Graphene & Solar Technologies Ltd - Annual Report: 2021 (Form 10-K)

FORM 10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

For the fiscal year ended September 30, 2021

OR

Commission file number: 333-174194

GRAPHENE & SOLAR TECHNOLOGIES LIMITED

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (949) 478-8387

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

Title of Each Class. N/A

Trading Symbol. N/A

Name of Each Exchange as which registered. N/A

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, and/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.

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 Act): Yes ☐ No ☒

The aggregate market value of the voting stock held by non-affiliates of the registrant on September 30, 2021 was approximately $142,400,206.65.

As of May 11, 2022, the registrant had 360,823,733 outstanding shares of common stock.

Documents Incorporated by Reference: None

Table of Contents

FORWARD-LOOKING STATEMENTS

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

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

PART I

ITEM 1. BUSINESS

Overview.

We are primarily focused on the early development of new graphene enabled photovoltaic solar modules, including graphene enabled covered thin-film solar panels. In this production initiative, we entered into a non-binding Letter of Intent for a joint venture with NanoGraphene, Inc. (doing business as GrapheneCA), a New York based manufacturer with five years’ experience in the manufacture of pure graphene and of the development of newly evolving graphene enhanced high-tech applications, to jointly develop graphene enhanced solar solutions. Of substantial importance, the principal of GrapheneCA has twelve years of experience in the design, construction and establishment of numerous thin film solar production factories through-out the U.S., Europe and Asia. As of September 30,2021, the joint venture has not been formed nor have there been any operations related to the joint venture.

The development of graphene enhanced combination silicon materials is currently one of the most intensive areas of research and development, attracting major interests from most world University research divisions and new technology players. Massachusetts Institute of Technology has actually manufactured graphene solar panels.

US Thin-Film Corporation (USTFC) was registered in April 2021 in the State of Nevada USA as a wholly owned subsidiary of Graphene & Solar Technologies Limited. On August 23 2021, the Company closed a Share Sale and Purchase Agreement through its wholly owned subsidiary, US Thin-Film Corporation with CIMA Nanotech Holdings Limited, “CNHL”, (a Cayman Island Registered company) to acquire its wholly owned subsidiary company Cima Specialty Materials Ltd and its wholly owned subsidiary companies, one of which holds the valuable portfolio of patents.

The portfolio includes several unique and specialised patents, patent applications and new inventions. They cover proprietary transparent conductive thin-film patented technologies from (1) basic manufacturing, (2) chemical formulation, (3) coating processes,(4) final product construct, to (5) transparent conductive thin film technology. Confirming the acquired patent assets as being extremely valuable for US Thin-Film Corporation and its parent, GSTX.

 Operational Overview.

GRAPHENE - HIGH PURITY MANUFACTURING – This facility will focus on establishing high efficiency and volume graphene production facilities to achieve high-quality, eco-friendly, and scalable graphene production in 2022/3. This initial factory will produce 1.5 tonnes per month (expanding to 12 tonnes +) of medical grade and industrial graphene suitable for applications such as cement 3D printing resin- coatings, epoxy resins and composites, as well as high-end medical connections of brain stem cells and lenses.

GREEN HYDROGEN PRODUCTION & AMBIENT AIR – WATER HARVESTING - Water scarcity is at the center of the world’s most significant challenges. The United Nations estimates approximately 30% of the world’s population will face severe water shortages by 2025. Management of the Company has developed a unique proprietary water harvesting technology utilizing modular, self-contained units that can be solar or grid powered, and deployed in urban and rural environments. The water harvester will extract moisture from the ambient air and collect as 100% pure fresh water. Each domestic water harvester will be capable of generating 30-50 liters (8-13 gal) of pure fresh water per day for personal use, with commercial models collecting up to 50,000 liters (13,000 gal) initially per day. The 100% pure H20 extracted from the atmosphere is also the perfect feed stock for the extraction of pure green hydrogen which is also planned as a major production initiative of a production facility complex.

Graphene Material.

Graphene, a new material, was discovered in 2004 by two UK based Russian university professors who were awarded the Nobel Prize in 2010 for their discovery. Graphene is a 2D material, (one atom thickness) made from graphite/carbon atoms, and whilst still largely unknown to the world is rapidly becoming a new industrial revolution in its own right with more than 8,800 patent applications for graphene and graphene enabled product applications having been filed recently. We have taken an early-stage leading-edge position in this evolving new technological field of graphene enabling and enhancement, specifically to focus upon development of graphene enabled photovoltaic solar panels. Subject to available capital we plan to work with GrapheneCA and other graphene developers to develop a new range of graphene enhanced thin-film solar module associated applications.

Graphene is the world’s thinnest and strongest material ever, with remarkable electrical, thermal and optical properties being the most conductive material ever scientifically measured. A sheet of graphene material is only one single atom in thickness and is referred to as a 2D nano-material having almost no measurable depth, only length and width. Graphene is also highly transparent and can be easily flexed and stretched 25% of its size without breaking. However, it is also 200 times stronger than steel and harder than a diamond. It is said that it would take the weight of an elephant balanced on a needlepoint to break through a single one-atom thick graphene sheet. Graphene material is completely impermeable, even a helium atom (the smallest) cannot pass through graphene. The advent of graphene and the introduction of the extraordinary benefits from combining graphene with existing solar industry materials to thereby create an entirely new range of solar grade materials with dramatically increased attributes and properties not previously believed possible before the advent of graphene is therefore of vital importance to the company.

Our main focus remains dedicated to our original premise of developing new leading-edge technologically advanced solar materials and applications, many of which when combined with graphene will ultimately expand the horizons of what is now possible relevant to the generating capacity of solar panels to sensitivity levels not achievable before the invention of graphene. Researchers have already established that the combination of graphene with existing solar materials and solar panel applications can increase the generating efficiency for conventional solar panels from 10%-12% sensitivity in thin-film solar applications, to recently achieved 17% -22% plus.

