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EX-31.2 - CERTIFICATION - GRAPHITE CORPgrph_ex312.htm
EX-10.1 - LICENSE AGREEMENT - GRAPHITE CORPgrph_ex101.htm
EX-31.1 - CERTIFICATION - GRAPHITE CORPgrph_ex311.htm
EX-32.1 - CERTIFICATION - GRAPHITE CORPgrph_ex321.htm

 

 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549

 

FORM 10-K

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF 

THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2014

 

Commission File No. 000-54336

 

GRAPHITE CORP.

(Exact name of registrant as specified in its charter)

 

Nevada

 

26-0641585

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

616 Corporate Way, Suite 2-9011, Valley Cottage, NY 10989

(Address of principal executive offices, zip code)

 

(844) 804-5599 

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act: 

None

 

Securities registered pursuant to section 12(g) of the Act: 

Common Stock $.00001 par value

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) Yes ¨ No x

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of 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. (Check one):

 

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

 

At June 30, 2014, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting common stock held by non-affiliates of the Registrant (without admitting that any person whose shares are not included in such calculation is an affiliate) was approximately $1,688,000. At April 14, 2015, there were 195,601,362 shares of the Registrant’s common stock, $0.0001 par value per share, outstanding. At December 31, 2014, the end of the Registrant’s most recently completed fiscal year, there were 195,601,362 shares of the Registrant’s common stock, par value $0.0001 per share, outstanding.

 

 

 

GRAPHITE CORP. 

TABLE OF CONTENTS

 

      Page No.  
       

PART I

       

Item 1.

Business

   

4

 

Item 1A.

Risk Factors

   

7

 

Item 1B.

Unresolved Staff Comments

   

7

 

Item 2.

Properties

   

7

 

Item 3.

Legal Proceedings

    7  

Item 4.

Mine Safety Disclosures

   

7

 
           

PART II

           

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

   

8

 

Item 6.

Selected Financial Data

   

9

 

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

    9  

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

   

15

 

Item 8.

Financial Statements and Supplementary Data

   

16

 

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

   

31

 

Item 9A.

Controls and Procedures

   

31

 

Item 9B.

Other Information

   

32

 
           

PART III

           

Item 10.

Directors, Executive Officers and Corporate Governance

   

33

 

Item 11.

Executive Compensation

   

36

 

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

   

38

 

Item 13.

Certain Relationships and Related Transactions, and Director Independence

   

39

 

Item 14.

Principal Accounting Fees and Services

   

39

 
           

PART IV

           

Item 15.

Exhibits and Financial Statement Schedules

   

40

 
 

Signatures

   

41

 

 

 
2

 

FORWARD-LOOKING STATEMENTS

 

This Annual Report on Form 10-K of Graphite Corp., a Nevada corporation, contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources. 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. Actual results may differ materially from the predictions discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: the volatility of minerals prices, the possibility that exploration efforts will not yield economically recoverable quantities of minerals, accidents and other risks associated with mineral exploration and development operations, the risk that the Company will encounter unanticipated geological factors, the Company’s need for and ability to obtain additional financing, the possibility that the Company may not be able to secure permitting and other governmental clearances necessary to carry out the Company’s exploration and development plans, other factors over which we have little or no control; and other factors discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”).

 

Our management has included projections and estimates in this Form 10-K, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

 

All references in this Form 10-K to the “Company”, “Graphite”, “we”, “us,” or “our” are to Graphite Corp.

 

 
3

 

PART I

 

ITEM 1. BUSINESS

 

Overview

 

We switched our business model in fiscal 2014 and are now engaged in the commercialization of nanomaterials through the use of proprietary manufacturing techniques to create scalable processes for the production and sale of graphene flakes (“GF”) for use in composite materials and other applications and graphene carbon nanotube hybrid material (“GCNT”) for use as an electrode.

 

GF

 

On August 11, 2014, the Company entered into a share exchange agreement with Advance Graphene Ltd., an Israeli company holding a license from Graphene Materials Ltd., an Israeli company (“AGL”), that, in turn, holds a license from Ben Gurion University for the production of high-quality, low-defect GF at a cost that is expected to be substantially lower than current production costs for graphene of similar quality. Pursuant to the share exchange agreement, AGL became a wholly-owned subsidiary of the Company.

 

Graphene is:

 

 

·

derivative of Graphite

 

·

a thin layer of carbon atoms bonded in a honeycomb lattice

 

·

thinnest compound known

 

·

lightest material known (1 sq.mt. weighs 0.77 mg)

 

·

strongest compound discovered (200x > steel), but very flexible

 

·

best conductor of heat

 

·

better electric conductor than copper

 

GF is utilized as an additive and can considerably improve the barrier, mechanical, physical and electrical properties of composites. GF offers potential applications for industries that manufacture microelectronics, coatings and composites. GF demonstrates high stiffness and thermal conductivity. Owing to these superior properties, graphene is now one of the most promising materials in nanomaterial research.

 

The commercialization of GF is expected to require an investment of up to $1,000,000 and up to one year to scale-up and optimize GF production.

 

GCNT

 

On December 19, 2014, the Company’s wholly-owned subsidiary, Tubz, LLC, a Delaware limited liability company (“Tubz”), and Rice University entered into and signed a license agreement in respect of Rice University’s patented graphene carbon nanotube electrode technology, which is expected to provide dramatic performance improvement over electrodes made from conventional material today at a comparable cost. The commercialization of this technology will require raising sufficient funds for the development of a prototype product (currently intended to be a smartphone battery) to demonstrate proof of concept and then production on an industrial scale.

 

Carbon Nanotubes (“CNT”) are allotropes of carbon with a cylindrical nanostructure. Nanotubes have been constructed with length-to-diameter ratio of up to 132,000,000:1, significantly larger than for any other material. CNTs have unusual properties, including, but not limited to 200x better energy charge, storage and discharge performance than any other technology on the market today, which are valuable for nanotechnology, electronics, optics and other fields of materials science and technology.

 

Strategy

 

Our primary focus is to identify promising nanomaterials and nanomaterial applications, secure binding rights to exploit and commercialize such materials and applications, finance their development and market and distribute such materials and applications to a wide range of industries and end-users. We are currently focused on two nanomaterials – GF and GCNT. Our plan is to produce samples of GF and GCNT, in each case, based on their respective methods of fabrication and then offer them for sale to relevant customers. Once we are able to consistently produce samples of GF and GCNT to the specifications we desire, we intend identify and try to form an alliance with strategic partners with the facilities and know-how to fabricate GG and/or GCNT in industrial quantities and at competitive prices. With such fabrication secured, we will approach the respective markets and commence marketing and sale activities.

 

 
4

 

GF

 

With significant breakthroughs in GF production we will seek to capture a share of the high-end (few-layer) graphene market. Current production worldwide is boutique or lab production only, the primary reason being that the cost of production is too high to warrant large-scale adoption into commercial processes. Our primary advantage over other graphene flakes is that our production cost is expected to be 333x – 1,000x less expensive than the current market price of and our GF will be of a higher quality (i.e., fewer layers and defects) than the graphene flakes available on the market today.

 

GCNT

 

We intend to develop a battery based on GCNT. Developed by the Tour group (www.jmtour.com) at Rice University and licensed to the Company, the GCNT electrode is expected to provide a 200%+ increase in the overall specific energy of lithium ion batteries. This patented innovation requires no process changes for battery manufacturers other than use of GCNT in lieu of conventional electrode materials such as graphite. Proof of concept in the form of a cellphone battery will enable us to offer a compelling competitive advantage to original equipment manufacturers that purchase pre-fabricated electrode stock and incorporate it into their processes for making batteries for use in both defense and commercial applications.

 

Competition

 

There are a number of other companies operating in the nanomaterial space. Such companies range from other producers of graphene flakes to developers of batteries based on other nanomaterials. We are aware of one competitor in the graphene space that has a similar product to our GF – Thomas Swan & Co. Ltd. – although we have seen reports of other companies seeking to get into this business. We are also aware of two competitors seeking to develop a battery based on other nanomaterials – Storedot Ltd. and Amprius, Inc. – although, again, we have seen reports of other companies seeking to get into this business.

