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EX-31.1 - CERTIFICATION - AMERICAN GRAPHITE TECHNOLOGIES INC.ex311.htm
EX-32.1 - CERTIFICATION - AMERICAN GRAPHITE TECHNOLOGIES INC.ex321.htm


 UNITED STATES
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 June 30, 2014
   
[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the transition period from __________ to __________

000-54521
Commission File Number
 
AMERICAN GRAPHITE TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
   
Nevada
N/A
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
   
3651 Lindell Rd., Ste. D#422, Las Vegas, NV
89103
(Address of principal executive offices)
(Zip Code)
 
(702) 473-8227
(Registrant’s  telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:
 
Title of each class
Name of each exchange on which registered
n/a
n/a

Securities registered pursuant to Section 12(g) of the Exchange Act:
 
Common Stock, $0.001 par value
Title of  class

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 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 
Yes
[X]
No
[   ]


 
 

 

ndicate 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 
Yes
[  ]
No
[ X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’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.

       
[  ]

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]
(Do not check if a smaller reporting company)
     

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 
Yes
[  ]
No
[ X]

The aggregate market value of voting and non-voting common stock held by non-affiliates of the registrant was $8,466,940 based on the closing price of $0.16 as reported as of December 31, 2013 (the last business day of the registrant’s most recently completed second quarter), assuming solely for the purpose of this calculation that all directors, officers and greater than 10% stockholders of the registrant are affiliates. The determination of affiliate status for this purpose is not necessarily conclusive for any other purpose.
 
APPLICABLE ONLY TO CORPORATE REGISTRANTS

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

 
96,083,348 shares of common stock issued and outstanding as of October 8, 2014
 
 
 
DOCUMENTS INCORPORATED BY REFERENCE

None.
 
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TABLE OF CONTENTS
 
 
 
   
Page
 
PART I
 
      4
Business
  18
Risk Factors
  25
Unresolved Staff Comments
  25
Properties
  25
Legal Proceedings
  31
Mine Safety Disclosures
  31
     
 
PART II
 
     
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  32
Selected Financial Data
  32
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  33
Quantitative and Qualitative Disclosures About Market Risk
  35
Financial Statements and Supplementary Data
  35
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  37
Controls and Procedures
  38
Other Information
  39
     
 
PART III
 
     
Directors, Executive Officers and Corporate Governance
  40
Executive Compensation
  44
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  45
Certain Relationships and Related Transactions, and Director Independence
  46
Principal Accounting Fees and Services
  47
     
 
PART IV
 
     
Exhibits, Financial Statement Schedules
  48
     
    49
 
 
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PART I
 
ITEM 1.                BUSINESS
 
Forward Looking Statements
 
This Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements.  These statements relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
 
Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
 
Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.
 
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to the common shares in our capital stock.
 
As used in this Annual Report, the terms “we”, “us”, “company” and “our company” mean American Graphite Technologies Inc., unless otherwise indicated.
 
Corporate Information
 
The address of our principal executive office is 3651 Lindell Road, Ste. D#422, Las Vegas, Nevada. Our telephone number is (702) 473-8227. Our website is http://americangraphitetechnologies.com.
 
Our common stock is quoted on the OTCBB (“Over-the-Counter- Bulletin-Board”) under the symbol “AGIN”.
 
Our company was incorporated in the State of Nevada on June 1, 2010 under the name Green & Quality Home Live, Inc.
 
On May 23, 2012, we underwent a change of control and on June 11, 2012, our company’s newly appointed sole director and majority shareholder approved a name change to American Graphite Technologies Inc. and a 125 new for 1 old forward stock split of our company’s issued and outstanding shares of common stock. Concurrent with the forward split we amended our authorized capital from 75,000,000 to 200,000,000.
 
Effective July 12, 2012, we filed the Certificate of Amendment with the State of Nevada and effective July 18, 2012 in accordance with approval from the Financial Industry Regulatory Authority (“FINRA”), we changed our name from Green & Quality Home Life, Inc. to American Graphite Technologies Inc. and increased our authorized capital from 75,000,000 to 200,000,000 shares of common stock, par value of $0.001. In addition, our issued and outstanding shares of common stock increased from 619,500 to 77,437,500 shares of common stock, par value of $0.001 on the basis of a 125:1 forward split of our issued and outstanding shares of common stock.
 
New management of our company determined to change the direction of our company and to enter into mining exploration and development related to graphite and the acquisition and development of technologies related thereto.   Our company has two projects, a mineral exploration project whereby we intend to explore for graphite and a licensing agreement for the development and marketing of a technology related to the graphene industry.
 
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Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.
 
We do not have any subsidiaries.
 
Previous Business
 
Before we went through a change of control and business focus, we were a development stage company intending to create a portfolio of products and services (controlling heating, ventilation and air conditioning) and develop a set of solutions which would automate these domestic activities. The lack of funds and the present economy prevented that from happening.  As we were unable to raise the capital necessary to develop our business plan, we began a search for other business opportunities which may benefit our shareholders and allow us to raise capital and operate.
 
Current Business
 
Shortly after changing out business focus to exploration stage properties, we identified certain opportunities to engage in the development of technologies relate to graphite and graphene and determined to pursue that business.    We entered into negotiations on projects, both graphite properties and technologies.   On July 31, 2012, our company entered into a Letter of Intent with a private US company for an option to participate in a 100% interest in all of certain property rights held by the U.S. private company. We were unable to close that acquisition.  Subsequently, we identified the opportunities for entry into our business by way of an agreement for the licensing and marketing of Bucky Paper, which is a product currently under development that is produced from graphene.   On December 3, 2012, we entered into and executed a non-exclusive technology license agreement for patent and trade secret technology in the field of graphene oxide or “Bucky” paper with Cheap Tubes, Inc.  Pursuant to the terms of the agreement, we acquired the rights to further develop, commercialize, market and distribute certain proprietary inventions and know-how related to the manufacturing processes for graphene products, including as Bucky Paper.  We agreed to fund commercial development activities and we received a license for the rights on a nonexclusive basis for marketing products and/or services.  Up to June 30, 2014, our company has funded a total of $335,000 in respect of this commercial development project, and Cheap Tubes has set up a production line and research and development facility in its new facility in Vermont, and with this process ongoing, our company hopes to be fully functional soon.
 
During the month of January 2013, our company undertook the staking of certain mining claims in the Province of Quebec, Canada.  In order to hold the property in the Province of Quebec, either a principal of our company or our company must have a prospector’s license.  The prospector’s license was granted to our director, Rick Walchuk on February 2, 2013 and the mineral concession is held in the name of Mr. Walchuk under a trust agreement with our company.   The mining claims are in an active area of graphite exploration and production.  We had intended to undertake an exploration program on the claims during the year ended June 30, 2014, but were delayed in getting a proposal underway by a qualified geologist.  Additionally, we focused the majority of our efforts funding the Bucky Paper commercialization project, as well as research project for 3D printing, as described below.   We are currently awaiting a program to be presented by a geologist in regard to the initial work program to be undertaken on the mineral claims for spring 2015, and are also pursuing the staking of additional claims in the fall of 2014.
 
During the month of April, 2013, we met with representatives of the National Academy of Science of the Ukraine National Science Center – Kharkov Institute of Physics and Techniques (the “Kharkov Institute”) in regard to the establishment of a collaboration between the Kharkov Institute and our company on a project for the research of the properties of grapheme contained matter as a working material for 3D-printing and other uses.  Our company and the Kharkov Institute will be working under the auspices of the Science and Technology Center in the Ukraine, which is an intergovernmental organization founded by the governments of the Ukraine, Canada, the EU and the USA which supports research and development activities for peaceful applications by Ukrainian, Georgian, Uzbekistani, Azerbaijani, and Moldovan scientists and engineers.  The project requires the approval of the U.S. Department of State, Bureau of International Security and Nonproliferation Office of Cooperative Threat Reduction.  On April 1, 2013, we submitted the documents to the U.S. Department of State.  On October 1, 2013, the project was granted live status and our company can now commence the research project.  The project is called P600 and is a collaboration between our company and the Kharkov Institute.
 
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The project is designed to research the properties of nanocarbon contained matter as a working material for 3D printing. The project team will consist of 8 scientists and doctors with experience in the fields of nanotechnology, 3D printing, solid state physics, physical materials and thermal physics.
 
The mandate of the project is to research the properties of materials containing nanostructured carbon, primarily graphene, to research the existing and prospective methods of 3D printing and analyze the possibility of applying the techniques to create 3D objects using nanocarbon material. During the year ended June 30, 2014, we paid a total of $44,832 as project costs in order to fully fund the program as required, and are awaiting project results in order to determine next steps.
 
Graphite and its Industrial Uses
 
Graphite is considered to be the purest form of carbon. Graphite is an excellent conductor of heat and electricity and has a high melting temperature of 3,500 degrees Celsius. It is extremely resistant to acid, chemically inert and highly refractory. The utility of graphite is dependent largely upon its type.
 
There are three principal types of natural graphite, each occurring in different types of ore deposits:
 
 
·
Crystalline flake graphite, or flake graphite, occurs as isolated, flat, plate-like particles with hexagonal edges, if unbroken, and when broken, the edges can be irregular or angular.
 
 
·
Amorphous graphite occurs as fine particles and is the result of thermal metamorphism of coal, the last stage of coalification, and is sometimes called meta-anthracite. Very fine flake graphite is sometimes called amorphous in the trade.
 
 
·
Lump graphite, or vein graphite, occurs in fissure veins or fractures and appears as massive platy intergrowths of fibrous or acicular crystalline aggregates, and is probably hydrothermal in origin.
 
All grades of graphite, especially high grade amorphous and crystalline graphite that remains suspended in oil are used as lubricants. Graphite has an extraordinarily low co-efficient of friction under most working conditions. This property is invaluable in lubricants. It diminishes friction and tends to keep the moving surface cool. Dry graphite as well as graphite mixed with grease and oil is utilized as a lubricant for heavy and light bearings. Graphite grease is used as a heavy-duty lubricant where high temperatures may tend to remove the grease.
 
The flake type graphite is found to possess extremely low resistivity to electrical conductance. The electrical resistivity decreases with the increase of flaky particles. The bulk density decreases progressively as the particles become flakier. Because of this property in flake graphite, it is used in the manufacture of carbon electrodes, plates and brushes required in the electrical industry and dry cell batteries. Flake graphite has been replaced to some extent by synthetic, amorphous, crystalline graphite and acetylene black in the manufacture of plates and brushes. Flake graphite containing 80 to 85% carbon is used for crucible manufacture; graphite containing a carbon content of 93% and above is preferred for the manufacture of lubricants, and graphite containing a carbon content of 40 to 70% is utilized for foundry facings. Natural graphite, refined or otherwise pure, having carbon content not less than 95% is used in the manufacture of carbon rods for dry battery cells.
 
Currently, artificially prepared graphite has replaced natural graphite to a great extent. Artificial graphite is prepared by heating a mixture of anthracite, high grade coal or petroleum coke, quartz and saw dust at a temperature of 3,000 degrees Celsius, out of contact with air. Graphite carbon is deposited as residue.
 
Graphene
 
Technology helps the world advance.  As humans it’s in our nature to investigate, innovate and solve problems.  This curiosity means we make things, create things and develop new technologies.  You can look back thousands of years for basic examples of technology pushing civilization forward.
 
 
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Most people don't understand the rapid change technology has on their life... or the speed at which change occurs.
 
 
·
200 times stronger than steel...
 
 
·
150,000 times thinner than a human hair
 
 
·
More flexible than a sheet of paper
 
You may have heard about Graphene.  If you haven't, it's a newly discovered, very special refined form of graphite.  It's a one-atom-thick sheet of densely packed carbon atoms arranged in a honeycomb lattice.
 
Image Agin
 
Put simply, it's a sheet of carbon atoms 150,000 times thinner than a human hair.  Under a powerful microscope, it looks like chicken wire.  But what's so special about it?
 
Everything:
 
For starters, it's 200 times stronger than structural steel; it's so strong you could suspend an elephant from a single strand of Graphene, and the strand would not break.
 
It's extremely lightweight. Soon, everything from bicycles and boats to airplanes and cars could be made out of Graphene composites.  And when they are, their energy efficiency and durability could skyrocket.
 
But, that's just the beginning of what this new ‘smart material’ can do. Not only is it the strongest material researchers have ever tested, it's also one of the best conductors man has ever found.  IBM has already created a Graphene-based processor capable of executing 100 billion cycles per second.  Researchers believe that in the future, a Graphene credit card could store as much information as today's computers.  We believe that this one material alone could prove more revolutionary than, and soon replace plastic, Kevlar and the silicon chip.
 
In fact, it's such a breakthrough that the first two scientists to successfully produce single-atom-thick crystals of Graphene were awarded the 2010 Nobel Prize in Physics.
 
In just two years, over 200 companies from a wide array of industries have researched the potential of Graphene:
 
Graphene is a substance made of pure carbon, with atoms arranged in a regular hexagonal pattern similar to graphite, but in a one-atom thick sheet. It is very light, with a 1 square meter sheet weighing only .77 milligrams. It is an allotrope of carbon whose structure is a single planar sheet of sp2-bonded carbon atoms that are densely packed in a honeycomb crystal lattice.
 
 
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The term graphene was coined as a combination of “graphite” and the suffix “ene” by Hanns-Peter Boehm, who described single-layer carbon foils in 1962. Graphene is most easily visualized as an atomic-scale chicken wire made of carbon atoms and their bonds. The crystalline or “flake” form of graphite consists of many graphene sheets stacked together.
 
The carbon-carbon bond length in graphene is about 0.142 nanometers. Graphene sheets stack to form graphite with an interplanar spacing of 0.335 nm. Graphene is the basic structural element of some carbon allotropes including graphite, charcoal, carbon nanotubes and fullerenes. It can also be considered as an indefinitely large aromatic molecule, the limiting case of the family of flat polycyclic aromatic hydrocarbons.
 
The Nobel Prize in Physics for 2010 was awarded to Andre Geim and Konstantin Novoselov at the University of Manchester for groundbreaking experiments regarding the two-dimensional material graphene.
 
Touch screens, processor chips, casings, and batteries (in everything from PCs and HD TVs to tablets), mobile phones and hybrids could all be made with Graphene.
 
It could change entire industries, economies, and our lives.
 
Imagine HD TVs as thin as wallpaper, Smart phones so skinny and flexible you can roll them up and put them behind your ear, and so durable you can beat them with a hammer.
 
These are some but not all of the benefits of graphene
 
Our Ongoing business:
 
By concentrating on securing domestic graphite mining opportunities and the commercialization of graphene specific proprietary technology methods, management is seeking to bring profit opportunities and maximize shareholder value.
 
The agreement with Cheap Tubes for the licensing and marketing of Bucky Paper was the first step in developing our business plan.  We are continuing to fund the technology development and have commenced the investigation of marketing the products and services developed while seeking other complimentary projects in a like field.
 
We have made contact and entered into a cooperation agreement with a well-recognized collaboration partner in the Ukraine to research the properties of graphene matter as a working material for 3-D printing, which we hope will lead to a possible joint patent of a new product and use for graphene, which would be a technology in which we hold a direct interest rather than just a licensing agreement as we currently have with Cheap Tubes.
 
We undertook the staking of certain mining claims in the Province of Quebec, Canada which are in an active area of graphite exploration and production.  We intend to fund an exploration program, which is currently under investigation for the fall of 2014.  We are required to spend a total of $120,000 on the mining claims prior to January 15, 2015 in order to maintain the claims.
 
We continue to get requests for information on our graphene products and we are building a contact list to work with once we have a saleable product developed.
 
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Bucky Paper
 
Product Description
 
Bucky Paper is a strong and lightweight substance manufactured from compressed carbon nanotubes, which are long, cylindrical carbon structures consisting of hexagonal graphite molecules attached at the edges.  A sheet of Bucky Paper looks like old-fashioned typewriter carbon paper but is much stronger than an equivalent mass of steel. When sheets of Bucky Paper are stacked and compressed, the resulting material is up to 500 times stronger than steel, at one-tenth of the weight. In this arrangement, the current-carrying capacity is remarkably high. Bucky Paper also has excellent thermal conductivity and low optical reflectivity.
 
Originally, Bucky Paper was fabricated as a way to handle carbon nanotubes, but it is also being studied and developed into applications and showing promise as an vehicle and body armor, Li Ion batteries, and next generation electronics and displays.  The generally accepted methods of making CNT films involve the use of surfactants which improves their dispersibility in aqueous or organic solutions. These suspensions can then be processed to yield uniform films called Bucky Papers.  Among the possible uses for Bucky Paper that are being researched:
 
Fire protection: covering material with a thin layer of Bucky Paper significantly improves its fire resistance due to the efficient reflection of heat by the dense, compact layer of carbon nanotubes or carbon fibers.
 
Lithium-ion batteries- as an anode or cathode in the batteries. It can enable faster charging rates and thermal stability.
 
If exposed to an electric charge, Bucky Paper could be used to illuminate computer and television screens. It could be more energy-efficient, lighter, and could allow for a more uniform level of brightness than current cathode ray tubes (CRT) and liquid crystal displays (LCD) technology.

Since individual carbon nanotubes are one of the most thermally conductive materials known, Bucky Paper lends itself to the development of heat sinks that would allow computers and other electronic equipment to disperse heat more efficiently than is currently possible. This, in turn, could lead to even greater advances in electronic miniaturization.
 
Films also could protect electronic circuits and devices within airplanes from electromagnetic interference, which can damage equipment and alter settings. Similarly, such films could allow military aircraft to shield their electromagnetic “signatures”, which can be detected via radar.
 
Bucky Paper could act as a filter membrane to trap microparticles in air or fluid. Because the nanotubes in Bucky Paper are insoluble and can be functionalized with a variety of functional groups, they can selectively remove compounds or can act as a sensor.
 
  ●
Produced in high enough quantities and at an economically viable price, Bucky Paper composites could serve as an effective armor plating.
 
Bucky Paper can be used to grow biological tissue, such as nerve cells. Bucky Paper can be electrified or functionalized to encourage growth of specific types of cells.
 
The Poisson's ratio for carbon nanotube Bucky Paper can be controlled and has exhibited auxetic behavior, capable of use as artificial muscles.
 
It could be added as a mechanical reinforcement in composite applications
 
The carbon nanotube evolved from three-dimensional structures similar to the geodesic dome, which was originally conceived by the inventor R. Buckminster (“Bucky”) Fuller. For this reason, nanotubes and materials made from them are often given names with “bucky” prefixes.
 
Bucky Paper is one tenth the weight yet potentially 500 times stronger than steel when its sheets are stacked to form a composite. It could disperse heat like brass or steel and it could conduct electricity like copper or silicon.
 
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Market, Customers and Distribution Methods
 
The market for Bucky Paper is an emerging market.
 
Until the manufacturing process improves and we are able to commercialize the Bucky Paper currently under development in our agreement with Cheap Tubes to the point where it is reliable and free of unwanted inconsistencies, the product will only see very limited usage. However, methods are improving at a rapid pace and more money is being funneled into research. Nevertheless, it will be a number of years before Bucky Paper fully replaces any competitive products. Bucky Paper still needs to undergo thorough testing along with studies delving into how it may potential impact the environment. Since this developing product is a completely untested product from the perspective of consumer safety, there may even be health risks. There have been concerns that Bucky Paper may be similar to asbestos and harm humans, however Bucky Paper is marketed currently although in limited quantities. Until adequate testing is performed, Bucky Paper will not be used on a large scale.
 
We do not yet have a product to market or customers and we have not yet determined distribution methods we will use.  Our licensed technology requires further development before we will have a product ready to market. We expect that we will be on the market in 12 to 18 months, however, we cannot say with certainty we will meet this timeline.  We expect to initially market the products via internet sales, direct sales and trade show sales.  We will however, be competing with our licensor, Cheap Tubes Inc., who currently markets a Bucky Paper product and markets other products related to our chosen industry in this fashion and has substantial market experience, having been in the industry since 2005 and manufacturing and marketing a 2-inch Bucky Paper since 2009. However, we will receive royalties on the products sold by Cheap Tubes Inc.
 
