||
| Other expenses, net | ( | ) | c | ( | ) | |||||||||
| Total other expense, net | ( | ) | c, e | ( | ) | |||||||||
| Loss before income taxes | ( | ) | a, c, e | ( | ) | |||||||||
| Income tax expense | ||||||||||||||
| Net loss | $ | ( | ) | $ | a, c, e | $ | ( | ) | ||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | a, c, e | ( | ) | |||||||
| Total comprehensive loss attributable to ordinary shareholders | $ | ( | ) | $ | a, c, e | $ | ( | ) | ||||||
| Weighted average number of ordinary shares outstanding - basic and diluted* | ( | ) | d | |||||||||||
| Loss per ordinary share - basic and diluted* | $ | ( | ) | $ | a, b, c, d e | $ | ( | ) | ||||||
| * |
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Summary of Restatements - Unaudited Condensed Consolidated Statements of Operations and Comprehensive loss:
| For the Nine Months Ended June 30, 2024 | ||||||||||||||
| As previously reported | Adjustments | Reference | As restated | |||||||||||
| Operating expenses: | ||||||||||||||
| General and administrative expenses | $ | $ | a, b, c, e | $ | ||||||||||
| Total operating expenses | a, b, c, e | |||||||||||||
| Loss from operations | ( | ) | ( | ) | a, b, c, e | ( | ) | |||||||
| Other income (expenses) | ||||||||||||||
| Interest expense, net | ( | ) | ( | ) | a, c | ( | ) | |||||||
| Other expenses, net | ( | ) | c | ( | ) | |||||||||
| Total other expense, net | ( | ) | ( | ) | a, c | ( | ) | |||||||
| Loss before income taxes | ( | ) | ( | ) | a, b, c, e | ( | ) | |||||||
| Income tax expense | ||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | a, b, c, e | $ | ( | ) | ||||
| Foreign currency translation adjustment | ( | ) | ( | ) | a, b, c, e | ( | ) | |||||||
| Total comprehensive loss attributable to ordinary shareholders | $ | ( | ) | $ | ( | ) | a, b, c, e | $ | ( | ) | ||||
| Weighted average number of ordinary shares outstanding - basic and diluted* | d | |||||||||||||
| Loss per ordinary share - basic and diluted* | $ | ( | ) | $ | a, b, c, d, e | $ | ( | ) | ||||||
| * |
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Summary of Restatements - Unaudited Condensed Consolidated Statements of Cash Flows:
| For the Nine Months Ended June 30, 2024 | ||||||||||||||
| As previously reported | Adjustments | Reference | As restated | |||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | a, b, e | $ | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities. | ||||||||||||||
| Amortization expense | ( | ) | a, e | |||||||||||
| Depreciation expense | ( | ) | e | |||||||||||
| Foreign currency translation | ( | ) | e | |||||||||||
| Changes in operating assets and liabilities | ||||||||||||||
| Prepaid expenses | ( | ) | d, e | |||||||||||
| Advance to a related company | ( | ) | e | |||||||||||
| Deposits | ( | ) | ( | ) | e | ( | ) | |||||||
| Other receivables | ( | ) | ( | ) | e | ( | ) | |||||||
| Interests payable | ( | ) | e | |||||||||||
| Other payables | ( | ) | d | |||||||||||
| Accrued expenses | ( | ) | d, e | |||||||||||
| Related party payable | ( | ) | d | |||||||||||
| Deferred underwriting fee | ( | ) | d | |||||||||||
| Payable to directors | ( | ) | a, c, d, e | |||||||||||
| Provision for bonus | c | |||||||||||||
| Net cash used in operating activities | ( | ) | a, b, c, d, e | ( | ) | |||||||||
| Cash flows from investing activities: | ||||||||||||||
| Purchases of property and equipment | ( | ) | ( | ) | e | ( | ) | |||||||
| Net cash used in investing activities | ( | ) | ( | ) | e | ( | ) | |||||||
| Cash flows from financing activities: | ||||||||||||||
| Proceeds from issuance of shares | ( | ) | d | |||||||||||
| Repayment of working capital loan | ( | ) | d | |||||||||||
| Proceeds from long-term debt - related party | c | |||||||||||||
| Repayments to long-term debt - related party | ( | ) | c | ( | ) | |||||||||
| Payments of deferred merger costs | ( | ) | b, e | ( | ) | |||||||||
| Proceeds from the completion of reverse recapitalization | d | |||||||||||||
| Proceeds from PIPE investment | b, c, d, e | |||||||||||||
| Net cash provided by financing activities | ( | ) | b, c, d, e | |||||||||||
| Effect of exchange rate changes | ( | ) | e | ( | ) | |||||||||
| Net change in cash | ||||||||||||||
| Cash - beginning of the period | ||||||||||||||
| Cash - end of the period | $ | $ | $ | |||||||||||
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) 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’s financial 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. Certain information 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-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and 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 available to the Company’s management. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 15, 2025. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements 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 the laws of the Cayman Islands on August 6, 2021 under the name Energem Corp., (“Energem”), and formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses.