Subject to available funding this combination of existing solar industry materials, and silicon combined with graphene will also greatly benefit our company in ultimately achieving our sales revenues and profitability targets for the benefit of our stockholders.

There are thousands of additional unique attributes and properties that make graphene a highly versatile material wit seemingly amazing properties similar to no material other with significant undeveloped potential. The number and variations of possible applications is virtually limitless, including graphene solar panels, graphene super capacitors (game changing graphene batteries that can recharge 5 to 10 times more quickly) than lithium-ion batteries, and cost-effective highly efficient water filtration and purification systems. Researchers have demonstrated graphene-based transistors, flexible networks, quantum dots, spintronic devices, integrated circuits and semiconductor as well as DNA sequencers and drug delivery applications. Adding 1% graphene to plastic makes it electronically conductive.

Government Product Approvals.

There are no identified government approvals required for our products and no export restrictions for the products.

Effect of Existing or Probable Governmental Regulations on the Business.

Management believes that there are no identified existing or probable government regulations that will adversely impact our business.

Research and Development Activities.

The primary research and development during the next fiscal year will involve further development and evaluation of new efficient processing techniques and applications recently brought about by the development of the new material graphene and the extensive development of new graphene-enabled products. Also, the dramatic complimentary effect the addition of graphene to many existing solar cell production methods and applications will have on the adoption of graphene-based new applications and products that can greatly enhance the generating capacity of existing photovoltaic solar panels with graphene enhancement.

Additional research and development resources will be progressively committed to develop new graphene/silica (quartz) and solar grade silicon graphene enabled products and applications to expand and diversify the company product offerings into complimentary solar/semiconductor and energy storage markets.

Compliance with Environmental Laws.

Based upon our long-term experience management believes that the nature of our proposed processing operations do not involve any onerous environmental compliance requirements. Compliance costs have been identified and quantified in the company plan of operations, business plan including financial plan.

Employees.

Certain members of our management team have been involved in this industry since 2005 and this has resulted in an experienced team of learned employees, advisors and technical experts in various locations and capacities within both Australia, Central Europe, and in the United States. It is planned to increase fulltime and part time employees/contractors from the present levels to a minimum of 30 within the next 12 months, subject to the company securing additional funding.

At the present time we rely upon experienced consultants with whom management has long-term relationships.

Executive Management and Technical Team.

Our executive management and technical team have largely co-worked together since 2005, and especially the last 5 years in Melbourne, Australia, China and the USA. All of the specialized human resources are available to us.

ITEM 1.A. RISK FACTORS.

Not applicable.

ITEM 1.B. UNRESOLVED STAFF COMMENTS.

Not Applicable

ITEM 2. PROPERTIES.

We own general office, lab and factory equipment with a net book value of $2,250 and $12,259 as of September 30, 2021 and 2020 respectively, net of depreciation.

We currently maintain a representative office at 23 Corporate Plaza Drive suite 150 Newport Beach, California 92660 (the Company pays monthly rent in the amount of $175 for this office). We also maintain a substantial office at 88 Lorimer Street, Docklands, Melbourne 3008, in the State of Victoria, Australia (the company pays monthly expense for use, equivalent to the amount of AUD$2,200 for this office, which it has occupied for the last seven years). These offices are currently adequate for our needs. These are month to month arrangements and therefore scoped out of ASC 842.

ITEM 3. LEGAL PROCEEDINGS.

Not applicable

PART II

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

Our common stock at September 30, 2021 trades in the OTC Markets OTC Pink Market under the symbol “GSTX”. Shown below is the range of high and low closing prices for our common stock for the periods indicated. The market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.

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

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

As of September 30, 2021, we had approximately 377 shareholders of record.

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

ITEM 6. SELECTED FINANCIAL DATA.

Not applicable.

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

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 can be 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

In July 2017, the Company acquired Solar Quartz Technologies Limited, a New Zealand corporation with substantial mineral resource and technical engineering assets.

Initially, the company focused upon recovering and developing the high purities silica (99.99%purity) into commercial grade high purity quartz sand (HPQS) internationally much in demand for the production of semiconductors and photovoltaic solar panels.

Although the enterprise was successful in identifying substantial valuable customers in Japan, China, South Korea, Taiwan and South-East Asia, the company was unable to secure funding to scale to meet demand for HPQS product, largely due to complications with the onset of Covid-19 in March 2020.

We continue to seek new financing in the form of equity, debt, or a combination thereof to meet further development and general operating obligations. Achieving sufficient funds soon is of vital importance. The Company has managed to raise sufficient capital by sale of shares, but as of September 30, 2021, the Company has not been successful in raising sufficient funds to maintain primary operations. However, substantial efforts are underway to secure funding, and we believe that funding for the Company is imminent in the near future, although no assurance can be made as to the amount of funds, if any, or the terms thereof.

The Company has appointed two additional “Special Legal Counsel Advisors”, in California and in Australia, both of whom are “LLM” (“Masters of Law”) to assist and advise in securing additional new financing for the new GSTX leading edge high-tech projects and general operating obligations.

Current Business and Operation

Significantly, the company has redirected its primary focus to that of developing several recently acquired leading edge technologies while still retaining its development initiatives for high purity quartz refining and development of HPQS.

We continue to develop our detailed plans for multi-faceted production facilities in Queensland Australia to enable us to process raw high purity quartz from mine-sites in the region into higher value high purity quartz products and sands (HPQS).

Further work is proceeding in respect to graphene production capability and business planning on thin-film capability. GSTX is currently negotiating an appropriate lease facility at the Brisbane Technology Park, 17 kms outside of Brisbane, Australia.

Currently, GSTX is primarily focused upon completing development and initial sample production of commercially viable and efficient photovoltaic “Transparent Solar Cells/Panels”. This initiative is to specifically meet the rapidly increasing demand from the construction industry for clear and transparent lightweight solar panel windows in high-rise buildings. Such installations can significantly contribute to meeting the facility’s electricity requirements.

In 2017, GSTX recognized the remarkable potential of the amazing new “2D (Length & Width) only one micron thickness” wonder-material Graphene to be utilized in high-end electronics production and for the manufacture of more robust and efficient essential combination materials.

