U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q/A

Amendment No. 1

 

Mark One

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2013

 

¨  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______ to _______

 

Commission File No. 000-54665

 

WESTERN GRAPHITE INC.

(Exact name of registrant as specified in its charter)

 

Nevada (State or Other Jurisdiction of Formation or Organization)

1000 (Primary Standard Industrial Classification Number)

20-8055672  (IRS Employer Identification Number)

 

1045 East Washington Street

Monticello, FL 32344

850-270-2808

(Address and telephone number of principal executive offices)

 

Prepared By:

Sunny J. Barkats, Esq.

JS Barkats, PLLC

18 East 41^st Street, 14^th Floor

New York, NY 10017

P: (646) 502-7001

F: (646) 607-5544

www.JSBarkats.com

 

Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ¨   Nox

 

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x

 

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

Yes ¨  No x

 

Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years. N/A

 

Indicate by checkmark whether the issuer has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court.  Yes¨  Nox

 

Applicable Only to Corporate Registrants

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:  71,500,000 shares as of September, 2013.

  

 

Explanatory Note

 

The purpose of this Amendment No. 1 to Western Graphite Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 is to amend the financial statements and the Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

We are filing Amendment No.1 to reflect the restatement of our unaudited condensed financial statements contained herein. On October 17, 2014, management concluded that, because of an error identified in the Company’s previously issued financial statement for the quarter ended September 30, 2013, the Company should restate its previously issued financial statement for the relevant periods. Accordingly, investors should no longer rely upon the Company’s previously released financial statements for these periods or any earnings release or other communications relating to these periods.

 

Please see Note 2 – Restatement contained in the Notes to Unaudited Condensed Financial Statement appearing later in this Form 10-Q/A Amendment No.1 which further describes the effect of these of these restatements.

 

No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

 

Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Form 10-Q/A includes new certifications by our principal executive officer and principal financial officer under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. Except for the items noted above, no other information included in the Company’s original Form 10-Q is being amended by this Form 10-Q/A.

  

WESTERN GRAPHITE INC.

 

FORM 10-Q/A

 

SEPTEMBER 30, 2013

 

INDEX

 

PART I— FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 4.	Controls and Procedures	14
PART II— OTHER INFORMATION
Item 6.	Exhibits	15
	SIGNATURES	16

 

 

Western Graphite, Inc. (formerly Lucky Strike Explorations, Inc.) CONDENSED BALANCE SHEETS

 

		September 30,				December 31,
		2013				2012
		(Unaudited)
		(Restated)
ASSETS
CURRENT ASSETS
Cash		$	82,304			$	73
Prepaid expenses			471				3,937
Investments, net			986				-
Total Current Assets			83,761				4,010
Property and equipment, net			-				-
TOTAL ASSETS		$	83,761			$	4,010
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses		$	180			$	60
Loan payable, related party			37,325				31,325
Accrued interest			4,014				-
Notes payable			150,000				-
Total Current Liabilities			191,519				31,385
LONG TERM LIABILITIES
Notes payable - related party			15,000				-
TOTAL LIABILITIES			206,519				31,385
Commitments and contingencies			-				-
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value; 750,000,000 and 75,000,000 shares authorized, respectively, 71,500,000 and 58,000,000 shares issued and outstanding, respectively			71,500				58,000
Additional paid-in capital			6,792,500				16,000
Accumulated deficit			(6,986,758	)			(101,375	)
TOTAL STOCKHOLDERS' DEFICIENCY			(122,758	)			(27,375	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY		$	83,761			$	4,010

 

The accompanying notes are an integral part of these unaudited condensed financial statements

 

 

Western Graphite, Inc.

(formerly Lucky Strike Explorations, Inc.)

