GTI
Graphjet Technology
NASDAQ
10-Q: Graphjet Technology Reports Q3 2024 Results: Operational Challenges and Strategic Adjustments
Sentiment:
Quarterly Report
12 August 2024 4:15 PM
Graphjet Technology's Q3 2024 report reveals a significant increase in operating expenses and net losses, alongside strategic shifts in production plans and ongoing challenges in the graphite market.
Worse than expected
The company's net loss of $14.157 million for the nine months ended June 30, 2024, is significantly worse than the $1.429 million loss for the same period in 2023.
The company's general and administrative expenses have increased substantially, indicating higher operational costs.
The company's current liabilities exceed its current assets by $2.054 million, raising concerns about its financial stability.
Delay expected
The company has deferred its plans to open a manufacturing plant in Kuantan, Malaysia.
The company's production start date has been delayed to late August 2024.
Capital raise
The company states that it may seek to raise additional funds through equity and debt financing or from other sources.
The company acknowledges that its future is dependent upon its ability to obtain financing to continue operations and attain profitable operations.
The company's auditor has expressed substantial doubt about the company's ability to continue as a going concern, which may make it more difficult to attract investors.
Summary
- Graphjet Technology reported a net loss of $14.157 million for the nine months ended June 30, 2024, compared to a net loss of $1.429 million for the same period in 2023.
- The company's general and administrative expenses increased substantially to $14.139 million for the nine months ended June 30, 2024, up from $1.411 million in the prior year.
- The company has deferred plans to open a manufacturing plant in Kuantan, Malaysia, and is now focusing on commissioning a factory in Kampung Baru Subang, with production expected to start in late August 2024.
- Graphjet anticipates a production output of 250 tons of graphite per month at full capacity.
- The company's current liabilities exceed its current assets by $2.054 million, raising concerns about its ability to continue as a going concern.
- Graphjet has secured loans totaling $528, including interest, and has accrued bonuses of $10.155 million for its senior management team.
- The company has also entered into debt-to-equity conversion agreements with directors and shareholders, issuing shares to settle outstanding balances.
- Graphjet has patents for its graphite production process and a patent pending for graphene production using palm kernel shells.
- The company has not yet generated any revenue from product sales and is currently focused on sampling its products to potential customers.
- The company's cash and cash equivalents stand at $88,000 as of June 30, 2024.
Sentiment
Score: 3
Explanation: The document presents a concerning financial picture with significant losses, increased expenses, and going concern doubts. While there are some positive aspects, such as the company's technology and production plans, the overall sentiment is negative due to the financial challenges and operational delays.
Highlights
- Graphjet Technology's net loss for the nine months ended June 30, 2024, was $14.157 million, a significant increase from the $1.429 million loss in the same period of 2023.
- General and administrative expenses surged to $14.139 million for the nine months ended June 30, 2024, compared to $1.411 million in the prior year.
- The company has deferred its Kuantan manufacturing plant plans and is now focusing on a factory in Kampung Baru Subang, with production expected to begin in late August 2024.
- Graphjet expects to produce 250 tons of graphite per month at full capacity.
- Current liabilities exceed current assets by $2.054 million, raising going concern doubts.
- The company has accrued $10.155 million in bonuses for senior management.
- Graphjet has patents for graphite production and a patent pending for graphene production using palm kernel shells.
- The company has not yet generated any revenue from product sales.
- Cash and cash equivalents are at $88,000 as of June 30, 2024.
Positives
- Graphjet possesses patented technology for producing graphite and graphene from palm kernel shells, a sustainable and renewable resource.
- The company is positioning itself as a low-cost producer of high-quality artificial graphite and graphene.
- Graphjet has collaborations with universities for research and development.
- The company has secured a factory in Kampung Baru Subang and expects to start production in late August 2024.
- The company has completed a business combination and received a $2.5 million PIPE investment.
Negatives
- The company has incurred a significant net loss of $14.157 million for the nine months ended June 30, 2024.
- Operating expenses have increased substantially, primarily due to staff costs, marketing, audit, consulting, and legal fees.
- The company's current liabilities exceed its current assets by $2.054 million, raising concerns about its ability to continue as a going concern.
- Graphjet has deferred its plans to open a manufacturing plant in Kuantan.
- The company has not yet generated any revenue from product sales.
- The company has a material weakness in its internal controls over financial reporting.
Risks
- The company's ability to continue as a going concern is dependent on its ability to operate profitably and receive adequate financial support from shareholders.
- The company faces risks related to geopolitical tensions, including the war in Ukraine and conflicts in the Middle East, which could affect raw material procurement and financing.
- The company is subject to risks related to the supply and pricing of palm kernel shells, its key raw material.
- The company faces competition in the graphene and graphite industry.