The US Public company, then Solar Quartz Technologies, (SQTX) was renamed Graphene & Solar Technologies (GSTX) in July 2018. Since then GSTX has established a strong working association with a pioneering United States based producer of Graphene. This US production house is highly regarded internationally for their ESG compliant processing and production techniques utilized for Graphene production. The production house has also established itself as a major exponent of Graphene enhanced polymers currently used in low-cost rapid production large scale 3D Home printing of near indestructible housing.

Following three (3) years of extensive evaluation and design consideration, GSTX and its USA associate have agreed to initiate a new Joint Venture company to establish an Australian Graphene production facility in Brisbane, Australia forthwith. The terms of the joint venture and funding have been initially documented and are in the final stages of negotiations before the share sale and purchase agreement is executed between the parties.

For 18 months the Company conducted extensive evaluations and due diligence on an Israeli engineering firm that had developed 72 patented applications for Transparent & Conductive-THIN-FILM Technologies. Evolving new thin film technologies are at the very leading edge of current technological advancements

GSTX purchased the valuable patent portfolio in the area of transparent and conductive thin film technologies, as it would enable the Company to complement its expertise in High Purity quartz and downstream applications in next generation transparent and flexible PV Solar Cell and semiconductor applications. On August 23 2021, the Company closed a Share Sale and Purchase Agreement through its wholly owned subsidiary, US Thin-Film Corporation (a Nevada company registered in April 2021 for this purpose) with CIMA Nanotech Holdings Limited, “CNHL”, (a Cayman Island Registered company) to acquire its wholly owned subsidiary company Cima Specialty Materials Ltd and its wholly owned subsidiary companies, one of which holds the valuable portfolio of patents.

Under the terms of the Agreement, 31,665,604 Regulation 144 restricted Common shares of the Company were agreed, approved, and issued as full and total consideration for the share sale and purchase.

US Thin-Film Corporation (USTFC), a United States company established in April 2021 as a 100% owned subsidiary the Company, now owns via the acquisition of Cima Specialty Materials Ltd exclusive, Intellectual Property rights to a Patent Portfolio of 72 (seventy-two) Patents. The Patents broadly cover the production of Transparent Conductive Thin Films (TCF) and several advanced nano-particle technologies used to produce innovative next-generation Thin-Film Conductive Coatings, Electro-Magnetic Shielding, transparent antennas, advanced touch screens, transparent anti-ice heating/defogging applications and of importance for next generation transparent solar panels.

Results of Operations.

Years Ended September 30, 2021 and 2020

For the years ended September 30, 2021 and 2020, we generated no revenues, and thus no cost of sales or gross profits.

For the years ended September 30, 2021 and 2020, we incurred $34,679,444 and $1,045,887, respectively in operating expenses. The operating expense increases are due primarily to higher costs of contracting professional services in the development of markets, financing, legal fees, and other general and administrative expenses.

For the years ended September 30, 2021 and 2020, our other income (expenses) consisted of the following:

For the year ended September 30, 2021, we reported a net loss before taxes of $34,814,944 compared to a net loss before taxes of $1,013,161 for the year ended September 30, 2020. Since there were no tax obligations in either year, net loss in each year was the same as that reported before taxes.

Cash Flows

Cash Flow from Operating Activities

Cash flows used in operating activities was $320,127 in the year ended September 30, 2021, while for the year ended September 30, 2020, the Company expended $192,122.

The increase in the year ended September 30, 2021 was primarily due to an increase in accounts payable and accrued expenses, primarily for legal and consulting expenses and due to related parties.

Cash Flow from Investing Activities

Shareholder loans and some minimal funding activities were mainly significant in the year ended September 30, 2021 and 2020.

Cash Flow from Financing Activities

Cash from financing activities in the year ended September 30, 2021 contributed $271,098, $138,093 from the sale of shared to unaffiliated investors and $133,005 from proceeds of convertible notes payable. Cash from financing activities in the year ended September 30, 2020 contributed $167,475, $93,623 from the sales of shares to unaffiliated investors, $68,220 from proceeds of a convertible note payable and $5,632 from proceeds of borrowings.

Liquidity and Capital Resources.

Years Ended September 30, 2021 and 2020.

As of September 30, 2021, we had total current liabilities of $3,539,553, while as of September 30, 2020 we had total current liabilities of $1,684,546, an increase of $1,855,007. The increase in current liabilities was primarily due to an increase in accounts payable and due to related party.

As of September 30, 2021, we had a working capital deficit of $3,263,621 compared to a working capital deficit of $1,684,534 as of September 30, 2020. As of September 30, 2021, we had cash and cash equivalents of $3,728 and total assets of $6,803,174 compared to cash and cash equivalents of $12 and total assets of $12,271 as of September 30, 2020.

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:

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 September 30 2021, a net loss and net cash used in operating activities for the year then ended and has generated no revenues since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the issuance date of the consolidated financial statements.

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 from the first half of 2020 has caused significant volatility in U.S. and international markets. There is significant uncertainty around the breadth and duration of business disruptions relate to COVlD-19, as well as its impact on the U.S. and international economies. The outbreak and any preventative or protective actions that governments or we may take in respect of this COVTD-19 may result in a period of business disruption. Any financial impact cannot be reasonably estimated at this time but may materially affect our future business and financial condition. The extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 and the actions required to contain the COVID-19 or treat its impact, among others.

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 Securities and Exchange Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and operating results and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, our most critical accounting policies are set forth below. The methods, estimates, and judgments the company uses in applying these most critical accounting policies have a significant impact on the results the company reports in its financial statements.

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.

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

Earnings Per Share – Basic earnings per share have been calculated based upon the weighted-average number of common shares outstanding. Diluted earnings per share have been calculated based upon the weighted-average number of common and potential shares 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 accounts for freestanding contracts that are settled in a company’s own stock, including common stock warrants, to be designated as an equity instrument or generally as a liability. A contract so designated is carried at fair value on a company’s balance sheet, with any changes in fair value recorded as a gain or loss in a company’s results of operations.