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2013				2012				2013				2012
		(Restated)								(Restated)
REVENUES
Revenues		$	-			$	-			$	-			$	-
TOTAL REVENUES			-				-				-				-
OPERATING EXPENSES
Impairment of investments and mining properties			14,014				-				6,514,014				-
General and administrative expenses			326,039				2,960				367,355				25,609
TOTAL OPERATING EXPENSES			340,053				2,960				6,881,369				25,609
LOSS FROM OPERATIONS			(340,053	)			(2,960	)			(6,881,369	)			(25,609	)
OTHER EXPENSE
Interest expense			(3,315	)			-				(4,014	)			-
TOTAL OTHER EXPENSE			(3,315	)			-				(4,014	)			-
NET LOSS		$	(343,368	)		$	(2,960	)		$	(6,885,383	)		$	(25,609	)
Basic and diluted loss per share		$	(0.00	)		$	(0.00	)		$	(0.10	)		$	(0.00	)
Weighted average number of common shares outstanding			71,494,565				58,000,000				68,071,429				58,000,000

 

The accompanying notes are an integral part of these unaudited condensed financial statements

 

 

Western Graphite, Inc.

(formerly Lucky Strike Explorations, Inc.)

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

		Nine Months Ended
		September 30,
		2013				2012
		(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(6,885,383	)		$	(25,609	)
Adjustment to reconcile net loss to net cash used in operating activities:
Stock based compensation			290,000				-
Impairment on investment			1,514,014				-
Impairment on asset purchase			5,000,000				-
Changes in operating assets and liabilities:
Deposits			3,466				-
Accrued interest			4,014				-
Accounts payable and accrued liabilities			120				1,060
NET CASH USED IN OPERATING ACTIVITIES			(73,769	)			(24,549	)
CASH FLOWS FROM INVESTING ACTIVITIES:			-				-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable			150,000				-
Proceeds from loans payable, related party			6,000				28,000
NET CASH PROVIDED BY FINANCING ACTIVITIES			156,000				28,000
Net increase in cash			82,231				3,451
Cash, beginning of year			73				17
Cash, end of year		$	82,304			$	3,468
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest		$	-			$	-
Cash paid for income taxes		$	-			$	-
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for investment		$	1,500,000			$	-
Common stock issued for asset purchase		$	5,000,000			$	-
Promissory note issued for acquisition of mining deeds		$	15,000			$	-

 

The accompanying notes are an integral part of these unaudited condensed financial statements

 

 

WESTERN GRAPHITE INC.

(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)

Notes to Unaudited Condensed Financial Statements

For the Nine Months Ended September 30, 2013 and 2012

 

NOTE 1. DESCRIPTION OF BUSINESS

 

Western Graphite Inc. (f/k/a Lucky Strike Explorations Inc.) (the “Company”) was incorporated under the laws of the State of Nevada on December 15, 2006. The Company was formed to engage in the acquisition, exploration and development of natural resource properties.

 

NOTE 2. RESTATEMENT

 

The Company has restated herein its unaudited financial statements as of September 30, 2013 and for the nine months ended September 30, 2013. The Company is no longer pursuing the acquisition of the mines stated in Note 5, therefore management has determined that the investments in the mining properties have been impaired due to inability of the Company to reliably determine the fair market value of the investments in the mining properties. The Company has reviewed all accounting transactions for the nine months ended September 30, 2013, to determine the effects of these impairments on the financial statements. As a result of reviewing all accounting transactions for the quarter, the Company has determined that deposits, accounts payable, note payable – related parties, property payments due and additional paid in capital needed to be restated as well due to findings in the documentation for all transactions reviewed related to the accounting for the investments in mining properties.

 

 

WESTERN GRAPHITE INC.

(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)

Notes to Unaudited Condensed Financial Statements

For the Nine Months Ended September 30, 2013 and 2012

 

The following represents the changes to the restated financial statements as of and for the three and nine months ended September 30, 2013:

 