Currently, Cheap Tubes makes a hybrid Bucky Paper using the surfactant free technology that will be further developed by our funding.  The current product, while highly flexible and highly conductive has resistance levels of between 3 ohms and 30 ohms.  The goal with the further development funding is to be below 1 ohm and ultimately below 0.1 ohm of resistance.  This resistance level while not required to be able to market the Bucky Paper is the perceived resistance level to develop sufficient market interest to generate sufficient revenues to recover our costs and hopefully generate profitability for our company.
 
We expect that the funding that we have allocated to Cheap Tubes will be sufficient to complete the testing and finalize development of the technology resulting in a marketable product, however, we cannot say with certainty that this will be the case.  We are relying on the fact that Cheap Tubes already has completed the initial stage product development and has certain equipment that will be required for the ongoing development and our funds will be allocated to purchasing additional equipment and to materials and testing costs.  Should we be required to fund additional costs, we expect to draw down on our current financing agreement to provide the funding, although we cannot say with certainty that such funding will not have been already drawn down for other projects or that the funds will be available for draw-down if and when required.
 
In regard to the government regulations which are required to market our products when developed, Cheap Tubes as more particularly identified under “Regulatory Approvals Required to Market the Products” on Page 10 and “Government Regulations Related to Bucky Paper” on page 11 of this filing.
 
Competition
 
We are a new company having entered into an agreement for a developing technology and as such we have a weak competitive position in the industry. We compete with independent manufacturers and institutional and individual investors who are actively seeking to develop and market Bucky Paper as well as more traditional alternatives.
 
Currently there are two main competitors, Nano Comp Tech & Buckeye Composites, a subsidiary of NanoTech Labs, Inc.  Nano Comp can make the product on a much larger scale and they are the largest industry player. They currently sell for $75/ sq. ft. and the goal is $20 sq. ft.  Cheap Tubes believes we can compete even at this lower price. Buckeye does a lot of hand manufacture (prepeg with polymers for example) which can be automated.  Both of these companies work more with the CNT Bucky Paper.  Our paper is mostly graphene with only a bit of CNTs for flexibility and conductivity enhancement.
 
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We also compete with other technology development companies for financing from a limited number of investors that are prepared to invest in such companies. The presence of competing companies in our field of endeavor may impact our ability to raise additional capital in order to fund our agreement or further acquisitions. If investors perceive that investments in our competitors are more attractive based on the merit of their technologies, or the advanced stage of marketing or development or the price of the investment opportunity.
 
Scientists in the US and China are already using tiny Graphene-based probes to target and identify tumors in live mice. They hope similar Graphene-based particles could shuttle cancer drugs to tumors, or even kill tumor cells directly.
 
Engineers at Northwest University, Seattle, found that specially crafted Graphene electrodes could allow a lithium-ion battery, like those found in your smart phone or Toyota Prius, to charge 10 times faster and hold 10 times more power.
 
And in 2011, chemists at Rice University, Houston, created Graphene-based thin films, unlocking the secret to incredibly flexible, super-durable touch screens and solar cells that can wrap around just about anything.
 
Image Agin
 
Samsung has already said its flexible displays should enter full-scale production later this year, and it expects to have a dozen more Graphene based products on the market within the next five.  IBM, Nokia and Apple are hot on their heels too.
 
We face competition from many companies, major universities and research institutions in the United States and abroad. Many of our competitors have substantially greater resources, experience in conducting research, experience in obtaining regulatory approvals for their products, operating experience, research and development and marketing capabilities name recognition and production capabilities. We will face competition from companies marketing existing products or developing new products which may render our licensed technologies (and products) obsolete. 
 
These companies may have numerous competitive advantages, including:
 
 
·
significantly greater name recognition;
 
 
·
established distribution networks;
 
 
·
more advanced technologies and product development;
 
 
·
additional lines of products, and the ability to offer rebates, higher discounts or incentives to gain a competitive advantage;
 
 
·
greater experience in conducting research and development, manufacturing, obtaining regulatory approval for products, and marketing approved products; and
 
 
·
greater financial and human resources for product development, sales and marketing, and patent litigation.
 
 
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Our commercial success will depend on our ability to compete effectively in product development areas such as, but not limited to, safety, price, marketing and distribution.
 
There can be no assurance that competitors will not succeed in developing products that are more effective than our licensed Bucky Paper technology, therefore rendering our licensed products obsolete and non-competitive. Accordingly, in addition to our licensors research and development efforts, we may need to create a public relations/advertising program designed to establish “brand” name recognition early on in our corporate development; we intend to continue to develop and market our brand name pending commercialization of products, if any, we may derive from the research and development efforts of our licensor. 
 
We believe our strategy ultimately will facilitate the marketing, distribution and public acceptance of any products that may be derived from research and development efforts if and when regulatory approval is received.
 
Competition with respect to our licensed technologies is and will be based, among other things, on safety, reliability, availability, price, marketing, distribution and patent position. Another important factor will be the timing of market introduction of any Graphene related products developed by our licensor.
 
Accordingly, the speed with which our licensor can develop Graphene products, complete safety approvals processes and ultimately supply commercial quantities of any products developed to the market is expected to be an important competitive factor.
 
Our competitive position will also depend upon our ability to attract and retain qualified personnel, for our licensor to obtain patent protection or otherwise develop proprietary products or processes, and to secure sufficient capital resources for the often substantial period between technological conception and commercial sales.
 
Regulatory Approvals Required for the Products to be Developed and Marketed
 
Cheap Tubes intends to file a pre-manufacturing notice (“PMN”) with the Environmental Protection Agency (“EPA”).  As the nanostructures are confined to a paper like product and not loose particles, it is anticipated that there may be an exemption from the EPA and there will be no requirement to finalize the PMN, as has occurred with one of the competitors currently marketing a similar product.  However, Cheap Tubes intends to complete and submit the PMN and with the submission they will ask for a low release exemption to be granted (LOREX).  Under a LOREX, the manufacturer agrees with the EPA on production levels which allows for the limited marketing of the products while finalizing the PMN over the course of a couple of years, when the products should receive full approval from the EPA.  The testing regimens with the EPA will get established after the LOREX is granted so we cannot predict at this time when we may be in full production.  However, we intend to market the products immediately upon the LOREX being granted.
 
Intellectual Property
 
We do not currently have any intellectual property other than our domain name and website, www.americangraphitetechnologies.com. We will not own any intellectual property under our agreement with Cheap Tubes.
 
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Rather, we will have the non-exclusive marketing rights to the Cheap Tubes technology and an overriding royalty on sales from the technology once developed and marketed.
 
Our licensor filed a utility patent in February 2011 (with a federal 2010 filing date due to provisional application) for the core technology of which the paper is one application.  Our licensor also has another provisional patent pending now which is specific to the Bucky Paper.  The core patent filing number is 12/932,221 and the provisional patent application number is 61/666,513.
 
The core patent has an office action rejecting the patent and our licensor submitted a further response with additional information on November 15, 2013.  The patent office sent a further office action rejecting the core patent in April 2014.  During the month of July 2014 our licensor submitted a further response with additional clarification and information.  Presently our licensor is of the opinion a telephone conference with its patent attorney and the patent office, as well as a potential site visit to the patent office in Washington D.C. may be required to complete the patent approval process.  Cheap Tubes has abandoned the provisional patent.
 
We intend to file any patents developed under our collaboration with the Kharkov Institute but as yet we have not completed the research so no patent is currently filed.  We cannot say if we will be successful in developing a patentable technology at this time.
 
Purchase of Significant Equipment
 
We do not intend to purchase any significant equipment over the twelve months ending June 30, 2015.
 
Research and Development
 
We incurred a total of $45,601 in research and development expenditures in connection with a project to research the properties of grapheme contained matter as a working material for 3D-printing and other uses in conjunction with the Kharkov Institute, Kharkov, Ukraine as part of a research project dubbed “P-600”.
 
Government Regulations Related to Bucky Paper
 
We are not yet aware of any direct government regulations relating to the manufacture of Bucky Paper; however the manufacture will be subject to various federal, and state laws governing manufacturing.  However, we will not manufacture, but will only market the products produced by Cheap Tubes, therefore the government regulations will relate to our marketing efforts.  We expect the manufacturer will be responsible for ensuring that the products are manufactured and supplied for distribution in compliance with all laws.  Our licensor advises that as long as they label the products for research and development use only, they do not run afoul of the US Environmental Protection Agency, which would impact on our ability to sell product.  When the licensor seeks to move out of research and development they will need to file a pre manufacturing notice.  This gives them two years to market and when they hit a certain volume threshold as negotiated with the US Environmental Protection Agency, they then need to negotiate a testing schedule.  
 
Environmental Regulations Related to Bucky Paper
 
We expect to comply with all applicable laws, rules and regulations relating to our business, and at this time, we do not anticipate incurring any material capital expenditures to comply with any environmental regulations or other requirements.  Our licensor will have to ensure that they comply with all environmental regulations and should they fail to do so, our supply of product may be at risk.
 
While our intended projects and business activities do not currently violate any laws, any regulatory changes that impose additional restrictions or requirements on us or on our potential customers could adversely affect us by increasing our operating costs or decreasing demand for the products or services, which could have a material adverse effect on our results of operations.
 
 
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There are several concerns with nanoparticles, they are human and environmental. Nanoparticles are bad to inhale or otherwise get inside your body.  They can provoke an immune response and can also pass the blood brain barrier.  Because they are electrically conductive they could electrically short nerves.   There is evidence that carbon nano-technologies can mimic asbestos exposure and mesothelioma could result.  They can also build up in arteries and contribute to atherosclerosis. 
 
The likely hood of this type of exposure is dramatically decreased when they are incorporated into a product such as Bucky Paper.   The environmental concern is to keep them out of the air and ground water.  This can be further mitigated by using a polymer in the formulae which our licensor may determine to do.  
 
Status of our Development Plan Under the Cheap Tubes Agreement
 
On December 3, 2012, we entered into and executed a non-exclusive technology license agreement for patent and trade secret technology in the field of graphene oxide or “Bucky” paper with Cheap Tubes, Inc.  Pursuant to the terms of the agreement, we acquired the rights to further develop, commercialize, market and distribute certain proprietary inventions and know-how related to the manufacturing processes for graphene products, including graphene paper, also known as Bucky Paper.  We agreed to fund commercial development activities based on the payment schedules defined below and we received a license for the rights on a nonexclusive basis for marketing products and/or services.   Pursuant to the terms of the agreement, we agreed to provide the following payments to Cheap Tubes:
 
A minimum of $250,000 over 18 months, payable as follows:
 
 
·
$10,000 on the execution of the agreement; (paid)
 
 
·
$40,000 per quarter on January 1, 2013, April 1, 2013, July 1, 2013 and October 1, 2013 and on January 1, 2014 and April 1, 2014, all of which amounts have been paid as required.
 
Under the terms of the agreement, Cheap Tubes was to incorporate a new corporation (“Newco”) and assign all rights and obligations of the agreement with us as well as the patent agreement.  The newly formed corporation would then become the party to this agreement.  Until such time as Newco was formed all funds paid were to remain in an attorney escrow.  Further, in order to have funds released from escrow the parties were to formulate and agree to a milestone schedule to be met by Cheap Tubes or Newco as the case may be.   Each quarter the milestones from the prior quarter must be met as a pre-condition to the upcoming quarterly funding.   Under the agreement our company was granted a non-exclusive license to market and distribute Bucky Paper using the patents, trade secrets and knowhow (the “Proprietary Rights”) throughout the world.   Newco or Cheap Tubes will manufacture the Bucky Paper products and we shall have no rights to sublicense the proprietary rights to a third party.  As the agreement is non-exclusive, Cheap Tubes will also have the right to market and distribute Bucky Paper products, subject to our ongoing fees, as described below.
 
On December 21, 2012, we received the required schedule under the agreement.  On December 24, 2012, we received notification of the incorporation of CTI Nanotechnologies LLC (“CTI”) and the assignment of the patents to CTI.  As per the terms of the agreement, all conditions were satisfied and therefore the funds were released from escrow.   
 
As consideration for funding, we will receive 40% of the net sales revenue for Bucky Paper until the amount we have received equals our capital investment regardless of whether we, Cheap Tubes or CTI are the ultimate vendors on the sale.  Thereafter, we will receive 30% of our capital investment until such time as we have received an amount equal to 20% of the $250,000 invested, 25% for the next five years and 20% for the remaining five years, at which time all obligations to us from Cheap Tubes or CTI shall cease.
 
Under the agreement, any new opportunities presented to us or Mike Foley (the shareholder of Cheap Tubes), Cheap Tubes or CTI are to be negotiated and if an agreement is reached then it shall be formalized in a mutually acceptable definitive agreement; with no obligation upon either party to enter into an agreement should they not be able to negotiate mutually acceptable terms.  However, it is the intent of the parties to work toward furthering the business of Cheap Tubes, CTI, our business and any new business that may present itself.
 
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During the fiscal year ended June 30 2014, our company paid cash in the amount of $335,000 (July 31, 2013 - $170,000) pursuant to the agreement, and recorded the amount as prepaid advances on future revenue under the licensing agreement.
 
Our licensing agreement had a number of scheduled milestones that were required to be met by our licensor in order for our company to continue to fund under the agreement.
 
All of the milestones were met as required for the quarter ended December 31, 2012 as per the indicated milestones and included, the finalization of agreements, the incorporation of CTI, the purchase of certain equipment for scale up of product production, the purchase of raw materials for testing.
 
For the first quarter ended March, 2013, CTI did not meet all of their milestones specifically the milestone related to the securing of new space and a move into the facility.  While new space was identified, there was a problem with oil residue in the facility which was proposed to be leased and the landlord declined to clean up so that our company could operate within the clean requirements for the development of the products.   Our company continued funding although this milestone was missed.
 
For the quarter ended June, 2013, CTI did not meet the milestones.  The building was leased and renovations were commenced with an expectation that CTI could move in by the end of October, 2013.  However, the siting of equipment did not allow for operations to commence.  Once the equipment was situated, an electrician was required to be engaged to determine the power requirements for the equipment and to sign off on a proposal which would allow CTI to make application to the power company for power to be installed to the facility.  The power company advised CTI that this action could take up to two months.  Therefore, CTI was not able to meet its ongoing milestones in a timely fashion.
 
At the year ended June 30, 2013, the agreement was in default due to the inability of CTI to meet the milestones.  Our company agreed to continue to fund on the basis that our company and CTI may revise the agreement.
 
Subsequent to the year ended June 30, 2013 CTI has continued to work to advance the project.
 
Up to the period ended November, 2013, CTI continued to work towards completion of the new building facility including installation of power (estimated for January 2014) and heat (estimated for end December 2013), as well as various other improvements including the completion of ceilings in newly constructed rooms, framing and insulating certain exterior doors, installing blowers and heap filters, building exhaust, painting and other minor repairs.  Further goals for the period included installation of equipment, design and construction of a steel structure to hoist the dryer for process design and maintenance, installation of a steam boiler and expansion of the production line to allow for a winder.  Upon completion of these projects it was anticipated that testing could commence as well as ongoing research and development developments.
 
During the period ended February 2014, additional issues with the utility further delayed the completion of the power installation, pushing the project outside the originally anticipated timelines a further two months at a minimum.  Further issues with the required sprinkler system, which resulted in November, and December 2013 delays continued to be an issue in the current period with installation expected to commence finally in the month of February 2014.  The building will still require various other work and repair before it will be operational including duct work to vent the equipment and a solution for heating the large building.
 
Other research was ongoing during the period with a view to finding solutions for reduced operating costs and the identification of the remaining equipment to outfit the facility.
 
At April 30, 2014, the new power service had finally been installed with a temporary six month permit.  The majority of the cosmetic work on the facility had been completed as well as the majority of the work required for a functional sprinkler system.  Heating of the facility remains an issue to be resolved once the facility is fully operational so that all factors can be considered (ie: heat thrown off by the operating equipment) when selecting an appropriate system. With these substantive construction projects completed, and the majority of work still required being mostly cosmetic in nature, the building move in was completed so that the plans to bring the production line into operation can move ahead.  Additional testing and progress in the aqueous formulation was also reviewed and undertaken during this period with promising results.
 
 
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By July 31, 2014, various other requirements for the facility were identified further pushing out the timeline to bring the site into production.  Additional capital equipment requirements including a small high shear mixer, a calender to compress the film and to provide a finish on the exposed side, a dryer and custom made tooling for the coating head, a corona discharge and certain other parts and machinery.  Our company has been advised by CTI that it and CTI will also need to reach an agreement on the use of the reactor purchased by Cheap Tubes, an investment in the reactor in order to reduce costs of the paper project, by contributing to the making of the Graphene oxide.
 
CTI has provided us with a notice claiming that additional payments are due under the terms of our agreement with them.  We have responded advising that all payments required pursuant to the terms of the agreement have been paid in full, as noted above.  We hope to resolve this misunderstanding with CTI in the immediate future such that the project can continue forward.
 
Information Related to our Mining Claims:
 
Measurement and Currency
 
Conversion of metric units into imperial equivalents is as follows:
 
Metric Units
Multiply by
Imperial Units
hectares
2.471
= acres
meters
3.281
= feet
kilometers
0.621
= miles (5,280 feet)
grams
0.032
= ounces (troy)
tonnes
1.102
= tons (short) (2,000 lbs.)
grams/tonne
0.029
= ounces (troy)/ton
 
We have staked a total of 100 mineral claims covering approximately 5,400 hectares (13,343 acres in the Province of Quebec, Canada in January, 2013, known as the Lac Nicolas Property (the “Property”).   The property is an exploration project with no proven or probable reserves.  We had intended to commence exploration on these mineral claims during the spring of calendar year 2014, however, we were unable to organize the required site team to complete this exploration activity.  We are presently investigating whether we can secure a short exploration program for the fall of 2014 before winter arrives.   We intend to explore for graphite. The property is part of the Government of Quebec’s proposed “Plan Nord” which is one of the biggest economic, social and environmental development initiatives with the intention to spend $80 billion during the next 25 years in this region and will create or consolidate 20,000 jobs per year. The government is considering giving tax credits for investment in the mining projects.
 
Market, Customers and Distribution Methods
 
Although there can be no assurance, large and well capitalized markets are readily available for all metals and precious metals throughout the world. A very sophisticated futures market for the pricing and delivery of future production also exists. The price for metals is affected by a number of global factors, including economic strength and resultant demand for metals for production, fluctuating supplies, mining activities and production by others in the industry, and new and or reduced uses for subject metals.
 
 
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The mining industry is highly speculative and of a very high risk nature. As such, mining activities involve a high degree of risk, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Few mining projects actually become operating mines. The mining industry is subject to a number of factors, including intense industry competition, high susceptibility to economic conditions (such as price of metal, foreign currency exchange rates, and capital and operating costs), and political conditions (which could affect such things as import and export regulations, foreign ownership restrictions). Furthermore, the mining activities are subject to all hazards incidental to mineral exploration, development and production, as well as risk of damage from earthquakes, any of which could result in work stoppages, damage to or loss of property and equipment and possible environmental damage. Hazards such as unusual or unexpected geological formations and other conditions are also involved in mineral exploration and development.
 
Competition
 
The mineral exploration industry is highly competitive. We are a new exploration stage company and have a weak competitive position in the industry. We compete with junior and senior mineral exploration companies, independent producers and institutional and individual investors who are actively seeking to acquire mineral exploration properties throughout the world together with the equipment, labor and materials required to operate on those properties. Competition for the acquisition of mineral exploration interests is intense with many mineral exploration leases or claims available in a competitive bidding process in which we may lack the technological information or expertise available to other bidders.
 
Many of the mineral exploration companies with which we compete for financing and for the acquisition of mineral exploration properties have greater financial and technical resources than those available to us. Accordingly, these competitors may be able to spend greater amounts on acquiring mineral exploration interests of merit or on exploring or developing their mineral exploration properties. This advantage could enable our competitors to acquire mineral exploration properties of greater quality and interest to prospective investors who may choose to finance their additional exploration and development. Such competition could adversely impact our ability to attain the financing necessary for us to acquire further mineral exploration interests or explore and develop our current or future mineral exploration properties.
 
