U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER: 333-174194
| SOLAR QUARTZ TECHNOLOGIES CORPORATION |
| (Exact Name of Company as Specified in its Charter) |
| Colorado |
| 27-2888719 |
| (State or Other Jurisdiction of Incorporation or Organization) |
| (I.R.S. Employer Identification No.) |
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| 433 North Camden Drive, Suite 400, Beverly Hills, California |
| 90212 |
| (Address of Principal Executive Offices) |
| (Zip Code) |
Company’s telephone number: (310) 279-5100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: common stock, $0.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes ¨ No x.
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 x.
Indicate by check mark whether the registrant (1) has filed all reports required 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 Company was required to file such reports), and (2) been subject to such filing requirements for the past 90 days: Yes x No ¨.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Company’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K x.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer | ¨ | Accelerated filer | ¨ |
| Non-accelerated filer | ¨ | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act: Yes ¨ No x.
The aggregate market value of the voting stock held by non-affiliates of the registrant on September 30, 2017 was $225,116,996. As of September 30, 2017, the registrant had 214,404,889 outstanding shares of common stock. It was also contractually committed to issue an additional 10,021,340 shares of common stock to certain holders or their successors of its common stock prior to July 1, 2017.
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Business Development.
Solar Quartz Technologies Corporation (“Company”) was incorporated in Colorado on June 21, 2010 as Vanguard Energy Corporation (“Vanguard”) and until June 2014 was involved in the exploration and development of oil and gas properties in southeast Texas. Vanguard was never able to earn a profit and in January of 2013 investigating began into the possibility of selling its oil and gas properties. The sale of these oil and gas properties represented the sale of substantially all of these assets in June 2014.
On July 1, 2017 the Company acquired all of the shares of Solar Quartz Technologies Limited, a company incorporated in New Zealand (“SQTNZ”). These shares were purchased from Solar Quartz Technologies, Inc. (“SQTI”). Subsequently the name was changed Solar Quartz Technologies Corporation in Colorado (on July 5, 2017) and with FINRA, and have also been cleared by FINRA to use the new trading symbol SQTX. During July 2017 the Company issued 213,402,755 new shares of common stock to SQTI in exchange for 122 (100%) of the common shares of SQTNZ. The issuance of these shares was equivalent to 95% of the Company’s shares issued, after the Company issues in the future an additional 10,021,224 shares of common stock to those holders of our common stock immediately prior to the acquisition. The Company does not anticipate any further reorganization of its common stock. The Company plans to apply to trade on the more senior OTCQX exchange or NASDAQ.
On August 19, 2014, a 100-for-1 reverse split of our common stock became effective. On July 1, 2017 the Company increased its authorized common shares to 500,000,000 and its authorized preferred shares to 10,000,000.
Current Business of the Company.
SQTNZ is a corporation that has had no prior business activity other than being the title owner of the exclusive mining and development rights for two High Purity Quartz (HPQ) Silica deposits known as Quartz Hill (represented by leases ML 30235, ML 30236 and ML 30237) and White Springs (represented by leases ML 30238 and ML 30239) located in North Queensland, Australia. Based on resource estimates prepared by I J M Wilson, ARMIT, MAIG, a qualified resource appraiser in Australia. The report is prepared in accordance with standards established by Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 204). Together they contain deposits of more than 15 million tons of 99% pure high purity quartz that is feedstock in high demand in the marketplace to be used in the production of high purity quartz sand according to independent professional reports. Based on preliminary, independent valuation studies, previously obtained offers for purchase of the raw materials and other considerations, the board of directors of the Company believes the net present value of the recoverable deposits to be $530 million. The valuation of these resources included consideration of the current market prices for the materials when mined and processed, the cost of mining the quartz deposits, mining recovery obligations, pre-processing and refining costs on a net present value basis.
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High purity quartz sand is an essential primary material for the manufacture of: photo-voltaic (“PV”) solar panels; semiconductors; all high-end electronic products; fiber optical cables; halogen lamps; HD and LCD television screens; and epoxy mounding compounds.
The Company is currently seeking capital to build a stage one pre-processing plant to upgrade the High purity quartz sand to be salable as feedstock for numerous high-tech applications. The Company plans to build that plant in Townsville, Queensland, Australia, near the mine site, and a major port city where the upgraded product can easily be shipped to any user in the world. The current estimated cost of the facility, plus operating capital, is approximately $10 million to build and equip. Upon completion, that facility will be able to upgrade the raw quartz to a High purity quartz sand purity level that meets significant worldwide demand for use in the manufacture of PV solar panels, semiconductors and all high-end electronics.
Following the establishment of the pre-processing plant, we plan to build a further upgrading (stage two) facility to upgrade the feedstock from the pre-processing facility to high purity quartz sand, the highest quality quartz sand necessary for the manufacture of PV solar panels and high-end electronics, fiber optics, semiconductors and microchips. That facility will cost an additional $28 million to construct and equip it with necessary equipment including a “clean room” and commercial scale processing equipment. High purity quartz sand is an essential material for this process and the essential solar crucibles, as it shares the same element (Si) and is almost non-reactive, assuring high quality silicon ingots. Apart from this, high purity quartz also finds primary applications in advanced lighting, telecom, optic and microelectronics industries. High purity quartz sand powers are required for epoxy molding compound used in manufacture of most semiconductors, and the fast-growing auto electronics sector.
Active discussions with potential end-user investor partners who can provide the funding for both facilities are ongoing.
Employees and Offices
As of September 30, 2017, the Company did not have any employees.
Not applicable.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not Applicable.
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As described in Item 1, Business, above, the Company’s subsidiary, Solar Quartz Technologies Limited, is the sole title owner of the exclusive mining and development rights for two high purity quartz silica (“HPQS”) deposits known as Quartz Hill (represented by leases ML 30235, ML 30236 and ML 30237) and White Springs (represented by leases ML 30238 and ML 30239) located in North Queensland, Australia. Based on independent expert reports, together they are estimated to contain deposits in excess of 15 million tons of 99% pure HPQS, which is feedstock that when refined is in high demand in the marketplace to be used in the production of HPQS sand. HPQS sand is a core ingredient in the production in crucibles for the manufacture of photovoltaic solar cells as well as high-end microchips.
The Company’s office is located at 433 North Camden Drive, Suite 400, Beverly Hills, California 90212. This a virtual office leased on a month to month basis at a rate of $149 per month.
There are no known legal or other proceedings against the Company that could at the time of submitting this registration statement that could have a materially adverse effect on the Company’s financial position or operations.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
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Market Information.
The Company’s common stock trades on the OTC Markets Group under the symbol “SQTX”. Prior to the Company’s name change effective on July 5, 2017, the Company’s common stock traded under the symbol “VNGE”.
The range of closing prices shown below is as reported by the OTC Markets Group. The quotations shown reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions.
Per Share Common Stock Bid Prices by Quarter
| For the Fiscal Year Ended on September 30, 2015 |
| High |
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| Low |
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| Quarter Ended December 31, 2014 |
| $ | 1.55 |
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| $ | 0.40 |
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| Quarter March 31, 2015 |
| $ | 2.09 |
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| $ | 0.90 |
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| Quarter Ended June 30, 2015 |
| $ | 1.99 |
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| $ | 1.01 |
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| Quarter Ended September 30, 2015 |
| $ | 1.65 |
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| $ | 1.01 |
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Per Share Common Stock Bid Prices by Quarter
| For the Fiscal Year Ending on September 30, 2014 |
| High |
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| Low |
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| Quarter Ended December 31, 2013 |
| $ | 0.24 |
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| $ | 0.13 |
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| Quarter Ended March 31, 2014 |
| $ | 0.15 |
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| $ | 0.10 |
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| Quarter Ended June 30, 2014 |
| $ | 0.10 |
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| $ | 0.02 |
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| Quarter Ended September 30, 2014 (1) |
| $ | 1.55 |
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| $ | 0.02 |
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| (1) | Price reflects a 100-for-1 stock split that became effective on August 19, 2014 |
The Company’s Articles of Incorporation authorize the Company to issue up to 10,000,000 shares of preferred stock. The provisions in the Articles of Incorporation relating to the preferred stock allow the Company to issue preferred stock with multiple votes per share and dividend rights that 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.
Holders of Common Equity.
As of December 15, 2015, we had approximately 100 shareholders of record. The number of record holders was determined from the records of the Company’s transfer agent. The number of record holders excludes any estimate of the number of beneficial owners of common shares held in street name
Dividends.
Holders of the Company’s common stock are entitled to receive dividends as may be declared by the board of directors. The board of directors is not restricted from paying any dividends but is not obligated to declare a dividend. The Company has not declared or paid any dividends on its common stock since inception, and the Company does not anticipate declaring or paying any dividends on the common stock for the foreseeable future. The Company currently intends to retain any future earnings to finance future growth. Any future determination to pay dividends will be at the discretion of the board of directors and will depend on our financial condition, results of operations, capital requirements and other factors the board of directors considers relevant
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Equity Securities Sold Without Registration.
There were no sales of unregistered (restricted) securities during the year ended on September 31, 2015 (not previously disclosed by the Company).
ITEM 6. SELECTED FINANCIAL DATA.
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following management’s discussion and analysis of financial condition and results of operations is based upon, and should be read in conjunction with, the Company’s audited financial statements and related notes presented in a separate section of this report following Item 15, which have been prepared in accordance with accounting principles generally accepted in the United States of America.
Overview.
As a result of the sale of Vanguard’s oil and gas properties in June of 2014, as discussed in Item 1 of this report, the Company no longer has any oil and gas assets or related operations during the periods reported, resulting in no revenue or revenue related expenses. Further, in spite of the significant acquisition on July 1, 2017, the asset has not yet begun to be exploited, thus we continued through the end of the period reported to have no revenue or revenue related expenses.
During the fiscal year ended September 30, 2016, the Company issued 23,025 common shares in satisfaction of $76,190 of convertible debt resulting in $76,190 in gain on debt extinguishment.
With the acquisition of Solar Quartz Technologies Limited, the Company now owns mining exploration and development rights to significant deposits of high purity quartz that the Company has determined in our evaluation of independent reports and considered judgment to have an aggregate market value of $530,000,000. The reserves are adequate to provide the Company with adequate resources for 25-30 years of production. See Item 1 Business for greater details.
The Company is currently actively securing interim working capital in order to complete mining plans and build a pre-processing plant in Townsville, North Queensland, Australia, build upon the Company’s already significant management team, and market high purity quartz silica to established markets with whom the management team have had prior relationships. These organizational efforts will also include securing significant new capital for the acquisition of a site and the building of the pre-processing plant. Upon completion, that plant will enable the Company to upgrade its newly mined high purity quartz silica to a higher level of purity that has a significant world-wide demand for use in the production of advanced PV solar panels and all high-end electronics, lighting, telecom, optic and microelectronics. Failure to secure these financings will have a negative impact on the Company’s ability to continue as a going concern.