Unaudited Condensed Balance Sheets
		Restated				As previously reported
		September 30, 2013				September 30, 2013				Differences
ASSETS
Current Assets
Cash		$	82,304			$	82,304			$	-
Deposit			471				1,209				(738	)
Investments, net			986				-				986
Total Current Assets			83,761				83,513				248
Fixed Assets
Mining properties			-				1,513,000				(1,513,000	)
Total Assets		$	83,761			$	1,596,513			$	(1,512,752	)
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities
Accounts payable and accrued expenses		$	180			$	116			$	64
Loan payable - related party			37,325				37,325				-
Accrued interest			4,014				3,986				28
Note payable			150,000				150,000				-
Property payments due			-				1,500,000				(1,500,000	)
Total Current Liabilities			191,519				1,691,427				(1,499,908	)
Long Term Liabilities
Note payable - related party			15,000				-				15,000
Total Liabilities			206,519				1,691,427				(1,484,908	)
Stockholders' Deficiency
Common stock, $0.001 par value; 750,000,000 shares authorized, 71,000,000 shares issued and outstanding			71,500				71,000				500
Additional paid-in capital			6,792,500				15,965				6,776,535
Accumulated deficit			(6,986,758	)			(181,879	)			(6,804,879	)
Total Stockholders' Deficiency			(122,758	)			(94,914	)			(27,844	)
Total Liabilities and Stockholders' Deficiency		$	83,761			$	1,596,513			$	(1,512,752	)

 

The accompanying notes are an integral part of these unaudited condensed financial statements

 

 

WESTERN GRAPHITE INC.

(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)

Notes to Unaudited Condensed Financial Statements

For the Nine Months Ended September 30, 2013 and 2012

 

Unaudited Condensed Statements of Operations
		For the Three Months Ended												For the Nine Months Ended
		Restated				As previously reported								Restated				As previously reported
		September 30, 2013				September 30, 2013				Differences				September 30, 2013				September 30, 2013				Differences
Revenues
Revenues		$	-			$	-			$	-			$	-			$	-			$	-
Total Revenues			-				-				-				-				-				-
Operating Expenses
Mineral property expenditures			-				-				-				-				12,277				(12,277	)
Impairment of investments and mining properties			14,014				-				14,014				6,514,014				-				6,514,014
General and administrative expenses			326,039				35,392				290,647				367,355				64,241				303,114
Total Operating Expenses			340,053				35,392				304,661				6,881,369				76,518				6,804,851
Loss from Operations			(340,053	)			(35,392	)			(304,661	)			(6,881,369	)			(76,518	)			(6,804,851	)
Other Expense
Interest expense, net			(3,315	)			(3,287	)			(28	)			(4,014	)			(3,986	)			(28	)
Total Other Expense			(3,315	)			(3,287	)			(28	)			(4,014	)			(3,986	)			(28	)
Net Loss		$	(343,368	)		$	(38,679	)		$	(304,689	)		$	(6,885,383	)		$	(80,504	)		$	(6,804,879	)
Basic and Diluted Loss per Share		$	(0.00	)		$	(0.00	)						$	(0.10	)		$	(0.00	)
Weighted average number of common shares outstanding			71,494,565				71,000,000								68,071,429				71,000,000

 

The accompanying notes are an integral part of these unaudited condensed financial statements

  

 

WESTERN GRAPHITE INC.

(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)

Notes to Unaudited Condensed Financial Statements

For the Nine Months Ended September 30, 2013 and 2012

 

