10-K: Graphjet Faces Nasdaq Delisting, Going Concern Doubts Amid Production Delays

Graphjet Technology has been delisted from Nasdaq to OTC Pink Limited due to multiple non-compliance issues, while auditors express substantial doubt about its ability to continue as a going concern.

Summary

• Graphjet Technology reported a net loss of $16,410,770 for the fiscal year ended September 30, 2025, an improvement from $17,815,307 in the prior year.
• The company had a working capital deficit of $10,059,898 as of September 30, 2025, and its independent auditor expressed substantial doubt about its ability to continue as a going concern.
• Graphjet's Class A ordinary shares were suspended from trading on The Nasdaq Global Market on November 13, 2025, and now trade on the OTC Pink Limited marketplace under the symbol GTIJF, following non-compliance with Nasdaq listing rules.
• The company generated $92,776 in revenue from selling 'side products' in FY2025, resulting in a gross loss of $100,165, as commercial sales of its primary graphite and graphene products have not yet commenced.
• A $30 million annual supply agreement with Toyoda has not generated revenue in 2023, 2024, or 2025 due to China's export controls and delays in completing Graphjet's production facility.
• Graphjet issued 20,000,000 warrants (333,334 post-consolidation) to Aiden Lee Ping Wei on May 15, 2025, at an exercise price of $0.055 ($3.30 post-consolidation) for a total purchase price of $200,000, with a fair value of $19.4 million recognized as share compensation expense.
• The company acquired its operating property in Malaysia for approximately $7.3 million (RM30.45 million) on August 19, 2025, partially paid by issuing 528,464 post-Share Consolidation shares to the vendor's sole owner.
• A 1-for-60 share consolidation became effective on August 25, 2025, increasing the par value of ordinary shares from $0.0001 to $0.006.
• Graphjet secured a secured, non-recourse term loan of approximately $7 million from International Liquidity, LLC on October 16, 2025, bearing a 5.0% annual interest rate and secured by 3,157,000 shares.
• Material weaknesses in internal control over financial reporting were identified, including a lack of backup personnel in key approval processes and insufficient U.S. GAAP expertise.
• The company is actively pursuing a diversified funding strategy and plans to leverage government incentive programs to support its growth and transition to commercial production.

Sentiment

Score: 2

Explanation: The company faces severe financial distress, evidenced by a significant working capital deficit and an auditor's 'going concern' warning. The delisting from Nasdaq to OTC Pink severely limits liquidity and investor access, further hindering crucial capital-raising efforts for a pre-revenue company. Despite patented technology and a supply agreement, the inability to generate revenue from core products for three years, coupled with ongoing production delays and identified material weaknesses in internal controls, presents an extremely high-risk investment profile. The positive aspects (reduced net loss, technology potential) are heavily outweighed by the immediate and existential threats to its operations and financial viability.

Positives

• Net loss decreased by approximately $1.4 million, or 7.88%, from $17.8 million in FY2024 to $16.4 million in FY2025.
• Secured a $30 million annual supply agreement with Toyoda for graphite and graphene, although revenue generation is pending production facility completion.
• Possesses proprietary, patented technology for manufacturing artificial graphene and graphite from palm kernel shells, a renewable waste product.
• Claims to produce graphite at a significantly lower cost (approximately $4,500 per ton) compared to natural ($8,000-$11,000/ton) and other artificial graphite ($20,000/ton).
• Produces high-purity graphene (in excess of 99.99%) and expects to offer it at 80-90% less than current market prices ($200-$450 per gram).
• Achieved up to an 83% reduction in carbon footprint and up to an 80% reduction in production costs with its manufacturing technology.
• Maintains strategic R&D collaborations with prestigious institutions like the National University of Malaysia (UKM), University Teknikal Malaysia Melaka (UTEM), and is a member of MIT's Industrial Liaison Program.
• Acquired its current operating property in Malaysia, demonstrating commitment to establishing production facilities.
• Successfully completed a fundraising exercise of approximately $1.4 million (MYR 6 million) from new external shareholders on November 1, 2024.
• Secured a $7 million secured, non-recourse term loan from International Liquidity, LLC on October 16, 2025.
• Regained compliance with Nasdaq's Periodic Filing Rule and Bid Price Rule by September 24, 2025, demonstrating efforts to meet listing standards (though subsequently delisted for other reasons).

