Graphene & Solar Technologies Ltd - Quarter Report: 2023 June (Form 10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2023

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

For the transition period from __________ to __________

Commission File Number: 333-174194

23 Corporate Plaza Drive, Suite 150 

Newport Beach, CA 92660

(Address of principal executive offices, including Zip Code)

(949) 478-8387

(Issuer’s telephone number, including area code)

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

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

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

As of September 12, 2023, the registrant had 384,792,610 outstanding shares of common stock.

GRAPHENE & SOLAR TECHNOLOGIES LIMITED

FORM 10-Q

TABLE OF CONTENTS

GRAPHENE & SOLAR TECHNOLOGIES LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

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

GRAPHENE & SOLAR TECHNOLOGIES LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME

(Unaudited)

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

GRAPHENE & SOLAR TECHNOLOGIES LIMITED

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY

(Unaudited)

Three and Nine Months Ended June 30, 2023 and 2022

GRAPHENE & SOLAR TECHNOLOGIES LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the Nine-Month Period Ended June 30, 2023 and 2022

(Unaudited)

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

GRAPHENE & SOLAR TECHNOLOGIES LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – BASIS OF PRESENTATION

These consolidated financial statements of Graphene & Solar Technologies Limited (GSTX or the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). In the opinion of management, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to Securities and Exchange Commission (SEC) rules and regulations. These financial statements should be read along with Graphene & Solar Technologies audited financial statements as of September 30, 2022.

Going Concern – The Company has incurred cumulative net losses since inception of $67,841,838 at June 30, 2023. Accordingly, it requires capital to fund working capital deficits and for future operating activities to take place. The Company’s ability to raise new funds through the future issuances of debt or common stock is unknown. The obtainment of additional financing, the successful development of a plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability of the Company to continue its operations is dependent on management’s plans, which include the raising of capital through debt and/or equity markets, with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur additional liabilities with certain related parties to sustain the Company’s existence. There can be no assurance that the Company will be able to raise any additional capital and therefore raise doubt about the Company’s ability to continue as a going concern.

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

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

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

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). A summary of the significant accounting policies applied in the preparation of the accompanying financial statements can be found in the Company’s Annual Report in form 10-K for the year ended September 30, 2022.

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

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

Cash and Cash Equivalents – Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. As of June 30, 2023 and September 30, 2022, the Company had $6,495 and $2,857 in cash, respectively, and no cash equivalents.

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

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

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

There was no derivative activity in fiscal quarter ending June 30, 2023. Therefore, no derivative liabilities were recorded during the quarter ended June 30, 2023.

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).

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

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

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

NOTE 3 – NOTES PAYABLE

The Company’s indebtedness as of June 30, 2023 and September 30, 2022 were as follows:

 Schedule of notes payable

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 June 30, 2023 and September 30, 2022, the total promissory notes payable balance was $107,197 and $102,710 including accrued interest of $47,197 and $42,710, 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.

Convertible Notes Payable

As of June 30, 2023 and September 30, 2022, noteholders representing $70,747 in outstanding principal had not requested the exchange of shares of common stock. As of June 30, 2023 and September 30, 2022, the exchange obligation payable was $176,835 and $168,897 including accrued interest of $106,087 and $98,150, respectively. As of June 30, 2023 and September 30, 2022, the exchange obligation was for 53,424 shares and 51,026 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 June 30, 2023 and September 30, 2022, the total convertible note payable balance was $52,241 and $49,997, including accrued interest of $22,241 and $19,997 respectively. As of June 30, 2023 and September 30, 2022, the exchange obligation was for 104,482 shares and 99,994 shares of common stock, respectively.

Related Party Loans

On December 5, 2022, the Company entered into a Promissory Loan Note with Mr. Andrew Liang, in the amount of US$20,000, with a maturity date of December 5, 2023. The loan will accrue interest at the rate of 10% per annum.