Unaudited Condensed Statements of Cash Flows
		Restated				As previously reported
		September 30, 2013				September 30, 2013				Differences
Cash Flows From Operating Activities:
Net Loss		$	(6,885,383	)		$	(80,504	)		$	(6,804,879	)
Adjustments to reconcile net loss to net cash used in operations
Stock based compensation			290,000				-				290,000
Impairment on investment			1,514,014				-				1,514,014
Impairment on asset purchase			5,000,000				-				5,000,000
Changes in operating assets and liabilities:
(Increase) decrease in deposit			3,466				2,728				738
Increase (decrease) in accrued interest			4,014				-				4,014
Increase (decrease) in accounts payable and accrued liabilities			120				4,042				(3,922	)
Increase (decrease) in property payments due			-				1,500,000				(1,500,000	)
Net Cash (Used In) Provided by Operating Activities			(73,769	)			1,426,266				(1,500,035	)
Cash Flows From Investing Activities:
Acquisition of mining properties			-				(1,513,000	)			1,513,000
Net Cash Used In Investing Activities			-				(1,513,000	)			1,513,000
Cash Flows From Financing Activities:
Proceeds from notes payable			150,000				150,000				-
Loan payable - related party			6,000				6,000				-
Issuance of common stock			-				12,965				(12,965	)
Net Cash Provided by Financing Activities			156,000				168,965				(12,965	)
Net Increase in Cash			82,231				82,231				-
Cash at Beginning of Period			73				73				-
Cash at End of Period		$	82,304			$	82,304			$	-
Supplemental disclosure of cash flow information:
Cash paid for interest		$	-			$	-			$	-
Cash paid for income taxes		$	-			$	-			$	-
Supplemental disclosure of non-cash investing and financing activities:
Common stock issued for investment		$	1,500,000			$	-			$	1,500,000
Common stock issued for asset purchase		$	5,000,000			$	-			$	5,000,000
Promissory note issued for acquisition of mining deeds		$	15,000			$	-			$	15,000

 

The accompanying notes are an integral part of these unaudited condensed financial statements

 

 

WESTERN GRAPHITE INC.

(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)

Notes to Unaudited Condensed Financial Statements

For the Nine Months Ended September 30, 2013 and 2012

  

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

BASIS OF ACCOUNTING

 

The Company’s policy is to maintain its books and prepare its financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Company’s Form 10-K filed with SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2012 as reported in the Form 10-K have been omitted.

 

USE OF ESTIMATES

 

The preparation of financial statements in conformity with GAAP 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. Actual results could differ from those estimates.

 

CASH AND CASH EQUIVALENTS

 

The Company considers highly liquid investments with original maturities of three months or less when purchased as cash equivalents. At times throughout the year, the Company might maintain bank balances that may exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. Periodically, the Company evaluates the credit worthiness of the financial institutions, and has not experienced any losses in such accounts. As of September 30, 2013 and December 31, 2012, the Company did not have bank balances that exceeded the FDIC insured limits.

 

  

WESTERN GRAPHITE INC.

(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)

Notes to Unaudited Condensed Financial Statements

For the Nine Months Ended September 30, 2013 and 2012

 

EARNINGS PER SHARE

 

The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, Earnings per Share. Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. 

 

For the nine months ended September 30, 2013 and 2012, the Company had no potentially dilutive commitments to issue common stock.

 

LONG-LIVED ASSETS

 

On a periodic basis, management assesses whether there are any indicators that the value of the Company’s long-lived assets may be impaired. An asset’s value may be impaired only if management’s estimate of the aggregate future cash flows, on an undiscounted basis, to be generated by the asset are less than the carrying value of the asset.

 

If impairment has occurred, the loss is measured as the excess of the carrying amount of the asset over its fair value. The Company’s estimates of aggregate future cash flows expected to be generated by each long-lived asset are based on a number of assumptions that are subject to economic and market uncertainties. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in their impairment analyses may not be achieved. As of September 30, 2013, total asset impairment was $5,000,000.

 

FAIR VALUE MEASUREMENT

 

The carrying amounts reported in the Company’s financial statements for prepaid expenses, accounts payable and accrued expenses, and loans payable approximate their fair value because of the immediate or short-term nature of these financial instruments. The carrying amounts reported in the balance sheet for its notes payable approximates fair value as the contractual interest rate and features are consistent with similar instruments of similar risk in the market place.

 

STOCK BASED COMPENSATION

 

On July 30, 2013, the Company’s Board of Directors approved the adoption of the 2013 Stock Option Plan, which permits the Company to issue up to 10,665,000 shares of common stock to directors, officers, employees and consultants upon the exercise of stock options granted under the 2013 Stock Option Plan.

 

The Company follows ASC 718, “Compensation – Stock Compensation”, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired.  Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights.  Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

 

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, “Equity–based Payments to Non-Employees”.  Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable:  (a) the goods or services received; or (b) the equity instruments issued.  The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.  