Negatives

• Delisted from The Nasdaq Global Market to OTC Pink Limited (GTIJF) on November 13, 2025, due to failure to comply with Nasdaq listing rules, including minimum market value of listed securities (MVLS), market value of publicly held shares (MVPHS), and minimum bid price.
• Independent registered public accounting firm's report contains an explanatory paragraph expressing 'substantial doubt about our ability to continue as a going concern' due to a net loss of $16.4 million and a working capital deficit of $10.0 million as of September 30, 2025.
• Has a very limited operating history and has not commenced commercial sales of its primary products (graphene and graphite) to date.
• Revenue of $92,776 in FY2025 was from 'side products' and resulted in a gross loss of $100,165, partly due to low productivity and quality deterioration from prolonged storage.
• The $30 million annual supply agreement with Toyoda has not generated any revenue in 2023, 2024, or 2025 due to China's export controls and delays in completing the Malaysian production facility.
• Identified material weaknesses in internal control over financial reporting, including a lack of backup personnel in key approval processes and insufficient U.S. GAAP expertise.
• Graphite prices have receded, with fine-flake graphite declining by approximately 20% in the first ten months of 2024, and China expanded export controls on artificial graphite anode materials effective November 8, 2025.
• Increased palm kernel shell prices have adversely impacted operational performance due to heightened demand.
• Geopolitical tensions, US-China trade war, and border control measures by Malaysia and China have disrupted raw material supply chains and affected the ability to transport and trade graphite efficiently.
• The slowdown in the semiconductor industry and operational halts by major players like LG and GM due to raw material shortages reflect broader market challenges.
• High dependence on external funding at the pre-revenue stage, with delays or limitations in securing financing potentially affecting liquidity and project timelines.
• Risk of loss of key technical personnel, which could disrupt operations and delay technology development.
• Material wastage is unavoidable during the research and development phase, contributing to increased short-term operating costs.
• Limited exposure to investor and capital markets due to OTC listing may constrain opportunities to attract strategic investors or secure competitive financing.