- The company is subject to regulatory risks and must comply with evolving laws and regulations.
- The company's qualification process for its products by future customers is expected to take 12 to 18 months.
- The company is affected by the recent border control measures implemented by Malaysia and China.
- The company is affected by the US-China trade war and China's ban on graphite exports.
- The company is affected by the reduction in the price of critical minerals.
Future Outlook
Graphjet Technology expects to start production at its Kampung Baru Subang factory in late August 2024, with an estimated output of 250 tons of graphite per month at full capacity. The company plans to sample its products to multinational companies for market acceptance and procurement purposes. The company believes it will have sufficient working capital for 9-12 months.
Management Comments
- Management believes that the net impact of the Business Combination along with cash balances will be sufficient to fund the current operating plan for 9-12 months.
- Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.
- Management believes that the unaudited condensed consolidated financial statements fairly present the company's financial condition, results of operations, and cash flows.
Industry Context
The report highlights the challenges faced by the graphite and graphene industry, including supply chain disruptions, geopolitical tensions, and price fluctuations. The company's focus on using palm kernel shells as a sustainable raw material is a differentiating factor in the market. The company is also affected by China's ban on graphite exports, which has led to production slowdowns across the EV industry.
Comparison to Industry Standards
- The company's lack of revenue and significant losses are not uncommon for early-stage companies in the advanced materials sector, particularly those focused on new technologies.
- The company's reliance on a single raw material source (palm kernel shells) is a risk, but also a potential advantage if it can secure a stable supply at competitive prices.
- The company's production target of 250 tons of graphite per month is a significant step towards commercialization, but it remains to be seen if it can achieve this target and maintain it.
- The company's focus on high-quality artificial graphite and graphene is in line with industry trends, as these materials are increasingly preferred for high-tech applications.
- The company's collaboration with universities for research and development is a common practice in the industry, as it helps to accelerate innovation and improve product quality.
- The company's financial results are significantly worse than established graphite and graphene producers, such as Syrah Resources, which has a revenue of $160 million in 2023, and Talga Group, which has a revenue of $1.5 million in 2023. However, these companies are much more mature and have established production and sales.
Stakeholder Impact
- Shareholders are impacted by the significant net losses and the company's going concern doubts.
- Employees are impacted by the company's financial challenges and potential delays in production.
- Customers are impacted by the company's delayed production start date and the ongoing qualification process.
- Suppliers are impacted by the company's financial challenges and potential delays in payments.
- Creditors are impacted by the company's financial challenges and the potential for default on loans.
Next Steps
- The company plans to start production at its Kampung Baru Subang factory in late August 2024.
- The company intends to sample its products to multinational companies for market acceptance and procurement purposes.
- The company will continue to monitor the market and adjust its strategies as needed.
Related Party Transactions
- The company has related party transactions with ZhongHe Industries Sdn Bhd, an entity owned by a shareholder and director.
- The company has related party loans with directors and shareholders.
- The company has entered into debt-to-equity conversion agreements with directors and shareholders.
Key Dates
- August 6, 2021: Energem Corp. was incorporated in the Cayman Islands.
- November 18, 2021: Energem completed its initial public offering (IPO).
- March 10, 2022: Graphjet entered into an Intellectual Property Sales Agreement with Mr. Liu Yu.
- March 14, 2024: The merger between Energem and Graphjet was consummated, and Energem changed its name to Graphjet Technology.
- February 28, 2024: Energem shareholders approved the Equity Incentive Plan.
- June 30, 2024: End of the reporting period for the quarterly report.
- August 1, 2024: Date the unaudited condensed consolidated financial statements were available for issuance.
- August 12, 2024: Date of the quarterly report filing.
Keywords
graphite, graphene, palm kernel shells, manufacturing, biomass, battery materials, financial results, patents, production, operating expenses
GTI
Graphjet Technology
NASDAQ
Sector: TBD
Filings with Classifications
Capital raise
30 April 2025 4:01 PM
8-K Filing
- The document mentions the risk that Graphjet will need to raise additional capital to execute its business plans.
- It also notes that such capital may not be available on acceptable terms or at all.
Worse than expected
30 April 2025 4:01 PM
8-K Filing
- The company received a delisting notice from Nasdaq due to its market value falling below the required threshold.
Worse than expected
6 March 2025 9:30 PM
8-K Filing
- The company received notices from Nasdaq for failing to meet listing requirements due to delayed financial filings and a low market value.
Delay expected
6 March 2025 9:30 PM
8-K Filing
- The company delayed filing its Quarterly Report on Form 10-K for the period ended September 30, 2024.
- The company delayed filing its Annual Report on Form 10-Q for the period ended December 31, 2024.
Capital raise
6 March 2025 9:30 PM
8-K Filing
- The company may need to raise additional capital to execute its business plans.