 

  

WESTERN GRAPHITE INC.

(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)

Notes to Unaudited Condensed Financial Statements

For the Nine Months Ended September 30, 2013 and 2012

 

Through newly issued restricted common stock, we pay qualified contractors and advisors common shares in lieu of compensation for services provided including business development, management, technology development, consulting, legal services and accounting services.

 

For the nine months ended September 30, 2013 and 2012, the Company charged to operations stock based compensation totaling $290,000 and $0, respectively.

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

In June 2014 the Financial Accounting Standards Board issued Accounting Standards Update ASU 2014-10, “Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation” (“ASU 2014-10”). The amendments in ASU 2014-10 remove the definition of a development stage entity from the master glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

 

The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations.

 

The Company has elected to adopt the provisions of ASU 2014-10 for the current nine months ending September 30, 2013. The adoption of ASU 2014-10 did not have a significant impact on our results of operations, financial condition or cash flow.

 

In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period." This ASU provides more explicit guidance for treating share-based payment awards that require a specific performance target that affects vesting and that could be achieved after the requisite service period as a performance condition. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have a material impact on the financial statements.

 

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40)”, which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company expects to adopt this new standard for the fiscal year ending December 31, 2014 and the Company will continue to assess the impact on its financial statements.

 

There are various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows.   

 

NOTE 4.  GOING CONCERN

 

The Company’s unaudited condensed financial statements have been prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred net losses of $6,885,383 and $25,609 during the nine months ended September 30, 2013 and 2012, respectively. Cash on hand will not be sufficient to cover debt repayments scheduled as of September 30, 2013 and operating expenses and capital expenditure requirements for at least twelve months from the balance sheet date. As of September 30, 2013 and December 31, 2012, the Company had working capital deficits of $107,758 and $27,375, respectively. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to seek equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

 

 

WESTERN GRAPHITE INC.

(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)

Notes to Unaudited Condensed Financial Statements

For the Nine Months Ended September 30, 2013 and 2012

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying unaudited condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 5.  INVESTMENT IN MINING PROPERTIES

 

On February 27, 2013, the Company acquired all the rights, title and interest in certain lands covering approximately 495 hectares known as the Amorf Graphite property located in the district of Bozyazi, in the village of Cabukkoyaoi, Mersin Province, Turkey.  The Company acquired the rights to the property pursuant to an agreement with Dr. Ahment Unsai in exchange for 3,000,000 shares, of the Company’s common stock valued at $0.50 per shares for a total of $1,500,000, along with two future payments totaling $1,500,000. As of February 27, 2013, the Company does not have control of the property and therefore has accounted for the acquisition as an investment. The Company no longer is pursuing the purchase of the Amorf Graphite property, and thus the remaining terms of the deal have nullified. The Company has determined that the fair market value of the Amorf Graphite property cannot be reliably determined and therefore it has deemed a total impairment of $1,500,000 and corresponding impairment expense on the rights to the property.

 

On March 4, 2013, the Company entered into an agreement with Seyit Kucuk for the acquisition of five claims located in the Omineca Mining Division of the Province of British Columbia.  The claims, which cover approximately 2,524 hectares, are known as the Pure Flake Graphite property and are subject to a 2% net milling royalty.  In consideration for the acquisition of these claims, the Company issued 10,000,000 shares, valued at $0.50 per shares for a total of $5,000,000, of the company’s restricted common stock. The Company has determined that the fair market value of the Pure Flake Graphite property cannot be reliably determined and therefore it has deemed a total impairment of $5,000,000 and corresponding impairment expense on the property.

 

On August 7, 2013, the Company acquired mining claims for mineral tenures which cover approximately 2,464 hectares, in British Columbia, Canada, from a related party through the issuance of a $15,000 unsecured promissory note. The Company has determined that the fair market value of the deeds cannot be reliably determined and the only value that can be supported for these deeds is the acquisition fee price paid initially by the original owner of the deeds. The acquisition price at the time of original purchase on March 29, 2012 was $0.40 per hectare, or $986, resulting in an impairment of $14,014. The value of the mining deeds at September 30, 2013 is $986.

