Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATION

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

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

FORWARD LOOKING STATEMENTS

The information contained in this Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, including among other things, statements regarding our capital needs, business strategy and expectations. Any statement which does not contain a historical fact may be deemed to be a forward-looking statement. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. In evaluating forward looking statements, you should consider various factors outlined in our Form 10-K report for the year ended September 30, 2024, filed with the U.S. Securities Exchange Commission ("SEC") and, from time to time, in other reports we file with the SEC. These factors may cause our actual results to differ materially from any forward-looking statement. We disclaim any obligation to publicly update these statements or disclose any difference between our actual results and those reflected in these statements.

Overview

GSTX is focused on manufacturing silicon wafers for supply into the solar manufacturing sector. Silicon wafers are the core material used for making solar cells. The solar panel supply chain can be depicted as follows:

Quartz -> silicon -> polysilicon -> silicon ingots -> silicon wafers -> solar cells -> solar modules (panels)

The GSTX strategy is to take advantage of the geopolitical, environmental and supply chain challenges the world faces at present. GSTX is focused on reshoring solar manufacturing from China for domestic manufacturing, and sales into domestic markets. GSTX is also developing projects in the upstream supply chain to maintain its own supply chain security for its silicon wafer manufacturing. This includes quartz, silicon and polysilicon. The year end September 30, 2024, was marked by significant progress in project development activities. The company has restructured its operations. Previous business of thin films and water harvesting have been paused. The company has established a wholly owned subsidiary, The Quartz & Silicon Materials Company Limited to develop its solar manufacturing related projects. Early planning for several projects is underway, including:

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Acquisition of quartz resources in Australia. Development of several prospective resources in Brail, USA, Canada and Europe.

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A completed acquisition of Ausquartz Group Holding Pty Ltd, a company associated with CEO Jason May, specializing in high purity quartz processing.

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A 10GW wafer facility in the USA,

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A 10GW wafer facility in Australia,

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A 60,000 metric ton chemical grade silicon smelter in New Zealand

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A 30,000 metric ton solar grade polysilicon plant in New Zealand

The US Inflation Reduction Act under the Biden era administration had strong financial support for a wide range of renewable businesses, including solar manufacturing. With the change of administration, the Trump era, significantly changed the policies and support for renewables as part of the One Big Beautiful Bill Act. This was signed into law on July 4, 2025. The US presidential election and the first 6 months of Trump's presidency caused a significant amount of uncertainty in the solar manufacturing sector. This did affect the operations of GSTX, but thankfully with the passing of the One Big Beautiful Bill there is now positive certainty regarding solar manufacturing incentives. In particular the section 45 manufacturing production credit framework has survived amendment and is a positive outcome for US solar manufacturing, and the GSTX business strategy.

Liquidity and Capital Resources

We expect to require substantial additional financing to fund the construction and commissioning of our planned manufacturing facilities. We intend to pursue a combination of equity financing, debt financing, government incentives, and customer offtake arrangements. There can be no assurance that such financing will be available on acceptable terms or at all.

Supply Chain and Development Activities

The Company has been in advanced discussion with several large incumbent manufacturers to reshore manufacturing of silicon ingots, wafers and cells to the US and Australia. QSM is structured to take advantage of the US One Big Beautiful Bill Act and the Australian "Made in Australia" programs to reshore critical solar manufacturing. Producing wafers locally (Made in America/Made in Australia) is key to being able to claim government incentives (production credits). QSM is a low technology risk enterprise, no new inventions, just manufacturing.

Outlook

For fiscal year 2025, the Company expects to continue project development activities, including establishing manufacturing joint ventures, detailed engineering, permitting, offtake sales and financing. We expect to continue to incur operating losses and negative operating cash flows until commercial operations commence. The timing of revenue generation is dependent on the successful completion of project financing and construction of the Company's planned manufacturing facilities.

Results of Operations

For the fiscal quarters ended June 30, 2025 and 2024, we generated no revenues, and thus no cost of sales or gross profits.

For the fiscal quarters ended June 30, 2025 and 2024, we incurred $803,874 and $304,825, respectively, in operating expenses.

For the fiscal quarters ended June 30, 2025 we recorded other expenses of $73,837, while in the fiscal quarters ended June 30, 2024, we incurred expenses of $14,798; both items are represented by accrued interest on debt. Other income/(expense) of $5 was incurred in the fiscal quarter, June 30, 2025 and a loss of $4,792 in fiscal quarter, June 30, 2024.

For the nine-months ended June 30, 2025, we reported net loss before taxes of $2,565,809 while in the nine-months ended June 30, 2024, we reported a net loss before taxes of $1,060,293.

For the periods ended June 30, 2025 and September 30, 2024, our cash positions were $42,791 and $1,845, respectively.

As of June 30, 2025, we had total current liabilities of $4,859,561 while as of September 30, 2024, we had total current liabilities of $3,026,409 an increase of about 37%. Accrued interest payable increased from $222,679 to $260,062 all attributable to accruals on the loans and the convertible notes payable. Related party debt increased from $852,743 to $2,209,249 during the period.

Liquidity and Capital Resources

As of June 30, 2025, we had $54,057 in total current assets and $4,859,561 in total current liabilities. Accordingly, we had a working capital deficit of $4,805,504.

Cash used in operating activities was $327,489 for the nine-months ended June 30, 2025, as compared to $53,161 cash used in operating activities for the nine-months ended June 30, 2024.

Net cash provided by financing activities was $367,172 for the nine-months ended June 30, 2025, as compared to $77,399 for the nine-months ended June 30, 2024.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

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