GRAPHITE CORP - FORM 10-Q - August 14, 2015

Attached files

file	filename
EX-31.1 - CERTIFICATION - GRAPHITE CORP	grph_ex311.htm
EX-32.1 - CERTIFICATION - GRAPHITE CORP	grph_ex321.htm
EX-10.1 - VIS VIRES CONVERTIBLE NOTE - GRAPHITE CORP	grph_ex101.htm
EX-31.2 - CERTIFICATION - GRAPHITE CORP	grph_ex312.htm
EX-10.3 - PROMISSORY NOTE - GRAPHITE CORP	grph_ex103.htm
EX-10.2 - VIS VIRES SECURITIES PURCHASE AGREEMENT - GRAPHITE CORP	grph_ex102.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

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

For the quarterly period ended: June 30, 2015

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

For the transition period from _______________ to _______________

Commission File No. 000-54336

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)

Indicate by check mark whether the issuer (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 o

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	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 Exchange Act Rule 12b-2 of the Exchange Act): Yes o No x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o

APPLICABLE ONLY TO CORPORATE ISSUERS

As of August 14, 2015, there were 195,601,362 shares of common stock, $0.0001 par value per share, outstanding.

GRAPHITE CORP.

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED JUNE 30, 2015

INDEX

Index		Page

Part I. Financial Information

Item 1.	Financial Statements

	Balance Sheet as of June 30, 2015 and December 31, 2014 (unaudited).		4

	Statements of Operations for the three and six months ended June 30, 2015 (unaudited), and from Inception (May 22, 2014) through June 30, 2014.		5

	Statements of Consolidated Statement of Comprehensive Income (unaudited).		6

	Statements of Cash Flows for the six months ended June 30, 2015 (unaudited), and from Inception (May 22, 2014) through June 30, 2014.		7

	Notes to Condensed Financial Statements (Unaudited).		8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		22

Item 4.	Controls and Procedures.		22

Part II. Other Information

Item 1.	Legal Proceedings.		23

Item 1A.	Risk Factors.		23

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		23

Item 3.	Defaults Upon Senior Securities.		23

Item 4.	Mine Safety Disclosures.		23

Item 5.	Other Information.		23

Item 6.	Exhibits.		24

Signatures			25

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q of Graphite Corp., a Nevada corporation (the “Company”), 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-Q, 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.

PART I. FINANCIAL INFORMATION

Graphite Corp.

Consolidated Balance Sheet

(unaudited)

	June 30,			December 31,
	2015			2014

ASSETS

CURRENT ASSETS

Cash	$	944		$	129,152

NON-CURRENT ASSETS

License, net of amortization of $3,968 and $0, respectively		36,032			40,000

TOTAL ASSETS	$	36,976		$	169,152

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

Accounts payable	$	67,119		$	61,501
Accounts payable - related party		206,292			59,517
Accrued interest		7,165			4,472
Related party payable		15,776			14,776
Loan payable, net of discount of $36,686 and $0 respectively		16,314			10,000
Loan payable - default		35,000			35,000

Total Current Liabilities		347,666			185,266

Total Liabilities		347,666			185,266

STOCKHOLDERS' EQUITY (DEFICIT)

Preferred stock: $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding as of June 30, 2015 and December 31, 2014		-			-
Common stock: $0.0001 par value, 300,000,000 shares authorized, 195,601,362 as of June 30, 2015 and December 31, 2014		19,560			19,560
Stock payable		920,853			716,305
Addiitional paid-in capital		2,761,058			2,732,747
Other comprehense income		200			310
Accumulated deficit		(4,012,361	)		(3,485,036	)

Total Stockholders' Equity (Deficit)		(310,690	)		(16,114	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	36,976		$	169,152

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

Graphite Corp.

Consolidated Statement of Operations

(unuadited)

	Three Months Ended			Six Months Ended			Inception
	Three Months Ended			Six Months Ended			(May 22, 2014) to
	June 30,			June 30,			June 30,
	2015			2015			2014

REVENUES	$	-		$	-		$	-

EXPENSES

Accounting and legal		10,000			16,000			-
Consulting		105,206			350,056			-
Interest expense		5,430			6,318			-
Investor relations		-			12,689			-
Research and development		38,617			101,617			-
Website costs		-			3,976			-
General and administrative		7,321			17,057			-
Travel		-			19,612			-

TOTAL EXPENSES		166,574			527,325			-

NET LOSS		(166,574	)		(527,325	)		-

BASIC AND DILUTED LOSS PER SHARE	$	(0.00	)	$	(0.00	)	$	(0.00	)

WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED		195,601,362			195,601,362			195,601,362

The accompanying notes are an integral part of these financial statements

Graphite Corp.