 

NOTE 6. LOAN PAYABLE – RELATED PARTY

 

As of September 30, 2013, $37,325 is owed to an ex-officer and director of the Company and is non-interest bearing with no specific repayment terms. The Company plans to repay this loan through stock issuances, or through funding from the next round of financing.

 

NOTE 7. NOTE PAYABLE – RELATED PARTY

 

On August 7, 2013, the Company issued an unsecured promissory note for $15,000 to the CEO of the Company in exchange for the acquisition of mining deeds. There is no interest associated with this note and the note matures on August 7, 2015.

 

  

 

WESTERN GRAPHITE INC.

(FORMERLY LUCKY STRIKE EXPLORATIONS, INC.)

Notes to Unaudited Condensed Financial Statements

For the Nine Months Ended September 30, 2013 and 2012

 

NOTE 8. NOTES PAYABLE

 

On May 10, 2013, the Company issued an unsecured promissory note for $50,000 to an unrelated third party for cash. The note accrues interest at 10% per annum and is due on demand. Accrued interest was $1,959 as of September 30, 2013.

 

On July 18, 2013, the Company issued an unsecured promissory note for $100,000 to an unrelated third party for cash. The note accrues interest at 10% per annum and is due on demand.  Accrued interest was $2,055 as of September 30, 2013.

 

NOTE 9. STOCKHOLDERS’ EQUITY

 

The stockholders equity section of the Company contains the following classes of capital stock as of September 30, 2013 and December 31, 2012: Common Stock, $0.001 par value: shares issued and outstanding of 71,500,000 and 58,000,000, respectively.

 

Transactions, other than employee’s stock issuance, are in accordance with ASC 505.  These issuances shall be accounted for based on the fair value of the consideration received.  Transactions with employee’s stock issuance are in accordance with ASC 718.  These issuances shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, or whichever is more readily determinable.

 

On February 27, 2013 the Company effected a 10 for 1 forward split of its issued and outstanding share capital such that everyone’s share of common stock issued and outstanding prior to the split was exchanged for ten post-split shares of common stock.  The number of shares referred to in these financial statements reflect a post-split number of shares. The Company’s post-split authorized capital has increased to 750,000,000 shares of common stock with a par value of $0.001 per share.  All share amounts have been retroactively adjusted for all periods presented.

 

On March 6, 2013 the Company issued a total of 3,000,000 shares of common stock to one individual for consideration for the rights to purchase the Amorf Graphite property, valued at $0.50 per share for a total of $1,500,000.  

 

On March 6, 2013 the Company issued a total of 10,000,000 shares of common stock to one individual for the acquisition of the Pure Flake property, valued at $0.50 per share for a total of $5,000,000.  

 

In July 2013, the Company issued a total of 500,000 shares of common stock, valued at $0.58 per share totaling $290,000, to two unrelated third parties as stock based compensation.

  

NOTE 10. SUBSEQUENT EVENTS

  

On April 3, 2014, the Company issued a convertible promissory note for $63,000 to an unrelated party for consulting services. The note accrues interest at 12% per annum, compounded monthly and matures on October 3, 2014. In the event of default, any overdue amounts will accrue interest at 20% per annum, compounded monthly. The principal balance of the note is convertible to common stock at the lower of either 0.03, or 50% of the lowest traded price 20 days prior to conversion, and is limited to 4.99% of the Company’s outstanding common stock at the time of conversion. All interest that accrues is convertible at $0.0001.

 

On May 1, 2014, the Company issued a convertible promissory note for $50,000. The note was issued for $30,000 in cash and $20,000 in payments towards services rendered. The note is due on demand and accrues interest at a rate of 8% per annum. In the event of default, the interest rate increases to 22% per annum on a simple interest basis. The note is convertible at a rate of 10% of the average of the three lowest trading prices for the ten days prior to conversion, and can be converted at any time at the option of the holder.