On February 28, 2023, the Company entered into a Promissory Loan Note with MI Labs Pty Ltd, in the amount of US$50,000 (of which $31,693 was received by the company as of June 30, 2023) with a maturity date of February 28, 2024. The loan will accrue interest at the rate 10% per annum.

NOTE 4- RELATED PARTY

MI Labs Pty Ltd, a management company controlled by Mr. Jason May, the Company’s Chief Executive Officer and a Company Director, provides management services to the Company for which the Company is charged $25,000 monthly. During the nine months ended June 30, 2023, the Company incurred charges to operations of $125,000 with respect to this arrangement.

CSA Liang Pty Ltd, a management company controlled by Mr. Andrew Liang, a Company Director and former Chief Executive Officer, provided management services to the Company for which the Company was charged $20,833 monthly. During the nine months ended June 30, 2023, the Company incurred charges to operations of $187,497 with respect to this arrangement.

Sativus Investments, a management company controlled by Mr. Paul Saffron, the Company’s Chief Operations Officer, provides management services to the Company for which the Company is charged $20,000 monthly, plus a $60,000 sign-on bonus. During the nine months ended June 30, 2023, the Company incurred charges to operations of $100,000 with respect to this arrangement.

During nine-months period ended June 30, 2023 and 2022, stock-based compensation expense relating to directors, officers, affiliates and related parties was $0 (0 shares) and $2,485,000 (3,500,000 shares), respectively.

NOTE 5 – STOCKHOLDERS’ EQUITY

During the quarter ended June 30, 2023, the Company issued 10,250,000 shares of the Company’s common stock to members of the Board of Directors, employees, and consultants. The fair value of the shares, as determined by reference market price of the Company’s common stock on each grant date, aggregated $30,750.

Total stock-based compensation expense was $30,750 for the nine-months ended June 30, 2023.

237,130 new common shares were issued during the nine- month period ending June 30, 2023 for settlement of debt and liabilities totaling $65,211. The company recognized a loss of $40,393 on this exchange.

The Company has a total of 5,778,366 shares that remain approved, reserved and outstanding and not yet issued by the Transfer Agent at June 30, 2023.

NOTE 6 – COMMITMENTS & CONTINGENCIES

Contingencies

From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect our financial condition, results of operations and liquidity. In addition, the ultimate outcome of any litigation is uncertain. Any outcome, whether favorable or unfavorable, may materially and adversely affect us due to legal costs and expenses, diversion of management attention and other factors. We expense legal costs in the period incurred. We cannot assure you that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against us in the future, and these matters could relate to prior, current or future transactions or events. As of June 30, 2023, there were no pending or threatened litigation against the Company.

NOTE 7 – INTANGIBLE ASSETS/PATENTS

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.

 Schedule of finite lived intangible assets

NOTE 8 – SUBSEQUENT EVENTS

On April 2, 2023, Mr. Jason May was appointed Chief Executive Officer by the Board of Directors. Mr. May was granted 2,000,000 shares per the terms of the agreement. As of this filing date, the 2,000,000 shares have been approved but remain unissued.

On June 1, 2023, Mr. Paul Saffron was appointed Chief Operations Officer by the Board of Directors. Mr. Saffron was granted 5,000,000 shares per the terms of the agreement. As of this filing date, the 5,000,000 shares have been approved but remain unissued.

On July 1, 2023, Mr. Andrew Liang stepped down from the Chief Executive Officer role but remains a Corporate Advisor and a Director on the Board. Mr. Liang was granted 10,000,000 shares per the terms of the agreement. As of this filing date, the 10,000,000 shares have been approved but remained unissued.

On July 28, 2023, Mr. Juan Hilsaca signed a consulting agreement with the Company and was granted 250,000 shares per the terms of the agreement. As of this filing date, the 250,000 shares have been approved but remained unissued.