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Results of Operations.
(a) Total Revenue.
The Company had revenue of $0 for the year ended September 30, 2015 compared to $1,676,213 for the year ended September 30, 2014. This changes was the result of the sale of the Company’s oil and gas properties.
| (b) | General and Administrative Expenses. |
The Company had general and administrative expenses of $109,953 for the year ended September 30, 2015 compared to $904,414 for the year ended September 30, 2014, a decrease of $794,451 or approximately 88%. This decrease was due to the shut down of Company operations.
| (c) | Net Loss. |
The Company had a net profit of $2,411,879 for the year ended September 30, 2015 compared to a net loss of $3,368,316 for the year ended September 30, 2014, a change of $5,780,195. This change was mainly due to a one-time gain on debt extinguishment.
Investing Activities.
The net cash provided by investment activity was $0 for the year ended September 30, 2015 compared to $4,487,207 for the year ended September 30, 2014. This decrease is due mainly to the net income in the year ended September 30, 2015.
Operating Activities.
The net cash used in operating activities was $89,246 for the year ended September 30, 2015 compared to $291,916 for the year ended September 30, 2014, a decrease of $202,670 or approximately 69%. This decrease is due mainly to the net income in the year ended September 30, 2015.
Liquidity and Capital Resources.
As of September 30, 2015, the Company had total current assets of $5 and total current liabilities of $266,463, resulting in a working capital deficit of $266,458. The cash and cash equivalents was $5 as of September 30, 2015.
Net cash provided by financing activities was $50,000 for the year ended September 30, 2015 compared to net cash used in financing activities of $5,490,325 for the year ended September 30, 2014, a change of $5,540,325. This change resulted primarily from the repayment of a note payable in the year ended September 30, 2014.
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During May 2015, the Company issued a series of short-term promissory notes in the total amount of $50,000. The Company issued another $20,000 of short-term promissory notes during 2016 and 2017.
The Company’s current cash and cash equivalents balance will not be sufficient to fund its operations for the next twelve months. The Company’s ability to continue as a going concern on a longer-term basis will be dependent upon its ability to generate sufficient cash flow from operations to meet its obligations on a timely basis, and to obtain additional financing, and ultimately attain profitability. The Company’s continued operations, as well as the implementation of the Company’s business plan will depend upon its ability to raise additional funds through bank borrowings and equity or debt financing.
Whereas the Company has been successful in the past in raising capital, no assurance can be given that these sources of financing will continue to be available to it and/or that demand for the Company’s common stock will be sufficient to meet its capital needs, or that financing will be available on terms favorable to the Company. If funding is insufficient at any time in the future, the Company may not be able to take advantage of business opportunities or respond to competitive pressures, or may be required to reduce the scope of the Company’s 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 the Company’s financial condition, which could require it to:
| · | curtail operations significantly; |
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| · | sell significant assets; |
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| · | seek arrangements with strategic partners or other parties that may require the Company to relinquish significant rights to products, technologies or markets; or |
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| · | explore other strategic alternatives including a merger or sale of the Company. |
To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to the Company’s 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 the Company’s operations. Regardless of whether the Company’s cash assets prove to be inadequate to meet its operational needs, the Company may seek to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to the Company’s existing stockholders.
Inflation.
The impact of inflation on the Company’s costs and the ability to pass on cost increases to its customers over time is dependent upon market conditions. The Company is not aware of any inflationary pressures that have had any significant impact on its operations over the past quarter and the Company does not anticipate that inflationary factors will have a significant impact on future operations.
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Off-Balance Sheet Arrangements.
The Company does not maintain off-balance sheet arrangements nor does it participate in non-exchange traded contracts requiring fair value accounting treatment.
Critical Accounting Policies.
The SEC has issued Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies” (“FRR 60”), suggesting companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the 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, the Company’s most critical accounting policies include: (a) conversion feature liability and warrant liabilities use of estimates; and (b) fair value measurements. 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) | Conversion Feature Liability and Warrant Liabilities. |
The conversion feature liability and warrant liabilities are recorded at fair value based upon valuation models utilizing relevant factors such as expected life, estimated volatility, risk-free interest and expected dividend rate. Changes in the fair value of these liabilities are reported in the statements of operations.
| (b) | Fair Value Measurements. |
The carrying value of cash and cash equivalents, accounts receivable, and accounts payable, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. The estimated fair value of long-term debt was determined by discounting future cash flows using rates currently available to the Company for debt with similar terms and remaining maturities. The Company calculated that the estimated fair value of the long-term debt is not significantly different than the carrying value of the debt. The participation liability associated with outstanding long-term debt was determined by utilizing a present value factor of 10 applied to proved developed reserves associated with the wells drilled with the proceeds of the notes.
Forward Looking Statements.
This Form 10-K contains “forward looking statements” within the meaning of Rule 175 of the Act, and Rule 3b-6 of the Securities Act of 1934, as amended. The words “believe,” “expect,” “anticipate,” “intends,” “forecast,” “project,” and similar expressions identify forward-looking statements. These are statements that relate to future periods and include, but are not limited to, statements as to the Company’s estimates as to the adequacy of its capital resources, its need and ability to obtain additional financing, and its critical accounting policies.
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Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. These forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Audited financial statements as of and for the years ended December 31, 2015 and 2014 are presented in a separate section of this report following Item 15.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures.
The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the 1934 Act”)) that are designed to ensure that information required to be disclosed in its periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosure.
The Company’s management, with the participation of the principal executive officer and the principal financial officer, evaluated the effectiveness of its disclosure controls and procedures as of September 30, 2015. Based on that evaluation, the principal executive officer and the principal financial officer concluded that, as of that date, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.
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Management’s Annual Report on Internal Control over Financial Reporting.
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act, and in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”).
The Company’s management conducted an evaluation, under the supervision and with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2015 based on the criteria established in the report entitled “Internal Control – Integrated Framework” published by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of September 30, 2015.
Inherent Limitations of Control Systems.
The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
Management, including the Company’s principal executive officer and the principal financial officer, does not expect that the Company’s internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control Over Financial Reporting.
There have not been any changes in the Company’s internal control over financial reporting during the fiscal year ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Subsequent Events.
Subsequent to October 1, 2017, the Company issued a total of 8,750,000 restricted shares of common stock to 2 directors and 10 consultants for the Company for services rendered, and to be rendered, to the Company.
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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
Directors and Executive Officers.
The name, age, and positions of the director/executive officers of the Company are set forth below. The director named below will serve until the next annual meeting of stockholders or until their successors are duly elected and have qualified. Directors are elected for a term until the next annual stockholders’ meeting. Officers will hold their positions at the will of the board of directors, absent any employment agreement, of which none currently exist or are contemplated.
There is no arrangement or understanding between the director/executive officer and any other person pursuant to which the director/officer was or is to be selected as a director/officer, and there is no arrangement, plan or understanding as to whether non-management stockholders will exercise their voting rights to continue to elect the current board of directors. There are also no arrangements, agreements or understandings between non-management stockholders that may directly or indirectly participate in or influence the management of the Company’s affairs. There are no other promoters or control persons of the Company. There are no legal proceedings involving the director/officer of the Company.
On June 19, 2018, Warren Dillard resigned as a director and chief executive officer of the Company; he remains as the chief financial officer of the Company. Roger May, one of the directors of the Company, was appointed by the board of directors on that date as interim chief executive officer of the Company.
| Name |
| Age |
| Position |
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| Roger May |
| 71 |
| Interim Chief Executive Officer (principal executive officer), Director |
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| Steven M. Powers |
| 76 |
| Vice President of Business Development, Secretary and a Director |
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| Warren Dillard |
| 76 |
| Chief Financial Officer (principal financial and accounting officer) |
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| David A.B. Halstead |
| 70 |
| Director |
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| Michael Selsman |
| 80 |
| Director |
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Roger May.
Mr. May was the original founder of the Company in 2014 and has been a director since July 1, 2017, and interim chief executive officer since June 20, 2018. Mr. May has extensive international business experience over the last 40 years, resided in the USA for 22 years, returning to Australia September 2001. Recognized Expert in “start-up” enterprises from inception to fully operational commercial ventures. He has overcome obstacles with great ability, tenacity, flexibility and creative initiative. Acknowledged visionary and creator combined with strong implementation skills. Mr. May has excellent capital raising skills in tens of millions of dollars. He has been founder, chairman & CEO of five publicly listed companies in the USA and Australia. He resided in the USA for 22 years. Mr. May has founded several high-tech. communications and mineral resource development companies. 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.
Steven M. Powers.
Mr. Powers has been a director since June 2010. Since February 2011, he has been the Company’s vice president of business development and secretary. Since 2005, Mr. Powers has served as chief executive officer, chairman and a director of Enercor, Inc., a private corporation involved in oil and gas exploration and development. Prior to his association with Enercor, he was a real estate developer. Mr. Powers earned a degree in philosophy from the University of California at Santa Barbara as well as an MBA from the University of California at Los Angeles.
Warren M. Dillard.
Mr. Dillard was the Company’s chief executive and financial officer and accounting officer, and a director from June 2010 until June 19, 2018, when he resigned as chief executive officer and director. He remains the Company’s chief financial officer and accounting officer. Since February 2011, Mr. Dillard has been the Company’s Principal Financial and Accounting Officer. He has previously managed mutual funds with the American Funds group of funds, was CFO of Pepperdine University and has been active in the development of numerous early stage companies in a variety of industries. Since 2005, Mr. Dillard has served as the president and a director of Enercor, Inc., a private corporation involved in oil and gas exploration and development in the western United States. Since the spring of 2010, his involvement with Enercor has been minimal. Mr. Dillard holds a degree in Accounting from Texas A & M University and an MBA in Finance from the Harvard Business School.
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, Mr. Halstead 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 in 1994, he established and operated, several integrated medical centers, a surgical hospital in Auckland and a state of the art diagnostic center. Mr. Halstead 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, he 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 maximise 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 NZ 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.”
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Michael Selsman.
Mr. Selsman has been a director since July 17, 2017. Mr. Selsman, as principal of Public Communications Company, Beverly Hills, CA, 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 entered the entertainment industry with 20th Century-Fox in New York City, and was subsequently hired by Paramount Pictures as East Coast Publicity manager. In Hollywood, he became a public relations executive for motion picture actors, directors and writers. As a talent agent at Artists Agency (now ICM), Mr. Selsman structured arrangements for prominent films and TV series. Becoming a producer, he re-joined 20th Century-Fox, and then MGM, and became an independent producer making films in various states. Mr. Selsman has recently published his autobiography, “All is Vanity”. He has been a talent agent with Artist Agency Corporation (now ICM) participating in many highly regarded television series and talent. Mr. Selsman has provided investor relations counsel to numerous publicly traded companies. Mr. 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.