Risks

• Very limited operating history makes it difficult to evaluate business success and future viability.
• Independent registered public accounting firm's report expresses substantial doubt about the ability to continue as a going concern.
• Proposed graphene/graphite manufacturing business carries risks including unanticipated liabilities, need for additional capital, and competition.
• The graphene and graphite industry is highly competitive, potentially leading to declines in market share, net sales, or net income.
• May not recoup expenditures associated with growth and expanding production capacity.
• Inability to respond quickly and profitably to continued innovations in the graphene and graphite industry.
• Failure to effectively implement sales, marketing, and service plans could hinder sales growth and results of operations.
• Must continuously invest in research and development and devote significant resources to commercializing new products.
• Limited capital poses a significant threat from inherent manufacturing risks (environmental hazards, industrial accidents, natural disasters, system failures).
• Risks associated with relationships with third parties for commercialization, sales, and marketing of products.
• Failure to protect intellectual property rights may undermine competitive position, and litigation to protect IP can be costly.
• May need to defend against claims of infringing, misappropriating, or violating the intellectual property rights of others.
• Dependence on third parties for certain construction, maintenance, engineering, transportation, warehousing, and logistics services.
• Business may be impacted by international instability, war, terrorism, and geopolitical events.
• Future success depends on the ability to increase production capacity cost-effectively, which is subject to significant risks and uncertainties.
• Failure to manage growth effectively could adversely affect business and operating results.
• Inability to attract and retain key employees and qualified management, technical, engineering, and sales personnel could harm business growth.
• Future litigation or administrative proceedings could have a material adverse effect on business, financial condition, and results of operations.
• Cyber-attacks or other failures in telecommunications or information technology systems could result in information theft, data corruption, and business disruption.
• Dependence on the palm oil industry for raw material availability and exposure to price volatility.
• Risks associated with international operations, including local economic/political conditions, conflicting laws, currency fluctuations, and trade barriers.
• Investments into or acquisitions of other companies or technologies could divert management's attention, result in dilution, and disrupt operations.
• Subject to export and import control laws and regulations that could impair ability to compete internationally or subject to liability.
• An active market for securities may not develop, adversely affecting liquidity and price.
• Negative reports from securities or industry analysts could cause share price and trading volume to decline.
• Future sales of Class A Ordinary Shares, or the perception of such sales, could cause the market price to decline.
• No current plans to pay cash dividends on Class A Ordinary Shares for the foreseeable future.
• Shareholders may experience dilution in the future due to equity issuances.
• Changes in laws, regulations, or rules, or failure to comply, may adversely affect business, investments, and results of operations.
• May be required to take write-downs or write-offs, restructuring, and impairment or other charges.
• Subject to financial reporting and other requirements as a public company for which accounting and management systems may not be adequately prepared.
• Quarterly operating results may fluctuate significantly and fall below expectations due to seasonality and other factors.
• Inability to obtain additional financing to fund operations and growth.
• Internal controls over financial reporting may not be effective, and independent auditors may not be able to certify their effectiveness.
• Inability to comply with the continued listing standards of any U.S. stock exchange.
• Trading on OTC Pink Limited may limit liquidity and make it difficult for shareholders to sell shares at a favorable price, and may result in greater price volatility.
• Delisting of Class A ordinary shares could negatively affect investor perception and reduce demand.
• Ability to raise additional capital may be limited due to trading on OTC Pink Limited.
• Impact of U.S. Government Shutdown or Disruptions on access to international capital and regulatory processing.
• Political and regulatory risks for green energy policies, including inconsistent government support and subsidies.
• Strict and evolving environmental regulations add complexity and cost to operations.
• Geopolitical tensions and policy shifts affect trade relations, market access, and raw material availability.
• Stringent import and export regulations in key markets pose significant operational challenges.
• Slowdown in the semiconductor industry may lead to reduced demand and disrupted partnerships.
• Raw material shortages and political uncertainties impacting industry leaders like Posco and Samsung SDI.
• China's dominance over raw materials supply chains influences global market pricing and supply continuity.
• Challenges in developing direct relationships with EV battery manufacturers due to competitive pressures and regional uncertainties.
• Government disruptions and ceased operations by industry leaders due to raw material shortages.
• Global supply chain vulnerabilities can significantly disrupt the availability of raw materials and machinery.
• Political uncertainty during election periods can lead to fluctuations in investor confidence and market stability.
• Increased regulatory burdens from new political leadership could result in higher operational costs.
• Potential alteration of SEC global cooperation stance under new leadership, affecting international agreements and compliance protocols.
• Shift in SEC enforcement priorities away from transparency and investor protection.
• Increased global supply and price volatility if China removes export restrictions on graphite and graphene.
• Market saturation if China lifts export restrictions, driving down prices and reducing demand for alternative suppliers.
• Business continuity risk due to lack of cross-functional backups or a succession plan.
• Technology transfer and training gaps leading to skill gaps, inefficiencies, and reliance on external consultants.
• Foreign currency exchange rate fluctuations, primarily between Malaysian Ringgit, U.S. Dollar, and Chinese Renminbi, affecting import costs and profit margins.
• Challenges in sourcing highly specialized equipment and spare parts from limited global suppliers.
• Challenges in machinery maintenance and repair work due to lack of local expertise, necessitating overseas technicians and incurring higher costs.
• Material wastage during the research and development stage, contributing to increased short-term operating costs.
• Limited exposure to investor and capital markets constrains opportunities to attract strategic investors or secure competitive financing.
• Technological performance and process efficiency risks, including challenges that reduce conversion yield or product uniformity.
• Regulatory and environmental compliance changes could require additional investment, financial penalties, or reputational damage.
• Market demand and industry trends, particularly in EV, renewable energy storage, and semiconductor manufacturing, influencing sales volume and product pricing.
• Operational and human resources factors, including shortages of qualified manpower, turnover, or occupational safety incidents.
• Dependence on external funding at the pre-revenue stage to support general operations and strategic growth plans.