 

On August 15, 2014, the Company issued 62,000,000 shares of common stock, valued at $0.0002 per share totaling $10,000 to a related party, for cash.

 

In addition, in a private sale, on July 29, 2014, Lauren Notar, former Chief Executive Officer, sold to the Guelph Partners, LLC 10,000,000 shares of common stock out of her personal ownership which, when combined with the Stock Purchase Agreement of August 20, 2014, grants the Purchaser an aggregate of seventy two million (72,000,000) shares, representing fifty four percent (54%) of the issued and outstanding shares of the Company, on a fully-diluted basis.

 

On August 26, 2014, the Chairman and Chief Executive Officer (“CEO”) of the Company, Lauren Notar, resigned and David Wimberly became the new Chairman and CEO of the Company.

 

On August 26, 2014, the Company issued a convertible promissory note for $120,000 for consulting services. The note is due on August 26, 2015 and accrues interest at a rate of 10% per annum, compounded monthly. The principal balance of the note is convertible at X-(X*25%), where X is the lesser of the closing price on date of conversion, or the closing price on date the note was executed multiplied by 1.25, and can be converted at any time at the option of the holder of the note.

 

On September 3, 2014, the Company issued a convertible promissory note for $60,000 for consulting services. This note is due on March 3, 2015 and accrues interest at a rate of 10% per annum, compounded monthly. The principal balance of this note is convertible at the lesser of $0.0037 or the closing price on the date of conversion, and can be converted at any time at the option of the holder.

 

On September 10, 2014, the Company issued a convertible promissory note for $52,500 for consulting services. The note is due on April 10, 2015 and accrues interest at a rate of 10% per annum, compounded monthly. The principal balance of this note is convertible at the lesser of $0.0025 or the closing price on the date of conversion, and can be converted at any time at the option of the holder.

 

On September 18, 2014, the Company issued 4,500,000 shares of common stock, valued at $0.0044 per share totaling $19,800 to an unrelated third party for legal services rendered.

 

On November 13, 2014, the Company issued 2,430,000 shares of common stock to a related party for consulting services regarding the financing and management of the Company’s business.

 

 

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

 

Forward Looking Statements

 

This annual report on Form 10-Q/A and other reports filed by Western Graphite Inc. (“we,” “us,” “our,” or the “Company”) from time to time with the SEC contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

 

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates. This discussion and analysis should be read in conjunction with the Company’s financial statements and accompanying notes to the financial statements for the quarter ended September 30, 2013.

 

This report contains forward-looking statements that involve risk and uncertainties.  We use words such as “anticipate”, “believe”, “plan”, “expect”, “future”, “intend”, and similar expressions to identify such forward-looking statements.  Investors should be aware that all forward-looking statements contained within this report are good faith estimates of management as of the date of this report and actual results may differ materially from historical results or our predictions of future results.

 

Results of Operations for the Three Months Ended September 30, 2013

 

Revenue:

 

We have generated no revenues to date.  

 

Operating Expenses:

 

Impairment of investments and mining properties $14,014 for the three months ended September 30, 2013, an increase of $14,014 from $0 for the three months ended September 30, 2012. The increase is primarily due to a $14,014 impairment of assets in 2013 related to the mining properties.

 

General and administrative expenses were $326,039 for the three months ended September 30, 2013, an increase of $323,079 or approximately 10915%, from $2,960 for the three months ended September 30, 2012. The increase is primarily due to a $290,000 increase in stock compensation, along with a $24,966 increase in officer compensation.

 

  

Other Expenses:

 

Other expenses were $3,315 for the three months ended September 30, 2013, an increase of $3,315 from $0 for the three months ended September 30, 2012. The increase is primarily due to $3,315 of interest accrued on notes payable.

 

Net Loss:

 

As a result of the above factors, we recognized net loss of $343,368 for the three months ended September 30, 2013, as compared to a net loss of $2,960 for the three months ended September 30, 2012, an increase of $340,408 or approximately 11500%.

 

Results of Operations for the Nine Months Ended September 30, 2013

 

Revenue:

 

We have generated no revenues to date.  