Compliance with Section 16(a) of the Securities Exchange Act.
Section 16(a) of the 1934 Act requires the Company’s directors, certain officers and persons holding 10% or more of the Company’s common stock to file reports regarding their ownership and regarding their acquisitions and dispositions of the Company’s common stock with the SEC. Such persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company under Rule 16a-3(d) during fiscal year 2015, and certain written representations from executive officers and directors, and control persons, the Company is not aware of any required reports were not timely filed.
| 15 |
| Table of Contents |
Corporate Governance.
The primary function of the Company’s board of directors is oversight of management so that identifying and addressing the risks and vulnerabilities that the Company faces is an important component of the board of directors’ responsibilities, whether monitoring ordinary operations or considering significant plans, strategies, or proposed transactions. The risk management process that the Company has established is overseen by the Audit Committee, which is also responsible for oversight of risk issues associated with our overall financial reporting and disclosure process and with legal compliance as well as reviewing policies on risk control assessment and accounting risk exposure. While the board of directors is ultimately responsible for risk oversight, our management is responsible for day-to-day risk management processes. The Company believes this division of responsibilities is the most effective approach for addressing the risks facing the Company and that its board of directors leadership structure supports this approach.
Code of Ethics.
The Company has not adopted a code of ethics that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Company has not adopted such a code of ethics because all of management’s efforts have been directed to building the business of the Company; at a later time, the board of directors may adopt such a code of ethics.
Audit Committee.
The Company’s board of directors functions as audit committee for the Company.
The primary responsibility of the Audit Committee will be to oversee the financial reporting process on behalf of the Company’s board of directors and report the result of their activities to the board. Such responsibilities include, but are not limited to, the selection, and if necessary the replacement, of the Company’s independent registered public accounting firm, review and discuss with such independent registered public accounting firm: (i) the overall scope and plans for the audit, (ii) the adequacy and effectiveness of the accounting and financial controls, including the Company’s system to monitor and manage business risks, and legal and ethical programs, and (iii) the results of the annual audit, including the financial statements to be included in the annual report on Form 10-K.
The Company’s policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the audit committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. The audit committee may also pre-approve particular services on a case-by-case basis.
| 16 |
| Table of Contents |
Other Committee of the Board of Directors.
The Company presently does not have a nominating committee, an executive committee of the board of directors, stock plan committee or any other committees.
Recommendation of Nominees.
The Company does not have a standing nominating committee or committee performing similar functions. Because of the small size of the Company, the board of directors believes that it is appropriate for the Company not to have such a committee. All the directors participate in the consideration of director nominees.
The board of directors does not have a policy with regard to the consideration of any director candidates recommended by security holders. Because of the small size of the Company, and the limited number of stockholders, the board of directors believes that it is appropriate for the Company not to have such a policy.
When evaluating director nominees, The Company considered the following factors:
| · | The appropriate size of the board. |
|
|
|
| · | The Company’s needs with respect to the particular talents and experience of company directors. |
|
|
|
| · | Knowledge, skills and experience of prospective nominees, including experience in finance, administration. |
|
|
|
| · | Experience with accounting rules and practices. |
|
|
|
| · | The desire to balance the benefit of continuity with the periodic injection of the fresh perspective provided by new board members. |
The Company’s goal is to assemble a board that brings together a variety of perspectives and skills derived from high quality business and professional experience.
| 17 |
| Table of Contents |
ITEM 11. EXECUTIVE COMPENSATION.
Executive Compensation.
The following table presents compensation information for the years ended December 31, 2015, 2014, and 2013 for the persons who served as principal executive officer and each of the two other most highly compensated executive officers whose aggregate salary and bonus was more than $100,000 in such year.
| Name and principal position (a) |
| Year (b) |
| Salary ($) (c) |
|
| Bonus ($) (d) |
|
| Stock Awards ($) (e) |
|
| Option Award(s) ($) (f) |
|
| Non-Equity Incentive Plan Compensation ($) (g) |
|
| Nonqualified Deferred Compensation Earnings ($) (h) |
|
| All Other Compensation ($) (i) |
|
| Total ($) (j) |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Warren Dillard, |
| 2015 |
| $ | 20,000 |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
| $ | 20,000 |
|
| President/CFO |
| 2014 |
| $ | 147,500 |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
| $ | 147,500 |
|
|
|
| 2013 |
| $ | 155,000 |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
| $ | 40,000 |
|
| $ | 195,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Steven M. |
| 2015 |
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
| Powers, VP |
| 2014 |
| $ | 3,642 |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
| $ | 3,642 |
|
|
|
| 2013 |
| $ | 34,500 |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
| $ | 34,500 |
|
Other Compensation.
There are no plans that provide for the payment of retirement benefits, or benefits that will be paid primarily following retirement, including but not limited to tax-qualified defined benefit plans, supplemental executive retirement plans, tax-qualified defined contribution plans and nonqualified defined contribution plans. In addition, there are no contracts, agreements, plans or arrangements, whether written or unwritten, that provide for payment(s) to a named executive officer at, following, or in connection with the resignation, retirement or other termination of a named executive officer, or a change in control of the Company or a change in the named executive officer’s responsibilities following a change in control, with respect to each named executive officer.
| 18 |
| Table of Contents |
The following table sets forth information regarding the beneficial ownership of shares of the Company’s common stock as of September 30, 2017 (214,404,889 (1) issued and outstanding) by (i) all stockholders known to the Company to be beneficial owners of more than 5% of the outstanding common stock; and (ii) all of the current directors and executive officers of the Company as a group:
| Title of Class |
| Name and Address of Beneficial Owner |
| Amount of Beneficial Ownership (1) |
|
| Percent of Class |
| ||
| Common Stock |
| Roger May, 21 Waterway Ave., Suite 300, The Woodlands, Texas 77380 |
|
| 0 |
|
|
| 0.00 | % |
| Common Stock |
| Warren Dillard, 21 Waterway Ave., Suite 300, The Woodlands, Texas 77380 |
|
| 0 |
|
|
| 0.00 | % |
| Common Stock |
| Steven M. Powers, 21 Waterway Ave., Suite 300, The Woodlands, Texas 77380 |
|
| 7,750 | (2) |
|
| 0.004 | % |
| Common Stock |
| David A.B. Halstead, 21 Waterway Ave., Suite 300, The Woodlands, Texas 77380 |
|
| 0 |
|
|
| 0.00 | % |
| Common Stock |
| Michael Selsman, 21 Waterway Ave., Suite 300, The Woodlands, Texas 77380 |
|
| 0 |
|
|
| 0.00 | % |
| Common Stock |
| Shares of all directors and executive officers as a group (1 person) |
|
| 7,750 |
|
|
| 0.004 | % |
| (1) | Each person has sole voting power and sole dispositive power as to all of the shares shown as beneficially owned by them. Except as set forth below, none of these individuals holds any convertible securities. |
|
|
|
| (2) | Mr. Powers is entitled to the issuance of an additional 77,500 shares pursuant to the Purchase and Sale Agreement in which the Company purchased the shares of Solar Quartz Technologies Limited on July 1, 2017 as reported in the Company’s Form 8-K filing on July 11, 2017. |
Neither the officers and directors of the Company, nor any company they directly or indirectly control, has entered into any arrangements, agreements (including derivative agreements), or contracts that give or will give anyone else an interest in the Company. The director/officer has not used shares of this Company to secure a loan.
Securities Authorized for Issuance under Equity Compensation Plans.
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
During the Company’s last two fiscal years, there has been no transaction, or any currently proposed transaction, in which the Company was or is to be a participant, and in which any related person (those set forth in the charts under Item 10 above) had or will have a direct or indirect interest.
The Company has not had a promoter at any time during the past five fiscal years.
The Company defines director independence in accordance with the definition as set forth in Rule 5605(a)(2) of the Rules of the NASDAQ Stock Market.
| 19 |
| Table of Contents |
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees
Briggs & Veselka Co. was engaged to audit the Company’s financial statements for the year ended September 30, 2014. This firm billed for professional services in the amount of $91,327.
Thayer O’Neal Company, LLC was engaged to audit our financial statements for the year ended September 30, 2015. This firm billed for professional services in the amount of $34,171.
Audit-Related Fees.
Briggs & Veselka Co. provided certain audit related services during the year ended September 30, 2014 in the amount of $35,576, and for the year ended September 30, 2015 in the amount of $16,337. The aggregate fees billed for assurance and related services by the accounting firm that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under Audit Fees above: $0.
Tax Fees.
Briggs & Veselka Co. provided professional services rendered by the accounting firm for tax compliance, tax advice, and tax planning for the year ended September 30, 2014 in the amount of $18,256, and for the year ended September 30, 2015 in the amount of $18,058.
All Other Fees.
The aggregate fees billed in each of the last two fiscal years for products and services provided by the accounting firm, other than the services reported above: $0.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
The following documents are being filed as a part of this report on Form 10-K:
(a) Audited financial statements as of and for the years ended December 31, 2015 and 2014; and
(b) Those exhibits required by Item 601 of Regulation S-K (included or incorporated by reference in this document are set forth in the Exhibit Index).
| 20 |
| Table of Contents |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Solar Quartz Technologies Corporation | |||
| Dated: September 6, 2018 | By: | /s/ Warren Dillard | |
| Warren Dillard, Chief Financial Officer | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated:
| Signature |
| Title |
| Date |
|
|
| |||
| /s/ Warren Dillard |
| Chief Financial Officer |
| September 6, 2018 |
| Warren Dillard |
|
|
|
|
| 21 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Solar Quartz Technologies Corporation
We have audited the accompanying consolidated balance sheets of Solar Quartz Technologies Corporation as of September 30, 2016 and 2015 and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Solar Quartz Technologies Corp. at September 30, 2016 and 2015, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1 to the consolidated financial statements, the Company sold its oil and gas properties that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Thayer O’Neal Company, LLC
Thayer O’Neal Company, LLC
Houston, Texas
November 15, 2017
| 22 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Vanguard Energy Corporation
We have audited the accompanying consolidated balance sheets of Vanguard Energy Corporation (the “Company”) as of September 30, 2014 and 2013 and the related consolidated statements of operations, changes in stockholders' deficit, and cash flows for each of the years then ended. Vanguard Energy Corporation’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based upon our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2014 and 2013, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States.