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

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

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 September 30, 2021 and 2020. The Binomial model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Binomial valuation model.

Recently Issued Accounting Pronouncements – For discussion of recently issued accounting pronouncements, please see Note 2 to the consolidated financial statements included in this report.

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

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Worlds, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Graphene & Solar Technologies Limited (the Company) as of September 30, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ deficit, and cash flows for each of the years in the two-year period ended September 30, 2021, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended September 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered net losses from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 

Other Assets

As discussed in Note 2 to the financial statements, the Company acquired a portfolio of patents using shares of common stock for the purchase. Auditing managements’ evaluation of the assets’ collective value can be a significant judgement given that the Company uses management estimates on future revenues and expenses, which are not able to be substantiated. To evaluate the appropriateness of the asset value, useful life, and amortization, we examined and evaluated patent information and facts, and financial information used by management to value the patents and their future economic benefit.

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GRAPHENE & SOLAR TECHNOLOGIES LIMITED

 CONSOLIDATED BALANCE SHEETS

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

GRAPHENE & SOLAR TECHNOLOGIES LIMITED

 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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

GRAPHENE & SOLAR TECHNOLOGIES LIMITED

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

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

GRAPHENE & SOLAR TECHNOLOGIES LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

GRAPHENE & SOLAR TECHNOLOGIES LIMITED 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2021 AND 2020

1. Organization and Basis of Presentation

Organization

On June 21, 2010, Graphene & Solar Technologies Limited (“Graphene” or “the Company”), was incorporated in Colorado as Vanguard Energy Corporation (“Vanguard”). On July 5, 2017, Vanguard changed its name to Solar Quartz Technologies Corporation. On September 18, 2018, the name was again changed to Graphene & Solar Technologies Limited (“Graphene”).

Business Operations

The development of graphene enhanced combination photovoltaic silicon materials is currently one of the most intensive areas of research and development, attracting major interests from most world university research divisions and new technology players.

The Company’s activities are subject to significant risks and uncertainties, including the need for additional capital, as described below. The Company has not yet commenced any revenue-generating operations, does not have positive cash flows from operations, and is dependent on periodic infusions of equity capital to fund its operating requirements.

The Company’s common stock is traded on the Over-the-Counter Market under the symbol “GSTX.”

Going Concern

The Company’s consolidated financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has not generated any revenues from operations to date and does not expect to do so in the foreseeable future. The Company has a stockholders’ deficit as of September 30, 2021. Furthermore, the Company has experienced recurring operating losses and negative operating cash flows since inception and has financed its working capital requirements during this period primarily through debt financing and the recurring sale of its equity securities.

As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the consolidated financial statements are being issued. In addition, the Company’s independent registered public accounting firm, in their report on the Company’s consolidated financial statements for the year ended September 30, 2021, has also expressed substantial doubt about the Company’s ability to continue as a going concern.

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 from the first half of 2020 has caused significant volatility in U.S. and international markets. There is significant uncertainty around the breadth and duration of business disruptions relate to COVlD-19, as well as its impact on the U.S. and international economies. The outbreak and any preventative or protective actions that governments or we may take in respect of this COVTD-19 may result in a period of business disruption. Any financial impact cannot be reasonably estimated at this time but may materially affect our future business and financial condition. The extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 and the actions required to contain the COVID-19 or treat its impact, among others.

The Company’s ability to continue as a going concern is dependent upon its ability to raise additional equity capital to fund its activities and to ultimately achieve sustainable operating revenues and profits. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Because the Company is currently engaged in an early stage of development, it may take a considerable amount of time to develop any product or intellectual property capable of generating sustainable revenues. Accordingly, the Company’s business is unlikely to generate any sustainable operating revenues in the next several years. In addition, to the extent that the Company is able to generate revenues through product sales, there can be no assurance that the Company will be able to achieve positive earnings and operating cash flows.

At September 30, 2021, the Company had cash of $3,728 available to fund its operations. The Company needs to raise additional capital during the year ending September 30, 2022 to fund its ongoing business activities.

The amount and timing of future cash requirements during the year ended September 30, 2022, will depend on the extent of financing the Company is able to arrange. As market conditions present uncertainty as to the Company’s ability to secure additional funds, there can be no assurances that the Company will be able to secure additional financing on acceptable terms, or at all, as and when necessary to continue to conduct operations. If cash resources are insufficient to satisfy the Company’s ongoing cash requirements, the Company would be required to scale back or discontinue its technology and product development programs, or obtain funds, if available (although there can be no certainty), through the sale of mineral resource assets, through strategic alliances that may require the Company to relinquish rights to certain of its assets, or to discontinue its operations entirely.

Intangible Assets

We capitalize external costs, such as filing fees and associated attorney fees, incurred to obtain issued patents and patent license rights. We expense costs associated with maintaining and defending patents subsequent to their issuance in the period incurred. We amortize capitalized patent costs for internally generated patents on a straight-line basis for 7 years, which represents the estimated useful lives of the patents. The seven-year estimated useful life for internally generated patents is based on our assessment of such factors as: the integrated nature of the portfolios being licensed, the overall makeup of the portfolio over time, and the length of license agreements for such patents. The estimated useful lives of acquired patents and patent rights, however, have been and will continue to be based on a separate analysis related to each acquisition and may differ from the estimated useful lives of internally generated patents. The average estimated useful life of acquired patents is 6.7 years. We assess the potential impairment to all capitalized net patent costs when events or changes in circumstances indicate that the carrying amount of our patent portfolio may not be recoverable.