Mr. Thomas Chang was granted a maximum of 1,000,000 shares per annum subject to performance in fiscal years 2021/2022, 2022/2023 and 2023/2024 to a total of 3,000,000 shares. 1,000,000 shares were issued during the 2021/2022 fiscal year. As of this filing date, the remaining 2,000,000 shares have been approved but remain unissued.

The Company has evaluated events occurring subsequent to June 30, 2023 through to the date these financial statements were issued and has identified no additional events requiring disclosure.

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

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

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

FORWARD LOOKING STATEMENTS

The information contained in this Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, including among other things, statements regarding our capital needs, business strategy and expectations. Any statement which does not contain a historical fact may be deemed to be a forward-looking statement. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. In evaluating forward looking statements, you should consider various factors outlined in our Form 10-K report for the year ended September 30, 2022, filed with the U.S. Securities Exchange Commission (“SEC”) and, from time to time, in other reports we file with the SEC. These factors may cause our actual results to differ materially from any forward-looking statement. We disclaim any obligation to publicly update these statements or disclose any difference between our actual results and those reflected in these statements.

Overview

We are primarily focused on providing the materials and technologies for a greener future. GSTX has a portfolio of projects in the cleantech are with:

These investments focus on global opportunities, multi-billion-dollar industries, with a significant positive environmental impact. GSTX is focused on projects with exceptionally strong business opportunities, taking advantage of the environmental and supply chain challenges the world faces at present. GSTX is currently focused on supplying advanced materials to existing manufacturers and water harvesting products to market.

Advanced Materials

A portfolio of proprietary technologies for upstream manufacturing material supply into high tech markets including solar, semiconductor, defense.

Water Technologies

A portfolio of products and technologies for providing clean drinkable water for consumers and industry.

The Company is also exploring acquisition opportunities for Critical Resources Assets (Minerals with identified supply chain risk), zero emission fossil fuel replacement, green hydrogen, and ammonia production.

Operational Overview.

US Thin Films

US Thin-Film Corporation, a 100% owned subsidiary of GSTX holds a Patent Portfolio (IP) relating to the novel leading-edge production of conductive transparent thin films. The thin films are based on a conductive nanoparticle technology, an innovative conductive coating that self-assembles into a random mesh-like network pattern when coated, providing excellent electrical conductivity, high transparency, and flexibility. The Technology was founded and developed in Israel and has built up significant R&D profile for over 15 years with more than USD $90 Million invested. The technology has won several international touchscreen technology awards.

Applications of the proprietary thin film in existing electronics applications outperforms current materials. Key applications include: Electromagnetic Interference (EMI) Shielding, Flexible Transparent Antennas (4G/5G communications), Transparent Heaters (windows, goggles, etc), Touch Displays (monitors, phones, tablets), Photovoltaic, OLED Lighting, Flexible Displays, Sensors, and numerous other electronic applications

The US Thin-Film technology is superior to traditional/existing technology with multiple times the electrical conductivity of conventional ITO based transparent conductive films with a simple manufacturing method protected by the company’s patent portfolio.

The company is presently in discussions with several contract manufacturing groups to produce initial samples of its thin film technology, branded Dragonfly film, for product qualification and pre-sales activity purposes.

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. Many people do not realise that the atmosphere, the air we breathe, contains a significant amount of water. Humidity is water in the air. Air can hold 1-2 ounces of water per cubic yard. At any one instant, the Earth’s atmosphere contains 37.5 trillion gallons of water vapor – enough to cover the entire surface of the planet with 1.5 inches of rain if condensed.

In parallel, massive population growth and urbanisation has led to an unprecedented demand for fresh water. Investment in infrastructure has been woefully inadequate, resulting in severe and critical water stress globally.

There are an estimated 13 trillion litres (3.4 trillion gal) of water floating in the atmosphere at any one time. There is 6 times as much fresh water in the air as in all rivers and lakes in the world.

The Company is continuing commercialization of a unique water harvesting technology utilizing modular, self-contained units that can be solar or grid powered, and deployed in urban and rural environments. The water harvesters 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) per day. The 100% pure H20 extracted from the atmosphere is also suitable for industrial use in green hydrogen production and pharmaceutical, semiconductor processing plants.