The accompanying consolidated financial statements have been prepared assuming that Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has insufficient working capital, a stockholders’ deficit and recurring net losses, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regards to these matters are also discussed in Note 1 to the consolidated financial statements. The consolidated statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Briggs & Veselka Co.
Briggs & Veselka Co.
Houston, Texas
December 29, 2014
| 23 |
SOLAR QUARTZ TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
|
|
| September 30, 2015 |
|
| September 30, 2014 |
| ||
|
|
|
|
|
|
|
| ||
| ASSETS | ||||||||
| Current assets: |
|
|
|
|
|
| ||
| Cash and cash equivalents |
| $ | 5 |
|
| $ | 39,251 |
|
| Other receivables |
|
| -- |
|
|
| -- |
|
| Other assets |
|
| -- |
|
|
| 12,500 |
|
| Total current assets |
|
| 5 |
|
|
| 51,751 |
|
|
|
|
|
|
|
|
|
|
|
| Debt issuance costs |
|
| -- |
|
|
| 83,654 |
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
| $ | 5 |
|
| $ | 135,405 |
|
|
| ||||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable |
| $ | 20.217 |
|
| $ | 578 |
|
| Accrued interest payable |
|
| 38,571 |
|
|
| 702,901 |
|
| Accrued liabilities |
|
| 10,463 |
|
|
| -- |
|
| Short term notes payable |
|
| 50,000 |
|
|
| 31,325 |
|
| Other liabilities |
|
| 275 |
|
|
| 8,600 |
|
| Current portion of notes payable, net of discount of $71,754 |
|
| 146,937 |
|
|
| 2,923,040 |
|
| Total current liabilities |
|
| 266,463 |
|
|
| 3,635,119 |
|
|
|
|
|
|
|
|
|
|
|
| Stockholders’ deficit: |
|
|
|
|
|
|
|
|
| Common stock; $0.00001 par value; 100,000,000 shares authorized, 979,109 and 115,243 shares issued and outstanding at September 30, 2015 and 2014, respectively(1) |
|
| 979 |
|
|
| 115 |
|
| Preferred stock; $0.00001 par value; 5,000,000,000 shares authorized, none issued or outstanding |
|
| -- |
|
|
| -- |
|
| Additional paid-in capital |
|
| 6,318,920 |
|
|
| 5,522,216 |
|
| Accumulated deficit |
|
| (6,586.357 | ) |
|
| (9,022,045 | ) |
| Total stockholders’ deficit |
|
| (266.458 | ) |
|
| (3,499,714 | ) |
| Total liabilities and stockholders’ equity (deficit) |
| $ | 5 |
|
| $ | 135,405 |
|
(1) Reflects the amounts after a 100 for 1 to 1 reverse split of the Company’s common stock that was effective on August 19, 2014, including retroactive adjustment of common share amounts See Note 6.
The accompanying notes are an integral part of these consolidated financial statements
| 24 |
SOLAR QUARTZ TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
| Year Ended September 30, 2015 |
|
| Year Ended September 30, 2014 |
| ||
| Revenues |
|
|
|
|
|
| ||
| Oil and gas sales |
| $ | -- |
|
| $ | 1,676,213 |
|
|
|
|
|
|
|
|
|
|
|
| Costs and expenses |
|
|
|
|
|
|
|
|
| Lease operating expense |
|
| -- |
|
|
| 544,045 |
|
| Production taxes |
|
| -- |
|
|
| 77,253 |
|
| Depreciation, depletion and amortization |
|
| -- |
|
|
| 984,200 |
|
| Impairment of oil and gas properties |
|
| -- |
|
|
| 861,579 |
|
| Asset retirement obligation accretion |
|
| -- |
|
|
| 29,088 |
|
| General and administrative |
|
| 109,953 |
|
|
| 904,414 |
|
| Total costs and expenses |
|
| 109,953 |
|
|
| 3,400,579 |
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations |
|
| (109,953 | ) |
|
| (1,724,348 | ) |
|
|
|
|
|
|
|
|
|
|
| Other income and (expense): |
|
|
|
|
|
|
|
|
| Other income |
|
| (23,810 | ) |
|
| 2,645 |
|
| Interest income |
|
| -- |
|
|
| 233 |
|
| Gain on settlement of participation liability |
|
| -- |
|
|
| 171,772 |
|
| Interest expense |
|
| (31,608 | ) |
|
| (1,458,898 | ) |
| Other equipment write-off |
|
| -- |
|
|
| 20,819 |
|
| Gain (loss) on debt extinguishment |
|
| 2,576,890 |
|
|
| (380,539 | ) |
| Total other income (expense) |
|
| 2,521,472 |
|
|
| (1,643,968 | ) |
|
|
|
|
|
|
|
|
|
|
| Net income (loss) before income taxes |
|
| 2,411,879 |
|
|
| (3,368,316 | ) |
|
|
|
|
|
|
|
|
|
|
| Provision for income taxes |
|
| -- |
|
|
| -- |
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
| 2,411,879 |
|
|
| (3,368,316 | ) |
|
|
|
|
|
|
|
|
|
|
| Income (loss) per share |
|
|
|
|
|
|
|
|
| Basic |
| $ | 2.90 |
|
| $ | 26.92 |
|
| Diluted |
| $ | 2.65 |
|
| $ | 26.92 |
|
|
|
|
|
|
|
|
|
|
|
| Weighted average number of shares outstanding (1) |
|
| 831,241 |
|
|
| 125,130 |
|
(1) Reflects the amounts after a 100 for 1 to 1 reverse split of the Company’s common stock that was effective on August 19, 2014, including retroactive adjustment of common share amounts See Note 6.
The accompanying notes are an integral part of these consolidated financial statements
| 25 |
SOLAR QUARTZ TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR YEARS ENDED SEPTEMBER 30, 2015 AND SEPTEMBER 30, 2014
|
|
| Common Stock |
|
|
|
|
|
|
|
| Total Stockholders’ |
| ||||||||
|
|
| Shares (1) |
|
| Amount |
|
| Additional Paid-in Capital |
|
| Accumulated Deficit |
|
| Equity (Deficit) |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| Balance, September 30, 2013 |
|
| 127,114 |
|
| $ | 127 |
|
| $ | 5,522,204 |
|
| $ | (2,254,698 | ) |
| $ | 3,267,633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Return of common stock |
|
| (11,871 | ) |
|
| (12 | ) |
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| (3,368,316 | ) |
|
| (3,368,316 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, September 30, 2014 |
|
| 115,243 |
|
|
| 115 |
|
|
| 5,522,204 |
|
|
| (9,022,045 | ) |
|
| (3,499,714 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Return of common stock |
|
| (2,484 | ) |
|
| (2 | ) |
|
| 2 |
|
|
| -- |
|
|
| -- |
|
| Cancellation of treasury shares |
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| 23,810 |
|
|
| 23,810 |
|
| Issuance of shares for debt settlement |
|
| 866,350 |
|
|
| 866 |
|
|
| 796,702 |
|
|
| -- |
|
|
| 797,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| 2,411,879 |
|
|
| 2,411,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, September 30, 2015 |
|
| 979,109 |
|
|
| 979 |
|
|
| 6,318,920 |
|
|
| (6,586,357 | ) |
|
| (266,458 | ) |
(1) Reflects the amounts after a 100 for 1 to 1 reverse split of the Company’s common stock that was effective on August 19, 2014, including retroactive adjustment of common share amounts See Note 6.
The accompanying notes are an integral part of these consolidated financial statements
| 26 |
SOLAR QUARTZ TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
| Year Ended September 30, |
|
| Year Ended September 30, |
| ||
|
|
| 2015 |
|
| 2014 |
| ||
| Cash flows from operating activities: |
|
|
|
|
|
| ||
| Net income (loss) |
| $ | 2,411,878 |
|
| $ | (3,368,316 | ) |
| Adjustments to reconcile net income (loss) to net cash from operating activities: |
|
|
|
|
|
|
|
|
| Interest expense |
|
| 31,608 |
|
|
| -- |
|
| Cancellation of treasury shares |
|
| 23,810 |
|
|
| -- |
|
| Depreciation, depletion and amortization |
|
| -- |
|
|
| 941,294 |
|
| Impairment of oil and gas properties |
|
| -- |
|
|
| 861,579 |
|
| Amortization of debt issuance costs |
|
| -- |
|
|
| 274,740 |
|
| Gain on settlement of participation liability |
|
| -- |
|
|
| (171,772 | ) |
| Amortization of debt discount |
|
| -- |
|
|
| 169,145 |
|
| Loss (gain) on debt extinguishment |
|
| (2,576,890 | ) |
|
| 380,539 |
|
| Asset retirement of obligation accretion |
|
| -- |
|
|
| 29,088 |
|
| Accretion of participation liability |
|
| -- |
|
|
| 63,160 |
|
| Other equipment write-off |
|
| -- |
|
|
| 20,819 |
|
| Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
| Accounts receivable |
|
| 12,500 |
|
|
| 343,194 |
|
| Other assets |
|
| -- |
|
|
| 14,363 |
|
| Accounts payable |
|
| 25,605 |
|
|
| (112,736 | ) |
| Accrued liabilities |
|
| (9,432 | ) |
|
| 393,357 |
|
| Other liabilities |
|
| (8,325 | ) |
|
| (4,050 | ) |
| Net cash used in operating activities |
|
| (89,246 | ) |
|
| (291,916 | ) |
|
|
|
|
|
|
|
|
|
|
| Cash flows from investing activities: |
|
|
|
|
|
|
|
|
| Capital expenditures on oil and gas properties |
|
| -- |
|
|
| (1,012,793 | ) |
| Proceeds from sale of oil and gas properties |
|
| -- |
|
|
| 5,500,000 |
|
| Net cash provided by investment activities |
|
| -- |
|
|
| 4,487,207 |
|
|
|
|
|
|
|
|
|
|
|
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
| Issuance of short term note payable |
|
| 50,000 |
|
|
| -- |
|
| Repayment of note payable |
|
| -- |
|
|
| (5,259,706 | ) |
| Settlement of participation liability |
|
| -- |
|
|
| (230,619 | ) |
| Net cash provided by investing activities |
|
| 50,000 |
|
|
| (5,490,325 | ) |
|
|
|
|
|
|
|
|
|
|
| Net change in cash and cash equivalents |
|
| (39,246 | ) |
|
| (1,295,034 | ) |
| 27 |
SOLAR QUARTZ TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
|
|
| Year Ended September 30, |
|
| Year Ended September 30, |
| ||
|
|
| 2015 |
|
| 2014 |
| ||
| Cash and cash equivalents: |
|
|
|
|
|
| ||
| Beginning of period |
|
| 39,521 |
|
| $ | 1,334,285 |
|
| End of period |
| $ | 5 |
|
| $ | 39,251 |
|
|
|
|
|
|
|
|
|
|
|
| Amounts paid during the year for: |
|
|
|
|
|
|
|
|
| Interest |
| $ | -- |
|
| $ | -- |
|
| Income taxes |
| $ | -- |
|
| $ | -- |
|
|
|
|
|
|
|
|
|
|
|
| Supplemental cash flow information |
|
|
|
|
|
|
|
|
| Noncash investing and financing activities: |
|
|
|
|
|
|
|
|
| Issuance of shares for settlement of debt |
| $ | 866,323 |
|
| $ | -- |
|
The accompanying notes are an integral part of these consolidated financial statements
| 28 |
SOLAR QUARTZ TECHNOLOGIES CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – BASIS OF PRESENTATION
These consolidated audited financial statements of Solar Quartz Technologies Corporation, a Colorado corporation (“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 financials statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of 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.