Business Combination
On November 18, 2021, we consummated an initial public offering (“IPO”). On March 14, 2024 (the “Closing Date”), we consummated a series of transactions that resulted 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 Graphjet Pre-Transaction Shares (the “Closing”) for Energem’s shareholders (the “Purchaser Representative”), the individuals 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”).
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The Merger and other transactions contemplated thereby (collectively, the “Business Combination”) closed on March 14, 2024 when pursuant to the SPA, Energem acquired all of the issued and outstanding shares Graphjet Pre-Transaction Shares from the Selling Shareholders and Graphjet became a wholly owned subsidiary of Energem. Pursuant to the SPA, Energem changed its name to “Graphjet Technology” and the business of the Company became the business of Graphjet.
The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Energem was treated as the acquired company and Graphjet was treated as the acquirer for financial statement reporting purposes.
Organization and Nature of Business
The Company is the owner of the state-of-the-art patented technology for the manufacture of high-quality graphene and graphite, critical raw materials utilized across various industries including energy storage, electronics, aerospace and advanced manufacturing. For graphene, is an extraordinary material that has sparked a global rush in industry. Graphjet Technology produces graphite, graphene and graphene-based anode battery material with over 98% similarity and greater consistent compared to other synthetic graphite and graphene which are produced from petroleum coke and coal. The breakthrough technology transforms a sustainable, abundant and renewable agricultural waste product, palm kernel shells into highly valuable artificial graphene 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 University Teknikal Malaysia Melaka (UTEM), which serve as the Company’s Technology Advisor Panel, providing expect insights and guidance in technology 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 proprietary bio-mass conversion process and graphite production method, and its graphene manufacturing technique. This unique capability positions Graphjet as the sole producer capable of mass-scale production of graphite and graphene using sustainable biomass sources, setting it apart from competitor worldwide.
Since Graphjet Technology uses a widely available waste product as their source, they are able to produce a higher quality product at a significantly lower cost than other graphite and graphene production methods currently in use worldwide.
Leveraging this innovation approach, Graphjet Technology aims to produce superior products at a significantly reduced cost compared to conventional graphite and graphene production methods that rely on non-renewable sources. This competitive advantage ensures the company’s products not only meet but exceed industry standards for quality and sustainability.
As for now, Graphjet Technology has not commenced commercial sales, but plans to strategically sample its products to leading multinational companies to gain market acceptance and facilitate procurement. 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 production facility in Kampung Baru Subang, Selangor State, Central Malaysia. Machinery commissioning was completed, and production was started. The Company has generated revenue from selling side products since June 2025.
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Key Factors Affecting Operating Results
The Company believes the key factors affecting the financial condition and results of operations include the following:
Intellectual Properties
Graphjet Technology acquired a palm-based synthetic graphite and the preparation method thereof with the application no. PI2021002802, a palm-based synthetic graphite and the preparation method 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-based graphene. The Company currently owns all of the intellectual property rights to its technology and manufacturing process and the Company’s technology is not subject to any ownership, intellectual property, or other rights of any parties other than Graphjet Technology.
The Company’s innovative technology offers a strong alternative option in the artificial graphite market. Traditionally, artificial graphite is preferred by the technology industry due to its superior quality over mineral graphite. Conventional artificial graphite usually sourced from coal or petroleum coke, which is a byproduct in its respective industry. Therefore, conventional artificial graphite may be limited by shortages or supply chain issues related to coal and petroleum coke. At this time, there are no similar supply chain issues that would affect Graphjet Technology’s access 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 comprehensive protection, others could potentially duplicate and commercialize similar technologies, undermining our competitive advantages and hindering our ability to successfully market our innovations or strategic.
Graphite Pricing
Graphite prices have receded with the ban of China graphite since December 1, 2023. Our business, financial condition and operating results could be materially and adversely affected to the extent prices for graphite continue to decline in future.