 

Raw Materials

 

We require graphite for our GF fabrication and graphene developed from chemical vapor deposition and carbon nanotubes for our GCNT fabrication. These materials are readily available on commodity markets and from suppliers around the world. There is no dependence on any one or a limited number of suppliers. We are currently purchasing graphite for our GF from various suppliers selling on the internet and fabricating graphene from chemical vapor deposition and carbon nanotubes in a laboratory in Austin, Texas with which we have an oral arrangement.

 

Intellectual Property

 

As at the date hereof, GF is not covered by any patent (provisional or otherwise), although a provisional patent application is under preparation. GCNT is expected to benefit from the following patent applications, which are currently pending:

 

Rice Reference No.

App. No.

Title

Filing Date

Patent No.

Issue Date

Inventors

2012-034-01

US 61/561,578

Graphene-CNT Hybrid Material and Use as a Supercapacitor Electrode

November 18, 2011

   

James Tour,

Yu Zhu, Lei Li

2012-034-02

PCT/US2012/065894

Graphene-CNT Hybrid Materials and Use as Electrodes

November 19, 2012

   

James Tour,

Yu Zhu, Lei Li, Zheng Yan, Jian Lin

2012-034-03

14/358,864 (US)

May 16, 2014

   

2012-034-04

12868206.9 (EU)

May 16, 2014

   

2012-034-05

10-2014-7016486 (SK)

June 17, 2014

   

2012-034-06

232667 (IS)

May 18, 2014

   

 

Costs and Effects of Complying with Environmental Regulations

 

Not applicable.

 

 
5

 

Research and Development

 

The Company has obligated itself to the following research and development expenses:GF - $250,000 over the course of calendar 2015GCNT - $180,000 over the course of calendar 2015If these payments are not made, the license in respect of each technology can be terminated by the other party, which may have other remedies, as well.

 

Government Regulation

 

Because of the ongoing controversy on the implications of nanotechnology, there is significant debate concerning whether nanomaterials merit special government regulation. This mainly relates to when to assess new substances prior to their release into the market, community and environment.

 

Regulatory bodies such as the United States Environmental Protection Agency and the Food and Drug Administration in the U.S. or the Health and Consumer Protection Directorate of the European Commission have started dealing with the potential risks posed by nanomaterials. As at the date hereof, neither engineered nanomaterials nor the products and materials that contain them are subject to any special regulation regarding production, handling or labelling. There is no assurance that this will not change in the future.

 

However, notwithstanding the foregoing, to the extent that nanomaterials are used in pharmaceuticals, defense, oil and gas, energy storage and certain other industries, the existing structure of regulations and approvals in such industries will apply equally to nanomaterials. Moreover, there are numerous export controls in respect of materials that have applications in defense and strategic industries. It is not possible as at the date hereof to determine if such controls will have any impact on GF, GCNT or any other business we may pursue.

 

We do not anticipate incurring any material expense in respect of or attributable to government regulation, although this may change as and when regulations change or if we enter into any business arrangement that is subject to export control.

 

On September 17, 2010, the United States Environmental Protection Agency (the “EPA”) issued significant new use rules (SNURs) under section 5(a)(2) of the Toxic Substances Control Act (TSCA) for carbon nanotubes. This action requires persons who intend to manufacture, import, or process either of these two chemical substances for a use that is designated as a significant new use by this final rule to notify the EPA at least 90 days before commencing that activity. EPA believes that this action is necessary because these chemical substances may be hazardous to human health and the environment. The required notification would provide EPA with the opportunity to evaluate the intended use and, if necessary, to prohibit or limit that activity before it occurs.

 

Employees

 

We have two persons providing us services on a full-time basis – our chief executive officer and our chief operating officer. We have one part-time employee – our acting chief financial officer.

 

Corporate History

 

We were incorporated in the State of Nevada on August 3, 2007 under the name Medzed, Inc. We were originally established for the purpose of becoming a third party reseller of medical office business solutions. However, due to poor performance related to the sales of the medical office business solutions, we believe as of September 30, 2008, the Company became a “shell” company, as that term is defined in Rule 12b-2 of the Securities Exchange Act of 1934.

 

From the time that the Company was considered a shell company until the time that we ceased being a shell company, we had focused our efforts on developing a new business, merging with, or acquiring an operating company with an operating history and assets. Accordingly, we refocused the Company's business direction to include a new business plan based on the exploration of mineral claims. We decided to enter the mining business because we were seeking out viable and feasible alternatives to create value for our shareholders. We determined that staking and exploring potential mineral claims could be an excellent long-term investment strategy that could lead to lucrative business opportunities. To reflect the Company’s new focus, on August 19, 2010, we filed an amendment to our Articles of Incorporation with the Nevada Secretary of State changing our name to First Resources Corp. The Company subsequently narrowed its focus to graphite mining and on June 14, 2012, we again filed an amendment to our Articles of Incorporation with the Nevada Secretary of State changing our name to Graphite Corp.

 

From June 2012 to the date of the share exchange transaction described below, we focused on exploiting two minerals lease agreements – one in Alabama and one in Montana, which is called the “Crystal Project”.

 

 
6

 

Discontinuation of Alabama Lease

 

On March 28, 2014, the Company decided not to continue with its plan of operation as it related to solely its Alabama leases and not to pursue any exploration in connection therewith. As such, on March 25, 2014, pursuant to a Stock Redemption Agreement dated February 24, 2014, by and between the Company and Stanley Smith, the Company redeemed 1,000,000 shares (the “Shares”) of the Company’s common stock, for a purchase price of $0.00001 per share, for an aggregate purchase price of $10.00. The sale closed on March 14, 2014. Subsequently, on March 19, 2014, the Company canceled the Shares, returning them to the authorized capital stock of the Company. Mr. Smith was a party to the Alabama lease agreements. The previous lease property was situated in Clay County, Alabama near the towns of Ashland and Lineville. The property was without known reserves and our proposed program for exploration of the property was exploratory in nature.

 

The Company acquired all of the outstanding shares of common stock of AGL by issuing 120,000,000 common shares. As a result of the share exchange, the former shareholders of the AGL controlled approximately 80.85% of the issued and outstanding common shares of the Company resulting in a change in control. The transaction was accounted for as a reverse recapitalization transaction, as the Company qualified as a non-operating public shell company given the fact that the Company held nominal net monetary assets, consisting of only cash at the time of merger transaction. As AGL is deemed to be the purchaser for accounting purposes under recapitalization accounting, the equity of the Company is presented as the equity of the combined company and the capital stock account of the Company has been adjusted to reflect the part value of the outstanding and issued common stock of the legal acquirer (AGL) after giving effect to the number of shares issued in the share exchange agreement.

Business Model Switch and Exit from the Mining Business

 

As a result of entering into the GF production and GCNT license agreements, the Company decided to switch its business model to the commercialization of GF and GCNT production. Following on from this decision, management has decided not to extend the Crystal Project lease when it expires in August 2015 and to exit the mining business altogether.

 

To date, we have not earned any revenues and have incurred a net loss of $3,485,036 in the year ended December 31, 2014 and a net loss of $3,485,036 since inception. We do not anticipate earning revenues until such time as we enter into commercial production of GF and/or GCNT. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its plan of operations described herein and eventually attain profitable operations.

 

 ITEM 1A. RISK FACTORS

 

As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2. PROPERTIES

 

Our current business address is 616 Corporate Way, Suite 2-9011, Valley Cottage, NY 10989. Our telephone number is +1 844 804 5599. 

 

We believe that this space is adequate for our current needs.

 

ITEM 3. LEGAL PROCEEDINGS

 

We are not currently involved in any legal proceedings and we are not aware of any pending or potential legal actions.