We also compete with other junior mineral exploration companies for financing from a limited number of investors that are prepared to invest in such companies. The presence of competing junior mineral exploration companies may impact our ability to raise additional capital in order to fund our acquisition or exploration programs if investors perceive that investments in our competitors are more attractive based on the merit of their mineral exploration properties or the price of the investment opportunity. In addition, we compete with both junior and senior mineral exploration companies for available resources, including, but not limited to, professional geologists, land specialists, engineers, camp staff, helicopters, float planes, mineral exploration supplies and drill rigs.
 
General competitive conditions may be substantially affected by various forms of energy legislation and/or regulation introduced from time to time by the governments of the United States and other countries, as well as factors beyond our control, including international political conditions, overall levels of supply and demand for mineral exploration. In the face of competition, we may not be successful in acquiring, exploring or developing profitable mineral properties or interests, and we cannot give any assurance that suitable oil and gas properties or interests will be available for our acquisition, exploration or development. Despite this, we hope to compete successfully in the mineral exploration industry by:
 
  
keeping our costs low;
 
 
relying on the strength of our management’s contacts; and
 
 
using our size and experience to our advantage by adapting quickly to changing market conditions or responding swiftly to potential opportunities.
 
Government Regulation
 
We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in Baie-Cameau Township, Quebec in Canada, including those which govern prospecting, mineral exploration, drilling, mining, production, mineral extraction, transportation of minerals, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and several other matters. We believe that we are in compliance in all material respects with applicable mining, health, safety and environmental statutes and the regulations promulgated by Quebec and the Canadian Federal Government. Currently, there are no costs associated with our compliance with such regulations and laws. There is presently no need for any government approval of our business or our anticipated mineral products.
 
Additional approvals and authorizations may be required from other government agencies, depending upon the nature and scope of the proposed exploration program. The amount of these costs is not known as we do not know the size, quality of any resource or reserve at this time. It is impossible to assess the impact of any capital expenditures on earnings or our competitive position.
 
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Environmental Regulations
 
Our exploration activities are also subject to various federal and local laws and regulations governing protection of the environment. These laws are continually changing and, as a general matter, are becoming more restrictive. Our policy is to conduct business in a way that safeguards public health and the environment and in material compliance with applicable environmental laws and regulations. Changes to current local or federal laws and regulations in the jurisdictions where we operate could require additional capital expenditures and increased operating costs. Although we are unable to predict what additional legislation and the associated costs of such legislation, if any, might be proposed or enacted, additional regulatory requirements could render certain exploration activities uneconomic.
 
Employees
 
As of June 30, 2014 we did not have any employees.  Currently the majority of our company’s business is managed by our director, secretary and acting president, chief financial officer and treasurer, Mr. Con Evan Anast, who devotes approximately 20 hours per week to our operations.
 
REPORTS TO SECURITY HOLDERS
 
We intend to furnish our shareholders annual reports containing financial statements audited by our independent auditors and to make available quarterly reports containing unaudited financial statements for each of the first three quarters of each year.
 
The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov.
 
ITEM 1A.             RISK FACTORS
 
An investment in our securities should be considered highly speculative due to various factors, including the nature of our business and the present stage of our development. An investment in our securities should only be undertaken by persons who have sufficient financial resources to afford the total loss of their investment. In addition to the usual risks associated with investment in a business, the following is a general description of significant risk factors which should be considered. You should carefully consider the following material risk factors and all other information contained in this Annual Report before deciding to invest in our Common Shares. If any of the following risks occur, our business, financial condition and results of operations could be materially and adversely affected. Additional risks and uncertainties we do not presently know or that we currently deem immaterial may also impair our business, financial condition or operating results.
 
RISKS RELATED TO OUR BUSINESS
 
The success of our business depends upon the continuing contributions of our acting president, and other key personnel and our ability to attract other employees to expand our business.
 
We will rely heavily on the services of our officers and directors, as well as other senior management personnel that we intend to hire. Loss of the services of any of such individuals would adversely impact our operations. In addition, we believe that our technical personnel will represent a significant asset and provide us with a competitive advantage over many of our competitors. We believe that our future success will depend upon our ability to retain these key employees and our ability to attract and retain other skilled financial, engineering, technical and managerial personnel. For example, we presently do not have access to the services of any key personnel other than Mr. Con Evan Anast, who have experience with preparing disclosure mandated by U.S. securities laws and we will be required to engage such persons, and independent directors, in order to satisfy the initial listing standards of the major exchanges on which we may seek to list our common stock. In addition, if we fail to engage qualified personnel, we may be unable to meet our responsibilities as a public reporting company under the rules and regulations of the Securities and Exchange Commission.
 
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If we are unable to retain or motivate key personnel or hire qualified personnel, we may not be able to grow our business effectively.
 
Our performance is largely dependent on the talents and efforts of highly-skilled individuals. Our future success depends on our continuing ability to identify, hire, develop, motivate and retain highly-skilled personnel for all areas of our organization, as well as to identify, contract with, motivate and retain contract personnel on an outsourced basis for special projects. Our continued ability to compete effectively depends on our ability to attract new employees. As we become a more mature company, we may find our recruiting efforts more challenging.  If we do not succeed in attracting excellent personnel or retaining or motivating existing personnel, we may struggle to grow our business.
 
The products we intend to market may not be accepted by the market.
 
Our success depends on the acceptance of the products we will market in the marketplace.  Market acceptance will depend upon several factors, including (i) the desire of consumers and corporations for the ability to use the products.  A number of factors may inhibit acceptance of the products, including (i) the existence of competing products, (ii) our inability to convince consumers that they need to pay for the products and services we offer, (iii) our inability to convince corporations that they need to pay for the products and services we offer or (iv) failure of individuals and corporations to use the products.  If the products are not accepted by the market, we may have to curtail our business operations, which could have a material negative effect on operating results and result in a lower stock price.
 
There is significant competition in our market, which could make it difficult to attract customers, cause us to reduce prices and result in reduced gross margins or loss of market share.
 
The market for the products and services is highly competitive, dynamic and subject to frequent technological changes. We expect the intensity of competition and the pace of change to either remain the same or increase in the future. A number of companies may offer products that provide the same or greater functionality than the licensed products. We may not be able to maintain our competitive position against current or potential competitors, especially those with significantly greater financial, marketing, service, support, technical and other resources. Competitors with greater resources may be able to undertake more extensive marketing campaigns, adopt more aggressive pricing policies and make more attractive offers to potential employees, distributors, resellers or other strategic partners. We expect additional competition from other established and emerging companies as the market for the licensed products continues to develop. Further, we will face competition from the licensor of the products we will market.
 
We may not be able to compete successfully against current and future competitors.
 
We will compete, in our current and proposed businesses, with other companies, some of which have far greater marketing and financial resources and experience than we do. We cannot guarantee that we will be able to penetrate this market and be able to compete at a profit. In addition to established competitors, other companies can easily enter our market and compete with us. Effective competition could result in price reductions, reduced margins or have other negative implications, any of which could adversely affect our business and chances for success. Competition is likely to increase significantly as new companies enter the market and current competitors expand their services. Many of these potential competitors are likely to enjoy substantial competitive advantages, including: larger technical staffs, greater name recognition, larger customer bases and substantially greater financial, marketing, technical and other resources. To be competitive, we must respond promptly and effectively to the challenges of technological change, evolving standards and competitors' innovations by continuing to enhance our services and sales and marketing channels. Any pricing pressures, reduced margins or loss of market share resulting from increased competition or our failure to compete effectively, could seriously damage our business and chances for success.
 
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We plan to grow very rapidly, which will place strains on management and other resources.
 
We plan to grow rapidly and significantly expand our operations. This growth will place a significant strain on management systems and resources. We will not be able to implement our business strategy in a rapidly evolving market without an effective planning and management process, and, to date, we have not implemented sophisticated managerial, operational and financial systems and controls. We may be required to manage multiple relationships with various strategic partners, technology licensors, users, advertisers and other third parties. These requirements will be strained in the event of rapid growth or in the number of third party relationships, and our systems, procedures or controls may not be adequate to support our operations and management may be unable to manage growth effectively. To manage our expected growth, we will be required to significantly improve or replace existing managerial, financial and operational systems, procedures and controls, and to expand, train and manage our intended growing employee base. We will be required to expand our finance, administrative and operations staff. We may be unable to complete in a timely manner the improvements to our systems, procedures and controls necessary to support future operations, management may be unable to hire, train, retain, motivate and manage required personnel and management may be unable to successfully identify, manage and exploit existing and potential market opportunities.
 
Our commercial success will depend in part on the ability of the licensor of the technology to maintain protection of their intellectual property.
 
Our success will depend in part on the ability of the licensor of the technology to maintain or obtain and enforce patent and other intellectual property protection for the technologies and to preserve trade secrets, and to operate without infringing upon the proprietary rights of third parties. We cannot be certain that the creators of the technology were the first inventors of inventions covered by their patent and patent application or that they were the first to file. Accordingly, there can be no assurance that the patent and patent application are valid or will afford us with protection against competitors with similar technology. The failure to obtain or maintain patent or other intellectual property protection on the technologies underlying our licensed biodiesel manufacturing processes may have a material adverse effect on our competitive position and business prospects. It is also possible that the technologies may infringe on patents or other intellectual property rights owned by others. If we are found liable for infringement, we may be liable for significant money damages and may encounter significant delays in bringing products and services to market.
 
If we do not continually introduce new products or enhance our current licensed products, they may become obsolete and we may not be able to compete with other companies.
 
Technology is rapidly evolving. Our ability to compete depends on our ability to develop or license new technologies and products as well as our ability market our current licensed products and our services. We may not be able to keep pace with technological advances and products may become obsolete. In addition, our competitors may develop related or similar products and bring them to market before we do, or do so more successfully, or develop technologies and products more effective than any that we have developed or are developing. If that happens, our business, prospects, results of operations and financial condition may be materially adversely affected.
 
We have no history of marketing technology which makes it difficult to evaluate our business.
 
We have just finalized our licensing agreements and are setting in place operations.  We have no history of operations in our industry. Our limited operating history makes it difficult for prospective investors to evaluate our business. Therefore, our operations are subject to all of the risks inherent in the initial expenses, challenges, complications and delays frequently encountered in connection with the early stages of any new business, as well as those risks that are specific to the biomass and energy industry. Investors should evaluate us in light of the problems and uncertainties frequently encountered by companies attempting to develop markets for new products, services, and technologies. Despite best efforts, we may never overcome these obstacles.
 
Our business is dependent upon the implementation of our business plan, as well as our ability to enter into agreements with third parties for the provision of our licensed technology. There can be no assurance that our efforts will be successful or result in continued revenue or profit.
 
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If we do not succeed in our expansion strategy, we may not achieve the results we project.
 
Our business strategy is designed to develop and market our licensed products and services. Our ability to implement our plans will depend primarily on the ability to attract customers and the availability of qualified and cost effective sales personnel. There are no firm agreements for employment of additional marketing personnel, and we can give you no assurance that any of our expansion plans will be successful or that we will be able to establish additional favorable relationships for the marketing and sales of our licensed products and or our services. We also cannot be certain when, if ever, we will be able to hire the appropriate marketing personnel and establish additional merchandising relationships.
 
Economic conditions could materially adversely affect our business.
 
Our operations and performance depend to some degree on economic conditions and their impact on levels of consumer spending, which have recently deteriorated significantly in many countries and regions, including the regions in which we operate, and may remain depressed for the foreseeable future. For example, some of the factors that could influence the levels of consumer spending include continuing increases in fuel and other energy costs, conditions in the residential real estate and mortgage markets, labor and healthcare costs, access to credit, consumer confidence and other macroeconomic factors affecting consumer spending behavior. These and other economic factors could have a material adverse effect on demand for our products and on our financial condition and operating results.
 
Mineral exploration is highly speculative in nature and there can be no certainty of our successful development of profitable commercial mining operations.
 
The exploration and development of mineral properties involve significant risks that even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few explored properties develop into producing mines. Substantial expenses may be incurred to locate and establish mineral reserves, develop metallurgical processes, and construct mining and processing facilities at a particular site. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as size, grade, and proximity to infrastructure; metals prices which are highly cyclical; drilling and other related costs that appear to be rising; and government regulations, including those related to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals, and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in us not receiving an adequate return on invested capital.
 
There is no certainty that the expenditures made by us towards the exploration and evaluation of mineral deposits will result in discoveries of commercial quantities of ore.
 
Because our business involves numerous operating hazards, we may be subject to claims of a significant size, which would cost a significant amount of funds and resources to rectify. This could force us to cease our operations.
 
Our operations are subject to the usual hazards inherent in exploring for minerals, such as general accidents, explosions, chemical exposure and cratering. The occurrence of these or similar events could result in the suspension of operations, damage to or destruction of the equipment involved and injury or death to personnel. Operations also may be suspended because of machinery breakdowns, abnormal climatic conditions, failure of subcontractors to perform or supply goods or services or personnel shortages. The occurrence of any such contingency would require us to incur additional costs, which would adversely affect our business.
 
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Damage to the environment could also result from our operations. If our business is involved in one or more of these hazards, we may be subject to claims of a significant size that could force us to cease our operations.
 
Mineral resource exploration, production and related operations are subject to extensive rules and regulations of federal, provincial, state and local agencies. Failure to comply with these rules and regulations can result in substantial penalties. Our cost of doing business may be affected by the regulatory burden on the mineral industry. Although we intend to substantially comply with all applicable laws and regulations, because these rules and regulations frequently are amended or interpreted, we cannot predict the future cost or impact of complying with these laws.  Environmental enforcement efforts with respect to mineral operations have increased over the years, and it is possible that regulations could expand and have a greater impact on future mineral exploration operations. Although our management intends to comply with all legislation and/or actions of local, provincial, state and federal governments, non-compliance with applicable regulatory requirements could subject us to penalties, fines and regulatory actions, the costs of which could harm our results of operations. We cannot be sure that our proposed business operations will not violate environmental laws in the future.  Our operations and properties are subject to extensive laws and regulations relating to environmental protection, including the generation, storage, handling, emission, transportation and discharge of materials into the environment, and relating to health and safety. These laws and regulations may do any of the following: (i) require the acquisition of a permit or other authorization before exploration commences; (ii) restrict the types, quantities and concentration of various substances that can be released in the environment in connection with exploration activities;  (iii) limit or prohibit mineral exploration on certain lands lying within wilderness, wetlands and other protected areas; (iv) require remedial measures to mitigate pollution from former operations; and (v) impose substantial liabilities for pollution resulting from our proposed operations.  The exploration of mineral reserves are subject to all of the usual hazards and risks associated with mineral exploration, which could result in damage to life or property, environmental damage, and possible legal liability for any or all damages. Difficulties, such as unusual or unexpected rock formations encountered by workers but not indicated on a map, or other conditions may be encountered in the gathering of samples and information, and could delay our exploration program. Even though we are at liberty to obtain insurance against certain risks in such amounts we deem adequate, the nature of those risks is such that liabilities could exceed policy limits or be excluded from coverage. We do not currently carry insurance to protect against these risks and there is no assurance that we will obtain such insurance in the future. There are also risks against that we cannot, or may not elect to insure. The costs, which could be associated with any liabilities, not covered by insurance or in excess of insurance coverage or compliance with applicable laws and regulations may cause substantial delays and require significant capital outlays, adversely affecting our financial position, future earnings, and/or competitive positions.
 
Mining operations generally involve a high degree of risk.
 
Mining operations are subject to all the hazards and risks normally encountered in the exploration, development and production of base or precious metals, including unusual and unexpected geological formations, seismic activity, rock bursts, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and possible legal liability. Mining operations could also experience periodic interruptions due to bad or hazardous weather conditions and other acts of God. Milling operations are subject to hazards such as equipment failure or failure of retaining dams around tailing disposal areas, which may result in environmental pollution and consequent liability.
 
If any of these risks and hazards adversely affect our mining operations or our exploration activities, they may: (i) increase the cost of exploration to a point where it is no longer economically feasible to continue operations; (ii) require us to write down the carrying value of one or more mines or a property; (iii) cause delays or a stoppage in the exploration of minerals; (iv) result in damage to or destruction of mineral properties or processing facilities; and (v) result in personal injury, death or legal liability. Any or all of these adverse consequences may have a material adverse effect on our financial condition, results of operations, and future cash flows.
 
We may not be able to compete with current and potential exploration companies, some of whom have greater resources and experience than we do in developing mineral reserves.
 
The natural resource market is intensely competitive, highly fragmented and subject to rapid change. We may be unable to compete successfully with our existing competitors or with any new competitors. We will be competing with many exploration companies that have significantly greater personnel, financial, managerial and technical resources than we do. This competition from other companies with greater resources and reputations may result in our failure to maintain or expand our business.
 
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We may not have access to all of the supplies and materials we need to begin exploration, which could cause us to delay or suspend operations.
 
Competition and unforeseen limited sources of supplies in the industry could result in occasional spot shortages of supplies and certain equipment such as bulldozers and excavators that we might need to conduct exploration. We have not attempted to locate or negotiate with any suppliers of products, equipment or materials. We will attempt to locate products, equipment and materials prior to undertaking exploration programs. If we cannot find the products, equipment and materials we need, we will have to suspend our exploration plans until we do find the products, equipment and materials.
 
We are an exploration stage company, and there is no assurance that a commercially viable deposit or “reserve” exists in the property in which we have claim.
 
We are an exploration stage company and cannot assure you that a commercially viable deposit, or “reserve,” exists on our mineral properties. Therefore, determination of the existence of a reserve will depend on appropriate and sufficient exploration work and the evaluation of legal, economic and environmental factors. If we fail to find commercially viable deposits, our financial condition and results of operations will be materially adversely affected.
 
RISKS RELATING TO AN INVESTMENT IN OUR SECURITIES
 
If we fail to maintain effective internal controls over financial reporting, the price of our common stock may be adversely affected.
 
We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations. Any failure of these controls could also prevent us from maintaining accurate accounting records and discovering accounting errors and financial frauds. Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require annual assessment of our internal control over financial reporting.  The standards that must be met for management to assess the internal control over financial reporting as effective are complex, and require significant documentation, testing and possible remediation to meet the detailed standards. We may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting. If we cannot assess our internal control over financial reporting as effective, investor confidence and share value may be negatively impacted.
 
In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of our internal controls over financial reporting, or disclosure of our public accounting firm’s attestation to or report on management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.
 
Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses.
 
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting. For example, on January 30, 2009, the SEC adopted rules requiring companies to provide their financial statements in interactive data format using the eXtensible Business Reporting Language, or XBRL. We currently have to comply with these rules. Our management team will need to invest significant management time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.
 
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Because of the early stage of development and the nature of our business, our securities are considered highly speculative.
 
Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of its development. We have not generated any revenues nor have we realized a profit from our operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term.  Any profitability in the future from our business will be dependent upon our ability to market the products developed under our licensing agreement and to source other acquisitions in the industry we have chosen either additional technologies or exploration projects. Since we have not generated any revenues, we will have to raise additional monies through the sale of our equity securities or debt in order to continue our business operations.
 
We may, in the future, issue additional common shares that would reduce investors’ percent of ownership and may dilute our share value.
 
The future issuance of common shares may result in substantial dilution in the percentage of our common shares held by our then existing stockholders. We may value any common shares issued in the future on an arbitrary basis. The issuance of common shares for future services or acquisitions or other corporate actions may have the effect of diluting the value of the common shares held by our investors, and might have an adverse effect on any trading market for our common shares.
 
The market for penny stock has suffered in recent years from patterns of fraud and abuse.
 
Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include: (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; (iv) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and, (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses.
 
Our common shares are subject to the “Penny Stock” Rules of the SEC, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
 
The SEC has adopted regulations that generally define a “penny stock” to be any equity security other than a security excluded from such definition by Rule 3a51-1 under the Securities Exchange Act of 1934, as amended. For the purposes relevant to our Company, it is any equity security that has a market price of less than $5.00 per share, subject to certain exceptions.
 