Consolidated Statement of Comprehensive Income

(unaudited)

	Three Months			Six Months			Inception
	Ended			Ended			(May 22, 2014) to
	June 30,			June 30,			June 30,
	2015			2015			2014

Net Loss	$	(166,574	)	$	(527,325	)	$	-

Foreign Currency Translation Gain		49			110			-

Other Comprehensive Income		49			110			-

TOTAL COMPREHENSIVE (LOSS)	$	(166,525	)	$	(527,215	)	$	-

The accompanying notes are an integral part of these financial statements

Graphite Corp.

Consolidated Statement of Cash Flows

(unaudited)

	Six Months			Inception
	Ended			(May 22, 2014) to
	June 30,			June 30,
	2015			2014
OPERATING ACTIVITIES
Net loss		(527,325	)		-
Changes in non-cash items:
Consulting fees in stock payable		192,548			-
Amortization of license		3,968			-
Amortization of debt discount		3,625			-
Changes in operating assets and liabilities
Increase in accounts payable		5,618			-
Increase in accounts payable - related party		146,775			-
Increase in accrued interest		2,693			-
Net Cash Used in
Operating Activities		(172,098	)		-

INVESTING ACTIVITY
Net Cash used in Investing Activity		-			-

FINANCING ACTIVITY
Increase in loans payable		43,000			-
Increase in due to related party		1,000			-
Net Cash used in
Financing Activity		44,000			-

Foreign currency adjustment		(110	)		-

NET INCREASE (DECREASE) IN CASH		(128,208	)		-
CASH AT BEGINNING OF PERIOD		129,152			-

CASH AT END OF PERIOD	$	944		$	-

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

CASH PAID FOR:
Interest	$	-		$	-
Income Taxes	$	-		$	-

NON CASH ITEMS:
Debt discount from inducement	$	10,000		$	-
Debt discount from beneficial conversion feature	$	28,311		$	-

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

GRAPHITE CORP.

Notes to Consolidated Financial Statements

June 30, 2015

(unaudited)

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. The Company intends engage in the exploration of certain mineral interests in the states of Alabama and Montana.

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.

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 June 30, 2015 and 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 June 30, 2015, 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 incomeand its components in the financial statements. As at June 30, 2015, the Company had comprehensive gain of $110 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 June 30, 2015 and December 31, 2014:

Description

Level 1

Level 2

Level 3

Total

Realized Loss

June 30, 2015

None

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.

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.

NOTE 4 – RELATED PARTY PAYABLES

As of June 30, 2015, the Company has a payable balance owing of $14,776 (December 31, 2014: $14,776), to a company affiliated with a former officer of the Company.

As of June 30, 2015, the Company had a payable balance owing of $160,500 (December 31, 2014: $55,502) to two officers.

As of June 30, 2015, the Company had a payable balance owing of $41,667 (December 31, 2014: $4,015) to a company 50% owned by a major shareholder.

As of June 30, 2015 and 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 June 30, 2015 and 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.

As of June 30, 2015, the Company owed a director of the Company 1% of issued and outstanding common shares as at the agreement date of January 9, 2015. This amounted to 338,220 common shares payable with a fair market value of $10,857.

As of June 30, 2015, the Company owed a director of the Company 6% of issued and outstanding common shares as at the agreement date of January 9, 2015. This amounted to 2,029,322 common shares payable with a fair market value of $65,141.

As of June 30, 2015, the Company owed a director of the Company 1,500,000 bonus common shares payable with a fair market value of $48,150.

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.

As of June 30, 2015, the Company owed a shareholder of the Company $1,000. The amount does not have specific repayment terms, is non-interest bearing and unsecured.

As of June 30, 2015, the Company owed $4,125 to Graphene Materials, a company controlled by a shareholder.

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. These expenditures were expensed as incurred.

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.

During the six month period ended June 30, 2015, the Company has recorded $3,968 in amortization expense related to this license.

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.

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.

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.

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.

The Company received a loan of $10,000 on June 28, 2015 that bears interest at 20% per annum and is due on February 1, 2016. In addition, the Company is to grant 1,000,000 as consideration for this loan, which has a fair market value of $12,000 and will be included in interest expense over the vesting term. Included on the balance sheet is a $9,908 debt discount from inducement with $2,092 expensed during the period ended June 30, 2015.