Assumed Liabilities

As a result of the acquisition of Cima Specialty Materials Ltd (CSML) from CIMA Nanotech Holdings Limited, “CNHL”, (a Cayman Island Registered company) the Company’s wholly owned subsidiary US Thin Film Corporation (USTFC) under the terms of the of the Share Sale and Purchase agreement the Company issued 3,000,000 shares of common stock for future liability settlement for assumed liabilities. The fair value of these future assumed liabilities of $720,000 was recorded as a stock receivable

Revenue recognition Policies (ASC 606)

The Company recognizes revenue on arrangements in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services ASC 606 requires companies to assess their contracts to determine the timing and amount of revenue to recognize under the new revenue standard. The model has a five-step approach:

1.       Identify the contract with the customer.

2.       Identify the performance obligations in the contract.

3.       Determine the total transaction price.

4.       Allocate the total transaction price to each performance obligation in the contract.

5.       Recognize as revenue when (or as) each performance obligation is satisfied.

Disclosure of Rental Income

Rental income is not recognized as ‘operating revenue” but as ‘other income’ during the period of $15,703. 

2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the financial statements of Graphene and its wholly-owned subsidiaries, Graphene and Solar Technologies Limited (“GSTXNZ) and US Thin-Film Corporation (“USTFC”). All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.

Basis of Presentation

These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. Significant estimates include those related to assumptions used in accruals for potential liabilities, valuing equity instruments issued for services, and the realization of deferred tax assets.

Cash and Cash Equivalents

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. As of September 30, 2021 and 2020, the Company had $3,728 and $12 in cash, respectively, and no cash equivalents.

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

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

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

There was no derivative activity in fiscal 2021 and 2020. Therefore, no derivative liabilities were recorded during the year ended September 30, 2021:

Debt Issuance Costs

Costs incurred in connection with the issuance of debt are amortized over the term of the related debt and netted against the liability.

Commitments and Contingencies

The Company follows ASC 450-20 to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

Income Taxes

The Company accounts for income taxes under an asset and liability approach for financial accounting and reporting for income taxes pursuant to ASC 740, “Income Taxes.” Accordingly, the Company recognizes deferred tax assets and liabilities for the expected impact of differences between the financial statements and the tax basis of assets and liabilities.

The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. In the event the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of its recorded amount, an adjustment to the deferred tax assets would be credited to operations in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or part of its deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to operations in the period such determination was made.

The Company is subject to U.S. federal income taxes and income taxes of various state tax jurisdictions. As the Company’s net operating losses have yet to be utilized, all previous tax years remain open to examination by Federal authorities and other jurisdictions in which the Company currently operates or has operated in the past. The Company had no unrecognized tax benefits as of September 30, 2021 and does not anticipate any material amount of unrecognized tax benefits within the next 12 months.

The Company accounts for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by GAAP. The tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If the tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are recognized. As of September 30, 2021, the Company had not recorded any liability for uncertain tax positions. In subsequent periods, any interest and penalties related to uncertain tax positions will be recognized as a component of income tax expense.

On December 22, 2017, the Tax Reform Act was signed into law. The Tax Reform Act is effective for tax years beginning on or after January 1, 2018, except for certain provisions, and resulted in significant changes to existing United States tax law, including various provisions that are expected to impact the Company. Among other provisions, the Tax Reform Act reduced the federal corporate tax rate from 35% to 21% effective January 1, 2018. The Company completed the accounting for the effects of the Tax Reform Act during the year ended September 30, 2020. Given that current deferred tax assets are offset by a full valuation allowance, these changes will have no impact on the balance sheet.

The Company is currently delinquent with respect to certain of its U.S. federal and state income tax filings.

Property and Equipment

Property and equipment is stated at cost, net of accumulated depreciation. Major improvements are capitalized, while maintenance and repairs are charged to expense as incurred. Gains and losses from disposition of property and equipment are included in the statement of operations when realized. Depreciation and amortization are provided using the straight-line method over a life of five years.

Intangible Assets/Patents

We capitalize external costs, such as filing fees and associated attorney fees, incurred to obtain issued patents and patent license rights. We expense costs associated with maintaining and defending patents subsequent to their issuance in the period incurred. We amortize capitalized patent costs for internally generated patents on a straight-line basis for 7 years, which represents the estimated useful lives of the patents. The seven-year estimated useful life for internally generated patents is based on our assessment of such factors as: the integrated nature of the portfolios being licensed, the overall makeup of the portfolio over time, and the length of license agreements for such patents. The estimated useful lives of acquired patents and patent rights, however, have been and will continue to be based on a separate analysis related to each acquisition and may differ from the estimated useful lives of internally generated patents. The average estimated useful life of acquired patents is 6.7 years. We assess the potential impairment to all capitalized net patent costs when events or changes in circumstances indicate that the carrying amount of our patent portfolio may not be recoverable.

Components of intangible assets are as follows:

During the years ended September 3, 2021, and 2020, the Company recorded amortization expenses related to patents of $102,231 and $0.00, respectively.

Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets to be held and used when events or circumstances warrant such a review. The carrying value of a long-lived asset to be held and used is considered impaired when the anticipated separately identifiable undiscounted cash flows from such an asset are less than the carrying value of the asset. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily by reference to the anticipated cash flows discounted at a rate commensurate with the risk involved. No impairment charges have been recorded in the periods presented.

Stock-Based Compensation

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

During the year ended September 30, 2021, the Company issued 12,888,596 shares of the Company’s common stock to members of the Board of Directors, employees and consultants. The fair value of the shares, as determined by reference to the closing price of the Company’s common stock on each respective grant date, aggregated $6,293,499.

During the year ended September 30, 2020, the Company issued 3,000,000 shares of the Company’s common stock to members of the Board of Directors, employees and consultants. The fair value of the shares, as determined by reference to the closing price of the Company’s common stock on each respective grant date, aggregated $300,000, ($0.10 per share).

Total stock-based compensation expense was $5,158,500 and $300,000 for the years ended September 30, 2021 and 2020, respectively.

Basic and Diluted Net Loss per Common Share

The Company computes basic and diluted earnings (loss) per share amounts in accordance with ASC Topic 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings (loss) per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.

The common share equivalents of these securities have not been included in the calculations of loss per share because such inclusions would have an anti-dilutive effect as the Company has incurred losses during the years ended September 30, 2021 and 2020.