A 100% operational subsidiary has been established for the water harvesting products. It will trade as Adaquo, which is a Latin verb meaning to supply water. The company has engaged the services of two industry veterans (20+ years experience) to assist with commercialization of the technology.

Whilst still undertaking in house development of the company’s proprietary solid-state technology, the company is also exploring opportunities to license and distribute existing products that have been market proven on an exclusive geographical basis.

Quartz Material.

The company has significant technical expertise and experience in the high purity quartz sector. Initially, the company focused upon acquiring resources and developing high purity silica (99.9% purity) into commercial grade high purity quartz sand (HPQS 99.997% purity). HPQS is essential for the production of semiconductors and photovoltaic solar panels.

Although the enterprise was successful in identifying substantial resources and 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. The COVID Pandemic saw significant disruption to the global solar and semiconductor manufacturing sector. This had significant flow on effects to HPQS market. It is anticipated that by mid-2023 the sector will be substantially recovered to pre-covid levels of production and associated demand for raw materials. At present manufacturing levels of solar cells are showing strong growth and a swift recovery.

The company is presently re-engaging with past acquisition opportunities and customers in the HPQ sector. At present there is a significant production shortfall for the material and prices/volumes are showing strong growth. The company is continuing to pursue the development of an Australian based production facility.

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.

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. 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 materials and products.

Our main focus remains dedicated to our original premise of producing low cost, high grade, high purity graphene for industrial sales to existing materials groups.

Results of Operations

For the fiscal quarter ended June 30, 2023 and 2022, we generated no revenues, and thus no cost of sales or gross profits.

For the fiscal quarter ended June 30, 2023 and 2022, we incurred $398,254 and $445,018, respectively, in operating expenses.

For the fiscal quarter ended June 30, 2023 we recorded other expenses of $5,375, while in the fiscal quarter ended June 30, 2022, we incurred expenses of $4,891; both items are represented by accrued interest on debt.

For the fiscal quarter ended June 30, 2023, we recorded other income of $8,116, while in the fiscal quarter ended June 30, 2022, we recorded other income of $7,288.

For the fiscal quarter ended June 30, 2023, $48 was recognized as loss on extinguishment of debt, while in the fiscal quarter ended June 30, 2022, we recorded $0.

For the nine months ended June 30, 2023, we reported net loss before taxes of $771,824 while in the nine months ended June 30, 2022, we reported a net loss before taxes of $13,733,684. Since there were no tax obligations in either year, net income / loss in each year was the same as that reported before taxes.

For the periods ended June 30, 2023 and September 30, 2022, our cash positions were $6,495 and $2,857 respectively.

As of June 30, 2023, we had total current liabilities of $4,778,186 while as of September 30, 2022, we had total current liabilities of $4,061,574 an increase of about 15%. Accrued interest payable increased from $161,602 to $177,112 all attributable to accruals on the loans and the convertible notes payable. Related party debt increased from $1,342,405 to $1,838,093 during the period.

Liquidity and Capital Resources

As of June 30, 2023, we had $17,899 in total current assets and $4,778,185 in total current liabilities. Accordingly, we had a working capital deficit of $4,760,287.

Cash used in operating activities was $46,950 for the quarter ended June 30, 2023, as compared to $49,463 cash used in operating activities for the quarter ended June 30, 2022.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive and Interim Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-Q, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Principal Executive [and Financial Officer], or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of December 31, 2020, our disclosure controls and procedures were not effective.

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

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

Functional Controls and Segregation of Duties

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

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

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

 Management’s Report on Internal Control over Financial Reporting

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

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

Roger May, our former Principal Executive Officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2020 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework (2013). Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls.

Changes in Internal Control Over Financial Reporting

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

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

PART II

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

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

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

Please see Note 5 to our Financial Statements.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibits

SIGNATURES

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