Supply of Palm Kernel Shells
Palm kernel shells are the critical raw material for our graphite production. Since initiating the merger exercise in August 2022, we have witnessed a surge in palm kernel shell prices driven 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 implemented by Malaysia and China have disrupted critical raw material supply chains. These restrictions have impacted our ability to transport and trade 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 Graphene and its related machineries
The ongoing trade tensions between the US and China continue to reshape global economic landscapes, with critical implications for strategic materials. Graphite, being a critical raw material, sourcing for its machineries amidst trade war is not immune to these effects. In response, we are proactively diversifying our sourcing strategy to mitigate risks associated with this trade war. China’s restriction on graphite exports, coupled with the EU’s regulations limiting the use of graphite and graphene due to environmental concerns, underscore the need for strategic adaptation. While the potential of these materials remains significant, we are committed to balancing their advantages with sustainable and responsible practices.
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Conflicts and Geopolitical Positions
The complex geopolitical landscape, particularly the ongoing conflicts, further escalation of the war, as well as further escalation of tensions between various countries could result in 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’s ability to raise equity and debt financing may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of these events on the world economy and the specific impact on the Company’s financial position, results of operations and its cash flows are not yet determinable. We remain acutely aware of these developments and prepared to pivot out strategic to mitigate their impact on our operation.
Impact of China’s Export Ban on Graphite
China’s ban on graphite exports has significant impact on the global supply chain. Graphite, a critical raw material in anode materials and battery production, has seen supply constraints that have led to production slowdowns across the electric vehicle (EV) industry. While we are actively exploring alternative sourcing channels to maintain our supply, we acknowledge the widespread challenges posed by the reduced global graphite demand. Our resolve to navigate these disruptions remains steadfast, as we continuously adapt to evolving market conditions to support sustainable growth and resilience.
Price Reduction and Market Slow Down of Critical Minerals
The reduction in the price of critical minerals has implications market slowdown, posing significant challenges for industry growth and revenue stability. As responsible stewards of market expansions and resilience, we are closely monitoring these pricing and market dynamics. We are committed to recalibrating our financial forecasts and operational strategies to ensure sustainable business practices and competitiveness. We value the trust of our stakeholders as we navigate these adjustments to align with market realities.
Competition
The competitive landscape in the graphene and graphite industry is driven by several factors, including market acceptance, material differentiation and quality, delivery reliability and customer service. The competition is expected to remain fierce, based primarily on price, performance and cost effectiveness, customer service and product innovation. Competition could prevent implementation of price increases, require price reductions or require increased spending on research and development, marketing and sales that could adversely affect us. Market shifts, such as changing customer preferences and advancements technology, could directly affected our ability to remain competitive and sustain profitability. Failure to achieve anticipated sales 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 governed by laws, which continue to evolve and change over time. The costs and resources necessary to comply with these laws are significant. Our profitability depends in part upon our ability, and that of our affiliated providers and independent contractors, to operate in compliance with applicable laws and to maintain all applicable licenses. To the extent any of our employees or third-party contractors engages in any misconduct or activity in violation of an applicable law, we may be subject to increased liability under the law or increased government scrutiny. If any such action is instituted against us, and we are not successful in defending ourselves or asserting our rights, such action could have a significant impact on our business, including the imposition of significant fines or other sanctions. Complying with any 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.
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Business Development and Marketing
Our commitment to excellence extends well beyond production. We recognize that robust business development and effective marketing strategies are fundamental for sustained success. To ensure our position in the competitive market, we are dedicating ample resources to enhance our business developing various strategies to better reach our customers with new marketing tools. The focus of our business development is the development of quality products that is 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 by prospective customers is a rigorous and necessary step, in line with industry standards. Industry standards dictate that this process generally 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. While the timeline may seem extended, it represents a strategic investment in ensuring that our offerings consistently meet or exceed industry expectations.
Political and Regulatory Risks for Green Energy Policies
Graphjet may face significant uncertainty stemming from changing political landscapes and shifting green energy policies. Lawmakers’ shifting position on supporting green energy initiative make it difficult for company to project revenues and make investment decision confidently. This inconsistent support affects innovation and the adoption of sustainable materials like graphite and graphene. In addition, the lack of a consistent approach to subsidies and incentives poses a considerable challenge. Company may face reduced funding and stalled research and development efforts, limiting their ability to stay competitive and innovate. Election cycles and new government leadership can result in abrupt changes in policy, impacting strategic plans and long-term investments. Companies must continuously adapt to these policy shifts, which can be resource-intensive and disrupt operation.
Environmental Compliance and Regulation
Strict and evolving environment regulations are necessary for sustainability but add complexity to operations. Company must invest significantly in eco-friendly technologies and production methods to comply, which can increase operating costs and lengthen production cycles. Failure to comply can lead to penalties, legal challenges and reputational damage. The financial burden of compliance diverts funds from other growth-oriented activities, putting smaller companies at risk of failing behind larger competitors with more resources.