For the years ended September 30, 2021 and 2021, respectively, the following common stock equivalents were potentially dilutive.

Foreign Currency

The accompanying consolidated financial statements are presented in United States dollars (“USD”). The Australian dollar (“AUD”) is the functional currency of Solar Quartz (the operating subsidiary) as it is the currency of Australia, which is the primary economic environment the operating subsidiary operates in and the environment in which the Company primarily utilizes cash.

Assets and liabilities are translated into USD utilizing currency exchange rates as published by WM/Reuters WM/Refinitiv FX Benchmark Rates | Refinitiv. Income and expense items are translated at average exchange rates prevailing during the period. The resulting translation adjustments are recorded as a component of shareholders’ deficiency. Gains and losses from foreign currency transactions are included in earnings in the period of settlement.

Related parties

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

Recent Accounting Pronouncements

Management does not believe that any recently issued but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

3. Property and Equipment

Property and equipment as of September 30, 2021 and 2020 are summarized as follows:

Depreciation expense for the years ended September 30, 2021 and 2020 was $12,504 and $16,324, respectively.

4. Convertible Notes Payable

The Company’s material future contractual obligations by fiscal years as of September 30, 2021 and 2020 were as follows:

Notes Payable and Other Loans

During 2015 and 2016, the Company executed promissory notes payable with six individuals with an aggregate principal balance of $60,000. The notes were due on demand and included interest at 10%. As of September 30, 2021 and 2020, the total promissory notes payable balance was $96,710 and $90,923, including accrued interest of $36,710 and $30,710, respectively. On January 15, 2019, the holder of a note with a principal balance of $10,000 made demand for payment. To date, the note has not been paid.

During the year ended September 30, 2020 a Company Advisor, A. Liang, loaned the Company $5,623. The loan is a demand note at zero interest.

Convertible Notes Payable

On June 29, 2012, the Company issued convertible secured notes payable totaling $8,254,500 to a group of private investors. The notes matured on June 30, 2015. The notes, with interest at 15%, were convertible at the discretion of the holders, into common shares of the Company at the rate of $3.31 per share. Unable to make a required interest payment on March 31, 2014, the notes became due on demand. Effective June 17, 2014, with the noteholder approval, the assets securing the convertible notes were sold with the net proceeds of approximately $5,200,000 being distributed to the noteholders. Noteholders were to receive payment for the remaining balance due on the notes in the form of an exchange for the common stock of the Company at the rate of $3.31 per share. As of September 30, 2021 and 2020, noteholders representing $70,747 in outstanding principal had not requested the exchange of shares of common stock. As of September 30, 2021 and 2020, the exchange obligation payable was $158,285 and $147,673, including accrued interest of $87,537 and $76,926, respectively. As of September 30, 2021 and 2020, the exchange obligation was for 47,820 shares and 44,614 shares of common stock, respectively.

On February 1, 2016, the Company issued convertible secured note payable of $30,000 to an individual. The note was due on January 31, 2017 and included interest at 10%. The note was convertible at discretion of the holder into common shares of the Company at the rate of $0.50 per shares. The Company has not extended the maturity date and the note is in default. As of September 30, 2021 and 2020, the total convertible note payable balance was $46,997 and $43,997, including accrued interest of $16,997 and $13,997, respectively. As of September 30, 2021 and 2020, the exchange obligation was for 93,994 shares and 87,995 shares of common stock, respectively.

On August 13, 2018, the Company entered into Securities Purchase Agreement with Power Up Lending Group (“Power Up”). In connection therewith, the Company issued Power Up a convertible note payable in the amount of $63,000. The note was due, including interest at 12%, and matured on May 30, 2019. After 170 days, the note carried a 150% of principal outstanding redemption premium. Also, after 170 days the note was convertible into fully paid and non-assessable shares of common stock, after 170 days (January 30, 2019), at a conversion price which is at 55% discount to the lowest trading price during the previous twenty trading days prior to the date of a conversion notice. As the conversion price of the note, which became effective on January 30, 2019, is variable, the conversion option was treated as a derivative liability and on January 30, 2019 the Company recognized and recorded a derivative liability.

On March 15, 2019, Power Up converted $12,000 in principal at $0.0825 per share for 145,455 shares of the Company’s common stock. In connection therewith, the Company recognized a loss on conversion of $9,818. On April 8, 2019, Power Up converted an additional $20,000 of principal at $.055 cents per share for 363,636 shares of the Company’s common stock. On April 24, 2019 the Company elected to pay off the remaining $31,000 balance on the loan, with accrued interest in the amount of $4,675, plus a redemption premium of $17,860. In connection with the payoff, the Company charged operations for the remaining unamortized discount on the note of $2,503 and credited additional paid-in capital for the terminal balance of the derivative liability in the amount of $57,649.

As of September 30, 2021 and 2020, the convertible note payable to Power Up totaled $0 and $0, net of an unamortized discount of $0 and $0; accrued interest on the convertible note payable totaled $0 and $0, respectively.

On December 5, 2019, the Company issued a convertible note payable in the amount of $68,220. The convertible note bear interest at 10% and matures on December 5, 2021 the principal and accrued interest of this convertible note can be converted at the discretion of the holder into common shares at 45% discount to the ADR 20 days prior to notification of conversion. The majority shareholder agreed to increase authorized shares if needed in order to settle this debt. This note was discounted for the full amount and the amount of amortization during the period was $15,517.

5. Stockholders’ Equity

Preferred Stock

No preferred shares have been designated by the Company as of September 30, 2021 and 2020.

Common Stock

The Company is authorized to issue up to 500,000,000 shares of common stock (par value $0.00001). As of September 30, 2021 and 2020, the Company had 343,237,369 shares and 246,248,723 shares of common stock issued and outstanding, respectively.