 

ITEM 4. MINE SAFETY DISCLOSURE

 

None.

 

 
7

 

PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS MARKET INFORMATION

 

Market Information

 

Our shares of common stock are quoted on the OTC Bulletin Board and the OTCQB tier of OTC Markets Group, Inc., and our ticker symbol is “GRPH.” The following table shows the reported high and low closing bid prices per share for our common stock based on information provided by the OTCQB. The over-the-counter market quotations set forth for our common stock reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

 

    BID PRICE PER SHARE  
    HIGH     LOW  
         

Three Months Ended December 31, 2014

 

$

0.08

   

$

0.02

 

Three Months Ended September 30, 2014

 

$

0.10

   

$

0.06

 

Three Months Ended June 30, 2014

 

$

0.11

   

$

0.07

 

Three Months Ended March 31, 2014

 

$

0.15

   

$

0.02

 

Three Months Ended December 31, 2013

 

$

0.11

   

$

0.02

 

Three Months Ended September 30, 2013

 

$

0.15

   

$

0.07

 

Three Months Ended June 30, 2013

 

$

0.38

   

$

0.15

 

Three Months Ended March 31, 2013

 

$

0.58

   

$

0.20

 

 

HOLDERS

 

As of December 31, 2014, the Company had 195,601,362 shares of common stock issued and outstanding held by approximately 35 shareholders of record. 21,100,000 of such shares were held of record by Cede & Co.

 

DIVIDENDS

 

Historically, we have not paid any dividends to the holders of our common stock and we do not expect to pay any such dividends in the foreseeable future as we expect to retain our future earnings for use in the operation and expansion of our business.

 

TRANSFER AGENT

 

Our transfer agent is Securities Transfer Corp., whose address is 2591 Dallas Parkway, Suite 102, Frisco, Texas 75034, and whose telephone number is (469) 633-0101.

 

RECENT SALES OF UNREGISTERED SECURITIES

 

On August 6, 2014, the Company issued the owners of AGL 120,000,000 shares of its common stock in exchange for 100% of their right, title and interest in, to and under AGL in a transaction not involving a public offering.

 

On August 6, 2014, the Company issued a non-US person 2,793,360 shares of its common stock for cash consideration of $150,000 in a transaction not involving a public offering.

 

On August 14, 2014, the Company issued a non-US person 186,219 shares of its common stock for cash consideration of $10,000 in a transaction not involving a public offering.

 

On October 7, 2014, the Company issued a non-US person 931,099 shares of its common stock for cash consideration of $50,000 in a transaction not involving a public offering.

 

On November 3, 2014, the Company issued a non-US person 465,550 shares of its common stock for cash consideration of $25,000 in a transaction not involving a public offering.

 

On November 3, 2014, the Company issued a non-US person 931,099 shares of its common stock for cash consideration of $50,000 in a transaction not involving a public offering.

 

On October 29, 2014, the Company issued 40,000,000 shares of its common stock to non-US investors in exchange for arranging the license agreement with Rice University in respect of GCNT in a transaction not involving a public offering.

 

On January 5, 2015, the Company issued a non-US person 1,862,198 shares of its common stock for cash consideration of $100,000 in a transaction not involving a public offering.

 

 
8

 

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

 

We have not established any compensation plans under which equity securities are authorized for issuance.

 

PURCHASES OF EQUITY SECURITIES BY THE REGISTRANT AND AFFILIATED PURCHASERS

 

We did not purchase any of our shares of common stock or other securities during the year ended December 31, 2014. However, as reported on a Current Report on Form 8-K on March 25, 2014, pursuant to a Stock Redemption Agreement dated February 24, 2014, by and between the Company and Stanley Smith, the Company redeemed 1,000,000 shares (the “Shares”) of the Company’s common stock, for a purchase price of $0.00001 per share, for an aggregate purchase price of $10.00. The sale closed on March 14, 2014. Subsequently, on March 19, 2014, the Company canceled the Shares, returning them to the authorized capital stock of the Company.

 

ITEM 6. SELECTED FINANCIAL DATA

 

As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

RESULTS OF OPERATIONS

 

We have generated no revenues since inception.

 

For the year ended December 31, 2014, we incurred total expenses of $3,485,036, comprised of $18,672 in professional fees, $3,306,570 in consulting fees, $1,814 in interest, $11,200 in investor relations, $33,151 in travel, $100,000 in license fees and $13,629 in general and administrative expenses.

 

At December 31, 2014, we incurred net losses of $3,485,036 and our net loss since inception on May 22, 2014 through December 31, 2014 is $3,485,036.

 

GOING CONCERN

 

Graphite Corp. is a pre-revenue development stage company. Our independent auditor has issued an audit opinion for us, which includes a statement raising substantial doubt as to our ability to continue as a going concern.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Our cash balance at December 31, 2014 was $129,152 with $185,266 in outstanding liabilities. Total expenditures over the next 12 months are expected to be approximately $2,500,000. If we experience a shortage of funds prior to generating revenues from operations we may have to raise funds from the capital markets of which there is no assurance of success. Our current cash balance will not be sufficient to fund our operations for the next twelve months.

 

 
9

 

Working Capital

 

    December31,
2014
$
 

Current Assets

 

129,152

 

Current Liabilities

   

185,266

 

Working Capital (Deficit)

 

(56,144

)

 

Cash Flows

 

    Year ended December 31,
2014
$
 

Cash Flows from (used in) Operating Activities

 

(228,440

)

Cash Flows from (used in) Financing Activities

   

381,500

 

Cash Flows from (used in) Investing Activities

 

(24,218

)

Foreign Currency Adjustment

   

310

 

Net Increase (decrease) in Cash During Period

   

129,152

 

 

Operating Revenues

 

Operating revenues for the period ended December 31, 2014 was $Nil.

 

Operating Expenses and Net Loss

 

Operating expenses for the year ended December 31, 2014 was $3,485,036 and is comprised of expenses related to licenses, consulting expenses and general and administrative expenses.

 

Net loss for the year ended December 31, 2014 was $3,485,036 and is comprised of expenses related to licenses, consulting expenses and general and administrative expenses.

 

Liquidity and Capital Resources

 

As at December 31, 2014, the Company’s cash balance was $129,152 and total asset balance was $169,152.

 

 
10

 

CRITICAL ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company’s financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is December 31.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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 all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As of December 31, 2014, the Company had no cash equivalents.

 

Stock-based Compensation

 

The Company accounts for stock-based compensation issued to employees based on ASC Topic “Share Based Payment” 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 Topic does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, “Employers’ Accounting for Employee Stock Ownership Plans”.

 

 It requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award – the requisite service period (usually the vesting period). It further requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. The scope of the Topic includes a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.

 

As at December 31, 2014, the Company had not adopted a stock option plan.

 

Basic and Diluted Net Loss Per Share

 

The Company computes net loss per share in accordance with ASC 260, Earnings Per Share, which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.

 

 
11

 

Income Taxes

 

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740, Income Taxes, as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

 

Comprehensive Loss

 

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2014, the Company had comprehensive income of $310 as a result of foreign currency transactions.

 

Financial Instruments

 

The Company adopted the FASB standard related to fair value measurement at inception. The standard defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The standard applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new fair value measurements. The standard clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The recorded values of long-term debt approximate their fair values, as interest approximates market rates. As a basis for considering such assumptions, the standard established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows.

 

 

Level 1.

Observable inputs such as quoted prices in active markets;

 

 

 
 

Level 2.

Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

 

 

 
 

Level 3.

Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The Company’s financial instruments are cash, accounts receivable, and accounts payable. The recorded values of cash, accounts receivable, and accounts payable approximate their fair values based on their short-term nature.