Geopolitical Tensions and Policy Shifts
Geopolitical tensions, such as presidential elections and policy shifts, affect trade relations, market access, and the availability of key raw materials. The uncertainty surrounding these events can cause delays in corporate decision-making, hinder expansion plans, and affect operational efficiency. Graphjet Technology may experience disrupted supply chains, unpredictable regulatory changes, and an inability to plan for long term growth, impacting profitability and stability.
Export and Import Regulations
Stringent import and export regulations in key markets such as Malaysia and US pose significant operational challenges. Company needs to navigate complex customs procedures and adapt to frequent policy changes that can delay shipments and increase costs. Political tensions further complicate this, leading to uncertainty in international trade. Regulatory barriers can lead to delays in product delivery, increased logistical expenses, and missed business opportunities.
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Semiconductor Industry Challenge
The slowdown in the semiconductor industry, highlighted by Intel’s financial struggles, has a domino effect on industries reliant on high-tech components. Graphjet, which supplies critical materials for chip production, may face reduced demand and disrupted partnership. The heavy reliance of Nvidia and AMD on TSMC, alongside China’s influence over Taiwan, creates additional risks. Graphjet Technology may find it harder to secure contracts and partnerships within 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 have scaled 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 forces production cuts, which could weaken company’s market position and profitability.
Market Pricing and Global Control
China’s dominance over raw materials supply chains continues to influence global market pricing. This control not only adds prices volatility but also creates uncertainty around supply 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 obligation and remain competitive.
Access to Market and Strategic Partnership
Developing direct relationships with EV battery manufacturers is essential for growth, yet remain challenging due to competitive pressures, regional economic uncertainties and frequent management changes driven by financial pressures. Graphjet aims to bridge this gap by ensuring a reliable supply of essential materials to these manufacturers. Despite this, barriers without strategic support and government cooperation make it difficult to access these key 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 and resilience.
Government Disruptions and Ceased Operations
Raw materials shortages and supply chain disruptions have led some industry leaders to reduce or cease operations. The lack of cohesive government support exacerbates these issues, making it challenging for company to sustain the operation and meet market demand. Company may risk reduced output, lost revenues, and potential closure, 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 operational halts, with major players such as LG and GM ceasing certain operations due to persistent raw materials shortages. This highlights the fragility of current supply chains and the pressing need for robust, diversified sourcing strategies. Graphjet is well-positioned to support these 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 ensure stability in the markets.
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Supply Chain Disruptions and Strategic Support Challenges
Global supply chain vulnerabilities can significantly disrupt the availability of raw materials essential for graphite and graphene production. Factor such as natural disasters, geopolitical tensions, and pandemic can create instability in supply chains. Additionally, the challenge of developing effective supply chain strategies and partnership adds complexity. Without strategic support from suppliers and stakeholders, Graphjet may struggle to secure reliable sources for critical materials. Disruptions in the supply chain can lead to production delays, increased operational costs, and potential revenue loss. If key materials become unavailable, Graphjet may be unable to meet customer demand, leading to damaged relationship and reduced market share. Additionally, the inability to establish robust supply chain partnerships could hinder Graphjet’s operational efficiency and long-term growth, ultimately impacting stakeholder confidence and overall financial performance.
Investor Sentiment and Market Stability
Political uncertainty during election periods can lead to fluctuations in investor confidence and market stability. A deadline in investor sentiment may result in reduced capital ability to fund growth initiatives and research. Market volatility could also impact stock prices, making it challenging to raise funds through equity financing.
Regulatory Compliance Burdens
New political leadership can lead to the introduction of additional regulations that require compliance. Increased regulatory burdens could result in higher operational costs and divert resources from core business activities to compliance-related functions. This can strain financial resources and impact profitability.
International Investments and Compliance
The SEC’ global cooperation stance under Gensler could be altered, affecting international agreement and compliance protocols, impacting how Graphjet interacts with global markets and 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 similar companies navigate these evolving regulatory expectations.
Shift in Enforcement Priorities
A new SEC chair may shift focus away from Gensler’s emphasis on transparency and investor protection, potentially leading to lighter regulatory burdens or heightened scrutiny, depending on the new leadership’s priorities.
Increased Global Supply and Price Volatility
A removal of export restrictions could flood the global market with cheaper Chinese graphite and graphene, leading to price volatility. Companie like Graphjet could face margin pressures due 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 producers of graphite and graphene, lifting export restrictions could lead to market oversupply, driving down prices and potentially reducing the demand for alternative suppliers, affecting the sales and market positioning of companies.
