GRAPHENE & SOLAR TECHNOLOGIES LIMITED The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this Form 10-K. Our Management's Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. Although the forward-looking statements in this Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
Overview
As a result of the sale of Vanguard's (VNGE) oil and gas properties in June of
2014, as discussed in Item 1 of this report, we no longer had any oil and gas
assets or related operations during the periods reported through
New Business Activities
We are currently in the process of securing interim working capital to complete
mine expansion plans and to build and establish a pre-processing plant in
Townsville,
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Results of Operations.
Years Ended
Years Ended
September 30,
2020 2019 Changes ($)
Operating expenses
98,341 $ (41,067 ) Net Income (loss)
For the years ended
For the years ended
For the years endedSeptember 30, 2020 and 2019, our other income (expenses) consisted of the following: Years Ended September 30, 2020 2019 Changes ($) Other (Income) Expense: Interest expense$ (36,839 ) $ (76,135 ) $ 39,293 Rental income 8,146 6,334 1,812 Impairment of assets (28,581 ) - (28,581 ) Promissory note prepayment penalty - (17,860 ) 17,860 Foreign currency transaction gain - 1,678 (1,678 ) Change in fair value of derivative liability - (2,540 ) 2,540 Loss on settlement of convertible note - (9,818 ) 9,818$ (57,274 ) $ (98,341 ) $ (41,067 )
For the year ended
Cash Flows
Years Ended
September 30,
2020 2019 Changes ($)
Cash Flows used in Operating
Activities $ (192,122 ) (600,797 ) $ 408,675
Cash Flows Provided (Used) by
Investing Activities $ - - $ -
Cash Flows provided by Financing
Activities $ 167,475 671,338 $ (503,863 )
Effect of exchange rate in cash (49,582 ) (3,004 ) (46,578 )
Net Change in Cash During Period
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Cash Flow from Operating Activities
Cash flows used in operating activities was
The decrease in the year ended
Cash Flow from Investing Activities
During the years ended
Cash Flow from Financing Activities
Cash from financing activities in the year ended
Liquidity and Capital Resources.
Years Ended
September 30, September 30,
2020 2019 Changes ($)
Cash $ 12 $ 74,241 $ (74,229 )
Working capital deficit $ (1,684,534 ) $ (1,038,539 ) $ (645,995 )
Total assets $ 12,271 $ 147,406 $ (135,135 )
Total liabilities $ 1,684,546 $ 1,129,661 $ 554,885
Total stockholders' deficit
As of
As of
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General Discussion.
Whereas management has been successful in the past in raising capital, there are no assurances that these sources of financing will continue to be available to us and/or that demand for our common stock will be sufficient to meet our capital needs, or that financing will be available on terms favorable to us. If funding is insufficient at any time in the future, we may not be able to take advantage of business opportunities or respond to competitive pressures or may be required to reduce the scope of our planned product development and marketing efforts, any of which could have a negative impact on its business and operating results. In addition, insufficient funding may have a material adverse effect on our financial condition, which could require it to:
? seek joint venture partners;
? monetize its assets;
? seek arrangements with strategic partners or other parties that may
require the company to relinquish significant rights to products,
technologies or markets; or
? explore other strategic alternatives including a merger or sale of our
company.
? Cease current operations
To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to our existing stockholders. If additional funds are raised through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet its operational needs, we may seek to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to our existing stockholders.
Inflation.
The impact of inflation on our costs and the ability to pass on cost increases to its customers over time is dependent upon market conditions. We are not aware of any inflationary pressures that have had any significant impact on its operations over the past quarter and we do not anticipate that inflationary factors will have a significant impact on future operations.
Going Concern and Management's Liquidity Plans.
As reflected in the consolidated financial statements, the Company had an
accumulated deficit at
The ability of the Company to continue its operations is dependent on management's plans, which include the raising of capital through debt and/or equity markets, with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur additional liabilities with certain related parties to sustain the Company's existence. There can be no assurance that the Company will be able to raise any additional capital.
The Company may also require additional funding to finance the growth of our anticipated future operations as well as to achieve its strategic objectives. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all. In that event, the Company would be required to change its growth strategy and seek funding on that basis, if at all.
The Company's plan regarding these matters is to raise additional debt and/or equity financing to allow the Company the ability to cover its current cash flow requirements and meet its obligations as they become due. There can be no assurances that financing will be available or if available, that such financing will be available under favorable terms. In the event that the Company is unable to generate adequate revenues to cover expenses and cannot obtain additional financing in the near future, the Company may seek protection under bankruptcy laws. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary
The spread of a novel strain of coronavirus (COVID-19) around the world in the
first half of 2020 has caused significant volatility in
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Off-Balance Sheet Arrangements.
We do not maintain off-balance sheet arrangements nor do we participate in non-exchange traded contracts requiring fair value accounting treatment.
Critical Accounting Policies and New Accounting Pronouncements.
The Securities and Exchange Commission SEC has issued Financial Reporting
Release No. 60, "Cautionary Advice Regarding Disclosure About Critical
Accounting Policies,"suggesting companies provide additional disclosure and
commentary on their most critical accounting policies. In FRR 60, the
A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows:
Stock-Based Compensation - We account for employee and non-employee stock-based compensation using the fair value method. The fair value attributable to stock options is calculated based on the Black-Scholes option pricing model and is amortized to expense over the service period which is equivalent to the time required to vest the stock options.
Income Taxes - Income taxes are provided based on the liability method for financial reporting purposes. Under this method deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.
Uncertain tax positions are recognized in the financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.
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We are required to file federal income tax returns in
Earnings Per Share - Basic earnings per share have been calculated based upon the weighted-average number of common shares outstanding. Diluted earnings per share have been calculated based upon the weighted-average number of common and potential shares and is not presented when anti-dilutive.
Financial Instruments and Fair Value Measurements - As defined in ASC 820 "Fair Value Measurements," fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The Company determines the level in the fair value hierarchy within which each fair value measurement falls in its entirety, based on the lowest level input that is significant to the fair value measurement in its entirety. In determining the appropriate levels, the Company performs an analysis of the assets and liabilities at each reporting period end.
The Company's financial instruments consist of cash, accounts receivable, accounts payable, accrued interest, and due to related parties. The carrying amounts of these financial instruments approximate fair value due to either length of maturity or interest rates that approximate prevailing rates unless otherwise disclosed in these financial statements.
Derivative Financial Instruments-
The Company records all derivatives on the balance sheet at fair value, adjusted at the end of each reporting period to reflect any material changes in fair value, with any such changes classified as changes in derivatives valuation in the statement of operations. The calculation of the fair value of derivatives utilizes highly subjective and theoretical assumptions that can materially affect fair values from period to period. The recognition of these derivative amounts does not have any impact on cash flows.
At the date of the conversion of any convertible debt, the pro rata fair value of the related embedded derivative liability is transferred to additional paid-in capital.
The Company determines our derivative liabilities to be a Level 3 fair value
measurement and uses the Binomial pricing model to calculate the fair value.
There are no derivative liabilities as of
Recently Issued Accounting Pronouncements- For discussion of recently issued accounting pronouncements, please see Note 2 to the consolidated financial statements included in this report.
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