The sale of the Company’s oil and gas properties, as explained in Note 3, raised substantial doubt of the Company to continue as a going concern. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation— The consolidated financial statements include the accounts of Solar Quartz Technologies Corporation and its subsidiaries. Solar Quartz’s significant accounting policies are consistent with those discussed in the audited financial statements as of September 30, 2016 and 2015. All significant intercompany accounts and transactions have been eliminated in consolidation.
The Company's fiscal year-end is September 30. 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 follows
Cash and Cash Equivalents—The Company considers all highly liquid instruments purchased with a maturity date of three months or less to be cash equivalents.
Debt Issuance Costs—Costs incurred in connection with the issuance of long-term debt are capitalized and amortized over the term of the related debt.
Conversion Feature Liability and Warrant Liabilities—The conversion feature liability and warrant liabilities are recorded at fair value based upon valuation models utilizing relevant factors such as expected life, estimated volatility, risk-free interest and expected dividend rate. Changes in the fair value of these liabilities are reported in the statements of operations.
| 29 |
Stock-Based Compensation—The Company accounts for 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.
The Company is required to file federal income tax returns in the United States and in various state and local jurisdictions. The Company's 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.
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.
Recently Issued Accounting Pronouncements – Various accounting standards updates have been recently issued, most of which represented technical corrections to the accounting literature or were applicable to specific industries. No new accounting pronouncements have been issued that are likely to have a material impact to the Company’s consolidated financial statements.
Fair Value Measurements—The carrying value of cash and cash equivalents, accounts receivable, and accounts payable, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. The estimated fair value of long-term debt was determined by discounting future cash flows using rates currently available to the Company for debt with similar terms and remaining maturities. The Company calculated that the estimated fair value of the long-term debt is not significantly different than the carrying value of the debt. The participation liability associated with outstanding long-term debt was determined by utilizing a present value factor of 10 applied to proved developed reserves associated with the wells drilled with the proceeds of the notes.
| 30 |
Fair value is defined as the price that would be received to sell an asset or price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used in determining fair value are classified for disclosure purposes according to a hierarchy that prioritizes those inputs based upon the degree to which they are observable. The three levels of the fair-value-measurement hierarchy are as follows:
| · | Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
|
|
|
| · | Level 2—Inputs that reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or the liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
|
|
|
| · | Level 3—Unobservable inputs reflecting the Company's own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. |
In determining fair value, the Company utilizes observable market data when available, or models that incorporate observable market data. In addition to market information, the Company incorporates transaction-specific details that, in management's judgment, market participants would take into account in measuring fair value. The Company utilizes the most observable inputs available for the valuation technique employed. If a fair value measurement reflects inputs at multiple levels within the hierarchy, the fair-value measurement of both financial and nonfinancial assets and liabilities are characterized based upon the lowest level of input that is significant to the fair value measurement.
NOTE 3 –SALE OF OIL AND GAS PROPERTIES/PAYMENT OF CONVERTIBLE NOTES
During 2012, the Company sold $8,254,500 of Convertible Promissory Notes. On March 31, 2014 the Company failed to make the scheduled interest payments on the notes. As a result, the note holders were entitled to declare the notes in default, in which case the principal amount of the notes plus all accrued and unpaid interest would be immediately due and payable.
The Company’s inability to make the interest payment to the note holders was the result of the expenditure of considerable capital to work over some of the Company’s wells. The costs of the work far exceeded the Company’s expectations and yet the work was required in order to get the wells back into production. This depleted the Company’s cash position far below its expectations. Further, although the initial work on those wells was successful in boosting production momentarily, further complications resulted in lower production than anticipated, which was not adequate to replenish the cash expended and enable the Company to make required interest payments.
| 31 |
With a view to paying its note holders, the Company, on June 17, 2014 sold its oil and gas properties to Vast Exploration, Inc. for $5,500,000, after obtaining approvals from the holders of a majority of the Company’s outstanding shares of common stock and approvals of a majority of note holders. An impairment charge of $880,213 was recognized during the quarter ended March 31, 2014 for the amount by which the carrying value of the Company’s oil and gas properties exceeded the estimated net proceeds from the planned sale. The Company adjusted the impairment charge by $(18,634) during the quarter ended June 30, 2014 based on final closing of the transaction. The total impairment as of September 30, 2014 is $861,579.
The Company used the proceeds from the sale as follows:
| Pay holders of the convertible notes |
| $ | 5,259,706 |
|
| Purchase the net profits interest held by Vanguard Net Profits, LLC |
|
| 230,619 |
|
| Pay legal and closing costs |
|
| 9,675 |
|
|
|
| $ | 5,500,000 |
|
A loss on early extinguishment of debt totaling $380,539 was recognized during the quarter ended June 30, 2014 for the write-off of a portion of the debt issuance costs and debt issuance discount associated with the debt repayment. After the payment of the $5,259,706, convertible notes totaling $2,994,794 remain to be paid together with accrued interest of $702,902. As of September 30, 2014 the unamortized discount on the convertible notes totaled $71,754. Interest expense for the amortization of debt issuance cost and discount on the notes for the period ending September 30, 2014 was $445,078. The effective interest rate of the convertible notes was 28.3% for the fiscal years ending September 30, 2014 and 2013.
In consideration for accepting less than the full amount due on the notes, and releasing their lien on the Company’s oil and gas properties, holders of notes in the approximated principal of amount of $2,404,197 as a group, have agreed to received 860,381 shares in the Company’s stock in payment of the remaining balances on their notes, plus accrued interest. The Company subsequently issued the additional shares as payment for the notes and accrued interest in November 2014.
NOTE 4 – ASSET RETIREMENT OBLIGATIONS
The Company had asset retirement obligations for any wells that were permanently removed from service. Since the Company sold all its oil and gas assets in the 3rd quarter of 2014, the Company no longer has any ARO liability. For the purpose of determining the fair value of ARO during the fiscal years presented, the Company used the following assumptions:
|
|
| September 30, 2014 |
| |
| Inflation rate |
|
| 4 | % |
| Estimated asset life |
| 9.5 years |
| |
| Credit adjusted risk free interest rate |
|
| 18 | % |
| 32 |
The following table shows:
| Asset retirement obligations at September 30, 2012 |
| $ | 96,410 |
|
|
|
|
|
|
|
| Additional retirement obligations incurred |
|
| (28,291 | ) |
| Change in estimate |
|
| 111,598 |
|
| Accretion expense |
|
| 23,186 |
|
| Settlements |
|
| (25,218 | ) |
|
|
|
|
|
|
| Asset retirement obligations at September 30, 2013 |
| $ | 177,685 |
|
|
|
|
|
|
|
| Accretion expense |
|
| (158,513 | ) |
| Settlements |
|
| (19,172 | ) |
|
|
|
|
|
|
| Asset retirement obligations at September 30, 2014 |
| $ | - |
|
NOTE 5 – INCOME TAXES
The components of the net deferred tax asset were as follows:
|
|
| September 30, 2015 |
|
| September 30, 2014 |
| ||
| Deferred tax assets |
|
|
|
|
|
| ||
| Net operating loss carryforwards |
| $ | 6,586.357 |
|
| $ | 5,165,180 |
|
| Stock-based compensation |
|
| 0 |
|
|
| 222,936 |
|
| Deferred tax liability - oil & gas properties |
|
| 0 |
|
|
| (794,263 | ) |
| Participation liability |
|
| 0 |
|
|
| (332,041 | ) |
| Subtotal |
|
| 6,586,357 |
|
|
| 4,261,812 |
|
| Valuation allowance |
|
| (6,586,357 | ) |
|
| (4,261,812 | ) |
| Net deferred tax asset |
| $ | -- |
|
| $ | -- |
|
A valuation allowance has been established to offset reported deferred tax assets. The Company's accumulated net operating losses were approximately $15,000,000 at September 30, 2014 and begin to expire if not utilized in the year 2033.
NOTE 6 – STOCKHOLDERS' EQUITY
On August 19, 2014, upon receiving approval from the Financial Industry Regulatory Authority, a 100-for-1 reverse split of the Company’s common stock became effective. Common share amounts and per share amounts in these financial statements have been retroactively adjusted to reflect the reverse split.
In July and November 2014, 11,871 and 2,450 shares previously issued to the Company’s founders were returned the Company, respectively.
| 33 |
Treasury Stock— There were 14,355 shares previously accounted for as treasury charged to income as a cancellation of treasury shares for the year ended September 30, 2015.
Common shares of 23,025 were issued in conjunction with the settlement of debt during the year ended September 30, 2015, respectively, resulting in increases to common stock of $23, respectively and additional paid-in capital of $0.
NOTE 7 – STOCK-BASED COMPENSATION
On January 10, 2011, the Board of Directors approved a Non-Qualified Stock Option Plan (the "Plan") that authorizes the issuance of up to 1,500,000 shares of Company common stock to persons that exercise options granted pursuant to the Plan. The Company's employees, directors, officers, consultants and advisors are eligible to be granted options pursuant to the Plan, provided however, that bona-fide services must be rendered by such consultants or advisors, and such services must not be in connection with the offer or sale of securities in a capital-raising transaction. As of September 30, 2015, no options were outstanding.
NOTE 8 – COMMITMENTS AND CONTINGENCIES
Office Lease – The Company leases a virtual office lease in The Woodlands, Texas until June 30, 2019 at $197 per month.
Contractual Obligations – The Company’s material future contractual obligations by fiscal year as of September 30, 2015 were as follows:
|
|
| Total |
|
| 2015 |
|
| Thereafter |
| |||
| Convertible notes |
| $ | 146.937 |
|
| $ | 146.937 |
|
|
| -- |
|
| Notes Payable |
| $ | 50,000 |
|
| $ | 50,000 |
|
|
| -- |
|
The Company has contractual capital commitments outstanding in the principal balance of $146.937 at September 30, 2015. Accrued interest of $38,571 is due in addition to the principal balance of the convertible notes.