Our common shares are currently regarded as a “penny stock”, since our shares are not listed on a national stock exchange or quoted on the NASDAQ Market within the United States, to the extent the market price for its shares is less than $5.00 per share. The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document prepared by the SEC, to provide a customer with additional information including current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer's account, and to make a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser's written agreement to the transaction. To the extent these requirements may be applicable; they will reduce the level of trading activity in the secondary market for the common shares and may severely and adversely affect the ability of broker-dealers to sell the common shares.
 
FINRA sales practice requirements may also limit a stockholders ability to buy and sell our stock.
 
In addition to the penny stock rules promulgated by the SEC, which are discussed in the immediately preceding risk factor, FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares.
 
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Our common stock may experience extreme rises or declines in price, and you may not be able to sell your shares at or above the price paid.
 
Our common stock may be highly volatile and could be subject to extreme fluctuations in response to various factors, many of which are beyond our control, including (but not necessarily limited to): (i) the trading volume of our shares; (ii) the number of securities analysts, market-makers and brokers following our common stock; (iii) changes in, or failure to achieve, financial estimates by securities analysts; (iv) actual or anticipated variations in quarterly operating results; (v) conditions or trends in our business industries; (vi) announcements by us of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; (vii) additions or departures of key personnel; (viii) sales of our common stock; and (ix) general stock market price and volume fluctuations of publicly-trading and particularly, microcap companies.
 
Investors may have difficulty reselling shares of our common stock, either at or above the price they paid for our stock, or even at fair market value. The stock markets often experience significant price and volume changes that are not related to the operating performance of individual companies, and because our common stock is thinly traded it is particularly susceptible to such changes. These broad market changes may cause the market price of our common stock to decline regardless of how well we perform as a company. In addition, there is a history of securities class action litigation following periods of volatility in the market price of a company’s securities. Although there is no such shareholder litigation currently pending or threatened against our company, such a suit against us could result in the incursion of substantial legal fees, potential liabilities and the diversion of management’s attention and resources from our business. Moreover, and as noted below, our shares are currently traded on the OTC-BB and, further, are subject to the penny stock regulations. Price fluctuations in such shares are particularly volatile and subject to manipulation by market-makers, short-sellers and option traders.
 
We have not and do not intend to pay any cash dividends on our common shares and, consequently, our stockholders will not be able to receive a return on their shares unless they sell them.
 
We intend to retain any future earnings to finance the development and expansion of our business. We have not, and do not, anticipate paying any cash dividends on our common shares in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.
 
A decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our ability to continue operations and we may go out of business.
 
A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, or convertible debt instruments, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.
 
ITEM 1B.              UNRESOLVED STAFF COMMENTS
 
As a “smaller reporting company”, we are not required to provide the information required by this Item.
 
ITEM 2.                 PROPERTIES
 
Our Offices:
 
Our executive staff offices remotely from corporate offices in Las Vegas, Nevada, which are our principal offices.  These offices provide mail, and the use of office facilities as required.  The fees for these offices are approximately $50 per month.  Our director, Rick Walchuk, provides office space where he works in his country of residence, Greece, free of charge to our company.  Our principal office is located at 3651 Lindell Road, Ste. D#422, Las Vegas, Nevada. Our telephone number is (702) 473-8227.
 
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Our Mineral Properies:
 
Index of Geologic Terms
 
TERM
DEFINITION
Amphibolite
is a non-foliated metamorphic rock that forms through recrystallization under conditions of high viscosity and directed pressure.
Anorthosite
is a type of intrusive igneous rock composed predominantly of calcium-rich plagioclasefeldspar. All anorthosites found on Earth consist of coarse crystals. Most anorthosites formed during Precambrian times.
Archean age
was a period of time 2,500-3,800 million years ago. The oldest rocks formed on earth were produced during the archean age.
Biotite
is a sheet silicate. Iron, magnesium, aluminium, silicon, oxygen, and hydrogen form sheets that are weakly bound together by potassium ions.
Breccia
a sedimentary rock consisting of sharp fragments embedded in clay or sand.
Gabbronorite
 is a coarse-grained, average between 2-16mm normal crystalline intrusive rock
Gneiss
is a common and widely distributed type of rock formed by high-grade regional metamorphic processes from pre-existing formations that were originally either igneous or sedimentary rocks.
Grenville Province
Makes up the youngest portion of the Canadian Shield.  Its name is derived from the village of Grenville in Quebec and is considered as a typical study area for base metals and related tectonics. It forms the southeastern margin of the Superior Province, and is divided into three distinct belts based on structure, lithology, and metamorphism. The Grenville Province is known for its graphite, iron and ilmenite mines, its industrial mineral potential, and less so for it’s
Horneblende
is a complex series of minerals. It is not a recognized mineral in its own right, but the name is used as a general or field term, to refer to a dark amphibole.
Hornblende is a mixture of three molecules; a calcium-iron-magnesium silicate, an aluminium-iron-magnesium silicate, and an iron-magnesium silicate.
Igneous rock
 Is any of various crystalline or glassy rocks formed by the cooling and solidification of molten earth material
 
Isoclinal fold
a fold in sedimentary rocks where the axial surface and limbs slope in the same direction and at approximately the same angle. Isoclinal folds are formed under conditions of intensive lateral compression or with slipping brought about by the force of gravity.
 
Metamorphic rocks
Metamorphic rocks make up a large part of the Earth's crust and are classified by texture and by chemical and mineral assemblage (metamorphic facies). They may be formed simply by being deep beneath the Earth's surface, subjected to high temperatures and the great pressure of the rock layers above it. They can form from tectonic processes such as continental collisions, which cause horizontal pressure, friction and distortion. They are also formed when rock is heated up by the intrusion of hot molten rock called magma from the Earth's interior
 
Paragneiss
a metamorphic rock formed in the earth’s crust from sedimentary rocks (sandstones and argillaceous schists) that recrystallized in the deep zones of the earth’s crust in an amphibolite facies of metamorphism.
 
Proterozoic age
relating to the later of the two divisions of Precambrian time, from approximately 2.5 billion to 570 million years ago,
 
Plagioclase
is a major constituent mineral in the Earth's crust, and is consequently an important diagnostic tool in petrology for identifying the composition, origin and evolution of igneous rocks.
 
Quartz
is the second most abundant mineral in the Earth's continental crust.
 
Quartzite
is a hard, non-foliated metamorphic rock which was originally sandstone.
 
 
 
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Our Properties
 
We have staked a total of 100 mineral claims covering approximately 5,400 hectares (13,343 acres in the Province of Quebec, Canada in January, 2013, known as the Lac Nicolas Property (the “Property”).  We had intended into commence exploration on these mineral claims during the spring of the calendar year 2014, however, we were unable to organize a ground crew in order to make our anticipated timeline.  We are currently investigating whether we can obtain a ground crew to undertake a short program before the winter of 2014.  We intend to explore for graphite. The property is part of the Government of Quebec’s proposed “Plan Nord” which is one of the biggest economic, social and environmental development initiatives with the intention to spend $80 billion during the next 25 years in this region and will create or consolidate 20,000 jobs per year. The government is considering giving tax credits for investment in the mining projects.
 
Image Agin
 
We do not yet have an exploration plan or program proposed for this Property.
 
Location and Access
 
The Property is located approximately 300 kilometers north of the town of Baie-Cameau in Quebec, on NTS map 22N03 with coordinates -69° 19’ 30”W; 51° 07’ 45 N (UTM: 477259 E; 5664239 N, NAD 1983, Zone 19) in the center of the Property. It can be accessed by highway 389 and a network of gravel roads which are part of Hydro Quebec’s Manicougan dam reservoir.
 
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Image Agin

 
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Image Agin
 
History
 
The earliest exploration work in the area was carried out in the late 1950’s to the early 1960’s and was mainly focused on following up magnetic anomalies in the iron formation to find iron deposits. In 2002, a graphite showing was discovered on a logging road which led to the development of Lac Gueret graphite deposit by Quebec Cartier Mining Company and is presently owned by Mason Graphite Corp.
 
Geology and Structure
 
The southern part of the property is underlain by paragneiss, quartzite and amphibolite geological rock units of Granville Province of Proterozoic age. The central and northern area is underlain by Archean age basement rocks mainly grey gneiss with quartz, plagioclase, biotite and/or hornblende, mafic gneiss with hornblende and / or biotite. Anorthosite and gabbronorite geological rock units are exposed to the south outside the property area.
 
Pre- Granville deformation has been overprinted by the Granville orogeny in which four periods of deformation are mapped in the area. These are alternate phases of folding and foliation affecting shallow bedrocks approximately to a depth 250 meters. Generally the graphite mineralization is associated with tight, steep isoclinal folds where high grade zones are located in brecciated zones.
 
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Image Agin
 
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Exploration Programs
 
Our company has not yet undertaken any exploration programs on its properties since acquired.  As of the date of this filing our company has requested a planned exploration program to be undertaken as weather permits before the close of 2014.  The plan has not yet been received.  Our company is required to expend a total of $120,000 on the mining claims to remain in good standing before mid-January, 2015.
 
ITEM 3.                 LEGAL PROCEEDINGS
 
 We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest
 
ITEM 4.                 MINE SAFETY DISCLOSURES
 
Not Applicable.
 
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PART II
 
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
Market Information
 
Our company's common stock is currently quoted on the Over-the-Counter Bulletin Board (OTC/BB) under the trading symbol “AGIN”, and has been quoted since July 18, 2012.   We provide below the information from the quarter ended September 30, 2012 to June 30, 2014.
 
Quarter
High ($)
Low ($)
4th Quarter ended 06/30/2014
0.13
0.044
3rd Quarter ended 03/31/2014
0.165
0.061
2nd Quarter ended 12/31/2013
0.20
0.144
1st Quarter ended 09/30/2013
0.47
0.14
4th Quarter ended 06/30/2013
0.87
0.4930
3rd Quarter ended 03/31/2013
2.00
0.40
2nd Quarter ended 12/31/2012
0.85
0.80
1st Quarter ended 09/30/2012
0.85
0.80
 
The above information was provided by OTC Markets.  The quotations provided may reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
 
Holders
 
As of October 8, 2014, there were 96,083,348 shares of common stock issued and outstanding and 15 record holders of our company’s common stock (which number does not include the number of stockholders whose shares are held by a brokerage house or clearing agency, but does include such brokerage houses or clearing agencies as one record holder).
 
Dividends
 
We have never declared or paid dividends on our common stock.  We intend to retain earnings, if any, to support the development of our business and therefore do not anticipate paying cash dividends for the foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including current financial condition, operating results and current and anticipated cash needs.
 
Transfer Agent
 
The transfer agent for the common stock is Empire Stock Transfer Inc. The transfer agent’s address is 1859 Whitney Mesa Dr., Henderson, NV, and its telephone number is (702) 818-5898.
 
Recent Sales of Unregistered Securities
 
There were no unregistered securities to report which were sold or issued by our company without the registration of these securities under the Securities Act of 1933 in reliance on exemptions from such registration requirements, within the period covered by this report, which have not been previously included in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
 
ITEM 6.                 SELECTED FINANCIAL DATA
 
 As a “smaller reporting company”, we are not required to provide the information required by this Item.
 
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ITEM 7.                      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Liquidity and Capital Resources
 
We intend to be engaged in the exploration of mineral properties and the development of related technologies for graphite and graphene.  To date, we have not generated any revenues.
 
Cash on hand at June 30, 2014 was $307,693 as compared to $116,588 as of June 30, 2013. We had a total of $336,494 in prepaid expenses on June 30, 2014 as compared to $170,000 in prepaid expenses as at June 30, 2013.  Prepaid expenses relate to amounts totaling $335,000 (2013- $170,000) paid against the licensing agreement with Cheap Tubes and the balance are prepaid expenses related to general and administration costs in the amount of $1,494 (2013 – Nil).
 
Our total current liabilities at June 30, 2014 were $32,795 as compared to $8,806 as at June 30, 2013. The total long term liabilities at June 30, 2014 were $554,828 as compared to $Nil at June 30, 2013. This significant change is solely related to a derivative warrant liability which occurred as a result of operating funds received from two unit private placements undertaken during the fiscal year ended June 30, 2014, whereby our company raised $900,000 to fund operations.   The private placements required the issuance of warrants, which are accounted for as a derivative liability.    We currently have mineral claims which potentially could have graphite deposits and two projects related to graphene or products related to graphene. 
 
During our fiscal year ended June 30, 2014 and the fiscal year ended June 30, 2013, our company was successful in raising the required funding for operations by way of private placements.   During the period ended March 31, 2014 we completed private placements in the amount of $600,000 (net $533,000) and $300,000 (net $266,500), which we believe will be sufficient to meet our ongoing expenditures through to the fiscal year ended June 30, 2015.  Our company believes it now has sufficient funds on hand for all its current commitments including $120,000 that is required for exploration of its mineral claims, should we determine to commence exploration.  Additionally we believe we have sufficient funds on hand should there be additional cash requirements for the Cheap Tubes project and the development of the 3-D project during the current fiscal year.   At this time, the additional cash requirements for the Cheap Tubes project and the 3-D projects cannot be estimated.   Operating costs for our company over the next twelve months for general and administrative expenses, including contractual expenses and fees for legal, accounting, audit and filing fees are estimated to be approximately $200,000.    We may need to raise additional capital for operations and Cheap Tubes if warranted.   We have new warrants outstanding pursuant to our recent financings, however, there can be no assurance that our company will raise any funds from warrant exercises and our company currently has no other financing agreements under which it can raise funding.   While we cannot say what actual funds may be required over the next twelve month period to further our business plan, we anticipate that we will require a minimum of $500,000 to fund operations for the next twelve months, which should allow for an exploration program on our mineral claims in the amount of $120,000, $50,000 for the 3D project and $80,000 to be paid to Cheap Tubes in regard to the technology development agreement with the balance for working capital and for our company to seek acquisitions of technologies related to our planned business.
 
We will raise any funds from warrant exercises and currently have no other financing agreements under which it can raise funding.   There can be no assurance that such funding, if required, will be available and if available it will be on favorable terms.  You may face substantial dilution in your share holdings on any ongoing financings which our company may negotiate.  Should we not be able to raise additional funding if and when required, we may have to delay or terminate our ongoing technology development.   At this time, we cannot state with certainty that it will be able to raise sufficient funding to continue with all of our intended projects.
 
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Results of Operations
 
We do not have any revenues and have not had any revenue since inception on June 1, 2010.
 
We have a net loss of $722,123 for the fiscal year ended June 30, 2014 as compared to a net loss of $575,384 for the fiscal year ended June 30, 2013 and operating losses of $553,202 for the fiscal year ended June 30, 2014 as compared to operating losses of $574,617 for the fiscal year ended June 30, 2013.   Net loss for the fiscal year ended June 30, 2014 was increased by the valuation of the change in the fair value of the warrant liability with no comparable offset during the fiscal year ended June 30, 2013.   There was no significant change in the operation losses. Research and development expenses for the fiscal year ended June 30, 2014 were $45,601 (2013 - $Nil).  During fiscal 2013 our company incurred $24,468 in exploration expenses with no similar expenditure during the year ended June 30, 2014.  Office and general administrative expenses increased  to $121,556 from $91,020 (2013) due to increased fees related to reporting requirements as our company created derivative warrant liability reporting with its financing agreements, additionally, management fees increased to $122,900 (2014) from $55,000 (2013) due to a contractual increase in fees.  Consulting fees and professional fees remained consistent.   The 2014, losses reflected a decrease in stock based compensation to $87,313 for the fiscal year ended June 30, 2014 as compared to $231,450 during the fiscal year ended June 30, 2013.
 
Basic and diluted losses per share for the respective fiscal years ended June 30, 2014 and June 30, 2013 was ($0.01).
 
Off-Balance Sheet Arrangements
 
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
 
Critical Accounting Policies and Estimates
 
The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Financial Statements.
 
Recent Accounting Pronouncements
 
On June 10, 2014, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, consolidation, which removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. For the first annual period beginning after December 15, 2014, the presentation and disclosure requirements in Topic 915 will no longer be required for the public business entities. The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. Early adoption is permitted. Our company has adopted the amendment.
 
There are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet effective. Each of these pronouncements, as applicable, has been or will be adopted by our company. As of June 30, 2014, none of these pronouncements is expected to have a material effect on the financial position, results of operations or cash flows of our company.
 
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ITEM 7A.                      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 As a “smaller reporting company”, we are not required to provide the information required by this Item.
 
ITEM 8.                      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
All financial information required by this Item is attached hereto below beginning on page F-1.
 
 
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AMERICAN GRAPHITE TECHNOLOGIES INC.
 
FINANCIAL STATEMENTS
JUNE 30, 2014 AND 2013
AUDITED
 
REPORTED IN UNITED STATES DOLLARS
 

 
36

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
To the Board of Directors and Stockholders of American Graphite Technologies, Inc.:
 
We have audited the accompanying balance sheet of American Graphite Technologies, Inc. (“the Company”) as of June 30, 2014 and 2013, and the related statement of operations, stockholders’ equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit. 
 
We conducted our audit in accordance with 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.  An audit 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 audit provides a reasonable basis for our opinion. 
 
In our opinion, the financial statement referred to above present fairly, in all material respects, the financial position of American Graphite Technologies, Inc., as of June 30, 2014 and 2013, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles in the United States of America.
 
The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit 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 Company's internal control over financial reporting.  Accordingly, we express no such opinion.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 
/s/ B F Borgers CPA PC
B F Borgers CPA PC
Denver, CO
 
October 13, 2014

 


 
F-1

 

AMERICAN GRAPHITE TECHNOLOGIES INC.
BALANCE SHEETS
 
       
       
   
June 30,
2014
   
June 30,
2013
 
Assets
           
CURRENT ASSETS
           
Cash
  $ 307,693     $ 116,588  
Prepaid expenses
    336,494       170,000  
TOTAL CURRENT ASSETS
    644,187       286,588  
TOTAL ASSETS
  $ 644,187     $ 286,588  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIT)
               
Accounts payable and accrued liabilities
  $ 32,795     $ 8,806  
TOTAL CURRENT LIABILITIES
    32,795       8,806  
                 
Derivative warrant liabilities (Notes 2, 6)
    554,828       -  
                 
TOTAL LIABILITIES
    587,623       8,806  
                 
STOCKHOLDERS’ EQUITY(DEFICIT)
               
Capital stock
Authorized   -  200,000,000 shares of common stock, $0.001 par value
Issued and outstanding
96,083,348 and 78,359,486  shares of common stock, respectively as at June 30, 2014 and June 30, 2013, respectively
    96,083       78,359  
Stock Payable
    -       85,000  
Additional paid in capital
    1,357,448       789,267  
Accumulated deficit
    (1,396,967 )     (674,844 )
TOTAL STOCKHOLDERS’ EQUITY(DEFICIT)
    56,564       277,782  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIT)
  $ 644,187     $ 286,588  

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

 
F-2

 

AMERICAN GRAPHITE TECHNOLOGIES INC.
STATEMENTS OF OPERATIONS
AUDITED
 
   
Fiscal Year Ended
 
   
June 30,
   
June 30,
 
   
2014
   
2013
 
             
REVENUE
  $ -     $ -  
                 
OPERATING EXPENSES
               
     Exploration expenses
    -       24,468  
     Research and development
    45,601       -  
     Office and general
    121,556       91,020  
     Stock based compensation
    87,313       231,450  
     Management fees
    122,900       55,000  
Consulting fees
    131,935       134,576  
     Professional fees
    43,897       38,103  
OPERATING LOSS
    (553,202 )     (574,617 )
                 
                 
OTHER EXPENSE
               
Interest Expense
    -       (767 )
Change in the fair value of warranty liability
    (168,921 )     -  
                 
NET LOSS
  $ (722,123 )   $ (575,384 )
                 
NET LOSS PER COMMON SHARE - BASIC
  $ (0.01 )   $ (0.01 )
                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- BASIC
    85,945,025       78,113,865  

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

 
F-3

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
AUDITED
 
   
Common stock
    Stock    
Additional Paid in
   
Accumulated
       
   
Shares
   
Amount
    Payable    
Capital
   
Deficit
   
Equity(Deficit)
 
Balance, June 30, 2012
    77,437,500       77,438       -       8,738       (99,460 )     (13,284 )
Stock options
    -       -       -       187,200       -       187,200  
Common stock issued for cash
    846,986       846               549,154       -       550,000  
Private placement
    -       -       85,000       -       -       85,000  
Common stock issued for financing agreement
    75,000       75       -       44,175       -       44,250  
Net loss
    -       -       -       -       (575,384 )     (575,384 )
Balance, June 30, 2013
    78,359,486       78,359       85,000       789,267       (674,844 )     277,782  
Private placement
    7,938,888       7,939       (85,000 )     876,561               799,500  
Common stock issued to agent placement
    232,500       233       -       (233 )             -  
Common stock issued for investor relationship services
    562,500       562               86,750               87,312  
Warrant
                            (118,161 )             (118,161 )
Derivate liabilities
                            (1,688,055 )             (1,688,055 )
Cashless warrants
    8,989,974       8,990               1,411,319               1,420,309  
Net loss
                                    (722,123 )     (722,123 )
Balance, June 30, 2014
    96,083,348     $ 96,083     $ -     $ 1,357,448     $ (1,396,967 )   $ 56,564  
 
The accompanying notes are an integral part of these financial statements.