- There is a risk that additional capital may not be available on acceptable terms or at all.
Worse than expected
27 February 2025 9:30 PM
8-K Filing
- The company received a delisting notice from NASDAQ due to the share price falling below $1 for 32 consecutive days.
Worse than expected
14 January 2025 6:03 PM
SEC Form 4
- The complete divestment by a 10% owner is generally viewed negatively by the market.
Worse than expected
10 January 2025 7:25 PM
SEC Form 4
- The sale of a large number of shares by a major shareholder is generally viewed negatively by the market.
Worse than expected
8 January 2025 5:03 PM
SEC Form 4 Filing
- A major shareholder selling a significant number of shares is generally viewed negatively by the market.
Worse than expected
8 January 2025 4:30 PM
Director Resignation Announcement
- The resignation of three directors, including an executive and two independent members, is a negative development that could impact investor confidence.
Worse than expected
6 January 2025 2:23 PM
SEC Form 4
- The sale of shares by a major shareholder is generally viewed negatively by the market.
Worse than expected
30 December 2024 1:14 PM
SEC Form 4 Filing
- The document indicates that a major shareholder is selling a significant portion of their shares, which is generally considered a negative signal.
Worse than expected
20 December 2024 7:25 PM
SEC Form 4 Filing
- The significant sale of shares by a major shareholder is generally viewed negatively by the market.
- The decreasing weighted average sale price over the three days suggests a lack of confidence in the stock.
Worse than expected
17 December 2024 5:15 PM
SEC Form 4
- The sale of a significant number of shares by a major shareholder is generally viewed negatively by the market.
Capital raise
5 December 2024 5:27 PM
Personnel Change Announcement
- The document mentions the risk that Graphjet will need to raise additional capital to execute its business plans.
- It also states that this capital may not be available on acceptable terms or at all.
Worse than expected
1 November 2024 4:06 PM
S-1/A Filing
- The company has incurred significant losses and has not recorded any revenue to date.
- The company's auditor has expressed substantial doubt about its ability to continue as a going concern.
- The company's current liabilities exceed its current assets.
Delay expected
1 November 2024 4:06 PM
S-1/A Filing
- The document mentions that the company was unable to export graphite from China in 2023, therefore it did not produce any revenue pursuant to the supply agreement in 2023.
- The document states that Graphjet expects to open its first manufacturing plant in the first quarter of fiscal year 2025.
Capital raise
1 November 2024 4:06 PM
S-1/A Filing
- The document details a best efforts offering of 718,390 Class A Ordinary Shares at $2.088 per share.
- The company aims to raise approximately $1,450,000, after deducting estimated expenses of $50,000, for working capital and general corporate purposes.
Capital raise
25 October 2024 4:46 PM
S-1/A Filing
- The filing pertains to the offer and sale of Class A Ordinary Shares, with no minimum offering amount.
- The offering is a best efforts offering, with officers and directors using their best efforts to sell the shares at a fixed price of $ per share for 180 days.
- Proceeds from the sale will be used for working capital and general corporate purposes.
Worse than expected
25 October 2024 4:46 PM
S-1/A Filing
- The company's auditor has expressed substantial doubt about its ability to continue as a going concern.
- The company has a limited operating history and has not recorded any revenue since inception.
- The company faces intense competition in the graphene and graphite industry.
Delay expected
25 October 2024 4:46 PM
S-1/A Filing
- Currently, Graphjet Technology believes its first production from this plant will be in the first quarter of fiscal year 2025.
- We were unable to export graphite from China in 2023, therefore we did not produce any revenue pursuant to the supply agreement in 2023.
Worse than expected
3 October 2024 4:28 PM
Registration Statement
- The company has a very limited operating history, which may make it difficult for investors to evaluate the success of its business.
- The company's independent registered public accounting firm's report contains an explanatory paragraph that expresses substantial doubt about its ability to continue as a going concern.
Delay expected
3 October 2024 4:28 PM
Registration Statement
- Graphjet Technology believes its first production from its manufacturing plant in Kuantan will be in the first quarter of fiscal year 2025.
Capital raise
3 October 2024 4:28 PM
Registration Statement
- Graphjet Technology is conducting a best efforts offering to sell Class A Ordinary Shares to raise up to $1.5 million.
- The offering price is fixed at $ per share, and the offering period is 180 days after the effective date of the registration statement.
- The company intends to use the proceeds for working capital and general corporate purposes.
Worse than expected
28 August 2024 5:30 PM
S-1/A Filing
- The Public Warrants and the Sponsor Warrants are out of the money, which means that the trading price of the Class A Ordinary Shares underlying the Warrants is below the $11.50 exercise price of the Warrants.
- The sale of the securities being registered in this prospectus, or the perception in the market that such sales may occur, could result in a significant decline in the public trading price of our Class A Ordinary Shares.