 

The following table presents assets and liabilities within the fair value hierarchy utilized to measure fair value on a recurring basis as of December 31, 2014:

 

   

Description

  Level 1     Level 2     Level 3     Total
Realized Loss
 

Dec. 31, 2014

 

None

 

$

-

   

$

-

   

$

-

   

$

-

 

 

 
12

 

Recently issued accounting pronouncements

 

On November 2014, The Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2014-16—Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force). The amendments in this Update do not change the current criteria in GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. That is, an entity will continue to evaluate whether the economic characteristics and risks of the embedded derivative feature are clearly and closely related to those of the host contract, among other relevant criteria. The amendments clarify how current GAAP should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. The effects of initially adopting the amendments in this Update should be applied on a modified retrospective basis to existing hybrid financial instruments issued in the form of a share as of the beginning of the fiscal year for which the amendments are effective. Retrospective application is permitted to all relevant prior periods.

 

On November 2014, The Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2014-17—Business Combinations (Topic 805): Pushdown Accounting (a consensus of the FASB Emerging Issues Task Force). The amendments in this Update provide an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. The amendments in this Update are effective on November 18, 2014. After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event. However, if the financial statements for the period in which the most recent change-in-control event occurred already have been issued or made available to be issued, the application of this guidance would be a change in accounting principle.

 

On August 2014, The Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2014-15, Presentation of Financial Statements – Going Concerns (Subtopic 205-40): Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.

 

In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 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. The new guidance requires that share-based compensation that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards and that could be achieved after an employee completes the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation costs should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on our financial position or results of operations.

 

In June 2014, the FASB issued ASU 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 , to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements of development stage entities. The amendments in this update remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, thereby improving financial reporting by eliminating the cost and complexity associated with providing that information. The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public companies, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption is permitted. The adoption of ASU 2014-10 is not expected to have a material impact on our financial position or results of operations.

 

 
13

 

In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, “Development Stage Entities”. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the ASC 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 in this update are applied retrospectively. The early adoption of ASU 2014-10 removed the development stage entity financial reporting requirements from the Company.

 

In June 2014, the FASB issued ASU 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 , to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements of development stage entities. The amendments in this update remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, thereby improving financial reporting by eliminating the cost and complexity associated with providing that information. The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public companies, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption is permitted. The adoption of ASU 2014-10 is not expected to have a material impact on our financial position or results of operations.

 

In July 2013, FASB issued ASU No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact on the Company's Consolidated Financial Statements.

 

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:

 

 

·

Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and

     
 

·

Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.

  

 
14

 

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.

 

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

We have no off-balance sheet arrangements.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

 

 
15

 

ITEM 8. FINANCIAL STATEMENTS

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Graphite Corp.

We have audited the accompanying consolidated balance sheets of Graphite Corp. (the Company) as of December 31, 2014 and the related statements of operations, stockholders’ equity (deficit) and cash flows for the period from inception (May 22, 2014) to December 31, 2014. The consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated 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 consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our 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 effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Graphite Corp. as of December 31, 2014 and the results of its operations and cash flows for the period described above in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the consolidated financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern.  Management’s plans regarding those matters are also described in Note 1.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 /s/ M&K CPAS, PLLC

 www.mkacpas.com

Houston, Texas

April 14, 2015 

 

 
16

 

 

Graphite Corp.

Consolidated Balance Sheet

 

    December 31  
    2014  

ASSETS

CURRENT ASSETS

   
     

Cash

 

$

129,152

 
       

NON-CURRENT ASSETS

       
       

License

   

40,000

 
       

TOTAL ASSETS

 

$

169,152

 
       

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

       

Accounts payable

 

$

61,501

 

Accounts payable - related party

   

59,517

 

Accrued interest

   

4,472

 

Related party payable

   

14,776

 

Loan payable

   

10,000

 

Loan payable - in default

   

35,000

 
       

Total Current Liabilities

   

185,266

 
       

STOCKHOLDERS' EQUITY (DEFICIT)

       

Preferred stock: $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding as of December 31, 2014

       

Common stock: $0.0001 par value, 300,000,000 shares authorized, 195,601,362 as of December 31, 2014

   

19,560

 

Stock payable

   

716,305

 

Additional paid-in capital

   

2,732,747

 

Other comprehense income

   

310

 

Accumulated deficit

 

(3,485,036

)

       

Total Stockholders' Equity (Deficit)

 

(16,114

)

       

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

$

169,152

 

 

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

 

 
17

 

Graphite Corp.

Consolidated Statement of Operations

 

    From Inception  
    on May 22, 2014  
    Through  
    December 31,  
    2014  
     

REVENUES

 

$

-

 
       

EXPENSES

       
       

Accounting and legal

   

18,672

 

Consulting

   

3,306,570

 

Interest expense

   

1,814

 

Investor relations

   

11,200

 

General and administrative

   

13,629

 

License fees

   

100,000

 

Travel

   

33,151

 
       

TOTAL EXPENSES

   

3,485,036

 
       

NET LOSS

 

$

(3,485,036

)

       

BASIC AND DILUTED LOSS PER SHARE

 

$

(0.03

)

       

WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED

 

$

118,177,344

 

 

The accompanying notes are an integral part of these financial statements

 

 
18

 

Graphite Corp.

Consolidated Statement of Comprehensive Income

 

    From Inception  
    on May 22, 2014  
    Through  
    December 31  
    2014  
     
Net Loss   $ (3,485,036 )
       
Foreign Currency Translation Gain     310  
       
Other comprehensive income     310  
       
TOTAL COMPREHENSIVE (INCOME)   $ (3,484,726 )

 

The accompanying notes are an integral part of these financial statements

 

 
19

 

Graphite Corp.

Statement of Stockholders' Equity (Deficit)

 

                    Deficit          
                    Accumulated          
                Additional     During the     Other     Total  
  Common Stock     Stock     Paid-in     Development     Comprehensive     Stockholders'  
    Shares     Amount     Payable     Capital     Stage     Income     Equity  
                             

Balance at inception, May 22, 2014

 

28,431,837

   

$

2,843

   

$

-

   

$

(2,843

)

 

$

-

   

$

-

   

$

-

 
                                                       

Effect of the reverse merger

   

120,000,000

     

12,000

     

-

   

(88,693

)

   

-

     

-

   

(76,693

)

                                                       

Shares issued for cash

   

7,169,525

     

717

     

-

     

384,283

     

-

     

-

     

385,000

 
                                                       

Shares issued for services

   

40,000,000

     

4,000

     

-

     

2,440,000

     

-

     

-

     

2,444,000

 
                                                       

Shares payable for services

   

-

     

-

     

716,305

     

-

     

-

     

-

     

716,305

 
                                                       

Foreign currency conversion

   

-

     

-

     

-

     

-

     

-

     

310

     

310

 
                                                       

Net loss for the year ended

                                                       

December 31, 2014

   

-

     

-

             

-

   

(3,485,036

)

   

-

   

(3,485,036

)

                                                       

Balance, December 31, 2014

   

195,601,362

   

$

19,560

   

$

716,305

   

$

2,732,747

   

$

(3,485,036

)

 

$

310

   

$

(16,114

)

 

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

 

 
20

 

Graphite Corp.

Consolidated Statement of Cash Flows

 

    From Inception  
    on May 22, 2014  
    Through  
    December 31  
    2014  

OPERATING ACTIVITIES

   

Net loss

 

$

(3,485,036

)

Changes for non-cash items

       

Consulting fees paid in stock

   

3,160,305

 

Changes in operating assets and liabilities

       

Increase in accounts payable

   

32,302

 

Increase in accounts payable - related party

   

59,517

 

Increase in accrued interest

   

4,472

 

Net Cash Used in

       

Operating Activities

 

(228,440

)

       

INVESTING ACTIVITIES

       

Effect of reverse merger

   

15,782

 

Cash paid for license

 

(40,000

)

Net Cash Used in

       

Investing Activities

 

(24,218

)

       

FINANCING ACTIVITIES

       

Repayments of loan

 

(3,500

)

Common stock issued for cash

   

385,000

 

Net Cash Provided by

       

Financing Activities

   

381,500

 
       

Foreign currency adjustment

   

310

 
       

NET INCREASE IN CASH

   

129,152

 

CASH AT BEGINNING OF PERIOD

   

-

 
       

CASH AT END OF PERIOD

 

$

129,152

 
       

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

       
       

CASH PAID FOR:

       

Interest

   

-

 

Income Taxes

   

-

 
       

NONCASH FINANCING ACTIVITIES

       

Stock issued for reverse merger

   

12,000

 

 

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

 

 
21

 

GRAPHITE CORP.