 
F-4

 


AMERICAN GRAPHITE TECHNOLOGIES INC.
STATEMENTS OF CASH FLOWS
AUDITED
 
       
       
   
Fiscal year ended June 30,
 
   
2014
   
2013
 
OPERATING ACTIVITIES
           
Net loss
  $ (722,123 )   $ (575,384 )
Adjustments to reconcile net loss to net cash used by
               
Stock-based compensation
    87,313       187,200  
Shares issued per financing agreement
            44,250  
    Change in the fair value of warrant liability
    168,921          
Changes in operating assets and liabilities:
               
   Interest
    -       (110 )
   Increase in accounts payable and accrued liabilities
    249       5,872  
   Decrease in accounts payable – related party
    23,740       (2,695 )
   Increase in prepaid expenses
    (166,494 )     (167,587 )
NET CASH USED IN OPERATING ACTIVITIES
    (608,394 )     (508,454 )
                 
FINANCING ACTIVITIES
               
   Proceeds from sale of common stock
    799,500       635,000  
   Proceeds from note payable
    -       -  
Repayment of note payable
    -       (40,000 )
   Due to related party
    -       -  
NET CASH PROVIDED BY FINANCING ACTIVITIES
    799,500       595,000  
                 
NET INCREASE (DECREASE) IN CASH
    191,106       86,546  
                 
CASH BEGINNING OF PERIOD
    116,588       30,042  
                 
CASH, END OF PERIOD
  $ 307,693     $ 116,588  
                 
 Supplemental cash flow information and noncash financing activities:
               
   Cash paid for interest
  $ -     $ 877  
   Cash paid for income taxes
  $ -     $ -  
                 
Non-cash transactions
               
Stock based compensation
  $ -     $ 187,200  
Shares issued per financing agreement
    -       44,250  
Forgiveness of shareholder loan
    -       -  
    $ -     $ 231,450  

The accompanying notes are an integral part of these financial statements.
 
F-5

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 1 – NATURE OF OPERTIONS AND BASIS OF PRESENTATION

American Graphite Technologies Inc. (Formerly Green & Quality Home Life, Inc.) (the “Company”) is in the initial exploration stage and has incurred losses since inception totaling $1,288,989. The Company was incorporated on June 1, 2010 in the State of Nevada and established a fiscal year end at June 30. The Company is an exploration stage company as defined in FASB ASC 915.   We were originally organized to offer a portfolio of products and services to provide solutions for every family to automate domestic activities, making them less time consuming, easy to manage and leveraging the quality of life of every member of a family.

On May 23, 2012, Rick Walchuk, a director of American Graphite Technologies Inc, acquired a total of 12,000,000 pre-forward split shares of the Company’s common stock from Fabio Alexandre Narita, the Company’s former director and officer, in a private transaction for an aggregate total of $350,000. The funds used for this share purchase were Mr. Walchuk’s personal funds. Mr. Walchuk’s 12,000,000 shares amounted to approximately 98% of the Company’s then currently issued and outstanding common stock.  This transaction effected a change in control of the Company.  With the change in control of the Company management determined to abandon the original business plan and has determined to enter into the business of exploration and development of mining projects and technology related to graphite and grapheme.  The Company currently has no projects and is in negotiations to acquire both mining concessions and technology.

As part of the sale of his shares Mr. Narita agreed to extinguish all debts owed to him by the Company.

Also on May 23, 2012, Fabio Alexandre Narita resigned as a director, President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer of the Company. In connection with the resignation of Mr. Narita, Rick Walchuk was appointed President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Treasurer, Secretary and a director. On December 13, 2013, the Board of Directors of the Company appointed Con Evan Anast to the Board of Directors of the Company and elected him Secretary of the Company, having received the resignation of Mr. Walchuk as Company Secretary.

On June 11, 2012, our Board of Directors unanimously approved the following items:

1. an amendment to our Articles of Incorporation to change our name to “American Graphite Technologies Inc.” (the “Name Change”);
2. an amendment to our Articles of Incorporation to increase our authorized capital from 75,000,000 to 200,000,000 shares of common stock, $0.001 par value (the “Increase in Authorized Capital”); and 3. an authorization to the Board of Directors to effect a forward split of the Company’s common stock, par value $0.001 per share at an exchange ratio of one hundred and twenty-five (125) for one (1) (the “Forward Split”) and to file such amendments as may be required with the requisite regulatory bodies to effect the Forward Split, so that every one (1) outstanding share of Common Stock before the Forward Split shall represent one hundred and twenty-five (125) shares of Common Stock after the Forward Split.

On June 11, 2012, our majority stockholder executed written consent in lieu of a special meeting approving the Amendments.

Pursuant to these actions to be undertaken by the Company, Mr. Walchuk returned a total of 11,640,000 pre-forward split shares of common stock which were cancelled by the Company and returned to treasury.

Effective July 18, 2012, in accordance with approval from the Financial Industry Regulatory Authority (“FINRA”), we changed our name from Green & Quality Home Life, Inc. to American Graphite Technologies Inc. and increased our authorized capital from 75,000,000 to 200,000,000 shares of common stock, par value of $0.001. In addition, our issued and outstanding shares of common stock increased from 619,500 to 77,437,500 shares of common stock, par value of $0.001 on the basis of a 125:1 forward split of our issued and outstanding shares of common stock. The forward split has been retroactively applied to all shares and per share figures in these financial statements.
 
F-6

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 1 – NATURE OF OPERTIONS AND BASIS OF PRESENTATION (continued)
 
Going Concern
The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company does not have material assets aside from cash and prepaid expenses, nor does it have operations or a source of revenue sufficient to cover its operating costs.  While there are sufficient funds to carry out the current operations of the Company, with no revenue generating operations there remains substantial doubt about our ability to continue as a going concern. As at June 30, 2014, the Company has an accumulated deficit of $1,396,967. While we presently have cash on hand, the Company may be dependent upon the raising of additional capital through placement of our common stock in order to fully implement its business plan, or merge with an operating company. There can be no assurance that the Company will be successful in either situation in order to continue as a going concern.

The ability of the Company to continue as a going concern is dependent on attaining profitable operations, accordingly there remains substantial doubt as to the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amount and classification of liabilities that might cause results from this uncertainty.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
The financial statements present the balance sheets and statements of operations, stockholders' equity (deficit) and cash flows of the Company. These financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States.

Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.

Use of Estimates and Assumptions
Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Warrants
We account for common stock warrants in accordance with applicable accounting guidance provided in ASC Topic 815 “Derivatives and Hedging – Contracts in Entity’s Own Equity” (ASC Topic 815), as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement.  We classify derivative warrant liabilities on the balance sheet as a current liability, which is revalued at each balance sheet date, subsequent to the initial issuance.  We use the Monte Carlo Options Lattice model, depending on the applicable terms of the warrant agreement, to value the derivative warrant liabilities.  Changes in the fair value of the warrants are reflected in the statement of operations as “Change in the fair value of warrant liability.”  See, Note 6 – financial agreement – (3) Securities Purchase Agreement, for a detailed description of our accounting for derivative warrant liabilities.
 
 
F-7

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes
The Company accounts for income taxes in accordance with accounting guidance now codified as FASB ASC Topic 740, “Income Taxes,” which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.  Accounting guidance now codified as FASB ASC Topic 740-20, “Income Tax – Intra-period Tax Allocation,” clarifies the accounting for uncertainties in income taxes recognized in accordance with FASB ASC Topic 740-20 by prescribing guidance for the recognition, de-recognition and measurement in financial statements of income tax positions taken in previously filed tax returns or tax positions expected to be taken in tax returns, including a decision whether to file or not to file in a particular jurisdiction. FASB ASC Topic 740-20 requires that any liability created for unrecognized tax benefits is disclosed. The application of FASB ASC Topic 740-20 may also affect the tax bases of assets and liabilities and therefore may change or create deferred tax liabilities or assets.

Net Loss per Share
Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.
 
The Company had the following potential common stock equivalents at June 30, 2014:

Warrants
4,012,500
 
Since the Company reflected a net loss in in fiscal year ended June 30, 2014 and 2013, respectively, the effect of considering any common stock equivalents, if outstanding, would have been anti-dilutive.  A separate computation of diluted earnings (loss) per share is not presented.
 
Fair Value of Financial Instruments
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2014 and 2013. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.
 
F-8

AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments (continued)
Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

As set forth in the Statement of Financial Accounting Standard No.  820-10-35-37 Fair Value in Financial Instruments (previously and herein referenced as “157”) to increase consistency, a fair value hierarchy was developed to rank the reliability of inputs that reflect assumptions, used as a basis for determining fair value. FAS 157 emphasizes that valuation techniques (income, market, and cost) used to measure the fair value of an asset or liability should maximize the use of observable inputs, that is, inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. The FAS 157 accounting standard requires companies use actual market data, when available or models, when unavailable. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available, except when it might not represent fair value at the measurement date. When using models, FAS 157 provides guidance on appropriate valuation techniques and addresses the inherent valuation issue of risk. A fair value measurement should include an adjustment for risk if market participants would include one in pricing the related asset or liability, even if the adjustment is difficult to determine.

We analyzed the derivative financial instruments, in accordance with EITF 07-05 and FAS 133. EITF 07-5 is effective for fiscal years beginning after December 15, 2009, and interim periods within those fiscal years. It should be applied to outstanding instruments as of the beginning of the fiscal year in which it is adopted. Any adjustment would be recognized in the opening balance of retained earnings. The objective of EITF 07-5 is to provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s own stock. This determination is needed for a scope exception under Paragraph 11(a) of FAS 133 which would enable a derivative instrument to be accounted for under the accrual method. The classification of a non-derivative instrument that falls within the scope of EITF 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the instrument is indexed to an entity’s own stock. A nonderivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must be accounted for as a liability. The EITF reached a consensus that would establish a two-step approach in determining whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument's contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument's settlement provisions.

Derivative financial instruments should be recorded as liabilities in the consolidated balance sheet and measured at fair value. For purposes of this engagement and report, we utilized fair value as the basis for formulating our opinion which has been defined by the Financial Accounting Standards Board (“FASB”) as “the amount for which an asset (or liability) could be
exchanged in a current transaction between knowledgeable, unrelated willing parties when neither party is acting under compulsion”. The FASB has provided guidance that its definition of fair value is consistent with the definition of fair market value in IRS Rev. Rule 59-60. In determining the fair value of the derivatives we assumed that the Company’s business would be conducted as a going concern. These derivative liabilities will need to be marked-to-market each quarter with the change in fair value recorded in the income statement. The FASB and IRS have provided guidance that its definition of fair value is consistent with the definition of fair market value in IRS Rev. Rule 59-60. Our opinion of Fair Value relied on a “value in use” or “going concern” premise. To properly apply this fair value standard, we gave consideration to the Holder’s intentions regarding whether or not the Securities purchased were to be held, sold, or abandoned. Our analysis also reflects assumptions that would be made by market participants if these market participants were to buy or sell each identified asset on an individual basis.
 
F-9

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments (continued)

The Warrants issued with debt contain derivatives and require accounting under FAS 133 until exercised or expired. The derivative liability is marked to market each subsequent reporting period.

The following table summarizes the components of the derivate liabilities:

Warrant liability:
 
June 30,
2014
   
March 14,
2014
   
September 9,
2013
 
                   
4,000,000 common stock purchase agreement dated September 9, 2013 *
  $ -     $ 1,482,326     $ 1,243,455  
3,750,000 common stock purchase agreement dated March 14, 2014
    554,828       562,761       -  
    $ 554,828     $ 2,045,087     $ 1,243,455  

*On March 14, 2014, the 3 subscribers, who were subscribers in an offering undertaken by the Company on September 9, 2013, along with 2 subscribers that did not elect to participate in this offering, executed a waiver and consent in regard to their rights under the September 9, 2013 offering (the “Original SPA”), whereby they waived the rights to receive any additional shares of common stock under the Original SPA agreements and the Company and the 5 investors agreed to a re-pricing of the warrants issued under the Original SPA from an exercise price of $0.30 per share to $0.0724 per share and that such reduction of the Exercise Price was deemed a reduction in connection with a Dilutive Issuance (as defined in the Warrants) and the number of Warrant Shares that may be purchased upon exercise of the Warrants increased.  On March 14, 2014 through March 21, 2014, the Company received notices and executed cashless exercise from the subscribers under the Original SPA.

The following table summarizes the number of common shares indexed to the derivative financial instruments as of June 30, 2014:
 
   
Warrant
Derivatives
 
       
4,000,000 common stock purchase agreement dated September 9, 2013
    -  
3,750,000 common stock purchase agreement dated March 14, 2014
    4,012,500  
      4,012,500  

The following table summarizes the effects on our income (expense) associated with changes in the fair values of our derivative financial instruments by type of financing:
 
   
Fiscal Year ended
   
   
June 30,
   
     
2014
     
2013
 
4,000,000 common stock purchase agreement dated September 9, 2013
  $ 176,853     $ -  
3,750,000 common stock purchase agreement dated March 14, 2014
    (7,932 )     -  
    $ 168,921     $    
 
 
F-10

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Related Parties
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions.  Parties are also considered to be related if they are subject to common control or common significant influence.

Stock-based Compensation
Stock-based compensation is accounted for using the Equity-Based Payments to Non-Employees Topic of the FASB ASC, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. The Company determines the value of stock issued at the date of grant. It also determines at the date of grant, the value of stock at fair market value or the value of services rendered (based on contract or otherwise) whichever is more readily determinable.

Recent Accounting Pronouncements
On June 10, 2014, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, consolidation, which removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. For the first annual period beginning after December 15, 2014, the presentation and disclosure requirements in Topic 915 will no longer be required for the public business entities. The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. Early adoption is permitted. The Company has adopted the amendment.
 
There are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. As of June 30, 2014, none of these pronouncements is expected to have a material effect on the financial position, results of operations or cash flows of the Company.

NOTE 3 – TECHNOLOGY AGREEMENTS

On December 3, 2012 we entered into and executed a non-exclusive technology License agreement for patent and trade secret technology in the field of graphene oxide or “Bucky” paper with Cheap Tubes, Inc.  Pursuant to the terms of the agreement, we acquired the rights to further develop, commercialize, market and distribute certain proprietary inventions and know-how related to the manufacturing processes for graphene products, including graphene paper, also known as Bucky Paper.  We agreed to fund commercial development activities based on the payment schedules defined below and we received a license for the rights on a nonexclusive basis for marketing products and/or services.   Pursuant to the terms of the agreement, we agreed to provide the following payments to Cheap Tubes:

A minimum of $250,000 over 18 months, payable as follows: 

 
-
$10,000 on the execution of the agreement; (paid) 
 
 
-
$40,000 per quarter on January 1, 2013, April 1, 2013, July 1, 2013 and October 1, 2013 and on January 1, 2014 and April 1, 2014.
 
 
F-11

 

AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements


NOTE 3 – TECHNOLOGY AGREEMENTS (continued)

Under the terms of the agreement, Cheap Tubes was to incorporate a new corporation (“Newco”) and assign all rights and obligations of the agreement with us as well as the patent agreement.  The newly formed corporation would then become the party to this agreement.   Until such time as Newco was formed all funds paid were to remain in an attorney escrow.  Further, in order to have funds released from escrow the parties were to formulate and agree to a milestone schedule to be met by Cheap Tubes or Newco as the case may be.   Each quarter the milestones from the prior quarter must be met as a pre-condition to the upcoming quarterly funding.   Under the agreement the Company was granted a non-exclusive license to market and distribute Bucky Paper using the patents, trade secrets and knowhow (the “Proprietary Rights”) throughout the world.   Newco or Cheap Tubes will manufacture the Bucky Paper products and we shall have no rights to sublicense the Proprietary Rights to a third party.  As the agreement is non-exclusive, Cheap Tubes will also have the right to market and distribute Bucky Paper products, subject to our ongoing fees, as described below.

As consideration for funding, we will receive 40% of the Net Sales Revenue for Bucky Paper until the amount we have received equals our capital investment regardless of whether we, Cheap Tubes or CTI are the ultimate vendors on the sale.  Thereafter, we will receive 30% of our capital investment until such time as we have received an amount equal to 20% of the capital invested, 25% for the next five years and 20% for the remaining five years, at which time all obligations to us from Cheap Tubes or CTI shall cease.

Under the agreement, any new opportunities presented to us or Mike Foley (the shareholder of Cheap Tubes), Cheap Tubes or CTI are to be negotiated and if agreement is reached then shall be formalized in a mutually acceptable definitive agreement; with no obligation upon either party to enter into an agreement should they not be able to negotiate mutually acceptable terms.  However, it is the intent of the parties to work toward furthering the business of Cheap Tubes, CTI, our business and any new business that may present itself.

As at June 30, 2014, the Company has paid cash in the amount of $335,000 pursuant to the agreement, and recorded the amount as prepaid expense - advances on future revenue under the licensing agreement.  All payments due under the licensing agreement are current per the terms of the agreement.   

Technology Development Agreement

On April 24, 2013 the Company signed a letter of intent (LOI) with the National Academy of Science of Ukraine; National Science Centre; Kharkov Institute of Physics and Technology (“KIPT”), Kharkov, Ukraine in regard to a research project dubbed “P-600”.

P-600 will research the properties of nanocarbon contained matter (graphene) as working material for 3D printing. The project will be a partnership between the Company, Science and Production Establishment “Renewable Energy Sources and Sustainable Technologies” (“RESST”) National Science Center “KIPT” National Academy of Science of Ukraine and Institute of Solid State Physics and Material Science National Science Center “KIPT”  National Academy of Science of Ukraine.

On October 17, 2013, the Company finalized an intellectual property agreement for its 3D Project P-600 with the project manager and National Science Centre KIPT of the National Academy of Sciences of Ukraine and remitted the funds to allow commencement of the Project.

Under the agreement, the Company agreed to Project costs of $42,697. Changes to the proposed budget could be made based on agreement of both sides. During the fiscal year ended June 30, 2014, the Company has paid a total of $44,832 as Project costs which have been recorded as research and development expenditures.


 
F-12

 

AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 4 – MINERAL PROPERTIES

During January, 2013, we engaged the services of Geomap Exploration Inc. to identify and stake certain mineral claims in an area in Quebec, Canada that has existing exploration for graphite being undertaken by adjacent companies.  The staking has been completed and a total of 100 mineral claims have been staked for transfer to the Company. The mineral claims encompass an area of approximately 5,400 hectares (13,343 acres) in Quebec, Canada.  They are located in the vicinity of an identified high grade graphite deposits, the Lac Gueret project belonging to Mason Graphite Corp., and new discoveries recently announced by Focus Graphite.  Geologically, the property has mineralization similar to other graphite deposits/discoveries in the area.  The mineral claims are in an area where the property has been designated by the Quebec Government for major economic, social and environmental development.  The mineral claims are 100% owned by the Company with no royalty or net smelter return requirements.  The Company had intended to undertake exploration programs on the mineral claims by the spring of 2014; however, it may undertake the exploration programs during the fall of 2014, dependent on finalizing additional funding and weather conditions.
 