During the year ended September 30, 2021, the Company issued 96,998,646 shares of common stock as follows:

During the year ended September 30, 2020, the Company issued 3,798,956 shares of common stock as follows:

6. Related Party Transactions

Due to related party

PGRNZ Limited, a management company controlled by the Company’s Chief Executive Officer, and a Company Director, provides management services to the Company for which the Company is charged $75,000(AUD) quarterly, approximately $54,045 (US). During the years ended September 30, 2021 and 2020, the Company incurred charges to operations of $309,150 (US) and $307,933 (US), respectively, with respect to this arrangement. During the year ended September 30, 2021, PGRNZ Limited charged to operations $309,150, approximately $225,000 as consulting fees and approximately $84,150 as administrative expenses. During the year ended September 30, 2020, PGRNZ Limited charged to operations $300,000 (AUD), approximately $213,240 as consulting fees and $94,693 (AUD), approximately $67,308 as administrative expenses.

During the year ended September 30, 2021, the Company borrowed $689,510 from PGRNZ Limited and repaid $496,174.

The Company’s Chief Executive Officer, and a Company Director, provides office facilities to the Company for which the Company is charged $6,000(AUD) monthly, approximately $4500 (US). During the years ended September 30, 2021 and 2020, the Company incurred charges to operations of $54,000 (US) and $51,180 (US), respectively, with respect to this arrangement.

 During the year ended September 30, 2020 the Company Chairman, F.J.Garafalo loaned the company $3,500. The loan is a demand note on zero interest.

As of September 30, 2021 and 2020, due to related parties was $947,826 and $717,075, respectively.

Due from related party

During September 2021 the Company approved and issued 50,000,000 shares to Rod Young who became a related party subsequent to this reporting period. The shares were fully expensed during the period

Stock-Based Compensation

During the years ended September 30, 2021 and 2020, stock-based compensation expense relating to directors, officers, affiliates and related parties was $6,293,368 and $300,000, respectively (Note 5).

7. Income Taxes

Graphene & Solar Technologies Limited was formed in 2010. Prior to the acquisition of Solar Quartz Technologies Limited (SQTL) New Zealand, now known as Graphene and Solar Technologies Limited (GSTLNZ) in July 2017, the Company only had operations in the United States. In July 2017, the Company became the parent of GSTLNZ., a wholly owned New Zealand subsidiary, which files tax returns in New Zealand.

The Company provides for income taxes under ASC 740, ”Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

The net loss for the year ended September 30, 2021 was $34,814,944 however the stock-based compensation and the debt discount amortization of $33,793,499 and $102,139 respectively are not used in the calculations below.

For the years ended September 30, 2021 and 2020, the local (“United States of America”) and foreign components of loss before income taxes were comprised of the following:

United States of America

Graphene & Solar Technologies Limited is subject to the tax laws of United States of America.

The income tax provision for the years ended September 30, 2021 and 2020, consists of the following:

Net deferred tax assets consist of the following components as of September 30, 2020 and 2019:

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Act”) resulting in significant modifications to existing law including lowering the corporate tax rate from 34% to 21%. In addition to applying the new lower corporate tax rate in 2018 and thereafter to any taxable income we may have, the legislation affects the way we can use and carry forward net operating losses previously accumulated and results in a revaluation of deferred tax assets and liabilities recorded on our balance sheet. The Company has completed the accounting for the effects of the Act during the year ended September 30, 2021. Given that current deferred tax assets are offset by a full valuation allowance, these changes will have no impact on the balance sheet.

At September 30, 2021 and 2020, the Company had $6,702,294 and $9,657,079 respectively of the U.S. net operating losses (the “U.S. NOLs”), which begin to expire beginning in 2039. NOLs generated in tax years prior to July 31, 2018, can be carryforward for twenty years, whereas NOLs generated after July 31, 2018 can be carryforward indefinitely

New Zealand

The Company’s subsidiary operating in New Zealand (“NZ”) are subject to the New Zealand Corporate Income Tax at a standard income tax rate range of 28% on the assessable income arising in New Zealand during its tax year. The reconciliation of income tax rate to the effective income tax rate for the years ended September 30, 2021 and 2020 is as follows:

Net deferred tax assets consist of the following components as of September 30, 2021 and September 30, 2020:

As of September 30, 2021, the operations in New Zealand incurred $560,636 of cumulative net operating losses which can be carried forward to offset future taxable income. The Company has provided for a full valuation allowance against the deferred tax assets of $1,310,444 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of September 30, 2021 and 2020:

8. Subsequent Events

Subsequent to September 30, 2021, the Company:

The Company has evaluated events occurring subsequent to September 30, 2021 through to the date these financial statements were issued and has identified no additional events requiring disclosure.

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

There are no changes in nor disagreements with accountants on accounting and financial disclosure. Effective for May 7, 2020, the firm of M&K CPAS PLLC was engaged to serve as the new principal accountant to audit our financial statements. The decision to retain this accountant for the years ended Sept 30, 2020 and 2021 was approved by our board of directors.

ITEM 9A. CONTROLS AND PROCEDURES.

An evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive and Interim Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-K. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-K, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Principal Executive [and Financial Officer], or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of September 30, 2020, our disclosure controls and procedures were not effective.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2020, based on the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 (“COSO”).

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

Functional Controls and Segregation of Duties

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

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

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

Management’s Report on Internal Control over Financial Reporting

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

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

Roger May, our Principal Executive Officer, evaluated the effectiveness of our internal control over financial reporting as of September 30, 2020 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework (2013). Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls.

Changes in Internal Control Over Financial Reporting

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

Management has been addressing any underlying causes for our weaknesses in internal control which may have occurred as a result of limited resources. The Company has also engaged local accountants in Australia to assist Company management to prepare the Company’s financial statements.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Our officers and directors are listed below. Our directors are generally elected at our annual shareholders’ meeting and hold office until the next annual shareholders’ meeting, or until their successors are elected and qualified. The executive officers are elected by the directors and serve at their discretion. Frank Garofalo resigned as Chairman and Director on May 6, 2021.

Roger T. May.

Mr. May was the original founder of our company and has been a director since July 1, 2017. Mr. May assumed the interim positions of President, Chief Executive on November 17, 2019.