Notes to Consolidated Financial Statements

December 31, 2014

 

NOTE 1 – NATURE OF OPERATIONS AND REVERSE MERGER

 

Nature of Operations

 

Graphite Corp. (formerly First Resources Corp.) (the “Company”) was organized on August 3, 2007, under the laws of the State of Nevada to engage in any lawful activity.

 

We switched our business model in fiscal 2014 and are now engaged in the commercialization of nanomaterials through the use of proprietary manufacturing techniques to create scalable processes for the production and sale of graphene flakes (“GF”) for use in composite materials and other applications and graphene carbon nanotube hybrid material (“GCNT”) for use as an electrode.

 

On August 19, 2010, the Company filed Amended and Restated Articles of Incorporation with the Nevada Secretary of State. As a result of the Amendment the Registrant, among other things, has: (i) changed its name to “First Resources Corp.;” and, (ii) increased the aggregate number of authorized shares to 310,000,000 shares, consisting of 300,000,000 shares of Common Stock, par value $0.0001 per share and 10,000,000 shares of preferred stock, par value $0.0001 per share.

 

On June 22, 2012, the Company filed Amended and Restated Articles of Incorporation with the Nevada Secretary of State. As a result of the Amendment the Registrant has changed its name to “Graphite Corp.”

 

The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 year-end.

 

Reverse Merger

 

On August 11, 2014, the Company entered into a share exchange agreement with Advance Graphene Ltd. (“AGL”). Pursuant to the agreement, the Company acquired all of the outstanding shares of common stock of AGL by issuing 120,000,000 common shares. As a result of the share exchange, the former shareholders of the AGL controlled approximately 80.85% of the issued and outstanding common shares of the Company resulting in a change in control. The transaction was accounted for as a reverse recapitalization transaction, as the Company qualifies as a non-operating public shell company given the fact that the Company held nominal net monetary assets, consisting of only cash at the time of merger transaction. As AGL is deemed to be the purchaser for accounting purposes under recapitalization accounting, the equity of the Company is presented as the equity of the combined company and the capital stock account of the Company is adjusted to reflect the part value of the outstanding and issued common stock of the legal acquirer (AGL) after giving effect to the number of shares issued in the share exchange agreement.

 

 
22

 

NOTE 2 – GOING CONCERN

 

The Company's financial statements are 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 not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

 

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking 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 in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is December 31.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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 all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As of December 31, 2014, the Company had no cash equivalents.

 

Stock-based Compensation

 

The Company accounts for stock-based compensation issued to employees based on ASC Topic “Share Based Payment” 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.

 

 
23

 

The Topic does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, “Employers’ Accounting for Employee Stock Ownership Plans”.

 

It requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award – the requisite service period (usually the vesting period). It further requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. The scope of the Topic includes a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.

 

As at December 31, 2014, the Company had not adopted a stock option plan.

 

Basic and Diluted Net Loss Per Share

 

The Company computes net loss per share in accordance with ASC 260, Earnings Per Share, which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.

 

Income Taxes

 

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740, Income Taxes, as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

 

Comprehensive Income

 

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive income and its components in the financial statements. As at December 31, 2014, the Company had comprehensive income of $310 as a result of foreign currency transactions.

 

 
24

 

Financial Instruments

 

The Company adopted the FASB standard related to fair value measurement at inception. The standard defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The standard applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new fair value measurements. The standard clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The recorded values of long-term debt approximate their fairvalues, as interest approximates market rates. As a basis for considering such assumptions, the standard established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows.

 

Level 1. Observable inputs such as quoted prices in active markets;

 

Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

 

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The Company’s financial instruments are cash, accounts receivable, and accounts payable. The recorded values of cash, accounts receivable, and accounts payable approximate their fair values based on their short-term nature.

 

The following table presents assets and liabilities within the fair value hierarchy utilized to measure fair value on a recurring basis as of December 31, 2014:

 

   

Description

  Level 1     Level 2     Level 3     Total Realized
Loss
 

December 31, 2014

 

None

 

$

-

   

$

-

   

$

-

   

$

-

 

 

Recently issued accounting pronouncements

 

On November 2014, The Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2014-16—Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force). The amendments in this Update do not change the current criteria in GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. That is, an entity will continue to evaluate whether the economic characteristics and risks of the embedded derivative feature are clearly and closely related to those of the host contract, among other relevant criteria. The amendments clarify how current GAAP should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. The effects of initially adopting the amendments in this Update should be applied on a modified retrospective basis to existing hybrid financial instruments issued in the form of a share as of the beginning of the fiscal year for which the amendments are effective. Retrospective application is permitted to all relevant prior periods.

 

 
25

 

On November 2014, The Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2014-17—Business Combinations (Topic 805): Pushdown Accounting (a consensus of the FASB Emerging Issues Task Force). The amendments in this Update provide an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. The amendments in this Update are effective on November 18, 2014. After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event. However, if the financial statements for the period in which the most recent change-in-control event occurred already have been issued or made available to be issued, the application of this guidance would be a change in accounting principle.

 

On August 2014, The Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2014-15, Presentation of Financial Statements – Going Concerns (Subtopic 205-40): Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.

 

In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, “Development Stage Entities”. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the ASC 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 in this update are applied retrospectively. The early adoption of ASU 2014-10 removed the development stage entity financial reporting requirements from the Company.

 

In June 2014, the FASB issued ASU 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 , to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements of development stage entities. The amendments in this update remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, thereby improving financial reporting by eliminating the cost and complexity associated with providing that information. The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public companies, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption is permitted. The adoption of ASU 2014-10 is not expected to have a material impact on our financial position or results of operations.

 

 
26

 

In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 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. The new guidance requires that share-based compensation that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards and that could be achieved after an employee completes the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation costs should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on our financial position or results of operations.

 

In June 2014, the FASB issued ASU 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 , to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements of development stage entities. The amendments in this update remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, thereby improving financial reporting by eliminating the cost and complexity associated with providing that information. The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public companies, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption is permitted. The adoption of ASU 2014-10 is not expected to have a material impact on our financial position or results of operations.

 

In July 2013, FASB issued ASU No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact on the Company's Consolidated Financial Statements.

 

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:

 

 
27

 

·

Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and

   

·

Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.

 

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.

 

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.

 

NOTE 4 – RELATED PARTY PAYABLES

 

As of December 31, 2014, the Company has a payable balance owing of $14,776, to a company affiliated with a former officer of the Company.

 

As of December 31, 2014, the Company had a payable balance owing of $55,502 to two officers.

 

As of December 31, 2014, the Company had a payable balance owing of $4,015 to a company 50% owned by a major shareholder.

 

As of December 31, 2014, the Company owed an officer of the Company 9% of the issued and outstanding common shares as at the agreement date of December 12, 2014. This amounted to 17,641,234 common shares payable with a fair market value of $511,596.

 

As of December 31, 2014, the Company owed an officer of the Company 8% of issued and outstanding common shares as at the agreement date of July 15, 2014. This amounted to 2,274,547 common shares payable with a fair market value of $204,709.

 

During the period ended December 31, 2014, the Company issued 40,000,000 common shares as a finder’s fee related to the introduction of the Rice University license agreement.

 

 
28

 

NOTE 5 – LICENSE

 

The Company purchased a royalty-bearing license to develop, exploit, utilize and commercialize licensed intellectual property and products.