The costs for staking of $7,179 and fees of $17,289 for geological services rendered to stake the claims were recorded as exploration expenses in the fiscal year ended June 30, 2013.

During the fiscal year ended June 30, 2014, the Company has not expended any funds on the claims. The Company is required to expend a total of $120,000 on the mining claims to remain in good standing before mid-January 2015.

 
NOTE 5 – PREPAID EXPENSES AND ADVANCES

The following table provides detail of the Company’s prepaid expenses as of June 30, 2014 and June 30, 2013:

   
June 30, 2014
   
June 30, 2013
 
News releases
  $ 1,494     $ -  
Advances related to technology agreement – Note 3
    335,000       170,000  
    $ 336,494     $ 170,000  

NOTE 6 – FINANCING AGREEMENTS

(1)  
Financing Agreement

On August 29, 2012, we entered into an Equity Based Financing Agreement with one non-US investor pursuant to which, the investor agreed to make available up to $2,500,000 by way of advances until August 29, 2013 (the “Completion Date”) in accordance with the terms of the agreement. The Completion Date may be extended for an additional term of up to twelve months at the option of our Company or the investor upon written notice on or before the Completion Date in accordance with the notice provisions of the Financing Agreement. We will issue, within ten (10) Banking Days following the date of the receipt by our Company of any advance under the agreement, shares of our common stock at a price equal to 80% of the average of the closing prices of our common stock for the preceding 5 Banking Days immediately preceding the date of the notice, as quoted on Yahoo Finance or other source of stock quotes as agreed to by the parties.

During the fiscal year ended June 30, 2013, the Company received amounts totaling $550,000 under the financing agreement by way of equity private placements for 781,250 shares of common stock at $0.64 per share and 65,736 shares of common stock at $0.76062, respectively.   The agreement expired without agreement to extend and therefore the Company will have no further ability to draw down under the agreement.
 
F-13

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 6 – FINANCING AGREEMENTS (continued)

The shares were issued as follows:
 
Issue Date
 
Shares Issued
 
Value Per Share
 
Issuance Valuation
September  4, 2012
   
781,250
   
$
0.64
   
$
500,000
 
May 3, 2013
   
65,736
   
$
0.76062
   
$
50,000
 

(2)  
Private Placement Agreement

On May 9th and May 20th, 2013 respectively, we entered into  two Private Placement Agreements, one with a   U.S. investor and one with a  non-US investor pursuant to which, the investors have funded a total of $85,000 by way of private placement units subscription agreements for a total of 188,888 units of the common stock of the Company at a price of $0.45 per unit, each unit consisting of one share and one share purchase warrant entitling the subscribers to purchase one additional share of common stock at $0.75 per share within one year from the original date of the  private placement. The 188,888 shares of common stock were issued as of September 30, 2013.
 
(3)
Securities Purchase Agreements (“SPA”)

SPA #1

On September 9, 2013, the Company entered into securities purchase agreements (the “SPA”) to raise a total $600,000 with five accredited investors introduced by Palladium to the Company.   Under the terms of the SPA, the purchasers subscribed for a total of 4,000,000 shares of the common stock of the Company at $0.15 per share and an equal number of warrants exercisable at $0.30 per share for a period of five years.    Under the SPA the purchasers have the option to purchase up to an equal number of shares and warrants as those purchased on the initial closing for a period of nine months from the initial closing date.  Each purchaser shall be entitled to one closing on the exercise of the subsequent closing option warrants have piggy back registration rights.   Subject to no effective registration statement registering the warrants within 180 days after the initial exercise date of the warrants, then the warrants shall have a cashless exercise provision. The warrants further have exercise limitations of 4.99% as a beneficial ownership limitation which the holder may increase or decrease upon 61 days prior notice to the Company, however, the beneficial ownership limitation shall not exceed 9.99% of the number of shares held by the holder.

Under the terms of the SPA, the purchasers that hold outstanding stock or warrants at the time of any subsequent funding have the right to participate in any subsequent financing up to 100% of the subsequent financing on the terms negotiated with any funders for a period of eighteen months from the date of the SPA.   Further, the shares of common stock issued under the SPA have a purchase price reset until the sooner of (i) the purchaser no longer holds and securities, and (ii) five years after the initial closing date whereby should the Company issue or sell any shares of common stock or any common stock equivalent at a price less than the per share purchase price(the Dilutive Financing”), then the Company shall issue additional shares of common stock to the purchasers who hold outstanding shares on the date of such Dilutive Financing for no additional consideration.  The warrants also have a warrant dilution adjustment which requires the issuance of additional warrant shares to reflect any dilutive financing undertaken by the Company whereby the holders of any outstanding warrants shall receive additional warrants based on the price of the Dilutive Financing.
 
The gross proceeds from issuance of the common stock under the SPA were allocated, at the date of the transaction, based upon the common stock and warrant’s relative fair values. The Company obtained third-party valuations to assist in quantifying the relative fair value of the debt and equity components. As a result of the fact that the warrants include a full reset dilutive feature we have treated the warrants as a derivative liability as of issuance and revalue at each quarterly period thereafter until expiry.  The fair value of the warrants was determined using a Monte Carlo Options Lattice model.
 
F-14

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 6 – FINANCING AGREEMENTS (continued)

(3)  
Securities Purchase Agreements (“SPA”) – continued

SPA #1(continued)

On March 14, 2014, the Company entered into a second financing under a Securities Purchase Agreement which is more particularly described below under SPA #2.   Pursuant to SPA #2, the Company and the five subscribers of this financing entered into a waiver and consent whereby the five subscribers executed a waiver and consent in regard to their rights under SPA #1, whereby they waived the rights to receive any additional shares of common stock under the SPA #1 agreements and the right to receive additional warrants under the SPA #1 agreements and the Company and the five investors agreed to a re-pricing of the warrants issued under SPA #1 from an exercise price of $0.30 per share to $0.0724 per share.

On March 14, 2014 through March 21, 2014, the Company received notices and executed cashless exercise from the subscribers under the SPA#1.

Allocation of proceeds arising from the SPA #1 on the inception date is as follows:

Classification
 
Allocation
 
Common Stock (par value)
   
4,000
 
Paid-in Capital (Common Stock)
   
(647,455)
 
Derivative Liabilities (Warrants)
   
1,243,455
 
Proceeds
 
$
600,000
 

The following table summarizes the number of common shares indexed to the derivative financial instruments as of June 30, 2014:
   
September 9,
2013
   
March 14
2014
   
June 30,
2014
 
4,000,000 common stock purchase agreement dated September 9, 2013
    4,280,000       17,734,807       -  

Information and significant assumptions embodied in our valuations (including ranges for certain assumptions during the subject periods that instruments were outstanding) as of the inception date is illustrated in the following tables:

 
Warrant Derivative
 
 
SPA Date
(September 9,
2013)
   
Reprising Date
(March 14, 2014)
   
Exercise Date
(March 14, 2014
~ March 21, 2014)
 
Warrants to purchase common stock:
               
  Strike price
  $ 0.30     $ 0.074     $ 0.074  
  Volatility
    110 %     120.34 %  
119.96% ~ 120.34%
 
  Term (years)
    5       4.49    
4.47 ~ 4.49
 
  Risk-free rate
    1.71 %     1.55 %  
1.55% ~ 1.75%
 
  Dividends
    -       -       -  

On June 30, 2014 as a result of the revaluation and exercises of the warrant derivatives the Company recorded a loss of $176,853 in respect of the change in the fair value of the warrant liability.
 
F-15

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 6 – FINANCING AGREEMENTS (continued)

(3)  
Securities Purchase Agreements (“SPA”) – continued

SPA #2(continued)

On March 14, 2014, the Company closed a financing with three subscribers, whom had been subscribers under SPA #1 as described above, whereby under this financing (SPA #2)  the Company raised a total $300,000 with three accredited investors introduced by Palladium to the Company.   Under the terms of the SPA #2, the purchasers subscribed for a total of 3,750,000 shares of the common stock of the Company at $0.08 per share and an equal number of warrants exercisable at $0.15 per share for a period of five years.    Under the SPA #2 the purchasers have the option to purchase up to an equal number of shares and warrants as those purchased on the initial closing for a period of nine months from the initial closing date.  Each purchaser shall be entitled to one closing on the exercise of the subsequent closing and option warrants have piggy back registration rights.   Subject to no effective registration statement registering the warrants within 180 days after the initial exercise date of the warrants, then the warrants shall have a cashless exercise provision. The warrants further have exercise limitations of 9.99% as a beneficial ownership limitation which the holder may increase or decrease upon 61 days prior notice to the Company, however, the beneficial ownership limitation shall not exceed 9.99% of the number of shares held by the holder.

Under the terms of the SPA, the purchasers that hold outstanding stock or warrants  at the time of any subsequent funding have the right to participate in any subsequent financing up to 100% of the subsequent financing on the terms negotiated with any funders for a period of eighteen months from the date of the SPA,   Further, the  shares of common stock issued under the SPA have a purchase price reset until the sooner of (i) the purchaser no longer holds and securities, and (ii) five years after the initial closing date whereby should the Company issue or sell any shares of common stock or any common stock equivalent at a price less than the per share purchase price (the Dilutive Financing”), then the Company shall issue additional shares of common stock to the purchasers who hold outstanding shares on the date of such Dilutive Financing for no additional consideration.  The warrants also have a warrant dilution adjustment which requires the issuance of additional warrant shares to reflect any dilutive financing undertaken by the Company whereby the holders of any outstanding warrants shall receive additional warrants based on the price of the Dilutive Financing.

Allocation of proceeds arising from the SPA #2 on the inception date is as follows:

Classification
 
Allocation
 
Common Stock (par value)
   
3,750
 
Paid-in Capital (Common Stock)
   
(266,511)
 
Derivative Liabilities (Warrants)
   
562,761
 
Proceeds
 
$
300,000
 

The following table summarizes the number of common shares indexed to the derivative financial instruments as of June 30, 2014:

   
March 14,
2014
   
June 30,
2014
 
3,7500,000 common stock purchase agreement dated March 14, 2014
    3,750,000       3,750,000  
 
 
F-16

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 6 – FINANCING AGREEMENTS (continued)

Information and significant assumptions embodied in our valuations (including ranges for certain assumptions during the subject periods that instruments were outstanding) as of March 31, 2014 and March 14, 2014 are illustrated in the following tables:
 
Warrant Derivative
 
 
SPA Date
(March 14,
2014)
   
Revaluation Date
(June 30,
2014)
 
Warrants to purchase common stock:
         
  Strike price
  $ 0.15     $ 0.15  
  Volatility
    120.34 %     121.01 %
  Term (years)
    5       4.70  
  Risk-free rate
    1.55 %     1.62 %
  Dividends
    -       -  

On June 30, 2014 as a result of the revaluation of the warrant derivatives the Company recorded a gain of $7,932 in respect of the change in the fair value of the warrant liability.

NOTE 7 – COMMITMENTS

(1)  
Investor Relations , Marketing Contracts and Consulting Agreements
 
(i)
Rosevale Capital S.A.

On April 21, 2013, effective as of April 15, 2013, American Graphite Technologies Inc. entered into an agreement with Rosevale Capital S.A. (“Rosevale”)  whereby the Company has engaged Rosevale to provide investor relations and marketing services for the Company (the “Agreement”). The Agreement was for a term of six (6) months, up to and including the close of business on October 14, 2013.

In consideration of services to be rendered under the agreement the Company was obligated to:
 
 
a)
pay to Rosevale a fee in the amount of Two Thousand Five Hundred Dollars  (USD$ 2,500) per month;
 
 
b)
upon signing of the Agreement,  pay Rosevale for the first three months of service in advance or $7,500;
 
 
c)
reimburse Rosevale for all expenses and disbursements, including all reasonable travel expenses incurred by Rosevale in connection with the performance of Rosevale's duties which amount is not to exceed one thousand USD ($1,000USD) per any one matter.
 
The Company paid $7,500 for the first three months of services during the fiscal year ended June 30, 2013.

During the three month period ended September 30, 2013, the Company paid $7,500 for the second three months of services.  The contract was paid in full as of September 30, 2013.

(ii)
Investor Relations Contract

On September 12, 2013 the Company entered into an agreement with an Investor Relations consulting firm whereby in consideration for management consulting, business advisory, shareholder information and public relations services, the Company agreed to pay $40,000 and issue 250,000 shares of restricted common stock. The $40,000 was paid in cash during the period ended September 30, 2013. During the period ended September 30, 2013 we issued 250,000 shares of our common stock valued at $0.168 per share, totaling $42,000, the fair market value of the shares on the date of issuance has been expensed as stock based compensation.
 
F-17

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 7 – COMMITMENTS (continued)

(1)  
Investor Relations , Marketing Contracts and Consulting Agreements (continued)

(iii)
Verge Consulting, LLC

On March 14, 2014, the Company entered into a consulting agreement with Verge Consulting, LLC. (“Verge”) whereby Verge will provide the Company with services to include a  public relations campaign for interviews and multi-media material, research reports, press releases, social media campaign, newsletter writers, and other information as determined by the Company and Verge.   The agreement is for a term of three months.    The Company issued to Verge a total of 312,500 shares of common stock at $0.145 per, totaling $45,313, the fair market value of the shares on the date of agreement has been expensed as stock based compensation, as payment under the agreement.

 (2)
Agency Agreements

(i)
Carter Terry

On May 20, 2013, American Graphite Technologies Inc. entered into an agency agreement with Carter Terry & Company (“CT”) whereby the Company engaged CT to act as a non-exclusive financial advisor investment bank and placement agent on a “best efforts” basis for a period of twelve months, with an option to extend for an additional six months. CT is to assist the Company in one or more capital raises which might result in a private placement, merger, acquisition, sale of assets, sale of common stock, sale of ownership interest or any other financial transaction. The Company is seeking to raise additional investment capital to fund its current projects.

In consideration of CT entering into the agreement, the Company is required to:

a)
pay to CT a fee by way of 75,000 restricted shares of the common stock of the Company;

b)
pay a success fee by way of cash consideration of 10% of the amount for any capital raised other than an equity line and 4% cash consideration for an equity line or equity enhanced program and pay an amount of restricted shares equal to 10,000 shares per $100,000 of capital raise for a period of two years. The shares will have piggy back registration rights.

The Company shall also be responsible for the payment of any expenses related to the entry into and drafting of any documents as required, subject to prior approval on any expenditures exceeding $2,500.

During the fiscal year ended June 30, 2013, we issued 75,000 shares of our common stock valued at $0.59 per, totaling $44,250, which was the fair market value of the shares on the date of issuance and has been expensed as stock based compensation.

(ii)
Palladium Capital Advisors, LLC

On August 12, 2013, the Company entered into a Placement Agent Agreement with Palladium Capital Advisors, LLC (“Palladium”) whereby Palladium agreed to act as the Company’s non-exclusive agent in a private placement or similar unregistered transaction of equity or equity-linked securities of the Company.   The Agreement is for a period of twelve months from the date of execution.   The Company shall pay to Palladium, upon the closing of each transaction with investors, (i) seven  percent (7%) of the aggregate consideration raised in each closing in cash; (ii) three percent (3%) of the aggregate consideration in shares of the Company’s common stock, calculated based upon the price of the common stock as offered in each transaction; and (iii) warrants to purchase seven (7%) of the Company’s common stock at each closing, identical to any warrants issued to investors.  The foregoing fees are payable for any sale of securities during the twelve month term or within twenty-four months thereafter with respect to investors identified by Palladium.  The Company is further required to pay expenses incurred by Palladium, including the fees and expenses of its legal counsel and any advisor retained by Palladium.  Fees and expenses in excess of $15,000 require prior written authorization from the Company.
 
F-18

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 7 – COMMITMENTS (continued)

(2)
Agency Agreements (continued)
 
(ii)
Palladium Capital Advisors, LLC
 
On September 9, 2013, the Company closed a financing with five subscribers (ref note 6(3)) and paid to Palladium cash consideration of $42,000, share consideration by way of the issuance of 120,000 shares of common stock of the Company and issued a total of 280,000 stock purchase warrants, each warrant exercisable at $0.30 per share for a period of five years from the date of issuance. On March 14, 2014, the exercise price of the warrants was reduced to $0.0724 per share.

On March 14, 2014, the Company closed a financing with three subscribers (ref note 6(3) and paid to Palladium Capital Advisers, LLC (“Palladium”), cash consideration of $21,000, share consideration by way of the issuance of 112,500 shares of common stock of the Company and the issuance of a total of 262,500 stock purchase warrants, each warrant exercisable at $0.15 per share for a period of five years from the date of issuance.

NOTE 8 – CAPITAL STOCK
 
On July 18, 2012, in accordance with approval from the Financial Industry Regulatory Authority (“FINRA”), we increased our authorized capital from 75,000,000 to 200,000,000 shares of common stock, par value of $0.001. In addition, our issued and outstanding shares of common stock increased from 619,500 to 77,437,500 shares of common stock, par value of $0.001 on the basis of a 125:1 forward split of our issued and outstanding shares of common stock. All references to shares and per share information in the financial statements and related notes have been adjusted to reflect the stock split on a retroactive basis.

On June 11, 2012, a director of the Company returned a total of 1,455,000,000 shares for cancellation. Due to the fact that the shares under this agreement have been cancelled for no consideration to reduce the number of shares outstanding, the Company considered the change in capital structure from the cancellation a reverse stock split. In accordance with SAB Topic 4.c, the Company recorded the cancellation retroactively.
 
On September 5, 2012, we issued 781,250 shares of our common stock at a price of $0.64 per share, pursuant to the closing of a private placement, for gross proceeds of $500,000. The private placement was undertaken pursuant to a financing agreement that we entered into on August 29, 2012 (see now note 6(1) above).
 
On May 3, 2013, we issued 65,736 shares of our common stock at a price of $0.76062 per share, pursuant to the closing of a private placement, for gross proceeds of $50,000. The private placement was undertaken pursuant to a financing agreement that we entered into on August 29, 2012 (see Note 6 (1) above).
 
On May 9th and May 20th, 2013 respectively, we entered into  two Private Placement Agreements, one with a   U.S. investor and one with a  non-US investor pursuant to which, the investors have funded a total of $85,000 by way of private placement units subscription agreements for a total of 188,888 units of the common stock of the Company at a price of $0.45 per unit, each unit consisting of one share and one share purchase warrant entitling the subscribers to purchase one additional share of common stock at $0.75 per share within one year from the original date of the  private placement.   
 
On May 20, 2013, we issued 75,000 shares of our common stock valued at $0.59 per share, totaling $44,250, the fair market value of the shares on the date of issuance, pursuant to the agency agreement (see Note 7(2)(i) above).

On July 11, 2013 we issued total of 188,888 units at a price of $0.45 per unit in connection with the private placements accepted on May 9 and May 20th 2013.
 
On September 9, 2013, the Company issued a total of 4,000,000 shares of the common stock of the Company at $0.15 per share and an equal number of warrants exercisable at $0.30 per share for a period of five years for gross proceeds of $600,000.   On March 14, 2014, the exercise price of the warrants was reduced to $0.0724 per share.  (see Note 6(3) above)
 
F-19

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 8 – CAPITAL STOCK (continued)

On September 12, 2013, the Company issued a total of 120,000 shares of the common stock of the Company at par value and an equal number of warrants exercisable at $0.30 per share for a period of five years under the placement agent agreement. On March 14, 2014, the exercise price of the warrants was reduced to $0.0724 per share.  (see Note 7(2)(ii) above).

On September 16, 2013 the Company issued 250,000 shares of restricted common stock valued at $0.168 per share, totaling $42,000, the fair market value of the shares on the date of issuance, pursuant to the Investor Relations agreement (see Note 7(1)(ii) above).  