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Business Continuity Risk
Without cross-functional backups or a succession plan, the company could face significant challenges in maintaining operational continuity, potentially impacting customer satisfaction and company performance. The lack of a contingency plan may led to halted operations, revenue loss, or reduced market confidence during transitions.
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’s technology 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 adopting green manufacturing methods and contributing to sustainable innovations. Company’ commitments to excellence in environmental, quality and health & safety management, driving operational, financial, and reputational gains that aligns with global best practices. In Malaysia, approximately 5 million tons of palm kernel shells (PKS) annually, but we only utilized a small fraction of that amount. Increasing the usage of palm kernel shells in producing graphene and graphite could significantly help reduce waste in Malaysia. Graphjet’s award-winning proprietary manufacturing technology achieved up to an 83% reduction in carbon footprint and up to an 80% reduction in production costs, setting a new benchmark for sustainability and efficiency in the industry.
Leadership in Graphene and Graphite Production
The Company is uniquely positioned to become a global leader in the production of high-quality graphene and graphite materials. With its state-of -the-art manufacturing processes, the company is poised to meet the increasing demand for these materials, which are integral to advanced technology sectors.
Diverse Market Applications
The Company’s products are essential for numerous high-growth industries, including biomedical advancements such as medical sensors and drug delivery system, automotive innovations like 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’s relevance across multiple billion-dollar markets.
Cost and Quality Advantage
The Company’s patented production technology and its use of low- cost raw materials, such as palm kernel shells, give it a significant edge over traditional suppliers. The Company can 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 team brings a proven track record in clean and sustainable manufacturing. Their dedication to using renewable waste materials reflects a strong commitment to environmental stewardship, positioning the company as a responsible leader in the graphene and graphite sector. This expertise also ensures operational excellence and drives investor confidence.
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Components of Results of Operations
Results of Operations
The following information includes, in Graphjet Technology’s opinion, all adjustments necessary to state fairly its consolidated results of operations for these periods. This data should be read in conjunction with Graphjet Technology’s unaudited condensed consolidated financial statements and notes thereto.
Comparison for the three months ended June 30, 2025 and 2024
| For the Three Months Ended June 30, | Changes | |||||||||||||||
| 2025 | 2024 | Amount | % | |||||||||||||
| USD | USD | USD | ||||||||||||||
| Revenues | 49,316 | — | 49,316 | 100 | % | |||||||||||
| Cost of revenues | (76,005 | ) | — | 76,005 | 100 | % | ||||||||||
| Gross loss | (26,689 | ) | — | 26,689 | 100 | % | ||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | (1,672,011 | ) | (2,012,938 | ) | 340,927 | (16.9 | )% | |||||||||
| Share compensation expense | (19,200,000 | ) | — | (19,200,000 | ) | 100 | % | |||||||||
| Loss from operations | (20,898,700 | ) | (2,012,938 | ) | (18,885,762 | ) | 938.2 | % | ||||||||
| Other expenses, net | (603,257 | ) | (5,593 | ) | (597,664 | ) | 10,685.9 | % | ||||||||
| Net loss | (21,501,957 | ) | (2,018,531 | ) | (19,483,426 | ) | 965.2 | % | ||||||||
Revenues
Our revenues increased by approximately $49,000, or 100% for the three months ended June 30, 2025. The increase had resulted from selling side products since June 2025.
Cost of revenues
Cost of revenues mainly consists of cost to manufacture products, primarily includes the cost to purchase raw materials, direct labor, and other related costs that are attributable to production. Our cost of revenues increased by approximately $76,000, or 100% for the three months ended June 30, 2025. The increase in cost of revenues was consistent with the increase in products revenue.
Gross loss
Our gross loss was approximately $27,000 for the three months ended June 30, 2025, mainly because we have not commenced commercial sales as our production line was operated at a low productivity level and the side products were also sold for a discount due to the deterioration in quality because of prolonged storage time. We expect to have a better gross margin when we begin our official graphite production.
Operating Expenses
Operating expenses included only general and administrative expenses in the three months ended June 30, 2025 and 2024 as we had no selling expenses.
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General and administrative expenses consist of a 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 robust operations, supporting strategic business functions, and ensuring compliance and transparency across all facets of our organization.