 

Consideration for the license is an annual license fee of $7,500 for the first three years and $20,000 for each year thereafter and $350,000 of research and development expenses until October 1, 2015 and royalties ranging between 3% and 5% subject to a $50,000 minimum. As of December 31, 2014, $100,000 has been spent on the license and expensed as a result of the related party relationships.

 

The Company entered into a license agreement to license Rice University’s grapheme carbon nanotube hybrid material technology in exchange for $40,000. The term of the agreement is from signing until the final licenses patent expires in approximately 17 years. Upon the fifth anniversary of the agreement, should the Company become insolvent, as defined within the agreement, shall result in any amounts owing from sub-licensees to the Company shall be payable directly to Rice University.

 

NOTE 6 – LOANS PAYABLE

 

The Company received a loan of $15,000 on June 27, 2013 that bears interest at 8% per annum and is due on June 27, 2014, default.

 

The Company received a loan of $15,000 on August 22, 2013 that bears interest at 8% per annum and is due on August 22, 2014, default.

 

The Company received a loan of $5,000 on January 16, 2014 that bears interest at 8% per annum and is due on January 16, 2015, default.

 

The Company received a loan of $10,000 on March 12, 2014 that bears interest at 8% per annum and is due on March 12, 2016.

 

NOTE 7 – STOCKHOLDERS’ EQUITY

 

On August 11, 2014, the Company entered into a share exchange agreement with AGL. Under the terms of the agreement, the Company issued 120,000,000 common shares for 100% of the issued and outstanding shares of AGL. The agreement results in management and shareholders of AGL to hold 81% of the issued and outstanding common shares of the Company, resulting in a reverse capitalization transaction (see Note 1). Following the above events, there were 148,431,837 shares outstanding including:

 

Shares

 

Held by:

120,000,000

 

AGL Shareholders

28,431,837

 

Graphite Corp. Shareholders

 

During the period ended December 31, 2014, the Company issued 7,169,525 common shares for $385,000.

 

During the period ended December 31, 2014, the Company issued 40,000,000 common shares as a finder’s fee related to the introduction of the Rice University license agreement (see Note 4).

 

 
29

 

NOTE 8 – INCOME TAXES

 

The Company has a net operating loss carry forward of $324,731 available to offset taxable income in future years which commence expiring in fiscal 2027.

 

The Company is subject to United States federal and state income taxes at an approximate rate of 34%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:

 

    Year Ended December 31,
2014
$
 
     

Income tax recovery at statutory rate

 

110,409

 
       

Valuation allowance change

 

(110,409

)

       

Provision for income taxes

   

 

 

The significant components of deferred income tax assets and liabilities at December 31, 2014:

 

    December 31,
2014
$
 
     

Net operating loss carried forward

 

110,409

 
       

Valuation allowance

 

(110,409

)

       

Net deferred income tax asset

   

 

 

 

NOTE 9 – SUBSEQUENT EVENTS

 

On January 9, 2015, the Company and Yehuda Eliraz, its chairman of the board of directors, signed a service agreement, a copy of which is attached hereto as Exhibit 10.1 (the “YE Service Agreement”). Pursuant to the YE Service Agreement, Mr. Eliraz will be paid an annual salary of $50,000 + VAT, a signing bonus of $16,667 and be entitled to receive shares of common stock and options representing an aggregate 6% ownership stake in the Company to vest over a three-year period. Mr. Eliraz’s annual salary will increase to $70,000 + VAT after the Company has raised an aggregate of $2,000,000. The term of the YE Service Agreement is three years, although the Company may terminate without cause with three months’ advance notice.

  

On January 9, 2015, the Company and Ziv Barak, a director, signed a service agreement, a copy of which is attached hereto as Exhibit 10.2 (the “ZB Service Agreement”). Pursuant to the ZB Service Agreement, Mr. Barak will be paid an annual salary of $6,000 + VAT, a signing bonus of $2,000 and be entitled to receive shares of common stock and options representing an aggregate 1% ownership stake in the Company to vest over a three-year period. Mr. Barak’s annual salary will increase to $7,000 after the Company has raised an aggregate of $2,000,000 in financing. The term of the ZB Service Agreement is three years, although the Company may terminate without cause with three months’ advance notice.

 

On January 16, 2015, a loan of $5,000 bearing interest at 8% per annum went into default.

 

On March 29, 2015, Ziv Barak resigned as a director of the Company.

  

 
30

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

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 are responsible for conducting an evaluation of the effectiveness of the design and operation of our internal controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the fiscal year covered by this report. Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission (“SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this report was being prepared. 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 as of December 31, 2014.

 

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

 

As of December 31, 2014, management assessed the effectiveness of our internal control over financial reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Company’s President and Chief Executive Officer, and Chief Financial Officer, who is also our principal accounting officer and principal financial officer, and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP in the United States of America and includes those policies and procedures that:

 

 

·

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;

     
 

·

Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

     
 

·

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statement.

 

In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework. Based on that evaluation, completed only by Mark Radom, our Chief Executive Officer, who also serves as our principal financial officer, Mr. Radom concluded that, as of December 31, 2014, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below.

 

This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

 

 
31

 

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (i) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (ii) inadequate segregation of duties consistent with control objectives; and (iii) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by our President, who also serves as our principal accounting officer and principal financial officer, in connection with the review of our financial statements as of December 31, 2014.

 

Management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

 

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING.

 

There were no changes in the Company’s internal control over financial reporting that occurred during the fourth quarter of the year ended December 31, 2014 that have materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION.

 

Discontinuation of Project in Alabama

 

On March 28, 2014, the Company decided not to continue with its plan of operation as it related to solely the Carr Leases and Cahaba Forest management Leases Option, and will not pursue and exploration in connection with the Carr Leases and Cahaba Forest management Leases Option. In connection therewith, on March 25, 2014, pursuant to a Stock Redemption Agreement dated February 24, 2014, by and between the Company and Stanley Smith, the Company redeemed 1,000,000 shares (the “Shares”) of the Company’s common stock, for a purchase price of $0.00001 per share, for an aggregate purchase price of $10.00. The sale closed on March 14, 2014. Subsequently, on March 19, 2014, the Company canceled the Shares, returning them to the authorized capital stock of the Company. Mr. Smith was a party to the Carr Leases and Cahaba Forest management Leases Option with the Company. The previous Carr Cahaba Property of the Company is situated in Clay County, Alabama, near the towns of Ashland and Lineville. The property was without known reserves and our proposed program for exploration of the property was exploratory in nature.

 

 
32

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Our executive officers and directors and their respective age’s as of December 31, 2014 were as follows:

 

Name

 

Age

 

Positions and Offices

Mark Radom

 

46

 

President, Chief Executive Officer, Treasurer and Director

Yehuda Eliraz

 

68

 

Director and Chairman of the Board

Ziv Barak*

 

45

 

Director

 

*Ziv Barak resigned on March 29, 2015.

 

The directors named above will serve until the next annual meeting of the stockholders or until their respective resignation or removal from office. Thereafter, directors are anticipated to be elected for one-year terms at the annual stockholders’ meeting. Officers will hold their positions at the pleasure of the Board of Directors, absent any employment agreement, of which none currently exists or is contemplated.

 

Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years.

 

Mark Radom

 

Chief Executive Officer and Director

 

Mr. Radom has served as our President, Chief Executive Officer, Treasurer and Director since August 6, 2014. Mr. Radom also serves as chief executive officer and director of First American Silver Corp. and since February 2010 Mr. Radom has also served as the chief carbon officer and general counsel of Blue Sphere Corporation. From 2009 through 2010, Mr. Radom was managing director of Carbon MPV Limited, a Cyprus company focused on developing renewable energy and carbon credit projects. From 2007 to 2009, Mr. Radom was general counsel and chief operating officer of Carbon Markets Global Limited, a London-based carbon credit and renewable energy project developer. Mr. Radom has extensive experience in business development in the renewable energy and carbon credit sectors. He has sourced over U.S. $100,000,000 in renewable energy, industrial gas and carbon credit projects and managed many complex aspects of their implementation. He was legal counsel for a number of carbon and ecological project developers and was responsible for structuring joint ventures and advising on developing projects through the CDM/JI registration cycle and emission reduction purchase agreements under the auspices of the Kyoto Protocol. Prior to this, he worked on Wall Street and in the City of London as a US securities and capital markets lawyer where he represented sovereigns, global investment banks and fortune 500 companies across a broad range of capital raising and corporate transactions. He is a graduate of Duke University and Brooklyn Law School. Mr. Radom is admitted to practice law in New York and New Jersey and speaks fluent Russian. 