Worse than expected
27 August 2024 4:15 PM
Current Report
- The resignation of the auditor and the going concern note in the audit report are both negative indicators.
Capital raise
12 August 2024 4:15 PM
Quarterly Report
- The company states that it may seek to raise additional funds through equity and debt financing or from other sources.
- The company acknowledges that its future is dependent upon its ability to obtain financing to continue operations and attain profitable operations.
- The company's auditor has expressed substantial doubt about the company's ability to continue as a going concern, which may make it more difficult to attract investors.
Delay expected
12 August 2024 4:15 PM
Quarterly Report
- The company has deferred its plans to open a manufacturing plant in Kuantan, Malaysia.
- The company's production start date has been delayed to late August 2024.
Worse than expected
12 August 2024 4:15 PM
Quarterly Report
- The company's net loss of $14.157 million for the nine months ended June 30, 2024, is significantly worse than the $1.429 million loss for the same period in 2023.
- The company's general and administrative expenses have increased substantially, indicating higher operational costs.
- The company's current liabilities exceed its current assets by $2.054 million, raising concerns about its financial stability.
Capital raise
19 July 2024 4:16 PM
S-1/A Filing
- The document details a primary offering of up to 12,028,075 Class A Ordinary Shares, including shares issuable upon exercise of Public and Sponsor Warrants.
- The company expects to continue efforts to raise additional capital to support its long-term business objectives.
Worse than expected
19 July 2024 4:16 PM
S-1/A Filing
- The current market price of the Class A Ordinary Shares is significantly below the exercise price of the warrants.
- The current market price is significantly below the price at the time of the Company's initial public offering.
Capital raise
25 June 2024 4:06 PM
Registration Statement
- The filing covers a primary offering of up to 12,028,075 Class A Ordinary Shares, including shares issuable upon exercise of public and sponsor warrants.
- It also includes a secondary offering for the resale of up to 108,848,493 Class A Ordinary Shares and 528,075 warrants by selling securityholders.
- The primary offering could generate up to approximately $138.3 million if all warrants are exercised for cash.
Worse than expected
25 June 2024 4:06 PM
Registration Statement
- The company has not had any sales of its products to date.
- The company's Public Warrants and the Sponsor Warrants are out of the money, which means that the trading price of the Class A Ordinary Shares underlying the Warrants is below the $11.50 exercise price of the Warrants.
Delay expected
25 June 2024 4:06 PM
Registration Statement
- We were unable to export graphite from China in 2023, therefore we did not produce any revenue pursuant to the supply agreement in 2023.
Capital raise
18 June 2024 8:24 PM
Quarterly Report
- The company may seek to raise additional funds through equity and debt financing or from other sources.
- The company's future is dependent upon its ability to obtain financing to continue operations and attain profitable operations.
Worse than expected
18 June 2024 8:24 PM
Quarterly Report
- The company reported a significant net loss of $11.594 million for the quarter, which is a substantial increase compared to the previous year.
- The company's general and administrative expenses have increased significantly, indicating higher operating costs.
- The company's auditor has expressed substantial doubt about the company's ability to continue as a going concern, which is a major concern.
Worse than expected
4 June 2024 4:16 PM
8-K Filing
- The company failed to file its quarterly report on time, resulting in a delinquency notice from Nasdaq, which is worse than expected.
Delay expected
4 June 2024 4:16 PM
8-K Filing
- The company's quarterly report for the period ended March 31, 2024, was not filed on time, leading to the Nasdaq delinquency notice.
Better than expected
2 April 2024 5:24 PM
Investor Presentation
- The company's production costs are significantly lower than industry standards.
- The company's carbon footprint is significantly lower than industry standards.
- The company's use of a renewable waste product is a significant advantage.
Capital raise
2 April 2024 5:24 PM
Investor Presentation
- The new manufacturing facility is subject to capital funds being raised.
Capital raise
20 March 2024 5:03 PM
Merger Announcement
- The document mentions a private financing (PIPE) that raised $2.5 million.
- The document also indicates that the company may need to raise additional capital in the future to execute its business plans.
Better than expected
4 March 2024 12:30 PM
Press Release
- The company is accelerating its production timeline, expecting commissioning by Q2 2024 and revenue generation in 2024, which is faster than previously anticipated.
Delay expected
20 February 2024 3:30 PM
Meeting Postponement Announcement
- The extraordinary general meeting of shareholders has been delayed from February 23, 2024, to February 28, 2024.
Delay expected
20 February 2024 9:00 AM
Material Definitive Agreement Update
- The document details a delay in the business combination deadline from February 18, 2024 to August 18, 2024.
Delay expected
23 January 2024 3:52 PM
Current Report
- The business combination deadline has been extended to February 18, 2024.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.