On March 14, 2014, the Company issued a total of 3,750,000 shares of the common stock of the company at $0.08 per share and an equal number of warrants exercisable at $0.15 per share for a period of five years for gross proceeds of $300,000.  (see Note 6(3) above)

On March 14, 2014, the Company issued a total of 112,500 shares of the common stock of the Company at par value and an equal number of warrants exercisable at $0.15 per share for a period of five years under the placement agent agreement. See Note 7(2)(ii) above).

On March 14, 2014, the Company issued a total of 312,500 restricted shares of common stock to Verge as required under the consulting agreement. See Note 7(1)(iii) above).
 
During March 14, 2014 through March 21, 2014, the Company issued a total of 8,989,974 shares of common stock for cashless exercise warrants under share purchase agreement dated September 9, 2013.

As of June 30, 2014, 96,083,348 shares of common stock were issued and outstanding.

NOTE 9 – STOCK OPTIONS

On July 30, 2012, the Company entered into two 12-month Consulting Services and Finder’s Fee Agreements (the “Consulting Agreements”) with third parties. The Consulting Agreements require the consultants to provide to the Company, customized problem and opportunity research, new business or services development, strategy development and refinements, acquisition assistance, marketing and investor relation services and the Company is required to grant to each of the consultants a total of 150,000 stock options vesting immediately and exercisable at $0.25 per share.  The Company granted 300,000 stock options which have vested.   The stock options expired on September 30, 2013 which was 60 days after the termination of the Consulting Agreements.
 
The following table summarizes information concerning stock options as of June 30, 2014:
 
 
June 30, 2014
 
June 30, 2013
   
Shares
 
Weighted Average Exercise Price
$
 
Shares
 
Weighted Average Exercise Price
$
Outstanding at beginning of the year
   
300,000
 
0.25
   
-
 
-
Granted
   
-
 
-
   
300,000
 
0.25
Exercised
   
-
 
-
   
-
 
-
Expired or cancelled
   
(300,000)
 
(0.25)
   
-
 
-
Outstanding at end of period
   
-
 
-
   
300,000
 
0.25

The Company recognized stock-based compensation of $187,200 in the fiscal year ended June 30, 2013.
 
F-20

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements
 
NOTE 9 – STOCK OPTIONS (continued)

Valuation Assumptions

The Company accounts for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards using the Black-Scholes option pricing model. The fair value of stock options under the Black-Scholes model requires management to make assumptions regarding projected employee stock option exercise behaviors, risk-free interest rates, volatility of the Company’s stock price and expected dividends.

Stock compensation expense for stock options is recognized over the vesting period of the award or expensed immediately under ASC 718 and EITF 96-18 when options are given for service without further recourse. The Company issued stock options to contractors to provide services to the Company during the fiscal year. However, the stock options have already been granted to the service providers and there is no claw back provision in the options if services are not performed.  Under ASC 718 and EITF 96-18 these options were recognized as expense in the period issued because they were given as a form of compensation for services to be rendered with no recourse.

The following table presents the range of the weighted average fair value of options granted and the related assumptions used in the Black-Scholes model for stock option grants made during the fiscal year ended June 30, 2013: 

   
Options Granted
   
July 30, 2012
Fair value of options granted
 
$
0.85
 
Assumptions used:
       
Expected life (years) (a)
   
1.00
 
Risk free interest rate (b)
   
0.18
%
Volatility (c)
   
111
%
Dividend yield (d)
   
0.00
%
 
 
a)
Expected life: The expected term of options granted is determined using the “shortcut” method allowed by SAB No.107. Under this approach, the expected term is presumed to be the mid-point between the vesting date and the end of the contractual term.
     
 
b)
Risk-free interest rate: The rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected life of the options.
 
 
c)
Volatility: The expected volatility of the Company’s common stock is calculated by using the historical daily volatility of the Company’s stock price calculated over a period of time representative of the expected life of the options.
     
 
d)
Dividend yield: The dividend yield rate is not considered in the model, as the Company has not established a dividend policy for the stock.
 
 
F-21

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 10 – SHARE PURCHASE WARRANTS

On May 9th and May 20th, 2013 respectively, we entered into two Private Placement Agreements,   one with a U.S. investor and  one with a  non-US investor pursuant to which, the investors have funded a total of $85,000 by way of a private placement units subscription agreement for a total of 188,888 units of the common stock of the Company at a price of $0.45 per unit, each unit consisting of one share and one share purchase warrant entitling the subscriber to purchase one additional share of common stock at $0.75 per share within one year from the original date of the  private placement.   

On September 9, 2013, the Company entered into securities purchase agreements (the “SPA”) to raise a total $600,000 with five accredited investors introduced by Palladium to the Company.   Under the terms of the SPA, the purchasers subscribed for a total of 4,000,000 shares of the common stock of the Company at $0.15 per share and an equal number of warrants exercisable at $0.30 per share for a period of five years.  On March 14, 2014, the warrants were re-priced at $0.0724 per share.  (see note 6(3) above).

On September 12, 2013, the Company issued total of 120,000 shares of the common stock of the Company at par value and an equal number of warrants exercisable at $0.30 per share for a period of five years under the placement agent agreement. On March 14, 2014, the warrants were re-priced at $0.0724 per share. (see Note 7(2)(ii))above).

On March 14, 2014, the Company entered into securities purchase agreements (the “SPA #2”) to raise a total $300,000 with three accredited investors introduced by Palladium to the Company.   Under the terms of the SPA, the purchasers subscribed for a total of 3,750,000 shares of the common stock of the Company at $0.08 per share and an equal number of warrants exercisable at $0.15 per share for a period of five years.  (see note 6(3) above).

On March 14, 2014, the Company issued total of 262,500 warrants exercisable at $0.15 per share for a period of five years under the placement agent agreement. see Note 7(2)(ii))above).

On March 14, 2014 through March 21, 2014 the Company received notices and executed cashless exercise warrants from the subscribers under the SPA#1.

As at June 30, 2014, the Company had the following warrants outstanding:
Exercise
Price
Expiry
Date
Weighted Average Remaining Contractual Life (Years)
Outstanding
at
June 30, 2013
Issued
Exercised
Waived
Expired
 
Outstanding
at
June 30, 2014
$ 0.75
May 9, 2014
0.10
88,888
-
-
 
88,888
-
$ 0.75
May 20, 2014
0.14
100,000
-
-
 
100,000
-
$ 0.0724
September 4, 2018
-
-
16,574,586
8,401,960
8,172,626
-
-
$ 0.0724
September 12, 2018
-
-
1,160,221
588,014
572,207
-
-
$0.15
March 14, 2019
4.95
-
4,012,500
-
 
-
4,012,500
     
188,888
21,747,307
8,989,974
8,744,833
188,888
4,012,500
 
 
F-22

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 11 – SHORT TERM LOAN

On June 20, 2012, the Company received funds from a third party in the amount of $40,000.

During the fiscal year ended June 30, 2013, the Company repaid in full in the amount of $40,876, which included the principal amount of $40,000 and accrued interest of $876, based on 10% per annum as agreed to between the Company and the lender.

NOTE 12 – RELATED PARTY TRANSACTIONS

On May 1, 2012, the Company entered into a consulting agreement with Rick Walchuk, a director of the Company, for management services. The consulting agreement became effective as of May 1, 2012 and shall continue to May 1, 2015. Under the consulting agreement, the Company shall pay $2,500 a month for the first six months, $5,000 a month for the next six months and $7,500 for the balance of the agreement payable on the 1st of each month. During the fiscal year ended June 30, 2014 and June 30, 2013, Mr. Walchuk invoiced the company for the services in the amount of $90,000 and $55,000, respectively. As at June 30, 2014, no amounts are owing to Mr. Walchuk.
 
On December 13, 2013, the Board of Directors of the Company appointed Con Evan Anast to the Board of Directors of the Company.

On December 15, 2013, the Company entered into a consulting agreement with Mr. Anast for the provision of services to the Company as Secretary and management consultant.  Under the terms of the consulting agreement, Mr. Anast has agreed to provide a minimum of 40 hours per month to the Company’s business operations.   The contract is for a term of three years commencing on December 15, 2013 for a monthly consulting fee of $5,000 per month, of which a total of $2,000 is payable and $3,000 per month is to be accrued monthly. Effective May 1, 2014 it was agreed that Mr. Anast would be paid $3,000 per month and $2,000 would be accrued as a result of increased hours required to be devoted to corporate efforts. During the fiscal year ended June 30, 2014, Mr. Anast invoiced the company for the services in the amount of $32,900, of which a total of $9,160 was paid in full as of June 30, 2014 and $23,740 is accrued.

NOTE 13 – PROVISION FOR INCOME TAXES

Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. 
 
Operating loss carry-forwards generated during the period from June 1, 2010 (date of inception) through June 30, 2014 of approximately $810,545, will begin to expire in 2030.   The Company applies a statutory income tax rate of 35%.

Accordingly, deferred tax assets related to net operating loss carry-forwards total approximately $283,690 at June 30, 2014. For the nine month periods ended June 30, 2014 and 2013, the valuation allowance increased by approximately $140,053 and $156,827, respectively. 
 
The Company has no tax positions at June 30, 2014, or June 30, 2013, for which the ultimate deductibility is highly uncertain but for which there is uncertainty about the timing of such deductibility.   The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company had no accruals for interest and penalties since inception. 
 
The tax returns for the years from July 1, 2010 to June 30, 2013 are subject to examination by the Internal Revenue Service.
 
F-23

 
AMERICAN GRAPHITE TECHNOLOGIES INC.
Notes to the Financial Statements

NOTE 14 – OTHER EVENTS

On April 28, 2014, Rick Walchuk, a director of our company was arrested in Palaio Faliro, Greece under an international arrest warrant issued in connection with claims asserted against Mr. Walchuk by the United States District Court for the Eastern District of Pennsylvania, in regards to an unaffiliated company.  Mr. Walchuk has not been found guilty of any claim asserted against him and denies any allegations against him. Mr. Walchuk intends to vigorously defend all claims asserted against him and presently remains in custody in the State of Pennsylvania awaiting the commencement of hearings set for October 20, 2014.
 
NOTE 15 – SUBSEQUENT EVENTS

On October 8, 2014, Rick Walchuk resigned from all officer positions and remains as a director of the Company.  Concurrently, the Company appointed Con Evan Anast as its President, Chief Executive Officer, Chief Financial Officer and Treasurer.

CTI has provided the Company with a notice claiming that additional payments are due under the terms of the agreement with them.  The Company has responded advising that all payments required pursuant to the terms of the agreement have been paid in full.

The Company has evaluated subsequent events from the balance sheet date through the date that the financial statements were issued and determined that there were no subsequent events to disclose.
 
F-24

 
 
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
On January 10, 2013, we notified De Joya Griffith, LLC of their termination as our company’s independent registered public accounting firm.
 
The reports of De Joya on our company’s financial statements as of and for the fiscal year ended June 30, 2012 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle except to indicate that there was substantial doubt about our company’s ability to continue as a going concern.
 
Our company’s board of directors participated in and approved the decision to change independent registered public accounting firms.
 
Through the interim periods (subsequent to our year ended June 30, 2012) to January 10, 2013 (the date of change in accountants), there have been no disagreements with De Joya on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of De Joya, would have caused them to make reference to the subject matter of the disagreements in connection with their report on the financial statements for such years.
 
On January 10, 2013, our company engaged Borgers & Cutler CPA’s PLLC as our independent registered public accounting firm.  During the two previous fiscal years and through January 10, 2013, our company had not consulted with Borgers & Cutler regarding (1) the application of accounting principles to a specific transaction, either completed or proposed; (2) the type of audit opinion that might be rendered on our company’s financial statements, and none of the following was provided to our company:  (a) a written report, or (b) oral advice was provided that Borgers & Cutler concluded was an important factor considered by our company in reaching a decision as to accounting, auditing or financial reporting issue; or (3) any matter that was subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K.
 
On March 15, 2013, Borgers & Cutler provided notice that they were ceasing their services as our company’s independent registered public accounting firm due to dissolution of Borgers & Cutler.
 
The reports of Borgers & Cutler on our company’s financial statements as of and for the fiscal year ended June 30, 2012 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle except to indicate that there was substantial doubt about our company’s ability to continue as a going concern.
 
Our company’s board of directors participated in and approved the decision to change independent registered public accounting firms.
 
Through the interim periods (subsequent to our year ended June 30, 2012) to March 15, 2013 (the date of change in accountants), there have been no disagreements with Borgers & Cutler on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of De Joya, would have caused them to make reference to the subject matter of the disagreements in connection with their report on the financial statements for such years.
 
On March 15, 2013, our company engaged BF Borgers CPA PC as our independent registered public accounting firm.  During the two previous fiscal years and through March 15, 2013, our company had not consulted with BF Borgers regarding (1) the application of accounting principles to a specific transaction, either completed or proposed; (2) the type of audit opinion that might be rendered on our company’s financial statements, and none of the following was provided to our company:  (a) a written report, or (b) oral advice was provided that BF Borgers concluded was an important factor considered by our company in reaching a decision as to accounting, auditing or financial reporting issue; or (3) any matter that was subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K.
 
37

 
ITEM 9A.                      CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures
 
Our management, under supervision and with the participation of our company’s acting president and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), evaluated the effectiveness of our disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e).  Based upon this evaluation, our acting president and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) concluded that, as of June 30, 2014, because of the material weakness in our internal control over financial reporting (“ICFR”) described below, our disclosure controls and procedures were not effective.
 
Disclosure controls and procedures are controls and other procedures that are designed to ensure that required information to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that required information to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
 
Management’s Report on Internal Control over Financial Reporting
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and 14d-14(f).  Our 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 generally accepted accounting principles.
 
All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation and presentation.  In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.
 
Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2014.  In making the assessment, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.   Based on its assessment, management concluded that, as of June 30, 2014, our internal control over financial reporting was not effective and that material weaknesses in ICFR existed as more fully described below.
 
As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements” established by the Public Company Accounting Oversight Board (“PCAOB”), a material weakness is a deficiency or combination of deficiencies that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected.  In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of June 30, 2014:
 
 
1)
Lack of an independent audit committee or audit committee financial expert, and no independent directors.  We do not have any members of our board who are independent directors and we do not have an audit committee.  These factors may be counter to corporate governance practices as defined by the various stock exchanges and may lead to less supervision over management;
 
 
2)
Inadequate staffing and supervision within our bookkeeping operations.  We have one consultant involved in bookkeeping functions, who provides two staff members.  The relatively small number of people who are responsible for bookkeeping functions and the fact that they are from the same firm of consultants prevents us from segregating duties within our internal control system.  The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. This may result in a failure to detect errors in spreadsheets, calculations or assumptions used to compile the financial statements and related disclosures as filed with the SEC;
 
 
38

 
 
 
3)
Outsourcing of our accounting operations.  Because there are no employees in our administration, we have outsourced all of our accounting functions to an independent firm.  The employees of this firm are managed by supervisors within the firm and are not answerable to our company’s management.  This is a material weakness because it could result in a disjunction between the accounting policies adopted by our board of directors and the accounting practices applied by the independent firm;
 
 
4)
Insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements;
 
 
5)
Ineffective controls over period end financial disclosure and reporting processes.
 
Management's Remediation Initiatives
 
As of June 30, 2014, management assessed the effectiveness of our internal control over financial reporting.  Based on that evaluation, it was concluded that during the period covered by this report, the internal controls and procedures were not effective due to deficiencies that existed in the design or operation of our internal controls over financial reporting.  However, management believes these weaknesses did not have an effect on our financial results.  During the course of their evaluation, we did not discover any fraud involving management or any other personnel who play a significant role in our disclosure controls and procedures or internal controls over financial reporting.
 
Due to a lack of financial and personnel resources, we are not able to, and do not intend to, immediately take any action to remediate these material weaknesses.  We will not be able to do so until, if ever, we acquire sufficient financing and staff to do so.  We will implement further controls as circumstances, cash flow, and working capital permits.  Notwithstanding the assessment that our internal controls over financial reporting was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Annual Report on Form 10-K for the period ended June 30, 2014, fairly presents our financial position, results of operations, and cash flows for the periods covered, as identified, in all material respects.
 
Management believes that the material weaknesses set forth above were the result of the scale of our operations and intrinsic to our small size.  Management also believes that these weaknesses did not have an effect on our financial results.
 
We are committed to improving our financial organization.   As part of this commitment, we will, as soon as funds are available to our company (1) appoint outside directors to our board of directors sufficient to form an audit committee and who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; (2) create a position to segregate duties consistent with control objectives and to increase our personnel resources.  We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary, and as funds allow.
 
This Annual Report does not include an attestation report of our company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by our company’s registered public accounting firm pursuant to  the rules of the Securities and Exchange Commission that permit our company to provide only management’s report in this annual report.
 
Changes in Internal Control over Financial Reporting
 
During the period covered by this report, there were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
ITEM 9B.                      OTHER INFORMATION
 
 On October 8, 2014, Rick Walchuk resigned from as our president, chief executive officer, chief financial officer and treasurer and remains as a director of our company.  Concurrently, we appointed Con Evan Anast as our president, chief executive officer, chief financial officer and treasurer. Mr. Anast also acts as secretary and director of our company.
 
39

 
PART III
 
ITEM 10.                      DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
Executive Officer and Directors
 
 Our directors will serve in that capacity until our next annual shareholder meeting or until their successors are elected and qualified. Officers hold their positions at the will of our board of directors. There are no arrangements, agreements or understandings between non-management security holders and management under which non-management security holders may directly or indirectly participate in or influence the management of our affairs.
 
Name
Age
Position
Date of Appointment
Rick Walchuk
57
Director
May 23, 2012
Con Evan Anast
50
Director, Chief Executive Officer, President, Chief Financial Officer, Treasurer and Secretary
December 13, 2013
 
Rick Walchuk, Director
 
Mr. Rick Walchuk was appointed as our president, chief executive officer, chief financial officer, secretary, treasurer and director of our company on May 23, 2012.  Mr. Walchuk resigned as secretary of our company on December 13, 2013 and as president, chief executive officer, chief financial officer and treasurer on October 8, 2014. Mr. Rick Walchuk, attended the University of Saskatchewan, College of Commerce, Saskatoon Campus. From 1980 until March 2004 Mr. Walchuk was employed as a financial advisor in Alberta, Canada. In April 2004 Mr. Walchuk was appointed as the chief executive officer of a start-up biotech company in Athens, Greece, a position he held until July 2004. Mr. Walchuk then served as a consultant to various public companies until December 2006, when he joined Bruca Trading Ltd., a private consulting company in Athens, Greece. Since March 14, 2007, Mr. Walchuk has acted as a director and officer of Viosolar Inc., a company engaged in the construction, management and operation of solar parks in Greece and throughout other South and South Eastern European Union countries. Mr. Walchuk was chosen to be our director due to his extensive background in venture capital, investor relations and corporate governance.
 
There have been no transactions between our company and Mr. Walchuk since our company’s last fiscal year other than those which are reported herein.
 
Until August 27, 2013, Mr. Walchuk acted as a director, president, chief executive officer, chief financial officer, principal accounting officer, treasurer and director of New America Energy Corp.  New America Energy Corp. has a class of securities registered under Section 12 of the Exchange Act.
 
Until April 16, 2014, Mr. Walchuk acted as a director and officer Viosolar Inc.  Viosolar published the notice, required by Exchange Act Rule 12h-6(h), disclosing its intention to terminate its duty to file reports under section 13(a) and section 15(d) of the Exchange Act, by means of a Form 6-K filed on April 17, 2014.
 
Con Evan Anast, President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director
 
Mr. Con Evan Anast was appointed as secretary and director of our company on December 13, 2013 and as president, chief executive officer, chief financial officer and treasurer on October 8, 2014.  Mr. Anast holds an MBA in Managerial Finance with special emphasis on asset allocation and risk management which he received from Alexandria University in California in 1988.    He received a Bachelor of Science in Economics from Alexandria University in 1984.  He is a certified mutual fund advisor from HSBC, Scottish Amicable (Prudential) Agrotiki Asfalistiki and is also certified by K.E.K. (Athens) as a licensed financial advisor.
 