 

 
33

 

Charles Maslin

 

Chief Operating Officer

 

Charles has served as our chief operating officer since July 15, 2014. Charles is an attorney with over twenty years of experience in the areas of corporate development and strategic planning. Charles’s prior experience includes participation in the building of several organizations in the financial, telecommunications and technology sectors. Most recently, Charles was Chief Operating Officer of USZoom, LLC a SaaS platform company serving the international parcel forwarding and digital mail industries. His responsibilities included the successful raising of seed capital and two follow-on investments at progressively higher valuations, drafting and/or reviewing all legal/corporate documents, creating strategic plans and partnerships and leading the international expansion through identifying and contracting with partners worldwide.

 

Prior to USZoom, LLC Charles was co-founder, CFO and General Counsel of Breakwater Capital, a technology based derivatives trading company. Charles helped build the organization from 5 to 150 people over a period of 5 years. He oversaw accounting, data analysts and human resources and managed outside counsel, accountants, auditors and compliance. Charles also sourced, lead due diligence, negotiated and implemented strategic partnerships and acquisitions. He also interfaced directly with the Chief Technology Officer and the hiring and development of a database administration and software development team for the design and implementation of mission critical applications.

 

Prior to Breakwater, Charles worked for Infinity Investments on the commercialization of technologies in graphene, ultra-nano-crystalline diamond and MEMS. Prior to Breakwater, Charles was Vice President of Corporate Development for Broadserve, a broadband Internet company. At Broadserve, Charles led capital formation and initiated/negotiated strategic partnerships with the largest telecommunications service providers in the US. Prior to Broadserve, Charles served in the General Counsel's Office of Salomon Brothers working in capital markets and special projects that focused on optimizing firm-wide business processes. Charles has a BA in Economics, minor in Philosophy, from Temple University, and a JD from New York Law School and an Executive program at the University of Pennsylvania, Wharton School

 

Yehuda Eliraz

 

Chairman of the Board

 

Yehuda became Chairman of the Board on August 11, 2014. Prior to joining the Company, Yehuda was Chairman of the Board of the Portfolio Management Company of the Bank of Jerusalem until April 2012 and Chairman of the Investment Committee of Migdal Provident Management Company Ltd. through June 2008. He was also a lecturer in economics and business administration at Hebrew and Bar Ilan Universities and senior economist at the Research and Development Unit of the Israeli Defense Ministry.

 

 
34

 

TERM OF OFFICE

 

All directors hold office until the next annual meeting of the stockholders of the Company and until their successors have been duly elected and qualified. The Company’s Bylaws provide that the Board of Directors will consist of no less than three members. Officers are elected by and serve at the discretion of the Board of Directors

 

DIRECTOR INDEPENDENCE

 

Our board of directors is currently composed of two members, neither of whom qualifies as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to each director that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.

 

CERTAIN LEGAL PROCEEDINGS

 

No director, nominee for director, or executive officer of the Company has appeared as a party in any legal proceeding material to an evaluation of his ability or integrity during the past ten years.

 

SIGNIFICANT EMPLOYEES AND CONSULTANTS

 

Other than our officers and directors, we currently have no other significant employees.

 

AUDIT COMMITTEE AND CONFLICTS OF INTEREST

 

Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. The Board of Directors has not established an audit committee and does not have an audit committee financial expert, nor has the Board of Directors established a nominating committee. The Board is of the opinion that such committees are not necessary since the Company is an early exploration stage company and has only two directors, and to date, such directors have been performing the functions of such committees. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions.

 

There are no family relationships among our directors or officers. Other than as described above, we are not aware of any other conflicts of interest with any of our executive officers or directors.

 

 
35

 

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who own more than ten percent of a registered class of our equity securities, file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater-than-ten percent stockholders are required by SEC regulations to furnish us with all Section 16(a) forms they file. Based on our review of filings made on the SEC website, and the fact of us not receiving certain forms or written representations from certain reporting persons that they have complied with the relevant filing requirements, we believe that, during the year ended December 31, 2013, our executive officers, directors and greater-than-ten percent stockholders have not complied with all Section 16(a) filing requirements.

 

CODE OF ETHICS

 

The Company has not adopted a code of ethics that applies to its principal executive officers, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Company has not adopted a code of ethics because it has only commenced operations.

 

 ITEM 11. EXECUTIVE COMPENSATION

 

The table below summarizes all compensation awarded to, earned by, or paid to our Officers for all services rendered in all capacities to us as of the years ended December 31, 2014, for the fiscal years ended as indicated.

 

SUMMARY COMPENSATION TABLE

 

Name and Principal Position

 

Year

  Salary
($)
    Bonus
($)
    Stock Awards
($)
    Option Awards
($)
    Non-Equity Incentive Plan Compensation ($)     Nonqualified Deferred Compensation ($)     All Other Compensation ($)     Total
($)
 
                                                                     

Brian Goss (1)

 

2014

   

0

     

0

     

0

     

0

     

0

     

0

     

0

     

0

 
   

2013

   

0

     

0

     

0

     

0

     

0

     

0

     

0

     

0

 
                                                                     

Jeanne Goss (2)

 

2014

   

0

     

0

     

0

     

0

     

0

     

0

     

0

     

0

 
   

2013

   

0

     

0

     

0

     

0

     

0

     

0

     

0

     

0

 

 

 

 

 

 

 

 

 

 

Mark Radom (3)

2014

 

0

0

0

0

0

0

 

 

 

 

 

 

 

 

 

 

 

Charles Maslin (4)

2014

0

0

0

0

0

0

 

 

(1) Appointed President and Chief Executive Officer, Chief Financial Officer, Treasurer and Director on July 9, 2012 and resigned therefrom on August 6, 2014.  

                            

(2) Appointed Secretary on September 21, 2012 and resigned therefrom on August 6, 2014.

 

(3) Appointed Chief Executive Officer and Director on August 6, 2014.

 

(4) Appointed Chief Operating Officer on August 6, 2014.

 

(5) Appointed Director on August 6, 2014.

 

(6) Appointed Director on August 25, 2014.

 

 
36

 

STOCK OPTION GRANTS

 

We have granted the following stock options to our executive officers:

 

Mark Radom – starting on September 16, 2016, Mr. Radom will receive options to purchase 0.75% (or pro-rata share thereof, as the case may be) of the Company’s issued and outstanding shares of common stock at the end of each successive three-month period for 18 months with each option conferring the right to purchase one share of common stock at a strike price of $0.01 per share.

 

Charles Maslin - starting on October 16, 2016, Mr. Maslin will receive options to purchase 0.4167% (or pro-rata share thereof, as the case may be) of the Company’s issued and outstanding shares of common stock at the end of each successive three-month period for 18 months with each option conferring the right to purchase one share of common stock at a strike price of $0.01 per share.

 

These are the only stock option grants since our inception.

 

EMPLOYMENT AGREEMENTS

 

The Company is a party to employment agreements with Mark Radom, its chief executive officer, and Charles Maslin, its chief operating officer. The Company is also party to a service agreement with Yehuda Eliraz, its chairman of the board, and Ziv Barak, its third director.