NOTE 9 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table summarizes the financial liabilities measured at fair value on a recurring basis as of September 30, 2015 and 2014:
| Description |
| Level |
|
| September 30, 2015 |
|
| September 30, 2014 |
| |||
| Convertible Notes |
|
| 1 |
|
| $ | 146.937 |
|
| $ | 2,923,040 |
|
| 34 |
NOTE 10 – SUBSEQUENT EVENTS
Preferred Stock— In July 2017 the Company increased its authorized preferred stock from 5,000,000 to 10,000,000 shares authorized none issued or outstanding.
Common Stock—In July 2017 the Company increased its authorized common shares from an aggregate of 100,000,000 shares to an aggregate of 500,000,000 shares of common stock with $0.00001 par value.
On July 1, 2017 the Company acquired all of the shares of Solar Quartz Technologies Limited, a company incorporated in New Zealand (“SQTNZ”). These shares were purchased from Solar Quartz Technologies, Inc. (“SQTI”). Subsequently the name was changed Solar Quartz Technologies Corporation in Colorado and with FINRA, and have also been cleared by FINRA to use the new trading symbol SQTX. During July 2017 the Company issued 213,402,755 new shares of common stock to SQTI in exchange for 122 (100%) of the common shares of SQTNZ. The issuance of these shares was equivalent to 95% of the Company’s shares issued, after the Company issues in the future an additional 10,021,224 shares of common stock to those holders of our common stock immediately prior to the acquisition. The Company does not anticipate any further reorganization of its common stock. The Company plans to apply to trade on the more senior OTCQX exchange or NASDAQ.
SQTNZ is a corporation that has no prior business activity other than being the title owner of the exclusive mining and development rights for two high purity quartz silica (“HPQS”) deposits known as Quartz Hill (represented by leases ML 30235, ML 30236 and ML 30237) and White Springs (represented by leases ML 30238 and ML 30239) located in North Queensland, Australia. Together they contain deposits in excess of 15 million tons of 99% pure HPQS which is feedstock in high demand in the marketplace to be used in the production of HPQS according to independent professional reports.
HPQS is an essential primary material for the manufacture of: photo-voltaic solar panels; semiconductors; all high-end electronic products; fiber optical cables; halogen lamps; HD and LCD television screens; and epoxy mounding compounds.
| 35 |
EXHIBIT INDEX
| 36 |
EXHIBIT 21
SUBSIDIARIES
Solar Quartz Technologies Limited, a New Zealand corporation
EXHIBIT 31.1
RULE 13a-14(a)/15d-14(a) CERTIFICATION
I, Roger May, certify that:
| 1. | I have reviewed this annual report on Form 10-K of Solar Quartz Technologies Corporation; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s independent registered public accounting firm and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: September 6, 2018 | /s/ Roger May | ||
| Roger May, Interim Chief Executive Officer (principal executive officer) |
EXHIBIT 31.2
RULE 13a-14(a)/15d-14(a) CERTIFICATION
I, Warren Dillard, certify that:
| 1. | I have reviewed this annual report on Form 10-K of Solar Quartz Technologies Corporation; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s independent registered public accounting firm and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: September 6, 2018 | /s/ Warren Dillard | ||
| Warren Dillard, Chief Financial Officer (principal financial and accounting officer) |
EXHIBIT 32
SECTION 1350 CERTIFICATION
In connection with the annual report of Solar Quartz Technologies Corporation (“Company”) on Form 10-K for the year ended September 30, 2015 as filed with the Securities and Exchange Commission (“Report”), the undersigned, in the capacities and on the dates indicated below, hereby certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) that to their knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: September 6, 2018 | /s/ Roger May | ||
| Roger May, Interim Chief Executive Officer (principal executive officer) | |||
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| /s/ Warren Dillard |
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| Warren Dillard, Chief Financial |
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| Officer (principal financial and accounting officer) |
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Document and Entity Information - USD ($) |
12 Months Ended | |
|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2017 |
|
| Document And Entity Information | ||
| Entity Registrant Name | SOLAR QUARTZ TECHNOLOGIES CORPORATION | |
| Entity Central Index Key | 0001497649 | |
| Document Type | 10-K | |
| Document Period End Date | Sep. 30, 2015 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --09-30 | |
| Is Entity a Well-known Seasoned Issuer? | No | |
| Is Entity a Voluntary Filer? | No | |
| Is Entity's Reporting Status Current? | No | |
| Entity Filer Category | Smaller Reporting Company | |
| Entity Public Float | $ 225,116,996 | |
| Entity Common Stock, Shares Outstanding | 214,404,889 | |
| Document Fiscal Period Focus | FY | |
| Document Fiscal Year Focus | 2015 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) |
Sep. 30, 2015 |
Sep. 30, 2014 |
|---|---|---|
| Current liabilities: | ||
| Notes payable, net of discount | $ 71,754 | $ 71,754 |
| Stockholders' deficit: | ||
| Preferred stock, par value | $ 0.00001 | $ 0.00001 |
| Preferred stock, authorized shares | 5,000,000,000 | 5,000,000,000 |
| Preferred stock, issued shares | 0 | 0 |
| Preferred stock, outstanding shares | 0 | 0 |
| Common stock, par value | $ 0.00001 | $ 0.00001 |
| Common stock, authorized shares | 100,000,000 | 100,000,000 |
| Common stock, issued shares | 979,109 | 115,243 |
| Common stock, outstanding shares | 979,109 | 115,243 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) |
12 Months Ended | |||
|---|---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
|||
| Revenues | ||||
| Oil and gas sales | $ 1,676,213 | |||
| Costs and expenses | ||||
| Lease operating expense | 544,045 | |||
| Production taxes | 77,253 | |||
| Depreciation, depletion and amortization | 984,200 | |||
| Impairment of oil and gas properties | 861,579 | |||
| Asset retirement obligation accretion | 29,088 | |||
| General and administrative | 109,953 | 904,414 | ||
| Total costs and expenses | 109,953 | 3,400,579 | ||
| Loss from operations | (109,953) | (1,724,348) | ||
| Other income and (expense): | ||||
| Other income | (23,810) | 2,645 | ||
| Interest income | 233 | |||
| Gain on settlement of participation liability | 171,772 | |||
| Interest expense | (31,608) | (1,458,898) | ||
| Other equipment write-off | 20,819 | |||
| Gain (loss) on debt extinguishment | 2,576,890 | (380,539) | ||
| Total other income (expense) | 2,521,472 | (1,643,968) | ||
| Net income (loss) before income taxes | 2,411,879 | (3,368,316) | ||
| Provision for income taxes | ||||
| Net Income (Loss) | $ 2,411,879 | $ (3,368,316) | ||
| Income (Loss) per share: | ||||
| Basic | $ 2.90 | $ 26.92 | ||
| Diluted | $ 2.65 | $ 26.92 | ||
| Weighted average number of shares outstanding (1) | [1] | 831,241 | 125,130 | |
| ||||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) |
Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Total |
|||
|---|---|---|---|---|---|---|---|
| Beginning Balance, Shares at Sep. 30, 2013 | [1] | 127,114 | |||||
| Beginning Balance, Amount at Sep. 30, 2013 | $ 127 | $ 5,522,204 | $ (2,254,698) | $ 3,267,633 | |||
| Return of common stock, Shares | [1] | (11,871) | |||||
| Return of common stock, Amount | $ (12) | ||||||
| Cancellation of treasury shares | |||||||
| Net Income loss | (3,368,316) | (3,368,316) | |||||
| Ending Balance, Shares at Sep. 30, 2014 | [1] | 115,243 | |||||
| Ending Balance, Amount at Sep. 30, 2014 | $ 115 | 5,522,204 | (9,022,045) | (3,499,714) | |||
| Return of common stock, Shares | [1] | (2,484) | |||||
| Return of common stock, Amount | $ (2) | 2 | |||||
| Cancellation of treasury shares | 23,810 | 23,810 | |||||
| Issuance of shares for debt settlement, Shares | [1] | 866,350 | |||||
| Issuance of shares for debt settlement, Amount | $ 866 | 796,702 | 797,568 | ||||
| Net Income loss | 2,411,879 | 2,411,879 | |||||
| Ending Balance, Shares at Sep. 30, 2015 | [1] | 979,109 | |||||
| Ending Balance, Amount at Sep. 30, 2015 | $ 979 | $ 6,318,920 | $ (6,586,357) | $ (266,458) | |||
| |||||||
CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($) |
12 Months Ended | |
|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
|
| Cash flows from operating activities | ||
| Net income (loss) | $ 2,411,879 | $ (3,368,316) |
| Adjustments to reconcile net income (loss) to net cash from operating activities: | ||
| Interest expense | 31,608 | |
| Cancellation of treasury shares | 23,810 | |
| Depreciation, depletion and amortization | 941,294 | |
| Impairment of oil and gas properties | 861,579 | |
| Amortization of debt issuance costs | 274,740 | |
| Gain on settlement of participation liability | (171,772) | |
| Amortization of debt discount | 169,145 | |
| Loss (gain) on debt extinguishment | (2,576,890) | 380,539 |
| Asset retirement of obligation accretion | 29,088 | |
| Accretion of participation liability | 63,160 | |
| Other equipment write-off | 20,819 | |
| Change in operating assets and liabilities: | ||
| Accounts receivable | 12,500 | 343,194 |
| Other assets | 14,363 | |
| Accounts payable | 25,605 | (112,736) |
| Accrued liabilities | (9,432) | 393,357 |
| Other liabilities | (8,325) | (4,050) |
| Net cash used in operating activities | (89,246) | (291,916) |
| Cash flows from investing activities: | ||
| Capital expenditures on oil and gas properties | (1,012,793) | |
| Proceeds from sale of oil and gas properties | 5,500,000 | |
| Net cash provided by investment activities | 4,487,207 | |
| Cash flows from financing activities | ||
| Issuance of short term note payable | 50,000 | |
| Repayment of note payable | (5,259,706) | |
| Settlement of participation liability | (230,619) | |
| Net cash provided by financing activities | 50,000 | (5,490,325) |
| Net change in cash and cash equivalents | (39,246) | (1,295,034) |
| Cash and cash equivalents | ||
| Beginning of period | 39,251 | 1,334,285 |
| End of period | 5 | 39,251 |
| Amounts paid during the year for: | ||
| Interest | ||
| Income taxes | ||
| Supplemental cash flow information Noncash investing and financing activities: | ||
| Issuance of shares for settlement of debt | $ 866,323 | |
BASIS OF PRESENTATION |
12 Months Ended |
|---|---|
Sep. 30, 2015 | |
| Notes to Financial Statements | |
| NOTE 1 - BASIS OF PRESENTATION |
These consolidated audited financial statements of Solar Quartz Technologies Corporation, a Colorado corporation (“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 financials statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of 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.