The Company received a loan of $33,000 on June 15, 2015 that bears interest at 8% per annum and is due on March 18, 2016. The loan included an original debt discount of $28,311 and, at June 30, 2014 ,included on the balance sheet is a $26,778 debt discount from beneficial conversion feature with $1,533 expensed during the period ended June 30, 2015.

As of June 30, 2015, there is accrued interest on the above loans in the amount of $7,165 (December 31, 2014: $4,472)

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 year 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).

As of June 30, 2015, the Company owed a director of the Company 1,500,000 bonus common shares payable with a fair market value of $48,150.

As of June 30, 2015, the Company owed two consultants an aggregate of 4,000,000 shares for services provided, valued at $68,400 using a closing price on the grant date February 23, 2015.

As of June 30, 2015, the Company owed a lender 1,000,000 shares as inducement to provide debt to the Company, valued at $12,000 and included in stock payable as June 30, 2015. The debt discount will be included in interest expense over the vesting term. Included on the balance sheet is a $9,908 debt discount from inducement with $2,092 expensed during the period ended June 30, 2015.

NOTE 8 – SUBSEQUENT EVENT

The Company has analyzed its operations subsequent to June 30, 2015 through the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following information should be read in conjunction with (i) the financial statements of Graphite Corp., a Nevada corporation and exploration-stage company, and the notes thereto appearing elsewhere in this Form 10-Q together with (ii) the more detailed business information and the December 31, 2014 audited financial statements and related notes included in the Company’s Annual Report on Form 10-K (File No. 000-54336), as filed with the Securities and Exchange Commission on April 14, 2015. Statements in this section and elsewhere in this Form 10-Q that are not statements of historical or current fact constitute “forward-looking” statements

OVERVIEW

Graphite Corp. (the “Company”) was incorporated in the State of Nevada on August 3, 2007 and established a fiscal year end of December 31.

Going Concern

To date the Company has no revenues and consequently has incurred recurring losses from operations. No revenues are anticipated until we implement our new business plan, as described in our current report on Form 8-K filed with the SEC on August 13, 2014. The ability of the Company to continue as a going concern is dependent on raising capital to fund our business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern.

The Company plans to raise additional funds through debt or equity offerings. There is no guarantee that the Company will be able to raise any capital through this or any other offerings.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have identified the policies below as critical to our business operations and to the understanding of our financial results:

Basis of Presentation

Use of 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 June 30, 2015 and December 31, 2014 the Company had no cash equivalents.

Mineral Properties

Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs are capitalized including licenses and lease payments. Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects. Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount.

Stock-based Compensation

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”.

As at June 30, 2015, the Company had not adopted a stock option plan.

Basic and Diluted Net Loss Per Share

Income Taxes

Comprehensive Income

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive income and its components in the financial statements. During the six months ended June 30, 2015, the Company had comprehensive income of $110 as a result of foreign currency transactions. The balance at June 30, 2015 and December 31, 2014 was $200 and $310, respectively.

Financial Instruments

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 following table presents assets and liabilities within the fair value hierarchy utilized to measure fair value on a recurring basis as of June 30, 2015 and December 31, 2014:

Description

Level 1

Level 2

Level 3

Total

Realized Loss

June 30, 2015

None

December 31, 2014

None

Recently issued accounting pronouncements

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.

PLAN OF OPERATION

Our plan of operation for the next twelve months is to continue to execute on the following business plan, which was started in August of 2014.

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.

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 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.

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.

Graphite Mining

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.

Results of Operations

The three months ended June 30, 2015 compared to period from inception (May 22, 2014) to June 30, 2014 (unaudited)

We recorded no revenues for the three-month periods ended June 30, 2015 and the period from inception (May 22, 2014) to June 30, 2014, respectively.

For the three months ended June 30, 2015, total operating expenses were $166,574, of which professional fees were $10,000, consulting fees were $105,206, research and development was $38,617 and general and administrative expenses were $7,321, as compared to operating expenses of $0, of which professional fees of $0, consulting fees of $0, research and development of $0 and general and administrative expenses of $0 for the period from inception (May 22, 2014) to June 30, 2014. The reason for the increase is attributable to the Company only starting operations under its current format in the third quarter of 2014.

Interest expense recorded for the three months ended June 30, 2015 was $5,430, as opposed to $0 for the period from inception (May 22, 2014) to June 30, 2014.

The six months ended June 30, compared to the period from inception (May 22, 2014) to June 30, 2014 (unaudited)

We recorded no revenues for the six-month periods ended June 30, 2015 and for the period from inception (May 22, 2014) to June 30, 2014.