 

DIRECTOR COMPENSATION

 

The following table sets forth director compensation as of December 31, 2014:

 

Name

  Fees Earned Paid in Cash($)    

Stock Awards
($)

    Option Awards
($)
    Non-Equity Incentive Plan Compensation ($)    

Nonqualified Deferred Compensation Earnings ($)

    All Other Compensation ($)     Total
($)
 
                                                         

Brain Goss (1)

   

0

     

0

     

0

     

0

     

0

     

0

     

0

 
                                                         

Jason Babcock (2)

   

0

     

0

     

0

     

0

     

0

     

0

     

0

 

 

 

 

 

 

 

 

 

Mark Radom (3) 2014

 

0

0

0

0

0

 

 

 

 

 

 

 

 

 

Yehuda Eliraz (4) 2014

 

0

0

0

0

0

 

 

 

 

 

 

 

 

 

Ziv Barak (5) 2014

 

0

0

0

0

0

 

 

(1)

Appointed President and Chief Executive Officer, Chief Financial Officer, Treasurer and Director, on July 9, 2012 and resigned therefrom on August 6, 2014.

 

 

(2)

Appointed Director on October 31, 2012 and resigned therefrom on August 6, 2014.

 

 

(3)

Appointed Chief Executive Officer and Director on August 6, 2014.

 

 

(4)

Appointed Directo on August 6, 2014.

 

 

(5)

Appointed Director on August 6, 2014 and resigned on March 29, 2015.

 

 
37

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table lists, as of December 31, 2014, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.

 

The percentages below are calculated based on 193,739,164 shares of our common stock issued and outstanding as of December 31, 2014.

 

Title of Class

 

Name and Address of

Beneficial Owner

Amount and Nature of Beneficial Ownership     Percent of
Common
Stock (1)
 
         

Common Stock

 

Brian Goss (2)

681,837

     

*0.4

 

Common Stock

 

Jeanne Goss (3)

 

-0-

     

*

 

Common Stock

 

Jason Babcock (4)

 

-0-

     

*

 

Common Stock

 

Mark Radom (5)

 

-0-

     

*

 

Common Stock

 

Charles Maslin (6)

 

-0-

     

*

 

Common Stock

 

Yehuda Eliraz (7)

 

-0-

     

*

 

Common Stock

 

Ziv Barak (8)

 

-0-

     

*

 

All directors and executive officers as a group (7 persons)

 

 

 

-0-

 

0.0

%

 

 

 

 

 

Common Stock

 

CTW – Changing the World Technologies, Ltd., Kingstown, St. Vincent & the Grenadines

31,100,000 

15.9

%

Common Stock

 

Yaacov Zecharia, Tel Aviv, Israel

32,000,000 

16.4

Common Stock

 

Dr. Borenstein Ltd., Tel Aviv, Israel

30,000,000 

15.3

Common Stock

 

Moshe Alon, Tel Aviv, Israel

15,000,000 

7.7

______________

*

less than 1%

 

 

(1)

Unless otherwise noted, the address of each person or entity listed is, c/o Graphite Corp., 616 Corporate Way, Suite 2-9011, Valley Cottage, NY 10989.

 

 
38

 

(2)

Appointed President and Chief Executive Officer, Chief Financial Officer, Treasurer and Director on July 9, 2012 and resigned on August 6, 2014.

 

 

(3)

Appointed Secretary on September 21, 2012 and resigned on August 6, 2014.

 

 

(4)

Appointed Director on October 31, 2012 and resigned on August 6, 2014.

 

(5)

Appointed Chief Executive Officer and Director on August 6, 2014.

 

 

(6)

Appointed Chief Operating Officer on August 6, 2014.

 

 

(7)

Appointed Director on August 6, 2014.

 

 

(8)

Appointed Director on August 25, 2014.

  

We have the following outstanding warrant, options or other securities exercisable for or convertible into shares of our common stock.

 

Consultant Options

 

# of options

 

Exercise period

 

Notes

Thomas Lewis

 

900,000

 

5 years from date of grant, which was between Oct 2012 and Sep 2013

 

Exercise price is $0.40

 

 

 

 

 

 

 

Ian Flint

 

600,000

 

3 years from May 9, 2013

 

Exercise price is $0.20

 

 

 

 

 

 

 

Roger Szelmeczka

 

250,000

 

3 years from date of grant, which was between Dec 2012 and Dec 2014

 

Exercise price is $0.70

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

None.

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

For the year ended December 31, 2014 and 2013, the total fees charged to the company for audit services, including quarterly reviews was $13,000 and $0 for audit-related services, $0.00 and $0.00 for tax services and other services were $0.00 and $0.00, respectively.

 

 
39

 

PART IV

 

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

 

(a) The following Exhibits, as required by Item 601 of Regulation SK, are attached or incorporated by reference, as stated below.

 

Number

 

Description

     

3.1

 

Articles of Incorporation*

     

3.2

 

Bylaws*

     
10.1

Graphene Flakes License Agreement between Advance Graphene Limited and Graphene Materials Limited dated August 1, 2014

 

10.2

Share Exchange Agreement dated August 6, 2014 (incorporated by reference to our current report on Form 8-K dated August 11, 2014)

 

10.3

Employment Agreement with Mark Radom dated December 3, 2014 (incorporated by reference to our current report on Form 8-K dated December 23, 2014)

 

10.4

Employment Agreement with Yehuda Eliraz dated December 3, 2014 (incorporated by reference to our current report on Form 8-K dated January 12, 2015)

 

10.5

Employment Agreement with Ziv Barak dated January 4, 2015 (incorporated by reference to our current report on Form 8-K dated January 12, 2015)

 

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

     

31.2

 

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

     

32.1

 

Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

101.INS **

 

XBRL Instance Document

     

101.SCH **

 

XBRL Taxonomy Extension Schema Document

     

101.CAL **

 

XBRL Taxonomy Extension Calculation Linkbase Document

     

101.DEF **

 

XBRL Taxonomy Extension Definition Linkbase Document

     

101.LAB **

 

XBRL Taxonomy Extension Label Linkbase Document

     

101.PRE **

 

XBRL Taxonomy Extension Presentation Linkbase Document

_______________ 

*

Incorporated by reference to the Registrant’s Form SB-2 (File No. 333-148719), filed with the Commission on January 17, 2008.

 

**

XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 
40

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

GRAPHITE CORP.

 
 

(Name of Registrant)

 
     

Date: April 14, 2015

By:

/s/ Mark Radom

 
 

Name:

Mark Radom

 
 

Title:

President and Chief Executive Officer, Chief Financial Officer, and Treasurer (principal executive officer, principal financial officer and principal accounting officer)

 

 

 
41

 

EXHIBIT INDEX

 

Number

 

Description

     

3.1

 

Articles of Incorporation*

     

3.2

 

Bylaws*

     

10.1

Graphene Flakes License Agreement between Advance Graphene Limited and Graphene Materials Limited dated August 1, 2014

 

 

10.2

Share Exchange Agreement dated August 6, 2014 (incorporated by reference to our current report on Form 8-K dated August 11, 2014)

 

 

10.3

Employment Agreement with Mark Radom dated December 3, 2014 (incorporated by reference to our current report on Form 8-K dated December 23, 2014)

 

 

10.4

Employment Agreement with Yehuda Eliraz dated December 3, 2014 (incorporated by reference to our current report on Form 8-K dated January 12, 2015)

 

 

10.5

Employment Agreement with Ziv Barak dated January 4, 2015 (incorporated by reference to our current report on Form 8-K dated January 12, 2015)

 

 

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

32.1

Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

101.INS **

 

XBRL Instance Document

     

101.SCH **

 

XBRL Taxonomy Extension Schema Document

     

101.CAL **

 

XBRL Taxonomy Extension Calculation Linkbase Document

     

101.DEF **

 

XBRL Taxonomy Extension Definition Linkbase Document

     

101.LAB **

 

XBRL Taxonomy Extension Label Linkbase Document

     

101.PRE **

 

XBRL Taxonomy Extension Presentation Linkbase Document

_______________

*

Incorporated by reference to the Registrant’s Form SB-2 (File No. 333-148719), filed with the Commission on January 17, 2008.

 

**

XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 

42