 

Operating Expenses:

 

Impairment of investments and mining properties $6,514,014 for the nine months ended September 30, 2013, an increase of $6,514,014 from $0 for the nine months ended September 30, 2012. The increase is primarily due to a $6,514,014 impairment of assets in 2013 related to the mining properties.

 

General and administrative expenses were $367,355 for the nine months ended September 30, 2013, an increase of $341,746 or approximately 1335%, from $25,609 for the nine months ended September 30, 2012. The increase is primarily due to a $290,000 increase in stock compensation, along with a $33,716 increase in officer compensation.

 

Other Expenses:

 

Other expenses were $4,014 for the nine months ended September 30, 2013, an increase of $4,014 from $0 for the nine months ended September 30, 2012. The increase is primarily due to $4,014 of interest accrued on notes payable.

 

Net Loss:

 

As a result of the above factors, we recognized net loss of $6,885,383 for the nine months ended September 30, 2013, as compared to a net loss of $25,609 for the nine months ended September 30, 2012, an increase of $6,859,774 or approximately 26787%.

 

Liquidity and Capital Resources

 

As of September 30, 2013, the Company had a stockholders’ deficit of $122,758. For the nine months ended September 30, 2013 and 2012, the Company had a net loss of $6,885,383 and $25,609, respectively. At September 30, 2013, the Company had working capital deficit of $107,758 compared to $27,375 at December 31, 2012.

 

Net cash used in operating activities was $73,769 for the nine months ended September 30, 2013 as compared to $24,549 for the nine months ended September 30, 2012. The increase of $49,220 was primarily due to an increase in administrative expenses.

 

Net cash used in investing activities was $0 for the nine months ended September 30, 2013 and 2012.

 

Net cash provided by financing activities amounted to $156,000 for the nine months ended September 30, 2013, compared to $28,000 for the nine months ended September 30, 2012 representing an increase of $128,000.  This was due to proceeds from notes payable in the amount of $150,000, and proceeds from a related party loan of $6,000.

 

Going Concern

 

The Company’s unaudited condensed financial statements have been prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred net losses of $6,885,383 and $25,609 during the three months ended September 30, 2013 and 2012, respectively. Cash on hand will not be sufficient to cover debt repayments scheduled as of September 30, 2013 and operating expenses and capital expenditure requirements for at least twelve months from the balance sheet date. As of September 30, 2013 and December 31, 2012, the Company had working capital deficits of $107,758 and $27,375, respectively. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to seek equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying unaudited condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Critical Accounting Policies and Estimates

 

Financial Reporting Release No. 60, published by the SEC, recommends that all companies include a discussion of critical accounting policies used in the preparation of their financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.

 

We believe that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our unaudited condensed results of operations, financial position or liquidity for the periods presented in this report. Please refer Note 3 Summary of Significant accounting Policies in the notes to unaudited condensed financial statements.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Inflation

 

We believe that inflation has not had, and is not expected to have, a material effect on our operations.

 

Climate Change

 

We believe that neither climate change, nor governmental regulations related to climate change, have had, or are expected to have, any material effect on our operations.

 

ITEM 4.     CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report.  Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were not effective such that the material information required to be included in our Securities and Exchange Commission reports is accumulated and communicated to our management, including our principal executive and financial officer, recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared.

 

Changes in Internal Controls Over Financial Reporting

 

There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

  

PART II. OTHER INFORMATION

 

ITEM 6. EXHIBITS

 

Exhibit No.		Description
31		Sec. 302 Certification of Principal Executive Officer and Principal Financial Officer
32		Sec. 906 Certification of Principal Executive Officer and Principal Financial Officer
101		Interactive data files pursuant to Rule 405 of Regulation S-T

 

  

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Western Graphite Inc.
Dated: December 24, 2014	By: /s/David Wimberly
	David Wimberly, Chief Executive Officer and Chief Financial Officer
	(Principal Executive Officer and Principal Financial and Accounting Officer)