For the six months ended June 30, 2015, total operating expenses were $527,325, of which professional fees were $16,000, consulting fees were $350,056, investor relations were $12,689, research and development was $101,617, website costs were $3,976, travel was $19,612 and general and administrative expenses were $17,057, as compared to operating expenses of $0 for the period from inception (May 22, 2014) to June 30, 2014. The reason for the increase is attributable to the Company only starting operations under its current format in the third quarter of 2014.

Interest expense recorded for the six months ended June 30, 2015 was $6,318, as opposed to $0 for the for the period from inception (May 22, 2014) to June 30, 2014.

Liquidity and Capital Resources

At June 30, 2015, we had a cash balance of $944 (December 31, 2014: $129,152). We do not have sufficient cash on hand to fund our ongoing operational expenses. We will need to raise funds to commence our exploration program and fund our ongoing operational expenses. Additional funding will likely come from equity financing from the sale of our common stock or sale of part of our interest in our mineral claims. If we are successful in completing an equity financing, existing shareholders will experience dilution of their interest in our Company. We do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our exploration activities and ongoing operational expenses. In the absence of such financing, our business will likely fail. There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing. If we are unable to achieve the financing necessary to continue our plan of operations, then we will not be able to continue our exploration of our minerals claims and our business will fail.

Cashflow from Operating Activities

During the period ended June 30, 2015, the Company used $172,098 of cash for operating activities resulting from a loss of $527,325 offset by increases in operating assets and liabilities of $355,227.

During the period from inception (May 22, 2015) to June 30, 2014, we had $0 change in operating activities.

Cashflow from Investing Activities

During the period ended June 30, 2015, the Company did not have any investing activities.

During the period from inception (May 22, 2015) to June 30, 2014, we had $0 change in investing activities.

Cashflow from Financing Activities

During the six-month period ended June 30, 2015, the Company received $44,000 of cash from financing activities.

During the period from inception (May 22, 2015) to June 30, 2014, we had $0 change in financing activities.

ITEM 3. 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 3.

ITEM 4. CONTROLS AND PROCEDURES.

DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, our principal executive officer and our principal financial officer are responsible for conducting an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities 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 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 June 30, 2015.

There were no changes in the Company’s internal controls over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is not currently subject to any legal proceedings. From time to time, the Company may become subject to litigation or proceedings in connection with its business, as either a plaintiff or defendant. There are no such pending legal proceedings to which the Company is a party that, in the opinion of management, is likely to have a material adverse effect on the Company’s business, financial condition or results of 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 1A.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINING SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

On June 15, 2015, we issued a convertible promissory note to an accredited investor in an aggregate principal amount of $33,000 for an aggregate purchase price of $33,000. This note matures on March 18, 2016 and accrues interest at a rate of 8% per annum. In an event of default, the note will bear interest at a rate of 22% per annum. This note may generally be converted into shares of our common stock at a conversion price of 42% discount to our lowest trade or closing prices during periods in proximity to the time of conversion subject to further discounts in the case of certain events of default.

The note includes customary default provisions related to payment of principal and interest and bankruptcy or creditor assignment. In addition, it shall constitute an event of default under the note if we are delinquent in our filings with the Securities and Exchange Commission, cease to be quoted on the OTCQB, or our common stock is not DWAC or DTC eligible. In the event of an event of default the notes may become immediately due and payable at a premium to the outstanding principal. The note also provides that if shares issuable upon conversion of the note are not timely delivered in accordance with the terms of the note then we shall be subject to certain cash penalties that increase proportionally to the duration of the delinquency.

On June 28, 2015, we issued a promissory note to an accredited investor in exchange for a loan of $10,000. This note matures on February 16, 2015 and bears interest at a rate of 20% per annum. We are also obligated to issue the lender 1,000,000 shares of our common stock by November 15, 2015.

ITEM 6. EXHIBITS.

(a) Exhibits required by Item 601 of Regulation SK.

(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		Vis Vires Convertible Note dated June 15, 2015

10.2		Vis Vires Securities Purchase Agreement dated June 15, 2015

10.3		Dr. Borenstein Ltd. Promissory Note dated June 28, 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.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GRAPHITE CORP.
	(Name of Registrant)

Date: August 14, 2015	By:	/s/ Mark Radom
	Name:	Mark Radom
	Title:	Chief Executive Officer

Attached files

Stock widget

Investing forum

GRAPHITE CORP Reports