Mr. May has extensive international business experience over the last 40 years, resided in the USA for 22 years, returning to Australia in October 2001. He has been founder, chairman and CEO of five publicly listed companies in the USA and Australia. Mr. May has founded several high-tech. communications and mineral resource development companies. He is presently focused on global commercialization of primary component material essential in manufacture of PV solar panels, semi-conductor, and all high-end electronics in the USA and Australia.

David A. B. Halstead.

Mr. Halstead has been a director since July 1, 2017. He has a wide range of corporate, secretarial and trusts experience, in both offshore and onshore companies. In 1973 he became a partner in a local chartered accounting firm and in 1984 a principal in the Hong Kong office of Coopers & Lybrand (now PWC), specializing in international corporate and secretarial services, and offshore tax structures. Upon his return to Auckland, New Zealand in 1994, Mr. Halstead established and operated, several integrated medical centers, a surgical hospital in Auckland and a “state of the art” diagnostic center. He then spent three years working with World Vision fund raising for its micro finance arm “Vision Fund” involved with the capitalization and establishment of Vision Fund Cambodia. Reflecting his interest in health care delivery, in 2003 to this day, Mr. Halstead became, and is a Trustee of the New Zealand based international medical aid charity, Medical Aid Abroad.

Since 2006, Mr. Halstead has acted as a director, company secretary and treasurer for a group of international clients. Contemporaneously he established and operated, until recently, a unique world-first web based joint venture service for the New Zealand Government processing immigration medicals online in a secure platform through a company called NZimed Limited. Mr. Halstead is a director of an immigration sector “lead generation” company, Leadgen Matrix Ltd, Business Epic Ltd, a company focused on assisting baby boomer SME owner operators maximize their business exit strategies and value, and Asia Capital (China) Ltd, a NZ registered Financial Services Provider facilitating investment into Australia and New Zealand. He is a director of several Hong Kong and Singapore companies as well as other New Zealand entities.

Mr. Halstead was educated at Kings College, Auckland, the son of a former New Zealand Cabinet Minister and diplomat. He is a graduate of the University of Auckland with a Bachelor of Commerce and further qualifications in accounting and taxation.”

Michael Selsman.

Mr. Selsman has been a director since July 17, 2017. Mr. Selsman, as principal of Public Communications Company, Beverly Hills, California, represents publicly traded companies as a consultant in both public relations and investor relations. He is a director of Gawk, Inc. and is CEO of Archer Entertainment Media Communications, Inc. Mr. Selsman also researches and writes due diligence reports for brokerages, public and private companies (www.publiccommunicationsco.com). He is also a partner in Troika Publishing Media, a digital new media company.

Mr. Selsman has provided investor relations counsel to numerous publicly traded companies. Selsman has served on the boards of a number of major charities and lectured at most of the major universities in the Los Angeles area.

Jeffrey Freedman.

Effective July 21, 2021, Jeffrey Freedman was elected to the Board of Directors of the Company. Mr. Freedman, aged 75, has a professional history spanning over 35 years predominantly in the Energy and Oilfield services industries and has held various executive level and finance positions and Board Directorships in companies in these sectors. These have included Financial Executive and Capital Markets Consultant at EcoStim Energy Solutions, Inc.; CEO and CFO at Petro River Oil Corp f/k/a Gravis Oil Corporation; Executive Vice President, Corporate Development and Board Member at Allis-Chalmers Energy, Inc.; Managing Director, Oilfield Service and Equipment at Prudential Securities and Managing Director, Oilfield Service and Equipment at Smith Barney. Jeffrey holds an MBA Finance and Investments from New York University, Stern School of Business and BSBA-Finance from Babson College.

Juliana Tan.

Effective July 20 2020, Juliana Tan was elected to the Board of Directors of the Company. Ms. Tan has over twenty years of international experience at senior levels in corporate acquisitions, wealth management, and capital raising. Her areas of expertise include international business development, operations, marketing and sales development, strategic planning, intellectual property, process improvement, manufacturing and financial planning. Ms. Tan recently founded Eligius Lab Pte. Ltd, Singapore which establishes architectures and hardware designs for marketing, commercialization and system integration in healthcare technology projects focused on patient engagement systems. She has also served as Executive Director of CIMA Nanotech and Clearview Technology Group where she was responsible for operations, strategy development and marketing. She has served as Executive Director of Egreen Co. Ltd, Seoul Korea, where she led fundraising activities and established regional business relationships including for Sri Lanka, Indonesia, China, India and Spain. Ms. Tan has served as investment advisor for Colliers International (Singapore, China and Hong Kong), Knight Frank (Singapore, China and Malaysia), Fraser and Company (Singapore and Malaysia), SP Setia Sdn Bhd (Malaysia and Australia), Hartemas Real Estate Sdn Bhd (Malaysia), Ascendants Assets Pte Ltd. (Singapore Tudorville Properties Ltd (UK) and Kingfield’s Solicitors (UK).

ITEM 11. EXECUTIVE COMPENSATION

The following table summarizes the compensation received by our principal executive and financial officers during the two years ended September 30, 2021.

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

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

Compensation of Directors During Years Ended September 30, 2021 and 2020. During the years ended September 30, 2021 and 2020, we did not compensate our directors for acting as such.

Compensation Committee Interlocks and Insider Participation. During the years ended September 30, 2021 and 2020, none of our officers was also a member of the compensation committee or a director of another entity, which other entity had one of its executive officers serving as one of our directors.

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

The following table shows the beneficial ownership of our common stock, as of September 30, 2021 (356,737,369 shares issued and outstanding) by (i) each person whom the company knows beneficially owns more than 5% of the outstanding shares of the common stock, (ii) each of the officers, (iii) each of the directors, and (iv) all the officers and directors as a group.

Unless otherwise indicated, each owner has sole voting and investment powers over his shares of common stock. Unless otherwise indicated, beneficial ownership is determined in accordance with the Rule 13d-3 promulgated under the Securities and Exchange Act of 1934, as amended, and includes voting or investment power with respect to shares beneficially owned.