The sale of the Company’s oil and gas properties, as explained in Note 3, raised substantial doubt of the Company to continue as a going concern. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 | |||||||||||
| Notes to Financial Statements | |||||||||||
| NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Principles of Consolidation and Basis of Presentation— The consolidated financial statements include the accounts of Solar Quartz Technologies Corporation and its subsidiaries. Solar Quartz’s significant accounting policies are consistent with those discussed in the audited financial statements as of September 30, 2016 and 2015. All significant intercompany accounts and transactions have been eliminated in consolidation.
The Company's fiscal year-end is September 30. 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 follows
Cash and Cash Equivalents—The Company considers all highly liquid instruments purchased with a maturity date of three months or less to be cash equivalents.
Debt Issuance Costs—Costs incurred in connection with the issuance of long-term debt are capitalized and amortized over the term of the related debt.
Conversion Feature Liability and Warrant Liabilities—The conversion feature liability and warrant liabilities are recorded at fair value based upon valuation models utilizing relevant factors such as expected life, estimated volatility, risk-free interest and expected dividend rate. Changes in the fair value of these liabilities are reported in the statements of operations.
Stock-Based Compensation—The Company accounts for 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.
The Company is required to file federal income tax returns in the United States and in various state and local jurisdictions. The Company's 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.
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.
Recently Issued Accounting Pronouncements – Various accounting standards updates have been recently issued, most of which represented technical corrections to the accounting literature or were applicable to specific industries. No new accounting pronouncements have been issued that are likely to have a material impact to the Company’s consolidated financial statements.
Fair Value Measurements—The carrying value of cash and cash equivalents, accounts receivable, and accounts payable, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. The estimated fair value of long-term debt was determined by discounting future cash flows using rates currently available to the Company for debt with similar terms and remaining maturities. The Company calculated that the estimated fair value of the long-term debt is not significantly different than the carrying value of the debt. The participation liability associated with outstanding long-term debt was determined by utilizing a present value factor of 10 applied to proved developed reserves associated with the wells drilled with the proceeds of the notes.
Fair value is defined as the price that would be received to sell an asset or price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used in determining fair value are classified for disclosure purposes according to a hierarchy that prioritizes those inputs based upon the degree to which they are observable. The three levels of the fair-value-measurement hierarchy are as follows:
In determining fair value, the Company utilizes observable market data when available, or models that incorporate observable market data. In addition to market information, the Company incorporates transaction-specific details that, in management's judgment, market participants would take into account in measuring fair value. The Company utilizes the most observable inputs available for the valuation technique employed. If a fair value measurement reflects inputs at multiple levels within the hierarchy, the fair-value measurement of both financial and nonfinancial assets and liabilities are characterized based upon the lowest level of input that is significant to the fair value measurement. |
SALE OF OIL AND GAS PROPERTIES/PAYMENT OF CONVERTIBLE NOTES |
12 Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 | |||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||
| NOTE 3 - SALE OF OIL AND GAS PROPERTIES/PAYMENT OF CONVERTIBLE NOTES |
During 2012, the Company sold $8,254,500 of Convertible Promissory Notes. On March 31, 2014 the Company failed to make the scheduled interest payments on the notes. As a result, the note holders were entitled to declare the notes in default, in which case the principal amount of the notes plus all accrued and unpaid interest would be immediately due and payable.
The Company’s inability to make the interest payment to the note holders was the result of the expenditure of considerable capital to work over some of the Company’s wells. The costs of the work far exceeded the Company’s expectations and yet the work was required in order to get the wells back into production. This depleted the Company’s cash position far below its expectations. Further, although the initial work on those wells was successful in boosting production momentarily, further complications resulted in lower production than anticipated, which was not adequate to replenish the cash expended and enable the Company to make required interest payments.
With a view to paying its note holders, the Company, on June 17, 2014 sold its oil and gas properties to Vast Exploration, Inc. for $5,500,000, after obtaining approvals from the holders of a majority of the Company’s outstanding shares of common stock and approvals of a majority of note holders. An impairment charge of $880,213 was recognized during the quarter ended March 31, 2014 for the amount by which the carrying value of the Company’s oil and gas properties exceeded the estimated net proceeds from the planned sale. The Company adjusted the impairment charge by $(18,634) during the quarter ended June 30, 2014 based on final closing of the transaction. The total impairment as of September 30, 2014 is $861,579.
The Company used the proceeds from the sale as follows:
A loss on early extinguishment of debt totaling $380,539 was recognized during the quarter ended June 30, 2014 for the write-off of a portion of the debt issuance costs and debt issuance discount associated with the debt repayment. After the payment of the $5,259,706, convertible notes totaling $2,994,794 remain to be paid together with accrued interest of $702,902. As of September 30, 2014 the unamortized discount on the convertible notes totaled $71,754. Interest expense for the amortization of debt issuance cost and discount on the notes for the period ending September 30, 2014 was $445,078. The effective interest rate of the convertible notes was 28.3% for the fiscal years ending September 30, 2014 and 2013.
In consideration for accepting less than the full amount due on the notes, and releasing their lien on the Company’s oil and gas properties, holders of notes in the approximated principal of amount of $2,404,197 as a group, have agreed to received 860,381 shares in the Company’s stock in payment of the remaining balances on their notes, plus accrued interest. The Company subsequently issued the additional shares as payment for the notes and accrued interest in November 2014. |
ASSET RETIREMENT OBLIGATIONS |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOTE 4 - ASSET RETIREMENT OBLIGATIONS |
The Company had asset retirement obligations for any wells that were permanently removed from service. Since the Company sold all its oil and gas assets in the 3rd quarter of 2014, the Company no longer has any ARO liability. For the purpose of determining the fair value of ARO during the fiscal years presented, the Company used the following assumptions:
The following table shows:
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INCOME TAXES |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOTE 5 - INCOME TAXES |
The components of the net deferred tax asset were as follows:
A valuation allowance has been established to offset reported deferred tax assets. The Company's accumulated net operating losses were approximately $15,000,000 at September 30, 2014 and begin to expire if not utilized in the year 2033. |
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STOCKHOLDERS' EQUITY |
12 Months Ended |
|---|---|
Sep. 30, 2015 | |
| Notes to Financial Statements | |
| NOTE 6 - STOCKHOLDERS EQUITY |
On August 19, 2014, upon receiving approval from the Financial Industry Regulatory Authority, a 100-for-1 reverse split of the Company’s common stock became effective. Common share amounts and per share amounts in these financial statements have been retroactively adjusted to reflect the reverse split.
In July and November 2014, 11,871 and 2,450 shares previously issued to the Company’s founders were returned the Company, respectively.
Treasury Stock— There were 14,355 shares previously accounted for as treasury charged to income as a cancellation of treasury shares for the year ended September 30, 2015.
Common shares of 23,025 were issued in conjunction with the settlement of debt during the year ended September 30, 2015, respectively, resulting in increases to common stock of $23, respectively and additional paid-in capital of $0. |
STOCK-BASED COMPENSATION |
12 Months Ended |
|---|---|
Sep. 30, 2015 | |
| Notes to Financial Statements | |
| NOTE 7 - STOCK-BASED COMPENSATION |
On January 10, 2011, the Board of Directors approved a Non-Qualified Stock Option Plan (the "Plan") that authorizes the issuance of up to 1,500,000 shares of Company common stock to persons that exercise options granted pursuant to the Plan. The Company's employees, directors, officers, consultants and advisors are eligible to be granted options pursuant to the Plan, provided however, that bona-fide services must be rendered by such consultants or advisors, and such services must not be in connection with the offer or sale of securities in a capital-raising transaction. As of September 30, 2015, no options were outstanding. |
COMMITMENTS AND CONTINGENCIES |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||
| NOTE 8 - COMMITMENTS AND CONTINGENCIES |
Office Lease – The Company leases a virtual office lease in The Woodlands, Texas until June 30, 2019 at $197 per month.
Contractual Obligations – The Company’s material future contractual obligations by fiscal year as of September 30, 2015 were as follows:
The Company has contractual capital commitments outstanding in the principal balance of $146.937 at September 30, 2015. Accrued interest of $38,571 is due in addition to the principal balance of the convertible notes. |
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FAIR VALUE OF FINANCIAL INSTRUMENTS |
12 Months Ended | ||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 | |||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||
| NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS |
The following table summarizes the financial liabilities measured at fair value on a recurring basis as of September 30, 2015 and 2014:
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SUBSEQUENT EVENT |
12 Months Ended |
|---|---|
Sep. 30, 2015 | |
| Notes to Financial Statements | |
| NOTE 10 - SUBSEQUENT EVENT |
Preferred Stock— In July 2017 the Company increased its authorized preferred stock from 5,000,000 to 10,000,000 shares authorized none issued or outstanding.
Common Stock—In July 2017 the Company increased its authorized common shares from an aggregate of 100,000,000 shares to an aggregate of 500,000,000 shares of common stock with $0.00001 par value.
On July 1, 2017 the Company acquired all of the shares of Solar Quartz Technologies Limited, a company incorporated in New Zealand (“SQTNZ”). These shares were purchased from Solar Quartz Technologies, Inc. (“SQTI”). Subsequently the name was changed Solar Quartz Technologies Corporation in Colorado and with FINRA, and have also been cleared by FINRA to use the new trading symbol SQTX. During July 2017 the Company issued 213,402,755 new shares of common stock to SQTI in exchange for 122 (100%) of the common shares of SQTNZ. The issuance of these shares was equivalent to 95% of the Company’s shares issued, after the Company issues in the future an additional 10,021,224 shares of common stock to those holders of our common stock immediately prior to the acquisition. The Company does not anticipate any further reorganization of its common stock. The Company plans to apply to trade on the more senior OTCQX exchange or NASDAQ.
SQTNZ is a corporation that has no prior business activity other than being the title owner of the exclusive mining and development rights for two high purity quartz silica (“HPQS”) deposits known as Quartz Hill (represented by leases ML 30235, ML 30236 and ML 30237) and White Springs (represented by leases ML 30238 and ML 30239) located in North Queensland, Australia. Together they contain deposits in excess of 15 million tons of 99% pure HPQS which is feedstock in high demand in the marketplace to be used in the production of HPQS according to independent professional reports.