Future Outlook

Graphjet Technology plans to complete its development and commissioning phase to transition into full commercial production, focusing on refining operating parameters, quality control, and process safety. The company intends to ramp up production in phases, secure commercial agreements, and expand customer support and logistics. Future plans include constructing additional manufacturing plants in different states of Malaysia and a commercial artificial graphite production facility in Nevada, capable of producing up to 10,000 metric tons of battery-grade graphite per year to support over 100,000 electric vehicles annually. The company is pursuing a diversified funding strategy, including engagement with strategic and institutional investors, asset-based financing, and leveraging government incentive programs, particularly in the United States, to accelerate market entry and capacity expansion. Continuous investment in research and development and building out sales and marketing teams are also key strategic priorities.

Management Comments

• Management expects that the net impact of the Business Combination along with cash balances held prior to the Closing Date will be sufficient to fund current operating plan for the next 12 months, but there is significant uncertainty beyond that period without raising additional capital.
• Chris Lai, CEO/CFO, committed to the Nasdaq Hearing Panel that the company's Forms 10-Q for the three months ended December 31, 2024, March 31, 2025, and June 30, 2025, would be filed by the middle of September 2025.
• Management believes that its cost and quality will allow an acceleration of the growth of the graphite and graphene market, making these materials available for more uses than currently possible.
• Management projects the capacity for graphite and graphene will be approximately 10,000 to 50,000 tons and 60 to 200 tons per annum, respectively, upon completion of manufacturing plants.

Industry Context

The global graphite market is projected to grow at a compound annual growth rate (CAGR) of 15.1% from 2024 to 2030, reaching $36.40 billion, driven primarily by demand from the lithium-ion battery industry, where graphite is the largest component. The global graphene market is expected to grow even more rapidly at a CAGR of 24.0% from $1.53 billion in 2023 to $8.58 billion in 2031, fueled by demand in energy, anti-corrosion coatings, sensors, 5G networks, and flexible electronics. The Inflation Reduction Act of 2022 in the United States, offering tax credits for personal electric vehicles, is expected to further boost demand for EV components, including graphite and graphene. China currently dominates the natural graphite supply chain, accounting for approximately 79% of global production in 2020, and has recently tightened export controls on artificial graphite anode materials, creating supply chain concerns and driving a desire for diversification in graphite production.

Comparison to Industry Standards

• Graphjet's proprietary technology produces graphite at approximately $4,500 per ton, which is significantly cheaper than both natural graphite (ranging from $8,000 to $11,000 per ton) and artificial graphite derived from coal or crude oil (approximately $20,000 per ton).
• The company's process yields graphene with a higher purity level, exceeding 99.99%, which is critical for downstream applications in energy, anti-corrosion coatings, and sensors.
• Graphjet aims to offer higher quality graphene at about 80-90% less than the current market price (USD $200 to $450 per gram) offered by existing suppliers.
• The company's manufacturing technology achieved up to an 83% reduction in carbon footprint and up to an 80% reduction in production costs, setting a new benchmark for sustainability and efficiency in the industry compared to traditional methods.

Management Changes

Corporate Governance

Legal Proceedings

• Settled one lawsuit related to nuisance claims alleging misleading disclosures in proxy statements soliciting shareholder approval of de-SPAC merger transactions, owing a de minimus mootness fee.
• Management believes that there are currently no claims or actions pending against the company, the ultimate disposition of which could have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

Related Party Transactions

• On May 15, 2025, Graphjet Technology entered into a Warrant Subscription Agreement with Aiden Lee Ping Wei (a shareholder), issuing 20,000,000 warrants (333,334 post-consolidation) to purchase Class A ordinary shares at an exercise price of $0.055 ($3.30 post-consolidation) for a total purchase price of $200,000.
• Between May and August 2025, the company entered into nine loan agreements with Aiden Lee Ping Wei for working capital, totaling $1,259,507 as of September 30, 2025, with an interest rate of 15% per annum and due on demand.
• As of September 30, 2025, the company had advances from an unnamed shareholder totaling $36,804, which are unsecured, non-interest bearing, and repayable on demand.
• Compensation payable to Liu Yu (a prior shareholder) for the purchase of palm-based graphene intellectual property amounted to $1,296,307 as of September 30, 2025, discounted at an imputed interest rate of 15% per annum.
• On April 30, 2025, the company signed a debt settlement agreement with Lim Hooi Beng (a prior shareholder) to settle an amount owing of $2,049,658 and a bonus provision of $3,450,000 via the issuance of ordinary shares in two tranches.
• On August 14, 2025, the company executed a Debt Settlement and Subscription Agreement with Goh Meng Keong to settle a debt of $553,201.33 by issuing 185,000 post-Share Consolidation ordinary shares.
• On August 19, 2025, the company entered into a Sale and Purchase Agreement with Cosmo Esteem SDN BHD (Vendor) to acquire a factory building for approximately $7.3 million (RM30.45 million), partially paid by issuing 528,464 post-Share Consolidation ordinary shares to Tan Chin Teong, the Vendor's sole owner.