General and administrative expenses decreased by approximately $0.3 million, or 16.9%, from approximately $2.0 million for the three months ended June 30, 2024, to approximately $1.7 million for the three months ended June 30, 2025. The decrease was primarily driven by a decrease in professional fees of approximately $0.9 million and a decrease in travel expense, meals and entertainment expense of approximately $0.2 million, both of which were due to less fees associated with the business combination. The decrease was partially offset by an increase in staff costs of approximately $0.9 million due to headcount increased and the increased salaries and compensation expense for management personnels.
Share compensation expense increased by $19.2 million for the three months ended June 30, 2025 compared to the same period in 2024 due to issuance of warrants to a shareholder.
Other Expenses, net
Other expenses mainly include loan interest, the amortization of imputed interest of compensation payable to shareholders and loss on debt settlement of approximately $0.6 million and approximately $6,000 for the three months ended June 30, 2025 and 2024, respectively.
Net Loss
Net loss increased by approximately $19.5 million, or 965.2%, from approximately $2.0 million for the three months ended June 30, 2024, to approximately $21.5 million for the three months ended June 30, 2025. Such change was mainly due to the reasons discussed above.
Comparison for the nine months ended June 30, 2025 and 2024
| For the Nine Months Ended June 30, | Changes | |||||||||||||||
| 2025 | 2024 | Amount | % | |||||||||||||
| USD | USD | USD | ||||||||||||||
| Revenues | 49,316 | — | 49,316 | 100 | % | |||||||||||
| Cost of revenues | (76,005 | ) | — | 76,005 | 100 | % | ||||||||||
| Gross loss | (26,689 | ) | — | 26,689 | 100 | % | ||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | (2,877,016 | ) | (16,328,960 | ) | ` | 13,451,944 | (82.4 | )% | ||||||||
| Share compensation expense | (19,200,000 | ) | — | (19,200,000 | ) | 100 | % | |||||||||
| Loss from operations | (22,103,705 | ) | (16,328,960 | ) | (5,774,745 | ) | 35.4 | % | ||||||||
| Other expenses, net | (664,430 | ) | (363,847 | ) | (300,583 | ) | 82.6 | % | ||||||||
| Net loss | (22,768,135 | ) | (16,692,807 | ) | (6,075,328 | ) | 36.4 | % | ||||||||
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Revenues
Our revenues increased by approximately $49,000, or 100% for the nine months ended June 30, 2025. The increase had resulted from selling side products since June 2025.
Cost of revenues
Cost of revenues mainly consists of cost to manufacture products, primarily includes the cost to purchase raw materials, direct labor, and other related costs that are attributable to production. Our cost of revenues increased by approximately $76,000, or 100% for the nine months ended June 30, 2025. The increase in cost of revenues was consistent with the increase in products revenue.
Gross loss
Our gross loss was approximately $27,000 for the nine months ended June 30, 2025, mainly because we have not commenced commercial sales as our production line was operated at a low productivity level and the side products were also sold for a discount due to the deterioration in quality because of prolonged storage time. We expect to have a better gross margin when we begin our official graphite production.
Operating Expenses
Operating expenses included only general and administrative expenses in the nine months ended June 30, 2025 and 2024 as we had no sales or selling expenses.
General and administrative expenses consist of a 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 robust operations, supporting strategic business functions, and ensuring compliance and transparency across all facets of our organization.
General and administrative expenses decreased by approximately $13.4 million, or 82.4%, from approximately $16.3 million for the nine months ended June 30, 2024, to approximately $2.9 million for the nine months ended June 30, 2025. The decrease was primarily driven by the decrease in provision for bonus of $13.8 million incurred during the nine months ended June 30, 2024. On February 29, 2024, the Board of Directors of Graphjet approved the proposed bonus plan to reward the senior management team of Graphjet for the successful business combination and corporate listing. The total provision made is $13,800,000 according to the plan. During the nine months ended June 30, 2024, the provision was recorded under the general and administrative expenses, and the full balance of $13.8 million is to be provided by December 2025. The decrease was also due to a decrease in professional fees of approximately $0.9 million due to less fees associated with the business combination. The decrease was partially offset by an increase in staff costs of approximately $1.3 million due to headcount increased and the increased salaries and compensation expense for management personnels.
Share compensation expense increased by $19.2 million for the nine months ended June 30, 2025 compared to the same period in 2024 due to issuance of warrants to a shareholder.
Other Expenses, net
Other expenses mainly include loan interest, the amortization of imputed interest of compensation payable to shareholders and loss on debt settlement of approximately $0.7 million and approximately $0.4 million for the nine months ended June 30, 2025 and 2024, respectively.
Net Loss
Net loss increased by approximately $6.1 million, or 36.4%, from approximately $16.7 million for the nine months ended June 30, 2024, to approximately $22.8 million for the nine months ended June 30, 2025. Such change was mainly due to the reasons discussed above.