40

 
From April 1999 to present he has worked both full time and part time as a financial advisor with T.S. Global Enterprises Ltd. From February 2004 to 2008, he also worked with Dunhill Scott Inc. selling F.X. Services and was director of sales and global marketing covering asset allocation, venture capital and project financing.    He has also held jobs with Duncan and Pratt, which was a subsidiary off of Merrill Lynch in New York on the trading desk, trading stocks, foreign exchange and precious metals.   He then work for Prudential, Commercial Union, Scottish Amicable from February 1992 to 2003, in wealth management and asset allocation specializing in life policies and mutual funds.  From 1997 to 2006, he was a minority stockholder of NRG Equity S.A., a small brokerage firm trading stocks on the Athens Stock Exchange.  From August 2000 to 2004, he was a financial advisor selling mutual funds for HSBC, Commercial Union, Alpha Trust and Hambros Hellenic.  Our company believes that Mr. Anast is a welcome addition to our board of directors to help our company with going forward for planning on our current projects both financially and corporately.
 
Mr. Anast is not an officer and director of any other reporting issuers.
 
Other Directorships
 
Other than as disclosed above, during the last 5 years, none of our directors held any other directorships in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.
 
Board of Directors and Director Nominees
 
Since our board of directors has no independent directors, the decisions of the board regarding director nominees are made by persons who have an interest in the outcome of the determination. Our board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted. Unless otherwise determined, at any time not less than 90 days prior to the next annual board meeting at which a slate of director nominees is adopted, our board will accept written submissions from proposed nominees that include the name, address and telephone number of the proposed nominee; a brief statement of the nominee’s qualifications to serve as a director; and a statement as to why the security holder submitting the proposed nominee believes that the nomination would be in the best interests of our security holders. If the proposed nominee is not the same person as the security holder submitting the name of the nominee, a letter from the nominee agreeing to the submission of his or her name for consideration should be provided at the time of submission. The letter should be accompanied by a résumé supporting the nominee's qualifications to serve on our board, as well as a list of references.
 
Our board identifies director nominees through a combination of referrals from different people, including management, existing board members and security holders. Once a candidate has been identified, our board reviews the individual's experience and background and may discuss the proposed nominee with the source of the recommendation. If our board believes it to be appropriate, board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of the slate of director nominees submitted to security holders for election to our board.
 
Conflicts of Interest
 
Our directors are not obligated to commit their full time and attention to our business and, accordingly, they may encounter a conflict of interest in allocating their time between our operations and those of other businesses. In the course of their other business activities, they may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which they owe a fiduciary duty. As a result, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. They may also in the future become affiliated with entities that are engaged in business activities similar to those we intend to conduct.
 
In general, officers and directors of a corporation are required to present business opportunities to the corporation if:
 
 
·
the corporation could financially undertake the opportunity;
 
 
·
the opportunity is within the corporation’s line of business; and
 
 
·
it would be unfair to the corporation and its stockholders not to bring the opportunity to the attention of the corporation.
 
 
41

 
 
 
We have adopted a code of ethics that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent.
 
Significant Employees
 
Other than as described above, we do not expect any other individuals to make a significant contribution to our business.
 
Legal Proceedings
 
On April 28, 2014, Rick Walchuk, a director of our company, was arrested in Palaio Faliro, Greece under an international arrest warrant issued in connection with claims asserted against Mr. Walchuk by the United States District Court for the Eastern District of Pennsylvania, in regards to an unaffiliated company.  Mr. Walchuk has not been found guilty of any claim asserted against him and denies any allegations against him. Mr. Walchuk intends to vigorously defend all claims asserted against him and presently remains in custody in the State of Pennsylvania awaiting the commencement of hearings set for October 20, 2014.
 
To the best of our knowledge, none of our directors or executive officers has, during the past ten years:
 
 
·
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
 
 
·
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
 
 
·
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
 
 
·
been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
 
 
·
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
 
 
·
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
 
Except as set forth in our discussion below in “Certain Relationships and Related Transactions, and Director Independence – Transactions with Related Persons,” none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.
 
42

 
Audit Committee and Charter
 
 We do not currently have an audit committee or a committee performing similar functions. The board of directors as a whole participates in the review of financial statements and disclosure.
 
Our board of directors has determined that it does not have a member of its audit committee that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K, and is “independent” as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.
 
We believe that the members of our board of directors are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date. In addition, we currently do not have nominating, compensation or audit committees or committees performing similar functions nor do we have a written nominating, compensation or audit committee charter. Our sole director does not believe that it is necessary to have such committees because believes the functions of such committees can be adequately performed by the sole member of our board of directors.
 
Code of Ethics
 
We have not yet adopted a corporate code of ethics. When we do adopt a code of ethics, we will announce it via the filing of a current report on form 8-K.
 
Family Relationships
 
There are no family relationships among our officers, directors, or persons nominated for such positions.
 
Section 16(a) Beneficial Ownership Reporting Compliance
 
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers, and stockholders holding more than 10% of our outstanding common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in beneficial ownership of our common stock.  Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.
 
Based on a review of Forms 3, 4, and 5 and amendments thereto furnished to the registrant during its most recent fiscal year ending June 30, 2014, the following represents each person who did not file on a timely basis reports required by Section 16(a) of the Exchange Act:
 
Name
Number of Late Reports
Number of Transactions
Not
Reported on a Timely
Basis
Failure to File
Requested Forms
Rick Walchuk(1)
2
5
Nil
Con Evan Anast(2)
1
1
Nil
 
 
(1)
The named officer, director or greater than 10% stockholder, as applicable, filed a late Form 4 – Statement of Changes of Beneficial Ownership of Securities.
 
 
(2)
The named officer, director or greater than 10% stockholder, as applicable, filed a late Form 3 – Initial Statement of Changes of Beneficial Ownership of Securities.
 
 
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EXECUTIVE COMPENSATION
 
The particulars of the compensation paid to the following persons:
 
 
(a)
our principal executive officer;
 
 
(b)
each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended June 30, 2014 and 2013; and
 
 
(c)
up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended June 30, 2014 and 2013,
 
who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:
 
SUMMARY COMPENSATION TABLE
Name and Principal Position
Fiscal Year Ended June 30,
Salary
($)
Bonus
($)
Stock Awards
($)
Option Awards
($)
Non-Equity Incentive Plan Compensation
($)
Change in Pension Value and Nonqualified Deferred Compensation Earnings
($)
All Other Compensation
($)
Total
($)
Rick Walchuk(1)
Director
2014
2013
90,000
55,000
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
90,000
55,000
Con Evan Anast(2)
President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director
2014
2013
32,900
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
32,900
-0-

 
(1)
Mr. Walchuk acted as our president, chief executive officer, chief financial officer, treasurer, secretary and director since May 23, 2012.  Mr. Walchuk resigned as secretary of our company on December 13, 2013 and as our president, chief executive officer, chief financial officer and treasurer on October 8, 2014.
 
(2)
Mr. Anast has been our secretary and director since December 13, 2013 and was appointed as our president, chief executive officer, chief financial officer and treasurer on October 8, 2014.  Of the amount reported a total of $9,160 has been paid and a total of $23,740 has been accrued.
 
Outstanding Equity Awards at Fiscal Year-End
 
No equity awards were outstanding as of the year ended June 30, 2014.
 
Option Grants and Exercises
 
During our fiscal year ended June 30, 2014 there were no options exercised by our named officers.
 
Employment Agreements
 
Our company has a three year consulting agreement with our director, Rick Walchuk, ending on May 1, 2015, whereby Mr. Walchuk receives a fee of $2,500 per month for the first six months, $5,000 a month for the next six months and $7,500 per month for the balance of the agreement for services to be rendered by the consultant.
 
On December 15, 2013, we entered into a consulting agreement with Mr. Anast for the provision of services to our company as secretary and management consultant.  Under the terms of the consulting agreement, Mr. Anast has agreed to provide a minimum of 40 hours per month to our company’s business operations.  The contract is for a term of three years commencing on December 15, 2013 for a monthly consulting fee of $5,000 per month, of which a total of $2,000 is payable and $3,000 per month is to be accrued monthly. Effective May 1, 2014, it was agreed that Mr. Anast would be paid $3,000 per month and $2,000 would be accrued as a result of increased hours required to be devoted to corporate efforts.
 
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Compensation of Directors
 
During the most recent fiscal year, none of our directors were provided any compensation for their role as directors.
 
Our company has made no arrangements for the cash remuneration of its directors, and to the extent that they will be entitled to receive reimbursement for actual, demonstrable out-of-pocket expenses, including travel expenses, if any, made on our company’s behalf. No further remuneration has been paid to our company’s directors for services to date.
 
Compensation Committee
 
We do not currently have a compensation committee. Our company’s executive compensation is currently approved by our board of directors in the case of our principal executive officer. For all other executive compensation contracts, our principal executive officer negotiates and approves the contracts and compensation.
 
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
 
Security Ownership of Certain Beneficial Owners
 
The following table sets forth information, as of October 8, 2014, with respect to the beneficial ownership of our company’s common stock by each person known by our company to be the beneficial owner of more than 5% of the outstanding common stock. Information is also provided regarding beneficial ownership of common stock if all outstanding options, warrants, rights and conversion privileges (to which the applicable 5% stockholders have the right to exercise in the next 60 days) are exercised and additional shares of common stock are issued.
 
Title of Class
Name and Address of Beneficial Owner
Amount and Nature
of Beneficial Ownership
Percentage of Class (1)
Common Stock
Rick Walchuk(2)
Kolokontroni 2A
Paleo Faliro
Athens, Greece  17563
24,134,166 shares held directly
25.11%
Common Stock
Con Evan Anast(3)
25 Orfeos Str.
Paleo Faliro
Athens, Greece  17564
5,000,000 shares held directly
5.20%
Directors and Officers as a Group
29,134,166
30.32%
 
 
(1)
Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on October 8, 2014. As of October 8, 2014, there were 96,083,348 shares of our company’s common stock issued and outstanding.
 
(2)
Rick Walchuk is a director of our company.
 
(3)
Con Evan Anast is our president, chief executive officer, chief financial officer, treasurer, secretary and director.

 
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 Changes in Control
 
We are unaware of any contract or other arrangement or provisions of our Articles or Bylaws the operation of which may at a subsequent date result in a change of control of our company. There are not any provisions in our Articles or Bylaws, the operation of which would delay, defer, or prevent a change in control of our company.
 
Securities authorized for issuance under equity compensation plans.
 
We do not have a stock option plan in favor of any director, officer, consultant or employee of our company.
 
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
Certain Relationships and Related Transactions
 
On May 1, 2012, we entered into a consulting agreement with Rick Walchuk, a director and former officer of our company, for management services. The consulting agreement became effective as of May 1, 2012 and shall continue to May 1, 2015. Under the consulting agreement, we shall pay $2,500 a month for the first six months, $5,000 a month for the next six months and $7,500 for the balance of the agreement payable on the 1st of each month. During the fiscal year ended June 30, 2014 and June 30, 2013, Mr. Walchuk invoiced our company for the services in the amount of $90,000 and $55,000, respectively. As at June 30, 2014, no amounts are owing to Mr. Walchuk.
 
On December 13, 2013, the board of the directors of our company appointed Con Evan Anast to our board of directors.
 
On December 15, 2013, we entered into a consulting agreement with Mr. Anast for the provision of services to our company as secretary and management consultant.  Under the terms of the consulting agreement, Mr. Anast has agreed to provide a minimum of 40 hours per month to our company’s business operations.   The contract is for a term of three years commencing on December 15, 2013 for a monthly consulting fee of $5,000 per month, of which a total of $2,000 is payable and $3,000 per month is to be accrued monthly. Effective May 1, 2014 it was agreed that Mr. Anast would be paid $3,000 per month and $2,000 would be accrued as a result of increased hours required to be devoted to corporate efforts.  Concurrently Mr. Anast took on the role of acting president, chief financial officer and treasurer. During the fiscal year ended June 30, 2014, Mr. Anast invoiced our company for the services in the amount of $32,900, of which a total of $9,160 was paid in full as of June 30, 2014 and $23,740 is accrued.
 
Other than as disclosed herein, we have not entered into any transaction since the last fiscal year nor are there any proposed transactions that exceed one percent of the average of our total assets at year end for the last three completed fiscal years in which any of our Directors, executive officers, stockholders or any member of the immediate family of any of the foregoing had or is to have a direct or indirect material interest.
 
Review, Approval or Ratification of Transactions with Related Persons
 
Our company does not currently have any written policies and procedures for the review, approval or ratification of any transactions with related persons.
 
46

 
Promoters and Certain Control Persons
 
None.
 
Director Independence
 
As of the date of this Annual Report, we have no independent directors.
 
Our company has developed the following categorical standards for determining the materiality of relationships that the directors may have with our company. A director shall not be deemed to have a material relationship with our company that impairs the director's independence as a result of any of the following relationships:
 
1.
the director is an officer or other person holding a salaried position of an entity (other than a principal, equity partner or member of such entity) that provides professional services to our company and the amount of all payments from our company to such entity during the most recently completed fiscal year was less than two percent of such entity’s consolidated gross revenues;
 
2.
the director is the beneficial owner of less than five (5%) per cent of the outstanding equity interests of an entity that does business with our company;
 
3.
the director is an executive officer of a civic, charitable or cultural institution that received less than the greater of one million ($1,000,000) dollars or two (2%) per cent of its consolidated gross revenues, as such term is construed by the New York Stock Exchange for purposes of Section 303A.02(b)(v) of the Corporate Governance Standards, from our  company or any of its subsidiaries for each of the last three (3) fiscal years;
 
4.
the director is an officer of an entity that is indebted to our company, or to which our company is indebted, and the total amount of either our company's or the business entity's indebtedness is less than three (3%) per cent of the total consolidated assets of such entity as of the end of the previous fiscal year; and
 
5.
the director obtained products or services from our company on terms generally available to customers of our company for such products or services. Our board retains the sole right to interpret and apply the foregoing standards in determining the materiality of any relationship.
 
Our board shall undertake an annual review of the independence of all non-management directors. To enable our board to evaluate each non-management director, in advance of the meeting at which the review occurs, each non-management director shall provide our board with full information regarding the director’s business and other relationships with our company, its affiliates and senior management.
 
Directors must inform our board whenever there are any material changes in their circumstances or relationships that could affect their independence, including all business relationships between a director and our company, its affiliates, or members of senior management, whether or not such business relationships would be deemed not to be material under any of the categorical standards set forth above. Following the receipt of such information, our board shall re-evaluate the director's independence.
 
ITEM 14.                      PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
The following table sets forth the fees billed to our company for professional services rendered by our company's principal accountant, for the fiscal years ended June 30, 2014 and 2013:
 
Services
2014
$
2013
$
Audit fees
10,500
7,000
Audit related fees
-
-
Tax fees
-
800
Total fees
10,500
7,800
 
Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.
 
Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.
 
47

 
PART IV
 
ITEM 15.                      EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 
 (a)
Financial Statements
 
(1)
Financial statements for our company are listed in the index under Item 8 of this document
 
(2)
All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto.
(b)
Exhibits
   
Exhibit Number
Description
 
3.1
Articles of Incorporation
Incorporated by reference to the Registration Statement on Form S-1 filed on August 4, 2010.
3.1 (i)
Certificate of Amendment to the Articles of Incorporation as filed with the State of Nevada on July 12, 2012
Incorporated by reference to the Current Report on Form 8-K filed on July 13, 2012.
3.2
Bylaws
Incorporated by reference to the Registration Statement on Form S-1 filed on August 4, 2010.
10.1
Release entered into by Fabio Alexandre Narita
Incorporated by reference to our Form 8-K filed with the SEC on May 29, 2012.
10.2
Share Purchase Agreement between Rick Walchuk and Fabio Alexandre Narita
Incorporated by reference to our Form 8-K filed with the SEC on May 29, 2012.
10.3
Subscription Agreement dated August 29, 2012.
Incorporated by reference to our Form 8-K filed with the SEC on September 11, 2012.
10.4
Form of Subscription Agreement
Incorporated by reference to our Form 8-K filed with the SEC on September 11, 2012.
10.5
Form of Subscription Agreement for Draw Down
Incorporated by reference to our Form 8-K filed with the SEC on September 11, 2012.
10.6
Patent and Technology License Agreement between our company and Cheap Tubes, Inc. dated December 3, 2012
Incorporated by reference to our Form 8-K filed with the SEC on December 18, 2012.
10.7
Schedule 2 to the Patent and Technology License Agreement between our company and Cheap Tubes, Inc.
Incorporated by reference to our Form 8-K/A filed with the SEC on February 5, 2013.
10.8
Consulting agreement dated July 30, 2012
Incorporated by reference to our Form 8-K/A filed with the SEC on February 5, 2013.
10.9
Consulting agreement dated July 30, 2012
Incorporated by reference to our Form 8-K/A filed with the SEC on February 5, 2013.
10.10
Financing Agreement dated August 29, 2012
Incorporated by reference to our Form 8-K/A filed with the SEC on February 5, 2013.
10.11
Consulting Agreement between our company and Rick Walchuk
Incorporated by reference to our Form 8-K/A filed with the SEC on February 5, 2013.
10.12
Agreement between our company and Rosevale Capital S.A
Incorporated by reference to our Form 8-K/A filed with the SEC on April 24, 2013.
10.13
Agency Agreement between our company and Carter Terry
Incorporated by reference to our Form 8-K filed with the SEC on June 19, 2013.
10.14
Form of Private Placement Units Subscription Agreement
Incorporated by reference to our Form 8-K filed with the SEC on September 16, 2013.
10.15
Agency Agreement between our company and Palladium Capital Advisors LLC.
Incorporated by reference to our Form 8-K filed with the SEC on September 16, 2013.
10.16
Form of Securities Purchase Agreement
Incorporated by reference to our Form 8-K filed with the SEC on September 16, 2013.
10.17
Form of Warrant
Incorporated by reference to our Form 8-K filed with the SEC on September 16, 2013.
10.18
Subscription Agreement between our company and Big North Graphite Corp.
Incorporated by reference to our Form 8-K filed with the SEC on September 16, 2013.
10.19
Consulting Agreement between our company and Con Anast
Incorporated by reference to our Form 8-K filed with the SEC on December 17, 2013
10.20
P-600 Partner Project Agreement dated October 1, 2013
Incorporated by reference to our Form 10-Q filed with the SEC on February 13, 2014
10.21
P-600 Project Intellectual Property Agreement executed October 17, 2013
Incorporated by reference to our Form 10-Q filed with the SEC on February 13, 2014
10.22
Form of Securities Purchase Agreement
Incorporated by reference to our Form 8-K filed with the SEC on March 18, 2014
10.23
Form of Warrant
Incorporated by reference to our Form 8-K filed with the SEC on March 18, 2014
10.24
Form of Waiver and Consent
Incorporated by reference to our Form 8-K filed with the SEC on March 18, 2014
10.25
Consulting Agreement with Verge Consulting, LLC
Incorporated by reference to our Form 8-K filed with the SEC on March 18, 2014
31.1
Certification of Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Filed Herewith
32.1
Certification of Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Filed Herewith
101*
Interactive Data File (Form 10-K for the year ended June 30, 2014 furnished in XBRL).
 
101.INS
XBRL Instance Document
 
101.SCH
XBRL Taxonomy Extension Schema
 
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
 
101.DEF
XBRL Taxonomy Extension Definition Linkbase
 
101.LAB
XBRL Taxonomy Extension Label Linkbase
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
 
*
To be filed by Amendment.
 
48

 
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
      AMERICAN GRAPHITE TECHNOLOGIES INC.
       
Date:
October 14, 2014
By:
/s/ Con Evan Anast
   
Name:
Con Evan Anast
   
Title:
President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting 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 registrant and in the capacities and on the dates indicated.
 
Date:
October 14, 2014
By:
/s/ Con Evan Anast
   
Name:
Con Evan Anast
   
Title:
President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director  (Principal Executive Officer, Principal Financial  Officer and Principal Accounting Officer)
       
Date:
October 14, 2014
By:
/s/ Rick Walchuk
   
Name:
Rick Walchuk
   
Title:
Director
 
 
49