Stakeholder Impact

• Shareholders face significant risks due to the company's delisting from Nasdaq to OTC Pink, which will likely result in reduced liquidity, marketability, and increased price volatility of their shares. The auditor's 'going concern' doubt also poses a substantial risk of loss of their entire investment. Future equity issuances for capital raising could lead to further dilution.
• Employees, particularly senior management, have been impacted by the reversal of bonus provisions due to resignations. The company's ability to attract and retain key technical and management personnel is crucial for its success, and financial instability could hinder this.
• Customers, such as Toyoda, are affected by the delays in Graphjet's production facility, which has prevented the fulfillment of the $30 million annual supply agreement for three years. Continued delays could damage customer relationships and future procurement opportunities.
• Creditors face increased risk due to the company's significant working capital deficit and the auditor's 'going concern' warning, which raises concerns about the company's ability to meet its financial obligations.
• Suppliers of raw materials (palm kernel shells) and equipment may experience tightened credit terms or additional due diligence requirements due to the company's financial condition and delisting, potentially impacting procurement timelines and costs.

Next Steps

• Complete the development and commissioning phase to prepare for commercial production.
• Finalize system integration, validate process stability, and establish production protocols, including refining operating parameters, quality control systems, and process safety measures.
• Strengthen engineering, production, and quality assurance teams, implement training programs, and formalize standard operating procedures.
• Progress customer qualification programs, including product testing and performance validation with potential customers in the battery and advanced materials sectors.
• Begin commercial production and supply, ramping up production in phases, securing commercial agreements, and expanding customer support and logistics capabilities.
• Secure necessary capital to finalize commissioning activities, optimize equipment performance, and complete remaining engineering and operational readiness milestones.
• Execute a structured capacity-expansion program, including scaling production capacity, upgrading automation, enhancing infrastructure, and expanding R&D initiatives.
• Build additional manufacturing plants in different states of Malaysia and a commercial artificial graphite production facility in Nevada.
• Pursue a diversified funding structure, engaging with strategic and institutional investors, exploring asset-based financing, strategic partnerships, and traditional banking facilities.
• Actively leverage government incentive programs in Malaysia, the United States, and other strategic markets.
• Implement remediation steps to improve internal controls, including hiring an external internal control reviewer and additional accounting and finance staff.
• Appeal the Nasdaq delisting decision to the Nasdaq Listing and Hearing Review Council and present a detailed, evidence-based compliance plan.
• Continue to monitor market pricing and regulatory developments closely and recalibrate financial forecasts and operational strategies.

Key Dates

Recommendation

Graphjet Technology is in a precarious financial position, evidenced by a significant working capital deficit and an explicit 'going concern' warning from its independent auditors. The delisting from Nasdaq to the less liquid OTC Pink market is a major blow, severely limiting investor access and the company's ability to raise crucial capital. Despite possessing patented technology and a notable supply agreement, the company has failed to generate any commercial revenue from its core products for three years due to persistent production delays and external factors. Material weaknesses in internal controls further compound the operational risks. While the technology holds long-term potential, the immediate financial instability, operational setbacks, and loss of public market credibility present an extremely high-risk profile, making it an unsuitable investment at this time. Investors should consider exiting their positions to mitigate further losses.

Keywords

Graphene, Graphite, Palm Kernel Shells, EV Batteries, Advanced Materials, SEC Filing, Nasdaq Delisting, OTC Markets, Financial Results, Going Concern, Capital Raise, Intellectual Property, Malaysia Manufacturing, Supply Chain Risk, Biomass Technology