HPQS is an essential primary material for the manufacture of: photo-voltaic solar panels; semiconductors; all high-end electronic products; fiber optical cables; halogen lamps; HD and LCD television screens; and epoxy mounding compounds. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
12 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 | |||||||||||
| Summary Of Significant Accounting Policies | |||||||||||
| Principles of Consolidation and Basis of Presentation |
The consolidated financial statements include the accounts of Solar Quartz Technologies Corporation and its subsidiaries. Solar Quartz’s significant accounting policies are consistent with those discussed in the audited financial statements as of September 30, 2016 and 2015. All significant intercompany accounts and transactions have been eliminated in consolidation.
The Company's fiscal year-end is September 30. 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 follows. |
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| Cash and Cash Equivalents | The Company considers all highly liquid instruments purchased with a maturity date of three months or less to be cash equivalents. |
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| Debt Issuance Costs | Costs incurred in connection with the issuance of long-term debt are capitalized and amortized over the term of the related debt.
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| Conversion Feature Liability and Warrant Liabilities | The conversion feature liability and warrant liabilities are recorded at fair value based upon valuation models utilizing relevant factors such as expected life, estimated volatility, risk-free interest and expected dividend rate. Changes in the fair value of these liabilities are reported in the statements of operations. |
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| Stock-Based Compensation | The Company accounts for 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. |
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| 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.
The Company is required to file federal income tax returns in the United States and in various state and local jurisdictions. The Company's 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. |
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| 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. |
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| 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. |
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| Recently Issued Accounting Pronouncements | Various accounting standards updates have been recently issued, most of which represented technical corrections to the accounting literature or were applicable to specific industries. No new accounting pronouncements have been issued that are likely to have a material impact to the Company’s consolidated financial statements. |
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| Fair Value Measurements | The carrying value of cash and cash equivalents, accounts receivable, and accounts payable, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. The estimated fair value of long-term debt was determined by discounting future cash flows using rates currently available to the Company for debt with similar terms and remaining maturities. The Company calculated that the estimated fair value of the long-term debt is not significantly different than the carrying value of the debt. The participation liability associated with outstanding long-term debt was determined by utilizing a present value factor of 10 applied to proved developed reserves associated with the wells drilled with the proceeds of the notes.
Fair value is defined as the price that would be received to sell an asset or price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used in determining fair value are classified for disclosure purposes according to a hierarchy that prioritizes those inputs based upon the degree to which they are observable. The three levels of the fair-value-measurement hierarchy are as follows:
In determining fair value, the Company utilizes observable market data when available, or models that incorporate observable market data. In addition to market information, the Company incorporates transaction-specific details that, in management's judgment, market participants would take into account in measuring fair value. The Company utilizes the most observable inputs available for the valuation technique employed. If a fair value measurement reflects inputs at multiple levels within the hierarchy, the fair-value measurement of both financial and nonfinancial assets and liabilities are characterized based upon the lowest level of input that is significant to the fair value measurement. |
SALE OF OIL AND GAS PROPERTIES/PAYMENT OF CONVERTIBLE NOTES (Tables) |
12 Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 | |||||||||||||||||||||
| Sale Of Oil And Gas Propertiespayment Of Convertible Notes | |||||||||||||||||||||
| Sale of oil and gas properties/payment of convertible notes | The Company used the proceeds from the sale as follows:
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ASSET RETIREMENT OBLIGATIONS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asset Retirement Obligations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of asset retirement obligations |
The following table shows:
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INCOME TAXES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of deferred tax assets |
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COMMITMENTS AND CONTINGENCIES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||
| Commitments And Contingencies | ||||||||||||||||||||||||||||||||||||||||
| Schedule of Contractual Obligation |
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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 | |||||||||||||||||||||||||||
| Fair Value Of Financial Instruments | |||||||||||||||||||||||||||
| Schedule of financial liabilities measured at fair value |
The following table summarizes the financial liabilities measured at fair value on a recurring basis as of September 30, 2015 and 2014:
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SALE OF OIL AND GAS PROPERTIES/PAYMENT OF CONVERTIBLE NOTES (Details) |
12 Months Ended |
|---|---|
|
Sep. 30, 2015
USD ($)
| |
| Proceeds from sale used to: | |
| Pay holders of the convertible notes | $ 5,259,706 |
| Purchase the net profits interest held by Vanguard Net Profits, LLC | 230,619 |
| Pay legal and closing costs | 9,675 |
| Total | $ 5,500,000 |
SALE OF OIL AND GAS PROPERTIES/PAYMENT OF CONVERTIBLE NOTES (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2014 |
Jun. 17, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2013 |
Sep. 30, 2012 |
|
| Assets Impairment charge | $ 861,579 | $ (18,634) | $ 880,213 | $ 861,579 | |||||
| Gain loss on extinguishment of debt | $ 380,539 | 2,576,890 | (380,539) | ||||||
| Repayment of note payable | 5,259,706 | ||||||||
| Accrued interest | 702,901 | 38,571 | 702,901 | ||||||
| Notes payable, net of discount | 71,754 | 71,754 | 71,754 | ||||||
| Interest expense | $ 445,078 | ||||||||
| Interest rate | 28.30% | 28.30% | |||||||
| Stock Issued | $ 860,381 | ||||||||
| Vast Exploration, Inc [Member] | |||||||||
| Proceeds from sale of oil and gas properties | $ 5,500,000 | ||||||||
| Convertible Notes [Member] | |||||||||
| Convertible debt | $ 8,254,500 | ||||||||
| Notes payable | $ 2,404,197 | $ 2,994,794 | $ 2,994,794 | ||||||
| Accrued interest | $ 38,571 | ||||||||
ASSET RETIREMENT OBLIGATIONS (Details) - Asset Retirement Obligations [Member] |
12 Months Ended |
|---|---|
Sep. 30, 2014 | |
| Inflation rate | 4.00% |
| Estimated asset life | 9.5 years |
| Credit adjusted risk free interest rate | 18.00% |
ASSET RETIREMENT OBLIGATIONS (Details 1) - USD ($) |
12 Months Ended | |
|---|---|---|
Sep. 30, 2014 |
Sep. 30, 2013 |
|
| Asset Retirement Obligations Details 1 | ||
| Asset retirement obligations Beginning of year | $ 177,685 | $ 96,410 |
| Additional retirement obligations incurred | (28,291) | |
| Change in estimate | 111,598 | |
| Accretion expense | (158,513) | 23,186 |
| Settlements | (19,172) | (25,218) |
| Asset retirement obligations Ending of year | $ 177,685 | |
INCOME TAXES (Details) - USD ($) |
Sep. 30, 2015 |
Sep. 30, 2014 |
|---|---|---|
| Deferred tax assets | ||
| Net operating loss carryforwards | $ 6,586,357 | $ 5,165,180 |
| Stock-based compensation | 0 | 222,936 |
| Deferred tax liability - oil & gas properties | 0 | (794,263) |
| Participation liability | 0 | (332,041) |
| Subtotal | 6,586,357 | 4,261,812 |
| Valuation allowance | (6,586,357) | (4,261,812) |
| Net deferred tax asset |
INCOME TAXES (Details Narrative) |
12 Months Ended |
|---|---|
|
Sep. 30, 2014
USD ($)
| |
| Income Taxes Details Narrative Abstract | |
| Net operating loss carryforwards | $ 15,000,000 |
| Net operating loss expiration year | 2033. |
STOCKHOLDERS EQUITY (Details Narrative) - USD ($) |
1 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Aug. 19, 2014 |
Sep. 30, 2015 |
Nov. 30, 2014 |
Jul. 31, 2014 |
|
| Treasury shares | 14,355 | 2,450 | 11,871 | |
| Issuance of shares for debt settlement, Amount | $ 797,568 | |||
| Reverse stock split | 100-for-1 | |||
| Common Stock One [Member] | ||||
| Issuance of shares for debt settlement, Shares | 23,025 | |||
| Issuance of shares for debt settlement, Amount | $ 23 | |||
| Additional paid-in capital | $ 0 |
STOCK-BASED COMPENSATION (Details Narrative) |
Jan. 10, 2011
shares
|
|---|---|
| Non-Qualified Stock Option Plan [Member] | Maximum [Member] | |
| Common stock shares issuable upon exercise of options | 1,500,000 |
COMMITMENTS AND CONTINGENCIES (Details) |
Sep. 30, 2015
USD ($)
|
|---|---|
| Convertible Notes [Member] | |
| 2015 | $ 146,937 |
| Thereafter | |
| Total | 146,937 |
| Notes Payable [Member] | |
| 2015 | 50,000 |
| Thereafter | |
| Total | $ 50,000 |
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) |
12 Months Ended | |
|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
|
| Accrued interest | $ 38,571 | $ 702,901 |
| Convertible Notes [Member] | ||
| Contractual capital commitments outstanding amount | 146,937 | |
| Accrued interest | 38,571 | |
| Woodlands, Texas [Member] | ||
| Office Lease periodic payments | $ 197 | |
| Frequency of periodic payments | Monthly | |
| Lease description | The Company leases a virtual office lease in The Woodlands, Texas until June 30, 2019 at $197 per month. |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) |
Sep. 30, 2015 |
Sep. 30, 2014 |
|---|---|---|
| Fair Value, Inputs, Level 1 [Member] | ||
| Convertible Notes | $ 146,937 | $ 2,923,040 |
SUBSEQUENT EVENT (Details Narrative) - $ / shares |
1 Months Ended | |||
|---|---|---|---|---|
Jul. 31, 2017 |
Jul. 01, 2017 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
| Common stock, par value | $ 0.00001 | $ 0.00001 | ||
| Subsequent Event [Member] | ||||
| Description for High Purity Quartz Silica deposits | Quartz Hill (represented by leases ML 30235, ML 30236 and ML 30237) and White Springs (represented by leases ML 30238 and ML 30239) located in North Queensland, Australia. Together they contain deposits in excess of 15 million tons of 99% pure High Purity Quartz which is feedstock in high demand in the marketplace to be used in the production of High Purity Quartz Sand (HPQS) according to independent professional reports | |||
| Preferred stock, shares authorized, increased | 10,000,000 | |||
| Common stock, shares authorized, increased | 500,000,000 | |||
| Common stock, par value | $ 0.00001 | |||
| SQTI [Member] | Subsequent Event [Member] | ||||
| Business acquisition consideration transferred, shares issued | 213,402,755 | |||
| Business acquisition shares issued or issuable, percentage | 95.00% | |||
| Additional common stock shares reserved for future issuance | 10,021,224 | |||
| SQTNZ [Member] | Subsequent Event [Member] | ||||
| Ownership interest acquired | 100.00% | |||
| Business acquisition, shares acquired from SQTI | 122 | |||
| Solar Quartz Technologies Limited [Member] | Subsequent Event [Member] | ||||
| State of Incorporation | New Zealand | |||