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Liquidity and Capital Resources
We currently finance our internal operations primarily with self-funding. Our fundamental principles are to build and maintain a financial base for the purpose of maintaining soundness and efficiency of operations and achieving sustainable growth. Our liquidity requirements are primarily to fund our business operations, including capital expenditures and working capital requirements. Our primary sources of liquidity are additional capital investment and debt.
The source, timing and availability of any future financing will depend principally upon market conditions, and, more specifically, on the market acceptance of our products. Funding may not 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 June 30, 2025, we have incurred cumulative losses from operations, negative cash flows from operating activities, and have an accumulated deficit of $48.6 million. We are a pre-revenue organization possess patented technologies and in production testing phase of operation at the factory located at Kampung Baru Subang district of Selangor State in Central Malaysia. While management expects that the proceeds from fundraising from new external shareholders and the net impact of the Business Combination along with our cash balances held prior to the Closing Date will be sufficient to fund our current operating plan for next 12 months from the date these consolidated financial statements were available to be issued, there is significant uncertainty around our ability to meet the going concern assumption beyond that period without raising additional capital.
Our short-term liquidity requirements are primarily linked 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 facility and the construction of our manufacturing facility. We successfully completed the Business Combination on March 14, 2024, and received the $2,500,000 PIPE Investment pursuant to the PIPE Investment Purchase Agreement. On November 1, 2024, we successfully completed a fundraising exercise amounting to approximately $1.0 million (MYR 4.4 million) net proceeds from new external shareholders. On April 30, 2025, we signed debt settlement agreements with our prior director and shareholder to settle the debts with them. We believe we will have sufficient working 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 additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operating flexibility and would also require us to incur interest expense. If we raise additional funds through the issuance of equity, the percentage ownership of our equity holders could be diluted. We can provide no assurance that additional financing will be available at all or, if available, that we would be able to obtain additional financing on terms favorable to us.
The following tables set forth a summary of our key components of cash flows for the nine months ended June 30, 2025 and 2024.
| For the Nine Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| USD | USD | |||||||
| Net cash used in operating activities | $ | (1,813,635 | ) | $ | (2,578,471 | ) | ||
| Net cash used in investing activities | (32,277 | ) | (1,271,734 | ) | ||||
| Net cash provided by financing activities | 1,568,062 | 4,059,793 | ||||||
| Effect of exchange rate changes | (19,491 | ) | (122,809 | ) | ||||
| Net change in cash | (297,341 | ) | 86,779 | |||||
| Cash, beginning of period | 348,655 | 1,430 | ||||||
| Cash, end of period | $ | 51,314 | $ | 88,209 | ||||
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Operating activities
Net cash used in operating activities for the nine months ended June 30, 2025 was approximately $1.8 million and was primarily attributable to a net loss of approximately $22.8 million with non-cash expenses of approximately $20.3 million. Cash outflow was also attributable to the increase in advance in purchase of machinery of approximately $0.1 million. Cash outflow was partially offset by the increase in payable to shareholders of approximately $0.6 million, and the increase in other payables and accrued expenses of approximately $0.1 million.
Net cash used in operating activities for the nine months ended June 30, 2024 was approximately $2.6 million and was primarily attributable to net loss of approximately $16.7 million. Cash outflow was partially offset by the provision for bonus of $13.8 million and the increase in other payables and accrued expenses of approximately $0.2 million.
Investing activities
Net cash used in investing activities for the nine months ended June 30, 2025 was approximately $32,000, which was due to purchases of fixed assets and intangible assets.
Net cash used in investing activities for the nine months ended June 30, 2024 was approximately $1.3 million, which was due to purchase of fixed assets.
Financing activities
Net cash provided by financing activities for the nine months ended June 30, 2025 was approximately $1.6 million which consisted of proceeds from issuance of ordinary shares of approximately $1.0 million, and proceeds from short-term related-party loans of approximately $0.6 million.
Net cash provided by financing activities for the nine months ended June 30, 2024 was approximately $4.1 million, which consisted of proceeds from long-term related-party loans of approximately $2.6 million, and proceeds from PIPE investment of $2.5 million. The cash provided by financing activities was partially offset by the payments of deferred merger costs of approximately $0.9 million, and repayments to long-term related-party loans of approximately $0.1 million.
Off-Balance Sheet Arrangements
As of June 30, 2025, 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 other benefits.
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Critical Accounting Estimates
This management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). The preparation of these unaudited condensed consolidated financial statements and accompanying notes requires us to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. On an ongoing basis, 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 under the circumstances, the results of which form the basis for making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. We have identified certain accounting estimates that are critical to the preparation of financial statements. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe that the critical accounting estimates, assumptions, and judgments that have the most significant impact on our consolidated financial statements are described below.
Impairment for long-lived assets
Long-lived assets, including property and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. We assess the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, we would reduce 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, but are not limited to, the cash flows that an asset is expected to generate in the future and the estimated useful lives. Changes in these assumptions 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 3. Quantitative and Qualitative Disclosures About Market Risk
Following the consummation of our IPO, the net proceeds of our IPO, including amounts in the Trust Account, have been invested in U.S. government treasury bills, notes or bonds with a maturity of 185 days or less or in certain money market funds that invest solely in US treasuries. Due to the short-term nature of these investments, we do not believe that there will be an associated material exposure to interest rate risk.
Item 4. Controls and Procedures
Under the supervision and with the participation of 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 in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Report.
Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
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Management’s Report on Internal Controls over Financial Reporting
As required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with GAAP. Our internal control 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 transactions and dispositions of the assets of our company, |
| (2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and |
| (3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our consolidated financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2024. In making these assessments, management used the criteria set forth 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 comprehensive written 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 control weaknesses; and as a result of inadequate inherent controls, the Company’s internal control over financial reporting may fail to prevent or detect errors or material misstatements in its consolidated financial statements. In addition, the management has assessed that there was a significant deficiency in the Company’s internal controls whereby the company does not have written policy for monitoring of control activities by management which led to inconsistencies in monitoring practices and insufficiency of entity level controls, making it difficult to identify emerging risks, detect control deficiencies, and take corrective actions in a timely manner.
Management intends to implement remediation steps to improve our internal controls including to hire an external internal control reviewer to review our internal controls to strengthen and document the internal control policies and procedures of the Company. We also to further improve this process by enhancing the size and composition of our board upon the closing of the business and to identify third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals and implemented additional layers of reviews in the financial close process.
This Quarterly Report on Form 10-Q does not include an attestation report of our independent registered public accounting firm due to our status as an emerging growth company under the JOBS Act.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter 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 legal proceedings relating to claims arising from the ordinary course of business. Our management believes that there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our results of operations, financial condition or cash flows.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report on Form 10-K filed with the SEC on July 15, 2025 (the “Annual Report”). Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report filed with the SEC.
Item 2. Unregistered Sales of Equity Securities and 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 ordinary shares, at an exercise price of $0.055 to Aiden Lee Ping Wei. |
On August 14, 2025, the Company executed two separate Subscription Agreements with Yasuka Infinity SDN BHD (“Yasuka Infinity”) and Goh Meng Keong. The Subscription Agreement with Yasuka Infinity is to settle a debt of USD$ 21,129.80 owed by the Company to Yasuka Infinity. As settlement of the debt, the Company agreed to issue 195,646 ordinary shares, which is 3,261 post-Share Consolidation shares. The Subscription Agreement with Goh Meng Keong is also to settle a debt of USD$ 553,201.33 owed by the Company to Goh Meng Keong. As settlement of the debt, the Company agreed to issue 11,100,000 ordinary shares, which is 185,000 post-Share Consolidation shares. On August 25, 2025, the Company issued 3,261 post-Share Consolidation shares to Yasuka Infinity and 185,000 post-Share Consolidation shares to Goh Meng Keong.
On August 19, 2025, the Company entered into a Sale and Purchase Agreement (the “Sale and Purchase Agreement”) with Cosmo Esteem SDN BHD, a company incorporated in and under the laws of Malaysia (the “Vendor”) and Graphjet Technology SDN BHD, a wholly owned subsidiary of the Company (the “Purchaser”). Pursuant to the Sale and Purchase Agreement, the Purchaser will buy the property from which the Company currently operates from, which is owned by the Vendor. As payment for the property to the Vendor, the Company agreed to issue 97,462,455 of its ordinary shares at a per share price of USD$ 0.074, to Tan Chin Teong, which is 1,624,375 post-Share Consolidation Shares. On August 25, 2025, the Company issued 528,464 post-Share Consolidation shares to Tan Chin Teong.
| (b) | As of September 30, 2024, we did not have any securities authorized for issuance under equity compensation plans. On February 28, 2024, in connection with the Transactions, our shareholders approved the Graphjet Technology 2023 Omnibus Equity Incentive Plan (the “2023 Equity Incentive Plan”). We have reserved a total of 14,903,075 Class A ordinary shares for issuance pursuant 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, or incorporated 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 Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Graphjet Technology | ||
| Date: September 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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